Sasol pulls out all the stops to comply with JSE directive

Petrochemical giant Sasol is pulling out all the stops to ensure that it complies with a directive from the JSE to publish its results by next Monday failing which its trading could be suspended from the bourse. File Photo: IOL

Petrochemical giant Sasol is pulling out all the stops to ensure that it complies with a directive from the JSE to publish its results by next Monday failing which its trading could be suspended from the bourse. File Photo: IOL

Published Oct 20, 2019

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JOHANNESBURG - Petrochemical giant Sasol is pulling out all the stops to ensure that it complies with a directive from the JSE to publish its results by next Monday failing which its trading could be suspended from the bourse.

Sasol has already delayed the release of the financials twice in one month, leading to fears that the JSE may annotate its listing and push for its possible removal from the continent’s biggest stock exchange.

The group cited the completion of an investigation into possible internal control weaknesses identified during the independent review of the Lake Charles Chemicals Project, in Louisiana in the US as a reason.

The delay has seen the company wiping billions off its stock, prompting the JSE to heightening the risk of suspension.

In the year to date, Sasol has lost more than R80 billion of its market cap.

Sasol this week announced that the results would be released on August 28, partially clearing the risk of a suspension and said the review project had been completed and would be made public in due course.

Vestact Asset Management portfolio manager Michael Treherne said while the threat of a suspension was cleared, the market had been spooked by the  delay.

Treherne said the market was always nervous when a company delayed the release of its results.

"Effectively market participants are asking themselves, what is so bad that the results had to be delayed? This is even more the case post-Steinhoff,” Treherne said. “Market participants are jumpy."

Treherne asserted Sasol would be able to shrug off the impact of the delay, charging that it was likely to meet the time frames given by the JSE.

"The postponement of the results might blemish the stock a bit, while the results are outstanding, but once the results have been published, most people will forget about the delay, he said.

"For the company and investors, it is better to delay the results and get them correct, than to rush the results and then have to restate them later."

The development of the Lake Charles Project has gone pear shaped and the company said in February that  capital costs had increased to between $11.6billion and $11.8bn.

It said that the start-up would be delayed by up to five months.

Investors were expecting to see whether those responsible for cost overruns at Lake Charles would be held accountable.

The company previously said that it was investigating control weakness, and whether the root cause of the changes in the cost and schedule of the Lake Charles were present in the previous financial year and or in the technology function of the group.

"The Board is focused on resolving this as soon as possible and all efforts are being made to get to a swift outcome without compromising the integrity of the processes underway," it said.  

Lester Davids, an analyst at Unum Capital said Sasol looked set to release the results before the JSE timeframes.

"Thus for now, the threat of the suspension of it's listing is mitigated, based on the aforementioned company statement," said Davids.

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