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TABLE OF CONTENTS
Item 17. FINANCIAL STATEMENTS
As filed with the Securities and Exchange Commission on 28 October 2019
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934for the year ended 30 June 2019 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 001-31615
Sasol Limited
(Exact name of registrant as Specified in its Charter)
Republic of South Africa
(Jurisdiction of Incorporation or Organisation)
Sasol Place, 50 Katherine Street, Sandton, 2196
South Africa
(Address of Principal Executive Offices)
Paul Victor, Chief Financial Officer, Tel. No. +27 10 344 7896, Email paul.victor@sasol.com
Sasol Place, 50 Katherine Street, Sandton, 2196, South Africa
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
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American Depositary Shares | SSL | New York Stock Exchange | ||
Ordinary Shares of no par value* | SSL | New York Stock Exchange | ||
4,50% Notes due 2022 issued by Sasol Financing International Limited | SOLJAS | New York Stock Exchange | ||
5,875% Notes due 2024 issued by Sasol Financing USA LLC | SOLJL | New York Stock Exchange | ||
6,50% Notes due 2028 issued by Sasol Financing USA LLC | SOLJL | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:
624 696 971 Sasol ordinary shares of no par value
6 331 347 Sasol BEE ordinary shares of no par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232 405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | Emerging growth company o |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP o |
International Financial Reporting Standards as issued
by the International Accounting Standards Board ý |
Other o |
If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 o Item 18 o
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
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We are incorporated in the Republic of South Africa as a public company under South African company law. Our audited consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).
As used in this Form 20-F:
We present our financial information in rand, which is our reporting currency. Solely for your convenience, this Form 20-F contains translations of certain rand amounts into US dollars at specified rates as at and for the year ended 30 June 2019. These rand amounts do not represent actual US dollar amounts, nor could they necessarily have been converted into US dollars at the rates indicated.
All references in this Form 20-F to "years" refer to the financial years ended on 30 June. Any reference to a calendar year is prefaced by the word "calendar".
Besides applying barrels (b or bbl) and standard cubic feet (scf) for reporting oil and gas reserves and production, Sasol applies the Système International (SI) metric measures for all global operations. A ton, or tonne, denotes one metric ton equivalent to 1 000 kilograms (kg). Sasol's reference to metric tons should not be confused with an imperial ton equivalent to 2 240 pounds (or about 1 016 kg). Barrels per day, or bpd, or bbl/d, is used to refer to our oil and gas production.
In addition, in line with a South African convention under the auspices of the South
African Bureau of Standards (SABS), the information presented herein is displayed using the decimal comma (e.g., 3,5) instead of the more familiar decimal point (e.g., 3.5) used in the UK, US and elsewhere. Similarly, a hard space is used to distinguish thousands in numeric figures (e.g., 2 500) instead of a comma (e.g., 2,500).
All references to the "group", "us", "we", "our", "company", or "Sasol" in this Form 20-F are to Sasol Limited, its group of subsidiaries and its interests in associates, joint arrangements and structured entities. All references in this Form 20-F are to Sasol Limited or the companies comprising the group, as the context may require. All references to "(Pty) Ltd" refers to Proprietary Limited, a form of corporation in South Africa which restricts the right of transfer of its shares and prohibits the public offering of its shares.
All references in this Form 20-F to "South Africa" and "the government" are to the Republic of South Africa and its government. All references to the "JSE" are to the JSE Limited or Johannesburg Stock Exchange, the securities exchange of our primary listing. All references to "SARB" refer to the South African Reserve Bank. All references to "PPI" and "CPI" refer to the South African Producer Price Index and Consumer Price Index, respectively, which are measures of inflation in South Africa. All references to "GTL" and "CTL" refer to our gas-to-liquids and coal-to-liquids processes, respectively.
Unless otherwise stated, presentation of financial information in this annual report on Form 20-F will be in terms of IFRS. Our discussion of business segment results follows the basis used by the Joint Presidents and Chief Executive Officers (the company's chief operating decision makers) for segmental financial decisions, resource allocation and performance assessment, which forms the accounting basis for segmental reporting, that is disclosed to the investing and reporting public.
"Financial Review" means the Chief Financial Officer's Finance Overview included in Exhibit 99.3.
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"Headline earnings per share (HEPS)" refers to disclosure made in terms of the JSE listing requirements.
"Core headline earnings per share (CHEPS)" refers to a disclosure based on HEPS above, calculated by adjusting headline earnings with once-off items, period close adjustments and depreciation and amortisation of capital projects (exceeding four billion rand) which have reached beneficial operation and are still ramping up and share-based payments on implementation of Broad-Based Black Economic Empowerment (B-BBEE) transactions. Period close adjustments in relation to the valuation of our derivatives at period end are to remove volatility from earnings as these instruments are valued using forward curves and other market factors at the reporting
date and could vary from period to period. We believe core headline earnings is a useful measure of the group's sustainable operating performance. However, this is not a defined term under IFRS, should not be viewed as a substitute for earnings for the year or earnings per share and may not be comparable with similarly titled measures reported by other companies. The aforementioned adjustments are the responsibility of the directors of Sasol. The adjustments have been prepared for illustrative purposes only and due to their nature, core headline earnings may not necessarily be indicative of Sasol's financial position, changes in equity, results of operations or cash flows.
"EBIT" refers to earnings before interest and tax.
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We may from time to time make written or oral forward-looking statements, including in this Form 20-F, in other filings with the US Securities and Exchange Commission, in reports to shareholders and in other communications. These statements may relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to:
Charles Chemicals Project, Mozambique exploration and development activities, the GTL joint ventures in Qatar and Nigeria, chemical projects and joint arrangements in North America and other investments), acquisitions of new businesses or the disposal of existing businesses, including estimates or projections of internal rates of return (IRR) and future profitability;
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Words such as "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "endeavour", "target", "forecast" and "project" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated in such forward-looking statements. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include among others, and without limitation:
The foregoing list of important factors is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider the foregoing factors and other uncertainties and events, and you should not place undue reliance on forward-looking statements. Forward-looking statements apply only as of the date on which they are made and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. See "Item 3.DRisk factors"
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ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
We are a public company incorporated under the company law of South Africa. Most of our directors and officers reside outside the US, principally in South Africa. You may not be able, therefore, to effect service of process within the US upon those directors and officers with respect to matters arising under the federal securities laws of the US.
In addition, most of our assets and the assets of most of our directors and officers are located outside the US. As a result, you may not be able to enforce against us or our directors and officers judgements obtained in US courts predicated on the civil liability provisions of the federal securities laws of the US.
There are additional factors to be considered under South African law in respect of the enforceability, in South Africa (in original actions or in actions for enforcement of judgements of US courts) of liabilities predicated on the US federal securities laws. These additional factors include, but are not necessarily limited to:
Based on the foregoing, there is no certainty as to the enforceability in South Africa (in original actions or in actions for enforcement of judgements of US courts) of liabilities predicated on the US federal securities laws.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
3.A Selected financial data
The following information should be read in conjunction with "Item 5Operating and financial review and prospects" and the consolidated financial statements, the accompanying notes and other financial information included elsewhere in this annual report on Form 20-F.
The financial data set forth below for the years ended as at 30 June 2019 and 2018 and for each of the years in the three-year period ended 30 June 2019 has been derived from and should be read in conjunction with our audited consolidated financial statements included in Item 18.
Financial data as at 30 June 2017, 2016 and 2015, and for the years ended 30 June 2016 and 2015 have been derived from the group's previously published audited consolidated financial statements, which are not included in this document.
The audited consolidated financial statements from which the selected consolidated financial
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data set forth below have been derived were prepared in accordance with IFRS.
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30 June
2019(1) |
30 June
2018(1) |
30 June
2017(1) |
30 June
2016(1) |
30 June
2015(1) |
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(Rand in millions)
(except per share information and weighted average shares in issue) |
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Income Statement data: |
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Turnover |
203 576 | 181 461 | 172 407 | 172 942 | 185 266 | |||||||||||
Earnings before interest and tax |
9 697 | 17 747 | 31 705 | 24 239 | 46 549 | |||||||||||
Earnings attributable to owners of Sasol Limited |
4 298 | 8 729 | 20 374 | 13 225 | 29 716 | |||||||||||
Statement of Financial Position data: |
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Total assets |
469 968 | 439 235 | 398 939 | 390 714 | 323 599 | |||||||||||
Total equity |
225 795 | 228 608 | 217 234 | 212 418 | 196 483 | |||||||||||
Total liabilities |
244 173 | 210 627 | 181 705 | 178 296 | 127 116 | |||||||||||
Share capital(2) |
9 888 | 15 775 | 29 282 | 29 282 | 29 228 | |||||||||||
Per share information (rand): |
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Basic earnings per share |
6,97 | 14,26 | 33,36 | 21,66 | 48,71 | |||||||||||
Diluted earnings per share |
6,93 | 14,18 | 33,27 | 21,66 | 48,70 | |||||||||||
Dividends per share(3) |
5,90 | 12,90 | 12,60 | 14,80 | 18,50 | |||||||||||
Weighted average shares in issue (in millions): |
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Average shares outstandingbasic(4) |
616,6 | 612,2 | 610,7 | 610,7 | 610,1 | |||||||||||
Average shares outstandingdiluted(5) |
620,3 | 615,9 | 612,4 | 610,7 | 610,2 |
3.B Capitalisation and indebtedness
Not applicable.
3.C Reasons for the offer and use of proceeds
Not applicable.
3.D Risk factors
Our large projects are subject to schedule delays and cost overruns, and we may face constraints in financing our existing projects or new business opportunities, which could render our projects unviable or less profitable than planned
We are progressing with the construction of our Lake Charles Chemicals Project (LCCP) in the US and indications are that the cost of the project will remain within the updated market guidance of US$12,6 - 12,9 billion. As at the end of June 2019, engineering, equipment fabrication and procurement were substantially complete and construction progress had reached 94% completion and overall the project completion is 98% with capital expenditure amounting to US$11,8 billion. During the financial year, we achieved first steam production in August 2018, followed by beneficial operation of our linear low density polyethylene (LLDPE) unit in February 2019, the ethylene oxide/ethylene glycol (EO/EG) unit in May 2019 and the ethane cracker in August 2019. The cracker remains stable at approximately 50% - 60% of design capacity, limited by operating issues with the acetylene removal system. A two to three week planned shutdown to replace the acetylene reactor catalyst is expected to address these issues. Normal production ramp up will occur after the acetylene reactor issues are resolved. These units, combined with the utilities that support them, comprise approximately 65% of LCCP's total capital cost. The progressive commissioning and start-up of the remainder of the derivative units is ongoing, with our low-density polyethylene (LDPE) facility anticipated to reach beneficial operation during the remainder of calendar year 2019 and our Ziegler alcohol, ethoxylates and Guerbet alcohol facilities completed shortly thereafter, to bring the LCCP to full completion during the remainder of 2020. Progress on the LCCP units is reviewed and considered internally and by third party consultants regularly, with past reviews identifying increased scope and slower construction and commissioning ramp-down curves as units reached start-up. As the start-up of the remaining units continues, we will update guidance in the event we confirm a materially different view of unit startup and/or cost.
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In Mozambique, Phase 1 and Phase 2 drilling activities in the Production Sharing Agreement (PSA) licence area have been completed. In total, 11 wells were drilled comprising of seven oil wells and four gas wells. We forecast recoverable volumes of light oil to be around the low end of the range presented in the field development plan, 8MMbbl compared to the midpoint of 55MMbbl. This has required a review of the development programme. While Phase 1 gas results confirmed gas resources cover for the planned Central Termica Temane (CTT), formerly Mozambique Gas to Power Project (MGtP), Phase 2 appraisal drilling results however indicate gas volumes to be at the lower end of our initial estimates. We plan to submit a revised field development plan encompassing an integrated oil, gas and LPG development for the whole licence area in 2020.
The development of these projects involve capital-intensive processes carried out over long durations. It requires us to commit significant capital expenditure and allocate considerable management resources in utilising our existing experience and know-how.
Projects like the LCCP and PSA are subject to the risk of delays and cost overruns inherent in any large construction project, including as a result of:
In addition, significant variations in the assumptions we make in assessing the viability of our projects, including those relating to commodity prices and the prices for our products, exchange rates, import tariffs, interest rates, discount rates (due to change in country risk premium) and the demand for our products, may adversely affect the profitability or even the viability of our investments.
As the LCCP capital investment is particularly material to Sasol, any further cost overruns or adverse changes in assumptions affecting the viability of the project could have a material adverse effect on our business, cash flows, financial condition and prospects. We have updated the LCCP economics with the latest view of long-term market assumptions obtained from independent market consultants. Due to the uncertainty and volatility in the market, the views from the independent market consultants differ significantly from period to period. Views provided also differ on ethane price assumptions in the long term. This divergence in views makes it more difficult to accurately evaluate the project economics and increases the risk that the assumptions underlying our assessment of the viability of the project may prove incorrect.
Our operating cash flow and credit facilities may be insufficient to meet our capital expenditure plans and requirements, depending on the timing and cost of development of our existing projects and any further projects we may pursue, as well as our operating performance and the utilisation of our credit facilities. As a result, new sources of capital may be needed to meet the
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funding requirements of these projects and to fund ongoing business activities. Our ability to raise and service significant new sources of capital will be a function of macro-economic conditions, our credit rating, our gearing and other risk metrics, the condition of the financial markets, future prices for the products we sell, the prospects for our industry, our operational performance and operating cash flow and debt position, among other factors.
In the event of unanticipated operating or financial challenges, any dislocation in financial markets, any downgrade of our credit ratings by ratings agencies or new funding limitations, our ability to pursue new business opportunities, invest in existing and new projects, fund our ongoing business activities and retire or service outstanding debt and pay dividends, could be constrained, any of which could have a material adverse effect on our business, operating results, cash flows and financial condition.
Fluctuations in crude oil, natural gas, ethane and petroleum product prices and refining margins may adversely affect our business, operating results, cash flows and financial condition
Market prices for crude oil, natural gas, ethane and petroleum products fluctuate as they are subject to local and international supply and demand fundamentals and other factors over which we have no control. Worldwide supply conditions and the price levels of crude oil may be significantly influenced by general economic conditions; industry inventory levels; technology advancements; production quotas or other actions that might be imposed by international associations that control the production of a significant proportion of the worldwide supply of crude oil; weather-related damage and disruptions; competing fuel prices and geopolitical risks, including warfare; especially in the Middle East, North Africa and West Africa.
During 2019, the dated Brent crude oil price averaged US$68,63/bbl and fluctuated between a high of US$86,16/bbl and a low of US$50,21/bbl. This compares to an average dated Brent crude oil price of US$63,62/bbl during 2018, when it fluctuated between a high of US$80,29/bbl and a low of US$46,53/bbl.
A substantial proportion of our turnover is derived from sales of petroleum, natural/piped gas and petrochemical products, prices for which have fluctuated widely in recent years and are affected by crude oil prices, the price and availability of substitute fuels, changes in product inventory, product specifications and other factors.
The South African government controls and/or regulates certain fuel prices. The pump price of petrol is regulated at an absolute level. Furthermore, maximum price regulation applies to the refinery gate price of liquefied petroleum gas (LPG) and the sale of unpacked illuminating paraffin. South African liquid fuels are valued using the "Basic Fuel Price" (BFP) mechanism. BFP is a formula-driven price that considers, amongst others, the international prices of refined products (petrol, diesel, jet fuel and illuminating paraffin), the rand/US dollar exchange rate and the logistical cost of transporting liquid fuels to South Africa. The BFP is then used as a component in the regulated prices that are published by the government on a monthly basis. Piped gas prices are regulated through the approval of maximum piped gas prices by the National Energy Regulator of South Africa (NERSA) from time to time.
Through our equity participation in the National Petroleum Refiners of South Africa (Pty) Ltd (Natref) crude oil refinery, we are exposed to fluctuations in refinery margins resulting from fluctuations in international crude oil and petroleum product prices. We are also exposed to changes in absolute levels of international petroleum product prices through our synthetic fuel operations.
Prolonged periods of low crude oil, natural gas and petroleum prices could also result in projects being delayed or cancelled, as well as the impairment of certain assets. In North America, softer ethylene and global mono-ethylene glycol prices and an increase in the capital cost of our LCCP in Louisiana, US, resulted in the impairment of our Tetramerization and EO/EG cash generating units (CGU) by R7,4 billion (US$ 526 million) and R5,5 billion (US$ 388 million), respectively in 2019. Our shale gas assets in Canada were impaired by a further R1,9 billion (CAD181 million) as at 30 June 2019
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to a carrying value of R22 million (CAD2 million). The total cumulative impairments recognised between 2014 and 2018 on our Canadian shale gas assets were R19,3 billion (CAD1,8 billion), mainly due to the declining gas prices. The valuation of the ammonia value chain in Southern Africa in 2019 was negatively impacted by softer international ammonia sales prices and higher gas feedstock prices. This resulted in an impairment of R3,3 billion.
We use derivative financial instruments to partially protect us against day-to-day and longer-term fluctuations in US dollar oil, export coal and ethane prices. The oil price affects the profitability of both our energy and chemical products. See "Item 11Quantitative and qualitative disclosures about market risk". While the use of these instruments may provide some protection against fluctuations in crude oil prices, it does not protect us against longer-term fluctuations in crude oil prices or differing trends between crude oil and petroleum product prices.
We are unable to accurately forecast fluctuations in crude oil, ethane, natural/piped gas and petroleum products prices. Fluctuations in any of these may have a material adverse effect on our business, operating results, cash flows and financial condition. Refer "Item 5AOperating results" for the impact of the crude oil prices on the results of our operations.
Fluctuations in exchange rates may adversely affect our business, operating results, cash flows and financial condition
The rand is the principal functional currency of our operations and we report our results in rand. However, a significant majority of our turnover is impacted by the US dollar and the price of most petroleum and chemical products is based on global commodity and benchmark prices which are quoted in US dollars.
Further, as explained above, the components of the BFP are US dollar-denominated and converted to rand, which impacts the price at which we sell fuel in South Africa.
A significant part of our capital expenditure and borrowings are US dollar-denominated, as
they relate to investments outside South Africa or constitutes materials, engineering and construction costs imported into South Africa. Fluctuations in the rand/US dollar exchange rate impacts our gearing and estimated capital expenditure.
We also generate turnover and incur operating costs in euro and other currencies.
Fluctuations in the exchange rates of the rand against the US dollar, euro and other currencies impact the comparability of our financial statements between periods due to the effects of translating the functional currencies of our foreign subsidiaries into rand at different exchange rates.
Accordingly, fluctuations in exchange rates between the rand and US dollar, and/or euro may have a material effect on our business, operating results, cash flows and financial condition.
During 2019, the rand/US dollar exchange rate averaged R14,20, fluctuating between a high of R15,44 and a low of R13,11. This compares to an average exchange rate of R12,85 during 2018, when it fluctuated between a high of R14,48 and a low of R11,55. At 30 June 2019 the closing rand/US dollar exchange rate was R14,08 as compared to R13,73 at 30 June 2018.
The rand exchange rate is affected by various international and South African economic and political factors. Subsequent to 30 June 2019, the rand has on average weakened against the US dollar and the euro, closing at R14,63 and R16,21, respectively, on 25 October 2019. In general, a weakening of the rand would have a positive effect on our operating results. Conversely, strengthening of the rand would have an adverse effect on our operating results, cash flows and financial condition. However, given the significance of our foreign currency denominated long-term debt a weaker rand against the US dollar has a negative impact on our gearing. Refer to "Item 5.AOperating results" for further information regarding the effect of exchange rate fluctuations on our results of operations. We engage in hedging activities which partially protects the balance sheet and our earnings against fluctuations in the rand exchange rate. While the use of these instruments may provide some protection against fluctuations in the rand exchange rate, it does not protect us against a
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longer term strong rand/US dollar exchange rate. Refer to "Item 11Quantitative and qualitative disclosures about market risk".
Although the exchange rate of the rand is primarily market-determined, its value at any time may not be an accurate reflection of its underlying value, due to the potential effect of, among other factors, exchange controls. For more information regarding exchange controls in South Africa see "Item 10.DExchange controls".
Cyclicality in petrochemical product prices and demand may adversely affect our business, operating results, cash flows and financial condition
The demand for chemicals, especially products such as polymers, solvents, surfactants and fertilisers is cyclical. Typically, higher demand during peaks in the industry business cycle leads producers to increase their production capacity. Although peaks in the business cycle have been characterised by increased EBIT margins in the past, such peaks have led to overcapacity with supply exceeding demand growth. Low periods during the industry business cycle are characterised by excess capacity, which can depress EBIT margins. Currently, shorter term factors including the current US/China trade dispute, 'Brexit' the scheduled withdrawal of the United Kingdom from the European Union, business and consumer confidence trends as well as other geo-political tensions pose significant risks to demand. Supply is currently largely affected by the US-China trade tensions and the capacity overbuild taking place in China. Consequently, forecasting the timing of the industry business cycle, and prices for chemical products during downturns in the cycle, remain difficult and a deterioration in overall conditions may have a material adverse effect on our business, operating results, cash flows and financial condition.
Our access to and cost of funding is affected by our credit rating, which in turn is affected by the sovereign credit rating of the Republic of South Africa
Our credit rating may be affected by our ability to maintain our outstanding debt and
financial ratios at levels acceptable to the credit ratings agencies; our business prospects; the sovereign credit rating of the Republic of South Africa and other factors, some of which are outside our control. The credit rating assigned by the ratings agencies is dependent on a number of factors, including the gearing levels of the group. In assessing these gearing levels, performance guarantees which have been issued by Sasol are taken into account as potential future exposure, which may impact the liquidity of the group. Our credit rating has been affected by movements in the sovereign credit rating of the Republic of South Africa.
Any future adverse rating actions or downgrade of the South African sovereign credit rating may have an adverse effect on our credit rating, which could negatively impact our ability to borrow money and could increase the cost of debt finance.
Failure to comply with any debt covenant could have an adverse impact on our financial position and results and/or liquidity
Our principal credit facilities contain restrictive covenants. These covenants limit, among other things, encumbrances on assets of Sasol and its subsidiaries, the ability of our subsidiaries to incur debt and the ability of Sasol and its subsidiaries to dispose of assets in certain circumstances. These restrictive and financial covenants could limit our operating and financial flexibility. Failure to comply with any covenant would enable the lenders to accelerate repayment obligations or may result in unfavourable changes to the credit facilities. Moreover, Sasol's credit facilities have standard provisions whereby certain events relating to other borrowers within the Group could, under certain circumstances, lead to acceleration of debt repayment under the credit facilities and the acceleration of debt repayment under the group's credit facilities and other borrowings under these cross-acceleration clauses could create liquidity pressures. In addition, the mere market perception of a potential breach of any financial covenant could have a negative impact on our ability to refinance indebtedness or the terms on which this could be achieved.
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We identified a material weakness in our internal control over financial reporting as of 30 June 2019, which we are still in the process of remediating. If we are unable to remediate this material weakness, or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, which could cause shareholders to lose confidence in our financial and other public reporting, and adversely affect our share price
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control. As disclosed below under Item 15. Controls and Procedures, during 2019, management identified a material weakness in internal control over financial reporting with respect to the capital cost estimation process implemented in connection with the LCCP which resulted from the aggregation of a series of individual control and project related control environment deficiencies. As a result, management concluded that our internal control over financial reporting was not effective as of 30 June 2019. While we are currently implementing remedial measures, there can be no assurance that our efforts will be successful. The material weakness cannot be considered remediated until the remedial controls operate for a sufficient period of time and management has time to conclude, through testing, that these controls are operating effectively. As a result of the material weakness described above, our management also concluded that our disclosure controls and procedures were not effective as of 30 June 2019.
We cannot be certain that any remedial measures we are currently in the process of implementing, or our internal control over financial reporting more generally, will ensure that we design, implement and maintain adequate controls over our financial processes and reporting in the future. Our failure to implement our remediation plan referred to above, or to implement newly required or improved controls or adapt our controls, or difficulties encountered in their operation, or difficulties in the assimilation
of acquired businesses into our control system, could prevent us from meeting our financial reporting obligations, including filing our periodic reports with the SEC on a timely basis and maintaining compliance with applicable NYSE listing requirements, or result in a restatement of previously disclosed financial statements.
The material weakness identified during 2019 resulted in a revision of capital commitments as at 30 June 2018. If other currently undetected material weaknesses in our internal controls exist, it could result in material misstatements in our financial statements requiring us to restate previously issued financial statements. In addition, material weaknesses, and any resulting restatements, could cause investors to lose confidence in our reported financial information, and could subject us to regulatory scrutiny and to litigation from shareholders, which could have a material adverse effect on our business and the price of our ordinary shares or ADSs. Furthermore, the remediation of any such material weaknesses could require additional remedial measures including additional personnel, which could be costly and time-consuming. If we do not maintain adequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance on a timely basis, which could cause a decline in our share price and adversely affect our results of operations and financial condition. Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.
Certain of the factors identified as resulting in the material weakness discussed above, in particular, that certain persons within the LCCP project management team responsible for the management of the Company reported inaccurate capital cost projections to senior executives and the board, may also constitute a reportable irregularity in accordance with the South African Auditing Profession Act 26 of 2005, on the basis that such persons may not have acted with the necessary care, skill and diligence required, which failure has caused, or is likely to cause material financial loss to the entity or stakeholders in its dealings with the entity, or, alternatively, this
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activity may have constituted a material breach of fiduciary duties by such persons. As a result of this activity, the Company removed all work responsibilities and initiated disciplinary action against one individual and negotiated the separation of three additional individuals, and took other remedial actions. Management believe that actions taken effectively remediate the activities that gave rise to a reportable irregularity. PricewaterhouseCoopers Incorporated (PwC) reported a reportable irregularity to the Independent Regulatory Board for Auditors in South Africa and concluded that these matters have been remediated and are no longer continuing.
Our ability to respond to climate change could negatively impact our growth strategies, reduce supply/demand for our products, increase our operational costs, reduce our competitiveness, negatively impact our stakeholder relations and affect our future legal licence to operate
Key manufacturing processes in South Africa, especially coal gasification and combustion, result in relatively high carbon dioxide emissions. Sasol is committed to reducing its overall impact on the environment, while developing and implementing an appropriate climate change management response to enable the long-term resilience of the company's strategy and business operations. Sasol's ability to develop and implement an appropriate climate change mitigation response poses a significant transitional risk for our business in South Africa. This is heightened by the necessity to appropriately address increasing societal pressures and shifts away from carbon intensive processes and products, as well as meeting new and anticipated policy and legislative requirements including carbon tax, budgets and reduction targets. It is particularly challenging in South Africa where access to lower carbon energies is limited and related infrastructure is under-developed.
A carbon tax was implemented in South Africa from 1 June 2019, which will significantly increase the operational costs of our South African operations post 2022. For the first phase to 2022, several transitional tax-free allowances are provided. The headline carbon tax is R120 per ton of CO2e (carbon dioxide equivalent) before
tax-free allowances, for emissions above the tax-free thresholds. At the same time the South African government is developing carbon budgets. Currently, there is uncertainty on how the mandatory carbon budget will be implemented and aligned to the carbon tax. The future risk that Sasol faces is how much the group will need to pay for either the carbon tax or possible penalties for exceeding the carbon budgets for the subsequent phases from 2023 onwards should the scale of mitigation not be possible in the timeframe required. Sasol's current carbon tax liability pre-tax is approximately R800 million to R1 billion per annum pre-tax in 2020, escalating at CPI + 2 percentage points until 2022. Considering South Africa's developmental challenges, the structure of its economy and the fact that the carbon tax design is not aligned with the carbon budget system, Sasol is supportive of carbon pricing but believes that alternative mechanisms could achieve the outcome sought by the proposed stand-alone carbon tax. In this instance, the alignment of the carbon budget with the carbon tax offers an efficient and effective solution for the South African economy to still grow while transitioning to a lower carbon economy. We continue to work to advocate for such a solution and actively engage with government and various stakeholders to appropriately manage these challenges that balance the need for economic development, job creation, energy security and greenhouse gas (GHG) emission reductions. Whilst we are not supportive of the Carbon Tax Act in its current form, Sasol is adhering to the Act and is participating in the relevant government process to develop the operating rules for the tax.
The group sees a lower carbon emission world representing changes to energy demand, regulations and commodity consumption patterns (also seen in externally validated data). Companies that do not respond to these possible realities could find parts of their portfolios, or potentially their entire business model, becoming less robust over time. Through our scenario analysis, Sasol visualises the potential areas where our business might be less robust to further changes in demand patterns, regulations or technology changes. This enables proactive mitigation action to be taken so that our
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operations (and our overall value chain) remain robust, as the world transitions to a lower carbon future. Given future uncertainty, Sasol has used a rigorous process to develop a set of scenarios based on an understanding of global and national energy system fundamentals, including government policy and carbon risk. There are, however, risks associated with accuracy, completeness and correctness of various assumptions that are used as inputs to scenario analysis work undertaken, including scenarios developed to test resilience to climate change threats. Should these assumptions prove to be inaccurate, incomplete or incorrect this could potentially significantly impact our resilience. In addition, scenarios by their very nature are inherently risky as it relates to limited ability to predict future outcomes.
Sasol's preliminary 2030 analysis of the Paris Agreement focuses our attention on reducing the use of coal to produce electricity as an immediate and critical mitigation opportunity for reducing emissions and will form part of a broader initiative to remain resilient. Sasol's foundation business portfolio in South Africa is sensitive to climate related risks if further reductions are not undertaken.
Further, climate change poses a significant risk for both our South African and global business as it relates to potential physical impacts including change of weather patterns, water scarcity and extreme weather events such as, hurricanes, tornadoes, flooding and sea level rise. In this regard, work is underway to develop an adaptation strategy for the identified key priority regions such as the US Gulf Coast, Mozambique, and South African operations (Secunda and Sasolburg). Ongoing monitoring efforts accordingly also guide our interventions to improve our maintenance, asset integrity processes and response procedures. While we are in the process of implementing an emission reduction framework based on the three pillars of reducing our emissions, transforming our coal-based operations and shifting our portfolio to a lower-carbon business, this framework may not be adequate to enable us to fully comply with any current or future regulations over GHG emissions.
Our international operations are less carbon-intensive and have been operating for some time in a more mature GHG regulatory regime. However, enhanced focus on issues concerning environmental quality and climate change may result not only in a more complex regulatory environment, but also additional legal risk, to the extent that damages relating to climate change and other air quality impacts are brought into judicial systems around the world. In addition our permits and operational licences are subject to public comment and/or input from stakeholders in certain of the jurisdictions in which we operate and there is an emerging trend by activists to use the public comment period to challenge a company's response to climate change.
Our coal, synthetic oil, natural oil and natural gas reserve estimates may be materially different from quantities that we eventually recover
Our reported coal, synthetic oil, natural oil and gas reserves are estimated quantities based on applicable reporting regulations that, under present conditions, have the potential to be economically mined, processed, produced, delivered to market and sold.
There are numerous uncertainties inherent in estimating quantities of reserves and in projecting future rates of production, including factors that are beyond our control. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation, costs to develop and produce, and market prices for related products.
Reserve estimates are adjusted from time to time to reflect improved recovery and extensions, and also revised from time to time based on improved data acquired from actual production experience and other factors, including resource extensions and new discoveries. In addition, regulatory changes, market prices, increased production costs and other factors may result in a revision to estimated reserves. Revised estimates may have a material adverse effect on our business, operating results, cash flows and financial condition. See "Item 4.DProperty, plants and equipment".
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We may be unable to access, discover, appraise and develop new coal, synthetic oil, natural oil and natural gas resources at a rate that is adequate to sustain our business and/or enable growth
Competition for suitable opportunities, increasing technical difficulty, stringent regulatory and environmental standards, large capital requirements and existing capital commitments may negatively affect our ability to access, discover, appraise and develop new resources in a timely manner, which could adversely impact our ability to support and sustain our current business operations. We acquire certain of these feedstocks through long term supply agreements and if the price levels at which replacement agreements are put into place are less favourable when such long term supply agreements come to an end it could adversely affect our business, cash flows and financial condition.
Our future growth could also be impacted by these factors, potentially leading to a material adverse effect on our business, operating results, cash flows and financial condition.
We may not achieve projected benefits of acquisitions or divestments
We may pursue acquisitions or divestments. With any such transaction, there is the risk that any benefits or synergies identified at the time of acquisition may not be achieved as a result of changing or inappropriate assumptions or materially different market conditions, or other factors. Furthermore, we could be found liable, regardless of extensive due diligence reviews, for past acts or omissions of the acquired business without any adequate right of redress.
In addition, delays in the sale of assets, or reductions in value realisable, may arise due to changing market conditions. Failure to achieve expected values from the sale of assets, or delays in expected receipt or delivery of funds may result in higher debt levels, the underperformance of those businesses and the loss of key personnel.
There are country-specific risks relating to the countries in which we operate that could adversely affect our business, operating results, cash flows and financial condition
Several of our subsidiaries, joint arrangements and associates operate in countries and regions that are subject to significantly differing political, social, economic and market conditions. See "Item 4.BBusiness overview" for a description of the extent of our activities in the main countries and regions in which we operate. Although we are a South African-domiciled company and the majority of our operations are located in South Africa, we also have significant energy businesses in other African countries, chemical businesses in Europe, the US, the Middle East and Asia, a joint venture GTL facility in Qatar, joint operations in the US and Canada and a 10% indirect economic interest in the Escravos GTL (EGTL) project in Nigeria, which is an upstream joint venture between Chevron Nigeria Limited (CNL) and Nigerian National Petroleum Corporation (NNPC).
Particular aspects of country-specific risks that may have a material adverse impact on our business, operating results, cash flows and financial condition include:
(a) Political and socioeconomic issues
i. Political, social and economic uncertainty
We have invested, or are in the process of investing in, significant operations in Southern African, Western African, European, North American, Asian and Middle Eastern countries that have in the past, to a greater or lesser extent, experienced political, social and economic uncertainty.
South Africa faces ongoing challenges in improving the country's long-term growth potential and weak public sector revenue growth, stabilising debt levels and addressing weaknesses at state-owned enterprises and other institutions. These factors continue to pose a risk to South Africa's sovereign credit rating outlook. In Mozambique, there has been an improvement in economic conditions. However, very high levels of public sector debt, insufficient governance, accountability and transparency, the need to
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strengthen institutions, security concerns and extreme weather events are expected to remain significant risks to the sovereign credit and operational outlook for the foreseeable future.
At a global level, the trade dispute between the US and China, the evolution of the Brexit process, geo-political tensions and conflicts, potential financial vulnerabilities that have been built up over years due to low-to-zero interest rates, abrupt shifts in financial conditions and weakening economic growth can also all have an influence on the macro-economic outlook in the countries in which we operate.
Other countries in which we operate could from time-to-time face sovereign rating risks, which may impact our counterparties' ability to access funding and honour commitments.
Government policies, laws and regulations in countries in which we operate, or plan to operate, may change in the future. Governments in those countries have in the past and may in the future pursue policies of resource nationalisation and market intervention, including through protectionism like import tariffs and subsidies. The impact of such changes on our ability to deliver on planned projects cannot be determined with any degree of certainty and such changes may therefore have an adverse effect on our operations and financial results.
Sasol's strategic objective to progressively grow a resilient oil-based portfolio in selected West African countries, inherently carries frontier basin exploration and new country entry risks, offset by potential high reward through unlocking of new exploration plays. Sasol manages the associated exploration and new country risks through building a balanced portfolio of exploration and production assets, rigorously ensuring compliance with all corporate and legislative governance requirements, and following its internal technical and business quality assurance processes.
ii. Transformation and local content
In all countries, our operations are required to comply with local procurement, employment equity, equity participation, corporate social responsibility and other regulations that are
designed to address country-specific social and economic transformation and local content issues. Should we not meet or are perceived to not be meeting country-specific transformation or local content requirements or regulations, our ability to sustainably deliver on our business objectives may be impacted.
In South Africa, there are various transformation initiatives with which we are required to comply since Sasol operates in more than one sector of the economy. The broad risks that we face should we not comply with these transformation initiatives include the inability to obtain licences to operate in certain sectors such as mining and liquid fuels, limited ability to successfully tender for government and public entity business and potential loss of customers (as private sector customers increasingly require their suppliers to have a minimum B-BBEE rating).
The 2018 Mining Charter was published for implementation on 27 September 2018. On 19 December 2018 certain amendments were published in the Government Gazette which provided that existing mining right holders must implement the 2018 Mining Charter from 1 March 2019. Although the 2018 Mining Charter is an improvement on the 2017 draft, the Minerals Council commenced with a judicial review of certain aspects of the 2018 Mining Charter. Sasol Mining will monitor the outcome of this process which may either result in the status quo being retained or certain amendments being made to the 2018 Mining Charter that may address the Minerals Council's concerns. For more information refer to "Item 3.DRisk FactorsSouth African mining legislation may have an adverse effect on our mineral rights".
The revised Codes of Good Practice for Broad-Based Black Economic Empowerment (B-BBEE) (the Revised Codes), which came into effect on 1 May 2015, provide a standard framework for the measurement of B-BBEE across all sectors of the economy, other than sectors that have their own sectorial transformation charters (e.g. the mining and liquid fuels industries). The Revised Codes provide more stringent targets, which negatively impacted on Sasol's B-BBEE contributor status. The liquid fuels industry is currently developing the
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"Petroleum and Liquid Fuels Sector Charter" (PLFSC) which will regulate B-BBEE in the liquid fuels and gas sector. While it is too early to assess the impact of the PLFSC, the PLFSC will be required to set industry-specific targets that cannot be more lenient than those in the Revised Codes.
Since our September 2017 announcement of plans to unwind the Sasol Inzalo B-BBEE transaction and introduce the Sasol Khanyisa B-BBEE transaction, we placed specific management focus on engaging with trade unions on issues pertaining to employee share ownership levels. Two of the five Sasol trade unions, Solidarity and CEPPWAWU, declared disputes relating individually to Sasol Khanyisa and the unwind of Sasol Inzalo which, if not resolved, might result in industrial action, which could adversely affect our operations and could give rise to costs which would impact earnings. In the case of the Solidarity trade union, the Sasol Khanyisa dispute is similar to disputes the trade union has with three other large employers in South Africa. The President of the Labour Court requested the various employers to prepare a stated case in order to allow the Labour Court to give guidance in this regard. It is therefore not a Sasol only matter in South Africa and affects other large companies as well. The Sasol Inzalo dispute lodged by the CEPPWAWU trade union has lost its momentum and it is no longer regarded as a major threat to Sasol. The time frame within which the matter was to be continued has become stale.
On 6 May 2019, Sasol received a statement of claim filed by the trade union Solidarity with the Labour Court in Johannesburg, alleging that the Sasol Khanyisa Employee Share Option Plan (ESOP) element of the Sasol Khanyisa transaction is discriminatory as it does not include white employees in South Africa and employees working for Sasol outside South Africa. This litigation is ongoing and we are unable at this time to assess the potential effect the ultimate outcome of the matter may have on the Sasol Khanyisa B-BBEE transaction. In addition, the Department of Mineral Resources and Energy may not recognise the ownership component of Sasol Khanyisa in which case we may be unable to fully comply with the 2018 Mining Charter requirements related to
new or amended licence applications, or the B-BBEE Commissioner may not recognise that the vendor financing mechanism allows us to be allocated points on Enterprise Supplier Development. Although Sasol Mining has applied for recognition of the Sasol Khanyisa ESOP to meet the ownership requirements contained in the 2018 Mining Charter, the Department of Mineral Resources and Energy has not yet formally responded to the request. The litigation instituted by Solidarity is of importance since the Department of Mineral Resources and Energy might be awaiting the outcome thereof before a final decision will be taken in respect of Sasol Khanyisa. At this stage all applications submitted prior to the 2018 Mining Charter becoming effective are being processed based on Sasol Mining's historic ownership level.
We expect that the long-term benefits of Sasol Khanyisa to the company and South Africa should outweigh any possible adverse effects, such as dilution to existing shareholders, but we cannot assure you that future implications of compliance with these requirements or with any newly imposed conditions will not have a material adverse effect on our shareholders or business, operating results, cash flows and financial condition. See "Item 4.BEmpowerment of historically disadvantaged South Africans".
Value creation, if any, to the majority of the Khanyisa shareholders at the conclusion of the transaction is exposed to the inherent business risks of Sasol South Africa during the empowerment period. This could potentially have an impact on dividend distributions to those Khanyisa shareholders that are required to settle funding obligations or otherwise negatively impact the valuation of the Sasol South Africa business on conclusion of the transaction.
iii. Disruptive industrial action
The majority of our employees worldwide belong to trade unions. These employees comprise mainly of general workers, artisans and technical operators. While Sasol believes its labour relations are currently stable, the South African labour market remains volatile and can be characterised by major industrial action in key sectors of the economy especially during wage negotiations.
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In Sasol South Africa, only the industrial chemicals sector is scheduled for wage negotiations during 2019. The petroleum sector is covered by a three-year wage agreement effective 1 July 2018 to 30 June 2021.
Sasol Mining concluded a three-year wage agreement with all five of its participating trade unions in August 2017 valid until June 2020, paving the way for stable labour relations over the duration of three years.
Although we have positive relationships with our employees and their unions, significant labour disruptions could occur in the future and our labour costs could increase significantly in the future.
(b) Fiscal and monetary policies
Macro-economic factors, such as higher inflation and interest rates, could adversely impact our ability to contain costs and/or ensure cost-effective debt financing in the countries in which we operate.
Our sustainability and competitiveness is influenced by our ability to optimise our cost base. As we are unable to control the price at which our products are sold, an increase in inflation in countries in which we operate may result in significantly higher future operational costs.
South African consumer price inflation averaged 4,6% in 2019, from 4,5% in 2018. During the year, inflation was impacted mainly by muted food price increases, electricity tariff hikes and higher fuel prices. Despite relatively stable inflation, the South African Reserve Bank decided to hike the policy interest rate by 25 basis points to 6,75%, citing potential upside inflationary pressures emanating from tightening global financial conditions, exchange rate weakness, higher wage growth, global oil price trends and possible above-inflation target electricity and water tariff adjustments as reasons for the decision. The policy interest rate was maintained at 6,75% for the rest of 2019.
South Africa's economic outlook remains constrained as policy uncertainty, weak levels of business and consumer confidence, and a generally weaker global outlook weigh on the
country's growth prospects. Ongoing economic weakness and subdued inflation already prompted the Reserve Bank to cut the policy interest rate by 25 basis points to 6,50% in July 2019.
The exchange rate remains a key risk to the inflation outlook. Global financial conditions, trade disputes, emerging market sentiment swings and domestic political and policy developments are likely to contribute to ongoing currency volatility.
The already weakening global growth outlook is clouded by the US and China trade dispute, while the Brexit process, weak euro area growth prospects and heightened geo-political tensions could result in even weaker than currently expected global growth. South African policy uncertainty, potential electricity supply constraints, limited fiscal space and low confidence levels are likely to constrain the country's near-term growth prospects. Against this background, Sasol's product sales in key markets are likely to remain under pressure for the foreseeable future.
(c) Legal and regulatory
i. Exchange control regulations
South African law provides for exchange control regulations which apply to transactions involving South African residents, including both natural persons and legal entities. These regulations may restrict the export of capital from South Africa, including foreign investments. The regulations may also affect our ability to borrow funds from non-South African sources for use in South Africa, including the repayment of these borrowings from South Africa and, in some cases, our ability to guarantee the obligations of our subsidiaries with regard to these funds. These restrictions may affect the manner in which we finance our transactions outside South Africa and the geographic distribution of our debt. See "Item 10.DExchange controls" and "Item 5.BLiquidity and capital resources". We may also be impacted by new exchange control regulations affecting our operations in Gabon. See "Item 4.BBusiness overviewRegulationSafety, health and environmentRegions in which Sasol operates and their applicable legislationGabon".
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ii. Tax laws and regulations
We operate in multiple tax jurisdictions globally and are subject to both local and international tax laws and regulations. Although we aim to fully comply with tax laws in all the countries in which we operate, tax is a highly complex area leading to the risk of unexpected tax uncertainties. Tax laws are changing regularly and their interpretation may potentially result in ambiguities and uncertainties, in particular in the areas of international taxation and transfer pricing. Where the tax law is not clear, we interpret our tax obligations in a responsible way, with the support of legal and tax advisors as deemed appropriate. Tax authorities and courts may arrive at different interpretations to those taken by Sasol, which may lead to substantial increases in tax payments. Although we believe we have adequate systems, processes and people in place to assist us with complying with all applicable tax laws and regulations, the outcomes of certain tax disputes and assessments may have a material adverse effect on our business, operating results, cash flows and financial position.
We could also be exposed to significant fines and penalties and to enforcement measures, including, but not limited to, tax assessments, despite our best efforts at compliance. In response to tax assessments or similar tax deficiency notices in particular jurisdictions, we may be required to pay the full amount of the tax assessed (including stated penalties and interest charges) or post security for such amounts notwithstanding that we may contest the assessment and related amounts.
In particular, two of our subsidiaries, Sasol Oil (Pty) Ltd ("Sasol Oil") and Sasol Financing International (SFI), have received assessments in relation to international business activities. The litigation in respect of the Sasol Oil matter has been resolved with Sasol no longer exposed to a potential liability and the litigation proceedings relating to the assessments in respect of SFI are still ongoing.
For more information regarding pending tax disputes and assessments see "Item 4.BBusiness overviewLegal proceedings and other contingencies".
Any of these risks may materially and adversely affect our business, results of operations, cash flows and financial condition.
iii. Ownership rights
We operate in several countries where ownership of rights in respect of land and resources is uncertain and where disputes in relation to ownership or other community matters may arise. For example, the South African government is considering the expropriation of land without compensation to enhance land reform and redistribution. The impact of these policy intentions and related disputes are not always predictable and may cause disruption to our operations or development plans.
iv. Legal and regulatory uncertainties
Some of the countries where we have already made investments, or other countries where we may consider making investments are in various stages of developing institutions and legal and regulatory systems that are characteristic of democracies and market economies.
The procedural safeguards of the legal and regulatory regimes in these countries in many cases are still being developed and, therefore, existing laws and regulations may be applied inconsistently. In some circumstances, it may not be possible to obtain the legal remedies provided under those laws and regulations in a timely manner.
(d) Transportation, water, electricity and other infrastructure
Our operations are located in multiple regions across the world and are reliant upon stable supply of electricity, availability of water and access to transportation routes in order to optimally run our operations and/or move our products. The infrastructure in some countries in which we operate, such as rail infrastructure, inland water systems, electricity and water supply, may need to be further upgraded and expanded, and in certain instances, possibly at our own cost. Should we not have access to reliable electricity supply, or should we have limited access to water or experience infrastructure challenges in the regions in which we operate, this could have a
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material adverse effect on our business, operating results, cash flows, financial condition and future growth.
Reliable supply of electricity is important to run our plants optimally. The South African power system specifically remains tight. Unplanned power outages as we experienced at our South African plants in 2019 have a negative impact on our production volumes, cost and profitability. Backup systems increase the cost of production and while we have the capacity to generate the majority of our own requirements, this only mitigates the risk partially as we remain dependent on external electricity supply.
Water, as a resource, is becoming increasingly limited as global demand for water increases. A significant part of our operations, including mining, chemical processing and others, requires use of large volumes of water. South Africa is generally an arid country and prolonged periods of drought or significant changes to current water laws could increase the cost of our water supplies or otherwise impact our operations. Water use by our operations varies widely depending largely on feedstock and technology choice. Water to our South African operations is supplied from the Integrated Vaal River System (IVRS), making up 86% of Sasol's total water demand. While the water supply to these operations remains secure the revised water balance for the IVRS continues to show a worsening of the water supply imbalance which may result in an increasing probability of water restrictions being imposed. Although various technological advances may improve the water efficiency of our processes they are capital intensive. We may experience limited water availability and other infrastructure challenges related to our South African operations which could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth.
Transportation of inbound materials to plants and products to customers is reliant on the region's available infrastructure. Numerous factors like natural disasters or extreme weather events may impact on transportation modes which could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth.
(e) Stakeholder relationships
Sasol has a complex network of stakeholders, often with competing interests. Our stakeholders are persons or groups who are directly or indirectly affected by our operations, as well as those who have interests in our business and/or the ability to influence its outcomes. Stakeholders may include members of local communities and their representatives, national, provincial or local government authorities, officials at all spheres of government, government agencies, multilateral organisations, regulators, political and religious leaders, civil society organisations and groups with special interests, suppliers, investors, business partners, customers, employees, trade unions, academics and media. Failure to manage relationships with our stakeholders may harm our reputation as well as our ability to conduct our operations effectively. Our stakeholder objective is to position Sasol as a credible partner and build trust with all our stakeholders. Our engagement approach is premised on open and effective communication, clear feedback, mutually beneficial outcomes where possible, as well as inclusiveness and integrity. However, we cannot assure you that the strategy will mitigate the risk fully and therefore, actions taken by stakeholders could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth.
(f) Contract stability
Host governments in some of the resource-rich countries in which we operate or consider making investments may display tendencies of wanting to change existing contracts through early terminations, non-renewal or cancellation of contractual rights, or we may not be able to fully enforce our contractual rights in those jurisdictions or enforce judgements obtained in the courts of other jurisdictions, should they hold the view that these contracts are not beneficial to their countries.
(g) Other specific country risks that are applicable to countries in which we operate and which may have a material adverse effect on our business include:
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Actual or alleged non-compliance with laws could result in criminal or civil sanctions and could harm our reputation
Non-compliance with competition laws, anti-corruption laws, sanction laws and environmental laws have been identified as our top four legal risks.
Anti-corruption and anti-bribery laws
Ethical misconduct and non-compliance with applicable anti-corruption laws could result in criminal or civil sanctions and could have a material adverse impact on our reputation, operations and licence to operate.
Petrochemical and energy companies need to be particularly vigilant with regard to the risk of bribery, especially when the scale of investments and the corruption perception of the countries where operations take place are considered. We, like other international petrochemical companies, have a geographically diverse portfolio and conduct operations in countries, some of which have a perceived high prevalence of corruption. Our operations must comply with applicable
anti-bribery laws, such as the US Foreign Corrupt Practices Act as well as similar anti-corruption and anti-bribery laws of South Africa and other applicable jurisdictions. There has been a substantial increase in the global enforcement of these laws. In particular, major investments in countries with a high corruption risk are subject to an elevated risk in dealing with other private companies, governments or government-controlled entities. Although we have an anti-corruption and anti-bribery compliance programme in place which is designed to prevent and reduce the likelihood of violations of such laws by our employees and companies associated with us, any violation could result in substantial criminal or civil sanctions and could damage our reputation.
Sanctions laws
Our international operations require compliance with applicable trade and economic sanctions or other restrictions imposed by governments, such as the US and United Kingdom, or organisations, including the United Nations, the European Union (EU) and its member countries. These trade and economic sanctions are not always aligned and this increases the complexities when a company has operations in various countries. Under economic and trading sanctions laws, governments may seek to impose modifications to business practices, and modifications to compliance programmes, which may increase compliance costs, and may subject us to fines, penalties and other sanctions.
Although we believe that we are in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to frequent amendments or changing interpretations.
We are monitoring developments in the US, the EU and other jurisdictions that maintain sanctions programmes, including developments in implementation and enforcement of such sanctions programmes. Expansion of sanctions programmes, embargoes and other restrictions in the future (including additional designations of persons, entities and countries subject to
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sanctions), or modifications in how existing sanctions are interpreted or enforced, could have a material adverse effect on our business, operating results, cash flows and financial condition.
Environmental laws and regulations
In recent years, the environmental legislation in South Africa has resulted in significantly stricter standards. For instance, by 1 April 2020, our existing plants are required to meet more stringent point source standards for air quality emissions applicable to newly commissioned plants. Meeting some of these requirements will require retrofitting of some of our existing plants, we continue to invest significant capital and are on track with the implementation of committed roadmaps intended to bring us into compliance with most of the new plant standards by 2025, supported by pending postponement applications for extension of compliance timeframes. We submitted these to the National Air Quality Officer in the first quarter of 2019. The new plant standard for boiler sulphur dioxide could pose significant compliance challenges for our existing plants beyond 2025 from a technical and financial feasibility point of view. Accordingly, Sasol continues discussions with key stakeholders, including support to the technical panel of experts being appointed by the Department of Environment, Forestry and Fisheries to provide strategic and technical guidance towards effective management of sulphur dioxide emissions from old plants. These efforts are aimed at the identification of sustainable longer-term solutions and technologies to enable us to comply and advance the necessary environmental compliance and improvement roadmaps.
To mitigate associated air quality compliance risks in the short and long term, Sasol will be reliant on mechanisms available in law and decisions thereon by the relevant authorities to obtain postponements on the requisite compliance timeframes. We also rely on other mechanisms, such as the implementation of air quality offsets as per our approved plans, to achieve our compliance obligations. We recognise that existing standards may become stricter over time which may pose a risk to some of our maturing operations in South Africa. This may, in some
cases, adversely affect our business, financial condition, results of operations and cash flows.
The outcome of these processes and applications cannot be guaranteed and may be successfully challenged by third parties. Non-compliance may result in the violation of licence conditions with the associated consequence of administrative enforcement action, which may include directions to cease operations, fines and penalties including criminal prosecution. This may have a material adverse impact on our business.
Some of our South African operations are carried out in declared air quality priority areas which are further subject to the requirements of the Vaal Triangle Air-Shed Priority Area Air Quality Management Plan and the Highveld Priority Area Air Quality Management Plan. These plans are currently under review, subject to the completion of source apportionment studies. Accordingly, further emission reduction commitments may be required from Sasol and are likely to trigger additional cost for air quality improvements in these priority areas.
Outside of South Africa, we operate a number of plants and facilities for the storage and processing of chemical feedstock, products and wastes. These operations are subject to numerous laws, regulations and ordinances relating to safety, health and the protection of the environment which may also affect our operating results and financial condition. The essential objectives of these legal frameworks are largely consistent with that of the South African framework, although regulatory and permitting requirements are more established and entrenched in some regions.
Competition laws/Anti-trust laws
Violations of competition/anti-trust legislation could expose the group to administrative penalties, civil claims and damages, including punitive damages by companies which can prove they were harmed by the violation of competition/anti-trust legislation. Such penalties and damages could be significant and have an adverse impact on Sasol's business, operating results, cash flows and financial condition. In addition, Sasol's reputation could be damaged by findings of such contraventions and individuals could be subject to imprisonment or fines in countries where
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competition/anti-trust violations are a criminal offence.
On 16 June 2017, Sasol Germany GmbH received a request for information issued by the European Commission. The request for information related to agreements and /or concerted practices regarding the purchasing of ethylene since 2008. On 31 July 2017, Sasol Germany GmbH responded to the request for information. On 5 March 2019, the European Commission confirmed that Sasol Germany GmbH was not a party to the investigations.
Although it is Sasol's policy to comply with all laws, and notwithstanding training and compliance programmes, we could inadvertently contravene competition/anti-trust laws and be subject to the imposition of fines, criminal sanctions and/or civil claims and damages. We endeavour to remain compliant with competition/anti-trust legislation in all the jurisdictions in which we operate to avoid any material adverse impact on our reputation, business, operating results, cash flows and financial condition.
South African mining legislation may have an adverse effect on our mineral rights
The Minister of Mineral Resources has indicated Government's intention to withdraw the Mineral and Petroleum Resource Development Amendment Bill in order to separate oil and gas related matters from that of mineral related matters. It is anticipated that the new "Petroleum Bill" will be introduced to the South African parliament formed following the elections held in May 2019. The impact thereof on our operations will be considered once we have clarity on the nature of the amendments.
The Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (2018 Mining Charter) was published on 27 September 2018 for implementation. The 2018 Mining Charter contains a number of changes compared to the previous Mining Charter including but not limited to an increase in the BEE shareholding requirement from 26% to 30% in respect of new
mining right applications. Furthermore, recognition is given to mining right holders who have achieved 26% BEE shareholding and whose shareholders exited prior to commencement of the 2018 Mining Charter. Such recognition is however only applicable for the duration of the right and not for subsequent renewals in which instance a 30% BEE shareholding is required. The 2018 Mining Charter contains more stringent compliance criteria than the previous Mining Charter, especially in respect of applications for new mining rights and the requirements in respect of procurement of mining goods which may have a material adverse effect on Sasol Mining. The potential impact on Sasol Mining may be two-fold: higher cost of production and the risk of being in non-compliance with the requirements of the 2018 Mining Charter which could lead to the suspension or cancellation of Sasol Mining's mining and/or prospecting rights. If a holder of a prospecting right or mining right in South Africa conducts prospecting or mining operations in contravention of the MPRDA, the converted mining rights can be suspended or cancelled by the Minister of Mineral Resources. The entity, upon receiving a notice of breach from the Minister, has a specific period of time to remedy such breach.
The MPRDA and applicable provisions in the National Environmental Management Act and National Water Act impose additional responsibilities with respect to environmental management as well as the prevention of environmental pollution, degradation or damage from mining and/or prospecting activities.
The effect of the possible future amendments to the MPRDA, associated regulations to be promulgated and the 2018 Mining Charter on our mining and petroleum rights in the future may have a material adverse effect on our business, operating results, cash flows and financial condition. See "Item 4.BBusiness overviewThe Mining Charter and the Mineral and Petroleum Resources Development Amendment Bill".
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Legislation in South Africa on petroleum and energy activities may have an adverse impact on our business, operating results, cash flows and financial condition
Regulation of Petroleum Products
The Petroleum Products Amendment Act
The Petroleum Products Amendment Act (the Petroleum Products Act) requires persons involved in the manufacturing, wholesale and retail sale of petroleum products to obtain relevant licences for such activities. Sasol Oil, Natref and Sasol South Africa Limited have submitted applications for their respective operations. The Sasol Oil wholesale licence and Sasol South Africa Limited manufacturing licence applications have been approved and the licences issued. The Sasol Oil manufacturing licence application has been accepted, however the licence has not yet been issued. As provided in the Petroleum Products Act, Sasol Oil continues to act as a deemed licence holder in relation to its manufacturing activities. The Natref manufacturing licence application is also still under review by the Department of Mineral Resources and Energy.
Accordingly, Sasol Oil and Natref continue to operate as being persons who, as of the effective date of the Petroleum Products Act, are deemed to be holders of a licence until their applications have been finalised. Until these applications have been finalised, we cannot provide assurance that the conditions of the licences may not have a material adverse impact on our business, operating results, cash flows and financial condition.
The Petroleum Products Act entitles the Minister of Energy to regulate the prices, specifications and stock holding of petroleum products and the status in this regard is as follows:
Regulation of pipeline gas activities in South Africa
The Gas Act
The Gas Act provides that the National Energy Regulator of South Africa (NERSA) has the authority to issue licences for construction and operation of gas pipelines and trading in gas. NERSA also has the authority to approve gas transmission tariffs and maximum gas prices that may be charged by gas traders, where there is
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inadequate competition as contemplated in the South African Competition Act. The Gas Act further gives NERSA the authority to impose fines and other punitive measures for failure to comply with the licence conditions and/or the provisions of the Gas Act. Future regulation of maximum gas prices may have a material adverse effect on our business, operating results, cash flow and financial condition.
Pursuant to the 2013 NERSA decisions approving the Sasol Gas maximum gas prices and transmission tariffs, Sasol Gas implemented a standardised pricing mechanism in its supply agreements with customers in compliance with the applicable regulatory and legal framework. NERSA approved further maximum gas prices and transmission tariffs based on the same pricing and tariff mechanisms in November 2017.
Seven of Sasol Gas's largest customers initiated a judicial review of the 2013 NERSA decisions relating to its maximum price and tariff methodologies and NERSA's decision on Sasol Gas's maximum price and transmission tariff applications. The review application proceedings were completed and the High Court upheld the NERSA-approved pricing methodology. The gas customers appealed this outcome in the Supreme Court of Appeal (SCA). In May 2018 the SCA upheld the appeal. NERSA appealed the SCA decision to the Constitutional Court. Sasol supported NERSA in this appeal. On 15 July 2019 the Constitutional Court handed down its decision. The Constitutional Court overturned the 2013 NERSA maximum price decisions and ordered NERSA to revise its decisions. The new decision by NERSA regarding the maximum gas price to be approved for Sasol will apply retrospectively from 26 March 2014 when the original decisions (now overturned) became effective. Pursuant to the decision by the Constitutional Court, Sasol will in terms of the process to be determined by NERSA bring a revised application for the approval of maximum gas prices for approval by NERSA.
The current contractual agreements with the Sasol Gas customers remain in place in terms of the November 2017 maximum price and transmission tariff decisions of NERSA. However, following the abovementioned outcome of the
appeal to the Constitutional Court, NERSA has to approve new maximum gas prices for Sasol in terms of the provisions of the Gas Act. The future implementation of such a new maximum gas price could have a material adverse effect on our business, operating results, cash flows and financial condition. If the new maximum gas price approved by NERSA for the period of the overturned decision is lower than the actual price charged to customers, then a retrospective liability may arise for Sasol Gas as a result. It is not possible to determine at this time what the outcome of such a price decision by NERSA will be. Therefore, the likelihood of a future obligation cannot be determined currently and neither can an amount for such a possible obligation be reliably estimated. Therefore, no provision has been raised at 30 June 2019.
Changes in safety, health, environmental and chemical regulations and legislation and public opinion may adversely affect our business, operating results, cash flows and financial condition
We are subject to a wide range of general and industry-specific environmental, health and safety and other legislation in jurisdictions in which we operate. See "Item 4.BBusiness overviewRegions in which Sasol operates and their applicable legislation".
One of our most material challenges is the ability to anticipate and respond to the rapidly changing regulatory and policy context and associated stakeholder challenges, in particular relating to environmental legislation in South Africa. Evolving legislation relating to air quality, climate change, water and waste management introduces profound regulatory challenges to our existing plants in South Africa. The quality, emission and disposal limit requirements imposed in our air quality, waste management and water use licences for our South African operations are consequently becoming increasingly stringent. These laws and regulations and their enforcement are likely to become more stringent over time in all jurisdictions in which we operate, although these laws in some jurisdictions are already more established than in others. These compliance challenges are further impacted by the fact that, in some instances, legislation does not adequately
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provide for sufficient and/or flexible transitional arrangements for existing plants to comply with the imposed more stringent requirements. Compliance with these requirements is a significant factor in our business. We continue to effectively invest in significant capital expenditures in order to comply with these requirements, our committed environmental roadmaps and offset commitments. We continue with transparent disclosures and engagements with our key stakeholders in an effort to address these challenges. A failure to comply could have an impact on our licence to operate, as well as result in administrative and criminal enforcement, and could harm our relationships with stakeholders.
Sasol's highly energy intensive operations in South Africa exist in the midst of rapidly evolving national legislation on GHG emissions. In support of the Paris Agreement, the government has recently published the Draft Climate Change Bill, promulgated the Carbon Tax Act effective 1 June 2019 and has promulgated the Pollution Prevention Plan and Greenhouse Gas Mandatory Reporting Regulations. Sasol has submitted its GHG inventory data for South Africa in compliance with the regulations and successfully obtained internal approval for its first mandatory Pollution Prevention Plan. We subsequently submitted our first annual report on our Pollution Prevention Plan in March 2019. We envisage that compliance with carbon budgets will become mandatory in 2021. For further information on the impact of carbon taxes refer to "Item 3.DRisk factorsOur ability to respond to climate change could negatively impact our growth strategies, reduce demand for our products, increase our operational costs, reduce our competitiveness, negatively impact our stakeholder relations and affect our future legal licence to operate".
Changes to waste management legislation in South Africa, particularly around landfill prohibitions being progressively implemented, are compelling our South African operations to find alternative solutions to waste management and disposal. The changing regulatory landscape introduces increasingly stringent waste disposal restrictions and punitive fiscal reform measures including waste levies. We are quantifying the potential costs associated with meeting these requirements. We will be dependent on regulatory
authorities clarifying the interpretation and applicability of specific requirements to our waste streams, to determine whether there would be compliance challenges associated with technical and feasibility constraints. We may have to rely on mechanisms in law, such as exemption applications, to address potential waste management compliance challenges, the outcome of which cannot be guaranteed.
Regarding the regulation of water activities, we have noticed an increase in the number of policy and regulatory documents issued by the Department of Human Settlements, Water and Sanitation for public consultation, proposing new institutional arrangements for governing water resources, economic regulation including the imposition of waste discharge limits and infrastructure investment. At present it is too early to gauge the likely impact on our operations, in particular in relation to access to water supply, once these are implemented.
From a chemicals management perspective, our products are required to be registered in accordance with regulatory requirements for many of the countries in which we operate, and sold in line with permit conditions, amongst other considerations. This includes filing of REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) registrations for chemicals we produce or import into Europe, and chemical notifications for other regions, especially the United States, Canada and China, as well as South Korea, Taiwan and other Asian countries. South Africa is also in the process of localising international commitments on safe chemicals management in national regulations. This includes the adoption of the Globally Harmonized System of Classification and Labelling of Chemicals (GHS) through the Department of Employment and Labour's draft Hazardous Chemical Agents Regulations and anticipated changes to regulations regarding the phase-out and management of ozone-depleting substances in line with the Montreal Protocol.
Although systems and processes are in place, monitored and improved upon, to ensure compliance with applicable laws and regulations applicable to Sasol and its obligations downstream in the value chain, we cannot assure you that we
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will be in compliance with all laws and regulations at all times. For example, non-compliance with environmental, health or safety laws may occur from system or human errors in monitoring our emissions of hazardous or toxic substances into the environment, such as the use of incorrect methodologies or defective or inappropriate measuring equipment, errors in manually capturing results, or other mistaken or unauthorised acts of our employees or service providers.
Public opinion and awareness is growing and challenges are increasingly being raised on community and consumer health and safety associated with the manufacturing and use of chemicals and industries reliant on fossil fuels. Our manufacturing processes may utilise and result in the emission of or exposure to substances with potential health risks. We also manufacture products which may pose safety, health and environmental risks. Although we remain committed to apply a duty of care principle and implement measures to eliminate or mitigate associated potential risks, including through our commitment to the Responsible Care® programme and adoption of the GHS, we may be subject to liabilities as a result of the use or exposure to these materials or emissions. See "Item 4.BBusiness overviewRegulation" for more detail.
We recognise that evolving chemicals control regulations globally may require additional product safety evaluations with the potential for restrictions on product uses. Consequently, markets may apply pressure on us concerning certain of our products, feedstock, manufacturing processes, transportation and distribution arrangements. As a result of these additional pressures, the associated costs of compliance and other factors, we may be required to modify or withdraw certain products from the market, which could have a material adverse effect on our business, operating results, cash flows, financial condition and reputation.
For example, the fast growth of plastics, combined with challenges in effective waste disposal, has resulted in a global problem associated with plastics waste in the environment. The main source of the problem is identified as
short-life consumer packaging-type applications, often referred to as single-use plastics. Consumer and regulator sentiment regarding the plastic pollution challenge may pose future responsibilities and business constraints on the wider industry, including Sasol, amongst other things through extended producer responsibility, bans on certain polymer product applications and reduced demand for polymers where alternatives are perceived to be more acceptable to the markets they serve.
We are subject to risks associated with litigation and regulatory proceedings
As with most large corporations, we are involved from time to time as a party to various lawsuits, arbitrations, regulatory proceedings, investigations or other disputes. Litigation, arbitration and other such legal proceedings or investigations involve inherent uncertainties and, as a result, we face risks associated with adverse judgments or outcomes in these matters. Even in cases where we may ultimately prevail on the merits of any dispute, we may face significant costs defending our rights, lose certain rights or benefits during the pendency of any proceeding or suffer reputational damage as a result of our involvement. We are currently engaged in a number of legal and regulatory proceedings and arbitrations in various jurisdictions including the litigation relating to the Sasol Khanyisa B-BBEE transaction described under "There are country specific risks relating to the countries in which we operate that could adversely affect our business, operating results, cash flows and financial condition(a) Political and socioeconomic issuesii. Transformation and local content" and the SFI tax proceedings described under "There are country specific risks relating to the countries in which we operate that could adversely affect our business, operating results, cash flows and financial condition(c) Legal and regulatoryii. Tax laws and regulations", as well as described under "Item 4.BBusiness overviewLegal proceedings and other contingencies". We could also face potential litigation or governmental investigations or regulatory proceedings in connection with the material weakness in our internal control over financial reporting or the reportable irregularity relating to the same matter (see "We identified
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a material weakness in our internal control over financial reporting as of 30 June 2019 which we are still in the process of remediating. If we are unable to remediate this material weakness, or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, which could cause shareholders to lose confidence in our financial and other public reporting and adversely affect our share price").
There can be no assurance as to the outcome of any litigation, arbitration or other legal proceeding or investigation, and the adverse determination of material litigation could have a material adverse effect on our business, operational results, cash flows and financial condition.
We may not be successful in attracting and retaining sufficiently skilled employees
In order for Sasol to deliver on its strategic objectives, sustainably grow into the future, and effectively operate and continuously improve existing and future assets and technologies, we are highly dependent on our human capital.
While we maintain a focus on attracting and retaining sufficiently skilled and experienced employees, including critical or scarce skills like qualified scientists, engineers, project execution managers, artisans and operators and highly skilled employees in business and functional roles, there exist various risks that may impact our ability to attract and retain required skills.
There is increasing competition in global labour markets for critical or scarce skills. The quality and availability of skills in certain labour markets may also be impacted by the challenges within the education and training systems in certain countries in which we operate. Localisation, diversity and other similar legislation in countries in which we operate are also key considerations in the attraction and retention of sufficiently skilled employees. The increasing use of digital technologies across our industry is placing increasing demand on data and digital technology skills. The availability and supply of these new skill sets are limited due to demand
outweighing supply. In addition, as the move into the digital space intensifies, future labour market dynamics may significantly change and we may fail to adequately or timeously anticipate and respond to such changes.
Without adequate investment in, effective management and deployment of our human capital, and failure to adequately or timeously anticipate changing labour market dynamics, our ability to meet current and future business needs, deliver on our strategy, perform to expectations, remain competitive and deliver stakeholder value may be compromised.
Intellectual property risks may adversely affect our freedom to operate our processes and sell our products and may dilute our competitive advantage
Our various products and processes, including most notably our specialty chemical and energy products and processes, have unique characteristics and chemical structures and, as a result, are subject to confidentiality and/or patent protection, the extent of which varies from country to country. Rapid changes in our technology commercialisation strategy may result in a misalignment between our intellectual property protection filing strategy and the countries in which we operate. The disclosure of our confidential information and/or the expiry of a patent may result in increased competition in the market for our products and processes, although the continuous supplementation of our patent portfolio reduces such risk to an extent. In addition, aggressive patenting by our competitors, particularly in countries like the US, China, Japan and Europe may result in an increased patent infringement risk and may constrain our ability to operate in our preferred markets.
A significant percentage of our products can be regarded as commodity chemicals, some of which have unique characteristics and chemical structure which make the products suitable for different applications than typical commodity products. These products are normally utilised by ourselves or our customers as feedstock to manufacture specialty chemicals or application-type products. We have noticed a worldwide trend of increased filing of patents
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relating to the composition of product formulations and the applications thereof. These patents may create pressure on both Sasol and those of our customers who market these product formulations which may adversely affect our sales to these customers. These patents may also increase our risk to exposure from limited indemnities provided to our customers of these products in case there is a patent infringement which may impact the use of the product on our customers' side. Patent-related pressures may adversely affect our business, market reputation, operating results, cash flows and financial condition.
We believe that our proprietary technology, know how, confidential information and trade secrets provide us with a competitive advantage. A possible loss of experienced personnel to competitors, and a possible transfer of know-how and trade secrets associated therewith, including the patenting by our competitors of technology built on our know-how obtained through former employees may negatively impact this advantage.
Similarly, operating and licensing technology in countries in which intellectual property laws are not well established and enforced may result in an inability to effectively enforce our intellectual property rights. The risk of some transfer of our know how and trade secrets to our competitors is increased by the increase in the number of licenses granted under our intellectual property, as well as the increase in the number of licensed plants which are brought into operation through entities which we do not control. As intellectual property warranties and indemnities are provided under each new licence granted, the cumulative risk increases accordingly. These risks may adversely affect our business, operating results, cash flows and financial condition.
Increasing competition in relation to products originating from countries with low production and logistical costs may adversely affect our business, operating results, cash flows and financial condition
Certain of our chemical production facilities are located in developed countries, including the US and in Europe. Economic and political conditions in these countries result in relatively
high labour costs and, in some regions, relatively inflexible labour markets. Increasing competition from regions with lower production costs and more flexible labour markets, for example the Middle East, India and China, exerts pressure on the competitiveness of our chemical products and, therefore, on our profit margins. This could result in the withdrawal of particular products or the closure of specific facilities, which may have a material adverse effect on our business, operating results, cash flows and financial condition.
We may face potential costs in connection with industry and value chain-related operational interruptions, accidents or deliberate acts of terror causing property damage, personal injuries or environmental contamination
Operational interruptions impacting our operations or value chains may have a material adverse effect on volumes produced and costs. This can be as a result of failure of critical assets, extreme weather events or natural disasters, lack of feedstock (coal, natural gas, ethane, ethylene), supply chain disruption (inbound and outbound), utility interruption (electricity, water, oxygen, steam, hydrogen, nitrogen) or a breach of our license to operate (non-compliance with regulatory requirements or permits).
We operate coal mines, explore for and produce oil and gas and operate a number of plants and facilities for the manufacture, storage, processing and transportation of oil, chemicals and gas, related raw materials, products and wastes. These facilities and their respective operations are subject to various risks, such as fires, explosions, releases and loss of containment of hazardous substances, soil and water contamination, flooding and land subsidence, among others. As a result, we are subject to the risk of, and in the past have experienced, industry-related incidents. Such incidents can be subjected to inspections by relevant authorities, with the associated potential consequences of enforcement action, including directions to temporarily cease and desist operations and the imposition of fines and penalties. This may have a material adverse effect on our business.
Our facilities are also subject to the risk of deliberate acts of terror.
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Our main Secunda production facilities are concentrated in a relatively small area in Secunda, South Africa. The size of the facility is approximately 83 square kilometres (km2) with operating plants accounting for 9 km2. This facility utilises feedstock from our mining and gas businesses, while the chemical and energy businesses elsewhere also rely on the facility for the raw materials it produces. Accidents and acts of terror may result in damage to our facilities and may require the shutdown of the affected facilities, thereby disrupting production and increasing production costs and may in turn disrupt the mining, gas, chemicals and oil businesses which make up a significant portion of our total income. Furthermore, accidents or acts of terror at our operations may have caused, or may in future cause, environmental contamination, personal injuries, health impairment or fatalities and may result in exposure to extensive environmental remediation costs, civil litigation, the imposition of fines and penalties and the need to obtain or implement costly pollution-control technology.
Sasol operates the Pande and Temane gas fields in Mozambique. Gas is produced from a portfolio of wells, and then processed through a Central Processing Facility (CPF). Gas is sold to our operations in Secunda and Sasolburg as well as to external customers in Mozambique and South Africa. The production of gas through wells, pipelines and a processing plant is inherently exposed to the risk of integrity failures which may result in a loss of containment and/or a disruption of gas supply to our own and/or customers operations. The risk of any well, pipeline or plant equipment failure is managed through a structured, continuously ongoing maintenance and management programme. Were Sasol's Mozambique gas wells or facilities to experience a catastrophic, simultaneous, long-term outage, particularly if we are unable to offset such outages through existing contractual gas sales agreement mechanisms, this could have a material adverse effect on our revenue, cash flows and costs.
Our products are ultimately sold to customers around the world and this exposes us to risks related to the transportation of such products by road, rail, pipelines or marine vessels or the nefarious use of our products for illegitimate
purposes, such as the manufacture of illicit drugs and chemical weapons, or the use of explosives for violent and criminal acts. Such activities would generally take place in the public domain exposing us to incident risks over which we have limited control.
It is Sasol's policy to ensure effective service provider management and procure appropriate property damage and business interruption insurance cover for its production facilities above acceptable deductible levels at acceptable commercial premiums. However, full cover for all loss scenarios may not be available at acceptable commercial rates, and we cannot give any assurance that the insurance procured for any particular year would cover all potential risks sufficiently or that the insurers will have the financial ability to pay all claims that may arise.
The costs we may incur as a result of the above or related factors could have a material adverse effect on our business, operating results, cash flows and financial condition.
Exposure related to investments in associates and joint arrangements may adversely affect our business, operating results, cash flows and financial condition
We have invested in a number of associates and joint arrangements and will consider opportunities for further upstream oil and gas and downstream investments (including licensing opportunities), where appropriate, as well as opportunities in chemicals. The development of these projects may require investments in associates and joint arrangements, some of which are aimed at facilitating entry into countries and/or sharing risk with third parties. Although the risks are shared, the objectives of our associates and joint arrangement partners; their ability to meet their financial and/or contractual obligations; their behaviour; their compliance with legal and ethical standards; and the increasing complexity of country-specific legislation and regulations may adversely affect our reputation and/or result in disputes and/or litigation. All of these may have a material adverse effect on our business, operating results, cash flows and financial condition, and may constrain the achievement of our growth objectives.
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We may face the risk of information security breaches or attempts to disrupt critical information technology services, which may adversely impact our operations
The increasing use of information technology (IT) and digital infrastructure systems in operations is making all industries, including the energy and chemicals industries, much more susceptible to cyber threats and information security breaches. IT and digital systems with related services include our financial, commercial, transacting and production systems. Sasol has an information security programme in place to mitigate the risks that come with cyber threats and information security breaches but recognises that if there is a breach of information security we could experience disruptions of critical services, or in the worst case scenario, this could have a material adverse effect on our business, operating results, cash flows and financial condition and our disclosure control processes.
In addition, we operate in countries that have data protection laws and regulations. Although it is our policy to comply with all applicable laws, and notwithstanding training, awareness and compliance programmes, non-compliance with data protection laws could result in fines and/or civil claims and damages. This could have a material adverse impact on our reputation and a consequential financial impact.
We may not pay dividends or make similar payments to shareholders in the future due to various factors
As further described under Item 8. Financial Information, the company's dividend policy takes into consideration various factors, including overall market and economic conditions, the group's financial position, capital investment plans as well as earnings growth. Whether funds are available for distribution to shareholders depends on a variety of factors, including the amount of cash available and our capital expenditures and other liquidity requirements existing at the time. Under South African law, the company will be entitled to pay a dividend or similar payment to its shareholders only if it meets the solvency and liquidity tests set out in the Companies Act of South Africa 71 of 2008, and is permitted to do so
in terms of the Memorandum of Incorporation. Given these factors and our board's discretion to declare cash dividends or other similar payments, dividends may not be paid in the future.
After careful consideration of our current leverage and the volatility in the macro-economic environment, we have decided to pass the final dividend in order to protect and strengthen our balance sheet. We may further consider the passing of the 2020 interim dividend based on the health of the balance sheet credit metrics at that stage.
Our dividend cover for 2017 was 2,8 times based on HEPS and 2,8 times based on CHEPS for 2018. Interim dividend for 2019 was 6,5 times based on CHEPS. We usually distribute dividends twice a year.
We may not be able to exploit technological advances quickly and successfully or competitors may develop superior technologies
Most of our operations, including the gasification of coal and the manufacture of synthetic fuels and petrochemical products, are highly dependent on the use of advanced technologies. The development, commercialisation and integration of the appropriate advanced technologies can affect, among other things, the competitiveness of our products, the continuity of our operations, our feedstock requirements and the capacity and efficiency of our production.
It is possible that new technologies or novel processes may emerge and that existing technologies may be further developed in the fields in which we operate. Unexpected advances in employed technologies or the development of novel processes can affect our operations and product ranges in that they could render the technologies we utilise or the products we produce obsolete or less competitive in the future. Difficulties in accessing new technologies may impede us from implementing them and competitive pressures may force us to implement these new technologies at a substantial cost.
In addition to the technological challenges, a number of our expansion projects are integrated across our value chain. Delays with the development of an integrated project might,
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accordingly, have an impact on more than one business segment.
Our ability to compete will depend on our timely and cost effective implementation of new technological advances. It will also depend on our success in commercialising these advances irrespective of competition we face. Any failure to do so could result in a material adverse effect on our business, operating results, cash flows and financial condition.
The exercise of voting rights by holders of American Depositary Receipts is limited in some circumstances
Holders of American Depositary Receipts (ADRs) may exercise voting rights with respect to the ordinary shares underlying their American Depositary Shares (ADSs) only in accordance with the provisions of our deposit agreement (Deposit Agreement) with J.P. Morgan Chase Bank N.A. (J.P. Morgan), as the depositary (Depositary). For example, ADR holders will not receive notice of a meeting directly from us. Rather, we will provide notice of a shareholders meeting to J.P. Morgan in accordance with the Deposit Agreement. J.P. Morgan has undertaken in turn, as soon as practicable after receipt of our notice, to mail voting materials to holders of ADRs. These voting materials include information on the matters to be voted on as contained in our notice of the shareholders meeting and a statement that the holders of ADRs on a specified date will be entitled, subject to any applicable provision of the laws of South Africa and our Memorandum of Incorporation (MOI), to instruct J.P. Morgan as to the exercise of the voting rights pertaining to the shares underlying their respective ADSs.
Upon the written instruction of an ADR holder, J.P. Morgan will endeavour, in so far as practicable, to vote or cause to be voted the shares underlying the ADSs in accordance with the instructions received. If instructions from an ADR holder are not received by J.P. Morgan by the date specified in the voting materials, J.P. Morgan will not request a proxy on behalf of such holder. J.P. Morgan will not vote or attempt to exercise the right to vote other than in accordance with the instructions received from ADR holders.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct J.P. Morgan to vote the shares underlying your ADSs. In addition, J.P. Morgan and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and there may be no recourse if your voting rights are not exercised as you directed.
Holders of Sasol's ordinary shares or ADSs may be subject to dilution as a result of any non-pre-emptive share issuance, and shareholders or ADS holders outside South Africa may not be able to participate in future offerings of securities (including Sasol's ordinary shares) carried out by or on behalf of Sasol
Future share issuances by Sasol, with or without subscription rights, could (depending on how the share issuance is structured) dilute the interests of existing shareholders or require them to invest further funds to avoid such dilution.
In the case of an equity offering with subscription rights, holders of Sasol's shares in certain jurisdictions may not be entitled to exercise such rights unless the rights and the related shares are registered or qualified for sale under the relevant legislation or regulatory framework. In particular, holders of Sasol's securities who are located in the United States (including those who hold ordinary shares or ADSs) may not be able to participate in securities offerings by or on behalf of Sasol unless a registration statement under the U.S. Securities Act of 1933 (the Securities Act) is effective with respect to such securities or an exemption from the registration requirements of the Securities Act is available thereunder. Holders of these shares in these jurisdictions may therefore suffer dilution of their shareholding should they not be permitted to, or otherwise choose not to, participate in future equity offerings with subscription rights.
Sales of a large amount of Sasol's ordinary shares and ADSs could adversely affect the prevailing market price of the securities
Historically, trading volumes and the liquidity of shares listed on the JSE Limited (JSE) have
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been low in comparison with other major markets. The ability of a holder to sell a substantial number of Sasol's ordinary shares on the JSE in a timely manner, especially in a large block trade, may be restricted by this limited liquidity. The sales of ordinary shares or ADSs, if substantial, or the perception that these sales may occur and be substantial, could exert downward pressure on the prevailing market prices for Sasol ordinary shares or ADSs, causing their market prices to decline.
ITEM 4. INFORMATION ON THE COMPANY
4.A History and development of the company
Sasol Limited, the ultimate holding company of our group, is a public company. It was incorporated under the laws of South Africa in 1979 and has been listed on the JSE Limited (JSE) since October 1979. Our registered office and corporate headquarters are at Sasol Place, 50 Katherine Street, Sandton, 2196, South Africa, and our telephone number is +27 10 344 5000. Our agent for service of process in the US is Puglisi & Associates, 850 Library Avenue, Suite 204, P.O. Box 885, Newark, Delaware 19715.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding Sasol that we file electronically with the SEC. To find the required information please visit www.sec.gov/. For further information please visit www.sasol.com. This website is not incorporated by reference in this annual report.
For a description of the company's principal capital expenditures and divestitures refer to "Item 5.BLiquidity and capital resources".
4.B Business overview
Sasol is an international integrated chemicals and energy company that, through its talented people, uses selected technologies to safely and sustainably source, produce and market chemical and energy products competitively to create superior value for our customers, shareholders and other stakeholders.
For details regarding the following sections, refer as indicated.
Seasonality
Sales volumes of our products are generally not subject to seasonal fluctuations, but tend to follow broader global industry trends and are therefore impacted by macro-economic factors. Sasol operates globally and in many diverse markets, and accordingly, no element of seasonality is likely to be material to the results of Sasol as a whole. For further information regarding cyclicality and prices and demand, refer to "Item 3.DRisk Factors".
Raw materials
In the Southern Africa value chain, the main feedstock components for the production of fuels and chemical products are coal obtained from Sasol Mining, natural gas obtained from Sasol Exploration and Production International and crude oil purchased from external suppliers.
In our Chemicals business, the main feedstocks used are kerosene, benzene, ethane, ethylene, oleochemicals, slack wax and aluminium.
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Feedstocks are purchased externally, with the exception of a portion of ethylene which is produced at our Lake Charles facility and the Fischer-Tropsch-based feedstock used for our South African alcohol, wax, ammonia, phenolics, and co-monomer production. The pricing of most of these raw materials follow global market dynamics which relate to crude oil and energy prices.
Marketing channels and principal markets
In our Operating Business Units, we make use of direct sales models, long-term marketing gas sales agreements and short-term crude oil sale and purchase agreements.
Our Regional Operating Hubs channel their products through the Strategic Business Units to external markets.
In our Strategic Business Units, marketing channels can be divided into the following main areas:
Energy:
Base Chemicals:
Performance Chemicals:
Factors on which the business is dependent
Intellectual property
Our proprietary or licensed technologies, our software licences, procedures and protocols support Sasol's competitive advantage. These consist of:
The Sasol Slurry Phase DistillateTM (Sasol SPDTM) processBased on our Technology function's extensive experience in the commercial application of the Fischer-Tropsch (FT) technology, we have successfully commercialized the FT-based Sasol SPDTM process for converting natural gas into high-quality, environment-friendly GTL diesel, GTL kerosene and other liquid hydrocarbons.
The Sasol SPDTM process intergrates the following three main technologies, each of which is commercially proven. These include:
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Currently we believe, based on our knowledge of the industry and publicly available information, that globally, we have the most extensive experience in the application of FT technology on a commercial scale. The Sasol SPDTM process converts natural gas into diesel and other liquid hydrocarbons, which are generally more environmentally friendly and of higher quality and performance compared to the equivalent crude oil-derived products. In view of product specifications gradually becoming more stringent, especially with respect to emissions, we believe that this option is environmentally friendly. The Sasol SPDTM process can further be adopted to produce differentiated value-added products, such as GTL base oils. The superior quality of GTL base oils positions these products firmly as premium components in the formulation of top-tier lubricants.
Key contracts
ORYX GTL, our 49% joint venture in Qatar, purchases natural gas feedstock from Al Khaleej Gas, a joint venture between ExxonMobil Middle East Gas Marketing Limited and Qatar Petroleum, under a gas purchase agreement with a contracted minimum off-take volume. The agreement commenced in November 2005 and is valid for a term of 25 years. The term of the agreement may be extended by the parties on terms and conditions that are mutually agreed.
Escravos GTL (EGTL), in which we hold a 10% indirect economic interest, purchases 100% of its gas requirements for the EGTL plant from Chevron Nigeria Limited (CNL) and Nigerian National Petroleum Corporation (NNPC), the upstream joint venture partners. The agreement commenced from the date of commissioning and is valid for 25 years after the start of beneficial operation which was during June 2014. The term of the agreement may be extended by the parties on terms and conditions that are mutually agreed.
Since November 2017, EGTL has been responsible for the marketing of its own products.
Central Térmica de Ressano Garcia (CTRG), our 49% joint operation in Mozambique, purchases natural gas feedstock produced from our natural gas asset Pande-Temane Petroleum Production Agreement (PPA), which is managed by an unincorporated joint operation comprising of Sasol's subsidiary Sasol Petroleum Temane Limitada (SPT), and partners Companhia Mozambique de Hidrocabonetos (CMH) and the International Financial Corporation (IFC). CTRG also has a gas transport agreement with the Republic of Mozambique Pipeline Investments Company (Pty) Ltd (ROMPCO) and a power purchase agreement with Electricidade de Mozambique (EDM). The term of the agreements commenced on 27 February 2015 and is valid for 20 years.
ROMPCO is owned by Sasol (50%, the shares are held by Sasol South Africa Limited, the South African Gas Development Company SOC Limited (iGas), a subsidiary of the Government of South African-owned Central Energy Fund (CEF) (25%) and Companhia Moçambicana de Gasoduto SA (CMG), a subsidiary of Government of Mozambique-owned ENH (25%)). It was formed to transport natural gas from the Pande and Temane gas fields in Mozambique to markets in both Mozambique and South Africa via the Mozambique-Secunda gas transmission pipeline (MSP).
Refer to "Item 4.DProperty, plants and equipmentExploration and Production International" for detail regarding key contracts in Gabon and Mozambique.
Legal proceedings and other contingencies
From time to time, Sasol companies are involved in litigation, tax and similar proceedings in the normal course of business. Although the outcome of these claims and disputes cannot be predicted with certainty, a detailed assessment is performed on each matter, and a provision is recognised, or contingent liability disclosed, where appropriate in terms of International Financial Reporting Standards.
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As previously reported, the South African Revenue Service ("SARS") issued revised assessments for Sasol Oil relating to a dispute around its international crude oil procurement activities for the 2005 to 2012 tax years. Sasol Oil raised a provision in its financial statements of R1,3 billion, including penalties and interest, which covers the 2005 to 2014 tax years in relation to these procurement activities. On 9 November 2018, the Supreme Court of Appeal ("SCA") upheld an appeal filed by Sasol Oil (in respect of the 2005 to 2007 tax years) and set aside an earlier ruling by the Tax Court. On the basis of this judgement, Sasol Oil has reversed the provision of R1,3 billion.
On 29 November 2018, SARS applied to the Constitutional Court ("Con Court") for leave to appeal against the SCA decision. On 4 February 2019, the Con Court dismissed the SARS application with costs ruling that the matter falls outside the jurisdiction of the Con Court and, in any event, bears no reasonable prospect of success.
In addition to the above litigation, the potential contingent liability relating to the ongoing dispute with SARS in relation to its revised assessments for the 2013 and 2014 tax years, based on a different primary grounds of assessment regarding Sasol Oil's crude oil procurement activity, amounts to R13,4 billion (including interest and penalties as at 30 June 2019). Sasol Oil disagrees with SARS's assessment for the 2013 and 2014 periods and hence this tax dispute was the subject of an ongoing appeal with the Tax Court lodged by Sasol Oil.
The impact of the SCA and Con Court judgements on the open years of assessment viz. 1999 to 2004 and 2008 to 2016 (open years), were fully considered by both parties. Consequently SARS and Sasol Oil have come to a mutual agreement resulting in the dispute between the parties being resolved for all the open years of assessment. As a result, Sasol is no longer exposed to the contingent liability of R13,4 billion.
As reported previously, SARS conducted an audit over a number of years on Sasol Financing International Plc (SFI) which performs an off-shore treasury function for Sasol. The audit culminated in the issuance of revised assessments
in respect of the 2002 to 2012 tax years and the dispute relates to the place of effective management of SFI. SFI has co-operated fully with SARS during the course of the audit relating to these assessments. The potential tax exposure is R2,4 billion (including interest and penalties as at 30 June 2019), which is disclosed as a contingent liability, and was reduced from the R3,2 billion previously reported, due to the reduction of the penalties applied by SARS.
SFI, in consultation with its tax and legal advisors, does not support the basis of these additional assessments for all the years of assessment. Accordingly, SFI lodged an objection and appeal in the Tax Court against the revised assessments. SFI and SARS have, however, come to a mutual agreement that the appeal and related Tax Court processes will be held in abeyance pending the outcome of the judicial review application noted below.
In addition, Sasol has also launched a judicial review application against the SARS decision to register SFI as a South African taxpayer. SARS's answering affidavit in this litigation was submitted on 8 February 2019 and SFI responded accordingly. The legal process is ongoing in this regard.
Sasol is committed to comply with tax laws and any disputes with tax authorities on the interpretation of tax laws and regulations will be addressed in a transparent and constructive manner.
For a description of the legal review of the NERSA maximum pricing and transmission tariffs refer to "Item 3.DRisk FactorsLegislation in South Africa on petroleum and energy activities may have an adverse impact on our business, operating results, cash flows and financial conditionRegulation of pipeline gas activities in South AfricaThe Gas Act".
Following a judgement by the South African Constitutional Court in 2011, which confirmed the right of employees in the mining industry who contracted certain occupational diseases to claim damages from their employers, a number of legal cases were instituted in South Africa. Similar cases have also been threatened against participants in the coal sector of the mining
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industry. As a result of the Constitutional Court judgement referred to above, Sasol Mining is currently the defendant in three separate litigation matters. The first matter was instituted by 22 claimants who allege that they have contracted coal dust related lung diseases, including pneumoconiosis, while in Sasol Mining's employment. The plaintiffs allege that they were exposed to harmful quantities of coal dust while working underground for Sasol Mining and that the company failed to comply with various sections of the Mine Health and Safety Act, 1996; failed to comply with various regulations issued in terms thereof; and failed to take effective measures to reduce the exposure of mine workers to coal dust. The plaintiffs allege that all of the above increased the risk for workers to contract coal dust related lung diseases.
The first lawsuit is not a class action but rather 22 individual cases, each of which will be judged on its own merits. Two plaintiffs have since passed away and their claims have been withdrawn. The remaining 20 plaintiffs seek compensation for damages relating to past and future medical costs and loss of income amounting to R67,7 million in total. Sasol Mining is defending the claims.
The merits of each single claim are not clear yet. There is also some uncertainty as to whether some of the claims have prescribed. Therefore, it is not possible at this stage to make an estimate of the likelihood that the plaintiffs will succeed with their claim and if successful, what the quantum of damages would be that the court will award. Therefore, no provision has been raised at 30 June 2019.
In addition to the above, during 2009, certain employees in Sasol Mining were charged with participation in an unprotected sit-in, threatening and forcing others to participate in an unprotected strike and for assaulting or attempting to assault others during an unprotected strike and were subsequently dismissed. These employees are disputing their dismissal. On 19 September 2019, the Labour Court passed a judgement directing inter alia Sasol Mining to re-instate the employees and pay certain past benefits. Sasol Mining filed an application for leave to appeal the judgement on
10 October 2019. Once the latter has been obtained the appeal will be heard by the Labour Appeal Court. This date has not been set. The outcome of the appeal is uncertain and therefore it is not possible at this stage to make an estimate of the likelihood of the outcome. No provision has been raised at 30 June 2019.
Following certain complaints submitted to the South African Broad Based Black Economic Empowerment Commission (B-BBEE Commission) by direct and indirect shareholders in Tshwarisano Liquid Fuels Investments (Pty) Ltd (Tshwarisano) relating to Tshwarisano's 25% shareholding in Sasol Oil (Pty) Ltd (Sasol Oil), the BBBEE Commission is investigating the compliance by Sasol Oil and other affected stakeholders with the South African B-BBEE Act, 53 of 2003. While certain of these investigations are still ongoing, Sasol Oil has received findings and recommendations from the B-BBEE Commission in relation to a complaint by a particular shareholder who complained about unfavourable terms and conditions of a funding arrangement concluded between the shareholder and its funders in order to fund its acquisition of shares in Tshwarisano. Sasol Oil was not a party to the funding agreement. The shareholders in question alleged that they did not derive any economic benefit from the said funding arrangement. Sasol Oil has fully co-operated with the B -BBEE Commission during all of the ongoing investigations and will continue to do so.
In terms of the provisions of the B-BBEE Act, 53 of 2003 the final findings of the B-BBEE Commission in this matter cannot be published yet. Sasol Oil has notified the B-BBEE Commission that it does not agree with the findings and that Sasol Oil will institute a legal review application in order for the High Court to overturn the findings made by the B-BBEE Commission. Sasol Oil will pursue the intended legal review process but due to the nature of litigation matters the outcome of the matter cannot be predicted with certainty. In addition the quantum of any ultimate financial liability for Sasol Oil resulting from a possible adverse finding against Sasol Oil in this matter cannot be established at this time, this matter currently represents a general contingent liability for the company.
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Further, from time to time, communities and non-governmental organisations challenge our environmental licences and related applications because of concerns regarding potential health and environmental impacts associated with Sasol's activities.
The South African National Environmental Management: Air Quality Act prescribes minimum emission standards, applicable to existing plants which had to be complied with starting on 1 April 2015. Some parts of our operating units in South Africa were not able to comply with the minimum emission standards, and accordingly, applied for postponements. On 24 February 2015, the Department of Environment, Forestry and Fisheries issued the postponement decisions. In those instances where Sasol was granted compliance extensions for less than the five years it initially requested, Sasol received further postponements. Sasol continues to operate under atmospheric emission licences that incorporate these postponement decisions.
More stringent minimum emission standards, applicable to existing plants are required to be complied with starting on 1 April 2020. Some parts of our operating units in South Africa will not be able to comply with these and therefore in March 2019 Sasol submitted applications for postponements on the timeframe to comply with the more stringent minimum emission standards. It is uncertain whether these further postponement applications will be granted or whether they will be challenged by third parties and if so, whether any decisions granted in respect thereof can always be successfully defended. In the case of a postponement decision being declared invalid, the consequences for Sasol may be material as operating units may be found in non-compliance with the aforementioned Air Quality Act and the associated atmospheric emission licence. Sasol needs to make substantial investment to meet minimum emissions standards requirements.
Competition law compliance
Sasol continuously evaluates its compliance programmes and controls in general, including its competition law compliance programme and controls. As a consequence of these compliance
programmes and controls, including monitoring and review activities, Sasol has adopted appropriate remedial and/or mitigating steps, where necessary or advisable, lodged leniency applications, and made and will continue to make disclosures on material findings as and when appropriate. These ongoing compliance activities have already revealed, and may still reveal, competition law contraventions or potential contraventions in respect of which we have taken, or will take, appropriate remedial and/or mitigating steps including lodging leniency applications.
Environmental orders
To ensure our ongoing compliance with air quality regulations in South Africa, Sasol applied for certain postponements to manage our short-term challenges relating to the compliance timeframes in adhering to the stricter emission standards. We have received confirmation on our initial postponement applications from the National Air Quality Officer, which are reflected in our atmospheric emission licences ("AEL"). Where shorter postponements were granted initially, applications have subsequently been made by our Secunda Synfuels, Sasolburg and Natref operations and further extensions until 2020 have been received to enable the progression of our committed environmental roadmaps. These extensions and associated conditions, which include stretched targets, are included in the relevant varied AELs under which we now operate. In March 2019, Sasol submitted applications for postponements on the timeframe to comply with certain of the more stringent minimum emission standards which will come into effect on 1 April 2020. These applications are currently with the Department of Environment, Forestry and Fishing for decision making.
Sasol's commitment remains to re commission the Sasolburg incinerators only if compliance with the applicable various emission limits can be sustained. Both our Sasolburg and Secunda Synfuels operations are engaging with their respective local licensing authorities with regards to the renewal of their AELs. Sasol's environmental obligation accrued at 30 June 2019
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was R18 742 million compared to R14 933 million at 30 June 2018. Included in this balance is an amount accrued of R4 924 million in respect of the costs of remediation of soil and groundwater contamination and similar environmental costs. These costs relate to the following activities: site assessments, soil and groundwater clean-up and remediation, and on-going monitoring. Due to uncertainties regarding future costs, the potential loss in excess of the amount accrued cannot be reasonably determined.
Although Sasol has provided for known environmental obligations that are probable and reasonably estimable, the amount of additional future costs relating to remediation and rehabilitation may be material to the results of the operations in the period in which they are recognised. We do not expect these environmental obligations to have a material effect on the financial position of the group.
Regulation
The South African government has, over the past 20 years, introduced a legislative and policy regime with the imperative of redressing historical social and economic inequalities, as stated in the Constitution of the Republic of South Africa, by way of the empowerment of historically disadvantaged South Africans (HDSAs) in the areas of ownership, management and control, employment equity, skills development, procurement, enterprise development and socioeconomic development.
The majority of our operations are based in South Africa, but we also operate in numerous other countries throughout the world. In South Africa, we operate coal mines and a number of production plants and facilities for the storage, processing and transportation of raw materials, products and wastes related to coal, oil, chemicals and gas. These facilities and the respective operations are subject to various laws and regulations that may become more stringent and may, in some cases, affect our business, operating results, cash flows and financial condition.
Our business activities in South Africa relating to coal mining, petroleum production, distribution and marketing of fuel products,
electricity and gas are subject to regulation by various government departments and independent regulators. Refer to "Item 3.DRisk factors" for details on particular aspects of regulations affecting our business activities.
Empowerment of historically disadvantaged South Africans
Black Economic Empowerment policies and legislation
Broad-Based Black Economic Empowerment Act, 53 of 2003 (B-BBEE Act)
Sasol is well aligned with the economic transformation and sustainable development objectives embodied in the South African legislative and regulatory framework governing Broad-Based Black Economic Empowerment (B-BBEE). The key elements of this framework are the B-BBEE Act and the Codes of Good Practice (the new Codes were gazetted on 11 October 2013 and promulgated on 1 May 2015 and further amended during May 2019) for B-BBEE issued by the Minister of Trade and Industry in terms of the Act (Codes), as well as the Charters (i.e. the Mining Charter and Liquid Fuels Charter) adopted by the various sectors within which Sasol operates businesses and the related scorecards.
Transformation is an essential part of the group's strategy, and thus our B-BBEE framework and plans have been developed to ensure that measurable progress is made towards sustainable economic transformation. Our approach is intrinsically collaborative and the business works together with all of our stakeholders: customers, partners, suppliers and the public sector, including government. Our approach to transformation is thus much more than just meeting targets and we are committed to constant evaluation of our achievements, as well as tackling challenges and leveraging new opportunities.
Sasol continues to support the goals of the National Development Plan (NDP) 2030, B-BBEE, Employment Equity and Skills Development Acts. Sasol supports the broader objectives of skills development and has been a significant contributor to skills development and in turn socioeconomic development in South
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Africa over the years. Through various management training programmes, Sasol has notably built a pipeline of black managers who are moving from junior management to senior management positions and have made strides in this area. Furthermore, Sasol provides support to small, medium and micro-sized enterprises (SMMEs) which includes loan funding to majority black-owned suppliers through the Sasol Siyakha Enterprise and Supplier Development Fund and business development and incubation support through our Sasol Business Incubator located in Sasolburg. Sasol further implemented the Economic Transformation strategy with the aim of transforming the supplier base which will contribute to the objectives set by the B-BBEE Codes. For Sasol to effectively deliver economic transformation and maximise impact on the communities surrounding our operations a decision was taken to be more "beneficiary centric", focusing on shared value rather than solely on shareholder value. The aim is to provide tailor-fit support to beneficiaries, sufficiently addressing their needs. This will ensure that beneficiaries are Sasol-ready, successfully transitioning into the Sasol supply chain and operations. The primary support through the Enterprise and Supplier Development function will enable sustainable development of beneficiaries while enabling beneficiaries to mature from the delivery of low complex goods and services to more complex goods and services. Sasol plans to deliver on this by simplifying its processes and accelerating the development of small transformed businesses. This is expected to result in expanded job opportunities; contribution to the reduction of community unrest; skills transfer and ensuring the suppliers are able to operate independently and do not depend only on Sasol for their business survival. Being a credible corporate citizen and member of the communities in which we operate is at the core of our approach to our socioeconomic development contribution. As a result, we have realigned our social investments towards programmes that enable access to quality education; stimulate local economic development and job creation; bolster the pool of technical, vocational and science, technology, engineering and mathematics-related skills; facilitate collaboration to advance the
delivery of municipal services; and promote the protection of the environment.
Our most recent certification issued in September 2018 puts us at a contributor status of level 4 and represents a key milestone in our transformation efforts, with year-on-year improvements once again being realised across most pillars of the scorecard as we aim to achieve at least a level 3 rating by 2025.
Sasol continues to entrench transformation within the organisational culture, enhancing its commitment as a corporate citizen.
Sasol Khanyisa transaction
In 2017, Sasol announced a new B-BBEE ownership transaction (the "Sasol Khanyisa Transaction", or "Sasol Khanyisa"), structured to comply with the revised B-BBEE legislation in South Africa.
Sasol Khanyisa was approved by the Sasol shareholders in November 2017 and was implemented in phases from March 2018. Sasol Khanyisa is a new and separate transaction and did not remove or modify the rights of the participants under the terms of the Sasol Inzalo transaction. As equity ownership is a critical pillar of the B-BBEE legislation and as Sasol Inzalo was coming to an end, Sasol Khanyisa was implemented to ensure continued compliance with the legislation. By implementing the Sasol Khanyisa transaction, the company sought to ensure on-going and sustainable B-BBEE ownership credentials.
The participants of the original Sasol Inzalo transaction and qualifying black employees (including those who participated in Sasol Inzalo) were invited to participate in Sasol Khanyisa.
Sasol Khanyisa has certain elements structured at a subsidiary level, namely Sasol South Africa Limited ("SSA"which was a wholly-owned subsidiary of Sasol before the effective date of Sasol Khanyisa), which houses the majority of the South African operations of Sasol. If the transaction conditions are fulfilled, ownership by participants in SSA at the end of the transaction will be exchanged for Sasol BEE ordinary shares in Sasol Limited based on the
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relative value of the SSA and Sasol BEE ordinary shares at the time of the exchange.
The accounting recognition and measurement principles applied to the Sasol Khanyisa transaction are the same as those applied to the Sasol Inzalo transaction, as the substance of both transactions was the same. Based on the underlying assumptions made by Sasol, the total IFRS 2 charge associated with Sasol Khanyisa is R6,5 billion over the life of the transaction, of which R952 million was recognised in 2019 (2018R3 billion).
The final element of the Sasol Inzalo transaction reached maturity in September 2018 with the repurchase by Sasol Limited of the entire shareholding of Sasol Inzalo Public (RF) Limited in Sasol Limited, comprising Sasol Preferred Ordinary Shares. The Sasol Inzalo transaction has accordingly been unwound. Refer to "Item 18Financial StatementsNote 35Share-based payment reserve" for further information.
With the implementation of Sasol Khanyisa, approximately 18,4% direct black ownership in SSA now exists, which, together with black ownership at Sasol Group level, translates into at least 25% black ownership credentials at SSA level (for purposes of measuring black ownership credentials under the current B-BBEE legislation).
The Mining Charter
The Broad-Based Black Economic Empowerment Charter for the South African Mining and Minerals Industry (Mining Charter) requires mining companies to meet various criteria intended to promote meaningful participation in the industry of HDSAs. The various iterations of the Mining Charter have been the subject of much legal disagreement between industry and the government, most particularly on the issue of equity ownership of mining companies.
The Department of Mineral Resources and Energy argues that holders of mining rights should ensure that their BEE ownership levels are at least 26%, and top them up perpetually should they fall below this level. The industry groups have argued that once a company has secured
mining rights based on its compliance with this requirement, it should not be required to conclude any further transactions to restore its BEE ownership back to 26%.
The revised 2018 Mining Charter that was published on 26 September 2018 is unlike the first two iterations of the charter as it details the ownership requirements for the mining industry. One of the major changes of the Charter is the requirement to increase black ownership to 30% from 26% when mining leases are renewed and on the transfer of mineral rights.
The principle of 26% B-BBEE shareholding remains for existing mining right holders. Applications for mining rights that are pending at the effective date of the 2018 Mining Charter will still be subject to the 26% B-BBEE shareholding requirement, but such mining right holders will then have to increase it to 30% within five years.
Amendments to the Mining Charter as well as the Mining Charter Guidelines were published in the Government Gazette on 19 December 2018. The most significant amendment is that the Mining Charter is effective as of 1 March 2019 and the first report is due on or before 31 March 2020. Stakeholders are required to submit compliance plans by August 2019.
In recent developments, the Minerals Council of South Africa has filed an application for a judicial review of the gazetted Mining Charter, citing problems with certain clauses and the fact that past deals were not sufficiently recognised.
We are considering the revised Mining Charter and will make representations to the Department of Mineral Resources and Energy if necessary.
The Mineral and Petroleum Resources Development Amendment Bill
The South African Minister of Mineral Resources has withdrawn the Mineral and Petroleum Resources Development Amendment Bill (the MPRDA Bill) from Parliament with the intent to separate the oil and gas matters from mining. It is anticipated that the oil and gas matters will be dealt with in a "Petroleum Bill" and will be introduced to the sixth Parliament in June 2019. The legislative process is still ongoing.
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The MPRDA Bill, now with a mining focus, contains certain provisions that may have a material negative effect on the mining industry. These include elevating the Codes of Good Practice for the South African Minerals Industry, the Housing and Living Conditions Standards for the Mineral Industry and the Amended Broad-Based Socio Economic Empowerment Charter for the South African Mining and Minerals Industry to the status of legislation without such documents having followed the normal route to create legislation. Another potential negative material effect on the mining industry is linked to the obligation for mining companies to sell a certain percentage of their production to local beneficiaries at a so-called "mine gate price" which will most likely be lower than the price at which the producer can sell the minerals in the open market.
The Liquid Fuels Charter
The Liquid Fuels Charter (the Charter) requires liquid fuels companies, including Sasol Oil, to ensure that HDSAs hold at least 25% equity ownership in the South African entity holding their operating assets by the end of a period of 10 years from the date of the signing of the Charter.
In order to meet this equity ownership objective, Sasol Limited entered into a BEE transaction with an HDSA-owned company, Tshwarisano LFB Investment (Pty) Ltd (Tshwarisano), in terms of which Sasol disposed of 25% of its shareholding in Sasol Oil to Tshwarisano. With effect from 1 July 2006, Sasol Oil met the 25% BEE ownership target, with Tshwarisano holding 25% of the shares in Sasol Oil in line with the Charter.
Tshwarisano's shareholding is fully unencumbered after it settled the last of its debt relating to its equity shareholding in February 2016.
The Charter further provides for the evaluation by the Department of Mineral Resources and Energy, from time to time, of the industry's progress in achieving the objectives of the Charter. The Department of Mineral Resources and Energy in concurrence with the Department of Trade and Industry initiated a
process to establish a Sector Charter (Petroleum and Liquid Fuels Sector Charter) in terms of section 12 of the B-BBEE Act. The outcome or potential effect of this process on Sasol cannot be assessed at this time.
The Restitution of Land Rights Act, 22 of 1994
Our privately held land could be subject to land restitution claims under the Restitution of Land Rights Act, 22 of 1994. Under this act, any person who was dispossessed of rights to land in South Africa as a result of past racially discriminatory laws or practices is granted certain remedies, including, but not limited to the restoration of the land claimed with or without compensation to the holder.
Mining rights
Sasol Mining is the holder of mining rights in terms of the Mineral and Petroleum Resources Development Act, 2002, in respect of its operations in the Mpumalanga and Free State provinces in South Africa.
In respect of the Secunda mining complex in Mpumalanga, Sasol Mining has four mining rights situated within the Bethal, Secunda, Highveld Ridge, Balfour and Standerton magisterial districts. These mining rights are valid for periods between 20 and 30 years.
Coal mining activities in the Free State province near the town of Sasolburg are conducted by virtue of Sasol Mining holding a mining right which is valid until 2040.
Safety, health and environment
Regions in which Sasol operates and their applicable legislation
South Africa
The major part of our operations is located in South Africa. We operate a number of plants and facilities for the manufacture, storage, processing and transportation of chemical feedstock, products and wastes. These operations are subject to numerous laws and regulations relating to safety, health and the protection of the environment.
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Environmental regulation
The Constitution of the Republic of South Africa (the Constitution) contains the underlying right which must be given effect to by environmental legislation in South Africa. The South African National Environmental Management Act, 107 of 1998 is therefore the framework act which primarily aims to give effect to the Constitutional environmental right. It also underpins specific environmental management acts, such as the National Environmental Management: Waste Act, 59 of 2000 (National Environment Management: Waste Act), the National Water Act, 36 of 1998, and the National Environmental Management: Air Quality Act, 39 of 2004 which all, in turn, regulate specific environmental media and the associated regulation of potential impacts thereon. The National Environmental Management: Waste Act also specifically regulates the process for management of contaminated land. These Acts also provide for enforcement mechanisms as well as provisions for the imposition of criminal sanction. These also apply to mining activities.
Apart from South Africa's international commitments, the country's climate change mitigation regulation is still being developed. Sasol continues to engage with the government on the development of the Climate Change Bill as well as the imposition of mandatory carbon budgets. Sasol's engagement focuses on the need for alignment of mitigation instruments in an effort to create long-term policy certainty. Although not mandatory, Sasol is participating in the first phase of the carbon budget process and has received and agreed to the carbon budget allocated to it, which is in place until 2020. The National GHG Emission Reporting Regulations and the National Pollution Prevention Plan Regulations were promulgated in April and June 2017 respectively. Sasol has accordingly submitted its GHG data and its pollution prevention plans have been approved. The Carbon Tax Act No 15 of 2019 was signed into law in May 2019 and came into effect on 1 June 2019.
For information regarding our challenges associated with these regulatory requirements refer to "Item 3.DRisk factors".
Health and safety
Occupational health and safety is governed by the Occupational Health and Safety Act, 85 of 1993 and the Mine Health and Safety Act, 29 of 1996 for compensation of employees who suffer occupationally related diseases or injuries. Specific requirements for chemicals and hazardous substances are regulated by the Hazardous Substances Act, 15 of 1973.
Germany and Italy
In Germany and Italy, we operate a number of plants and facilities for the manufacture, storage, processing and transportation of chemical feedstock, products and waste. These operations are subject to numerous laws and ordinances relating to safety, health and the protection of the environment. The objectives and requirements of these legal frameworks are largely consistent with that of the South African framework, although more established and pervasive in some respects.
Hazardous substances
Provisions for the protection of humans and the environment against the harmful effects of hazardous substances and preparations are provided in the Chemicals Act, and related ordinances on the Prohibition of Certain Chemicals and Hazardous Incidents. All hazardous substances are subject to the requirements of the European Union (EU) Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation, including requirements for registration and notification obligation before these substances can be brought onto the market. Hazardous substances and mixtures must be classified, labelled and packed in accordance with the EU classification, labelling and packaging regulation. Further regulations prohibiting and limiting manufacture, marketing and use also apply.
United States
In the US, we operate a number of plants and facilities for the storage and processing of chemical feedstock, products and wastes. Sasol's US operations and growth projects are subject to numerous laws, regulations and ordinances relating to safety, health and the protection of the
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environment. The essential objectives of these legal frameworks are largely consistent with that of the South African framework, although regulatory and permitting requirements are more established and entrenched in some respects.
Regulation relating to climate change in the US at the federal level is currently uncertain given the US political climate, but climate change policy continues to be developed at the state level, and to some extent, through the judicial system. However, the US political climate and current administration have not materially diminished environmental regulation and enforcement, particularly with respect to air quality. Our operations in the US remain regulated at the federal, state, and local level relating to health, safety, environment, and community impact. In the US, we anticipate continuing to respond in part to the regulatory environment through existing systems and control technology as well as through efficiency and control technology reviews and improvement opportunities where appropriate.
Hazardous substances are, in particular, regulated by a standard that incorporates the requirements of the Globally Harmonised System for classification and labelling of chemicals into occupational health and safety legislations. Chemical manufacturers and importers are required to evaluate the hazards of the chemicals they produce or import, and prepare labels and safety data sheets to convey the hazard information to their downstream customers.
Canada
The British Columbia (BC) Petroleum and Natural Gas Act and Environmental Management Act are the primary sources of regulatory controls over our natural oil and gas-producing areas in Canada. The acts and supporting legislation are administered by the BC Oil & Gas Commission to regulate the oil and gas industry and ensure public safety, environmental protection, conservation of petroleum resources and equitable participation in production. Regulations aimed at achieving methane reductions have recently been published.
In late 2016, the Canadian federal government announced a national carbon price
programme requiring all provinces and territories to have carbon pricing initiatives in effect by 2018 at a minimum of CAD10/tonne of CO2 equivalent emissions, to increase by CAD10/tonne annually until they reach CAD50/tonne in 2022. The introduction of the national carbon price programme is having a relatively minor financial impact on Sasol's Canadian operations.
Mozambique
A National Environmental Policy (Resolution 5/1995, of 3 August) is the government document outlining the priorities for environmental management and sustainable development in Mozambique, including the required legal framework. The Environmental Law (Law 20/1997, of 1 October as amended by Law 16/2014, of 20 June) provides a legal framework for the use and correct management of the environment and its components and to assure sustainable development in Mozambique. The Regulations on Environmental Impact Assessment (Decree 54/2015, of 31 December) set forth the procedures applicable for the granting of environmental licences.
The Environmental Regulations for Petroleum Operations (Decree 56/2010, of 31 December) apply to petroleum operations including exploration, development, production, transport, storage and marketing of petroleum products.
Regulations on Environmental Quality and Emission Standards (Decree 18/2004, of 2 June as amended by Decree 67/2010, of 31 December) aim to establish the standards for environmental quality and for effluents release in order to assure the effective control and maintenance of the admissible standards of concentration of polluting substances on the environmental components. This is supplemented by specific regulations on solid waste and water quality management.
The Petroleum Act (Law 21/2014, of 18 August) and the Petroleum Operations Regulations (Decree 34/2015, of 31 December) require holders of exploration and production rights to conduct petroleum operations in compliance with environmental and other applicable legislation. The law makes provision for compensation to be paid under general legislation
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by the holder of a right to conduct petroleum operations to persons whose assets are damaged. The law establishes strict liability for the holder of the right who causes environmental damage or pollution.
Gabon
The primary legislation in Gabon governing oil and gas activities is the Hydrocarbon Law (Law No. 02/2019) which was published in the Gabonese Official Journal on 22 July 2019. This establishes a new regime governing hydrocarbons exploration, exploitation and transportation activities, in compliance with environmental and other applicable legislation. Existing production sharing contracts remain in force until their expiry and will remain governed by the previous law (Law No. 14/1982), with the exception of a limited number of additional obligations such as a natural gas flaring prohibition. At this point in time, any risks and impact on Sasol cannot be finally assessed.
The Economic and Monetary Community of Central Africa, known as CEMAC and which includes Gabon, has issued Foreign Exchange Regulation No. 02/18-CEMAC-UMAC which is due to come into effect on 1 September 2019. This regulation allows the CEMAC Central Bank (BEAC) to take measures to restore reserves in foreign exchange currency including restrictions on foreign currency bank accounts in and outside CEMAC and limits a company's ability to enter into loans, import / export services and assets and make investments. Fines for breach are extremely severe being up to 50% of the company's assets. We are working with industry to try to lobby the IMF, CEMAC and BEAC to obtain an extension to the 1 September 2019 deadline and to seek an exemption for the oil and gas industry.
Other countries
In a number of other countries, we are engaged in various activities that are impacted by local and international laws, regulations and treaties. In China and other countries, we operate plants and facilities for the storage, processing and transportation of chemical substances, including feedstock, products and waste. In the United Arab Emirates, Nigeria and other
countries, we are involved, or are in the process of becoming involved, in exploration, extraction, processing or storage and transportation activities in connection with feedstock, products and waste relating to natural oil and gas, petroleum and chemical substances.
In Qatar, we participate in a joint venture owning and operating a GTL facility involving the production, storage, marketing and transportation of GTL diesel, GTL naphtha and LPG. These operations are subject to numerous laws and ordinances relating to safety, health and the protection of the environment.
Our operations in the respective jurisdictions are subject to numerous laws and regulations relating to exploration and mining rights and the protection of safety, health and the environment.
4.C Organisational structure
Sasol Limited is the ultimate parent of the Sasol group of companies.
SSA, a subsidiary of Sasol and a company incorporated in South Africa, primarily holds our operations located in South Africa. A number of other subsidiaries incorporated in South Africa, including Sasol Oil (Pty) Ltd, Sasol Mining Holdings (Pty) Ltd, Sasol Gas (Pty) Ltd, Sasol Middle East and India (Pty) Ltd and Sasol Africa (Pty) Ltd, also hold our interests in operations in South Africa, other parts of Africa and the Middle East. Sasol Financing Limited, responsible for the management of cash resources and investments, is wholly owned and incorporated in South Africa.
Our wholly owned subsidiary, Sasol Investment Company (Pty) Ltd, a company incorporated in South Africa, primarily holds our interests in Sasol group companies incorporated outside of South Africa, including Sasol European Holdings Limited (United Kingdom), Sasol Wax International GmbH (Germany), Sasol (USA) Corporation (US), Sasol Financing USA Ltd, Sasol Holdings (Asia Pacific) (Pty) Ltd (South Africa), Sasol Chemical Holdings International (Pty) Ltd (South Africa), Sasol Canada Holdings Limited (Canada) and their respective subsidiaries.
See Exhibit 8.1 for a list of our significant subsidiaries and significant jointly controlled entities.
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4.D Property, plants and equipment
Refer to "Item 18Financial StatementsNote 17 Property, plant and equipment" for further information regarding our property, plant and equipment.
Mining
Coal mining facilities
Our main coal mining facilities are located at the Secunda Mining Complex, which consists of underground collieries (Bosjesspruit; Brandspruit; Impumelelo; Middelbult; Shondoni shaft; Syferfontein; and Twistdraai Thubelisha) and the Sigma complex consisting of the Mooikraal colliery near Sasolburg.
For detail regarding the cost of the assets in our coal mining facilities, refer to the segmental information contained in "Item 18Financial StatementsNote 17 Property, plant and equipment".
A map showing the location of our coal properties and major manufacturing plants in South Africa is shown on page M-1.
Mining operates six mines for the supply of coal to the Secunda Synfuels Operations, Sasolburg Operations (utility coal only) and the external market. The annual production of each mine, the primary market to which it supplies coal and the location of each mine are indicated in the table below:
|
|
|
|
Production
(Mt)(3) |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
Nominated
capacity per year (Mt)(2) |
||||||||||||||
Colliery
|
Location | Market | 2019 | 2018 | 2017 | ||||||||||||
Bosjesspruit |
Secunda | Secunda Synfuels Operations | 6,3 | 4,9 | 5,7 | 6,1 | |||||||||||
Brandspruit(5) |
Secunda | Secunda Synfuels Operations | | 0,5 | 2,3 | 2,8 | |||||||||||
Impumelelo(5) |
Secunda | Secunda Synfuels Operations | 6,8 | 4,8 | 3,2 | 2,2 | |||||||||||
Middelbult, Shondoni shaft |
Secunda | Secunda Synfuels Operations | 8,0 | 7,1 | 6,9 | 6,5 | |||||||||||
Syferfontein |
Secunda | Secunda Synfuels Operations | 11,0 | 10,1 | 10,5 | 10,9 | |||||||||||
Twistdraai Thubelisha |
Secunda | Export/Secunda Synfuels Operations(1) | 9,7 | 8,7 | 8,8 | 7,9 | |||||||||||
Sigma : Mooikraal |
Sasolburg | Sasolburg Operations | 1,9 | 1,4 | 1,4 | 1,2 | |||||||||||
| | | | | | | | | | | | | | | | | |
|
37,5 | 38,8 | 37,6 | ||||||||||||||
| | | | | | | | | | | | | | | | | |
Production tons per continuous miner (mining production machine) per shift including off-shift production(4) (t/cm/shift) |
1 191 | 1 161 | 1 147 | ||||||||||||||
| | | | | | | | | | | | | | | | | |
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Processing operations
Coal export businessSecunda operations. We started the coal export business in August 1996. Run of mine coal is sourced from Twistdraai Thubelisha Colliery (nominated capacity 9,7 Million tons (Mt)). The export beneficiation plant has a design throughput total capacity of 10,5 Mt per annum. In 2019, we produced 8,7 Mt from Twistdraai Thubelisha Colliery; of which we beneficiated 8,5 Mt, and 0,2 Mt was bypassed to Sasol Coal Supply.
The run of mine (ROM) coal is transported via an overland conveyor belt to the export beneficiation plant from the Twistdraai Thubelisha Colliery. The export product is loaded onto trains by means of a rapid load-out system, and then transported to the Richards Bay Coal Terminal (RBCT) in KwaZulu-Natal.
Mining has a 4,2% shareholding in RBCT, which corresponds to the existing entitlement of 3,6 Mt per year. Actual export volumes for 2019 were 3,2 Mt. For the foreseeable future, we anticipate exports of approximately 3,3 Mt per year.
Sasol Coal SupplySecunda Operations. Sasol Coal Supply operates the coal handling facility between Mining and Secunda Synfuels Operations by stacking and blending coal on six live stockpiles. The overland conveyors from the mining operations to the coal handling facility are, in total, approximately 100 kilometres (km) long and also form part of the Sasol Coal Supply operation.
The operation has a live stockpile capacity of 720 000 tons, which is turned over around 1,2 times per week. In addition, there is a targeted strategic stockpile capacity of more than 2,0 Mt. The objectives of this facility are:
The daily coal supply to Secunda Synfuels Operations is approximately 109 000 tons.
Coal exploration techniques
Mining's geology department employs several exploration techniques in assessing the geological risks associated with the exploitation of the coal deposits. These techniques are applied in a mutually supportive way to achieve an optimal geological model of the relevant coal seams, targeted for production purposes. The Highveld Basin is considered to be structurally complex when compared to the other coalfields in South Africa where mining activities take place. As a result, Mining bases its geological modelling on sufficient and varied geological information. This approach is utilised in order to achieve a high level of confidence and support to the production environment.
Core recovery exploration drilling. This is the primary exploration technique that is applied in all exploration areas, especially during reconnaissance phases. In and around operational mines, the average vertical borehole density varies from 1:10 to 1:15 (boreholes per hectare), while in medium-term mining areas, the average borehole density is in the order of 1:25. Depths of the boreholes drilled vary, depending on the depth to the Pre-Karoo basement, from 160 metres (m) to 380 m. The major application of this technique is to locate the coal horizons, to determine coal quality and to gather structural information about dolerite dykes and sills, and the associated de-volatilisation and displacement of coal reserves. This information is used to compile geological models and forms the basis of geological interpretation.
Directional drilling. Directional drilling from surface to in-seam has been successfully applied for several years. A circular area with a radius of approximately 1,4 km of coal deposit can be covered by this method from one drill site. The main objective of this approach is to locate dolerite dykes and transgressive dolerite sills, as well as faults with displacements larger than the coal seam thickness.
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Horizontal drilling. This technique is applied to all operational underground mines and supplies short-term (minimum three months) exploration coverage per mining section. No core is usually recovered, although core recovery is possible, if required. The main objective is to locate dolerite dykes and transgressive sills intersecting the coal mining horizon, by drilling horizontal holes in the coal seam from a mined out area. A drilling reach of up to 1 km is possible, although the average length is usually 800 m in undisturbed coal.
Aeromagnetic surveys. Many explorations are usually aero-magnetically surveyed before the focused exploration is initiated. The main objective is to locate magnetic dolerite sills and dykes, as well as large-scale fault zones.
Geophysical wireline surveys of directional boreholes. Geophysical surveys are routinely conducted in the completed directional drilled boreholes. This results in the availability of detailed information leading to increased confidence of the surface directional drilling results.
Secunda operations
The coal supplied to Secunda Synfuels Operations is the raw coal mined from the four mines supplying Secunda Synfuels Operations exclusively and the secondary product from the export beneficiation plant.
We have carried out extensive geological exploration in the coal resource areas, and undertake additional exploration to update and refine the geological models. This allows for accurate forecasting of geological conditions and coal qualities, and also effective planning and utilisation of coal reserves.
Computation and storage of geological information
We store geological information in the acQuire database. We conduct regular data validation and quality checking through several in-house methods. Data modelling is conducted by manual interpretation and computer-derived geological models, using the Minex 6 edition of
the GEOVIA/ MINEX software. Reserves and composite qualities are computed using established and recognised geo-statistical techniques.
General stratigraphy
The principal coal horizon, the Number 4 Lower Coal Seam, provides some 91,81% (201891,72%) of the total proved and probable reserves. The Number 4 Lower Coal Seam is one of six coal horizons occurring in the Vryheid Formation of the Karoo Supergroup, a permo-carboniferous aged, primarily sedimentary sequence. The coal seams are numbered from the oldest to the youngest.
The Number 4 Lower Coal Seam is a bituminous hard coal, characterised by the following borehole statistics:
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The other potential coal seam is:
Reserve estimation (remaining reserves at 31 March 2019)
We have approximately 4,0 billion tons (Bt) (20184,2 Bt) of gross in situ proved and probable coal reserves in the Secunda Deposit and approximately 1,3 Bt (20181,4 Bt) of recoverable reserves. The coal reserve estimations are set out in table 1 that follows. Reported
reserves will be converted into synthetic oil reserves, except for reserves which will be used for utilities in Secunda Synfuels Operations and the majority of the Twistdraai Thubelisha reserves which will be exported. The reserve disclosure in this section includes Mining's total coal resources and reserves available for mining operations in Secunda. These reserves have not been adjusted for the synthetic oil reserves reported in the supplemental oil and gas information. The different reserve areas are depicted on the map on page M-1, as well as whether a specific reserve area has been assigned to a specific mine.
Table 1.
Coal reserve estimations(1) as at 31 March 2019, in the Secunda area where we have converted mining rights (signed on 29 March 2010) in terms of the Mineral and Petroleum Resources Development Act, Act 28 of 2002.
Reserve area
|
Gross in
situ coal resource(2) (Mt)(5) |
Geological
discount (Mt)(5) |
Mine
layout losses (Mt)(5) |
Extraction
rate (%) |
Recoverable
reserves(3) (Mt)(5) |
Beneficiated
yield(4) (%) |
Proved/
probable |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Middelbult mine, number 4 seam |
619 | 84 | 148 | 48 | 201 | 100 | Proved | |||||||||||||
Middelbult mine, number 2 seam |
61 | 12 | 6 | 41 | 19 | 100 | Probable | |||||||||||||
Bosjesspruit mine |
186 | 7 | 81 | 45 | 64 | 100 | Proved | |||||||||||||
Bosjesspruit mine |
71 | 3 | 25 | 45 | 33 | 100 | Probable | |||||||||||||
Syferfontein mine |
866 | 152 | 138 | 48 | 265 | 100 | Proved | |||||||||||||
Syferfontein mine |
| | | | 16 | 100 | Probable | |||||||||||||
Twistdraai Thubelisha mine |
629 | 117 | 64 | 56 | 260 | P34,S37 | Proved | |||||||||||||
Impumelelo, Block 2, number 4 seam |
621 | 81 | 125 | 51 | 211 | 100 | Proved | |||||||||||||
Impumelelo, Block 2, number 2 seam |
356 | 53 | 164 | 41 | 45 | 100 | Probable | |||||||||||||
Block 2 South, number 4 seam |
363 | 98 | 48 | 54 | 123 | 100 | Probable | |||||||||||||
Block 2 South, number 2 seam |
133 | 36 | 18 | 54 | 45 | 100 | Probable | |||||||||||||
Block 3 South |
141 | 38 | 19 | 58 | 52 | 100 | Probable | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total Secunda area |
4 046 | 1 334 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
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were certified as correct. The estimation of the proved reserves is compliant with the definition and guidelines as stated in SEC Industry Guideline 7.
Table 2.
Coal qualities, on an air dry basis, in respective coal reserve areas, where Mining has converted mining rights in respect of the Secunda mining complex in terms of the Mineral and Petroleum Resources Development Act, Act 28 of 2002.
Reserve area
|
Wet/dry
tons |
Average
Inherent Moisture Content (%) |
Average
Superficial Moisture Content (%) |
Assigned/
unassigned |
Steam/
metallurgical coal |
Heat
Value (air dry) basis MJ/kg |
Sulphur
(air dry basis) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Middelbult mine |
Wet | 4,3 | n/a | Assigned | Steam | 21,0 | 0,9 | |||||||||||
Bosjesspruit mine |
Wet | 3,9 | n/a | Assigned | Steam | 19,9 | 0,8 | |||||||||||
Syferfontein mine |
Wet | 5,2 | n/a | Assigned | Steam | 21,8 | 0,8 | |||||||||||
Twistdraai Thubelisha mine |
Wet | 4,5 | n/a | Assigned | Steam | 21,1 | 1,1 | |||||||||||
Impumelelo, Block 2, number 4 seam. |
Wet | 3,9 | n/a | Assigned | Steam | 20,6 | 1,3 | |||||||||||
Impumelelo, Block 2, number 2 seam |
Wet | 3,8 | n/a | Assigned | Steam | 20,4 | 0,7 | |||||||||||
Block 2 South, number 4 seam |
Wet | 4,1 | n/a | Unassigned | Steam | 18,2 | 1,2 | |||||||||||
Block 2 South, number 2 seam |
Wet | 3,6 | n/a | Unassigned | Steam | 17,4 | 0,7 | |||||||||||
Block 3 South |
Wet | 3,6 | n/a | Unassigned | Steam | 21,9 | 0,7 |
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Table 3.
Coal qualities, on an as received basis, in respective coal reserve areas, where Mining has converted mining rights in the Secunda mining complex in terms of the Mineral and Petroleum Resources Development Act, Act 28 of 2002.
