Energy and Chemicals group Sasol says it is continuing to engage with possible buyers for its share in the Arya Sasol Polymers Company (ASPC), in Iran, as it announced that it had taken a R1.97-billion impairment on the business.
The company said in an interim trading statement the impairment charge was based on an assessment of the fair value of the asset and took account of the uncertainty associated with the Iranian environment.
It warned of further potential impairments as a result of a deteriorating Iranian environment and the accounting requirement to continue recognising operating profits, which might not be recuperated through the divestiture.
It said that, in line with International Financial Reporting Standards, further losses relating to the foreign currency translation reserve of approximately $100-million might be recognised in income once ASPC was sold.
“Despite a solid operational performance by ASPC, results for the six month reporting period have been negatively impacted by the devaluation of the Iranian currency, which resulted in translation losses of approximately R1.1-billion being recognised in the income statement,” the company said.
The JSE-listed group, which is led by David Constable, reported that headline earnings a share for the six months to December 31, 2012, would be between 0% and 5% higher when compared with the corresponding period in 2011.
But earnings a share would decrease by between 10% and 20%, owing to the ASPC impairment.
Profitability for the period had been supported by an improved production performance and an 11% weakening of the average rand/ dollar exchange rate. But these gains had been offset by a softening in the oil price, depressed chemical prices and margins.
The interim results were also affected by higher maintenance and labour costs and could be further affected by any adjustments resulting from its half-year end closure process.
Sasol would release its interim results on March 11.