JOHANNESBURG, SOUTH AFRICA – Sasol today announced it was implementing additional cash conservation measures to provide a further buffer against short term volatility due to the continued negative impact of COVID-19 on market demand.
Earlier this month, Sasol announced that as part of a comprehensive response plan it had set a cash conservation target of US$2 billion by June 2021, focusing on management self-help measures aimed at increasing business efficiencies.
“While we are making good progress on our target, the low oil price and impacts of COVID-19, and in particular the national lockdown in South Africa, has led to a steep decline in fuels demand,” said Sasol President and Chief Executive Officer Fleetwood Grobler. “Given our assessment of the market and current developments, we are implementing further measures to increase cash conservation during this period.”
In addition to material cut backs in capital, significant reductions in external spend, and ongoing work targeting a significant reduction in working capital, Sasol will implement a number of actions aimed at reducing employee-related expenses.
The company is in discussions with its respective Retirement Funds’ Boards of Trustees to suspend the employer contribution to the Sasol South Africa retirement funds, for an eight-month period up to December 2020. In countries where a suspension of employer contributions are not possible, an equivalent salary sacrifice or alternatively a sacrifice to other benefits will apply.
A fee reduction of between 20% - 40% will be implemented for the Sasol Limited Board of Directors, across all fees. The Group Executive Committee will also implement a salary sacrifice of 20% up to December 2020.
As CEO, Mr. Grobler’s salary sacrifice comprises two-parts. For three months, 33% of his salary will be donated to the Solidarity Fund set up by the South African government to support the fight against COVID-19. For the remaining five months, a salary sacrifice of 20% will apply as part of the company’s cash conservation drive.
The company will also introduce a global salary sacrifice for employees from supervisory and specialist levels upwards, who do not form part of collective bargaining arrangements. This will be implemented in line with the respective legal requirements in different countries, according to a sliding scale. The scale ranges from 20% for employees in executive to senior manager levels to 10% for employees at supervisory levels, for a period of eight months.
Furthermore, Sasol will forgo salary increases in the new financial year, to all employees outside of its collective bargaining arrangements globally, and no short-term incentives will be payable this year.
“Given the current environment, we must take all necessary measures to proactively manage this market volatility and uncertainty. The decision to implement a salary sacrifice is regrettable, but this is a short term measure necessary to help secure Sasol’s long-term future.”
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Please note: One billion is defined as one thousand million. bbl – barrel, bscf – billion standard cubic feet, mmscf – million standard cubic feet, oil references brent crude, mmboe – million barrels oil equivalent. All references to years refer to the financial year 30 June. Any reference to a calendar year is prefaced by the word “calendar”.