Reserve area
|
Wet/dry
tons |
Average
Inherent Moisture Content (%) |
Average
Superficial Moisture Content (%) |
Assigned/
unassigned |
Steam/
metallurgical coal |
Heat
Value (as received) basis MJ/kg |
Sulphur
(as received basis) |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Middelbult mine |
Wet | 4,2 | 4,5 | Assigned | Steam | 19,5 | 0,9 | ||||||||||||
Bosjesspruit mine |
Wet | 3,8 | 4,0 | Assigned | Steam | 18,0 | 0,8 | ||||||||||||
Syferfontein mine |
Wet | 5,2 | 4,1 | Assigned | Steam | 20,8 | 0,8 | ||||||||||||
Twistdraai Thubelisha mine |
Wet | 4,4 | 4,3 | Assigned | Steam | 19,5 | 1,0 | ||||||||||||
Impumelelo, Block 2, number 4 seam |
Wet | 3,9 | 3,6 | Assigned | Steam | 19,4 | 1,3 | ||||||||||||
Impumelelo, Block 2, number 2 seam |
Wet | 3,7 | 3,5 | Assigned | Steam | 19,2 | 0,7 | ||||||||||||
Block 2 South, number 4 seam |
Wet | 4,1 | 3,1 | Unassigned | Steam | 18,0 | 1,1 | ||||||||||||
Block 2 South, number 2 seam |
Wet | 3,6 | 2,7 | Unassigned | Steam | 17,2 | 0,7 | ||||||||||||
Block 3 South |
Wet | 3,4 | 3,6 | Unassigned | Steam | 21,8 | 0,7 |
Criteria for proved and probable
Over and above the definitions for coal reserves, probable coal reserves and proved coal reserves, set forth in Industry Guide 7, promulgated by the US Securities and Exchange Commission, we consider the following criteria to be pertinent to the classification of the reserves:
Probable reserves are those reserve areas where the drill hole spacing is sufficiently close in the context of the deposit under consideration, where conceptual mine design can be applied, and for which all the legal and environmental aspects have been considered. Probable reserves can be estimated with a lower level of confidence than proved coal reserves. Currently this classification results in variable drill spacing depending on the complexity of the area being considered and is generally less than 500 m, although in some areas it may extend to 800 m. The influence of increased drilling in these areas should not materially change the underlying geostatistics of the area on the critical parameters such as seam floor, seam thickness, ash and volatile content.
Proved reserves are those reserves for which the drill hole spacing is generally less than 350 m, for which a complete mine design has been applied which includes layouts and schedules resulting in a full financial estimation of the
reserve. This classification has been applied to areas in the production stage or for which a detailed feasibility study has been completed.
Legal rights on coalfields
Sasol Mining (Pty) Ltd is the holder of various prospecting and mining rights for coal in Mpumalanga and the Free State. These prospecting and mining rights are granted by the State acting as custodian of South Africa's mineral and petroleum resources in accordance with the provisions of the Mineral and Petroleum Resources Development Act, 28 of 2002, as amended.
In respect of the Secunda mining complex in Mpumalanga, Sasol Mining has four mining rights situated within the Bethal, Secunda, Highveld Ridge, Balfour and Standerton magisterial districts. These mining rights are valid for periods of between 20 and 30 years, which allows Sasol Mining to provide a continuous and steady coal supply to Sasol South Africa Limited, which beneficiates the coal into higher value and in most cases, end-line products. Please refer to page M1 for a map of the Secunda mining complex layout.
Coal mining activities in the Free State province near the town of Sasolburg are conducted by virtue of Sasol Mining holding a
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mining right which is valid for 30 years. The coal is mainly used for electricity and steam generation at our Sasolburg operations. Steam is a major component which is required in the production of Sasol's chemical products as well as the refining of oil.
The validity period of Sasol's mining rights may, on application to the Department of Mineral Resources and Energy, be extended for further periods not exceeding 30 years each.
Exploration and Production International (E&PI)
Natural oil and gas operations
Our natural oil and gas operations are managed by our Exploration and Production International (E&PI) business unit. E&PI's principal activities are the exploration, appraisal, development and production of hydrocarbon resources. Currently we hold equity in three producing assets with proved reserves in Mozambique, Gabon and Canada and one non-producing asset in Mozambique. We also have equity in exploration licences in Mozambique, South Africa and Gabon.
In the narrative sections below, unless stated otherwise, all quantitative statements refer to gross figures. The tabular information which follows the narrative provides:
The financial information in these sections has been prepared in accordance with International Financial Reporting Standards in order to ensure consistency between this document and the Annual Financial Statements.
Refer to the "Supplemental Oil and Gas Information" on pages G-1 to G-7 for:
The maps on page M-2 show E&PI's global footprint and the location of our assets and exploration licences.
Mozambique
Licence terms
Development and production
In Mozambique, we have interests in two onshore assets, one of which is producing with proved reserves. The other asset consists of two areas under development and other reservoirs that are being assessed for commerciality.
The producing asset is the Pande-Temane Petroleum Production Agreement (PPA) licence
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(302,2 thousand developed net acres). Our subsidiary Sasol Petroleum Temane Limitada (SPT), the operator, holds a 70% working interest in the PPA. The PPA expires in 2034, and carries two possible five-year extensions. There is no requirement to relinquish any acreage until the expiry of the PPA.
The other asset is the Pande-Temane Production Sharing Agreement (PSA) licence (442,8 thousand undeveloped net acres). Our subsidiary Sasol Petroleum Mozambique Limitada (SPM), the operator, holds a 100% working interest. Under the terms of the current PSA licence, Empresa Nacional de Hidrocarbonetos EP (ENH) as the licence holder is entitled to a profit share of production.
The two PSA development areas covered by development and production periods until 2041 for the oil development (125,9 thousand undeveloped net acres) and 2046 for the gas development (157,3 thousand undeveloped net acres), are being developed in accordance with the Phase 1 field development plan approved by the Mozambican authorities in January 2016. The remaining PSA Pande area (159,6 thousand undeveloped net acres) is covered by a commercial assessment period (CAP) enduring for an initial period of five years with an option for up to two renewals of three years each. The initial period expired in February 2018 and an extension has been agreed for an additional three years.
Exploration
We have interests in two offshore exploration licences, shallow water Blocks 16 & 19 (operated) and Angoche A5-A (non-operated). We also have one operated onshore licence PT5-C.
The offshore shallow water Blocks 16 & 19 which cover 622,7 thousand undeveloped net acres are operated by Sasol through its subsidiary Sasol Petroleum Mozambique Exploration Limitada (SPMEL) with 85% working interest and ENH carried through the exploration period for 15% until field development. Petroleum operations in the licence have been suspended since 2008, pending the outcome of the strategic environmental assessment (SEA), commissioned by the Mozambique government.
In October 2015, the authorities announced the results of the Fifth Mozambique Licensing Round in which our subsidiary SPMEL and our partners were successful. The negotiations for the exploration and production concession contracts (EPCC) were completed and signed in October 2018 with the effective date of 1 January 2019. SPMEL holds a 70% working interest, as operator, in the onshore Pande-Temane Area PT5-C (521,0 thousand undeveloped net acres). It also holds a 25,5% working interest (324,2 thousand undeveloped net acres) in the offshore Angoche Area A5-A, which is operated by Eni Mozambico S.p.A.
Activities
Present activities in the Pande-Temane PPA asset include projects for infill drilling and additional compression that will lower the inlet pressure at the CPF. The first infill well in the Pande field was drilled in April 2018, tested in June 2018 and was brought into operation in December 2018.
Follow-up development projects include additional infill wells and phase three compression at the CPF, necessary to maintain production as the reservoirs deplete and are in accordance with the approved field development plan. This compression project was brought into operation in October 2020.
In the PSA development areas in Inhassoro and Temane (Phase 1 of the PSA Development), nine wells were drilled and completed in 2017 and 2018, in accordance with the drilling programme in the approved field development plan. Recoverable volumes of light oil are now forecast to be around the low end of the range presented in the field development plan, which has required a review of the development programme. Sasol has spent over US$400 million in the current development execution phase and is planning to submit a revision to the field development plan encompassing an integrated oil, gas and LPG development for the whole licence area in 2020.
In the PSA CAP area, two wells were drilled in 2018. One well confirmed gas while the other one did not encounter a hydrocarbon-bearing interval. The development of the PSA CAP area, as well as the small accumulations discovered as
53
part of the development, will be incorporated in the revised field development plan.
Capitalised exploratory well costs
At 30 June 2019, there were no exploratory wells costs capitalised in the Pande-Temane PPA asset or in the A5-A, PT5-C and Blocks 16 & 19 licences.
In the PSA CAP area, exploratory well costs continue to be capitalised for a period greater than one year after the completion of drilling, amounting to US$27,0 million net to Sasol; these costs relate to the exploration drilling activities conducted and completed in 2008, and the follow up activities which continued in 2017, 2018 and 2019.
Facilities and productive wells
Natural gas and condensate is produced from the Pande-Temane PPA asset facilities, at the CPF on a site of approximately 400 000 square metres, located some 700 kilometres north of Maputo, the capital of Mozambique. Production from the Temane and Pande fields, which are managed as a single operational field, is routed from production wells via in-field flowlines and pipelines to the CPF. The design capacity of the CPF is 491 million standard cubic feet per day sales gas together with small amounts of associated condensate.
At 30 June 2019, there were 17 productive wells, down from 21 producing wells in the prior year. Well integrity risks were identified and some wells were shut-in with remediation plans in place for 2020.
Delivery commitments
Gas produced from the Pande-Temane PPA asset, other than royalty gas provided to the Mozambican government, is supplied in accordance with long-term gas sales agreements (GSAs). The gas produced in accordance with GSA1, signed on 27 December 2002 (25 years contract term from 1 April 2004), and GSA2, signed on 10 December 2008 (20 years contract term from 1 January 2010), is sold internally for use as part of the feedstock for our chemical and
synthetic fuel operations and to the external market in South Africa, with a maximum daily quantity equivalent to 132 PJ/a (119,75 bscf/a) and 27 PJ/a (24,49 bscf/a) for GSA1 and GSA2 respectively. There are four GSA3 20-year contracts that supply gas to the Mozambique market. These satisfy a licence condition that a portion of gas produced is utilised in-country. The contracts are with Matola Gas Company S.A from 1 July 2014 for 8 PJ/a (7,26 bscf/a), ENH-Kogas from 1 March 2013 for 6 PJ/a (5,44 bscf/a), Central Termica de Ressano Garcia S.A. from end-February 2015 for 11 PJ/a (9,98 bscf/a) and ENH effective from 1 June 2015 for 2PJ/a (1,81 bscf/a).
Infill drilling and compression projects which will convert proved undeveloped reserves into proved developed reserves in order to meet near-term delivery commitments are under way. During 2018 it was determined that production will nevertheless begin to decline during 2023 and we will no longer be able to supply at currently contracted rates. Technical and commercial options are under consideration to address the matter.
PPA condensate is currently sold to Petróleos de Moçambique, S.A. (Petromoc), which transports the condensate by truck from the CPF for export. The contract expired at the end of June 2019 and after a competitive tendering process, Petromoc was selected as the preferred bidder. The commercial agreements were finalised effective 1 July 2019 for a two year period.
Proved reserves (all quantities are net to Sasol)
Our Mozambique proved reserves are contained in the Pande-Temane PPA asset. These represent the net economic interest volumes that are attributable to Sasol after the deduction of petroleum production tax. The primary sales product for the PPA is natural gas, with minor amounts of associated liquid hydrocarbons.
Changes to proved reserves
There was a reduction of 63,7 billion cubic feet in proved gas reserves due to production offset by revisions of previous estimates.
54
Changes to proved developed reserves
Proved developed gas reserves decreased by 71,1 billion cubic feet to 750,0 billion cubic feet. The decrease was due to production of 113,9 billion cubic feet partially offset by an upward revision of 42,8 billion cubic feet.
Proved undeveloped reserves converted to proved developed reserves
No reserves were converted from undeveloped to developed during 2019.
Changes to proved undeveloped reserves
Proved undeveloped gas reserves were revised upwards by 7,4 billion cubic feet.
Proved undeveloped reserves remaining undeveloped
Proved undeveloped gas reserves, presently estimated to be 196,0 billion cubic feet, have remained undeveloped in the Pande-Temane PPA asset for the last thirteen years. The total proved volume (developed plus undeveloped) represents gas that will be recovered as part of the approved field development plan and which is required to satisfy existing gas sales agreements. In order to optimise the timing of the capital expenditure required to convert undeveloped reserves to developed reserves, E&PI regularly studies production performance and reviews its plan for installation of additional compression and wells. The first infill in the Pande field was brought into operation in December 2018. This will be followed by additional infill wells and phase three compression.
Rest of Africa (outside Mozambique)
Licence terms
Gabon
Development and production
In Gabon, our subsidiary Sasol Gabon S.A. holds a 27,75% working interest in the Etame Marin Permit (EMP) asset, which is a producing asset with proved reserves. VAALCO Gabon S.A. is the operator of the asset, under the terms of the EMP exploration and production sharing
contract. The EMP contract area comprises three exclusive exploration areas (EEAs) namely Etame EEA, Avouma EEA and Ebouri EEA.
The EMP contract terms were renegotiated in September 2018 to align and extend the three EEAs in time. All EEAs were renewed from September 2018 with a duration of 10 years and include two five-year optional extensions. The EEAs were also extended in area as follows:
Exploration
Our subsidiary Sasol Gabon S.A. entered into a farm-in agreement with Perenco Oil & Gas Gabon S.A. for a 40% working interest in the DE 8 permit offshore Gabon (245,7 thousand undeveloped net acres). The farm-in was approved in principle by the government in July 2017 and the corresponding PSC amendment submitted to the authorities was approved in August 2018. In July 2018, the Government granted its approval for the joint venture to enter the third exploration period of the licence, which expires in June 2021 and includes one commitment well.
South Africa
In South Africa, we have an interest in one exploration licence.
Our subsidiary Sasol Africa (Pty) Ltd holds a 60% working interest in the ER236 licence, offshore in the Durban Basin, which is operated by Eni South Africa BV (9 740,3 thousand undeveloped net acres). In April 2019, the operator submitted an application for the second renewal exploration period, which has a mandatory relinquishment of 15% (1 457,2 thousand undeveloped net acres affected). The application submitted to the Petroleum Agency SA (PASA) is pending approval.
55
Activities
Gabon
Development and production
Following the signature of the license amendment in September 2018, current activities include preparing for a drilling programme in 2020 and early stage studies for further development of the field.
Exploration
Geological and geophysical studies focused on reviewing the current inventory of leads and prospects to assess and polarise its associated geological risk in order to rank and identify the best prospect to be drilled by 2021.
South Africa
Exploration
A second 3D seismic survey within the ER236 licence was acquired during April 2018 and data processed in November 2018. An environmental impact assessment for future potential drilling activities in the block was submitted to PASA for approval in 2019, with final authorisation pending.
Capitalised exploratory well costs
There were no exploratory well costs capitalised in Africa outside Mozambique.
Facilities and productive wells
In Gabon, oil is produced from the EMP asset facilities which comprise of four wellhead platforms, subsea flowlines and a floating production, storage and off-loading vessel (FPSO) located some 35 kilometres offshore southern Gabon. Oil from the Etame, Avouma and Ebouri EEA's, managed as a single operational field, is produced by means of a combination of subsea and platform wells, which are connected by pipelines to the FPSO. The FPSO is contracted from and operated by Tinworth Pte. Limited. The processed oil is stored in tanks on the FPSO prior to export by shipping tanker.
At 30 June 2019, there were 12 productive wells from the EMP.
Delivery commitments
The oil produced from the Gabon EMP asset is marketed internationally on the open market and sold under a short-term crude oil sale and purchase agreement (COSPA) that is renewed periodically. The COSPA was re-tendered at the end of 2018 (for the contract period commencing January 2019) and Mercuria Energy Trading SA was the successful buyer. The current COSPA expires on 31 January 2020 and is expected to be further extended or re-contracted as required on terms not dissimilar to the current contract.
Proved reserves (all quantities are net to Sasol)
Our rest of Africa proved reserves are contained in the EMP asset, Gabon. These represent the net economic interest volumes attributable to Sasol after application of the licence terms, including the deduction of royalty. The primary sales product is oil, all gas produced is consumed in operations or flared.
Changes to proved reserves
There was an increase of 0,2 million barrels in proved oil reserves.
Changes to proved developed reserves
Proved developed reserves remained unchanged at 1,8 million barrels. The production of 1,2 million barrels were offset by a 1,2 million barrel revision due primarily to better-than-expected well performance amounting to 0,9 million barrels and also as a result of the licence extension amounting to 0,3 million barrels.
Proved undeveloped reserves converted to proved developed reserves
No reserves were converted from undeveloped to developed during 2019.
Changes to proved undeveloped reserves
There was an increase of 0,2 million barrels to proved undeveloped reserves following approval of the 2020 drilling programme.
56
Proved undeveloped reserves remaining undeveloped
There were 0,2 million barrels proved undeveloped reserves at 30 June 2019.
North America
Licence terms
Canada
In Canada, our subsidiary Sasol Canada Exploration and Production Limited Partnership (SCEP LP), holds a 50% working interest in the Farrell Creek and Cypress A asset located in British Columbia, which is a producing asset with proved reserves. The asset is operated by Petronas Energy Canada Ltd (PECL).
As at 30 June 2019 Farrell Creek comprised 29 licences and leases and Cypress A comprised 21 licences and leases. The Farrell Creek and Cypress A asset covers an area of 18,2 thousand developed net acres and 35,8 thousand undeveloped net acres. Acreage retention and the conversion of licences to leases is enabled by drilling commitments, the provincial government's prescribed lease selection and validation process and licence extension applications.
Activities
Canada
The drilling programme planned for 2019 included the drilling of four wells. As of 30 June 2019 drilling on three wells had finished and one well was suspended. The completion of the three drilled wells is scheduled to be completed in 2020.
Capitalised exploratory well costs
Canada
At 30 June 2019, there were no exploratory well costs capitalised in Canada.
Facilities and productive wells
Natural gas and liquids are produced from the Farrell Creek and Cypress A asset by means of production wells, flowlines, gathering lines and processing facilities. Gas from Farrell Creek wells and Cypress A southern wells is processed through facilities owned by SCEP LP and PECL,
covering a site of approximately 160 000 square metres. Gas from Cypress A northern wells is currently processed and sold through third party production facilities.
At 30 June 2019, there were 157 productive wells.
Delivery commitments
We currently do not have any delivery commitments with customers in Canada. The marketing and sale of natural gas, and the small amount of petroleum liquids, from the Farrell Creek and Cypress A assets is managed on a short-term basis as part of operations.
Natural gas from the Farrell Creek and Cypress A asset is sold into the Western Canada market at two sales hubs. Pricing at each hub is based on the daily realised spot market prices less transportation and marketing fees. Natural gas is delivered to the sales hubs through long-term transportation contracts expiring between 2019 and 2033.
Proved reserves (all quantities are net to Sasol)
Our North America proved reserves are contained in the Canada Farrell Creek and Cypress A asset. These represent the net economic interest volumes that are attributable to Sasol before the deduction of royalties. The primary sales product is natural gas, with minor amounts of associated liquid hydrocarbons.
Full development of the asset will require around 2 200 wells, of which only some 9% have been drilled and completed to date. Reserves are limited to those volumes of gas and associated liquid hydrocarbons attributable to Sasol that are forecast to be produced from productive wells together with wells to be drilled and/or completed in the approved work programme.
Changes to proved reserves
There was a reduction of 21,8 billion cubic feet in proved gas reserves.
Changes to proved developed reserves
Proved developed gas reserves decreased by 25,0 billion cubic feet to 38,2 billion cubic feet.
57
The reduction was due to the combined effects of the production of 16,3 billion cubic feet and a downward revision of 8,7 billion cubic feet largely due to further reduction in natural gas prices and a reassessment of future operating expenditures.
Proved undeveloped reserves converted to proved developed reserves
No reserves were converted from undeveloped to developed during 2019.
Changes to proved undeveloped reserves
Proved undeveloped gas reserves increased by 3,2 billion cubic feet as a result of the approval of the 2019/2020 drilling and completion programme.
Proved undeveloped reserves remaining undeveloped
There were 3,2 billion cubic feet proved undeveloped reserves at 30 June 2019.
Australasia
Licence terms
As of 30 June 2019 we no longer have interests in the Australasian region.
Tabular natural oil and gas information
Developed and undeveloped acreage
The table below provides total gross and net developed and undeveloped acreage for our natural oil and gas assets by geographic area at 30 June 2019.
Natural oil and gas
acreage concentrations at 30 June 2019(3) |
Mozambique(1) |
Rest of
Africa(2) |
North
America(1)(2) |
Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
thousand acres
|
||||||||||||
Developed acreage |
|||||||||||||
Gross |
431,7 | 46,1 | 36,4 | 514,2 | |||||||||
Net |
302,2 | 12,8 | 18,2 | 333,2 | |||||||||
Undeveloped acreage |
|||||||||||||
Gross |
3 191,1 | 16 848,1 | 71,6 | 20 110,8 | |||||||||
Net |
1 910,7 | 9 986,0 | 35,8 | 11 932,5 |
Drilling activities
The table below provides the number of net wells completed in each of the last three years and the number of wells being drilled or temporarily suspended at 30 June 2019.
Number of wells(2) drilled for the
year ended 30 June |
Mozambique |
Rest of
Africa(1) |
North
America(1) |
Australasia(1) | Total | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2017 |
||||||||||||||||
Net development wellsproductive(2) |
| (6) | | 5,0 | | 5,0 | ||||||||||
Net extension wells(5)productive(2) |
6,0 | (6) | | | | 6,0 | ||||||||||
Net stratigraphic test wellsexploratory type(3) |
0,5 | | | 0,4 | 0,9 | |||||||||||
2018 |
||||||||||||||||
Net extension wells(5)productive(2) |
3,0 | (6) | | | | 3,0 | ||||||||||
Net development wellsproductive(2) |
0,7 | (6) | | 0,5 | | 1,2 | ||||||||||
Net stratigraphic test wellsexploratory type(3) |
| 0,4 | | | 0,4 | |||||||||||
Net stratigraphic test wellsdevelopment type(3) |
2,0 | | | | 2,0 | |||||||||||
2019 |
||||||||||||||||
Net exploratory wellsdry(2) |
| | | | | |||||||||||
Net exploratory wellsproductive(2) |
| | | | | |||||||||||
Net extension wells(5)productive(2) |
| | | | | |||||||||||
Net extension wells(5)dry |
| | | | | |||||||||||
Net development wellsproductive(2) |
| | | | | |||||||||||
Net development wellsdry(2) |
| | 0,5 | | 0,5 | |||||||||||
Net stratigraphic test wellsexploratory type(3) |
| | | | | |||||||||||
Net stratigraphic test wellsdevelopment type(3) |
| | | | | |||||||||||
As at 30 June 2019 |
||||||||||||||||
Wells being drilledgross(4) |
| | 3,0 | | 3,0 | |||||||||||
Wells being drillednet(4) |
| | 1,5 | | 1,5 |
Capitalised exploratory well costs
The table below provides details about natural oil and gas capitalised exploratory well costs at the end of the last three years, showing
58
additions, costs charged to expense and costs reclassified.
|
2019 | 2018(1) | 2017 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
|
(Rand in millions)
|
|||||||||
Capitalised Exploratory Well Costs |
||||||||||
Balance at beginning of year |
354,9 | 290,3 | 279,8 | |||||||
Additions for the year |
54,5 | 443,3 | 197,7 | |||||||
Costs incurred |
31,8 | 574,0 | 209,6 | |||||||
Asset retirement obligation adjustments |
22,7 | (130,7 | ) | (11,9 | ) | |||||
Charged to expense for the year |
(34,1 | ) | (346,3 | ) | (189,0 | ) | ||||
Farm down proceeds |
| | | |||||||
Exiting of licences |
| | | |||||||
Costs reclassified to Capital Work in Progress |
| | | |||||||
Translation of foreign entities |
0,1 | (32,4 | ) | 1,8 | ||||||
| | | | | | | | | | |
Balance at end of year |
375,4 | 354,9 | 290,3 | |||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Mozambique | Total | ||||||
---|---|---|---|---|---|---|---|
|
(Rand in millions)
|
||||||
1 to 5 years |
300,0 | 300,0 | |||||
over 5 years |
58,2 | 58,2 | |||||
Number of projects |
1 | (2) | 1 |
Oil and gas production facilities and productive wells
We operate production facilities in Mozambique and have non-operated interests in producing assets in Canada and Gabon.
The table below provides the production capacity at 30 June 2019.
Plant Description
|
Location | Design Capacity | ||
---|---|---|---|---|
Central Processing Facility |
Pande-Temane PPA, Mozambique | 491 MMscf/day gas | ||
Floating, Production, Storage and Offloading facility |
Etame Marin Permit, Gabon |
25 000 bpd oil |
||
Processing Facilities |
Farrell Creek, Canada |
320 MMscf/day gas |
The table below provides the number of productive oil and gas wells at 30 June 2019. A productive well is a producing well or a well that is mechanically capable of production.
Number of productive
wells 30 June 2019 |
Mozambique |
Rest of
Africa(1) |
North
America(1) |
Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Productive oil wells |
|||||||||||||
Gross |
| 12,0 | | 12,0 | |||||||||
Net |
| 3,3 | | 3,3 | |||||||||
Productive gas wells |
|||||||||||||
Gross |
17,0 | | 157,0 | 174,0 | |||||||||
Net |
11,9 | | 78,5 | 90,4 |
Sales prices and production costs
The table below summarises the average sales prices for natural gas and petroleum liquids produced and the average production cost, not including ad valorem and severance taxes, per unit of production for each of the last three years.
Average sale prices and
production costs for the year ended 30 June |
Mozambique |
Rest of
Africa(2) |
North
America(2) |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
(Rand per unit)
|
|||||||||
2017 |
||||||||||
Average sales prices |
||||||||||
Natural gas, per thousand standard cubic feet |
23,0 | | 24,3 | |||||||
Natural liquids, per barrel |
166,1 | 653,2 | 338,7 | |||||||
Average production cost(1) |
||||||||||
Natural gas, per thousand standard cubic feet |
3,2 | | 2,4 | |||||||
Natural liquids, per barrel |
| 389,0 | | |||||||
2018 |
|
|
|
|||||||
Average sales prices |
||||||||||
Natural gas, per thousand standard cubic feet |
24,8 | | 12,8 | |||||||
Natural liquids, per barrel |
337,9 | 822,8 | 492,6 | |||||||
Average production cost(1) |
||||||||||
Natural gas, per thousand standard cubic feet |
5,0 | | 9,8 | |||||||
Natural liquids, per barrel |
| 486,4 | | |||||||
2019 |
|
|
|
|||||||
Average sales prices |
||||||||||
Natural gas, per thousand standard cubic feet |
32,6 | | 13,0 | |||||||
Natural liquids, per barrel |
514,6 | 977,7 | 517,4 | |||||||
Average production cost(1) |
||||||||||
Natural gas, per thousand standard cubic feet |
6,3 | | 11,1 | |||||||
Natural liquids, per barrel |
| 458,6 | |
59
EnergyPlants and facilities
Our facilities in South Africa
Our main manufacturing facilities are located at Secunda Synfuels Operations. Additionally the Natref refinery, based in Sasolburg, is approximately 2,0 km2.
Our interests in facilities in Qatar
ORYX GTL is a gas-to-liquids plant, located at Ras Laffan Industrial City, situated along the northeast coast of Qatar.
Our interests in facilities in Nigeria
EGTL is a gas-to-liquids plant, located at Escravos in the Delta state, part of the Niger Delta region, situated on the South East of Nigeria.
Our interests in facilities in Mozambique
CTRG is a power generation facility, located at Ressano Garcia.
Transportation capacity
The table below provides details of the transportation capacity and location available to the Energy business.
Plant description
|
Location |
Design
capacity(1) |
||
---|---|---|---|---|
Gauteng transmission
|
Gauteng | 128 bscf/a | ||
Rompco Pipeline |
From Central Processing Facility (Mozambique) to Pressure Protection Station (Secunda) (865km)From Mozambique to Secunda and Sasolburg | 191 bscf/a | ||
Secunda, Witbank and Middelburg pipeline |
South Africa | 11 bscf/a | ||
Transnet Pipeline
|
South Africa | 23 bscf/a |
The following table provides details of the production capacity and location of the main
jointly held plants where the Energy business has an interest.
Plant description
|
Location | Design capacity(1) | ||
---|---|---|---|---|
ORYX GTL |
Ras Laffan Industrial City in Qatar | 32 400 bpd (nominal) | ||
EGTL |
Escravos, Nigeria | 33 200 bpd (nominal) | ||
Natref |
Sasolburg, South Africa | 108 000 bpd (nominal) | ||
CTRG |
Ressano Garcia, Mozambique | 175MW |
Secunda Synfuels Operations
Synthetic oil
Refer to "Item 4.DProperty, plants and equipmentMining" for details on our mining properties and coal exploration techniques used during the estimation of synthetic oil reserves.
The size of this total property is approximately 83 square kilometres (km2) with operating plants accounting for 9 km2. This forms the base for the main manufacturing facilities for Energy, Base and Performance Chemicals.
The following table sets forth a summary of the synthetic oil equivalent average sales price and related production costs for the year shown.
|
2019 | 2018 | 2017 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Average sales price per barrel (rand per unit) |
966,64 | 800,07 | 683,46 | |||||||
Average production cost per barrel (rand per unit) |
579,90 | 484,53 | 448,67 | |||||||
Production (millions of barrels) |
41,2 | 42,7 | 41,3 |
Supplemental oil and gas information
Supplemental oil and gas information: See "Item 18Financial StatementsSupplemental Oil and Gas Information" for supplemental information relating to synthetic oil producing activities.
Base Chemicals
Our facilities in South Africa
Our main manufacturing facilities are located in Secunda and Sasolburg. The size of Sasol's total Secunda property is approximately 83 square kilometres (km2) with operating plants accounting for 9 km2. The size of the Sasolburg property is approximately 51 km2.
60
Our facilities in the United States
Base Chemicals' share of the LCCP is located at Lake Charles, Louisiana (size of full site approximately 6 km2; Base Chemicals' plant size 1,7 km2). The legacy business in Lake Charles consists of the ethylene cracker. As part of the LCCP the linear low density polyethylene (LLDPE) unit reached beneficial operation in February 2019 (capacity of 470 ktpa). The plant is ramping up to our expectation. The low density polyethylene (LDPE) unit is expected to reach beneficial operation in 2020.
Production at our HDPE joint venture with Ineos in North America achieved beneficial operation in November 2017 (our share of capacity: 235 ktpa). The plant is producing at expectation.
Refer to "Item 3.DRisk factors" and "Item 5.BLiquidity and capital resources" for further detail on the construction of the LCCP.
The following table summarises the main production capacities of the Regional Operating Hubs in Secunda, Sasolburg and North America, as well as our international joint venture partnership in North America, that produce polymer and monomer products marketed by Base Chemicals.
Production capacity at 30 June 2019
Product
|
South
Africa(2) |
North
America(1)(2) |
Total | |||||||
---|---|---|---|---|---|---|---|---|---|---|
|
(ktpa)
|
|||||||||
Ethylene(3) |
615 | 455 | 1 070 | |||||||
Propylene(3) |
950 | | 950 | |||||||
LDPE |
220 | | 220 | |||||||
LLDPE |
150 | 470 | 620 | |||||||
HDPE |
| 235 | 235 | |||||||
Polypropylene |
625 | | 625 | |||||||
Ethylene dichloride |
160 | | 160 | |||||||
Vinyl chloride |
205 | | 205 | |||||||
PVC |
190 | | 190 | |||||||
Chlorine |
145 | | 145 | |||||||
Caustic soda |
167 | | 167 | |||||||
Cyanide |
40 | | 40 | |||||||
Hydrochloric acid |
90 | | 90 | |||||||
Calcium chloride |
10 | | 10 |
The following table summarises the main production capacities of the Regional Operating Hubs in Secunda and Sasolburg that produce solvent products marketed by Base Chemicals.
Production capacity as at 30 June 2019
Product
|
South
Africa |
Germany | Total(1) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
|
(ktpa)
|
|||||||||
Ketones |
328 | | 328 | |||||||
Acetone |
200 | | 200 | |||||||
MEK |
70 | | 70 | |||||||
MiBK |
58 | | 58 | |||||||
Glycol ethers |
| 80 | 80 | |||||||
Butyl glycol ether |
| 80 | 80 | |||||||
Acetates |
60 | | 60 | |||||||
Ethyl acetate |
60 | | 60 | |||||||
Mixed alcohols |
215 | | 215 | |||||||
Pure alcohols |
499 | | 499 | |||||||
Methanol (C1) |
140 | | 140 | |||||||
Ethanol (C2) |
114 | | 114 | |||||||
n-Propanol (C3) |
80 | | 80 | |||||||
n-Butanol (C4) |
150 | | 150 | |||||||
iso-Butanol (C4) |
15 | | 15 | |||||||
Acrylates |
125 | | 125 | |||||||
Ethyl acrylate |
35 | | 35 | |||||||
Butyl acrylate |
80 | | 80 | |||||||
Glacial acrylic acid |
10 | | 10 | |||||||
Maleic anhydride(2) |
| 53 | 53 | |||||||
Other |
19 | | 19 |
Nameplate capacity represents the total saleable production capacity. Due to the integrated nature of these facilities, the requirement for regular statutory maintenance shutdowns and market conditions, actual saleable volumes will be less than the nameplate capacity.
61
2019 with a preliminary equity purchase price of EUR90,3 million received by Sasol. The final purchase price will be confirmed on verification of the closing accounts by the independent auditors.
Approximately 90% of our production capacity is located at sites in South Africa and 10% in Germany.
Performance Chemicals
Our facilities in South Africa
Our facilities at Secunda and Sasolburg are the base for a number of our chemical industries operations.
Our facilities in Germany
Performance Chemicals operations are based at three locations in Germany, namely Brunsbüttel (site size approximately 2 million m2; plant size 500 000 m2), Marl (site size approximately 160 000 m2; plant size 75 000 m2) and the wax facility based in Hamburg (site size approximately 160 000 m2; plant size 100 000 m2).
Our facilities in Italy
The operations of Performance Chemicals are based at three locations in Italy. The primary facilities are at Augusta (site size approximately 1,36 million m2; plant size 510 000 m2) and Terranova (site size approximately 330 000 m2; plant size 160 000 m2).
Our facilities in the United States
Performance Chemicals operations in the US are based in Lake Charles, Louisiana and Tucson, Arizona. The most significant of these facilities is located at Lake Charles, Louisiana (size of full site approximately 6 km2; Performance Chemicals' plant size 1,9 km2 including share of the LCCP located at Lake Charles). As part of the LCCP, beneficial operation was declared in May 2019 on the ethylene oxide/ethylene glycol (EO/EG) plant in Lake Charles.
A small specialty alumina facility is located in Tucson.
Our facility in China
The operations of Performance Chemicals are based at two locations in Nanjing (Fangshui site
size approximately 90 000 m2; plant size 4 000 m2; Zhaoqiaohe site size approximately 136 000 m2; plant size 3600 m2).
The following table provides details of the production capacity and location of the plants where the Performance Chemicals business has an interest.
Production capacity at 30 June 2019
|
|
|
|
|
|
|
|
|
Product
|
| Facilities location | | Total(1) | | |||
---|---|---|---|---|---|---|---|---|
|
|
|
|
(ktpa)
|
| |||
Surfactants |
| United States, Europe, Far East | | | 1 100 | | | |
EO/EG |
| United States | | | 300 | | | |
C6+ alcohol |
| United States, Europe, South Africa, Far East | | | 630 | | | |
Inorganics |
| United States, Europe, South Africa | | | 87 | | | |
Paraffins and olefins |
| United States, Europe | | | 750 | | | |
LAB |
| United States, Europe | | | 435 | | | |
C5-C8 alpha olefins |
| United States, South Africa | | | 456 | | | |
Paraffin wax and wax emulsions |
| Europe | | | 460 | | | |
FT-based wax and related products |
| South Africa | | | 280 | | | |
Paraffin wax |
| South Africa | | | 30 | | |
Refer to "Item 3.DRisk factors" and "Item 5.BLiquidity and capital resources" for further detail on the construction of the LCCP.
ITEM 4A. UNRESOLVED STAFF COMMENTS
There are no unresolved written comments from the SEC staff regarding our periodic reports under the Securities Exchange Act of 1934 received not less than 180 days before 30 June 2019, that are considered material.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
This section should be read in conjunction with our consolidated financial statements included in "Item 18Financial Statements" as at 30 June 2019 and 2018, and for the years ended 30 June 2019, 2018 and 2017, including the accompanying notes, that are included in this annual report on Form 20-F. The following discussion of operating results and the financial review and prospects as well as our consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB.
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For information regarding our financial overview and external factors impacting on our business, refer to the "Chief Financial Officer's Finance OverviewKey drivers impacting our results" as contained in Exhibit 99.3. This includes an analysis of the impact of macro-economic factors on Sasol's performance and an overview of the current economic environment, crude oil prices, exchange rates, gas prices and chemical prices. Movements in our cost base are also analysed, including the impact of cost-reduction measures and inflation.
The discussion on the 2017 financial results have not been included as this can be found under Item 5 of our Form 20-F for the year ended 30 June 2018.
Certain information contained in the discussion and analysis set forth below and elsewhere in this annual report includes forward-looking statements that involve risks and uncertainties. See "Forward-Looking Statements" and see "Item 3.DRisk factors" for a discussion of significant factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this annual report.
5.A Operating results
Results of operations
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2019 | 2018 |
Change
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Turnover |
203 576 | 181 461 | 12 | 172 407 | 5 | |||||||||||
Operating costs and expenses |
(176 308 | ) | (152 390 | ) | 16 | (140 157 | ) | 9 | ||||||||
Remeasurement items |
(18 645 | ) | (9 901 | ) | 88 | (1 616 | ) | 513 | ||||||||
Equity accounted profits, net of tax |
1 074 | 1 443 | (26 | ) | 1 071 | 35 | ||||||||||
Sasol Khanyisa share-based payment |
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Earnings before interest and tax |
9 697 | 17 747 | (45 | ) | 31 705 | (44 | ) | |||||||||
Net finance costs |
(466 | ) | (2 043 | ) | (77 | ) | (1 697 | ) | 20 | |||||||
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Earnings before tax |
9 231 | 15 704 | (41 | ) | 30 008 | (48 | ) | |||||||||
Taxation |
(3 157 | ) | (5 558 | ) | (43 | ) | (8 495 | ) | (35 | ) | ||||||
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Earnings |
6 074 | 10 146 | (40 | ) | 21 513 | (53 | ) | |||||||||
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Financial review 2019
Turnover
Turnover consists of the following categories.
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Sale of products |
| 200 097 | | 178 463 | | | 12 | | | | 169 115 | | | | 6 | | | |||||
Services rendered |
| 1 735 | | 1 612 | | | 8 | | | | 1 549 | | | | 4 | | | |||||
Other trading income |
| 1 744 | | 1 386 | | | 26 | | | | 1 743 | | | | (20 | ) | | |||||
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Turnover |
| 203 576 | | 181 461 | | | 12 | | | | 172 407 | | | | 5 | | | |||||
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The primary factors contributing to the increases in turnover were.
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Turnover, 2018 and 2017 |
| | 181 461 | | | | | | | 172 407 | | | | | | ||||||
Exchange rate effects |
| | 15 213 | | | | 8 | | | | (5 890 | ) | | | (3 | ) | | ||||
Product prices |
| | 3 575 | | | | 2 | | | | 16 112 | | | | 9 | | | ||||
crude oil |
| | 6 526 | | | | 4 | | | | 16 401 | | | | 9 | | | ||||
other products |
| | (2 951 | ) | | | (2 | ) | | | (289 | ) | | | | | | ||||
Net volume changes |
| | 3 359 | | | | 2 | | | | (1 394) | (1) | | | (1 | ) | | ||||
Other effects |
| | (32 | ) | | | | | | | 226 | | | | | | | ||||
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Turnover |
| | 203 576 | | | | 12 | | | | 181 461 | | | | 5 | | | ||||
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Operating costs and expenses
Operating costs and expense consists of the following categories.
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Materials, energy and consumables used |
| (90 589 | ) | (76 606 | ) | | 18 | | | | (71 436 | ) | | | 7 | | | |||||
Selling and distribution costs |
| (7 836 | ) | (7 060 | ) | | 11 | | | | (6 405 | ) | | | 10 | | | |||||
Maintenance expenditure |
| (10 227 | ) | (9 163 | ) | | 12 | | | | (8 654 | ) | | | 6 | | | |||||
Employee-related expenditure |
| (29 928 | ) | (27 468 | ) | | 9 | | | | (24 417 | ) | | | 12 | | | |||||
Exploration expenditure and feasibility costs |
| (663 | ) | (352 | ) | | 88 | | | | (491 | ) | | | (28 | ) | | |||||
Depreciation and amortisation |
| (17 968 | ) | (16 425 | ) | | 9 | | | | (16 204 | ) | | | 1 | | | |||||
Translation gains/(losses) |
| 604 | | (11 | ) | | (5 591 | ) | | | (1 201 | ) | | | (99 | ) | | |||||
Other operating expenses |
| (21 064 | ) | (16 715 | ) | | 26 | | | | (13 037 | ) | | | 28 | | | |||||
Other operating income |
| 1 363 | | 1 410 | | | (3 | ) | | | 1 688 | | | | (16 | ) | | |||||
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Operating costs and expenses |
| (176 308 | ) | (152 390 | ) | | 16 | | | | (140 157 | ) | | | 9 | | | |||||
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Materials, energy and consumables used. Materials, energy and consumables used in 2019 amounted to R90 589 million, an increase of R13 983 million, or 18%, compared with R76 606 million in 2018, which increased by 7% from R71 436 million in 2017. The increase in these costs between 2019 and 2018 was due to the higher processed volumes of oil, higher costs (higher Brent crude prices) and a weaker rand/US dollar exchange rate.
Selling and distribution costs. These costs comprise of marketing and distribution of products, freight and customs and excise duty after the point of sale. Selling and distribution costs in 2019 amounted to R7 836 million, which represents an increase of R776 million, or 11%, compared with R7 060 million in 2018, which increased by R655 million, or 10%, compared with R6 405 million in 2017. The variation in these costs was mainly attributable to increased freight, rail car and terminal expenditure due to higher quantities of products sold during 2019, in conjunction with higher freight rates which is exchange rate related. Selling and distribution costs represented 4% of sales in 2019, 4% of sales in 2018, and 4% of sales in 2017.
Maintenance expenditure. Maintenance expenditure in 2019 amounted to R10 227 million, which represents an increase of R1 064 million, or 12%, compared with R9 163 million in 2018, which increased by R509 million, or 6%, compared with R8 654 million in 2017. Maintenance expenditure increased in 2019 compared to 2018 mainly due to inflation and schedule changes.
Employee-related expenditure. Employee-related expenditure amounted to R29 928 million, which represents an increase of R2 460 million, or 9%, compared with R27 468 million in 2018, which increased by R3 051 million, or 12%, from 2017.
This amount includes labour costs of R28 709 million (2018R25 903 million and 2017R24 191 million) and a share-based payment charge to the income statement of R1 219 million (debit), (2018R1 565 million (debit) and 2017R226 million (debit)).
Excluding the effect of the share-based payment expenses, our employee costs increased by R2 806 million, or 11%, in 2019. This was primarily due to normal annual salary increases, a weaker rand/US dollar exchange rate and an increase in headcount relating to business growth due to LCCP, particularly in our US operations. Overall headcount increased from 31 270 in 2018 to 31 429 employees in 2019, an increase of 0,5%.
Exploration expenditure and feasibility costs. Exploration expenditure and feasibility costs in 2019 amounted to R663 million, which represents an increase of R311 million, or 88%, compared with R352 million in 2018, which decreased by R139 million compared with R491 million in 2017. The increase in 2019 as compared to 2018 was largely attributable to the additional costs relating to the two new licences obtained in Mozambique.
Depreciation and amortisation. Depreciation and amortisation in 2019 amounted to R17 968 million, which represents an increase of R1 543 million, compared with R16 425 million in 2018, which increased by R221 million compared with R16 204 million in 2017. The increase in depreciation of R1 543 million mainly relates to the increase of fixed assets due to the capitalisation of some of the LCCP units.
Translation gains/(losses). Translation gains arising primarily from the translation of monetary assets and liabilities, amounted to R604 million in 2019, as compared to a R11 million loss in 2018 and a R1 201 million loss in 2017. The rand weakened against the US dollar throughout 2019, with the closing exchange rate having weakened by 2,5% to R14,08 at 30 June 2019 compared to R13,73 at 30 June 2018. This had a negative impact on our gearing and the valuation of our derivatives and South African export debtors and loans. However, a translation gain was recognised as a result of the realised gain of R633 million on the settlement of US$ 600 million of the Revolving Credit Facility which offset the translation losses experienced by the Group.
Other operating expenses. Other operating expenses in 2019 amounted to R21 064 million, an increase of R4 349 million, compared to R16 715 million in 2018, which increased by R3 678 million from R13 037 million in 2017.
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This amount includes:
Other operating income. Other operating income in 2019 amounted to R1 363 million,
which represents a decrease of R47 million, or 3%, compared with R1 410 million in 2018. In 2017, other operating income amounted to R1 688 million. Other operating income includes profit made by pooling the foreign exchange requirements of the group and rental income.
Share of profits from equity accounted investments
The share of profits of equity accounted investments (net of tax) amounted to R1 074 million in 2019 as compared to R1 443 million in 2018 and R1 071 million in 2017. R230 million of the decrease in equity accounted earnings for 2019 was due to the sale of our investment in Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd in 2018.
In Nigeria, the EGTL plant production was restricted to single train operation during the first six months of the financial year due to repairs on the main air compressor. As a result, the losses increased to R216 million in 2019 compared to losses of R207 million in 2018.
Remeasurement items
For information regarding the remeasurement items recognised, refer to "Item 18Financial StatementsNote 9 Remeasurement items affecting operating profit".
Finance costs and finance income
For information regarding finance costs incurred and finance income earned, refer to "Item 18Financial StatementsNote 7 Net finance costs".
The decrease in finance costs is mainly due to the adoption of the amendment to IAS 23 Borrowing Costs, where any specific borrowings
65
that remain outstanding after the related asset is ready for its intended use or sale, becomes part of the general borrowings of the entity when calculating the capitalisation rate.
Tax
The effective tax rate decreased to 34,2% in 2019 compared to 35,4% in 2018. The decrease is mainly due to the increase in Section 12L incentive allowances. For further information regarding the tax charge, refer to "Item 18Financial StatementsNote 12 Taxation".
Non-controlling interests
For information regarding our non-controlling interests, and their share of profit, refer "Item 18Financial StatementsNote 22 Interest in significant operating subsidiaries".
Earnings attributable to non-controlling interests in subsidiaries of R1 776 million increased by R359 million, or 25%, from R1 417 million in 2018, which was an increase of R278 million or 24% from R1 139 million in 2017.
The increase in earnings attributable to non-controlling interests in 2019, as compared to the increase in 2018 is largely attributable to an increase in the profits attributable to the non-controlling interests in Sasol Oil due to a reversal of a provision for litigation.
Financial review 2018
Group results
Earnings before interest and tax of R17,7 billion decreased by 44% compared to the prior year largely driven by a stronger exchange rate, with the rand/US dollar averaging R12,85 compared to R13,61 in the prior year, and the negative impact of remeasurement items. Global markets remained challenging and highly volatile. The increase in the oil price had a significant positive impact on our results, which was offset by the stronger average rand/US dollar exchange rate. During 2018, the average Brent crude oil prices moved higher by 28% compared to the prior year (average dated Brent was US$64/bbl for the year ended 30 June 2018 compared with US$50/bbl in the prior year). Largely as a result of the stronger rand the present value of future
cash flows of our South African chlor vinyls cash generating unit have been adversely impacted, resulting in a R5,2 billion impairment. To mitigate the impact of financial risks on our business, we have entered into various hedging contracts to protect the group against volatility in commodity prices, currencies and interest rates.
Items which materially impacted earnings before interest and tax
During 2018, earnings were impacted by the following significant items:
Segment reviewresults of operations
Reporting segments are identified in the way in which the Joint Presidents and Chief Executive Officers organise segments within our group for making operating decisions and assessing performance. The segment overview included below is based on our segment results. Inter-segment turnover was entered into under terms and conditions substantially similar to terms and conditions which would have been negotiated with an independent third party. Refer to Business segment information of "Item 18Financial StatementsSegment information" for further detail regarding turnover and operating profit per segment.
66
Refer also to "How we structure ourselves to create value" as contained in Exhibit 99.4.
Operating Business Units
Mining
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2018/2017 |
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External turnover |
| 3 222 | | 3 446 | | | (7 | ) | | | 2 946 | | | | 17 | | | |||||
Inter-segment turnover |
| 17 654 | | 16 351 | | | 8 | | | | 16 016 | | | | 2 | | | |||||
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Total turnover |
| 20 876 | | 19 797 | | | 5 | | | | 18 962 | | | | 4 | | | |||||
Operating costs and expenses(1) |
| (16 175 | ) | (14 553 | ) | | 11 | | | | (15 237 | ) | | | (4 | ) | | |||||
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Earnings before interest and tax |
| 4 701 | | 5 244 | | | (10 | ) | | | 3 725 | | | | 41 | | | |||||
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EBIT margin % |
| 23 | | 26 | | | | | | 20 | | | | | |
Results of operations 2019 compared to 2018
Total turnover increased by 5% from R19 797 million to R20 876 million. Earnings before interest and tax of R4 701 million represents a decrease of 10% when compared to the prior year, mainly as a result of lower sales volumes in line with our customer demand, higher rehabilitation provisions and increased royalty taxes associated with our capital expenditure.
Stock pile levels have reduced as part of our working capital optimisation efforts and external coal purchases decreased by 22% from the prior period. Lower overall production levels, combined with above-inflation cost increases resulted in our normalised cost of production increasing by 4% above inflation to R313/ton compared to the prior year.
Above-inflation cost increases relate to higher-than-inflation increases in labour, operating and maintenance expenditure. The above inflation operating and maintenance expenditure is attributable to geological complexity and challenges driving up stonework metres and costs, and equipment reliability issues arising from Proximity Detection System implementation on our diesel fleet following our previous fatality.
Our productivity increased by 3%, as we continue to focus on improving our operational efficiency while striving to achieve zero harm.
For further analysis of our results refer "Integrated ReportOperational and strategic overviews" as contained in Exhibit 99.7.
Exploration and Production International
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External turnover |
| 1 815 | | 1 610 | | | 13 | | | | 1 750 | | | | (8 | ) | | |||||
Inter-segment turnover |
| 3 369 | | 2 588 | | | 30 | | | | 2 334 | | | | 11 | | | |||||
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Total turnover |
| 5 184 | | 4 198 | | | 23 | | | | 4 084 | | | | 3 | | | |||||
Operating costs and expenses(1) |
| (6 073 | ) | (7 881 | ) | | (23 | ) | | | (3 499 | ) | | | 125 | | | |||||
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(Loss)/earnings before interest and tax |
| (889 | ) | (3 683 | ) | | (76 | ) | | | 585 | | | | (730 | ) | | |||||
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EBIT margin % |
| (17 | ) | (88 | ) | | | | | 14 | | | | | |
Results of operations 2019 compared to 2018
Total turnover increased by 23% from R4 198 million in 2018 to R5 184 million in 2019 due to higher oil (Gabon) and gas (Mozambique) prices, a weaker rand/US dollar exchange rate and higher volumes in Gabon offset by lower volumes (natural decline in production from fields in Canada and lower internal consumption for our Mozambican gas). Earnings before interest and tax of R1 166 million (excluding remeasurement items of R1 976 million and translation losses of R79 million) increased by R897 million compared to earnings before interest and tax of R269 million in 2018 (excluding remeasurement items of R4 241 million and translation gains of R289 million).
Earnings before interest and tax from our Mozambican producing operations was R2 507 million (excluding translation loss of R114 million) compared to R1 916 million (excluding translation gain of R54 million) in the prior year. The increased earnings before interest and tax is largely due to higher sales prices, partly offset by increased maintenance cost and lower internal volume demand.
There was no impairment or dry well write-off on our PSA development and appraisal project compared to the prior year partial impairment of R1 143 million and dry well write off of R150 million.
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Our Gabon operating asset recorded earnings before interest and tax of R484 million (excluding translation gains of R54m) compared to R331 million (excluding remeasurement items of R130 million and translation gains of R206 million) in the prior year, mainly due to higher sales prices, lower well workover maintenance costs and reversal of bad debt provisions. This was offset by an increase in depreciation due to higher asset base than the prior year.
Our Canadian shale gas asset in Montney generated a loss before interest and tax of R801 million (excluding the impairment of R1 947 million) compared to a loss before interest and tax of R818 million (excluding impairment of R2 764 million) in the prior year. Our Canadian gas production volumes decreased by 15% compared to the prior year resulting from the natural decline of the field.
We continue with the divestment process of the Canadian shale gas assets and the impairment of R1 947 million was aligned to the anticipated fair value.
For further analysis of our results refer "Integrated ReportOperational and strategic overviews" as contained in Exhibit 99.7.
Strategic Business Units
Energy
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External turnover |
| 82 977 | | 69 110 | | | 20 | | | | 64 254 | | | | 8 | | | |||||
Inter-segment turnover |
| 826 | | 663 | | | 25 | | | | 518 | | | | 28 | | | |||||
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Total turnover |
| 83 803 | | 69 773 | | | 20 | | | | 64 772 | | | | 8 | | | |||||
Operating costs and expenses(1) |
| (67 237 | ) | (55 692 | ) | | 21 | | | | (53 554 | ) | | | 4 | | | |||||
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Earnings before interest and tax |
| 16 566 | | 14 081 | | | 18 | | | | 11 218 | | | | 26 | | | |||||
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EBIT margin % |
| 20 | | 20 | | | | | | 17 | | | | | |
Results of operations 2019 compared to 2018
Total turnover increased by 20% from R69 773 million in 2018 to R83 803 million in
2019, mainly due to the impact of higher Brent crude oil prices, higher volumes sold, the weaker rand/US dollar exchange rate partly negated by the lower petrol differentials.
Earnings before interest and tax, including equity accounted earnings, of R16 566 million increased by R2 485 million or 18% compared to the prior year. EBIT margins remained unchanged at 20%.
The 18% increase in earnings before interest and tax is mainly due to higher crude oil prices, the impact of weaker rand/US dollar exchange rates and higher liquid fuel sales volumes partially offset by the impact of higher coal, gas and other product prices at Secunda Synfuels Operations, lower refining margins at Natref and lower earnings from equity accounted earnings.
Gas sales volumes were 3% higher compared to the prior year mainly due to higher market demand.
Our share of power produced at the CTRG joint operation in Mozambique amounted to 564 gigawatt-hours of electricity, 5% lower than the prior year, due to lower market demand and the additional gas tolling agreement which ended in August 2017.
ORYX GTL production volumes were 16% lower compared to the prior year due to the unplanned shutdown of both trains as a result of maintenance required on the waste heat boilers of the reformer reactors. Train 1 went into an extended shutdown from December 2018 to April 2019 and train 2 was also shutdown for a precautionary inspection in April 2019. This resulted in a full year utilisation rate of 81% from 95% in 2018. Both trains were back in operation from May 2019 and are currently stable. As a result, ORYX GTL contributed R1 131 million to earnings before interest and tax , 3% lower than the prior year comparative of R1 168 million.
For further analysis of our results refer "Integrated ReportOperational and strategic overviews" as contained in Exhibit 99.7.
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Base Chemicals
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External turnover |
| 48 113 | | | 43 269 | | | | 11 | | | | 41 582 | | | | 4 | | | |||||
Inter-segment turnover |
| 700 | | | 682 | | | | 3 | | | | 706 | | | | (3 | ) | | |||||
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Total turnover |
| 48 813 | | | 43 951 | | | | 11 | | | | 42 288 | | | | 4 | | | |||||
Operating costs and expenses(1) |
| (50 244 | ) | | (43 033 | ) | | | 17 | | | | (35 400 | ) | | | 22 | | | |||||
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(Loss)/earnings before interest and tax |
| (1 431 | ) | | 918 | | | | (256 | ) | | | 6 888 | | | | (87 | ) | | |||||
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EBIT margin % |
| (3 | ) | | 2 | | | | | | | 16 | | | | | |
Results of operations 2019 compared to 2018
Total turnover increased by 11% from R43 951 million in 2018 to R48 813 million in 2019, mainly as a result of the weaker rand/US dollar exchange rate offset by the softer commodity chemical prices across most of our sales regions and products. The Base Chemicals business benefitted from 4% higher sales volumes largely from US polymers with our high density polyethylene (HDPE) plant contributing for the full year and our linear low density polyethylene (LLDPE) plant achieving beneficial operation in February 2019. Base Chemicals foundation business sales volumes were largely in line with 2018.
Earnings before interest and tax decreased by R2 349 million or 256% from R918 million in 2018 to a loss of R1 431 million in 2019, while EBIT margin decreased from 2% to 3%.
The decrease in earnings before interest and tax is largely attributable to additional operating losses due to the LCCP incurring depreciation and cash fixed cost without corresponding gross margin realised while in the ramp-up phase and additional costs incurred on our foundation business. In addition, the Ammonia cash generating unit in the Southern African value chain was impaired by R3,3 billion, mainly attributable to lower international ammonia sales price assumptions in the short- to medium-term and increased gas feedstock prices in the longer term. We reversed an impairment amounting to R949 million on our South African chlor vinyls cash generating unit due to the useful life
extension from 2034 to 2050. This is in line with the detailed study undertaken that proved the viability of non-gas dependent operations beyond 2034 as feedstock is supplied from Secunda with an approved useful life up to 2050.
In line with the asset review process, Sasol explosives business was identified for partial divestment and collaboration with a world-class explosives partner. The downstream portion of the explosives business was classified as a disposal group held for sale at 30 June 2019, following approval to commence negotiations with a preferred partner, with the aim of creating a joint venture, managed and operated by the partner. The partial divestment and partnering is expected to be completed within the next 12 months.
For further analysis of our results refer "Integrated ReportOperational and strategic overviews" as contained in Exhibit 99.7.
Performance Chemicals
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| 2019 | | 2018(2) | |
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External turnover |
| 67 389 | | | 63 986 | | | | 5 | | | | 61 359 | | | | 4 | | | |||||
Inter-segment turnover |
| 907 | | | 901 | | | | 1 | | | | 826 | | | | 9 | | | |||||
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Total turnover |
| 68 296 | | | 64 887 | | | | 5 | | | | 62 185 | | | | 4 | | | |||||
Operating costs and expenses(1) |
| (75 336 | ) | | (57 034 | ) | | | 32 | | | | (53 448 | ) | | | 7 | | | |||||
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Earnings before interest and tax |
| (7 040 | ) | | 7 853 | | | | (190 | ) | | | 8 737 | | | | (10 | ) | | |||||
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EBIT margin % |
| (10 | ) | | 12 | | | | | | | 14 | | | | | |
Results of operations 2019 compared to 2018
Turnover increased by 5% from R64 887 million to R68 296 million mainly due to a weaker exchange rate. The business recorded a loss of R7 040 million before interest and tax following impairments of our US assets. After adjusting for remeasurement items and translation movements of the closing exchange rate, earnings before interest and tax decreased by 23% from R7 911 million to R6 091 million mainly as result of start-up costs associated with our growth projects and adverse price movements especially in the US with lower ethylene over ethane margins as compared to the previous period.
69
Sales volumes decreased by 3% compared to the prior year which was mainly driven by some lower sales of commodity products, planned outages and a force majeure in Europe. The more differentiated areas of our product portfolio were performing at or above the previous year's levels.
In 2019, the Tetramerization and EO/EG value chains were impaired by R7,4 billion (US$526 million) and R5,5 billion (US$388 million), respectively. The impairments were driven by an increase in capital cost for the LCCP and lower US ethylene and global mono-ethylene glycol price assumptions as at 30 June 2019.
Europe and Asia were impacted by a softer macro-economic environment specifically with some of our key markets, such as automotive, showing signs of a downturn. Overall the ramp-up of our new ETO unit in China as well as the first units of the LCCP is still supported by a robust market demand for our differentiated organics and alumina products.
For further analysis of our results refer "Integrated ReportOperational and strategic overviews" as contained in Exhibit 99.7.
Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13 (r) of the Exchange Act
To our knowledge, none of Sasol's activities, transactions or dealings is in violation of applicable sanctions laws and regulations. Sasol Germany sold chemicals mainly from its advanced materials range to a direct customer in Iran. The total revenue from one transaction in July 2018 was R9,5 million (2018: R32,1 million) for 43,4 tons sold (2018: 199,6 tons).
For more information refer to "Actual or alleged non-compliance with laws could result in criminal or civil sanctions and could harm our reputationSanction laws" under "Item 3.DRisk Factors".
Significant accounting policies and estimates
The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported results of our operations. Some of our accounting
policies require the application of significant judgements and estimates by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgements are subject to an inherent degree of uncertainty and are based on our historical experience, terms of existing contracts, management's view on trends in the industries in which we operate and information from outside sources and experts. Actual results may differ from those estimates. Management believes that the more significant judgement and estimates relating to the accounting policies used in the preparation of Sasol's consolidated financial statements could potentially impact the reporting of our financial results and future financial performance.
We evaluate our estimates, including those relating to environmental rehabilitation and decommissioning obligations, long-lived assets, trade receivables, inventories, investments, intangible assets, income taxes, share-based payment expenses, hedges and derivatives, pension and other post-retirement benefits and contingencies and litigation on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making our judgements about carrying values of assets and liabilities that are not readily available from other sources.
In addition to the items below, "Item 18Financial Statements" are incorporated by reference.
For accounting policies and areas of judgements relating to:
70
Estimation of natural oil and gas reserves
In accordance with the US Securities and Exchange Commission (SEC) regulations, proved oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically produciblefrom a given date forward, from known reservoirs under existing economic conditions, operating methods, and government regulationsprior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract hydrocarbons must be approved and must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. Existing economic conditions define prices and costs at which economic producibility is to be determined. The price is the average sales price during the 12-month period prior to the reporting date (30 June), determined as an un-weighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements. Future price changes are limited to those provided by contractual arrangements in existence at year-end.
Our reported natural oil and gas reserves are estimated quantities based on SEC reporting
regulations. Additionally, we require that the estimated quantities of oil and gas and related substances to be produced by a project be sanctioned by all internal and external parties to the extent necessary for the project to enter the execution phase and sufficient to allow the resultant products to be brought to market. See "Item 4.D Information on the companyProperty, plants and equipment".
There are numerous uncertainties inherent in estimating quantities of reserves and in projecting future rates of production, including factors which are beyond our control. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgement. Estimates of oil and gas reserves therefore are subject to future revision, upward or downward, resulting from new data and current interpretation, as well as a result of improved recovery, extensions and discoveries, the purchase or sale of assets, and production. Accordingly, financial and accounting measures (such as the standardised measure of future discounted cash flows, depreciation and amortisation charges and environmental and decommissioning obligations) that are based on proved reserves are also subject to revision and change.
Refer to "Table 5Standardised measure of discounted future net cash flows relating to proved reserves", on page G-6 for our standardised discounted future net cash flow information in respect of proved reserves for the year ended 30 June 2019 and to "Table 6Changes in the standardised measure of discounted net cash flows", on page G-7.
Depreciation of natural oil and gas assets
Depreciation of mineral assets on producing oil and gas properties and property acquisition costs is based on the units-of-production method, calculated using estimated proved developed reserves.
Fair value estimations of financial instruments
We base fair values of financial instruments on quoted market prices of identical instruments, where available. If quoted market prices are not
71
available, fair value is determined based on other relevant factors, including dealers' price quotations and price quotations for similar instruments traded in different markets. Fair value for certain derivatives is based on pricing models that consider current market and contractual prices for the underlying financial instruments or commodities, as well as the time value and yield curve or fluctuation factors underlying the positions. Pricing models and their underlying assumptions impact the amount and timing of unrealised gains and losses recognised, and the use of different pricing models or assumptions could produce different financial results. Refer to "Item 11Quantitative and qualitative disclosures about market risk".
5.B Liquidity and capital resources
Liquidity, cash flows and borrowings
Based on our funding plan, we believe that current cash on hand, funds from operations and existing borrowing facilities, will be sufficient to cover our working capital and debt service requirements in the year ahead. We finance our capital expenditure from funds generated out of our business operations and borrowing facilities.
For information regarding our funding cash flows and liquidity, refer "Item 18Financial StatementsNote 16 Long-term debt and finance leases" which includes an overview of our banking facilities and debt arrangements.
For information regarding the company's cash flow requirements refer to the "Chief Financial Officer's Finance OverviewManaging cash and capital" and "Managing our funding plan, debt profile and credit rating" as contained in Exhibit 99.3.
The following table provides a summary of our cash flows for each of the three years ended 30 June 2019, 2018 and 2017.
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Net cash retained from operating activities |
| 31 943 | | 25 629 | | 27 491 | | |||
Net cash used in investing activities |
| (56 412 | ) | (53 979 | ) | (56 677 | ) | |||
Net cash generated by financing activities |
| 23 131 | | 15 112 | | 9 536 | |
Cash flows retained from operating activities include the following significant items.
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Cash generated by operating activities |
| 51 398 | | 42 877 | | 44 069 | | |||
Income tax paid |
| (3 946 | ) | (7 041 | ) | (6 352 | ) | |||
Dividends paid |
| (9 952 | ) | (7 952 | ) | (8 628 | ) |
The cash generated by our operating activities is applied first to fund our operations, pay our debt and tax commitments and then to provide a return in the form of a dividend to our shareholders. The net cash retained is then invested based on our updated capital allocation framework which is aimed at driving maximum shareholder return.
Operating activities
Cash generated by operating activities in 2019 increased by 20% to R51 398 million, largely attributable to an increase in crude oil prices, decreases in working capital as well as a weaker average rand/US dollar exchange rate of R14,20/US$ for 2019 compared to R12,85/US$ for 2018. The decrease in working capital is mainly attributable to cash management actions implemented during the year.
Cash generated by operating activities in 2018 decreased by 3% to R42 877 million, largely attributable to purchases of crude oil options of $207 million (approximately R2,7 billion) necessary as part of our risk mitigation strategy, increases in working capital as well as a stronger average rand exchange rate of R12,85/US$ for 2018 compared to R13,61/US$ for 2017. The increase in working capital is mainly attributable to an increase in our trade receivables due to higher chemical sales prices and higher sales volumes in June 2018 and an increase in inventory mainly as a result of higher feedstock costs as a result of the increase in crude oil prices compared to the prior year.
For further information regarding our cash flow generation, refer "Chief Financial Officer's Finance OverviewManaging cash and capital" as contained in Exhibit 99.3.
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Investing activities
Net cash used in investing activities increased to R56 412 million in 2019 as compared to R53 979 million in 2018. Net cash used in investing activities in 2018 decreased from R56 677 million in 2017.
Cash flows utilised in investing activities include the following significant items.
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2019 | 2018 | 2017 | |||||||
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(Rand in millions)
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Additions to non-current assets(1) |
(56 734 | ) | (55 891 | ) | (56 812 | ) | ||||
Proceeds on disposals |
567 | 2 316 | 788 |
In 2019, included in additions to non-current assets is R30,3 billion (US$2,1 billion) relating to the construction of the LCCP. This is as compared to R30,1 billion (US$2,3 billion) in 2018. This increase is largely as a result of the weakening of the rand against the US dollar and an increase in the overall capital cost estimate of the LCCP.
Included in investing activities in 2019 are the proceeds from the sale of the investments in Heat Transfer Fuels (HTF) business of R271 million, as part of our strategic asset reviews.
Included in investing activities in 2018 are the proceeds from the sale of the investments in Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd of R1 918 million, as well as the sale of the Lake de Smet land of R215 million, as part of our strategic asset reviews.
For information regarding cash flows from investing activities refer "Chief Financial Officer's Finance Overview"Managing our funding plan, debt profile and credit rating" as contained in Exhibit 99.3.
For information regarding cash flows from additions and disposals, refer "Item 18Financial StatementsNote 18 Assets under construction" and "Note 10 Disposals and scrapping".
For details of our additions to non-current assets, and the projects to which these relate, refer to "Item 18Financial StatementsNote 18 Assets under construction".
For details of our capital commitments refer to "Item 18Financial StatementsNote 17 Property, plant and equipment".
Financing activities
Net cash generated from financing activities increased to R23 131 million in 2019 as compared to R15 112 million in 2018. Net cash generated from financing activities in 2018 increased from R9 536 million in 2017.
The reason for the increase in cash generated from financing activities is mainly due to the loans raised to fund our US growth projects.
The group's operations are financed primarily by means of its operating cash flows. Cash shortfalls are usually short-term in nature and are met primarily from short-term banking facilities. Our long-term capital expansion projects are financed by a combination of floating and fixed rate long-term debt, as well as internally generated funds. To the extent possible, this debt is normally financed in the same currency as the underlying project to be funded and the repayment terms are designed to match the cash flows expected from that project. A centralised treasury model enables Sasol to optimise the Group's cash and borrowing facilities wherever it is required.
For information regarding our debt and funding structure, refer "Chief Financial Officer's Finance OverviewManaging our funding plan, debt profile and credit rating" as contained in Exhibit 99.3.
Capital resources
Sasol Financing Limited, Sasol Financing International Limited and Sasol Financing USA LLC act as our group's financing vehicles. All our group treasury, cash management and borrowing activities are facilitated through Sasol Financing Limited, Sasol Financing International Limited and Sasol Financing USA LLC. The group executive committee (GEC) and senior
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management meet regularly, to review and, if appropriate, approve the implementation of optimal strategies for the effective management of the group's financial risk.
Our cash requirements for working capital, share repurchases, capital expenditures, debt service and acquisitions over the past three years have been primarily financed through a combination of funds generated from operations and borrowings. In our opinion, our working capital is sufficient for present requirements.
Our debt as at 30 June comprises the following.
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2019 | 2018 | 2017 | |||||||
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(Rand in millions)
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Long-term debt, including current portion |
137 339 | 109 454 | 81 405 | |||||||
Short-term debt |
1 239 | 1 946 | 2 625 | |||||||
Bank overdraft |
58 | 89 | 123 | |||||||
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Total debt |
138 636 | 111 489 | 84 153 | |||||||
Less cash (excluding cash restricted for use) |
(13 397 | ) | (15 148 | ) | (27 643 | ) | ||||
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Net debt |
125 239 | 96 341 | 56 510 | |||||||
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As at 30 June 2019, we had R2 480 million (2018R1 980 million) in cash restricted for use. Refer to "Item 18Financial StatementsNote 27 Cash and cash equivalents" for a breakdown of amounts included in cash restricted for use.
The group has borrowing facilities with major financial institutions and debt securities of R160 002 million (2018R164 502 million; 2017R136 143 million). Of these facilities and debt instruments, R137 023 million (2018R111 489 million; 2017R84 153 million) has been utilised at year end. Long-term debt of R137 339 million increased by R27 885 million compared to 2018 due to the funding of the LCCP and the weakening of the closing rand exchange rate to the US dollar (R14,08 at 30 June 2019 compared to R13,73 at 30 June 2018). Refer to "Item 18Financial StatementsNote 16 Long-term debt", for a breakdown of our banking facilities and the utilisation thereof.
There were no events of default for the years ended 30 June 2019 and 30 June 2018.
Included in the abovementioned borrowing facilities is our commercial paper programme of R8 billion. There were no amounts outstanding under the commercial paper programme at 30 June 2019. Further, a revolving credit facility of US$400 million is available to the group for further funding requirements. Centralised treasury facilities of R121,3 billion (US$8,6 billion and R953 million) were drawn at 30 June 2019.
In August 2019, Sasol issued its inaugural paper to the value of R2 176 million in the local debt market under the current Domestic Medium Term Note (DMTN) programme, at 130 basis points above 3 month Jibar. The net proceeds from the notes issue will be used for general corporate purposes and to refinance existing facilities.
Financial instruments and risk
Refer to "Item 11Quantitative and qualitative disclosures about market risk" for a breakdown of our liabilities summarised by fixed and floating interest rates.
Debt profile and covenants
The information set forth under "Item 18Financial StatementsNote 16 Long-term debt" is incorporated by reference.
Capital commitments
Refer "Item 18Financial StatementsNote 17 Property, plant and equipment".
The discussion below includes forward-looking statements. For a discussion of factors that could cause actual results to differ from those expressed or implied in forward-looking statements, please refer to "Forward-Looking Statements" above. You should not place undue reliance on forward-looking statements.
Our growth aspirations have been prioritised as we steadily advance our growth strategy, particularly in Southern Africa and North America. Capital investments in these regions will constitute a significant portion of our total
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capital expenditure over the next 10 years. Given that a large portion of our funding for our capital intensive growth plan will come from the offshore debt markets, we are acutely aware that we need to manage our gearing within our long-term targeted range. The higher LCCP capital cash outflows and impairments recognised during the year has increased our gearing, with our near-term gearing target to range between 55% - 65%, including the impact of leases.
However, we continue to have access to sufficient liquidity to meet our commitments and at the same time provide a buffer against adverse volatilities.
In the US, we are constructing the US$12,6 - 12,9 billion LCCP, which consists of a world-scale 1,5 million ton per year ethane cracker, and six downstream chemical plants. At 30 June 2019, the capital expenditure was $11,8 billion, and the overall project completion was around 98%. In September 2018, Sasol Financing USA LLC issued US$2,25 billion of US dollar-denominated notes, the proceeds of which were used to partially repay the LCCP project asset finance facility, while in June 2019, the remaining US$1,8 billion of project finance was refinanced in the US dollar bank marketalso via Sasol Financing USA LLC. Both of these new issuances were supported by a Sasol Limited guarantee. As a result of this refinancing, the completion guarantee applicable to the LCCP has now fallen away. For further detail on the funding, refer "Item 18Financial StatementsNote 16 Long-term debt".
As the first units are nearing completion we are closing out commercial arrangements to release committed funds back into contingency to enable the project to reach beneficial operation within the revised cost estimate of US$12,6 - 12,9 billion. During 2019, due to the decline in chemical prices and margin assumptions as well as the increase in capital expenditure on the LCCP, the ethane cash generating unit in Lake Charles was impaired by R12,9 billion (US$914 million). The impairment is allocated between the Tetramerization and EO/EG units.
Various savings opportunities have been identified and are continuously being implemented to mitigate project risks. Although unplanned event-driven risks may still impact the execution and cost of the project, we are confident that the remaining construction, procurement, execution and business readiness risks can be managed within the revised cost estimate of US$12,6 - 12,9 billion.
In Mozambique, the PSA Phase 1 and Phase 2 drilling activities have been completed. In total, 11 wells were drilled comprising of seven oil wells and four gas wells. The Inhassoro oil reservoirs have proved more complex than expected and, with the reduced expectation of recoverable oil volumes and uncertainty on the oil price, we are looking to maximise the use of existing processing facilities in the adjacent PPA facilities. Phase 1 gas results confirm gas resources cover for Central Termica Temane (CTT), formerly Mozambique Gas to Power Project (MGtP). Phase 2 appraisal drilling results indicate gas volumes to be at the lower end of initial estimates. Focused efforts are underway to assess the range of options and possibilities to sustainably secure and source gas feedstock.
For information on amounts capitalised in respect of these projects refer, "Item 18Financial StatementsNote 17 Property, plant and equipment" and "Note 18 Assets under construction".
For information on future amounts expected to be spent to complete the projects, refer "Item 18Financial StatementsNote 18 Assets under construction".
5.C Research and development, patents and licences
Refer to the "Item 4.BFactors on which the business is dependentIntellectual Property" for further information research and development, patents and licences.
5.D Trend information
Refer to the "Chief Financial Officer's Finance OverviewKey drivers impacting our results" as contained in Exhibit 99.3.
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5.E Off-balance sheet arrangements
We do not engage in off-balance sheet financing activities and do not have any off-balance sheet debt obligations, off-balance sheet structured entities or unconsolidated affiliates.
Guarantees
As at 30 June 2019, the group recognised amounts in respect of certain guarantees. Refer to "Item 18Financial Statements, "Note 16 Long-term debt" and "Note 18 Assets under construction" for further information on guarantees.
Product warranties
The group provides product warranties with respect to certain products sold to customers in the ordinary course of business. These warranties typically provide that products sold will conform to specifications. The group accrues a warranty liability on a transaction-specific basis depending on the individual facts and circumstances related to each sale. Both the liability and expense related to product warranties are immaterial to the consolidated financial statements.
5.F Tabular disclosure of contractual obligations
Contractual obligations/commitments.
The following significant undiscounted contractual obligations existed at 30 June 2019.
Contractual
obligations |
Total
amount |
Within
1 year |
1 to 5
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More than
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Bank overdraft |
58 | 58 | | | |||||||||
Capital commitments |
60 095 | 32 194 | 27 901 | | |||||||||
Environmental and other obligations(1) |
96 940 | 10 264 | 16 802 | 69 874 | |||||||||
External long-term debt(2) |
157 965 | 7 025 | 134 318 | 16 622 | |||||||||
External short-term debt |
1 239 | 1 239 | | | |||||||||
Finance leases(2) |
25 480 | 1 207 | 4 135 | 20 138 | |||||||||
Operating leases |
24 081 | 2 276 | 6 089 | 15 716 | |||||||||
Post-retirement healthcare obligations(3) |
4 093 | 198 | 828 | 3 067 | |||||||||
Post-retirement pension obligations(3) |
9 014 | 201 | 849 | 7 964 | |||||||||
Purchase commitments(4) |
57 700 | 25 873 | 23 374 | 8 453 | |||||||||
Share-based payments |
264 | 264 | | | |||||||||
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Total |
436 929 | 80 799 | 214 296 | 141 834 | |||||||||
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Refer to "Item 18Financial StatementsNote 17 Property, plant and equipment" for significant capital commitments and "Note 31 Long-term provisions".
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A Directors and senior management
The board of directors and senior management
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Senior managementexperience
We have identified our senior management as the members of our group executive committee (GEC). See "Integrated ReportInformation about our board of directors and senior management" as contained in Exhibit 99.8 for experience of our executive directors who are members of the GEC.
Family relationship
There are no family relationships between any of our non-executive directors, executive directors or members of our GEC.
Other arrangements
None of our non-executive directors, executive directors or GEC members or other key management personnel is elected or appointed under any arrangement or understanding with any major shareholder, customer, supplier or otherwise.
6.B Compensation
Refer to our Remuneration Report filed as Exhibit 99.2 for details of our directors and senior management compensation.
Long-term incentive schemes applicable to executive directors and senior management
For details regarding our long-term incentive schemes applicable to executive directors and senior management named in Item 6.ADirectors and senior management and refer to our Remuneration Report filed as Exhibit 99.2.
6.C Board practices
Refer to "Item 6.ADirectors and senior management" for our board of directors and information with respect to their terms of office. Refer to our Remuneration Report filed as Exhibit 99.2 for details of our directors' and senior management service contracts and benefits upon termination of employment.
Refer to "Integrated ReportGovernance overview" as contained in Exhibit 99.9 for details relating to our audit and remuneration
committees, as well as the names of committee members; and refer to the "Terms of ReferenceAudit Committee and Remuneration Committee" as contained in Exhibit 99.9.2 for summaries of the terms of reference under which these committees operate.
6.D Employees
The information set forth under "Item 18Financial StatementsNote 4 Employee-related expenditure" is incorporated by reference.
Remuneration of directors and key personnel is contained in the Remuneration Report, contained in Exhibit 99.2.
For information regarding the employees per segment, refer to "Item 18Financial StatementsNote 4 Employee-related expenditure". Our workforce geographic location composition at 30 June is presented below.
Region
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2019 | 2018 | 2017 | |||||||
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Number of employees
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South Africa |
26 003 | 26 145 | 26 058 | |||||||
Europe |
2 865 | 2 773 | 2 728 | |||||||
North America |
1 791 | 1 611 | 1 430 | |||||||
Other |
770 | 741 | 684 | |||||||
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Total |
31 429 | 31 270 | 30 900 | |||||||
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6.E. Share ownership
Refer to our Remuneration Report filed as Exhibit 99.2 for details of share ownership applicable to executive directors and senior management.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A Major shareholders
Refer to "Item 18Financial StatementsNote 15 Share Capital" for the authorised and issued share capital of Sasol Limited.
To the best of our knowledge, Sasol Limited is not directly or indirectly owned or controlled by another corporation or the government of South Africa, or any other government. We believe that no single person or entity holds a controlling interest in our securities.
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In accordance with the requirements of the Companies Act of South Africa 71 of 2008 (Companies Act), the following beneficial shareholdings equal to or exceeding 5% of the total issued securities during the last three years were disclosed or established from inquiries as of 30 June 2019.
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2019 | 2018 | 2017 | ||||||||||||||||
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|
Number of
shares |
% of
shares |
Number of
shares |
% of
shares |
Number of
shares |
% of
shares |
|||||||||||||
GEPF(1) |
86 926 548 | 13.78 | 84 392 139 | 13.5 | 85 275 320 | 13,1 | |||||||||||||
IDC(2) |
53 266 887 | 8.44 | 53 266 887 | 8.5 | 53 266 887 | 8,2 | |||||||||||||
AGPL(3) |
* | | * | | 40 366 150 | 6,2 |
The voting rights of major shareholders do not differ from the voting rights of other shareholders.
As of 25 September 2019, 16 585 025 million Sasol ordinary shares, or approximately 2,63% of our total issued securities, were held in the form of American Depositary Receipts (ADRs). As of 25 September 2019, 348 record holders in the US held approximately 16,07% of our total issued securities in the form of either Sasol ordinary shares or ADRs.
7.B Related party transactions
There have been no material transactions during the most recent three years, other than as described below, nor are there proposed to be any material transactions at present to which we or any of our subsidiaries are or were a party and in which any senior executive or director, or 10% shareholder, or any relative or spouse thereof or any relative of such spouse, who shared a home with this person, or who is a director or executive officer of any parent or subsidiary of ours, had or is to have a direct or indirect material interest. Furthermore, during our three most recent years, there has been no, and at 30 June 2019 there was no, outstanding indebtedness to us or any of our subsidiaries owed by any of our executive or independent directors or any associate thereof.
During the year, Sasol group companies, in the ordinary course of business, entered into
various purchase and sale transactions with associates, joint ventures and certain other related parties. The effect of these transactions is included in the financial performance and results of the Sasol group. Terms and conditions are determined on an arm's length basis.
Amounts due to and from related parties are disclosed in the respective notes to the financial statements for the respective statement of financial position line items. Refer to "Item 18Financial StatementsNote 38 Related party transactions" for further details.
7.C Interests of experts and counsel
Not applicable.
8.A Consolidated statements and other financial information
Refer "Item18. Annual Financial Statements" for our financial statements, related notes and other financial information.
Dividend policy
Core headline earnings per share ("CHEPS") served as a reference for deciding on the dividend amount. The company's dividend policy also takes into consideration various factors, including overall market and economic conditions, the group's financial position, capital investment plans as well as earnings growth.
As of February 2018, to provide more stability in the dividend payment, the company approved a change in dividend policy to pay dividends with a dividend cover range based on CHEPS. CHEPS reflects the sustainable business operations and is used by the board to measure the business and financial performance. When we make a decision on dividends, we take a number of factors into account. These include the impact of the current volatile macro-economic environment, capital investment plans, the current strength of the company's balance sheet, and the dividend cover range.
Refer to "Item 10.BMemorandum and articles of associationRights and privileges of holders of our securities".
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Legal proceedings
For information regarding our legal proceedings refer to "Item 4.BBusiness overviewLegal proceedings and other contingencies".
8.B Significant changes
Refer to "Item 18Financial StatementsNote 39 Subsequent events".
9.A Offer and listing details
The principal trading market for our shares is the JSE. Our American Depositary Shares (ADS) have been listed on the New York Stock Exchange since 9 April 2003, each representing one common ordinary share of no par value, under the symbol "SSL". J.P. Morgan Chase Bank N.A. (J.P. Morgan) is acting as the Depositary for our ADSs and issues our ADRs in respect of our ADSs.
9.B Plan of distribution
Not applicable.
9.C Markets
Refer to Item 9.AOffer and listing details above for further information.
9.D Selling shareholders
Not applicable.
9.E Dilution
Not applicable.
9.F Expenses of the issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
10.A Share capital
Not applicable.
10.B Memorandum and articles of association
1. Registration number, and object and purpose of the Company
The Company is registered in South Africa at the Companies and Intellectual Property Commission under registration number 1979/003231/06.
Refer to "Item 10.B" of our registration statement pursuant to section 12(b) or 12(g) of the Securities Exchange Act of 1934, filed with the Securities and Exchange Commission on 6 March 2003 (the Registration Statement) for the object and purpose of the company. The objects and purpose are not specifically contained in the Company's constitution, its MOI. Instead the Company has been given the powers and capacity of an individual, that is to say its powers and capacity, subject to the South African Companies Act, are unlimited (clause 4.1) and may do anything which the South African Companies Act and the JSE Listings Requirements empower it to do if so authorised by its MOI (clause 4.3).
2. Summary of the MOI with respect to directors
Director's power to vote in respect of matters in which a director has a material interest. In terms of our MOI and the Companies Act, a director who has a personal financial interest in respect of a matter to be considered at a board meeting, or knows that a related person has a personal financial interest in the matter, may not vote on the matter and must, after giving his/her full views on the matter, recuse himself/herself from the meeting. In terms of our board charter directors are appointed on the express agreement that they may be removed by the board if and when they develop an actual or prospective material, enduring conflict of interest with the Company or another group company.
Directors' power to vote on remuneration for themselves. A distinction is drawn between remuneration of directors as employees (applicable to executive directors) of the company and remuneration of directors for their services as directors. With regard to remuneration of directors for their services as directors, in accordance with the Companies Act our MOI requires shareholder approval by way of a special
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resolution (ie requiring a 75% majority of those present and voting) obtained in the previous two years for the payment of remuneration to directors for their service as directors.
The remuneration of executive directors is determined by a disinterested quorum of directors on recommendation of the remuneration committee determined in accordance with the group's remuneration policy put to shareholders for a non-binding advisory vote at the annual general meeting as required by the King IV Report on Corporate Governance for South Africa 2016 (King IV). King IV further requires that the remuneration implementation report also be put to shareholders for a non-binding advisory vote. No powers are conferred by our MOI, or by any other means, on the directors who are employees of the company, to vote on their own remuneration in the absence of a disinterested quorum of directors.
Borrowing powers exercisable by directors. Clause 26.2 of our MOI provides that the directors may borrow money and secure the payment or repayment thereof upon terms and conditions which they may deem fit in all respects and, in particular, through the issue of debentures which bind as security all or any part of the property of the company, both current and future. The borrowing powers may be varied by our shareholders passing a special resolution amending the MOI to that effect.
Age limit requirement. There is no mandatory retirement age for directors in South African law. Although there is no mandatory retirement age in our MOI, no director (executive or non-executive) may have a term of office exceeding 12 years.
General qualification requirements for directors to hold shares in the company. There are no general qualification requirements either in South African law or in the MOI for directors to hold shares in the Company.
3. Rights and privileges of holders of our securities
General
We have two classes of shares in issue, namely:
They rank pari passu in all respects. The only difference between them in principle is that anyone may hold ordinary shares but Sasol BEE ordinary shares may only be owned by persons who meet certain broad-based black economic empowerment credentials. In order to meet such credentials such person must, inter alia, be a South African citizen (BEEs).
For more details regarding shareholders voting rights, see information provided in our Registration Statement.
Dividend rights, including any time limit after which dividend entitlement lapses and an indication of the party in whose favour this entitlement operates. In terms of our MOI, the company may make any type of distributions, including in specie distributions and distributions of capital. Only once a dividend is declared by the board, does a shareholder have a right to receive a dividend which may be enforced against the company.
For more information regarding the payment of dividends on ordinary shares and to Holders of ADRs, refer to our Registration Statement.
In terms of the Companies Act, no dividend may be paid unless it reasonably appears that the company will satisfy the solvency and liquidity test as defined in the Companies Act immediately after completing the proposed distribution; and the board, by resolution, has acknowledged that it has applied the solvency and liquidity test and has reasonably concluded that the company's assets equal or exceed the liabilities of the company and that the company will be able to pay its debts as they become due in the ordinary course of business for a period of 12 months following the payment of the dividend. If the board resolves that the solvency and liquidity test has been passed, the board may declare a dividend but it must be paid within 120 business days, failing
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which it is necessary again for the board to consider the solvency and liquidity test.
A dividend entitlement lapses if it is unclaimed by any shareholder for a period of not less than 12 years and the board of directors resolves that it be forfeited. If a dividend is forfeited, it belongs to the company.
For further information on our dividend policy, see "Item 8.AConsolidated statements and other financial information" and our Registration Statement.
Voting rights including whether directors stand for re election at staggered intervals and the impact of that arrangement where cumulative voting is permitted or required. Each Sasol BEE ordinary shares rank pari passu with each ordinary share in relation to the right to vote at shareholders' meetings of the company.
Our non-executive directors, and alternate directors (if the board has resolved to permit election of alternate directors at an annual general meeting, failing which as alternate directors are required to be elected by the MOI, there will be no alternate directors elected), are elected by our shareholders at the annual general meeting. Broadly speaking 1/3rd of the non-executive directors retire each year in rotation but are eligible for re election unless they have been in office for 12 years, but in addition all non-executive directors in office for 5 years since last election prior to November 2016 or in office for 9 years since first election must retire. As between directors of equal seniority, the directors to retire, in the absence of agreement, will be selected from among them in alphabetical order. The election is carried out in a series of votes on the candidacy of a single individual to fill a single vacancy. For more details regarding the rotation of directors, see information provided in our Registration Statement.
The directors, determine the appropriate number (determined by the directors within the minimum and maximum limits stipulated in the MOI (being 10 and 16 directors respectively)) and the suitable persons (with the assistance of the Nomination and Governance Committee) to recommend to the shareholders for election / re election as directors from time to time. In
addition any shareholder may nominate a person for consideration for election as a director.
Shareholder right to share in the company profits. There is no absolute right for shareholders to share in profits. They are dependent upon the directors declaring dividends or other distributions, (subject to the solvency and liquidity requirements being met). However if the directors do declare dividends or other distributions, it is only the shareholders who participate.
Rights to surplus in the event of liquidation. The Ordinary Shares and the Sasol BEE Ordinary Shares each rank pari passu if there is a surplus on winding up.
Redemption provision. There are no redemption provisions relating to the ordinary shares and the Sasol BEE ordinary shares.
Sinking funds. There are no sinking funds.
Liability for further capital calls by the company. Under the previous South African Companies Act, shares could only be issued if they were fully paid. Accordingly, no shares were issued which were subject to any capital calls. Under the current Companies Act however, partly paid shares may be issued under certain circumstances. The company is prohibited by our MOI from making use of these provisions.
There are no other types of capital calls which the company could make against its shareholders. In particular, the MOI expressly provides that no obligation be imposed, in respect of a distribution of capital, that the company is entitled to be subscribed again. This is not required under the South African Companies Act nor the JSE listings requirements.
Discriminatory provisions against substantial shareholders. There are no discriminatory provisions in our MOI against any holder of shares as a result of such holder owning a substantial number of shares in the company.
4. Changing rights of holders of shares
In terms of our MOI, the rights attached to any shares or the conversion of any of our shares (whether issued or not) into shares of another
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class, may only be effected by a change to the MOI by special resolution.
If the rights, privileges or conditions of any class of shareholders will be adversely affected, then provision is made in the MOI for a separate class meeting of the holders of such class of shares. There is no such requirement in the South African Companies Act.
In addition, shareholders have appraisal rights under the Companies Act if we amend our MOI by altering the preferences, rights, limitations or other terms of any class of our shares in a manner that is materially adverse to the rights or interests of holders of that class of shares. If the requirements contemplated under the Companies Act for establishing an appraisal right are complied with, the shareholder concerned effectively has the right to be bought out by the Company at fair value.
5. General meeting of shareholders including conditions of admission
The annual general meeting is convened and held in the same manner as any other general meeting. The concept of extraordinary general meetings no longer applies in South Africa. All meetings are general meetings, save for the annual general meeting.
In terms of the South African Companies Act, the board or any other person specified in the company's MOI, including a shareholder/s holding not less than 10% (ten per cent) of the voting rights attached to the shares, may call a shareholders' meeting at any time. A written and signed demand to convene a shareholders meeting must describe the specific purpose for which the meeting is proposed. The MOI only permits the board or the company secretary (in lieu of the board) and a shareholders/s holding not less than 10% of the Voting Rights attached to the shares, to convene a shareholders' meeting.
If the company is unable to convene a meeting because it has no directors, then in terms of our MOI, any single shareholder entitled to vote may convene a meeting.
If the company fails to convene a meeting in accordance with its MOI, or as required by the
shareholders holding in the aggregate at least 10% of the voting rights as set out above, or within the time periods as required, any shareholder may apply to court for an order to convene a shareholders' meeting on a date and subject to such terms as a court considers appropriate.
In terms of our MOI we are required to deliver written notice of shareholders' meetings to each shareholder and each beneficial holder (being a person whose name is not on the share register but who has the ultimate right to receive distributions or direct how the shares in question are voted or direct when the shares in question are to be disposed of) at least 15 business days before a meeting. The South African Companies Act also stipulates that delivery of a notice will be deemed to have taken place on the seventh calendar day following the day on which the notice was posted by way of registered post.
Before a person will be allowed to attend or participate at shareholder meetings in person or by proxy, that person must present reasonably satisfactory identification and the person presiding at the meeting must reasonably satisfy himself/herself that the right of the person to attend as shareholder or proxy has been verified. Meetings of shareholders may be attended by any person who holds shares in the company and whose name has been entered into our securities register and any person who is entitled to exercise any voting rights in relation to the company. Any person entitled to attend and to vote at any meeting may appoint a proxy/ies in writing to attend and to vote at such meeting on his/her/its behalf. In respect of shares which are not subject to the rules of a central securities depository, and in respect of which a person holds a beneficial interest which includes the right to vote on a matter, that beneficial holder may attend and vote on a matter at a meeting of shareholders, but only if that person's name has been entered in our register of disclosures as the holder of that beneficial interest. Shareholders who have dematerialised their shares other than on an own name basis, are required to contact the their Central Securities Depository Participant, as the case may be, for assistance to attend and vote at meetings.
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In terms of our MOI, the quorum necessary for the commencement of a shareholders meeting shall be sufficient persons present at the meeting to exercise, in aggregate, at least 25% of all the voting rights that are entitled to be exercised in respect of at least one matter to be decided at the shareholders meeting but the shareholders' meeting may not begin unless at least three persons entitled to vote are present. In terms of our MOI, if the required quorum of shareholders is not present within 30 minutes from the time appointed for the meeting to begin, the meeting will be postponed to the next business day and if at such adjourned shareholders' meeting a quorum is not present within 15 minutes from the time appointed for the shareholders' meeting, then the persons entitled to vote present shall be deemed to be the requisite quorum. In terms of the Companies Act, no further notice is required of a postponed or adjourned meeting unless the location is different from that of the postponed or adjourned meeting, or is different from a location announced at the time of an adjourned meeting.
See our Registration Statement for more information with respect to the holding of an annual general meeting and the proceedings at the annual general meeting.
6. Limitations on the rights to own shares
Non-South African shareholders are treated no differently to South African shareholders as to the ownership of shares under the Company's MOI. However, Sasol BEE ordinary shares may only be owned by persons who must, inter alia, be South African citizens.
See our Registration Statement for more information with respect to the rights of non-South African shareholders.
7. Provisions of the company's MOI that would have the effect of delaying, deferring or preventing a change of control or merger or corporate restructuring
The South African Companies Act and the regulations to the South African Companies Act deal extensively with the requirements that must be met by a company with respect to a merger, an acquisition or a corporate restructure.
There are no provisions in our MOI which could have the effect of delaying, deferring or preventing a change of control of the company and that would operate only with respect to a merger, acquisition or corporate restricting involving the company or any of its subsidiaries, save perhaps that the requirement that the Sasol BEE Ordinary Shares may only be held by BEEs.
8. Disclosure of ownership threshold
Pursuant to section 122(1)(a) and (b) of the South African Companies Act, a person must notify the company within three business days after acquiring or disposing of a beneficial interest in sufficient securities of a class issued by that company such that, as a result of the acquisition or disposal, the person holds or no longer holds as the case may be, a beneficial interest in securities amounting to any multiple of 5% of the issued securities of that class. The Takeover Regulation Panel, which administers that section of the South African Companies Act, has interpreted this to mean an acquisition or disposal of shares in any 5% increment.
The JSE Listings Requirements require a listed company to disclose in its annual financial statements the interest of any shareholder, other than a director, who, insofar as it is known to the company, is directly or indirectly beneficially interested in 5% or more of any class of the company's capital.
9. Effect of the South African law
With respect to items 2 through 8 above, the effect of the South African law applicable to our company has been explained in those paragraphs.
10. Stricter conditions imposed by the MOI than the South African law governing changes in the capital of the Company
The requirements of our MOI are stricter than the South African law in that
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10.C Material contracts
We do not have any material contracts, other than contracts entered into in the ordinary course of business.
10.D Exchange controls
South African exchange control regulations are administered by the Financial Surveillance Department (FSD) of the South African Reserve Bank and are applied throughout the Common Monetary Area (CMA) (South Africa, the Kingdoms of Lesotho and Swaziland and the Republic of Namibia) and regulate transactions involving South African residents, as defined in the Exchange Control Rulings, including natural persons and legal entities.
Day-to-day interaction with the FSD on exchange control matters is facilitated through Authorised Dealers who are persons authorised by National Treasury to deal in foreign exchange, in so far as transactions in respect of foreign exchange are concerned.
The South African government has from time to time stated its intention to relax South Africa's exchange control regulations when economic conditions permit such action. In recent years, the government has incrementally relaxed aspects of exchange control.
The following is a general outline of South African exchange controls. The comments below relate to exchange controls in force at the date of this annual report. These controls are subject to
change at any time without notice. Investors should consult a professional advisor as to the exchange control implications of their particular investments.
Foreign financing and investments
Foreign debt. We, and our South African subsidiaries, require approval by the FSD to obtain foreign loans.
Funds raised outside the CMA by our non-resident subsidiaries, i.e. a non-resident for exchange control purposes, are not restricted under South African exchange control regulations and may be used for any purpose including foreign investment, as long as such use is without recourse to South Africa. We, and our South African subsidiaries, would, however, require approval by the FSD in order to provide guarantees for the obligations of any of our subsidiaries with regard to funds obtained from non-residents of the CMA.
Debt raised outside the CMA by our non-resident subsidiaries must be repaid or serviced by those foreign subsidiaries. Without approval by the FSD, we can neither use cash we earn in South Africa to repay or service such foreign debts nor can we provide security on behalf of our non-resident subsidiaries.
We may retain dividends declared by our foreign subsidiaries offshore which we may use for any purpose, without any recourse to South Africa. These funds may, subject to certain conditions, also be invested back into the CMA in the form of equity investments or loans.
Raising capital overseas. A listing by a South African company on any stock exchange requires prior approval by the FSD.
Under South African exchange control regulations, we must obtain approval from the FSD regarding any capital raising activity involving a currency other than the rand. In granting its approval, the FSD may impose conditions on our use of the proceeds of the capital raising activity outside South Africa, including limits on our ability to retain the proceeds of this capital raising activity outside South Africa or a requirement that we seek
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further approval by the FSD prior to applying any of these funds to any specific use. Any limitations imposed by the FSD on our use of the proceeds of a capital raising activity could adversely affect our flexibility in financing our investments.
Foreign investments. Under current exchange control regulations we, and our South African subsidiaries, require approval, either by Authorised Dealers of the FSD to invest offshore.
Although there is no limitation placed on us with regard to the amount of funds that we can transfer from South Africa for an approved foreign investment, the FSD may, however, request us to stagger the capital outflows relating to large foreign investments in order to limit the impact of such outflows on the South African economy and the foreign exchange market.
The FSD also requires us to provide it with an annual report, which will include the results, of all our foreign subsidiaries.
Investment in South African companies
Inward investment. As a general rule, a foreign investor may invest freely in shares in a South African company. Foreign investors may also sell shares in a South African company and transfer the proceeds out of South Africa without restriction. Acquisitions of shares or assets of South African companies by non-South African purchasers are not generally subject to review by the FSD when the consideration is in cash, but may require review by the FSD in certain circumstances, including when the consideration is equity in a non-South African company or when the acquisition is financed by a loan from a South African lender.
Dividends. There are no exchange control restrictions on the remittance of dividends declared out of trading profits to non-residents of the CMA. However, residents of the CMA may under no circumstances have dividends paid outside the CMA without specific approval from the FSD.
Transfer of shares and American Depositary Shares (ADSs). Effective 6 May 2019, J.P Morgan Chase Bank N.A became the depositary for Sasol's ADSs. Prior to that it was Bank of
New York Mellon (up to 5 May 2019). Sasol's ADSs, each representing one Sasol ordinary share, are traded on the New York Stock Exchange under the symbol "SSL". Under South African exchange control regulations, our shares and ADSs are freely transferable outside South Africa among persons who are not residents of the CMA. Additionally, where shares are sold on the JSE on behalf of our shareholders who are not residents of the CMA, the proceeds of such sales will be freely exchangeable into foreign currency and remittable to them. The FSD may also require a review to establish that the shares have been sold at market value and at arm's length. While share certificates held by non-resident shareholders will be endorsed with the words "non-resident", such endorsement will, however, not be applicable to ADSs held by non-resident shareholders.
10.E Taxation
South African taxation
Corporate Income Tax
The following discussion summarises the South African (SA) tax consequences of the ownership and disposition of shares or ADSs by a US holder (as defined below). This summary is based upon current SA tax law and the convention that has been concluded between the governments of the US and the SA for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains, signed on 17 February 1997 (the Treaty). In addition, this summary is based in part upon representations of the Depositary (J.P. Morgan, as Depositary for our ADSs), and assumes that each obligation provided for in, or otherwise contemplated by the Deposit Agreement and any related agreement, will be performed in accordance with its respective terms.
The summary of the SA tax considerations does not address the tax consequences to a US holder that is resident in SA for SA tax purposes or whose holding of shares or ADSs is effectively connected with a permanent establishment in SA through which such US holder carries on business activities. It equally does not address the scenario where the US holder is not the beneficial recipient of the dividends or returns or, where the
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source of the transaction is deemed to be in SA, the recipient is not entitled to the full benefits under the Treaty or, in the case of an individual who performs independent person services, who has a fixed base situated in SA.
The statements of law set forth below are subject to any changes (which may be applied retroactively) in SA law or in the interpretation thereof by the SA tax authorities, or in the Treaty, occurring after the date hereof. Holders are strongly urged to consult their own tax advisors as to the consequences under SA, US federal, state and local, and other applicable laws, of the ownership and disposition of shares or ADSs.
Carbon tax
A carbon tax was introduced in South Africa with effect from 1 June 2019. The motivation for the design and implementation of the carbon tax is to ensure that emitters of GHGs change their behaviour and start the process of reducing emissions to enable the transition to a lower-carbon economy. This objective is fully supported by Sasol and can be achieved through the alignment of the carbon tax and carbon budgets supported by a well-considered integrated mitigation policy which:
The tax will initially be levied at a marginal rate of R120 per ton CO2e of greenhouse gases (process emissions, combustion emissions and fugitive emissions) emitted by a company. This rate is initially reduced by way of a number of allowances resulting in a lower effective tax. However, there are increased administration and compliance costs for the carbon taxpayer over and above the carbon tax liability.
SARS has extended the section 12L energy efficiency allowances that taxpayers can qualify for until 31 December 2022 to incentivise taxpayers to transition into a low carbon economy. Being a responsible corporate citizen, Sasol has embarked
on various initiatives to reduce our carbon footprint over a number of years. This has culminated in the claiming of section 12L benefits totaling in excess of R10 billion since the introduction of the section 12L energy efficiency allowances. In addition, we continue to investigate and invest in initiatives that result in such energy efficiency savings while shifting towards a relatively low-carbon footprint, thereby effectively managing our carbon tax liability for the group.
Taxation of dividends
A dividends tax was introduced in South Africa with effect from 1 April 2012. In terms of these provisions, a dividends tax at the rate of 20% currently is levied on any dividend paid by a company to a shareholder. The liability to pay such dividends tax is on the shareholder, even though the company generally acts as a withholding agent. In the case of listed shares the regulated intermediary (being the Central Securities Depository Participant referred to below) is liable to withhold the dividends tax.
In the absence of any renegotiation of the Treaty, the tax on the dividends paid to a US holder with respect to shares or ADSs, is limited to 5% of the gross amount of the dividends where a US corporate holder holds directly at least 10% of the voting stock of Sasol. The maximum dividends tax rate is equal to 15% of the gross amount of the dividends in all other cases. The applicable administrative forms need to be completed by the US holder and received by the regulated intermediary by the date of payment of the dividend.
The definition of a dividend currently means any amount transferred or applied by a company that is a resident (including Sasol) for the benefit or on behalf of any person in respect of any share in that company, whether that amount is transferred or applied by way of a distribution made by the company, or as consideration for the acquisition of any share in that company. It specifically excludes any amount transferred or applied by the company that results in a reduction of so-called contributed tax capital (CTC) or constitutes shares in the company or constitutes an acquisition by the company of its own securities by way of a general repurchase of
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securities in terms of the JSE Listings Requirements. A distinction is thus made between a general repurchase of securities and a specific repurchase of securities. If the company embarks upon a general repurchase of securities, the proceeds are not deemed to be a dividend whereas, in the case of a specific repurchase of securities where the purchase price is not funded out of CTC, the proceeds are likely to constitute a dividend.
The concept of CTC effectively means the sum of the stated capital or share capital and share premium of a company that existed on 1 January 2011, excluding any transfers from reserves to the share premium account or stated capital account, plus proceeds from any new issue of shares by a company. Any application of CTC is limited to the holders of a class of shares and specifically that a distribution of CTC attributable to a specific class of shares must be made proportionately to the number of shares held by a shareholder in a specific class of shares. In other words, CTC can only be used proportionately by a company and cannot be applied by a company for the benefit of only one specific shareholder. The CTC of the company cannot therefore also be used in respect of different classes of shares and the CTC of a specific class is ring-fenced.
Taxation of gains on sale or other disposition
SA introduced a tax on capital gains effective 1 October 2001, which applies to SA residents and only to non-residents if the sale is attributable to a permanent establishment of the non-resident or if it relates to an interest in immovable property in SA. With effect from 1 October 2007, gains realised on the sale of ordinary shares are automatically deemed to be on capital account, and therefore, subject to capital gains tax, if the ordinary shares have been held for a continuous period of at least three years by the holder thereof. This deeming provision is limited to ordinary shares and does not extend to preference shares or ADSs. The meaning of the word "resident" is different for individuals and corporations and is governed by the SA Income Tax Act of 1962 (the Act) and by the Treaty. In the event of conflict, the Treaty, which contains a tie breaker clause or mechanism to determine residency if a holder is resident in both countries,
will prevail. In terms of the Act and the Treaty, a US resident holder of shares or ADSs will not be subject to capital gains tax on the disposal of securities held as capital assets unless the securities are linked to a permanent establishment conducted in SA. In contrast, gains on the disposal of securities which are not capital in nature are usually subject to income tax. However, even in the latter case, a US resident holder will not be subject to income tax unless the US resident holder carries on business in SA through a permanent establishment situated therein. In such a case, this gain may be subject to tax in SA, but only so much as is attributable generally to that permanent establishment.
Dividend stripping and anti-avoidance rules relating to share buy-backs
Anti-avoidance rules relating to share buy backs and dividend stripping were strengthened effective 19 July 2017 to address avoidance mechanisms utilised to erode the value of the shares through distribution of dividends prior to the disposal of shares. Such anti-avoidance dividend rules apply to situations where excessive dividends (as defined) are declared prior to disposal of shares and only to the extent that such dividends are treated as exempt dividend therefore not subject to dividend withholding tax. Where exempt dividends qualify as extraordinary dividends, the exempt dividends are re-characterised as proceeds for capital gains tax purposes or revenue for income tax purposes resulting in an increased tax liability for the seller of the shares.
Ordinary shares
Excessive dividends (also referred to as extraordinary dividends) equate to the aggregate dividend received within an 18-month period exceeding 15% of the higher of the market value of that share at the beginning of the 18 months and as at the date of disposal of the share.
Preference shares
Excessive dividends equates to the aggregate dividend received within an 18-month period as it exceeds the amount that would have accrued in respect to that share had it been determined with
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reference to the consideration for which that share was issued by applying an interest rate of 15% per annum for the period in respect of which the dividend was received or accrued.
Securities transfer tax
With effect from 1 July 2008, a single security transfer tax of 0,25% was introduced and is applicable to all secondary transfers of shares. No securities transfer tax (STT) is payable on the issue of securities, even though it is payable on the redemption of securities. STT is payable in South Africa regardless of whether the transfer is executed within or outside South Africa. A transfer of a dematerialised share can only occur in South Africa.
A security is also defined as a depository receipt in a company. Accordingly, STT is payable on the transfer of a depository receipt issued by a company. Generally, the central securities depository that has been accepted as a participant in terms of the Financial Markets Act, No. 19 of 2012 (that commenced on 3 June 2013) is liable for the payment of the STT, on the basis that the STT is recoverable from the person to whom the security is transferred.
Withholding taxes
A withholding tax on interest at the rate of 15% is currently applicable. This withholding tax is reduced to zero percent in terms of the Treaty to the extent that the interest is derived and beneficially owned by a resident of the other Contracting State.
A withholding tax on royalties at the rate of 15% is currently applicable. This withholding tax is reduced to zero percent in terms of the Treaty to the extent that the royalty is derived and beneficially owned by a resident of the other Contracting State.
Reportable arrangements
The legislation dealing with Reportable Arrangements ("RA") was promulgated during February 2016 which places a requirement on South African taxpayers to report certain transactions which are perceived by SARS to have characteristics that may lead to undue tax
benefits. The reporting of such transactions intends to give SARS advance notice of the arrangements. In this regard, RA would typically include the following:
Excluded from RAs are:
Non-compliance to this legislation will trigger significant penalties on a monthly basis.
Transfer pricing and BEPS
Transfer pricing was introduced in South Africa in 1995, and the transfer pricing principles adopted largely follow the Organisation for
88
Economic Co-Operation and Development (the OECD) guidelines on transfer pricing. The main requirement is to ensure that a transaction is concluded at arm's length and that the transfer pricing between group entities is also at arm's length (also known as the 'arm's length principle').
The OECD guidelines prescribe methodologies for determining arm's length pricing which have been adopted by many countries including South Africa for their local transfer pricing regulation.
Where there is a deviation from the arm's length principle, the price charged between group entities (where one of those entities is a tax resident) which is different from what would have been concluded at an arm's length basis between unrelated persons and to tax the entity concerned is adjusted to increase the taxable income of the tax resident (also known as a primary adjustment). In addition, the adjusted amount is also deemed to be a dividend (also referred to as a secondary adjustment) that will be subject to dividend withholding tax, as well as the relevant penalties and interest is levied should such an adjustment occur.
Although not a member, South Africa is an observer of the OECD and therefore closely monitors the developments within the OECD. South Africa participated in the Base Erosion and Profit Shifting (BEPS) project initiative by the OECD. This influenced certain legislation amendments in the South African Income Tax Act as well as the adoption of three-tiered documentation regulatory obligations such as the country-by-country reporting (CBC), master file and local file. In addition to the OECD-recommended three-tiered documentation for transfer pricing, South Africa has also prescribed additional documentation to be retained by South African taxpayers in support to cross-border transactions entered into by the taxpayer as well as non-South African resident connected party transactions with third parties.
United States federal income taxation
The following is a general summary of the material US federal income tax consequences of the ownership and disposition of shares or ADSs to a US holder (as defined below) that holds its
shares or ADSs as capital assets. This summary is based on US tax laws, including the Internal Revenue Code of 1986, as amended (the Code), Treasury regulations, rulings, judicial decisions, administrative pronouncements, all as of the date of this annual report, and all of which are subject to change or changes in interpretation, possibly with retroactive effect. In addition, this summary is based in part upon the representations of the Depositary and the assumption that each obligation in the Deposit Agreement relating to the ADSs and any related agreement will be performed in accordance with its terms.
US holders are strongly urged to consult their own tax advisors regarding the specific US federal, state and local tax consequences of owning and disposing of shares or ADSs in light of their particular circumstances as well as any consequences arising under the laws of any other taxing jurisdiction. In particular, US holders are urged to consult their own tax advisors regarding whether they are eligible for benefits under the Treaty.
This summary does not address all aspects of US federal income taxation that may apply to holders that are subject to special tax rules, including US expatriates, insurance companies, tax-exempt organisations, banks, financial institutions, regulated investment companies, persons subject to the alternative minimum tax or the 3.8% Medicare tax on net investment income, securities broker-dealers, traders in securities who elect to apply a mark-to-market method of accounting, persons holding their shares or ADSs as part of a straddle, hedging transaction or conversion transaction, persons who acquired their shares or ADSs pursuant to the exercise of employee stock options or similar derivative securities or otherwise as compensation, persons who directly or indirectly hold more than 10% of Sasol's shares (by vote or value), partnerships or other pass-through entities or arrangements, persons subject to a special tax accounting rule as a result of any item of gross income being taken into account in "an applicable financial statement" (as defined in section 451 of the Code) or persons whose functional currency is not the US dollar. Such holders may be subject to US federal income tax consequences different from those set forth below.
89
As used herein, the term "US holder" means a beneficial owner of shares or ADSs that is:
If a partnership (or other entity or arrangement treated as a partnership for US federal income tax purposes) holds shares or ADSs, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partner in a partnership that holds shares or ADSs is urged to consult its own tax advisor regarding the specific tax consequences of the ownership and disposition of the shares or ADSs.
For US federal income tax purposes, a US holder of ADSs should be treated as owning the underlying shares represented by those ADSs. The following discussion (except where otherwise expressly noted) applies equally to US holders of shares and US holders of ADSs. Furthermore, deposits or withdrawals of shares by a US holder for ADSs or ADSs for shares will not be subject to US federal income tax.
Taxation of distributions
Distributions (without reduction of SA withholding taxes, if any) made with respect to shares or ADSs (other than certain pro rata distributions of Sasol's capital stock or rights to subscribe for shares of Sasol's capital stock) are includible in the gross income of a US holder as foreign source dividend income on the date such distributions are received by the US holder, in the
case of shares, or by the Depositary, in the case of ADSs, to the extent paid out of Sasol's current or accumulated earnings and profits, if any, as determined for US federal income tax purposes ("earnings and profits"). Any distribution that exceeds Sasol's earnings and profits will be treated first as a nontaxable return of capital to the extent of the US holder's tax basis in the shares or ADSs (thereby reducing a US holder's tax basis in such shares or ADSs) and thereafter as either long-term or short-term capital gain (depending on whether the US holder has held shares or ADSs, as applicable, for more than one year as of the time such distribution is actually or constructively received).
The amount of any distribution paid in foreign currency, including the amount of any South African withholding tax thereon, will be included in the gross income of a US holder in an amount equal to the US dollar value of the foreign currency calculated by reference to the spot rate in effect on the date the dividend is actually or constructively received by the US holder, in the case of shares, or by the Depositary, in the case of ADSs, regardless of whether the foreign currency is converted into US dollars at such time. If the foreign currency is converted into US dollars on the date of receipt, a US holder of shares generally should not be required to recognise foreign currency gain or loss in respect of the dividend. If the foreign currency received in the distribution is not converted into US dollars on the date of receipt, a US holder of shares will have a basis in the foreign currency equal to its US dollar value on the date of receipt.
Any gain or loss recognised upon a subsequent conversion or other disposition of the foreign currency will be treated as US source ordinary income or loss. In the case of a US holder of ADSs, the amount of any distribution paid in a foreign currency ordinarily will be converted into US dollars by the Depositary upon its receipt. Accordingly, a US holder of ADSs generally will not be required to recognise foreign currency gain or loss in respect of the distribution.
Accrual basis US holders are urged to consult their own tax advisors regarding the requirements and elections available to accrual method
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taxpayers to determine the US dollar amount includable in income in the case of taxes withheld in a foreign currency.
Subject to certain limitations (including a minimum holding period requirement), South African dividend withholding taxes (as discussed above under "Item 10.E.TaxationSouth African taxationTaxation of dividends") will be treated as foreign taxes eligible for credit against a US holder's US federal income tax liability. For this purpose, dividends distributed by Sasol with respect to shares or ADSs generally will constitute foreign source "passive category income" for most US holders. The use of foreign tax credits is subject to complex conditions and limitations. In lieu of a credit, a US holder may instead elect to deduct any such foreign income taxes paid or accrued in the taxable year, provided that the US holder elects to deduct (rather than credit) all foreign income taxes paid or accrued for the taxable year. US holders are urged to consult their own tax advisors regarding the availability of foreign tax credits or the deductibility of foreign taxes.
Dividends paid by Sasol will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. Certain non-corporate US holders are eligible for preferential rates of US federal income tax in respect of "qualified dividend income".
Sasol currently believes that dividends paid with respect to its shares and ADSs should constitute qualified dividend income for US federal income tax purposes (and Sasol anticipates that such dividends will be reported as qualified dividends on Form 1099-DIV delivered to US holders) if Sasol was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid, a Passive Foreign Investment Company (PFIC) for US federal income tax purposes. Each individual US holder of shares or ADSs is urged to consult his own tax advisor regarding the availability to him of the preferential dividend tax rate in light of his own particular situation including foreign tax credit limitations with respect to any qualified dividend income paid by Sasol, as applicable.
Sale, exchange or other taxable disposition of shares or ADSs
Upon a sale, exchange or other taxable disposition of shares or ADSs, a US holder generally will recognise a capital gain or loss for US federal income tax purposes in an amount equal to the difference between the US dollar value of the amount realised on the disposition and the US holder's adjusted tax basis, determined in US dollars, in the shares or ADSs. Such gain or loss generally will be US source gain or loss, and generally will be treated as a long-term capital gain or loss if the holder's holding period in the shares or ADSs exceeds one year at the time of disposition if Sasol was not, at any time during the holder's holding period, a PFIC, as discussed below, for US federal income tax purposes. The deductibility of capital losses is subject to significant limitations. If the US holder is an individual, long-term capital gain generally is subject to US federal income tax at preferential rates. Each US holder of shares or ADSs is urged to consult his own tax advisor regarding the potential US tax consequences from the taxable disposition of shares or ADSs, including foreign currency implications arising therefrom and any other SA taxes imposed on a taxable disposition.
Passive foreign investment company considerations
A non-U.S. corporation is a passive foreign investment company in any taxable year in which, after taking into account the income and assets of certain subsidiaries, either (a) at least 75% of its gross income is passive income or (b) at least 50% of the quarterly average of its assets is attributable to assets that produce or are held to produce passive income. Sasol believes that it should not be classified as a PFIC for US federal income tax purposes for the taxable year ended 30 June 2019. US holders are advised, however, that this conclusion is a factual determination that must be made annually and thus may be subject to change. If Sasol were to be classified as a PFIC, the tax on distributions on its shares or ADSs and on any gains realised upon the disposition of its shares or ADSs may be less favourable than as described herein. Furthermore, dividends paid by a PFIC are not "qualified dividend income" and are not eligible for the reduced rates of taxation for certain dividends. In
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addition, each US person that is a shareholder of a PFIC, may be required to file an annual report disclosing its ownership of shares in a PFIC and certain other information. US holders should consult their own tax advisors regarding the application of the PFIC rules (including applicable reporting requirements) to their ownership of the shares or ADSs.
US information reporting and backup withholding
Dividend payments made to a holder and proceeds paid from the sale, exchange, or other disposition of shares or ADSs through a US intermediary or other US paying agent may be subject to information reporting to the US Internal Revenue Service (IRS). US federal backup withholding generally is imposed on specified payments to persons who fail to furnish required information. Backup withholding will not apply to a holder who furnishes a correct taxpayer identification number or certificate of foreign status and makes any other required certification, or who is otherwise exempt from backup withholding. US persons who are required to establish their exempt status generally must provide IRS Form W-9 (Request for Taxpayer Identification Number and Certification) or applicable substitute form. Non-US holders generally will not be subject to US information reporting or backup withholding. However, these holders may be required to provide certification of non-US status (generally on IRS Form W-8BEN, W-8BEN-E or applicable substitute form) in connection with payments received in the United States or through certain US-related financial intermediaries.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a holder's US federal income tax liability. A holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.
Additional reporting requirements
US holders who are individuals may be required to report to the IRS on Form 8938 information relating to their ownership of foreign financial assets, such as the shares or ADSs, subject to certain exceptions (including an exception for shares or ADSs held in accounts maintained by certain financial institutions). US holders should consult their tax advisors regarding the effect, if any, of these rules on their obligations to file information reports with respect to the shares or ADSs.
10.F Dividends and paying agents
Not applicable.
10.G Statement by experts
Not applicable.
10.H Documents on display
All reports and other information that we file with the Securities and Exchange Commission (SEC) may be obtained, upon written request, from J.P. Morgan Chase Bank N.A. (J.P. Morgan), as Depositary for our ADSs at its Corporate Trust office, located at 383 Madison Avenue, Floor 11, New York, New York, 10179. These reports and other information can also be inspected without charge and copied at prescribed rates at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. These reports may also be accessed via the SEC's website (www.sec.gov). Also, certain reports and other information concerning us will be available for inspection at the offices of the NYSE. In addition, all the statutory records of the company and its subsidiaries may be viewed at the registered address of the company in South Africa.
10.I Subsidiary information
Not applicable. For a list of our subsidiaries see Exhibit 8.1 to this annual report on Form 20-F.
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a group, we are exposed to various market risks associated with our underlying assets, liabilities and anticipated transactions. We continuously monitor these exposures and enter into derivative financial instruments to reduce these risks. We do not enter into derivative transactions on a speculative basis. All fair values have been determined using current market pricing models.
The principal market risks (i.e. the risk of losses arising from adverse movements in market rates and prices) to which we are exposed are:
as well as on conversion of assets and liabilities to rand;
Refer to "Item 18Financial StatementsNote 40 Financial risk management and financial instruments" for a qualitative and quantitative discussion of the group's exposure to these market risks. Specific recognition and measurement principles of the interest rate swap are contained within the same reference. The following is a breakdown of our debt arrangements and a summary of fixed versus floating interest rate exposures for operations. Liabilities reflect principal payments in each year.
Liabilitiesnotional
|
2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Total |
Fair
value |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
(Rand in millions)
|
||||||||||||||||||||||||
Fixed rate (Rand) |
1 058 | 137 | 149 | 97 | 108 | 4 874 | 6 423 | 6 483 | |||||||||||||||||
Average interest rate |
10,30 | % | 10,55 | % | 10,55 | % | 10,55 | % | 10,54 | % | 10,54 | % | |||||||||||||
Variable rate (Rand) |
1 204 | 1 073 | 672 | 68 | 68 | 213 | 3 298 | 3 376 | |||||||||||||||||
Average interest rate |
9,18 | % | 9,16 | % | 9,07 | % | 8,91 | % | 8,88 | % | 8,87 | % | |||||||||||||
Fixed Rate (US$) |
1 154 | 224 | 201 | 14 207 | 21 329 | 14 113 | 51 228 | 54 878 | |||||||||||||||||
Average interest rate |
6,14 | % | 6,14 | % | 6,14 | % | 6,40 | % | 7,12 | % | 7,92 | % | |||||||||||||
Variable rate (US$) |
294 | 96 | 2 408 | 2 413 | 69 966 | 2 067 | 77 244 | 77 244 | |||||||||||||||||
Average interest rate |
3,60 | % | 3,60 | % | 3,59 | % | 3,58 | % | 3,61 | % | 4,69 | % | |||||||||||||
Fixed rate (Euro) |
74 | 65 | 64 | 62 | 40 | 81 | 386 | 456 | |||||||||||||||||
Average interest rate |
3,38 | % | 3,61 | % | 3,98 | % | 4,64 | % | 5,61 | % | 6,19 | % | |||||||||||||
Variable rate (Euro) |
58 | | | | | | 58 | 58 | |||||||||||||||||
Average interest rate |
0,60 | % | | | | | | ||||||||||||||||||
Variable rate (Other currencies) |
| | | | | | | | |||||||||||||||||
Average interest rate |
| | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total |
3 842 | 1 595 | 3 494 | 16 847 | 91 511 | 21 348 | 138 637 | 142 495 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
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|
2020 | 2021 | 2022 | 2023 | 2024 | Thereafter |
Fair
value |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
(Rand in millions)
|
|||||||||||||||||||||
Interest rate swapdesignated as a hedging instrument (instrument 1)* |
||||||||||||||||||||||
Average notional amount |
27 119 | 25 750 | 24 283 | 22 921 | 21 539 | 18 933 | (1 488 | ) | ||||||||||||||
Average receive rate |
2,10 | % | 1,81 | % | 1,72 | % | 1,70 | % | 1,71 | % | 1,78 | % | ||||||||||
Average pay rate |
2,78 | % | 2,78 | % | 2,78 | % | 2,78 | % | 2,78 | % | 2,78 | % | ||||||||||
Notional at 30 June |
26 789 | 25 397 | 23 906 | 22 587 | 21 183 | 19 115 | ||||||||||||||||
Interest rate swapdesignated as a hedging instrument (instrument 2)* |
|
|
|
|
|
|
|
|||||||||||||||
Average notional amount |
389 | 345 | 302 | 265 | 229 | 110 | 15 | |||||||||||||||
Average receive rate |
2,02 | % | 1,77 | % | 1,73 | % | 1,78 | % | 1,90 | % | 1,87 | % | ||||||||||
Average pay rate |
2,80 | % | 2,80 | % | 2,80 | % | 2,80 | % | 2,80 | % | 2,80 | % | ||||||||||
Notional at 30 June |
378 | 334 | 293 | 256 | 220 | 92 |
|
2020 | 2021 | 2022 | 2023 | 2024 | Thereafter |
Total
Maturity |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Foreign Currency Derivativesheld for trading* |
||||||||||||||||||||||
US$ |
||||||||||||||||||||||
Zero-cost collars |
579 | | | | | | 579 | |||||||||||||||
Foreign Exchange Contracts |
(44 | ) | | | | | | (44 | ) | |||||||||||||
Euro |
||||||||||||||||||||||
Foreign Exchange Contracts |
14 | | | | | | 14 | |||||||||||||||
Other Currencies |
||||||||||||||||||||||
Foreign Exchange Contracts |
1 | | | | | | 1 | |||||||||||||||
Commodity derivativesheld for trading* |
||||||||||||||||||||||
Crude oil |
||||||||||||||||||||||
Crude oil options |
| | | | | | | |||||||||||||||
Crude oil futures |
1 521 | | | | | | 1 521 | |||||||||||||||
Other commodity derivatives |
254 | | | | | | 254 | |||||||||||||||
Coal price |
||||||||||||||||||||||
Coal swaps |
| | | | | | | |||||||||||||||
Ethane price |
||||||||||||||||||||||
Ethane swaps |
(454 | ) | | | | | | (454 | ) |
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ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A Debt securities
Not applicable.
12.B Warrants and rights
Not applicable.
12.C Other securities
Not applicable.
12.D American depositary shares
12.D.1 Depositary name and address
J.P. Morgan Chase Bank, N.A.
383 Madison Avenue, Floor 11
New York, New York, 10179
12.D.2 Description of American depositary shares
American depositary shares are evidenced by American Depositary Receipts (ADRs) that represents the right to receive, and to exercise the beneficial ownership interests in, the number of Sasol Ordinary shares specified in the form of ADRs.
Please see Exhibit 2.2 to this annual report on Form 20-F.
12.D.3 Depositary fees and charges
J.P. Morgan Chase Bank N.A. (J.P. Morgan) was appointed as Sasol Limited's new depositary for Sasol's ADSs, effective 6 May 2019. Prior to J.P. Morgan's appointment, the Bank of New York Mellon served as the depositary for Sasol's ADSs. Sasol's ADSs, each representing one Sasol ordinary share, are traded on the New York Stock Exchange under the symbol "SSL". The ADSs are evidenced by American Depositary Receipts, or ADRs, issued by J.P Morgan, as Depositary.
In terms of a Deposit Agreement (dated as of 14 July 1994, as amended and restated as of 6 March 2003), among the Bank of New York Mellon, Sasol Limited and its registered ADR holders, ADR holders were required to pay the
following fees to the Bank of New York Mellon, as the Depositary up to and including 6 May 2019.
Service
|
Fees (USD) | |
---|---|---|
Depositing or substituting the underlying shares |
Up to US$5,00
per 100 ADS |
|
Receiving or distributing dividends |
Up to US$0,02
per ADS |
|
Selling or exercising rights |
Up to US$5,00
per 100 ADS |
|
Withdrawing an underlying security |
Up to US$5,00
per 100 ADS |
As from 6 May 2019, the Deposit Agreement between J.P Morgan, Sasol Limited and its registered ADR holders, ADR holders are required to pay the following fees.
Service
|
Fees (USD) | |
---|---|---|
Depositing or substituting the underlying shares |
Up to US$5,00
per 100 ADS |
|
Receiving or distributing dividend |
Up to US$0,04
per ADS |
|
Selling or exercising rights |
Up to US$5,00
per 100 ADS |
|
Withdrawing an underlying security |
Up to US$5,00
per 100 ADS |
In addition, all non-standard out-of-pocket administration and maintenance expenses, including but not limited to, any and all reasonable legal fees and disbursements incurred by the Depositary (including legal opinions, and any fees and expenses incurred by or waived to third-parties) will be paid by the company. Fees and out-of-pocket expenses for the servicing of non-registered ADR holders and for any special service(s) performed by the Depositary will be paid for by the company.
12.D.4 Depositary payments for 2019
In terms of the Bank of New York Mellon's Amended and Restated Deposit Letter Agreement dated as of 21 September 2015 (the Letter Agreement), the Depositary will pay the company 70% of all dividend fees it collects for as long as the number of ADRs outstanding exceed 50% of the number outstanding on 21 September 2015. These payments will be made to the company within 60 days from the date such fees are collected. During the 2019 financial year, two payments of US$247 641,35 and US$236 062,39 were received
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from the Bank of New York Mellon in respect of the 2018 year end final dividend and the 2019 interim dividend respectively.
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
Board review
In May 2019, the Board commissioned an independent review into the circumstances that may have delayed the prompt identification and reporting of the LCCP cost and schedule overruns. The purpose of the review was to consider the circumstances that may have delayed the prompt identification and reporting of these developments, root causes and the legal consequences thereof. The review has now been concluded. The Board has made the following key findings:
As a result of this activity, the Company removed all work responsibilities and initiated disciplinary action against one individual and negotiated the separation of three additional individuals, and took other remedial actions.
(a) Disclosure controls and procedures
The Company's Joint Presidents and Chief Executive Officers and Chief Financial Officer, performed an evaluation of the effectiveness of the group's disclosure controls and procedures (required by paragraph (b) of 17 CFR 240.13a-15) as of the end of the period covered by this annual report on Form 20-F.
Based on this evaluation, our Joint Chief Executive Officers and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective as of 30 June 2019 due to a material weakness in internal control over financial reporting with respect to the capital cost estimation process implemented in connection with the LCCP, which resulted from the aggregation of a series of individual control and project-related control environment deficiencies described below in Management's annual report on internal control over financial reporting.
Notwithstanding this material weakness, management concluded that the consolidated financial statements included in this annual report on Form 20-F present fairly, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). Management further concluded that prior year financial statements were accurate in all material respects. Management's assessment is based upon a number of factors, including, but not limited to:
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(b) Management's annual report on internal control over financial reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Under Section 404 of the Sarbanes-Oxley Act of 2002, management is required to assess the effectiveness of the Company's internal control over financial reporting as of the end of each financial year and report, based on that assessment, whether the Company's internal control over financial reporting is effective.
The Company's internal control over financial reporting is a process designed under the supervision of the Joint Presidents and Chief Executive Officers and Chief Financial Officer to provide reasonable assurance as to the reliability of the Company's financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorisations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those processes of internal control over financial reporting determined to be effective can provide only reasonable assurance with respect to the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS.
Management assessed the effectiveness of the Company's internal control over financial reporting as of 30 June 2019. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organisations of the Treadway Commission (COSO) in "Internal ControlIntegrated Framework (2013)".
Material Weakness
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of financial statements will not be prevented or detected on timely basis.
Based on this assessment, our management has determined that, as of 30 June 2019, the Company's internal control over financial reporting was ineffective due to the existence of a material weakness with respect to the capital cost estimation process implemented in connection with the LCCP, which resulted from the aggregation of a series of individual control and project-related control environment deficiencies, the remediation of which had not been fully implemented and validated as of year-end. Our management, based on both its own analysis and based on the information identified during the Board review, concluded that the material weakness identified above was the result of a number of deficiencies:
97
Our management has further determined that this unremediated material weakness led to a misstatement in the disclosure of the Company's capital commitments for the year ended 30 June 2018, which has been revised in the Company's consolidated financial statements. Additionally, this material weakness could result in misstatements of the LCCP capital cost and related assets under construction and property, plant and equipment impairment account balances or disclosures that would result in a material misstatement to the consolidated financial statements that would not be prevented or detected.
Remediation Plan with Respect to the Material Weakness
The Company is committed to ensuring a strong internal control environment and to ensuring that a proper, consistent tone is communicated throughout the organization. To that end, the Company began efforts to remediate the material weakness identified above prior to 30 June 2019, and is currently still implementing additional measures to remediate the underlying causes that gave rise to the material weakness.
To date, the Company has already completed the following measures to remediate the identified material weakness:
In addition, the Company is engaging in a number of ongoing remedial steps to address the inappropriate conduct, tone and cultural aspects of the identified root causes of the material weakness. These include:
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While significant progress was made to remediate the material weakness as of 30 June 2019, the Company is still in the process of testing the operating effectiveness of certain of the new and enhanced controls and is continuing with the implementation of some of the longer-term remediation efforts described above. We believe our actions will be effective in remediating the material weakness, and we continue to devote significant time and attention to these efforts. The material weakness will not be considered remediated until we have completed designing and implementing the longer-term remediation efforts and the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
(c) Attestation report of the registered public accounting firm
The effectiveness of the Company's internal control over financial reporting as of 30 June 2019 was audited by PricewaterhouseCoopers Inc., an independent registered public accounting firm, as stated in its report on page F-1 of this Form 20-F.
(d) Changes in internal control over financial reporting
Except for the identification of the material weakness and remediation efforts in connection therewith described above, no other change in the Company's internal control over financial reporting occurred during the year ended 30 June 2019 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
Item 16.A AUDIT COMMITTEE FINANCIAL EXPERT
Mr. Colin Beggs, an independent member of the audit committee and its chairman since 1 January 2011, was determined by our board to be the audit committee's financial expert within the meaning of the Sarbanes-Oxley Act, in accordance with the Rules of the NYSE and the SEC.
Sasol adopted a new Code of Conduct effective 1 March 2018, previously called "Code of Ethics". The Code of Conduct adopts a behaviours-based approach which reinforces the importance of linking our day-to-day actions to Sasol's shared values and our aspirational culture. The Code of Conduct is further underpinned by policies and guidance notes to enhance its everyday application. The Code of Conduct applies to all of our directors, officers and employees, including the Joint Presidents and Chief Executive Officers, Chief Financial Officer and the Senior Vice President: Financial Control Services.
Any amendment or waiver of the Code of Conduct as it relates to our Joint Presidents and Chief Executive Officers or Chief Financial Officer will be posted on our website within five business days following such amendment or waiver. No such amendments or waivers are anticipated.
The Code of Conduct is available on our internet website. The website address is https://www.sasol.com/sustainability/ethics/sasol-code-conduct. This website is not incorporated by reference in this annual report.
We operate an independent ethics reporting telephone line through external advisors. This confidential and anonymous ethics hotline provides an impartial facility for all stakeholders to report deviations from ethical behaviour, including fraud and unsafe behaviour or environmental misconduct. Our Code of Conduct and related policies guide our interactions with all government representatives. Our policy prohibits contributions to political parties or government officials since these may be interpreted as an inducement for future beneficial treatment, and as interference in the democratic process.
99
Item 16.C PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate audit and audit-related fees, tax fees and all other fees billed by our principal accountants (PricewaterhouseCoopers Inc.) for each of the 2019 and 2018 years.
|
Audit
fees |
Audit-
related fees |
Tax
fees |
All
other fees |
Total | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
(Rand in millions)
|
|||||||||||||||
2019(1) |
93 | 3 | 0,4 | 0,8 | 97 | |||||||||||
2018(1) |
84 | 3 | 0,5 | 0,3 | 88 |
Audit fees consist of fees billed for the annual audit of the company's consolidated financial statements, review of the group's internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act and the audit of statutory financial statements of the company's subsidiaries, including fees billed for assurance and related services that are reasonably related to the performance of the audit or reviews of the company's financial statements that are services that only an external auditor can reasonably provide.
Audit-related fees consist of the review of documents filed with regulatory authorities, consultations concerning financial accounting and reporting standards, review of security controls and operational effectiveness of systems, due diligence related to acquisitions and employee benefit plan audits.
Tax fees include fees billed for tax compliance services, including assistance in the preparation of original and amended tax returns; tax consultations, such as assistance in connection with tax audits and appeals; tax advice relating to acquisitions, transfer pricing, and requests for rulings or technical advice from tax authorities; and tax planning services and expatriate tax compliance, consultation and planning services.
All other fees consist of fees billed which are not included under audit fees, audit related fees or tax fees.
Audit committee approval policy
In accordance with our audit committee pre-approval policy, all audit and non-audit services performed for us by our independent accountants were approved by the audit committee of our board of directors, which concluded that the provision of such services by the independent accountants was compatible with the maintenance of that firm's independence in the conduct of its auditing functions.
In terms of our policy, non-audit services not exceeding R500 000 that fall into the categories set out in the pre-approval policy, do not require pre-approval by the audit committee, but are pre-approved by the Senior Vice President: Financial Control Services. The audit committee is notified of each such service at its first meeting following the rendering of such service. All non-audit services exceeding R500 000 but not exceeding R2 million are pre-approved by the Chief Financial Officer. The audit committee is notified on a monthly basis of services approved within this threshold. Fees in respect of non-audit services exceeding R2 million require pre-approval by the audit committee, prior to engagement.
The total aggregate amount of non-audit fees in any one financial year must be less than 20% of the total audit fees for Sasol's annual audit engagement, unless otherwise directed by the audit committee. In addition, services to be provided by the independent accountants that are not within the category of approved services must be approved by the audit committee prior to engagement, regardless of the service being requested and the amount, but subject to the restriction above.
Requests or applications for services that require specific separate approval by the audit committee are required to be submitted to the audit committee by both management and the independent accountants, and must include a detailed description of the services to be provided and a joint statement confirming that the
100
provision of the proposed services does not impair the independence of the independent accountants.
No work was performed by persons other than the principal accountant's employees on the principal accountant's engagement to audit Sasol Limited's financial statements for 2019.
Item 16.D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
Item 16.E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
At its annual general meeting (AGM) held on 16 November 2018, shareholders authorised the board of directors of Sasol Limited to approve the general repurchase by the company or any of its subsidiaries of the company's issued ordinary shares or Sasol BEE ordinary shares (the shares) on 16 November 2018.
In terms of the authority granted on 16 November 2018, up to 10% of the shares in each class may be repurchased at a price up to 10% above the weighted average of the market value of the shares for the five business days immediately preceding the date on which the repurchase is effected.
The authority granted on 16 November 2018 will expire at the company's next AGM on 27 November 2019.
Item 16.F CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
Item 16.G CORPORATE GOVERNANCE
Sasol maintains a primary listing of its ordinary shares and Sasol BEE ordinary shares on the Johannesburg Stock Exchange operated by the JSE Limited (JSE) and a listing of American Depositary Shares on the New York Stock Exchange (NYSE). Accordingly, the company is subject to the disclosure, corporate governance and other requirements imposed by applicable South African and US legislation, the JSE, the US Securities and Exchange Commission (SEC) and the NYSE. We have implemented controls to provide reasonable assurance of our compliance with all relevant requirements in respect of our listings.
We have compared our corporate governance practices to those for domestic US companies listed on the NYSE and confirm that we comply substantially with such NYSE corporate governance standards and there were no significant differences at 30 June 2019.
Refer to "Integrated ReportGovernance overview" as contained in Exhibit 99.9, for further details of our corporate governance practices.
Item 16.H MINE SAFETY DISCLOSURE
Not applicable.
Sasol is furnishing financial statements pursuant to the instructions of Item 18 of Form 20-F.
101
The following consolidated financial statements, together with the auditors' report of PricewaterhouseCoopers Inc. (PwC) are filed as part of this annual report on Form 20-F:
Index to Consolidated Financial Statements for the years ended 30 June 2019, 2018 and 2017
Report of the Independent Registered Public Accounting Firm (PwC) |
F-1 | |||
Consolidated Financial Statements* |
F- |
|||
Supplemental Oil and Gas Information (Unaudited) |
G-1 |
102
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Sasol Limited
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statement of financial position of Sasol Limited and its subsidiaries (the "Company") as of 30 June 2019 and 30 June 2018, and the related consolidated income statement, statement of comprehensive income, changes in equity and cash flows for each of the three years in the period ended 30 June 2019, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of 30 June 2019, based on criteria established in Internal ControlIntegrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of 30 June 2019 and 30 June 2018, and the results of its operations and its cash flows for each of the three years in the period ended 30 June 2019 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of 30 June 2019, based on criteria established in Internal ControlIntegrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to the capital cost estimation process implemented in connection with the Lake Charles Chemicals Project, which resulted from the aggregation of a series of individual control and project-related control environment deficiencies.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in the accompanying Management's Annual Report on Internal Control over Financial Reporting appearing under Item 15(b). We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2019 consolidated financial statements, and our opinion regarding the effectiveness of the Company's internal control over financial reporting does not affect our opinion on those consolidated financial statements.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
F-1
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment assessment of property, plant and equipment (PPE) and assets under construction (AUC)
As described in Notes 17 and 18 to the consolidated financial statements, the company's consolidated PPE and AUC at 30 June 2019 amounted to R233 549 million and R127 764 million, respectively. Furthermore, as described in Note 9 to the consolidated financial statements, management recognised an impairment charge of R18 451 million for the year ended 30 June 2019, mainly related to the Tetramerization and Ethylene Oxide / Ethylene Glycol (EO/EG) value chains, the Ammonia value chain in South Africa (Ammonia value chain) and the Sasol Canada shale gas assets (Sasol Canada). Management assesses non-financial assets for impairment at each reporting date or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
F-2
Recoverable amounts are estimated for individual assets or, where an individual asset cannot generate cash inflows independently, the recoverable amount is determined for the larger cash generating unit to which it belongs. Management judgment is applied in identifying cash-generating units. The recoverable amount of the assets is determined based on the higher of the fair value less costs to sell or value-in-use calculations. Future cash flow assumptions relating to this valuation, are estimated based on financial budgets which reflect the long term plans for the Company. The determination of future cash flows include significant management's judgements and assumptions, including crude oil prices, gas prices, chemical prices, exchange rates, growth rates and weighted average cost of capital (WACC) rates.
The principal considerations for our determination that performing procedures relating to the impairment assessment of PPE and AUC is a critical audit matter are, there were significant judgments by management when identifying cash generating units, as well as developing their assessment of the recoverable amount for all cash generating units where impairment indicators were identified. This in turn led to a high degree of auditor judgment, subjectivity and effort in evaluating management's identification of cash generating units and main assumptions, including crude oil prices, gas prices, chemical prices, exchange rates, growth rates and WACC rates. In addition, the audit effort involved the use of professionals with specialised skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained. As described in the "Opinions on the Financial Statements and Internal Control over Financial Reporting" section, a material weakness was identified related to this matter.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management's identification of cash generating units and impairment calculations, including controls relating to the main assumptions used in these calculations. These procedures also included, among others, an assessment of the appropriateness of the cash generating units identified by management, testing management's process for determining the recoverable amount of the cash generating units where impairment indicators were identified, evaluating the appropriateness of the methodology used in the impairment models, testing the completeness, accuracy, and relevance of underlying data used in the impairment models, and evaluating the main assumptions used by management. Evaluating the reasonableness of management's assumptions involved (i) evaluating key market-related assumptions (including crude oil prices, gas prices, chemical prices, exchange rates, growth rates and WACC rates) used in the models to external market and third party data, (ii) performing a retrospective comparison of forecasted cash flows to actual past performance and previous forecasts, and (iii) performing sensitivity analyses. Professionals with specialised skill and knowledge were used to assist in evaluating the appropriateness of the methodology used in the impairment models and the WACC rates, as well as assessing management's Lake Charles Chemicals Project capital cost estimate for reasonability.
/s/ PricewaterhouseCoopers Inc.
Johannesburg,
Republic of South Africa
28 October 2019
We have served as the Company's auditor since 2014.
F-3
SUPPLEMENTAL OIL AND GAS INFORMATION (unaudited)
In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Section 932, "Extractive IndustriesOil and Gas", and regulations of the US Securities and Exchange Commission (SEC), this section provides supplemental oil and gas information separately about our natural oil and gas exploration and production operations, as managed by Exploration and Production International (E&PI); and about our coal mining operations and the conversion of coal reserves to synthetic oil, as managed by Mining and Sasol Secunda Operations.
NATURAL OIL AND GAS
The supplemental information provided below relates to our natural oil and gas operations, which are managed by Exploration and Production International (E&PI).
Tables 1 through to 3 present historical information pertaining to costs incurred for property acquisitions, exploration and development, capitalised costs, and results of operations. Table 4 presents estimates of proved developed and proved undeveloped reserves (which are not supplemental). Tables 5 and 6 present information on the standardised measure of estimated discounted future net cash flows related to proved reserves and changes therein.
TABLE 1COSTS INCURRED FOR PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT ACTIVITIES
The table below presents the costs incurred, during the last three years, in natural oil and gas property acquisition, exploration and development activities, whether capitalised or charged to income currently.
|
Natural Oil and Gas (Rand in millions) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Mozambique |
Rest of
Africa(1) |
North
America(1) |
Australasia(1) | Total | |||||||||||
Year ended 30 June 2017 |
||||||||||||||||
Acquisition of proved properties |
| | | | | |||||||||||
Acquisition of unproved properties |
| | | | | |||||||||||
Exploration |
40,5 | 212,6 | | 160,1 | 413,2 | |||||||||||
Development |
1 986,7 | (43,7 | )(2) | 362,4 | | 2 305,4 | ||||||||||
| | | | | | | | | | | | | | | | |
Total costs incurred |
2 027,2 | 168,9 | 362,4 | 160,1 | 2 718,6 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Year ended 30 June 2018 |
||||||||||||||||
Acquisition of proved properties |
| | | | | |||||||||||
Acquisition of unproved properties |
| | | | | |||||||||||
Exploration |
395,8 | 265,5 | | (2,2 | ) | 659,1 | ||||||||||
Development |
1 674,5 | 19,3 | 106,0 | | 1 799,8 | |||||||||||
| | | | | | | | | | | | | | | | |
Total costs incurred |
2 070,3 | 284,8 | 106,0 | (2,2 | ) | 2 458,9 | ||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Year ended 30 June 2019 |
||||||||||||||||
Acquisition of proved properties |
| | | | | |||||||||||
Acquisition of unproved properties |
| | | | | |||||||||||
Exploration |
298,0 | 104,5 | | | 402,5 | |||||||||||
Development |
576,9 | 278,7 | 141,5 | | 997,1 | |||||||||||
| | | | | | | | | | | | | | | | |
Total costs incurred |
874,9 | 383,2 | 141,5 | | 1 399,6 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
G-1
TABLE 2CAPITALISED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
The table below summarises the aggregate amount of property, plant and equipment and intangible assets relating to natural oil and gas exploration and production activities, and the aggregate amount of the related depreciation and amortisation.
|
Natural Oil and Gas (Rand in millions) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Mozambique |
Rest of
Africa(1) |
North
America(1) |
Australasia(1) | Total | |||||||||||
Year ended 30 June 2017 |
||||||||||||||||
Proved properties |
8 599,2 | 4 251,8 | 27 502,1 | | 40 353,1 | |||||||||||
| | | | | | | | | | | | | | | | |
Producing wells and equipment |
8 513,2 | 4 250,2 | 27 420,2 | | 40 183,6 | |||||||||||
Non-producing wells and equipment |
86,0 | 1,6 | 81,9 | | 169,5 | |||||||||||
| | | | | | | | | | | | | | | | |
Unproved properties |
6 051,6 | | | 49,3 | 6 100,9 | |||||||||||
| | | | | | | | | | | | | | | | |
Capitalised costs |
14 650,8 | 4 251,8 | 27 502,1 | 49,3 | 46 454,0 | |||||||||||
Accumulated depreciation |
(3 832,6 | ) | (4 036,9 | ) | (20 577,9 | ) | | (28 447,4 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net book value |
10 818,2 | 214,9 | 6 924,2 | 49,3 | 18 006,6 | |||||||||||
| | | | | | | | | | | | | | | | |
Year ended 30 June 2018 |
||||||||||||||||
Proved properties |
8 937,9 | 4 438,7 | 28 396,0 | | 41 772,6 | |||||||||||
| | | | | | | | | | | | | | | | |
Producing wells and equipment |
8 496,4 | 4 413,7 | 28 396,0 | | 41 306,1 | |||||||||||
Non-producing wells and equipment |
441,5 | 25,0 | | | 466,5 | |||||||||||
| | | | | | | | | | | | | | | | |
Unproved properties |
5 965,4 | 39,7 | | | 6 005,1 | |||||||||||
| | | | | | | | | | | | | | | | |
Capitalised costs |
14 903,3 | 4 478,4 | 28 396,0 | | 47 777,7 | |||||||||||
Accumulated depreciation |
(4 292,0 | ) | (4 323,8 | ) | (25 104,2 | ) | | (33 720,0 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net book value |
10 611,3 | 154,6 | 3 291,8 | | 14 057,7 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Year ended 30 June 2019 |
||||||||||||||||
Proved properties |
10 107,4 | 4 836,8 | 29 606,0 | | 44 550,2 | |||||||||||
| | | | | | | | | | | | | | | | |
Producing wells and equipment |
9 734,9 | 4 811,9 | 29 506,0 | | 44 052,8 | |||||||||||
Non-producing wells and equipment |
372,5 | 24,9 | 100,0 | | 497,4 | |||||||||||
| | | | | | | | | | | | | | | | |
Unproved properties |
6 904,1 | 40,7 | | | 6 944,8 | |||||||||||
| | | | | | | | | | | | | | | | |
Capitalised costs |
17 011,5 | 4 877,5 | 29 606,0 | | 51 495,0 | |||||||||||
Accumulated depreciation |
(4 862,3 | ) | (4 581,2 | ) | (28 594,0 | ) | | (38 037,5 | ) | |||||||
| | | | | | | | | | | | | | | | |
Net book value |
12 149,2 | 296,3 | 1 012,0 | | 13 457,5 | |||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
G-2
TABLE 3RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
The results of operations for natural oil and gas producing activities are summarised in the table below.
|
Natural Oil and Gas (Rand in millions) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Mozambique |
Rest of
Africa(1) |
North
America(1) |
Australasia(1) | Total | |||||||||||
Year ended 30 June 2017 |
||||||||||||||||
Sales to unaffiliated parties |
224,8 | 835,2 | 559,7 | | 1 619,7 | |||||||||||
Transfers to affiliated parties |
2 464,7 | | | | 2 464,7 | |||||||||||
| | | | | | | | | | | | | | | | |
Total revenues |
2 689,5 | 835,2 | 559,7 | | 4 084,4 | |||||||||||
Production costs |
(373,3 | ) | (497,4 | ) | (48,2 | ) | (0,4 | ) | (919,3 | ) | ||||||
Foreign currency translation (losses)/gains |
345,6 | (0,5 | ) | | (1,1 | ) | 344,0 | |||||||||
Exploration expenses |
(37,3 | ) | (232,4 | ) | | 9,9 | (259,8 | ) | ||||||||
Valuation provision |
| 197,2 | | (189,0 | ) | 8,2 | ||||||||||
Farm-down (losses)/gains |
| (0,9 | ) | | | (0,9 | ) | |||||||||
Depreciation |
(560,4 | ) | (201,5 | ) | (1 260,3 | ) | | (2 022,2 | ) | |||||||
| | | | | | | | | | | | | | | | |
Operating profit / (loss) |
2 064,1 | 99,7 | (748,8 | ) | (180,6 | ) | 1 234,4 | |||||||||
Tax |
(321,1 | ) | (126,6 | ) | | | (447,7 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Results of operations |
1 743,0 | (26,9 | ) | (748,8 | ) | (180,6 | ) | 786,7 | ||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Year ended 30 June 2018 |
||||||||||||||||
Sales to unaffiliated parties |
217,6 | 984,6 | 284,2 | | 1 486,4 | |||||||||||
Transfers to affiliated parties |
2 711,3 | | | | 2 711,3 | |||||||||||
| | | | | | | | | | | | | | | | |
Total revenues |
2 928,9 | 984,6 | 284,2 | | 4 197,7 | |||||||||||
Production costs |
(926,4 | ) | (578,4 | ) | (182,6 | ) | (0,8 | ) | (1 688,2 | ) | ||||||
Foreign currency translation (losses)/gains |
108,0 | 206,2 | | (0,8 | ) | 313,4 | ||||||||||
Exploration expenses(2) |
(14,8 | ) | (86,6 | ) | | (0,1 | ) | (101,5 | ) | |||||||
Valuation provision |
(1 295,4 | ) | | (2 763,8 | ) | (33,9 | ) | (4 093,1 | ) | |||||||
Farm-down (losses)/gains |
| 11,9 | | | 11,9 | |||||||||||
Depreciation |
(466,8 | ) | (75,1 | ) | (893,9 | ) | | (1 435,8 | ) | |||||||
| | | | | | | | | | | | | | | | |
Operating profit/(loss) |
333,5 | 462,6 | (3 556,1 | ) | (35,6 | ) | (2 795,6 | ) | ||||||||
Tax |
(285,9 | ) | (138,2 | ) | | | (424,1 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Results of operations |
47,6 | 324,4 | (3 556,1 | ) | (35,6 | ) | (3 219,7 | ) | ||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Year ended 30 June 2019 |
||||||||||||||||
Sales to unaffiliated parties |
303,0 | 1 135,1 | 239,0 | | 1 677,1 | |||||||||||
Transfers to affiliated parties |
3 506,9 | | | | 3 506,9 | |||||||||||
| | | | | | | | | | | | | | | | |
Total revenues |
3 809,9 | 1 135,1 | 239,0 | | 5 184,0 | |||||||||||
Production costs |
(781,6 | ) | (537,9 | ) | (173,6 | ) | | (1 493,1 | ) | |||||||
Foreign currency translation (losses)/gains |
(125,6 | ) | 54,0 | | (3,6 | ) | (75,2 | ) | ||||||||
Exploration expenses |
(406,0 | ) | (303,6 | ) | | 3,1 | (706,5 | ) | ||||||||
Valuation provision |
| | (1 946,9 | ) | 2,3 | (1 944,6 | ) | |||||||||
Farm-down (losses)/gains |
| | | | | |||||||||||
Depreciation |
(576,6 | ) | (148,5 | ) | (830,7 | ) | | (1 555,8 | ) | |||||||
| | | | | | | | | | | | | | | | |
Operating profit/(loss) |
1 920,1 | 199,1 | (2 712,2 | ) | 1,8 | (591,2 | ) | |||||||||
Tax |
(663,7 | ) | (246,5 | ) | | | (910,2 | ) | ||||||||
| | | | | | | | | | | | | | | | |
Results of operations |
1 256,4 | (47,4 | ) | (2 712,2 | ) | 1,8 | (1 501,4 | ) | ||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
G-3
TABLE 4PROVED RESERVE QUANTITY INFORMATION
The table below summarises the proved developed and proved undeveloped reserves of natural oil and gas, as at 30 June 2019 and the two previous years, along with volumes produced during the year. The table also presents the changes in the proved reserves and the reasons for the changes, over the last three years.
As at 30 June 2019, the total proved reserve estimate for natural oil and gas is 169,2 million barrels in oil equivalent terms (6 000 standard cubic feet of natural gas is equivalent to 1 barrel of oil).
|
Crude oil and condensate(3) | Natural gas(3) | Oil equivalent(3) | |||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Mozambique(1) |
Rest of
Africa(2)(4) |
North
America(2) |
Total | Mozambique(1) |
North
America(2) |
Total | Mozambique(1) |
Rest of
Africa(2)(4) |
North
America(2) |
Total | |||||||||||||||||||||||
|
Millions of barrels
|
Billions of cubic feet
|
Equivalent, Millions of barrels
|
|||||||||||||||||||||||||||||||
Balance at 30 June 2016 |
3,8 | 0,8 | 0,2 | 4,8 | 1 210,5 | 122,7 | 1 333,2 | 205,5 | 0,8 | 20,7 | 227,0 | |||||||||||||||||||||||
Revisions |
0,2 | 2,1 | 0,5 | 2,8 | 88,9 | 21,6 | 110,5 | 15,1 | 2,1 | 4,0 | 21,2 | |||||||||||||||||||||||
Improved recovery |
(0,3 | ) | 0,1 | | (0,2 | ) | (43,3 | ) | | (43,3 | ) | (7,5 | ) | 0,1 | | (7,4 | ) | |||||||||||||||||
Production |
(0,3 | ) | (1,3 | ) | (0,1 | ) | (1,7 | ) | (116,4 | ) | (21,9 | ) | (138,3 | ) | (19,7 | ) | (1,3 | ) | (3,8 | ) | (24,8 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at 30 June 2017 |
3,4 | 1,7 | 0,6 | 5,7 | 1 139,7 | 122,4 | 1 262,1 | 193,4 | 1,7 | 20,9 | 216,0 | |||||||||||||||||||||||
Revisions |
(0,1 | ) | 1,1 | (0,2 | ) | 0,8 | 4,7 | (41,7 | ) | (37,0 | ) | 0,6 | 1,1 | (7,1 | ) | (5,4 | ) | |||||||||||||||||
Improved recovery |
(0,1 | ) | 0,1 | | | (18,8 | ) | 1,7 | (17,1 | ) | (3,2 | ) | 0,1 | 0,3 | (2,8 | ) | ||||||||||||||||||
Production |
(0,3 | ) | (1,1 | ) | (0,1 | ) | (1,5 | ) | (115,9 | ) | (19,2 | ) | (135,1 | ) | (19,6 | ) | (1,1 | ) | (3,3 | ) | (24,0 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at 30 June 2018 |
2,9 | 1,8 | 0,3 | 5,0 | 1 009,7 | 63,2 | 1 072,9 | 171,2 | 1,8 | 10,8 | 183,8 | |||||||||||||||||||||||
Revisions |
(0,3 | ) | 1,2 | (0,1 | ) | 0,8 | 50,2 | (8,7 | ) | 41,5 | 8,1 | 1,2 | (1,5 | ) | 7,8 | |||||||||||||||||||
Improved recovery |
| 0,2 | 0,1 | 0,3 | | 3,2 | 3,2 | | 0,2 | 0,6 | 0,8 | |||||||||||||||||||||||
Production |
(0,2 | ) | (1,2 | ) | (0,1 | ) | (1,5 | ) | (113,9 | ) | (16,3 | ) | (130,2 | ) | (19,2 | ) | (1,2 | ) | (2,8 | ) | (23,2 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at 30 June 2019 |
2,4 | 2,0 | 0,2 | 4,6 | 946,0 | 41,4 | 987,4 | 160,1 | 2,0 | 7,1 | 169,2 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Proved developed reserves |
||||||||||||||||||||||||||||||||||
At 30 June 2017 |
2,0 | 1,7 | 0,6 | 4,3 | 710,7 | 122,4 | 833,1 | 120,5 | 1,7 | 20,9 | 143,1 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At 30 June 2018 |
2,4 | 1,8 | 0,3 | 4,5 | 821,1 | 63,2 | 884,3 | 139,2 | 1,8 | 10,8 | 151,8 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At 30 June 2019 |
1,9 | 1,8 | 0,1 | 3,8 | 750,0 | 38,2 | 788,2 | 126,9 | 1,8 | 6,5 | 135,2 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Proved undeveloped reserves |
||||||||||||||||||||||||||||||||||
At 30 June 2017 |
1,4 | | | 1,4 | 429,0 | | 429,0 | 72,9 | | | 72,9 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At 30 June 2018 |
0,5 | | | 0,5 | 188,6 | | 188,6 | 32,0 | | | 32,0 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At 30 June 2019 |
0,5 | 0,2 | 0,1 | 0,8 | 196,0 | 3,2 | 199,2 | 33,2 | 0,2 | 0,6 | 34,0 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
G-4
Preparation of reserve estimates
To ensure natural oil and gas reserves are appropriately estimated, are accurately disclosed and are compliant with current Securities and Exchange Commission (SEC) regulations and Financial Accounting Standards Board (FASB) requirements, E&PI has established and maintains estimation guidelines, procedures and standards, which are subject to review by suitably experienced independent external consultants, and a set of internal controls, which are in accordance with the requirements of the Sarbanes Oxley Act of 2002. The internal controls cover, amongst other matters, the segregation of duties between the asset teams which prepare the reserve estimates, the corporate reserves team which assures the estimates and the corporate authority which is the E&PI Hydrocarbon Resource Committee. The controls also include confirmation that the members of the corporate reserves team are appropriately qualified and experienced and that their compensation arrangements are not materially affected by the reserves.
The estimation process includes a review of all estimated future production rates and future capital and operating costs to ensure that the assumptions, data, methods and procedures are appropriate; a review of the technologies used in the process to determine reliability; and arrangements to validate the economic assumptions and to ensure that only accurate, complete and consistent data are used in the estimation of reserves.
The technical person within E&PI who is primarily responsible for overseeing the preparation of natural oil and gas reserves is the E&PI Manager: Corporate Reserves and Resources. The incumbent is a Member of the Energy Institute, a Chartered Petroleum Engineer, holds a MA and MSc in Mathematics and has 40 years' experience in oil and gas exploration and production activities with 31 years' experience in reserves estimation.
The definitions of categories of natural oil and gas reserves used in this disclosure are consistent with those set forth in the Regulations:
Proved reserves of oil and gasThose quantities of oil and gas, which, by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be economically produciblefrom a given date forward, from known reservoirs under existing economic conditions, operating methods, and government regulationsprior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract hydrocarbons must be approved and must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. Additionally Sasol requires that natural oil and gas reserves will be produced by a "project sanctioned by all internal and external parties".
Existing economic conditions define prices and costs at which economic producibility is to be determined. The price is the average sales price during the 12-month period prior to the ending date of the period covered by the report, determined as an un-weighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements. Future price changes are limited to those provided by contractual arrangements in existence at year-end. At the reporting date, product sales prices were determined by existing contracts for the majority of Sasol's natural oil and gas reserves. Costs comprise development and production expenditure, assessed in real terms, applicable to the reserves class being estimated. Depending upon the status of development proved reserves of oil and gas are subdivided into "Proved Developed Reserves" and "Proved Undeveloped Reserves".
Proved developed reservesThose proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods (or in which the cost of the required equipment is relatively minor compared to the cost of a new well) and through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.
G-5
Proved undeveloped reservesThose proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required before production can commence.
Definitions of Changes to Proved Reserves
The definitions of the changes to Proved Reserves estimates used in this disclosure are consistent with FASB ASC 932-235-50-5.
TABLE 5STANDARDISED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED RESERVES
The standardised measures of discounted future net cash flows, relating to natural oil and gas proved reserves for the last three years, are shown in the table below.
|
Natural Oil and Gas (Rand in millions) | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Mozambique |
Rest of
Africa(1) |
North
America(1) |
Total | |||||||||
Year ended 30 June 2017 |
|||||||||||||
Future cash inflows |
25 803,2 | 1 142,7 | 3 642,5 | 30 588,4 | |||||||||
Future production costs |
(6 764,1 | ) | (1 236,9 | ) | (2 787,4 | ) | (10 788,4 | ) | |||||
Future development costs |
(5 720,9 | ) | (595,6 | ) | (1 613,6 | ) | (7 930,1 | ) | |||||
Future income taxes |
(5 396,4 | ) | (111,9 | ) | (0 | ) | (5 508,3 | ) | |||||
| | | | | | | | | | | | | |
Undiscounted future net cash flows |
7 921,8 | (801,7 | ) | (758,5 | ) | 6 361,6 | |||||||
10% annual discount for timing of estimated cash flows |
(2 534,0 | ) | 213,2 | 620,6 | (1 700,2 | ) | |||||||
| | | | | | | | | | | | | |
Standardised measure of discounted future net cash flows |
5 387,8 | (588,5 | ) | (137,9 | ) | 4 661,4 | |||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Year ended 30 June 2018 |
|||||||||||||
Future cash inflows |
28 163,3 | 1 604,4 | 1 579,9 | 31 347,6 | |||||||||
Future production costs |
(7 010,9 | ) | (1 297,9 | ) | (2 192,0 | ) | (10 500,8 | ) | |||||
Future development costs |
(5 478,2 | ) | (481,8 | ) | (1 732,8 | ) | (7 692,8 | ) | |||||
Future income taxes |
(6 117,0 | ) | (156,9 | ) | (0,0 | ) | (6 273,9 | ) | |||||
| | | | | | | | | | | | | |
Undiscounted future net cash flows |
9 557,2 | (332,2 | ) | (2 344,9 | ) | 6 880,1 | |||||||
10% annual discount for timing of estimated cash flows |
(2 679,9 | ) | 95,4 | 787,5 | (1 797,0 | ) | |||||||
| | | | | | | | | | | | | |
Standardised measure of discounted future net cash flows |
6 877,3 | (236,8 | ) | (1 557,4 | ) | 5 083,1 | |||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Year ended 30 June 2019 |
|||||||||||||
Future cash inflows |
32 123,0 | 2 066,2 | 1 088,3 | 35 277,5 | |||||||||
Future production costs |
(6 462,7 | ) | (1 541,2 | ) | (1 167,3 | ) | (9 171,2 | ) | |||||
Future development costs |
(5 451,1 | ) | (764,8 | ) | (1 143,0 | ) | (7 358,9 | ) | |||||
Future income taxes |
(7 612,7 | ) | (132,0 | ) | 0,0 | (7 744,7 | ) | ||||||
| | | | | | | | | | | | | |
Undiscounted future net cash flows |
12 596,5 | (371,8 | ) | (1 222,0 | ) | 11 002,7 | |||||||
10% annual discount for timing of estimated cash flows |
(3 543,2 | ) | 146,4 | 365,5 | (3 031,3 | ) | |||||||
| | | | | | | | | | | | | |
Standardised measure of discounted future net cash flows |
9 053,3 | (225,4 | ) | (856,5 | ) | 7 971,4 | |||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
In Canada for our Farrell Creek and Cypress A asset and in Gabon for our Etame Marin Permit asset, the undiscounted future net cash flows are negative as a result of future production and development costs which are not directly related to future production or dependent upon the continuation of production and will be incurred even in the event of no future production. These are contractually committed costs (in 2017 for both assets; in 2018 and 2019 for the Farrell Creek and Cypress A asset only) and asset retirement costs (for both assets in 2017, 2018 and 2019). For both assets these costs are fully responsible for the negative future cash flow.
In Canada, the cost of unused gas transportation capacity is included in production costs. We market the unused capacity on an ad hoc basis and although such marketing has been successful in the past, no future revenue from this marketing is included in the calculation of the standardised measure of discounted future net cash flows.
Standardised measure of discounted future net cash flows
The standardised measure of discounted future net cash flows, relating to the proved reserves in the table above, are calculated in accordance with the requirements of FASB ASC-Section 932-235. Future cash inflows are computed by applying the prices used in estimating proved reserves to the year-end quantities of those reserves. Future development and production costs are computed by applying the costs used in estimating proved reserves. Future income taxes are computed by applying the appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, to the future pre-tax net cash flows relating to the reserves, less the tax basis of the properties involved. The future income tax expenses therefore give effect to the tax deductions, tax credits and allowances relating to the reserves.
Discounted future net cash flows are the result of subtracting future development and production costs and future income taxes from the cash inflows. A discount rate of 10 percent a year is applied to reflect the timing of the future net cash flows relating to the reserves.
G-6
The information provided here does not represent management's estimate of the expected future cash flows or value of the properties. Estimates of reserves are imprecise and will change over time as new information becomes available. Moreover probable and possible reserves along with other classes of resources, which may become proved reserves in the future, are excluded from the calculations. The valuation prescribed under FASB ASC Section 932 requires assumptions as to the timing and amount of future development and production costs. The calculations are made as of 30 June each year and should not be relied upon as an indication of the company's future cash flows or value of natural oil and gas reserves.
TABLE 6CHANGES IN THE STANDARDISED MEASURE OF DISCOUNTED NET CASH FLOWS
The changes in standardised measure of discounted future net cash flows, relating to the Proved Reserves are shown in the table below.
|
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| Natural Oil and Gas (Rand in millions) | |
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
| Mozambique | |
Rest of
Africa(1) |
|
North
America(1) |
| Total | |
|
||||||||||
Present value at 30 June 2016 |
| | | 7 444,7 | | | | (1 175,2 | ) | | | (1 152,7 | ) | | 5 116,8 | | ||||||
Net changes for the year |
| | | (2 056,9 | ) | | | 586,7 | | | | 1 014,8 | | | (455,4 | ) | ||||||
| | | | | | | | | | | | | ||||||||||
Sales and transfers of oil and gas produced net of production costs |
| | | (2 141,9 | ) | | | (375,9 | ) | | | (434,5 | ) | | (2 952,3 | ) | ||||||
Development costs incurred |
| | | 267,0 | | | | 35,7 | | | | 499,9 | | | 802,6 | | ||||||
Net change due to current reserves estimates from: |
| | | | | | | | | | | | ||||||||||
(Reduced)/improved recovery |
| | | (822,0 | ) | | | 15,1 | | | | | | | (806,9 | ) | ||||||
Revisions |
| | | 1 324,8 | | | | 1 204,4 | | | | 434,2 | | | 2 963,4 | | ||||||
Net changes in prices and costs related to future production |
| | | (1 232,1 | ) | | | (530,9 | ) | | | 413,3 | | | (1 349,7 | ) | ||||||
Changes in estimated future development costs |
| | | 289,2 | | | | 261,7 | | | | 71,5 | | | 622,4 | | ||||||
Accretion of discount |
| | | 1 127,4 | | | | (112,9 | ) | | | (115,3 | ) | | 899,2 | | ||||||
Net change in income tax |
| | | 522,1 | | | | (49,9 | ) | | | (0,0 | ) | | 472,2 | | ||||||
Net change due to exchange rate |
| | | (1 391,4 | ) | | | 139,4 | | | | 145,7 | | | (1 106,3 | ) | ||||||
| | | | | | | | | | | | | ||||||||||
Present value at 30 June 2017 |
| | | 5 387,8 | | | | (588,5 | ) | | | (137,9 | ) | | 4 661,4 | | ||||||
| | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | ||||
Net changes for the year |
| | | 1 489,5 | | | | 351,7 | | | | (1 419,5 | ) | | 421,7 | | ||||||
| | | | | | | | | | | | | ||||||||||
Sales and transfers of oil and gas produced net of production costs |
| | | (2 595,6 | ) | | | (408,6 | ) | | | (215,5 | ) | | (3 219,7 | ) | ||||||
Development costs incurred |
| | | 862,9 | | | | 80,5 | | | | 96,4 | | | 1 039,8 | | ||||||
Net change due to current reserves estimates from: |
| | | | | | | | | | | | ||||||||||
(Reduced)/improved recovery |
| | | (226,5 | ) | | | 53,8 | | | | 15,9 | | | (156,8 | ) | ||||||
Revisions |
| | | (82,4 | ) | | | 807,0 | | | | (339,8 | ) | | 384,8 | | ||||||
Net changes in prices and costs related to future production |
| | | 2 923,9 | | | | (115,8 | ) | | | (614,1 | ) | | 2 194,0 | | ||||||
Changes in estimated future development costs |
| | | (112,5 | ) | | | 50,7 | | | | (342,8 | ) | | (404,6 | ) | ||||||
Accretion of discount |
| | | 869,5 | | | | (49,3 | ) | | | (13,8 | ) | | 806,4 | | ||||||
Net change in income tax |
| | | (642,4 | ) | | | (38,7 | ) | | | (0,0 | ) | | (681,1 | ) | ||||||
Net change due to exchange rate |
| | | 492,6 | | | | (27,9 | ) | | | (5,8 | ) | | 458,9 | | ||||||
| | | | | | | | | | | | | ||||||||||
Present value at 30 June 2018 |
| | | 6 877,3 | | | | (236,8 | ) | | | (1 557,4 | ) | | 5 083,1 | | ||||||
| | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | ||||
Net changes for the year |
| | | 2 176,0 | | | | 11,4 | | | | 700,9 | | | 2 888,3 | | ||||||
| | | | | | | | | | | | | ||||||||||
Sales and transfers of oil and gas produced net of production costs |
| | | (3 255,8 | ) | | | (618,3 | ) | | | (200,2 | ) | | (4 074,3 | ) | ||||||
Development costs incurred |
| | | 508,6 | | | | 56,3 | | | | 1 024,0 | | | 1 588,9 | | ||||||
Net change due to current reserves estimates from: |
| | | | | | | | | | | | ||||||||||
(Reduced)/improved recovery |
| | | 316,2 | | | | 160,8 | | | | 62,8 | | | 539,8 | | ||||||
Revisions |
| | | (55,5 | ) | | | 999,5 | | | | (14,0 | ) | | 930,0 | | ||||||
Net changes in prices and costs related to future production |
| | | 4 408,3 | | | | (392,4 | ) | | | 458,1 | | | 4 474,0 | | ||||||
Changes in estimated future development costs |
| | | (113,1 | ) | | | (203,4 | ) | | | (424,6 | ) | | (741,1 | ) | ||||||
Accretion of discount |
| | | 1 082,7 | | | | (10,2 | ) | | | (155,7 | ) | | 916,8 | | ||||||
Net change in income tax |
| | | (1 021,9 | ) | | | 22,0 | | | | (0,0 | ) | | (999,9 | ) | ||||||
Net change due to exchange rate |
| | | 306,5 | | | | (2,9 | ) | | | (49,5 | ) | | 254,1 | | ||||||
| | | | | | | | | | | | | ||||||||||
Present value at 30 June 2019 |
| | | 9 053,3 | | | | (225,4 | ) | | | (856,5 | ) | | 7 971,4 | | ||||||
| | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | |
G-7
SYNTHETIC OIL
TABLE 1COSTS INCURRED FOR PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT ACTIVITIES
The table below provides the costs incurred during the year in synthetic oil property acquisition, exploration and development activities, whether capitalised or charged to income currently.
|
Synthetic oilSouth Africa
(Rand in millions) |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Year ended 30 June
|
2019 | 2018 | 2017 | |||||||
Acquisition of proved properties |
6,4 | 667,0 | 0,1 | |||||||
Acquisition of unproved properties |
15,9 | | | |||||||
Exploration |
141,5 | 94,0 | 129,8 | |||||||
Development |
2 128,6 | 2 361,6 | 2 063,8 | |||||||
| | | | | | | | | | |
Total costs incurred |
2 292,5 | 3 122,6 | 2 193,7 | |||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
TABLE 2CAPITALISED COSTS RELATING TO SYNTHETIC OIL ACTIVITIES
The table below summarises the aggregate amount of property, plant and equipment and intangible assets relating to synthetic oil and production activities, and the aggregate amount of the related depreciation and amortisation.
|
|
Synthetic oilSouth Africa
(Rand in millions) |
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year ended 30 June
|
|
2019 | 2018 | 2017 |
|
||||||||
Proved properties |
110 172,8 | 102 961,8 | 91 872,4 | ||||||||||
| | | | | | | | | | | | | |
Producing wells and equipment |
109 522,8 | 102 311,8 | 91 872,4 | ||||||||||
Non-producing wells and equipment |
650,0 | 650,0 | | ||||||||||
| | | | | | | | | | | | | |
Unproved properties |
323,0 | | | ||||||||||
| | | | | | | | | | | | | |
Capitalised costs |
110 495,8 | 102 961,8 | 91 872,4 | ||||||||||
Accumulated depreciation |
(35 553,9 | ) | (32 403,7 | ) | (28 936,4 | ) | |||||||
| | | | | | | | | | | | | |
Net book value |
75 264,9 | 70 558,1 | 62 936,0 | ||||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
TABLE 3RESULTS OF OPERATIONS FOR SYNTHETIC OIL ACTIVITIES
The results of operations for synthetic oil activities are summarised in the table below.
|
Synthetic oilSouth Africa
(Rand in millions) |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Year ended 30 June
|
2019 | 2018 | 2017 | |||||||
Sales to unaffiliated parties |
| | | |||||||
Transfers to affiliated parties |
48 961,9 | 40 289,6 | 35 659,7 | |||||||
| | | | | | | | | | |
Total revenues |
48 961,9 | 40 289,6 | 35 659,7 | |||||||
Production costs |
(23 886,4 | ) | (20 679,6 | ) | (18 507,5 | ) | ||||
Foreign currency translation gains |
(135,4 | ) | 7,7 | 7,2 | ||||||
Exploration expenses |
(41,0 | ) | (18,0 | ) | (28,0 | ) | ||||
Depreciation |
(6 804,9 | ) | (5 927,7 | ) | (6 088,1 | ) | ||||
| | | | | | | | | | |
Operating profit |
18 094,2 | 13 672,0 | 11 043,3 | |||||||
Tax |
(2 722,7 | ) | (2 517,1 | ) | (1 967,9 | ) | ||||
| | | | | | | | | | |
Results of operations |
15 371,5 | 11 154,9 | 9 075,4 | |||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
TABLE 4PROVED RESERVE QUANTITY INFORMATION
Proved reserves
The table below summarises proved developed and proved undeveloped reserves of synthetic oil as at 30 June, for the last three years. As at 30 June 2019, the total proved reserve estimate for synthetic oil is 1 199,9 million barrels in oil equivalent terms.
|
Synthetic oilSouth Africa
(Millions of barrels) |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
2019 | 2018 | 2017 | |||||||
Opening balance |
1 223,2 | 980,5 | 990,9 | |||||||
Revisions |
(2,9 | ) | 8,8 | 30,9 | ||||||
Extensions / discoveries |
20,8 | 276,6 | | |||||||
Production |
(41,2 | ) | (42,7 | ) | (41,3 | ) | ||||
| | | | | | | | | | |
Balance at 30 June |
1 199,9 | 1 223,2 | 980,5 | |||||||
| | | | | | | | | | |
Proved developed reserves |
1 199,9 | 1 223,2 | 980,5 | |||||||
| | | | | | | | | | |
Proved undeveloped reserves |
| | | |||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
TABLE 5STANDARDISED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED RESERVES
|
Synthetic oilSouth Africa
(Rand in millions) |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Year ended 30 June
|
2019 | 2018 | 2017 | |||||||
Future cash inflows |
1 159 985,9 | 978 647,5 | 670 163,5 | |||||||
Future production costs |
(532 035,3 | ) | (505 577,9 | ) | (373 987,5 | ) | ||||
Future development costs |
(257 706,9 | ) | (230 371,6 | ) | (199 417,2 | ) | ||||
Future income taxes |
(123 131,9 | ) | (84 408,9 | ) | (38 109,1 | ) | ||||
| | | | | | | | | | |
Undiscounted future net cash flows |
247 111,8 | 158 289,1 | 58 649,7 | |||||||
10% annual discount for timing of estimated cash flows |
(161 805,5 | ) | (107 701,8 | ) | (40 504,8 | ) | ||||
| | | | | | | | | | |
Standardised measure of discounted future net cash flows |
85 306,3 | 50 587,3 | 18 144,9 | |||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
The standardised measure of discounted future net cash flows, relating to the proved reserves in the table above, are calculated in accordance with the requirements of FASB ASC Section 932-235.
TABLE 6CHANGES IN THE STANDARDISED MEASURE OF DISCOUNTED NET CASH FLOWS
|
|
Synthetic oilSouth Africa
(Rand in millions) |
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
2019 | 2018 | 2017 |
|
||||||||
Present valueopening balance |
50 587,1 | 18 144,8 | 24 448,7 | ||||||||||
Net changes for the year |
34 719,0 | 32 442,3 | (6 303,9 | ) | |||||||||
| | | | | | | | | | | | | |
Sales and transfers of oil and gas produced net of production costs |
(25 075,5 | ) | (19 610,0 | ) | (17 152,2 | ) | |||||||
Development costs incurred |
11 238,6 | 9 618,4 | 9 339,9 | ||||||||||
Net change due to current reserves estimates from: |
|||||||||||||
Improved recovery |
| | | ||||||||||
Commercial arrangements |
| | | ||||||||||
Revisions |
112,1 | (7 351,7 | ) | 1 695,3 | |||||||||
Extensions |
2 493,1 | 39 341,0 | | ||||||||||
Net changes in prices and costs related to future production |
24 614,8 | 59 665,2 | 21 021,7 | ||||||||||
Changes in estimated future development costs |
(16 204,1 | ) | (11 890,8 | ) | (11 616,0 | ) | |||||||
Accretion of discount |
4 670,8 | 1 522,2 | 2 195,5 | ||||||||||
Net change in income tax |
(11 950,9 | ) | (13 973,1 | ) | 2 355,0 | ||||||||
Net change due to exchange rate |
44 820,1 | (24 878,9 | ) | (14 143,1 | ) | ||||||||
| | | | | | | | | | | | | |
Present value at 30 June |
85 306,1 | 50 587,1 | 18 144,8 | ||||||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Standardised measure of discounted future net cash flows
The standardised measure of discounted future net cash flows, relating to the proved reserves in the table above, are calculated in accordance with the requirements of FASB ASC Section 932-235. Future cash inflows are computed by applying the prices used in estimating proved reserves to the year-end quantities of those reserves. Future development and production costs are computed by applying the costs used in estimating proved reserves. Future income taxes are computed by applying the appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, to the future pre-tax net cash flows relating to the reserves, less the tax basis of the properties involved. The future income tax expenses therefore give effect to the tax deductions, tax credits and allowances relating to the reserves.
Discounted future net cash flows are the result of subtracting future development and production costs and future income taxes from the cash inflows. A discount rate of 10 percent a year is applied to reflect the timing of the future net cash flows relating to the reserves. The information provided here does not represent management's estimate of the expected future cash flows or value of the properties. Estimates of reserves are imprecise and will change over time as new information becomes available. Moreover probable and possible reserves along with other classes of resources, which may become proved reserves in the future, are excluded from the calculations. The valuation prescribed under FASB ASC Section 932 requires assumptions as to the timing and amount of future development and production costs. The calculations are made as of 30 June each year and should not be relied upon as an indication of the companies' future cash flows or value of synthetic oil reserves.
G-9
H-1
M-1
E&PI Location Maps
Licence AreasAfrica
Figure 1 E&PI Licence Areas
Africa Global Footprint and Office Locations
M-2
Figure 2 E&PI Global Footprint
M-3
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
SASOL LIMITED | ||||
|
|
By: |
|
/s/ BONGANI NQWABABA |
Date: 28 October 2019 |
Bongani Nqwababa
Joint President and Chief Executive Officer |
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|
|
By: |
|
/s/ STEPHEN CORNELL Stephen Cornell Joint President and Chief Executive Officer |
Republic of South Africa
Companies Act, 2008
MEMORANDUM OF INCORPORATION
Name of company: Sasol Limited
Registration No.: 1979/003231/06
This MOI was adopted by Special Resolution passed on 30 November 2012 in substitution for the existing memorandum of incorporation of the Company.(1)
(1) As at 16 November 2018
1. INTERPRETATION
In this MOI, -
1.1. words that are defined in the Companies Act (which are contained in Schedule 3 for easy reference but which do not form part of this MOI for purposes of interpretation) but not defined in this MOI will bear the same meaning in this MOI as in the Companies Act read where necessary with definitions in the Listings Requirements. For ease of reading, such terms have been capitalised in this MOI;
1.2. unless the context otherwise requires
1.2.1. Companies Act means the Companies Act, 2008, as amended or any legislation which replaces it;
1.2.2. Company means Sasol Limited (or by whatever other name it may be known from time to time), registration number 1979/003231/06, being a pre-existing Public Company incorporated under the Companies Act, 1973;
1.2.3. Company Secretary means the secretary of the Company appointed in terms of section 86 as contemplated in clause 32;
1.2.4. Deliver means deliver in the manner in which the Company is entitled to give notice or deliver documents in accordance with clause 35 (Notices), the Companies Act and the Regulations;
1.2.5. Electronic Address means any address or contact number furnished to the Company by the Holder or holder of Beneficial Interests in the Securities of the Company to which the Company can send Electronic Communication;
1.2.6. Equity Securities means equity securities as defined in the Listings Requirements;
1.2.7. Holder means the registered holder of Securities;
1.2.8. Ineligible or Disqualified means ineligible or disqualified as contemplated in the Companies Act (a list of which is in Schedule 4 for easy reference but which does not form part of this MOI for purposes of interpretation) or as contemplated in clause 23.1.11 which shall apply not only to Directors and Alternate Directors but also to members of Board committees and members of Audit committees and Prescribed Officers and the Company Secretary;
1.2.9. JSE means the exchange operated by JSE Limited, (Registration No. 2005/022939/06) (or any other name by which it may be known in the future) or its successor body;
1.2.10. Listings Requirements means the listings requirements of the JSE from time to time;
1.2.11. MOI means this Memorandum of Incorporation;
1.2.12. Ordinary Share means no par value ordinary Shares in the Companys Share capital, listed on the JSE;
1.2.13. Participant means a depository institution accepted by a Central Securities Depository as a participant in the Securities Services Act;
1.2.14. Preferred Ordinary Share means no par value Shares in the Companys Share capital designated as Preferred Ordinary Shares having the rights, privileges and conditions set out in clause 39;
1.2.15. Regulations means regulations published pursuant to the Companies Act from time to time;
1.2.16. Sasol BEE Ordinary Shares means no par value Shares in the Companys Share capital designated as Sasol BEE Ordinary Shares, having the rights, privileges and restrictions set out in clauses 40 to 47, if the Election is not exercised or a Holders exercise of the Election is void for any reason, or clause 47A.2, if the Election is exercised and/or if a Holder acquires Sasol BEE Ordinary Shares after the SOLBE1 Redesignation Date whether as a consequence of a new issue, or a transfer, of Sasol BEE Ordinary Shares;
1.2.17. Securities Services Act means the Securities Services Act, 2004;
1.2.17A SOLBE1 Redesignation Date means the date on which Sasol BEE Ordinary Shares held by Holders who do not exercise the Election or whose exercise of the Election is void for any reason, are automatically re-designated as Ordinary Shares;
1.2.18. Uncertificated Securities means securities as defined in the Securities Services Act which are by virtue of the Companies Act transferable without a written instrument and are not evidenced by a certificate;
1.2.19. Writing includes Electronic Communication but as regards any Holder entitled to vote, only to the extent that such Holder has notified the Company of an Electronic Address and Written shall be construed accordingly;
1.3. any reference to an enactment is to that enactment as at the date on which this MOI is adopted and as amended or re-enacted from time to time and includes any subordinate legislation made from time to time under such enactment. Any reference to a particular section in an enactment is to that section as at the date on which this MOI is adopted, and as amended or re-enacted from time to time and/or an equivalent measure in an enactment, provided that if as a result of such amendment or re-enactment, the specific requirements of a section referred to in this MOI are changed, the relevant provision of this MOI shall be read also as if it had been amended as necessary, without the necessity for an actual amendment;
1.4. to the extent that any provisions of this MOI are based on any unalterable provisions of the Companies Act or the Regulations and any of those unalterable provisions are amended, the Board is authorised to amend this MOI to reflect such amendments (which amendments will apply to the Company by operation of law), in addition to its rights to amend the MOI in terms of section 17, and in so doing eliminate the risk that if there is a conflict between any provision of this MOI and the unalterable provisions of the Companies Act or the Regulations, as amended, the relevant provision of this MOI will be void to the extent that it contravenes, or is inconsistent with the amended unalterable provisions of the Companies Act or the Regulations, as the case may be;
1.5. if any of the provisions of this MOI have been included as a consequence of the Companys obligations under the Listings Requirements and the JSE
1.5.1. amends and relaxes any of those Listings Requirements, this MOI shall be read with reference to such relaxed standard/s;
1.5.2. deletes any of those Listings Requirements, this MOI shall be read as if those provisions of the MOI had been deleted;
1.6. references to Holders represented by proxy shall include Holders entitled to vote represented by an agent appointed under a general or special power of attorney;
1.7. references to Holders entitled to vote Present at a Meeting or acting in Person shall include Juristic Persons represented by a duly authorised representative or acting in the manner prescribed in the Companies Act;
1.8. all references to section/s in this MOI refer to the sections of the Companies Act unless the context indicates otherwise;
1.9. the headings are for reference purposes only and shall not affect the interpretation of this MOI;
1.10. words in the singular number shall include the plural, and words in the plural number shall include the singular, words importing the masculine gender shall include the female gender, and words importing Persons shall include created entities (corporate or not);
1.11. if any term is defined within the context of any particular clause in the MOI, the term so defined, unless it is clear from the clause in question that the term so defined has limited application to the relevant clause, shall bear the meaning ascribed to it for all purposes in terms of this MOI, notwithstanding that that term has not been defined in this interpretation provision;
1.12. save to the extent that item 4(4) of Schedule 5 may permit this MOI to prevail, if the provisions of this MOI are in any way inconsistent with the provisions of the Companies Act, the provisions of the Companies Act shall prevail, and this MOI shall be read in all respects subject to the Companies Act;
1.13. in respect of the Preferred Ordinary Shares, if there is a conflict between the rights, privileges and restrictions set out in clause 39 applicable to the Preferred Ordinary Shares and the remainder of this MOI, the provisions of clause 39 will prevail;
1.14. in respect of the Sasol BEE Ordinary Shares, if there is a conflict between the rights, privileges and restrictions set out in
1.14.1. clauses 40 to 47 applicable to the Sasol BEE Ordinary Shares if the Election is not exercised or a Holders exercise of the Election is void for any reason, and the remainder of this MOI, the provisions of clauses 40 to 47 will prevail; or
1.14.2. clause 47A.2 applicable to the Sasol BEE Ordinary Shares if the Election is exercised and/or if a Holder acquires Sasol BEE Ordinary Shares after the SOLBE1 Redesignation Date whether as a consequence of a new issue, or a transfer, of Sasol BEE Ordinary Shares, and the remainder of this MOI, the provisions of clause 47A.2 will prevail;
1.15. the rule of construction that a contract shall be interpreted against the party responsible for the drafting or preparation of the contract, shall not apply to this MOI;
1.16. if and for so long as the Company might be a Wholly-owned Subsidiary, nothing shall be read or interpreted as removing or restricting the rights granted to such a company in terms of section 57(2).
2. CALCULATION OF BUSINESS DAYS
When a particular number of Business Days is provided for between the happening of one event and another, the number of days must be calculated by
2.1. excluding the day on which the first such event occurs;
2.2. including the day on or by which the second event is to occur; and
2.3. excluding any public holiday (gazetted in South Africa from time to time), Saturday or Sunday that falls on or between the days contemplated in clauses 2.1 and 2.2 respectively.
3. PUBLIC COMPANY
The Company is a Public Company as it is not a Private Company or a State-Owned Company or a Personal Liability Company.
4. POWERS AND CAPACITY OF THE COMPANY
4.1. The Company has the powers and capacity of an Individual.
4.2. No Special Resolution may be put to Holders to ratify any action by the Company or the Directors that is inconsistent with any limit, restriction or qualification regarding the purposes, powers or activities of the Company, or the authority of the Directors to perform an act on behalf of the Company, if that action was contrary to the Listings Requirements, unless otherwise agreed with the JSE.
4.3. Notwithstanding the omission from this MOI of any provision to that effect, the Company may do anything which the Companies Act and the Listings Requirements empower it to do if so authorised by its MOI.
4.4. The following corporate actions shall be undertaken in accordance with the Listings Requirements
4.4.1. issues of Securities (including options) for cash;
4.4.2. repurchases of Securities; and
4.4.3. alterations of authorised Securities and rights attaching to classes of Securities.
5. AMENDMENTS TO THE MOI
5.1. Save for correcting errors substantiated as such from objective evidence or which are self evident errors (including, but without limitation ejusdem generis, spelling, punctuation,
reference, grammar or similar defects) in the MOI, which the Board is empowered to do, and the circumstances contemplated in clauses 1.4 and 1.5, all other amendments of the MOI shall be effected in accordance with section 16(1) and a Special Resolution passed by the relevant Holders.
5.2. If errors in the MOI are corrected as referred to in clause 5.1, the Board shall either:
5.2.1. publish a copy of any such correction effected by the Board on the Companys website; or
5.2.2. furnish Shareholders with Written notice of such correction effected by the Board,
within 14 (fourteen) days after filing the notice of alteration with the Commission.
6. THE MAKING OF RULES
The Directors power to make, amend or repeal Rules as contemplated in section 15(3) is prohibited.
7. AUTHORISED SECURITIES, PREFERENCES, RIGHTS AND OTHER SHARE TERMS
7.1. The Company is authorised to issue:
7.1.1. 1 127 690 590 (one billion one hundred and twenty seven million six hundred and ninety thousand five hundred and ninety) Ordinary Shares of no par value (which includes Ordinary Shares already issued at any time), each Ordinary Share having associated with it 1 (one) vote as contemplated in clauses 20.5.7 and 20.5.8, which shall have Voting Rights in respect of every matter that may be decided by voting and which shall rank after all other classes of Shares in the Company which do not rank pari passu with the Ordinary Shares as regards Distributions, but save as aforesaid shall be entitled to receive the net assets of the Company upon its liquidation;
7.1.2. 28 385 646 (twenty eight million three hundred and eighty five thousand six hundred and forty six) Preferred Ordinary Shares of no par value (which includes Preferred Ordinary Shares already issued at any time) which shall have the rights, privileges and restrictions set out in clause 39;
7.1.3. 158 331 335 (one hundred and fifty eight million three hundred and thirty one thousand three hundred and thirty five) Sasol BEE Ordinary Shares of no par value (which includes Sasol BEE Ordinary Shares already issued at any time) which shall have the rights, privileges and restrictions set out in clauses 40 to 47 as regards those in respect of which the Election is not
exercised or not validly exercised, and clause 47A.2 as regards those which do not redesignate on the SOLBE1 Redesignation Date.
7.2. The Board shall not have the power to amend the authorisation (including increasing or decreasing the number) and classification of Shares (including determining rights, limitations and preferences) as contemplated in section 36(2)(b) or 36(3), unless any amendment to the authorisation and classification of Shares has been approved by Special Resolution.
7.3. Preferences, rights, limitations or other terms of any class of Shares may not be varied in response to any objectively ascertainable external fact or facts as contemplated in sections 37(6) and (7) and no resolution may be proposed to Shareholders to include in the rights attaching to any Shares the variation of the preferences, rights, limitations or other terms attaching to those Shares in response to any objectively ascertainable external fact or facts.
7.4. All Securities of a class shall rank pari passu in all respects.
7.5. No rights, privileges or conditions for the time being attached to any class of Securities of the Company nor any interests of that class of Securities may (unless otherwise provided by the terms of issue of the Securities of that class) whether or not the Company is being wound up, be varied in any manner adverse to the Holders of that class of Securities, nor may any variations be made to the rights, privileges or conditions of any class of Securities, such that the interests of another class of Securities is adversely affected unless, the consent in Writing of the Holders of not less than 75% (seventy five per cent) of the issued Securities of that adversely affected class has been obtained, or a Special Resolution has been passed by the Holders of that adversely affected class of Securities with the support of more than 75% (seventy five per cent) of the Voting Rights exercised on the Special Resolution at a separate meeting of the Holders of that class. The provisions of this MOI relating to Shareholders Meetings shall mutatis mutandis apply to any such separate meeting except that
7.5.1. the necessary quorum shall be 3 (three) Holders Present at the Shareholders Meeting entitled to Exercise at least 50% (fifty per cent) of the Voting Rights on that matter, at the time the matter is called on the agenda; and
7.5.2. if at any adjourned meeting of such Holders, the required quorum contemplated in clause 7.5.1 is not present, those Persons entitled to vote who are Present at the Shareholders Meeting shall be a quorum; or
7.5.3. in the case of Preferred Ordinary Shares, the provisions of clause 39.8.3 shall apply.
7.6. Notwithstanding any implication in this MOI to the contrary, the Board may not authorise any financial assistance by the Company in connection with the subscription for or purchase of its Securities or those of a Related or Inter-Related company without complying with section 44(3).
8. AUTHORITY TO ISSUE SECURITIES
8.1. The Board shall not have the power to issue authorised Securities (other than as contemplated in clause 8.4) without the prior approval contemplated in clause 8.2 and the approval of the JSE (where necessary).
8.2. As regards the issue of
8.2.1. Shares contemplated in sections 41(1) and (3) or as contemplated in Listings Requirement 5.50, the Board shall not have the power to allot or issue same without the prior approval of a Special Resolution;
8.2.2. Shares, other than those contemplated in clause 8.2.1, and other Securities including options in respect thereof, the Board shall not have the power to allot or issue same without the prior approval of an Ordinary Resolution,
provided that such issue has been approved by the JSE. No special privileges may be granted to secured and unsecured debt instruments as contemplated in section 43(3).
8.3. Any such approval in terms of clause 8.2, may be in the form of a general authority to the Directors, whether conditional or unconditional, to allot or issue any such Securities contemplated in clauses 8.1 and 8.2.2 in their discretion, or in the form of a specific authority in respect of any particular allotment or issue of such Securities contemplated in clauses 8.2.1 and 8.2.2. Such authority shall endure for the period provided in the Ordinary or Special Resolution in question but may be revoked by Ordinary Resolution or Special Resolution, as the case may be, at any time.
8.4. The Shareholders may approve by Ordinary Resolution for the Board to issue, or the Board (without the prior approval of an Ordinary Resolution) may issue, capitalisation Shares or offer a cash payment in lieu of awarding a capitalisation Share in accordance with section 47.
8.5. No Shares of a class which is listed may be issued other than as fully paid.
8.6. If the Shareholders at any time approve the establishment of a Share incentive scheme that approval constitutes authority given to the Board to issue Shares pursuant to such scheme, subject to any maximum ceiling on the number of Shares to be issued imposed by the
Shareholders in approving the scheme. A Special Resolution is required to approve a Share incentive scheme that does not constitute an Employee Share Scheme.
9. PRE-EMPTION ON ISSUE OF EQUITY SECURITIES
9.1. Equity Securities in the Company which are authorised but unissued and which are intended to be issued for cash, shall be offered to the existing Holders by way of a rights offer pro rata to the Voting Power of that Shareholders Voting Rights immediately before the offer was made, with a reasonable time allowed to subscribe, unless -
9.1.1. the approvals contemplated in clause 8.1 have been obtained;
9.1.2. a capitalisation issue, an issue for an acquisition of assets (including another company) or an issue for the purposes of an Amalgamation or Merger, is to be undertaken;
9.1.3. the Equity Securities are to be issued in terms of option or Conversion rights;
9.1.4. the Equity Securities are to be issued to an approved Share incentive scheme,
provided that if any fraction of an Equity Security will have to be issued, that allocation of Equity Securities will be rounded down to the nearest whole number (unless the JSE has granted a ruling to permit otherwise) resulting in an allocation of a whole Equity Security and a cash payment for the fraction as determined in terms of the Listings Requirements..
9.2. After the expiration of the time within which the offer may be accepted, or on the receipt of an intimation from the Person to whom the offer is made that he declines to accept the Equity Securities offered, the Board may, subject to clause 9.1, issue such Equity Securities in such manner as they think most beneficial to the Company.
10. CERTIFICATES EVIDENCING ISSUED SECURITIES, UNCERTIFICATED SECURITIES AND SECURITIES REGISTER
10.1. The Securities issued by the Company may either be certificated (that is evidenced by a certificate) or uncertificated in which case the Company must not issue certificates evidencing or purporting to evidence title to those Securities. When any new Securities are to be issued by the Company, the subscriber shall, subject to the Companies Act, be entitled to elect whether all or part of the Securities offered to him shall be in certificated or uncertificated form. Each original certificate issued to a Holder in certificated form shall be issued without charge, but for every subsequent certificate issued in respect of the same Securities to the same Holder, the Directors shall be entitled, as they may deem fit, to
require a charge in settlement of the reasonable costs included in such issue and in the case of the Preferred Ordinary Shares, the provisions of clause 39.12.4 shall apply.
10.2. The Company shall convert its share register into a Securities Register with effect from the Effective Date which shall reflect
10.2.1. the number of Securities authorised and the number available to be issued and the date of authorisation;
10.2.2. the total number of Securities of a class that have been issued, re-acquired or surrendered to the Company;
10.2.3. the number of Securities of a class that are held in uncertificated form;
10.2.4. the number of Securities of that class that are the subject of options or conversion rights which, if exercised, would require Securities of that class to be issued;
10.2.5. in the case of uncertificated Securities, a unique identifying number of the Person to, from or by whom the Securities were issued, re-acquired or surrendered, as the case may be;
10.2.6. details of any unlisted Securities issued by the Company.
10.3. As soon as practicable after -
10.3.1. issuing any Securities the Company must enter or cause to be entered in its Securities Register, in respect of every class of Securities evidenced by certificates that it has issued
10.3.1.1. the names and addresses and identity numbers of the Persons to whom the Securities were issued;
10.3.1.2. those Persons Electronic Addresses who have furnished them;
10.3.1.3. the number and class of Securities issued to each of them, the date of issue, distinguishing numbers and the subscription Consideration;
10.3.1.4. the total number of Securities of a class held by any Person;
10.3.1.5. the date on which any such Securities were issued or transferred to the Holder, and the date on which any such Securities were transferred by the Holder or by operation of law to another Person or re-acquired by or surrendered to the Company;
10.3.1.6. the number of, and prescribed circumstances relating to, any Securities
10.3.1.6.1. that have been placed in trust as contemplated in section 40(6)(d) by reason of not having been fully paid for; or
10.3.1.6.2. whose transfer has been restricted;
10.3.1.7. as regards debt instruments as contemplated in section 43
10.3.1.7.1. the number of those Securities still in issue;
10.3.1.7.2. the names and addresses of the Holders of the Securities and any holders of a Beneficial Interest in the Securities;
10.3.1.8. the total number of uncertificated Securities from time to time;
10.3.2. the re-acquisition or surrender of any Securities the Company must enter or cause to be entered in its Securities Register, in respect of Securities re-acquired or surrendered
10.3.2.1. the date on which the Securities were re-acquired by, or surrendered to, the Company;
10.3.2.2. the distinguishing number or numbers of any certificated Securities re-acquired or surrendered to the Company;
10.3.2.3. the Consideration for which the Securities were re-acquired by, or surrendered to, the Company; and
10.3.2.4. the name of the Person from or by whom the Securities were re-acquired or surrendered, as the case may be;
10.3.3. transferring any Securities, the Company must enter or cause to be entered in its Securities Register, in respect of Securities evidenced by certificates that it has transferred -
10.3.3.1. the name and address of the transferee;
10.3.3.2. the description of the Securities, or interest transferred;
10.3.3.3. the date of the transfer;
10.3.3.4. the value of any Consideration still to be received by the Company on each Security or interest, in the case of a transfer of Securities the subscription price for which has not been fully paid;
10.3.3.5. any other information contemplated in clause 10.3.1, any reference to issue being read as a reference to transfer,
provided that such entry may only be made if the transfer
10.3.3.6. is evidenced by a proper instrument of transfer that has been Delivered to the Company; or
10.3.3.7. was effected by operation of law;
10.3.4. any disclosures to the Company of any Beneficial Interests in respect of Securities evidenced by certificates, the Company must enter or cause to be entered in its Securities Register, a record of all such disclosures, including the following information for any Securities in respect of which a disclosure was made
10.3.4.1. the name and unique identifying number of the Holder of the Securities;
10.3.4.2. the number, class and the distinguishing numbers of the Securities; and
10.3.4.3. for each Person who holds a Beneficial Interest in the Securities, the extent of the Persons Interest in the Securities, together with that Persons
10.3.4.3.1. name and unique identity number;
10.3.4.3.2. business, residential or postal address;
10.3.4.3.3. Electronic Address if available;
and any other information prescribed in terms of the Companies Act from time to time. If the Company has uncertificated Securities at any time it shall comply with the provisions of sections 52 and 53 and in particular shall enter or cause to be entered in its Securities Register the total number of such uncertificated Securities from time to time.
10.4. In the case of the death of any one or more of the joint Holders of any Securities, the remaining Holder whose name then appears first in the Securities Register shall be recognised by the Company as being the only Person entitled to such Securities, subject to clause 15, but nothing herein contained shall exempt the estate of a deceased joint Holder from any liability in respect of Securities held jointly by him.
10.5. Securities certificates shall be issued in such manner and form as the Directors shall from time to time prescribe save that they must -
10.5.1. state on the face
10.5.1.1. the name of the Company;
10.5.1.2. the name of the Person to whom the Securities were issued;
10.5.1.3. the number and class of Shares and the designation of the series, if any, evidenced by that certificate; and
10.5.1.4. any restriction on the transfer of the Securities (which are not listed on the JSE) evidenced by that certificate;
be signed by either two Directors or the Company Secretary and one Director by autographic, mechanical or electronic means.
10.6. Each class of Shares, and any other Securities, must be distinguished by an appropriate numbering system. If all of the Companys Shares rank equally for all purposes, and are therefore not distinguished by a numbering system each certificate issued in respect of those Shares must be distinguished by a numbering system and if the Share has been transferred, the certificate must be endorsed with a reference number or similar device that will enable each preceding Holder of the Share in succession to be identified.
10.7. Each Holder shall be entitled to 1 (one) certificate for all the Securities of a particular class registered in his name, or to several certificates, each for a part of such Securities.
10.8. A certificate for Securities registered in the names of 2 (two) or more Persons shall be Delivered to the Person first named in the Securities Register and Delivery of a certificate for Securities to that Person shall be a sufficient Delivery to all joint Holders. In the case of the death of any one or more of the joint Holders of any Securities, the remaining Holder whose name then appears first in the Securities Register shall be recognised by the Company as being the only Person entitled to such certificate or any new certificate issued in lieu thereof.
10.9. If a certificate for Securities is defaced, lost or destroyed, it may be renewed, on such terms, as to evidence and indemnity and payment of such fee as the Board, a Director authorised
by the Board, or the Company Secretary, thinks fit, and (in case of defacement) on Delivery of the old certificate or share warrant to bearer to the Company, but in the case of the Preferred Ordinary Shares, the provisions of clause 39.12.4 shall apply.
10.10. A Person
10.10.1. acquires the rights associated with any particular Securities of the Company when that Persons name is entered in the Companys Securities Register as a Person to whom those Securities have been issued or transferred; and
10.10.2. ceases to have the rights associated with any particular Securities of the Company when the transfer to another Person, re-acquisition by the Company, or surrender to the Company of those Securities has been entered in the Companys Securities Register.
10.11. After receiving a notice from a Central Securities Depository or Participant that a Holder who wishes to withdraw all or part of the uncertificated Securities held by that Person in an uncertificated Securities Register, and obtain a certificate in respect of those withdrawn Securities, the Company must
10.11.1. immediately enter the relevant Persons name and details of that Persons holding of Securities in the Securities Register and indicate on the Securities Register that the Securities so withdrawn are no longer held in uncertificated form;
10.11.2. within 10 (ten) Business Days, or 20 (twenty) Business Days in the case of a Holder who is not resident within South Africa
10.11.2.1. prepare and Deliver to the relevant Person a certificate in respect of the Securities; and
10.11.2.2. notify the Central Securities Depository that the Securities are no longer held in uncertificated form,
and may charge the Holder a reasonable fee to cover the actual costs of issuing a certificate.
10.12. If the Company issues Securities and is not granted a listing for such Securities or if, for any reason, certain Securities are delisted, the share certificates for those Securities must be held in trust and stamped with the words unlisted securities and may only be released by the Company with the written permission of the JSE.
11. PROHIBITION AGAINST THE COMPANY TAKING ANY LIEN
The Company shall not be entitled to take any lien over any Securities issued by it.
12. LISTINGS ON OTHER EXCHANGES
12.1. The Company may seek listings on such Exchanges as the Directors may consider appropriate from time to time.
12.2. For so long as the Securities of the Company are listed on any Exchange in addition to the JSE -
12.2.1. if the listing on the JSE is the primary listing and if the Company is obliged to obtain the approval of the JSE in regard to any matter, it shall be obliged also to obtain the consent at the same time of any other Exchanges on which any of its Securities are listed to the extent that the listings requirements of those other Exchanges require the Company to obtain such consent/s;
12.2.2. the Company will comply with -
12.2.2.1. the most stringent of the same or a similar type of listings requirements of all the Exchanges on which its Securities are listed, to the extent that the listings requirements of those other Exchanges require the Company to comply with their listings requirements; and
12.2.2.2. any legislation which is applicable to the Company as a consequence of any of its Securities being listed on a particular Exchange.
13. COMMISSION
13.1. The Company may pay commission not exceeding 10% (ten per cent) of the subscription price at which Securities of the Company are issued to any Person, in consideration of him subscribing or agreeing to subscribe, whether absolutely or conditionally, for any securities or of him procuring or agreeing to procure subscriptions, whether absolute or conditional, for any Securities, and such commission may be paid or may agreed to be paid out of the profits, whether current or in reserve or transferred or out of profits. Any such commission may be paid in full or in part in fully paid-up Securities of the Company, provided that such commission, or any part thereof, may not be paid without prior authorisation by Ordinary Resolution.
13.2. Should all or any part of the Securities of the Company being offered for subscription be or become underwritten, the provisions of section 100(6) shall be complied with.
14. TRANSFER OF SECURITIES
14.1. The Ordinary Shares are freely transferrable, but
14.1.1. the Preferred Ordinary Shares are subject to the restrictions on transfer set out in clause 39.9; and
14.1.2. the Sasol BEE Ordinary Shares are subject to the restrictions on transfer set out in clause 44.1.
14.2. The transfer of any Securities which are certificated shall be implemented in accordance with section 51 using the then common form of transfer (which shall be in Writing) or in such manner as the Board may from time to time decide. Every instrument of transfer shall be signed by the transferor and left at the transfer office of the Company at which it is presented for registration, accompanied by the certificate of the Securities to be transferred, and or such other evidence as the Company may require to prove the title of the transferor or his rights to transfer the Securities. All instruments of transfer which are registered shall be held by the Company, but any deed of transfer which the Board may refuse to register shall be returned on demand to the Person who lodged it (except in the case of fraud).
14.3. All authorities to sign transfer deeds granted by Holders for the purpose of transferring Securities that may be lodged, produced or exhibited with or to the Company at any of its transfer offices shall as between the Company and the grantor of such authorities, be taken and deemed to continue and remain in full force and effect, and the Company may allow the same to be acted upon until such time as express notice in Writing of the revocation of the same shall have been given and lodged at the Companys transfer offices at which the authority was lodged, produced or exhibited. Even after the giving and lodging of such notices the Company shall be entitled to give effect to any instruments signed under the authority to sign, and certified by any officer of the Company, as being in order before the giving and lodging of such notice. The Company shall not be bound to allow the exercise of any act or matter by an agent of the Holder, unless a duly certified copy of that agents authority is produced and lodged with the Company.
14.4. The certificated Securities Register may, upon notice being given by advertisement in the South African Government Gazette and a newspaper circulating in the district in which the office of the Company is situated, be closed during such time as the Board thinks fit, not exceeding in the whole 60 (sixty) days in each year.
15. TRANSMISSION OF SECURITIES BY OPERATION OF LAW
Subject to the laws relating to securities transfer tax upon or in respect of the estates of deceased Persons and the administration of the estates of insolvent and deceased Persons and Persons under disability -
15.1. the parent or guardian or curator of any Holder who is a minor;
15.2. the trustee of an insolvent Holder;
15.3. the liquidator of a body corporate Holder;
15.4. the tutor or curator of a Holder under disability;
15.5. the executor or administrator of the estate of a deceased Holder; or
15.6. any other Person becoming entitled to any Securities held by a Holder by any lawful means other than transfer in terms of this MOI,
shall, upon production of such evidence as may be required by the Directors, have the right either -
15.7. to exercise the same rights and to receive the same Distributions and other advantages to which he would be entitled if he were the Holder of the Securities registered in the name of the Holder concerned; or
15.8. himself to be registered as the Holder in respect of those Securities and to make such transfer of those Securities as the Holder concerned could have made, but the Board shall have the same right to decline or suspend registration as they would have had in the case of a transfer of the Securities by the Holder.
16. FINANCIAL YEAR END
The financial year end of the Company is 30 June.
17. ACCOUNTING RECORDS AND FINANCIAL STATEMENTS
17.1. The Company shall maintain the necessary Accounting Records which shall be kept at its Registered Office.
17.2. The Company shall prepare its Financial Statements in accordance with the Companies Act, Listings Requirements and the International Financial Reporting Standards and shall have its annual Financial Statements audited.
17.3. The Directors shall from time to time determine at what times and places (save in the case of Accounting Records which shall be accessible from the Registered Office) and under what conditions, subject to the requirements of the Regulations, the Holders and holders of Beneficial Interests not being Directors are entitled to inspect and take copies of the records referred to in section 26(1). No Shareholder (not being a Director) shall have any right to inspect any Accounting Records or book or document of the Company except as permitted in terms of the Companies Act or with the prior approval of an Ordinary Resolution or with the authority of the Board.
17.4. Access to any other information in addition to the records referred to in section 26(1), which the Holders and holders of Beneficial Interests are not expressly entitled to inspect in terms of the Companies Act or Regulations, will be subject to the provisions of the Promotion of Access to Information Act, 2000.
17.5. Subject to the provisions of the Promotion of Access to Information Act, 2000, apart from the Holders and holders of Beneficial Interests, no other Person shall be entitled to inspect any of the documents of the Company (other than the Securities Register and the register of Directors) unless expressly authorised by the Company Secretary (or his nominee).
17.6. The Company shall notify the Holders and the holders of Beneficial Interests of the publication of any annual Financial Statements of the Company, setting out the steps required to obtain a copy of those Financial Statements. If a Holder or holder of Beneficial Interests demands a copy of the annual Financial Statements, the Company shall make same available to such Holder / holder of Beneficial Interests free of charge. The Company may provide any Person with a summary of any particular Financial Statements in accordance with section 29(3).
18. AUDIT COMMITTEE
18.1. For so long as the Companies Act requires the Company to have an Audit committee, the Company must elect an Audit committee in terms of the Companies Act, each member of which must be a Person who satisfies the criteria set out in section 94(4).
18.2. The Board must appoint an Individual to fill any vacancy on the Audit committee within 40 (forty) Business Days after the vacancy arises.
18.3. The Audit committees duties are set out in the Companies Act and the terms of reference applicable to the Audit committee (which terms of reference are approved by the Board from time to time).
18.4. The Company must pay all expenses reasonably incurred by its Audit committee, including, if the Audit committee considers it appropriate, the fees of any consultant or specialist engaged by the Audit committee to assist it in the performance of its functions.
18.5. No Person shall be elected as a member of the Audit committee, if he is Ineligible or Disqualified and any such election shall be a nullity. A Person placed under probation by a court must not serve as a member of the Audit committee unless the order of court so permits.
18.6. A member of the Audit committee shall cease to hold office as such immediately he
18.6.1. becomes Ineligible or Disqualified in terms of the Companies Act; and / or
18.6.2. ceases to be a Director.
18.7. The Board, from time to time, may prescribe general qualifications for an Individual to serve as a member of the Audit committee in addition to the requirements of the Companies Act.
19. AUDITOR
19.1. The Company shall appoint in accordance with the Companies Act, an Auditor that satisfies the requirements prescribed in the Companies Act.
19.2. The Auditor shall fulfil the duties set out in the Companies Act and the terms of reference of the Companys Audit committee and
19.2.1. has the right of access at all times to the accounting records and all books and documents of the Company, and is entitled to require from the Directors or Prescribed Officers any information and explanations necessary for the performance of the Auditors duties;
19.2.2. if the Company is a Holding Company, has the right of access to all current and former financial statements of any Subsidiary and is entitled to require from the Directors or Prescribed Officers of the Company or Subsidiary any information and explanations in connection with any such statements and in connection with the Accounting Records, books and documents of the Subsidiary as necessary for the performance of the Auditors duties; and
19.2.3. is entitled to
19.2.3.1. attend any Shareholders Meeting;
19.2.3.2. receive all notices of and other communications relating to any Shareholders Meeting; and
19.2.3.3. be heard at any Shareholders Meeting on any part of the business of the meeting that concerns the Auditors duties or functions;
19.2.4. may not perform any services for the Company
19.2.4.1. that would place the Auditor in a conflict of interest as prescribed or determined by the Independent Regulatory Board for Auditors in terms of section 44(6) of the Auditing Profession Act; or
19.2.4.2. as may be prescribed by the Audit committee.
19.3. The provisions of clauses 32.4 and 32.5 apply mutatis mutandis to the Auditor.
20. SHAREHOLDERS MEETINGS
20.1. Convening of Shareholders Meetings
20.1.1. The Company shall convene an Annual General Meeting once in every calendar year within 6 (six) months of the Companys financial year-end, but no more than 15 (fifteen) months after the date of the previous Annual General Meeting, which must, at a minimum, provide for the following business to be transacted
20.1.1.1. presentation of
20.1.1.1.1. the Directors report;
20.1.1.1.2. Audited Financial Statements for the immediately preceding financial year;
20.1.1.1.3. an Audit committee report;
20.1.1.2. election of Directors, to the extent required by the Companies Act or the MOI;
20.1.1.3. election of an Audit committee;
20.1.1.4. appointment of an Auditor for the ensuing year;
20.1.1.5. any matters raised by Holders, with or without advance notice to the Company.
20.1.2. The Company shall hold a Shareholders Meeting in order to consider one or more resolutions and shall not permit resolution/s that could be voted on at a Shareholders Meeting to be dealt with in accordance with section 60 by Written resolutions of those Persons entitled to vote.
20.1.3. The Company must hold a Shareholders Meeting at any time that the Board is required by the Companies Act or the MOI to refer a matter to Holders entitled to vote for decision.
20.1.4. Each resolution shall be expressed with sufficient clarity and specificity and accompanied by sufficient information / explanatory material to enable a Person who is entitled to vote on the resolution to determine whether to participate in the Shareholders Meeting, if applicable, and to seek to influence the outcome of the vote on the resolution. Once a resolution has been approved, it may not be challenged or impugned on the ground that it did not comply with the aforegoing.
20.1.5. The following Persons may convene a Shareholders Meeting
20.1.5.1. the Board or the Company Secretary, to the extent that the Board is unable to do so or has authorised him to do so; or
20.1.5.2. a Shareholder/s holding not less than 10% (ten per cent) of the Voting Rights attached to the Shares; or
20.1.5.3. if the Company has no Directors, any single Holder entitled to vote,
whenever he thinks fit.
20.1.6. A Shareholders Meeting must be convened if one or more Written and signed demands for such a Shareholders Meeting is/are Delivered to the Company, and
20.1.6.1. each such demand describes the specific purpose for which the Shareholders Meeting is proposed; and
20.1.6.2. in aggregate, demands for substantially the same purpose are made and signed by the Holders at the earliest time specified in any of those demands, of at least 10% (ten per cent) of the Voting Rights entitled to be exercised in relation to the matter proposed to be considered at the Shareholders Meeting.
20.1.7. Every Shareholders Meeting shall be held at the time and where the Board or Company Secretary determines from time to time. The authority of the Company to conduct a Shareholders Meeting entirely by Electronic Communication, or to provide for participation in a Shareholders Meeting by Electronic Communication so long as the Electronic Communication employed satisfies the requirements prescribed in the Companies Act and/or the Regulations, is not limited or restricted.
20.2. Notice of Shareholders Meetings
20.2.1. The Holder of any Securities which are in certificated form and thus not subject to the rules of Strate as the Central Securities Depository in which any Person has a Beneficial Interest must Deliver to each such Person
20.2.1.1. a notice of any Shareholders Meeting of the Company at which those Securities may be voted within 2 (two) Business Days after receiving such a notice from the Company; and
20.2.1.2. a proxy appointment to the extent of that Persons Beneficial Interest, if the Person so demands in compliance with section 56(11).
20.2.2. A Shareholders Meeting shall be called by at least 15 (fifteen) Business Days notice Delivered by the Company to all Holders entitled to vote or otherwise entitled to receive notice and at the same time to the JSE. An announcement shall also be made on SENS. The notice convening an Annual General Meeting shall designate the meeting as such.
20.2.3. Shareholders entitled to request that a resolution be proposed shall bear the cost of any notice furnished to Shareholders in relation to that resolution.
20.2.4. A Holder entitled to vote, who is Present at a Shareholders Meeting
20.2.4.1. is regarded as having received or waived notice of the Shareholders Meeting if at least the required minimum notice was given;
20.2.4.2. has a right to
20.2.4.2.1. allege a Material defect in the form of notice for a particular item on the agenda for the Shareholders Meeting; and
20.2.4.2.2. participate in the determination whether to waive the requirements for notice, if less than the required minimum notice was given, or to ratify a defective notice; and
20.2.4.3. except to the extent set out in clause 20.2.4.2 is regarded to have waived any right based on an actual or alleged Material defect in the notice of the Shareholders Meeting.
20.2.5. A notice of a Shareholders Meeting must be in Writing, in plain language and must include
20.2.5.1. the date, time and place for the Shareholders Meeting, and the Record Date for the Shareholders Meeting;
20.2.5.2. the general purpose of the Shareholders Meeting, and any specific purpose contemplated in clause 20.1.5, if applicable;
20.2.5.3. in the case of the Annual General Meeting a summarised form of the Financial Statements to be presented and directions for obtaining a copy of such complete annual Financial Statements;
20.2.5.4. a copy of any proposed resolution of which the Company has received notice, and which is to be considered at the Shareholders Meeting, and a notice of the percentage of Voting Rights that will be required for that resolution to be adopted;
20.2.5.5. a reasonably prominent statement that
20.2.5.5.1. a Holder entitled to attend and vote at the Shareholders Meeting shall be entitled to appoint a proxy to attend, participate in, speak and vote at the Shareholders Meeting in the place of the Holder entitled to vote;
20.2.5.5.2. a proxy need not be a Holder;
20.2.5.5.3. a Holder entitled to vote may appoint more than 1 (one) proxy to exercise Voting Rights attached to different Securities held by that Holder entitled to vote in respect of any Shareholders Meeting and may appoint more than 1 (one) proxy to exercise
Voting Rights attached to different Securities held by the Holder which entitle him to vote;
20.2.5.5.4. the proxy may not delegate the authority granted to him as proxy to another Person;
20.2.5.5.5. participants in a Shareholders Meeting are required to furnish satisfactory identification in terms of section 63(1) in order to reasonably satisfy the Person presiding at the Shareholders Meeting that the right of that Person to participate and vote, either as a Shareholder, or as a proxy for a Shareholder, has been reasonably verified;
20.2.5.5.6. participation in the Shareholders Meeting by Electronic Communication is available, and provide any necessary information to enable Holders entitled to vote or their proxies to access the available medium or means of Electronic Communication and advise that access to the medium or means of Electronic Communication is at the expense of the Holder entitled to vote or proxy, except to the extent that the Company determines otherwise.
20.2.6. A Shareholders Meeting may proceed notwithstanding a Material defect in the giving of the notice, subject to clause 20.2.7, only if every Person who is entitled to exercise Voting Rights in respect of each item on the agenda of the Shareholders Meeting is Present at the Shareholders Meeting and votes to approve the ratification of the defective notice.
20.2.7. If a Material defect in the form or manner of giving notice of a Shareholders Meeting relates only to one or more particular matters on the agenda for the Shareholders Meeting
20.2.7.1. any such matter may be severed from the agenda, and the notice remains valid with respect to any remaining matters on the agenda; and
20.2.7.2. the Shareholders Meeting may proceed to consider a severed matter, if the defective notice in respect of that matter has been ratified in terms of clause 20.2.6.
20.2.8. An immaterial defect in the form or manner of Delivering notice of a Shareholders Meeting, or an accidental or inadvertent failure in the Delivery of the notice to any particular Holder to whom it was addressed does not invalidate any action taken at the Shareholders Meeting.
20.3. Quorum
20.3.1. Business may be transacted at any Shareholders Meeting only while a quorum is present.
20.3.2. The quorum necessary for the commencement of a Shareholders Meeting shall be sufficient Persons Present at the Shareholders Meeting to exercise, in aggregate, at least 25% (twenty five per cent) of all of the Voting Rights that are entitled to be exercised in respect of at least one matter to be decided at the Shareholders Meeting but
20.3.2.1. the Shareholders Meeting may not begin unless at least 3 (three) Persons entitled to vote are Present;
20.3.2.2. if the Company is a Subsidiary of a company, those constituting the quorum must include its Holding Company present in Person.
20.3.3. A matter to be decided at the Shareholders Meeting may not begin to be considered unless those who fulfilled the quorum requirements of clause 20.3.2, continue to be Present. If a resolution is proposed to meet the Listings Requirements, notwithstanding that the Holders of Securities not listed on the JSE shall be entitled to be counted in the quorum as a matter of law, they shall not be taken into account for the purposes of determining whether or not the quorum requirements of the JSE have been attained.
20.3.4. If within 30 (thirty) minutes from the time appointed for the Shareholders Meeting to commence, a quorum is not present, or if the quorum requirements in clause 20.3.3 cannot be achieved for any one or more matters, the Shareholders Meeting shall be postponed, without motion, vote or further notice, subject to clause 20.3.7, to the next Business Day, and if at such adjourned Shareholders Meeting a quorum is not present within 15 (fifteen) minutes from the time appointed for the Shareholders Meeting, then the Person/s entitled to vote Present shall be deemed to be the requisite quorum.
20.3.5. A Shareholders Meeting, or the consideration of any matter being debated at the Shareholders Meeting, may be adjourned from time to time without further notice on a motion supported by Persons entitled to exercise, in aggregate, a majority of the Voting Rights
20.3.5.1. held by all of the Persons who are Present at the Shareholders Meeting at the time; and
20.3.5.2. that are entitled to be exercised on at least one matter remaining on the agenda of the Shareholders Meeting, or on the matter under debate, as the case may be.
Such adjournment shall be to the next Business Day at a fixed time and place.
20.3.6. A Shareholders Meeting may be adjourned until further notice (in which case a further notice shall be Delivered to Holders), as agreed at a Shareholders Meeting.
20.3.7. No further notice is required to be Delivered by the Company of a Shareholders Meeting that is postponed or adjourned as contemplated in clause 20.3.4, unless the location or time for the Shareholders Meeting is different from
20.3.7.1. the location or time of the postponed or adjourned Shareholders Meeting; or
20.3.7.2. a location or time announced at the time of adjournment, in the case of an adjourned Shareholders Meeting; or
20.3.7.3. the location or time for the postponed or adjourned Shareholders Meeting as specified in the notice for the Shareholders Meeting.
20.3.8. The notice for the Shareholders Meeting can specify
20.3.8.1. one location for the Shareholders Meeting; and
20.3.8.2. the same or a different location for the postponed or adjourned Shareholders Meeting.
20.3.9. No other business shall be transacted at any adjourned meeting other than the business left unfinished at the Shareholders Meeting at which the adjournment took place.
20.4. Chairman
The chairman, if any, of the Board shall preside as chairman at every Shareholders Meeting. If there is no such chairman, or if at any Shareholders Meeting he is not present within 10 (ten) minutes after the time appointed for holding the Shareholders Meeting or is unwilling to act as chairman, the Directors shall select a Director present at the Shareholders Meeting, or if no Director is present at the Shareholders Meeting, or if all the Directors present decline to take the chair, the Persons entitled to vote shall select one of their number which is Present to be chairman of the Shareholders Meeting.
20.5. Voting
20.5.1. At any Shareholders Meeting a resolution put to the vote shall be decided on a show of hands, unless before or on the declaration of the result of the show of hands a poll shall be demanded by
20.5.1.1. the chairman;
20.5.1.2. not less than 5 (five) Persons having the right to vote on that matter;
20.5.1.3. a Person/s entitled to exercise not less than 1/10th (one tenth) of the total Voting Rights entitled to vote on that matter; or
20.5.1.4. Person/s entitled to vote at a Shareholders Meeting and holding not less than 1/10th (one tenth) of the issued Share capital of the Company,
and, unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the minute book of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, such resolution. No objection shall be raised as to the admissibility of any vote except at the Shareholders Meeting or adjourned Shareholders Meeting at which the vote objected to is or may be given or tendered. Every vote not disallowed at such Shareholders Meeting shall be valid for all purposes. Any such objection shall be referred to the chairman of the Shareholders Meeting, whose decision shall be final and conclusive.
20.5.2. If a poll is duly demanded it shall be taken in such manner as the chairman directs save that it shall be taken forthwith, and the result of the poll shall be deemed to be the resolution of the Shareholders Meeting at which the poll was
demanded. Scrutineers may be appointed by the chairman to declare the result of the poll, and if appointed their decision shall be deemed to be the resolution of the Shareholders Meeting at which the poll is demanded. The demand for a poll shall not prevent the continuation of a Shareholders Meeting for the transaction of any business other than the question upon which the poll has been demanded. The demand for a poll may be withdrawn.
20.5.3. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the Shareholders Meeting at which the show of hands takes place, or at which the poll is demanded, shall not be entitled to a second or casting vote in addition to the vote or votes to which he is entitled as a Holder.
20.5.4. A minute of resolutions and proceedings at Shareholders Meetings made in one of the minute books of the Company, if signed by the chairman of that Shareholders Meeting to which it relates, or by any Person appointed by the Directors to sign same in his stead, or by the chairman of the next succeeding Shareholders Meeting, shall be accepted as evidence of the facts therein stated. A report of the proceedings of any Shareholders Meeting may be circulated or advertised at the Companys expense.
20.5.5. Any Person entitled to a Security in terms of clause 15 (Transmission of Securities by Operation of Law) may vote at any Shareholders Meeting in respect thereof in the same manner as if he were the Holder of that Security: provided that (except where the Directors have previously accepted his right to vote in respect of that Security) at least 24 (twenty four) hours (excluding Saturdays, Sundays and public holidays) before the time of holding the Shareholders Meeting at which he proposes to vote, he shall have satisfied the Directors that he is entitled to exercise the right referred to in clause 15 (Transmission of Securities by Operation of Law).
20.5.6. Every resolution of Shareholders is either an Ordinary Resolution or a Special Resolution. An Ordinary Resolution, save to the extent expressly provided in respect of a particular matter contemplated in this MOI, shall require to be adopted with the support of more than 50% (fifty per cent) of the Voting Rights exercised on the resolution. A Special Resolution shall require to be adopted with the support of at least 75% (seventy five per cent) of the Voting Rights exercised on the resolution. For so long as the Company is listed on the JSE, if any of the Listings Requirements require an ordinary resolution to be passed with a 75% (seventy five per cent) majority, the resolution shall instead be required to be passed by a Special Resolution.
20.5.7. Subject to clause 20.5.9, on a show of hands a Person entitled to vote Present at the Meeting shall have only 1 (one) vote, irrespective of the number of Voting Rights that Person would otherwise be entitled to Exercise. A proxy shall irrespective of the number of Holders of Securities entitled to vote he represents have only 1 (one) vote on a show of hands.
20.5.8. On a poll every Person entitled to vote who is Present at the Meeting shall have 1 (one) vote for every Share held by him. On a poll, a Shareholder who is entitled to more than 1 (one) vote need not, if he votes, use all his votes or use all his votes in the same manner.
20.5.9. Save for the Holders of Ordinary Shares and any special Shares created for the purposes of black economic empowerment in terms of the Broad-Based Black Economic Empowerment Act, 2003 and the Codes of Good Practice on Black Economic Empowerment (including the Preferred Ordinary Shares and the Sasol BEE Ordinary Shares), any other Holders of Securities shall not be entitled to vote on any resolution taken by the Company other than as specified in the Listings Requirements, in which case, their votes may not carry any special rights or privileges and they shall be entitled to 1 (one) vote for each Share that they hold, provided that their total Voting Rights may not be more than 24.99% (twenty four comma ninety nine per cent) of the total Voting Rights of all Persons entitled to vote on such resolution.
20.5.10. If a resolution is proposed to meet the Listings Requirements, notwithstanding that the Holders of Securities not listed on the JSE shall be entitled to vote thereon as a matter of law, their votes shall not be taken into account for the purposes of determining whether or not the Listings Requirements have been attained.
20.5.11. Where there are joint Holders of Shares, any one of such joint Holders may vote at any Shareholders Meeting in respect of such Shares, either in Person or by proxy, as if he were solely entitled thereto; but if more than one of such joint Holders are Present at a Meeting the vote of the Person whose name appears first in the Securities Register in respect of such Shares, whether in Person or by proxy, shall be accepted to the exclusion of the votes of the other joint Holders. Several executors or administrators of a deceased Shareholder in whose name Shares are registered, shall, for the purpose of this clause, be deemed to be joint Holders thereof.
20.5.12. A Person who holds a Beneficial Interest in any Securities may vote in a matter at a Shareholders Meeting, without a proxy only to the extent that
20.5.12.1. the Beneficial Interest includes the right to vote on the matter; and
20.5.12.2. the Persons name is on the Companys register of disclosures as the holder of a Beneficial Interest.
20.6. Proxies
20.6.1. No form appointing a proxy shall be valid after the expiration of 1 (one) year from the date when it was signed unless the proxy itself provides for a longer or shorter duration but it may be revoked at any time. The appointment is revocable unless the proxy appointment expressly states otherwise, and may be revoked by cancelling it in Writing, or making a later inconsistent appointment of a proxy, and Delivering a copy of the revocation instrument to the proxy, and to the Company. The appointment is suspended at any time and to the extent that the Holder entitled to vote chooses to act directly and in Person in the exercise of any rights as a Holder entitled to vote.
20.6.2. The form appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority shall be Delivered to the Company or any Person which it has identified in the notice of meeting as being a Person to whom proxies may be delivered on behalf of the Company, 24 (twenty four) hours (excluding Saturdays, Sundays and public holidays) prior to the time scheduled for the commencement of the Shareholders Meeting (or such shorter period as permitted in the discretion of the Board, chairman or Company Secretary (or his nominee)).
20.6.3. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the death or mental disorder of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Securities in respect of which the proxy is given, provided that no intimation in Writing of such death, insanity, revocation or transfer as aforesaid shall have been received by the Company at its Registered Office before the commencement of the Shareholders Meeting or adjourned Shareholders Meeting at which the proxy is used.
20.6.4. Subject to the provisions of the Companies Act, a form appointing a proxy may be in any form determined by the Company Secretary (or his nominee) provided that it is in Writing, which form shall be supplied by the Company upon request by a Holder entitled to vote.
20.6.5. If a proxy is received duly signed but with no indication as to how the Person named therein should vote on any resolution, the proxy may vote or abstain from voting as he sees fit.
21. RECORD DATE
21.1. The Board shall determine the Record Date in accordance with the Companies Act, the applicable rules of the Central Securities Depository and the Listings Requirements.
21.2. If, at any time, the Board fails to determine a Record Date, the Record Date for the relevant matter is
21.2.1. in the case of dividends a date subsequent to the declaration date or confirmation of the dividend, whichever is the later;
21.2.2. 10 (ten) Business Days before the date on which the action or event is scheduled to occur, in the case of a Shareholders Meeting and in any other case.
21.3. If required in terms of the Companies Act and/or the Regulations, the Company will publish a notice of a Record Date for any matter by
21.3.1. Delivering a copy to each Holder; and
21.3.2. posting a conspicuous copy of the notice
21.3.2.1. at its principal office;
21.3.2.2. on its website, if it has one; and
21.3.2.3. on any automated system of disseminating information maintained by the JSE.
22. DIRECTORS AND ALTERNATE DIRECTORS, ELECTION, RETIREMENT AND VACANCIES
22.1. Number of Directors
22.1.1. The minimum number of Directors shall be 10 (ten) and the maximum 16 (sixteen), provided a maximum of 5 (five) salaried employees of the Company may simultaneously hold the office of Director. This restriction shall not apply to Alternate Directors.
22.1.2. Any failure by the Company at any time to have the minimum number of Directors, does not limit or negate the authority of the Board, or invalidate anything done by the Board or the Company.
22.2. Rotation of Directors
22.2.1. At the Annual General Meeting held in each calendar year 1/3 (one third) of the Directors, or if their number is not a multiple of 3 (three), then the number nearest to, but not less than 1/3 (one third) (excluding those Directors appointed in terms of clause 22.4) shall retire from office.
22.2.2. The Directors who have been longest in office since their last election shall retire at each Annual General Meeting. As between Directors of equal seniority, the Directors to retire shall, in the absence of agreement, be selected from among them in alphabetical order.
22.2.3. Notwithstanding anything herein contained, if, at the date of any Annual General Meeting, a non-executive Director:
22.2.3.1. has held office for a period of 5 (five) years since his last election, which election took place prior to 25 November 2016, he shall retire at such Meeting, either as one of the non-executive Directors to retire in terms of clause 22.2.1 read with clause 22.2.2 or in terms of this clause; or
22.2.3.2. has held office for a period of 9 (nine) years since his first election, which election took place on or after 25 November 2016, he shall retire at such Meeting, either as one of the non-executive Directors to retire in terms of clause 22.2.1, read with clause 22.2.2or in terms of this clause, provided that the Board may nominate such Director for re-election by the Shareholders for additional periods of one year at a time, but that no Directors term of office shall exceed 12 (twelve) years.
A retiring non-executive Director shall act as a Director throughout the Annual General Meeting at which he retires. Retiring non-executive Directors may be re-elected, provided they are eligible.
22.3. Election of Directors
22.3.1. A Shareholder shall be entitled to nominate by Written notice to the Company any Person as a Director (and an Alternate Director thereto) for election by Shareholders in terms of clause 22.3.8. Such Written notice must
22.3.1.1. be submitted to the Company Secretary by no later than the end of the 1st (first) week in September each year;
22.3.1.2. include written confirmation from the Person to be nominated that he agrees to be nominated as Director and consents to serve as a Director should he be elected in terms of clause 22.3.8.
22.3.2. The Directors shall, within the minimum and maximum limits stipulated in clause 22.1, determine the number of Directors, provided that there shall be 15 (fifteen) Directors until such time as the Directors determine another number.
22.3.3. Each of the Directors and the Alternate Directors, other than a Director contemplated in clause 22.4, shall be elected (which in the case of a vacancy arising shall take place at the next Annual General Meeting), in accordance with clause 22.3.8. Nominations of Persons to be elected as Alternate Directors at a particular Annual General Meeting in accordance with clause 22.3.8 will only be accepted by the Company if the Board has resolved to permit the election of any Alternate Directors at that particular Annual General Meeting.
22.3.4. An Alternate Director shall serve in the place of 1 (one) or more Director/s named in the resolution appointing or electing him, as the case may be, during the Directors/s absence or inability to act as Director.
22.3.5. If a Person is an Alternate Director to more than 1 (one) Director or if an Alternate Director is also a Director, he shall have a separate vote, on behalf of each Director he is representing in addition to his own vote, if any.
22.3.6. Alternate Directors will cease to hold office if the Director (who he serves in place of during that Directors absence or inability to act as Director) ceases to be a Director.
22.3.7. There are no general qualifications prescribed by the Company for a Person to serve as a Director or an Alternate Director in addition to the requirements of the Companies Act. The Board with the assistance of the Nomination, Governance, Social and Ethics Committee must make recommendations to the Holders regarding the suitability of Persons nominated for election as Directors,
taking into account their past performance and contribution, if applicable. A brief curriculum vita of each Person standing for election or re-election as a Director at a Meeting or the Annual General Meeting, must accompany the notice of the Meeting.
22.3.8. In any election of Directors and Alternate Directors, the election is to be conducted as follows
22.3.8.1. a series of votes of those entitled to exercise votes regarding such election, each of which is on the candidacy of a single individual to fill a single vacancy, with the series of votes continuing until all vacancies on the Board at that time have been filled; and
22.3.8.2. in each vote to fill a vacancy
22.3.8.2.1. each Voting Right entitled to be exercised may be exercised once; and
22.3.8.2.2. the vacancy is filled only if a majority of the Voting Rights exercised support the candidate, but if the number of Persons nominated for election exceeds the number of vacancies, the vacancies will be filled by those Persons who receive the highest number of votes in excess of a majority of the Voting Rights exercised in support of each of the candidates.
22.3.9. No Person shall be appointed or elected as a Director or Alternate Director, if he is Ineligible or Disqualified in terms of the Companies Act and Regulations and any such appointment or election shall be a nullity. A Person placed under probation by a court must not serve as a Director or an Alternate Director unless the order of court so permits.
22.4. Vacancies
22.4.1. Any vacancy occurring on the Board may be filled on a temporary basis by the Board with a Person who satisfies the requirements for election as a Director and is subject to all of the liabilities of any other Director, but so that the total number of the Directors shall not at any time exceed the maximum number fixed, if any, but the Individual so elected shall cease to hold office at the termination of the first Shareholders Meeting to be held after the appointment of such Individual as a Director unless he is elected at such Shareholders Meeting (and for the avoidance of doubt, if the first Shareholders Meeting held after his
appointment is the Annual General Meeting, his ceasing to hold office at that Annual General Meeting shall not constitute a retirement by rotation and accordingly he shall not be included in the 1/3 (one third) of the non-executive Directors retiring from office at that Annual General Meeting).
22.4.2. Should the number of Directors fall below the number fixed by or pursuant to this MOI as the minimum, the remaining Directors must, as soon as possible, and, in any event, not later than 3 (three) months from the date that the number of Directors falls below the minimum, fill the vacancies or call a Shareholders Meeting for the purpose of filling the vacancies. A failure by the Company to have the minimum number of Directors during the 3 (three) month period does not limit or negate the authority of the Board or invalidate anything done by the Board. After the expiry of the 3 (three) month period, the remaining Directors shall only be permitted to act for the purpose of filling vacancies or calling Shareholders Meetings.
22.4.3. If there is no Director able and willing to act, then
22.4.3.1. any Holder entitled to exercise Voting Rights in the election of a Director; or
22.4.3.2. the Company Secretary,
may convene a Shareholders Meeting for the purpose of electing Directors.
22.5. Record of Directors
22.5.1. The Company shall maintain a record of its Directors, including, in respect of each Director, that Persons:
22.5.1.1. full name, and any former names;
22.5.1.2. identity number or, if the Person does not have an identity number, the Persons date of birth;
22.5.1.3. nationality and passport number, if the Person is not a South African;
22.5.1.4. occupation;
22.5.1.5. date of their most recent election or appointment as Director of the Company;
22.5.1.6. name and registration number of every other company or foreign company of which the Person is a director, and in the case of a foreign company, the nationality of that company; and
22.5.1.7. the address for service for that Director; and
22.5.1.8. any professional qualifications and experience of the Director, to the extent necessary to enable the Company to comply with the requirement that at least onethird of the members of the Companys Audit committee at any particular time must have academic qualifications, or experience in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resource management.
22.5.2. With respect to each past Director, the Company must retain the information in terms of clause 22.5.1 for 7 (seven) years after the past Director retired from the Company.
23. CESSATION OF OFFICE AS DIRECTOR OR ALTERNATE DIRECTOR
23.1. A Director or Alternate Director shall cease to hold office as such
23.1.1. immediately he becomes Ineligible or Disqualified or the Board resolves to remove him on such basis and in the latter case the Director / Alternate Director has not within the permitted period filed an application for review or has filed such an application but the court has not yet confirmed the removal (during which period he/she shall be suspended);
23.1.2. when his term of office contemplated in clauses 22.2, 22.3 and 22.4 expires;
23.1.3. when he dies;
23.1.4. when he resigns by Written notice to the Company;
23.1.5. if there are more than 3 (three) Directors in office and if the Board determines that he has become incapacitated to the extent that the Person is unable to perform the functions of a Director, and is unlikely to regain that capacity within a reasonable time, and the Director / Alternate Director has not within the permitted period filed an application for review or has filed such an application but the court has not yet confirmed the removal (during which period he shall be suspended);
23.1.6. if he is declared delinquent by a court, or placed on probation under conditions that are inconsistent with continuing to be a Director of the Company;
23.1.7. if he is removed by Ordinary Resolution;
23.1.8. if there are more than 3 (three) Directors in office and if he is removed by resolution of the Board for being negligent or derelict in performing the functions of a Director or having an interest that conflicts with the interests of the Company, and the Director / Alternate Director has not within the permitted period filed an application for review or has filed such an application but the court has not yet confirmed the removal (during which period he shall be suspended);
23.1.9. if he files a petition for the surrender of his estate or an application for an administration order, or if he commits an act of insolvency as defined in the insolvency law for the time being in force, or if he makes any arrangement or composition with his creditors generally;
23.1.10. if he is otherwise removed in accordance with any provisions of this MOI;
23.1.11. if he is absent from meetings of the Directors for 6 (six) consecutive months without leave of the Directors and is not at any such meeting during such 6 (six) consecutive months represented by an Alternate Director.
24. REMUNERATION OF DIRECTORS AND ALTERNATE DIRECTORS AND MEMBERS OF BOARD COMMITTEES
24.1. The Directors or Alternate Directors or members of Board committees shall be entitled to such remuneration for their services as Directors or Alternate Directors or members of Board Committees, the basis of which must be approved from time to time by Special Resolution within the previous 2 (two) years.
24.2. In addition, the Directors and Alternate Directors shall be entitled to be reimbursed by the Company for all reasonable expenses incurred in travelling to and from meetings of the Directors and Holders, and the members of the Board committees shall be entitled to all reasonable expenses in travelling to and from meetings of the members of the Board committees, as determined by a disinterested quorum of Directors. The Company may pay or grant any type of remuneration contemplated in sections 30(6)(b) to (g) to any executive Directors.
24.3. To the extent permitted in terms of the Companies Act, Listings Requirements or the listings requirements of any Exchange on which the Securities of the Company are listed in addition to the JSE, a Director may be employed
24.3.1. in any other capacity in the Company; or
24.3.2. as a director or employee of a company controlled by, or itself a Subsidiary of, the Company,
and in that event, his appointment and remuneration in respect of such other office must be determined by a disinterested quorum of Directors of the Company in clause 24.3.1 or the company referred to in clause 24.3.2, as the case may be.
25. FINANCIAL ASSISTANCE FOR DIRECTORS AND PRESCRIBED OFFICERS AND THEIR RELATED AND INTER-RELATED PARTIES
The Boards powers to provide direct or indirect financial assistance as contemplated in section 45(2) are not limited in any manner, provided all the requirements in section 45 have been met.
26. GENERAL POWERS AND DUTIES OF DIRECTORS
26.1. The powers granted to the Directors in terms of section 66(1) are not limited.
26.2. The Directors may borrow money and secure the payment or repayment thereof upon terms and conditions which they may deem fit in all respects and, in particular, through the issue of debentures which bind as security all or any part of the property of the Company, both current and future.
26.3. The Board must appoint a president and chief executive officer and a chief financial officer, both of whom shall be directors (provided always that the number of Directors so appointed as the holders of any such executive office, including a chairman who holds an executive office, but not a chairman who is a non-executive Director, shall at all times comply with clause 22.1.1) at such remuneration (whether by way of salary or commission, or participation in profits or partly in one way and partly in another) and generally on such terms it may think fit, and it may be made a term of his appointment that he be paid a pension, gratuity or other benefit on his retirement from office.
26.4. The Board may from time to time remove or dismiss a Director from any executive office referred to in clause 26.3 and appoint another or others in his or their place or places at such remuneration and on such terms as it may think fit. A Director appointed in an executive office is subject to the same provisions as to retirement by rotation and removal from office
as other Directors of the Company. If the president and chief executive officer or the chief financial officer for any reason ceases to hold office as Director, he shall ipso facto immediately cease to be the president and chief executive officer or the chief financial officer, as the case may be.
26.5. The Board may from time to time entrust to and confer upon a president and chief executive officer, chief financial officer, manager or Director holding a similar executive office any of the powers vested in the Directors as it may think fit for a period of time and to be exercised for general or specific objects and upon such terms and with such restrictions as it may think fit.
26.6. The Directors may exercise the Voting Rights attached to the shares in any other company held or owned by the Company in all respects in the manner in which they deem fit.
27. BOARD COMMITTEES
27.1. The Directors may appoint any number of Board committees and
27.1.1. constitute such committees
27.1.1.1. as required in terms of the Companies Act, Listings Requirements and the listings requirements of any Exchange on which the Securities of the Company are listed in addition to the JSE; and
27.1.1.2. as recommended in terms of any applicable code of good corporate governance;
27.1.2. delegate to such committees any authority of the Board, subject to the delegations of authority set out in the terms of reference applicable to each committee.
27.2. The members of any such committees may include Persons who are not Directors, but such Persons shall not be able to vote.
27.3. A Director may be appointed to more than one Board Committee.
27.4. No Person shall be appointed as a member of a Board committee, if he is Ineligible or Disqualified and any such appointment shall be a nullity. A Person placed under probation by a court must not serve as a member of a Board committee unless the order of court so permits.
27.5. The Board, from time to time, may prescribe general qualifications for an Individual to serve as a member of a Board committee in addition to the requirements of the Companies Act.
27.6. A member of a Board committee shall cease to hold office as such immediately he becomes Ineligible or Disqualified in terms of the Companies Act.
27.7. Committees of the Board may consult with or receive advice from any Person, provided that the prior written consent of the Company Secretary to any such consultation with, or request for advice from, any such Person has been obtained.
27.8. Meetings and other proceedings of a committee of the Board consisting of more than 1 (one) member shall be governed by the provisions of this MOI regulating the meetings and proceedings of Directors in so far as they are applicable thereto and are not substituted by terms of reference provided for by the Board in terms of clause 27.1.
27.9. The composition of such committees, a brief description of their mandates, the number of meetings held and other relevant information must be disclosed in the annual report of the Company.
28. PERSONAL FINANCIAL INTERESTS OF DIRECTORS AND PRESCRIBED OFFICERS AND MEMBERS OF BOARD COMMITTEES
28.1. For the purposes of this clause 28 (Personal Financial Interests of Directors and Prescribed Officers and Members of Board Committees), -
28.1.1. Director includes an Alternate Director, a Prescribed Officer, and a Person who is a member of a committee of the Board, irrespective of whether or not the Person is also a member of the Board; and
28.1.2. Related Person when used in reference to a Director, has the meaning set out in section 1, but also includes a second company of which the Director or a Related Person is also a Director, or a close corporation of which the Director or a Related Person is a Member.
28.2. This clause 28 (Personal Financial Interests of Directors and Prescribed Officers and Members of Board Committees) shall not apply to a Director in respect of a decision that may generally affect
28.2.1. all of the Directors in their capacity as Directors, but in that case all the Directors shall act in accordance with and as if section 75(3) were applicable unless the Directors are acting pursuant to an authorisation given by the Holders for the Directors to make a decision within certain thresholds, relating to their capacity as Directors; or
28.2.2. a class of Persons, despite the fact that the Director is one member of that class of Persons, unless the only members of the class are the Director or Persons Related or Inter-related to the Director. In such event the Director shall be treated as not having a Personal Financial Interest, unless the class is predominantly made up of Directors and Persons Related or Inter-related to such Directors and in the circumstances the conflict of the Director requires the provisions of this clause 28 (Personal Financial Interests of Directors and Prescribed Officers and Members of Board Committees) to apply.
28.3. If despite the Listings Requirements, there is only 1 (one) Director in office at any time, and since the Company is listed and that Director cannot as a result hold all of the Beneficial Interests of all of the issued Securities of the Company, that Director may not -
28.3.1. approve or enter into any agreement in which the Director or a Related Person has a Personal Financial Interest; or
28.3.2. as a Director, determine any other matter in which the Director or a Related Person has a Personal Financial Interest,
unless the agreement or determination is approved by an Ordinary Resolution after the Director has disclosed the nature and extent of that Personal Financial Interest to those entitled to vote on such Ordinary Resolution.
28.4. At any time, a Director may disclose any Personal Financial Interest in advance, by delivering to the Board, or Holders (if the circumstances contemplated in clause 28.3 prevail), a notice in Writing setting out the nature and extent of that Personal Financial Interest, to be used generally by the Company until changed or withdrawn by further Written notice from that Director.
28.5. If, in the reasonable view of the other non-conflicted Directors, a Director or the Related Person in respect of such Director acts in competition with the Company relating to the matter to be considered at the meeting of the Board, the Director shall only be entitled to such information concerning the matter to be considered at the meeting of the Board as shall be necessary to enable the Director to identify that such Personal Financial Interest exists or continues to exist.
28.6. If a Director (whilst the circumstances contemplated in clause 28.3 are not applicable), has a Personal Financial Interest in respect of a matter to be considered at a meeting of the Board, or Knows that a Related Person has a Personal Financial Interest in the matter, that Director must comply with the requirements set out in section 75(5).
28.7. If a Director acquires a Personal Financial Interest in an agreement or other matter in which the Company has a Material interest, or Knows that a Related Person has acquired a Personal Financial Interest in the matter, after the agreement or other matter has been approved by the Company, the Director must promptly disclose to the Board, or to the Holders entitled to vote (if the Company is a company contemplated in clause 28.3), the nature and extent of that Personal Financial Interest, and the material circumstances relating to the Director or Related Persons acquisition of that Personal Financial Interest.
28.8. A decision by the Board, or a transaction or agreement approved by the Board, or by the Holders (if the Company is a company contemplated in clause 28.3), is valid despite any Personal Financial Interest of a Director or Person Related to the Director, only if
28.8.1. it was approved following the disclosure of the Personal Financial Interest in the manner contemplated in this clause 28 (Personal Financial Interests of Directors and Prescribed Officers and Members of Board Committees); or
28.8.2. despite having been approved without disclosure of that Personal Financial Interest, it has been ratified by an Ordinary Resolution following disclosure of that Personal Financial Interest or has been declared to be valid by a court.
29. PROCEEDINGS OF DIRECTORS
29.1. Convening of Directors Meetings
29.1.1. A Director authorised by the Board (or the Company Secretary on the request of a Director authorised by the Board)
29.1.1.1. may, at any time, call a meeting of the Directors; and
29.1.1.2. must call a meeting of the Directors if required to do so by at least
29.1.1.2.1. 25% (twenty five per cent) of the Directors, in the case of a Board that has at least 12 (twelve) members; or
29.1.1.2.2. 2 (two) Directors, in any other case.
29.1.2. The Board may meet together for the despatch of business, adjourn and otherwise regulate its meetings as its thinks fit.
29.1.3. All meetings shall be held at the place determined by the chairman and in the absence of the chairman, shall be held where the Companys Registered Office is for the time being situated. A meeting of Directors may be conducted by
Electronic Communication and any of the Directors may participate in a meeting by Electronic Communication provided that the Electronic Communication facility employed ordinarily enables all Persons participating in that meeting to communicate concurrently with each other without an intermediary, and to participate effectively in the meeting.
29.2. Notice of Directors Meetings
29.2.1. The Directors may determine what period of notice shall be given of meetings of Directors and may determine the means of giving such notice which may include telephone, telefax or Electronic Communication. For matters requiring urgent resolution by the Directors, notice of meetings may be given by telephone or Electronic Communication. It shall be necessary to give notice of a meeting of Directors to all Directors (including Alternate Directors).
29.2.2. If all of the Directors
29.2.2.1. acknowledge actual receipt of the notice;
29.2.2.2. are present at a meeting of the Directors; or
29.2.2.3. waive notice of the meeting,
the meeting may proceed even if the Company failed to give the required notice of that meeting, or there was a defect in the giving of the notice.
29.3. Quorum
29.3.1. The quorum for a Directors meeting is 5 (five) Directors of which not less than 3 (three) Directors shall be non-executive.
29.3.2. A meeting of Directors at which a quorum is present shall be authorised to exercise all or any of the powers and authorities which vest in the Directors or which may be exercised by them in terms of this MOI or the Companies Act.
29.4. Chairman
29.4.1. The Directors may elect a chairman, vice-chairman and/or lead independent non-executive Director of their meetings and determine the period for which they are to hold office.
29.4.2. If no chairman, vice-chairman or lead independent non-executive Director is elected, or if at any meeting the chairman or vice-chairman have given notice of
their inability to be present at the meeting, or such chairman or vice-chairman is not present within 5 (five) minutes after the time appointed for holding it, or the chairman or vice-chairman is present at the Directors meeting but is unwilling to act as chairman, the Directors present may choose one of their number to be chairman of the meeting. If an interim vacancy in the office of chairman, vice-chairman or lead independent non-executive Director arises, the Directors may elect a chairman, vice-chairman or lead independent non-executive Director, as the case may be.
29.5. Voting
29.5.1. Each Director has 1 (one) vote on a matter before the Board and a majority of the votes cast on a resolution is sufficient to approve that resolution.
29.5.2. In the case of a tied vote the chairman may not cast a deciding vote and the matter being voted on fails.
29.5.3. The Company must keep minutes of the meetings of the Board, and any of its committees as prescribed in the Companies Act.
29.5.4. Resolutions adopted by the Board
29.5.4.1. must be dated and sequentially numbered; and
29.5.4.2. are effective as of the date of the resolution, unless the resolution states otherwise.
29.5.5. Any minutes of a meeting, or a resolution, or any extract therefrom, signed by the chairman of the meeting, or by the chairman of the next meeting of the Board, or by any Person authorised by the Board to sign same in his stead, or by any 2 (two) Directors, are/is evidence of the proceedings of that meeting, or adoption of that resolution, as the case may be without the necessity for further proof of the facts stated. The Company Secretary or his authorised nominee may sign an extract from the minutes of a Board meeting, or a resolution, which shall constitute evidence of the proceedings of that meeting, or adoption of that resolution, as the case may be without the necessity for further proof of the facts stated.
29.5.6. A Written resolution shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted, provided that each Director who is able to receive notice, has received notice of the matter to be decided. For the purposes hereof a Written resolution means a resolution passed other
than at a meeting of Directors, in respect of which, subject to clause 29.5.3, a majority of Directors (for which purpose one or more Alternate Directors shall be entitled to sign a round robin resolution if one or more Directors are not able to sign or timeously return a signed copy of the resolution, and without his vote/s the requisite majority cannot be achieved), voted in favour by signing in Writing a resolution in counterparts or otherwise. Any such resolution may consist of one or more documents, with the same form and contents, which in aggregate have been signed by the required number of Directors or Alternate Directors.
30. VALIDITY OF ACTS OF DIRECTORS
As regards all persons dealing in good faith with the Company, all acts of a Director shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or election.
31. PRESCRIBED OFFICERS
31.1. No Person shall act as a Prescribed Officer, if he is Ineligible or Disqualified. A Person placed under probation by a court must not consent to be appointed to an office or undertake any functions which would result in him being a Prescribed Officer nor act in such office nor undertake any such functions unless the order of court so permits.
31.2. A Prescribed Officer shall cease to hold office immediately after he becomes Ineligible or Disqualified in terms of the Companies Act or the Companys employment policies.
32. APPOINTMENT OF COMPANY SECRETARY
32.1. The Directors must appoint the Company Secretary from time to time, who
32.1.1. shall be a permanent resident of South Africa and remain so while serving as Company Secretary; and
32.1.2. shall have the requisite knowledge of, or experience in, any law relevant to or affecting the Company; and
32.1.3. may be a Juristic Person subject to the following
32.1.3.1. every employee of that Juristic Person who provides company secretary services, or partner and employee of that partnership, as the case may be, is not Ineligible or Disqualified;
32.1.3.2. at least 1 (one) employee of that Juristic Person, or one partner or employee of that partnership, as the case may be, satisfies the requirements in clauses 32.1.1 and 32.1.2;
32.2. Within 60 (sixty) Business Days after a vacancy arises in the office of Company Secretary, the Board must fill the vacancy by appointing a Person whom the Board considers to have the requisite knowledge and experience. A change in the membership of a Juristic Person or partnership that holds office as Company Secretary does not constitute a vacancy in the office of Company Secretary, if the Juristic Person or partnership continues to satisfy the requirements of clause 32.1.3.
32.3. If at any time a Juristic Person or partnership holds office as Company Secretary of the Company
32.3.1. the Juristic Person or partnership must immediately notify the Board if the Juristic Person or partnership no longer satisfies the requirements of clause 32.1.3, and is regarded to have resigned as Company Secretary upon giving that notice to the Company;
32.3.2. the Company is entitled to assume that the Juristic Person or partnership satisfies the requirements of clause 32.1.3, until the Company has received a notice contemplated in clause 32.3.1; and
32.3.3. any action taken by the Juristic Person or partnership in performance of its functions as Company Secretary is not invalidated merely because the Juristic Person or partnership had ceased to satisfy the requirements of clause 32.1.3 at the time of that action.
32.4. The Company Secretary may resign from office by giving the Company 1 (one) months Written notice or less than that with the prior Written approval of the Board.
32.5. If the Company Secretary is removed from office by the Board, the Company Secretary may, by giving Written notice to that effect to the Company by not later than the end of the financial year in which the removal took place, require the Company to include a statement in its annual Financial Statements relating to that financial year, not exceeding a reasonable length, setting out the Company Secretarys contention as to the circumstances that resulted in the removal. The Company must include this statement in the Directors report in its annual Financial Statements.
33. DISTRIBUTIONS
33.1. The Company
33.1.1. may make Distributions from time to time, provided that
33.1.1.1. any such Distribution
33.1.1.1.1. is pursuant to an existing legal obligation of the Company, or a court order; or
33.1.1.1.2. the Board, by resolution, has authorised the Distribution in accordance with the Companies Act;
33.1.1.2. it reasonably appears that the Company will satisfy the Solvency and Liquidity Test immediately after completing the proposed Distribution; and
33.1.1.3. the Board, by resolution, has acknowledged that it has applied the Solvency and Liquidity Test and reasonably concluded that the Company will satisfy the Solvency and Liquidity Test immediately after completing the proposed Distribution; and
33.1.1.4. no obligation is imposed, if it is a distribution of capital, that the Company is entitled to require it to be subscribed again;
33.1.1.5. any payment to Shareholders which is not pro rata to all Shareholders will be regarded as a specific payment and will require the Company to obtain the approval of its Shareholders at a Shareholders Meeting, which approval is not required in respect of cash dividends paid out of retained income, scrip dividends or capitalisation issues;
33.1.1.6. where the underlying Securities are unlisted when the Company effects a Distribution in specie by way of an unbundling (either by way of pro rata or specific payment) or where such Securities become unlisted as a result of the unbundling, Shareholder approval is required;
33.1.2. must before incurring any debt or other obligation for the benefit of any Holders, comply with the requirements in clause 33.1.1,
and must complete any such Distribution fully within 120 (one hundred and twenty) Business Days after the acknowledgement referred to in clause 33.1.1, failing which it must again comply with the aforegoing.
33.2. No notice of change of address or instructions as to payment received less than 3 (three) Business Days before the date of payment of the dividend of other Distribution shall become effective until after the dividend or other Distribution has been made, unless the Board so determines at the time the dividend or other Distribution is approved.
33.3. All unclaimed Distributions as contemplated in this clause
33.3.1. will be held for a period of 3 (three) years without the Company being entitled to use same; and may be invested or otherwise be made use of by the Directors for the benefit of the Company until claimed, without the payment of interest, provided that any dividend or other Distribution remaining unclaimed for a period of not less than 12 (twelve) years from the date on which it became payable may be forfeited by resolution of the Directors for the benefit of the Company.
33.3.2. After the expiry of the 3 (three) year period referred to in clause 33.3.1, may be invested or otherwise be made use of by the Directors for the benefit of the Company,
without the payment of interest, provided that any dividend or other Distribution remaining unclaimed for a period of not less than 12 (twelve) years from the date on which it became payable may be forfeited by resolution of the Directors for the benefit of the Company and upon the passing of such resolution the Holders concerned shall no longer have any claim against the Company in respect thereof.
33.4. The Company shall be entitled at any time to delegate its obligations in respect of unclaimed dividends or other unclaimed Distributions, to any one of the Companys bankers from time to time.
33.5. Where Shareholders reside outside South Africa, the Directors are empowered, subject to applicable law, to make Distributions in another appropriate currency and in such case to determine the date upon which and the exchange rate at which the Distributions shall be converted into that other currency.
33.6. If any problem arises in connection with a Distribution, the Directors may settle same as they deem fit, and in particular may determine the value in respect of a Distribution in specie of the assets forming part thereof, and may determine to make cash payments as necessary, and may vest any such assets in trustees upon such trust for the Persons entitled to the Distribution as they deem fit.
33.7. If several Persons are registered as the joint Holders of any Security, any one of such Persons may give valid receipts for all the Distributions in respect of such Security.
33.8. Each Holder shall provide the Company with his banking details in Writing and notify the Company in Writing of any changes to such banking details. A Distribution will be paid by electronic funds transfer or otherwise as the Board may from time to time decide, unless a particular Holder requests in Writing for such payment to be made by cheque (in which case
that Holder shall bear the risk of such payment by cheque). Proof of payment shall be sent to the Electronic Address of the Holder entitled thereto or to any other address requested by him in the case of joint Holders to that one of them named first in the Securities Register in respect of such joint Holding, and suchproof of payment exempts the Company of liability in respect of such dividend. If a Shareholder has requested that Distributions be paid to him by cheque and the amount of any 1 (one) Distribution is less than R100 (one hundred Rands), such amount shall be retained in trust, in the Companys unclaimed dividend account, for the benefit of such Shareholder until such amount exceeds R100 (one hundred Rands), whereupon it shall be paid by the Company to the Shareholder.
34. LOSS OF DOCUMENTS
The Company shall not be responsible for the loss in transmission of any cheque, warrant, certificate or (without any limitation eiusdem generis) other document sent through the post either to the registered address of any Holder or to any other address requested by the Holder.
35. NOTICES
35.1. The Company may give notices, documents, records or statements by personal delivery to the Holder or holder of Beneficial Interests or by sending them prepaid through the post or by transmitting them by fax or by Electronic Communication to such Persons last known address. The Company must give notice of
35.1.1. any Shareholders Meeting in the manner referred to in clause 35.1 to each Person entitled to vote at such Shareholders Meeting, other than proxies and Persons entitled to vote at such Shareholders Meeting who have elected not to receive such notice;
35.1.2. availability of a document, record or statement to the Holder or holder of Beneficial Interests in the manner prescribed in the Companies Act and/or the Regulations.
35.2. Any Holder or holder of Beneficial Interests who/which has furnished an Electronic Address to the Company, by doing so
35.2.1. authorises the Company to use Electronic Communication to give notices, documents, records or statements to him; and
35.2.2. confirms that same can conveniently be printed by the Holder / holder of the Beneficial Interests within a reasonable time and at a reasonable cost.
35.3. A Holder or Person entitled to Securities (or his executor) shall be bound by every notice in respect of the Securities Delivered to the Person who was, at the date on which that notice was Delivered, shown in the Securities Register or established to the satisfaction of the Directors (as the case may be) as the Holder of or Person entitled to the Securities, notwithstanding that the Holder or Person entitled to Securities may then have been dead or may subsequently have died or have been or become otherwise incapable of acting in respect of the Securities, and notwithstanding any transfer of the Securities was not registered at that date. The Company shall not be bound to enter any Person in the Securities Register as entitled to any Securities until that Person gives the Company an address for entry on the Securities Register.
35.4. If joint Holders are registered in respect of any Securities or if more than 1 (one) Person is entitled to Securities, all notices shall be given to the Person named first in the Securities Register in respect of the Securities, and notice so Delivered shall be sufficient notice to all the Holders of or Persons entitled to or otherwise interested in the Securities.
35.5. The Company shall not be bound to use any method of giving notice, documents, records or statements or notices of availability of the aforegoing, contemplated in the Regulations in respect of which provision is made for deemed delivery, but if the Company does use such a method, the notice, document, record or statement or notice of availability of the aforegoing shall be deemed to be delivered on the day determined in accordance with Table CR3 in the Regulations (which is included as Schedule 5 for easy reference but which does not form part of this MOI for purposes of interpretation). In any other case, when a given number of days notice or notice extending over any period is required to be given (which are not Business Days which shall be calculated in accordance with clause 2 (Calculation of Business Days)), the provisions of clause 2 (Calculation of Business Days) shall also be applied.
35.6. The holder of a Share warrant to bearer shall not, unless it be otherwise expressed in the warrant, be entitled in respect thereof to notice of any Shareholders Meeting or otherwise, except by way of advertisement in a Johannesburg daily newspaper, provided that where a branch Securities Register or transfer office has been established, such advertisement shall also be inserted in at least 1 (one) daily newspaper circulating in the district in which any branch Securities Register or transfer office is located, for at least 7 (seven) days. Any notice given by advertisement shall be deemed to have been delivered on the first day when the newspaper containing such advertisement shall be published.
35.7. As regards the signature of an Electronic Communication by a Holder, it shall be in such form as the Directors may specify to demonstrate that the Electronic Communication is genuine, or failing any such specification by the Directors, subject to section 13 of the
Electronic Communications and Transactions Act, it shall be constituted by the Holder indicating in the Electronic Communication that it is the Holders intention to use the Electronic Communication as the medium to indicate the Holders approval of the information in, or the Holders signature of the document in or attached to, the Electronic Communication which contains the name of the Holder sending it in the body of the Electronic Communication.
36. INDEMNITY
36.1. For the purposes of this clause 36 (Indemnity), Director includes a former Director, an Alternate Director, a Prescribed Officer, a Person who is a member of a committee of the Board, irrespective of whether or not the Person is also a member of the Board and a member of the Audit committee.
36.2. The Company may
36.2.1. not directly or indirectly pay any fine that may be imposed on a Director, or on a Director of a Related company, as a consequence of that Director having been convicted of an offence in terms of any national legislation unless the conviction was based on strict liability;
36.2.2. advance expenses to a Director to defend litigation in any proceedings arising out of the Directors service to the Company; and
36.2.3. directly or indirectly indemnify a Director for
36.2.3.1. any liability, other than in respect of
36.2.3.1.1. any liability arising in terms of section 77(3)(a), (b) or (c) or from wilful misconduct or wilful breach of trust on the part of the Director; or
36.2.3.1.2. any fine contemplated in clause 36.2.1;
36.2.3.2. any expenses contemplated in clause 36.2.2, irrespective of whether it has advanced those expenses, if the proceedings
36.2.3.2.1. are abandoned or exculpate the Director; or
36.2.3.2.2. arise in respect of any other liability for which the Company may indemnify the Director in terms of clause 36.2.3.
36.3. The Company may purchase insurance to protect
36.3.1. a Director against any liability or expenses contemplated in clause 36.2.2 or 36.2.3; or
36.3.2. the Company against any contingency including but not limited to
36.3.2.1. any expenses
36.3.2.1.1. that the Company is permitted to advance in accordance with clause 36.2.2; or
36.3.2.1.2. for which the Company is permitted to indemnify a Director in accordance with clause 36.2.3.2; or
36.3.2.2. any liability for which the Company is permitted to indemnify a Director in accordance with clause 36.2.3.1.
36.4. The Company is entitled to claim restitution from a Director or of a Related company for any money paid directly or indirectly by the Company to or on behalf of that Director in any manner inconsistent with section 78.
36.5. Subject to the provisions of this MOI, no Director is liable for the acts, receipts, neglect or default of any other Director, or for joining, for the sake of conformity, in any receipt or other act, or for loss or expense suffered or incurred by the Company as a result of the insufficiency or deficiency of title to any property acquired by order of the Directors for and on behalf of the Company, or for the insufficiency or deficiency of any security in or upon which any of the money of the Company shall be invested, or for any loss or damage arising from the bankruptcy, insolvency or unlawful act of any Person with whom money or Securities were deposited, or for any loss or damage occasioned by any error of judgement or oversight on his part, or for any other loss, damage or misfortune of whatever nature which occurred in the execution of the duties of his office or in relation thereto, unless same occurred in consequence of his own negligence, neglect, breach of duty or disregard of a trust.
37. REPURCHASE OF SECURITIES
Subject to clause 39.5, the Company is authorised to repurchase its Securities subject to compliance with the Companies Act and the Listings Requirements, including for the purposes of an odd-lot offer as contemplated in the Listings Requirements.
38. WINDING-UP
Upon winding-up, any part of the assets of the Company remaining after the payment of the debts and liabilities of the Company and the costs of liquidation, including Securities of other companies, may -
38.1. with the sanction of a Special Resolution, be divided in specie among the Shareholders in proportion to the number of Shares respectively held by each of them, provided that the provisions of this MOI shall be subject to the rights of the Holders of Securities issued upon special conditions; or
38.2. with the same sanction, be vested in trustees for the benefit of such Shareholders, and the liquidation of the Company may be finalised and the Company dissolved.
39. RIGHTS, PRIVILEGES AND CONDITIONS ATTACHING TO THE PREFERRED ORDINARY SHARES
The Preferred Ordinary Shares in the Share capital of the Company shall have the following rights, privileges and conditions -
39.1. Definitions
39.1.1. In this clause 39, headings are for convenience only and shall not be used in its interpretation and, unless the context clearly indicates a contrary intention, an expression which denotes any gender includes the other genders, any reference to a natural person includes a reference to an artificial or juristic person and vice versa, the singular includes the plural and vice versa and the followings words and expressions shall bear the meanings assigned to them below and cognate expressions shall bear corresponding meanings -
39.1.1.1. Board - the board of directors of the Company from time to time;
39.1.1.2. Business Day - each calendar day, other than Saturdays, Sundays and official public holidays in South Africa, on which banks are open for business in South Africa;
39.1.1.3. Cessation of Preferred Rights the automatic cessation of all Privileges and Conditions set out in Articles 39.3, 39.4, 39.5, 39.6, 39.7, 39.8, 39.12 and 39.13 attaching to a Preferred Ordinary Share and the automatic re-designation of such Preferred Ordinary Share into and as an Ordinary Share in accordance with clause 39.11;
39.1.1.4. Class A Preference Share - a class A cumulative fixed rate redeemable preference share with a par value of ZAR0,01 (one cent) in the issued Share capital of Groups FundCo and/or Public FundCo (as the context may indicate);
39.1.1.5. Class A Preference Shareholder in relation to a Class A Preference Share the registered holder (as reflected in the Securities Register of Groups FundCo and/or Public FundCo, as the case may be) of that Class A Preference Share from time to time and for the time being;
39.1.1.6. Class A Preference Share Terms the rights, privileges and conditions attaching to the Class A Preference Shares, as set out in the Groups FundCo Subordination and Agency Agreement and the Public FundCo Subordination and Agency Agreement (as the context may indicate);
39.1.1.7. Class B Preference Share - a Class B cumulative fixed rate redeemable preference Share with a par value of ZAR0,01 (one cent) in the issued Share capital of Groups FundCo and/or Public FundCo (as the context may indicate);
39.1.1.8. Class B Preference Shareholder - in relation to a Class B Preference Share the registered holder (as reflected in the Securities Register of Groups FundCo and/or Public FundCo, as the case may be) of that Class B Preference Share from time to time and for the time being;
39.1.1.9. Class B Preference Share Terms the rights, privileges and conditions attaching to the Class B Preference Shares, as set out in the Groups FundCo Subordination and Agency Agreement and the Public FundCo Subordination and Agency Agreement (as the context may indicate);
39.1.1.10. Class C Preference Share - a Class C cumulative floating rate redeemable preference Share with a par value of ZAR0,01 (one cent) in the issued Share capital of Groups FundCo and/or Public FundCo (as the context may indicate);
39.1.1.11. Class C Preference Shareholder in relation to a Class C Preference Share the registered holder (as reflected in the
Securities Register of Groups FundCo and/or Public FundCo, as the case may be) of that Class C Preference Share from time to time and for the time being;
39.1.1.12. Class C Preference Share Terms the rights, privileges and conditions attaching to the Class C Preference Shares, as set out in the Groups FundCo Subordination and Agency Agreement and the Public FundCo Subordination and Agency Agreement (as the context may indicate);
39.1.1.13. Credit for STC - the amount of any dividends accrued to a company which may be deducted from the amount of any dividend declared by that company in determining the net amount of such dividend declared in accordance with the provisions of section 64B(3) of the Income Tax Act, 1962;
39.1.1.14. Dividend in respect of a class of Shares - a dividend declared or otherwise paid by the Company to the Registered Holders of that class of Shares in their capacity as such;
39.1.1.15. Encumber - any
39.1.1.15.1. mortgage, pledge, lien, assignment or cession conferring security, hypothecation, security interest, preferential right, trust arrangement, lease, option, right of first refusal, right of pre-emption, right of retention or any other encumbrance securing any obligation of any person;
39.1.1.15.2. agreement, arrangement or transaction under or pursuant to which
39.1.1.15.2.1. a security interest is created and/or security is granted over any asset; and/or
39.1.1.15.2.2. any money or claims to, or for the benefit of, a bank or other account may be applied, set-off or made subject to a combination of accounts so as to effect a full or
partial discharge of any sum owed or payable to any person; or
39.1.1.15.3. other type of preferential agreement, arrangement or transaction (including any title transfer and retention arrangement), the effect of which is the creation of a security interest,
and the words Encumbrance and Encumbered shall be construed in a like manner;
39.1.1.16. Final Preferred Ordinary Dividend a Dividend deemed to be declared and required to be paid in respect of each Preferred Ordinary Share on the Redesignation Date of such Preferred Ordinary Share, as contemplated in clause 39.4.3.2;
39.1.1.17. Groups FundCo Sasol Inzalo Groups Funding Proprietary Limited (Registration No. 2007/030536/07), a private company with limited liability duly incorporated under the laws of South Africa;
39.1.1.18. Groups FundCo Call Option the call option granted by the Groups FundCo Preference Shareholders to the Company as set out in clause 10 of the Groups FundCo Subordination and Agency Agreement;
39.1.1.19. Groups FundCo Preference Share - a Class A Preference Share, a Class B Preference Share or a Class C Preference Share issued by Groups FundCo from time to time;
39.1.1.20. Groups FundCo Preference Share Agent the preference Share agent appointed by the Groups FundCo Preference Shareholders in writing to act on their behalf pursuant to clause 4 of the Groups FundCo Subordination and Agency Agreement;
39.1.1.21. Groups FundCo Preference Shareholder - a registered holder of one or more Groups FundCo Preference Shares at that point in time;
39.1.1.22. Groups FundCo Redesignation Date in respect of a Preferred Ordinary Share held by Groups FundCo the date on which a Cessation of Preferred Rights occurs in respect of that Preferred Ordinary Share and on which that Preferred Ordinary Share is
automatically re-designated into an Ordinary Share, being the date which is the earlier of
39.1.1.22.1. the 10th (tenth) anniversary of the Issue Date of the first Preferred Ordinary Share to be issued, or a date selected by Sasols Board (or anyone to whom it delegates its authority), occurring during the period 1 April 2018 to 27 June 2018, to facilitate a co-ordinated approach in an appropriate manner to the termination of the Sasol Inzalo BEE transaction that was implemented in 2008; or
39.1.1.22.2. the date of receipt by the Company of a written notice from the Groups FundCo Preference Share Agent referring to the Preferred Ordinary Shares held by Groups FundCo and confirming that a Redemption Event has occurred in respect of any Groups FundCo Preference Share, unless the Company has at such date already exercised its rights under the Groups FundCo Call Option,
provided that if such date falls on a day which is not a Business Day, the Groups FundCo Redesignation Date shall fall on the immediately succeeding Business Day;
39.1.1.23. Groups FundCo Subordination and Agency Agreement the written subordination and agency agreement concluded between the Groups FundCo Preference Share Agent, the Company, Sasol Financing Proprietary Limited, the subscribers for Groups FundCo Preference Shares listed in annexure A to that agreement and Groups FundCo;
39.1.1.24. Holder at a point in time - a Registered Holder of a Preferred Ordinary Share at that point in time;
39.1.1.25. Issue Date of a Preferred Ordinary Share - the date on which that Preferred Ordinary Share is issued;
39.1.1.26. Normal Distribution in respect of Ordinary Shares (or any class of Shares in the Share capital of the Company other than the Preferred Ordinary Shares) - any Shareholder Distribution declared
and paid by the Company in respect of Ordinary Shares (or that other class of Shares other than the Preferred Ordinary Shares) which is not a Special Distribution;
39.1.1.27. Ordinary Shareholder at a point in time - the Registered Holder of one or more Ordinary Shares at that point in time;
39.1.1.28. Person includes natural persons, companies, corporations, close corporations, trusts, foundations, firms, partnerships and other entities, juristic persons and associations of persons, wheresoever incorporated or registered and whether or not incorporated or registered;
39.1.1.29. Post-Redemption Event Cashflow Waterfall in relation to the Preferred Ordinary Shares, held by
39.1.1.29.1. Groups FundCo the Post-Redemption Event Cashflow Waterfall as defined in the Class A Preference Share Terms, Class B Preference Share Terms and Class C Preference Share Terms for purposes of the rights, conditions and privileges of any Class A Preference Share, any Class B Preference Share or any Class C Preference Share issued by Groups FundCo;
39.1.1.29.2. Public FundCo the Post-Redemption Event Cashflow Waterfall as defined in the Class A Preference Share Terms, Class B Preference Share Terms and Class C Preference Share Terms for purposes of the rights, conditions and privileges of any Class A Preference Share, any Class B Preference Share or any Class C Preference Share issued by Public FundCo;
39.1.1.30. Preferred Ordinary Dividend - the cumulative preferential cash Dividend payable on each Preferred Ordinary Share, as provided for in clause 39.4;
39.1.1.31. Preferred Ordinary Share Class Meeting - a class meeting of the Holders as contemplated in clause 39.8;
39.1.1.32. Preference Share Agent - the Groups FundCo Preference Share Agent or the Public FundCo Preference Share Agent, as the context may indicate;
39.1.1.33. Prime Rate - the publicly quoted prime rate of interest (percent, per annum, compounded monthly in arrears and calculated on a 365 (three hundred and sixty five) day year irrespective of whether or not the year is a leap year) as published by The Standard Bank of South Africa Limited, (or its successor) as being its prime rate from time to time, as certified by any manager of such bank whose authority, appointment and designation need not be proved;
39.1.1.34. Privileges and Conditions the provisions and conditions attaching to the Preferred Ordinary Shares, as set out in this clause 39;
39.1.1.35. Public FundCo - Sasol Inzalo Public Funding Proprietary Limited (Registration No. 2008/000072/07), a private company with limited liability duly incorporated under the laws of South Africa;
39.1.1.36. Public FundCo Call Option the call option granted by the Public FundCo Preference Shareholders to the Company as set out in clause 10 of the Public FundCo Subordination and Agency Agreement;
39.1.1.37. Public FundCo Preference Share - a Class A Preference Share, a Class B Preference Share or a Class C Preference Share issued by Public FundCo from time to time;
39.1.1.38. Public FundCo Preference Share Agent the preference Share agent appointed by the Public FundCo Preference Shareholders in writing to act on their behalf pursuant to clause 4 of the Public FundCo Subordination and Agency Agreement;
39.1.1.39. Public FundCo Preference Shareholder at a point in time - a registered holder of one or more Public FundCo Preference Shares at that point in time;
39.1.1.40. Public FundCo Redesignation Date in respect of a Preferred Ordinary Share held by Public FundCo the date on which a Cessation of Preferred Rights occurs in respect of that Preferred Ordinary Share and on which that Preferred Ordinary Share is
automatically re-designated into an Ordinary Share, being the date which is the earlier of
39.1.1.40.1. the 10th (tenth) anniversary of the Issue Date of the first Preferred Ordinary Share to be issued, or a date selected by Sasols Board (or anyone to whom it delegates its authority), occurring during the period 1 April 2018 to 27 June 2018, to facilitate a co-ordinated approach in an appropriate manner to the termination of the Sasol Inzalo BEE transaction that was implemented in 2008; or
39.1.1.40.2. the date of receipt by the Company of a written notice from the Public FundCo Preference Share Agent referring to the Preferred Ordinary Shares held by Public FundCo and confirming that a Redemption Event has occurred in respect of any Public FundCo Preference Share held by Public FundCo unless the Company has at such date already exercised its rights under the Public FundCo Call Option,
provided that if such date falls on a day which is not a Business Day, the Public FundCo Redesignation Date shall fall on the immediately succeeding Business Day;
39.1.1.41. Public FundCo Subordination and Agency Agreement the written subordination and agency agreement concluded between the Public FundCo Preference Share Agent, the Company, Sasol Financing Proprietary Limited, the subscribers for Public FundCo Preference Shares listed in annexure A to that agreement and Public FundCo;
39.1.1.42. Redemption Event in relation to the Preferred Ordinary Shares held by
39.1.1.42.1. Groups FundCo - the occurrence of a Redemption Event as defined in the Class A Preference Share Terms, Class B Preference Share Terms and Class C Preference Share Terms under and for purposes of the rights, conditions and privileges of
any Class A Preference Share, any Class B Preference Share or any Class C Preference Share issued by Groups FundCo;
39.1.1.42.2. Public FundCo - the occurrence of a Redemption Event as defined in the Class A Preference Share Terms, Class B Preference Share Terms and Class C Preference Share Terms under and for purposes of the rights, conditions and privileges of any Class A Preference Share, any Class B Preference Share or any Class C Preference Share issued by Public FundCo;
39.1.1.43. Redesignation Date the Groups FundCo Redesignation Date and/or the Public FundCo Redesignation Date, as the context may indicate;
39.1.1.44. Registered Holder of a Share in the Company as at a point in time - the holder of that Share at that time as reflected in the Securities Register of the Company;
39.1.1.45. Shareholder Distribution in respect of a class of Shares - a Dividend, a capital or other distribution or any other payment to Registered Holders of that class of Shares in their capacity as such;
39.1.1.46. Special Distribution - any Dividend or other Shareholder Distribution declared and paid by the Company which (i) does not coincide (in respect of date) with either the normal annual final Dividend or normal semi-annual interim Dividend declared by the Company on or in respect of the Ordinary Shares, or (ii) entails the declaration or distribution of any Dividend in specie, or (iii) entails the payment or distribution of an amount exceeding 5% (five per cent) of the Companys market capitalisation on the JSE as at the date of declaration, but then only in respect of the amount of such excess, or (iv) is paid in respect of the Preferred Ordinary Shares as a result of a share buy-back transaction in terms of clause 39.5, or (v) is described by the Board as a special, extraordinary or abnormal Dividend or Shareholder Distribution;
39.1.1.47. STC - secondary tax on companies levied in terms of the Income Tax Act 58 of 1962 (as amended, repromulgated or substituted from time to time);
39.1.1.48. Tax - any tax, duty, levy, surcharge or imposition of any nature whatever, and any penalties or interest payable in respect thereof, which may be lawfully imposed under the laws of South Africa, including STC or any other tax on Dividends.
39.1.2. When calculating any increase, decrease and/or reduction for purposes of determining any Tax, Credit for STC or credit for Tax on Dividends, such calculation shall be done on the basis of no double counting.
39.1.3. When the day for performance of any obligation of the Company in relation to the Preferred Ordinary Shares is not a Business Day then the Company shall perform such obligation on the immediately succeeding Business Day on the basis that such later performance shall not affect any calculation required to be made in respect of the Preferred Ordinary Shares.
39.1.4. All calculations to be made by applying an annualised rate to an amount shall be made on the basis of the assumption that the year in question is a 365 (three hundred and sixty five) day year.
39.1.5. Any term used in this clause 39 that refers to a South African legal concept or process (for example, without limiting the aforegoing, winding-up, business rescue, curatorship or the like) shall be deemed to include a reference to the equivalent or analogous concept or process in any other jurisdiction to the laws of which the Company may be or become subject.
39.1.6. Any reference to any statute, regulation or other legislation shall be a reference to that statute, regulation or other legislation as at the Issue Date, and as amended or substituted from time to time.
39.1.7. Any reference to any agreement, deed, bond or other document shall include a reference to all annexures, appendices, schedules and other attachments thereto and shall be a reference to that agreement, deed, bond or other document (including such annexures, appendices, schedules and other attachments thereto) as amended, novated and/or replaced from time to time.
39.1.8. Any reference to Subsidiary, Subsidiary Company, Subsidiaries or Holding Company shall be given the meaning which would be ascribed thereto in accordance with the provisions of the Companies Act. Where any
term is defined within a particular clause of this MOI other than this clause 39, that term shall bear the meaning ascribed to it in that clause wherever it is used in this clause 39.
39.1.9. Where any period or number of days is to be calculated, such period or number shall be calculated as including the first day and excluding the last day, provided that if the last day of such period or number so calculated falls on a day which is not a Business Day, the last day shall be deemed to be the immediately succeeding day which is a Business Day.
39.1.10. The use of the word including, include and includes followed by a specific example/s shall not be construed as limiting the meaning of the general wording preceding it and the eiusdem generis rule shall not be applied in the interpretation of such wording or such specific example/s.
39.1.11. The word Dispose shall mean any form of alienation of any property or assets and any agreement for such form of alienation of property or assets and shall include a sale, donation, pledge, cession, assignment or licence, and the words Disposed, Disposition and Disposal shall be construed in a like manner, provided that the payment of money shall not constitute a Disposal.
39.1.12. The word Month means a period starting on one day in any calendar month and ending on the day before the numerically corresponding day in the next calendar month, provided that (i) if any such period would otherwise end on a day in the later calendar month which is not a Business Day, it shall end on the immediately preceding Business Day in the later calendar month and (ii) if a period starts on the last Business Day in a calendar month, or if there is no numerically corresponding day in the next calendar month in which that period ends, that period shall end on the last Business Day in that later calendar month.
39.2. Issue and certificates
39.2.1. Other than in regard to the Preferred Ordinary Shares consented to be issued by the JSE on or about 29 February 2008, Preferred Ordinary Shares shall only be issued in accordance with such requirements as the JSE may impose from time to time. Each Preferred Ordinary Share shall be issued at such subscription price as may be agreed in writing between the Company and the Subscriber for that Preferred Ordinary Share, and each Preferred Ordinary Share shall, until its Redesignation Date, have the rights, privileges and conditions as set out in these Privileges and Conditions.
39.2.2. The Share certificate issued by the Company to a Holder in respect of each Preferred Ordinary Share held by such Holder shall be endorsed with the amount originally paid for the issue of that Preferred Ordinary Share.
39.3. Ranking
Save as provided to the contrary in clauses 39.4 to 39.9 (both inclusive) and in clauses 39.11 to 39.13 (both inclusive), each Preferred Ordinary Share shall, until its Redesignation Date, rank pari passu in all respects with each Ordinary Share, including in relation to the right (i) to vote, (ii) to receive notice of, attend and speak at all Shareholder Meetings, (iii) to participate in any rights, capitalisation, share split, bonus, consolidation, unbundling transactions or other similar issues and offers, and (iv) to participate in and receive any Special Distribution declared or distributed by the Company to its Ordinary Shareholders, but specifically excluding the right to participate in and receive any Normal Distribution declared or distributed by the Company to its Ordinary Shareholders.
39.4. Preferred Ordinary Dividends
39.4.1. The Board shall be entitled, from time to time, to declare and pay any Dividend and to declare and distribute any other Shareholder Distribution to any Ordinary Shareholder other than Holders, provided that (notwithstanding any other provision of this MOI), -
39.4.1.1. no such declaration shall be made unless done on the basis that the payment of such Dividend or the distribution of such other Shareholder Distribution (as the case may be) shall be subject to the prior payment in full of all Preferred Ordinary Dividends that should, in terms of the following provisions of this clause 39.4, have been declared and paid as at such point in time; and
39.4.1.2. no such payment or distribution shall be made unless and until the Company has declared and paid all Preferred Ordinary Dividends that should, in terms of the following provisions of this clause 39.4, have been declared and paid as at such point in time.
39.4.2. Notwithstanding the provisions of clause 39.4.1, the Board shall be entitled to declare and pay any Dividend and any other Shareholder Distribution to the Registered Holders of preference Shares in the Share capital of the Company prior to the Company declaring and paying all Preferred Ordinary Dividends that should have been declared and paid as at such point in time.
39.4.3. Notwithstanding any other provision of this MOI and irrespective of whether there are sufficient profits, reserves or other amounts available for distribution, each Preferred Ordinary Share shall confer on the Holder thereof, the right to receive and be paid (in priority to the Ordinary Shareholders and the Registered Holders of any other class of Shares in the capital of the Company, other than the Registered Holders of preference Shares), a Preferred Ordinary Dividend (which shall be deemed to have been declared) consisting of
39.4.3.1. on each of 31 March and 30 September in each year that -
39.4.3.1.1. falls between (i) the Issue Date of the first Preferred Ordinary Share to be issued and (ii) the earlier of the third anniversary of the Issue Date of the 1st (first) Preferred Ordinary Share to be issued, the Redesignation Date of the last Preferred Ordinary Share still in issue and the date on which the Company is deregistered or wound-up, in circumstances where
39.4.3.1.1.1. the period preceding the relevant date of 31 March and 30 September is a full 6 (six) month period, an amount per Preferred Ordinary Share of ZAR16 (sixteen Rands) per annum payable in equal instalments on each such dates of 31 March and 30 September in respect of the 6 (six) month period preceding each such date of 31 March and 30 September; or
39.4.3.1.1.2. the period preceding the relevant date of 31 March and 30 September is not a full 6 (six) month period, an amount per Preferred Ordinary Share equal to ZAR16 (sixteen Rands) multiplied by the actual number of days in the relevant period and divided by 365
(three hundred and sixty five) in respect of such period shorter than 6 (six) months; and
39.4.3.1.2. falls between (i) the 3rd (third) anniversary of the Issue Date of the 1st (first) Preferred Ordinary Share to be issued and (ii) the earlier of the 6th (sixth) anniversary of the Issue Date, and the Redesignation Date of the last Preferred Ordinary Share still in issue and the date on which the Company is deregistered or wound-up, an amount per Preferred Ordinary Share of ZAR22 (twenty two Rands) per annum payable in equal instalments on each such dates of 31 March and 30 September in respect of the 6 (six) month period preceding each such date of 31 March and 30 September; or
39.4.3.1.3. falls between (i) the 6th (sixth) anniversary of Issue Date of the 1st (first) Preferred Ordinary Share to be issued and (ii) the Redesignation Date of the last Preferred Ordinary Share still in issue and the date on which the Company is deregistered or wound-up, an amount per Preferred Ordinary Share of ZAR28 (twenty eight Rands) per annum payable in equal instalments on each such dates of 31 March and 30 September in respect of the 6 (six) month period preceding each such date of 31 March and 30 September, provided that if any such date of 31 March or 30 September is not a Business Day, the relevant amount shall be paid on the Business Day immediately succeeding it; plus
39.4.3.2. on
39.4.3.2.1. the Redesignation Date of each Preferred Ordinary Share; or
39.4.3.2.2. the date on which the Company is deregistered or wound-up,
(whichever occurs first), an amount in respect of that Preferred Ordinary Share of ZAR28 (twenty eight Rands) per share, subject to clause 39.4.7, divided by 365 (three hundred and sixty five) multiplied by the number of days in the period from 31 March 2018 to,
39.4.3.2.3. if clause 39.4.3.2.1 is applicable, the 10th anniversary of the Issue Date of the first Preferred Ordinary Share issued to Groups FundCo or Public FundCo, as the case may be, which was the intended originalRedesignation Date, in each case); or
39.4.3.2.4. if clause 39.4.3.2.2 is applicable, the date of deregistration or winding-up, as the case may be;
plus
39.4.3.3. to the extent that any amount referred to in clause 39.4.3.1 and clause 39.4.3.2 is not paid in full on the relevant date referred to in clause 39.4.3.1 or clause 39.4.3.2 (as the case may be), an additional amount determined by compounding the unpaid amount at the Prime Rate for the period from the relevant date referred to in clause 39.4.3.1 or clause 39.4.3.2 (as the case may be) up to (and including) the date on which it is actually paid in full, compounded monthly in arrear; plus
39.4.3.4. if, for any reason, any amount declared or paid to a Holder in terms of this clause 39.4 is or becomes subject to Tax in the hands of the Holder and/or is or becomes the subject of any deduction or withholding on account of Tax, a further amount (if any) in order to place that Holder in the same overall net after Tax position that it would have been in had same not been the case, provided that the Company shall not be required to pay any amount pursuant to this clause 39.4 if the payment thereof would leave the Company in a worse overall net after Tax position than it would have been in on the Issue Date of the 1st (first) Preferred Ordinary Share (as set out in clause 39.4.5); plus
39.4.3.5. if, for any reason, any amount paid to a Holder in terms of this clause 39.4 does not carry an amount equal to 10% (ten per cent) of
the amount so paid in the form of a Credit for STC or a credit for a Tax on Dividends for which the Holder is responsible, a further amount (if any), in the form of a Dividend, in order to place that Holder in the same overall net after Tax position that it would have been in had same not been the case, provided that the Company shall not be required to pay any amount pursuant to this clause 39.4.3.5 if the payment thereof would leave the Company in a worse overall net after Tax position than what it would have been in on the Issue Date of the 1st (first) Preferred Ordinary Share (as set out in clause 39.4.5).
39.4.4. The Company shall be entitled to increase any amount determined in terms of clause 39.4.3 from time to time.
39.4.5. For purposes of determining the Companys overall net after Tax position as referred to in clauses 39.4.3.3 and 39.4.3.5
39.4.5.1. it is recorded that, as at the Issue Date of the 1st (first) Preferred Ordinary Share to be issued, the Company would (i) not have been entitled to claim any deduction for or reduction of Tax in respect of any amounts paid to any Holder in terms of this clause 39, (ii) have been obliged to pay STC of 10% (ten per cent) on all amounts declared for payment to the Holders in terms of this clause 39, (iii) not have to pay Tax on Dividends paid to Holders, and (iv) not have been obliged to deduct from or pay any withholding Tax on Dividends paid to Holders; and
39.4.5.2. only circumstances which relate to the Preferred Ordinary Shares shall be taken into account for the determination to be made.
39.4.6. For purposes of determining a Holders overall net after Tax position as referred to in clauses 39.4.3.3 and 39.4.3.5, it is recorded that, as at the Issue Date of the 1st (first) Preferred Ordinary Share to be issued, that Holder would (i) not have to pay Tax on any Dividend accrued to or received by it, and (ii) have received a benefit in the form of a Credit for STC on any Dividend accrued to or received by it in an amount equal to 10% (ten per cent) of the amount so accrued or received.
39.4.7. Notwithstanding any other provision contained in this clause 39, it is hereby recorded that if STC is abolished and replaced with a new withholding tax on dividends (as contemplated in the Media Statement published by the South
African Revenue Services on 20 February 2008, headed Conversion of the Secondary Tax on Companies (STC) to a Shareholder Dividend Tax), each Preferred Ordinary Dividend shall increase to such amount derived by multiplying the then applicable Preferred Ordinary Dividend by the sum of 1 (one) plus the lower of 0.1 (zero comma one) and the rate of STC applicable immediately prior to such abolition.
39.5. Share buy-backs
Notwithstanding the provisions of clause 39.3, until the Redesignation Date, the Company shall not (without the prior written consent of Groups FundCo or Public FundCo holding such Preferred Ordinary Shares, as the case may be) be entitled to buy-back any Preferred Ordinary Share unless
39.5.1. such buy-back transaction is conducted in respect of Ordinary Shares pursuant to a general repurchase of Securities where the Company undertakes to buy-back Securities pro rata from all its Shareholders and such transaction complies with the requirements of a general repurchase of Securities as contained in the Listings Requirements, and the objective of such buy-back transaction is not to accommodate the introduction of any new Shareholder (or class of Shareholders) or the change in Shareholding of any existing Shareholder (or class of Shareholders) in the Company;
39.5.2. the proceeds received as a result of such buy-back transaction will constitute a Special Distribution; and
39.5.3. such buy-back transaction constitutes an arms length transaction specifically approved by the Company.
39.6. Winding-up
On a deregistration or winding-up of the Company -
39.6.1. all Preferred Ordinary Dividends that should, in terms of clause 39.4, have been declared and paid as at such point in time, shall automatically be declared (to the extent not yet declared) and shall be paid in priority to any Shareholder Distribution to Ordinary Shareholders or the Registered Holders of any other classes of Shares in the capital of the Company from time to time other than any Shareholder Distributions to the Registered Holders of preference Shares; and
39.6.2. thereafter, each Preferred Ordinary Share shall participate pari passu with each Ordinary Share in the remaining profits and assets of the Company.
39.7. No listing
The Preferred Ordinary Shares are not, and shall not at any time prior to their respective Redesignation Dates, be listed on the JSE or any other stock or securities exchange.
39.8. Preferred Ordinary Share Class Meetings
39.8.1. If and to the extent the provisions of this clause 39.8 conflict with those in clauses 20.1 to 20.2, the provisions of this clause 39.8 shall prevail in respect of the Preferred Ordinary Shares.
39.8.2. Any modification of, or alteration or variation to, any of the Privileges and Conditions may only be effected with the prior approval of a Shareholder Meeting and with the prior written consent of both Preference Share Agents (if, at the time, there is any Class A Preference Share, any Class B Preference Share or any Class C Preference Share in issue) and with the prior
39.8.2.1. written consent of each of the Holders; or
39.8.2.2. sanction of a resolution passed at a Preferred Ordinary Share Class Meeting by 75% (seventy five per cent) of the Voting Rights exercisable and exercised by Holders who are present in Person or by proxy or represented at such Preferred Ordinary Share Class Meeting.
39.8.3. The provisions of clauses 20.1 to 20.4 relating to Shareholder Meetings shall apply, mutatis mutandis, to each Preferred Ordinary Share Class Meeting, except that a quorum at each such Preferred Ordinary Share Class Meeting shall be such Holder(s) (present in Person or by proxy or represented) which are at the time of the Preferred Ordinary Share Class Meeting the Registered Holders of at least one quarter of the then issued Preferred Ordinary Shares; provided that the quorum at any adjourned meeting shall be any Holder.
39.8.4. The provisions of this MOI relating to adjourned Shareholder Meetings shall apply, mutatis mutandis, if a quorum is not present at any Preferred Ordinary Share Class Meeting.
39.9. Restriction on sale and encumbrance of Preferred Ordinary Shares
39.9.1. A Holder shall not be entitled to directly or indirectly -
39.9.1.1. Dispose of all or any of the Preferred Ordinary Shares held by it or all or any of its rights and/or interests therein or thereto or forming part thereof save pursuant to a share buy-back allowed in terms of clause 39.5 or as may be agreed in writing between the Company, the Holder and the relevant Preference Share Agent(s) (if, at the time, there is any Class A Preference Share, any Class B Preference Share or any Class C Preference Share in issue) from time to time. The Company hereby irrevocably agrees to the Disposal of such number of Preferred Ordinary Shares (or, after the Redesignation Date, Ordinary Shares) as the relevant Preference Share Agent (if, at the time, there is any Class A Preference Share, any Class B Preference Share or any Class C Preference Share in issue) may decide to Dispose in accordance with such written agreement or in accordance with any Encumbrance (permitted in terms of clause 39.9.1.2) that may be given over the Preferred Ordinary Shares in future; or
39.9.1.2. Encumber all or any of the Preferred Ordinary Shares or all or any of its rights and/or interests therein or thereto or forming part thereof save as may be agreed in writing between the Company, the Holder and the relevant Preference Share Agent(s) (if, at the time, there is any Class A Preference Share, any Class B Preference Share or any Class C Preference Share in issue) from time to time. The Company hereby irrevocably agrees to the Preferred Ordinary Shares being dealt with in accordance with such written agreement and (once it becomes legally competent to do so) to the Preferred Ordinary Shares being Encumbered as security for the obligations of Groups FundCo to the Groups FundCo Preference Shareholders in relation to the Groups FundCo Preference Shares and as security for the obligations of Public FundCo to the Public FundCo Preference Shareholders in relation to the Public FundCo Preference Shares.
39.9.2. Upon a Disposal of any Preferred Ordinary Shares (or, after the Redesignation Date, Ordinary Shares) as a result of the enforcement of any Encumbrance as security for -
39.9.2.1. the obligations of Groups FundCo to the Groups FundCo Preference Shareholders (referred to in clause 39.9.1.2); or
39.9.2.2. the obligations of Public FundCo to the Public FundCo Preference Shareholders referred to in clause 39.9.1.2;
any surplus amount that exists after all claims of the Groups FundCo Preference Shareholders and/or the Public FundCo Preference Shareholders (as the case may be) have been satisfied in full, and after payment to Sasol in accordance with the Post-Redemption Event Cashflow Waterfall shall be paid to Groups FundCo and/or Public FundCo (as the case may be).
39.9.3. The Company shall not register any transfer of a Preferred Ordinary Share which is not effected in compliance with this clause 39.9.
39.10. Consolidations and Subdivisions
If at any time the Ordinary Shares are consolidated into a smaller number of Ordinary Shares, or are subdivided into a larger number of Ordinary Shares, in a specific ratio (Specific Ratio), -
39.10.1. the Preferred Ordinary Shares shall similarly and simultaneously be consolidated into a smaller number of Preferred Ordinary Shares, or be subdivided into a larger number of Preferred Ordinary Shares (as the case may be), in the Specific Ratio; and
39.10.2. the amounts referred to in clauses 39.4.3.1, 39.4.3.2 and 39.4.3.3 shall similarly be divided and/or multiplied (as the case may be) in the Specific Ratio so as to ensure that the aggregate amount that will be paid on the Preferred Ordinary Shares post such consolidation or subdivision is equal to the aggregate amount that was payable on the Preferred Ordinary Shares prior to such consolidation or subdivision.
39.11. Cessation of Preferred Rights
39.11.1. If any Redemption Event occurs in respect of any Groups FundCo Preference Share, the Groups FundCo Preference Share Agent (if, at the time, there is any Class A Preference Share, any Class B Preference Share or any Class C Preference Share in issue by Groups FundCo and Sasol has not exercised its right to acquire the Class A Preference Shares, the Class B Preference Shares and the Class C Preference Shares) may deliver a written notice to the Company to that effect and advising that a Cessation of Preferred Rights is required in respect of the Preferred Ordinary Shares referred to in such notice. If any Redemption Event occurs in respect of any Public FundCo Preference Share, the Public FundCo Preference Share Agent (if, at the time, there is any
Class A Preference Share, any Class B Preference Share or any Class C Preference Share in issue by Public FundCo and Sasol has not exercised its right to acquire the Class A Preference Shares, the Class B Preference Shares and the Class C Preference Shares) may deliver a written notice to the Company to that effect and advising that a Cessation of Preferred Rights is required in respect of the Preferred Ordinary Shares referred to in such notice.
39.11.2. On the Redesignation Date of each Preferred Ordinary Share -
39.11.2.1. the Company shall pay the Final Preferred Ordinary Dividend in respect of that Preferred Ordinary Share; and
39.11.2.2. there shall automatically occur a Cessation of Preferred Rights in respect of that Preferred Ordinary Share and that Preferred Ordinary Share shall automatically be re-designated as an Ordinary Share, ranking pari passu in all respects with each other Ordinary Share.
39.11.3. Within 3 (three) Business Days after the Redesignation Date of each Preferred Ordinary Share, the Company shall procure the necessary electronic entries being made in the Companys sub-register reflecting the Holder of that Preferred Ordinary Share as holding an Ordinary Share, and from the date on which such entries are made, the Share certificate of the Preferred Ordinary Share shall no longer be valid. The Company shall within such 3 (three) Business Day period also take all necessary steps and comply with all necessary procedures for the dematerialisation of the Preferred Ordinary Shares which have become subject to a Cessation of Preferred Rights with the relevant central securities depository.
39.11.4. The Preferred Ordinary Dividends payable in respect of each Preferred Ordinary Share shall cease to accrue from the Redesignation Date of that Preferred Ordinary Share.
39.11.5. The Company shall procure that the Ordinary Shares arising pursuant to the Cessation of Preferred Rights shall be listed on any stock or securities exchange on which the issued Ordinary Shares are then listed.
39.11.6. In order to comply with any formalities that may be required for any Cessation of Preferred Rights in terms of this clause 39.11 and in order to enable the re-designated Ordinary Shares to be listed as envisaged in clause 39.11.5, the Company shall, as soon as reasonably possible, but by no later than 1 (one)
Business Day after the Redesignation Date of each Preferred Ordinary Share, complete any and all documents, and do all other things which may be necessary or desirable for that purpose, and failing timeous compliance by the Company with its obligations in terms hereof, the Company irrevocably and in rem suam appoints each Holder and the relevant Preference Share Agent (or any Person appointed by any of them for such purpose) in its name and stead, to attend to all of the aforegoing.
39.11.7. On the Redesignation Date of each Preferred Ordinary Share, all Preferred Ordinary Dividends which have been declared in respect of such Preferred Ordinary Share but which were for any reason whatsoever not paid in full and which remain unpaid at that time and all Preferred Ordinary Dividends that should, in terms of clause 39.4, have been declared and paid in respect of such Preferred Ordinary Share as at such point in time, shall automatically be declared (to the extent not yet declared) and shall be paid in priority to any Shareholder Distribution to Ordinary Shareholders or the Registered Holders of any other classes of shares in the capital of the Company from time to time. The Cessation of Preferred Rights shall not affect any accrued rights of the Holders in terms of this clause 39.
39.11.8. The Company shall be liable for any securities transfer tax and/or like Tax, charge or duty which becomes payable by the Holder in respect of a Cessation of Preferred Rights if such Cessation of Preferred Rights occurs as a result of the occurrence of a Redemption Event. To the extent that the Holder pays or becomes liable to pay such securities transfer tax or any such like Tax, charge or duty, the Company shall pay an amount to the Holder equal to the amount so paid by the Holder.
39.12. General
39.12.1. Any payment due by the Company to the Holder shall be made without set-off, deduction or any form of withholding whatsoever and shall be made by electronic funds transfer into a bank account nominated in writing by the Holder.
39.12.2. The Company shall not be liable for any interest on amounts which are due and payable to, and have been tendered to, the Holder under this clause 39, but which have not been claimed by such Holder.
39.12.3. All notices required in terms of this clause 39 shall be in writing.
39.12.4. If any certificate issued in respect of a Preferred Ordinary Share is defaced, lost or destroyed, it shall be replaced by the Company only with the prior written consent of the relevant Preference Share Agent (if, at the time, there is any Class A Preference Share or any Class B Preference Share in issue) and upon receipt by the Company of -
39.12.4.1. either
39.12.4.1.1. the defaced certificate; or
39.12.4.1.2. an affidavit by the Holder (or a Director of the Holder) to the effect that such certificate has been lost or destroyed; and
39.12.4.1.3. a written undertaking by the Holder to indemnify the Company against any loss, liability, damage, cost or expense which the Company may suffer as a result of issuing such replacement certificate.
39.13. Stipulation
Each of the provisions of this clause 39 which, and to the extent it, confers rights on either Preference Share Agent constitutes a stipulation for the benefit of the relevant Preference Share Agent which may accept same at any time without giving any notice to the Company or to any Holder.
40. DEFINITIONS APPLICABLE TO CLAUSES 41 TO 48
40.1. For purposes of clauses 41, 42, 43.1, 44, 45, 46, 47, 47A and 48 and Schedule 6 the following words shall have the meaning assigned to them hereunder and cognate expressions shall bear corresponding meanings -
40.1.1. Amended Cash Contract means the Cash Contract as amended by the Replacement Clauses;
40.1.2. Amended New Cash Contract means the New Cash Contract as amended by the Replacement Clauses;
40.1.3. BEE Compliant Person means as interpreted by the courts, from time to time
40.1.3.1. as regards a natural person, one who falls within the ambit of the definition of black people in the Codes;
40.1.3.2. as regards a Juristic Person having Shareholdings or similar members interests, one who falls within the ambit of the definitions of BEE controlled company or BEE owned company, as defined in the Codes, using the flow-through principle;
40.1.3.3. as regards any other entity, any entity similar to a BEE controlled company or BEE owned company using the flow-through principle which would enable the issuer of Securities owned or controlled by such entity to claim points attributable to the entitys ownership of the Securities pursuant to the Codes;
40.1.4. BEE Contract means the contract to be known by that name, the form of which is prescribed by the JSE which comprises the generic terms set forth therein and, as regards each issuer on the BEE Segment of the Main Board, the additional terms relating to that issuers Securities listed on the BEE Segment;
40.1.5. Beneficial Owner means, in respect of the Sasol BEE Ordinary Shares, the person or entity to whom the risks and rewards of ownership are attributable which is typically evidenced by:-
40.1.5.1. the right or entitlement to receive any dividend payable in respect of those Sasol BEE Ordinary Shares; or
40.1.5.2. the right to exercise or cause to be exercised in the ordinary course of events, any or all of the voting, conversion, redemption or other rights attached to those Sasol BEE Ordinary Shares; or
40.1.5.3. the right to dispose of or direct the disposition of those Sasol BEE Ordinary Shares, or any part of a distribution in respect of those Sasol BEE Ordinary Shares and to have the benefit of the proceeds;
40.1.6. Broker means any member of the JSE;
40.1.7. Bulk Dematerialisation means the process by which all the Share certificates in respect of Sasol BEE Ordinary Shares, whose holders are not Election Shareholders, are converted, prior to the Designated Date, to an electronic form and such Shares are transferred into the name of the Computershare Nominee Company or the OTC Nominee Company, if the listing on the JSE does not occur, so as to be held by it for and on behalf of the Bulk Dematerialised Shareholders;
40.1.8. Bulk Dematerialisation Shares means the Sasol BEE Ordinary Shares that have been dematerialised pursuant to the Bulk Dematerialisation;
40.1.9. Bulk Dematerialised Shareholders means all the Holders of Sasol BEE Ordinary Shares who are not Election Shareholders;
40.1.10. Cash Contract means the contract concluded by the Company with each of the Holders of the certificated Sasol BEE Ordinary Shares during 2008 when the Sasol BEE Ordinary Shares were allotted and issued, which contract contains, inter alia, provisions governing the holding of certificated Sasol BEE Ordinary Shares and a requirement that the Registered Holder and the Beneficial Owner be the same person;
40.1.11. Codes means the Broad-Based Black Economic Empowerment Codes of Good Practice gazetted under the Broad-Based Black Economic Empowerment Act, No. 53 of 2003;
40.1.12. Computershare means Computershare Investor Services Proprietary Limited, registration number 2004/003647/07;
40.1.13. Computershare Limited means Computershare Limited, registration number 2000/006082/06, the current custodian for the certificated Sasol BEE Ordinary Shares;
40.1.14. Computershare Nominee Company means Computershare Nominees Proprietary Limited, registration number 1999/00543/07, the nominee company designated by Computershare for purposes of being the Registered Holder, holding, in such nominee companys name, the Bulk Dematerialisation Shares for and on behalf of the Bulk Dematerialised Shareholders pursuant to the Bulk Dematerialisation or any other nominee company appointed by the Company from time to time in its discretion, to be the Registered Holder on behalf of the Bulk Dematerialised Shareholders;
40.1.15. Dematerialised BEE Ordinary Shares means the Sasol BEE Ordinary Shares that have been dematerialised;
40.1.16. Designated Date means:-
40.1.16.1. if the Sasol BEE Ordinary Shares are to be listed on the JSE, the date on which the Sasol BEE Ordinary Shares are first listed on the JSE; or
40.1.16.2. if the Sasol BEE Ordinary Shares are not to be listed on the JSE, the date on which the Sasol BEE Ordinary Shares are first traded on the OTC;
40.1.16A Election means the right of election granted in clause 47A.1 to each Holder of Sasol BEE Ordinary Shares;
40.1.17. Election Shareholders means those Holders of certificated Sasol BEE Ordinary Shares who have by the date designated by the Company as the date by which those Holders are required to submit their forms of election, elected to continue to hold their Sasol BEE Ordinary Shares in certificated form by lodging their forms of election;
40.1.18. Empowerment Period means as regards those Sasol BEE Ordinary Shares in respect of which the Election is not exercised or a Holders exercise of the Election is void for any reason, the period ending on 7 September 2018 or such shorter period as may be determined by the Company in its sole discretion and notified in one national South African newspaper and if the Sasol BEE Ordinary Shares are listed on the JSE, on the Securities Exchange News Service;
40.1.19. New Cash Contract means the contract prescribed by the Company concluded by a Registered Holder (who is also the Beneficial Owner) who acquired or acquires Sasol BEE Ordinary Shares from 8 September 2010 until the Designated Date;
40.1.20. Nominee Company means the company in whose name the Dematerialised BEE Ordinary Shares are registered which holds such Shares for and on behalf of the Beneficial Owner;
40.1.21. OTC means an over the counter trading system which the Company may decide to establish, on which Sasol BEE Ordinary Shares may be traded and which may be operated by an independent administrator for and on behalf of the Company;
40.1.22. OTC Nominee Company means the nominee company designated by the Company for purposes of being the Registered Holder holding, in such nominee companys name, the Bulk Dematerialisation Shares for and on behalf of the Bulk Dematerialised Shareholders pursuant to the Bulk Dematerialisation, if the listing on the JSE does not occur;
40.1.23. Public Facilitation Trust means The Sasol Inzalo Public Facilitation Trust, IT Reference Number: 1182/2008;
40.1.24. Registered Holder means, if Sasol BEE Ordinary Shares are registered in the Beneficial Owners name, the Beneficial Owner, and in any other case means the Nominee Company holding such Shares for and on behalf of the Beneficial Owner;
40.1.25. Replacement Clauses means the amendments to Annexure 17 forming part of the Cash Contract and to Annexure A of the New Cash Contract, respectively, contained in Schedule 1 to this MOI.
41. BULK DEMATERIALISATION
For purposes of enabling the Sasol BEE Ordinary Shares to be traded on the JSE, bearing in mind that all Shares traded on the JSE must be Dematerialised, or facilitating trades on the OTC, if the listing on the JSE does not occur -
41.1. the Company shall, at its cost, as regards all the Bulk Dematerialised Shareholders, cause the Bulk Dematerialisation of their Sasol BEE Ordinary Shares prior to the Designated Date and the transfer of such Shares into the name of Computershare Nominee Company or the OTC Nominee Company, as the case may be, (depending on whether the Sasol BEE Ordinary Shares are to be listed on the JSE or not), as the Registered Holder, holding such Shares as nominee for and on behalf of each Bulk Dematerialised Shareholder who will continue to be the Beneficial Owner;
41.2. this clause 41 constitutes the instruction by each of the Bulk Dematerialised Shareholders to the Company to convert his certificated Sasol BEE Ordinary Shares into Dematerialised BEE Ordinary Shares prior to the Designated Date as part of the Bulk Dematerialisation. Each of the Bulk Dematerialised Shareholders authorises the Company to appoint Computershare Limited as his duly authorised agent to sign any documents as may be necessary to give effect to the Bulk Dematerialisation;
41.3. each of the Bulk Dematerialised Shareholders authorises, to the extent necessary, the Company to release Computershare Limited in its capacity as the custodian of each Bulk Dematerialised Shareholders certificated Sasol BEE Ordinary Shares from its obligations to hold in custody the Share certificates in respect of his Bulk Dematerialisation Shares;
41.4. each Bulk Dematerialised Shareholder consents, to the extent necessary, to the release by Computershare Limited to the Company of all the information and documentation on which Computershare Limited relied in carrying out its functions as custodian;
41.5. the Company and each Bulk Dematerialised Shareholder by participating in the Bulk Dematerialisation shall be deemed to have agreed to the amendment of Annexure 17 forming part of the Cash Contract and Annexure A to the New Cash Contract, respectively,
by the Replacement Clauses. The Computershare Nominee Company, when it becomes the Registered Holder, shall be deemed to be bound as regards each Bulk Dematerialised Shareholder by the provisions of the Amended Cash Contract and/or the Amended New Cash Contract, depending on which contract the Bulk Dematerialised Shareholder in question is bound to;
41.6. in the event that the Sasol BEE Ordinary Shares are listed on the JSE, each Bulk Dematerialised Shareholder shall be deemed to have agreed to be bound to the custody agreement set out in Schedule 2 to this MOI with Computershare Limited and Computershare Nominee Company;
41.7. the mere Dematerialisation of any Sasol BEE Ordinary Shares pursuant to the Bulk Dematerialisation shall not be construed as confirmation by the Company that all the Bulk Dematerialised Shareholders are BEE Compliant Persons and the Company shall, notwithstanding the Bulk Dematerialisation, be entitled to verify whether or not any Bulk Dematerialised Shareholder is a BEE Compliant Person.
42. CONTINUED APPLICATION OF THE CASH CONTRACT AND/OR THE NEW CASH CONTRACT IN RESPECT OF THE ELECTION SHAREHOLDERS
The Cash Contract or New Cash Contract, as the case may be, to which an Election Shareholder is a party shall remain unaffected by the making of an election by the Election Shareholder to retain his Sasol BEE Ordinary Shares in certificated form.
43. ADDITIONAL TERMS OF THE BEE CONTRACT
43.1. The provisions of this clause 43 form an integral part of the BEE Contract and must be read as if contained in the BEE Contract. Terms defined in the BEE Contract will apply to clauses 43.2 to 43.8. If the JSE changes the format for any reason of the BEE Contract, as a result of which clause numbering changes, the references to clause numbering in the BEE Contract in this clause 43 shall be read as references to the changed clause numbering.
43.2. The Registered Holder is permitted to encumber the Sasol BEE Ordinary Shares subject to clause 15 of the BEE Contract.
43.3. For purposes of clause 1.13 of the BEE Contract and clauses 43.3 to 43.8, Empowerment Period means the period ending on 7 September 2018 or such shorter period as may be determined by the Company in its sole discretion and notified in one national South African newspaper, and if the Sasol BEE Ordinary Shares are listed on the JSE, on the Securities Exchange News Service.
43.4. For purposes of clauses 17.2.2 and 24.2.2 of the BEE Contract the purchase price at which such Shares will be acquired shall be the forced sale value determined as set out in clause 43.8, discounted by 25% (twenty five per cent).
43.5. For purposes of clause 18 of the BEE Contract -
43.5.1. the prescribed periods contemplated in clauses 18.1.2 and 18.3.2 shall be 180 (one hundred and eighty days);
43.5.2. he purchase price contemplated in clauses 18.2.2 and 18.4.2 shall be the forced sale value determined as set forth in clause 43.8, discounted by 5% (five per cent).
43.6. For purposes of clause 19 of the BEE Contract:
43.6.1. the prescribed periods contemplated in clauses 19.1.2 and 19.3.3 shall be 180 (one hundred and eighty days);
43.6.2. the purchase price contemplated in clauses 19.2.2 and 19.4.2 shall be the forced sale value determined as set forth in clause 43.8, discounted by 5% (five per cent).
43.7. For purposes of clauses 17, 18, 19 and 24 of the BEE Contract the securities transfer tax shall be borne by the Company or its nominee, the Public Facilitation Trust, if it is the buyer of the Shares in question.
43.8. For purposes of clauses 43.4, 43.5.2 and 43.6.2 the forced sale value of a Sasol BEE Ordinary Share shall be the 5 (five) day volume weighted average price of a Sasol BEE Ordinary Share, being the total value of the Sasol BEE Ordinary Shares traded for that period divided by the total number of Sasol BEE Ordinary Shares traded for that period. In the event of any corporate action, the value will be adjusted appropriately if required.
43.9. For purposes of clause 9.1 of the BEE Contract, an additional date on which the BEE Contract will cease to be of force is inserted which reads as follows
9.1.3 the termination of this BEE Contract upon the implementation by the Issuer of a BEE Verification process (as defined in the JSE Listings Requirements and contemplated in paragraph 4.32B thereof), which process shall come into effect on a date determined by the Issuer in its sole discretion and announced by it to the Holders of BEE Securities on the Stock Exchange News Service of the JSE and in one national South African newspaper.
44. RIGHTS, PRIVILEGES AND RESTRICTIONS ATTACHING TO THE SASOL BEE ORDINARY SHARES
44.1. The Sasol BEE Ordinary Shares will rank pari passu with the existing Ordinary Shares in the capital of the Company, save that during the Empowerment Period the following restrictions shall apply to the Sasol BEE Ordinary Shares -
44.1.1. the Sasol BEE Ordinary Shares shall be Beneficially Owned only by a person who is a BEE Compliant Person and the relevant Holder hereby grants a power of attorney irrevocably and in rem suam and with power of substitution to the Company, to effect transfer of that Holders Sasol BEE Ordinary Shares on behalf of that Holder to the Company or its nominee;
44.1.2. in the case of Sasol BEE Ordinary Shares that are -
44.1.2.1. dematerialised it shall be permissible to register such Shares in the name of a Nominee Company which is not a BEE Compliant Person, provided that
44.1.2.1.1. if the Sasol BEE Ordinary Shares are listed on the JSE, the Beneficial Owner (if he is not a Bulk Dematerialised Shareholder, as the Bulk Dematerialised Shareholders are bound to the Amended Cash Contract or Amended New Cash Contract, as the case may be, in respect of the Bulk Dematerialised Shares) and the Registered Holder have signed a BEE Contract;
44.1.2.1.2. if the Sasol BEE Ordinary Shares are not listed on the JSE, the Beneficial Owner has complied with the Companys requirements as regards the OTC;
44.1.2.2. certificated it shall not be permissible to register such Shares in the name of a Registered Holder who is not also the Beneficial Owner;
44.1.3. if, whilst listed on the JSE -
44.1.3.1. the Sasol BEE Ordinary Shares are acquired or otherwise transferred after the Designated Date without the Beneficial Owner and (if the Beneficial Owner is also not the Registered Holder) the Registered Holder having signed a BEE Contract; or
44.1.3.2. the Sasol BEE Ordinary Shares are dematerialised (other than pursuant to the Bulk Dematerialisation) without the Beneficial Owner and/or the Registered Holder having signed the BEE Contract; or
44.1.3.3. a BEE Contract is otherwise required to be signed and is not signed,
and, if the JSE has not, pursuant to its equities rules, if applicable, exercised its discretion to cancel the transaction in terms of which such Shares were acquired by reason of the failure to sign the BEE Contract, the Company shall be entitled, but not obliged, to require the Beneficial Owner and the Registered Holder concerned to remedy the situation by signing the BEE Contract within 10 (ten) days of receipt of a written notice from the Company requiring the Beneficial Owner and the Registered Holder to sign the BEE Contract failing which the Dematerialised BEE Ordinary Shares registered in the name of the Registered Holder in question shall be deemed to have been sold to the Company or its nominee, the Public Facilitation Trust, on the following terms and conditions -
44.1.3.4. the Dematerialised BEE Ordinary Shares shall be acquired with effect from the date on which the Beneficial Owner became the beneficial owner of the Dematerialised BEE Ordinary Shares in question;
44.1.3.5. the purchase price shall be the forced sale value determined by the Company in accordance with the formula set forth in clause 43.8, discounted by 25% (twenty five per cent);
44.1.3.6. the purchase price shall be payable by the Company or the Public Facilitation Trust, as the case may be, against transfer of the Dematerialised BEE Ordinary Shares;
44.1.3.7. the Dematerialised BEE Ordinary Shares shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, other than the following warranty that no person has any right of any nature whatsoever to acquire the Dematerialised BEE Ordinary Shares in question;
44.1.3.8. the securities transfer tax payable shall be borne by the Company or the Public Facilitation Trust, as the case may be;
44.1.4. if the Sasol BEE Ordinary Shares are not or are no longer listed on the JSE or any other exchange licensed pursuant to the Financial Markets Act, 2012 (or any other replacement legislation), but are held in dematerialised form, and the Beneficial Owner and (if the Beneficial Owner is also not the Registered Holder) the Registered Holder are not parties to an Amended Cash Contract or an Amended New Cash Contract, the Company shall be entitled, but not obliged, to require the Beneficial Owner and/or the Registered Holder to remedy the situation by signing an Amended Cash Contract or an Amended New Cash Contract within 10 (ten) days of receipt of a written notice from the Company requiring the Beneficial Owner and/or the Registered Holder to sign the Amended New Cash Contract and/or Amended Cash Contract failing which the Dematerialised BEE Ordinary Shares in question shall be deemed to have been sold to the Company or its nominee, the Public Facilitation Trust mutatis mutandis on the terms and conditions set out in clause 44.1.3;
44.1.5. the Registered Holder and, if the Registered Holder is not the Beneficial Owner, the Beneficial Owner undertake/s not to encumber his Sasol BEE Ordinary Shares at any time during the Empowerment Period unless the terms of the agreement for such encumbrance expressly provide that if the security is realised, the Sasol BEE Ordinary Shares may only be sold to a BEE Compliant Person.
44.2. The Sasol BEE Ordinary Shares shall automatically be re-designated as Ordinary Shares, on the expiry of the Empowerment Period.
45. DEMATERIALISATION AND RE-MATERIALISATION OF SASOL BEE ORDINARY SHARES (OTHER THAN VIA THE BULK DEMATERIALISATION)
45.1. If any Holder of Sasol BEE Ordinary Shares who holds such Shares in a dematerialised form elects at any time to -
45.1.1. appoint a new person to be the Registered Holder holding such Shares for and on his behalf, he shall, together with such person and the relevant parties, be obliged to sign a replacement BEE Contract;
45.1.2. hold his Dematerialised BEE Ordinary Shares in certificated form, then such Holder shall be obliged to sign a New Cash Contract unless an existing Cash Contract or New Cash Contract to which he is a party is still in place covering Sasol BEE Ordinary Shares being held in certificated form, and the Share certificate in respect of the certificated Sasol BEE Ordinary Shares in question
shall be held in custody by the Custodian as contemplated in the Cash Contract or New Cash Contract.
45.2. If any Holder of certificated Sasol BEE Ordinary Shares (including any Election Shareholder) elects to dematerialise his Sasol BEE Ordinary Shares, he shall be obliged to sign a BEE Contract in respect of those Shares being dematerialised. Any Holder of certificated Sasol BEE Ordinary Shares who/which elects to dematerialise his Sasol BEE Ordinary Shares shall by giving written notice to that effect to the Company authorise the Company to -
45.2.1. release the Custodian (as contemplated in the Cash Contract or New Cash Contract) of such Holders certificated Sasol BEE Ordinary Shares from its obligations to hold in custody the Share certificate/s in respect of the Sasol BEE Ordinary Shares being dematerialised;
45.2.2. appoint the Custodian (as contemplated in the Cash Contract or New Cash Contract) to sign, to the extent necessary, any documents as may be necessary to give effect to the dematerialisation contemplated in this clause 45.2.
46. PROOF OF PARTICIPATION OR OTHER SIMILAR STATEMENTS
Any proof-of-participation or other similar statement issued by the Company to any Holder of Sasol BEE Ordinary Shares which are held in certificated form and accordingly obliged to be held in safe custody, will cease to be of any force or effect from the date on which his Sasol BEE Ordinary Shares are dematerialised.
46A. NEW ISSUES OF SASOL BEE ORDINARY SHARES
If Sasol BEE Ordinary Shares are issued after the SOLBE1 Redesignation Date, each Registered Holder of such Sasol BEE Ordinary Shares is bound by the terms set forth in Schedule 6 as regards such new issues of Sasol BEE Ordinary Shares to the exclusion of any Cash Contract, New Cash Contract or BEE Contract which may have been signed by that Registered Holder, irrespective of whether they deal with new issues of Sasol BEE Ordinary Shares or not.
47. SASOLS RIGHTS TO DELIST SASOL BEE ORDINARY SHARES
In the event that the listings requirements of the JSE so permit and the Company determines that a listing of Sasol BEE Ordinary Shares on the JSE is not ensuring that in general Sasol BEE Ordinary Shares are Beneficially Owned by BEE Compliant Persons only, the Company shall be entitled to delist the Sasol BEE Ordinary Shares form the JSE, provided that it puts in place an alternative trading mechanism.
47A. PROVISIONS GRANTING THE ELECTION AND APPLICABLE TO SASOL BEE ORDINARY SHARES WHICH DO NOT REDESIGNATE ON THE SOLBE1 REDESIGNATION DATE
47A.1 Each Holder of Sasol BEE Ordinary Shares on the Securities Register at a date to be determined by Sasol, shall be entitled, during 2018 and in a manner to be determined by Sasol in its sole and absolute discretion, to elect that its Sasol BEE Ordinary Shares do not automatically re-designate as Ordinary Shares pursuant to clause 44.2, but as a consequence will remain (without any re-designation occurring at all) as Sasol BEE Ordinary Shares, subject to the provisions of clause 47A.2 as applied to clauses 40 to 46A, and on the basis that
47.A.1.1 Holders of Sasol BEE Ordinary Shares must make the Election in respect of all and not some of their Sasol BEE Ordinary Shares;
47A.1.2 those Holders of Sasol BEE Ordinary Shares who make the Election will be unable to trade their Sasol BEE Ordinary Shares from the date on which their Election is received by Computershare Nominees Proprietary Limited, their CSD Participant or their Broker, as applicable, in respect of all of their SOLBE1 Shares, until the date on which Sasol BEE Ordinary Shares, held by those Holders of Sasol BEE Ordinary Shares who did not make the Election, re-designate to Ordinary Shares;
47A.1.3 should a Holder of Sasol BEE Ordinary Shares dispose of any of his Sasol BEE Ordinary Shares after receiving the Election, the Election attributable to all of such Holders Sasol BEE Ordinary Shares will be forfeited;
47A.1.4 if a Holder of Sasol BEE Ordinary Shares disposes of any of his Sasol BEE Ordinary Shares after making the Election, such Election will be void;
47A.1.5 if a person acquires Sasol BEE Ordinary Shares after the last day to trade for purposes of the Election, that Holder will not be entitled to participate in the Election.
47A.2 The provisions of clause 47 shall not apply at all to all Sasol BEE Ordinary Shares which do not redesignate on the SOLBE1 Redesignation Date, and the provisions of clauses 40 to 46A (other than clauses 44.1.4 and 44.2) shall apply to all these Sasol BEE Ordinary Shares, subject to the following changes
47A.2.1 the definition of Empowerment Period in clauses 40.1.18 and 43.3 shall be read instead as the period for so long as the Sasol BEE Ordinary Shares are listed on an exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation), or such shorter period
as may be determined by the Company in its sole and absolute discretion and notified in one national South African newspaper and, if the Sasol BEE Ordinary Shares are then listed on the JSE, on the Securities Exchange News Service;
47A.2.2 the word if at the start of clause 44.1.3, shall be read as pro non scripto.
48. CONTACT DETAILS
The Holder of any class of Shares in the issued Share capital of the Company consents to the release by his Participant, Broker, Nominee Company, and/or Agent, as the case may be, of all his contact details to the Company.
49. CESSATION OF APPLICATION OF CLAUSES 40 TO 47A
As of the date, if any, determined by Sasol, in its sole discretion, as being the date on which the BEE Verification process (as defined in the JSE Listings Requirements and contemplated in paragraph 4.32B thereof) will be implemented, which date will announced to the Holders of Sasol BEE Ordinary Shares on the Stock Exchange News Service of the JSE and in one national South African newspaper
49.1. the provisions of clauses 40 to 47A of the MOI shall cease to be of any effect, but without affecting, or invalidating any of the remaining provisions of this MOI which shall continue to be of full force and effect; and
49.2. the following new clause shall take effect
40. RIGHTS, PRIVILEGES AND RESTRICTIONS ATTACHING TO THE SASOL BEE ORDINARY SHARES
The Sasol BEE Ordinary Shares will rank pari passu with the Ordinary Shares in the capital of the Company, save that for so long as the Sasol BEE Ordinary Shares are listed on an exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation), or such shorter period as may be determined by the Company in its sole and absolute discretion and notified in one national South African newspaper and, if the Sasol BEE Ordinary Shares are then listed on the JSE, on the Securities Exchange News Service (i.e. the Empowerment Period), the Sasol BEE Ordinary Shares shall
40.1 be beneficially owned by and registered in the name of a BEE Compliant Person (as defined in the JSE Listings Requirements); and
40.2 have the rights, privileges and restrictions set out in Schedule 6A,
and all references in the MOI to clauses 40 to 47A shall be read as referring to this new clause read with Schedule 6A of this MOI.
Schedule 1 - REPLACEMENT CLAUSES
AMENDMENTS TO ANNEXURE 17 FORMING PART OF THE CASH CONTRACT
1. A new clause A is inserted above clause 1 which reads as follows:
As a consequence of the fact that from the Transfer Date you will be the beneficial owner of your Sasol BEE Ordinary Shares, but no longer the registered owner thereof -
A1. any reference to you in Annexure 17, save as contemplated in clause A2 and clause A3, is to be read from the Transfer Date as a reference to you as the successful applicant for Sasol BEE Ordinary Shares only in your capacity as beneficial owner of your Sasol BEE Ordinary Shares and no longer also as the registered holder;
A2. for purposes of clauses 7.2.3, 8.2.3, 8.4, 8.4.3, 9.2.3 and 9.4.3, any reference to you from the Transfer Date is to be read referring to the beneficial owner of the Sasol BEE Ordinary Shares and also to the New Registered Shareholder;
A3. all obligations imposed on you as the successful applicant for Sasol BEE Ordinary Shares in clauses 5.3.1, 5.3.3 and 8.3.5 of this Agreement in your capacity as registered owner of your Sasol BEE Ordinary Shares will from the Transfer Date bind instead the New Registered Shareholder;
A4. you undertake not to cause the New Registered Shareholder to take any action or omit to take any action which would result in the New Registered Shareholder being in breach of any of its obligations under this Agreement;
A5. any reference in clauses 7.2.3, 8.2.3, 8.4.3, 9.2.3 and 9.4.3 to the words against delivery of the transfer form for your Sasol BEE Ordinary Shares. If the Public Facilitation Trust has not received the requisite transfer form within 7 (seven) days from the date when the Public Facilitation Trust gives your executor notice, you agree that the Public Facilitation Trust is irrevocably and in rem suam authorised and appointed as your attorney and agent, or that of your executor, to sign the necessary transfer forms shall from the Transfer Date be read as a reference to the words against registration of your Sasol BEE Ordinary Shares in the name of the Public Facilitation Trust;
A6. any reference in clauses 8.1.1.3, 8.2, 8.2.2 and 8.2.3 to executor shall from the Transfer Date be read as referring to the executor and also to the New Registered Shareholder;
A7. any reference in clauses 9.1.3, 9.2, 9.2.2 and 9.2.3 to trustee shall from the Transfer Date be read as referring to the trustee and also to the New Registered Shareholder;
A8. any reference in clauses 9.3.5, 9.4, 9.4.2 and 9.4.3 to liquidator shall from the Transfer Date be read as referring to the liquidator and also to the New Registered Shareholder.
2. A new clause 1.2.3A is inserted after clause 1.2.3 which reads as follows -
1.2.3.A BEE Compliant Persons means as interpreted by the courts, from time to time
1.2.3A.1 as regards a natural person, a Black Person;
1.2.3A.2 as regards a juristic person having a shareholding or similar members interests, one who falls within the ambit of the definitions of BEE Controlled Company* or BEE Owned Company, using the flow-through principle;
1.2.3A.3 as regards any other entity, any entity similar to a BEE Controlled Company* or BEE Owned Company using the flow-through principle which would enable Sasol to claim points attributable to the entitys ownership of Sasol BEE Ordinary Shares pursuant to the Broad-Based Black Economic Empowerment Codes of Good Practice gazetted from time to time under the BEE Act;
3. A new clause 1.2.3B is inserted after clause 1.2.3A which reads as follows -
1.2.3B BEE Contract means the contract, the form of which is prescribed by the JSE and which is required to be signed by at least the proposed beneficial owner of BEE Securities before acquiring such BEE Securities for the first time;
4. A new clause 1.2.3C is inserted after clause 1.2.3B which reads as follows
1.2.3C BEE Securities means the securities in respect of which the issuer requires that the beneficial owners are BEE Compliant Persons for a period of time as prescribed by the issuer;
5. A new clause 1.2.17A is inserted as follows
1.2.17A Election means the right granted to you pursuant to clause 47A.1 of the Sasol Memorandum of Incorporation to elect that your Sasol BEE Ordinary Shares do not automatically re-designate as Sasol Ordinary Shares pursuant to clause 44.2 of the
Sasol Memorandum of Incorporation, but as a consequence will remain (without any re-designation occurring at all) as Sasol BEE Ordinary Shares, subject to the provisions of clause 47A.2 of the Sasol Memorandum of Incorporation;
6. Clause 1.2.18 is replaced with the following
1.2.18 Empowerment Period means as regards you, if you
1.2.18.1 do not exercise the Election or do not validly exercise the Election, a period of 3 650 (three thousand six hundred and fifty) days (or if the last day of that period is not a Business Day, up to and including the next Business Day) or such shorter period as may be determined by Sasol, commencing on the Effective Date; or
1.2.18.2 hold Sasol BEE Ordinary Shares which do not redesignate on the SOLBE1 Redesignation Date, the period for so long as the Sasol BEE Ordinary Shares are listed on an exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation), or such shorter period as may be determined by Sasol in its sole and absolute discretion and notified in one national South African newspaper, and, if the Sasol BEE Ordinary Shares are then listed on the JSE, on the Securities Exchange News Service;
7. Clause 1.2.20 is replaced with the following
1.2.20 Forced Sale Value means the 5 (five) day volume weighted average price of a Sasol BEE Ordinary Share, being the total value of the Sasol BEE Ordinary Shares traded for that period divided by the total number of the Sasol BEE Ordinary Shares traded for that period. In the event of any corporate action, the value will be adjusted appropriately if required;
8. A new clause 1.2.21A is inserted after clause 1.2.21 which reads as follows -
1.2.21A New Registered Shareholder means, from the Transfer Date, Computershare Nominees Proprietary Limited (Registration No. 1999/008543/07);
9. Clause 1.2.25 which reads Sasol Articles means the articles of association of Sasol is deleted;
10. Clause 1.1.26 is replaced with the following -
1.1.26 Sasol BEE Ordinary Shares means no par value shares in Sasols Share capital designated as Sasol BEE Ordinary Shares;
11. A new clause 1.2.27A is inserted as follows
1.2.27.A Sasol Memorandum of Incorporation means Sasols Memorandum of Incorporation;
12. A new clause 1.2.28A is inserted as follows
1.2.28.A SOLBE1 Redesignation Date means the date on which Sasol BEE Ordinary Shares held by Sasol BEE Shareholders who do not exercise or do not validly exercise the right granted in clause 47A.1 of the Sasol Memorandum of Incorporation to each Sasol BEE Shareholder, are automatically re-designated as Sasol ordinary shares;
13. A new clause 1.2.29A is inserted after clause 1.2.29 which reads as follows -
1.2.29A Transfer Date means the date on which your Sasol BEE Ordinary Shares are transferred from you as registered (but not beneficial) holder to the New Registered Shareholder;
14. A new clause 2.3 is inserted which reads as follows -
2.3 If you wish from time to time to replace the New Registered Shareholder with another registered shareholder to hold some or all of your Sasol BEE Ordinary Shares, you shall not instruct the New Registered Shareholder to transfer your Sasol BEE Ordinary Shares, nor shall the New Registered Shareholder act on any such instruction, unless you first sign a BEE Contract with the new registered shareholder, which will replace this Agreement in respect of those of your Sasol BEE Ordinary Shares which are transferred to such person as the new registered shareholder.
15. Clauses 3.2, 3.3, 3.4, 3.5 and 3.6 are deleted with effect from the Transfer Date;
16. In clause 3.4.1, the words the Sasol Articles are deleted and replaced with the words the Sasol Memorandum of Incorporation;
17. A new clause 3.6 is inserted as follows
3.6 After the Empowerment Period
3.6.1 contemplated in clause 1.2.18.1, a certificate in respect of your Sasol Ordinary Shares arising on re-designation of your Sasol BEE Ordinary Shares; or
3.6.2 contemplated in clause 1.2.18.2, a certificate in respect of your Sasol BEE Ordinary Shares,
will be posted by the Custodian to your address for service selected by you in terms of clause 12.1.2, at your risk.
18. Clause 4 is amended by the insertion at the end of the following words From the Transfer Date, you will no longer be the registered owner thereof (as warranted in Part F of the Funded Application Form).;
19. Clause 5.3.1 is amended by the insertion at the end of this clause of the following words -
5.3.1 You and the New Registered Shareholder shall procure that a copy of such agreement in respect of such Encumbrance is delivered to Sasol;
20. Clause 6.1 is replaced with the following -
6.1 Save for a Sale of the Sasol BEE Ordinary Shares to the Public Facilitation Trust, and, save for the transfer of the Sasol BEE Ordinary Shares to your heirs in the event of your death or the Sale by your liquidator or trustee in the event of your insolvency, the Sale must take place in the Trading Market, provided that Sasol has established one;
21. Clause 7.2 is replaced with the following
7.2 At any time after learning of the occurrence of an event contemplated in any one of the provisions in clause 7.1, the Company shall be entitled, but shall not be obliged, either at the Companys election, to (i) act on a power of attorney which you hereby grant irrevocably and in rem suam and with power of substitution to the Company, to dispose of your Sasol BEE Ordinary Shares on your behalf on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or (ii) facilitate the purchase by the Public Facilitation Trust of your Sasol BEE Ordinary Shares by the Public Facilitation Trust giving you written notice, in which event a Sale of your Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions:
22. Clause 7.2.2 is amended by replacing the words 50% (fifty per cent) with the words 25% (twenty five per cent);
23. Clauses 7.2.4.1, 8.2.4.1, 8.4.4.1, 9.2.4.1 and 9.4.4.1 are replaced with the following -
from the Transfer Date, you are the beneficial owner and the New Registered Shareholder is the registered holder of those Sasol BEE Ordinary Shares;
24. Clauses 8.2.2, 8.4.2, 9.2.2 and 9.4.2 are amended by replacing the words 10% (ten per cent) with the words 5% (five per cent);
25. the following words are inserted at the beginning of clauses 8.3.3 and 9.3.3, the Company shall not be entitled to act on the power of attorney referred to in clause 7.2 and;
26. clause 8.4 is replaced with the following
8.4 If your Sasol BEE Ordinary Shares have not been Sold or the breach caused by the death has not otherwise been remedied within 180 (one hundred and eighty) days from the date of the death in question, the Company shall be entitled, but shall not be obliged, either (at the Companys election) to (i) act on a power of attorney which you hereby grant irrevocably and in rem suam and with power of substitution to the Company, to dispose of your Sasol BEE Ordinary Shares on your behalf on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or (ii) facilitate the purchase by the Public Facilitation Trust of your Sasol BEE Ordinary Shares by the Public Facilitation Trust giving you written notice, in which event a Sale of your Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions:
27. clause 9.2 is replaced with the following
9.2 If the trustee has not complied with clause 9.1.3, the Company shall be entitled, but shall not be obliged, either (at the Companys election) to (i) act on a power of attorney which you hereby grant irrevocably and in rem suam and with power of substitution to the Company, to dispose of your Sasol BEE Ordinary Shares on your behalf on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or (ii) facilitate the purchase by the Public Facilitation Trust of your Sasol BEE Ordinary Shares by the Public Facilitation Trust giving written notice to the trustee, in which event a Sale of your Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions:
28. clause 9.4 is replaced with the following
9.4 If your Sasol BEE Ordinary Shares have not been Sold or the breach caused by the liquidation has not otherwise been remedied within 180 (one hundred and eighty) days from the date of your liquidation, the Company shall be entitled, but shall not be obliged, either (at the Companys election) to (i) act on a power of attorney which you hereby grant irrevocably and in rem suam and with power of substitution to the Company, to dispose of your Sasol BEE Ordinary Shares on your behalf on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares
are then listed; or (ii) facilitate the purchase by the Public Facilitation Trust of your Sasol BEE Ordinary Shares by the Public Facilitation Trust giving written notice to your liquidator, in which event a Sale of your Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions:
29. A new clause 9A is inserted above clause 10 which reads as follows -
9A OBLIGATION ON NEW REGISTERED SHAREHOLDER TO PROCURE TRANSFER OF SASOL BEE ORDINARY SHARES
In respect of clauses 7.2, 8.2, 8.4, 9.2 and 9.4, the New Registered Shareholder will be obliged within 10 (ten) days after receipt of notice from Sasol to instruct the relevant central securities depository participant to effect transfer of your Sasol BEE Ordinary Shares out of the account in the name of the New Registered Shareholder into an account in the name of the Public Facilitation Trust both as registered and beneficial owner.
30. A new clause 12.1.3 is inserted which reads as follows
12.1.3 NEW REGISTERED SHAREHOLDER:
Physical: 70 Marshall Street
Johannesburg
2001
Postal: PO Box 61051
Marshalltown
2107
Telefax: (011) 688 5279
Attention: Company Secretary
31. Annexure 17(1) Formula for determining value of Sasol BEE Ordinary Shares is deleted in its entirety;
AMENDMENTS TO ANNEXURE A OF THE NEW CASH CONTRACT
1. A new clause A is inserted above clause 1 which reads as follows -
As a consequence of the fact that from the Transfer Date You will be the beneficial owner of Your Sasol BEE Ordinary Shares, but no longer the registered owner thereof -
A1. any reference to You in Annexure A, save as contemplated in clause A2 and clause A3, is to be read from the Transfer Date as a reference to the signatory to this Agreement, other than Sasol, only in his/her/its capacity as beneficial owner of his/her/its Sasol BEE Ordinary Shares and no longer also as the registered holder;
A2. for purposes of clauses 7.2.3, 8.2.3, 8.4, 8.4.3, 9.2.3 and 9.4.3, any reference to You from the Transfer Date is to be read referring to the beneficial owner of the Sasol BEE Ordinary Shares and also as referring to the New Registered Shareholder;
A3. all obligations imposed on the signatory to this Agreement, other than Sasol, in clauses 5.3.1, 5.3.2 and 8.3.3 of this Agreement in his/her/its capacity as registered owner of his/her/its Sasol BEE Ordinary Shares will from the Transfer Date bind instead the New Registered Shareholder;
A4. You undertake not to cause the New Registered Shareholder to take any action or omit to take any action which would result in the New Registered Shareholder being in breach of any of its obligations under this Agreement;
A5. any reference in clauses 7.2.3, 8.2.3, 8.4.3, 9.2.3, 9.4.3 to the words against delivery of the transfer form for Your Sasol BEE Ordinary Shares. If the Public Facilitation Trust has not received the requisite transfer form within 7 (seven) days from the date when the Public Facilitation Trust gives Your executor notice, You agree that the Public Facilitation Trust is irrevocably and in rem suam authorised and appointed as Your attorney and agent, or that of Your executor, to sign the necessary transfer forms shall from the Transfer Date be read as a reference to the words against registration of Your Sasol BEE Ordinary Shares in the name of the Public Facilitation Trust;
A6. any reference in clauses 8.1.1.2, 8.2, 8.2.2 and 8.2.3 to executor shall from the Transfer Date be read as referring to the executor and also to the New Registered Shareholder;
A7. any reference in clauses 9.1.2, 9.2, 9.2.2 and 9.2.3 to trustee shall from the Transfer Date be read as referring to the trustee and also to the New Registered Shareholder;
A8. any reference in clauses 9.3.5, 9.4, 9.4.2 and 9.4.3 to liquidator shall from the Transfer Date be read as referring to the liquidator and also to the New Registered Shareholder.
2. A new clause 1.2.4A is inserted after clause 1.2.4 which reads as follows -
1.2.4A BEE Compliant Persons means as interpreted by the courts, from time to time
1.2.4A.1 as regards a natural person, a Black Person;
1.2.4A.2 as regards a juristic person having a shareholding or similar members interests, one who falls within the ambit of the definitions of BEE Controlled Company¹ or BEE Owned Company², using the flow-through principle;
1.2.4A.3 as regards any other entity, any entity similar to a BEE Controlled Company¹ or BEE Owned Company² using the flow-through principle which would enable Sasol to claim points attributable to the entitys ownership of Sasol BEE Ordinary Shares pursuant to the Broad-Based Black Economic Empowerment Codes of Good Practice gazetted from time to time under the BEE Act;
3. A new clause 1.2.4B is inserted after clause 1.2.4A which reads as follows -
1.2.4B BEE Contract means the contract, the form of which is prescribed by the JSE Limited and which is required to be signed by at least the proposed beneficial owner of BEE Securities before acquiring such BEE Securities for the first time;
4. A new clause 1.2.4C is inserted after clause 1.2.4B which reads as follows:
1.2.4C BEE Securities means the securities in respect of which the issuer requires that the beneficial owners are BEE compliant persons for a period of time as prescribed by the issuer;
5. A new clause 1.2.13A is inserted as follows -
1.2.13A Election means the right granted to You pursuant to clause 47A.1 of the Sasol Memorandum of Incorporation to elect that Your Sasol BEE Ordinary Shares do not automatically re-designate as Sasol Ordinary Shares pursuant to clause 44.2 of the Sasol Memorandum of Incorporation, but as a consequence will remain (without any re-designation occurring at all) as Sasol BEE Ordinary Shares, subject to the provisions of clause 47A.2 of the Sasol Memorandum of Incorporation;
6. Clause 1.2.14 is replaced with the following -
1.2.14 Empowerment Period means as regards You, if You
1.2.14.1 do not exercise the Election or do not validly exercise the Election, a period ending on 7 September 2018, or such shorter period as may be determined by Sasol; or
1.2.14.2 hold Sasol BEE Ordinary Shares which do not redesignate on the SOLBE1 Redesignation Date, the period for so long as the Sasol BEE Ordinary Shares are listed on an exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation), or such shorter period as may be determined by Sasol in its sole and absolute discretion and notified in one national South African newspaper, and, if the Sasol BEE Ordinary Shares are then listed on the JSE, on the Securities Exchange News Service;
7. Clause 1.2.16 is replaced with the following
1.2.16 Forced Sale Value means the 5 (five) day volume weighted average price of a Sasol BEE Ordinary Share, being the total value of the Sasol BEE Ordinary Shares traded for that period divided by the total number of the Sasol BEE Ordinary Shares traded for that period. In the event of any corporate action, the value will be adjusted appropriately if required;
8. A new clause 1.2.16A is inserted after clause 1.2.16 which reads as follows -
1.2.16A New Registered Shareholder means Computershare Nominees Proprietary Limited (Registration No. 1999/008543/07);
9. Clause 1.2.18 which reads Sasol Articles means the articles of association of Sasol until the Companies Act, No. 71 of 2008 comes into force and thereafter means Sasols memorandum of incorporation is deleted;
10. a new clause 1.2.20A is inserted as follows -
1.2.20A Sasol Memorandum of Incorporation means Sasols Memorandum of Incorporation;
11. A new clause 1.2.22A is inserted as follows -
1.2.22A SOLBE1 Redesignation Date means the date on which Sasol BEE Ordinary Shares held by Sasol BEE Shareholders who do not exercise or do not validly exercise the right granted in clause 47A.1 of the Sasol Memorandum of Incorporation to each Sasol BEE Shareholder, are automatically re-designated as Sasol ordinary shares;
12. Clause 1.2.22A is renumbered 1.2.22B;
13. A new clause 2.3 is inserted which reads as follows -
2.3 If You wish from time to time to replace the New Registered Shareholder with another registered shareholder to hold some or all of Your Sasol BEE Ordinary Shares, You shall not instruct the New Registered Shareholder to transfer Your Sasol BEE Ordinary Shares, nor shall the New Registered Shareholder act on any such instruction, unless You first sign a BEE Contract with the new registered shareholder, which will replace this Agreement in respect of those of your Sasol BEE Ordinary Shares which are transferred to such person as the new registered shareholder.
14. Clauses 3.1, 3.2, 3.3, 3.4 and 3.5 are deleted with effect from the Transfer Date;
15. In clause 3.3.1, the words the Sasol Articles are deleted and replaced with the words the Sasol Memorandum of Incorporation;
16. A new clause 3.5 is inserted as follows
3.5 After the Empowerment Period
3.5.1 contemplated in clause 1.2.14.1, a certificate in respect of Your Sasol Ordinary Shares arising on re-designation of Your Sasol BEE Ordinary Shares; or
3.5.2 contemplated in clause 1.2.14.2, a certificate in respect of Your Sasol BEE Ordinary Shares,
will be posted by the Custodian to Your address for service selected by You in Annexure B, at Your risk.
17. Clause 4 is amended by the insertion at the end of the following words From the Transfer Date, You will no longer be the registered owner thereof (as warranted in paragraph 2.2 on the signature page of this Agreement).;
18. Clause 5.3.1 is amended by the insertion at the end of this clause of the following words -
5.3.1 You and the New Registered Shareholder shall procure that a copy of such agreement in respect of such Encumbrance is delivered to Sasol;
19. Clause 6.1 is replaced with the following
6.1 Save for a Sale to the Public Facilitation Trust, and, save for the transfer of the Sasol BEE Ordinary Shares to Your heirs in the event of Your death or the Sale by Your liquidator or trustee in the event of Your insolvency, the Sale must take place in the Trading Market, provided that Sasol has established one.
20. Clause 7.2 is replaced with the following
7.2 At any time after learning of the occurrence of an event contemplated in any one of the provisions in clause 7.1, the Company shall be entitled, but shall not be obliged, either at the Companys election, to (i) act on a power of attorney which You hereby grant irrevocably and in rem suam and with power of substitution to the Company, to dispose of Your Sasol BEE Ordinary Shares on Your behalf on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or (ii) facilitate the purchase by the Public Facilitation Trust of Your Sasol BEE Ordinary Shares by the Public Facilitation Trust giving You written notice, in which event a Sale of Your Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions:
21. Clause 7.2.2 is amended by replacing the words 50% (fifty per cent) with the words 25% (twenty five per cent);
22. Clauses 7.2.4.1, 8.2.4.1, 8.4.4.1, 9.2.4.1 and 9.4.4.1 are replaced with the following -
from the Transfer Date, You are the beneficial owner and the New Registered Shareholder is the registered holder of those Sasol BEE Ordinary Shares;
23. Clauses 8.2.2, 8.4.2, 9.2.2 and 9.4.2 are amended by replacing the words 10% (ten per cent) with the words 5% (five per cent);
24. the following words are inserted at the beginning of clauses 8.3.1 and 9.3.1, the Company shall not be entitled to act on the power of attorney referred to in clause 7.2 and;
25. clause 8.4 is replaced with the following
8.4 If Your Sasol BEE Ordinary Shares have not been Sold or the breach caused by the death has not otherwise been remedied within 180 (one hundred and eighty) days from the date of the death in question, the Company shall be entitled, but shall not be obliged, either (at the Companys election) to (i) act on a power of attorney which You hereby grant irrevocably and in rem suam and with power of substitution to the Company, to dispose of Your Sasol BEE Ordinary Shares on Your behalf on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or (ii) facilitate the purchase by the Public Facilitation Trust of Your Sasol BEE Ordinary Shares by the Public Facilitation Trust giving You written notice, in which event a Sale of Your Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions:
26. Clause 9.2 is replaced with the following
9.2 If the trustee has not complied with clause 9.1.2, the Company shall be entitled, but shall not be obliged, either (at the Companys election) to (i) act on a power of attorney which You hereby grant irrevocably and in rem suam and with power of substitution to the Company, to dispose of Your Sasol BEE Ordinary Shares on Your behalf on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or (ii) facilitate the purchase by the Public Facilitation Trust of Your Sasol BEE Ordinary Shares by the Public Facilitation Trust giving written notice to the trustee, in which event a Sale of Your Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions:
27. Clause 9.4 is replaced with the following
9.4 If Your Sasol BEE Ordinary Shares have not been Sold or the breach caused by the liquidation has not otherwise been remedied within 180 (one hundred and eighty) days from the date of Your liquidation, the Company shall be entitled, but shall not be obliged, either (at the Companys election) to (i) act on a power of attorney which You hereby grant irrevocably and in rem suam and with power of substitution to the Company, to dispose of Your Sasol BEE Ordinary Shares on Your behalf on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or (ii) facilitate the purchase by the Public Facilitation Trust of Your Sasol BEE Ordinary Shares by the Public Facilitation Trust giving written notice to Your liquidator, in which event a Sale of Your Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions:
28. A new clause 9A is inserted above clause 10 which reads as follows -
9A OBLIGATION ON NEW REGISTERED SHAREHOLDER TO PROCURE TRANSFER OF SASOL BEE ORDINARY SHARES
In respect of clauses 7.2, 8.2, 8.4, 9.2 and 9.4, the New Registered Shareholder will be obliged within 10 (ten) days after receipt of notice from Sasol to instruct the relevant central securities depository participant to effect transfer of your Sasol BEE Ordinary Shares out of the account in the name of the New Registered Shareholder into an account in the name of the Public Facilitation Trust both as registered and beneficial owner.
29. A new clause 12.1.3 is inserted which reads as follows
12.1.3 NEW REGISTERED SHAREHOLDER:
Physical: 70 Marshall Street
Johannesburg
2001
Postal: PO Box 61051
Marshalltown
2107
Telefax: (011) 688 5279
Attention: Company Secretary
30. Annexure A (1) Forced Sale Value Formula is deleted in its entirety;
Computershare Proprietary Limited
Reg. No. 2000/006082/07
Schedule 2 - CUSTODY AND SETTLEMENT AGREEMENT FOR A BULK DEMATERIALISED SHAREHOLDER
CUSTODY AND SETTLEMENT AGREEMENT FOR A BULK DEMATERIALISED SHAREHOLDER
TERMS AND CONDITIONS OF CUSTODY AND SETTLEMENT AGREEMENT FOR A BULK DEMATERIALISED SHAREHOLDER
1. INTERPRETATION
1.1 Unless otherwise expressly stated, or the context otherwise requires, the words and expressions listed below shall, when used in this Agreement, bear the meanings ascribed to them:
Agreement |
|
means this private investor custody and settlement agreement between the Client and Computershare; |
Amended Cash Contract |
|
means the contract concluded by Sasol with each of the holders of the Sasol BEE Ordinary Shares during 2008 when the Sasol BEE Ordinary Shares were allotted and issued, as amended by the Replacement Clauses; |
|
|
Amended New Cash Contract means the prescribed contract concluded between Sasol and a holder of Sasol BEE Ordinary Shares who acquired such shares on or after 8 September 2010, as amended by the Replacement Clauses; |
Bank Account |
|
means the bank account nominated by the Client at the time of the Clients initial subscription for or acquisition of Securities or nominated when the Client acquired Securities on or after 8 September 2010, or as may be advised in writing to Computershare from time to time; |
BEE Act |
|
means the Broad-Based Black Economic Empowerment Act, 2003 and any regulations promulgated thereunder; |
BEE Securities |
|
means the securities in respect of which an issuer requires that the beneficial owners are Black Persons or Black Groups for a period as prescribed by the issuer; |
BEE Segment |
|
means a segment of the main board of the JSE where an issuer may list its BEE Securities and where trading in BEE Securities is restricted to Black Persons and Black Groups; |
Black Companies |
|
means a company which is a BEE Controlled Company and a BEE Owned Company each as defined in the Codes; |
Black Entities |
|
means a vesting trust which qualifies for recognition under the Codes, a broad- based ownership scheme, a close corporation, or an unincorporated entity or association, including a partnership, joint venture, syndicate or stokvel as may be determined by Sasol in its sole discretion as an entity or association, which may enable Sasol to claim points pursuant to the Codes; |
Black Groups |
|
means Black Companies and Black Entities; |
Black Person |
|
means a black person as defined in the BEE Act and/or the Codes and/or any charter applicable to Sasol group of companies, whichever is the most stringent at the date of selling the Sasol BEE Ordinary Shares and Black shall be construed accordingly; |
Bulk Dematerialisation |
|
means the process by which all the share certificates in respect of the Sasol BEE Ordinary Shares, whose holders have not elected to hold such shares in certificated form, are converted into an electronic form and such shares are transferred into the name of Computershare so as to be held by it for and on behalf |
|
|
of those holders of Sasol BEE Ordinary Shares who bulk dematerialise; |
Client |
|
means the contracting natural person or juristic person which will continue to be the beneficial owner of the Securities after the Bulk Dematerialisation is implemented; |
Codes |
|
means the Codes of Good Practice promulgated in terms of section 9(1) of the BEE Act; |
Computershare |
|
means Computershare Proprietary Limited (registration number 2000/006082/07) and Computershare Nominees (Proprietary) Limited (registration number 1999/008543/07) (the company designated by Computershare as the nominee holding the Securities for and on behalf of the Client as the registered holder); |
CSD |
|
means a Central Securities Depository licensed as such under section 32 of the Securities Services Act; |
FAIS |
|
means the Financial Advisory and Intermediary Services Act (Act No. 37 of 2002); |
FICA |
|
means the Financial Intelligence Centre Act (Act No. 38 of 2001) and its regulations; |
Issuer |
|
means Sasol, being the issuer of the Sasol BEE Ordinary Shares; Issuers-Participants Contract means the contract prescribed by the JSE, which is required to be signed by issuers of BEE Securities prior to their BEE Securities being listed on the BEE Segment; |
|
|
all Participants which have been accepted in terms of section 34 of the Securities Services Act by the CSD as Participants in the CSD prior to the date of the first listing of BEE Securities on the BEE Segment; and |
|
|
all other Participants prior to the earlier of their (i) being accepted in terms of section 34 of the Securities Services Act by the CSD as Participants in the CSD or (ii) being assigned all of a Participants rights and obligations in terms of this contract in accordance with the provisions thereof, both of which occurrences in (i) and (ii) take place after the date of the first listing of BEE Securities on the BEE Segment; |
JSE |
|
means JSE Limited; |
Participant |
|
means a person who holds in custody and administers Securities or an interest in Securities and that has been accepted by the CSD as a Participant; |
Replacement Clauses |
|
means the clauses which are set out in Appendix 5 to the circular to Sasol shareholders dated 1 November 2010; |
Sasol |
|
means Sasol Limited (registration number 1979/003231/06); |
Sasol BEE Ordinary Shares |
|
means no par value shares in Sasols share capital designated as Sasol BEE Ordinary Shares; |
Securities |
|
means Sasol BEE Ordinary Shares; |
Securities Legislation |
|
means the Companies Act (Act No. 61 of 1973), as amended and its successor enactment, the Securities Services Act, the Rules and Directives of the JSE or any other applicable stock exchange and the Rules and Directives of any central securities depository made under section 39 of the Securities Services Act; |
Securities Services Act |
|
means the Securities Services Act (Act No. 36 of 2004). |
1.2 Clause and paragraph headings are for purposes of reference only and shall not be used in interpretation.
1.3 Unless the context clearly indicates a contrary intention, any word connoting any gender includes the other gender, the singular includes the plural and vice versa and natural persons includes artificial persons and vice versa.
1.4 When any number of days is prescribed such number shall exclude the first and include the last day unless the last day falls on a Saturday, Sunday, or a public holiday in the Republic of South Africa, in which case the last day shall be the next succeeding day which is not a Saturday, Sunday or a public holiday in the Republic of South Africa.
2. APPOINTMENT
2.1 Computershare is the holder of a category II Financial Services Provider licence issued in terms of FAIS and is authorised to render intermediary services in respect of investment schemes and products as defined in 2.2 below:
2.2 Computershare is authorised to execute transactions in accordance with the Clients instructions relating to the following financial products:
2.2.1 Securities and Instruments: Shares
2.2.2 Securities and Instruments: Money Market Instruments
2.2.3 Securities and Instruments: Debentures and Securities Debt
2.2.4 Securities and Instruments: Warrants, Certificates and other instruments Securities and Instruments: Bonds
2.2.5 Securities and Instruments: Short Term Deposits
2.3 Subject to the terms of this Agreement and the provisions of the Amended Cash Contract, the Amended New Cash Contract and/or the Issuers-Participants Contract, as the case may be, the Client appoints Computershare as its financial services provider, agent, custodian and administrator for the safe keeping and administration of Securities, and for the settlement of transactions in those Securities and to attend to certain incidental matters detailed in this Agreement.
2.4 Computershare may make use of the services of its staff to execute certain administrative functions in the course of rendering intermediary services to the Client.
2.5 For the purposes of this Agreement, Computershare shall be referred to as a Participant and vice versa.
2.6 The parties shall at all times be bound by the provisions of the Securities Legislation and must comply with any other provisions that may be required by legislation as a result of the nature of the Client.
2.7 For the purposes of this Agreement, Computershare will aggregate any instructions received from local clients (within the Common Monetary Area) in terms of clause 12.1.14 of these terms and conditions and effect the transaction in the local jurisdiction.
2.8 The Client may not hold Securities in the capacity of a nominee holding Securities on behalf of a beneficial owner, while his/her/its Securities are held by Computershare.
3. SECURITIES DEPOSITED FOR SAFE CUSTODY
3.1 Securities that Computershare may accept on behalf of the Client in accordance with this Agreement shall be uncertificated securities.
3.2 Computershare shall be obliged to accept all Securities pursuant to the Bulk Dematerialisation.
3.3 The Client warrants to Computershare that any encumbrance of the Securities deposited for safe custody from time to time, will be in accordance with the provisions of the Amended Cash Contract and/or the Amended New Cash Contract, as the case may be.
3.4 The Client undertakes in favour of Computershare to disclose any beneficial, limited or other interest in Securities deposited for safe custody from time to time.
4. CONFLICT
4.1 In the event of any conflict between the provisions of this Agreement and the Securities Legislation, the provisions of the Securities Legislation shall prevail.
5. SECURITIES ACCOUNT
5.1 Computershare shall in accordance with its standard operating procedures open and maintain a securities account(s) in its records in the name of the Client to record the number or nominal value of Securities of each kind deposited by the Client with Computershare and to record all transactions and entries made in respect of such Securities (the Securities Account).
5.2 Any entry made in a Securities Account shall be made only in accordance with authenticated
instructions given by the Client and the provisions of the Securities Legislation. Computershare will make the entry in the relevant account of the Client where the Securities are held.
5.3 Computershare shall not be obliged to make any entry in a Securities Account unless it conforms to clause 11 of this Agreement, the Amended Cash Contract, the Amended New Cash Contract, and/or the Issuers-Participants Contract, as the case may be.
5.4 Computershare shall not give effect to any instruction that will result in a debit balance in respect of any security held in a Securities Account.
6. SAFEKEEPING OF SECURITIES
6.1 Records of uncertificated securities held by Computershare shall be kept and maintained in the manner provided for in the Securities Legislation.
6.2 Securities held on the Clients behalf must be registered in the name of Computershare.
6.3 Computershare shall take such steps to protect Securities held under custody against theft, loss or destruction as provided for in the Securities Services Act.
7. RETENTION OF RECORDS
7.1 Computershare will keep the records of this Agreement and related documents in terms of section 22 of FICA.
7.2 The Client agrees that Computershare at its absolute discretion will destroy the records and documentation relating to this Agreement after the expiry of the retention period referred to in clause 7.1.
7.3 The Client acknowledges and agrees that records and relevant documents shall be considered to be retained by Computershare if the copies are scanned and are available in electronic form. Subject to an electronic copy being available, Computershare shall not be under any obligation to retain records and documents in paper form.
8. SETTLEMENT OF TRANSACTIONS
8.1 For the purposes of this Agreement, the Client designates the Bank Account as his/her/its settlement account. The Bank Account may be amended from time to time by completing the necessary instruction in writing to Computershare.
8.2 Computershare shall credit the Bank Account with all proceeds received by Computershare in respect of the Securities held in or transacted through the Securities Account. The Client authorises Computershare or its agent to debit the Bank Account with any amount owing by the Client.
8.3 The Client acknowledges that he is conversant with his responsibility to provide settlement instructions to Computershare in accordance with the provisions from time to time of the JSE Rules and Directives.
9. SECURITIES STATEMENTS
9.1 Computershare shall provide the Client with a statement when there is a change in the clients portfolio and in accordance with the Securities Legislation.
9.2 Unless an objection is made in writing by the Client to any entry contained in any statement of a Securities Account within 60 days after the statement date, the statement shall, in the absence of fraud or any manifest error, be treated as prima facie evidence of the entries indicated therein and the Client shall not thereafter be entitled to make any claim against Computershare or to any other action in respect thereof.
10. VERIFICATION OF IDENTITY OF CLIENT
10.1 Computershare may verify information against any credit bureaus database for verification or security purposes, if required.
11. INSTRUCTIONS BY THE CLIENT
11.1 All instructions given by the Client shall be sent to Computershare at the address set out at clause 21 of this Agreement. All instructions shall be sent in writing, or by any other means as may be approved by Computershare from time to time in writing. Computershare shall not be obliged to carry out any instruction that does not comply with this Agreement, the Amended Cash Contract the Amended New Cash Contract, the Issuer-Participants Contract, the requirements of FICA, the Securities Legislation or Computershares standard operating procedures, as the case may be.
11.2 On each occasion on which an instruction is given, the Client will be regarded as having confirmed that he has the necessary authority. Computershare may record telephonic or electronic conversations with the Client and its representatives and the Client agrees that such recordings or transcripts thereof may be used as evidence in any dispute with the Client.
11.3 In the event that the Client gives to Computershare an instruction to buy or sell Securities on behalf of the Client, subject to the limited mandate to carry out such instruction without having to exercise any independent discretion and in terms of a particular service offered by Computershare, then the Client gives to Computershare the right to appoint and pay brokers and other agents to carry out such instruction, to receive and give receipts in respect of such purchases or sales and to do all such things incidental thereto in order to give effect to such instruction.
11.4 Where the Client has previously provided an e-mail address and/or cellular phone number the Client will continue to receive communications via these media, unless a written instruction is received to the contrary.
12. DEALING ROUTING SERVICE
12.1 By submitting any instruction to transact in Securities using the Computershare Dealing Routing Service (dealing service) the Client agrees to the following provisions:
12.1.1 The Client may only give instructions to transact in any Security by means of the telephonic service when operational. Instructions will not be accepted by any other means, including without limitation, fax, electronic mail, and photocopied forms or through the Internet. Computershare reserves the right to alter the times that the telephonic service is available.
12.1.2 Computershare will not carry out any instruction to transact Securities on behalf of the Client unless it is satisfied that the Client has been recorded as the owner of the Securities in Computershares records.
12.1.3 The Client may only use the dealing service if his Securities are registered in the South African sub-sub- register maintained and operated by Computershare.
12.1.4 Computershare will endeavour to inform the Client if an instruction given by the Client will not be carried out unless Computershare has good reason for not doing so. Computershare will not be liable for refusing to carry out any instruction if it has good reason for not doing so.
12.1.5 Any instruction submitted by another person on behalf of the Client should not be recognised unless an original power of attorney or other appropriate authority (or a complete copy thereof certified by a Commissioner of Oaths) has been received and accepted by Computershare.
12.1.6 All instructions given by the Client to the dealing service are irrevocable and shall be dealt with on the business day immediately following the business day on which they were received and failing that as soon as reasonably possible thereafter.
12.1.7 In the event that Computershares nominated stockbroker is unable to process the entire trade due to there being insufficient buyers or sellers in the market, the balance of the trade will be kept pending by the broker for a 30-day period in terms of standard market practice.
12.1.8 Computershare will thereafter endeavour to notify the Client of the status of the trade and the Client shall upon receipt of Computershares notification provide a replacement instruction or cancel the balance of the trade.
12.1.9 No limit order or raise order will be accepted by Computershare. The Client acknowledges
that prices may fluctuate from the time the instruction is given until the time that the transaction is executed.
12.1.10 By submitting an instruction to Computershare to arrange to sell any Security on his behalf, the Client warrants that:
12.1.10.1 he has not sold or purported to sell the Securities or the interest in any Security to any third party;
12.1.10.2 the Securities will be sold free from all liens, charges or other third party rights or any encumbrance of any kind;
12.1.10.3 he is entitled to sell the Securities;
12.1.10.4 the sale will not constitute a breach by the Client of any applicable laws and regulations; and
12.1.10.5 he is not a minor, or if he is a minor, that he is properly assisted by a parent or court appointed guardian.
12.1.11 The Client irrevocably undertakes that he will do, or procure to be done, all acts and things, and execute or procure the execution of all such documents as Computershare may from time to time require to give effect to any instruction by the Client.
12.1.12 The dealing service shall be operated strictly on an execution only basis. Computershare shall not provide, or have any responsibility to provide any financial, taxation or other advice to the Client.
12.1.13 A transaction in any Security through the dealing service will be executed by a stockbroker appointed by Computershare. By submitting an instruction to Computershare the Client irrevocably authorises Computershare to appoint a stockbroker to execute the transaction on behalf of the Client on the basis that:
12.1.13.1 Computershare will instruct a stockbroker to obtain the best price reasonably available in the market at the time of dealing. If no such price can be ascertained, the stockbroker will take reasonable care to carry out the instruction at a price which is fair and reasonable; and
12.1.13.2 Computershare shall, to the exclusion of all others including the Client, be entitled to bring any action, suit or proceedings (Actions) against the stockbroker arising out of or in connection with the sale. Computershare shall, in its sole discretion, determine the nature and scope of such Actions. By submitting an instruction to Computershare the Client waives his right in relation to such Actions.
12.1.14 The stockbroker appointed by Computershare may aggregate any instruction with those of other holders of Securities transacting Securities through the dealing service but may not aggregate the sale with any other clients of the stockbroker, provided that any aggregation shall take place in accordance with the Rules of the JSE.
12.1.14.1 The price per Security that the Client will receive in the case of transactions that are aggregated will be the total proceeds of all aggregated transactions in the relevant period less all costs of the transactions divided by the number of Securities sold in such transactions;
12.1.14.2 The price per Security that the Client will receive where transactions are not aggregated will be the price at which such Securities are sold in the relevant period less all costs of the sale;
12.1.14.3 The proceeds payable to the Client shall be rounded down, where necessary, to the nearest whole Rand. Resulting fractions of any Rand will be aggregated and may be retained by Computershare.
12.1.14.4 Each Security aggregated with other Securities being transacted through the dealing service in any relevant period will only be treated as sold when it is actually sold by the dealing service.
12.1.15 The Client shall ensure that in respect of any purchase of Securities by the Client in respect of which Computershare is required to act as settlement agent, the Client shall deposit cleared funds to cover the purchase consideration in the Computershare Ltd Dealing Trust Account, being account number 62022148317 held at First National Bank, branch code 25-50-05. The Client shall then immediately forward proof of the deposit to Computershare and then telephone Computershare to place the purchase order. The Client acknowledges that he is conversant with his responsibility to provide settlement instructions to Computershare in accordance with the provisions from time to time of the JSE Rules and Directives.
12.1.16 Unless settlement instructions and cleared funds are received by Computershare in accordance with Clause 12.1.15, Computershare shall not be under any obligation to confirm settlement to a
central securities depository and the Client shall be liable for any resultant penalties levied by a settlement authority pursuant to any failed trade.
12.1.17 Orders executed through the service shall be subject to the charges published from time to time, initially as set out in Schedule A to this Agreement.
12.1.18 Computershare may vary the amount, rate or basis of charges from time to time and may introduce new charges.
12.1.19 Fees, taxes, charges and other expenses of whatever nature incurred on behalf of the Client will be deducted from the proceeds of any transaction.
12.1.20 Instructions to carry out more than one transaction will be treated as separate transactions and each such transaction shall be charged separately.
12.1.21 All transactions will take place on the JSE.
12.1.22 Computershare will subject to applicable exchange control legislation and regulations pay to the Client the proceeds of any sale into the Clients Bank Account.
12.1.23 Advice of any transaction will be included in a transaction statement sent to the Client.
12.1.24 Computershare may terminate the dealing service at any time without giving notice thereof to the Client. All valid instructions given to the dealing service in accordance with this Agreement before termination will be carried out.
12.1.25 Transactions will be carried out and records relating to instructions by the Client will be kept according to the rules, customs and practices of the JSE.
12.1.26 If the dealing service cannot perform any of its services under this Agreement due to circumstances beyond its reasonable control, Computershare will take all reasonable steps to bring such circumstances to an end, but Computershare shall not be liable for any non-performance of the dealing service.
12.1.27 Without prejudice to any stockbrokers obligations to execute transactions on the JSE, when a stockbroker executes an instruction given to the dealing service the Client acknowledges that the stockbroker could be acting as principal for its own account. By submitting an instruction to the dealing service the Client consents, where applicable, to the stockbroker acting as principal for its own account.
12.1.28 The Client indemnifies Computershare and those persons acting on his behalf in relation to the provision of the dealing service and their respective directors, employees and agents against any liability (except to the extent that the liability is caused by Computershare or such persons own default, negligence or fraud) which it or they may incur as a result of the dealing service.
12.1.29 Computershare does not receive any brokerage commission in lieu of execution of trades.
12.1.30 Computershare shall not be responsible for the loss in transmission of any cheque, document of title, statement or any other document sent through the post to the Client, whether or not it was so sent at the Clients request.
13. VOTING ON BEHALF OF CLIENTS
13.1 Computershare will only vote on behalf of the client if a written instruction is received from the Client by the stipulated date.
14. NOTIFICATION OF CORPORATE EVENTS AND CASH DIVIDENDS
14.1 Computershare shall notify clients of all corporate events as required in terms of the Securities Legislation, which includes but is not limited to non-elective events i.e. announcements and related information.
14.2 Computershare is not obliged to send such notification as stated in 14.1 above to the extent that all the salient details of such non-elective benefits are incorporated in the Annual Financial Statements, Interim Statements or a shareholder circular by the Issuer and it has been or will be sent directly to the Client by an Issuer.
14.3 Computershare will send its notification on receipt of the final announcement published by the CSD.
14.4 The Client may elect not to receive annual financial statements or circulars provided that they understand the implications and consequences of such an election. By choosing not to receive the
documentation, the Client acknowledges that they may not receive pertinent information concerning non-elective events or the payment of dividends.
14.5 Dividend information will continue to be published in the local newspapers in terms of standard market practice and Computershare will continue to send a payment advice/statement once the payment or corporate action has been processed.
15. ACCRUALS
15.1 All cash accruals received in respect of investments, including dividends will be paid in accordance with the Clients instructions and regulatory requirements.
16. INTEREST ON FUNDS DEPOSITED INTO CLIENT TRUST ACCOUNT FOR PURCHASE OF SECURITIES
16.1 Where funds are deposited into Computershares Client Trust account for the purchase of securities, Computershare will retain any interest that accrues to cover administration costs. The Client may claim interest by lodging a claim in writing, however, only claims for amounts of more than R50.00 (Fifty Rand) will be considered.
17. INFORMATION TO BE DISCLOSED BY PRODUCT SUPPLIERS
17.1 The Client confirms that Computershare shall not be required to provide any information other than that required by law.
18. CHARGES
18.1 The Client shall pay the fees and charges published from time to time by Computershare and notified to the Client.
18.2 Computershare may increase or vary the charges on 60 days written notice to the Client and may thereafter levy such fees or charges.
18.3 Notwithstanding anything to the contrary in this Agreement, Computershare shall not be obliged to act upon any instruction given by the Client or to deliver to the Client any securities or monies until all the amounts due and owing by the Client to Computershare have been discharged in full.
19. INDEMNITY
19.1 The Client hereby indemnifies and agrees to hold Computershare harmless against all liability, costs or expenses incurred by Computershare or its nominees or agents in connection with the due and proper performance by Computershare of its obligations pursuant to this Agreement.
19.2 The Client accepts the risk of loss or damage arising directly or indirectly as a result of any failure in, misuse of, or any fraud or misrepresentation due to his failure to give a valid instruction in accordance with the terms of this Agreement.
20. TERMINATION
20.1 Either party may terminate this Agreement at any time by giving at least 30 days written notice of termination to the other party.
20.2 Computershare shall advise the Client in writing within three (3) business days of any termination of its participation as a Participant or of it being placed under interim management.
20.3 The Client must, following notification of termination of its Participant in terms of Rule 5.7.7, inform the Participant, its trustee, liquidator, curator, judicial manager, administrator or other lawful agent to which Participant the Clients Securities Account shall be transferred within 30 (thirty) calendar days of the Clients receiving such notification.
21. NOTICES
21.1 For the purposes of this Agreement, the Client chooses the physical address provided at the time of the initial subscription of Securities or provided when the Client acquired Securities on or after 8 September 2010 or such amendment thereto as advised in writing to Computershare from time to time as the address for the receipt of all notices and legal process. Any notice by Computershare to the Client shall, if sent by facsimile or by e-mail, be deemed to have been received by the Client on the day of transmission of the facsimile or e-mail and if sent by post, on the seventh day after posting.
21.2 Any notices by Computershare to the Client given either orally or by electronic means shall be deemed to have been received by the Client.
21.3 Computershare chooses as the address for the receipt of all notices and legal process 1st Floor Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196.
22. VARIATION
22.1 Any addition to, variation or cancellation of this Agreement shall be communicated to the other party in writing.
23. GOVERNING LAW
23.1 This Agreement shall be construed in accordance with the laws of the Republic of South Africa.
COMPUTERSHARE PROPRIETARY LIMITED
Service and Settlement Fee Structure for Shareholder
FEE DESCRIPTION |
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ISSUER SPONSORED NOMINEE (using Computershare Dealing Routing Service) |
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Dematerialisation |
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Not applicable * |
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Service |
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Not applicable * |
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Transaction & Settlement |
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On exchange: included in the dealing fee |
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Off exchange: R80.00 + R11.20 (VAT)=R91.20 per transaction for third party transfer (Change of Beneficial Ownership) |
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Off-market Account Transfer: R70.00 + R9.80 (VAT) = R79.80 per transfer |
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Off-market Securities Lending: R70.00 + R9.80 (VAT) = R79.80 per transaction |
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Portfolio Moves: R54.21 + R7.59 (VAT) =R61.80 per transaction (Transfer holdings to or from broker or other CSD Participant) |
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Pledge/Pledge Release: Service not available |
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Certificate Withdrawal: (Rematerialisation): R550.00 + R77.00 (VAT) = R627.00 per certificate |
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Removal: Not Applicable |
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Cancellations: R22.59 + R3.16 (VAT) = R25.75 per cancellation |
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Dealing |
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Sales:
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Other |
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Cash Transfer/Refund/Residual Refund: R23.25 + R3.25 (VAT) = R26.50 per transaction |
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Cash deposit or Automated Deposit Terminal fee: R1.80 + R0.25 (VAT) = R2.05 per R100.00 deposited with a minimum fee of R7.50 |
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Cheque Deposit Fee: R4.39 + R0.61(VAT) = R5.00 per cheque deposit |
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Stop Payment & Re-issue cheque/EFT: R142.11 + R19.89 (VAT) = R162.00 per request |
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Unpaid cheque fee: R59.39 + R8.31 (VAT) = R67.70 per cheque deposit |
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Issuing payments by cheque rather than EFT: R29.12 + R4.08 (VAT) = R33.20 per cheque |
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Posting cheque via registered mail: R35.09 + R4.91 (VAT) = R40.00 per cheque |
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Issue of duplicate transaction advice: R32.46 + R4.54 (VAT) = R37.00 per advice |
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Queries older than 1 year: R263.16 + R36.84 (VAT) = R300.00 (Include refund of deposits) |
* Fees sponsored by the Issuer of the security.
All fees quoted, unless otherwise indicated, include Strate cost. Fees are subject to change.
Schedule 3 Definitions in the Companies Act
accounting records means information in written or electronic form concerning the financial affairs of a company as required in terms of this Act including, but not limited to, purchase and sales records, general and subsidiary ledgers and other documents and books used in the preparation of financial statements;(2)
alternate director means a person elected or appointed to serve, as the occasion requires, as a member of the board of a company in substitution for a particular elected or appointed director of that company;
amalgamation or merger means a transaction, or series of transactions, pursuant to an agreement between two or more companies, resulting in-
(a) the formation of one or more new companies, which together hold all of the assets and liabilities that were held by any of the amalgamating or merging companies immediately before the implementation of the agreement, and the dissolution of each of the amalgamating or merging companies; or
(b) the survival of at least one of the amalgamating or merging companies, with or without the formation of one or more new companies, and the vesting in the surviving company or companies, together with any such new company or companies, of all of the assets and liabilities that were held by any of the amalgamating or merging companies immediately before the implementation of the agreement;
annual general meeting means the meeting of a public company required by section 61(7);
audit has the meaning set out in the Auditing Profession Act, but does not include an independent review of annual financial statements, as contemplated in section 30(2)(b)(ii)(bb);
Auditing Profession Act means the Auditing Profession Act, 2005 (Act No. 26 of 2005);
auditor has the meaning set out in the Auditing Profession Act;
beneficial interest, when used in relation to a companys securities, means the right or entitlement of a person, through ownership, agreement, relationship or otherwise, alone or together with another person to
(a) receive or participate in any distribution in respect of the companys securities;
(b) exercise or cause to be exercised, in the ordinary course, any or all of the rights attaching to the companys securities; or
(c) dispose or direct the disposition of the companys securities, or any part of a distribution in respect of the securities,
but does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, 2002 (Act No. 45 of 2002);
board means the board of directors of a company;
business days has the meaning determined in accordance with section 5(3);
central securities depository has the meaning set out in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004);
Commission means the Companies and Intellectual Property Commission established by section 185;
company means a juristic person incorporated in terms of this Act, a domesticated company, or a juristic person that, immediately before the effective date
(2) Regulation 25(3) contains requirements as to what the accounting records must include.
(a) was registered in terms of the
(i) Companies Act, 1973 (Act No. 61 of 1973), other than as an external company as defined in that Act; or
(ii) Close Corporations Act, 1984 (Act No. 69 of 1984), if it has subsequently been converted in terms of 0;
(b) was in existence and recognised as an existing company in terms of the Companies Act, 1973 (Act No. 61 of 1973); or
(c) was deregistered in terms of the Companies Act, 1973 (Act No. 61 of 1973), and has subsequently been re-registered in terms of this Act;
Competition Act, means the Competition Act, 1998 (Act No. 89 of 1998);
consideration, means anything of value given and accepted in exchange for any property, service, act, omission or forbearance or any other thing of value, including-
(a) any money, property, negotiable instrument, securities, investment credit facility, token or ticket;
(b) any labour, barter or similar exchange of one thing for another; or
(c) any other thing, undertaking, promise, agreement or assurance, irrespective of its apparent or intrinsic value, or whether it is transferred directly or indirectly;
convertible when used in relation to any securities of a company, means securities that may, by their terms, be converted into other securities of the company, including
(a) any non-voting securities issued by the company and which will become voting securities
(i) on the happening of a designated event; or
(ii) if the holder of those securities so elects at some time after acquiring them; and
(b) options to acquire securities to be issued by the company, irrespective of whether those securities may be voting securities, or non-voting securities contemplated in paragraph (a);
director means a member of the board of a company, as contemplated in section 66, or an alternate director of a company and includes any person occupying the position of a director or alternative director, by whatever name designated; [Note: Article 1(i)(c).]
distribution means a direct or indirect
(a) transfer by a company of money or other property of the company, other than its own shares, to or for the benefit of one or more holders of any of the shares or to the holder of a beneficial interest in any such shares, of that company or of another company within the same group of companies, whether
(i) in the form of a dividend;
(ii) as a payment in lieu of a capitalisation share, as contemplated in section 47;
(iii) as consideration for the acquisition
(aa) by the company of any of its shares, as contemplated in section 48; or
(bb) by any company within the same group of companies, of any shares of a company within that group of companies; or
(iv) otherwise in respect of any of the shares of that company or of another company within the same group of companies, subject to section 164(19);
(b) incurrence of a debt or other obligation by a company for the benefit of one or more holders of any of the shares of that company or of another company within the same group of companies; or
(c) forgiveness or waiver by a company of a debt or other obligation owed to the company by one or more holders of any of the shares of that company or of another company within the same group of companies,
but does not include any such action taken upon the final liquidation of the company; [Note: Article 119.]
effective date, with reference to any particular provision of this Act, means the date on which that provision came into operation in terms of section 225;
electronic communication has the meaning set out in section 1 of the Electronic Communications and Transactions Act;
Electronic Communications and Transactions Act means the Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002);
exchange when used as a noun, has the meaning set out in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004);
exercise, when used in relation to voting rights, includes voting by proxy, nominee, trustee or other person in a similar capacity;
external company means a foreign company that is carrying on business, or non-profit activities, as the case may be, within the Republic, subject to section 23(2);
financial statement includes
(a) annual financial statements and provisional annual financial statements;
(b) interim or preliminary reports;
(c) group and consolidated financial statements in the case of a group of companies; and
(d) financial information in a circular, prospectus or provisional announcement of results, that an actual or prospective creditor or holder of the companys securities, or the Commission, Panel or other regulatory authority, may reasonably be expected to rely on;
group of companies means a holding company and all of its subsidiaries;
holding company, in relation to a subsidiary, means a juristic person that controls that subsidiary as a result of any circumstances contemplated in section 2(2)(a) or 3(1)(a);
individual means a natural person;
inter-related, when used in respect of three or more persons, means persons who are related to one another in a linked series of relationships, such that two of the persons are related in a manner contemplated in section 2(1) and one of them is related to the third in any such manner, and so forth in an unbroken series;
juristic person includes
(a) a foreign company; and
(b) a trust, irrespective of whether or not it was established within or outside the Republic;
knowing, knowingly or knows, when used with respect to a person, and in relation to a particular matter, means that the person either
(a) Had actual knowledge of the matter; or
(b) Was in a position in which the person reasonably ought to have
(i) had actual knowledge;
(ii) investigated the matter to an extent that would have provided the person with actual knowledge; or
(iii) taken other measures which, if taken, could reasonably be expected to have provided the person with actual knowledge of the matter;
material when used as an adjective, means significant in the circumstances of a particular matter, to a degree that is-
(a) of consequence in determining the matter; or
(b) might reasonably affect a persons judgement or decision-making in the matter;
nominee has the meaning set out in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004);
ordinary resolution means a resolution adopted with the support of more than 50% of the voting rights exercised on the resolution, or a higher percentage as contemplated in section 65(8)
(a) at a shareholders meeting; or
(b) by holders of the companys securities acting other than at a meeting, as contemplated in section 60;
person includes a juristic person; [Note: Article 1(i)(j).]
personal financial interest, when used with respect to any person
(a) means a direct material interest of that person, of a financial, monetary or economic nature, or to which a monetary value may be attributed; but
(b) does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, 2002 (Act No. 45 of 2002), unless that person has direct control over the investment decisions of that fund or investment;
prescribed officer means a person who, within a company, performs any function that has been designated by the Minister in terms of section 66(10);
present at a meeting means to be present in person, or able to participate in the meeting by electronic communication, or to be represented by a proxy who is present in person or able to participate in the meeting by electronic communication; [Note: Article 54.]
private company means a profit company that
(a) is not a public, personal liability or state-owned company; and
(b) satisfies the criteria set out in section 8(2)(b);
profit company means a company incorporated for the purpose of financial gain for its shareholders;
public company means a profit company that is not a state-owned company, a private company or a personal liability company;
record date means the date established under section 59 on which a company determines the identity of its shareholders and their shareholdings for the purposes of this Act;
registered auditor has the meaning set out in the Auditing Profession Act;
registered office means the office of a company, or of an external company, that is registered as required by section 23; [Note: Article 1(i)(i).]
related, when used in respect of two persons, means persons who are connected to one another in any manner contemplated in section 2(1)(a) to section (c);
rules and rules of a company means any rules made by a company as contemplated in section 15(3) to (5);
securities means any shares, debentures or other instruments, irrespective of their form or title, issued or authorised to be issued by a profit company; [Note: Article 1(i)(a).]
securities register means the register required to be established by a profit company in terms of section 50(1); [Note: Article 1(i)(k).]
share means one of the units into which the proprietary interest in a profit company is divided;
shareholder, subject to section 57(1), means the holder of a share issued by a company and who is entered as such in the certificated or uncertificated securities register, as the case may be; [Note: Article 1(i)(h).]
shareholders meeting, with respect to any particular matter concerning a company, means a meeting of those holders of that companys issued securities who are entitled to exercise voting rights in relation to that matter; [Note: Article 1(i)(e).]
solvency and liquidity test means the test set out in section 4 (1);
special resolution means
(a) in the case of a company, a resolution adopted with the support of at least 75% of the voting rights exercised on the resolution, or a different percentage as contemplated in section 65(10) -
(i) at a shareholders meeting; or
(ii) by holders of the companys securities acting other than at a meeting, as contemplated in section 60; or
(b) in the case of any other juristic person, a decision by the owner or owners of that person, or by another authorised person, that requires the highest level of support in order to be adopted, in terms of the relevant law under which that juristic person was incorporated;
[Note: Article 1(i)(p).]
subsidiary has the meaning determined in accordance with section 3;
voting power, with respect to any matter to be decided by a company, means the voting rights that may be exercised in connection with that matter by a particular person, as a percentage of all such voting rights;
voting rights, with respect to any matter to be decided by a company, means -
(a) the rights of any holder of the companys securities to vote in connection with that matter, in the case of a profit company; or
(b) the rights of a member to vote in connection with the matter, in the case of a non-profit company;
voting securities, with respect to any particular matter, means securities that
(a) carry voting rights with respect to that matter; or
(b) are presently convertible to securities that carry voting rights with respect to that matter.
Schedule 4 Ineligible / disqualified in terms of section 69(7) and (8) of the Companies Act read with Regulation 39(3)
1. A Person is ineligible to be a Director if the Person
1.1. is a Juristic Person;
1.2. is an unemancipated minor, or is under a similar legal disability; or
1.3. does not satisfy any qualification set out in the MOI.
2. A person is disqualified to be a Director if
2.1. a court has prohibited that Person to be a Director, or declared the Person to be delinquent in terms of section 162, or in terms of section 47 of the Close Corporations Act, 1984 (Act No. 69 of 1984); or
2.2. the Person
2.2.1. is an unrehabilitated insolvent;
2.2.2. is prohibited in terms of any public regulation to be a Director;
2.2.3. has been removed from an office of trust, on the grounds of misconduct involving dishonesty; or
2.2.4. has been convicted, in the Republic or elsewhere, and imprisoned without the option of a fine, or fined more than R1 000,00 (one thousand rand), for theft, fraud, forgery, perjury or an offence
2.2.4.1. involving fraud, misrepresentation or dishonesty;
2.2.4.2. in connection with the promotion, formation or management of a company, or in connection with any act contemplated in subsection (2) or (5); or
2.2.4.3. under the Companies Act, the Insolvency Act, 1936 (Act No. 24 of 1936), the Close Corporations Act, 1984, the Competition Act, the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001), the Securities Services Act, 2004 (Act No. 36 of 2004), or Chapter 2 of the Prevention and Combating of Corruption Activities Act, 2004 (Act No. 12 of 2004).
Schedule 5 Prescribed methods of delivery in the Regulations
Person to whom the
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Date and Time of Deemed delivery |
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Any Person |
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By faxing the notice or a certified copy of the document to the Person, if the Person has a fax number; |
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On the date and at the time recorded by the fax receiver, unless there is conclusive evidence that it was delivered on a different date or at a different time. |
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By sending the notice or a copy of the document by electronic mail, if the Person has an Electronic Address; |
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On the date and at the time recorded by the computer used by the Company, unless there is conclusive evidence that it was delivered on a different date or at a different time. |
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By sending the notice or a certified copy of the document by registered post to the Persons last known address; |
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On the 7th (seventh) day following the day on which the notice or document was posted as recorded by a post office, unless there is conclusive evidence that it was delivered on a different day. |
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By any other means authorised by the High Court; or |
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In accordance with the order of the High Court. |
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By any other method allowed for that Person in terms of the following rows of this Table. |
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As provided for that method of delivery. |
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Any natural Person |
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By handing the notice or a certified copy of the document to the Person, or to any representative authorised in Writing to accept service on behalf of the Person; |
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On the date and at the time recorded on a receipt for the delivery. |
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By leaving the notice or a certified copy of the document at the Persons place of residence or business with any other Person who is apparently at least 16 (sixteen) years old and in charge of the premises at the time; |
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On the date and at the time recorded on a receipt for the delivery. |
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By leaving the notice or a certified copy of the document at the Persons place of employment with any Person who is apparently at least 16 (sixteen) years old and apparently in authority. |
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On the date and at the time recorded on a receipt for the delivery. |
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A company or similar body corporate |
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By handing the notice or a certified copy of the document to a responsible employee of the company or body corporate at its registered office or its principal place of business within South Africa; |
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On the date and at the time recorded on a receipt for the delivery. |
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If there is no employee willing to accept service, by affixing the notice or a certified copy of the document |
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On the date and at the time sworn to by affidavit of the Person who affixed the document, unless there is conclusive |
Person to whom the
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Method of delivery |
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Date and Time of Deemed delivery |
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to the main door of the office or place of business. |
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evidence that the document was affixed on a different date or at a different time. |
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The state or a province |
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By handing the notice or a certified copy of the document to a responsible employee in any office of the State Attorney. |
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On the date and at the time recorded on a receipt for the delivery. |
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A municipality |
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By handing the notice or a certified copy of the document to the town clerk, assistant town clerk or any Person acting on behalf of that Person. |
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On the date and at the time recorded on a receipt for the delivery. |
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A trade union |
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By handing the notice or a certified copy of the document to a responsible employee who is apparently in charge of the main office of the union or for the purposes of section 13(2), if there is a union office within the magisterial district of the firm required to notify its employees, in terms of the Regulations at that office. |
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On the date and at the time recorded on a receipt for the delivery. |
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If there is no person willing to accept service, by affixing a certified copy of the notice or document to the main door of that office. |
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On the date and at the time sworn to by affidavit of the Person who affixed the document, unless there is conclusive evidence that the document was affixed on a different date or at a different time. |
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Employees of the Company |
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By fixing the notice or certified copy of the document, in a prominent place in the workplace where it can be easily read by employees. |
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On the date and at the time sworn to by affidavit of the Person who affixed the document, unless there is conclusive evidence that the document was affixed on a different date or at a different time. |
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A partnership, firm or association |
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By handing the notice or a certified copy of the document to a Person who is apparently in charge of the premises and apparently at least 16 (sixteen) years of age, at the place of business of the partnership, firm or association; |
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On the date and at the time recorded on a receipt for the delivery. |
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If the partnership, firm or association has no place of business, by handing the notice or a certified copy of the document to a partner, the owner of the firm, or the chairman or secretary of the managing or other controlling body of the association, as the case may be. |
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On the date and at the time recorded on a receipt for the delivery. |
Schedule 6 Terms which govern Holders of New Issues of Sasol BEE Ordinary Shares after the SOLBE1 Redesignation Date
1. INTRODUCTION AND INTERPRETATION
1.1. The following terms shall have the following meanings in this Schedule 6 -
1.1.1. BEE Certificate means an original or copy of a certificate issued by a verification agency accredited by the accreditation body contemplated in the Codes, certifying that the person identified in the certificate is a BEE Compliant Person;
1.1.2. Companys Nominee means the Public Facilitation Trust or such other facilitation trust as the Company may appoint from time to time, in its discretion, to acquire the New Sasol BEE Ordinary Shares in the circumstances contemplated in These Terms;
1.1.3. Forced Sale Value means the 5 (five) day volume weighted average price of a New SOLBE1 Share, being the total value of the New SOLBE1 Shares traded for that period divided by the total number of the New SOLBE1 Shares traded for that period. In the event of any corporate action, the value will be adjusted appropriately if required;
1.1.4. New SOLBE1 Shares means Sasol BEE Ordinary Shares issued by the Company after the SOLBE1 Redesignation Date from time to time;
1.1.5. Off Market means a sale of New SOLBE1 Shares other than on an exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed;
1.1.6. Own Name Client means a person whose own name is on the main register of the Company and in whom/which the benefits of the bundle of rights attaching to the New SOLBE1 Shares so registered in his/her/its name vest, which is typically evidenced by one or more of the following -
1.1.6.1. the right or entitlement to receive any dividend or interest payable in respect of those New SOLBE1 Shares;
1.1.6.2. the right to exercise or cause to be exercised in the ordinary course of events, any or all of the voting, conversion, redemption or other rights attached to those New SOLBE1Shares;
1.1.6.3. the right to dispose or direct the disposition of those New SOLBE1 Shares, or any part of a distribution in respect of those New SOLBE1 Shares and to have the benefit of the proceeds;
1.1.7. Sell means sell or otherwise dispose of or transfer (including, but without limiting the generality of the aforegoing, by way of donation or dividend or distribution of assets) and Sale and Sold shall be construed accordingly;
1.1.8. These Terms means the terms set out in this Schedule 6 which apply to the Holders of New SOLBE1 Shares until the end of the Empowerment Period and which must be read with the terms set out in clause 44 of the MOI;
1.2. Any reference in These Terms to a Holder of New SOLBE1 Shares shall -
1.2.1. if a Holder of New SOLBE1 Shares is liquidated or sequestrated, as the case may be, be applicable also to and binding upon the liquidator or trustee of such Holder of New SOLBE1 Shares; or
1.2.2. if a Holder of New SOLBE1 Shares is a natural person who dies, be applicable also to and binding upon the executor of such Holders estate.
2. APPLICATION OF THESE TERMS TO THE EXCLUSION OF OTHER CONTRACTS
Notwithstanding that any Holder of New SOLBE1 Shares which is a party to a Cash Contract, Amended Cash Contract, New Cash Contract, Amended New Cash Contract or a BEE Contract, may be bound to provisions in those contracts which could be interpreted as governing new issues of New SOLBE1 Shares, These Terms alone shall apply to such New SOLBE1 Shares to the exclusion of any such other contracts.
3. OBLIGATIONS TO SIGN NEW CONTRACTS
3.1. A Holder who has not concluded a contract with the Company to cover rematerialised New SOLBE1 Shares will be required to conclude a New Cash Contract with the Company to cover those certificated New SOLBE1 Shares and that contract will continue to apply for so long as such Holder continues to hold those New SOLBE1 Shares in certificated form.
3.2. A Holder of New SOLBE1 Shares who is a Beneficial Owner and who wishes to replace his/her/its Registered Shareholder with another Registered Shareholder, will be required to conclude a BEE Contract in respect of those New SOLBE1 Shares which are transferred to such person as the new Registered Shareholder and so will such person. A Holder of New SOLBE1 Shares shall not instruct the Registered Shareholder to transfer his/her/its New SOLBE1 Shares, nor shall the Registered Shareholder act on any such instruction until a new BEE Contract has been concluded.
3.3. If a Holder is an Own Name Client and wishes to register his/her/its New SOLBE1 Shares in the name of another person as Registered Shareholder, such Holder will be required to conclude a BEE Contract in respect of those New SOLBE1 Shares which are transferred to such person as the new Registered Shareholder and so will any intermediary which such Holder appoints for the purposes of, inter alia, managing such Holders New SOLBE1 Shares.
4. WARRANTIES
4.1. Each Holder of New SOLBE1 Shares warrants in favour of the Company that -
4.1.1. he/she/it is a BEE Compliant Person;
4.1.2. the New SOLBE1 Shares will be registered in his/her/its name as an Own Name Client;
4.1.3. each warranty provided in clauses 4.1.1 and 4.1.2 is and will be true from the date that the Holder acquires New SOLBE1 Shares and -
4.1.3.1. in respect of the warranty provided in clause 4.1.1 will continue to be true for so long as such Holder holds New SOLBE1 Shares; and
4.1.3.2. in respect of the warranty provided in clause 4.1.2 will continue to be true for so long as such Holder holds New SOLBE1 Shares as an Own Name Client;
4.1.4. any information provided by the Holder to the Company will be true and complete unless the Holder advises the Company in writing to the contrary.
4.2. All the warranties given in clause 4.1 are material and the Company will rely on the truth and completeness of such warranties.
5. UNDERTAKINGS
Each Holder of New SOLBE1 Shares undertakes -
5.1. that he/she/it is a BEE Compliant Person;
5.2. at his/her/its own cost, to provide the Company within 30 (thirty) days of its written request to such Holder, with -
5.2.1. if the Holder is a natural person, any documentation reasonably required by the Company in order to satisfy itself that such Holder is a BEE Compliant Person;
5.2.2. if the Holder is not a natural person -
5.2.2.1. a BEE Certificate which is unexpired;
5.2.2.2. any other documentation reasonably required by the Company in order to satisfy itself that each such Holder is a BEE Compliant Person.
6. PLEDGES AND OTHER ENCUMBRANCES
Holders of New SOLBE1 Shares may pledge or otherwise Encumber or cause the pledging or Encumbrance of his/her/its New SOLBE1 Shares subject to compliance with the following -
6.1. Each such Holder acknowledges that in order to ensure that those New SOLBE1 Shares are held only by BEE Compliant Persons he/she/it is only permitted to Encumber or record the Encumbrance of those New SOLBE1 Shares, provided that -
6.1.1. if the security is realised those New SOLBE1 Shares must only be Sold to a BEE Compliant Person who/which binds himself/herself/itself to a BEE Contract prior to taking transfer of those New SOLBE1 Shares; and
6.1.2. the terms of the agreement in respect of such Encumbrance shall expressly provide that if the security is realised those New SOLBE1 Shares must only be Sold to a BEE Compliant Person who/which binds herself/himself/itself to a BEE Contract prior to taking transfer of those New SOLBE1 Shares and such Holder shall procure that a copy of such agreement in respect of such Encumbrance is delivered to the Company.
6.2. Each Holder of New SOLBE1 Shares warrants in favour of the Company that the agreement in respect of such Encumbrance shall contain the required provision referred to in clause 6.1 and that he/she/it shall not enter into or permit the entering into of any such agreement without such provision.
7. PROVISIONS APPLICABLE TO OFF MARKET TRANSFERS OF NEW SOLBE1 SHARES
7.1. If a Holder of New SOLBE1 Shares Sells any New SOLBE1 Shares or causes any of such shares to be Sold Off Market other than to the Companys Nominee, such Holder shall be obliged to ensure that -
7.1.1. the person to whom/which those New SOLBE1 Shares are Sold, either being the new Beneficial Owner or an Own Name Client in whose name those New SOLBE1 Shares are to be registered, is in fact a BEE Compliant Person; and
7.1.2. a BEE Contract is signed by the person to whom/which those New SOLBE1 Shares are Sold, either being the new Beneficial Owner or an Own Name Client in whose name those New SOLBE1 Shares are to be registered (unless such new Beneficial Owner or Own Name Client has already signed such a contract), the registered shareholder (only for a new Beneficial Owner), a central securities depository participant and if applicable, a JSE member, and the person with whom the new Beneficial Owner or Own Name Client holds an account for the purposes of, inter alia, managing these New SOLBE1 Shares, and procure that a copy of such contract is delivered to the Company.
7.2. Each Holder of New SOLBE1 Shares undertakes not to permit the Sale Off Market of any New SOLBE1 Shares or any rights or interests therein, nor to instruct the Registered Shareholder, the central securities depository participant or anyone else, to effect transfer or permit the transfer of those New SOLBE1 Shares to any person who/which is not a BEE Compliant Person and who/which has not signed a BEE Contract.
8. OBLIGATION ON THE HOLDER OF NEW SOLBE1 SHARES TO PROCURE TRANSFER OF NEW SOLBE1 SHARES
If the Companys Nominee is the acquirer of New SOLBE1 Shares in terms of These Terms, the Holder of New SOLBE1 Shares will be obliged within 10 (ten) days after receipt of notice from the Company, to effect transfer of the New SOLBE1 Shares out of the account in the Holders own name into an account in the name of the Companys Nominee. If the Holder of such New SOLBE1 Shares fails to effect the transfer within such period, such Holder hereby grants a power of attorney irrevocably and in rem suam and with power of substitution to the Company, to effect transfer of that Holders New SOLBE1 Shares on behalf of that Holder to the Companys Nominee.
9. FORCED SALE IN THE EVENT OF AN OCCURRENCE OF A BREACH EVENT
9.1. If a Holder of New SOLBE1 Shares at any time -
9.1.1. misrepresented that he/she/it is a BEE Compliant Person or has in any way committed a breach of any of the warranties given by him/her/it and set out in These Terms;
9.1.2. breached any of his/her/its obligations set out in clauses 3, 4, 5, 6, 7 or 8 of These Terms; or
9.1.3. made a fraudulent or untrue statement in any documents provided by him/her/it to the Company,
(Breach Event), the Holder shall be obliged to immediately notify the Company of the occurrence of such Breach Event in writing.
9.2. At any time after learning of the occurrence of a Breach Event, the Company shall be entitled (but shall not be obliged) either (at the Companys election) to
9.2.1. act on a power of attorney which each Holder of New SOLBE1 Shares hereby grants irrevocably and in rem suam and with power of substitution to the Company, to dispose of that Holders New SOLBE1 Shares on behalf of that Holder on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or
9.2.2. buy (or to nominate the Companys Nominee to buy) from the Holder his/her/its New SOLBE1 Shares by giving such Holder written notice, in which event a Sale of those New SOLBE1 Shares shall be deemed to have been concluded on the following terms and conditions -
9.2.3. those New SOLBE1 Shares shall be acquired with effect from the day prior to the date of the occurrence of the Breach Event;
9.2.4. the purchase price of those New SOLBE1 Shares shall be the Forced Sale Value thereof calculated as at the date
9.2.4.1. of the occurrence of the relevant Breach Event; or
9.2.4.2. upon which the Company learns of the occurrence of the relevant Breach Event,
whichever is the lower, discounted by 25% (twenty five percent);
9.2.5. the purchase price as calculated in terms of clause 9.2.4 less an amount equal to the amount of dividends paid by the Company to the Holder for his/her/its benefit after the occurrence of a Breach Event, shall be payable against the registration of those New SOLBE1 Shares in the name of the Companys Nominee, if the Companys Nominee acquires those New SOLBE1 Shares, or upon the cancellation of those New SOLBE1 Shares if the Company buys back those New SOLBE1 Shares;
9.2.6. those New SOLBE1 Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
9.2.6.1. the Holder is an Own Name Client in whose name those New SOLBE1 Shares are registered; and
9.2.6.2. no person has any right of any nature whatsoever to acquire those New SOLBE1Shares.
10. DEATH
10.1. If a Holder of New SOLBE1 Shares is a natural person who dies, then -
10.1.1. the Company (or the Companys Nominee) shall not have the right to buy the New SOLBE1 Shares which were held by such Holder pursuant to clause 9 even though those New SOLBE1 Shares as a result may then be held in breach of the requirements of These Terms, unless clause 10.2 applies;
10.1.2. instead of having to do so immediately, the executor of the Holders estate shall have 180 (one hundred and eighty) days commencing on the date of such Holders death, to -
10.1.2.1. transfer the New SOLBE1 Shares to such Holders heir/s provided that such heir/s is/are a BEE Compliant Person/s; or
10.1.2.2. Sell the New SOLBE1 Shares to any BEE Compliant Person,
and the executor of the Holders estate shall be obliged to take whatever steps are necessary in order to effect any such transfer or Sale of the New SOLBE1 Shares, as the case may be.
10.2. If the executor of the Holders estate has not complied with his/her/its obligations in clause 10.1 as regards New SOLBE1 Shares, the Company shall be entitled, but shall not be obliged to buy (or to nominate the Companys Nominee to buy) from the executor of such Holders estate those New SOLBE1 Shares by written notice to the executor, in which event a Sale of those New SOLBE1 Shares shall be deemed to have been concluded on the following terms and conditions -
10.2.1. those New SOLBE1 Shares shall be acquired with effect from the day prior to the date of such Holders death;
10.2.2. the purchase price of those New SOLBE1 Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company to the executor of the Holders estate discounted by 5% (five percent);
10.2.3. the purchase price as calculated in terms of clause 10.2.2, less an amount equal to the amount of dividends paid by the Company to the Holder for his/her benefit while the executor of his/her estate was in breach of clause 10.2.1, shall be payable against the registration of those New SOLBE1 Shares in the name of the Companys Nominee or upon the cancellation of those New SOLBE1 Shares;
10.2.4. those New SOLBE1 Shares shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
10.2.4.1. the Holder is an Own Name Client in whose name those New SOLBE1 Shares are registered; and
10.2.4.2. no person has any right of any nature whatsoever to acquire those New SOLBE1 Shares.
10.3. If the Holder is not a natural person and any of its shareholders, members, participants or beneficiaries die, as a result of which, the Holder is no longer a BEE Compliant Person, then -
10.3.1. the Company shall not be entitled to act on the power of attorney referred to in clause 9.2.1 nor shall the Company (or the Companys Nominees) have the right to buy the New SOLBE1 Shares pursuant to clause 9 even though those New SOLBE1 Shares as a result may now be held in breach of the requirements of These Terms unless clause 10.4 applies;
10.3.2. instead of having to remedy the breach caused by the death immediately the Holder shall have 180 (one hundred and eighty) days commencing on the date of the death to Sell the New SOLBE1 Shares to a BEE Compliant Person and shall be obliged to take whatever steps are necessary to give effect to any such Sale of the New SOLBE1 Shares by effecting transfer of the New SOLBE1 Shares out of the account in the name of the Holder into an account in the name of the registered shareholder of that BEE Compliant Person.
10.4. If the New SOLBE1 Shares have not been Sold or the breach caused by the death has not otherwise been remedied within 180 (one hundred and eighty) days commencing on the date of the death in question, the Company shall be entitled, but shall not be obliged either (at the Companys election) to
10.4.1. act on a power of attorney which each Holder of New SOLBE1 Shares hereby grants irrevocably and in rem suam and with power of substitution to the Company, to dispose of that Holders New SOLBE1 Shares on behalf of that Holder on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or
10.4.2. buy from the Holder those New SOLBE1 Shares by giving such Holder (if not a natural person) written notice, in which event a Sale of those New SOLBE1 Shares shall be deemed to have been concluded on the following terms and conditions
10.4.2.1. those New SOLBE1 Shares shall be acquired with effect from the day prior to the date of the death in question;
10.4.2.2. the purchase price of those New SOLBE1 Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company (or the Companys Nominee) to the Holder (if not a natural person) discounted by 5% (five percent);
10.4.2.3. the purchase price as calculated in terms of clause 10.4.2, less an amount equal to the amount of dividends paid by the Company to the Holder for its benefit during the period in which the Holder has been in breach of clause 10.3.2, shall be payable against the registration of those New SOLBE1 Shares in the name of the Companys Nominee or upon the cancellation of those New SOLBE1 Shares;
10.4.2.4. those New SOLBE1 Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
10.4.2.4.1. the Holder is an Own Name Client in whose name those New SOLBE1 Shares are registered; and
10.4.2.4.2. no person has any right of any nature whatsoever to acquire those New SOLBE1 Shares.
11. INVOLUNTARY INSOLVENCY/LIQUIDATION
11.1. If a Holder of New SOLBE1 Shares is a natural person who is involuntarily sequestrated (whether provisionally or finally), then -
11.1.1. the Company (or the Companys Nominees) shall not have the right to buy the New SOLBE1 Shares pursuant to clause 9 even though those New SOLBE1 Shares as a result may now be held in breach of the requirements of These Terms unless clause 11.2 applies;
11.1.2. instead of having to do so immediately, the trustee shall have 180 (one hundred and eighty) days commencing on the date of such Holders provisional sequestration, to Sell the New SOLBE1 Shares to any BEE Compliant Person,
subject to compliance with clause 7,and the trustee shall be obliged to take such steps, in order to give effect to any such Sale of the New SOLBE1 Shares by effecting transfer of the New SOLBE1 Shares out of the account in his/her name into an account in the name of the registered shareholder of that BEE Compliant Person.
11.2. If the trustee has not complied with its obligations in clause 11.1 as regards New SOLBE1 Shares, the Company shall be entitled, but shall not be obliged either (at the Companys election) to
11.2.1. act on a power of attorney which each Holder hereby grants irrevocably and in rem suam and with power of substitution to the Company, to dispose of that Holders New SOLBE1 Shares on behalf of that Holder on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or
11.2.2. buy (or to nominate the Companys Nominee to buy) from such trustee those New SOLBE1 Shares by written notice to the trustee, in which event a Sale of those New SOLBE1 Shares shall be deemed to have been concluded on the following terms and conditions -
11.2.2.1. those New SOLBE1 Shares shall be acquired with effect from the day prior to the Holders provisional sequestration;
11.2.2.2. the purchase price of those New SOLBE1 Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company (or the Companys Nominee) to the trustee, discounted by 5% (five percent);
11.2.2.3. the purchase price as calculated in terms of clause 11.2.2.2, less an amount equal to the amount of dividends paid by the Company to the Holder for his/her benefit while the trustee was in breach of clause 11.1.2, shall be payable against the registration of those New SOLBE1 Shares in the name of the Companys Nominee or upon the cancellation of those New SOLBE1 Shares;
11.2.2.4. those New SOLBE1 Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
11.2.2.4.1. the Holder is an Own Name Client in whose name those New SOLBE1 Shares are registered; and
11.2.2.4.2. no person has any right of any nature whatsoever to acquire those New SOLBE1 Shares.
11.3. If a Holder of New SOLBE1 Shares is not a natural person and either the Holder or any of its shareholders, members, participants or beneficiaries are involuntarily liquidated (provisionally or finally), as a result of which such Holder is no longer a BEE Compliant Person, then -
11.3.1. the Company shall not be entitled to act on the power of attorney referred to in clause 11.2.1 nor shall the Company (or the Companys Nominees) have the right to buy the New SOLBE1 Shares pursuant to clause 9 even though those New SOLBE1 Shares as a result may now be held in breach of the requirements of These Terms unless clause 11.4 applies;
11.3.2. if it is not possible for the breach to be remedied, the liquidator of such Holder or the Holder itself (if any of its shareholders, members, participants or beneficiaries are involuntarily liquidated), as the case may be, can Sell the New SOLBE1 Shares to a BEE Compliant Person who signs a BEE Contract;
11.3.3. instead of having to do so immediately, the liquidator of such Holder or the Holder itself, as the case may be shall have 180 (one hundred and eighty) days commencing on the date of the provisional liquidation of the Holder or any of its shareholders, members, participants or beneficiaries to Sell the New SOLBE1 Shares to any BEE Compliant Person who signs a BEE Contract and the liquidator of the Holder shall instruct such Holder to take whatever steps are necessary, and the Holder shall be obliged to take such steps, in order to effect any such Sale of the New SOLBE1 Shares.
11.4. If the New SOLBE1 Shares have not been Sold or the breach caused by the liquidation has not otherwise been remedied within 180 (one hundred and eighty) days commencing on the date of the involuntary liquidation of the Holder or of any of its shareholders, members, participants or beneficiaries, the Company shall be entitled, but shall not be obliged either (at the Companys election) to
11.4.1. act on a power of attorney which each Holder hereby grants irrevocably and in rem suam and with power of substitution to the Company, to dispose of that Holders New SOLBE1 Shares on behalf of that Holder on the exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; or
11.4.2. buy (or to nominate the Companys Nominee to buy) from the Holder of those New SOLBE1 Shares by giving the liquidator of such Holder or the Holder itself written notice, in which event a Sale of those New SOLBE1 Shares shall be deemed to have been concluded on the following terms and conditions -
11.4.2.1. those New SOLBE1 Shares shall be acquired with effect from the day prior to the provisional liquidation of the Holder or any of such Holders shareholders, members, participants or beneficiaries;
11.4.2.2. the purchase price of those New SOLBE1Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company (or the Companys Nominee) to the liquidator of the Holder or the Holder itself, as the case may be, discounted by 5% (five percent);
11.4.2.3. the purchase price as calculated in terms of clause 11.4.2.2, less an amount equal to the amount of dividends paid by the Company to the Holder for its benefit while the liquidator of such Holder or the Holder itself, as the case may be was in breach of clause 11.3.2, shall be payable against the registration of those New SOLBE1 Shares in the name of the Companys Nominee or upon the cancellation of those New SOLBE1 Shares;
11.4.2.4. those New SOLBE1 Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
11.4.2.4.1. the Holder is an Own Name Client in whose name those New SOLBE1 Shares are registered; and
11.4.2.4.2. no person has any right of any nature whatsoever to acquire those New SOLBE1 Shares.
12. SECURITIES TRANSFER TAX
Securities transfer tax shall be borne by the Company or the Companys Nominee, if it is the purchaser of the New SOLBE1 Shares contemplated in These Terms.
13. CUSTODY AND MANDATE AGREEMENT FOR NEW SOLBE1 SHARES
Each Holder of New SOLBE1 Shares shall be deemed to be bound by the custody and mandate agreement with Computershare Investor Services Proprietary Limited set out in Schedule 7 to this MOI.
14. CESSATION OF THE APPLICATION OF THESE TERMS AND REPLACEMENT WITH THE TERMS SET OUT IN SCHEDULE 6A
As of the date, if any, determined by Sasol, in its sole discretion, as being the date on which the BEE Verification process (as defined in the JSE Listings Requirements and contemplated in paragraph 4.32B thereof) will be implemented, which date will be announced to the Holders of Sasol BEE Ordinary Shares on the Stock Exchange News Service of the JSE and in one national South African newspaper, the provisions of this Schedule 6 shall cease to be of any force or effect, but without affecting, or invalidating any of the remaining provisions of this MOI which shall continue to be of full force and effect, and any of the provisions of this Schedule 6 which must of necessity continue to have effect after such termination, notwithstanding that the clauses themselves do not expressly provide for this.
Schedule 6A Terms which govern Holders of Sasol BEE Ordinary Shares
1. INTRODUCTION AND INTERPRETATION
In this schedule 6A
1.1. capitalised terms used but not defined herein will bear the same meanings as in clause 1 of the MOI;
1.2. the following terms shall have the following meanings -
1.2.1. BEE Certificate means an original or copy of a certificate issued by a verification agency accredited by the accreditation body contemplated in the Codes, certifying that the person identified in the certificate is a BEE Compliant Person;
1.2.2. BEE Compliant Person means as interpreted by the courts, from time to time
1.2.2.1. as regards a natural person, one who falls within the ambit of the definition of black people in the Codes;
1.2.2.2. as regards a Juristic Person having a shareholding or similar members interests, one who falls within the ambit of the definitions of B-BBEE controlled company or B-BBEE owned company, as defined in the Codes, using the flow-through principle;
1.2.2.3. as regards any other entity, any entity similar to a B-BBEE controlled company or B-BBEE owned company using the flow-through principle which would enable the issuer of Securities owned or controlled by such entity to claim points attributable to the entitys ownership of the Securities pursuant to the Codes;
1.2.3. BEE Verification Agent means the Company itself, or an agent appointed from time to time by the Company in its sole discretion, conducting the BEE Verification Process;
1.2.4. BEE Verification Process means the verification of a potential purchaser of Sasol BEE Ordinary Shares by the BEE Verification Agent, with a view to determining whether such potential purchaser -
1.2.4.1. is a BEE Compliant Person;
1.2.4.2. has been advised of the necessary restrictions, limitations and requirements applicable to such Sasol BEE Ordinary Shares from time to time in order to achieve the continued ownership of Sasol BEE Ordinary Shares by BEE Compliant Persons as set out in the MOI; and
1.2.4.3. has accepted the prevailing terms and conditions of the Companys BEE ownership scheme as set out in the MOI, and has completed and/or signed all documents required in terms of such ownership scheme;
1.2.5. BEE Verified Person means any person who has been verified by the BEE Verification Agent as a BEE Compliant Person in the BEE Verification Process;
1.2.6. Beneficial Owner means, in respect of the Sasol BEE Ordinary Shares, the person or entity to whom the risks and rewards of ownership are attributable which is typically evidenced by -
1.2.6.1. the right or entitlement to receive any dividend payable in respect of those Sasol BEE Ordinary Shares; or
1.2.6.2. the right to exercise or cause to be exercised in the ordinary course of events, any or all of the voting, conversion, redemption or other rights attached to those Sasol BEE Ordinary Shares; or
1.2.6.3. the right to dispose of or direct the disposition of those Sasol BEE Ordinary Shares, or any part of a distribution in respect of those Sasol BEE Ordinary Shares and to have the benefit of the proceeds;
1.2.7. Companys Nominee means the Sasol Khanyisa Warehousing Trust, IT Reference Number: 001293/2018(G) or such other warehousing or facilitation trust as the Company may appoint from time to time, in its discretion, to acquire Sasol BEE Ordinary Shares in the circumstances contemplated in These Terms;
1.2.8. Codes means the Broad-Based Black Economic Empowerment Codes of Good Practice gazetted under the Broad-Based Black Economic Empowerment Act, 2003;
1.2.9. Custodian means a custodian of the Sasol BEE Ordinary Shares appointed by the Company from time to time, in its discretion, currently being Computershare Limited, registration number 2000/006082/06;
1.2.10. Effective Date means the date on which These Terms take effect, which date will be determined by the Company, at its sole discretion, and announced to the Holders of the Sasol BEE Ordinary Shares in one national South African newspaper and on Stock Exchange News Service of the JSE;
1.2.11. Empowerment Period the period for so long as the Sasol BEE Ordinary Shares are listed on an exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation), or such shorter period as may be determined by the Company in its sole and absolute discretion and notified in one national South African newspaper and, if the Sasol BEE Ordinary Shares are then listed on the JSE, on the Securities Exchange News Service;
1.2.12. Encumbrance means any encumbrance or any other arrangement which has a similar effect as the granting of security and Encumber shall be construed accordingly;
1.2.13. Forced Sale Value means as regards
1.2.13.1. Sasol BEE Ordinary Shares which were subscribed for and/or acquired at any time during the period from 7 September 2008, when the Sasol BEE Ordinary Shares were first allotted and issued, to 7 February 2011, being the date on which the Sasol BEE Ordinary Share were first listed on the JSE, and which have since 7 February 2011 continued to be held in certificated form, the 5 (five) day volume weighted average price of a Sasol Ordinary Share, subject to an appropriate adjustment in the event of any corporate action;
1.2.13.2. any other Sasol BEE Ordinary Shares, the 5 (five) day volume weighted average price of a Sasol BEE Ordinary Share, being the total value of the Sasol BEE Ordinary Shares traded for that period divided by the total number of the Sasol BEE Ordinary Shares traded for that period. In the event of any corporate action, the value will be adjusted appropriately if required;
1.2.14. Off Market means a sale of Sasol BEE Ordinary Shares other than on an exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed;
1.2.15. Own Name Client means a person whose own name is on the main register of the Company and in whom/which the benefits of the bundle of rights attaching to dematerialised Sasol BEE Ordinary Shares so registered in his/her/its name vest, which is typically evidenced by one or more of the following -
1.2.15.1. the right or entitlement to receive any dividend or interest payable in respect of those Sasol BEE Ordinary Shares;
1.2.15.2. the right to exercise or cause to be exercised in the ordinary course of events, any or all of the voting, conversion, redemption or other rights attached to those Sasol BEE Ordinary Shares;
1.2.15.3. the right to dispose or direct the disposition of those Sasol BEE Ordinary Shares, or any part of a distribution in respect of those Sasol BEE Ordinary Shares and to have the benefit of the proceeds;
1.2.16. Sell means sell or otherwise dispose of or transfer (including, but without limiting the generality of the aforegoing, by way of donation or dividend or distribution of assets) and Sale and Sold shall be construed accordingly;
1.2.17. These Terms means the provisions of this Schedule 6A, which must be read with the provisions of clause 49 of the MOI;
1.2.18. Transfer Secretaries means Computershare Investor Services (Proprietary) Limited (registration number 2004/003647/07) or a transfer secretary selected by Sasol from time to time in its discretion.
1.3. Any reference in These Terms to a Holder of Sasol BEE Ordinary Shares shall -
1.3.1. if a Holder of Sasol BEE Ordinary Shares is liquidated or sequestrated, as the case may be, be applicable also to and binding upon the liquidator or trustee of such Holder of Sasol BEE Ordinary Shares; or
1.3.2. if a Holder of Sasol BEE Ordinary Shares is a natural person who dies, be applicable also to and binding upon the executor of such Holders estate.
2. APPLICATION AND COMING INTO EFFECT OF THESE TERMS
Notwithstanding the date of filing of the MOI (including These Terms) with the Companies and Intellectual Property Commission, These Terms shall come into effect on the Effective Date and will apply to the Holders of the Sasol BEE Ordinary Shares for the duration of the Empowerment Period.
3. OWNERSHIP OF SASOL BEE ORDINARY SHARES
3.1. For purposes of ensuring that the rights, privileges and restrictions attaching to the Sasol BEE Ordinary Shares as set out in These Terms and clause 49 of the MOI are binding on all Beneficial Owners of Sasol BEE Ordinary Shares
3.1.1. as regards Sasol BEE Ordinary Shares which are held in
3.1.1.1. certificated form, the Holder shall be the Beneficial Owner and vice versa;
3.1.1.2. dematerialised form, they shall only be registered in the name of the Beneficial Owner as an Own Name Client;
3.1.2. to the extent that on the 30th (thirtieth) day prior to the Effective Date any dematerialised Sasol BEE Ordinary Shares are not registered in the name of the Beneficial Owner as an Own Name Client, the Holder authorises the Company, at the Companys own cost, to register the Sasol BEE Ordinary Shares in the name of the Beneficial Owner as Own Name Client instead of them being registered in the name of the Holder;
3.2. The mere updating by the Company of its Securities Register pursuant to clause 3.1.2 shall not be construed as confirmation by the Company that all the Beneficial Owners are BEE Compliant Persons, and the Company shall, notwithstanding the aforementioned, be entitled to verify whether or not any Beneficial Owner is a BEE Compliant Person.
4. DEMATERIALISATION AND RE-MATERIALISATION OF SASOL BEE ORDINARY SHARES
4.1. Any Holder of Sasol BEE Ordinary Shares who holds any of his/her/its shares in certificated agrees that the share certificate/s in respect of such shares shall continue to be held in custody by the Custodian.
4.2. If a Holder of Sasol BEE Ordinary Shares who/which holds any of his/her/its shares in certificated form at any time wishes to dematerialise his/her/its Sasol BEE Ordinary Shares -
4.2.1. he/she/it shall give written notice to that effect to the Company;
4.2.2. he/she/it authorises the Custodian to
4.2.2.1. release the share certificate/s in respect of the Sasol BEE Ordinary Shares being dematerialised to the Transfer Secretaries;
4.2.2.2. sign, to the extent necessary, any documents as may be necessary to give effect to the dematerialisation contemplated in clause 4.2.
4.2.3. any proof-of-participation or other similar statement issued by the Company to any Holder of Sasol BEE Ordinary Shares which are held in materialised form and accordingly obliged to be held in safe custody, will cease to be of any force or effect from the date on which his/her/its Sasol BEE Ordinary Shares are dematerialised.
4.3. If any Holder of Sasol BEE Ordinary Shares who holds any of his/her/its Sasol BEE Ordinary Shares in dematerialised form wishes at any time to hold any of such shares in materialised form, he/she/it -
4.3.1. shall give written notice to that effect to the Company and his/her/its central securities depository participant;
4.3.2. authorises the Transfer Secretaries to deliver the share certificates to be held in custody by the Custodian.
5. CUSTODIAN AND TRANSFER SECRETARIES
5.1. Each Holder who holds his/her/its Sasol BEE Ordinary Shares in materialised form agrees that -
5.1.1. at his/her/its own risk, the share certificate/s in respect of his/her/its Sasol BEE Ordinary Shares will be deposited with and will be held on his/her/its behalf by the Custodian;
5.1.2. in addition to any express provisions in the MOI, the Holder will be bound by those parts of any agreement which Sasol concludes with the Custodian relating to the Custodian holding the share certificates and which are standard in the market, provided that he/she/it will not in any way be liable for any fees of the Custodian.
5.2. If the Holder holds his/her/its Sasol BEE Ordinary Shares in materialised form Encumbers any of his/her/its Sasol BEE Ordinary Shares in accordance with the requirements of clause 8, the Custodian will hold the share certificate/s on behalf of the person in whose favour the Holder gives the Encumbrance.
5.3. The Holders share certificate/s will be released by the Custodian to the Transfer Secretaries for purposes of implementing any transfer of his/her/its Sasol BEE Ordinary Shares as is permitted in terms of -
5.3.1. the MOI; and/or
5.3.2. any agreement providing for an Encumbrance complying with clause 8.
5.4. Subject to clause 9.1, if the transferee contemplated in clause 5.3 wishes to hold the Sasol BEE Ordinary Shares in certificated from, the Transfer Secretaries will issue a new share certificate to the new owner of the Sasol BEE Ordinary Shares which shall be deposited with the Custodian. To the extent that the Holder has not Sold all of his/her/its Sasol BEE Ordinary Shares, a new share certificate in respect of such Sasol BEE Ordinary Shares which have not been Sold will be redeposited with the Custodian.
5.5. After the Empowerment Period, the Holders share certificate will be posted by the Custodian to his/her/its address for service selected at the time of acquiring/subscribing for and/or otherwise receiving the Sasol BEE Ordinary Shares, at the Holders own risk.
6. WARRANTIES
6.1. Each Holder of Sasol BEE Ordinary Shares warrants in favour of the Company that -
6.1.1. he/she/it is a BEE Compliant Person;
6.1.2. he/she/it is the Beneficial Owner of such Sasol BEE Ordinary Shares;
6.1.3. the warranty provided in
6.1.3.1. clause 6.1.1 is and will be true from the date that the Holder acquires/subscribes for and/or otherwise receives Sasol BEE Ordinary Shares
6.1.3.2. clause 6.1.2 is and will be true from the Effective Date,
and will continue to be true for so long as such Holder holds Sasol BEE Ordinary Shares; and
6.1.4. any information provided by him/her/it to the Company regarding whether he/she/it is a BEE Compliant Person will be true and complete unless the Holder advises the Company in writing to the contrary.
6.2. All the warranties given in clause 6.1 are material and the Company will rely on the truth and completeness of such warranties.
7. UNDERTAKINGS
Each Holder of Sasol BEE Ordinary Shares undertakes -
7.1. that he/she/it is a BEE Compliant Person;
7.2. at his/her/its own cost, to provide the Company within 30 (thirty) days of its written request to such Holder, with -
7.2.1. if the Holder is a natural person, any documentation reasonably required by the Company and/or its BEE Verification Agent in order to satisfy itself that such Holder is a BEE Compliant Person;
7.2.2. if the Holder is not a natural person, a BEE Certificate which is unexpired;
7.3. not to Sell his/her/its Sasol BEE Ordinary Shares or any rights or interest therein during the Empowerment Period to anyone who is not a BEE Verified Person.
8. PLEDGES AND OTHER ENCUMBRANCES
Holders of Sasol BEE Ordinary Shares may pledge or otherwise Encumber or cause the pledging or Encumbrance of his/her/its Sasol BEE Ordinary Shares subject to compliance with the requirement that each such Holder acknowledges that in order to ensure that those Sasol BEE Ordinary Shares are held only by BEE Compliant Persons, he/she/it is only permitted to Encumber or record the Encumbrance of those Sasol BEE Ordinary Shares, provided that -
8.1. if the security is realised, those Sasol BEE Ordinary Shares must only be Sold to a BEE Verified Person; and
8.2. the terms of the agreement in respect of such Encumbrance shall expressly provide that if the security is realised those Sasol BEE Ordinary Shares must only be Sold to a BEE Verified Person and such Holder shall procure that a copy of such agreement in respect of such Encumbrance is delivered to the Company.
9. PROVISIONS APPLICABLE TO OFF MARKET TRANSFERS OF SASOL BEE ORDINARY SHARES
9.1. If a Holder of Sasol BEE Ordinary Shares Sells any Sasol BEE Ordinary Shares or causes any of such shares to be Sold Off Market other than to the Companys Nominee, such
Holder shall be obliged to ensure that the person to whom/which those Sasol BEE Ordinary Shares are Sold, being an Own Name Client in whose name those Sasol BEE Ordinary Shares are to be registered, is in fact a BEE Verified Person; and
9.2. Each Holder of Sasol BEE Ordinary Shares undertakes not to permit the Sale Off Market of any Sasol BEE Ordinary Shares or any rights or interests therein, nor to instruct the central securities depository participant or anyone else, to effect transfer or permit the transfer of those Sasol BEE Ordinary Shares to any person who/which is not a BEE Verified Person.
10. OBLIGATION ON THE HOLDER OF SASOL BEE ORDINARY SHARES TO PROCURE TRANSFER OF SASOL BEE ORDINARY SHARES
If the Companys Nominee is the acquirer of Sasol BEE Ordinary Shares in terms of These Terms, the Holder of Sasol BEE Ordinary Shares will be obliged within 10 (ten) days after receipt of notice from the Company, to effect transfer of the Sasol BEE Ordinary Shares out of the account in the Holders own name into an account in the name of the Companys Nominee.
11. FORCED SALE IN THE EVENT OF AN OCCURRENCE OF A BREACH EVENT
11.1. If a Holder of Sasol BEE Ordinary Shares at any time -
11.1.1. misrepresented that he/she/it is a BEE Compliant Person or has in any way committed a breach of any of the warranties given by him/her/it and set out in These Terms;
11.1.2. breached any of his/her/its obligations set out in clauses 6, 7, 8 or 9 of These Terms; or
11.1.3. made a fraudulent or untrue statement regarding whether he/she/it is a BEE Compliant Person in any documents provided by him/her/it to the Company,
(Breach Event), the Holder shall be obliged to immediately notify the Company of the occurrence of such Breach Event in writing.
11.2. At any time after learning of the occurrence of a Breach Event, the Company shall be entitled (but shall not be obliged) to buy (or to nominate the Companys Nominee to buy) from the Holder his/her/its Sasol BEE Ordinary Shares by giving such Holder written notice, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions
11.2.1. those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the date of the occurrence of the Breach Event;
11.2.2. the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the occurrence of the relevant Breach Event discounted by 25% (twenty five percent);
11.2.3. the purchase price as calculated in terms of clause 11.2.2 less an amount equal to the amount of dividends paid by the Company to the Holder for his/her/its benefit after the occurrence of a Breach Event, shall, -
11.2.3.1. if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Companys Nominee) has not received the requisite transfer form within 3 (three) days from the date when the Company (or the Companys Nominee) gives
such Holder the written notice contemplated in clause 11.2, then the Holder agrees that the Company (or the Companys Nominee) is irrevocably and in rem suam authorised and appointed as his/her/its attorney and agent to sign the necessary transfer forms;
11.2.3.2. if the Sasol BEE Ordinary Shares are held in dematerialised form, be payable against the registration of those shares in the name of the Companys Nominee, if the Companys Nominee acquires those Sasol BEE Ordinary Shares, or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares;
11.2.4. those Sasol BEE Ordinary Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
11.2.4.1. the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and
11.2.4.2. no person has any right of any nature whatsoever to acquire those Sasol BEE Ordinary Shares.
12. DEATH
12.1. If a Holder of Sasol BEE Ordinary Shares is a natural person who dies, then
12.1.1. the Company (or the Companys Nominee) shall not have the right to buy the Sasol BEE Ordinary Shares which were held by such Holder pursuant to clause 11 even though those Sasol BEE Ordinary Shares as a result may then be held in breach of the requirements of These Terms, unless clause 12.1.3 applies;
12.1.2. instead of having to do so immediately, the executor of the Holders estate shall have 180 (one hundred and eighty) days commencing on the date of such Holders death, to -
12.1.2.1. transfer the Sasol BEE Ordinary Shares to such Holders heir/s provided that such heir/s is/are a BEE Verified Person/s ; or
12.1.2.2. Sell the Sasol BEE Ordinary Shares to any BEE Verified Person,
and the executor of the Holders estate shall be obliged to take whatever steps are necessary in order to effect any such transfer or Sale of the Sasol BEE Ordinary Shares, as the case may be.
12.1.3. if the executor of the Holders estate has not complied with his/her/its obligations in clause 12.1.2 as regards Sasol BEE Ordinary Shares, the Company shall be entitled, but shall not be obliged to buy (or to nominate the Companys Nominee to buy) from the executor of such Holders estate those Sasol BEE Ordinary Shares by written notice to the executor, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions -
12.1.3.1. those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the date of such Holders death;
12.1.3.2. the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company to the executor of the Holders estate discounted by 5% (five percent);
12.1.3.3. the purchase price as calculated in terms of clause 12.1.3.2, less an amount equal to the amount of dividends paid by the Company to the Holder for his/her benefit while the executor of his/her estate was in breach of clause 12.1.2, shall
12.1.3.3.1. if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Companys Nominee) has not received the requisite transfer form within 7 (seven) days from the date when the Company (or the Companys Nominee) gives the executor the notice contemplated in clause 12.1.3, the Holder agrees that the Company (or the Companys Nominee) is irrevocably and in rem suam authorised and appointed as the Holders attorney and agent, or that of his/her executor, to sign the necessary transfer forms;
12.1.3.3.2. if the Sasol BEE Ordinary Shares are held in dematerialised form, be payable against the registration of those Sasol BEE Ordinary Shares in the name of the Companys Nominee or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares;
12.1.3.4. those Sasol BEE Ordinary Shares shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
12.1.3.4.1. the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and
12.1.3.4.2. no person has any right of any nature whatsoever to acquire those Sasol BEE Ordinary Shares.
12.2. If the Holder is not a natural person and any of its shareholders, members, participants or beneficiaries die, as a result of which, the Holder is no longer a BEE Compliant Person, then -
12.2.1. neither the Company (nor the Companys Nominees) shall have the right to buy the Sasol BEE Ordinary Shares pursuant to clause 11 even though those Sasol BEE Ordinary Shares as a result may now be held in breach of the requirements of These Terms unless clause 12.2.3 applies;
12.2.2. instead of having to remedy the breach caused by the death immediately, the Holder shall have 180 (one hundred and eighty) days commencing on the date of the death to Sell the Sasol BEE Ordinary Shares to a BEE Verified Person and shall be obliged to take whatever steps are necessary to give effect to any
such Sale of the Sasol BEE Ordinary Shares by effecting transfer of the Sasol BEE Ordinary Shares out of the account in the name of the Holder into an account in the name of the registered shareholder of that BEE Verified Person.
12.2.3. if the Sasol BEE Ordinary Shares have not been Sold or the breach caused by the death has not otherwise been remedied within 180 (one hundred and eighty) days commencing on the date of the death in question, the Company shall be entitled, but shall not be obliged to buy from the Holder those Sasol BEE Ordinary Shares by giving such Holder written notice, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions
12.2.3.1. those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the date of the death in question;
12.2.3.2. the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company (or the Companys Nominee) to the Holder discounted by 5% (five percent);
12.2.3.3. the purchase price as calculated in terms of clause 12.2.3.2, less an amount equal to the amount of dividends paid by the Company to the Holder for its benefit during the period in which the Holder has been in breach of clause 12.2.2, shall, -
12.2.3.3.1. if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Companys Nominee) has not received the requisite transfer form within 7 (seven) days from the date when the Company (or the Companys Nominee) gives the written notice contemplated in clause 12.2.3, then the Holder agrees that the Company (or the Companys Nominee) is irrevocably and in rem suam authorised and appointed as the its attorney and agent to sign the necessary transfer forms;
12.2.3.3.2. if the Sasol BEE Ordinary Shares are held in materialised form, be payable against the registration of those Sasol BEE Ordinary Shares in the name of the Companys Nominee or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares;
12.2.3.4. those Sasol BEE Ordinary Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
12.2.3.4.1. the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and
12.2.3.4.2. no person has any right of any nature whatsoever to acquire those Sasol BEE Ordinary Shares.
12.3. If there is any conflict between the provisions of this 12 and the more general provisions of clause 11, the provisions of clause 12 shall prevail.
13. INVOLUNTARY INSOLVENCY/LIQUIDATION
13.1. If a Holder of Sasol BEE Ordinary Shares is a natural person who is involuntarily sequestrated (whether provisionally or finally), then -
13.1.1. the Company (or the Companys Nominees) shall not have the right to buy the Sasol BEE Ordinary Shares pursuant to clause 11 even though those Sasol BEE Ordinary Shares as a result may now be held in breach of the requirements of These Terms unless clause 13.1.3 applies;
13.1.2. instead of having to do so immediately, the trustee shall have 180 (one hundred and eighty) days commencing on the date of such Holders provisional sequestration, to Sell the Sasol BEE Ordinary Shares to any BEE Verified Person, subject to compliance with clause 9, and the trustee shall be obliged to take such steps, in order to give effect to any such Sale of the Sasol BEE Ordinary Shares by effecting transfer of the Sasol BEE Ordinary Shares out of the account in his/her name into an account in the name of the registered shareholder of that BEE Verified Person.
13.1.3. If the trustee has not complied with its obligations in clause 13.1.2 as regards Sasol BEE Ordinary Shares, the Company shall be entitled, but shall not be obliged to buy (or to nominate the Companys Nominee to buy) from such trustee those Sasol BEE Ordinary Shares by written notice to the trustee, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions
13.1.3.1. those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the Holders provisional sequestration;
13.1.3.2. the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company (or the Companys Nominee) to the trustee, discounted by 5% (five percent);
13.1.3.3. the purchase price as calculated in terms of clause 13.1.3.2, less an amount equal to the amount of dividends paid by the Company to the Holder while the trustee was in breach of clause 13.1.2, shall, -
13.1.3.3.1. if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Companys Nominee) has not received the requisite transfer form within 7 (seven) days from the date when the Company (or the Companys Nominee) gives the trustee the written notice contemplated in clause 13.1.3, then the Holder agrees that the Company (or the Companys Nominee) is irrevocably and in rem suam authorised and appointed as his/her attorney and agent to sign the necessary transfer forms;
13.1.3.3.2. if the Sasol BEE Ordinary Shares are held in dematerialised form, against the registration of those Sasol BEE Ordinary Shares in the name of the Companys Nominee or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares;
13.1.3.4. those Sasol BEE Ordinary Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
13.1.3.4.1. the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and
13.1.3.4.2. no person has any right of any nature whatsoever to acquire those Sasol BEE Ordinary Shares.
13.2. If a Holder of Sasol BEE Ordinary Shares is not a natural person and either the Holder or any of its shareholders, members, participants or beneficiaries are involuntarily liquidated (provisionally or finally), as a result of which such Holder is no longer a BEE Compliant Person, then
13.2.1. the Company shall not have the right to buy the Sasol BEE Ordinary Shares pursuant to clause 11 even though those Sasol BEE Ordinary Shares as a result may now be held in breach of the requirements of These Terms unless clause 13.2.4 applies;
13.2.2. if it is not possible for the breach to be remedied, the liquidator of such Holder or the Holder itself (if any of its shareholders, members, participants or beneficiaries are involuntarily liquidated), as the case may be, can Sell the Sasol BEE Ordinary Shares to a BEE Verified Person;
13.2.3. instead of having to do so immediately, the liquidator of such Holder or the Holder itself, as the case may be shall have 180 (one hundred and eighty) days commencing on the date of the provisional liquidation of the Holder or any of its shareholders, members, participants or beneficiaries to Sell the Sasol BEE Ordinary Shares to any BEE Verified Person and the liquidator of the Holder shall instruct such Holder to take whatever steps are necessary, and the Holder shall be obliged to take such steps, in order to effect any such Sale of the Sasol BEE Ordinary Shares;
13.2.4. If the Sasol BEE Ordinary Shares have not been Sold or the breach caused by the liquidation has not otherwise been remedied within 180 (one hundred and eighty) days commencing on the date of the involuntary liquidation of the Holder or of any of its shareholders, members, participants or beneficiaries, the Company shall be entitled, but shall not be obliged to buy (or to nominate the Companys Nominee to buy) from the Holder of those Sasol BEE Ordinary Shares by giving the liquidator of such Holder or the Holder itself written notice, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions
13.2.4.1. those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the provisional liquidation of the Holder or any of such Holders shareholders, members, participants or beneficiaries;
13.2.4.2. the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company (or the Companys Nominee) to the liquidator of the Holder or the Holder itself, as the case may be, discounted by 5% (five percent);
13.2.4.3. the purchase price as calculated in terms of clause 13.2.4.2, less an amount equal to the amount of dividends paid by the Company to the Holder for its benefit while the liquidator of such Holder or the Holder itself, as the case may be was in breach of clause 13.2.2, shall,
13.2.4.3.1. if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Companys Nominee) has not received the requisite transfer form within 7 (seven) days from the date when the Company (or the Companys Nominee) gives the written notice contemplated in clause 13.2.4, then the Holder agrees that the Company (or the Companys Nominee) is irrevocably and in rem suam authorised and appointed as its attorney and agent to sign the necessary transfer forms;
13.2.4.3.2. if the Sasol BEE Ordinary Shares are held in dematerialised form, against the registration of those Sasol BEE Ordinary Shares in the name of the Companys Nominee or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares;
13.2.4.4. those Sasol BEE Ordinary Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that
13.2.4.4.1. the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and
13.2.4.4.2. no person has any right of any nature whatsoever to acquire those Sasol BEE.
13.3. If there is any conflict between the provisions of this clause 13 and the more general provisions of clause 11, the provisions of clause 13 shall prevail
14. SECURITIES TRANSFER TAX
Securities transfer tax shall be borne by the Company or the Companys Nominee, if it is the purchaser of the Sasol BEE Ordinary Shares contemplated in These Terms.
15. CUSTODY AND MANDATE AGREEMENT FOR SASOL BEE ORDINARY SHARES
15.1. Each Holder of Sasol BEE Ordinary Shares who subscribes for and/or acquires and/or otherwise receives transfer of the Sasol BEE Ordinary Shares in dematerialised form, shall
15.1.1. when subscribing for Sasol BEE Ordinary Shares, including Holders who were issued Sasol BEE Ordinary Shares on 1 June 2018 -
15.1.1.1. be deemed to be bound by the custody and mandate agreement with Computershare Investor Services Proprietary Limited set out in Schedule 7 to the MOI;
15.1.1.2. be entitled to replace Computershare Investor Services Proprietary Limited as his/her/its central securities depository participant provided that
15.1.1.2.1. the Holder concludes an agreement in respect of the Sasol BEE Ordinary Shares for which his/her/its elected central securities depository participant will be providing securities services;
15.1.1.2.2. the Holder procures that a copy of such agreement in respect of such securities services is delivered to the Company.
15.1.2. when acquiring and/or otherwise receiving transfer of Sasol BEE Ordinary Shares be deemed to be bound by the custody and mandate agreement with Computershare Investor Services Proprietary Limited set out in Schedule 7 to the MOI, unless he/she/it notifies the Company in writing that he/she/it has appointed an alternative central securities depository participant, and provided that
15.1.2.1. the Holder concludes an agreement with the elected central securities depository participant in respect of the Sasol BEE Ordinary Shares for which his/her/its elected central securities depository participant will be providing securities services;
15.1.2.2. the Holder procures that a copy of such agreement in respect of such securities services is delivered to the Company.
15.2. Each Holder who subscribed for and/or acquired and/or otherwise received transfer of Sasol BEE Ordinary Shares prior to 1 June 2018 shall, as regards these Sasol BEE Ordinary Shares, be deemed to be bound by the custody and mandate agreement with Computershare Investor Services Proprietary Limited set out in Schedule 7 to the MOI, unless he/she/it notifies the Company in writing that he/she/it has appointed an alternative central securities depository participant, and provided that
15.2.1. the Holder concludes an agreement with the appointed central securities depository participant in respect of the Sasol BEE Ordinary Shares for which his/her/its appointed central securities depository participant will be providing securities services;
15.2.2. the Holder procures that a copy of such agreement in respect of such securities services is delivered to the Company.
Schedule 7 Computershares Custody and Settlement Agreement for Holders of New Issues of Sasol BEE Ordinary Shares after the SOLBE1 Redesignation Date
Computershare Proprietary Limited
Reg. No. 2000/006082/07
Custody and Settlement Agreement for a Private Investor
A PERSONAL DETAILS
Surname (hereinafter referred to as the Client)
Title (Mr/Mrs/Ms/Dr/Prof) |
First name(s) in full |
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Identity number / Passport number |
Tax number if issued |
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(Enclose a certified copy of your identity document and a document issued by SARS in order to verify your tax number)
Postal address |
Physical address (Enclose a certified copy of a service bill) |
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Postal code |
Postal code |
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Telephone: Home |
Telephone: Office hours |
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Facsimile contact number |
Mobile Number(1) |
Email Address
B BANKING DETAILS
(If you bank with ABSA, FNB, Standard Bank, Nedbank, Capitec or Mercantile Bank, Computershare will verify your banking details via an independent third party service provider. Alternatively, please enclose a certified copy of your bank statement or request your bank to verify your account details by stamping and signing this form.) Please note that third party banking details cannot be accepted.
Account holder |
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Bank |
Branch |
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Branch Code |
Account number |
Type of account (Current / Savings) |
C NOMINEE DECLARATION
o I confirm that I am not acting in the capacity of a nominee intending to hold Securities on behalf of a beneficial owner.
(1) The personal information that the Client provides will be held by Computershare on a computer database and/or in any other way. Computershare may use this information:
· to administer the services that Computershare provides to the Client and any future agreements that Computershare may have with the Client;
· to advise the Client of products or services of Computershare;
· to prevent and detect fraud. Information can be used to prevent crime and trace those responsible; and
· to carry out statistical analysis and market research; in this connection, Computershare may use the services of a reputable external agency.
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I/We confirm that I am/we are a nominee and intend to hold Securities on behalf of the beneficial owners. |
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Please note that nominee companies must be approved by the Financial Services Board before a share account may be opened. A copy of this approval must be provided to Computershare together with the relevant agreement. Please note too that the Computershare Deal Routing Service is not available to institutional clients or nominees companies. |
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ISSUER COMMUNICATION SELECTION |
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I wish to continue to receive an annual report or |
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Summary financial statements for Securities maintained in terms of this custody mandate. |
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I do not wish to receive any reports from the Issuer for Securities maintained in terms of this custody mandate. If you select this option, please refer to clause 14 of the terms and conditions overleaf regarding the receipt of information relating to non-elective events. |
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If available, I wish to receive annual reports and other documentation in electronic format. |
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CUSTODY SERVICE SELECTION |
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Please tick the instruction as to the custody service to be rendered: I hereby elect that: |
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Securities held on my behalf must be registered in my Own Name in any electronic sub-register maintained by Computershare Proprietary Limited using the Own Name Custody Service and utilising Computershares Deal Routing Service. I wish to maintain a direct relationship with the Issuer. Please note that this option is only available to private individual shareholders who are resident in the Common Monetary Area and are not emigrant holders of Securities for purposes of the South African Exchange Control Regulations. |
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Securities must be registered in my Own Name in any electronic sub-register maintained by Computershare Proprietary Limited using the Own Name Custody Service and utilising my own broker for trading purposes. I wish to maintain a direct relationship with the Issuer. Please note that shareholders who select this option must furnish Computershare with the name and contact number of their stockbroker. |
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Name of stockbroker |
Contact details of stockbroker |
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SEGREGATED DEPOSITORY ACCOUNTS(2) |
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The Client may request a Primary Participant to open one or more Segregated Depository Account(s) (SDA); appoint a Secondary Participant; and have one or more Segregated Depository Accounts for his/her various holdings with different primary and secondary Participants, provided that the requirements stipulated in the Rules of Strate (Pty) Limited are adhered to. |
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I /We confirm that I/we would not like to open a SDA. |
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I /We confirm that I/we would like to open a SDA with Strate with as the Primary Participant, and as the Secondary Participant.(3) |
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I/We, the undersigned person(s) indicated in Part A above have read this entire Agreement, inclusive of the terms and conditions contained on pages 1 to 8 and agree to be bound thereby.
Dated at |
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Signature |
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On behalf of Computershare Proprietary Limited and/or Computershare Nominees (Pty) Ltd |
(2) *A Client who elects to open a SDA will not be able to use Computershares low-cost Deal Routing Service.
(3) *It is not compulsory for a Client to pre-appoint a Secondary Participant.
G. TERMS AND CONDITIONS OF CUSTODY AGREEMENT
1. INTERPRETATION
(a) Unless otherwise expressly stated, or the context otherwise requires, the words and expressions listed below shall, when used in this Agreement, bear the meanings ascribed to them:
Agreement means this private investor custody and settlement agreement between the Client and Computershare;
Client means the contracting natural person identified in Part A of this Agreement;
Issuer means an issuer of Securities;
Bank Account means the Clients nominated bank account detailed in Part B of this Agreement or as may be amended and advised in writing, or by any other means as may be approved by Computershare from time to time;
BEE Contract means the contract prescribed by the JSE as referred to in clause 21 of this Agreement and appended hereto as Schedule B;
BEE Compliant Persons shall have a meaning as defined in the BEE Contract;
BEE Securities means the Securities which are beneficially owned by or registered in the names of own name clients which/who are BEE Compliant Persons for a specified period and as fully defined in the BEE Contract;
Computershare means Computershare Proprietary Limited (registration number 2000/006082/07);
CSD means a Central Securities Depository licensed as such under section 29 of the Financial Markets Act;
Electronic Communication means electronic communication as defined in the Electronic Communications and Transactions Act No. 25 of 2002;
FAIS means the Financial Advisory and Intermediary Services Act (Act No. 37 of 2002);
FICA means the Financial Intelligence Centre Act (Act No. 38 of 2001) and its regulations;
FMA means the Financial Markets Act (Act No. 19 of 2012);
Insolvency Proceeding means a judicial or administrative proceeding or both, authorised in or by national legislation or the laws of a country other than the Republic of South Africa, including an interim proceeding, in which the assets and affairs of a person are AUTOMATIC SH control or supervision by a court or an Insolvency Administrator for the purpose of re-organisation, business rescue, curatorship or liquidation;
JSE means the JSE Limited;
Own Name Client means a Client whose Own Name appears on the sub-register maintained by a Participant as opposed to the shares held by a nominee company;
Participant means a person authorised by the Central Securities Depository to perform custody and administration services or settlement services or both in terms of the CSD Rules;
Primary Participant means the Participant responsible for administering a Segregated Depository Account, and who will be replaced by a Secondary Participant in the event of an Insolvency Proceeding against such Primary Participant;
Secondary Participant means the Participant appointed by a Client to administer a Segregated Depository Account in the event of an Insolvency Proceeding against the Primary Participant;
Securities means Securities as defined from time to time in the Financial Markets Act;
Securities Account means the account that Computershare will open and maintain, in its records, in the name of the Client, or his designated nominee, in accordance with its standard operating procedures, to record the number or nominal value of the Securities deposited by the Client with Computershare, and to record all transactions and entries made in respect of such Securities;
Securities Legislation means the Companies Act (Act No. 71 of 2008) as amended, the Financial Markets Act, the Rules and Directives of the JSE or any other applicable stock exchange and the Rules and Directives of any
central securities depository made under section 30 of the Financial Markets Act.
Segregated Depository Account means an elective account opened in the records of the CSD by the Primary Participant to record the number or nominal value of the Securities deposited by the Client with the Participant, and to record all transactions and entries made in respect of such Securities; This is a designated Central Securities Account opened in the name of the Client and is clearly segregated and distinguishable from the Participants Central Securities Account;
Sub-Register means a record of Uncertificated Securities administered and maintained by a Participant which forms part of the Uncertificated Register of the relevant company; the shares are normally held by a nominee company or in the name of an own name client.
(b) Clause and paragraph headings are for purposes of reference only and shall not be used in interpretation.
(c) Unless the context clearly indicates a contrary intention, any word connoting any gender includes the other gender, the singular includes the plural and vice versa and natural persons includes artificial persons and vice versa;
(d) When any number of days is prescribed such number shall exclude the first and include the last day unless the last day falls on a Saturday, Sunday, or a public holiday in the Republic of South Africa, in which case the last day shall be the next succeeding day which is not a Saturday, Sunday or a public holiday in the Republic of South Africa.
2. APPOINTMENT
2.1 Computershare is the holder of a category I and II Financial Services Provider licence issued in terms of FAIS and is authorised to render intermediary services in respect of investment schemes and products as defined in 2.2 below:
2.2 Computershare is authorised to execute transactions in accordance with the Clients instructions relating to the following financial products:
2.2.1 Securities and Instruments: Shares
2.2.2 Securities and Instruments: Money Market Instruments
2.2.3 Securities and Instruments: Debentures and Securitised Debt
2.2.4 Securities and Instruments: Warrants, Certificates and other instruments
2.2.5 Securities and Instruments: Bonds
2.2.6 Securities and Instruments: Short Term Deposits
2.3 Subject to the terms of this Agreement, the Client appoints Computershare as its financial services provider, agent, custodian and administrator for the safe keeping and administration of Securities, and for the settlement of transactions in those Securities and to attend to certain incidental matters detailed in this Agreement.
2.4 Computershare may make use of the services of its staff to execute certain administrative functions in the course of rendering intermediary services to the Client.
2.5 For the purposes of this Agreement, Computershare shall be referred to as a Participant and vice versa.
2.6 The parties shall at all times be bound by the provisions of the Securities Legislation and must comply with any other provisions that may be required by legislation as a result of the nature of the Client.
2.7 For the purposes of this Agreement, Computershare will aggregate any instructions received from local clients (within the Common Monetary Area) in terms of clause 12.1.17 of these terms and conditions and effect the transaction in the local jurisdiction.
3. SECURITIES DEPOSITED FOR SAFE CUSTODY
3.1 Securities that Computershare may accept on behalf of the Client in accordance with this Agreement shall be Securities of a type and form
determined from time to time by Computershare and may include either certificated or uncertificated securities.
3.2 Computershare shall not be obliged to accept any Security remitted in terms of this Agreement. In the event that any Security remitted for entry into a Securities Account is not good for delivery or has a defect in relation to the Clients title thereto, Computershare shall not accept such Security for entry into a Securities Account until such defect has been corrected to the satisfaction of Computershare. Computershare shall return to the Client any Securities not accepted by Computershare in accordance with this Agreement or the Securities Legislation.
3.3 The Client warrants to Computershare that the Securities deposited for safe custody from time to time will be and remain free from any encumbrance, other than as provided for in this Agreement.
4. CONFLICT
4.1 In the event of any conflict between the provisions of this Agreement and the Securities Legislation, the provisions of the Securities Legislation shall prevail.
5. SECURITIES ACCOUNT
5.1 Computershare shall in accordance with its standard operating procedures open and maintain a Securities Account(s) in its records in the name of the Client to record the number or nominal value of Securities of each kind deposited by the Client with Computershare and to record all transactions and entries made in respect of such Securities (the Securities Account).
5.2 Any entry made in a Securities Account shall be made only in accordance with authorising instructions given by the Client and the provisions of the Securities Legislation. Computershare will make the entry in the relevant account of the Client where the Securities are held.
5.3 Computershare shall not be obliged to make any entry in a Securities Account unless it conforms to clause 11 of this Agreement.
5.4 Computershare shall not give effect to any instruction that will result in a debit balance in respect of any Security held in a Securities Account.
5.5 The Client may in terms of the CSD Rules and Directives:
5.5.1 request a Primary Participant to open one or more Segregated Depository Account(s);
5.5.2 appoint a Secondary Participant;
5.6 If the Client elects to open a Segregated Depository Account, the Client will be required to complete a custody and settlement agreement, the Securities will be withdrawn from the Own Name Securities Account and the Client may no longer use the Deal Routing service provided by Computershare.
5.7 The Client undertakes to pay all the related costs associated with such transfer and to pay the annual administration fee as notified by Computershare from time to time.
5.8 In the event of an Insolvency Proceeding against the Primary Participant, the CSD may take any action as is necessary in accordance with the Act, Rules, Directives and Client mandate.
6. SAFEKEEPING OF SECURITIES
6.1 Records of uncertificated Securities held by Computershare shall be kept and maintained in the manner provided for in the Securities Legislation.
6.2 Securities held by Computershare shall at all times be held in accordance with the election detailed in Part E of this Agreement. Any Client who elects the Own Name custody service, utilising Computershares Deal Routing Service, shall be subject to the terms and conditions from time to time under which the Deal Routing service is administered, and the Client shall by instructing Computershare to register Securities using this service be deemed thereby to agree to such terms and conditions.
6.3 Computershare shall take such steps to protect Securities held under custody against theft, loss or destruction.
7. RETENTION OF RECORDS
7.1 Computershare will keep the records of this Agreement and related documents as prescribed by applicable legislation.
7.2 The Client agrees that Computershare at its absolute discretion will destroy the records and documentation relating to this Agreement after the expiry of the retention period referred to in applicable legislation.
7.3 The Client acknowledges and agrees that records and relevant documents shall be considered to be retained by Computershare if the copies are scanned and are available in electronic form. Subject to an electronic copy being available, Computershare shall not be under any obligation to retain records and documents in paper form.
8. SETTLEMENT OF TRANSACTIONS
8.1 The Client shall designate a current banking account at a registered bank as a settlement account for the purposes of this Agreement. The Client designates the bank account indicated in Part B of this Agreement as the settlement account. The designated bank account may be amended by completing the necessary instruction in writing, or by any other means as may be approved by Computershare from time to time.
8.2 Computershare shall credit the designated bank account with all proceeds received by Computershare in respect of the Securities held in or transacted through the Securities Account. The Client authorises Computershare or its agent to debit the designated bank account with any amount owing by the Client.
8.3 The Client acknowledges that he is conversant with his responsibility to provide settlement instructions to Computershare in accordance with the provisions from time to time of the JSE Rules and Directives.
9. SECURITIES STATEMENTS
9.1 Computershare shall provide the Client with a statement when there is a change in the Clients portfolio and in accordance with the Securities Legislation.
9.2 Unless an objection is made in writing by the Client to any entry contained in any statement of a Securities Account within 60 days after the statement date, the statement shall, in the absence of fraud or any manifest error, be treated as prima facie evidence of the entries indicated therein and the Client shall not thereafter be entitled to make any claim against Computershare or to any other action in respect thereof.
10. VERIFICATION OF IDENTITY OF CLIENT
10.1 Computershare shall use reasonable endeavours to verify the identity of the Client in terms of section 21 of FICA.
10.2 The Client agrees that Computershare will not be held liable by reason of having accepted as valid any documents of any kind which are forged, not authentic or are untrue, if despite taking reasonable steps to verify the identity of the Client, the document or identity of the Client is accepted and is subsequently shown to be invalid or incorrect.
10.3 The Client acknowledges and agrees that the verification process is a requirement in terms of FICA and that Computershare shall not be liable for the delays that may be caused as a result of the verification process. The Client accepts risk including the risk of change in the share price during the verification process. Computershare reserves the right to delay taking action on a particular instruction if any further information is required from the Client in order to comply with any legal or regulatory requirements (including FICA), or to investigate any concerns as to the validity or any other matter relating to the instruction.
10.4 The Client hereby indemnifies and agrees to hold Computershare harmless against all liability, costs, expense or damage incurred by Computershare or its agents or nominees arising (whether directly or indirectly) as a result of or in connection with Computershare acting on any forged, fabricated or other inaccurate, invalid or unauthorised documents
(including identity document) or instruction received by it in connection with the performance of Computershares obligations in terms of this Agreement, except to the extent that such liability, cost, expense or damage arises as a result of Computershares failure to comply with the provisions of clauses 10.1 and 10.2 of this Agreement. Notwithstanding anything to the contrary contained in this Agreement, save for clause 4 of this Agreement, in the event of any conflict between the provisions of this clause and any other clause of this Agreement the provisions of this clause shall prevail.
10.5 The Client hereby irrevocably indemnifies Computershare and holds it harmless from any loss, damages or claim of whatsoever nature arising as a result of Computershare acting on Electronic Communication or telephonic instructions received from the Client or a duly authorised agent.
10.6 Computershare may verify information against any independent third party database for verification or security purposes if required.
11. INSTRUCTIONS BY THE CLIENT
11.1 For purposes of this paragraph instructions by the Client only strictly refers to transfer instructions given by the Client. All transfer instructions given by the Client shall be sent to Computershare at the address set out at clause 26 of this Agreement below or by Electronic Communication, to: custody@computershare.co.za . All instructions shall be sent in writing, or by any other means as may be approved by Computershare from time to time in writing. Computershare shall not be obliged to carry out any instruction that does not comply with this Agreement, requirements of FICA, the Securities Legislation or Computershares standard operating procedures.
11.2 On each occasion on which an instruction is given, the Client will be regarded as having confirmed that he has the necessary authority. Computershare may record telephonic or electronic conversations with the Client and its representatives and the Client agrees that such recordings or transcripts thereof may be used as evidence in any dispute with the Client.
11.3 In the event that the Client gives to Computershare an instruction to buy or sell Securities on behalf of the Client, subject to the limited mandate to carry out such instruction without having to exercise any independent discretion and in terms of a particular service offered by Computershare, then the Client gives to Computershare the right to appoint and pay brokers and other agents to carry out such instruction, to receive and give receipts in respect of such purchases or sales and to do all such things incidental thereto in order to give effect to such instruction.
11.4 Computershare shall not incur any liability for acting on an instruction, direction or other communication on which Computershare is authorised to rely pursuant to this section or for any delay in delivery or non-delivery or error in transmission.
12. DEAL ROUTING SERVICE
12.1 By submitting any instruction to transact in Securities using the Computershare Deal Routing Service (dealing service) the Client agrees to the following provisions:
12.1.1 For purposes of this clause Client instructions means sale instructions received from the Client. The Client may only give an instruction to sell Securities that have been dematerialised and are held in uncertificated form. The Securities Account must be FICA verified (as referred to in clause 10) before a sale instruction will be processed.
12.1.2 The Client may only give instructions to transact in any Security by means of the telephonic service or on-line share dealing service when operational. Instructions will not be accepted by any other means, including without limitation, fax, e-mail and photocopied forms. Computershare reserves the right to alter the times that the dealing service is available.
12.1.3 Where the Client transacts via the on-line share dealing service, Computershare shall send data messages (Electronic Communication) to the Clients mobile device or e-mail address as forms of notification and confirmation of all transactions. The Client must ensure that the contact details Computershare has on record are correct at all times, and that no unauthorized persons gain access to the notifications or confirmations.
12.1.4 In the event that there are any discrepancies in the information provided via the on-line dealing service, the instruction will be cancelled and a Contact Centre agent will contact the Client.
12.1.5 Computershare will not carry out any instruction to transact Securities on behalf of the Client unless it is satisfied that the Client has been recorded as the owner of the Securities in Computershares records.
12.1.6 The Client may only use the dealing service if his Securities are registered in the South African or Namibian sub-register maintained and operated by Computershare.
12.1.7 Computershare will endeavour to inform the Client if an instruction given by the Client will not be carried out unless Computershare has good reason for not doing so. Computershare will not be liable for refusing to carry out any instruction if it has good reason for not doing so.
12.1.8 Any instruction submitted by another person on behalf of the Client should not be recognised unless an original power of attorney or other appropriate authority (or a complete copy thereof certified by a Commissioner of Oaths) has been received and accepted by Computershare.
12.1.9 All instructions given by the Client to the dealing service are irrevocable and shall be dealt with on the business day immediately following the business day on which they were received and failing that as soon as reasonably possible thereafter.
12.1.10 In the event that Computershares nominated stockbroker is unable to process the entire trade due to there being insufficient buyers or sellers in the market, the balance of the trade will be kept pending by the broker for a 30 day period in terms of standard market practice.
12.1.11 Computershare will thereafter endeavour to notify the Client of the status of the trade and the Client shall upon receipt of Computershares notification provide a replacement instruction or cancel the balance of the trade.
12.1.12 No limit order or raise order will be accepted by Computershare. The Client acknowledges that prices may fluctuate from the time the instruction is given until the time that the transaction is executed.
12.1.13 By submitting an instruction to Computershare to arrange to sell any Security on his behalf, the Client warrants that-
12.1.13.1 he has not sold or purported to sell the Securities or the interest in any Security to any third party;
12.1.13.2 the Securities will be sold free from all liens, charges or other third party rights or any encumbrance of any kind;
12.1.13.3 he is entitled to sell the Securities;
12.1.13.4 the sale will not constitute a breach by the Client of any applicable laws and regulations; and
12.1.13.5 he is not a minor, or if he is a minor, that he is properly assisted by a parent or court appointed guardian.
12.1.14 The Client irrevocably undertakes that he will do, or procure to be done, all acts and things, and execute or procure the execution of all such documents as Computershare may from time to time require to give effect to any instruction by the Client.
12.1.15 The dealing service shall be operated strictly on an execution only basis. Computershare shall not provide, or have any responsibility to provide any financial, taxation or other advice to the Client.
12.1.16 A transaction in any Security through the dealing service will be executed by a stockbroker appointed by Computershare. By submitting an instruction to Computershare the Client irrevocably authorises
Computershare to appoint a stockbroker to execute the transaction on behalf of the Client on the basis that-
12.1.16.1 Computershare will instruct a stockbroker to obtain the best price reasonably available in the market at the time of dealing. If no such price can be ascertained, the stockbroker will take reasonable care to carry out the instruction at a price which is fair and reasonable; and
12.1.16.2 Computershare shall, to the exclusion of all others including the Client, be entitled to bring any action, suit or proceedings (Actions) against the stockbroker arising out of or in connection with the sale. Computershare shall, in its sole discretion, determine the nature and scope of such Actions. By submitting an instruction to Computershare the Client waives his right in relation to such Actions.
12.1.17 The stockbroker appointed by Computershare may aggregate any instruction with those of other holders of Securities transacting Securities through the dealing service but may not aggregate the sale with any other clients of the stockbroker, provided that any aggregation shall take place in accordance with the Rules of the JSE.
12.1.17.1 The price per Security that the Client will receive in the case of transactions that are aggregated will be the total proceeds of all aggregated transactions in the relevant period less all costs of the transactions divided by the number of Securities sold in such transactions;
12.1.17.2 The price per security that the Client will receive where transactions are not aggregated will be the price at which such Securities are sold in the relevant period less all costs of the sale;
12.1.17.3 The proceeds payable to the Client shall be rounded down, where necessary, to the nearest whole Rand. Resulting fractions of any Rand will be aggregated and may be retained by Computershare.
12.1.17.4 Each Security aggregated with other Securities being transacted through the dealing service in any relevant period will only be treated as sold when it is actually sold by the dealing service.
12.1.18 The Client shall ensure that in respect of any purchase of Securities by the Client in respect of which Computershare is required to act as settlement agent, the Client shall deposit cleared funds to cover the purchase consideration in the Computershare Nominees Proprietary Limited Dealing Trust Account, being account number 62022148317 held at First National Bank, branch code 25-50-05. The Client shall then immediately forward proof of the deposit to Computershare and then provide instructions to Computershare to place the purchase order. The minimum amount that a Client may deposit to purchase shares is R1,000.00 (One Thousand Rand). The instruction to purchase shares should be placed within 30 (thirty) days of the deposit being made. In the event that Computershare does not receive the instructions to purchase, the deposit, less Computershares administration costs, will be refunded into the bank account registered on Computershares records 30 (thirty) days from date of the deposit. The Client acknowledges that he is conversant with his responsibility to provide settlement instructions to Computershare in accordance with the provisions from time to time of the JSE Rules and Directives.
12.1.19 Unless settlement instructions and cleared funds are received by Computershare in accordance with Clause 12.1.18, Computershare shall not be under any obligation to confirm settlement to a central securities depository and the Client shall be liable for any resultant penalties levied by a settlement authority pursuant to any failed trade.
12.1.20 Orders executed through the service shall be subject to the charges published from time to time, initially as set out in Schedule A to this Agreement.
12.1.21 Computershare may vary the amount, rate or basis of charges from time to time and may introduce new charges.
12.1.22 Fees, taxes, charges and other expenses of whatever nature incurred on behalf of the Client will be deducted from the proceeds of any transaction.
12.1.23 Instructions to carry out more than one transaction will be treated as separate transactions and each such transaction shall be charged separately.
12.1.24 All transactions will take place on the JSE.
12.1.25 Computershare will subject to applicable exchange control legislation and regulations pay to the Client the proceeds of any sale in accordance with the Clients instructions detailed in Part B of this Agreement.
12.1.26 Advice of any transaction will be included in a transaction statement sent to the Client.
12.1.27 Computershare may terminate the dealing service at any time without giving notice thereof to the Client. All valid instructions given to the dealing service in accordance with this Agreement before termination will be carried out.
12.1.28 Transactions will be carried out and records relating to instructions by the Client will be kept according to the rules, customs and practices of the JSE.
12.1.29 If the dealing service cannot perform any of its services under this Agreement due to circumstances beyond its reasonable control, Computershare will take all reasonable steps to bring such circumstances to an end, but Computershare shall not be liable for any non-performance of the dealing service.
12.1.30 Without prejudice to any stockbrokers obligations to execute transactions on the JSE, when a stockbroker executes an instruction given to the dealing service the Client acknowledges that the stockbroker could be acting as principal for its own account. By submitting an instruction to the dealing service the Client consents, where applicable, to the stockbroker acting as principal for its own account.
12.1.31 The Client indemnifies Computershare and those persons acting on his behalf in relation to the provision of the dealing service and their respective directors, employees and agents against any liability (except to the extent that the liability is caused by Computershare or such persons own default, negligence or fraud) which it or they may incur as a result of the dealing service.
12.1.32 Computershare does not receive any brokerage commission in lieu of execution of trades.
12.1.33 Computershare shall not be responsible for the loss in transmission of any cheque, document of title, statement or any other document sent through the post to the Client, whether or not it was so sent at the Clients request.
12.1.34 Where there are residual funds from deposits into Computershares Client Trust account for the purchase of Securities, Computershare will only refund the residual cash balance in the event that the said residual cash balance is more than R50.00 (Fifty Rand).
12.1.35 Securities Transfer Tax (STT) is payable by the purchaser in every instance of a transfer of equities Securities which results in a change in beneficial ownership. Computershare will rely on the instructions of the Client to advise the instances where STT is payable. Brokers (JSE Members) are responsible for collection of STT in respect of on-market transactions and CSD Participants are responsible for collection of STT in respect of off-market equities transactions.
13. VOTING ON BEHALF OF CLIENTS
Computershare will only vote on behalf of the client if a proxy form is received from the Client by the stipulated date and time.
14 NOTIFICATION OF CORPORATE EVENTS AND CASH DIVIDENDS
14.1 Computershare shall notify Clients of all corporate events as required in terms of the Securities Legislation, which includes but is not limited to non-elective events i.e. announcements and related information.
14.2 Computershare will send its notification on receipt of the final announcement published by the CSD.
14.3 The Client may elect not to receive annual financial statements or circulars provided that they understand the implications and consequences of such an election. By choosing not to receive the documentation, the Client acknowledges that they may not receive pertinent information concerning non-elective events or the payment of dividends.
14.4 Dividend information will continue to be published in the local newspapers in terms of standard market practice and Computershare will continue to send a payment advice/statement once the payment or corporate action has been processed.
15. ACCRUALS
15.1 All cash accruals received in respect of investments, including dividends will be paid into the Clients bank account detailed in part B of this Agreement or as amended from time to time and in accordance with regulatory requirements.
16. INTEREST ON FUNDS DEPOSITED INTO CLIENT TRUST ACCOUNT FOR PURCHASE OF SECURITIES
16.1 Where funds are deposited into Computershares Client Trust account for the purchase of Securities, Computershare will retain any interest that accrues to cover administration costs. The Client may claim interest by lodging a claim in writing, however, only claims for amounts of more than R50.00 (Fifty Rand) will be considered.
17. INFORMATION TO BE DISCLOSED BY PRODUCT SUPPLIERS
17.1 The Client confirms that Computershare shall not be required to provide any information other than that required by law.
17.2 Information relating to a Client which is obtained by Computershare in the course of its operations will be kept confidential, except to the extent that disclosure is required in terms of a court order or by any law, the information is in the public domain, the information is non-personal, with the prior written consent of the Client or the information must be disclosed to the CSD in terms of the Rules and Directives.
18. CHARGES
18.1 The Client shall pay the fees and charges published from time to time by Computershare and notified to the Client.
18.2 Computershare may increase or vary the charges on 60 days written notice to the Client and may thereafter levy such fees or charges.
18.3 Notwithstanding anything to the contrary in this Agreement, Computershare shall not be obliged to act upon any instruction given by the Client or to deliver to the Client any Securities or monies until all the amounts due and owing by the Client to Computershare have been discharged in full.
19. INDEMNITY
19.1 The Client hereby indemnifies and agrees to hold Computershare harmless against all liability, costs or expenses incurred by Computershare or its nominees or agents in connection with the due and proper performance by Computershare of its obligations pursuant to valid instructions received from the Client in line with terms and conditions set out in this Agreement.
19.2 The Client accepts the risk of loss or damage arising directly or indirectly as a result of any failure in, misuse of, or any fraud or misrepresentation due to his failure to give a valid instruction in accordance with the terms of this Agreement.
19.3 Computershare shall be liable under this Agreement only for direct damages incurred by the Client by reason of Computershares wilful default or negligence and except in the case of fraud shall not in any event be liable for indirect, special or consequential loss or damages of any kind whatsoever.
20. FORCE MAJEURE
Computershare shall not be responsible for the loss or damage to any Securities or for the failure to fulfill its duties hereunder if such loss,
damage or failure is caused by or directly or indirectly due to war, enemy action, the act of any government or other competent authority, riot, civil disturbance, rebellion, explosion, storm, tempest fire, strike or lock-out (except a strike or lock-out of the employees of Computershare) or any other occurrence or event beyond the reasonable control of Computershare.
21. BEE CONTRACT
21.1 Notwithstanding anything to the contrary herein contained, where the Client wishes to transact in BEE Securities, he shall at all times ensure completion of and adherence to the BEE Contract, appended herein as Schedule B. In this regard, the Client hereby agrees to irrevocably indemnify and keep Computershare indemnified against all and any claims, suits, actions, proceedings or demands of whatsoever nature and howsoever so arising which may occur, be brought or be made by any person against Computershare as a result of or connected with or arising out of his failure to complete and/or adhere to the terms of such BEE Contract.
(e) 21.2 Where applicable, in the event of any conflict between provisions of this Agreement and the BEE Contract, the provisions of BEE Contract shall prevail.
22. STRATE RULES
22.1 It is the responsibility of the Client to keep abreast of the Strate Rules and Directives. The latest Strate Rules and Directives are available on its website www.strate.co.za.
23. DIVIDENDS TAX
23.1 The Client is solely responsible for and agrees to submit a written declaration if applicable, and to forthwith inform Computershare (a regulated intermediary) in writing should the circumstances of the beneficial owner change.
24. TERMINATION
24.1 Either party may terminate this Agreement at any time by giving at least 30 days written notice of termination to the other party.
24.2 Computershare shall publish a notification in the event of termination of its participation as a CSD Participant, the occurrence of an Insolvency Proceeding or of it being placed under interim management.
24.3 The Client must, following notification of termination of its Participant in terms of Rule 5.8.8, inform the Participant, its Insolvency Administrator or other lawful agent, to which Participant the Clients Securities must be moved within 30 (thirty) days of the Client receiving such notification.
24.4 Where the Client has not provided Computershare with the instruction referred to in clause 24.3 above within 30 (thirty) days of Computershare, its Insolvency Administrator or other lawful agent giving notice to the Client of its termination or the occurrence of an Insolvency Proceeding against Computershare, Computershare, its Insolvency Administrator or other lawful agent shall move the Clients Securities in the Securities Account to another willing Participant, and for such willing Participants own cost, and advise the Client of the details of the receiving Participant.
24.5 After the movement of Securities, the Client may choose to maintain the Securities Account at the new Participant, or instruct such new Participant to move the Securities to another Participant, at the Clients own cost.
25. LOSS SHARING
25.1 In the event that an Insolvency Proceeding occurs in respect of Computershare, where Computershare does not hold sufficient Securities, the shortfall in Securities shall be borne in the following sequence:
25.1.1 Computershares own Securities of the same kind, if any, shall first be used to make up for the shortfall in Securities;
25.1.2 if after clause 25.1.1 there is still a shortfall in Securities, all Computershares Clients who hold securities of the same kind collectively in a Central Securities Account shall bear the shortfall in
Securities in such Central Securities Account or Securities Account in proportion to the interest allocated to each such Client, at the time immediately preceding the occurrence of an Insolvency Proceeding against Computershare.
26. NOTICES
26.1 The Client chooses the physical address detailed in Part A of this Agreement or such amendment thereto as advised to Computershare from time to time as the address for the receipt of all notices and legal process. Any notice by Computershare to the Client shall, if sent by facsimile or by Electronic Communication, be deemed to have been received by the Client on the day of transmission of the facsimile or Electronic Communication and if sent by post, on the seventh day after posting.
26.2 Any notices by Computershare to the Client given either orally or by electronic means shall be deemed to have been received by the Client.
26.3 Computershare chooses as the address for the receipt of all notices and legal process Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196.
27. VARIATION
Any addition to, variation or cancellation of this Agreement shall be communicated to the other party in writing.
28. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the Republic of South Africa.
FEBRUARY 2017 V 22
SCHEDULE A TO THE CUSTODY AND SETTLEMENT AGREEMENT
Service and Settlement Fees
Private Investor using Deal Routing Service
Service
Service fees for private investors (natural persons) are sponsored by the issuer of the shares
Transaction and Settlement |
|
Cost
|
|
Cost
|
|
On Exchange (transactions placed through the Stock Exchange) This charge is included in the dealing admin fee |
|
n/a |
|
n/a |
|
Off Exchange (transaction not placed through the Stock Exchange) per transaction for third party transfer (change of beneficial ownership) |
|
R95.04 |
|
R108.34 |
|
Cancelled or failed transactions |
|
n/a |
|
n/a |
|
Account Transfer per transfer |
|
R85.64 |
|
R97.62 |
|
Off-market Securities Lending per transfer |
|
R85.65 |
|
R97.64 |
|
Off-market Unlisted Securities per transfer |
|
R65.04 |
|
R74.14 |
|
Portfolio Moves (Transfer holdings to or from broker or other CSDP) per transaction |
|
R70.65 |
|
R80.54 |
|
Certificate Withdrawal (Rematerialisation) per certificate |
|
R566.88 |
|
R646.24 |
|
Removal (transfer of shares from a South African register to a foreign jurisdiction) per transfer |
|
R316.88 |
|
R361.24 |
|
Private Investor using Deal Routing Service |
|
|
|
|
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Dealing Administration Fee |
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R135.51 |
|
R154.48 |
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· R0.01 to R40 000 |
|
|
|
|
|
· Over R40 000 - an additional fee of 0.35% of the value of the transaction is levied |
|
R135.51+ |
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R154.48+ |
|
Note: Bank charges such as cheque and cash deposit fees are treated as out of pocket expenses and will be deducted from your deposit. |
|
||||
General |
|
|
|
|
|
Cash Transfer, Refund or Residual Refund per transaction |
|
R31.01 |
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R35.35 |
|
Note: Refunds are only made on residual balances of more than R50.00 per transaction. |
|
|
|
|
|
Unpaid cheque per deposit |
|
R122.70 |
|
R139.87 |
|
Duplicate transaction advice per advice |
|
R50.25 |
|
R57.29 |
|
Queries older than 1 year including refund of deposits |
|
R428.26 |
|
R488.22 |
|
Payments of Sale Proceeds
Due to the risk of fraud, Computershare has implemented a policy change and will no longer issue cheques for share trading. Sales proceeds will only be paid by electronic means into the bank account noted in our records.
Fees quoted include Strate and messaging costs and are subject to change.
Schedule B to the Custody and Settlement Agreement
BEE Contract
(which comprises the generic terms set forth below and, as regards each Specified Issuer, the Additional Terms which form an integral part of This BEE Contract)
Your attention is drawn to clause 32.
entered into between
(You)(1)
(insert full name of person who/which is:
· the Beneficial Owner of Specified BEE Securities; or
· an Own Name Client in respect of Specified BEE Securities)(2)
· (insert identity number/registration number/IT reference number)
(gender: male/female or not applicable)
(disabled: yes/no)
Physical address: |
|
|
|
Postal address: |
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|
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Telefax: |
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email: |
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Attention (in the case of entity): |
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and/or
(IH)(3)
· (insert full name of person)
(insert registration number)
Physical address |
|
|
|
Postal address |
|
|
|
Telefax |
|
|
|
Attention: |
|
and/or
1 |
Your shall have a corresponding meaning. |
2 |
The Beneficial Owner always has to sign This BEE Contract as the party defined as You and in that case, the nominee of such Beneficial Owner, in whose name the BEE Securities are registered, must sign as the Registered Shareholder. Own Name Clients to sign This BEE Contract as the party defined as You and in addition as the Registered Shareholder. |
3 |
There may not always be an IH which is a party to This BEE Contract. The IH will sign as IH, but not as Registered Shareholder. |
(IHRS)(4)
(insert full name of person)
(insert registration number)
Physical address |
|
|
|
Postal address |
|
|
|
Telefax |
|
|
|
Attention: |
|
and/or
(JSE Member)(5)
(insert full name)
(insert registration number)
Physical address |
|
|
|
Postal address |
|
|
|
Telefax |
|
|
|
|
|
|
|
Attention: |
|
and
(Registered Shareholder)(6)
(insert full name of person whose name is recorded in the sub register)
(insert identity number/registration number/IT reference number)
Physical address |
|
|
|
Postal address |
|
|
|
Telefax |
|
|
|
|
|
|
|
Attention (in the case of entity): |
|
and/or
(CSDP)(7)
(insert full name)
(insert registration number)
Physical address |
|
|
|
Postal address |
|
|
|
Telefax |
|
|
|
|
|
|
|
Attention: |
|
|
in terms of which the parties agree to the terms set forth in This BEE Contract. |
(4) |
· There may not always be an IHRS which is a party to This BEE Contract. The IHRS will sign as IHRS and as Registered Shareholder. |
(5) |
· There may not always be a JSE Member which is a party to This BEE Contract. The JSE Member will sign as JSE Member and as Registered Shareholder, if applicable. |
(6) |
· The Registered Shareholder always has to sign This BEE Contract. Own Name Clients to sign as Registered Shareholder and as the party defined as You. |
(7) |
· The CSDP will sign This BEE Contract as CSDP and as Registered Shareholder to the extent that the party defined as You is a non-controlled client of the CSDP or a client of the IH which IH is a non-controlled client of the CSDP. The CSDP will sign This BEE Contract as CSDP to the extent that the party defined as You is an Own Name Client. |
PART A: INTRODUCTION INTERPRETATION
1. The following terms shall have the following meanings:
1.1 Additional Terms means the terms specific to that Specified Issuers BEE Securities which are listed on the BEE Segment and which are contained in that Specified Issuers Constitution under the heading Additional Terms of BEE Contract, which form an integral part of and must be read as if contained in This BEE Contract;
1.2 BEE Act means the Broad-Based Black Economic Empowerment Act, No. 53 of 2003 as amended from time to time;
1.3 BEE Certificate means an original or copy of a certificate issued by a verification agency accredited by the accreditation body contemplated in the BEE Codes, certifying that the person identified in the certificate is a BEE Compliant Person, which is attached as Annexure D;
1.4 BEE Codes means the Broad-Based Black Economic Empowerment Codes of Good Practice gazetted from time to time under the BEE Act;
1.5 BEE Compliant Persons means, as interpreted by the courts from time to time:
1.5.1 as regards a natural person, one who falls within the ambit of the definition of black people in the BEE Codes;
1.5.2 as regards a juristic person having shareholdings or similar members interest, one which falls within the ambit of the definitions of BEE owned company and BEE controlled company using the flow through principle contemplated in the BEE Codes;
1.5.3 as regards any other entity, any entity similar to a BEE controlled company or a BEE owned company using the flow through principle contemplated in the BEE Codes, which would enable the Issuer of securities owned or controlled by such entity to claim points attributable to the entitys ownership of the securities pursuant to the BEE Codes;
1.6 BEE Contract means the contract prescribed by the JSE which is made up of the generic terms set forth therein which apply to all Issuers and, as regards each Issuer, the terms specific to that Issuers BEE Securities which are listed on the BEE Segment and which are contained in that Issuers Constitution under the heading Additional Terms of BEE Contract, which form an integral part of and must be read as if contained in the BEE Contract;
1.7 BEE controlled company means a BEE controlled company as defined in Schedule 1 to the BEE Codes;
1.8 BEE owned company means a BEE owned company as defined in Schedule 1 to the BEE Codes;
1.9 BEE Securities means the securities which the Issuer requires are to be Beneficially Owned by, or registered in the names of Own Name Clients which/who are, BEE Compliant Persons for the Empowerment Period;
1.10 BEE Segment means a segment of the JSEs main board where an Issuer may list its BEE Securities and where trading in BEE Securities is restricted to BEE Compliant Persons;
1.11 Beneficial Owner means, in respect of equity securities (as defined in the JSEs Equities Rules), a person in whom the benefits of the bundle of rights attaching to equity securities vest, which is typically evidenced by one or more of the following:
1.11.1 the right or entitlement to receive any dividend or interest payable in respect of those equity securities;
1.11.2 the right to exercise or cause to be exercised in the ordinary course of events, any or all of the voting, conversion, redemption or other rights attached to those equity securities;
1.11.3 the right to dispose or direct the disposition of those equity securities, or any part of a distribution in respect of those equity securities and to have the benefit of the proceeds, whose securities are held in the name of the Registered Shareholder acting as a Nominee for that person and Beneficially Own and Beneficial Ownership shall be construed accordingly;
1.12 Companies Act means the Companies Act, 1973, as amended from time to time, or the Companies Act, 2008, when it comes into operation;
1.13 Constitution means the articles of association of an Issuer and when the Companies Act, 2008 comes into force means the Memorandum of Incorporation of the Issuer;
1.14 CSD means Strate Limited, registration number 1998/022242/06, or its successor-in-title as a licensed central securities depository in terms of the SSA;
1.15 CSD Rules and Directives means the rules and directives of the CSD;
1.16 CSDP means the person, if applicable, that holds in custody and administers Your Specified BEE Securities or an interest in Your Specified BEE Securities and that has been accepted in terms of section 34 of the SSA by a central securities depository as a participant in that central securities depository, which person is identified on the cover page of This BEE Contract;8
1.17 Empowerment Period means as regards an Issuer, the period specified as such in that Issuers Additional Terms, being the period that Issuers BEE Securities are required to be Beneficially Owned by, or registered in the names of Own Name Clients which/who are, BEE Compliant Persons;
1.18 Encumbrance means any encumbrance or any other arrangement which has a similar effect as the granting of security;
1.19 Extract means if You are a natural person, a certified copy (or a copy of a certified copy) of an extract from Your identity book which is attached as Annexure B which either reflects that You were born in South Africa or alternatively that the identity book was issued prior to 27 April 1994;
(8) The CSDP will sign This BEE Contract as CSDP and as Registered Shareholder to the extent that the party defined as You is a non-controlled client of the CSDP or a client of the IH which IH is a non-controlled client of the CSDP. The CSDP will sign This BEE Contract as CSDP to the extent that the party defined as You is an Own Name Client.
1.20 Forced Sale Value means as regards an Issuer, the value specified as such in that Issuers Additional Terms, being the value determined for the purpose of the Specified Issuer exercising its rights in Part D;
1.21 IH means intermediate holder, being an intermediary with which You hold an account for the purposes of, inter alia, managing Your Specified BEE Securities, but which is not You, the JSE Member, the Registered Shareholder, the CSDP, the IHRS or the Issuers of Your Specified BEE Securities; (9)
1.22 IHRS means intermediate holder, which is also the Registered Shareholder of Your Specified BEE Securities, being a Nominee with which You hold an account for the purposes of, inter alia, managing Your Specified BEE Securities; (10)
1.23 ISN means an issuer sponsored nominee, which is approved as such by the Registrar of Financial Services Providers;
1.24 Issuers means from time to time those companies which have issued BEE Securities which are listed on the BEE Segment;
1.25 JSE means JSE Limited (registration number 2005/022939/06) (or its successor body);
1.26 JSE Member means a member of the JSE, being a category of authorised user (as defined in section 1 of the SSA), which person is identified on the cover page of This BEE Contract; (11)
1.27 Naturalisation Affidavit means the original affidavit to be attested to by You, if You are a natural person, in which You state under oath that You became a South African citizen prior to 27 April 1994 or, if You did not become a South African citizen prior to 27 April 1994, You warrant that You would have qualified for South African naturalisation prior to 27 April 1994 in the absence of the laws governing the apartheid regime;
1.28 Nominee means a person which acts as the registered holder of BEE Securities and manages an interest in BEE Securities on behalf of other persons, and which has been approved by:
1.28.1 an exchange (as defined in the SSA) in terms of section 36(1)(a) of the SSA;
1.28.2 the Registrar of Securities Services in terms of section 36(2) of the SSA; or
1.28.3 a central securities depository (as defined in the SSA) in terms of section 36(1)(b) of the SSA;
1.29 Off Market means not On Market nor utilising the services of an authorised user (as defined in the SSA);
1.30 On Market means on the BEE Segment, utilising the services of an authorised user (as defined in the SSA);
1.31 Own Name Client means a person whose own name is on the main register of an Issuer kept in terms of the Companies Act and in whom/which the benefits of the bundle of rights attaching to the equity securities so registered in his/her/its name vest, which is typically evidenced by one or more of the following:
1.31.1 the right or entitlement to receive any dividend or interest payable in respect of those equity securities;
1.31.2 the right to exercise or cause to be exercised in the ordinary course of events, any or all of the voting, conversion, redemption or other rights attached to those equity securities;
1.31.3 the right to dispose or direct the disposition of those equity securities, or any part of a distribution in respect of those equity securities and to have the benefit of the proceeds;
1.32 Registered Shareholder means, as the context requires:
1.32.1 the person in whose name, if You are a Beneficial Owner, all Your Specified BEE Securities will be registered (unless another person is the registered holder of a part of Your Specified BEE Securities listed on the BEE Segment and You have concluded a BEE Contract with that person, in respect of that part of Your Specified BEE Securities), which may include the CSDP, IHRS or JSE Member; or
1.32.2 You, if You are an Own Name Client in respect of Your Specified BEE Securities,being the person identified as such in This BEE Contract; (12)
1.33 Sell means sell or otherwise dispose of or transfer (including, but without limiting the generality of the aforegoing, by way of donation or dividend or distribution of assets) and Sale and Sold shall be construed accordingly;
1.34 Specified BEE Securities means BEE Securities from time to time:
1.34.1 of which You are the Beneficial Owner and which are held in dematerialised form in the name of the Registered Shareholder; and/or
1.34.2 which are held in dematerialised form in Your name, if You are an Own Name Client;
1.35 Specified Issuers means the relevant Issuers of Your Specified BEE Securities;
1.36 Specified Issuers Nominee means a person nominated by a Specified Issuer to acquire the Specified BEE Securities issued by that Specified Issuer in the circumstances contemplated in clauses 17.2, 18.2, 18.4, 19.2, 19.4 and 24.2;
1.37 SSA means the Securities Services Act, 2004, as amended; This BEE Contract means this contract made up of the generic terms set forth in this document which apply to all Issuers and, as regards each Specified Issuer, the Additional Terms
1.38 This BEE Contract means this contract made up of the gerneric terms set forth in this document which apply to all Issuers and, as regards each Specified
(9) |
There may not always be an IH which is a party to This BEE Contract. The IH will sign as IH, but not as Registered Shareholder. |
(10) |
There may not always be an IHRS which is a party to This BEE Contract. The IHRS will sign as IHRS and as Registered Shareholder. |
(11) |
There may not always be a JSE Member which is a party to This BEE Contract. The JSE Member will sign as JSE Member and as Registered Shareholder, if applicable. |
(12) |
The Registered Shareholder always has to sign This BEE Contract. Own Name Clients to sign as Registered Shareholder and as the party defined as You. |
2. The provisions of This BEE Contract contained in this document are divided into 5 (five) parts:
2.1 introductory provisions and definitions used throughout This BEE Contract (Part A);
2.2 provisions which apply for the duration of This BEE Contract, whether or not Specified BEE Securities are Beneficially Owned by You or registered in Your name as an Own Name Client (Part B);
2.3 provisions which apply only whilst Specified BEE Securities are Beneficially Owned by You or registered in Your name as an Own Name Client and which are relevant to all Specified Issuers (Part C);
2.4 provisions which apply only whilst Specified BEE Securities are Beneficially Owned by You or registered in Your name as an Own Name Client and which are relevant to a Specified Issuer and its Specified BEE Securities (Part D); and
2.5 miscellaneous provisions (Part E).
3. Any reference in this BEE Contract to You shall:
3.1 if You are liquidated or sequestrated, as the case may be, be applicable also to and binding upon Your liquidator or trustee; or
3.2 if You are a natural person and die, be applicable also to and binding upon Your executor.
4. The CSDP is only a party to This BEE Contract to the extent that You are:
4.1 a non-controlled client of the CSDP; or
4.2 a client of the IH (in which event the IH will be a party to This BEE Contract) which IH is a non- controlled client of the CSDP.
5. In the event that You are:
5.1 a controlled client of the JSE Member;
5.2 a client of a controlled client of the JSE Member; or
5.3 a client of the IHRS, which IHRS is a non-controlled client of the CSDP,
the CSDP will not be a party to This BEE Contract.
6. In the event that any one of the IH, IHRS, JSE Member or CSDP is not a party to This BEE Contract, any reference in This BEE Contract to those of them which are not parties to This BEE Contract is to be read pro non scripto, as if they were not a party to This BEE Contract.
7. The rule of construction that a contract shall be interpreted against the party responsible for the drafting or preparation of the contract, shall not apply.
8. For the avoidance of doubt:
8.1 if You hold other BEE Securities in certificated form, You will have concluded a different contract to cover those BEE Securities and that contract will continue to apply for so long as You continue to hold those BEE Securities in certificated form. If You dematerialise any or all of those BEE Securities, those BEE Securities will become subject to This BEE Contract if You hold them as an Own Name Client or in the name of the Registered Shareholder;
8.2 if You hold BEE Securities in dematerialised form and rematerialise any or all of these BEE Securities, but You have not concluded a contract with the relevant Issuer to cover those rematerialised BEE Securities, You will be required to conclude a different contract to This BEE Contract to cover those certificated BEE Securities and that contract will continue to apply for so long as You continue to hold those BEE Securities in certificated form;
8.3 if You hold BEE Securities in dematerialised form in the name of an ISN as registered shareholder, which BEE Securities were held by You prior to the date of the listing on the BEE Segment of such BEE Securities, You will have concluded a different contract to cover those BEE Securities and that contract will continue to apply for so long as You continue to hold those particular BEE Securities in dematerialised form in the name of an ISN as registered shareholder. Only in the event that You:
8.3.1 acquired additional BEE Securities after the date of the listing on the BEE Segment of such BEE Securities, will You have been required to conclude This BEE Contract; or
8.3.2 wish to replace the ISN as registered shareholder of those particular BEE Securities with another registered shareholder to hold some or all of those particular BEE Securities, will You be required to conclude a BEE Contract in respect of those of Your BEE Securities which are transferred to such person as the new registered shareholder;
8.4 if You are a Beneficial Owner and wish to replace Your Registered Shareholder with another Registered Shareholder, You will be required to conclude a new BEE Contract in respect of those of Your BEE Securities which are transferred to such person as the new Registered Shareholder and so will such person and the other parties to This BEE Contract and You shall not instruct the Registered Shareholder to transfer Your Specified BEE Securities, nor shall the Registered Shareholder act on any such instruction until a new BEE Contract has been concluded;
8.5 if You are an Own Name Client and wish to register Your BEE Securities in the name of another person as Registered Shareholder, You will be required to conclude a new BEE Contract in respect of those of Your BEE Securities which are transferred to such person as the new Registered Shareholder and so will such person and the other parties to This BEE Contract and if applicable, any intermediary which You appoint for the purposes of, inter alia, managing Your Specified BEE Securities;
8.6 if You are a Beneficial Owner and wish to replace Your JSE Member with another JSE Member, You will be required to conclude a new BEE Contract in respect of those of Your BEE Securities which are transferred to such person as the new JSE Member and so will such person and the other parties to This BEE Contract;
8.7 if You are a Beneficial Owner and wish to replace Your IHRS with another Nominee, You will be required to conclude a new BEE Contract in respect of those of Your BEE Securities which are transferred to such person as the new IHRS and so will such person and the other parties to This BEE Contract;
8.8 if You are a Beneficial Owner and wish to replace Your IH with another intermediary for the purposes of, inter alia, managing Your Specified BEE Securities, You will be required to conclude a new BEE Contract in respect of those of Your BEE Securities which are to be inter alia managed by such person as the new IH and so will such person and the other parties to This BEE Contract;
8.9 if You wish to replace Your CSDP with another person, You will be required to conclude a new BEE Contract in respect of those of Your BEE Securities for which such person as the new CSDP will be providing You with securities services (as defined in the SSA) and so will such person and the other parties to This BEE Contract;
8.10 if You are a Beneficial Owner and wish to hold Your Specified BEE Securities in Your name as an Own Name Client:
8.10.1 but did not conclude This BEE Contract with a CSDP, You will be required to conclude a new BEE Contract in respect of those of Your BEE Securities for which such person as the new CSDP will be providing You with securities services (as defined in the SSA) and so will such person, but to the extent that a Registered Shareholder, JSE Member, IHRS or IH are parties to This BEE Contract, none of them will be required to conclude the new BEE Contract; or
8.10.2 did conclude This BEE Contract with a CSDP, You will be required to sign This BEE Contract as Registered Shareholder in respect of those of Your BEE Securities which will be registered in Your name.
PART B: Provisions which apply for the duration of this BEE contract, whether or not specified BEE securities are beneficially owned by you or registered in your name as an own name client
9. DURATION
9.1 This BEE Contract shall remain in force from the date of Your signature hereof until the earlier of:
9.1.1 the replacement of This BEE Contract with a new BEE Contract in the circumstances contemplated in clauses 8.4 to 8.10; or
9.1.2 the end of the last remaining Empowerment Period of all Issuers.
9.2 Notwithstanding the provisions of clause 9.1, the expiration or termination of This BEE Contract shall not affect such of the provisions of This BEE Contract as expressly provide that they will operate after any such expiration or termination or which of necessity must continue to have effect after such expiration or termination, notwithstanding that the clauses themselves do not expressly provide for this.
10. SCOPE AND NATURE
10.1 This BEE Contract will govern all Your Specified BEE Securities from time to time (other than those held in the name of an ISN as registered shareholder, which BEE Securities were held by You prior to the date of the listing on the BEE Segment of such BEE Securities) and will continue in force (unless a new BEE Contract is signed in the circumstances contemplated in clauses 8.4 to 8.10), notwithstanding the fact that You may Sell all of the Specified BEE Securities from time to time, in order to avoid the necessity for You to sign a new BEE Contract every time that You become the Beneficial Owner of Specified BEE Securities or Specified BEE Securities are registered in Your name as an Own Name Client.
10.2 Notwithstanding that This BEE Contract will govern all Your Specified BEE Securities in accordance with clause 10.1 and govern Your relationship potentially with many Specified Issuers, the parties agree that This BEE Contract will be treated as a separate contract between a particular Specified Issuer and the other parties to This BEE Contract (other than the other Issuers, as if none of such other Issuers were parties to it).
11. WARRANTIES
11.1 You as Beneficial Owner warrant in favour of the JSE, the Registered Shareholder, CSDP, JSE Member, IH and IHRS that for the duration of This BEE Contract any information provided by You to the Registered Shareholder, CSDP, JSE Member, IH, IHRS or the JSE will be true and complete unless You advise them in writing to the contrary.
11.2 You acknowledge that the JSE, the Registered Shareholder, CSDP, JSE Member, the IH and/or the IHRS will rely on the truth and completeness of the above warranty.
11.3 The warranty in clause 11.1 is material.
11.4 You as Own Name Client warrant in favour of the JSE, CSDP and JSE Member that for the duration of This BEE Contract any information provided by You to the JSE, CSDP or JSE Member, will be true and complete unless You advise them in writing to the contrary.
11.5 You as Own Name Client acknowledge that the JSE, CSDP and JSE Member will rely on the truth and completeness of the above warranty.
11.6 The warranty in clause 11.4 is material.
12. UNDERTAKINGS
12.1 You undertake at Your cost, to provide the CSDP, Registered Shareholder, JSE Member, the IH and the IHRS, as the case may be, on signature of This BEE Contract with:
12.1.1 if You are a natural person:
12.1.1.1 an Extract (to be attached as Annexure B to This BEE Contract) which either reflects that You were born in South Africa, alternatively that Your identity book was issued prior to 27 April 1994, and if neither of those is the case, You shall provide a Naturalisation Affidavit (to be attached as Annexure C to This BEE Contract);
12.1.1.2 any other documentation reasonably required by the CSDP, Registered Shareholder, JSE Member, IH or the IHRS, as the case may be, in order to satisfy itself that You are a BEE Compliant Person;
12.1.2 if You are not a natural person:
12.1.2.1 a BEE Certificate which is unexpired (to be attached as Annexure D to This BEE Contract); and
12.1.2.2 any other documentation reasonably required by the CSDP, Registered Shareholder, JSE Member, IH or the IHRS in order to satisfy itself that You are a BEE Compliant Person.
12.2 If you are a controlled client of the JSE Member or a client of a controlled client of the JSE Member in respect of Your Specified BEE Securities, the JSE Member undertakes in favour of each Specified Issuer:
12.2.1 as regards You, to perform the checks set out in Annexure A, depending on whether You are a natural person or a person other than a natural person; and
12.2.2 to retain the signed original version of This BEE Contract.
12.2.3 If You are a client of the IH in respect of Your Specified BEE Securities and the IH is a controlled client of the JSE Member:
12.2.4 the IH undertakes in favour of each Specified Issuer as regards You, to perform the checks set out in Annexure A, depending on whether You are a natural person or a person other than a natural person;
12.2.5 the JSE Member undertakes in favour of each Specified Issuer:
12.2.5.1 to check that the IH has signed This BEE Contract in its capacity as IH; and
12.2.5.2 to retain the signed original version of This BEE Contract;
12.3 If You are a non-controlled client of the CSDP in respect of Your Specified BEE Securities, the CSDP undertakes in favour of each Specified Issuer:
12.3.1 as regards You, to perform the checks set out in Annexure A, depending on whether You are a natural person or a person other than a natural person; and
12.3.2 to retain the signed original version of This BEE Contract.
12.4 If You are an Own Name Client in respect of Your Specified BEE Securities, the CSDP undertakes in favour of each Specified Issuer:
12.4.1 as regards You, to perform the checks set out in Annexure A, depending on whether You are a natural person or a person other than a natural person;
12.4.2 to ensure that You sign This BEE Contract as the party defined as You and Registered Shareholder; and
12.4.3 to retain the signed original version of This BEE Contract.
12.5 If You are a Beneficial Owner which/who is client of the IH in respect of Your Specified BEE Securities and the IH is a non-controlled client of the CSDP:
12.5.1 the IH undertakes in favour of each Specified Issuer as regards You, to perform the checks set out in Annexure A, depending on whether You are a natural person or a person other than a natural person;
12.5.2 the CSDP undertakes in favour of each Specified Issuer:
12.5.2.1 to check that the IH has signed This BEE Contract in its capacity as IH; and
12.5.2.2 to retain the signed original version of This BEE Contract;
12.6 If You are a Beneficial Owner which/who is client of the IHRS in respect of Your Specified BEE Securities and the IHRS is a non-controlled client of the CSDP, the IHRS undertakes in favour of each Specified Issuer:
12.6.1 as regards You, to perform the checks set out in Annexure A, depending on whether You are a natural person or a person other than a natural person; and
12.6.2 to retain the signed original version of This BEE Contract.
PART C: Provisions which apply only whilst specified BEE securities are beneficially owned by you or registered in your name as an own name client and which are applicable to all specified issuers
13. WARRANTIES
13.1 You warrant in favour of each of the Specified Issuers that:
13.1.1 You are a BEE Compliant Person;
13.1.2 You will be the Beneficial Owner of the Specified BEE Securities or the Specified BEE Securities will be registered in Your name as an Own Name Client, as the case may be;
13.1.3 each warranty provided by You in clauses 13.1.1, 13.1.2 and 32 is and will be true from the date that You acquire that Specified Issuers BEE Securities and:
13.1.3.1 in respect of each warranty provided by You in clauses 13.1.1 and 32 will continue to be true for so long as You hold that Specified Issuers Specified BEE Securities; and
13.1.3.2 in respect of the warranty provided by You in clause 13.1.2 will continue to be true for so long as You hold that Specified Issuers Specified BEE Securities either as Beneficial Owner or Own Name Client, as the case may be;
13.1.4 the information provided by You in This BEE Contract is true and complete as at the date of signature hereof.
13.2 You acknowledge that each Specified Issuer will rely on the truth and completeness of the above warranties when recording Your details as:
13.2.1 the Beneficial Owner of that Specified Issuers Specified BEE Securities; or
13.2.2 an Own Name Client in whose name that Specified Issuers Specified BEE Securities are registered, as the case may be.
13.2.3 All the warranties given by You in clause 13.1 are material.
14. YOUR UNDERTAKINGS
You undertake whilst Your Specified BEE Securities are Beneficially Owned by You or registered in Your name as an Own Name Client:
14.1 that You are a BEE Compliant Person;
14.2 at Your cost, to provide the CSDP, the Registered Shareholder, the IH, IHRS and the JSE Member on an annual basis and a Specified Issuer within 30 (thirty) days of its written request to You, with:
14.2.1 if You are a natural person, any documentation reasonably required by a Specified Issuer in order to satisfy itself that You are a BEE Compliant Person;
14.2.2 if You are not a natural person:
14.2.2.1 a BEE Certificate which is unexpired (to replace any BEE Certificate attached as Annexure D to This BEE Contract which has expired);
14.2.2.2 any other documentation reasonably required by the Issuer in order to satisfy itself that You are a BEE Compliant Person.
For the sake of clarity, You shall not be obliged to furnish any Issuer other than a Specified Issuer with the aforegoing.
15. PLEDGES AND OTHER ENCUMBRANCES
If the Additional Terms of a Specified Issuer permit of pledges or any other form of Encumbrance in respect of the Specified BEE Securities issued by that Specified Issuer, You may pledge or otherwise Encumber or cause the pledging or Encumbrance of those Specified BEE Securities subject to compliance with the Additional Terms of that Specified Issuer and with the following:
15.1 You acknowledge that in order to ensure that those Specified BEE Securities are held only by BEE Compliant Persons, You, the CSDP, the Registered Shareholder, the IH, the IHRS and/or the JSE Member, as the case may be, is/are only permitted to Encumber or record the Encumbrance of those Specified BEE Securities at any time during the existence of This BEE Contract at Your request, provided that:
15.1.1 if the security is realised those Specified BEE Securities must only be Sold to a BEE Compliant Person who/which binds herself/himself/itself to a BEE Contract prior to taking transfer of those Specified BEE Securities; and
15.1.2 the terms of the agreement in respect of such Encumbrance shall expressly provide that if the security is realised those Specified BEE Securities must only be Sold to a BEE Compliant Person who/ which binds herself/himself/itself either as a Beneficial Owner or an Own Name Client to a BEE Contract prior to taking transfer of those Specified BEE Securities. You shall procure that a copy of such agreement in respect of such Encumbrance is delivered to the Specified Issuer.
15.1.3 You warrant in favour of the Specified Issuers that the agreement in respect of such Encumbrance shall contain the required provision referred to in clause 15.1 and that You shall not enter into or permit the entering into of any such agreement without such provision.
16. PROVISIONS APPLICABLE TO OFF MARKET TRANSFERS OF YOUR SPECIFIED BEE SECURITIES
16.1 If You Sell any of the Specified BEE Securities or cause any of the Specified BEE Securities to be Sold Off Market other than to a Specified Issuers Nominee, it is Your responsibility to make sure that:
16.1.1 the person to whom/which those Specified BEE Securities are Sold, either being the new Beneficial Owner or an Own Name Client in whose name those Specified BEE Securities are to be registered, is in fact a BEE Compliant Person; and
16.1.2 a BEE Contract is signed by the person to whom/which those Specified BEE Securities are Sold, either being the new Beneficial Owner or an Own Name Client in whose name those Specified BEE Securities are tobe registered (unless such new Beneficial Owner or Own Name Client has already signed such a contract), the registered shareholder (only for a new Beneficial Owner), a central securities depository participant and if applicable, a JSE member, and the person with whom the new Beneficial Owner or Own Name Client holds an account for the purposes of, inter alia, managing these Specified BEE Securities, and procure that a copy of such contract is delivered to the Specified Issuer of those Specified BEE Securities.
16.1.3 You undertake for the duration of This BEE Contract, not to permit the Sale Off Market of any of the Specified BEE Securities or any rights or interests therein, nor to instruct the Registered Shareholder, the CSDP, the JSE Member, the IH or the IHRS, as the case may be, to effect transfer or permit the transfer of those BEE Securities on Your behalf, to any person who/which is not a BEE Compliant Person and who/ which has not signed a BEE Contract.
17. BREACH
17.1 If at any time during the existence of This BEE Contract:
17.1.1 You have misrepresented that You are a BEE Compliant Person or have in any way committed a breach of any of the warranties given by You and set out in This BEE Contract;
17.1.2 You breach any of Your obligations set out in clauses 8.2 to 8.10, 12, 14, 15, 16 or 20 of This BEE Contract; or
17.1.3 17.1.3 You have made a fraudulent or untrue statement in This BEE Contract or any documents provided by You to the CSDP, JSE Member, IH, IHRS or the Registered Shareholder,
You shall immediately notify all Specified Issuers, the JSE, the Registered Shareholder, CSDP, JSE Member, IH and IHRS in writing.
17.2 At any time after learning of the occurrence of an event contemplated in clause 17.1, any Specified Issuer (or the Specified Issuers Nominee) shall be entitled, but shall not be obliged to buy from You the Specified BEE Securities issued by that Specified Issuer by giving You and if You are a Beneficial Owner, the Registered Shareholder written notice, in which event a Sale of those Specified BEE Securities shall be deemed to have been concluded on the following terms and conditions:
17.2.1 those Specified BEE Securities shall be acquired with effect from the day prior to the date of the occurrence of an event contemplated in clause 17.1;
17.2.2 the purchase price of those Specified BEE Securities shall be the Forced Sale Value thereof calculated as at the date of the occurrence of the relevant event, discounted by the percentage set out in that Specified Issuers Additional Terms, if any;
17.2.3 the purchase price as calculated in terms of clause 17.2.2, less an amount equal to the amount of dividends paid by that Specified Issuer to the Registered Shareholder for Your benefit while You were in breach, shall be payable against the registration of those Specified BEE Securities in the name of that Specified Issuers Nominee, if the Specified Issuers Nominee acquires those Specified BEE Securities, or upon the cancellation of these Specified BEE Securities if the Specified Issuer buys back those Specified BEE Securities;
17.2.4 those Specified BEE Securities and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that:
17.2.4.1 You are the Beneficial Owner, and the Registered Shareholder is the registered holder, of those Specified BEE Securities, or You are an Own Name Client in whose name those Specified BEE Securities are registered, as the case may be; and
17.2.4.2 no person has any right of any nature whatsoever to acquire these Specified BEE Securities.
18. DEATH
18.1 If You are a natural person who dies during the existence of This BEE Contract, then:
18.1.1 the Specified Issuers (or the Specified Issuers Nominees) shall not have the right to buy Your Specified BEE Securities issued by those Specified Issuers pursuant to clause 17 even though those Specified BEE Securities as a result may now be held in breach of the requirements of This BEE Contract, unless clause 18.2 applies;
18.1.2 instead of having to do so immediately, the executor of Your estate shall have the additional periods as set out in the Additional Terms of each Specified Issuer in relation to each Specified Issuers Specified BEE Securities commencing on the date of Your death, to:
18.1.2.1 transfer the Specified BEE Securities, subject to compliance with clause 16, to Your heir/s provided that such heir/s is/are a BEE Compliant Person/s; or
18.1.2.2 Sell the Specified BEE Securities to any BEE Compliant Person, and the executor of Your estate shall instruct the Registered Shareholder to take whatever steps are necessary, and the Registered Shareholder shall be obliged to take such steps, in order to effect any such transfer or Sale of the Specified BEE Securities, as the case may be.
18.2 If the executor of Your estate and/or the Registered Shareholder have not complied with their obligations in clause 18.1 as regards Specified BEE Securities of a particular Specified Issuer, that Specified Issuer (or that Specified Issuers Nominee) shall be entitled, but shall not be obliged to buy from the executor of Your estate those Specified BEE Securities by written notice to the executor of Your estate and the Registered Shareholder, in which event a Sale of those Specified BEE Securities shall be deemed to have been concluded on the following terms and conditions:
18.2.1 those Specified BEE Securities shall be acquired with effect from the day prior to the date of Your death;
18.2.2 the purchase price of those Specified BEE Securities shall be the Forced Sale Value thereof calculated as at the date of the written notice from that Specified Issuer (or the Specified Issuers Nominee) to the executor of Your estate and the Registered Shareholder, discounted by the percentage set out in that Specified Issuers Additional Terms, if any or as applicable;
18.2.3 the purchase price as calculated in terms of clause 18.2.2, less an amount equal to the amount of dividends paid by that Specified Issuer to the Registered Shareholder for Your benefit while the executor of Your estate and/or the Registered Shareholder was in breach of clause 18.1.2, shall be payable against the registration of those Specified BEE Securities in the name of that Specified Issuers Nominee or upon the cancellation of those Specified BEE Securities;
18.2.4 those Specified BEE Securities shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that:
18.2.4.1 Your executor is the Beneficial Owner, and the Registered Shareholder is the registered holder, of these Specified BEE Securities, or Your executor is an Own Name Client in whose name those Specified BEE Securities are registered, as the case may be; and
18.2.4.2 no person has any right of any nature whatsoever to acquire those Specified BEE Securities.
18.3 If You are not a natural person and any of Your shareholders, members, participants or beneficiaries die, as a result of which, during the existence of This BEE Contract, You are no longer a BEE Compliant Person, then:
18.3.1 the Specified Issuers (or the Specified Issuers Nominees) shall not have the right to buy the Specified BEE Securities issued by those Specified Issuers pursuant to clause 17 even though those Specified BEE Securities as a result may now be held in breach of the requirements of This BEE Contract unless clause 18.4 applies;
18.3.2 instead of having to remedy the breach caused by the death immediately, You shall have the additional periods as set out in the Additional Terms of each Specified Issuer in relation to each Specified Issuers Specified BEE Securities commencing on the date of the death to Sell the Specified BEE Securities to a BEE Compliant Person and instruct the Registered Shareholder to take whatever steps are necessary, and the Registered Shareholder shall be obliged to take such steps, in order to give effect to any such Sale of the Specified BEE Securities by effecting
transfer of each Specified Issuers Specified BEE Securities out of the account in the name of the Registered Shareholder into an account in the name of the registered shareholder of that BEE Compliant Person.
18.4 If the Specified BEE Securities of a particular Specified Issuer have not been Sold or the breach caused by the death has not otherwise been remedied within the additional period as set out in the Additional Terms of a particular Specified Issuer commencing on the date of the death in question, that Specified Issuer (or that Specified Issuers Nominee) shall be entitled, but shall not be obliged to buy from You those Specified BEE Securities which that Specified Issuer has issued by giving You (if not a natural person) and the Registered Shareholder written notice, in which event a Sale of those Specified BEE Securities shall be deemed to have been concluded on the following terms and conditions:
18.4.1 those Specified BEE Securities shall be acquired with effect from the day prior to the date of the death in question;
18.4.2 the purchase price of those Specified BEE Securities shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Specified Issuer (or the Specified Issuers Nominee) to You (if not a natural person) and the Registered Shareholder, discounted by the percentage as set out in the Additional Terms of that Specified Issuer, if any or as applicable;
18.4.3 the purchase price as calculated in terms of clause 18.4.2, less an amount equal to the amount of dividends paid by that Specified Issuer to the Registered Shareholder for Your benefit during the period in which You have been in breach of clause 18.3.2, shall be payable against the registration of those Specified BEE Securities in the name of that Specified Issuers Nominee or upon the cancellation of those Specified BEE Securities;
18.4.4 those Specifi BEE Securities and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that:
18.4.4.1 You are the Beneficial Owner, and the Registered Shareholder is the registered holder, of those Specified BEE Securities, or You are an Own Name Client in whose name those Specified BEE Securities are registered, as the case may be; and
18.4.4.2 no person has any right of any nature whatsoever to acquire those Specified BEE Securities.
19. INVOLUNTARY INSOLVENCY/LIQUIDATION
19.1 If You are a natural person who is involuntarily sequestrated (whether provisionally or finally), during the existence of This BEE Contract, then:
19.1.1 the Specified Issuers (or the Specified Issuers Nominees) shall not have the right to buy the Specified BEE Securities issued by those Specified Issuers pursuant to clause 17 even though those Specified BEE Securities as a result may now be held in breach of the requirements of This BEE Contract unless clause 19.2 applies;
19.1.2 instead of having to do so immediately, the trustee shall have the additional periods as set out in the Additional Terms of each Specifi Issuer in relation to each Specifi Issuers Specifi BEE Securities commencing on the date of Your provisional sequestration, to Sell the Specifi BEE Securities, subject to compliance with clause 16, to any BEE Compliant Person and the trustee shall instruct the Registered Shareholder to take whatever steps are necessary, and the Registered Shareholder shall be obliged to take such steps, in order to give effect any such Sale of the Specifi BEE Securities by effecting transfer of each Specifi Issuers Specifi BEE Securities out of the account in the name of the Registered Shareholder into an account in the name of the registered shareholder of that BEE Compliant Person.
19.2 If the trustee and/or the Registered Shareholder have not complied with their obligations in clause 19.1 as regards Specified BEE Securities of a particular Specified Issuer, that Specified Issuer (or that Specified Issuers Nominee) shall be entitled, but shall not be obliged to buy from You those Specified BEE Securities by written notice to the trustee and the Registered Shareholder, in which event a Sale of those Specified BEE Securities shall be deemed to have been concluded on the following terms and conditions:
19.2.1 those Specified BEE Securities shall be acquired with effect from the day prior to Your provisional sequestration;
19.2.2 the purchase price of those Specified BEE Securities shall be the Forced Sale Value thereof calculated as at the date of the written notice from that Specified Issuer (or the Specified Issuers Nominee) to the trustee and the Registered Shareholder, discounted by the percentage set out in the Additional Terms of that Specified Issuer, if any or as applicable;
19.2.3 the purchase price as calculated in terms of clause 19.2.2, less an amount equal to the amount of dividends paid by that Specified Issuer to the Registered Shareholder for Your benefit while the trustee and/or the Registered Shareholder was in breach of clause 19.1.2, shall be payable against the registration of those Specified BEE Securities in the name of that Specified Issuers Nominee or upon the cancellation of those Specified BEE Securities;
19.2.4 those Specified BEE Securities and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that:
19.2.4.1 You are the Beneficial Owner, and the Registered Shareholder is the registered holder, of those Specified BEE Securities, or You are an Own Name Client in whose name those Specified BEE Securities are registered, as the case may be; and
19.2.4.2 no person has any right of any nature whatsoever to acquire those Specified BEE Securities.
19.3 If You are not a natural person and either You or any of Your shareholders, members, participants or beneficiaries are involuntarily liquidated (provisionally or finally), as a result of which, during the existence of This BEE Contract, You are no longer a BEE Compliant Person, then:
19.3.1 the Specified Issuers (or the Specified Issuers Nominees) shall not have the right to buy the Specified BEE Securities issued by those Specified Issuers pursuant to clause 17 even though those Specified BEE Securities as a result may now be held in breach of the requirements of This BEE Contract unless clause 19.4 applies;
19.3.2 if it is not possible for the breach to be remedied, Your liquidator or You (if any of Your shareholders, members, participants or beneficiaries are involuntarily liquidated), as the case may be, can Sell the Specified BEE Securities to a BEE Compliant Person;
19.3.3 instead of having to do so immediately, Your liquidator or You, as the case may be, and the Registered Shareholder shall have the additional periods as set out in the Additional Terms of each Specified Issuer in relation to each Specified Issuers Specified BEE Securities commencing on the date of Your or Your shareholders, members, participants or beneficiarys provisional liquidation, to Sell the Specified BEE Securities to any BEE Compliant Person and Your liquidator or You, as the case may be, shall instruct the Registered Shareholder to take whatever steps are necessary, and the Registered Shareholder shall be obliged to take such steps, in order to effect any such Sale of the Specified BEE Securities.
19.4 If the Specified BEE Securities have not been Sold or the breach caused by the liquidation has not otherwise been remedied within the additional period as set out in the Additional Terms of a particular Specified Issuer commencing on the date of Your or Your shareholders, members, participants or beneficiarys involuntary liquidation, that Specified Issuer (or that Specified Issuers Nominee) shall be entitled, but shall not be obliged to buy from You those Specified BEE Securities which that Specified Issuer has issued by giving Your liquidator or You, as the case may be, and the Registered Shareholder written notice, in which event a Sale of those Specified BEE Securities shall be deemed to have been concluded on the following term and conditions:
19.4.1 those Specified BEE Securities shall be acquired with effect from the day prior to Your or Your shareholders, members, participants or beneficiarys provisional liquidation;
19.4.2 the purchase price of those Specified BEE Securities shall be the Forced Sale Value thereof calculated as at the date of the written notice from that Specified Issuer (or the Specified Issuers Nominee) to Your liquidator or You, as the case may be, and the Registered Shareholder, discounted by the percentage set out in the Additional Terms of each Specified Issuer, if any or as applicable;
19.4.3 the purchase price as calculated in terms of clause 19.4.2, less an amount equal to the amount of dividends paid by that Specified Issuer to the Registered Shareholder for Your benefit while Your liquidator or You, as the case may be, and/or the Registered Shareholder was in breach of clause 19.3.2, shall be payable against the registration of those Specified BEE Securities in the name of that Specified Issuers Nominee or upon the cancellation of those Specified BEE Securities;
19.4.4 those Specified BEE Securities and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that:
19.4.4.1 You are the Beneficial Owner, and the Registered Shareholder is the registered holder, of those Specified BEE Securities, or You are an Own Name Client in whose name those Specified BEE Securities are registered, as the case may be; and
19.4.4.2 no person has any right of any nature whatsoever to acquire those Specified BEE Securities.
20. OBLIGATION ON REGISTERED SHAREHOLDER TO PROCURE TRANSFER OF SPECIFIED BEE SECURITIES
In respect of clauses 17.2, 18.2, 18.4, 19.2, 19.4 and 24.2, the Registered Shareholder will be obliged within 10 (ten) days after receipt of notice from a Specified Issuer, to instruct the CSDP to effect transfer of the Specified BEE Securities issued by that Specified Issuer out of the account in the name of the Registered Shareholder into an account in the name of that Specified Issuers Nominee, unless the Specified Issuer has elected itself to buy back those Specified BEE Securities.
21. INDEMNITY
21.1 By virtue of You having purchased Specified BEE Securities on the BEE Segment during the existence of This BEE Contract, You indemnify the Registered Shareholder, JSE Member, CSDP, the IH and IHRS and their directors, employees, servants, agents or contractors or other persons for whom in law they may be liable against:
21.1.1 any claims, demands, actions or proceedings made or instituted against the Registered Shareholder, JSE Member, CSDP, IH or IHRS by any person including Specified Issuers; and
21.1.2 any loss or damage of any kind suffered by any person in the event that the Registered Shareholder, JSE Member, CSDP, IH or IHRS should breach any of the JSEs Equities Rules and Directives applicable to the BEE Segment or the provisions of This BEE Contract, as a consequence of any act or omission on Your part, including Your breach of any provisions of This BEE Contract or the JSEs Equities Rules and Directives.
21.2 You waive against the directors, employees, servants, agents or contractors of the Registered Shareholder, JSE Member, CSDP, IH and IHRS, or other persons for whom in law the Registered Shareholder, JSE Member, CSDP, IH or IHRS may be liable any claims which You may have if the Registered Shareholder permits any of the Specified BEE Securities to be Sold to any Specified Issuers Nominee in accordance with clauses 17.2, 18.2, 18.4, 19.2, 19.4 or 24.2, as a consequence of any breach by You of the provisions of This BEE Contract or the JSEs Equities Rules and Directives.
21.3 Clauses 21.1 and 21.2 constitute stipulatio alteri for the benefit of the directors, employees, servants, agents or contractors of the Registered Shareholder, JSE Member, CSDP, IH and IHRS or other persons for whom in law the Registered Shareholder, JSE Member, CSDP, IH or IHRS may be liable, which they will be entitled to accept at any time by notifying You in writing of their acceptance.
21.4 You, the JSE Member, CSDP, IH and IHRS acknowledge that the Registered Shareholder is obliged to instruct the CSDP to effect the necessary transfers of Specified BEE Securities issued by a particular Specified Issuer out of the account in the name of the Registered Shareholder into an account in the name of that Specified Issuers Nominee in order to give effect to any Sale referred to in clauses 20 and 25.
PART D: Provisions which apply only whilst specified securities are beneficially owned by you or registered in your name as an own name client and which are relevant to a specified issuer and its specified BEE Securities
22. UNDERTAKING
The CSDP, Registered Shareholder, JSE Member, IH or IHRS, whichever holds the original signed copy of This BEE Contract, undertakes in favour of each Specified Issuer at that Specified Issuers cost:
22.1 to furnish a copy of This BEE Contract within 5 (five) days of request, to the JSE at the JSEs request if the first acquisition by You of Specified BEE Securities is On Market, and to the CSDP, at the CSDPs request if the first acquisition by You of Specified BEE Securities is Off Market, as the case may be, so that the JSE or the CSDP, as the case may be, can notify the Specified Issuers whose Specified BEE Securities have been acquired, that a BEE Contract has been concluded; and
22.2 to furnish a notarial copy of This BEE Contract, or procure that a notarial copy of This BEE Contract is furnished, to a Specified Issuer within 10 (ten) days of a Specified Issuers written request to the Registered Shareholder, if a Specified Issuer requires such notarial copy in order to enforce This BEE Contract in a court of law.
23. ACCESS TO INFORMATION
23.1 You consent to any of the Specified Issuer, the Specified Issuers Nominee, the Registered Shareholder, JSE Member, CSDP, IH or IHRS furnishing This BEE Contract and any information, whether oral or written, relating to Your holding of Your Specified BEE Securities and any Encumbrances over Your Specified BEE Securities, to any person (including the JSE) for the purposes of enabling it to:
23.1.1 exercise any rights which it may have; or
23.1.2 discharge any obligations which it may have, in terms of, inter alia, any applicable law, the JSE Equities Rules and Directives, the JSE Listings Requirements, the constitutional documents of the Issuer, This BEE Contract or any other agreement concluded by any of them. You also consent to the JSE (in whose favour this clause constitutes a stipulation for the benefit of a third party which is open for its acceptance) using any information furnished to it pursuant to clause 23.1 for such purposes as it may deem appropriate.
24. BREACH
24.1 If at any time during the existence of This BEE Contract:
24.1.1 You breach any of Your obligations set out in clauses 8.2, 14.2, 22 or 25 in relation to a Specified Issuer or clauses 15 (if applicable) or 16 in relation to Specified BEE Securities issued by a particular Specified Issuer; or
24.1.2 You have made a fraudulent or untrue statement in This BEE Contract or any documents provided by You to a Specified Issuer, You shall immediately notify that Specified Issuer in writing.
24.2 At any time after learning of the occurrence of an event contemplated in clause 24.1, that Specified Issuer (or the Specified Issuers Nominee) shall be entitled, but shall not be obliged to buy from You the Specified BEE Securities issued by that particular Specified Issuer by giving You and the Registered Shareholder written notice, in which event a Sale of those Specified BEE Securities shall be deemed to have been concluded on the following terms and conditions:
24.2.1 those Specified BEE Securities shall be acquired with effect from the day prior to the date of the occurrence of an event contemplated in clause 24.1;
24.2.2 the purchase price of those Specified BEE Securities shall be the Forced Sale Value thereof calculated as at the date of the occurrence of the relevant event, discounted by the percentage set out in that Specified Issuers Additional Terms, if any;
24.2.3 the purchase price as calculated in terms of clause 24.2.2, less an amount equal to the amount of dividends paid by that Specified Issuer to the Registered Shareholder for Your benefit while You were in breach, shall be payable against the registration of those Specified BEE Securities in the name of that Specified Issuers Nominee, if that Specified Issuers Nominee acquires those Specified BEE Securities, or upon the cancellation of these Specified BEE Securities if that Specified Issuer buys back those Specified BEE Securities;
24.2.4 those Specified BEE Securities and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that:
24.2.4.1 You are the Beneficial Owner, and the Registered Shareholder is the registered holder, of those Specified BEE Securities, or You are an Own Name Client in whose name those Specified BEE Securities are registered, as the case may be; and
24.2.4.2 no person has any right of any nature whatsoever to acquire those Specified BEE Securities.
25. OBLIGATION ON REGISTERED SHAREHOLDER TO PROCURE TRANSFER OF SPECIFIED BEE SECURITIES
In respect of clause 24.2, the Registered Shareholder will be obliged within 10 (ten) days after receipt of notice from that Specified Issuer, to instruct the CSDP to effect transfer of the Specified BEE Securities issued by that Specified Issuer out of the account in the name of the Registered Shareholder into an account in the name of that Specified Issuers Nominee.
PART E: Miscellaneous
26. RIGHTS FOR THE BENEFIT OF THE SPECIFIED ISSUER AND THE SPECIFIED ISSUERS NOMINEE
The provisions of This BEE Contract, save for clauses 11, 12 and 21, constitute a stipulatio alteri for the benefit of each of the Specified Issuers and each of the Specified Issuers Nominees, which any of them will be entitled to accept at any time. Notwithstanding the fact that there will be many Specified Issuers which will be parties to This BEE Contract, in the event that a Specified Issuer wants to accept the benefits under This BEE Contract, that Specified Issuer shall not be obliged to notify the other Specified Issuers of such acceptance.
27. ADDRESS FOR SERVICE
27.1 The parties choose as their addresses for service for all purposes under This BEE Contract, whether in respect of court process, notices or other documents or communications of whatsoever nature, the addresses set out in the cover page of This BEE Contract. The Issuer chooses its registered office as its address for service for all purposes under This BEE Contract, whether in respect of court process, notices or other documents or communications of whatsoever nature, but in the case of notices they shall be marked for the attention of the company secretary.
27.2 Any notice or communication required or permitted to be given in terms of This BEE Contract shall be valid and effective only if in writing, whether delivered by hand, by post, by telefax or electronically.
27.3 Any party may by notice to the other parties change the physical address chosen as its address for service to another physical address where postal delivery occurs in the Republic of South Africa or its postal address, telefax number or e-mail address provided that the change shall become effective on the 7th (seventh) business day from the deemed receipt of the notice by the other parties.
27.4 Any notice to a party:
27.4.1 sent by prepaid registered post (by airmail if appropriate) in a correctly addressed envelope to its chosen address for service shall be deemed to have been received on the 7th (seventh) business day after posting (unless the contrary is proved);
27.4.2 delivered by hand to a responsible person during ordinary business hours at its chosen address for service shall be deemed to have been received on the day of delivery;
27.4.3 sent by telefax to its chosen telefax number shall be deemed to have been received on the date of despatch (unless the contrary is proved); or
27.4.4 sent electronically to its chosen e-mail address, shall be deemed to have been received on the date of despatch (unless the contrary is proved).
27.5 Notwithstanding anything to the contrary herein contained a written notice or communication actually received by a party shall be an adequate written notice or communication to it, notwithstanding that it was not sent to or delivered at its chosen address for service.
28. EXTENSION OF TIME, WAIVER OR RELAXATION
No extension of time or waiver or relaxation of any of the provisions or terms of This BEE Contract or any contract, bill of exchange or other document issued or executed pursuant to or in terms of This BEE Contract, which is furnished by any Specified Issuer, shall operate as an estoppel against any party in respect of its rights under This BEE Contract, nor shall it operate so as to preclude such party (save as to any extension, waiver or relaxation actually given) thereafter from exercising its rights strictly in accordance with This BEE Contract.
29. CESSION
29.1 A Specified Issuer shall be entitled at any time and without consent of the parties to This BEE Contract to cede all or any of its rights and delegate all or any of its obligations in terms of This BEE Contract to any third party whomsoever.
29.2 Each of the CSDP and the JSE Member shall be entitled to assign all of its rights and obligations in terms of This BEE Contract as an indivisible whole (provided that includes any liabilities under This BEE Contract which may have arisen prior to such assignment) to any successor-in-title to that CSDPs business or JSE Members business, as the case may be, provided that successor-in-title to that CSDPs business or JSE Members business, as the case may be, has signed a contract in the form of This BEE Contract.
29.3 Save for a Specified Issuer, the CSDP and the JSE Member, the parties to This BEE Contract shall not be entitled to cede any of their rights or delegate any of their obligations in terms of This BEE Contract to any person whomsoever.
30. AMENDMENT
You, the Registered Shareholder, the CSDP, the JSE Member, IH and the IHRS agree that This BEE Contract cannot be amended by any of you without the prior written consent of all the Specified Issuers.
31. EXECUTION IN COUNTERPARTS
This BEE Contract may be executed in several counterparts, each of which shall together constitute one and the same instrument.
32. ADDITIONAL TERMS
By placing Your signature in the space provided below* You warrant that You:
32.1 acknowledge and understand that This BEE Contract comprises:
32.1.1 the generic terms set forth in This BEE Contract; and
32.1.2 as regards each Specified Issuer, its Additional Terms which form an integral part of This BEE Contract;
32.2 acknowledge and confirm that You have read and understood, and are bound by, the generic terms set forth in This BEE Contract and the Additional Terms specific to each Issuer whose BEE Securities are already listed on the BEE Segment;
32.3 acknowledge and confirm that in respect of any BEE Securities which are to be listed on the BEE Segment after Your signature of This BEE Contract, You will read that Issuers Additional Terms before You acquire that Issuers BEE Securities and by trading in such Specified BEE Securities You agree that You will be bound by such Additional Terms as an integral part of This BEE Contract.
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The Beneficial Owner always has to sign This BEE Contract as the party defined as You and in that case, the nominee of such Beneficial Owner, in whose name the BEE Securities are registered, must sign as the Registered Shareholder. Own Name Clients to sign This BEE Contract as the party defined as You and in addition as the Registered Shareholder. |
(14) |
There may not always be an IH which is a party to This BEE Contract. The IH will sign as IH, but not as Registered Shareholder. |
(15) |
There may not always be an IHRS which is a party to This BEE Contract. The IHRS will sign as IHRS, but not as Registered Shareholder. |
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There may not always be a JSE Member which is a party to This BEE Contract. The JSE Member will sign as JSE Member and as Registered Shareholder, if applicable. |
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The Registered Shareholder always has to sign This BEE Contract. Own Name Clients to sign as Registered Shareholder and as the party defined as You. |
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The CSDP will sign This BEE Contract as CSDP and as Registered Shareholder to the extent that the party defined as You is a non-controlled client of the CSDP or a client of the IH which IH is a non-controlled client of the CSDP. The CSDP will sign This BEE Contract as CSDP to the extent that the party defined as You is an Own Name Client. |
Annexure A Checks in relation to You
Annexure B Extract of Identity Document
[to be attached when This BEE Contract is signed]
Annexure C Naturalisation Affidavit
AFFIDAVIT FOR A NATURAL PERSON
I, the undersigned,
(Full names)
(South African Identity Number)
hereby declare under oath as follows, that:
1 I am a Black Person as defined in the Broad-Based Black Economic Empowerment Codes of Good Practice gazetted from time to time under the Broad-Based Black Economic Empowerment Act, No. 53 of 2003, as this definition of interpreted by the courts from time to time;
2 #I became a South African citizen by birth/descent before the commencement date of the constitution of the Republic of South Africa Act of 1993, being prior to 27 April 1994;
3 #I became a South African citizen by naturalisation before the commencement date of the constitution of the Republic of South Africa Act of 1993, being prior to 27 April 1994;
4 #I became a South African citizen by naturalisation after the commencement date of the constitution of the Republic of South Africa Act of 1993, being prior to 27 April 1994, but I would have qualified for South African naturalisation prior to 27 April 1994 in the absence of the laws governing the apartheid regime;
5 the certified copy of my identity document attached to this affidavit is true and complete and is verifiable proof of the above declarations.
#Delete if not applicable
[FULL NAME OF DEPONENT]
I certify that the deponent has acknowledged that he/she knows and understands the contents of this affidavit, that he/she has no objection to taking the prescribed oath and that he/she considers it binding upon his/her conscience.
Thus signed and sworn to before me at |
[Place] on |
[Date] |
COMMISSIONER OF OATHS
FULL NAMES: |
DESIGNATION: |
STREET ADDRESS: |
Annexure D Bee Certificate
[To be attached when This Bee Contract is signed]
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
American Depositary Receipts
The ADRs are issued by JPMorgan Chase Bank, N.A. (JPMorgan), as depositary. Each ADS represents an ownership interest in a designated number of shares which are deposited with the custodian, as agent of the depositary, under the deposit agreement among ourselves, the depositary, holders of ADRs, and all beneficial owners of an interest in the ADSs evidenced by ADRs from time to time.
The depositarys office is located at 383 Madison Avenue, Floor 11, New York, NY 10179.
Each ADS represents one share. The ADS to share ratio is subject to amendment as provided in the form of ADR (which may give rise to fees contemplated by the form of ADR). In the future, each ADS will also represent any securities, cash or other property deposited with the depositary but which they have not distributed directly to you.
A beneficial owner is any person or entity having a beneficial ownership interest ADSs. A beneficial owner need not be the holder of the ADR evidencing such ADS. If a beneficial owner of ADSs is not an ADR holder, it must rely on the holder of the ADR(s) evidencing such ADSs in order to assert any rights or receive any benefits under the deposit agreement. A beneficial owner shall only be able to exercise any right or receive any benefit under the deposit agreement solely through the holder of the ADR(s) evidencing the ADSs owned by such beneficial owner. The arrangements between a beneficial owner of ADSs and the holder of the corresponding ADRs may affect the beneficial owners ability to exercise any rights it may have.
An ADR holder shall be deemed to have all requisite authority to act on behalf of any and all beneficial owners of the ADSs evidenced by the ADRs registered in such ADR holders name for all purposes under the deposit agreement and ADRs. The depositarys only notification obligations under the deposit agreement and the ADRs is to registered ADR holders. Notice to an ADR holder shall be deemed, for all purposes of the deposit agreement and the ADRs, to constitute notice to any and all beneficial owners of the ADSs evidenced by such ADR holders ADRs.
Unless certificated ADRs are specifically requested, all ADSs will be issued on the books of our depositary in book-entry form and periodic statements will be mailed to you which reflect your ownership interest in such ADSs. In our description, references to American depositary receipts or ADRs shall include the statements you will receive which reflect your ownership of ADSs.
You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold the ADSs through your broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are.
As an ADR holder or beneficial owner, we will not treat you as a shareholder of ours and you will not have any shareholder rights. The law of the Republic of South Africa governs shareholder rights. Because the depositary or its nominee will be the shareholder of record for the shares represented by all outstanding ADSs, shareholder rights rest with such record holder. Your rights are those of an ADR holder or of a beneficial owner. Such rights derive from the terms of the deposit agreement entered into among us, the depositary and all holders and beneficial owners from time to time of ADRs issued under the deposit agreement and, in the case of a beneficial owner, from the arrangements between the beneficial owner and the holder of the corresponding ADRs. The obligations of the depositary and its agents are also set out in the deposit agreement. Because the depositary or its nominee will actually be the registered owner of the shares, you must rely on it to exercise the rights of a shareholder on your behalf.
The deposit agreement and the ADSs are governed by New York law. Under the deposit agreement, by holding an ADS or an interest therein, ADR holders and beneficial owners each irrevocably agree that any legal
suit, action or proceeding against or involving us or the depositary, arising out of or based upon the deposit agreement, the ADSs, the ADRs or the transactions contemplated thereby, may be instituted in a state or federal court in New York, New York, irrevocably waive any objection which you may have to the laying of venue of any such proceeding, and irrevocably submit to the exclusive jurisdiction of such courts in any such suit, action or proceeding.
The following is a summary of what we believe to be the material terms of the deposit agreement. Notwithstanding this, because it is a summary, it may not contain all the information that you may otherwise deem important. For more complete information, you should read the entire deposit agreement and the form of ADR which contains the terms of your ADSs. You can read a copy of the deposit agreement which is filed as an exhibit to the registration statement on Form F-6, which is available on the SECs website at http://www.sec.gov.
Share Dividends and Other Distributions
How will I receive dividends and other distributions on the shares underlying my ADSs?
We may make various types of distributions with respect to our securities. The depositary has agreed that, to the extent practicable, it will pay to you the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after converting any cash received into U.S. dollars (if it determines such conversion may be made on a reasonable basis) and, in all cases, making any necessary deductions provided for in the deposit agreement. The depositary may utilize a division, branch or affiliate of JPMorgan to direct, manage and/or execute any public and/or private sale of securities under the deposit agreement. Such division, branch and/or affiliate may charge the depositary a fee in connection with such sales, which fee is considered an expense of the depositary. You will receive these distributions in proportion to the number of underlying securities that your ADSs represent.
Except as stated below, the depositary will deliver such distributions to ADR holders in proportion to their interests in the following manner:
· Cash. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain registered ADR holders, and (iii) deduction of the depositarys and/or its agents expenses in (1) converting any foreign currency to U.S. dollars to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution.
· Shares. In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such shares. Only whole ADSs will be issued. Any shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR holders entitled thereto.
· Rights to receive additional shares. In the case of a distribution of rights to subscribe for additional shares or other rights, if we timely provide evidence satisfactory to the depositary that it may lawfully distribute such rights, the depositary will distribute warrants or other instruments in the discretion of the depositary representing such rights. However, if we do not timely furnish such evidence, the depositary may:
(i) sell such rights if practicable and distribute the net proceeds in the same manner as cash to the ADR holders entitled thereto; or
(ii) if it is not practicable to sell such rights by reason of the non-transferability of the rights, limited markets therefor, their short duration or otherwise, do nothing and allow such rights to lapse, in which case ADR holders will receive nothing and the rights may lapse.
· Other Distributions. In the case of a distribution of securities or property other than those described above, the depositary may either (i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, sell such securities or property and distribute any net proceeds in the same way it distributes cash.
· Elective Distributions. In the case of a dividend payable at the election of our shareholders in cash or in additional shares, we will notify the depositary at least 30 days prior to the proposed distribution stating whether or not we wish such elective distribution to be made available to ADR holders. The depositary shall make such elective distribution available to ADR holders only if (i) we shall have timely requested that the elective distribution is available to ADR holders, (ii) the depositary shall have determined that such distribution is reasonably practicable and (iii) the depositary shall have received satisfactory documentation within the terms of the deposit agreement including any legal opinions of counsel that the depositary in its reasonable discretion may request. If the above conditions are not satisfied, the depositary shall, to the extent permitted by law, distribute to the ADR holders, on the basis of the same determination as is made in the local market in respect of the shares for which no election is made, either (x) cash or (y) additional ADSs representing such additional shares. If the above conditions are satisfied, the depositary shall establish procedures to enable ADR holders to elect the receipt of the proposed dividend in cash or in additional ADSs. There can be no assurance that ADR holders generally, or any ADR holder in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of shares.
If the depositary determines in its discretion that any distribution described above is not practicable for the purpose of effecting such distribution with respect to any specific registered ADR holder entitled thereto, the depositary may choose any method of distribution that it deems practicable for such ADR holder, including the distribution of foreign currency, securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.
Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the depositary in accordance with its then current practices.
The depositary is not responsible if it fails to determine that any distribution or action is lawful or reasonably practicable.
There can be no assurance that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time period. All purchases and sales of securities will be handled by the depositary in accordance with its then current policies, which are currently set forth in the Depositary Receipt Sale and Purchase of Security section of https://www.adr.com/Investors/FindOutAboutDRs, the location and contents of which the depositary shall be solely responsible for.
Deposit, Withdrawal and Cancellation
How does the depositary issue ADSs?
The depositary will issue ADSs if you or your broker deposit shares or evidence of rights to receive shares with the custodian and pay the fees and expenses owing to the depositary in connection with such issuance.
Shares deposited in the future with the custodian must be accompanied by certain delivery documentation and shall, at the time of such deposit, be registered in the name of JPMorgan Chase Bank, N.A., as depositary for the benefit of holders of ADRs or in such other name as the depositary shall direct.
The custodian will hold all deposited shares (including those being deposited by or on our behalf in connection with the offering to which this prospectus relates) for the account and to the order of the depositary, in each case for the benefit of ADR holders. ADR holders and beneficial owners thus have no direct ownership
interest in the shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred to as deposited securities.
Deposited securities are not intended to, and shall not, constitute proprietary assets of the depositary, the custodian or their nominees. Beneficial ownership in deposited securities is intended to be, and shall at all times during the term of the deposit agreement continue to be, vested in the beneficial owners of the ADSs representing such deposited securities. Notwithstanding anything else contained herein, in the deposit agreement, in the form of ADR and/or in any outstanding ADSs, the depositary, the custodian and their respective nominees are intended to be, and shall at all times during the term of the deposit agreement be, the record holder(s) only of the deposited securities represented by the ADSs for the benefit of the ADR holders. The depositary, on its own behalf and on behalf of the custodian and their respective nominees, disclaims any beneficial ownership interest in the deposited securities held on behalf of the ADR holders.
Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name or upon the order of the person entitled thereto evidencing the number of ADSs to which such person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the depositarys direct registration system, and a registered holder will receive periodic statements from the depositary which will show the number of ADSs registered in such holders name. An ADR holder can request that the ADSs not be held through the depositarys direct registration system and that a certificated ADR be issued.
How do ADR holders cancel an ADS and obtain deposited securities?
When you turn in your ADR certificate at the depositarys office, or when you provide proper instructions and documentation in the case of direct registration ADSs, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying shares to you or upon your written order. Delivery of deposited securities in certificated form will be made at the custodians office. At your risk, expense and request, the depositary may deliver deposited securities at such other place as you may request.
The depositary may only restrict the withdrawal of deposited securities in connection with:
· temporary delays caused by closing our transfer books or those of the depositary or the deposit of shares in connection with voting at a shareholders meeting, or the payment of dividends;
· the payment of fees, taxes and similar charges; or
· compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities.
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Record Dates
The depositary may, after consultation with us if practicable, fix record dates (which, to the extent applicable, shall be as near as practicable to any corresponding record dates set by us) for the determination of the registered ADR holders who will be entitled (or obligated, as the case may be):
· to receive any distribution on or in respect of deposited securities,
· to give instructions for the exercise of voting rights at a meeting of holders of shares, or
· to pay the fee assessed by the depositary for administration of the ADR program and for any expenses as provided for in the ADR,
· to receive any notice or to act or be obligated in respect of other matters,
all subject to the provisions of the deposit agreement.
Voting Rights
How do I vote?
If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the shares which underlie your ADSs. Subject to the next sentence, as soon as practicable after receiving notice from us of any meeting at which the holders of shares are entitled to vote, or of our solicitation of consents or proxies from holders of shares, the depositary shall fix the ADS record date in accordance with the provisions of the deposit agreement, provided that if the depositary receives a written request from us and at least 30 days prior to the date of such vote or meeting, the depositary shall, at our expense, distribute to the registered ADR holders a voting notice stating (i) final information particular to such vote and meeting and any solicitation materials, (ii) that each ADR holder on the record date set by the depositary will, subject to any applicable provisions of South African law, be entitled to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the deposited securities represented by the ADSs evidenced by such ADR holders ADRs and (iii) the manner in which such instructions may be given, including instructions for giving a discretionary proxy to a person designated by us. Each ADR holder shall be solely responsible for the forwarding of voting notices to the beneficial owners of ADSs registered in such ADR holders name. There is no guarantee that ADR holders and beneficial owners generally or any holder or beneficial owner in particular will receive the notice described above with sufficient time to enable such ADR holder or beneficial owner to return any voting instructions to the depositary in a timely manner.
Following actual receipt by the ADR department responsible for proxies and voting of ADR holders instructions (including, without limitation, instructions of any entity or entities acting on behalf of the nominee for DTC), the depositary shall, in the manner and on or before the time established by the Depositary for such purpose, endeavor to vote or cause to be voted the deposited securities represented by the ADSs evidenced by such ADR holders ADRs in accordance with such instructions insofar as practicable and permitted under the provisions of or governing deposited securities.
Holders are strongly encouraged to forward their voting instructions to the depositary as soon as possible. Voting instructions will not be deemed received until such time as the ADR department responsible for proxies and voting has received such instructions, notwithstanding that such instructions may have been physically received by the depositary prior to such time. The depositary will not itself exercise any voting discretion in respect of deposited securities. The depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast, including, without limitation, any vote cast by a person to whom the depositary is required to grant a discretionary proxy, or for the effect of any such vote. Notwithstanding anything contained in the deposit agreement or any ADR, the depositary may, to the extent not prohibited by any law, rule or regulation or the rules and/or requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of deposited securities, distribute to the registered holders of ADRs a notice that provides such holders with, or otherwise publicizes to such holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).
There is no guarantee that you will receive voting materials in time to instruct the depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.
Reports and Other Communications
Will ADR holders be able to view our reports?
The depositary will make available for inspection by ADR holders at the offices of the depositary and the custodian the deposit agreement, the provisions of or governing deposited securities, and any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities.
Additionally, if we make any written communications generally available to holders of our shares, and we furnish copies thereof (or English translations or summaries) to the depositary, it will distribute the same to registered ADR holders.
Fees and Expenses
What fees and expenses will I be responsible for paying?
The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of shares, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities or whose ADSs are cancelled or reduced for any other reason, $5.00 for each 100 ADSs (or any portion thereof) issued, delivered, reduced, cancelled or surrendered. The depositary may sell (by public or private sale) sufficient securities and property received in respect of a share distribution, rights and/or other distribution prior to such deposit to pay such charge.
The following additional charges shall also be incurred by the ADR holders, the beneficial owners, by any party depositing or withdrawing shares or by any party surrendering ADSs and/or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADSs or the deposited securities or a distribution of ADSs), whichever is applicable:
· a fee of U.S.$0.05 or less per ADS held (i) upon which any cash distribution is made pursuant to the deposit agreement or (ii) in the case of an elective cash/stock dividend, upon which a cash distribution or an issuance of additional ADSs is made as a result of such elective dividend;
· an aggregate fee of U.S.$0.05 or less per ADS per calendar year (or portion thereof) for services performed by the depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as of the record date or record dates set by the depositary during each calendar year and shall be payable in the manner described in the next succeeding provision);
· a fee for the reimbursement of such fees, charges and expenses as are incurred by the depositary and/or any of its agents (including, without limitation, the custodian and expenses incurred on behalf of ADR holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the shares or other deposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the depositarys or its custodians compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against ADR holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such ADR holders or by deducting such charge from one or more cash dividends or other cash distributions);
· a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal to the $0.05 per ADS issuance fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those ADR holders entitled thereto;
· stock transfer or other taxes and other governmental charges;
· SWIFT, cable, telex and facsimile transmission and delivery charges incurred at your request in connection with the deposit or delivery of shares, ADRs or deposited securities;
· transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities;
· in connection with the conversion of foreign currency into U.S. dollars, JPMorgan Chase Bank, N.A. shall deduct out of such foreign currency the fees, expenses and other charges charged by it and/or its agent (which may be a division, branch or affiliate) so appointed in connection with such conversion; and
· fees of any division, branch or affiliate of the depositary utilized by the depositary to direct, manage and/or execute any public and/or private sale of securities under the deposit agreement.
JPMorgan Chase Bank, N.A. and/or its agent may act as principal for such conversion of foreign currency. For further details see https://www.adr.com.
We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary.
The right of the depositary to receive payment of fees, charges and expenses survives the termination of the deposit agreement, and shall extend for those fees, charges and expenses incurred prior to the effectiveness of any resignation or removal of the depositary.
The fees and charges described above may be amended from time to time by agreement between us and the depositary.
The depositary may make available to us a set amount or a portion of the depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as we and the depositary may agree from time to time. The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, or by directly billing investors, or by charging the book-entry system accounts of participants acting for them. The depositary will generally set off the amounts owing from distributions made to holders of ADSs. If, however, no distribution exists and payment owing is not timely received by the depositary, the depositary may refuse to provide any further services to ADR holders that have not paid those fees and expenses owing until such fees and expenses have been paid. At the discretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when declared owing by the depositary.
Payment of Taxes
ADR holders or beneficial owners must pay any tax or other governmental charge payable by the custodian or the depositary on any ADS or ADR, deposited security or distribution. If any taxes or other governmental charges (including any penalties and/or interest) shall become payable by or on behalf of the custodian or the depositary with respect to any ADR, any deposited securities represented by the ADSs evidenced thereby or any distribution thereon, such tax or other governmental charge shall be paid by the ADR holder thereof to the depositary and by holding or having held an ADR or any ADSs evidenced thereby, the ADR holder and all beneficial owners thereof, and all prior ADR holders and beneficial owners thereof, jointly and severally, agree to indemnify, defend and save harmless each of the depositary and its agents in respect of such tax or other governmental charge. Each ADR holder and beneficial owner of the ADSs evidenced thereby, and each prior ADR holder and beneficial owner thereof (collectively, the Tax Indemnitors), by holding or having held an ADR or an interest in ADSs, the ADR holder thereof (and prior ADR holder thereof) acknowledges and agrees that the depositary shall have the right to seek payment of amounts owing from any one or more Tax Indemnitor(s) as determined by the depositary in its sole discretion, without any obligation to seek payment from any other Tax Indemnitor(s). If an ADR holder owes any tax or other governmental charge, the depositary may (i) deduct the amount thereof from any cash distributions, or (ii) sell deposited securities (by public or private sale) and deduct the amount owing from the net proceeds of such sale. In either case the ADR holder remains liable for any shortfall. If any tax or governmental charge is unpaid, the depositary may also refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities until such payment is made. If any tax or governmental charge is required to be withheld on any cash distribution, the depositary may deduct the amount required to be withheld from any cash distribution or, in the case of a non-cash distribution, sell the distributed property or securities (by public or private sale) in such amounts and in such manner as the depositary deems necessary and practicable to pay such taxes and
distribute any remaining net proceeds or the balance of any such property after deduction of such taxes to the ADR holders entitled thereto.
As an ADR holder or beneficial owner, you will be agreeing to indemnify us, the depositary, its custodian and any of our or their respective officers, directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.
Reclassifications, Recapitalizations and Mergers
If we take certain actions that affect the deposited securities, including (i) any change in par value, split-up, consolidation, cancellation or other reclassification of deposited securities or (ii) any distributions of shares or other property not made to holders of ADRs or (iii) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all of our assets, then the depositary may choose to, and shall if reasonably requested by us:
· amend the form of ADR;
· distribute additional or amended ADRs;
· distribute cash, securities or other property it has received in connection with such actions;
· sell any securities or property received and distribute the proceeds as cash; or
· none of the above.
If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities and each ADS will then represent a proportionate interest in such property.
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the ADSs without your consent for any reason. ADR holders must be given at least 30 days notice of any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, SWIFT, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or otherwise prejudices any substantial existing right of ADR holders or beneficial owners. Such notice need not describe in detail the specific amendments effectuated thereby, but must identify to ADR holders and beneficial owners a means to access the text of such amendment. If an ADR holder continues to hold an ADR or ADRs after being so notified, such ADR holder and any beneficial owner are deemed to agree to such amendment and to be bound by the deposit agreement as so amended. No amendment, however, will impair your right to surrender your ADSs and receive the underlying securities, except in order to comply with mandatory provisions of applicable law.
Any amendments or supplements which (i) are reasonably necessary (as agreed by us and the depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act of 1933 or (b) the ADSs or shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by ADR holders, shall be deemed not to prejudice any substantial rights of ADR holders or beneficial owners. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the deposit agreement or the form of ADR to ensure compliance therewith, we and the depositary may amend or supplement the deposit agreement and the ADR at any time in accordance with such changed laws, rules or regulations. Such amendment or supplement to the deposit agreement in such circumstances may become effective before a notice of such amendment or supplement is given to ADR holders or within any other period of time as required for compliance.
Notice of any amendment to the deposit agreement or form of ADRs shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the ADR holders identifies a means for ADR holders and beneficial owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the SECs, the depositarys or our website or upon request from the depositary).
How may the deposit agreement be terminated?
The depositary may, and shall at our written direction, terminate the deposit agreement and the ADRs by mailing notice of such termination to the registered holders of ADRs at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the depositary shall have (i) resigned as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered ADR holders unless a successor depositary shall not be operating under the deposit agreement within 60 days of the date of such resignation, and (ii) been removed as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered holders of ADRs unless a successor depositary shall not be operating under the deposit agreement on the 60th day after our notice of removal was first provided to the depositary.
After the date so fixed for termination, the depositary and its agents will perform no further acts under the deposit agreement or the ADRs, except to receive and hold (or sell) distributions on deposited securities and deliver deposited securities being withdrawn. As soon as practicable after the date so fixed for termination, the depositary shall use its reasonable efforts to sell the deposited securities and shall thereafter (as long as it may lawfully do so) hold in an account (which may be segregated or unsegregated account) the net proceeds of such sales, together with any other cash then held by it under the deposit agreement, without liability for interest, in trust for the pro rata benefit of the holders of ADRs not theretofore surrendered. After making such sale, the depositary shall be discharged from all obligations in respect of the deposit agreement and the ADR, except to account for such net proceeds and other cash.
Limitations on Obligations and Liability to ADR holders
Limits on our obligations and the obligations of the depositary; limits on liability to ADR holders and holders of ADSs
Prior to the issue, registration, registration of transfer, split-up, combination, or cancellation of any ADRs, or the delivery of any distribution in respect thereof, and from time to time in the case of the production of proofs as described below, we or the depositary or its custodian may require:
· payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the deposit agreement;
· the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial or other ownership of any securities, compliance with applicable law, regulations, provisions of or governing deposited securities and terms of the deposit agreement and the ADRs, as it may deem necessary or proper; and
· compliance with such regulations as the depositary may establish consistent with the deposit agreement.
The issuance of ADRs, the acceptance of deposits of shares, the registration, registration of transfer, split-up or combination of ADRs or the withdrawal of shares, may be suspended, generally or in particular instances, when the ADR register or any register for deposited securities is closed or when any such action is deemed advisable by the depositary; provided that the ability to withdraw shares may only be limited under the following circumstances: (i) temporary delays caused by closing transfer books of the depositary or our transfer books or the deposit of shares in connection with voting at a shareholders meeting, or the payment of dividends,
(ii) the payment of fees, taxes, and similar charges, and (iii) compliance with any laws or governmental regulations relating to ADRs or to the withdrawal of deposited securities.
The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents, provided, however, that no disclaimer of liability under the Securities Act of 1933 is intended by any of the limitations of liabilities provisions of the deposit agreement. The deposit agreement provides that each of us, the depositary and our respective agents will:
· incur no liability to holders or beneficial owners of ADRs if any present or future law, rule, regulation, fiat, order or decree of the United States, the Republic of South Africa or any other country or jurisdiction, or of any governmental or regulatory authority or securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism, nationalization, expropriation, currency restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, computer failure or circumstance beyond our, the depositarys or our respective agents direct and immediate control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the deposit agreement or the ADRs provide shall be done or performed by us, the depositary or our respective agents (including, without limitation, voting);
· incur no liability to holders or beneficial owners of ADRs by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or things which by the terms of the deposit agreement it is provided shall or may be done or performed or any exercise or failure to exercise discretion under the deposit agreement or the ADRs including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable;
· not incur or assume any liability to holders or beneficial owners of ADRs if it performs its obligations under the deposit agreement and ADRs without gross negligence or willful misconduct and the depositary shall not be a fiduciary or have any fiduciary duty to holders or beneficial owners of ADRs;
· in the case of the depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs;
· in the case of us and our agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs, which in our or our agents opinion, as the case may be, may involve it in expense or liability, unless indemnity satisfactory to us or our agent, as the case may be against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be requested;
· not be liable to holders or beneficial owners of ADRs for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting shares for deposit, any registered holder of ADRs, any other person believed by it to be competent to give such advice or information, or in the case of the depositary only, us; or
· may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by it to be genuine and to have been signed, presented or given by the proper party or parties.
Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense (including fees and disbursements of counsel) and liability is furnished as often as may be required. The depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the deposit agreement, any registered holder or holders of ADRs, any ADRs or otherwise related to the deposit agreement or ADRs to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators. The depositary shall not be liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system. Furthermore, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any custodian that is not a branch or affiliate of JPMorgan.
Notwithstanding anything to the contrary contained in the deposit agreement or any ADRs, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the custodian except to the extent that any registered ADR holder has incurred liability directly as a result of the custodian having (i) committed fraud or willful misconduct in the provision of custodial services to the depositary or (ii) failed to use reasonable care in the provision of custodial services to the depositary as determined in accordance with the standards prevailing in the jurisdiction in which the custodian is located. The depositary and the custodian(s) may use third party delivery services and providers of information regarding matters such as pricing, proxy voting, corporate actions, class action litigation and other services in connection with the ADRs and the deposit agreement, and use local agents to provide extraordinary services such as attendance at annual meetings of issuers of securities. Although the depositary and the custodian will use reasonable care (and cause their agents to use reasonable care) in the selection and retention of such third party providers and local agents, they will not be responsible for any errors or omissions made by them in providing the relevant information or services. The depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale.
The depositary has no obligation to inform ADR holders or beneficial owners about the requirements of the laws, rules or regulations or any changes therein or thereto of any country or jurisdiction or of any governmental or regulatory authority or any securities exchange or market or automated quotation system.
Additionally, none of us, the depositary or the custodian shall be liable for the failure by any registered holder of ADRs or beneficial owner therein to obtain the benefits of credits or refunds of non-U.S. tax paid against such ADR holders or beneficial owners income tax liability. The depositary is under no obligation to provide the ADR holders and beneficial owners, or any of them, with any information about our tax status. Neither we nor the depositary shall incur any liability for any tax or tax consequences that may be incurred by registered ADR holders or beneficial owners on account of their ownership or disposition of ADRs or ADSs.
Neither the depositary nor its agents will be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast, including, without limitation, any vote cast by a person to whom the depositary is required to grant a discretionary proxy, or for the effect of any such vote. The depositary may rely upon instructions from us or our counsel in respect of any approval or license required for any currency conversion, transfer or distribution. The depositary shall not incur any liability for the content of any information submitted to it by us or on our behalf for distribution to ADR holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the deposited securities, for the validity or worth of the deposited securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the deposit agreement or for the failure or timeliness of any notice from us. The depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary. Neither us, the depositary nor any of its agents shall be liable for any indirect, special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity (including, without limitation holders or beneficial owners of ADRs and ADSs), whether or not foreseeable and regardless of the type of action in which such a claim may be brought.
No provision of the deposit agreement or the ADRs is intended to constitute a waiver or limitation of any rights which an ADR holder or any beneficial owner may have under the Securities Act of 1933 or the Securities Exchange Act of 1934, to the extent applicable.
The depositary and its agents may own and deal in any class of securities of our company and our affiliates and in ADRs.
Disclosure of Interest in ADSs
To the extent that the provisions of or governing any deposited securities may require disclosure of or impose limits on beneficial or other ownership of, or interests in, deposited securities, other shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, you as ADR holders or beneficial owners agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable instructions we may provide in respect thereof.
Books of Depositary
The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which register shall include the depositarys direct registration system. Registered holders of ADRs may inspect such records at the depositarys office at all reasonable times, but solely for the purpose of communicating with other ADR holders in the interest of the business of our company or a matter relating to the deposit agreement. Such register may be closed at any time or from time to time, when deemed expedient by the depositary or, in the case of the issuance book portion of the ADR Register, when reasonably requested by the Company solely in order to enable the Company to comply with applicable law.
The depositary will maintain facilities for the delivery and receipt of ADRs.
Appointment
In the deposit agreement, each registered holder of ADRs and each beneficial owner, upon acceptance of any ADSs or ADRs (or any interest in any of them) issued in accordance with the terms and conditions of the deposit agreement will be deemed for all purposes to:
· be a party to and bound by the terms of the deposit agreement and the applicable ADR or ADRs,
· appoint the depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the deposit agreement and the applicable ADR or ADRs, to adopt any and all procedures necessary to comply with applicable laws and to take such action as the depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the deposit agreement and the applicable ADR and ADRs, the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof; and
· acknowledge and agree that (i) nothing in the deposit agreement or any ADR shall give rise to a partnership or joint venture among the parties thereto, nor establish a fiduciary or similar relationship among such parties, (ii) the depositary, its divisions, branches and affiliates, and their respective agents, may from time to time be in the possession of non-public information about us, ADR holders, beneficial owners and/or their respective affiliates, (iii) the depositary and its divisions, branches and affiliates may at any time have multiple banking relationships with us, ADR holders, beneficial owners and/or the affiliates of any of them, (iv) the depositary and its divisions, branches and affiliates may, from time to time, be engaged in transactions in which parties adverse to us or ADR holders or beneficial owners may have interests, (v) nothing contained in the deposit agreement or any ADR(s) shall (A) preclude the depositary or any of its divisions, branches or affiliates from engaging in such transactions or establishing or maintaining such relationships, or (B) obligate the depositary or any of its divisions, branches or affiliates to disclose such transactions or relationships or to account for any profit made or payment received in such transactions or relationships, (vi) the depositary shall not be deemed to have knowledge of any information held by any branch, division or affiliate of the depositary and (vii) notice to an ADR holder shall be deemed, for all purposes of the deposit agreement and the ADRs, to constitute notice to any and all beneficial owners of the ADSs evidenced by such ADR holders ADRs. For all purposes under the deposit agreement and the ADRs, the ADR holders thereof shall be deemed to have all requisite authority to act on behalf of any and all beneficial owners of the ADSs evidenced by such ADRs.
Governing Law
The deposit agreement, the ADSs and the ADRs are governed by and construed in accordance with the internal laws of the State of New York. In the deposit agreement, we have submitted to the non-exclusive jurisdiction of the courts of the State of New York and appointed an agent for service of process on our behalf. Any action based on the deposit agreement, the ADSs, the ADRs or the transactions contemplated therein or thereby may be instituted by the depositary against us in any competent court in the Republic of South Africa and/or the United States.
Under the deposit agreement, by holding an ADR or an interest therein, ADR holders and beneficial owners each irrevocably agree that any legal suit, action or proceeding against or involving us or the depositary,
arising out of or based upon the deposit agreement, the ADSs, the ADRs or the transactions contemplated thereby, may only be instituted in a state or federal court in New York, New York, and by holding an ADS or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.
Jury Trial Waiver
In the deposit agreement each party thereto (including, for avoidance of doubt, each holder and beneficial owner and/or holder of interests in ADSs and ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any suit, action or proceeding against the depositary and/or us directly or indirectly arising out of or relating to the shares or other deposited securities, the ADSs or the ADRs, the deposit agreement or any transaction contemplated therein, or the breach thereof (whether based on contract, tort, common law or any other theory), including any claim under the U.S. federal securities laws.
If we or the depositary were to oppose a jury trial demand based on such waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in accordance with applicable state and federal law, including whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. The waiver to right to a jury trial of the deposit agreement is not intended to be deemed a waiver by any holder or beneficial owner of ADSs of the Companys or the depositarys compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.
Sasol Limited Registration No 1979/003231/06 THE SASOL LONG-TERM INCENTIVE PLAN (The Plan) 1
TABLE OF CONTENTS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 INTRODUCTION.................................................................................................... 2 INTERPRETATION ................................................................................................ 3 OPERATION OF THIS PLAN............................................................................... 12 PLAN LIMITS ....................................................................................................... 14 AWARDS OF CONDITIONAL SHARES............................................................... 16 SETTING OF PERFORMANCE CONDITION(S).................................................. 18 REVIEW OF PERFORMANCE CONDITION(S) AND VESTING OF AWARDS.... 19 SETTLEMENT ..................................................................................................... 20 TERMINATION OF EMPLOYMENT .................................................................... 21 CHANGE OF CONTROL ..................................................................................... 25 VARIATION IN SHARE CAPITAL ....................................................................... 27 FORFEITURE AND LAPSE OF AWARDS ........................................................... 28 FURTHER CONDITIONS..................................................................................... 29 DISCLOSURE IN ANNUAL FINANCIAL STATEMENTS ..................................... 31 AMENDMENTS AND TERMINATION ................................................................. 31 DOMICILIUM AND NOTICES .............................................................................. 33 DISPUTES ........................................................................................................... 35 GOVERNING LAW .............................................................................................. 37
1 INTRODUCTION 1.1 The purpose of this Plan is for the Company to provide selected Employees of the Employer Companies, including Executives, with the opportunity to receive Shares in the Company in the form of Awards. The Plan will furthermore provide Participants with the opportunity to share in the success of the Company, provide alignment between the interests of senior Employees of the Group and shareholders of the Company and act as a retention tool for Participants that are high performers and those with critical and scarce skills. 1.2 The Plan could be used to make: 1.2.1 annual awards of Long-Term Incentives to Employees; and 1.2.2 ad hoc awards of Long-Term Incentives to Employees for reasons of appointment, promotion and/or retention, the Vesting of which will be subject to the satisfaction by Participants of Performance Conditions and/or Employment Condition. 1.3 Notwithstanding Rules 5.1, 5.2 and 5.4, participants under the Sasol Long-Term Incentive Scheme 2014 will be deemed to be Participants under this Plan and deemed to no longer be participants under the Sasol Long-Term Incentive Scheme 2014, save for those participants 1.3.1 who are Executives that elect on written notice to their Employer Company or former Employer Company, as applicable; or 1.3.2 whose Employer Company or former Employer Company elects on written notice to the Company, 2
prior to the Settlement Date(s) applicable to those participants award(s), for those participants to remain participants under the Sasol Long-Term Incentive Scheme 2014. 1.4 Awards made to participants under the Sasol Long-Term Incentive Scheme 2014 who are deemed to be Participants under this Plan will be governed by these Rules as if such awards were Awards of Conditional Shares made pursuant to this Plan and references in these Rules to Award Letters will be read as reference to award letters issued pursuant to the Sasol Long-Term Incentive Scheme 2014. 2 INTERPRETATION 2.1 In these Rules, unless inconsistent with the context, the following words and expressions shall have the following meanings set out hereafter - 2.1.1 Accept the acceptance of an Award by default by an Employee in terms of Rule 5.2.3, unless the Employeespecificallyrejects theAwardand Accepted or Acceptance shall be construed accordingly; 2.1.2 Act the Companies Act No. 71 of 2008; 2.1.3 ADR an American Depository Receipt, which is a negotiablecertificateissuedbyaUSBank representing one ordinary share each in the share capital of the Company and which is traded on a US exchange or an over the counter market; 2.1.4 Auditors the auditors of the Company from time to time; 2.1.5 Award or Long-Term Incentives 3
a right granted by the Company to a Participant to or LTI receive a specified number of Conditional Shares, commonly referred to by the Company in its communiques to Participants, as Long-Term Incentives or LTIs; 2.1.6 Award Date the date, specified in an Award Letter, on which an Award is made to an Employee, being a date not earlier than the date on which the RemCom resolved to make such an Award to the Employee; 2.1.7 Award Letter a letter containing the information specified in Rule 5.2, sent by the Company, or its nominee, on the recommendation of the Employer Company, to an Employee, informing the Employee of the Award that has been made to him by the Company; 2.1.8 Business Day any day on which the JSE and / or the NYSE is open for the transaction of their businesses; 2.1.9 Capitalisation Issue an issue of capitalisation shares as contemplated in section 47 of the Act; 2.1.10 Change of Control where a person (or persons acting together in concert), who did not have Control of the Company prior to the Change of Control Date, on the Change of Control Date through a transaction, or series of transactions, acquires Control of the Company; 2.1.11 Change of Control Date the date on which a Change of Control of the 4
Company becomes effective; 2.1.11.1 Closed Period a closed period as defined in terms of the JSE Listings Requirements; 2.1.12 Company Sasol Limited, Registration No 1979/003231/06; a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; 2.1.13 Company Secretary thecompanysecretaryoftheCompanyas appointed in terms of the Act from time to time; 2.1.14 Conditional Shares Shares, the Vesting of which is subject to the fulfilment of the Employment Condition and may also be subject to the satisfaction of Performance Condition(s) as specified in the Award Letter, and such additional numbers of Shares (rounded down to the nearest whole number in the case of fractions) equal in value to the dividends that a Participant would have earned if he was the owner of the Shares that have Vested from the Award Date to the Vesting Date by reference to the dividend record dates occurring in that period; 2.1.15 Control shall have the meaning assigned to it in section 2(2)(a), (b) and (c) of the Act, save that company when used in that section 2(2) in relation to these Rules, shall be deemed to include a juristic person incorporated in any jurisdiction outside of South 5
Africa; 2.1.16 Country Schedule a schedule to these Rules to be adopted as directed by the RemCom, governing participation in the Plan byParticipantsemployedbytheGroupin jurisdictions other than South Africa. Such Country Schedule shall form part of the Rules, and will govern the Award made in terms thereof; 2.1.17 Date of Termination of Employment the date upon which a Participant is no longer permanently employed by any Employer Company, being the date upon which the termination of permanent employment of a Participant with any Employer Company takes effect; 2.1.18 Directors the directors of the Company from time to time; 2.1.19 Employee any person holding permanent salaried employment with an Employer Company, and who is appointed to a position linked to role category Operational or Functional Execution or higher, but excluding any non-executive director of any Employer Company; 2.1.20 Employer Company the Company or any Subsidiary which employs a Participant; 6
2.1.21 Employment Condition the condition of continued employment of the Participant by Employer Companies within the Group for the duration of the Employment Period, such condition being specified in the Award Letter; 2.1.22 Employment Period subject to Rule 9.3, the period commencing on the Award Date and ending on the date as specified in the Award Letter (both dates included) during which the Participant is required to fulfil the Employment Condition, being a period of not less than 3 years; 2.1.23 Executive a Participant who, at the time of receiving an award, is: a) an Executive Vice President (EVP) (which includes the President and Chief Executive Officer of the Company), executive directors of the Company and other members of the Group Executive Committee; or b) a Senior Vice President (SVP) which includes members of the group leadership team of the Group, being the role category layer below the Group Executive Committee of the Group; 2.1.24 Financial Year the financial year of the Company, commencing on 1 July of each year, as amended from time to time; 2.1.25 Group the Company and its Subsidiary/ies from time to time; 7
2.1.26 JSE the exchange operated by the JSE Limited, Registration No 2005/022939/06, a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa, licensed as an exchange under the Financial Markets Act, No.19 of 2012; 2.1.27 JSE Listings Requirements the Listings Requirements of the JSE, as amended from time to time whether by way of practice note or otherwise; 2.1.28 Liquidation Date the date on which any application for the final liquidation of the Company is successful; 2.1.29 Majority of Operations all or the greater part of the assets or undertaking of the Company; 2.1.30 NYSE the New York Stock Exchange, being a stock exchange operated by NYSE Euronext Incorporated; 2.1.31 Participant an Employee to whom an Award has been made under this Plan, unless, pursuant to Rule 5.2.3, he has specifically declined the Award, including the executor of the Participants deceased estate; 2.1.32 Performance Condition(s) if applicable, condition(s) to the Vesting of an Award, in addition to the Employment Condition, as contemplated in Rule 6 and set out in the Award Letter; 8
2.1.33 Performance Period the period of at least three years during which the Performance Conditions are to be satisfied by a Participant, as provided for in the applicable Award Letter; 2.1.34 Plan the Sasol Long-Term Incentive Plan established by the Company pursuant to, and governed by, these Rules; 2.1.35 Prohibited Period (a) a Closed Period; or (b) any other period, as determined by the Company Secretary,when there exists any circumstancewhichconstitutespricesensitive information(asdefinedintheJSEListings Requirements)inrelationtotheCompanys securities; 2.1.36 Recharge Policy a policy or agreement in force from time to time between the Company and an Employer Company regulating the funding of the Settlement; 2.1.37 RemCom the remuneration committee of the Companys board of Directors, comprised solely of non-executive Directors of the Company, which is responsible for the governance of the Plan; 2.1.38 Retirement in relation to a Participant, normal or early retirement as determined by the rules of any applicable Employer Company retirement funds; 9
2.1.39 Rights Issue an offer by the Company to all of its existing ordinary shareholders to subscribe for further ordinary shares pro rata to their then existing holdings of ordinary shares in the Company; 2.1.40 Rules these rules of the Plan, as amended from time to time; 2.1.41 Sasol Long-Term Incentive Scheme 2014 a phantom share plan established by the Company and regulated by the rules of that scheme until 25 November 2016; 2.1.42 Settlement the delivery to a Participant of that number of Shares which is equivalent to the number of Conditional Shares to which that Participant is entitled, in accordance with one of the Settlement methods stipulated in Rule 8, following the Vesting of an Award; and the words Settle and Settled shall bear a corresponding meaning; 2.1.43 Settlement Date the date on which Settlement shall occur; 2.1.44 Share an ordinary share in the share capital of the Company listed on the main board of the JSE or an ADR, as the case may be; 2.1.45 Subsidiary a company incorporated under the Act or a juristic person incorporated in a jurisdiction other than South Africa, which is controlled by the Company as 10
contemplated in section 3 of the Act; 2.1.46 Vest the event which confers on the Participant the unconditional entitlement to the Vesting of the Conditional Shares as determined according to Rule 7.1 and Vesting and Vested shall be construed accordingly; and 2.1.47 Vesting Date(s) the date on which Vesting occurs. 2.2 The headings in these Rules are inserted for reference purposes only and shall in no way govern or affect the interpretation hereof. 2.3 If any provision in a definition is a substantive provision conferring rights or imposing obligations on any party, effect shall be given to it as if it were a substantive provision in the body of these Rules. 2.4 Unless the context indicates otherwise, an expression that denotes any gender includes the others; a natural person includes a created entity (corporate or unincorporated) and the singular includes the plural, and vice versa in each case. 2.5 References in these Rules to any statutory provisions include a reference to those provisions as amended or replaced from time to time and include any regulations made under them. 2.6 When any number of days is prescribed in this Plan, same shall be reckoned exclusively of the first and inclusively of the last day unless the last day falls on a day which is not a Business Day, in which case the last day shall be the next succeeding day which is a Business Day. 11
2.7 Unless a contrary intention clearly appears - 2.7.1 if figures are referred to in numbers and in words and if there is any conflict between the two, the words shall prevail; 2.7.2 the words "include", "including" and "in particular" shall be construed as being by way of example or emphasis only and shall not be construed as, nor shall they take effect as, limiting the generality of any preceding word/s; 2.7.3 any reference in this plan to another agreement or document shall be construed as a reference to such other agreement or document as same may have been, or may from time to time be, amended, varied, novated or supplemented; and 2.7.4 the words "other" and "otherwise" shall not be construed eiusdem generis with any preceding words if a wider construction is possible. 3 OPERATION OF THIS PLAN 3.1 Basis of Awards 3.2 The RemCom may from time to time, in its discretion, request in writing that the Employer Companies nominate Employees to participate in the Plan. 3.3 The Directors of the Company have delegated to RemCom the final authority to decide: 3.3.1 which Employees will participate in the Plan and receive an Award; 3.3.2 subject to Rule 4.1, the aggregate annual number of Conditional Shares to comprise Awards to all Employees; 3.3.3 subject to Rule 4.2, the number of Conditional Shares that may comprise an Award to be granted to an Employee by taking into consideration the Employees basic salary or total guaranteed package, role category, performance, potential, retention requirements and 12
market benchmarks; 3.3.4 the Employment Period and Vesting Date in respect of each Award; 3.3.5 the terms of the Performance Condition(s); 3.3.6 the Performance Period(s); and 3.3.7 all other issues relating to the governance and administration of the Plan. 3.4 If, and when, the RemCom approves an Award, the RemCom shall, in writing, notify the Company and the Employer Company of each Employee who has been approved for participation in the Plan. 3.5 Each Employer Company shall, in writing, acknowledge to the RemCom, the participation in the Plan of those of its Employees whose participation has been approved by RemCom. 3.6 The Company or its nominee shall issue an Award Letter to every Employee whose participation in the Plan has been approved by RemCom as soon as is practically possible after the Company receives the RemComs notification in terms of Rule 3.4. 3.7 Pursuant to the Recharge Policy, the Company or Employer Companies will remain responsible for procuring the Settlement of Shares under the Plan to the Participants employed by them on the Settlement Date, or as may otherwise be regulated under the Recharge Policy. 3.8 A Participant will not be entitled to any beneficial rights in and to the Shares which are the subject of an Award, including voting rights, dividend rights, the right to transfer the Shares and rights arising on the liquidation of the Company, prior to the Settlement of such an Award. 13
3.9 Subject to Rule 8, the Vesting of the Conditional Shares which comprise an Award in terms of Rule 3.3.3 will in all instances be subject to the fulfilment of the Employment Condition and / or to the satisfaction of the Performance Condition(s). 4 PLAN LIMITS 4.1 Overall Company Limit 4.1.1 Subject to Rule 4.3, the maximum aggregate number of Shares which may at any time be Settled in respect of this Plan to all Participants shall not exceed 32,500,000 (thirty-two million five-hundred thousand) Shares, which equates to approximately 5% (five per cent) of the number of issued Shares at the date of adoption of this Plan. For purposes of this Rule, if a percentage is referred to as well as a number and, if there is any conflict between the two, the number shall prevail. 4.1.2 The limit referred to in Rule 4.1.1 shall be calculated to be the actual number of new Shares allotted and issued by the Company in Settlement of the Awards under this Plan, as contemplated in Rules 8.2.2 and 8.2.3. 4.1.3 The limit referred to in Rule 4.1.1 shall exclude the following: 4.1.3.1 Shares purchased in the market as contemplated in Rule 8.2.1 in Settlement of this Plan; and 4.1.3.2 Conditional Shares comprising Awards under the Plan which Awards are forfeited by a Participant, as no Shares would have been Settled as consequence of the forfeiture of these Awards. 4.2 Individual limit Subject to the provisions of Rule 11, the maximum number of Shares which are Settled to any single Participant under this Plan over a maximum period of 5 (five) years from the 14
date of the first Settlement to such Participant or date of grant to such Employee, as the case may be, shall not exceed 1% (one per cent) of 32,500,000 Shares, being 325,000 (three-hundred and twenty-five thousand) Shares. For the avoidance of doubt, Shares which are the subject of Awards which are forfeited and accordingly, are not Settled, will not be included in the aforementioned limit. In the event of a discrepancy between the number of Shares and the percentage of the amount of 32,500,000 Shares, which such number represents, the number will prevail. 4.3 Adjustments 4.3.1 The RemCom must, where required by the Company, adjust the number of Shares available for the Plan stated in Rule 4.1 (without the prior approval of shareholders in the Company), to take account of a sub-division or consolidation of the Shares of the Company, a Capitalisation Issue, a dividend in specie (other than a dividend paid in the ordinary course of business out of the current years retained earnings), a Rights Issue or a scheme of arrangement as contemplated in section 114 of the Act, including a reduction in the capital of the Company. Such adjustment should give a Participant the entitlement to receive the same proportion of Shares in the Company as he was entitled to receive prior to the occurrence of such event. 4.3.2 The RemCom may, where required by the Company, adjust the number of Shares which comprise the individual limit stated in Rule 4.2 (without the prior approval of shareholders in the Company) to take account of a Capitalisation Issue, a dividend in specie (other than a dividend paid in the ordinary course of business out of the current years retained earnings), a Rights Issue or a scheme of arrangement as contemplated in section 114 of the Act, including areduction in the capital of the Company.Such adjustment should give a Participant the entitlement to receive the same proportion of Shares in the Company as he was entitled to receive prior to the occurrence of such event. 15
4.3.3 The Auditors, or other independent advisor acceptable to the JSE, shall confirm to the JSE in writing that any adjustment made in terms of Rules 4.3.1 and 4.3.2 has been properly calculated on a reasonable and equitable basis, in accordance with the Rules. 4.3.4 The issue of Shares as consideration for an acquisition, and the issue of Shares for cash or a vendor consideration placing will not be regarded as a circumstance that requires any adjustment to the limits stated in Rules 4.1 and 4.2. 4.3.5 The Company shall notify the Participants of any adjustments which are made under Rule 11.1 and shall further comply with Rule 4.3.Any adjustments made in terms of Rules 4.3.1 and 4.3.2 must be reported on in the Companys annual financial statements in the year during which the relevant adjustment is made. 5 AWARDS OF CONDITIONAL SHARES 5.1 Time when Awards may be made 5.1.1 The RemCom may select an Employee for participation in the Plan, and make an Award to an Employee in accordance with Rule 3: 5.1.1.1 at any time after the Plan has been approved by the Companys shareholders; and 5.1.1.2 subject to Rule 5.1.1.1, on any day on which there are no restrictions on the making of Awards, being restrictions imposed during a Closed Period or Prohibited Period, or by statute, order, regulation or directive, or by any corporate governance code adopted by the Company relating to dealings in securities by directors, or the JSE Listings Requirements, as the case may be. 5.2 Award Letter 5.2.1 Award Letters shall be in writing and shall specify the terms of the Award including: 16
5.2.1.1 the name of the Employee; 5.2.1.2 the Award Date; 5.2.1.3 the number of Conditional Shares which comprise the Award; 5.2.1.4 the Vesting Date(s); 5.2.1.5 the Employment Period; 5.2.1.6 the Performance Condition(s) and Performance Period; and 5.2.1.7 any other relevant terms and conditions. 5.2.2 An Award shall be personal to the Employee to whom the Award Letter is addressed and may only be acted on by such Employee. 5.2.3 An Award Letter shall: 5.2.3.1 indicate that the Employee will be deemed to have Accepted the Award unless declined by the Employee in writing to the Employer Company within a period of not more than 10 (ten) days after the Award Date; and 5.2.3.2 state that the Award is made on the terms and subject to the conditions of the Rules of the Plan. 5.3 Save for Securities Transfer Tax, where payable, which the Employer Company may recover from the Participant, the Participant will give no consideration to the Company for the Award. The method of recovering the applicable Securities Transfer Tax amount will be agreed between the Employer Company and the Participant prior to the Settlement Date and failing such agreement being reached, the Employer Company may withhold such amount as is required to discharge the Companys liability for the payment of the applicable Securities Transfer Tax amount from the Participants salary 17
or other payments due to him from the Employer Company. 5.4 The Award Letter will also stipulate the various options which the Participant has in respect of settling any tax liability arising from the Vesting of his Conditional Shares. 6 SETTING OF PERFORMANCE CONDITION(S) 6.1 The Vesting of an Award may, in addition to the fulfilment of the Employment Condition, be subject to the satisfaction of Performance Conditions and any other conditions specified by the RemCom. 6.2 Any such Performance Conditions and further condition(s) imposed under Rule 6.1 shall be: 6.2.1 objective; and 6.2.2 set out in, or attached in the form of a schedule to, the relevant Award Letter. 6.3 Should an event occur at any time during the Performance Period(s) which causes the RemCom to consider that the Performance Condition(s) imposed under Rule 6.1 are no longer appropriate, the RemCom may substitute or vary the Performance Condition(s) in such a manner as: 6.3.1 is reasonable in the circumstances; and 6.3.2 produces a fairer measure of performance and is not materially less or materially more difficult to satisfy. 6.4 The relevant Award will then continue to be effective as of the Award Date, but subject to the imposition of the Performance Condition(s) as so substituted or varied and communicated in writing by the Company to the Participant. 18
7 REVIEW OF PERFORMANCE CONDITION(S) AND VESTING OF AWARDS 7.1 Subject to Rules 8 and 10, an Award will Vest on the later of: 7.1.1.1 the date or dates on which the Participant has satisfied the Employment Condition(s) as specified in the Award Letter; and 7.1.1.2 to the extent applicable, the date on which the RemCom determines that the Performance Condition(s) and to the extent applicable, any other conditions which have been imposed by the RemCom, have been satisfied by the relevant Participant. 7.2 As soon as reasonably practicable after the end of the Performance Period in relation to an Award, the RemCom shall review the Performance Condition(s) as specified in the relevant Award Letter and any other conditions specified by the RemCom in terms of Rule 6.1 and determine the extent to which these Performance Condition(s) and other conditions have been satisfied by the relevant Participant. 7.3 If the RemCom is satisfied that the Performance Condition(s) and any other conditions specified by the RemCom in terms of Rule 6.1, have been fulfilled by the relevant Participant, the RemCom shall calculate the number of Conditional Shares that will Vest for that Participant and notify that Participant of this fact as soon as is reasonably practicable after the RemComs determination pursuant to Rule 7.2 has been made. 7.4 If the RemCom is satisfied that the Performance Condition(s) and any other conditions specified by the RemCom in terms of Rule 6.1 have not been fulfilled, the portion of the Award linked to the Performance Condition(s) and any other conditions specified by the RemCom in terms of Rule 6.1, will not Vest. The Participant will be notified in writing by the Employer Company of such fact accordingly. 7.5 In the event that the Performance Condition(s) have to be reviewed by the RemCom prior to the end of the Performance Period, as envisaged by Rules 9.3 and 10, at least 19
once in each Financial Year, the RemCom will review the Performance Condition(s) and determine the extent to which the Performance Condition(s) have been met, or are reliably estimated to be met, by the Participant. The outcome of such testing of the satisfaction of the Performance Condition(s) will be used by the RemCom in respect of all Awards made to that Participant in respect of which the Performance Condition(s) have to be reviewed prior to the end of the relevant Performance Period in that particular Financial Year. 7.6 Following the Vesting of an Award, the relevant Participant will become entitled to the Settlement of the Shares comprised in the Award, free of any further restrictions. 7.7 No consideration will be payable by the Participant to the Company in respect of the Settlement of the Award pursuant to Rule 8. 8 SETTLEMENT 8.1 Following the Vesting Date of an Award, the Company or relevant Employer Company shall within 30 (thirty) days of the Vesting Date procure the Settlement to the relevant Participant of that number of Shares which is equivalent to the number of Conditional Shares to which that Participant is entitled in accordance with the Settlement methods described in Rule 8.2. 8.2 Any one of the following Settlement methods may be used by the Company, as directed by the RemCom: 8.2.1 The Employer Company will incur an expense by making a cash contribution to a third party appointed by the Company in an amount equal to the market value of the number of Shares required to Settle the Award, on the basis that the third party will acquire the required number of Shares on the market and effect Settlement to the relevant Participant; or 20
8.2.2 The Employer Company will incur an expense by making a cash contribution to a third party appointed by the Company in an amount equal to the subscription price of the total number of Shares required to Settle the Award, on the basis that the third party will acquire this number of Shares by subscription from the Company and effect Settlement to the relevant Participant, the subscription price per Share to be calculated on the basis of either: 8.2.2.1 the market value per Share; or 8.2.2.2 any other consideration; or 8.2.3 the Company will issue Shares to the Participants. 8.3 Where the Company incurs costs in relation to the Settlement of an Award, whether in the form of the cash contribution or otherwise, the Company will recharge such costs to the relevant Employer Company in terms of the applicable Recharge Policy. 8.4 Subject to Rules 9 and 10, the number of Shares delivered to the Participant in Settlement of an Award shall be that number of Shares which is calculated in accordance with the provisions of the relevant Award Letter, irrespective of the cost to the Company or Employer Company. 8.5 Beneficial rights attached to the Shares, including voting rights, dividend rights, the right to transfer the Shares and rights arising on the liquidation of the Company, will pass to the Participant on the Vesting Date. 9 TERMINATION OF EMPLOYMENT 9.1 Bad leavers If a Participants employment with any Employer Company terminates before the Vesting Date as a consequence of: 21
9.1.1 his resignation; 9.1.2 his dismissal by the Employer Company on grounds of misconduct, proven poor performance or proven dishonesty or fraudulent conduct or conduct against the interest of the Group or its shareholders; 9.1.3 his abscondment; or 9.1.4 any other reason other than those stated in Rule 9.3, all unvested Awards allocated to that Participant will be forfeited in their entirety by that Participant immediately on the Date of Termination of Employment. For the avoidance of doubt, any Awards allocated to that Participant which have already Vested will be unaffected by this Rule 9.1. 9.2 For the purposes of this Rule 9, a Participant will not be treated as ceasing to be an Employee of an Employer Company if, on the same date on which he ceases to be an Employee of an Employer Company, he is employed by another Employer Company. 9.3 Good leavers 9.3.1 If a Participants employment with any Employer Company terminates before the Vesting Date as a consequence of: 9.3.1.1 his death; 9.3.1.2 his Retirement; 9.3.1.3 his retrenchment, as determined to the satisfaction of the RemCom; 9.3.1.4 his being injured, having a disability or ill-health, in each case as certified by a qualified medical practitioner nominated by the relevant Employer Company or determined to the satisfaction of the RemCom; 22
9.3.1.5 the Participants Employer Company ceasing to be a member of the Group or the undertaking in which he is employed being transferred to a transferee which is not a member of the Group; or 9.3.1.6 the RemCom making a determination to terminate his employment, in its absolute discretion, for any other reason, the unvested Awards allocated to that Participant will be dealt with by the Company pursuant to Rules 9.3.2, 9.3.3 and/or 9.3.4, as the case may be. 9.3.2 If the Participants employment with an Employer Company is terminated within 6 (six) months of the Award Date, the Award made to the Participant on that Award Date will be forfeited in its entirety on the Date of Termination of Employment. For the avoidance of doubt, any Awards allocated to that Participant which have already Vested will be unaffected by this Rule 9.3.2. 9.3.3 Where the Participant is not an Executive, a portion of his Award(s) shall Vest as soon as reasonably possible after the Date of Termination of Employment, after the RemCom has determined the extent to which the Performance Condition(s) and any other conditions specified by the RemCom in terms of Rule 6.1 have been satisfied in accordance with Rule 7.5. The portion of the Award which shall Vest in the Participant will be determined based on the number of complete years commencing on the Award Date during which the Participant was employed by any Employer Company until the Date of Termination of Employment, divided by / over the total number of complete years commencing on the Award Date which comprise the Performance Period(s) and adjusted based on the extent to which the Performance Conditions and any other conditions specified by the RemCom in terms of Rule 6.1 have been satisfied or are forecasted by RemCom to be satisfied. To the extent that there is more than one Vesting Date and more than one Employment Period in respect of a particular Award, the 23
determination of what portion of the Award which shall Vest in the Participant should be carried out in respect of each Performance / Employment Period and Performance Condition and each other condition specified by the RemCom in terms of Rule 6.1. The portion of the Award that does not Vest in the Participant will be forfeited in its entirety on the Date of Termination of Employment; provided that the RemCom may, acting fairly and reasonably, decide that a Participant whose employment is terminated for one of the reasons contemplated in Rule 9.3.1.2, 9.3.1.3 or 9.3.1.6, will continue to participate in the Plan, in terms of the Rules, beyond the Date of Termination of Employment and the complete Awards (and not a portion thereof) will Vest in that Participant pursuant to Rule 7.1, provided further that the RemCom may determine the final percentage of the Award which Vests in that Participant with reference to the satisfaction of the Performance Condition(s) and/or the Employment Condition attaching to the particular Award(s). 9.3.4 Where the Participant is an Executive, and - 9.3.4.1 that Participants employment is terminated by an Employer Company pursuant to Rule 9.3.1.1, 9.3.1.4 or 9.3.1.5, as the case may be, the Award which has been allocated to that Participant will Vest in that Participant in accordance with Rule 9.3.3; or 9.3.4.2 that Participants employment is terminated by an Employer Company pursuant to Rule 9.3.1.2, 9.3.1.3 or 9.3.1.6, as the case may be, the Participant will continue to participate in the Plan, in terms of the Rules, beyond the Date of Termination of Employment and the Awards which have been allocated to that Participant will Vest in that Participant in accordance with Rule 7.1, unless determined otherwise at the sole discretion of the RemCom. The portion of the Award which shall Vest in the Participant will be determined based on the number of complete years commencing on the Award Date during which the Participant was employed by any Employer Company until the Date of Termination of Employment divided by / over the total number of complete years 24
comprising the Performance Period(s) and adjusted based on the extent to which the Performance Conditions and any other conditions specified by the RemCom in terms of Rule 6.1 have been satisfied or are forecasted by RemCom to be satisfied. To the extent that there is more than one Vesting Date and more than one Employment / Performance Period in respect of a particular Award, the determination of what portion of the Award which shall Vest in the Participant should be carried out in respect of each Employment Period and Performance Condition and each other condition specified by the RemCom in terms of Rule 6.1. 10 CHANGE OF CONTROL 10.1 In the event of a Change of Control of the Company occurring before a particular Vesting Date which directly results in: 10.1.1 the Shares ceasing to be listed on the JSE; 10.1.2 the Majority of Operations of the Company being merged with those of another company or companies; or 10.1.3 the Plan being terminated; a portion of the Award held by a Participant will Vest as soon as reasonably practicable after the Change of Control Date, provided that the RemCom has determined the extent to which the Performance Condition(s) and/or any other condition set by the RemCom in terms of Rule 6.1 have been met in accordance with Rule 7. The portion of the Conditional Shares which shall Vest will be calculated in accordance with Rule 10.2. 10.2 The portion of the Award which shall Vest in a particular Participant will be determined by the RemCom based on the number of complete months served commencing on the Award Date until the Change of Control Date during which the Participant was employed by any Employer Company, divided by / over the total number of complete months 25
which comprise the Performance Period(s) and adjusted based on the extent to which the Performance Conditions and any other conditions specified by the RemCom in terms of Rule 6.1 have been satisfied. 10.3 To the extent that there is more than one Vesting Date and more than one Employment/Performance Period in respect of a particular Award, the determination of what portion of the Award which shall Vest in the Participant pursuant to Rule 10.2 shall be carried out in respect of each such Period. 10.4 The portion of the Award that does not Vest in a Participant as a result of the Change of Control will, except on the termination of the Plan as envisaged in Rule 10.1.3 in which case such Award will be forfeited by the Participant, continue to be subject to the terms of the Award Letter relating thereto unless the RemCom determines that the terms of the Award Letter relating thereto are no longer appropriate. In that case the RemCom shall make such adjustments to the number of Conditional Shares or convert Awards into awards in respect of shares in one or more other companies in the Group, provided that the Participants are no worse off than they would have been had there been no Change of Control.The RemCom may also vary the Performance Condition(s) relating to the Award in accordance with Rule 6. 10.5 If any other event happens which may affect the Awards, including the Shares ceasing to be listed on the JSE (unless pursuant to a Change of Control as referred to in Rule 10.1.1), there being an internal restructuring of the Group or any other event which does not involve: 10.5.1 any Change of Control; or 10.5.2 any change in the ultimate Control of the Company; or 10.5.3 a Change of Control which does not result directly in an event specified in Rule 10.1.1, 26
10.1.2 or 10.1.3, the Award held by a Participant shall not Vest as a consequence of that event and shall continue to be governed by the Rules of the Plan. However, the RemCom may take such action as it considers appropriate to protect the interests of Participants following the occurrence of such event, including converting Awards into awards in respect of shares in one or more other companies in the Group, provided that the Participant is no worse off than he would have been had had there been no occurrence of such event. The RemCom may also vary the Performance Condition(s) relating to Conditional Shares in accordance with Rule 6.3. 11 VARIATION IN SHARE CAPITAL 11.1 Rights Issue, Capitalisation Issue, subdivision or consolidation of Shares, liquidation, etc. 11.1.1 In the event of a: 11.1.1.1 Rights Issue; or 11.1.1.2 Capitalisation Issue; or 11.1.1.3 subdivision of Shares; or 11.1.1.4 consolidation of Shares; or 11.1.1.5 the Company entering into a scheme of arrangement as contemplated in section 114 of the Act; or 11.1.1.6 the Company making distributions, including a reduction of capital and a distribution in specie, other than a dividend paid in the ordinary course of business out of the current years retained earnings, 27
Participants shall continue to participate in the Plan. The RemCom may make such adjustment as it considers appropriate to the number of Conditional Shares comprised in the relevant Award to place Participants in no worse a position than they were prior to the occurrence of the relevant event. 11.2 The issue of Shares as consideration for an acquisition, and the issue of Shares for a vendor consideration placing will not be regarded as a circumstance that requires any adjustment to Awards. 11.3 The Company shall notify the Participants of any adjustments which are made under Rule 11.1 and shall further comply with Rule 4.3. 11.4 If the Company is placed into liquidation, other than for purposes of reorganisation, an Award of Conditional Shares shall ipso facto lapse as from the Liquidation Date. 12 FORFEITURE AND LAPSE OF AWARDS 12.1 Notwithstanding any other provision of the Rules, an Award shall lapse on the earliest of: 12.1.1 the date on which the RemCom determines that the Performance Condition(s) or any further condition imposed by RemCom under Rule 6.1, in relation to Conditional Shares, has not been satisfied either in whole or in part in respect of the Award and can no longer be satisfied; 12.1.2 subject to Rules 8 and 10, the Date of Termination of Employment; 12.1.3 the Liquidation Date; and 12.1.4 any other date provided for under these Rules. 28
13 FURTHER CONDITIONS 13.1 In circumstances where the tax and/or regulatory requirements of a particular jurisdiction where a Participant is employed by an Employer Company makes Settlement impossible or impractical, the RemCom can determine alternative arrangements for the delivery of Shares to that Participant including (but not limited to) that the Participant being paid a cash amount on the Vesting Date in lieu of his receiving Shares that would have been delivered to the Participant, which cash amount is equivalent to the aggregate market value of such Shares as calculated at the Vesting Date. Where appropriate, the terms and conditions of such Award may be set out in a separate Country Schedule, approved by RemCom. 13.2 An Employer Company may withhold any amount required by the Employer Company: 13.2.1 to meet any costs incurred by the Employer Company in respect of the Vesting of an Award, for which the Participant is liable; or 13.2.2 for employees tax and any other statutory deductions in respect of that Participant. 13.3 The Award Letter will stipulate the various options which the Participant has in respect of settling any tax liability arising from the Vesting of Conditional Shares, including one or more of the options set out in Rule 13.4. 13.4 On the Vesting of the Awards, in order for the Participant to meet any costs related to taxation of the Awards, the Participant will have the option to advise the Company to: 13.4.1 sell or to procure the sale of all the Shares for and on behalf of the Participant and to remit the amount which is equal to the tax on the Shares, to the Company; or 13.4.2 sell or to procure the sale of as many Shares as will cover the taxation owed for and on behalf of the Participant; or 29
13.4.3 pay the amount equal to the tax due on the Shares, to the Company from the Participants remuneration or any other amount due by the Employer Company to the Participant. 13.5 Subject to Rule 9, the Employer Company will delay the Settlement or Vesting of the Award, whichever is appropriate, to the Participant if the acquisition or disposal of the Shares would otherwise: 13.5.1 occur during a Closed Period; or 13.5.2 where a Participant is in the full or part time employ of an Employer Company, occur during a Prohibited Period; or 13.5.3 be in contravention of any code adopted by the Company relating to dealings in securities by Directors; or 13.5.4 be prohibited by insider trading legislation or any other legislation or regulations, until the third Business Day following the expiry of such event. 13.6 The rights of Participants under this Plan are determined exclusively by these Rules as read with the Award Letters. 13.6.1 Except as otherwise provided in the Rules, the Participant has no right to any compensation, damages or any other sum or benefit by reason of the fact that: 13.6.2 he ceased to be a Participant in the Plan; or 13.6.3 any of his rights or expectations under this Plan were reduced or lost. 13.7 The Company will ensure compliance with paragraphs 3.63 3.74 (director dealings) of the JSE Listings Requirements in terms of share dealings by the Company relating to the Plan, save for the circumstances pursuant to paragraph 3.92 of the JSE Listings 30
Requirements being present. 13.8 The issue of Shares to Employees which do not fall under the Rules of this Plan will be treated as a specific issue for cash as contemplated in paragraph 5.51 of the JSE Listings Requirements. 13.9 Where a Participant is transferred from one Employer Company to another Employer Company: 13.9.1 all Awards granted to such Participant by the first Employer Company shall remain in force on the same terms and conditions as set out in these Rules and the relevant Award Letter; and 13.9.2 the second Employer Company shall assume a pro rata portion of the first Employer Company's obligations in respect of the relevant Awards in consideration for obtaining the Participant's services from the first Employer Company. 14 DISCLOSURE IN ANNUAL FINANCIAL STATEMENTS The Company shall disclose in its annual financial statements, to the extent required by the Act or the JSE Listings Requirements, the number of Shares that may be utilised for purposes of the Plan at the beginning of the accounting period, changes in such number during the accounting period and the balance of Shares available for utilisation for purposes of the Plan at the end of the accounting period. 15 AMENDMENTS AND TERMINATION 15.1 Subject to the provisions of this Rule 15, the RemCom may at any time, alter, vary or add to these Rules as it thinks fit. Amendments to these Rules may only affect Awards to Participants that have already been made, subject to the respective applicable JSE Listings Requirements; provided that, if an amendment is to the material disadvantage 31
of Participants, as proven to the Company by any Participants, a majority of Participants materially disadvantaged by the amendment shall have approved such amendment. 15.2 Except as provided in Rule 15.3 the provisions relating to: 15.2.1 the category of persons who are eligible for participation in the Plan as envisaged in Rule 2.1.19; 15.2.2 the number of Shares that may be utilised for the Plan as envisaged in Rule 4.1; 15.2.3 the individual limitations on benefits or maximum entitlements to Shares envisaged in Rule 4.2; 15.2.4 the voting, dividend and other rights attached to the Awards, including those arising on a liquidation of the Company, envisaged in Rules 3.8, 8.5 and 12.1.3; 15.2.5 the basis for determining Awards as stipulated in Rule 3.1; 15.2.6 the adjustment of Awards and price in the event of a variation of capital of the Company as stipulated in Rule 4.3; 15.2.7 the procedure to be adopted in respect of the Vesting of Conditional Shares in the event of a Change of Control as stipulated in Rule 10.1, or in any other event which may affect the Awards (excluding a Change of Control) as stipulated in Rule 10.5; 15.2.8 the procedure to be adopted in respect of the Vesting of Conditional Shares in the event of the termination of employment as envisaged in Rule 9; and 15.2.9 the terms of this Rule 15.2, may not be amended without the prior approval of the JSE and by ordinary resolution of shareholders of the Company entitled to exercise at least 75% (seventy five percent) of the voting rights exercisable on that decision, excluding all of the votes attached to all 32
Shares owned and controlled by persons who are existing Participants in the Plan and which have been acquired under the Plan. 15.3 Subject to JSE notification and approval, the RemCom may make minor amendments to these Rules for ease of the administration of the Plan, to comply with, or take account of, the provisions of any proposed or existing legislation or to obtain or maintain favourable taxation or regulatory treatment of any Company or any Employer Company or any present or future Participant. 15.4 The RemCom may terminate the Plan at any time, but Awards granted to Participants before such termination will continue to be valid and shall be dealt with in terms of the Rules of the Plan. 16 DOMICILIUM AND NOTICES 16.1 The parties choose domicilium citandi et executandi for all purposes arising from this Plan, including, without limitation, the giving of any notice, the delivery of Shares, the serving of any process, as follows: 16.1.1 the Company, the Company Secretary and the RemCom: Sasol Place 50 Katherine Street Sandton Tel: +27 010 3445000 16.1.2 any Employer Company - The address and electronic address of the registered office of the Employer Company from time to time; 16.1.3 each Participant - The physical address and electronic address from time to time reflected as being his business address, telefax number and/or electronic address in the Employer Company's payroll system from time to time. 33
16.2 Any of the above parties shall be entitled from time to time, by written notice to the other, to vary its domicilium to any other physical address within the Republic of South Africa and/or its facsimile number and/or (in the case of a Participant) his electronic address; provided that in the case of a Participant such variation is also made to his details on the Employer Company's payroll system. 16.3 Any notice given and any delivery made by any of the above persons to any other which: 16.3.1 is delivered by hand during the normal business hours of the addressee at the addressee's domicilium for the time being shall be rebuttably presumed to have been received by the addressee at the time of delivery; 16.3.2 is delivered by courier during the normal business hours of the addressee at the addressee's domicilium for the time being shall be rebuttably presumed to have been received by the addressee on the 3rd (third) day after the date of the instruction to the courier to deliver to the addressee; and 16.3.3 is posted by prepaid registered post from an address within the Republic of South Africa to the addressee at the addressee's domicilium for the time being shall be rebuttably presumed to have been received by the addressee on the 7th (seventh) day after the date of posting. 16.4 Any notice given that is transmitted by electronic mail and/or facsimile to the addressee at the addressee's electronic address and/or facsimile address (as the case may be) for the time being shall be rebuttably presumed until the contrary is proved by the addressee to have been received by the addressee on the date of successful transmission thereof. 16.5 In the case of any notice or document given to the Employer Company pursuant to the Plan, delivered or sent by post to its registered office or such other address as may be 34
specified by the Employer Company, such notice or document: 16.5.1 must be marked for the attention of the Chief Legal Counsel of the Employer Company; and 16.5.2 will not be deemed to have been received before actual receipt by the Chief Legal Counsel of the Employer Company. 16.6 Notwithstanding anything to the contrary herein contained, a written notice or document which is actually received by a person shall be adequate for purposes of this Plan notwithstanding that such notice or document was not received at that partys domicilium citandi et executandi. 17 DISPUTES 17.1 Any dispute arising under the Plan shall be decided by arbitration in the manner set out in Rule 17 (other than where an interdict is sought or urgent relief may be obtained from a court of competent jurisdiction). 17.2 The arbitration shall be held subject to the provisions of this Plan - 17.2.1 at Johannesburg; 17.2.2 informally; 17.2.3 otherwise in accordance with the provisions of the Arbitration Act, No. 42 of 1965, it being the intention of the parties that if possible the arbitration shall be held and concluded within 21 (twenty-one) Business Days, after it has been demanded. 17.3 The arbitrator shall be, if the question in issue is: 17.3.1 primarily an accounting matter, an independent accountant with not less than 15 35
(fifteen) years experience agreed upon between the parties. In the event that the parties cannot agree within 7 (seven) Business Days, a chartered accountant to be nominated by the Chairperson (or if his title has changed, or if this office no longer exists, the equivalent office no matter what it may be titled) for the time being of the South African Institute of Chartered Accountants; 17.3.2 primarily a legal matter, a practising senior counsel or attorney with no less than 15 (fifteen) years standing agreed upon between the parties. In the event that the parties cannot agree within 7 (seven) Business Days, a practising attorney nominated by the President (or if this title has changed, or if this office no longer exists, the equivalent office no matter what it may be titled) for time being of the Law Society of the Northern Provinces or instead the relevant Provincial Council once established under the Legal Practices Act, 2014; 17.3.3 any other matter, an independent person agreed upon between the parties. 17.4 An aggrieved party may appeal against the arbitration award within 10 (ten) Business Days after receipt of the arbitration award by lodging a notice of appeal with the other party. 17.5 Any party to the arbitration shall be entitled to have the arbitration award made an order of court of competent jurisdiction. 17.6 Where an appeal is made, 2 (two) practising senior counsel of at least 15 (fifteen) years standing shall be appointed as chairpersons of the appeal. If the parties are unable to agree on the chairpersons for the appeal the provisions of Rule 17.3 shall mutatis mutandis apply with the changes required by the context. The chairpersons shall meet the parties within 7 (seven) Business Days after their appointment to determine the procedure for the appeal. 36
18 GOVERNING LAW South African law governs the Plan. 37
This Plan was duly adopted at the annual general meeting of Sasol Limited held on 25 November 2016 and was available for inspection at the Companys registered office for at least 14 (fourteen) days prior to the annual general meeting. Chairman of the Annual General Meeting 38
TRUST DEED CONSTITUTING THE SASOL KHANYISA EMPLOYEE SHARE OWNERSHIP PLAN entered into between SASOL SOUTH AFRICA LIMITED Registration Number: 1968/013914/06 ("Co-Founder") and SASOL LIMITED Registration Number: 1979/003231/06 ("Co-Founder") and YVONNE MALEKHOTLA MOTSISI Identity Number: 6308280958084 (the "First Trustee") and NAEEM ADAM Identity Number: 7604155021084 (the "First Trustee") w Poswa incorporated Attorneys Nolaries COnveyancers
(i) TABLE OF CONTENTS PART A -INTRODUCTION AND INTERPRETATION.........................................................1 1. INTERPRETATION AND DEFINITIONS .....................................................................1 2. ESTABLISHMENT AND PURPOSE OF THE TRUST ...............................................17 PART B-THE KHANYISA TIER 1 PLAN .........................................................................19 3. PARTICIPATION BY KHANYISA TIER 1 PARTICIPANTS.......................................19 4. FUNDING OF THE KHANYISA TIER 1 PLAN .......................................................... 20 6. VESTED RIGHTS OF THE KHANYISA TIER 1 PARTICIPANTS.............................. 20 7. DISTRIBUTIONS TO KHANYISA TIER 1 PARTICIPANTS....................................... 22 B. RESTRICTIVE COVENANTS: KHANYISA TIER 1 PLAN......................................... 22 9. CESSATION OF EMPLOYMENT, FORFEITURE AND REALLOCATION AS REGARDS KHANYISA TIER 1 PARTICIPANTS ............................................................... 23 10. TRANSFER OF ENTITLEMENT ASSETS TO KHANYISA TIER 1 PARTICIPANTS 25 11. TERMINATION OF THE KHANYISA TIER 1 PLAN .................................................. 26 12. CORPORATE ACTION AS REGARDS THE KHANYISA TIER 1 PLAN...................27 PART C-THE KHANYISA TIER 2 PLAN .........................................................................29 13. PARTICIPATION BY KHANYISA TIER 2 PARTICIPANTS....................................... 29 14. SUBSCRIPTION FOR SSA KHANYISA SHARES ....................................................30 15. VESTED RIGHTS OF THE KHANYISA TIER 2 PARTICIPANTS.............................. 31 16. DISTRIBUTIONS IN RELATION TO KHANYISA TIER 2 PARTICIPANTS ............... 34 17. RESTRICTIVE COVENANTS: KHANYISA TIER 2 PLAN.........................................35 1B. REPURCHASE AND DISTRIBUTION OF SSA KHANYISA SHARES...................... 35 19. CESSATION OF EMPLOYMENT, FORFEITURE AND REALLOCATION AS REGARDS KHANYISA TIER 2 PARTICIPANTS ............................................................... 45 20. TRANSFER OF ENTITLEMENT ASSETS TO KHANYISA TIER 2 PARTICIPANTS 49 21. CORPORATE ACTION AS REGARDS THE KHANYISA TIER 2 PLAN...................51 22. DISTRIBUTION TO THE RESIDUAL BENEFICIARYIIES......................................... 54 PART D-GENERAL PROVISIONS APPLICABLE TO THE TRUST ................................ 54 23. FURTHER FUNDING OF THE TRUST BY THE COMPANY .....................................54
(ii) 24. TRUSTEES................................................................................................................54 25. PROCEEDINGS OF TRUSTEES............................................................................... 59 26. POWERS OF TRUSTEES ......................................................................................... 60 27. DUTIES OF TRUSTEES............................................................................................ 62 28. PRIVILEGES OF THE TRUSTEES............................................................................ 63 29. RESTRICTIVE COVENANTS PERTAINING TO THE TRUST................................... 64 30. BOOKS OF ACCOUNT AND AUDITORS ................................................................. 64 31. DAY-TO-DAY ADMINISTRATION AND COSTS AND EXPENSES OF THE TRUST 65 32. INVESTMENT OF CASH........................................................................................... 66 33. MEETINGS OF BENEFICIARIES .............................................................................. 66 34. ENTITLEMENT OF BENEFICIARIES TO REQUISITION MEETINGS ...................... 67 35. VOTING OF PLAN ASSETS .....................................................................................68 36. CORPORATE ACTION AS REGARDS THE TRUST GENERALLY .........................69 37. CONSOLIDATIONS, SUBDIVISIONS AND ADJUSTMENT OF SHARES ................ 71 38. GENERAL PROVISION APPLICABLE TO THE SALE OF ENTITLEMENT ASSETS71 39. DISCLOSURE IN ANNUAL FINANCIAL STATEMENTS .......................................... 72 40. MEDIATION............................................................................................................... 72 41. ARBITRATION .......................................................................................................... 73 42. DOMICILIUM CITANDIET EXECUTANDI ................................................................79 43. TERMINATION.......................................................................................................... 80 44. CHANGES TO THE BEE STANDARDS ................................................................... 81 45. AMENDMENTS TO THE DEED ................................................................................ 82 SCHEDULE 1-REPURCHASE FORMULA ........................................................................1
Page 1 PART A -INTRODUCTION AND INTERPRETATION 1. INTERPRETATION AND DEFINITIONS 1.1. The headings of the clauses in this Trust Deed are for the purpose of convenience and reference only and shall not be used in the interpretation of nor modify nor amplify the terms of this Trust Deed nor any clause hereof. Unless a contrary intention clearly appears: 1.2. words importing: 1.2.1. any one gender include the other two genders; 1.2.2. the singular include the plural and vice versa; and 1.2.3. natural persons include created entities (corporate or unincorporate) and the state and vice versa; 1.3. the following terms shall have the meanings assigned to them hereunder and cognate expressions shall have corresponding meanings, namely: 1.3.1. "Administrator" means, from time to time, either: 1.3.1.1. a person independent of Sasol; or 1.3.1.2. a group of employees of the Company ring-fenced from the functions of the human resources department, who will have sufficient operational capacity and be suitably qualified and experienced to administer the day-to-day affairs of the Trust, including operating from a premises that satisfies the necessary requirements for operating a business; 1.3.2. "Allocated SSA Khanyisa Shares" means those SSA Khanyisa Shares as are as defined in clause 13.4; 1.3.3. "Auditors" means the auditors of the Trust from time to time, it being recorded that initially, the auditors shall be PricewaterhouseCoopers Inc; 1.3.4. "Automatic Repurchase" means the automatic repurchase by the Company from the Trust of the Automatic Repurchase Shares (subject to compliance by the Company with any applicable laws, including solvency and liquidity);
Page 2 1.3.5. "Automatic Repurchase Shares" means that number of SSA Khanyisa Shares as is determined in terms of the Repurchase Formula; 1.3.6. "Automatic Share Exchange" means, subject to clause 18.2.1, the automatic exchange of SOLBE1 Shares to be issued by Sasol, either as selected by Sasol in its sole discretion, to: 1.3.6.1. the Trustees, for all of their remaining SSA Khanyisa Shares; or alternatively 1.3.6.2. each Khanyisa Tier 2 Participant in whose name his/her share of the SSA Khanyisa Shares have been transferred by the Trustees, for all his/her SSA Khanyisa Shares; 1.3.7. "Bargaining Council" means a bargaining council established in terms of the LRA; 1.3.8. "B-BBEE" means broad-based black economic empowerment as defined in the 8-BBEE Act and the Codes; 1.3.9. "B-BBEE Act" means the Broad-Based Black Economic Empowerment Act, 53 of 2003 as amended by the Broad-Based Black Economic Empowerment Act, 46 of 2013, and any regulations or codes of good practice promulgated thereunder (including the Codes) as they may exist from time to time; 1.3.10. "BEE Standards" means each and all of (a) the B-BBEE Act, (b) the Codes, (c) any Charter and (d) any other law, codes or license condition applicable to the Company and/or Sasol (or relevant parts thereof) pursuant to which the ownership and/or control and/or economic or other interest of Black People is measured or a requirement relating to Black People (or B-BBEE) is imposed, or the rights, interests and/or obligations of an entity are affected thereby directly; each as enacted, amended, interpreted and applied from time to time; 1.3.11. "Beneficiaries" means collectively, Khanyisa Tier 1 Participants and Khanyisa Tier 2 Participants who do not cease to be Beneficiaries in accordance with the provisions of this Trust Deed, or in respect of those who die, their replacements contemplated in clauses 9.1 or 19.1, as the case may be, and "Beneficiary" shall, as the context dictates, mean any one of them;
Page3 1.3.12. "Black Groups" means each company and other entity which qualifies as Black for purposes of the ownership criteria as contemplated in the 8-BBEE Act; 1.3.13. "Black People" or "Black Person/s" has the meaning ascribed to it under the 8-BBEE Act, being Africans, Coloureds and Indians, and who are natural persons and who are South African citizens by (i) birth or descent or (ii) naturalisation occurring (a) before 27 April 1994, or (b) on or after 27 April 1994 and who would have been entitled to acquire citizenship by naturalisation prior to that date, and "Black'' shall be construed accordingly; 1.3.14. "Board" means the board of directors of the Company, acting either as such or through any committee or person, to which or whom the board of directors has delegated authority for the purposes of the Plan; 1.3.15. "Business Day" means any day on which banks are generally open for business in the Republic of South Africa, except a Saturday, Sunday or official public holiday in the Republic of South Africa; 1.3.16. "Capitalisation Shares" means the Elective Capitalisation Shares or Non Elective Capitalisation Shares, as the context dictates; 1.3.17. "CCMA" means the Commission for Conciliation, Mediation and Arbitration established in terms of the LRA; 1.3.18. "Charter" means any transformation charters issued under sections 9 and/or 12 of the B-BBEE Act or other charter of general application to the Company and/or Sasol (or relevant parts thereof); 1.3.19. "Codes" mean the Codes of Good Practice on Broad-Based Black Economic Empowerment promulgated as regulations in terms of the B-BBEE Act; 1.3.20. "Companies Act" means the Companies Act, 71 of 2008; 1.3.21. "Company" means Sasol South Africa Limited, a public limited liability company with registration number: 1968/013914/06, duly incorporated in accordance with the laws of the Republic of South Africa; 1.3.22. "Consideration Assets" means those assets, other than cash, offered as consideration by an Offeror as contemplated in clauses 12 or 21;
Page4 1.3.23. "Corporate Action" means any action referred to in clauses 12, 21 and 36; 1.3.24. "Costs" means all costs, expenses and taxes (including dividend withholding tax) due and payable by the Trust, which are not Specific Taxation and Expenses; 1.3.25. "Dispose" means to sell, cede outright, transfer, lend, distribute or otherwise alienate, dispose or encumber and "Disposed" or "Disposal/s" shall have a similar meaning as the context dictates; 1.3.26. "Dividend Percentage" means as regards SSA Khanyisa Shares: 1.3.26.1. from the Effective Date until the end of the 2023 financial year, 2,5% (two comma five percent); and 1.3.26.2. thereafter the percentage shall be equal to the percentage reflected in the second column of the table below, which percentage shall remain unchanged thereafter: provided that if the nominal annual prime lending rate of the Company's bankers, compounded monthly in arrear, exceeds an average of 15% (fifteen percent) for any consecutive rolling 24 (twenty four) month period from the Effective Date to the 2023 financial year end, the Dividend Percentage for the period from the 2023 financial year end until the Automatic Repurchase is exercised, shall remain 2,5% (two comma five percent); *CTC is for the period from the Effective Date to the 2023 financial year end, the total cash available from operating activities for the SSA Group, less cash used in investing activities (having applied due governance processes), less J L less than R67,000,000,000 between R67,000,000,000-R73,600,000,000 5,00% between R73,600,000,001 - R75,000,000,000 8,75% between R75,000,000,001 - R76,000,000,000 12,50% between R76,00,000,0001 - R79,000,000,000 16,25% greater than R79,000,000,001 20,00%
PageS repayments of long-term and short-term debt, all as defined in the statement of cash flows contained in the consolidated annual financial statements of the Group and as regards the month of June 2018, as determined by utilising Sasol's management accounts, the terms above being those used in the consolidated statement of cash flows of the Group in the 30 June 2017 annual financial statements. For the purposes hereof "SSA Group" means the Company and its subsidiaries; 1.3.27. "Effective Date" means 1 June 2018 or such other date as Sasol in its sole discretion shall determine; 1.3.28. "Elected Trustees" means the Trustees who are elected by the Beneficiaries in terms of clause 24.3 or clause 24.4.5; 1.3.29. "Elective Capitalisation Shares" means those shares awarded to a holder of shares by way of a capitalisation issue, if the capitalisation issue is made to a holder of shares as an alternative to any kind of Normal Distribution; 1.3.30. "Eligible Employee" means for the purposes of: 1.3.30.1. the Khanyisa Tier 1 Plan, a person who is eligible by reason of having been a participant in either of the Sasol lnzalo employee scheme or Sasollnzalo management scheme and such person is a permanent employee of a member of the Group on 18 May 2018 or such other date consequent upon a change to the Effective Date; 1.3.30.2. the Khanyisa Tier 2 Plan, a person who is eligible by reason of being a Black Person who either: 1.3.30.2.1. is in the permanent employ of a member of the Groupon 18May2018 orsuchotherdate consequent upon a change to the Effective Date; or 1.3.30.2.2. becomes permanently employed by any member of the Group at any time during the period from 19 May 2018 (or such other date consequent upon a change to the Effective Date) until the 5th (fifth) anniversary of the Effective Date;
Page 6 1.3.31. "Employees' Tax" means employees' tax as contemplated in the Fourth Schedule to the Income Tax Act and taxes to be deducted from Entitlement Assets vested or transferred and/or amounts payable by the Trustees to a Beneficiary, or any similar tax; 1.3.32. "Employer Company" means a member of the Group which employs the Eligible Employee; 1.3.33. "Employer Company Board" means the board of directors of any Employer Company, as constituted from time to time, acting either as such or through any committee or person to which or whom the board of directors of the relevant Employer Company has delegated authority for the purposes of the Trust; 1.3.34. "Employment by the Group" means employment by any Group Company; 1.3.35. "Empowerment Period" means a period expiring on the earlier of: 1.3.35.1. the 1Oth (tenth) anniversary of the Effective Date; and 1.3.35.2. the later of the date on which: 1.3.35.2.1. the preference shares issued by Sasol Khanyisa FundCo to Sasol have been fully redeemed and all accumulated dividends thereon have been fully paid; or 1.3.35.2.2. the Automatic Repurchase has been implemented to its fullest extent, if applicable, unless Sasol otherwise determines that this clause 1.3.35.2 shall not apply, or determines to extend the period beyond the settlement of the preference shares issued by Sasol Khanyisa FundCo to Sasol, or the implementation of the Automatic Repurchase to its fullest extent, whichever may be applicable, to a date selected by Sasol, but which date shall not be after the date in clause 1.3.35.1, or such shorter period as may be determined by Sasol in its sole discretion;
Page? 1.3.36. "Entitlement Assets" means such Plan Assets in which any Beneficiary has a Vested Right and/or any assets or proceeds contemplated in clause 12 or clause 21 in respect of which s/he will take ownership pursuant to this Trust Deed, subject to the Automatic Repurchase, the Automatic Share Exchange and the non-automatic share exchange as contemplated in clause 18.3, to the extent applicable, prior to the termination of the Khanyisa Tier 1 Plan and/or Khanyisa Tier 2 Plan, whichever is relevant; 1.3.37. "Expert" means: 1.3.37.1.one of Sizwe Ntsaluba Gobodo Inc, PricewaterhouseCoopers, Ernst and Young,Deloitte & Touche (or its respective successors-in-title), or any other audit firm; or 1.3.37.2.if so approved by Sasolshareholders during 2018, any corporate finance firm or investment bank, as selected by Sasol, in its sole discretion, provided that the firm or investment bank selected is independent of Sasol; 1.3.38. "Existing Khanyisa Tier 2 Participant" means a Black Person who is employed by any Group Company and did not reject participation in the Plan and as a result becomes a Khanyisa Tier 2 Participant on the Effective Date; 1.3.39. "Extraordinary Distributions" means any distributions by either Sasol or the Company which are not Normal Distributions, and accordingly extraordinary distributions include any distribution in specie of an asset, any return of share capital, any distribution the direct source of which is a realisation of any asset held on capital account by the distributor, as well as any other extraordinary distributions; 1.3.40. "Final Date" means the last day of the Empowerment Period; 1.3.41. "First Trustee/s" means the Trustee/s referred to in clause 24.2.1; 1.3.42. "Forfeited Fractions" means the forfeited fractions referred to in clause 9.6; 1.3.43. "Forfeited SSA Fractions" means the forfeited SSA Fractions referred to in clause 19.6.2;
Page 8 1.3.44. "Forfeiture Period" means the period from the Effective Date to the third anniversary of the Effective Date, or as regards any particular New Khanyisa Tier 2 Participant, his/her Subsequent Effective Date to the third anniversary of his/her Subsequent Effective Date, as the case may be; 1.3.45. "Group" means collectively: 1.3.45.1. Sasol; 1.3.45.2. Sasol's wholly owned subsidiaries from time to time (as defined in the Companies Act); and 1.3.45.3. such other subsidiaries of Sasol from time to time, including the Company, or other entities determined by the Sasol Board from time to time as forming part of the Group; 1.3.46. "Group Company" means any company forming part of the Group; 1.3.47. "Income Tax Act" means the Income Tax Act, 58 of 1962; 1.3.48. "JSE" means the stock exchange operated by JSE Limited, registration number 2005/022939/06, a public company registered and incorporated in accordance with the laws of South Africa, licensed as an exchange under the Financial Markets Act, 2012; 1.3.49. "Khanyisa Tier 1 Final Date" means the 3rd (third) anniversary of the Effective Date or such earlier date as may be determined by Sasol in its sole discretion either as regards: 1.3.49.1. all Khanyisa Tier 1 Participants; or 1.3.49.2. those Khanyisa Tier 1 Participants having Vested Rights in respect of SOL Shares without affecting the Khanyisa Tier 1 Final Date as regards all Khanyisa Tier 1 Participants having Vested Rights in respect of SOLBE1 Shares; or 1.3.49.3. those Khanyisa Tier 1 Participants having Vested Rights in respect of SOLBE1 Shares without affecting the Khanyisa Tier 1 Final Date as regards all Khanyisa Tier 1 Participants having Vested Rights in respect of SOL Shares;
Page9 1.3.50. "Khanyisa Tier 1 Participant/s" means the Eligible Employee/s who were offered and did not reject participation in the Khanyisa Tier 1 Plan, and who accordingly initially acquire/s Vested Rights in SOL Shares or SOLBE1 Shares, as the case may be, and any replacement Beneficiary/ies from time to time contemplated in clause 9.1; 1.3.51. "Khanyisa Tier 1 Plan" means the plan set out in Part B hereof; 1.3.52. "Khanyisa Tier 1 Subscription" means the subscription by the Trust for SOL Shares and/or SOLBE1 Shares; 1.3.53. "Khanyisa Tier 1 Subscription Shares" means the SOL Shares and SOLBE1 Shares issued by Sasol to the Trust for the benefit of the Khanyisa Tier 1 Participants; 1.3.54. "Khanyisa Tier 1 Transfer Date" means as soon as reasonably possible after the later of: 1.3.54.1.the last date upon which any Khanyisa Tier 1 Participant may make the election and has made the requisite payment contemplated in clause 10.3; and 1.3.54.2.the last date on which the Trustees have received the proceeds from the disposal of sufficient of those Entitlement Assets, which are shares, in order to discharge the liability of each one of those Khanyisa Tier 1 Participants who did not make the election and requisite payment contemplated in clause 10.3, in order to pay the Specific Taxation and Expenses, including taxation arising from this very disposal, attributable to him/her as contemplated in clause 10.4, but not before the Khanyisa Tier 1 Final Date; 1.3.55. "Khanyisa Tier 2 Participant/s" means any Eligible Employee/s who is/are offered the opportunity to become a Beneficiary in the Khanyisa Tier 2 Plan in terms of this Trust Deed and who did not reject participation in the Plan and accordingly initially acquires Vested Rights in SSA Khanyisa Shares and any replacement Beneficiarylies from time to time contemplated in clause 19.1; 1.3.56. "Khanyisa Tier 2 Plan" means the plan set out in Part C hereof;
Page 10 1.3.57. "Khanyisa Tier 2 Subscription" means the subscription by the Trust for the SSA Khanyisa Shares; 1.3.58. "Khanyisa Tier 2 Transfer Date" means as regards the SSA Khanyisa Shares, as soon as reasonably possible after the later of the last date upon which: 1.3.58.1.any Khanyisa Tier 2 Participant may make the election and has made the requisite payment contemplated in clause 20.4; or 1.3.58.2.the Trustees have received the proceeds from the disposal of sufficient of those Entitlement Assets, which are shares, in order to discharge the liability of each one of those Khanyisa Tier 2 Participants who did not make the election and requisite payment contemplated in clause 20.4, in order to pay the Specific Taxation and Expenses, including taxation arising from this very disposal, attributable to him/her as contemplated in clause 20.5, but not before the Final Date; 1.3.59. "Labour Court" means the Labour Court established in terms of the LRA; 1.3.60. "LRA" means Labour Relations Act, 66 of 1995; 1.3.61. "Master" means the Master of the High Court of the Republic of South Africa; 1.3.62. "New Khanyisa Tier 2 Participant" means an Eligible Employee who is a Black Person who becomes an employee of any Group Company within 5 (five) years of the Effective Date; 1.3.63. "Nominee" means Computershare Nominees Proprietary Limited, or its successor in title; 1.3.64. "Non-Elective Capitalisation Shares" means those shares in a company awarded to a holder of its shares by way of a capitalisation issue without any other alternative; 1.3.65. "Normal Distribution/s" means all distributions by:
Page 11 1.3.65.1.Sasol in the ordinary course to the Trust in respect of the SOL Shares and/or the SOLBE1 Shares held by the Trustees (but excluding any Extraordinary Distribution); and 1.3.65.2.the Company in the ordinary course to the Trust in respect of the SSA Khanyisa Shares held by the Trustees (but excluding any Extraordinary Distribution); 1.3.66. "Notional Vendor Finance" means the notional vendor finance provided by the Company to the Trust in connection with the subscription of the SSA Khanyisa Shares as a term of issue; 1.3.67. "Offer'' means an offer contemplated in clause 21.1 or in clause 21.2, as the case may be; 1.3.68. "Offer Affecting Khanyisa Tier 1" means one of the following offers should an Offeror give notice to the Sasol Board that it intends to propose a take over offer or scheme of arrangement as a result of which: 1.3.68.1. the entire issued share capital of Sasol; 1.3.68.2. only part of each Sasol shareholder's shares; 1.3.68.3. the entire issued number of SOL Shares, but not the entire issued number of SOLBE1 Shares; 1.3.68.4. the entire issued number of SOLBE1 Shares, but not the entire issued number of SOL Shares; 1.3.68.5. a part only of the issued number of SOL Shares, but none of the SOLBE1 Shares; 1.3.68.6. a part only of the issued number of SOLBE1 Shares, but none of the SOL Shares, will be acquired in consideration for cash and/or Consideration Assets and as a result will extend to the Khanyisa Tier 1 Participants as regards their SOL Shares, or SOLBE1 Shares, as the case may be; 1.3.69. "Offeror" means a bona fide third party offeror making an offer contemplated in either clauses 12, 21 or 36;
Page 12 1.3.70. "Plan" means the Sasol Khanyisa employee share ownership plan the terms of which are set out in this Trust Deed; 1.3.71. "Plan Assets" means as the context dictates, either the Khanyisa Tier 1 Subscription Shares or the SSA Khanyisa Shares or both and any Extraordinary Distribution/Normal Distribution from time to time received by virtue of the Trustees holding the relevant shares and other relevant Entitlement Assets relating to the Khanyisa Tier 1 Plan and/or the Khanyisa Tier 2 Plan; 1.3.72. "Register/s" means the respective registers required to be maintained by the Trustees referred to in clause 27.1; 1.3.73. "Repurchase Formula" means the repurchase formula set out in Schedule 1 as it may be adjusted by the Expert, in accordance with the provisions of clause 18.1.1; 1.3.74. "Retirement" means in relation to a Beneficiary, the termination of the employment of such Beneficiary with any Employer Company, on or after such Beneficiary attaining normal retirement age (as laid down in the relevant approved Employer Company's pension fund or provident fund regulations from time to time, it being recorded that the reference herein to the pension and provident fund regulations is intended to be descriptive of the concept of "retire" rather than requiring a retirement pursuant to those regulations) or, with the approval of any Employer Company Board, such Beneficiary retiring prior to attaining the normal requirement age due to permanent disability or having elected early retirement not related to illness; 1.3.75. "Sasol" means Sasol Limited, a public company with limited liability registered in accordance with the laws of South Africa under registration number 1979/003231/06; 1.3.76. "Sasol Appointed Trustee" means a Trustee who is appointed by the Sasol Board from time to time in terms of clause 24.2; 1.3.77. "Sasol Board" means the board of directors of Sasol, acting either as such or through any committee or person, to which or whom the board of directors of Sasol has delegated authority for purposes of the Trust;
Page 13 1.3.78. "Sasol Khanyisa FundCo" means Sasol Khanyisa FundCo (RF) Limited, registration number: 2017/662953/06, a public company with limited liability, registered in accordance with the laws of South Africa; 1.3.79. "Share" means, as the context dictates either: 1.3.79.1. a SOL Share; or 1.3.79.2. a SOLBE1 Share; or 1.3.79.3. a SSA Khanyisa Share; 1.3.80. "Shareholders" means the shareholders of the Company from time to time; 1.3.81. "Share Exchange Ratio" means taking account, to the extent considered necessary by the Expert, of the effect which may be brought about by any Corporate Actions, the ratio in which either: 1.3.81.1.all of the remaining SSA Khanyisa Shares which will be exchanged by the Trustees, if an exchange with them is selected by Sasol, as referred to in the definition of "Automatic Share Exchange"; or 1.3.81.2.all of the SSA Khanyisa Shares which have been transferred by the Trustees into the names of the relevant Beneficiaries, which will be exchanged by these Beneficiaries, if an exchange with them is selected by Sasol, as referred to in the definition of "Automatic Share Exchange", for an issue of SOLBE1 Shares, which ratio will be determined by the Expert in accordance with the provisions of clause 18.2.5; 1.3.82. "Signature Date" means the date on which the last party signing this Trust Deed does so; 1.3.83. "SOL Shares" means Sasol ordinary shares of no par value in the stated share capital of Sasollisted on: 1.3.83.1.the JSE under the JSE stock code SOL and ISIN code ZAE000006896; and
Page 14 1.3.83.2. the New York Stock Exchange, in the form of American Depository Receipts, under the New York Stock Exchange stock code SSL and ISIN code US8038663006; 1.3.84. "SOLBE1 Shares" means Sasol Ordinary BEE shares of no par value in the stated share capital of Sasol listed on the JSE under the JSE stock code SOLBE1 and ISIN code ZAE000151817; 1.3.85. "Specific Taxation and Expenses" means in relation to a Beneficiary, the sum of: 1.3.85.1. any Tax; and 1.3.85.2. any costs, expenses and disbursements (including without limitation, brokerage costs and/or securities transfer tax) payable, in respect of the transactions under the Plan specifically relating to or for the benefit of that Beneficiary including, but not limited to, the vesting or transfer of Entitlement Assets; 1.3.86. "SSA Khanyisa Shares" means the identical number of SSA Ordinary Shares to be issued by the Company to Sasol Khanyisa FundCo, which will not exceed 28 385 647 SSA Ordinary Shares, which identical number of shares will be issued by the Company to the Trustees initially and any further SSA Ordinary Shares held by the Trustees from time to time; 1.3.87. "SSA Ordinary Shares" means ordinary shares of no par value in the stated capital of the Company; 1.3.88. "Statutes" means the Trust Property Control Act and any other statute affecting the performance by the Trustees of their duties or functions as such; 1.3.89. "Subsequent Effective Date" means the date on which an Eligible Employee becomes a New Khanyisa Tier 2 Participant; 1.3.90. "Subsequent Vesting" means in respect of each New Khanyisa Tier 2 Participant, the vesting of the Vested Rights by reason of becoming a Beneficiary pursuant to the provisions of clause 15.2; 1.3.91. "Subsequent Vesting Notice" means a notice given by any Employer Company Board to the Trustees in terms of clause 15.2.1;
Page 15 1.3.92. "Tax" means any tax including, without limitation, Employees' Tax, dividend withholding tax, securities transfer tax, that is payable by the Trust or the Group in relation to the participation of a Beneficiary in the Plan; 1.3.93. "Trigger Date" means the 1Olh (tenth) Business Day prior to the Final Date unless, Sasol elects in its sole discretion, that it shall be: 1.3.93.1.in the case of an Offer, the Business Day immediately succeeding the opening of the Offer; or 1.3.93.2.the Business Day immediately prior to the day on which any Extraordinary Distribution is intended to be implemented; 1.3.94. "Trust" means the Plan constituted by this Trust Deed; 1.3.95. "Trust Deed" means this trust deed, as amended from time to time; 1.3.96. "Trust Property Control Act" means the Trust Property Control Act, 57 of 1988; 1.3.97. "Trustees" means the First Trustee/s and, thereafter, the Sasol Appointed Trustees and Elected Trustees from time to time of the Trust, where appropriate being read as a reference to them acting in their capacities nomine officio; 1.3.98. "Unallocated Entitlement Assets" means those SSA Khanyisa Shares and other Entitlement Assets in respect of which at the relevant time, no Vested Rights have vested in any Khanyisa Tier 2 Participants, including those in respect of which there had previously been Vested Rights, which had been forfeited, but subject to clause 19.4.5; 1.3.99. "Vested Right/s" means vested rights in respect of any Beneficiary initially to a determined number of the Shares and to any associated Entitlement Asset and any Normal Distribution and/or Extraordinary Distribution in respect thereof from a trust law perspective, pursuant to this Trust Deed; 1.3.100. "Vesting Notice" means a notice given by any Employer Company Board to the Trustees in terms of clauses 6.1 or 15.1.1, as the case may be; and 1.3.101. 'VWAP" means the volume weighted average traded price of a SOL Share or a SOLBE1 Share, as applicable, being the total value of the SOL Shares or
Page 16 SOLBE1 Shares traded on the JSE for a specified number of Business Days divided by the total number of SOL Shares or SOLBE1 Shares traded on the JSE for that period. 1.4. If any provision in a definition is a substantive provision conferring rights or imposing obligations on any interested party, notwithstanding that it is only in the interpretation clause, effect shall be given to it as if it were a substantive provision of this Trust Deed. 1.5. Any reference to an enactment or subordinate legislation is to that enactment or subordinate legislation as at the Signature Date and as amended or re-enacted from time to time. 1.6. If any term is defined within the context of any particular clause in this Trust Deed, the term so defined, unless it is clear from the clause in question that the term so defined has limited application to the relevant clause, shall bear the meaning ascribed to it for all purposes in terms of this Trust Deed, notwithstanding that that term has not been defined in this interpretation clause. 1.7. The rule of construction that a contract shall be interpreted against the party responsible for the drafting or preparation of such contract, shall not apply. 1.8. The words "other" and "otherwise" shall not be construed eiusdem generis with any preceding words where a wider construction is possible. 1.9. Any number of days prescribed in this Trust Deed excludes the first day and includes the last day and any relevant action or notice may be validly done or given on the last day. 1.10. Unless the context indicates otherwise, if the day for payment of any amount or performance of any obligation falls on a day which is not a Business Day, that day will be the next Business Day. 1.11. The annexures to this Trust Deed form an integral part hereof and words and expressions defined in this Trust Deed shall bear, unless the context otherwise requires, the same meaning in such annexures. 1.12. In this Trust Deed, unless the context clearly indicates a contrary intention, a provision that makes reference to any one gender, includes all genders.
Page 17 2. ESTABLISHMENT AND PURPOSE OF THE TRUST 2.1. There is hereby established by the Co-Founders the Sasol Khanyisa Employee Share Ownership Plan comprised of 2 (two) separate employee share ownership plans in terms of which Khanyisa Tier 1 Participants and Khanyisa Tier 2 Participants will become vested Beneficiaries of the Trust. The Co-Founders will accordingly make a contribution of R100.00 (one hundred Rand) each for the establishment of the Trust. The Trust shall be administered by the Trustees for the benefit of all Beneficiaries and in the manner and upon the terms and conditions set out in this Trust Deed. 2.2. The Company, and thereby Sasol indirectly, have the following objectives namely: 2.2.1. as a primary aim, to spread a significant portion of its empowerment transaction amongst selected employees of the Group to enhance the Group and the Company's B-BBEE ownership credentials in accordance with the B BBEE Act and the Codes; 2.2.2. as secondary aims to: 2.2.2.1. broaden equity ownership among selected employees of the Group to promote the sustained success of both the Company and the Group; promote the interests of Beneficiaries in the growth of the relevant Employer Companies; and 2.2.2.2. 2.2.2.3. maintain and promote sound employment relations and to attract, empower and retain Black employees on an on-going basis and to contribute towards the on-going and sustained unencumbered B-BBEE ownership profile of the Group. 2.3. The Sasol Khanyisa Employee Share Ownership Plan will be submitted for registration to the Broad-Based Black Economic Empowerment Commission ("BEE Commission"). In terms of the relevant legislation, the BEE Commission may assess the Sasol Khanyisa Employee Share Ownership Plan for adherence to the relevant legislation and advise of any concerns, and any such concerns must be remedied within a reasonable period. If any such concerns are expressed by the BEE Commission, it shall be in the sole discretion of Sasol, subject to obtaining the approval of its shareholders, if so required in terms of the Listings Requirements of the JSE or this Trust Deed, to determine what course of action to take, including requiring
Page 18 amendments to this Trust Deed which the Trustees shall be obliged to agree to and which shall be binding on all the Beneficiaries, whether or not they affect any Vested Rights. If Sasol in its sole discretion determines that its primary aim referred to in clause 2.2.1 will not be achieved, whether in whole or in part, by reason of the concerns expressed by the BEE Commission and the consequent changes required to be made to this Trust Deed which are not acceptable to Sasol, Sasol shall be entitled by written notice to the Trustees and the Khanyisa Tier 2 Participants to terminate the Khanyisa Tier 2 Plan, in which event: 2.3.1. the Khanyisa Tier 2 Participants shall cease to have any Vested Rights whatsoever, from receipt of such notice; and 2.3.2. the Company shall buy back the SSA Khanyisa Shares at the price of R0.04 per share. 2.4. For the avoidance of doubt, if the buy back in clause 2.3 is applicable and more than 5% (five percent) of the SSA Ordinary shares are repurchased by the Company, the provisions of section 48(8)(b) of the Companies Act will not be applicable, as the Trustees have agreed to the buy back occurring, if applicable, in this Trust Deed. 2.5. Unless a Khanyisa Tier 1 Participant or a Khanyisa Tier 2 Participant notifies the Trustees that s/he does not wish to become a Beneficiary, s/he will become a vested Beneficiary at no consideration to the Beneficiary. 2.6. In terms of the Plan, the Trustees shall subscribe for Khanyisa Tier 1 Subscription Shares and SSA Khanyisa Shares. 2.7. In order to facilitate the transaction as contemplated herein: 2.7.1. for purposes of Khanyisa Tier 1 Participants, each of the relevant Employer Companies will make the relevant contributions to be paid to the Trust (based on the participation of each of their particular Eligible Employees), to enable the Trustees to subscribe for the Khanyisa Tier 1 Subscription Shares; and 2.7.2. for purposes of Khanyisa Tier 2 Participants, Sasol will make a capital contribution of R0.04 (four cents) for each SSA Khanyisa Share to be subscribed for by the Trustees, in furtherance of the objectives as contemplated in this clause 2.
Page 19 PART 8-THE KHANYISA TIER 1 PLAN 3. PARTICIPATION BY KHANYISA TIER 1 PARTICIPANTS 3.1. The Khanyisa Tier 1 Participants who participate in the Khanyisa Tier 1 Plan will comprise: 3.1.1. Black Persons who will acquire Vested Rights in respect of SOLBE1 Shares, unless they elect prior to becoming Beneficiaries of the Khanyisa Tier 1 Plan to acquire Vested Rights in SOL Shares (instead of SOLBE1 Shares), as contemplated in clause 6.2. Sasol will determine what the election form in this regard will look like, the manner in which it will be distributed, when it will be sent out and the time period during which Black Persons will be required to revert in the event that they elect to acquire Vested Rights in SOL Shares (instead of SOLBE1 Shares); and 3.1.2. Eligible Employees who are not Black Persons who will acquire Vested Rights in SOL Shares, and the Trustees will maintain two separate Registers in this regard. 3.2. For purposes of the Khanyisa Tier 1 Plan, the Trustees will subscribe, subject to elections made by Black Persons as contemplated in clause 3.1.1, in respect of each Khanyisa Tier 1 Participant and Sasol will allot and issue to the Trustees for the benefit of each Khanyisa Tier 1 Participant either: 3.2.1. SOLBE1 Shares; or 3.2.2. SOL Shares, to the value of R100 000 (one hundred thousand Rand), subject to clause 3.3, on the Effective Date in respect of each Khanyisa Tier 1 Participant. 3.3. If the number of SOL Shares or SOLBE1 Shares which can be subscribed for based on R100 000 (one hundred thousand Rand) per Khanyisa Tier 1 Participant would result in a fraction of a share having to be issued, the cost to the Employer Company per Khanyisa Tier 1 Participant will slightly exceed R100 000 (one hundred thousand Rand) to avoid such fractionalisation to take account of the cost of the fraction of a SOL Share or SOLBE1 Share, as the case may be, necessary to round up the number of SOL or SOLBE1 Shares which are subscribed for.
Page20 3.4. The shareholders of Sasot have approved the issue of a maximum of 4 902 286 SOL Shares and a maximum of 3 709 970 SOLBE1 Shares for purposes of the Khanyisa Tier 1 Plan. 4. FUNDING OF THE KHANYISA TIER 1 PLAN By not later than the last Business Day prior to the Effective Date, each Employer Company shall make a cash capital contribution to the Trust of R100 000 (one hundred thousand Rand) or slightly more if the provisions of clause 3.3 apply, in respect of each of the Khanyisa Tier 1 Participants employed by that Employer Company, for the sole purpose of enabling the Trustees to subscribe for the Khanyisa Tier 1 Subscription Shares in terms of clause 5 below. 5. SUBSCRIPTION FOR KHANYISA TIER 1 SUBSCRIPTION SHARES The Trustees will subscribe for the following shares on the Effective Date in respect of each Khanyisa Tier 1 Participant who will receive Vested Rights in: 5.1. SOL Shares, for that number of SOL Shares as can be acquired with R100 000 (one hundred thousand Rand), subject to clause 3.3, to be issued at the 30 (thirty) day VWAP of the SOL Shares ending on the trading day being 2 (two) Business Days prior to the Effective Date; 5.2. SOLBE1 Shares, for that number of SOLBE1 Shares as can be acquired with R100 000 (one hundred thousand Rand) subject to clause 3.3, to be issued at the 30 (thirty) day VWAP of the SOLBE1 Shares ending on the trading day being 2 (two) Business Days prior to the Effective Date, and Sasol shall allot and issue them. 6. VESTED RIGHTS OF THE KHANYISA TIER 1 PARTICIPANTS 6.1. Vesting Any Employer Company of Eligible Employees who qualify to become Khanyisa Tier 1 Participants shall deliver to: 6.1.1. each Eligible Employee, a notice by no later than 18 May 2018, or such other date consequent upon a change to the Effective Date, stating that it is the intention of the Employer Company to procure that such Eligible Employee becomes a Khanyisa Tier 1 Participant under the Trust Deed and informing him/her that he/she shall be obliged:
Page 21 6.1.1.1. on or before 25 May 2018, (or such other date consequent upon a change to the Effective Date), to notify such Employer Company in writing in the event that s/he does not wish to become a Khanyisa Tier 1 Participant; and 6.1.1.2. as regards Eligible Employees who are Black Persons that want to become Khanyisa Tier 1 Participants, on or before 25 May 2018, (or such other date consequent upon a change to the Effective Date), to notify such Employer Company of his/her election by written notice, as regards whether s/he wants to acquire Vested Rights initially in SOL Shares or SOLBE1 Shares, failing which s/he will initially acquire Vested Rights in SOLBE1 Shares; 6.1.2. the Trustees a notice, by no later than 29 May 2018, detailing the particulars of its Eligible Employees and instructing the Trustees, which Eligible Employees will participate as Khanyisa Tier 1 Participants and the elections h/she has made, where relevant. The Trustees shall thereafter be obliged, in respect of each such Khanyisa Tier 1 Participant, to vest the relevant shares into his/her name and to enter his/her name into the relevant Register. 6.2. Unless an Eligible Employee notifies the relevant Employer Company on or before 25 May 2018 (or such other date consequent upon a change to the Effective Date), that s/he does not wish to become a Khanyisa Tier 1 Participant and/or unless s/he ceases to be employed by an Employer Company during the period between 19 May 2018 and the Effective Date, s/he will become a Khanyisa Tier 1 Participant and will acquire Vested Rights on the Effective Date in: 6.2.1. SOL Shares or SOLBE1 Shares, as the case may be depending, as regards each Khanyisa Tier 1 Participant who is a Black Person, on his/her election in that regard; and 6.2.2. the case of all other Khanyisa Tier 1 Participants, in SOL Shares, with effect from the Effective Date and from time to time Vested Rights in his/her other Entitlement Assets and Normal Distributions and Extraordinary Distributions including the right, in the circumstances expressly provided for in this Trust Deed, to direct the Trustees as to the manner in which they should vote the SOL Shares or SOLBE1
Page 22 Shares, as the case may be, in respect of which s/he has a Vested Right at the relevant time. 7. DISTRIBUTIONS TO KHANYISA TIER 1 PARTICIPANTS 7.1. Except where a Khanyisa Tier 1 Participant has forfeited the right thereto in terms of the provisions of this Trust Deed, each Khanyisa Tier 1 Participant shall be entitled, subject to clause 7.2 to receive all Normal Distributions less Specific Taxation and Expenses, if applicable, in consequence of his/her Vested Rights to Entitlement Assets. 7.2. Except as otherwise specifically provided in terms of this Trust Deed, payment of any part of Normal Distributions less Specific Taxation and Expenses to Khanyisa Tier 1 Participants who have Vested Rights thereto, shall be effected as soon as reasonably possible after receipt thereof by the Trustees provided that, in order to avoid incurring costs of effecting payments which are disproportionate to the size of the payment due to any Khanyisa Tier 1 Participant, no amount shall be paid to a Khanyisa Tier 1 Participant unless and until the amount thereof, when aggregated with other unpaid Normal Distributions less Specific Taxation and Expenses due to that Khanyisa Tier 1 Participant amounts to at least R50.00 (fifty Rand). 7.3. A Khanyisa Tier 1 Participant shall have Vested Rights in his/her share of Extraordinary Distributions if and when Extraordinary Distributions are received by the Trustees, but those Extraordinary Distributions will only be transferred to a Khanyisa Tier 1 Participant on the Khanyisa Tier 1 Transfer Date and not when the Trustees receive same. 8. RESTRICTIVE COVENANTS: KHANYISA TIER 1 PLAN 8.1. Notwithstanding anything to the contrary contained in this Trust Deed, Khanyisa Tier 1 Participants shall not be entitled, without obtaining the prior written consent of Sasol, until the Khanyisa Tier 1 Final Date and such additional period as may be required thereafter in order to obtain the necessary tax directives concerning any Tax and/or Specific Taxation and Expenses which must be deducted pursuant to the Khanyisa Tier 1 Participants being vested Beneficiaries of the Trust, and to implement clause 10.4, if applicable, to: 8.1.1. Dispose of or enter into any contract to Dispose of any of their Vested Rights; 8.1.2. other than as set out in clause 33.2.6, enter into any agreement in respect of the votes in respect of which they have Vested Rights; or
Page 23 8.1.3. Dispose of or enter into any contract to Dispose of any Entitlement Assets which have been transferred to him/her in terms of the Trust Deed. 8.2. If the provisions of clause 8.1 are breached by any particular Khanyisa Tier 1 Participant prior to the Khanyisa Tier 1 Final Date, the Vested Rights and/or the Entitlement Assets of that Khanyisa Tier 1 Participant will be forfeited. 9. CESSATION OF EMPLOYMENT, FORFEITURE AND REALLOCATION AS REGARDS KHANYISA TIER 1 PARTICIPANTS 9.1. Cessation of Employment by Reason of Death If any Khanyisa Tier 1 Participant ceases to be employed by an Employer Company at any time prior to the Khanyisa Tier 1 Final Date, s/he will cease to be a Beneficiary of the Trust and forfeit his/her Vested Right in his/her Entitlement Assets, save unless the reason for such cessation is death (or in the case of a Khanyisa Tier 1 Participant contemplated in clause 9.2, supervening death), in which event the Beneficiary's nominated beneficiaries, in proportion to their allocation as per the nomination form, under the relevant Employer Company's approved pension fund schemes, or in the absence of any such nominations, the Beneficiary's heirs, shall be substituted as the Beneficiary in place of the deceased Beneficiary and shall acquire Vested Rights in his/her Entitlement Assets subject to the same restrictive covenants as set out in clause B. If such replacement Beneficiary dies the provisions of this clause 9.1 will apply to his/her heirs as replacement Beneficiaries. 9.2. Cessation of Employment with the Group by reason of Retirement, Retrenchment or by virtue of s197 of the LRA If any Khanyisa Tier 1 Participant ceases to be employed by an Employer Company at any time prior to the Khanyisa Tier 1 Final Date, s/he will cease to be a Beneficiary of the Trust and forfeit his/her Vested Right in his/her Entitlement Assets, save unless the reason for such cessation is his/her Retirement, as a result of a retrenchment or as a result of the application of section 197 of the LRA ("Retired/Retrenched/Transferred Employee"), in which event the Khanyisa Tier 1 Participant concerned shall continue to be a Beneficiary of the Trust, with Vested Rights, including the right to receive Normal Distributions in relation to his/her Entitlement Assets in respect of which such Khanyisa Tier 1 Participant has Vested Rights, subject to the same restrictive covenants as set out in clause 8.
Page 24 9.3. Cessation of Employment by reason of resignation Any Khanyisa Tier 1 Participant who ceases to be employed by an Employer Company due to resignation at any time prior to the Khanyisa Tier 1 Final Date shall, ipso facto, with effect from the date of his/her resignation, forfeit his/her Vested Rights in his/her Entitlement Assets (but will not forfeit Normal Distributions already declared by Sasol but not yet paid to the Trustees or received by the Trustees, but not yet paid to the Khanyisa Tier 1 Participants prior to the date of his/her resignation) and will cease to be a Beneficiary of the Trust. 9.4. Cessation of Employment by Reason of Dismissal 9.4.1. Subject to clause 9.4.2 if a Khanyisa Tier 1 Participant ceases to be employed at any time prior to the Khanyisa Tier 1 Final Date, by an Employer Company by reason of his/her dismissal, such dismissed Khanyisa Tier 1 Participant shall, ipso facto, with effect from the date of his/her dismissal, forfeit his/her Vested Rights in his/her Entitlement Assets (including his/her Vested Right to any Normal Distribution already declared by Sasol but not yet paid to the Trustees or received by the Trustees, but not yet paid to the Khanyisa Tier 1 Participants prior to the date of his/her dismissal) and will cease to be a Beneficiary of the Trust. 9.4.2. If the dismissal of a Khanyisa Tier 1 Participant is found by one of the CCMA, a Bargaining Council having jurisdiction, the Labour Court or the Labour Appeal Court to have been substantively unfair and such decision is either not challenged by the Employer Company or has been confirmed on review by the Labour Court then the dismissed employee shall be re-instated as a Khanyisa Tier 1 Participant with effect from the date of his/her dismissal and shall with retrospective effect, be reinstated with the Vested Rights forfeited as a result of the dismissal as if the forfeiture had never taken place. 9.4.3. In the event that a Khanyisa Tier 1 Participant is found to have been substantively unfairly dismissed as described in clause 9.4.2, but is not awardedreinstatement ofhis/her employment, theKhanyisa Tier 1 Participant will be considered, for purposes of this Trust Deed, to have resigned with effect from the date of his/her dismissal.
Page 25 9.4.4. The operation of clauses 9.4.2 and 9.4.3 shall not be suspended by any appeal that may be launched, by an Employer Company or former Khanyisa Tier 1 Participant to the Labour Appeal Court or any other court. 9.5. Transfers within the Group Notwithstanding anything to the contrary contained herein, a Khanyisa Tier 1 Participant who ceases to be employed by a Group Company, but is thereupon immediately employed by another Group Company, shall not for the purposes of clause 9 be deemed to have ceased to be in employment by the Group. 9.6. Reallocation of Forfeited Vested Rights As regards any Entitlement Assets which are forfeited during any financial year of the Company, each of the remaining Khanyisa Tier 1 Participants on the 30th (thirtieth) day prior to the end of that financial year will automatically acquire either Vested Rights or ownership, as applicable, in those forfeited Entitlement Assets in the same ratios as s/he then has Vested Rights or ownership in his/her Entitlement Assets, save that there will be no Vested Rights in or ownership of fractions of Shares ("Forfeited Fractions"). Those Forfeited Fractions will be disposed of by the Trustees for the benefit of the Khanyisa Tier 1 Participants on the Khanyisa Tier 1 Final Date and the proceeds realised pursuant to those disposals, less Specific Taxation and Expenses, will be vested and paid on the Khanyisa Tier 1 Transfer Date to those Khanyisa Tier 1 Participants in the proportions that their Entitlement Assets bear to each other. 10.TRANSFER OF ENTITLEMENT ASSETS TO KHANYISA TIER 1 PARTICIPANTS 10.1. On the Khanyisa Tier 1 Transfer Date, the Trustees shall transfer: 10.1.1. the Entitlement Assets which are shares into the name of the relevant Khanyisa Tier 1 Participant and Sasol shall amend its share register accordingly; 10.1.2. the remaining Entitlement Assets which are not shares, including cash, to each Khanyisa Tier 1 Participant, subject to the deduction of Specific Taxation and Expenses set out below. 10.2. Each Khanyisa Tier 1 Participant shall be liable for the Specific Taxation and Expenses arising from the vesting, transfer and/or realisation of his/her Entitlement Assets in terms of the provisions of this Trust Deed. The Trustees will inform each Khanyisa
Page 26 Tier 1 Participant in writing of the directive received from the South African Revenue Service relating to the Specific Taxation and Expenses attributable to him/her. 10.3. Each Khanyisa Tier 1 Participant entitled to Entitlement Assets shall, by no later than 5 (five) days from receipt of the notification referred to in clause 10.2, which date shall be before any transfer of Entitlement Assets is effected, notify the Trustees if s/he wishes to make payment in cash of the amount of Specific Taxation and Expenses attributable to such Khanyisa Tier 1 Participant to the Trustees prior to the transfer of the Entitlement Assets to him/her. 10.4. Should a Khanyisa Tier 1 Participant fail to: 10.4.1. notify the Trustees within the 5 (five) day period that s/he intends to make payment to the Trustees prior to the transfer of the Entitlement Assets to him/her in cash of the amount of Specific Taxation and Expenses attributable to such Khanyisa Tier 1 Participant; and/or 10.4.2. make the payment so notified in terms of clause 10.4.1 in cash within the relevant period, the Trustees, before ownership of such Entitlement Assets has passed to the Khanyisa Tier 2 Participant, as his/her agent and on his/her behalf, shall use any cash in respect of which such Khanyisa Tier 1 Participant has Vested Rights and to the extent necessary shall realise sufficient of the Entitlement Assets in which s/he has Vested Rights, in order to discharge his/her liability to pay the Specific Taxation and Expenses attributable to him/her, including taxation arising from this very disposal. In this circumstance, the Khanyisa Tier 1 Participant grants the Trustees an irrevocable power of attorney to act as his/her agent, with power of substitution. Any proceeds of such realisation remaining after discharging the Specific Taxation and Expenses attributable to such Khanyisa Tier 1 Participant shall be paid to the Khanyisa Tier 1 Participant concerned. 11.TERMINATION OF THE KHANYISA TIER 1 PLAN For the avoidance of doubt, the Khanyisa Tier 1 Plan is terminated within a reasonable time after the provisions of clauses 8, 9 and 10 have been implemented and all relevant Normal Distributions have been paid in respect of which Khanyisa Tier 1 Participants have Vested Rights.
Page 27 12. CORPORATE ACTION AS REGARDS THE KHANYISA TIER 1 PLAN 12.1. Offer Affecting Khanyisa Tier 1 Should an Offeror give notice to the Sasol Board that it intends to propose an Offer Affecting Khanyisa Tier 1: 12.1.1. and Sasol has indicated its intention to the Trustees, if the Offer Affecting Khanyisa Tier 1 becomes unconditional, to make the Khanyisa Tier 1 Final Date an earlier date: 12.1.1.1. the Trustees shall notify each Khanyisa Tier 1 Participant about the Offer Affecting Khanyisa Tier 1 and each Khanyisa Tier 1 Participant shall be entitled, by not later than 3 (three) Business Days prior to the closing of the Offer Affecting Khanyisa Tier 1, to direct the Trustees in writing, who in turn will direct the Nominee how to vote, as regards his/her SOL Shares or SOLBE1 Shares in respect of which s/he has Vested Rights and which are the subject of the Offer Affecting Khanyisa Tier 1; 12.1.1.2. if the Offer Affecting Khanyisa Tier 1 becomes unconditional and Sasol has exercised its discretion to bring the Khanyisa Tier 1 Final Date forward, the Trustees, as the owners of the SOL Shares and/or SOLBE1 Shares, which are the subject of the Offer Affecting Khanyisa Tier 1 must, to the extent that the Offer Affecting Khanyisa Tier 1 is: 12.1.1.2.1. binding on all the holders of SOL Shares and/or SOLBE1 Shares, as the case may be, whether by acceptance or by operation of law, comply with such Offer Affecting Khanyisa Tier 1, including releasing such SOL Shares and/or SOLBE1 Shares, as the case may be, to the Offeror and receiving the consideration due from the Offeror. In such event, the Vested Rights in SOL Shares or SOLBE1 Shares of each Khanyisa Tier 1 Participant concerned shall be substituted for Vested Rights to such consideration, in place of the SOL Shares or SOLBE1 Shares which have been released to the
Page 28 Offeror and the provisions of clause 10 shall be implemented; 12.1.1.2.2. not binding on all the holders of SOL Shares and/or SOLBE1 Shares, as the case may be, but any particular Khanyisa Tier 1 Participant directed the Trustees to accept the Offer Affecting Khanyisa Tier 1 in respect those SOL Shares and/or SOLBE1 Shares to which he/she has Vested Rights and which are the subject of the Offer Affecting Khanyisa Tier 1, comply with such offer, including releasing the SOL Shares and/or SOLBE1 Shares, as the case may be, to the Offeror and receiving the consideration due from the Offeror. In such event, the Vested Rights in SOL Shares or SOLBE1 Shares of each Khanyisa Tier 1 Participant concerned will be substituted for Vested Rights to such consideration in place of the SOL Shares or SOLBE1 Shares, which have been released to the Offeror and the provisions of clause 10 shall be implemented. As regards those Khanyisa Tier 1 Participants who did not direct the Trustees to accept the Offer Affecting Khanyisa Tier 1, s/he shall continue to have Vested Rights in his/her SOL Shares or SOLBE1 Shares, as the case may be and the provisions of clause 10 shall be applied in respect of such SOL Shares and/or SOLBE1 Shares. 12.1.2. and Sasol has not indicated to the Trustees that, if the Offer Affecting Khanyisa Tier 1 becomes unconditional, Sasol will make the Khanyisa Tier 1 Final Date an earlier date, the consequence will be that it will not be possible for the Trustees to participate in the Offer Affecting Khanyisa Tier 1. In such event neither the Trustees nor the Khanyisa Tier 1 Participants shall have any claims against Sasol but if the listing of the SOLBE1 Shares has been affected by the implementation of the Offer Affecting Khanyisa Tier 1, Sasol will take whatever steps are necessary in an endeavour to ensure that there is a listing of the SOLBE1 Shares on the same or similar basis as currently
Page 29 prevails or at least that there is an alternative trading platform for the SOLBE1 Shares on the Khanyisa Tier 1 Final Date. 12.2. Acquisition of Sasol shareholders' shares other than Shares held by the Trust Should an Offeror give notice to the Sasol Board that it intends to make an offer as a result of which all or part of each Sasol shareholder's Shares: 12.2.1. other than those Shares held by the Trust, if any, shall be acquired; 12.2.2. including those Shares held by the Trust, if any, shall be acquired, but Sasol does not exercise its discretion to make the Khanyisa Tier 1 Final Date earlier, the Trustees and/or the Khanyisa Tier 1 Participants shall not be entitled to participate in that offer and they to the extent necessary waive any right to receive such offer or have any claims as a result of their non-participation in the offer. PART C-THE KHANYISA TIER 2 PLAN 13. PARTICIPATION BY KHANYISA TIER 2 PARTICIPANTS 13.1. Khanyisa Tier 2 Participants comprise of both Existing Khanyisa Tier 2 Participants and New Khanyisa Tier 2 Participants employed by a member of the Group within 5 (five) years after the Effective Date. 13.2. The maximum number of SSA Khanyisa Shares to be allotted and issued to the Trust for purposes of participation by the Khanyisa Tier 2 Participants in the Plan will be 28 385 647. 13.3. The number of SSA Khanyisa Shares in which a Khanyisa Tier 2 Participant will acquire Vested Rights on the Effective Date will be a maximum of 1300 SSA Khanyisa Shares. The actual number will be determined by dividing the number of SSA Khanyisa Shares allotted and issued to the Trust by the number of Eligible Employees. 13.4. Existing Khanyisa Tier 2 Participants will in the aggregate acquire Vested Rights to 86% (eighty six percent) of the SSA Khanyisa Shares on the Effective Date, which will constitute the Allocated SSA Khanyisa Shares. 13.5. The balance of 14% (fourteen percent) of the SSA Khanyisa Shares on the Effective Date will initially constitute Unallocated Entitlement Assets.
Page 30 13.6. The Trustees shall notify each Existing Khanyisa Tier 2 Participant of the number of SSA Khanyisa Shares in respect of which each such Khanyisa Tier 2 Participant has Vested Rights as soon as reasonably possible after the Effective Date. 14. SUBSCRIPTION FOR SSA KHANYISA SHARES 14.1. Subscription 14.1.1. The Trustees shall subscribe on the Effective Date for the relevant number of SSA Khanyisa Shares and the Company shall allot and issue them. 14.1.2. It will be a term of issue that the SSA Khanyisa Shares will be subject to notional vendor funding, and accordingly each SSA Khanyisa Share will be issued at R0.04 (four cents). An Automatic Repurchase, which will be one of the terms of issue of the SSA Khanyisa Shares, will be implemented on the Trigger Date at R0.04 (four cents) in respect of each of the SSA Khanyisa Shares. 14.1.3. It will be a term of issue of the SSA Khanyisa Shares that the Trustees shall: 14.1.3.1.only be entitled to the Dividend Percentage of the Normal Distributions which the Company declares on each SSA Khanyisa Share to its other Shareholders; 14.1.3.2. not be entitled to any Extraordinary Distributions, except to the extent that such suspension would result in rollover relief not being obtained for tax purposes. In that case, the Extraordinary Distribution in question will be paid to the Trustees and it will form part of the Entitlement Assets subject to clause 16.5. 14.1.4. After the Automatic Repurchase or when no SSA Khanyisa Shares can be repurchased in accordance with the Repurchase Formula, such suspension of the right to Normal and Extraordinary Distributions shall cease and the Company will declare the identical dividend or other Normal and Extraordinary Distributions per SSA Khanyisa Share to the Trustees as it declares to all its other Shareholders. 14.1.5. Sasol will make a capital contribution to the Trust to enable it to subscribe for the SSA Khanyisa Shares. Jt)l
Page 31 15. VESTED RIGHTS OF THE KHANYJSA TIER 2 PARTICIPANTS 15.1. Vesting 15.1.1. Any Employer Company in respect of Eligible Employees who would qualify to become Khanyisa Tier 2 Participants, shall deliver to: 15.1.1.1. each Eligible Employee, a notice by no later than 18 May 2018, or such other date consequent upon a change to the Effective Date, stating that it is the intention of the Employer Company to procure that such Eligible Employee becomes a Khanyisa Tier 2 Participant under the Trust Deed and informing him/her that he/she shall be obliged, on or before 25 May 2018, (or such other date consequent upon a change to the Effective Date), to notify such Employer Company in writing in the event that s/he does not wish to become a Khanyisa Tier 2 Participant; and 15.1.1.2. the Trustees a notice, by no later than 29 May 2018, detailing the particulars of its Eligible Employees and instructing the Trustees, which Eligible Employees will participate as Khanyisa Tier 2 Participants. The Trustees shall thereafter be obliged, in respect of each such Khanyisa Tier 2 Participant, to vest the relevant shares into his/her name and to enter his/her name into the relevant Register. 15.1.2. Unless an Eligible Employee notifies the relevant Employer Company on or before 25 May 2018, (or such other date consequent upon a change to the Effective Date), that s/he does not wish to become a Khanyisa Tier 2 Participant and/or unless s/he ceases to be employed by an Employer Company during the period between 19 May 2018 and the Effective Date, s/he will initially acquire Vested Rights in a maximum of 1300 SSA Khanyisa Shares with effect from the Effective Date and from time to time Vested Rights in his/her other Entitlement Assets and Normal Distributions including the right, in the circumstances expressly provided for in this Trust Deed, to direct the Trustees as to the manner in which they should vote the SSA Khanyisa Shares in respect of which s/he has a Vested Right at the relevant time.
Page 32 15.2. Subsequent Vestings 15.2.1. During the period from the 19 May 2018 until the expiry of 5 (five) years from the Effective Date, any Employer Company Board may deliver to the Trustees a Subsequent Vesting Notice in writing detailing the particulars of the Eligible Employees who will become Beneficiaries of the Trust with effect from the Subsequent Effective Date and instructing the Trustees to notify in writing within 5 (five) days from receipt of the Subsequent Vesting Notice, each such Eligible Employee that it is the intention of the Trustees to make him/her a Khanyisa Tier 2 Participant under the Trust Deed, unless s/he notifies the Trustees in writing within 5 (five) days of the date of the written notification, that s/he does not wish to become a Khanyisa Tier 2 Participant. On receipt of the Subsequent Vesting Notice, the Trustees shall comply with the instructions of any Employer Company Board contained in the Subsequent Vesting Notice. Unless an Eligible Employee to whom a notice in terms of this clause 15.2.1 is sent, timeously notified the Trustees in writing that s/he did not wish to accept his/her Subsequent Vesting, the Trustees shall be obliged to enter his/her name in the Register and such New Khanyisa Tier 2 Participant shall thereby, with effect from the Subsequent Effective Date, become a Beneficiary, but subject to clause 15.2.4. 15.2.2. Subject to clause 15.2.3, if the Subsequent Effective Date occurs during the period from: 15.2.2.1. 19 May 2018 ending on the 1st (first) anniversary of the Effective Date, each such Eligible Employee shall acquire Vested Rights to 90% (ninety per cent) of the Allocated SSA Khanyisa Shares and associated Entitlement Assets; 15.2.2.2. the 2nd (second) year after the Effective Date ending on the 2nd (second) anniversary of the Effective Date, each such Eligible Employee shall acquire Vested Rights to 80% (eighty per cent) of the Allocated SSA Khanyisa Shares and associated Entitlement Assets; 15.2.2.3. the 3rd (third) year after the Effective Date ending on the 3rd (third) anniversary of the Effective Date, each such Eligible Employee shall acquire Vested Rights to 70% (seventy per cent)
Page 33 of the AllocatedSSAKhanyisa Sharesand associated Entitlement Assets; 15.2.2.4.the 4th (fourth) year after the Effective Date ending on the 4th (fourth) anniversary of the Effective Date, each such Eligible Employee shall acquire Vested Rights to 60% (sixty per cent) of the Allocated SSA Khanyisa Shares and associated Entitlement Assets; and 15.2.2.5.the 5th (fifth) year after the Effective Date ending on the day prior to the 5th (fifth) anniversary of the Effective Date, each such Eligible Employee shall acquire Vested Rights to 50% (fifty per cent) of the Allocated SSA Khanyisa Shares and associated Entitlement Assets, that were vested in each of the Existing Khanyisa Tier 2 Participants initially on the Effective Date; 15.2.3. If there are not any or insufficient Unallocated Entitlement Assets in any one year for every New Khanyisa Tier 2 Participant in respect of whom a Subsequent Vesting Notice has been given, to acquire Vested Rights in respect of a designated number of SSA Khanyisa Shares and associated Entitlement Assets applicable to him/her determined in accordance with clause 15.2.2 ("Designated Number"): 15.2.3.1.those New Khanyisa Tier 2 Participants who were employed: 15.2.3.1.1. in an earlier period referred to in clause 15.2.2 (shall rank ahead); 15.2.3.1.2. in the same period referred to in clause 15.2.2, shall rank pari passu, as regards rights to vest in Unallocated Entitlement Assets which are forfeited and accordingly become available for New Khanyisa Tier 2 Participants to acquire Vested Rights therein until such time as such New Khanyisa Tier 2 Participants ranking first in time have Vested Rights to the Designated Number, and so on, until all New Khanyisa Tier 2 Participants have, to the extent possible having regard to the Unallocated Entitlement Assets
Page 34 available from time to time, been granted Vested Rights in respect of the Designated Number of SSA Khanyisa Shares and their associated Entitlement Assets. 15.2.4. New Khanyisa Tier 2 Participants who have not been granted Vested Rights in respect of the full Designated Number of SSA Khanyisa Shares and associated Entitlement Assets by the fifth anniversary of the Effective Date, shall with effect from that date forfeit the expectation to acquire any Vested Rights in respect of the balance of the Designated Number of SSA Khanyisa Shares and associated Entitlement Assets. Those who have not received any part of their Designated Number of SSA Khanyisa Shares and associated Entitlement Assets will not become Beneficiaries of the Trust. 16. DISTRIBUTIONS IN RELATION TO KHANYISA TIER 2 PARTICIPANTS 16.1. Except where a Khanyisa Tier 2 Participant has forfeited the right thereto in terms of the provisions of this Trust Deed, each Khanyisa Tier 2 Participant shall, subject to clause 14.1.3 and clauses 16.2 and 16.4 be entitled, receive all Normal Distributions less Specific Taxation and Expenses, if applicable, in consequence of his/her Vested Rights to Entitlement Assets. 16.2. All Normal Distributions declared, the rights to which will vest in any New Khanyisa Tier 2 Participant as a result of any Subsequent Vesting, after the Subsequent Effective Date but before the New Khanyisa Tier 2 Participants obtain the Vested Rights will be paid to him/her as soon as reasonably possible after his/her details have been entered into the Register provided that, in order to avoid incurring costs of effecting payments which are disproportionate to the size of the payment due to any Khanyisa Tier 2 Participant, no amount shall be paid to a Khanyisa Tier 2 Participant unless and until the amount thereof, when aggregated with other unpaid Normal Distributions less Specific Taxation and Expenses due to that Khanyisa Tier 2 Participant amounts to at least R50.00 (fifty Rand). 16.3. Any Normal Distributions in respect of Unallocated Entitlement Assets, whilst they are still Unallocated Entitlement Assets, will be used by the Trust to settle its Costs from time to time. 16.4. Except as otherwise specifically provided in terms of this Trust Deed, payment of any part of Normal Distributions less Specific Taxation and Expenses to Khanyisa Tier 2 Participants who have Vested Rights thereto, shall be effected as soon as reasonably
Page 35 possible after receipt thereof by the Trustees provided that, in order to avoid incurring costs of effecting payments which are disproportionate to the size of the payment due to any Khanyisa Tier 2 Participant, no amount shall be paid to a Khanyisa Tier 2 Participant unless and until the amount thereof, when aggregated with other unpaid Normal Distributions less Specific Taxation and Expenses due to that Khanyisa Tier 2 Participant amounts to at least R50.00 (fifty Rand). 16.5. A Khanyisa Tier 2 Participant shall have Vested Rights in his/her share of Extraordinary Distributions if and when Extraordinary Distributions are received by the Trustees, but, subject to clause 18.3, the Extraordinary Distributions will only be transferred to a Khanyisa Tier 2 Participant on the Khanyisa Tier 2 Transfer Date and not when the Trustees receive same. 17. RESTRICTIVE COVENANTS: KHANYISA TIER 2 PLAN 17.1. Notwithstanding anything to the contrary contained in this Trust Deed, Khanyisa Tier 2 Participants shall not be entitled, without obtaining the prior written consent of Sasol, until expiry of the Empowerment Period and such additional period as may be required thereafter in order to obtain the necessary tax directives concerning any Tax and/or Specific Taxation and Expenses which must be deducted pursuant to the Khanyisa Tier 2 Participants being vested Beneficiaries of the Trust, and to implement clause 20.5, if applicable, to: 17.1.1. Dispose of or enter into any contract to Dispose of any of their Vested Rights; 17.1.2. other than as set out in clause 33.2.6, enter into any agreement in respect of the votes in respect of which they have Vested Rights; or 17.1.3. Dispose of or enter into any contract to Dispose of any Entitlement Assets which have been transferred to him/her in terms of the Trust Deed. 17.2. If the provisions of clause 17.1 are breached by any particular Khanyisa Tier 2 Participant prior to the Final Date, the Vested Rights and the Entitlement Assets of that Khanyisa Tier 2 Participant will be forfeited. 18. REPURCHASE AND DISTRIBUTION OF SSA KHANYISA SHARES 18.1. Automatic Repurchase of SSA Khanyisa Shares 18.1.1. Should any manifest arithmetic errors be discovered in the Repurchase Formula, or should any Corporate Actions impacting upon the holding of SSA
Page 36 Khanyisa Shares be anticipated, the Expert shall determine the necessary changes, if any, to be made to the Repurchase Formula, and the provisions of clauses 18.2.6, 18.2.8 and 18.2.9 will apply to any such determination. 18.1.2. The Automatic Repurchase shall occur on the Trigger Date. For the avoidance of doubt, if the Trigger Date occurs before the Final Date and if after the Automatic Repurchase, the Trustees continue to hold any SSA Khanyisa Shares, the Khanyisa Tier 2 Plan shall continue as regards Khanyisa Tier 2 Participants until the Final Date. 18.1.3. The Company shall repurchase the Automatic Repurchase Shares from the Trust for R0.04 (four cents) per Automatic Repurchase Share. The purchase price shall be payable on the Trigger Date by the Company. 18.1.4. For the avoidance of doubt, if the Automatic Repurchase is applicable and more than 5% (five percent) of the SSA Ordinary shares are repurchased by the Company, the provisions of section 48(8){b) of the Companies Act will not be applicable, as the Trustees have agreed to the Automatic Repurchase occurring, if applicable, in this Trust Deed. 18.1.5. The Expert shall determine the market value of an SSA Ordinary Share for the purposes of P2 in the Repurchase Formula, in accordance with the provisions of clauses 18.2.5 and 18.2.8. 18.1.6. The Automatic Repurchase Shares shall be repurchased voetstoots and without any warranties of any nature save that the Trustees are the owners thereof, nomine officio, and that the Automatic Repurchase Shares are not subject to any pledge, cession in security, mortgage or any other encumbrance (except that securities transfer tax will be payable in respect of the Automatic Repurchase by the Company). 18.1.7. As regards any Automatic Repurchase Shares repurchased by the Company, each Khanyisa Tier 2 Participant shall obtain Vested Rights to the price paid by the Company to the Trustees for the Automatic Repurchase Shares which shall be distributed to the Khanyisa Tier 2 Participants on the Khanyisa Tier 2 Transfer Date in accordance with their Vested Rights and the ratios which they bear to one another, after deduction of Specific Taxation and Expenses.
Page 37 18.2. Automatic Share Exchange 18.2.1. The Automatic Repurchase must have occurred before this clause 18.2 may be implemented. 18.2.2. Sasol has the option after clause 18.1 has been implemented, but prior to the transfer of the SSA Khanyisa Shares to the relevant Beneficiaries, to elect by written notice to the Trustees either to implement the Automatic Share Exchange with: 18.2.2.1.the Trustees, after which the exchanged SOLBE1 Shares will be registered in the name of the Nominee for the benefit of the Trustees, and the Khanyisa Tier 2 Participants shall have Vested Rights in those SOLBE1 Shares in substitution for the subject matter of the Vested Rights; or 18.2.2.2.each Khanyisa Tier 2 Participant with Vested Rights in the SSA Khanyisa Shares, into whose name those SSA Khanyisa Shares will have been transferred, after which they will have SOLBE1 Shares transferred into his/her name. 18.2.3. If Sasol fails to make the election contemplated in clause 18.2.2.1, the provisions of clause 18.2.2.2 shall apply. 18.2.4. The Automatic Share Exchange shall occur in accordance with the Share Exchange Ratio on the Final Date if the provisions of clause 18.2.2.1 have been selected by Sasol to apply or otherwise if the provisions of clause 18.2.2.2 apply, shaH occur immediately after the Khanyisa Tier 2 Transfer Date or if the provisions of clause 21.1 are to be implemented, shall occur on the Business Day immediately succeeding the Trigger Date. For the avoidance of doubt, if the Trigger Date occurs before the Final Date and if after the Automatic Repurchase, the Trustees hold any SSA Khanyisa Shares which are the subject of the Automatic Share Exchange, the Khanyisa Tier 2 Plan shall continue as regards Khanyisa Tier 2 Participants, but with Vested Rights in respect of the SOLBE1 Shares, rather than the SSA Khanyisa Shares until the Final Date.
Page 38 18.2.5. The Share Exchange Ratio shall be determined in the following manner: 18.2.5.1. unless clause 18.2.5.2 or 18.2.5.3 applies, the Expert will be required to determine a ratio which is fair in the circumstances to the Sasol shareholders on the one hand and the other participant in the Automatic Share Exchange on the other hand. The Expert will therefore be at large as to the valuation methodologies which he/she will take into account in order to determine such a fair ratio, but for which purpose the Expert shall consider the methodologies current at that time to determine market value, and shall determine whichever of those are deemed appropriate by the Expert, assessed on a quantitative and qualitative basis; 18.2.5.2. if the shareholders of Sasol resolve at the annual general meeting of Sasol during 2018 that the method contemplated in this clause 18.2.5.2 will apply to the exclusion of the methods contemplated in clauses 18.2.5.1 and clause 18.2.5.3, the Expert shall be required: 18.2.5.2.1. as regards SSA Ordinary Shares: 18.2.5.2.1.1. to use the same methodology to determine the value of the Company and its subsidiaries ("SSA Group") and accordingly an SSA Ordinary Share as was used when the Trustees subscribed for SSA Khanyisa Shares, namely: i). a discounted cash flow valuation of the free cash flow generated by the SSA Group, derived from the latest available management accounts and forecasts prepared by management of the Company; ii). macro-economic assumptions utilised in the discounted cash flow valuation, unless the Expert
Page 39 considersthat anyof such assumptionswasnot market related, in which event the Expert will determine what the market related assumption macro-economic used by Sasol, shouldhave been andthe Expert's determination shall be used in place thereof; iii). the discount rate will be determined utilising the same principles as were used at the time that the Trustees subscribed for the SSA Khanyisa Shares, taking the following into account: a) an appropriate measurement of risk (beta) derived from relevantandcomparable peer analysis; group company b) the prevailing equity market risk premium at the time; c) an appropriate post tax cost of debt of the SSA Group as determined by applying a market-related lending spread over the long term risk free rate over South African government bonds; d) the long term debt to equity ratio for the Company and any subsidiary of the Company, as targeted by the Board or board ofthe
Page 40 subsidiary, as the case may be, (having taken account of the Sasol Group funding policy) that is taken into account when the weighted average cost of capital is calculated; 18.2.5.2.1.2. sequentially applyinga minority discount of 25% (twenty five percent) and liquidity (marketability) discount of 10% (ten percent) (i.e. an effective 32.5% (thirty two point five percent) discount), discounts Trustees being applied the percentage at the time the subscribedfortheSSA Khanyisa Shares; 18.2.5.2.1.3. taking account of any relevant and comparable peer group trading valuation multiples. Having applied clauses 18.2.5.2.1.1 to 18.2.5.2.1.3, the Expert shall consider whether, in order to enable the Automatic Share Exchange to be undertaken pursuant to section 42 of the Income Tax Act, 1962, or any equivalent successor legislation, it is necessary to apply principles in addition to those mentioned above for determining market value current at that time, assessed on a quantitative and qualitative basis, and accordingly, whether it would be appropriate to make an adjustment to the value of SSA determined in accordance with clauses 18.2.5.2.1.1 to 18.2.5.2.1.3; 18.2.5.2.2. as regards SOLBE1 Shares, their market based on an appropriate VWAP or such value other
Page 41 methodology for determining market value as the Expert may determine; or 18.2.5.3. if the shareholders of Sasol resolve at the annual general meeting of Sasol during 2018 that the method contemplated in this clause 18.2.5.3 will apply to the exclusion of the methods contemplated in clauses 18.2.5.1 and 18.2.5.2, the Expert shall be required: 18.2.5.3.1. as regards SSA Ordinary Shares: 18.2.5.3.1.1. to use the same methodology to determine the value of Company and its subsidiaries ("SSA Group") and accordingly an SSA Ordinary Share as was used when the Trustees subscribed for SSA Khanyisa Shares, namely: i). a discounted cash flow valuation of the free cash flow generated by the SSA Group, derived from the latest available management accounts and forecasts prepared by management of the Company; ii). macro-economic assumptions utilised in the discounted cash flow valuation, unless the Expert considersthat any of such assumptions was not market related, in which event the Expert will determine what the market related assumption macro-economic used by Sasol, shouldhave beenandthe Expert's determination shall be used in place thereof;
Page 42 iii). the discount rate will be determined utilising the same principles as were used at the time that the Trustees subscribed for the SSA Khanyisa Shares, taking the following into account: e) an appropriate measurement of risk (beta) derived from relevantandcomparable peer analysis; group company f) the prevailing equity market risk premium at the time; g) an appropriate post tax cost of debt of the SSA Group as determined by applying a market-related lending spread over the long term risk free rate over South African government bonds; h) the long term debt to equity ratio for the Company and any subsidiary of the Company, as targeted by the Boardorboardofthe subsidiary, as the case may be, (having taken account of theSasol Group funding policy) that is taken into account when the weighted average cost of capital is calculated; 18.2.5.3.1.2. sequentially applying aminority discount of 25% (twenty five percent)
Page43 and liquidity (marketability) discount of 10% (ten percent) (i.e. an effective 32.5% (thirty two point five percent) discount), discounts Trustees beingthe percentage applied at the time the subscribed forthe SSA Khanyisa Shares; 18.2.5.3.1.3. taking account of any relevant and comparable peer group trading valuation multiples. 18.2.6. The Expert will act as an expert and not as an arbitrator and his/her decision shall be final and binding on Sasol and all the other participants to the Automatic Share Exchange (save for manifest arithmetic errors). However, Sasol and the Trustees will be entitled to make submissions to the Expert. It will be in the sole discretion of the Expert to determine to what extent he/she will take account of any such submissions. 18.2.7. Sasol shall ensure that the required valuations shall be undertaken in sufficient time in order for the exchange ratios to be known prior to the Final Date. Accordingly, Sasol shall instruct the Expert at least 3 (three) months prior to the Final Date. Sasol shall permit the Expert to have full access to all relevant information concerning the Company and necessary to undertake the valuation, subject to such Expert signing any confidentiality undertaking and other undertakings required by Sasol, the Company and Sasol Khanyisa FundCo. 18.2.8. The Expert shall not (without the prior written consent of Sasol) be appointed to act as an arbitrator or as advisor in a dispute related to, or involving the determination of the market value of the Company. 18.2.9. The costs of the Expert shall be borne by Sasol. 18.2.10. Sasol shall issue the relevant SOLBE1 Shares to the Nominee for the benefit of each relevant Khanyisa Tier 2 Participant, or the Trustees, as the case may be.
Page 44 18.2.11. Sasol shall be entitled to require the Trustees to transfer out of their names nomine officio those SSA Khanyisa Shares into the name of Sasol as nominee for the Trustees. 18.3. Non-Automatic Share Exchange At the election of Sasol, which election shall be notified to the Trustees if the provisions of clause 18.2.2: 18.3.1. become operative, during the period from the date on which the provisions of clause 18.2.2 become operative but prior to the implementation of the Automatic Share Exchange; or 18.3.2. do not become operative, during the 60 (sixty) day period from the implementation of the Automatic Repurchase, there shall be: 18.3.3. an exchange for any of the Entitlement Assets which are shares other than SSA Khanyisa Shares for SOLBE1 Shares, for which purpose the provisions of clause 18.2, read with the definition of Share Exchange Ratio, shall be applied mutatis mutandis to any of such Entitlement Assets, to determine a ratio for the exchange of such Entitlement Assets; and/or 18.3.4. a subscription for SOLBE1 Shares using any Extraordinary Distributions, provided that, if clause 18.2.5.2 applies to the Automatic Share Exchange, it shall not apply to this non-automatic share exchange, but instead, the Expert shall: 18.3.5. as regards such Entitlement Assets which are shares and which were valued for the purposes of the subscription by the Trustees of SSA Khanyisa Shares, and an interest in the company which issued such Entitlement Assets, is still held by the Company, use the same methodology to determine the market value of such Entitlement Assets, as was used then. Having applied the same methodology, the Expert shall consider whether, in order to enable the non-automatic share exchange to be undertaken pursuant to section 42 of the Income Tax Act, or any equivalent successor legislation, it is necessary to apply other methodologies for determining market value current at that time, assessed on a quantitative and qualitative basis, and accordingly, whether it
Page 45 would be appropriate to make an adjustment to the value of the relevant Entitlement Assets determined in accordance with the same methodology; or 18.3.6. determine that the Trustees must use cash Extraordinary Distributions to subscribe for SOLBE1 Shares, such subscription shall be at a price per SOLBE1 Share determined by the Expert in accordance with clause 18.2; 18.3.7. in any other case, use any valuation method determined by the Expert as being appropriate to determine market value. 19. CESSATION OF EMPLOYMENT, FORFEITURE AND REALLOCATION AS REGARDS KHANYISA TIER 2 PARTICIPANTS 19.1. Cessation of Employment by Reason of Death If any Khanyisa Tier 2 Participant ceases to be employed by an Employer Company at any time prior to the Final Date s/he will cease to be a Beneficiary of the Trust and forfeit his/her Vested Right in his/her Entitlement Assets, save unless the reason for such cessation is death (or in the case of a Khanyisa Tier 2 Participant contemplated in clause 19.2 below, supervening death), in which event the Khanyisa Tier 2 Participant's nominated beneficiaries, in proportion to their allocation as per the nomination form, under the relevant Employer Company's approved pension fund scheme who are Black Persons or Black Groups, or in the absence of any such nominations, the Beneficiary's heirs, who are Black Persons or Black Groups, shall be substituted for the deceased Khanyisa Tier 2 Participant and shall acquire Vested Rights in his/her Entitlement Assets, subject to the same restrictive covenants as set out in clause 17. If such replacement Beneficiary: 19.1.1. dies the provisions of this clause 19.1 will apply to his/her heirs as replacement Beneficiaries; 19.1.2. is not a Black Person or a Black Group, the provisions of clause 19.3 will apply to such replacement Beneficiary mutatis mutandis, with any reference to: 19.1.2.1.the resignation of a Khanyisa Tier 2 Participant being read as a reference to the date upon which the deceased Khanyisa Tier 2 Participant died;
Page 46 19.1.2.2.a Khanyisa Tier 2 Participant who ceases to be employed by an Employer Company by reason of his/her resignation ("Resigned Employee") being read as a reference to the replacement Beneficiary. 19.2. Cessation of Employment with the Group by reason of Retirement, Retrenchment or by virtue of s197 of the LRA If any Khanyisa Tier 2 Participant ceases to be employed by an Employer Company at any time prior to the Final Date, s/he will cease to be a Beneficiary of the Trust and forfeit his/her Vested Right in his/her Entitlement Assets, save unless the reason for such cessation is that s/he is a Retired/Retrenched/Transferred Employee in which event the Khanyisa Tier 2 Participant concerned shall continue to be a vested Beneficiary of the Trust in relation to his/her Entitlement Assets, subject to the same restrictive covenants as set out in clause 17. 19.3. Cessation of Employment by reason of resignation Any Resigned Employee: 19.3.1. at any time until the 3rct (third) anniversary of the Effective Date or the Subsequent Effective Date, as the case may be, the Resigned Employee shall, ipso facto, with effect from the date of his/her resignation, forfeit his/her Vested Rights in his/her Entitlement Assets (but will not forfeit Normal Distributions already declared but not yet paid to the Trustees or received by the Trustees and not yet paid to the Khanyisa Tier 2 Participants and will cease to be a Khanyisa Tier 2 Participant prior to the date of his/her resignation) and will cease to be a Beneficiary of the Trust. 19.3.2. after the Forfeiture Period but prior to the Final Date, the Resigned Employee shall, ipso facto, with effect from the date of his/her resignation forfeit: 19.3.2.1.70% (seventy percent) of his/her Vested Rights if s/he resigned at any time during the first year after the Forfeiture Period; 19.3.2.2.60% (sixty percent) of his/her Vested Rights if s/he resigned at any time during the second year after the Forfeiture Period; 19.3.2.3.50% (fifty percent) of his/her Vested Rights if s/he resigned at any time during the third year after the Forfeiture Period;
Page 47 19.3.2.4. 40% (forty percent) of his/her Vested Rights if s/he resigned at any time during the fourth year after the Forfeiture Period; 19.3.2.5. 30% (thirty percent) of his/her Vested Rights if s/he resigned at any time during the fifth year after the Forfeiture Period; 19.3.2.6. 20% (twenty percent) of his/her Vested Rights if s/he resigned at any time during the sixth year after the Forfeiture Period; or 19.3.2.7. 10% (ten percent) of his/her Vested Rights if s/he resigned at any time during the seventh year after the Forfeiture Period, excluding his/her right to any Distribution already declared by the Company, but not yet paid to the Trustees or received by the Trustees and not yet paid to the Khanyisa Tier 2 Participants and will cease to be a Khanyisa Tier 2 Participant under the Trust. 19.4. Cessation of Employment by Reason of Dismissal 19.4.1. Subject to clause 19.4.2, if a Khanyisa Tier 2 Participant ceases to be employed at any time prior to the Final Date by reason of his/her dismissal, such dismissed Khanyisa Tier 2 Participant shall, ipso facto, with effect from the date of his/her dismissal, forfeit his/her Vested Rights in his/her Entitlement Assets (including his/her Vested Right to any Normal Distribution declared by SSA but not yet paid to the Trustees or received by the Trustees but not yet paid to the Khanyisa Tier 2 Participants prior to the date of his/her dismissal) and will cease to be a Khanyisa Tier 2 Participant under the Trust. 19.4.2. If the dismissal of a Khanyisa Tier 2 Participant is found by one of the CCMA, a Bargaining Council having jurisdiction or the Labour Court or the Labour Appeal Court to have been substantively unfair and such decision is either not challenged by the Employer Company or has been confirmed on review by the Labour Court then the dismissed employee shall be re-instated as a Khanyisa Tier 2 Participant with effect from the date of his/her dismissal and shall with retrospective effect, be reinstated with the Vested Rights forfeited as a result of the dismissal as if the forfeiture had never taken place. 19.4.3. In the event that a Khanyisa Tier 2 Participant is found to have been substantively unfairly dismissed as described in clause 19.4.2 above, but is not awarded reinstatement of his/her employment, the Khanyisa Tier 2
Page 48 Participant will be considered, for purposes of this Trust Deed, to have resigned with effect from the date of his/her dismissal. 19.4.4. The operation of clauses 19.4.2 and 19.4.3 above shall not be suspended by any appeal that may be launched, by an Employer Company or former Khanyisa Tier 2 Participant to the Labour Appeal Court or any other court. 19.4.5. If a dispute is declared regarding the substantive fairness of the dismissal of a Khanyisa Tier 2 Participant, such Khanyisa Tier 2 Participant's Vested Rights shall continue to be forfeited, but the Entitlement Assets which are the subject of the Vested Rights shall not become unallocated if the provisions of clause 19.4.2 apply. If it is no longer possible for clause 19.4.2 to be invoked the Vested Rights shall remain forfeited and the Entitlement Assets in question shall thereupon only from that date form part of the Unallocated Entitlement Assets. 19.4.6. Once the dispute referred to in clause 19.4.5 has been settled and: 19.4.6.1. the Khanyisa Tier 2 Participant concerned has been dismissed, the forfeited Entitlement Assets will follow the process of forfeited Vested Rights as set out in clause 19.6; 19.4.6.2. the Khanyisa Tier 2 Participant concerned has been reinstated, his/her Entitlement Assets will not be forfeited and he/she will be paid any Normal Distributions declared but not paid to him/her by the Trust during the period of the dispute. 19.5. Transfers within the Group Notwithstanding anything to the contrary contained herein, a Khanyisa Tier 2 Participant who ceases to be employed by a Group Company but is thereupon immediately employed by another Group Company, shall not for the purposes of clause 19, be deemed to have ceased to be in employment by the Group. 19.6. Reallocation of Forfeited Vested Rights 19.6.1. For the 5 (five) year period from the Effective Date the provisions of clause 15.2 shall apply and only after all New Khanyisa Tier 2 Participants have received Vested Rights in the Designated Number of Entitlement Assets, shall the Entitlement Assets which were the subject matter of such
Page 49 Vested Rights which are forfeited, become available for reallocation as contemplated in clause 19.6.2. 19.6.2. As regards any Entitlement Assets which are forfeited during any financial year of the Company up to the 5th (fifth) anniversary of the Effective Date and which are not required for purposes of clause 15.2, each of the Khanyisa Tier 2 Participants on the 30th (thirtieth) day prior to the end of that financial year will automatically acquire either Vested Rights or ownership, as applicable, in those forfeited Entitlement Assets in the same ratios as s/he then has Vested Rights or ownership in his/her Entitlement Assets, save that there will be no Vested Rights in or ownership of fractions of Shares ("Forfeited SSA Fractions"). Any Forfeited SSA Fractions remaining on the Final Date will first vest before they are exchanged by the Trustees with Sasol for SOLBE1 Shares mutatis mutandis in accordance with the Automatic Share Exchange provisions, whereafter they will be sold in the market for the benefit of the Khanyisa Tier 2 Participants. The proceeds Jess Specific Taxation and Expenses, will be vested and paid on the Khanyisa Tier 2 Transfer Date in the proportions that the Entitlement Assets of the Khanyisa Tier 2 Participants bear to each other. 19.6.3. On the 5th (fifth) anniversary of the Effective Date, the Khanyisa Tier 2 Participants will automatically acquire Vested Rights in respect of any remaining Unallocated Entitlement Assets in the same proportions as s/he holds his/her Entitlement Assets at that date, save for fractions which will be dealt with mutatis mutandis in accordance with clause 19.6.2. 20.TRANSFER OF ENTITLEMENT ASSETS TO KHANYISA TIER 2 PARTICIPANTS 20.1. On the Khanyisa Tier 2 Transfer Date, the Entitlement Assets which are shares, or the SOLBE1 Shares if the Automatic Share Exchange has occurred, and, if applicable the non-automatic share exchange contemplated in clause 18.3, less Specific Taxation and Expenses (which shall be dealt with as contemplated in either clause 20.4 or 20.5) shall thenceforth be held by: 20.1.1.if they are SOLBE1 Shares, the Nominee for the benefit of the Khanyisa Tier 2 Participants concerned as beneficial owners, instead of the Trustees;
Page 50 20.1.2. if they are Entitlement Assets which are shares, the Trustees no longer as principals, nomine officio, but as nominees for the benefit of the Khanyisa Tier 2 Participants concerned as beneficial owners. 20.2. On the Khanyisa Tier 2 Transfer Date, the Trustees shall transfer to each Khanyisa Tier 2 Participant his/her Entitlement Assets, which are not shares, including cash. 20.3. Each Khanyisa Tier 2 Participant shall be liable for the Specific Taxation and Expenses arising from the vesting, transfer and/or realisation of his/her Entitlement Assets in terms of the provisions of this Trust Deed. The Trustees will inform each Khanyisa Tier 2 Participant in writing of any directive received from the South African Revenue Services relating to the Specific Taxation and Expenses attributable to him/her. 20.4. Each Khanyisa Tier 2 Participant entitled to Entitlement Assets shall, by no later than 5 (five) days from receipt of the notification referred to in clause 20.3 above, which date shall be before any transfer of Entitlement Assets is effected, notify the Trustees if s/he shall make payment to the Trustees prior to the transfer of the Entitlement Assets to him/her, in cash of the amount of Specific Taxation and Expenses attributable to such Khanyisa Tier 2 Participant. 20.5. Should a Khanyisa Tier 2 Participant fail to: 20.5.1. notify the Trustees within the 5 (five) day period that s/he intends to make payment to the Trustees prior to the transfer of the Entitlement Assets to him/her, in cash of the amount of Specific Taxation and Expenses attributable to such Khanyisa Tier 2 Participant; and/or 20.5.2. make the payment so notified in terms of clause 20.5.1, in cash within the relevant period, the Trustees, before ownership of such Entitlement Assets has passed to the Khanyisa Tier 2 Participant, as his/her agent and on his/her behalf, shall use any cash in respect of which such Khanyisa Tier 2 Participant has Vested Rights and to the extent necessary shall realise sufficient of his/her Entitlement Assets in order to discharge his/her liability to pay the Specific Taxation and Expenses attributable to him/her, including taxation of this very disposal. In this circumstance, the Khanyisa Tier 2 Participant grants the Trustees an irrevocable power of attorney to act as his/her agent, with power of substitution. Any proceeds of such realisation remaining after discharging
Page 51 the Specific Taxation and Expenses attributable to such Khanyisa Tier 2 Participant shall be paid to the Khanyisa Tier 2 Participant concerned. 21. CORPORATE ACTION AS REGARDS THE KHANYISA TIER 2 PLAN 21.1. Take Overs at Company Level Only If an Offeror offers to purchase all or a portion of the Ordinary Shares held by Sasol and/or by any other member of the Sasol Group and: 21.1.1. no simultaneous Offer is made by the Offeror to the Trustees for the acquisition of the SSA Khanyisa Shares, then the Trustees agree that the Trust will not be entitled to participate in that Offer (and to the extent necessary waive any right to receive such Offer) or have any claims as a result of its non-participation in the Offer; 21.1.2. a simultaneous Offer is made by the Offeror to the Trustees for the acquisition of the SSA Khanyisa Shares, then at Sasol's election given in writing to the Trustees, the Trustees shall be obliged to accept or reject the Offer in respect of the SSA Khanyisa Shares on the following basis: 21.1.2.1. if Sasol does not make any election, it shall be deemed to have directed that the Trustees must reject the Offer; 21.1.2.2. if the Trustees are directed by Sasol not to accept the Offer or Sasol is deemed to have directed that the Trustees must reject the Offer, then the Trustees agree that the Trust will not be entitled to participate in that Offer, and to the extent necessary the Trustees waive any right to receive such Offer and the Trustees and each of the Khanyisa Tier 2 Participants shall not have any claims as a result of the Trust's non-participation in the Offer; 21.1.2.3. if the Trustees are directed by Sasol to accept the Offer, then Sasol shall bring forward the Trigger Date as contemplated in clause 1.3.93.1 and shall bring forward the Final Date to the first Business Day after the closing of the Offer. In such event, the Vested Rights in SSA Khanyisa Shares of each Khanyisa Tier 2 Participant concerned shall be substituted for Vested Rights to the consideration which the Trustees will receive on acceptance
Page 52 of that Offer, in place of the SSA Khanyisa Shares which have been released to the Offeror and the provisions of clause 20 shall be implemented. 21.2. Take Overs at Sasol Level affecting the Trust Should an Offeror give notice to the Sasol Board that it intends to propose an Offer for the acquisition of all or a part of the entire share capital of Sasol or the SOLBE1 Shares: 21.2.1. and Sasol has indicated its intention to the Trustees, to bring forward the Trigger Date as contemplated in clause 1.3.93.1, to effect the Automatic Share Exchange (and if Sasol so determines the non-automatic share exchange in accordance with clause 18.3) with the Trustees on the day after the Trigger Date and, if the Offer becomes unconditional, to make the Final Date an earlier date: 21.2.1.1. the Trustees shall notify each Khanyisa Tier 2 Participant about the Offer and each Khanyisa Tier 2 Participant shall be entitled, by not later than 3 (three) Business prior to the closing date of the Offer to direct the Trustees in writing, who in turn will direct the Nominee how to vote, as regards the SOLBE1 Shares in respect of which s/he will have Vested Rights when the Automatic Share Exchange is implemented and which are the subject of the Offer; 21.2.1.2. if the Offer becomes unconditional the Trustees, as the owners of SOLBE1 Shares, which are the subject of the Offer must, to the extent that the Offer is: 21.2.1.2.1.binding on all the holders of SOLBE1 Shares whether by acceptance or by operation of law, comply with such offer, including releasing such SOLBE1 Shares, to the Offeror and receiving the consideration due from the Offeror. In such event, the Vested Rights in SOLBE1 Shares of each Khanyisa Tier 2 Participant concerned shall be substituted for Vested Rights to such consideration, in place of the SOLBE1 Shares which have been
Page 53 released to the Offeror and the provisions of clause 20 shall be implemented; 21.2.1.2.2. not binding on all the holders of SOLBE1 Shares but any particular Khanyisa Tier 2 Participant directed the Trustees to accept the Offer in respect of those SOLBE1 Shares to which he/she would have Vested Rights on the implementation of the Automatic Share Exchange and which are the subject of the Offer, comply with such Offer, including releasing the SOLBE1 Shares to the Offeror and receiving the consideration due from the Offeror. In such event, the Vested Rights in SOLBE1 Shares of each Khanyisa Tier 2 Participant concerned willbe substituted for Vested Rights to such consideration in place of the SOLBE1 Shares, which have been released to the Offeror and the provisions of clause 20 shall be implemented. As regards those Khanyisa Tier 2 Participants who did not direct the Trustees to accept the Offer, s/he shall continue to have Vested Rights in his/her SOLBE1 Shares and the provisions of clause 20 shall be applied in respect of such SOLBE1 Shares; 21.2.2. and Sasol has not indicated to the Trustees an intention to bring the Trigger Date forward, to effect the Automatic Share Exchange on the Business Day after the Trigger Date, and, if the Offer becomes unconditional, Sasol will make the Final Date an earlier date, the consequence will be that it will not be possible for the Trustees to participate in the Offer. In such event neither the Trustees nor the Khanyisa Tier 2 Participants shall have any claims against Sasol but if the listing of the SOLBE1 Shares has been affected by the implementation of the Offer, Sasol will take whatever steps are necessary in an endeavour to ensure that there is a listing of the SOLBE1 Shares on the same or similar basis as currently prevails or at least that there is an alternative trading platform for the SOLBE1 Shares on the Final Date.
Page 54 21.3.Power of Attorney The Trustees irrevocably and in rem suam appoint Sasol as their attorney and agent to do all such things as may be necessary to comply with the provisions of this clause 21 dealing with Corporate Actions only. 22.DISTRIBUTION TO THE RESIDUAL BENEFICIARYIIES If the selection has been made in terms in clause 1.3.6.2, any cash remaining on the later of the Khanyisa Tier 2 Transfer Date and the application of the Automatic Share Exchange which is not required to settle Costs, shall vest in and be paid to all of the Khanyisa Tier 2 Participants pro rata to their respective Vested Rights on the Final Date. PART D-GENERAL PROVISIONS APPLICABLE TO THE TRUST 23. FURTHER FUNDING OF THE TRUST BY THE COMPANY Save as contemplated in clause 31, the Company shall not be obliged to provide any funding of any nature to the Trust nor shall it be obliged to give any guarantee or indemnity in respect of any of the Trust's liabilities or obligations. 24. TRUSTEES 24.1. Number and Composition of Trustees 24.1.1.Save as may otherwise be required by the Codes, and save in the period prior to the appointment of the first Elected Trustees in terms of clause 24.3, there shall at all times be no more than, and no less than, 4 (four) Trustees in office for the valid exercise of the powers and discharge of the duties of the Trustees in terms of this Trust Deed: 24.1.1.1. all of whom must be Black People; 24.1.1.2. one of whom must be a Black Person who is female; 24.1.1.3. one of whom must be a director of Sasol or any of the Group Companies; 24.1.1.4. the majority of whom must be independent of Sasol; 24.1.1.5. none of whom shall benefit from the Plan.
Page 55 24.1.2. No executive director of Sasol or of any other Employer Company may be appointed as a Trustee. 24.1.3. In the event that the Codes require the appointment of any additional trustees, the first additional Trustee will be appointed by the Beneficiaries and the second additional Beneficiary shall be appointed by Sasol, and so on in rotation. 24.1.4. The Trustees shall be appointed as follows: 24.1.4.1.2 (two) shall be appointed, removed and replaced by the Beneficiaries, it being recorded that at all times, the Trustees appointed by the Beneficiaries must have experience in the administration of trusts and will be independent of Sasol; and 24.1.4.2.2 (two) shall be appointed, removed and replaced by Sasol, it being recorded that at all times one of these Sasol Appointed Trustees will be independent of Sasol. 24.2. Sasol Appointed Trustees 24.2.1.It is recorded that Yvonne Malekhotla Motsisi and Naeem Adam are the Sasol Appointed Trustees in terms of clause 24.1.4.2 and also the First Trustees of the Trust. Yvonne Malekhotla Motsisi and Naeem Adam, by their signature to this Trust Deed, accept their appointment as such and undertake to carry out all the duties, functions and obligations incumbent upon them as soon as the letters of authority have been issued to them by the Master. 24.2.2.Sasol shall from time to time on written notice to the Trustees be entitled to remove and replace a Sasol Appointed Trustee so appointed. 24.3. Elected Trustees 24.3.1. Within 6 (six) months of the Effective Date, the First Trustee/s shall procure that the Beneficiaries shall have the opportunity to elect their Trustees referred to in clause 24.1.4.1 from a list containing the names of persons, who shall be independent of Sasol, who have been nominated by Beneficiaries as candidates, who comply with the applicable requirements of this clause 24, including but not limited to clauses 24.4.1 and 24.4.2, and who are not disqualified in terms of clause 24.4 ("Qualification, Disqualification
Page 56 and Further Election of Trustees") ("Candidates"), in accordance with procedures to be determined by Sasol from time to time, which procedures shall not entitle Sasol to veto the nomination of any Candidate. 24.3.2. The First Trustee/s shall send a written notice to each Beneficiary, requesting him/her to vote for the appointment as Trustees of 2 (two) Candidates. Each Beneficiary who wishes to vote for Candidates shall address his/her vote or votes to the First Trustees by returning such notice, stating the names of the Candidates for whom s/he is voting. 24.3.3. The First Trustee/s shall count the votes received from the Beneficiaries, which count shall be verified by the Auditors, and the nominees to receive the highest number of votes shall be elected whereafter the First Trustees shall notify the Beneficiaries of the Candidates who have been elected in terms of this clause 24.3. 24.3.4. Should the Master refuse to grant the letters of authority to an Elected Trustee, or require that security be provided by an Elected Trustee, the Elected Trustee concerned shall not qualify to be an Elected Trustee of this Trust and in such event, the First Trustees shall identify the Candidate who received the next most votes in the election in terms of this clause 24.3, and such Candidate shall be put forward to the Master to replace the disqualified Candidate. The same process shall be followed if the Master refuses to grant letters of authority to, or requires security from, such alternate Candidate. 24.3.5. The Trustees in office from time to time shall ensure that an election of new Elected Trustees shall take place at 3 (three) year intervals, mutatis mutandis, on the basis set out in the other provisions of this clause 24.3, provided that if no nominations are made by the Beneficiaries, or in the case of nominations no votes are cast in respect of any Candidates, then the Elected Trustees shall remain in office for the next period of 3 (three) years. 24.3.6. 10 (ten) Beneficiaries may, by notice in writing to the Trustees ("Requisition Notice"), requisition that a meeting of Beneficiaries be convened by the Trustees for the purposes of considering a resolution or resolutions to remove an Elected Trustee then in office. The Requisition Notice shall detail: the name of the Elected Trustee the removal of whom will be considered at the meeting of Beneficiaries, and the reasons for requiring the removal of the Elected Trustee. As soon as practicable after receipt of a Requisition Notice,
Page 57 the Trustees shall convene a meeting of Beneficiaries mutatis mutandis in accordance with the provisions of clause 33, save that 24.3.6.1. not less than 21 (twenty-one) clear days' written notice of such meeting shall be given to the Beneficiaries and to the Elected Trustee; 24.3.6.2. such notice shall set out the reasons advanced by the Beneficiaries for the removal of the Elected Trustee as set out in the Requisition Notice; and 24.3.6.3. in order for a resolution for the removal of an Elected Trustee to be validly passed and effective at such meeting, such resolution must be passed by more than 50% (fifty per cent) of the votes cast in terms of clause 33.2.7 by Beneficiaries present in person or by proxy and voting at such meeting. 24.4. Qualification, Disqualification and Further Election of Trustees 24.4.1. Trustees shall have a minimum of 5 (five) years' experience in the administration of employee share ownership plans with a B-BBEE element in South Africa. 24.4.2. Beneficiaries shall not be eligible for appointment as Trustees. 24.4.3. Notwithstanding anything to the contrary contained in this clause 24 the following persons shall be disqualified from acting as Trustee, and any Trustee in office from time to time that falls to be disqualified in terms hereof, shall be deemed to have ipso facto resigned: 24.4.3.1. any person who would be disqualified from acting as a director of a company in terms of the Companies Act; 24.4.3.2. any person removed from any office of trust on account of misconduct; 24.4.3.3. any person whose estate has been sequestrated and has not yet been rehabilitated; 24.4.3.4. any person who has been declared by a competent court to be mentally ill or incapable of managing his/her own affairs or if s/he
Page 58 is by virtue of the Mental Health Act, 1973, detained as a patient in an institution or as a state patient; 24.4.3.5. any person who has been convicted in South Africa or elsewhere of any offence of which dishonesty is an element or of any other offence for which s/he has been sentenced to either imprisonment without the option of a fine or a fine in excess of R5 000,00 (five thousand Rand); 24.4.3.6. any person who has been dismissed from the employ of the Company or any Group Company for any reason whatsoever; and 24.4.3.7. any person whose appointment would in any way adversely impact the points which the Company may otherwise have been entitled to earn under the generic scorecard of the Codes and/or Charter (as the case maybe). 24.4.4. The office of a Trustee shall be automatically vacated if: 24.4.4.1. s/he becomes disqualified in terms of clause 24.4.3; 24.4.4.2. s/he resigns his/her office by not less than 60 (sixty) days (or such shorter period as the remaining Trustees may agree to) written notice to the remaining Trustees; 24.4.4.3. s/he dies; 24.4.4.4. his/her term of office as such shall have expired as contemplated in clause 24.3.5; 24.4.4.5. in the case of a Sasol Appointed Trustee, s/he is removed from office by Sasol in terms of clause 24.2.2; or 24.4.4.6. in the case of an Elected Trustee, s/he is removed from office by a resolution of the Beneficiaries at a meeting of Beneficiaries convened in terms of clause 24.3.6. 24.4.5. If the office of an Elected Trustee is vacated for any reason whatsoever, then the remaining Trustees shall as soon as possible thereafter cause elections to be held in terms of clause 24.3 to elect a new Elected Trustee.
Page 59 24.4.6.No Trustee shall have the right during his/her lifetime or by last will to appoint his/her successor or an alternate Trustee to serve as Trustee in his/her place and stead. 25. PROCEEDINGS OF TRUSTEES 25.1. Any Trustee is at all times entitled to convene a meeting of the Trustees by giving 14 (fourteen) clear days' written notice to the other Trustees, or such shorter notice as may be agreed by all of them in writing. 25.2. The Trustees shall meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they deem fit. 25.3. The Trustees may participate in a meeting of the Trustees by means of conference telephone or similar equipment by means of which all persons participating in the meeting can hear each other and any such participation in a meeting shall constitute presence in person at the meeting. 25.4. Save at the time prior to the appointment of the first Elected Trustee in terms of clause 24.3 the majority of Trustees shall constitute a meetings of the Trustees. quorum for the purposes of 25.5. Save as may be expressly otherwise provided in this Trust Deed or the Statutes, decisions to be taken by the Trustees present at a meeting of Trustees shall take place by majority vote. 25.6. A resolution in writing signed by the majority of Trustees shall be valid and effectual as if it had been passed at a meeting of the Trustees duly called and constituted, and such resolution may be signed in counterparts and shall have effect from the date of last signature. 25.7. The Trustees shall keep minutes of their meetings in writing and all resolutions passed by the Trustees shall be duly signed by the majority of Trustees. 25.8. In the event that the Trustees are required to vote on any proposed resolution (including any voluntary winding-up) of the shareholders of SSA or Sasol (as the case may be), or with regard to the acceptance of a take-over offer or scheme of arrangement, the Trustees shall be obliged to allow the relevant Beneficiaries adequate time, to give directions to the Trustees on how to vote in such regard.
Page 60 26. POWERS OF TRUSTEES 26.1. Subject to the restrictive covenants set out in clause 29, the Trustees shall have the power and authority to achieve the intents, objects and purposes of the Trust, to do whatever may be effected by a natural person who is a major in relation to his/her own affairs and as may be necessary for, or incidental to, the carrying out of their duties as set out in this Trust Deed, and such powers to do all things necessary to exercise the rights and perform the obligations of the Trust. Without derogating from the generality of the foregoing, the Trustees shall have the following specific powers: 26.1.1. to open and operate (either themselves or by a person/s authorised by them) bank accounts in the name of the Trust with any bank without any overdraft facility available in respect thereof, to draw, accept, make or endorse cheques, bills of exchange or promissory notes for and on behalf of the Trust; 26.1.2. to make any investments with the relevant member of the Group in accordance with clause 32; 26.1.3. to subscribe for the SOL Shares, SOLBE1 Shares and SSA Khanyisa Shares in accordance with clauses 5.1, 5.2 and 14.1 respectively, but to hold them only as an investment and never to trade in them, otherwise than as provided for in this Trust Deed, or for the avoidance of doubt, the term of issue of the SSA Khanyisa Shares relating to the Notional Vendor Finance; 26.1.4. to exercise or to procure the exercise of the voting powers or other rights attached to the Plan Assets, as determined in accordance with clause 35; 26.1.5. to attend shareholders' meetings of the Company and exercise voting rights thereat in accordance with the provisions of clauses 35.5 to 35.7; 26.1.6. to vest Unallocated Entitlement Assets as and when required in appropriate Beneficiaries during the Empowerment Period; 26.1.7. to distribute Plan Assets and any other assets to the Beneficiaries in accordance with the terms of this Trust Deed; 26.1.8. to vest Forfeited Fractions and Forfeited SSA Fractions and thereafter to realise same for the benefit of Beneficiaries, after the deduction of Costs; 26.1.9. to pay Costs out of Normal Distributions in respect of Unallocated Entitlement Assets;
Page 61 26.1.10. to delegate any of their rights, obligations, functions and powers set out in this Trust Deed to a person or entity (including the Administrator) who is approved in writing by the Board; 26.1.11. to employ any professional or other person as the Trustees, acting reasonably and prudently, may decide, to provide professional services to the Trust and to take and act upon any professional advice so obtained, provided that the Trustees have obtained the pre-approval in writing of the Company's audit committee for an appointment by the Trustees of the Auditors for any non-audit services; 26.1.12. to receive any Normal Distributions or Extraordinary Distributions; 26.1.13. to comply with the Automatic Repurchase and the Automatic Share Exchange and the non-automatic share exchange contemplatedin clause 18.3; 26.1.14. to keep books of account of all transactions and proper records of the affairs of the Trust; 26.1.15. to deal with any Corporate Action on the basis set out in this Trust Deed; 26.1.16. to appear wherever necessary and there to sign all documents and generally to do all things required to give effect to the terms of this Trust Deed; and 26.1.17. to exercise such further rights, powers and authorities as may from time to time be conferred upon them by resolution of the Board or the Sasol Board, as the case may be. 26.2. The Elected Trustees shall have the power to employ any professional person as the Elected Trustees may any time reasonably require to enable them to perform their powers, duties and functions under this Trust Deed, and the Trust shall bear the reasonable costs of employing such professional person. 26.3. Without prejudice to any of the foregoing, the Trustees shall have: 26.3.1. full capacity to contract on behalf of the Trust, subject always to such limitations, if any, as may be imposed by this Trust Deed, provided that they shall under no circumstances, subject to the Statutes, be personally liable on any such contract; and
Page 62 26.3.2. locus standi in judicio and be capable of bringing, defending, opposing, withdrawing, settling and/or otherwise acting on behalf of the Trust in connection with any proceedings whatsoever in or before any court, or in any arbitration forum, or before any other forum, provided that all costs reasonably incurred by them in that regard shall be for the account of the Trust. 26.4. All deeds, documents or instruments required to be executed by the Trustees shall be deemed to have been validly executed if executed by all the Trustees. 27. DUTIES OF TRUSTEES 27.1. The Trustees shall establish separate Registers for the SSA Khanyisa Shares, the SOL Shares and the SOLBE1 Shares and other Entitlement Assets which are shares, in which they shall record, in respect of each Beneficiary, at least the following: 27.1.1. the number of Entitlement Assets in respect of which each such Beneficiary has Vested Rights; 27.1.2. the Entitlement Assets in respect of which Vested Rights are still to be granted to him/her if the proviso in clause 15.2 is applicable to such New Khanyisa Tier 2 Participant; 27.1.3. the Subsequent Effective Date where such Beneficiary is a New Khanyisa Tier 2 Participant; 27.1.4. any forfeitures of Vested Rights, which shall be entered into the Register as soon as possible after the forfeiture occurs; 27.1.5. the date of termination of his/her Employment by the Group; 27.1.6. the reason for termination of his/her Employment by the Group; and 27.1.7. details of all Normal Distributions and/or Entitlement Assets, after deduction of an amount to cover Specific Taxation and Expenses, made to him/her in terms of this Trust Deed. 27.2. The Trust shall hold the Plan Assets in accordance with the provisions of this Trust Deed for the ultimate benefit of the Beneficiaries, but in relation to the SSA Khanyisa Shares, subject to the Automatic Repurchase.
Page 63 27.3. The Trustees shall not incur liabilities other than liabilities (including, without limitation, audit fees and liabilities in respect of Tax) that they are obliged to incur in terms of any applicable law, or as specifically permitted by this Trust Deed. 27.4. The Trustees shall not make any distributions to Beneficiaries in a manner other than that specified in this Trust Deed. 27.5. The Trustees shall procure, insofar as they are able, that all circulars, letters and other documents issued to Shareholders or Sasol Shareholders, as the case may be, are made available to Beneficiaries, on written request to the Administrator during normal business hours. 27.6. The Trustees shall procure that the Trust Deed is available on written request by any Beneficiary in an official language in which that Beneficiary is familiar, having regard to the necessity to have this Trust Deed translated and allowing sufficient time therefor, provided that the English version of the Trust Deed shall prevail over any other translated version of the Trust Deed. 28. PRIVILEGES OF THE TRUSTEES 28.1. The Trustees shall be exempt from any obligation to furnish security in connection with their appointment and/or for the due administration of the Trust to the Master or any other person, body or authority. 28.2. Subject to the Statutes: 28.2.1. no Trustee shall be liable to make good to the Trust or any Beneficiary any loss occasioned or sustained by any cause, howsoever arising, except such losses as may arise from or be occasioned by his/her own personal dishonesty or other wilful misconduct or gross negligence; 28.2.2. no Trustee shall be liable for any act of dishonesty or other misconduct committed by any other Trustee unless she knowingly allowed it or was an accessory to such dishonesty or other misconduct; and 28.2.3. the Trustees shall be indemnified out of the assets of the Trust against all claims and demands of whatsoever nature that may be made upon them arising out of the exercise or purported exercise of any of the powers hereby conferred upon them.
Page 64 28.3. The Trustees shall be reimbursed for all reasonable and necessary expenses incurred by them on behalf of, or for the benefit of, the Trust. 28.4. Trustees who are not employees of the Group shall be entitled to be remunerated for their services as such and such remuneration shall be determined by Sasol from time to time. 29. RESTRICTIVE COVENANTS PERTAINING TO THE TRUST The Trustees shall, unless and to the extent that the Company and Sasol may otherwise in writing agree, not: 29.1. save for the Plan Assets or SOLBE1 Shares pursuant to the Automatic Share Exchange, acquire any other asset except for holding cash, or if the asset relates to the Plan Assets for example following an unbundling transaction; 29.2. pledge, cede in security, mortgage or otherwise hypothecate or encumber any assets or any of the rights attached to the Plan Assets; 29.3. except in accordance with the provisions of this Trust Deed, Dispose of or enter into any contract to Dispose of any Plan Assets (whether or not they are listed) or any of the rights attached thereto; or 29.4. enter into any agreement in respect of the votes attached to any of the Plan Assets (which are shares) or any of the other rights attached to the Plan Assets (which are shares). 30. BOOKS OF ACCOUNT AND AUDITORS 30.1. The Trustees shall keep true and correct records and books of account of their administration of the Trust as contemplated in clause 30.5.1. 30.2. Such records and books of account, together with all other papers and documents connected with or relating to the Trust, shall be kept at the office of the Administrator. 30.3. The Trustees shall be entitled to appoint and remove the Auditors subject to the prior written consent of Sasol. 30.4. The Auditors, Sasol and all Employer Company Boards shall have the right of access at all times to the books and records of the Trust.The Auditors and the Employer Company Boards shall each be entitled to demand from the Trustees such information
Page 65 and explanations as the Employer Company Boards may reasonably require and in the case of the Auditors, as may be necessary for the performance of their duties as Auditors. 30.5. The Trustees shall: 30.5.1. ensure that the books of account of the Trust are prepared in accordance with the Company's accounting policy from time to time and International Financial Reporting Standards stipulated from time to time by the International Accounting Standards Board (or its successor body) and that such books of account are audited in accordance with international standards on auditing; and 30.5.2. annually cause financial statements to be prepared and the financial statements so prepared to be audited by the Auditors. 31. DAY-TO-DAY ADMINISTRATION AND COSTS AND EXPENSES OF THE TRUST 31.1. The day-to-day administration of the affairs of the Trust shall, be undertaken on behalf of the Trustees by the Administrator appointed, removed and replaced from time to time by the Trustees. 31.2. All Costs of the Trust shall be borne by the Trust out of Normal Distributions received (including accrued interest from surplus cash invested and any other income) in respect of Unallocated Entitlement Assets which are shares. If there is any shortfall in the costs of administering the Trust, Sasol shall pay same to the Trust by way of a capital contribution. For the avoidance of doubt, any Extraordinary Distributions will be the subject matter of Vested Rights and accordingly will be distributed to Beneficiaries only with the other Entitlement Assets. 31.3. For the avoidance of doubt, it is recorded that the Trust shall not be responsible for any costs (including, without limitation, Specific Taxation and Expenses) in respect of any right exercised by a Beneficiary, or in respect of any Vested Rights or benefit distributed to the Beneficiary under this Trust Deed which will be for the account of the Beneficiary. 31.4. The Trustees shall be obliged initially by not later than 2 months after the Effective Date to produce a budget and in subsequent years, by 1 August of each succeeding year, which budget will be subject to the approval of Sasol.
Page 66 31.5. Additional criteria applicable to B-BBEE ownership schemes and employee ownership schemes which will also be applicable to the Plan include that the Administrator must have a track-record of operating as a B-BBEE ownership scheme and employee ownership scheme, or in the absence of such a track-record demonstrable evidence of full operational capacity to operate as a B-BBEE ownership scheme and employee ownership scheme. For the avoidance of doubt operational capacity must be evidenced by suitably qualified and experienced staff in sufficient number, experienced professional advisors, operating premises and all other necessary requirements for operating a business. 32. INVESTMENT OF CASH Any available cash of the Trust shall be invested with Sasol Financing Proprietary Limited or its successors-in-title as the financier member of the Group, for the benefit of the Trust, provided that the interest rates payable to the Trust in respect of such investment are at least market related rates. 33. MEETINGS OF BENEFICIARIES 33.1. The Trustees shall procure that meetings of the Beneficiaries are held at least once a year, and as and when the Trustees deem fit. At the yearly meetings, the Trustees shall present to the Beneficiaries the annual financial statements of the Trust and, to the extent they deem it necessary and appropriate having regard to their fiduciary duties, shall seek the views of, consult with and where appropriate take directions from Beneficiaries in respect of their interests held by the Trust. 33.2. In respect of all meetings of the Beneficiaries relevant to their respective Entitlement Assets: 33.2.1. such meetings shall be held at such suitable venue as the Trustees may determine and obtain; 33.2.2. the Trustees shall give not less than 21 (twenty one) clear days' written notice to all Beneficiaries, or such shorter notice as may be agreed by all the Beneficiaries in writing; 33.2.3. a minimum number of 10 (ten) Beneficiaries, attending in person or by proxy, shall constitute a quorum;
Page 67 33.2.4. if within 30 (thirty) minutes from the time appointed for a meeting a quorum is not present, the meeting shall stand adjourned to a date 7 (seven) days after the date of the meeting at the same time and place, (or if such place not be available, at such other place as the Trustees may appoint and notify the Beneficiaries in writing). If at such adjournment of any such meeting a quorum is not present within 30 (thirty) minutes from the time appointed for the adjourned meeting, those present at such meeting shall constitute a quorum. The agenda for any adjourned meeting shall be the same agenda as for the meeting which was originally scheduled; 33.2.5. the meetings shall be chaired by the Trustees on a rotational basis annually, with one of the Sasol Appointed Trustees being the first chairperson for the first year from the Effective Date and one of the two Elected Trustees chosen by lot to be the second chairperson, and so on in rotation; 33.2.6. each Beneficiary shall be entitled to appoint, in writing, a proxy to represent him/her; 33.2.7. each Beneficiary shall have 1 (one) vote for each Plan Share in respect of which at the relevant time s/he has Vested Rights; and 33.2.8. the Trustees shall keep minutes of the meetings of Beneficiaries in writing and such minutes and resolutions passed by the Beneficiaries shall be duly signed by the chairperson of the meeting and such minutes shall be available on written request to any Beneficiary at the Trust's domicilium address during normal business hours. 33.3.Nothing contained in this clause 33 shall prevent the Trustees from exercising their discretion as Trustees. 34. ENTITLEMENT OF BENEFICIARIES TO REQUISITION MEETINGS A minimum number of 1o (ten) Beneficiaries, may, by notice in writing to the Trustees, requisition a meeting of the Beneficiaries. Such notice shall specify in detail the matters which the Beneficiaries wish to discuss at the meeting. Subject to the provisions of clause 24.3.6.1, as soon as practicable after receipt of such notice, the Trustees shall, give not less than 21 (twenty one) clear days' written notice to all Beneficiaries of a meeting to be held to discuss the matters specified in such requisition.
Page 68 35. VOTING OF PLAN ASSETS 35.1. Where the Trustees are required to vote on a proposed resolution (including any voluntary winding-up, but excluding the appointment or election of any director to the Board which will be dealt with as contemplated in clauses 35.5 and 35.6) of the shareholders of the Company or Sasol or any other company, the shares of which are included as Entitlement Assets (or any other company in terms of clause 21) (as the case may be) ("Proposed Shareholders' Resolution"), the Trustees shall be obliged within a reasonable period prior to voting, to dispatch a written notice to the Beneficiaries concerned describing the Proposed Shareholders' Resolution and asking each of them to direct the Trustees as to the manner in which those Entitlement Assets which are shares ("Plan Shares") shall be voted by the Trustees, (i.e. in favour of/against/abstention) by a written notice delivered by a date which date may not be later than 5 (five) Business Days prior to the date of the Proposed Shareholders' Resolution stipulated in the notice. 35.2. On receipt of all the written returns, the Trustees shall count the votes in favour of and against the Proposed Shareholders' Resolution, as well as any non-returns and abstentions. 35.3. The Trustees shall thereafter vote on the Proposed Shareholders' Resolution: 35.3.1. the number of votes by Beneficiaries in favour of the Proposed Shareholders' Resolution, by voting the same number of Plan Shares in favour of the Proposed Shareholders' Resolution; 35.3.2. the number of votes by Beneficiaries against the Proposed Shareholders' Resolution, by voting the same number of Plan Shares against the Proposed Shareholders' Resolution; and 35.3.3. the number of non-returns or abstentions and in respect of any Plan Shares not subject to Vested Rights, as they in their discretion exercised jointly in accordance with the provisions of clause 25.5, determine. 35.4. In the case of an offer contemplated in clause 12 or clause 21 which permits the holder of the Plan Shares to make an election as to the proportion of cash and other Consideration Assets, the Trustees shall exercise that election in accordance with each Beneficiary's election notified to the Trustees in writing not less than 2 (two) Business Days before the Trustees are required to make the election.
Page 69 35.5. As soon as possible after the Effective Date, the Trustees shall be obliged to dispatch a written notice to the Khanyisa Tier 2 Participants requesting them to vote the Plan Shares to which they have Vested Rights in favour of 1 (one) of the Trustees contemplated in clause 24.3.1, being eligible for appointment by the Trustees to the Board. The Khanyisa Tier 2 Participants who wish to exercise their voting rights must do so in writing delivered to the Trustees within 14 (fourteen) days after receipt of the written notice from the Trustees. On receipt of all the written returns, the Trustees shall count the votes in favour of each such Trustee, and the Trustee who receives the majority of the votes shall be the one to be appointed by the Trustees to the Board. 35.6. For so long as the Trustee appointed to the Board remains a Trustee, that person shall continue to be the Trust's appointee on the board of directors of the Company, but subject to the provisions of the Memorandum of Incorporation of the Company. If the Trustee who has been appointed by the Trustees to the board of directors of the Company ceases to be a Trustee of the Trust, or is otherwise disqualified from being a director of the Company, the provisions of clause 35.5 and this clause 35.6 shall again be implemented to detennine which of the Trustees contemplated in clause 24.3.1 shall be appointed by the Trustees to the board of directors of the Company in place of that incumbent Trustee. 35.7. The Trustees shall vote any Unallocated Entitlement Assets in the same manner as a majority of the votes exercised by the Beneficiaries in respect of any resolutions or any voting in respect of the selection of the nominee to be appointed to the board of directors of the Company. 36.CORPORATE ACTION AS REGARDS THE TRUST GENERALLY 36.1. Capitalisation Shares award 36.1.1. Should an award of Non-Elective Capitalisation Shares in Sasol or the Company, as the case may be, be made to the Trustees then those Non Elective Capitalisation Shares shall fonn part of the Plan Assets. 36.1.2. In the case of Sasol offering a Distribution with the alternative of Elective Capitalisation Shares or vice versa, the Trustees shall exercise the choice provided that the same choice shall be made as regards all Khanyisa Tier 1 Participants. If the Trustees elect to Shares on behalf of all Khanyisa Capitalisation Shares shall form part receive the Elective Capitalisation Tier 1 Participants such Elective of the Plan Assets and shall be
Page 70 distributed immediately to the Khanyisa Tier 1 Participants. If the Trustees elect to receive cash, such cash shall be distributed to the Khanyisa Tier 1 Participants. 36.1.3. In the case of the Company offering a Distribution with the alternative of Elective Capitalisation Shares or vice versa, the Trustees shall be obliged to elect to receive the Elective Capitalisation Shares. Such Elective Capitalisation Shares shall form part of the Plan Assets but shall not be distributed to the Khanyisa Tier 2 Participants, despite the fact that they were an alternative to a Distribution. 36.2. Other Corporate Actions 36.2.1. As regards any (i) unbundling by Sasol or the Company, as the case may be, of any of its assets, or (ii) a buy back by Sasol and/or the Company made generally to shareholders, those assets or the proceeds, including cash, of the buy back offer, as the case may be, shall not be released to the relevant Beneficiaries, but the relevant Beneficiaries shall, in substitution, acquire Vested Rights therein and the remaining provisions of this Trust Deed shall apply mutatis mutandis to those assets or proceeds. 36.2.2. As regards any other form of Corporate Action which could result in Plan Assets being acquired from the Trustees, the Trustees shall act in accordance with the Sasol Board's requirements so as to ensure that Sasol's B-BBEE credentials shall not be adversely impacted, provided that to the extent that any such direction could relieve Sasol or the Company of any of its obligations in terms of this Trust Deed the Trustees shall not implement that direction. 36.3. Reorganisation of Shares If Shares are reorganised in any way, then the number of Entitlement Assets in respect of which Vested Rights are granted or are intended to be granted to Beneficiaries under this Trust Deed shall be adjusted by the Auditors to reflect such reorganisation in such manner as they, acting as experts and not as arbitrators, shall determine. Their decision shall be final and binding.
Page 71 36.4. Sasol and Subsidiaries entitled to dispose of assets Notwithstanding anything to the contrary contained in this Trust Deed, no provision of this Trust Deed shall prevent Sasol or the Company, as the case may be, from disposing of any of its subsidiaries or relinquishing control thereof, or Sasol, or the Company, as the case may be, or any of it or its subsidiaries from disposing of its business at any time. 37. CONSOLIDATIONS, SUBDIVISIONS AND ADJUSTMENT OF SHARES 37.1. In the event of a sub-division or consolidation of Shares, there will be a consequent adjustment to the number of Shares in respect of which Beneficiaries have Vested Rights, which adjustment will give the Beneficiaries the same Vested Rights proportionately to the Shares as that to which they were previously entitled. 37.2. The Auditors, or other independent advisor acceptable to the JSE, shall confirm to the JSE in writing that any adjustment, which may be necessary to take account of capitalisation issues, special dividends, rights issues or a reduction in capital has been properly calculated on a reasonable and equitable basis. 37.3. The issue of Shares for consideration for an acquisition, and the issue of Shares for cash or a vendor consideration placing will not be regarded as a circumstance that requires any adjustment to the limit in respect of any Beneficiary. 37.4. The Trustees shall notify the Beneficiaries of any adjustments which are made in accordance with this clause 37. Any adjustments made in terms of this clause 37 must be reported in the Trust's annual financial statements in the year during which the relevant adjustment is made. 38. GENERAL PROVISION APPLICABLE TO THE SALE OF ENTITLEMENT ASSETS In order for the Trustees to procure the sale of the Entitlement Assets as contemplated in clauses 10.4 and 20.5, which are shares, for the benefit of any Beneficiary, the procedure to be followed by the Trustees in connection therewith shall be determined by the Board or the Sasol Board, as the case may be, depending on whether it comprises of the Khanyisa Tier 1 Plan or the Khanyisa Tier 2 Plan, which may, inter alia, prescribe: 38.1. which broker shall be instructed to sell the Entitlement Assets; 38.2. the frequency and periods of time allotted for the sale of large tranches of Entitlement Assets; and
Page 72 38.3. if appropriate, the method of averaging, between Beneficiaries, sale prices of Entitlement Assets sold in the event that the Trustees sell Entitlement Assets on behalf of more than 1 (one) Beneficiary during any given period. 39. DISCLOSURE IN ANNUAL FINANCIAL STATEMENTS Each of Sasol and the Company, as the case may be, shall disclose in its annual financial statements, to the extent required by the JSE Listings Requirements, the number of Shares that may be utilised for purposes of the Plan at the beginning of the accounting period, changes in such number during the accounting period and the balance of Shares available for utilisation for purposes of the Plan at the end of the accounting period. 40. MEDIATION If any dispute arises between any of the parties in regard to the carrying into effect of any of the parties' rights and obligations arising from this Trust Deed, such parties agree to negotiate with each other in good faith in an effort to resolve such dispute. If such negotiations fail or do not occur within 3 (three) days after the dispute arises, the dispute shall not become the subject of litigation or arbitration until it has been heard by a mediator unless such action is critical to avoid the prescription of a cause of action or right at law or in order to obtain an interdict, or otherwise to limit any material damage to such party's interests. Such dispute shall be referred to mediation before a mediator within 3 (three) days after the dispute arises if the good faith negotiations have not resulted in the resolution of the dispute. The mediator shall be appointed by the parties or failing agreement by them as to the mediator, shall be nominated by the chairperson (or the equivalent office no matter what it may be titled) for the time being of the Arbitration Foundation of Southern Africa (or its successor body) (AFSA). The mediation shall terminate upon any one of the disputants withdrawing or the mediator informing the disputants that in the mediator's opinion, no useful purpose will be achieved in continuing the mediation. All communications made by the disputants to the mediator or to each other during or in connection with the mediation are made without prejudice to any rights which they may have and form part of bone fide settlement negotiations. The mediator shall not be compelled by any disputant to disclose any fact learnt in the course of the mediation in any subsequent legal proceedings which may take place and the parties waive their right to require the mediator to testify regarding what transpired in the mediation. The mediator shall: 40.1.be entitled to communicate and meet with any disputant either in the presence of the other disputantls or in private;
Page 73 40.2. not disclose any information furnished in confidence by any one disputant to the mediator, to any other disputant without the prior consent of the disputant who furnished the information; 40.3. act impartially and disclose to the disputants any relationship or dealings which the mediator may have had with any of the disputants; 40.4. not make any decision which is binding upon the disputants, the resolution of the dispute depending entirely upon the disputants achieving agreement in respect thereof; 40.5. decide and certify if, in the event that the parties are unable to reach agreement on an issue referred to him/her, whether the specific dispute is, on a reasonable assessment of the nature and scope thereof, sufficiently material to require arbitration thereof. 41. ARBITRATION 41.1. Save in respect of those provisions of this Trust Deed which provide for their own remedies which would be incompatible with arbitration, a dispute which arises in regard to this Trust Deed or out of or pursuant to this Trust Deed (other than where an interdict is sought or urgent relief may be obtained from a court of competent jurisdiction, shall be submitted to and decided by arbitration). 41.2. That arbitration shall be held with only the parties to the arbitration and their representatives present thereat. 41.3. The seat of the arbitration shall be Johannesburg. 41.4. Save as expressly provided in this Trust Deed to the contrary, the arbitration shall be subject to the rules of the Arbitration Foundation of Southern Africa in force at the time the arbitration takes place, unless the parties to the arbitration and the arbitrator agree in writing to any departure therefrom. If any provision of this clause 41 is inconsistent with the rules of the Arbitration Foundation of Southern Africa in force at that time, the provisions of this clause shall prevaiL If there is any dispute in relation to such inconsistency or alleged inconsistency and/or as to which rules prevail, the arbitrator shall determine such dispute (which determination shall be final and binding on the parties to the arbitration) applying such rules and procedures as the arbitrator considers appropriate. 41.5. The arbitrator shall be, if the matter in dispute is principally:
Page 74 41.5.1. a legal matter, an impartial retired judge, or an impartial practising advocate of not less than 15 (fifteen) years' standing, or an impartial admitted attorney of not less than 15 (fifteen) years' standing; 41.5.2. an accounting matter, an impartial practising chartered accountant of not less than 15 (fifteen) years' standing; 41.5.3. any other matter, an impartial person with not less than 15 (fifteen) years' appropriate expertise. 41.6. If the parties to the arbitration fail to agree on an arbitrator within 14 (fourteen) days after the arbitration has been demanded, the arbitrator shall be nominated, at the request of any one of the parties to the arbitration by the chairman (or the equivalent office no matter what it may be titled) of the Bar Council or instead the voluntary association constituted for the benefit of a majority of attorneys in South Africa who shall take the provisions of clauses 41.5.1 to 41.5.3 into account in nominating the arbitrator, whereupon the parties to the arbitration shall forthwith appoint such person as the arbitrator. If that person fails or refuses to make the nomination or if any such office does not exist, any party to the arbitration may approach the High Court of South Africa to make such an appointment. To the extent necessary, the court is expressly empowered to do so. 41.7. If the parties to the arbitration fail to agree whether the dispute is of a legal, accounting or other nature within 14 (fourteen) days after the arbitration has been demanded, it shall be considered a matter referred to in clause 41.5.1. 41.8. Within 14 (fourteen) days after the pleadings have closed, the arbitrator shall determine the period within which the hearing will be concluded, taking into account the particular circumstances of the dispute. Upon making such a determination the arbitrator shall: 41.8.1. provide written notice to the parties to the arbitration in which the arbitrator sets out the period within which the hearing will be concluded, together with a list of all the dates within a 6 (six) month period from the date of such notice on which the arbitrator is available to commence with the hearing; 41.8.2. determine the date on which the hearing will commence, which determination shall be made in accordance with the following procedure: 41.8.2.1. each party to the arbitration shall, within 3 (three) Business Days after delivery of the notice referred to in clause 41.8.1 provide to
Page 75 the arbitrator and to the other parties to the arbitration a list of at least 5 (five) dates on which that party's legal representative is available provided that, each of those dates: 41.8.2.1.1. must fall on a Business Day; 41.8.2.1.2. must fall within a period not exceeding 6 (six) months from the date of delivery of such notice; 41.8.2.1.3. must coincide with the dates on which the arbitrator is available; 41.8.2.1.4. may not be on consecutive days; 41.8.2.1.5. must be proposed in good faith; 41.8.2.2. if: 41.8.2.2.1. any party to the arbitration does not provide a list of at least 5 (five) dates on which representative is available in that party's legal compliance with clause 41.8.1, the arbitrator may select a commencement date on a date on which the arbitrator and the other parties to the arbitration that have complied with clause 41.8.1 are available; 41.8.2.2.2. each party to the arbitration provides a list of at least 5 (five) datesonwhichthat party'slegal representative is available in compliance with clause 41.8.1, but none of those dates coincide with each other, then the arbitrator must call a meeting between the parties to the arbitration within a period not exceeding 14 (fourteen) days for the purposes of selecting a date upon which the arbitrator and the parties to the arbitration and their legal representatives are all available. If the parties to the arbitration are unable to reach agreement, the arbitratorshall,in thearbitrator'sdiscretion, determine the commencement date provided that:
Page 76 41.8.2.2.2.1. the commencement date must fall within a period not exceeding 6 (six) months from the date of delivery of the notice referred to in clause 41.8.1; 41.8.2.2.2.2. if the period that the arbitrator determined for the hearing is has not more than 5 (five) Business Days, the commencement date must be at least 30 (thirty) days after the date on which thearbitrator makes to a the determination as commencement date; 41.8.2.2.2.3. if the period that the arbitrator has determined for the hearing is more than 5 (five) Business Days, the commencement date must be at least 60 (sixty) days after the date on which thearbitrator makes to a the determination as commencement date, and the arbitration may commence on that date regardless of the absence of any party to the arbitration or its legal representative; 41.8.3. if the arbitration hearing is not completed within the period determined by the arbitrator, determine the date for recommencement of the hearing in accordance with clause 41.8.1. 41.9. The determination made by the arbitrator as regards the period within which the hearing will be concluded and/or the commencement date and/or the recommencement date shall be final and, provided that there has been compliance with clause 41.8, no party to the arbitration may raise as good and sufficient cause for the absence of that party at the arbitration proceedings, the unavailability of that party's legal representative. 41.10. The arbitrator shall, subject to the provisions of this clause, have the fullest and freest discretion with regard to the proceedings save that the arbitrator, shall be obliged to
Page 77 give his/her award in writing fully supported by reasons and shall adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined. 41.11. Furthermore the arbitrator: 41.11.1. may by notice to the parties to the arbitration within 14 (fourteen) days after his/her appointment, dispense wholly or in part with formal submissions or pleadings provided that the parties to the arbitration are given the opportunity to make submissions; 41.11.2. shall not be bound by strict rules of evidence; 41.11.3. shall allow any party to the arbitration to call any witnesses he/she determines and shall permit cross examination of witnesses; 41.11.4. may, in addition to any other award he/she may be able to make: 41.11.4.1. require specific performance, with an award of damages or without an award of damages, but may not award cancellation of this Trust Deed; 41.11.4.2. take into account the practicality or otherwise of ordering the continuance of any legal relationship between disputants; 41.11.4.3. award interest with effect from any date, and on any other basis, he/she considers appropriate in the circumstances; 41.11.4.4. shall make such order as to costs as he/she deems just. 41.12. Any party to the arbitration shall be entitled to have the award made an order of court of competent jurisdiction. 41.13. Any dispute shall be deemed to have been referred or subjected to arbitration hereunder when any party gives written notice to the others of the dispute, demands an arbitration and requests agreement on an arbitrator. 41.14. The parties to the arbitration shall keep the evidence in the arbitration proceedings and any order made by any arbitrator confidential.
Page 78 41.15. The arbitrator shall have the power to give default judgment if any party to the arbitration fails to make submissions on due date and/or fails to appear at the arbitration. 41.16. The arbitrator's award shall be final and binding on the parties to the arbitration. There shall be a right of appeal against any award of the arbitrator provided that: 41.16.1. the appeal is noted within 14 (fourteen) days of the arbitrator's award; 41.16.2. the appellant delivers the record to the respondentls within 14 (fourteen) days of the record becoming available to the appellant. The relevant provisions of this arbitration clause shall apply mutatis mutandis in regard to the appeal; 41.16.3. the appeal shall be heard before a panel of 3 (three) arbitrators and the provisions of clauses 41.5 and 41.6 shall apply. 41.17. The parties to the arbitration, together with the arbitrator will agree from time to time on the arbitrator's remuneration and when and how it shall be paid in the interim. The parties to the arbitration shall, pending the final determination of the arbitrator as to which of the parties to the arbitration shall ultimately be liable for the costs of the arbitration, fund the costs (such as costs of any venue, arbitrator's remuneration, recording, transcription and other costs and expenses ancillary to the arbitration) which need to be paid in the interim. If at any time a party to the arbitration does not pay his/her/its portion of the costs when required in the interim, that party will be excluded from participating in the arbitration and the other parties to the arbitration shall be entitled to request a final award from the arbitrator as regards that party.Within 10 (ten) days of the making by the arbitrator of a final determination as to which party to the arbitration shall bear the costs of the arbitration, the party against which such determination has been made shall reimburse to the other parties the costs borne by such parties in the interim together with interest thereon, if the arbitrator so awards in terms of clause 41.11.4. 41.18. If it is alleged that this Trust Deed was induced by a fraudulent misrepresentation or if this Trust Deed is void or voidable on any other ground, then notwithstanding that the remainder of this Trust Deed may be void or voidable the parties agree that the provisions of this clause are severable from the rest of this Trust Deed and shall remain in effect. In such circumstances, any dispute relating to any such fraudulent misrepresentation or relating to whether this Trust Deed is void or voidable shall be submitted to and decided by arbitration in accordance with this clause.
Page 79 42. DOMICILIUM CITANDI ET EXECUTANDI 42.1. The parties choose as their domici/ia citandi et executandi for all purposes under this Trust Deed, whether in respect of court process, notices communications of whatsoever nature, the following address: or other documents or 42.1.1. the Company: Physical: Sasol Place 50 Katherine Street Sandton 2196 Postal: PO Box 5486 Johannesburg 2000 Telefax: 011 788 5091 Email: sasoJHR@sasol.com Marked for the attention of the Company Secretary 42.1.2. the Trustees: Physical: Sasol Place 50 Katherine Street Sandton 2196 Postal: PO Box 5486 Johannesburg 2000 Telefax: 011 788 5091 Email: sasoiHR@sasol.com Marked for the attention of the Company Secretary 42.1.3. Sasol: Physical:Sasol Place 50 Katherine Street Sandton 2196 Postal: PO Box5486 Johannesburg 2000
Page 80 Telefax: 011 788 5091 Email: sasoiHR@sasol.com Marked for the attention of the Company Secretary 42.2. Any notice or communication required or permitted to be given in terms of this Trust Deed shall be valid and effective only if in writing but it shall be competent to give notice by telefax. 42.3. Either the Company or the Trustees may by notice to the other of them change the physical address chosen as its domicifium citandi et executandi to another physical address where postal delivery occurs in South Africa or its telefax number, provided that the change shall become effective on the 5th (fifth) Business Day from the deemed receipt of the notice by the other party. 42.4. Any notice to a party: 42.4.1. delivered by hand to a responsible person during normal business hours at the physical address chosen as its domicifium citandi et executandi shall be deemed to have been received on the day of delivery; 42.4.2. sent by telefax to its chosen telefax number stipulated in clause 42.1 shall be deemed to have been received on the date of dispatch (unless the contrary is proved); 42.4.3. sent by prepaid registered post (by airmail if appropriate) in a correctly addressed envelope to it at an address chosen as its domicifium citandi et executandi to which post is delivered shall be deemed to have been received on the 7th (seventh) business day after posting (unless the contrary is proved); or 42.4.4. sent by email to its chosen email address stipulated in clause 42.1, shall be deemed to have been received on the date of despatch (unless the contrary is proved). 42.5. Notwithstanding anything to the contrary herein contained a written notice or communication actually received by a party shall be an adequate written notice or communication notwithstanding that it was not sent to or delivered at its chosen domicifium citandi et executandi. 43. TERMINATION
Page 81 43.1. This Trust Deed shall not be capable of cancellation, subject to clause 2.3. 43.2. This Trust shall terminate upon the last of: 43.2.1. the Trust ceasing to hold any Plan Assets or other assets; or 43.2.2. the Trustees having discharged, in accordance with the provisions of this Trust Deed, all of their liabilities, and periormed all of their obligations. 44. CHANGES TO THE BEE STANDARDS 44.1. If at any time during the Empowerment Period there is/are change/s to the BEE Standards as a result of which the Trust cannot meet the new BEE Standards ("New BEE Standards") Sasol shall be entitled by written notice to the Trustees and the Beneficiaries to terminate the Khanyisa Tier 1 Plan and the Khanyisa Tier 2 Plan, in which event: 44.1.1. Sasol, or any member of the Sasol Group selected by it, shall acquire from each of the Beneficiaries, his/her Vested Rights, in the case of Vested Rights to: 44.1.1.1. SOL or SOLBE1 Shares, at the 30 (thirty) day VWAP determined on the date on which Sasol gives written notice to the Trustees multiplied by the Period Factor. For the purposes hereof the "Period Factor" shall be if the written notice is given in the first year from the Effective Date, 33.3% (thirty three point three percent), in the second year from the Effective Date, 66.6% (sixty six point six percent) and in the third year, 100% (one hundred percent); 44.1.1.2. SSA Khanyisa Shares, at the fair value thereof multiplied by the Period Factor, which fair value shall be determined by the Expert and the provisions of clauses 18.2.5 and 18.2.8 will apply to any such determination. For the purposes hereof the "Period Factor'' shall be if the written notice is given in the first year from the Effective Date, 10% (ten percent), in the second year from the Effective Date, 20% (twenty percent), in the third year from the Effective Date, 30% (thirty percent), in the fourth year from the Effective Date, 40% (forty percent), in the fifth year from the Effective Date, 50% (fifty percent), in the sixth year from the
Page 82 Effective Date, 60% (sixty percent), in the seventh year from the Effective Date, 70% (seventy percent), in the eighth year from the Effective Date, 80% (eighty percent), in the ninth year from the Effective Date and 90% (ninety percent), in the tenth year from the Effective Date; 44.1.2. after clause 44.1.1 has been implemented, Sasol shall buy back the SOLBE1 and SOL Shares and the Company shall buy back the SSA Khanyisa Shares. 44.2.For the avoidance of doubt, if the buy back in clause 44.1.2 is applicable and more than 5% (five percent) of the SSA Ordinary shares are repurchased by the Company, the provisions of section 48(8)(b) of the Companies Act will not be applicable, as the Trustees have agreed to the buy back occurring, if applicable, in this Trust Deed. 45. AMENDMENTS TO THE DEED The Trustees shall be: 45.1. obliged to amend this Trust Deed if directed to do so by, and in accordance with the written directions of, the Board and the Sasol Board, provided that such amendment shall not relieve Sasol or the Company of its obligations, nor change: 45.1.1. the methodology for identification of Beneficiaries; or 45.1.2. the Vested Rights; or 45.1.3. any of the other matters contemplated in Schedule 14.1 (a) to (h) of the JSE Listings Requirements, without obtaining the requisite approval contemplated in Schedule 14.2 of the JSE Listings Requirements and in addition, as regards any change relating to clause 45.1.2, the approval of 75% (seventy five percent) of the affected class of Beneficiaries concerned present and voting at a meeting; or 45.2. entitled to amend this Trust Deed with the prior written consent of the Board and the Sasol Board, but not without first having obtained the prior approval of the JSE, provided that if any such amendment prejudices: 45.2.1. a majority of the Khanyisa Tier 1 Participants in any material way, then the Trustees shall, in addition, obtain the approval of a majority of the votes of the Khanyisa Tier 1 Participants present at a meeting exercised in
Page 83 accordance with the provisions of clause 33.2.7 at a meeting convened in accordance with the provisions of clause 33; 45.2.2. a majority of the Khanyisa Tier 2 Participants in any material way, then the Trustees shall, in addition, obtain the approval of a majority of the votes of the Khanyisa Tier 2 Participants present at a meeting exercised in accordance with the provisions of clause 33.2.7 at a meeting convened in accordance with the provisions of clause 33. 45.3. subject to JSE notification and approval, entitled to make minor amendments to this Trust Deed to comply with, or take account of, the provisions of any proposed or existing legislation or to obtain or maintain favourable taxation or regulatory treatment of any Employer Company or any present or future Khanyisa Tier 1 Participant Khanyisa Tier 2 Participant. or 5fttJ DIOAf ...LA_,_,f._,_'/l....;:._t_L 2o18. SIGNED at For and on be If of SASOL SOUTH AFRICA LIMITED, same being duly authorised and who warrants his/her authority thereto SftA.ID71JN on this the 18/t...day f_J},-=-.L.. .:....;; IL=----2018. SIGNED at For and on ehalf of SASOL LIMITED, same being duly authorised and who warrants his/her authority thereto
Page 84 SIGNED at _T=1 1_ _' _J_o on this the ay of R fQ r l-_ 2018. Full names Capacity SIGNED at on this the day of 2018. NAEEM ADAM Full names Capacity
Page 84 SIGNED at on this the day of 2018. YVONNE MALEKHOTLA MOTSISI names 2018. NAEEM ADAM Full names Flt:J'\ i(L\SIC-0 Capacity
Page 1 SCHEDULE1-REPURCHASEFORMULA RS = ([N x P1 x (1+R)AT1]-D) I P2 Where: RS = Number of SSA Khanyisa Shares to be repurchased N =Number of SSA Khanyisa Shares subscribed for by the Trustees P1 = the market value, for the purposes of subscription, per SSA Khanyisa Share detennined in accordance with the formula AlB, where: A is the market value of the Company for the purposes of this transaction, as determined by KPMG at 30 June 2017 and adjusted by Sasol management for debt and debt-like items expected to be in the Company's books at the Effective Date; and B is the number of SSA Ordinary Shares in issue on the Effective Date held by Sasol, Sasol Khanyisa FundCo and the Trustees. R =Escalation factor of 75% of the nominal annual prime lending rate of Sasol's primary bankers over the relevant 6 month period, compounded monthly. For the avoidance of doubt, each month's escalation will be equivalent to the relevant nominal annual prime lending rate divided by 12 T1 = Number of 6 month periods from the Effective Date to the Trigger Date with the last period being a partial 6 month period D = The sum of all the individual E(FV)s from the Effective Date to the Trigger Date E(FV) = E, for any period from 1 to n, escalated by R for the number of full 6 monthly periods from date of the specific dividend receipt to the Trigger Date and for the last partial 6 monthly period E (1 ton)= the absolute difference in amount between: 1) the amount of each Normal Distribution received by the Trustees on an SSA Khanyisa Share (to which the Dividend Percentage will have been applied); and 2) the same Normal Distribution to the full extent thereof, received by other shareholders of the Company on an SSA Ordinary Share, multiplied by the number of SSA Khanyisa Shares held by the Trustees on that date, to which must be added, if applicable, the amount of any Extraordinary Distribution received by other shareholders of the Company on an SSA Ordinary Share but not received by the Trustees on an SSA Khanyisa Share, multiplied by the number of SSA Khanyisa Shares held by the Trustees on that date n = Number of dividend periods from the Effective Date to the Trigger Date including the last partial period immediately prior to the Trigger Date P2 = the market value per a SSA Ordinary Share at the Trigger Date as determined by the Expert.
LIST OF SUBSIDIARIES
Name |
|
Nature of business |
|
Percentage
|
|
Country of
|
|
Sasol Mining (Pty) Ltd |
|
Coal mining activities |
|
89.8 |
|
South Africa |
|
Sasol Mining Holdings (Pty) Ltd |
|
Holding company for the groups mining interests |
|
100 |
|
South Africa |
|
|
|
|
|
|
|
|
|
Sasol Technology (Pty) Ltd |
|
Engineering services, research and development and technology transfer |
|
100 |
|
South Africa |
|
Sasol Financing Limited |
|
Management of cash resources, investment and procurement of loans (for South African operations) and other general treasury activites |
|
100 |
|
South Africa |
|
Sasol Investment Company (Pty) Ltd |
|
Holding company for the groups foreign investments and investment in moveable and immovable property |
|
100 |
|
South Africa |
|
Sasol South Africa Limited |
|
Integrated petrochemicals and energy company. |
|
100 |
|
South Africa |
|
Sasol Oil (Pty) Ltd |
|
Production and marketing of liquid fuels, base oils, lubricants and other products |
|
75 |
|
South Africa |
|
Sasol International Services Limited |
|
Buying and selling of crude oil |
|
100 |
|
United Kingdom |
|
Sasol Chemical Holdings International (Pty) Ltd |
|
Holding company for some of the Sasol Groups international chemical business interests |
|
100 |
|
South Africa |
|
Sasol UK Limited |
|
Marketing and distribution of chemical products |
|
100 |
|
United Kingdom |
|
Sasol Chemicals Pacific Limited |
|
Marketing and distribution of chemical products |
|
100 |
|
Hong Kong |
|
Sasol Financing International Limited |
|
Management of cash resources, investment and procurement of loans (for operations outside South Africa) |
|
100 |
|
Isle of Man |
|
Sasol Gas (Pty) Ltd |
|
Selling, marketing and transportation of gas and any related services |
|
100 |
|
South Africa |
|
Sasol Oil International Limited |
|
Buying and selling of crude oil |
|
75 |
|
Isle of Man |
|
Sasol New Energy Holdings (Pty) Ltd |
|
Investment in research, design and construction for the production, storage, marketing, delivery and sale of low carbon and renewable energy and related products, co-products or by-products |
|
100 |
|
South Africa |
|
Sasol Africa (Pty) Ltd |
|
Exploration, development, production, marketing and distribution of natural oil and gas and associated products |
|
100 |
|
South Africa |
|
Sasol Canada Exploration and Production Limited |
|
General partner in, and management of, the Sasol Canada Exploration and Production Limited Partnership which holds Sasols upstream interests in the Sasol Progress Energy Canada Ltd partnership in Canada |
|
100 |
|
Canada |
|
Sasol Canada Holdings Limited |
|
Exploration, development, production, marketing and distribution of natural oil and gas and associated products in Canada |
|
100 |
|
Canada |
|
Sasol Middle East and India (Pty) Ltd |
|
Develop and implement international GTL and CTL ventures and any other related matters |
|
100 |
|
South Africa |
|
Sasol Wax International GmbH |
|
Holding company for Sasol Wax operations (outside South Africa) |
|
100 |
|
Germany |
|
Sasol Wax GmbH |
|
Production, marketing and distribution of waxes and wax related products |
|
100 |
|
Germany |
|
National Petroleum Refiners of South Africa (Pty) Ltd |
|
Refining of petroleum feedstocks into finished and unfinished petroleum products |
|
47.73 |
|
South Africa |
|
Sasol Chemie GmbH and Co. KG |
|
Investment in the Sasol Germany GmbH, Sasol Solvents Germany GmbH and Sasol Performance Chemicals GmbH |
|
100 |
|
Germany |
|
Sasol Germany GmbH |
|
Production, marketing and distribution of chemical products |
|
100 |
|
Germany |
|
Sasol Solvents Germany GmbH |
|
Production and marketing of solvents |
|
100 |
|
Germany |
|
Sasol Italy SpA |
|
Trading and transportation of oil products, petrochemicals and chemical products and derivatives |
|
99.95 |
|
Italy |
|
Sasol Holdings (USA) (Pty) Ltd |
|
Holding company for the groups interests in the United States |
|
100 |
|
South Africa |
|
Sasol Chemicals (USA) LLC |
|
Production, marketing and distribution of chemical products |
|
100 |
|
United States |
|
Sasol Financing USA LLC |
|
Management of cash resources, investment and procurement of loans (North American Operations) |
|
100 |
|
United States |
|
Sasol Holdings (Asia Pacific) (Pty) Ltd |
|
Holding company for the groups Asia Pacific investments |
|
100 |
|
South Africa |
|
Sasol European Holdings Limited |
|
Resale of Sasol chemical products into UK / Ireland market area |
|
100 |
|
United Kingdom |
|
Sasol Financing International Limited |
|
Management of cash resources, investments and procurement of loans (for our foreign operations) |
|
100 |
|
South Africa |
|
Sasol (USA) Corporation |
|
Holds and manages our interests and operations in the United States |
|
100 |
|
United States |
|
INCORPORATED JOINTLY CONTROLLED ENTITIES
Name |
|
Nature of business |
|
Interest % |
|
Country of
|
|
Chevron Sasol EGTL Limited |
|
Investment activities in relation to the Escravos gas-to-liquids project |
|
10% S class shares |
|
Bermuda |
|
Ixia Coal (Pty) Ltd |
|
Investment activities Sasol Mining |
|
49 |
|
South Africa |
|
ORYX GTL Limited (QSC) |
|
Manufacturing and marketing of synthetic fuels from gas |
|
49 |
|
Qatar |
|
|
|
|
|
|
|
|
|
Sasol Chevron Holdings Limited |
|
Marketing of Escravos GTL products |
|
50 |
|
Bermuda |
|
Sasol-Huntsman GmbH & Co KG |
|
Manufacturing of chemical products |
|
49.5 Limited partner |
|
Germany |
|
Kubu Energy Resources (Pty) Ltd. |
|
Coal bed methane exploration |
|
50 |
|
Botswana |
|
Sasol Chevron Nigeria Limited |
|
Personal, technical services and training to the Escravos GTL facility in Nigeria |
|
50 |
|
Nigeria |
|
Sasol Dyno Nobel (Pty) Ltd |
|
Manufacturing and distribution of explosives |
|
50 |
|
South Africa |
|
|
|
|
|
|
|
|
|
Petromoc E Sasol SARL |
|
Retail and commercial marketing of liquid fuels; petrol, diesel, illuminating paraffin, liquefied petroleum gas (LPG), fuel oil and lubricants in Mozambique |
|
49 |
|
Mozambique |
|
Strategic Energy Technology Systems Private Limited |
|
Prospecting, exploration, production, exploitation of mineral oil, petroleum, oil, gas and other similar or allied substances |
|
50 |
|
India |
|
Central Termica de Ressano Garcia (CTRG SA) |
|
Production, generation, transport and commercialisation of electrical energy, including export, construction operation and management of a power plant |
|
49 |
|
Mozambique |
|
Sasol Wilmar Alcohol Industries (Lianyungang) Co Ltd |
|
Development, production, sale and distribution of oleochemical based alcohol, surfactant, auxiliaries, petroleum additives, leather chemicals, water treatment auxiliaries, etc. |
|
50 |
|
China |
|
Gemini HDPE LLC |
|
Construction of the high-density polyethylene plant |
|
50 |
|
United States |
|
Republic of Mozambique Pipeline Investments Company (Pty) Ltd (ROMPCO) |
|
Owning and operating the natural gas transmission pipeline between Temane in Mozambique and Secunda in South Africa for the transportation of natural gas produced in Mozambique to markets in Mozambique and South Africa |
|
50 |
|
South Africa |
|
I, Bongani Nqwababa, certify that:
Date: 28 October 2019
|
|
By: |
|
/s/ BONGANI NQWABABA Bongani Nqwababa Joint President and Chief Executive Officer |
I, Stephen Cornell, certify that:
Date: 28 October 2019
|
|
By: |
|
/s/ STEPHEN CORNELL Stephen Cornell Joint President and Chief Executive Officer |
I, Paul Victor, certify that:
Date: 28 October 2019
|
|
By: |
|
/s/ PAUL VICTOR Paul Victor Chief Financial Officer |
CERTIFICATION PURSUANT TO 18
U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Sasol Limited (the "Company") on Form 20-F for the period ending 30 June 2019, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify that to the best of our knowledge:
Date: 28 October 2019
|
|
By: |
|
/s/ BONGANI NQWABABA Bongani Nqwababa Joint President and Chief Executive Officer |
|
|
By: |
|
/s/ STEPHEN CORNELL Stephen Cornell Joint President and Chief Executive Officer |
Date: 28 October 2019
|
|
By: |
|
/s/ PAUL VICTOR Paul Victor Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to and will be retained by Sasol Limited and furnished to the Securities and Exchange Commission or its staff upon request.
This certification will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. This certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, even if the document with which it is submitted to the Securities and Exchange Commission is so incorporated by reference.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-218375) and Form F-3 (333-227263) of Sasol Limited of our report dated 28 October 2019 relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 20-F.
/s/ PricewaterhouseCoopers Inc.
Johannesburg, Republic of South Africa
28 October 2019
Exhibit 99.1
Income statement
for the year ended 30 June
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Turnover |
|
2 |
|
203 576 |
|
181 461 |
|
172 407 |
|
Materials, energy and consumables used |
|
3 |
|
(90 589 |
) |
(76 606 |
) |
(71 436 |
) |
Selling and distribution costs |
|
|
|
(7 836 |
) |
(7 060 |
) |
(6 405 |
) |
Maintenance expenditure |
|
|
|
(10 227 |
) |
(9 163 |
) |
(8 654 |
) |
Employee-related expenditure |
|
4 |
|
(29 928 |
) |
(27 468 |
) |
(24 417 |
) |
Exploration expenditure and feasibility costs |
|
|
|
(663 |
) |
(352 |
) |
(491 |
) |
Depreciation and amortisation |
|
|
|
(17 968 |
) |
(16 425 |
) |
(16 204 |
) |
Other expenses and income |
|
|
|
(19 097 |
) |
(15 316 |
) |
(12 550 |
) |
Translation gains/(losses) |
|
5 |
|
604 |
|
(11 |
) |
(1 201 |
) |
Other operating expenses and income |
|
6 |
|
(19 701 |
) |
(15 305 |
) |
(11 349 |
) |
Equity accounted profits, net of tax |
|
20 |
|
1 074 |
|
1 443 |
|
1 071 |
|
Operating profit before remeasurement items and Sasol Khanyisa share-based payment |
|
|
|
28 342 |
|
30 514 |
|
33 321 |
|
Remeasurement items |
|
9 |
|
(18 645 |
) |
(9 901 |
) |
(1 616 |
) |
Sasol Khanyisa share-based payment* |
|
35 |
|
|
|
(2 866 |
) |
|
|
Earnings before interest and tax (EBIT) |
|
|
|
9 697 |
|
17 747 |
|
31 705 |
|
Finance income |
|
7 |
|
787 |
|
1 716 |
|
1 568 |
|
Finance costs |
|
7 |
|
(1 253 |
) |
(3 759 |
) |
(3 265 |
) |
Earnings before tax |
|
|
|
9 231 |
|
15 704 |
|
30 008 |
|
Taxation |
|
12 |
|
(3 157 |
) |
(5 558 |
) |
(8 495 |
) |
Earnings for the year |
|
|
|
6 074 |
|
10 146 |
|
21 513 |
|
Attributable to |
|
|
|
|
|
|
|
|
|
Owners of Sasol Limited |
|
|
|
4 298 |
|
8 729 |
|
20 374 |
|
Non-controlling interests in subsidiaries |
|
|
|
1 776 |
|
1 417 |
|
1 139 |
|
|
|
|
|
6 074 |
|
10 146 |
|
21 513 |
|
|
|
|
|
Rand |
|
Rand |
|
Rand |
|
Per share information |
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
8 |
|
6,97 |
|
14,26 |
|
33,36 |
|
Diluted earnings per share |
|
8 |
|
6,93 |
|
14,18 |
|
33,27 |
|
* |
2018 relates to the implementation of Sasol Khanyisa in relation to SOLBE1, Inzalo Public, Inzalo Groups and Khanyisa Public participants. |
|
|
|
The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements. |
Sasol Annual Financial Statements 2019
Sasol Limited Group
Statement of comprehensive income
for the year ended 30 June
|
|
2019 |
|
2018 |
|
2017 |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Earnings for the year |
|
6 074 |
|
10 146 |
|
21 513 |
|
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
Items that can be subsequently reclassified to the income statement |
|
1 353 |
|
6 068 |
|
(8 931 |
) |
Effect of translation of foreign operations |
|
1 533 |
|
5 237 |
|
(10 074 |
) |
Effect of cash flow hedges* |
|
(287 |
) |
1 233 |
|
1 821 |
|
Fair value of investments available-for-sale |
|
|
|
13 |
|
11 |
|
Tax on items that can be subsequently reclassified to the income statement** |
|
107 |
|
(415 |
) |
(689 |
) |
Items that cannot be subsequently reclassified to the income statement |
|
(265 |
) |
(54 |
) |
743 |
|
Remeasurement on post-retirement benefit obligation*** |
|
(531 |
) |
(80 |
) |
1 114 |
|
Fair value of investments through other comprehensive income |
|
136 |
|
|
|
|
|
Tax on items that cannot be subsequently reclassified to the income statement |
|
130 |
|
26 |
|
(371 |
) |
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
7 162 |
|
16 160 |
|
13 325 |
|
Attributable to |
|
|
|
|
|
|
|
Owners of Sasol Limited |
|
5 377 |
|
14 727 |
|
12 234 |
|
Non-controlling interests in subsidiaries |
|
1 785 |
|
1 433 |
|
1 091 |
|
|
|
7 162 |
|
16 160 |
|
13 325 |
|
* |
These amounts include the loss of R1 400 million (2018 R286 million; 2017 R302 million) on the revaluation of the cash flow hedge pertaining to the interest rate swap and a gain of R1 115 million relating to the reclassification of the swap to profit and loss on termination of the hedge relationship. |
|
|
** |
The amount is mainly on the cash flow hedge. |
|
|
*** |
Includes the effect of a loss/(gain) of R58 million (2018 R1 051 million; 2017 (R105 million)) relating to the movement in the asset limitation, as well as a loss/(gain) of R83 million (2018 R1 million; 2017 R50 million) on reimbursive rights related to post-retirement benefits, recognised in long-term receivables. |
|
|
|
The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements. |
Statement of financial position
at 30 June
|
|
|
|
2019 |
|
2018 |
|
|
|
Note |
|
Rm |
|
Rm |
|
Assets |
|
|
|
|
|
|
|
Property, plant and equipment |
|
17 |
|
233 549 |
|
167 457 |
|
Assets under construction |
|
18 |
|
127 764 |
|
165 361 |
|
Goodwill and other intangible assets |
|
|
|
3 357 |
|
2 687 |
|
Equity accounted investments |
|
20 |
|
9 866 |
|
10 991 |
|
Other long-term investments |
|
|
|
1 248 |
|
951 |
|
Post-retirement benefit assets |
|
33 |
|
1 274 |
|
1 498 |
|
Long-term receivables and prepaid expenses |
|
19 |
|
6 317 |
|
4 646 |
|
Long-term financial assets |
|
40 |
|
15 |
|
291 |
|
Deferred tax assets |
|
14 |
|
8 563 |
|
4 096 |
|
Non-current assets |
|
|
|
391 953 |
|
357 978 |
|
Assets in disposal groups held for sale |
|
11 |
|
2 554 |
|
113 |
|
Short-term investments |
|
|
|
|
|
85 |
|
Inventories |
|
23 |
|
29 646 |
|
29 364 |
|
Tax receivable |
|
13 |
|
730 |
|
3 302 |
|
Trade and other receivables |
|
24 |
|
28 578 |
|
29 729 |
|
Short-term financial assets |
|
40 |
|
630 |
|
1 536 |
|
Cash and cash equivalents |
|
27 |
|
15 877 |
|
17 128 |
|
Current assets |
|
|
|
78 015 |
|
81 257 |
|
Total assets |
|
|
|
469 968 |
|
439 235 |
|
Equity and liabilities |
|
|
|
|
|
|
|
Shareholders equity |
|
|
|
219 910 |
|
222 985 |
|
Non-controlling interests |
|
|
|
5 885 |
|
5 623 |
|
Total equity |
|
|
|
225 795 |
|
228 608 |
|
Long-term debt |
|
16 |
|
127 350 |
|
89 411 |
|
Finance leases |
|
16 |
|
7 445 |
|
7 280 |
|
Long-term provisions |
|
31 |
|
17 622 |
|
15 160 |
|
Post-retirement benefit obligations |
|
33 |
|
12 708 |
|
11 900 |
|
Long-term deferred income |
|
|
|
924 |
|
879 |
|
Long-term financial liabilities |
|
40 |
|
1 440 |
|
133 |
|
Deferred tax liabilities |
|
14 |
|
27 586 |
|
25 908 |
|
Non-current liabilities |
|
|
|
195 075 |
|
150 671 |
|
Liabilities in disposal groups held for sale |
|
11 |
|
488 |
|
36 |
|
Short-term debt |
|
16 |
|
3 783 |
|
14 709 |
|
Short-term provisions |
|
32 |
|
3 289 |
|
3 508 |
|
Tax payable |
|
13 |
|
1 039 |
|
2 318 |
|
Trade and other payables |
|
25 |
|
39 466 |
|
37 150 |
|
Short-term deferred income |
|
|
|
210 |
|
220 |
|
Short-term financial liabilities |
|
40 |
|
765 |
|
1 926 |
|
Bank overdraft |
|
27 |
|
58 |
|
89 |
|
Current liabilities |
|
|
|
49 098 |
|
59 956 |
|
Total equity and liabilities |
|
|
|
469 968 |
|
439 235 |
|
The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements. |
Statement of changes in equity
for the year ended 30 June
|
|
Share
|
|
Share
|
|
Share-
|
|
Investment
|
|
|
|
Note 15 |
|
Note 15 |
|
Note 35 |
|
reserve |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Balance at 30 June 2016 |
|
29 282 |
|
(2 641 |
) |
(13 582 |
) |
26 |
|
Share-based payment expense |
|
|
|
|
|
463 |
|
|
|
Long-term incentive scheme converted to equity-settled* |
|
|
|
|
|
645 |
|
|
|
Long-term incentives vested and settled |
|
|
|
|
|
(51 |
) |
|
|
Total comprehensive income for the year |
|
|
|
|
|
|
|
7 |
|
profit |
|
|
|
|
|
|
|
|
|
other comprehensive income for the year |
|
|
|
|
|
|
|
7 |
|
Dividends paid |
|
|
|
|
|
|
|
|
|
Balance at 30 June 2017 |
|
29 282 |
|
(2 641 |
) |
(12 525 |
) |
33 |
|
Transactions with non-controlling shareholders |
|
|
|
|
|
|
|
|
|
Movement in share-based payment reserve |
|
|
|
|
|
989 |
|
|
|
Share-based payment expense |
|
|
|
|
|
823 |
|
|
|
Deferred tax |
|
|
|
|
|
166 |
|
|
|
Unwind of Sasol Inzalo transaction |
|
(12 698 |
) |
|
|
6 999 |
|
|
|
Repurchase of shares |
|
(12 698 |
) |
|
|
12 698 |
|
|
|
Share-based payment reserve to retained earnings |
|
|
|
|
|
(5 699 |
) |
|
|
Long-term incentives vested and settled |
|
|
|
|
|
(605 |
) |
|
|
Implementation of Sasol Khanyisa transaction |
|
1 832 |
|
|
|
1 121 |
|
|
|
Share-based payment expense |
|
|
|
|
|
2 953 |
|
|
|
Shares issued to Sasol Khanyisa Employee Trust |
|
1 832 |
|
|
|
(1 832 |
) |
|
|
Repurchase of shares |
|
(2 641 |
) |
2 641 |
|
|
|
|
|
Total comprehensive income for the year |
|
|
|
|
|
|
|
10 |
|
profit |
|
|
|
|
|
|
|
|
|
other comprehensive income for the year |
|
|
|
|
|
|
|
10 |
|
Dividends paid |
|
|
|
|
|
|
|
|
|
Balance at 30 June 2018 |
|
15 775 |
|
|
|
(4 021 |
) |
43 |
|
Disposal of business |
|
|
|
|
|
|
|
|
|
Movement in share-based payment reserve |
|
|
|
|
|
1 552 |
|
|
|
Share-based payment expense |
|
|
|
|
|
707 |
|
|
|
Sasol Khanyisa transaction |
|
|
|
|
|
952 |
|
|
|
Deferred tax |
|
|
|
|
|
(107 |
) |
|
|
Unwind of Sasol Inzalo transaction |
|
(5 887 |
) |
|
|
3 452 |
|
|
|
Repurchase of shares |
|
(5 887 |
) |
|
|
5 887 |
|
|
|
Final distribution to Sasol Inzalo Public |
|
|
|
|
|
|
|
|
|
Share-based payment reserve to retained earnings |
|
|
|
|
|
(2 435 |
) |
|
|
Long-term incentives vested and settled |
|
|
|
|
|
(573 |
) |
|
|
Total comprehensive income for the year |
|
|
|
|
|
|
|
89 |
|
profit |
|
|
|
|
|
|
|
|
|
other comprehensive income for the year |
|
|
|
|
|
|
|
89 |
|
Dividends paid |
|
|
|
|
|
|
|
|
|
Balance at 30 June 2019 |
|
9 888 |
|
|
|
410 |
|
132 |
|
* |
Refer to note 35 for further detail on the conversion of the long-term incentive scheme. |
|
|
The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements. |
Foreign
|
|
Cash flow
|
|
Remeasurement
|
|
Retained
|
|
Shareholders
|
|
Non-
|
|
Total
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
33 316 |
|
(1 788 |
) |
(2 533 |
) |
164 917 |
|
206 997 |
|
5 421 |
|
212 418 |
|
|
|
|
|
|
|
|
|
463 |
|
|
|
463 |
|
|
|
|
|
|
|
|
|
645 |
|
|
|
645 |
|
|
|
|
|
|
|
51 |
|
|
|
|
|
|
|
(10 031 |
) |
1 141 |
|
743 |
|
20 374 |
|
12 234 |
|
1 091 |
|
13 325 |
|
|
|
|
|
|
|
20 374 |
|
20 374 |
|
1 139 |
|
21 513 |
|
(10 031 |
) |
1 141 |
|
743 |
|
|
|
(8 140 |
) |
(48 |
) |
(8 188 |
) |
|
|
|
|
|
|
(8 628 |
) |
(8 628 |
) |
(989 |
) |
(9 617 |
) |
23 285 |
|
(647 |
) |
(1 790 |
) |
176 714 |
|
211 711 |
|
5 523 |
|
217 234 |
|
|
|
|
|
|
|
|
|
|
|
(51 |
) |
(51 |
) |
|
|
|
|
|
|
|
|
989 |
|
|
|
989 |
|
|
|
|
|
|
|
|
|
823 |
|
|
|
823 |
|
|
|
|
|
|
|
|
|
166 |
|
|
|
166 |
|
|
|
|
|
|
|
6 256 |
|
557 |
|
(557 |
) |
|
|
|
|
|
|
|
|
557 |
|
557 |
|
(557 |
) |
|
|
|
|
|
|
|
|
5 699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 953 |
|
|
|
2 953 |
|
|
|
|
|
|
|
|
|
2 953 |
|
|
|
2 953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 215 |
|
827 |
|
(54 |
) |
8 729 |
|
14 727 |
|
1 433 |
|
16 160 |
|
|
|
|
|
|
|
8 729 |
|
8 729 |
|
1 417 |
|
10 146 |
|
5 215 |
|
827 |
|
(54 |
) |
|
|
5 998 |
|
16 |
|
6 014 |
|
|
|
|
|
|
|
(7 952 |
) |
(7 952 |
) |
(725 |
) |
(8 677 |
) |
28 500 |
|
180 |
|
(1 844 |
) |
184 352 |
|
222 985 |
|
5 623 |
|
228 608 |
|
(52 |
) |
|
|
|
|
|
|
(52 |
) |
|
|
(52 |
) |
|
|
|
|
|
|
|
|
1 552 |
|
|
|
1 552 |
|
|
|
|
|
|
|
|
|
707 |
|
|
|
707 |
|
|
|
|
|
|
|
|
|
952 |
|
|
|
952 |
|
|
|
|
|
|
|
|
|
(107 |
) |
|
|
(107 |
) |
|
|
|
|
|
|
1 063 |
|
(1 372 |
) |
|
|
(1 372 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 372 |
) |
(1 372 |
) |
|
|
(1 372 |
) |
|
|
|
|
|
|
2 435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
573 |
|
|
|
|
|
|
|
1 530 |
|
(180 |
) |
(360 |
) |
4 298 |
|
5 377 |
|
1 785 |
|
7 162 |
|
|
|
|
|
|
|
4 298 |
|
4 298 |
|
1 776 |
|
6 074 |
|
1 530 |
|
(180 |
) |
(360 |
) |
|
|
1 079 |
|
9 |
|
1 088 |
|
|
|
|
|
|
|
(8 580 |
) |
(8 580 |
) |
(1 523 |
) |
(10 103 |
) |
29 978 |
|
|
|
(2 204 |
) |
181 706 |
|
219 910 |
|
5 885 |
|
225 795 |
|
Statement of cash flows
for the year ended 30 June
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Cash receipts from customers |
|
|
|
203 613 |
|
178 672 |
|
172 061 |
|
Cash paid to suppliers and employees |
|
|
|
(152 215 |
) |
(135 795 |
) |
(127 992 |
) |
Cash generated by operating activities |
|
28 |
|
51 398 |
|
42 877 |
|
44 069 |
|
Dividends received from equity accounted investments |
|
20 |
|
1 506 |
|
1 702 |
|
1 539 |
|
Finance income received |
|
7 |
|
682 |
|
1 565 |
|
1 464 |
|
Finance costs paid* |
|
7 |
|
(6 222 |
) |
(4 797 |
) |
(3 612 |
) |
Tax paid |
|
13 |
|
(3 946 |
) |
(7 041 |
) |
(6 352 |
) |
Cash available from operating activities |
|
|
|
43 418 |
|
34 306 |
|
37 108 |
|
Dividends paid |
|
30 |
|
(9 952 |
) |
(7 952 |
) |
(8 628 |
) |
Dividends paid to non-controlling shareholders in subsidiaries |
|
|
|
(1 523 |
) |
(725 |
) |
(989 |
) |
Cash retained from operating activities |
|
|
|
31 943 |
|
25 629 |
|
27 491 |
|
Additions to non-current assets |
|
|
|
(56 734 |
) |
(55 891 |
) |
(56 812 |
) |
additions to property, plant and equipment |
|
17 |
|
(1 229 |
) |
(714 |
) |
(390 |
) |
additions to assets under construction |
|
18 |
|
(54 552 |
) |
(52 635 |
) |
(59 892 |
) |
additions to other intangible assets |
|
|
|
(19 |
) |
(35 |
) |
(61 |
) |
(decrease)/increase in capital project related payables |
|
|
|
(934 |
) |
(2 507 |
) |
3 531 |
|
Net cash movements in equity accounted investments |
|
|
|
66 |
|
(164 |
) |
(444 |
) |
Proceeds on disposals and scrappings |
|
10 |
|
567 |
|
2 316 |
|
788 |
|
Net cash disposed of on disposal of businesses |
|
10 |
|
|
|
(36 |
) |
|
|
Purchase of investments |
|
|
|
(222 |
) |
(124 |
) |
(96 |
) |
Proceeds from sale of investments |
|
|
|
142 |
|
114 |
|
28 |
|
Increase in long-term receivables |
|
|
|
(231 |
) |
(194 |
) |
(141 |
) |
Cash used in investing activities |
|
|
|
(56 412 |
) |
(53 979 |
) |
(56 677 |
) |
Proceeds from long-term debt |
|
16 |
|
93 884 |
|
24 961 |
|
9 277 |
|
Repayment of long-term debt |
|
16 |
|
(70 000 |
) |
(9 199 |
) |
(2 364 |
) |
Proceeds from short-term debt |
|
|
|
977 |
|
1 957 |
|
4 033 |
|
Repayment of short-term debt |
|
|
|
(1 730 |
) |
(2 607 |
) |
(1 410 |
) |
Cash generated by financing activities |
|
|
|
23 131 |
|
15 112 |
|
9 536 |
|
Translation effects on cash and cash equivalents |
|
|
|
162 |
|
954 |
|
(3 207 |
) |
Decrease in cash and cash equivalents |
|
|
|
(1 176 |
) |
(12 284 |
) |
(22 857 |
) |
Cash and cash equivalents at the beginning of year |
|
|
|
17 039 |
|
29 323 |
|
52 180 |
|
Reclassification to disposal groups held for sale |
|
|
|
(44 |
) |
|
|
|
|
Cash and cash equivalents at the end of the year |
|
27 |
|
15 819 |
|
17 039 |
|
29 323 |
|
* |
Included in finance costs paid is amounts capitalised to assets under construction. Refer note 18. |
|
|
The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements. |
Notes to the financial statements
The Annual Financial Statements outlined below, provide a full overview of our financial results, in the context of our strategy, while enabling more effective analysis of the groups performance.
Segment information
|
|
Mining |
|
Exploration
|
|
Energy |
|
Base Chemicals*** |
|
Performance
|
|
||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Statement of financial position |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
26 485 |
|
25 197 |
|
13 542 |
|
14 217 |
|
67 325 |
|
64 526 |
|
141 160 |
|
124 826 |
|
126 949 |
|
116 945 |
|
Current assets |
|
1 809 |
|
2 547 |
|
2 475 |
|
2 339 |
|
19 727 |
|
20 657 |
|
19 478 |
|
15 714 |
|
25 007 |
|
26 335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
1 701 |
|
1 629 |
|
6 782 |
|
5 684 |
|
11 561 |
|
11 616 |
|
10 612 |
|
38 749 |
|
11 763 |
|
36 538 |
|
Current liabilities |
|
2 601 |
|
2 801 |
|
1 685 |
|
2 371 |
|
13 160 |
|
11 462 |
|
10 234 |
|
9 883 |
|
12 462 |
|
12 584 |
|
|
|
Mining |
|
Exploration and Production
|
|
Energy |
|
||||||||||||
|
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External turnover |
|
3 222 |
|
3 446 |
|
2 946 |
|
1 815 |
|
1 610 |
|
1 750 |
|
82 977 |
|
69 110 |
|
64 254 |
|
Total turnover |
|
20 876 |
|
19 797 |
|
18 962 |
|
5 184 |
|
4 198 |
|
4 084 |
|
83 803 |
|
69 773 |
|
64 772 |
|
Intersegmental turnover |
|
(17 654 |
) |
(16 351 |
) |
(16 016 |
) |
(3 369 |
) |
(2 588 |
) |
(2 334 |
) |
(826 |
) |
(663 |
) |
(518 |
) |
Earnings before interest and tax |
|
4 701 |
|
5 244 |
|
3 725 |
|
(889 |
) |
(3 683 |
) |
585 |
|
16 566 |
|
14 081 |
|
11 218 |
|
Earnings attributable to owners of Sasol Limited |
|
3 021 |
|
3 336 |
|
2 266 |
|
(1 800 |
) |
(4 168 |
) |
47 |
|
11 970 |
|
8 558 |
|
6 395 |
|
Effect of remeasurement items* |
|
45 |
|
34 |
|
6 |
|
1 976 |
|
4 241 |
|
(6 |
) |
247 |
|
971 |
|
1 844 |
|
Depreciation and amortisation |
|
1 805 |
|
1 677 |
|
1 905 |
|
1 582 |
|
1 465 |
|
2 053 |
|
5 331 |
|
4 817 |
|
4 496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operations |
|
7 025 |
|
6 877 |
|
5 401 |
|
2 528 |
|
2 665 |
|
1 726 |
|
23 247 |
|
17 158 |
|
17 996 |
|
Additions to non-current assets** |
|
2 912 |
|
3 729 |
|
2 839 |
|
1 086 |
|
2 525 |
|
2 600 |
|
7 484 |
|
6 650 |
|
6 781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other disclosures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital commitments* |
|
2 372 |
|
2 640 |
|
3 099 |
|
19 795 |
|
18 811 |
|
19 431 |
|
10 390 |
|
10 320 |
|
10 327 |
|
* |
Excludes equity accounted investments. |
|
|
** |
Includes capital accruals. |
|
|
*** |
The comparative financial results have been restated for the transfer of the Phenolics, Ammonia and Specialty Gases businesses from Performance Chemicals to Base Chemicals. The restatements were performed to align with the current strategy and to best reflect the basis in which the Chief Operating Decision Maker reviews and makes decisions. |
Group Functions |
|
Total |
|
Deferred tax assets
|
|
Net tax
|
|
Post-retirement
|
|
Total per statement
|
|
||||||||||||
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 655 |
|
6 673 |
|
382 116 |
|
352 384 |
|
8 563 |
|
4 096 |
|
|
|
|
|
1 274 |
|
1 498 |
|
391 953 |
|
357 978 |
|
8 789 |
|
10 363 |
|
77 285 |
|
77 955 |
|
|
|
|
|
730 |
|
3 302 |
|
|
|
|
|
78 015 |
|
81 257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125 070 |
|
30 547 |
|
167 489 |
|
124 763 |
|
27 586 |
|
25 908 |
|
|
|
|
|
|
|
|
|
195 075 |
|
150 671 |
|
7 917 |
|
18 537 |
|
48 059 |
|
57 638 |
|
|
|
|
|
1 039 |
|
2 318 |
|
|
|
|
|
49 098 |
|
59 956 |
|
Base Chemicals*** |
|
Performance Chemicals*** |
|
Group Functions |
|
Total |
|
||||||||||||||||
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48 113 |
|
43 269 |
|
41 582 |
|
67 389 |
|
63 986 |
|
61 359 |
|
60 |
|
40 |
|
516 |
|
203 576 |
|
181 461 |
|
172 407 |
|
48 813 |
|
43 951 |
|
42 288 |
|
68 296 |
|
64 887 |
|
62 185 |
|
78 |
|
52 |
|
516 |
|
227 050 |
|
202 658 |
|
192 807 |
|
(700 |
) |
(682 |
) |
(706 |
) |
(907 |
) |
(901 |
) |
(826 |
) |
(18 |
) |
(12 |
) |
|
|
(23 474 |
) |
(21 197 |
) |
(20 400 |
) |
(1 431 |
) |
918 |
|
6 888 |
|
(7 040 |
) |
7 853 |
|
8 737 |
|
(2 210 |
) |
(6 666 |
) |
552 |
|
9 697 |
|
17 747 |
|
31 705 |
|
1 622 |
|
2 075 |
|
5 899 |
|
(3 516 |
) |
7 434 |
|
7 124 |
|
(6 999 |
) |
(8 506 |
) |
(1 357 |
) |
4 298 |
|
8 729 |
|
20 374 |
|
3 190 |
|
4 512 |
|
(374 |
) |
13 182 |
|
103 |
|
136 |
|
5 |
|
40 |
|
10 |
|
18 645 |
|
9 901 |
|
1 616 |
|
4 788 |
|
4 422 |
|
4 050 |
|
3 739 |
|
3 299 |
|
2 965 |
|
723 |
|
745 |
|
735 |
|
17 968 |
|
16 425 |
|
16 204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 343 |
|
9 017 |
|
11 476 |
|
9 743 |
|
12 303 |
|
12 272 |
|
102 |
|
(1 382 |
) |
(2 635 |
) |
48 988 |
|
46 638 |
|
46 236 |
|
23 065 |
|
20 299 |
|
24 182 |
|
20 403 |
|
19 384 |
|
23 055 |
|
850 |
|
797 |
|
886 |
|
55 800 |
|
53 384 |
|
60 343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16 504 |
|
21 125 |
|
30 375 |
|
10 434 |
|
16 432 |
|
26 743 |
|
600 |
|
599 |
|
761 |
|
60 095 |
|
69 927 |
|
90 736 |
|
Geographic segment information
|
|
Mining |
|
Exploration and Production
|
|
Energy |
|
||||||||||||
|
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
External turnover* |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
· South Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
77 345 |
|
65 827 |
|
60 814 |
|
· Rest of Africa |
|
|
|
|
|
|
|
652 |
|
341 |
|
355 |
|
4 665 |
|
3 282 |
|
3 438 |
|
· Europe |
|
2 819 |
|
2 691 |
|
2 040 |
|
924 |
|
985 |
|
835 |
|
967 |
|
1 |
|
2 |
|
· North America |
|
|
|
|
|
|
|
239 |
|
284 |
|
560 |
|
|
|
|
|
|
|
· South America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
· Asia, Australasia and Middle East |
|
403 |
|
755 |
|
906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operations |
|
3 222 |
|
3 446 |
|
2 946 |
|
1 815 |
|
1 610 |
|
1 750 |
|
82 977 |
|
69 110 |
|
64 254 |
|
* |
The analysis of turnover is based on the location of the customer. |
|
|
** |
The comparative financial results have been restated for the transfer of the Phenolics, Ammonia and Specialty Gases businesses from Performance Chemicals to Base Chemicals. The restatements were performed to align with the current strategy and to best reflect the basis in which the Chief Operating Decision Maker reviews and makes decision. |
* |
Includes equity accounted profits/(losses) remeasurement items and once-off share-based payment expenses. |
|
|
** |
The comparative financial results have been restated for the transfer of the Phenolics, Ammonia and Specialty Gases businesses from Performance Chemicals to Base Chemicals. The restatements were performed to align with the current strategy and to best reflect the basis in which the Chief Operating Decision Maker reviews and makes decision. |
Non-current assets
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
· South Africa |
|
147 688 |
|
143 493 |
|
139 398 |
|
· Rest of Africa |
|
19 323 |
|
18 443 |
|
17 856 |
|
· Europe |
|
15 944 |
|
15 389 |
|
13 925 |
|
· North America |
|
189 560 |
|
165 742 |
|
125 983 |
|
· South America |
|
1 |
|
1 |
|
1 |
|
· Asia, Australasia and Middle East |
|
9 600 |
|
9 316 |
|
10 118 |
|
Total operations |
|
382 116 |
|
352 384 |
|
307 281 |
|
Deferred tax asset |
|
8 563 |
|
4 096 |
|
3 082 |
|
Post-retirement benefit assets |
|
1 274 |
|
1 498 |
|
622 |
|
Total non-current assets |
|
391 953 |
|
357 978 |
|
310 985 |
|
Base Chemicals** |
|
Performance Chemicals** |
|
Group Functions |
|
Total |
|
||||||||||||||||
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
22 561 |
|
21 336 |
|
19 891 |
|
1 049 |
|
1 297 |
|
1 292 |
|
|
|
|
|
|
|
100 955 |
|
88 460 |
|
81 997 |
|
2 573 |
|
2 142 |
|
2 751 |
|
900 |
|
790 |
|
786 |
|
24 |
|
|
|
34 |
|
8 814 |
|
6 555 |
|
7 364 |
|
7 324 |
|
7 037 |
|
5 922 |
|
33 168 |
|
33 008 |
|
29 261 |
|
|
|
|
|
|
|
45 202 |
|
43 722 |
|
38 060 |
|
8 039 |
|
5 894 |
|
3 228 |
|
19 459 |
|
16 926 |
|
19 375 |
|
|
|
|
|
|
|
27 737 |
|
23 104 |
|
23 163 |
|
584 |
|
513 |
|
396 |
|
1 501 |
|
1 415 |
|
1 669 |
|
|
|
|
|
|
|
2 085 |
|
1 928 |
|
2 065 |
|
7 032 |
|
6 347 |
|
9 394 |
|
11 312 |
|
10 550 |
|
8 976 |
|
36 |
|
40 |
|
482 |
|
18 783 |
|
17 692 |
|
19 758 |
|
48 113 |
|
43 269 |
|
41 582 |
|
67 389 |
|
63 986 |
|
61 359 |
|
60 |
|
40 |
|
516 |
|
203 576 |
|
181 461 |
|
172 407 |
|
Base Chemicals** |
|
Performance Chemicals** |
|
Group Functions |
|
Total |
|
||||||||||||||||
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
2019 |
|
2018 |
|
2017 |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
(843 |
) |
(3 213 |
) |
2 899 |
|
449 |
|
1 547 |
|
1 340 |
|
(1 004 |
) |
(7 617 |
) |
(125 |
) |
18 576 |
|
8 585 |
|
20 444 |
|
120 |
|
416 |
|
220 |
|
189 |
|
22 |
|
86 |
|
(25 |
) |
553 |
|
26 |
|
707 |
|
635 |
|
954 |
|
526 |
|
812 |
|
734 |
|
2 754 |
|
3 530 |
|
2 984 |
|
251 |
|
345 |
|
84 |
|
5 017 |
|
6 012 |
|
3 910 |
|
(1 724 |
) |
430 |
|
1 221 |
|
(11 844 |
) |
1 809 |
|
3 049 |
|
(1 436 |
) |
50 |
|
85 |
|
(17 743 |
) |
(2 316 |
) |
1 871 |
|
7 |
|
141 |
|
100 |
|
111 |
|
138 |
|
160 |
|
|
|
|
|
|
|
118 |
|
279 |
|
260 |
|
483 |
|
2 332 |
|
1 714 |
|
1 301 |
|
807 |
|
1 118 |
|
4 |
|
3 |
|
482 |
|
3 022 |
|
4 552 |
|
4 266 |
|
(1 431 |
) |
918 |
|
6 888 |
|
(7 040 |
) |
7 853 |
|
8 737 |
|
(2 210 |
) |
(6 666 |
) |
552 |
|
9 697 |
|
17 747 |
|
31 705 |
|
Reporting segments
The group has six main reportable segments that reflects the structure used by the Joint Presidents and Chief Executive Officers to make key operating decisions and assess performance. The groups reportable segments are operating segments that are differentiated by the activities that each undertakes and the products they manufacture and market (referred to as business segments). The group evaluates the performance of its reportable segments based on earnings before interest and tax (EBIT).
The operating model structure reflects how the results are reported to the Chief Operating Decision Maker (CODM). The CODM for Sasol are the Joint Presidents and Chief Executive Officers.
Operating business units
Mining
Mining is responsible for securing coal feedstock for the Southern African value chain, mainly for gasification, but also to generate electricity and steam. Coal is sold for gasification and utility purposes to Secunda Synfuels, for utility purposes to Sasolburg Operations; and to third parties in the export market.
Mining sells coal under both long- and short-term contracts at a price determinable from the agreements. Turnover is recognised upon delivery of the coal to the customer, which, in accordance with the related contract terms is the point at which the control passes to the customer. Prices are fixed or determinable and collectability is probable.
The date of delivery related to Mining is determined in accordance with the contractual agreements entered into with customers. These are summarised as follows:
Delivery terms |
|
Control passes to the customer |
Free on Board |
|
At the point in time when the coal is loaded onto the vessel at Richards Bay Coal Terminal; the customer is responsible for shipping and handling costs. |
The related costs of sales are recognised in the same period as the supply of the coal and include any shipping and handling costs incurred. All inter-segment sales are conducted at market related prices.
Exploration and Production International
Exploration and Production International (E&PI) develops and manages the groups upstream interests in oil and gas exploration and production in Mozambique, South Africa, Canada and Gabon.
E&PI sells Mozambican gas under long-term contracts to both Sasol and external customers, condensate on short-term contracts and Canadian gas into the market at spot prices. Oil is sold to customers under annual contracts. Turnover is recognised upon delivery to the customer, which, in accordance with the related contract terms is the point at which control passes to the customer. Prices are determinable from the agreements and on the open market.
Delivery terms |
|
Control passes to the customer |
On-delivery |
|
At the point in time when the: |
|
|
· Gas reaches the inlet coupling of the customers pipeline. |
|
|
· Condensate is loaded onto the customers truck. |
|
|
These are the points when the customer controls the gas or condensate, or directs the use of it. The customer is responsible for transportation and handling costs. |
Strategic business units
Performance Chemicals
Performance Chemicals markets commodity and differentiated performance chemicals. The key product lines are organics, waxes and advanced materials. These are produced in various Sasol production facilities around the world.
Base Chemicals
Base Chemicals markets commodity chemicals based on the groups upstream Fischer-Tropsch, ethylene, propylene and ammonia value chains. The key product lines are polymers, solvents and ammonia-based explosives and fertilisers. These are produced in various Sasol production facilities around the world.
The Base and Performance Chemicals businesses sell the majority of their products under contracts at prices determinable from such agreements. Turnover is recognised upon delivery which, in accordance with the related contract terms, is the point at which control transfer to the customer. Prices are determinable and collectability is probable.
The point of delivery is determined in accordance with the contractual agreements entered into with customers which are as follows:
Delivery terms |
|
Control passes to the customer: |
Ex-tank sales |
|
At the point in time when products are loaded into the customers vehicle or unloaded from the sellers storage tanks. |
Ex-works |
|
At the point in time when products are loaded into the customers vehicle or unloaded at the sellers premises. |
Carriage Paid To (CPT); Cost Insurance Freight (CIF); Carriage and Insurance Paid (CIP); and Cost Freight Railage (CFR) |
|
Products CPT: At the point in time when the product is delivered to a specified location or main carrier. |
|
Products CIF, CIP and CFR: At the point in time when the products are loaded into the transport vehicle. |
|
|
Carriage, freight and insurance: Over the period of transporting the products to the customers nominated place where the seller is responsible for carriage, freight and insurance costs, which are included in the contract. |
|
Free on Board |
|
At the point in time when products are loaded into the transport vehicle; the customer is responsible for shipping and handling costs. |
Delivered at Place |
|
At the point in time when products are delivered to and signed for by the customer. |
Consignment Sales |
|
As and when products are consumed by the customer. |
Energy
Energy is responsible for the sales and marketing of liquid fuels, pipeline gas and electricity. In South Africa, Energy sells approximately nine billion liters of liquid fuels annually, blended from fuel components produced by the Secunda Synfuels operations, crude oil refined at Natref, as well as some products purchased from other refiners. Energy markets approximately 55 billion standard cubic feet (bscf) of natural and methane-rich gas a year.
Energy sells liquid fuel products under both short- and long-term agreements for both retail sales and commercial sales, including sales to other oil companies. The prices for retail sales are regulated and fixed by South African law. For commercial sales and sales to other oil companies, the prices are fixed and determinable according to the specific contract, with periodic price adjustments.
Turnover for the supply of fuel is based on measurement through a flow-meter into customers tanks. Turnover is derived from the sale of goods produced by the operating facilities and is recognised when, in accordance with the related contract terms, control passes to the customer. Prices are fixed or determinable and collectability is probable. Shipping and handling costs are included in turnover when billed to customers in conjunction with the sale of the products. Turnover is also derived from the rendering of engineering services to external partners in joint ventures upon the proof of completion of the service.
Gas is sold under long-term contracts at a price determinable from the supply agreements in accordance with the pricing methodology used by the National Energy Regulator of South Africa (NERSA). Gas analysis and tests of the specifications and content are performed prior to delivery.
Turnover is recognised under the following arrangements:
Service/good |
|
Delivery terms |
|
Control passes to the customer: |
Sale of fuel |
|
On-delivery |
|
At the point in time when the fuel is delivered onto the rail tank car, road tank truck or into the customer pipeline. |
|
|
Free Carrier |
|
At the point in time when the goods are unloaded to the port of shipment; Sasol is not responsible for the freight and insurance. |
|
|
Carriage Paid To |
|
Products: At the point in time when the product is delivered to a specified location or main carrier.
|
Sale of gas |
|
On-delivery |
|
At the point in time when the gas has reached the inlet coupling of the customers pipeline. |
Sale of electricity |
|
On-delivery |
|
At the point in time when the electricity passes through the supply points to the customers transmission line. |
The Energy business also develops, implements and manages the groups international business ventures based on Sasols proprietary gas-to-liquids (GTL) technology. Sasol holds 49% in ORYX GTL in Qatar, and an indirect 10% share in Escravos GTL in Nigeria.
Group Functions
Group Functions includes head office and centralised treasury operations.
1 Statement of compliance
The consolidated financial statements are prepared in compliance with International Financial Reporting Standards (IFRS) and Interpretations of those standards, as issued by the International Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements and the South African Companies Act, 2008. The consolidated financial statements were approved for issue by the Board of Directors on 28 October 2019 and will be presented to shareholders at the Annual General Meeting on 27 November 2019.
Basis of preparation of financial results
The consolidated financial statements are prepared using the historic cost convention except that, certain items, including derivative instruments, liabilities for cash-settled share-based payment schemes, financial assets at fair value through profit or loss and financial assets designated at fair value through other comprehensive income, are stated at fair value. The consolidated financial results are presented in rand, which is Sasol Limiteds functional and presentation currency, rounded to the nearest million.
The consolidated financial statements are prepared on the going concern basis.
The comparative figures are reclassified or restated as necessary to afford a proper and more meaningful comparison of results as set out in the affected notes to the financial statements.
Certain additional disclosure has been provided in respect of the current year, as described on page 163 Pro-forma financial information. To the extent practicable, comparative information has also been provided.
Accounting policies
The accounting policies applied in the preparation of these consolidated financial statements are in terms of IFRS and are consistent with those applied in the consolidated annual financial statements for the year ended 30 June 2018, except for the adoption of IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and an amendment to IAS 23 Borrowing Costs with effect from 1 July 2018. Both IFRS 9 and IFRS 15 were adopted using the modified transition approach, where the comparative financial information is not restated as permitted by the standard. The amendment to IAS 23 is applied prospectively. These accounting policies are consistently applied throughout the group.
Accounting standards, interpretations and amendments to published accounting standards
IFRS 9 Financial Instruments
IFRS 9 provides a single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. The groups financial assets are classified as measured at amortised cost, fair value through profit or loss, or fair value through other comprehensive income. The group elected to recognise the fair value gains and losses on its current equity investments through other comprehensive income as they are held for long-term strategic purpose. Due to the limited unlisted investments held, this change in measurement basis from amortised cost to fair value had an insignificant effect on Sasols accounting, and therefore no transition adjustment is presented.
For financial liabilities the existing classification and measurement requirements of IAS 39 will remain the same.
Impairments of financial assets classified as measured at amortised cost are recognised on an expected loss basis which incorporates forward-looking information when assessing credit risk, with the expected losses recognised in profit or loss. The effect of the change was inconsequential due to the stringent debtor management policies currently applied by Sasol, and therefore no transition adjustment is presented. Refer to note 40 for the expected credit loss calculation.
The adoption of IFRS 9 did not have a significant impact on the groups accounting policies relating to financial assets and financial liabilities.
The IFRS 9 hedge accounting requirements are not effective for the group until the International Accounting Standards Boards macro hedging project is finalised.
IFRS 15 Revenue from contracts with customers
Under IFRS 15, revenue from contracts with customers is recognised when a performance obligation is satisfied by transferring promised goods or services to customers. Goods or services are transferred when the customer obtains control of the goods or services. The transfer of control of Sasols energy and chemical products usually coincides with title passing to the customer and the customer taking physical possession, with the groups performance obligations primarily satisfied at a point in time. Amounts of revenue recognised relating to performance obligations over time are not significant. The accounting for revenue under IFRS 15 therefore represents an inconsequential change from the groups previous practice for recognising revenue from sales with customers, and therefore no transition adjustment is presented.
An analysis of revenue from contracts with customers by product is presented on note 2. Amounts presented for comparative periods include revenues determined in accordance with the groups previous accounting policies, but the differences are inconsequential.
1 Statement of compliance continued
IAS 23 Borrowing Costs
The amendment to IAS 23 clarifies that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. Previously, if any specific borrowing remained outstanding after the related asset was ready for its intended use or sale, Sasol recognised the finance costs related to this borrowing in profit and loss.
The adoption of the amendment has been applied prospectively from 1 July 2018 and had a material impact on the groups earnings for the period as Sasol has a large number of projects to which borrowing costs are capitalised. The impact of applying the amendment for the period ended 30 June 2019 is:
|
|
Results
|
|
Adjustment
|
|
Results
|
|
|
|
Rm |
|
Rm |
|
Rm |
|
Non-current assets |
|
|
|
|
|
|
|
Property, plant, equipment and assets under construction |
|
358 135 |
|
1 998 |
|
360 133 |
|
Income statement |
|
|
|
|
|
|
|
Finance costs |
|
(3 251 |
) |
1 998 |
|
(1 253 |
) |
Accounting standards, interpretations and amendments not yet effective
IFRS 16 Leases (Effective for the group from 1 July 2019)
IFRS 16 introduces a single lease accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right of use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. The finance charge to unwind the lease liability and depreciation of the leased asset are recognised in the income statement based on the implied interest rate and contract terms respectively.
This standard does not apply to leases to explore for or use minerals, oils, natural gas and similar non-regenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained.
Previously, the group planned to adopt the standard from 1 July 2019 on a full retrospective basis and was in the process of completing this adoption method. However, with the new standard indirectly impacting the accounting of a number of other business areas, including the valuation of inventory and the value-in-use of cash generating units, the group decided from a cost/benefit perspective that it would be preferable to apply the modified retrospective approach as applied by almost all of our peers. This approach allow the cumulative effect of initially applying the standard to be recognised at the date of initial application, with no restatement of comparative financial information required.
The identification and classification of leases and the analysis of the effect on the groups consolidated financial statements have largely been completed. A new software program has been introduced to manage and measure leases going forward and the results from the solution, used to determine the impact disclosed below, is currently being assessed. Accounting policies and processes have been updated and the impact on key performance indicators and financial metrics have been quantified.
The adoption of the standard will have a material effect on the groups financial statements, significantly increasing the groups recognised assets and liabilities. Upon adoption, the most significant impact will be the present value of the operating lease commitments as per note 37, which are not currently recognised on the statement of financial position and provides an indication of the magnitude of assets and liabilities that will be recognised on the statement of financial position on adoption. We expect an increase in the depreciation expense and also in cash flows from operating activities as the lease payments will be reflected as financing outflows in our cash flow statement.
The discount rates applied on operating leases in determining the lease liabilities recognised are based on the incremental borrowing rates as appropriate for each lease considering factors such as the lessee country of operation, lease term, nature of asset and commencement date. Currently across the group, the incremental borrowing rates applicable to the significant portion of the undiscounted lease cash flows range from 8,2% 11,5% (South Africa), 0,9% 3,6% (Eurasia) and 3,7% 5,6% (United States).
Based on the groups current assessment, the impact on 2020 is expected to be as follows:
· Between R8,4 billion and R9,0 billion of additional lease liabilities would be recognised in the statement of financial position and a corresponding right-of-use asset of between R8,4 billion and R9,0 billion at 1 July 2019.
· Net income before interest and tax would increase between zero and R0,4 billion and interest expense increased by between R0,3 billion and R0,6 billion, the net results having an immaterial impact on earnings. Depreciation would increase by between R1,4 billion and R1,7 billion.
· The additional lease liabilities are expected to add approximately 5% on gearing.
SASOL LIMITED GROUP
EARNINGS GENERATED FROM OPERATIONS
Page |
|
|
|
|
|
17 Operating Activities |
|
|
|
|
|
· Turnover |
|
|
· Material, energy and consumables used |
|
|
· Employee-related expenditure |
|
|
· Translation gains/(losses) |
|
|
· Other operating expenses and income |
|
|
· Net finance costs |
|
|
· Earnings and dividends per share |
|
|
|
|
|
23 Once-off items |
|
|
|
|
|
· Remeasurement items affecting operating profit |
|
|
· Disposals and scrapping |
|
|
· Disposal groups held for sale |
|
|
|
|
|
31 Taxation |
|
|
|
|
|
· Taxation |
|
|
· Tax paid |
|
|
· Deferred tax |
|
|
Operating activities
2 Turnover
|
|
2019 |
|
2018* |
|
2017* |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Revenue by major product line |
|
|
|
|
|
|
|
Base Chemicals |
|
48 113 |
|
43 262 |
|
41 573 |
|
Polymers |
|
25 864 |
|
22 332 |
|
22 206 |
|
Solvents |
|
13 178 |
|
12 948 |
|
11 619 |
|
Fertilisers and explosives |
|
4 718 |
|
4 145 |
|
4 021 |
|
Other base chemicals** |
|
4 353 |
|
3 837 |
|
3 727 |
|
Performance Chemicals |
|
67 228 |
|
63 916 |
|
61 322 |
|
Organics |
|
51 405 |
|
49 005 |
|
47 122 |
|
Waxes |
|
8 474 |
|
8 456 |
|
8 197 |
|
Advanced materials |
|
7 349 |
|
6 455 |
|
6 003 |
|
Upstream, Energy and Other |
|
|
|
|
|
|
|
Coal |
|
3 222 |
|
3 446 |
|
2 946 |
|
Liquid fuels and crude oil*** |
|
75 819 |
|
62 555 |
|
57 640 |
|
Gas (methane rich and natural gas) and condensate*** |
|
5 986 |
|
5 411 |
|
5 625 |
|
Other (Technology, refinery services)**** |
|
2 308 |
|
1 933 |
|
2 418 |
|
Revenue from contracts with customers |
|
202 676 |
|
180 523 |
|
171 524 |
|
Revenue from other contracts (franchise rentals, use of fuel tanks and fuel storage) |
|
900 |
|
938 |
|
883 |
|
|
|
203 576 |
|
181 461 |
|
172 407 |
|
* |
Sale of goods (2018 R178 463 million; 2017 R169 115 million), services rendered (2018 R1 612 million; 2017 R1 549 million) and other trading income (2018 R1 386 million; 2017 R1 743 million). |
|
|
** |
Phenolics, Ammonia and Speciality Gases. |
|
|
*** |
Relate to the Exploration and Production International and Energy segments. |
|
|
**** |
Other includes revenue in relation to different insignificant performance obligations mainly for the Energy and Performance Chemicals segments. |
Accounting policies:
IFRS 15 applicable in 2019:
Revenue from contracts with customers is recognised when the control of goods or services has transferred to the customer through the satisfaction of a performance obligation. Group performance obligations are satisfied at a point in time and over time, however the group mainly satisfies its performance obligations at a point in time.
Revenue recognised reflects the consideration that the group expects to be entitled to for each distinct performance obligation after deducting indirect taxes, rebates and trade discounts and consists primarily of the sale of oil, natural gas and chemical products, services rendered, license fees and royalties. The group allocates revenue based on stand-alone selling price.
The group enters into exchange agreements with the same counterparties for the purchase and sale of inventory that are entered into in contemplation of one another. When the items exchanged are similar in nature, these transactions are combined and accounted for as a single exchange transaction. The exchange is recognised at the carrying amount of the inventory transferred.
Revenue from arrangements that are not considered contracts with customers, mainly pertaining to franchise rentals, use of fuel tanks and fuel storage, is presented as revenue from other contracts.
The period between the transfer of the goods and services to the customer and the payment by the customer does not exceed 12 months and the group does not adjust for time value of money.
For further information on revenue recognition, refer to Segment information on pages 12 to 13.
2 Turnover continued
IAS 18 applicable to prior periods:
Revenue is recognised at the fair value of the consideration received or receivable net of indirect taxes, rebates and trade discounts and consists primarily of the sale of products, services rendered, licence fees and royalties.
Revenue is recognised when the following criteria are met:
· evidence of an arrangement exists;
· delivery has occurred or services have been rendered and the significant risks and rewards of ownership have been transferred to the purchaser;
· transaction costs can be reliably measured;
· the selling price is fixed or determinable; and
· collectability is reasonably assured.
The timing of revenue recognition is as follows. Revenue from:
· the sale of products is recognised when the group has substantially transferred all the risks and rewards of ownership and no longer retains continuing managerial involvement associated with ownership or effective control;
· services rendered is based on the stage of completion of the transaction, based on the proportion that costs incurred to date bear to the total cost of the project; and
· licence fees and royalties are recognised on an accrual basis.
The group enters into exchange agreements with the same counterparties for the purchase and sale of inventory that are entered into in contemplation of one another. When the items exchanged are similar in nature, these transactions are combined and accounted for as a single exchange transaction. The exchange is recognised at the carrying amount of the inventory transferred.
3 Materials, energy and consumables used
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Cost of raw materials |
|
79 774 |
|
66 928 |
|
63 291 |
|
Cost of energy and other consumables used in production process |
|
10 815 |
|
9 678 |
|
8 145 |
|
|
|
90 589 |
|
76 606 |
|
71 436 |
|
Costs relating to items that are consumed in the manufacturing process, including changes in inventories and distribution costs up until the point of sale.
4 Employee-related expenditure
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Analysis of employee costs |
|
|
|
|
|
|
|
|
|
Labour |
|
|
|
30 706 |
|
28 448 |
|
26 646 |
|
salaries, wages and other employee-related expenditure |
|
|
|
28 665 |
|
26 388 |
|
24 814 |
|
post-retirement benefits |
|
|
|
2 041 |
|
2 060 |
|
1 832 |
|
Share-based payment expenses |
|
|
|
1 219 |
|
1 565 |
|
226 |
|
equity-settled |
|
35 |
|
1 659 |
|
910 |
|
463 |
|
cash-settled |
|
34 |
|
(440 |
) |
655 |
|
(237 |
) |
Total employee-related expenditure |
|
|
|
31 925 |
|
30 013 |
|
26 872 |
|
Costs capitalised to projects |
|
|
|
(1 997 |
) |
(2 545 |
) |
(2 455 |
) |
Per income statement |
|
|
|
29 928 |
|
27 468 |
|
24 417 |
|
4 Employee-related expenditures continued
The total number of permanent and non-permanent employees, in approved positions, including the groups share of employees within joint operation entities and excluding contractors, joint ventures and associates employees, is analysed below:
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Number |
|
Number |
|
Number |
|
Permanent employees |
|
31 112 |
|
31 020 |
|
30 600 |
|
Non-permanent employees |
|
317 |
|
250 |
|
300 |
|
|
|
31 429 |
|
31 270 |
|
30 900 |
|
The number of employees by area of employment is analysed as follows:
* |
Increase mainly due to LCCP. |
Accounting policies:
Remuneration of employees is charged to the income statement, except where it is capitalised to projects in line with the accounting policy for assets under construction.
Short-term employee benefits
Short-term employee benefits includes salaries, wages and costs of temporary employees, paid vacation leave, sick leave and incentive bonuses.
Long-term employee benefits
Long-term employee benefits are those benefits that are expected to be wholly settled more than 12 months after the end of the annual reporting period, in which the services have been rendered and are discounted to their present value.
Post-retirement benefits
Further information on these benefits is provided in Note 33, and include defined benefit contribution plans, as well as defined benefit plans.
5 Translation gains/(losses)
Differences arising on the translation of monetary assets and liabilities into functional currency.
6 Other operating expenses and income
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rentals |
|
1 845 |
|
1 497 |
|
1 367 |
|
Insurance |
|
514 |
|
432 |
|
511 |
|
Computer costs |
|
2 155 |
|
2 042 |
|
1 991 |
|
Hired labour |
|
786 |
|
838 |
|
878 |
|
Audit remuneration |
|
97 |
|
88 |
|
89 |
|
Derivative losses/(gains) (including foreign exchange contracts)(1) |
|
2 465 |
|
3 927 |
|
(635 |
) |
Professional fees |
|
2 226 |
|
1 971 |
|
1 383 |
|
Enablement of digital and continuous improvement initiatives |
|
454 |
|
409 |
|
17 |
|
Other |
|
1 772 |
|
1 562 |
|
1 366 |
|
Changes in rehabilitation provisions |
|
1 096 |
|
(804 |
) |
472 |
|
Other expenses(2) |
|
9 880 |
|
6 724 |
|
6 981 |
|
Other operating income |
|
(1 363 |
) |
(1 410 |
) |
(1 688 |
) |
|
|
19 701 |
|
15 305 |
|
11 349 |
|
(1) |
Relates mainly to the groups hedging activities which includes a loss of R1,5 billion on the reclassification of the interest rate swap to profit and loss on termination of the hedge relationship, refer note 40. |
|
|
(2) |
Increase relates mainly to growth cost relating to the LCCP and high-density polyethyline (HDPE) plants that have reached beneficial operation. |
7 Net finance costs
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Finance income |
|
|
|
|
|
|
|
|
|
Dividends received from investments |
|
|
|
42 |
|
520 |
|
59 |
|
Notional interest received |
|
|
|
|
|
5 |
|
1 |
|
Interest received on |
|
|
|
745 |
|
1 191 |
|
1 508 |
|
other long-term investments |
|
|
|
27 |
|
32 |
|
36 |
|
loans and receivables |
|
|
|
334 |
|
359 |
|
349 |
|
cash and cash equivalents |
|
|
|
384 |
|
800 |
|
1 123 |
|
Per income statement |
|
|
|
787 |
|
1 716 |
|
1 568 |
|
Less: notional interest |
|
|
|
|
|
(5 |
) |
(1 |
) |
Less: interest received on tax |
|
|
|
(105 |
) |
(146 |
) |
(103 |
) |
Per the statement of cash flows |
|
|
|
682 |
|
1 565 |
|
1 464 |
|
Finance costs |
|
|
|
|
|
|
|
|
|
Debt |
|
|
|
6 088 |
|
4 166 |
|
3 463 |
|
debt |
|
|
|
6 044 |
|
3 880 |
|
3 162 |
|
interest rate swap net settlements |
|
|
|
44 |
|
286 |
|
301 |
|
Preference share dividends |
|
|
|
116 |
|
963 |
|
989 |
|
Finance leases (refer note 16) |
|
|
|
871 |
|
483 |
|
86 |
|
Other(1) |
|
|
|
(462 |
) |
291 |
|
378 |
|
|
|
|
|
6 613 |
|
5 903 |
|
4 916 |
|
Amortisation of loan costs |
|
16 |
|
725 |
|
462 |
|
279 |
|
Notional interest |
|
31 |
|
857 |
|
962 |
|
834 |
|
Total finance costs |
|
|
|
8 195 |
|
7 327 |
|
6 029 |
|
Amounts capitalised to assets under construction(2) |
|
18 |
|
(6 942 |
) |
(3 568 |
) |
(2 764 |
) |
Per income statement |
|
|
|
1 253 |
|
3 759 |
|
3 265 |
|
Total finance costs before amortisation of loan costs and notional interest |
|
|
|
6 613 |
|
5 903 |
|
4 916 |
|
Add: modification gain |
|
|
|
109 |
|
|
|
|
|
Less: interest accrued on long-term debt |
|
16 |
|
(1 025 |
) |
(878 |
) |
(956 |
) |
Less: interest reversed/(accrued) on tax payable(1) |
|
|
|
525 |
|
(228 |
) |
(348 |
) |
Per the statement of cash flows |
|
|
|
6 222 |
|
4 797 |
|
3 612 |
|
(1) |
Interest (reversed)/accrued on tax payable relates mainly to our tax litigation claim. Refer to note 12. |
(2) |
Finance costs capitalised increased due to higher assets under construction and the adoption of the amendment of IAS23 Borrowing Costs on 1 July 2018, which resulted in higher capitalisation of costs. |
8 Earnings and dividends per share
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rand |
|
Rand |
|
Rand |
|
Attributable to owners of Sasol Limited |
|
|
|
|
|
|
|
Basic earnings per share |
|
6,97 |
|
14,26 |
|
33,36 |
|
Headline earnings per share |
|
30,72 |
|
27,44 |
|
35,15 |
|
Diluted earnings per share |
|
6,93 |
|
14,18 |
|
33,27 |
|
Diluted headline earnings per share |
|
30,54 |
|
27,27 |
|
35,05 |
|
Dividends per share |
|
5,90 |
|
12,90 |
|
12,60 |
|
interim |
|
5,90 |
|
5,00 |
|
4,80 |
|
final* |
|
|
|
7,90 |
|
7,80 |
|
* |
Declared subsequent to 30 June and has been presented for information purposes only. |
Earnings per share (EPS)
Earnings per share is derived by dividing attributable earnings by the weighted average number of shares, after taking the long-term incentives (LTIs), the Sasol Inzalo and Sasol Khanyisa share transactions into account. Appropriate adjustments are made in calculating diluted, headline and diluted headline earnings per share.
for the year ended 30 June |
|
|
|
2019 |
|
2018 |
|
2017 |
|
Weighted average number of shares |
|
million |
|
616,6 |
|
612,2 |
|
610,7 |
|
Earnings attributable to owners of Sasol Limited |
|
Rm |
|
4 298 |
|
8 729 |
|
20 374 |
|
Basic earnings per share |
|
Rand |
|
6,97 |
|
14,26 |
|
33,36 |
|
Headline earnings per share (HEPS)
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
million |
|
million |
|
million |
|
Weighted average number of shares |
|
616,6 |
|
612,2 |
|
610,7 |
|
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Headline earnings is determined as follows: |
|
|
|
|
|
|
|
|
|
Earnings attributable to owners of Sasol Limited |
|
|
|
4 298 |
|
8 729 |
|
20 374 |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
Effect of remeasurement items for subsidiaries and joint operations, net of tax |
|
9 |
|
14 628 |
|
8 058 |
|
1 077 |
|
gross remeasurement items |
|
|
|
18 645 |
|
9 901 |
|
1 616 |
|
tax effect and non-controlling interest effect |
|
|
|
(4 017 |
) |
(1 843 |
) |
(539 |
) |
Effect of remeasurement items for equity accounted investments |
|
9 |
|
15 |
|
11 |
|
14 |
|
Headline earnings |
|
|
|
18 941 |
|
16 798 |
|
21 465 |
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rand |
|
Rand |
|
Rand |
|
Headline earnings attributable to owners of Sasol Limited |
|
|
|
|
|
|
|
Headline earnings per share |
|
30,72 |
|
27,44 |
|
35,15 |
|
8 Earnings and dividends per share continued
Diluted earnings per share (DEPS) and diluted headline earnings per share (DHEPS)
DEPS and DHEPS are calculated considering the potential dilution that could occur if all of the groups long-term incentives (LTIs) had vested, if all outstanding share options were exercised and the effect of all dilutive potential ordinary shares resulting from the Sasol Inzalo and Sasol Khanyisa Tier 1 share transactions.
The number of shares outstanding is adjusted to show the potential dilution if the LTIs and Sasol Khanyisa Tier 1 were settled in Sasol Limited shares.
The Sasol Inzalo share transaction is anti-dilutive for EPS and HEPS in 2019, 2018 and 2017.
The Sasol Khanyisa Tier 2 and Khanyisa Public are anti-dilutive for EPS and HEPS in 2019 and 2018.
|
|
Number of shares |
|
||||
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
million |
|
million |
|
million |
|
Weighted average number of shares |
|
616,6 |
|
612,2 |
|
610,7 |
|
Potential dilutive effect of long-term incentive scheme* |
|
2,9 |
|
3,7 |
|
1,7 |
|
Potential dilutive effect of Sasol Khanyisa Tier 1 |
|
0,8 |
|
|
|
|
|
Diluted weighted average number of shares for DEPS and DHEPS |
|
620,3 |
|
615,9 |
|
612,4 |
|
* |
On 25 November 2016, the cash-settled LTI scheme was converted to an equity-settled share scheme. |
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Diluted earnings is determined as follows: |
|
|
|
|
|
|
|
Earnings attributable to owners of Sasol Limited |
|
4 298 |
|
8 729 |
|
20 374 |
|
Diluted earnings attributable to owners of Sasol Limited |
|
4 298 |
|
8 729 |
|
20 374 |
|
Diluted headline earnings is determined as follows: |
|
|
|
|
|
|
|
Headline earnings attributable to owners of Sasol Limited |
|
18 941 |
|
16 798 |
|
21 465 |
|
Diluted headline earnings attributable to owners of Sasol Limited |
|
18 941 |
|
16 798 |
|
21 465 |
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rand |
|
Rand |
|
Rand |
|
Diluted earnings per share |
|
6,93 |
|
14,18 |
|
33,27 |
|
Diluted headline earnings per share |
|
30,54 |
|
27,27 |
|
35,05 |
|
Once-off items
9 Remeasurement items affecting operating profit
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Effect of remeasurement items for subsidiaries and joint operations |
|
|
|
|
|
|
|
|
|
Impairment of |
|
|
|
18 451 |
|
9 115 |
|
2 477 |
|
property, plant and equipment |
|
17 |
|
14 161 |
|
7 623 |
|
415 |
|
assets under construction |
|
18 |
|
4 272 |
|
1 492 |
|
1 942 |
|
goodwill and other intangible assets |
|
|
|
11 |
|
|
|
120 |
|
other assets |
|
|
|
7 |
|
|
|
|
|
Reversal of impairment of |
|
|
|
(949 |
) |
(354 |
) |
(1 136 |
) |
property, plant and equipment |
|
17 |
|
(650 |
) |
|
|
(272 |
) |
assets under construction |
|
18 |
|
(299 |
) |
(14 |
) |
(849 |
) |
goodwill and other intangible assets |
|
|
|
|
|
(56 |
) |
|
|
equity accounted investments |
|
|
|
|
|
(269 |
) |
(15 |
) |
other assets |
|
|
|
|
|
(15 |
) |
|
|
Fair value write down assets held for sale |
|
|
|
|
|
|
|
64 |
|
Loss/(profit) on |
|
10 |
|
1 109 |
|
828 |
|
211 |
|
disposal of property, plant and equipment |
|
|
|
(32 |
) |
(3 |
) |
(25 |
) |
disposal of goodwill and other intangible assets |
|
|
|
|
|
11 |
|
4 |
|
disposal of other assets |
|
|
|
|
|
(1 |
) |
|
|
disposal of businesses |
|
|
|
(267 |
) |
(833 |
) |
(51 |
) |
scrapping of property, plant and equipment |
|
|
|
556 |
|
454 |
|
183 |
|
disposal and scrapping of assets under construction |
|
|
|
852 |
|
1 200 |
|
100 |
|
Write-off of unsuccessful exploration wells |
|
18 |
|
34 |
|
312 |
|
|
|
Remeasurement items per income statement |
|
|
|
18 645 |
|
9 901 |
|
1 616 |
|
Tax effect |
|
|
|
(4 012 |
) |
(1 834 |
) |
(532 |
) |
Non-controlling interest effect |
|
|
|
(5 |
) |
(9 |
) |
(7 |
) |
Total remeasurement items for subsidiaries and joint operations, net of tax |
|
|
|
14 628 |
|
8 058 |
|
1 077 |
|
Effect of remeasurement items for equity accounted investments |
|
|
|
15 |
|
11 |
|
14 |
|
Total remeasurement items for the group, net of tax |
|
|
|
14 643 |
|
8 069 |
|
1 091 |
|
Impairment/reversal of impairments
The groups non-financial assets, other than inventories and deferred tax assets, are assessed for impairment at each reporting date or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Recoverable amounts are estimated for individual assets or, where an individual asset cannot generate cash inflows independently, the recoverable amount is determined for the larger cash generating unit to which it belongs.
Impairment calculations
The recoverable amount of the assets assessed for impairment is determined based on the higher of the fair value less costs to sell or value-in-use calculations. Key assumptions relating to this valuation include the discount rate and cash flows. Future cash flows are estimated based on financial budgets covering a five year period and extrapolated over the useful life of the assets to reflect the long term plans for the group using the estimated growth rate for the specific business or project. Where reliable cash flow projections are available for a period longer than five years, those budgeted cash flows are used in the impairment calculation. The estimated future cash flows and discount rate are post-tax, based on the assessment of current risks applicable to the specific entity and country in which it operates. Discounting post-tax cash flows at a post-tax discount rate yields the same results as discount pre-tax cash flows at a pre-tax discount rate, assuming there are no significant temporary tax differences.
9 Remeasurement items affecting operating profit continued
Main assumptions used for impairment calculations
* |
Assumptions are provided on a long-term average basis. Oil price, ammonia price and exchange rate assumptions are calculated based on a five year period, while the ethane price is based on a ten year period. The Henry Hub gas price is calculated until 2041, linked to the plants useful life. |
|
|
|
|
South
|
|
United
|
|
Europe |
|
Canada |
|
|
|
|
|
% |
|
% |
|
% |
|
% |
|
Growth rate long-term Producer Price Index |
|
2019 |
|
5,50 |
|
2,00 |
|
2,00 |
|
2,00 |
|
Weighted average cost of capital* |
|
2019 |
|
13,12 |
|
7,18 |
|
7,18 9,48 |
|
7,18 |
|
Discount rate risk adjusted |
|
2019 |
|
13,12 |
|
7,18 |
|
7,18 9,48 |
|
10,00 |
|
Growth rate long-term Producer Price Index |
|
2018 |
|
5,50 |
|
2,00 |
|
2,00 |
|
2,00 |
|
Weighted average cost of capital* |
|
2018 |
|
12,71 |
|
7,56 |
|
7,68 9,35 |
|
7,68 |
|
Discount rate risk adjusted |
|
2018 |
|
12,71 |
|
7,56 |
|
7,68 9,35 |
|
10,00 |
|
Growth rate long-term Producer Price Index |
|
2017 |
|
5,50 |
|
2,00 |
|
2,00 |
|
2,00 |
|
Weighted average cost of capital* |
|
2017 |
|
12,50 |
|
6,60 |
|
6,60 8,22 |
|
6,60 |
|
Discount rate risk adjusted |
|
2017 |
|
12,50 |
|
6,60 |
|
6,60 8,22 |
|
9,50 9,80 |
|
* |
Calculated using spot market factors on 30 June. |
Areas of judgement:
Management determines the expected performance of the assets based on past performance and its expectations of market developments. The weighted average growth rates used are consistent with the increase in the geographic segment long-term Producer Price Index. Estimations are based on a number of key assumptions such as volume, price and product mix which will create a basis for future growth and gross margin. These assumptions are set in relation to historic figures and external reports. If necessary, these cash flows are then adjusted to take into account any changes in assumptions or operating conditions that have been identified subsequent to the preparation of the budgets.
The weighted average cost of capital rate (WACC) is derived from a pricing model. The variables used in the model are established on the basis of management judgement and current market conditions. Management judgement is also applied in estimating future cash flows and defining of cash-generating units. These values are sensitive to the cash flows projected for the periods for which detailed forecasts are not available and to the assumptions regarding the long-term sustainability of the cash flows thereafter.
Determining as to whether, and by how much, cost incurred on a project is abnormal and needs to be scrapped involves judgement. The factors considered by management include the scale and complexity of the project, the technology being applied and guidance from experts in terms of what constitute abnormal wastage on the project.
9 Remeasurement items affecting operating profit continued
Significant impairment (reversals of impairment) of assets in 2019
|
|
|
|
Property,
|
|
Assets
|
|
Goodwill
|
|
Other |
|
Total |
|
|
|
Business |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
|
Cash-generating unit (CGU) |
|
segmentation |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Tetramerization value chain (LCCP) |
|
Performance Chemicals |
|
3 929 |
|
3 474 |
|
|
|
|
|
7 403 |
|
Ethylene Oxide/Ethylene Glycol value chain (LCCP) |
|
Performance Chemicals |
|
4 662 |
|
798 |
|
|
|
|
|
5 460 |
|
Ammonia value chain |
|
Base Chemicals |
|
3 347 |
|
|
|
|
|
|
|
3 347 |
|
Sasol Canada Shale gas assets |
|
Exploration and Production International |
|
1 947 |
|
|
|
|
|
|
|
1 947 |
|
Chlor Vinyls value chain |
|
Base Chemicals |
|
(650 |
) |
(299 |
) |
|
|
|
|
(949 |
) |
High Purity Alumina assets |
|
Performance Chemicals |
|
205 |
|
|
|
|
|
|
|
205 |
|
Sasol Wilmar Alcohol Industries |
|
Performance Chemicals |
|
65 |
|
|
|
11 |
|
7 |
|
83 |
|
Other |
|
Various |
|
6 |
|
|
|
|
|
|
|
6 |
|
|
|
|
|
13 511 |
|
3 973 |
|
11 |
|
7 |
|
17 502 |
|
Performance Chemicals Tetramerization and Ethylene Oxide/Ethylene Glycol (EO/EG) value chains
In 2019, the Tetramerization and EO/EG value chains were impaired by R7,4 billion (US$526 million) and R5,5 billion (US$388 million), respectively. The impairments were driven by an increase in capital cost for the Lake Charles Chemicals Project (LCCP) and lower US ethylene and global mono-ethylene glycol price assumptions as at 30 June 2019. The upstream ethane cracker is a corporate asset and the increase in its capital cost has an impact on the downstream derivative units. All cash generating units linked to the LCCP were assessed for impairment.
Base Chemicals Ammonia value chain
In 2019, an impairment of R3,3 billion was recognised on our Ammonia value chain mainly as a result of lower international ammonia sales price assumptions in the short- to medium-term and increased gas feedstock prices in the longer term.
Sasol Canada Shale gas assets
Our shale gas assets in Canada were impaired by a further R1,9 billion (CAD181 million) as at 30 June 2019 to a carrying value of R22 million (CAD2 million), impacted by the depressed Canadian gas price environment. This is aligned with the anticipated fair value. We remain committed to divest from these assets as part of our strategic portfolio optimisation.
These assets were previously impaired (2018 R2,8 billion (CAD281 million); 2016 R9,9 billion (CAD880 million); 2015 R1,3 billion (CAD133 million); 2014 R5,3 billion (CAD540 million)), mainly due to the declining gas prices.
Base Chemicals Chlor Vinyls value chain
In 2018, the full carrying value of our Chlor Vinyls value chain in South Africa was impaired by R5,2 billion due to the continued and sustained strengthening of the exchange rate outlook and the resulting impact on Base Chemicals margins.
A structural change in the integrated ethylene value chain led to the extension of the useful life of the Chlor Vinyls CGU in Sasolburg from 2034 to 2050.
Based on the sustained improvement in the impairment calculation due to the useful life extension, R949 million of the previous impairment recognised was reversed on 31 December 2018.
Significant scrapping of assets
Lake Charles Chemicals Project
In 2019, we scrapped R682 million (US$48 million) of cost incurred on the LCCP, mainly relating to rework that was required on the Low Density Polyethylene compression motor that was damaged and a number of heat exchangers that had to be either repaired or replaced due to quality issues. Management considered the scale and complexity of the project, the technology being applied and input from experts to determine the cost incurred on the project which were scrapped.
9 Remeasurement items affecting operating profit continued
Significant impairments of assets in prior periods
Sasol Petroleum Mozambique PSA
In 2018, an impairment of R1,1 billion (US$94 million) was recognised in respect of the PSA asset. The project was still in an early stage of development with the impairment largely driven by lower than expected oil volumes and weaker long-term macroeconomic assumptions. A discount rate of 13,23% (2017: 12,16%) was used which takes into account the projects exposure to both South Africa and Mozambique operating and fiscal environment.
Base Chemicals Lake Charles Chemicals Project
In 2016, following the announcement of the US$2 billion cost overrun on the LCCP, we recognised an impairment of R956 million (US$65 million) on the Low-Density Polyethylene (LDPE) unit. In 2017, following a detailed review of the plant economics and on evaluating the results of benchmarking of similar Sasol assets, the useful life of the asset was extended from 25 years to 50 years. Based on this, the previous impairment of R849 million (US$65 million) was reversed.
US Phenolics
In 2017 the US Phenolics assets were impaired by R527 million (US$38,4 million), in addition to R165 million (US$11,2 million) impaired in 2016. These impairments were largely driven by lower forecasted profit margins and lower volumes.
Significant scrapping of assets in prior periods
US Gas-To-Liquids (GTL)
At 31 December 2017 we scrapped the remaining capitalised FEED costs relating to our US GTL assets of R1,1 billion (US$83 million), following our formal strategic decision not to pursue new GTL ventures in future. This is in addition to an impairment recognised in 2017 of R1,7 billion (US$130 million) based on the delay of the US GTL project and the uncertainty around the probability and timing of project execution.
Sensitivity to changes in assumptions:
Management has considered the sensitivity of the impairment calculations to various key assumptions such as crude oil and gas prices, commodity prices and exchange rates. These sensitivities have been taken into consideration in determining the required impairments and reversals of impairments. The following assets are particularly impacted by changes in key assumptions:
Performance Chemicals Tetramerization and EO/EG value chains
The Tetramerization and EO/EG value chains are highly sensitive to changes in assumptions. A 5% change in the ethane price assumption could change the recoverable amount of these value chains by approximately R85 million (US$6 million) and R774 million (US$55 million), respectively. An increase in overall project cost of US$200 million would decrease the value of the Tetramerization CGU by R70 million (US$5 million) and the EO/EG CGU by R422 million (US$30 million). As the LCCP is nearing completion and with the upstream ethylene cracker having reached beneficial operation in August 2019, these value chains are not expected to incur significant additional capital costs. The pricing factors are outside of the control of management. We continue to monitor these assets, as well as the other derivative units within the LCCP complex for further impairments.
Base Chemicals Ammonia value chain
The performance of this CGU is highly sensitive to changes in international Ammonia prices driven by changes in the global market conditions. A 5% increase in the ammonia price assumption could increase the recoverable amount of the CGU by approximately R1 138 million. A $1/GJ increase in gas feedstock prices in the long-term will decrease the recoverable amount by approximately R230 million. The pricing factors are outside of the control of management.
Base Chemicals Chlor Vinyls value chain
The performance of this CGU is highly sensitive to the Rand/US$ exchange rate. A R0,50/US$ weakening in the exchange rate assumption could increase the recoverable amount of the CGU by approximately R872 million. The macro-economic factors are outside of the control of management. The Base Chemicals CGUs are also highly sensitive to variability in product prices driven by changes in the global market conditions. We continue to monitor these assets for signs of recovery indicating a reversal of impairment.
Sasol Petroleum Mozambique Production Sharing Agreement (PSA)
The PSA is sensitive to changes in assumptions regarding capital, costs, gas prices and discount rates. A capital costs increase of 20% would decrease the recoverable amount by R1 183 million (US$84 million). A 10% increase in gas prices would increase the recoverable amount by approximately R141 R521 million (US$10 US$37 million). A 0,5% increase in the discount rate would decrease the recoverable amount by approximately R380 R408 million (US$27 US$29 million).
9 Remeasurement items affecting operating profit continued
Accounting policies:
Remeasurement items are items of income and expense recognised in the income statement that are less closely aligned to the operating or trading activities of the reporting entity and includes the impairment of non-current assets, profit or loss on disposal of non-current assets including businesses and equity accounted investments, and scrapping of assets. The groups non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, to determine whether there is any indication of impairment. An impairment test is performed on all goodwill, intangible assets not yet in use and intangible assets with indefinite useful lives at each reporting date.
The recoverable amount of an asset is defined as the amount that reflects the greater of the fair value less costs of disposal and value-in-use that can be attributed to an asset as a result of its ongoing use by the entity. Value-in-use is estimated using a discounted cash flow model. The future cash flows are adjusted for risks specific to the asset and is adjusted where applicable to take into account any specific risks relating to the country where the asset or cash-generating unit is located. The rate applied in each country is reassessed each year. The recoverable amount may be adjusted to take into account recent market transactions for a similar asset.
Some assets are an integral part of the value chain but are not capable of generating independent cash flows because there is no active market for the product streams produced from these assets, or the market does not have the ability to absorb the product streams produced from these assets or it is not practically possible to access the market due to infrastructure constraints that would be costly to construct. Product streams produced by these assets form an input into another process and accordingly do not have an active market. These assets are classified as corporate assets in terms of IAS 36 when their output supports the production of multiple product streams that are ultimately sold into an active market.
The groups corporate assets are allocated to the relevant cash generating unit based on a cost or volume contribution metric. Costs incurred by the corporate asset are allocated to the appropriate cash generating unit at cost. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the cash-generating unit to which the corporate asset belongs.
In Southern Africa, the coal value chain starts with feedstock mined in Secunda and Sasolburg and continues along the integrated processes of the operating business units, ultimately resulting in fuels and chemicals-based product lines. Similarly, the gas value chain starts with the feedstock obtained in Mozambique and continues along the conversion processes in Secunda and Sasolburg, ultimately resulting in fuels and chemicals-based product lines.
The groups of assets which support the different product lines, including corporate asset allocations, are considered to be separate cash-generating units.
In the US, the ethylene value chain results in various chemicals-based product lines, sold into active markets. The assets which support the different chemicals-based product lines, including corporate asset allocations, are considered to be separate cash-generating units.
In Europe, the identification of separate cash-generating units is based on the various product streams that have the ability to be sold into active markets by the European business units.
Certain products are sometimes produced incidentally from the main conversion processes and can be sold into active markets. When this is the case, the assets that are directly attributable to the production of these products, are classified as separate cash-generating units. The cost of conversion of these products is compared against the revenue when assessing the asset for impairment.
Exploration assets are tested for impairment when development of the property commences or whenever facts and circumstances indicate impairment. An impairment loss is recognised for the amount by which the exploration assets carrying amount exceeds their recoverable amount.
10 Disposals and scrapping
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Property, plant and equipment |
|
17 |
|
708 |
|
591 |
|
836 |
|
cost |
|
|
|
7 245 |
|
6 297 |
|
7 037 |
|
accumulated depreciation and impairment |
|
|
|
(6 537 |
) |
(5 706 |
) |
(6 201 |
) |
Assets under construction |
|
18 |
|
852 |
|
1 200 |
|
105 |
|
Goodwill and other intangible assets |
|
|
|
112 |
|
147 |
|
103 |
|
cost |
|
|
|
336 |
|
319 |
|
173 |
|
accumulated amortisation and impairment |
|
|
|
(224 |
) |
(172 |
) |
(70 |
) |
Equity accounted investments |
|
|
|
|
|
1 525 |
|
|
|
Long-term receivables and prepaid expenses |
|
|
|
|
|
|
|
7 |
|
Assets in disposal groups held for sale |
|
|
|
94 |
|
215 |
|
|
|
Trade and other receivables |
|
|
|
|
|
339 |
|
7 |
|
Cash and cash equivalents |
|
|
|
|
|
36 |
|
|
|
Liabilities in disposal groups held for sale |
|
|
|
(38 |
) |
|
|
|
|
Short-term provisions |
|
|
|
|
|
(24 |
) |
|
|
Tax payable |
|
|
|
|
|
(35 |
) |
|
|
Trade and other payables |
|
|
|
|
|
(208 |
) |
(30 |
) |
|
|
|
|
1 728 |
|
3 786 |
|
1 028 |
|
Non-controlling interest |
|
|
|
|
|
(51 |
) |
|
|
|
|
|
|
1 728 |
|
3 735 |
|
1 028 |
|
Total consideration |
|
|
|
567 |
|
2 425 |
|
788 |
|
consideration received |
|
|
|
567 |
|
2 316 |
|
788 |
|
long-term supply agreement |
|
|
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 161 |
) |
(1 310 |
) |
(240 |
) |
Realisation of accumulated translation effects |
|
|
|
52 |
|
482 |
|
29 |
|
Net loss on disposal |
|
|
|
(1 109 |
) |
(828 |
) |
(211 |
) |
Consideration received comprising |
|
|
|
|
|
|
|
|
|
Performance Chemicals Heat Transfer Fuels (HTF) business |
|
|
|
271 |
|
|
|
|
|
Base Chemicals Investment in Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd |
|
|
|
|
|
1 918 |
|
|
|
Energy Property and mineral rights in the US (Lake de Smet) |
|
|
|
|
|
215 |
|
|
|
Energy Sale of Canada land |
|
|
|
|
|
|
|
389 |
|
Other |
|
|
|
296 |
|
183 |
|
399 |
|
Consideration received |
|
|
|
567 |
|
2 316 |
|
788 |
|
Significant disposals and scrappings in 2019
Performance Chemicals Heat Transfer Fuels (HTF) business
In 2019, we disposed of our HTF business with the producing assets located within the Marl facility in Germany.
Lake Charles Chemicals Project
In 2019, we scrapped R682 million (US$48 million) of cost incurred on the LCCP, mainly relating to rework required. Refer note 9.
Significant disposals in prior periods
Base Chemicals Investment in Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd
Our divestment from Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd was concluded on 14 March 2018, resulting in a profit on disposal of R864 million, including the reclassification of the Foreign Currency Translation Reserve of R494 million.
Energy US Gas-To-Liquids (GTL) Scrapping
We have scrapped the US GTL Project amounting to R1,1 billion (US$83 million) during the 2018 financial year.
Energy Sale of Canada land
In 2017, we disposed of a portion of our land in Canada with a carrying value of R354 million (CAD35 million) for proceeds of R389 million (CAD38 million).
11 Disposal groups held for sale
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Assets in disposal groups held for sale |
|
|
|
|
|
Base Chemicals Explosives business |
|
1 404 |
|
|
|
Base Chemicals Investment in Sasol Huntsman GmbH & co KG |
|
846 |
|
|
|
Performance Chemicals Sasol Wilmar Alcohol Industries |
|
290 |
|
|
|
Performance Chemicals Heat Transfer Fuels (HTF) business |
|
|
|
110 |
|
Other |
|
14 |
|
3 |
|
|
|
2 554 |
|
113 |
|
Liabilities in disposal groups held for sale |
|
|
|
|
|
Base Chemicals Explosives business |
|
(398 |
) |
|
|
Performance Chemicals Sasol Wilmar Alcohol Industries |
|
(90 |
) |
|
|
Performance Chemicals Heat Transfer Fuels (HTF) business |
|
|
|
(36 |
) |
|
|
(488 |
) |
(36 |
) |
|
|
|
|
|
|
Business segmentation |
|
|
|
|
|
· Mining |
|
|
|
3 |
|
· Energy |
|
14 |
|
|
|
· Base Chemicals |
|
1 852 |
|
|
|
· Performance Chemicals |
|
200 |
|
74 |
|
Total operations |
|
2 066 |
|
77 |
|
Significant disposal group held for sale in 2019
Base Chemicals Explosives business
In line with the asset review process, Sasols Explosives business was identified for partial divestment and collaboration with a world-class Explosives partner. The downstream portion of the explosives business was classified as a disposal group held for sale at 30 June 2019, following approval to commence negotiations with a preferred partner, with the aim of creating a joint venture, managed and operated by the partner. The partial divestment and partnering is expected to be completed within the next 12 months.
Base Chemicals Investment in Sasol Huntsman GmbH & co KG
On 26 July 2019 Sasol and Huntsman Corporation signed a definitive agreement for Sasol to dispose of our 50% equity interest in the Sasol-Huntsman maleic anhydride joint venture. The transaction closed on 30 September 2019 with a preliminary equity purchase price of EUR90,3 million received by Sasol. The final purchase price will be confirmed on verification of the closing accounts by the independent auditors. The group has classified its investment in Sasol Huntsman GmbH & co KG as held for sale at 30 June 2019.
Performance Chemicals Sasol Wilmar Alcohol Industries
During May 2019 and based on the results of the recently concluded asset review, the Sasol Investment Committee approved the commencement of negotiations to sell Sasols share in Sasol Wilmar Alcohol Industries. A share purchase agreement was signed on 18 October 2019. The agreement is subject to chinese authority approval. Accordingly, the group has classified its investment in Sasol Wilmar Alcohol Industries as held for sale and recorded an impairment on its portion of the assets, down to its fair value less costs to sell. Refer to note 9.
11 Disposal groups held for sale continued
Accounting policies:
A non-current asset or disposal group (a business grouping of assets and their related liabilities) is designated as held for sale when its carrying amount will be recovered principally through a sale transaction rather than through continuing use. The classification as held for sale of a non-current asset or disposal group occurs when it is available for immediate sale in its present condition and the sale is highly probable. A sale is considered highly probable if management is committed to a plan to sell the non-current asset or disposal group, an active divestiture programme has been initiated, the non-current asset or disposal group is marketed at a price reasonable to its fair value and the disposal will be completed within one year from classification.
Where a disposal group held for sale will result in the loss of control or joint control of a subsidiary or joint operation, respectively, all the assets and liabilities of that subsidiary or joint operation are classified as held for sale, regardless of whether a non-controlling interest in the former subsidiary or an ongoing interest in the joint operation is to be retained after the sale.
Where a disposal group held for sale will result in the loss of joint control of a joint venture or significant influence of an associate, the full investment is classified as held for sale. Equity accounting ceases from the date the joint venture or associate is classified as held for sale.
Before classification of a non-current asset or disposal group as held for sale, it is reviewed for impairment. The impairment loss charged to the income statement is the excess of the carrying amount of the non-current asset over its expected fair value less costs to sell.
No depreciation or amortisation is provided on non-current assets from the date they are classified as held for sale.
Taxation
12 Taxation
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
South African normal tax |
|
|
|
3 206 |
|
4 035 |
|
4 393 |
|
current year |
|
|
|
3 804 |
|
4 689 |
|
3 887 |
|
prior years |
|
|
|
(598 |
) |
(654 |
) |
506 |
|
Dividend withholding tax |
|
|
|
|
|
68 |
|
59 |
|
Foreign tax |
|
|
|
2 640 |
|
2 530 |
|
2 682 |
|
current year |
|
|
|
2 544 |
|
3 035 |
|
2 680 |
|
prior years |
|
|
|
96 |
|
(505 |
) |
2 |
|
|
|
|
|
|
|
|
|
|
|
Income tax |
|
|
|
5 846 |
|
6 633 |
|
7 134 |
|
Deferred tax South Africa |
|
14 |
|
2 086 |
|
(414 |
) |
2 677 |
|
current year |
|
|
|
2 069 |
|
(545 |
) |
2 634 |
|
prior years |
|
|
|
17 |
|
131 |
|
43 |
|
|
|
|
|
|
|
|
|
|
|
Deferred tax foreign |
|
14 |
|
(4 775 |
) |
(661 |
) |
(1 316 |
) |
current year* |
|
|
|
(4 831 |
) |
(874 |
) |
(718 |
) |
prior years |
|
|
|
55 |
|
485 |
|
(127 |
) |
recognition of previously unrecognised deferred tax assets** |
|
|
|
|
|
(49 |
) |
(470 |
) |
tax rate change |
|
|
|
1 |
|
(223 |
) |
(1 |
) |
|
|
|
|
3 157 |
|
5 558 |
|
8 495 |
|
* |
Increase in the current year relates mainly to tax losses incurred at our US operations where we anticipate sufficient profits to be generated in future to utilise the deferred tax asset against. |
** |
Included in the previous years is the recognition of a deferred tax asset relating to the accumulated tax losses in Italy which were previously limited in line with the forecasted utilisation thereof. In 2017, profits and a successful business turnaround strategy have resulted in the recognition of a previously unrecognised deferred tax asset of EUR25,4 million (R377,2 million). Additionally in 2017 R93 million of previously unrecognised tax assets were recognised after the approval of the Production Sharing Agreement (PSA) licence areas Field Development Plan (FDP) in Mozambique. |
12 Taxation continued
Contingent liability
Sasol Oil
As previously reported, the South African Revenue Service (SARS) issued revised assessments for Sasol Oil (Pty) Ltd (Sasol Oil) relating to a dispute around our international crude oil procurement activities for the 2005 to 2012 tax years. Sasol Oil raised a provision in its financial statements of R1,3 billion, including penalties and interest, which covers the 2005 to 2014 tax years in relation to these procurement activities. On 9 November 2018, the Supreme Court of Appeal (SCA) upheld an appeal filed by Sasol Oil (in respect of the 2005 to 2007 tax years) and set aside an earlier ruling by the Tax Court. On the basis of this judgement, Sasol Oil has reversed the provision of R1,3 billion.
On 29 November 2018, SARS applied to the Constitutional Court (Con Court) for leave to appeal against the SCA decision. On 4 February 2019, the Con Court dismissed SARS application with costs, ruling that the matter falls outside the jurisdiction of the Con Court and, in any event, bears no reasonable prospect of success.
In addition to the above litigation, the potential contingent liability relating to the ongoing dispute with SARS in relation to its revised assessments for the 2013 and 2014 tax years, based on different primary grounds of assessment regarding Sasol Oils crude oil procurement activity, amounts to R13,4 billion (including interest and penalties as at 30 June 2019). Sasol Oil disagrees with SARS assessment for the 2013 and 2014 periods and hence this tax dispute was the subject of an ongoing appeal with the Tax Court lodged by Sasol Oil.
The impact of the SCA and Con Court judgements on the open years of assessment relating to 1999 to 2004 and 2008 to 2016 (open years), were fully considered by both parties. Consequently SARS and Sasol Oil has come to a mutual agreement resulting in the dispute between the parties being resolved for all the open years of assessment. As a result Sasol is no longer exposed to the contingent liability of R13,4 billion.
Sasol Financing International
Further, as reported previously, SARS conducted an audit over a number of years on Sasol Financing International Plc (SFI) which performs an off-shore treasury function for Sasol. The audit culminated in the issuance of revised assessments in respect of the 2002 to 2012 tax years and the dispute relates to the place of effective management of SFI. SFI has co-operated fully with SARS during the course of the audit relating to these assessments. The potential tax exposure of R2,4 billion (including interest and penalties as at 30 June 2019), which is disclosed as a contingent liability, was reduced from the R3,2 billion previously reported, due to the reduction of the penalties applied by SARS.
SFI, in consultation with its tax and legal advisors, does not support the basis of these additional assessments for all the years of assessment. Accordingly, SFI lodged an objection and appeal in the Tax Court against the revised assessments. SFI and SARS has however come to a mutual agreement that the appeal and related Tax Court processes will be held in abeyance pending the outcome of the judicial review application noted below.
In addition, Sasol has also launched a judicial review application against the SARS decision to register SFI as a South African taxpayer. SARS answering affidavit in this litigation was submitted on 8 February 2019 and SFI responded accordingly. The legal process is ongoing in this regard.
Sasol is committed to compliance with tax laws and any disputes with tax authorities on the interpretation of tax laws and regulations will be addressed in a transparent and constructive manner.
12 Taxation continued
(1) |
Includes non-deductible expenses incurred not deemed to be in the production of taxable income mainly relating to exploration activities and non-productive interest in our treasury function. |
(2) |
This relates to the share based payment expense on the Sasol Khanyisa transaction. |
(3) |
Relates mainly to the impact of lower tax rate in the US on the increases in tax losses incurred during the year. |
(4) |
2019 includes reversal of tax and interest pertaining to Sasol Oil and 2017, includes tax, interest and penalties. |
(5) |
Tax losses not recognised resulted mainly from the R1,9 billion (2018 R2,8 billion) impairment of the Canadian shale gas asset and the Mozambique PSA impairment of R1,1 billion in 2018 for which no deferred tax asset was raised. Refer note 9. |
(6) |
2018, includes profit on disposal of our investments in Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd. |
(7) |
Energy efficiency allowances relating to our South African operations increased by R4,2 billion compared to the prior year. |
(8) |
Effective tax rate adjusted for equity accounted investments, remeasurement items and once-off items. |
13 Tax paid
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Net amounts receivable at beginning of year |
|
|
|
(984 |
) |
(635 |
) |
(1 609 |
) |
Disposal of businesses |
|
|
|
(1 |
) |
(35 |
) |
|
|
Net interest and penalties on tax* |
|
|
|
(630 |
) |
92 |
|
245 |
|
Income tax per income statement |
|
12 |
|
5 846 |
|
6 633 |
|
7 134 |
|
Reclassification to held for sale |
|
|
|
6 |
|
|
|
|
|
Foreign exchange differences recognised in income statement |
|
|
|
4 |
|
(52 |
) |
(8 |
) |
Translation of foreign operations |
|
|
|
14 |
|
54 |
|
(45 |
) |
|
|
|
|
4 255 |
|
6 057 |
|
5 717 |
|
Net tax payable per statement of financial position |
|
|
|
(309 |
) |
984 |
|
635 |
|
tax payable |
|
|
|
(1 039 |
) |
(2 318 |
) |
(1 903 |
) |
tax receivable |
|
|
|
730 |
|
3 302 |
|
2 538 |
|
Per the statement of cash flows |
|
|
|
3 946 |
|
7 041 |
|
6 352 |
|
Comprising |
|
|
|
|
|
|
|
|
|
Normal tax |
|
|
|
|
|
|
|
|
|
South Africa |
|
|
|
933 |
|
4 681 |
|
3 984 |
|
Foreign |
|
|
|
3 013 |
|
2 292 |
|
2 309 |
|
Dividend withholding tax |
|
|
|
|
|
68 |
|
59 |
|
|
|
|
|
3 946 |
|
7 041 |
|
6 352 |
|
* |
2019, relates to the reversal of interest pertaining to the Sasol Oil matter. |
14 Deferred tax
|
|
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Reconciliation |
|
|
|
|
|
|
|
Balance at beginning of year |
|
|
|
21 812 |
|
22 778 |
|
Current year charge |
|
|
|
(2 819 |
) |
(851 |
) |
per the income statement |
|
12 |
|
(2 689 |
) |
(1 075 |
) |
per the statement of comprehensive income |
|
|
|
(130 |
) |
224 |
|
Reclassification to held for sale |
|
|
|
(6 |
) |
|
|
Foreign exchange differences recognised in income statement |
|
|
|
22 |
|
34 |
|
Translation of foreign operations |
|
|
|
14 |
|
(149 |
) |
Balance at end of year |
|
|
|
19 023 |
|
21 812 |
|
|
|
|
|
|
|
|
|
Comprising |
|
|
|
|
|
|
|
Deferred tax assets |
|
|
|
(8 563 |
) |
(4 096 |
) |
Deferred tax liabilities |
|
|
|
27 586 |
|
25 908 |
|
|
|
|
|
19 023 |
|
21 812 |
|
Deferred tax assets and liabilities are determined based on the tax status and rates of the underlying entities. The increase in deferred tax assets relates to our US operations.
14 Deferred tax continued
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Attributable to the following tax jurisdictions |
|
|
|
|
|
· South Africa |
|
25 065 |
|
22 501 |
|
· United States of America |
|
(4 998 |
) |
301 |
|
· Germany |
|
(550 |
) |
(431 |
) |
· Mozambique |
|
559 |
|
766 |
|
· Other |
|
(1 053 |
) |
(1 325 |
) |
|
|
19 023 |
|
21 812 |
|
Deferred tax is attributable to temporary differences on the following: |
|
|
|
|
|
Net deferred tax assets: |
|
|
|
|
|
Property, plant and equipment |
|
2 003 |
|
1 194 |
|
Short- and long-term provisions |
|
(2 851 |
) |
(1 296 |
) |
Calculated tax losses |
|
(7 329 |
) |
(3 267 |
) |
Other |
|
(386 |
) |
(727 |
) |
|
|
(8 563 |
) |
(4 096 |
) |
Net deferred tax liabilities: |
|
|
|
|
|
Property, plant and equipment |
|
33 342 |
|
32 233 |
|
Current assets |
|
(1 147 |
) |
(777 |
) |
Short- and long-term provisions |
|
(4 061 |
) |
(4 991 |
) |
Calculated tax losses |
|
(150 |
) |
(284 |
) |
Financial derivatives |
|
59 |
|
57 |
|
Other |
|
(457 |
) |
(330 |
) |
|
|
27 586 |
|
25 908 |
|
Deferred tax assets have been recognised for the carry forward amount of unused tax losses relating to the groups operations where, among other things, taxation losses can be carried forward indefinitely and there is compelling evidence that it is probable that sufficient taxable profits will be available in the future to utilise all tax losses carried forward.
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Calculated tax losses |
|
|
|
|
|
(before applying the applicable tax rate) |
|
|
|
|
|
Available for offset against future taxable income |
|
48 444 |
|
23 893 |
|
Utilised against the deferred tax balance |
|
(29 745 |
) |
(6 272 |
) |
Not recognised as a deferred tax asset(1) |
|
18 699 |
|
17 621 |
|
Deferred tax assets not recognised on tax losses mainly relate to Sasols exploration and development entities, where future taxable income is uncertain. |
|
|
|
|
|
Calculated tax losses carried forward that have not been recognised: |
|
|
|
|
|
Expiry between three and five years |
|
712 |
|
376 |
|
Expiry thereafter |
|
2 212 |
|
2 052 |
|
Indefinite life |
|
15 775 |
|
15 193 |
|
|
|
18 699 |
|
17 621 |
|
(1) |
Included are calculated tax losses of R15,5 billion relating to Sasol Canada. |
Areas of judgement:
Sasol companies are involved in tax litigation and tax disputes with various tax authorities in the normal course of business. A detailed assessment is performed regularly on each matter and a provision is recognised where appropriate. Although the outcome of these claims and disputes cannot be predicted with certainty, Sasol believes that open engagement and transparency will enable appropriate resolution thereof.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the deferred tax asset can be utilised. This includes the significant tax losses incurred at our US operations where we anticipate sufficient profits to be generated in future to utilise the deferred tax asset against. These losses do not expire. The provision of deferred tax assets and liabilities reflects the tax consequences that would follow from the expected recovery or settlement of the carrying amount of its assets and liabilities.
14 Deferred tax continued
Unremitted earnings at end of year that would be subject to foreign dividend withholding tax and after tax effect if remitted
Deferred tax liabilities are not recognised for the income tax effect that may arise on the remittance of unremitted earnings by foreign subsidiaries, joint operations and incorporated joint ventures. It is managements intention that, where there is no double taxation relief, these earnings will be permanently re-invested in the group.
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Unremitted earnings at end of year that would be subject to dividend withholding tax |
|
28 150 |
|
45 280 |
|
Europe |
|
10 808 |
|
12 555 |
|
Rest of Africa |
|
2 675 |
|
2 346 |
|
United States of America* |
|
10 486 |
|
23 591 |
|
Other |
|
4 181 |
|
6 788 |
|
|
|
|
|
|
|
Tax effect if remitted |
|
1 012 |
|
1 718 |
|
Europe |
|
241 |
|
267 |
|
Rest of Africa |
|
213 |
|
188 |
|
United States of America |
|
524 |
|
1 179 |
|
Other |
|
34 |
|
84 |
|
* |
Decrease in the current year relates mainly to tax losses incurred at our US operations where we anticipate sufficient profits to be generated in future to utilise the deferred tax asset against. |
Dividend withholding tax
Dividend withholding tax is payable at a rate of 20% on dividends distributed to shareholders. Dividends paid to companies and certain other institutions and certain individuals are not subject to this withholding tax. This tax is not attributable to the company paying the dividend but is collected by the company and paid to the tax authorities on behalf of the shareholder.
On receipt of a dividend, the company includes the dividend withholding tax in its computation of the income tax expense.
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Undistributed earnings at end of year subjected to dividend withholding tax withheld by the company on behalf of Sasol Limited shareholders |
|
180 692 |
|
185 064 |
|
Maximum withholding tax payable by shareholders if distributed to individuals |
|
36 138 |
|
37 013 |
|
Accounting policies:
The income tax charge is determined based on net income before tax for the year and includes deferred tax and dividend withholding tax.
The current tax charge is the tax payable on the taxable income for the financial year applying enacted or substantively enacted tax rates and includes any adjustments to tax payable in respect of prior years.
Deferred tax is provided for using the liability method, on all temporary differences between the carrying amount of assets and liabilities for accounting purposes and the amounts used for tax purposes and on any tax losses. No deferred tax is provided on temporary differences relating to:
· the initial recognition of goodwill;
· the initial recognition (other than in a business combination) of an asset or liability to the extent that neither accounting nor taxable profit is affected on acquisition; and
· investments in subsidiaries, associates and interests in joint arrangements to the extent that the temporary difference will probably not reverse in the foreseeable future and the control of the reversal of the temporary difference lies with the parent, investor, joint venturer or joint operator.
The provision for deferred tax is calculated using enacted or substantively enacted tax rates at the reporting date that are expected to apply when the asset is realised or liability settled.
Deferred tax assets and liabilities are offset when the related income taxes are levied by the same taxation authority, there is a legally enforceable right to offset and there is an intention to settle the balances on a net basis.
SOURCES OF CAPITAL
GENERATED FROM OPERATIONS
Page
38 Equity
· Share capital
39 Funding activities and facilities
· Long-term debt and finance leases
Equity
15 Share capital
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Issued share capital (as per statement of changes in equity)* |
|
9 888 |
|
15 775 |
|
29 282 |
|
|
|
Number of shares |
|
||||
for the year ended 30 June |
|
2019 |
|
2018 |
|
2017 |
|
Authorised |
|
|
|
|
|
|
|
Sasol ordinary shares of no par value |
|
1 127 690 590 |
|
1 127 690 590 |
|
1 127 690 590 |
|
Sasol preferred ordinary shares of no par value |
|
28 385 646 |
|
28 385 646 |
|
28 385 646 |
|
Sasol BEE ordinary shares of no par value |
|
158 331 335 |
|
158 331 335 |
|
18 923 764 |
|
|
|
1 314 407 571 |
|
1 314 407 571 |
|
1 175 000 000 |
|
Issued |
|
|
|
|
|
|
|
Shares issued at beginning of year |
|
645 560 928 |
|
679 822 439 |
|
679 775 162 |
|
Issued in terms of the employee share schemes |
|
1 566 581 |
|
1 776 361 |
|
47 277 |
|
Repurchase and cancellation of shares* |
|
(16 085 199 |
) |
(43 503 454 |
) |
|
|
Issued in terms of Sasol Khanyisa |
|
(13 992 |
) |
7 465 582 |
|
|
|
Shares issued at end of year |
|
631 028 318 |
|
645 560 928 |
|
679 822 439 |
|
Comprising |
|
|
|
|
|
|
|
Sasol ordinary shares of no par value |
|
624 696 971 |
|
623 081 550 |
|
651 436 793 |
|
Sasol preferred ordinary shares of no par value |
|
|
|
16 085 199 |
|
25 547 081 |
|
Sasol BEE ordinary shares of no par value |
|
6 331 347 |
|
6 394 179 |
|
2 838 565 |
|
|
|
631 028 318 |
|
645 560 928 |
|
679 822 439 |
|
Unissued shares |
|
|
|
|
|
|
|
Sasol ordinary shares of no par value |
|
502 993 619 |
|
504 609 040 |
|
476 253 797 |
|
Sasol preferred ordinary shares of no par value |
|
28 385 646 |
|
12 300 447 |
|
2 838 565 |
|
Sasol BEE ordinary shares of no par value |
|
151 999 988 |
|
151 937 156 |
|
16 085 199 |
|
|
|
683 379 253 |
|
668 846 643 |
|
495 177 561 |
|
* On 7 September 2018, 16 085 199 preferred ordinary shares were repurchased from Inzalo Public Funding (RF) Proprietary Limited at a purchase price of R542,11 per share as per the shareholders authorisation obtained at the Annual General Meeting held on 17 November 2017, which had the effect that these shares were cancelled and restored to authorised share capital.
On 26 June 2018, 9 461 882 Sasol Limited preferred ordinary shares were repurchased from Inzalo Groups Funding at a purchase price of R475,03 per share as per the shareholders authorisation obtained at the Annual General Meeting held on 17 November 2017, which had the effect that these shares were cancelled and restored to authorised share capital.
On 4 June 2018, 25 231 686 Sasol Limited ordinary shares were repurchased from the Inzalo Employee schemes at a nominal value of R0,01 per share (as per Sasols rights of repurchase under the Inzalo Employee schemes trust deeds). The Inzalo Employee scheme participants did not receive a distribution of Sasol Limited ordinary shares.
On 26 February 2018, 8 809 886 Sasol Limited ordinary shares were repurchased from its wholly owned subsidiary, Sasol Investment Company (Pty) Ltd as per shareholders approval obtained at the Annual General Meeting held on 17 November 2017, which had the effect that these shares were cancelled and restored. At 30 June 2016, these shares represented 1,43% of the issued share capital of the company, excluding the Sasol Inzalo share transaction.
At 30 June 2019, 13 969 621 shares were held by the Sasol Foundation Trust and the Sasol Khanyisa Employee Share Ownership Plan.
Accounting policies:
When Sasol Limiteds shares are repurchased by a subsidiary, the amount of consideration paid, including directly attributable costs, is recognised as a deduction from shareholders equity. Repurchased shares are classified as treasury shares and are disclosed as a deduction from total equity. Where such shares are subsequently reissued, any consideration received is included in the statement of changes in equity.
Funding activities and facilities
16 Long-term debt and finance leases
|
|
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Total long-term debt |
|
|
|
137 339 |
|
109 454 |
|
Short-term portion |
|
|
|
(2 544 |
) |
(12 763 |
) |
|
|
|
|
134 795 |
|
96 691 |
|
Comprising: |
|
|
|
|
|
|
|
Long-term debt |
|
|
|
127 350 |
|
89 411 |
|
Finance leases |
|
|
|
7 445 |
|
7 280 |
|
|
|
|
|
134 795 |
|
96 691 |
|
Analysis of long-term debt and finance leases |
|
|
|
|
|
|
|
At amortised cost |
|
|
|
|
|
|
|
Secured debt(1) |
|
|
|
6 602 |
|
62 601 |
|
Preference shares |
|
|
|
|
|
7 493 |
|
Finance leases |
|
|
|
7 770 |
|
7 624 |
|
Unsecured debt* |
|
|
|
123 555 |
|
32 513 |
|
Unamortised loan costs |
|
|
|
(588 |
) |
(777 |
) |
|
|
|
|
137 339 |
|
109 454 |
|
Reconciliation |
|
|
|
|
|
|
|
Balance at beginning of year |
|
|
|
109 454 |
|
81 405 |
|
Loans raised |
|
|
|
94 002 |
|
31 061 |
|
proceeds from new loans* |
|
|
|
93 884 |
|
24 961 |
|
finance leases acquired |
|
|
|
118 |
|
6 100 |
|
Loans repaid** |
|
|
|
(70 000 |
) |
(9 199 |
) |
Modification gain |
|
|
|
(112 |
) |
|
|
Interest accrued |
|
7 |
|
1 025 |
|
878 |
|
Amortisation of loan costs |
|
7 |
|
725 |
|
462 |
|
Translation effect of foreign currency loans |
|
|
|
212 |
|
22 |
|
Translation of foreign operations |
|
|
|
2 033 |
|
4 825 |
|
Balance at end of year |
|
|
|
137 339 |
|
109 454 |
|
Interest-bearing status |
|
|
|
|
|
|
|
Interest-bearing debt |
|
|
|
136 394 |
|
108 017 |
|
Non-interest-bearing debt |
|
|
|
945 |
|
1 437 |
|
|
|
|
|
137 339 |
|
109 454 |
|
Maturity profile |
|
|
|
|
|
|
|
Within one year |
|
|
|
2 544 |
|
12 763 |
|
One to five years |
|
|
|
113 447 |
|
72 899 |
|
More than five years |
|
|
|
21 348 |
|
23 792 |
|
|
|
|
|
137 339 |
|
109 454 |
|
Business segmentation |
|
|
|
|
|
|
|
· Mining |
|
|
|
|
|
679 |
|
· Exploration and Production International |
|
|
|
|
|
784 |
|
· Energy |
|
|
|
8 893 |
|
9 503 |
|
· Base Chemicals |
|
|
|
5 503 |
|
33 716 |
|
· Performance Chemicals |
|
|
|
1 466 |
|
27 914 |
|
· Group Functions |
|
|
|
121 477 |
|
36 858 |
|
Total operations |
|
|
|
137 339 |
|
109 454 |
|
(1) The LCCP term loan was repaid with the proceeds from the US dollar bonds issued in September 2018 and the subsequent draw down of the term loan and revolving credit facility.
* Loans raised to fund US growth projects.
** 2019 relate mainly to the settlement of the LCCP term loan, discharging the completion guarantee issued in respect of the LCCP and the settlement of the Inzalo Public debt. 2018 mainly relates to the repayment of the Inzalo Groups debt.
16 Long-term debt and finance leases continued
Fair value of long-term debt
The fair value of long-term debt is based on the quoted market price for the same or similar instruments or on the current rates available for debt with the same maturity profile and with similar cash flows. Market related rates ranging between 2,4% and 15,3% were used to discount estimated cash flows based on the underlying currency of the debt.
|
|
2019 |
|
2018 |
|
|
|
Rm |
|
Rm |
|
Total long-term debt (before unamortised loan costs)*** |
|
141 198 |
|
109 984 |
|
*** The difference in the fair value of long-term debt when compared to the carrying value is mainly due to the prevailing market price of the debt instruments.
In terms of Sasol Limiteds memorandum of incorporation, the groups borrowing powers are limited to twice the sum of its share capital and reserves (2019 R440 billion; 2018 R446 billion).
|
|
|
|
|
|
|
|
Interest rate at |
|
2019 |
|
2018 |
|
Terms of repayment |
|
Security |
|
Business |
|
Currency |
|
30 June 2019 |
|
Rm |
|
Rm |
|
Secured debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayable in bi-annual instalments ending December 2021(1) |
|
Secured by assets under construction with a carrying value of 2018 R140 912 million and other assets with a carrying value of 2018 R24 368 million |
|
Base and Performance Chemicals (US Operations) |
|
US dollar |
|
|
|
|
|
54 953 |
|
Repayable in quarterly instalments ending August 2024 |
|
Secured by property, plant and equipment with a carrying value of R4 183 million (2018 R4 551 million). |
|
Base Chemicals |
|
US dollar |
|
Libor + 2,5% |
|
2 735 |
|
2 765 |
|
Repayable in bi-annual instalments ending June 2022 |
|
Secured by property, plant and equipment with a carrying value of R4 941 million (2018 R5 415 million) |
|
Energy (Rompco) |
|
Rand |
|
Jibar + 1,75% |
|
2 590 |
|
3 473 |
|
Repayable in bi-annual instalments ending February 2030 |
|
Secured by shares, property, plant and equipment with a carrying value of R1 480 million (2018 R1 443 million) |
|
Energy (CTRG) |
|
US dollar |
|
Libor + 5,5% |
|
1 093 |
|
1 183 |
|
|
|
|
|
Various |
|
Various |
|
Various |
|
184 |
|
227 |
|
|
|
|
|
|
|
|
|
|
|
6 602 |
|
62 601 |
|
Preference shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
A preference shares repayable in semi-annual instalments between June 2008 and September 2018(2) |
|
Secured by Sasol preferred ordinary shares held by the company |
|
Group Functions (Inzalo) |
|
Rand |
|
|
|
|
|
828 |
|
B preference shares repayable between June 2008 and September 2018(2) |
|
Secured by Sasol preferred ordinary shares held by the company |
|
Group Functions (Inzalo) |
|
Rand |
|
|
|
|
|
789 |
|
C preference shares repayable September 2018(2) |
|
Secured by guarantee from Sasol Limited |
|
Group Functions (Inzalo) |
|
Rand |
|
|
|
|
|
5 822 |
|
A preference shares repayable between March 2013 and September 2018 |
|
Secured by preference shares held in Sasol Mining (Pty) Ltd |
|
Mining (Ixia) |
|
Rand |
|
|
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
7 493 |
|
(1) The US$4 billion secured term loan was settled during the year with the proceeds from the US$2,25 billion bond issued in September 2018 together with a US$1,65 billion term loan and a RCF of US$150 million incurred in June 2019.
(2) The A, B and C preference share debt relating to the Sasol Inzalo Public share transaction was settled on 10 September 2018.
16 Long-term debt and finance leases continued
|
|
|
|
|
|
|
|
Interest rate at |
|
2019 |
|
2018 |
|
Terms of repayment |
|
Security |
|
Business |
|
Currency |
|
30 June 2019 |
|
Rm |
|
Rm |
|
Finance leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayable in monthly instalments over 1 to 37 years ending December 2056 |
|
Secured by plant and equipment with a carrying value R7 369 million (2018 R7 541 million) |
|
Energy, Base and Performance Chemicals |
|
Various |
|
Fixed 2,36% to 16,58% and variable 8% to 9,5% |
|
7 673 |
|
7 521 |
|
Other finance leases |
|
Underlying assets |
|
Various |
|
Various |
|
Various |
|
97 |
|
103 |
|
|
|
|
|
|
|
|
|
|
|
7 770 |
|
7 624 |
|
|
|
|
|
|
|
|
|
|
|
14 372 |
|
77 718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate at |
|
2019 |
|
2018 |
|
Terms of repayment |
|
|
|
Business |
|
Currency |
|
30 June 2019 |
|
Rm |
|
Rm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
Various repayment terms ending April 2031 |
|
Various |
|
Various |
|
Various |
|
1 779 |
|
1 567 |
|
||
Repayable in July 2018(1) |
|
Exploration and Production International |
|
Canadian dollar |
|
|
|
|
|
784 |
|
||
Various repayment terms |
|
Energy |
|
Rand |
|
Fixed 8,0% |
|
626 |
|
523 |
|
||
Various repayment terms from November 2022 to November 2023(2)(3) |
|
Group Functions (Sasol Financing International) |
|
US dollar |
|
Fixed 4,5% and variable Libor + 1% |
|
63 548 |
|
29 014 |
|
||
Various repayment terms from June 2024 to September 2028(4)(5) |
|
Group Functions (Sasol Financing USA) |
|
US dollar |
|
Fixed 5,8% to 6,5% and variable Libor + 1% to 1,4% |
|
57 602 |
|
|
|
||
Repayable in bi-annual instalments ending December 2018 |
|
Mining |
|
Rand |
|
|
|
|
|
625 |
|
||
Total unsecured debt |
|
|
|
|
|
|
|
123 555 |
|
32 513 |
|
||
Total long-term debt |
|
|
|
|
|
|
|
137 927 |
|
110 231 |
|
||
Unamortised loan costs (amortised over period of debt using the effective interest rate method) |
|
|
|
|
|
|
|
(588 |
) |
(777 |
) |
||
|
|
|
|
|
|
|
|
|
|
137 339 |
|
109 454 |
|
Short-term portion of long-term debt |
|
|
|
(2 544 |
) |
(12 763 |
) |
||||||
|
|
|
|
|
|
|
|
|
|
134 795 |
|
96 691 |
|
(1) The carry of CAD75 million (R780 million) was repaid on 3 July 2018.
(2) Included in this amount is the US$1 billion (R14 billion) bond, with a fixed interest rate of 4,5% which is listed on the New York Stock Exchange and is recognised in Sasol Financing International Limited, a 100% owned subsidiary of the group. Sasol Limited has fully and unconditionally guaranteed the bond. There are no restrictions on the ability of Sasol Limited to obtain funds from the finance subsidiary by dividend or loan.
(3) During the year Sasol Financing International Limited, drew down on its revolving credit facility US$2,6 billion to fund mainly the LCCP.
(4) In September 2018 Sasol Financing USA LLC issued bonds to the value of US$1,50 billion and US$0,75 billion respectively and in June 2019 incurred a term loan of US$1,65 billion and a revolving credit facility of US$150 million. The proceeds were utilised to fully repay the US$4 billion secured term loan.
(5) Included in this amount is the US$2,25 billion (R31,7 billion) bonds, with fixed interest rates of 5,88% and 6,5% which are listed on the New York Stock Exchange and is recognised in Sasol Financing USA LLC, a 100% owned subsidiary of the group. Sasol Limited has fully and unconditionally guaranteed the bond. There are no restrictions on the ability of Sasol Limited to obtain funds from the finance subsidiary by dividend or loan.
|
|
Total
|
|
Cash utilised |
|
Remaining |
|
Rand |
|
at 30 June 2019 |
|
US$m |
|
US$m |
|
US$m |
|
equivalent |
|
Lake Charles Chemicals Project funding profile |
|
|
|
|
|
|
|
|
|
Term loan |
|
1 650 |
|
1 650 |
|
|
|
|
|
Bonds |
|
2 250 |
|
2 250 |
|
|
|
|
|
Available cash, cash flow from operations and general borrowings |
|
9 000 |
|
7 533 |
|
1 467 |
|
20 655 |
|
Total funding requirement |
|
12 900 |
* |
11 433 |
|
1 467 |
|
20 655 |
|
* Includes the US$300 million contingency
16 Long-term debt and finance leases continued
|
|
|
|
|
|
Contract
|
|
Total
|
|
Utilised
|
|
Available
|
|
30 June 2019 |
|
Expiry date |
|
Currency |
|
million |
|
Rm |
|
Rm |
|
Rm |
|
Banking facilities and debt arrangements |
|
|
|
|
|
|
|
|
|
|
|
||
Group treasury facilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper (uncommitted)(1) |
|
None |
|
Rand |
|
8 000 |
|
8 000 |
|
|
|
8 000 |
|
Commercial banking facilities |
|
None |
|
Rand |
|
10 300 |
|
10 300 |
|
953 |
|
9 347 |
|
Revolving credit facility |
|
November 2023 |
|
US dollar |
|
3 900 |
|
54 915 |
|
49 283 |
|
5 632 |
|
Revolving credit facility(3) |
|
June 2024 |
|
US dollar |
|
150 |
|
2 112 |
|
2 112 |
|
|
|
Debt arrangements |
|
|
|
|
|
|
|
|
|
|
|
|
|
US Dollar Bond |
|
November 2022 |
|
US dollar |
|
1 000 |
|
14 081 |
|
14 081 |
|
|
|
US Dollar Bond(2) |
|
March 2024 |
|
US dollar |
|
1 500 |
|
21 121 |
|
21 121 |
|
|
|
US Dollar Bond(2) |
|
September 2028 |
|
US dollar |
|
750 |
|
10 561 |
|
10 561 |
|
|
|
US Dollar term loan(3) |
|
June 2024 |
|
US dollar |
|
1 650 |
|
23 233 |
|
23 233 |
|
|
|
Other Sasol businesses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Specific project asset finance |
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Republic of Mozambique Pipeline Investments Company (Rompco) |
|
June 2022 |
|
Rand |
|
2 511 |
|
2 511 |
|
2 511 |
|
|
|
Energy Republic of Mozambique Pipeline Investments Company (Rompco) |
|
December 2019 |
|
Rand |
|
71 |
|
71 |
|
71 |
|
|
|
Energy Clean Fuels II (Natref) |
|
Various |
|
Rand |
|
1 948 |
|
1 948 |
|
1 948 |
|
|
|
Debt arrangements |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other debt arrangements |
|
|
|
Various |
|
|
|
|
|
11 149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
137 023 |
|
22 979 |
|
Available cash |
|
|
|
|
|
|
|
|
|
|
|
13 339 |
|
Total funds available for use |
|
|
|
|
|
|
|
|
|
|
|
36 318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total utilised facilities |
|
|
|
|
|
|
|
|
|
|
|
137 023 |
|
Accrued interest |
|
|
|
|
|
|
|
|
|
|
|
1 025 |
|
Unamortised loan cost |
|
|
|
|
|
|
|
|
|
|
|
588 |
|
Total debt including accrued interest and unamortised loan cost |
|
|
|
|
|
|
|
|
|
|
|
138 636 |
|
Comprising |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
134 795 |
|
Short-term debt |
|
|
|
|
|
|
|
|
|
|
|
3 783 |
|
Short-term debt |
|
|
|
|
|
|
|
|
|
|
|
1 239 |
|
Short-term portion of long-term debt |
|
|
|
|
|
|
|
|
|
|
|
2 544 |
|
Bank overdraft |
|
|
|
|
|
|
|
|
|
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
138 636 |
|
(1) In August 2019, Sasol issued its inaugural paper to the value of R2 176 million in the local debt market under the current Domestic Medium Term Note (DMTN) programme, at 130 basis points above 3 month Jibar. The net proceeds from the notes issue will be used for general corporate purposes and to refinance existing facilities.
(2) In September 2018 Sasol Financing USA LLC issued bonds to the value of US$1,50 billion and US$0,75 billion respectively. The net proceeds from the bonds of US$2,24 billion were used to partially repay the US$4,0 billion secured term loan.
(3) In June 2019 Sasol Financing USA LLC obtained a term loan of US$1,65 billion and a revolving credit facility of US$150 million, the proceeds of which were utilised to fully repay the remainder of the US$4 billion secured term loan.
Accounting policies:
Debt, which constitutes a financial liability, includes short-term and long-term debt. Debt is initially recognised at fair value, net of transaction costs incurred and is subsequently stated at amortised cost. Debt is classified as short-term unless the borrowing entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Debt is derecognised when the obligation in the contract is discharged, cancelled or has expired. Premiums or discounts arising from the difference between the fair value of debt raised and the amount repayable at maturity date are charged to the income statement as finance expenses based on the effective interest rate method. A debt modification gain or loss is recognised immediately when a debt measured at amortised cost has been modified.
CAPITAL ALLOCATION AND UTILISATION
Effective capital management fuelling growth
Page
44 Investing activities
· Property, plant and equipment
· Assets under construction
· Long-term receivables and prepaid expenses
· Equity accounted investments
· Interest in joint operations
· Interest in significant operating subsidiaries
59 Working capital
· Inventories
· Trade and other receivables
· Trade and other payables
· Decrease/(increase) in working capital
62 Cash management
· Cash and cash equivalents
· Cash generated by operating activities
· Cash flow from operations
· Dividends paid
Investing Activities
17 Property, plant and equipment
|
|
Land |
|
Building
|
|
Plant,
|
|
Mineral
|
|
Total |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Carrying amount at 30 June 2018 |
|
2 744 |
|
8 537 |
|
127 336 |
|
28 840 |
|
167 457 |
|
Additions |
|
6 |
|
395 |
|
959 |
|
1 360 |
|
2 720 |
|
to sustain existing operations |
|
6 |
|
76 |
|
959 |
|
1 360 |
|
2 401 |
|
to expand operations |
|
|
|
319 |
|
|
|
|
|
319 |
|
Net reclassification (to)/from other assets |
|
(6 |
) |
19 |
|
(97 |
) |
(306 |
) |
(390 |
) |
Reduction in rehabilitation provisions capitalised (note 31) |
|
|
|
|
|
(1 |
) |
|
|
(1 |
) |
Projects capitalised |
|
1 452 |
|
7 281 |
|
83 768 |
|
3 583 |
|
96 084 |
|
Reclassification to held for sale |
|
(8 |
) |
(57 |
) |
(438 |
) |
|
|
(503 |
) |
Translation of foreign operations |
|
36 |
|
4 |
|
(182 |
) |
78 |
|
(64 |
) |
Disposals and scrapping |
|
(22 |
) |
(90 |
) |
(547 |
) |
(49 |
) |
(708 |
) |
Current year depreciation charge |
|
|
|
(643 |
) |
(13 607 |
) |
(3 285 |
) |
(17 535 |
) |
Net impairment of property, plant and equipment |
|
|
|
(12 |
) |
(11 956 |
) |
(1 543 |
) |
(13 511 |
) |
Carrying amount at 30 June 2019 |
|
4 202 |
|
15 434 |
|
185 235 |
|
28 678 |
|
233 549 |
|
|
|
Land |
|
Building
|
|
Plant,
|
|
Mineral
|
|
Total |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Carrying amount at 30 June 2017 |
|
1 357 |
|
7 851 |
|
117 699 |
|
31 866 |
|
158 773 |
|
Additions |
|
5 |
|
367 |
|
6 327 |
|
293 |
|
6 992 |
|
to sustain existing operations |
|
5 |
|
29 |
|
4 279 |
|
293 |
|
4 606 |
|
to expand operations |
|
|
|
338 |
|
2 048 |
|
|
|
2 386 |
|
Net reclassification from/(to) other assets |
|
3 |
|
(171 |
) |
169 |
|
(1 |
) |
|
|
Reduction in rehabilitation provisions capitalised (note 31) |
|
|
|
(2 |
) |
(85 |
) |
(874 |
) |
(961 |
) |
Disposal of business |
|
|
|
|
|
(24 |
) |
|
|
(24 |
) |
Projects capitalised |
|
1 268 |
|
928 |
|
19 990 |
|
3 130 |
|
25 316 |
|
Reclassification (to)/from held for sale |
|
15 |
|
(6 |
) |
(50 |
) |
|
|
(41 |
) |
Translation of foreign operations |
|
113 |
|
151 |
|
1 512 |
|
(137 |
) |
1 639 |
|
Disposals and scrapping |
|
(17 |
) |
(9 |
) |
(428 |
) |
(113 |
) |
(567 |
) |
Current year depreciation charge |
|
|
|
(572 |
) |
(12 445 |
) |
(3 030 |
) |
(16 047 |
) |
Net impairment of property, plant and equipment |
|
|
|
|
|
(5 329 |
) |
(2 294 |
) |
(7 623 |
) |
Carrying amount at 30 June 2018 |
|
2 744 |
|
8 537 |
|
127 336 |
|
28 840 |
|
167 457 |
|
17 Property, plant and equipment continued
|
|
Land |
|
Building
|
|
Plant,
|
|
Mineral
|
|
Total |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
4 403 |
|
23 034 |
|
316 548 |
|
74 769 |
|
418 754 |
|
Accumulated depreciation and impairment |
|
(201 |
) |
(7 600 |
) |
(131 313 |
) |
(46 091 |
) |
(185 205 |
) |
|
|
4 202 |
|
15 434 |
|
185 235 |
|
28 678 |
|
233 549 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
3 036 |
|
15 652 |
|
239 262 |
|
70 386 |
|
328 336 |
|
Accumulated depreciation and impairment |
|
(292 |
) |
(7 115 |
) |
(111 926 |
) |
(41 546 |
) |
(160 879 |
) |
|
|
2 744 |
|
8 537 |
|
127 336 |
|
28 840 |
|
167 457 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
1 630 |
|
14 231 |
|
215 017 |
|
67 880 |
|
298 758 |
|
Accumulated depreciation and impairment |
|
(273 |
) |
(6 380 |
) |
(97 318 |
) |
(36 014 |
) |
(139 985 |
) |
|
|
1 357 |
|
7 851 |
|
117 699 |
|
31 866 |
|
158 773 |
|
|
|
2019 |
|
2018 |
|
|
|
Rm |
|
Rm |
|
Business segmentation |
|
|
|
|
|
· Mining |
|
23 540 |
|
22 584 |
|
· Exploration and Production International |
|
6 076 |
|
7 646 |
|
· Energy |
|
48 924 |
|
47 743 |
|
· Base Chemicals |
|
77 339 |
|
46 874 |
|
· Performance Chemicals |
|
74 313 |
|
39 274 |
|
· Group Functions |
|
3 357 |
|
3 336 |
|
Total operations |
|
233 549 |
|
167 457 |
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Additions to property, plant and equipment (cash flow) |
|
|
|
|
|
|
|
Current year additions |
|
2 720 |
|
6 992 |
|
1 112 |
|
Adjustments for non-cash items |
|
(1 491 |
) |
(6 278 |
) |
(722 |
) |
movement in environmental provisions capitalised |
|
(1 387 |
) |
(178 |
) |
(324 |
) |
movement in long-term debt* |
|
(104 |
) |
(6 100 |
) |
|
|
other non-cash movements |
|
|
|
|
|
(398 |
) |
|
|
|
|
|
|
|
|
Per the statement of cash flows |
|
1 229 |
|
714 |
|
390 |
|
* 2018, additions include the Air Separation Unit at SSO of R3,4 billion and the Lake Charles Chemical Project rail yard and wash bay leases of R1,8 billion that commenced during the year.
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Leased assets |
|
|
|
|
|
Carrying value of capitalised leased assets (included in plant, equipment and vehicles) |
|
7 423 |
|
7 547 |
|
cost |
|
9 316 |
|
9 116 |
|
accumulated depreciation |
|
(1 893 |
) |
(1 569 |
) |
17 Property, plant and equipment continued
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Capital commitments (excluding equity accounted investments) |
|
|
|
|
|
Capital commitments, excluding capitalised interest, include all projects for which specific board approval has been obtained. Projects still under investigation for which specific board approvals have not yet been obtained are excluded from the following: |
|
|
|
|
|
Authorised and contracted for |
|
212 848 |
|
179 172 |
|
Authorised but not yet contracted for |
|
43 097 |
|
47 338 |
|
Less expenditure to the end of year |
|
(195 850 |
) |
(156 583 |
) |
|
|
60 095 |
|
69 927 |
* |
|
|
|
|
|
|
to sustain existing operations |
|
29 654 |
|
26 925 |
|
to expand operations |
|
30 441 |
|
43 002 |
|
Estimated expenditure |
|
|
|
|
|
Within one year |
|
32 194 |
|
44 801 |
|
One to five years |
|
27 901 |
|
25 126 |
|
|
|
60 095 |
|
69 927 |
* |
Business segmentation |
|
|
|
|
|
· Mining |
|
2 372 |
|
2 640 |
|
· Exploration and Production International |
|
19 795 |
|
18 811 |
|
· Energy |
|
10 390 |
|
10 320 |
|
· Base Chemicals |
|
16 504 |
|
21 125 |
|
· Performance Chemicals |
|
10 434 |
|
16 432 |
|
· Group Functions |
|
600 |
|
599 |
|
Total operations |
|
60 095 |
|
69 927 |
* |
Significant capital commitments at 30 June comprise of:
|
|
|
|
|
|
2019 |
|
2018 |
|
Project |
|
Project location |
|
Business segment |
|
Rm |
|
Rm |
|
Lake Charles Chemicals Project* |
|
United States |
|
Base and Performance Chemicals |
|
11 856 |
|
22 084 |
|
Mozambique exploration and development |
|
Mozambique |
|
Exploration and Production International |
|
17 375 |
|
17 108 |
|
Sixth fine ash dam |
|
Secunda |
|
Energy |
|
2 302 |
|
3 720 |
|
Shutdown and major statutory maintenance |
|
Various |
|
Energy, Base and Performance Chemicals |
|
5 949 |
|
6 172 |
|
Renewal projects |
|
Secunda and Sasolburg |
|
Energy, Base and Performance Chemicals |
|
4 578 |
|
5 003 |
|
Mulalo project: 132 kilo volt electrical infrastructure |
|
Secunda |
|
Energy, Base and Performance Chemicals |
|
1 329 |
|
|
|
Steam Station 2 NOx Abatement |
|
Sasolburg |
|
Base and Performance Chemicals |
|
1 168 |
|
50 |
|
Steam Station 1 Air Quality Compliance |
|
Sasolburg |
|
Base and Performance Chemicals |
|
577 |
|
|
|
Mozambique drilling campaign and infield compression |
|
Mozambique |
|
Exploration and Production International |
|
915 |
|
|
|
Clean fuels II: To meet legislated fuel specifications |
|
Secunda |
|
Energy |
|
418 |
|
|
|
China Ethoxylation plant |
|
China |
|
Performance Chemicals |
|
135 |
|
577 |
|
Air Liquide air separation unit |
|
Secunda |
|
Energy, Base and Performance Chemicals |
|
|
|
470 |
|
Refurbishment of equipment |
|
Secunda |
|
Mining |
|
409 |
|
445 |
|
Etame field development |
|
Gabon |
|
Exploration and Production International |
|
380 |
|
|
|
Mine geographical expansions |
|
Secunda |
|
Mining |
|
406 |
|
426 |
|
Natref air quality compliance projects |
|
Sasolburg |
|
Energy |
|
353 |
|
17 |
|
Impumelelo Colliery to maintain Brandspruit Colliery operation |
|
Secunda |
|
Mining |
|
220 |
|
357 |
|
Coal tar filtration east and west project |
|
Secunda |
|
Energy, Base and Performance Chemicals |
|
356 |
|
779 |
|
Other capital commitments |
|
Various |
|
Various |
|
11 369 |
|
12 719 |
|
|
|
|
|
|
|
60 095 |
|
69 927 |
|
* The LCCP capital commitment excludes the remaining contingency of US$216 million. During the year a misstatement was identified in the calculation of the LCCP capital cost estimate that was included in the capital commitment disclosure as at 30 June 2018. The misstatement related to the inaccurate estimation of the cost still to be incurred on the project. Accordingly, the capital commitments disclosure as at 30 June 2018 that were originally presented as R63 276 million has been revised by R6 651 million (US$484 million) to R69 927 million. Management concluded that the revision is not material to the financial statements.
17 Property, plant and equipment continued
Accounting policies:
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Land is not depreciated.
When plant and equipment comprises major components with different useful lives, these components are accounted for as separate items.
Depreciation of mineral assets on producing oil and gas properties is based on the units-of-production method calculated using estimated proved developed reserves.
Life-of-mine coal assets are depreciated using the units-of-production method and is based on proved and probable reserves assigned to that specific mine (accessible reserves) or complex which benefits from the utilisation of those assets. Other coal mining assets are depreciated on the straight-line method over their estimated useful lives.
Depreciation of property acquisition costs, capitalised as part of mineral assets in property, plant and equipment, is based on the units-of-production method calculated using estimated proved reserves.
Property, plant and equipment, other than mineral assets, is depreciated to its estimated residual value on a straight-line basis over its expected useful life.
Areas of judgement:
The depreciation methods, estimated remaining useful lives and residual values are reviewed at least annually. The estimation of the useful lives of property, plant and equipment is based on historic performance as well as expectations about future use and therefore requires a significant degree of judgement to be applied by management.
The following depreciation rates apply in the group:
Buildings and improvements |
|
1 17%, units of production over life of related reserve base |
|
Retail convenience centres |
|
3 5 |
% |
Plant |
|
2 50 |
% |
Equipment |
|
3 91 |
% |
Vehicles |
|
5 33 |
% |
Mineral assets |
|
Units of production over life of related reserve base |
|
Life-of-mine coal assets |
|
Units of production over life of related reserve base |
|
18 Assets under construction
|
|
Property
|
|
Other
|
|
Exploration
|
|
Total |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Balance as at 30 June 2018 |
|
163 783 |
|
1 125 |
|
453 |
|
165 361 |
|
Additions |
|
52 786 |
|
289 |
|
67 |
|
53 142 |
|
to sustain existing operations |
|
21 739 |
|
245 |
|
|
|
21 984 |
|
to expand operations |
|
31 047 |
|
44 |
|
67 |
|
31 158 |
|
Net reclassification from/(to) other assets |
|
(93 |
) |
|
|
323 |
|
230 |
|
Finance costs capitalised |
|
6 942 |
|
|
|
|
|
6 942 |
|
Net impairment of assets under construction |
|
(3 973 |
) |
|
|
(34 |
) |
(4 007 |
) |
Reclassification to disposal groups held for sale |
|
(153 |
) |
|
|
|
|
(153 |
) |
Projects capitalised |
|
(96 084 |
) |
(816 |
) |
|
|
(96 900 |
) |
Translation of foreign operations |
|
3 971 |
|
29 |
|
1 |
|
4 001 |
|
Disposals and scrapping* |
|
(852 |
) |
|
|
|
|
(852 |
) |
Balance at 30 June 2019 |
|
126 327 |
|
627 |
|
810 |
|
127 764 |
|
* Determining as to whether, and how much, cost incurred on a project is abnormal and needs to be scrapped, involves judgement. The factors considered by management include the scale and complexity of the project, the technology being applied and input from experts.
|
|
Property
|
|
Other
|
|
Exploration
|
|
Total |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Balance as at 30 June 2017 |
|
129 124 |
|
1 245 |
|
365 |
|
130 734 |
|
Additions |
|
51 871 |
|
321 |
|
614 |
|
52 806 |
|
to sustain existing operations |
|
18 889 |
|
238 |
|
|
|
19 127 |
|
to expand operations |
|
32 982 |
|
83 |
|
614 |
|
33 679 |
|
Net reclassification from/(to) other assets |
|
42 |
|
(33 |
) |
|
|
9 |
|
Finance costs capitalised |
|
3 568 |
|
|
|
|
|
3 568 |
|
Net impairment of assets under construction |
|
(1 478 |
) |
|
|
(312 |
) |
(1 790 |
) |
Reduction in rehabilitation provision capitalised (note 31) |
|
(341 |
) |
|
|
(131 |
) |
(472 |
) |
Projects capitalised |
|
(25 315 |
) |
(454 |
) |
|
|
(25 769 |
) |
Translation of foreign operations |
|
7 464 |
|
46 |
|
(35 |
) |
7 475 |
|
Disposals and scrapping |
|
(1 152 |
) |
|
|
(48 |
) |
(1 200 |
) |
Balance at 30 June 2018 |
|
163 783 |
|
1 125 |
|
453 |
|
165 361 |
|
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Business segmentation |
|
|
|
|
|
· Mining |
|
2 268 |
|
2 095 |
|
· Exploration and Production International |
|
7 426 |
|
6 457 |
|
· Energy |
|
7 698 |
|
5 993 |
|
· Base Chemicals |
|
60 927 |
|
75 648 |
|
· Performance Chemicals |
|
48 764 |
|
74 595 |
|
· Group Functions |
|
681 |
|
573 |
|
Total operations |
|
127 764 |
|
165 361 |
|
18 Assets under construction continued
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended at 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Additions to assets under construction (cash flow) |
|
|
|
|
|
|
|
Current year additions |
|
53 142 |
|
52 806 |
|
60 312 |
|
Adjustments for non-cash items |
|
1 410 |
|
(171 |
) |
(420 |
) |
cash flow hedge accounting |
|
|
|
1 |
|
(2 |
) |
movement in environmental provisions capitalised |
|
(537 |
) |
(172 |
) |
(418 |
) |
movement in long-term debt |
|
(13 |
) |
|
|
|
|
LCCP investment incentives |
|
1 960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per the statement of cash flows* |
|
54 552 |
|
52 635 |
|
59 892 |
|
* Excludes finance costs capitalised to assets under construction.
18 Assets under construction continued
|
|
|
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
Rm |
|
Rm |
|
Capital expenditure |
|
|
|
|
|
|
|
|
|
Projects to expand operations comprise of: |
|
Project location |
|
Business segment |
|
|
|
|
|
Lake Charles Chemicals Project |
|
United States |
|
Base and Performance Chemicals |
|
30 289 |
|
30 100 |
|
China Ethoxylation plant |
|
China |
|
Performance Chemicals |
|
489 |
|
398 |
|
Canadian shale gas asset |
|
Canada |
|
Exploration and Production International |
|
141 |
|
101 |
|
High-density polyethylene plant |
|
United States |
|
Base Chemicals |
|
|
|
265 |
|
Mozambique exploration and development |
|
Mozambique |
|
Exploration and Production International |
|
221 |
|
1 002 |
|
Other projects to expand operations |
|
Various |
|
Various |
|
1 445 |
|
1 644 |
|
Capital expenditure cash flow* |
|
|
|
|
|
32 585 |
|
33 510 |
|
* Excludes finance costs capitalised to assets under construction.
Project-related performance guarantees
With the settlement of the LCCP term loan the completion guarantees and sureties issued in respect of the Lake Charles Chemicals Project have been discharged.
Accounting policies:
Assets under construction
Assets under construction are non-current assets, which includes land and expenditure capitalised for work in progress in respect of activities to develop, expand or enhance items of property, plant and equipment, intangible assets and exploration assets. The cost of self-constructed assets includes expenditure on materials, direct labour and an allocated proportion of project overheads. Cost also includes the estimated costs of dismantling and removing the assets and site rehabilitation costs to the extent that they relate to the construction of the asset as well as gains or losses on qualifying cash flow hedges attributable to that asset. When regular major inspections are a condition of continuing to operate an item of property, plant and equipment, and plant shutdown costs will be incurred, an estimate of these shutdown costs are included in the carrying value of the asset at initial recognition. Land acquired, as well as costs capitalised for work in progress in respect of activities to develop, expand or enhance items of property, plant and equipment are classified as part of assets under construction.
Finance expenses in respect of specific and general borrowings are capitalised against qualifying assets as part of assets under construction. Where funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset, the amount of finance expenses eligible for capitalisation on that asset is the actual finance expenses incurred on the borrowing during the period less any investment income on the temporary investment of those borrowings.
Where funds are made available from general borrowings and used for the purpose of acquiring or constructing qualifying assets, the amount of finance expenses eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on these assets. The capitalisation rate of 5,5% is calculated as the weighted average of the interest rates applicable to the borrowings of the group that are outstanding during the period, including borrowings made specifically for the purpose of obtaining qualifying assets once the specific qualifying asset is ready for its intended use. The amount of finance expenses capitalised will not exceed the amount of borrowing costs incurred.
18 Assets under construction continued
Exploration assets
Exploration assets comprise capitalised expenditure relating to the exploration for and evaluation of mineral resources (coal, oil and gas). Mineral assets comprise capitalised expenditure relating to producing coal, oil and gas properties, including development costs and previously capitalised exploration assets.
Oil and gas
The successful efforts method is used to account for natural oil and gas exploration, evaluation and development activities.
Property and licence acquisition costs as well as development cost, including expenditure incurred to drill and equip development wells on proved properties, are capitalised as part of assets under construction and transferred to mineral assets in property, plant and equipment when the assets begin producing.
On completion of an exploratory well or exploratory-type stratigraphic test well, the entity will be able to determine if there are oil or gas resources. The classification of resources as proved reserves depends on whether development of the property is economically feasible and recoverable in the future, under existing economic and operating conditions, and if any major capital expenditure to develop the property as a result of sufficient quantities of additional proved reserves being identified is justifiable, approved and recoverable.
The cost of exploratory wells, through which potential proved reserves may be or have been discovered and the associated exploration costs are capitalised as exploration and evaluation assets in assets under construction. These costs remain capitalised pending the evaluation of results and the determination of whether there are proved reserves.
The following conditions must be met for these exploration costs to remain capitalised:
· Sufficient progress is being made in assessing the oil and gas resources, including assessing the economic and operating viability with regards to developing the property.
· It has been determined that sufficient oil and gas resources or reserves exist which are economically viable based on a range of technical and commercial considerations to justify the capital expenditure required for the completion of the well as a producing well, either individually or in conjunction with other wells.
Progress in this regard is reassessed at each reporting date and is subject to technical, commercial and management review to ensure sufficient justification for the continued capitalisation of such qualifying exploration and evaluation expenditure as an exploration and evaluation asset as part of assets under construction. If both of the above conditions are not met or if information is obtained that raise substantial doubt about the economic or operating viability, the costs are charged to the income statement.
Exploratory wells and exploratory-type stratigraphic test wells can remain suspended on the statement of financial position for several years while additional activity including studies, appraisal, drilling and/or seismic work on the potential oil and gas field is performed or while the optimum development plans and timing are established in the absence of impairment indicators.
Coal mining
Coal mining exploration and evaluation expenditure is charged to the income statement until completion of a final feasibility study supporting proved and probable coal reserves. Expenditure incurred subsequent to proved and probable coal reserves being identified is capitalised as exploration assets in assets under construction.
Expenditure on producing mines or development properties is capitalised when excavation or drilling is incurred to extend reserves or further delineate existing proved and probable coal reserves. All development expenditure incurred after the commencement of production is capitalised to the extent that it gives rise to probable future economic benefits.
A unit is considered to be produced once it has been removed from underground and taken to the surface, passed the bunker and has been transported by conveyor over the scale of the shaft head. The calculation is based on proved and probable reserves assigned to that specific mine (accessible reserves) or complex which benefits from the utilisation of those assets. Inaccessible reserves are excluded from the calculation.
19 Long-term receivables and prepaid expenses
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Total long-term receivables |
|
6 007 |
|
3 921 |
|
Impairment of long-term receivables* |
|
(211 |
) |
(38 |
) |
Short-term portion |
|
(214 |
) |
(97 |
) |
|
|
5 582 |
|
3 786 |
|
Long-term prepaid expenses |
|
735 |
|
860 |
|
|
|
6 317 |
|
4 646 |
|
Comprising: |
|
|
|
|
|
Long-term receivables (interest-bearing) joint operations |
|
1 252 |
|
1 204 |
|
Long-term loans |
|
2 370 |
|
2 582 |
|
LCCP investment incentives |
|
1 960 |
|
|
|
|
|
5 582 |
|
3 786 |
|
*Impairment of long-term loans and receivables
In 2019 long-term loans and receivables are considered for impairment under the expected credit loss model. Refer to note 40 for detail on the impairments recognised. In 2018 loans and receivables were considered for impairment under IAS 39.
20 Equity accounted investments
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Amounts recognised in the statement of financial position: |
|
|
|
|
|
Investments in joint ventures and associates |
|
9 866 |
|
10 991 |
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Amounts recognised in the income statement: |
|
|
|
|
|
|
|
Share of profits of equity accounted investments, net of tax |
|
1 074 |
|
1 443 |
|
1 071 |
|
share of profits |
|
1 089 |
|
1 454 |
|
1 085 |
|
remeasurement items |
|
(15 |
) |
(11 |
) |
(14 |
) |
|
|
|
|
|
|
|
|
Amounts recognised in the statement of cash flows: |
|
|
|
|
|
|
|
Dividends received from equity accounted investments |
|
1 506 |
|
1 702 |
|
1 539 |
|
There are no significant restrictions on the ability of the joint ventures or associate to transfer funds to Sasol Limited in the form of cash dividends or repayment of loans or advances.
Impairment testing of equity accounted investments
Based on impairment indicators at each reporting date, impairment tests in respect of investments in joint ventures and associates are performed. The recoverable amount of the investment is compared to the carrying amount, as described in note 9, to calculate the impairment.
20 Equity accounted investments continued
At 30 June, the groups interest in equity accounted investments and the total carrying values were:
|
|
Country of |
|
|
|
Interest |
|
2019 |
|
2018 |
|
Name |
|
incorporation |
|
Nature of activities |
|
% |
|
Rm |
|
Rm |
|
Joint ventures |
|
|
|
|
|
|
|
|
|
|
|
ORYX GTL Limited |
|
Qatar |
|
GTL plant |
|
49 |
|
8 239 |
|
8 179 |
|
Sasol Huntsman GmbH & co KG* |
|
Germany |
|
Manufacturing of chemical products |
|
50 |
|
|
|
893 |
|
Sasol Dyno Nobel (Pty) Ltd |
|
South Africa |
|
Manufacturing and distribution of explosives |
|
50 |
|
273 |
|
271 |
|
Sasol Chevron Holdings Limited |
|
Bermuda |
|
Marketing of Escravos GTL products |
|
50 |
|
274 |
|
311 |
|
Associates |
|
|
|
|
|
|
|
|
|
|
|
Escravos GTL (EGTL)** |
|
Nigeria |
|
GTL plant |
|
10 |
|
753 |
|
1 027 |
|
Other equity accounted investments |
|
|
|
|
|
Various |
|
327 |
|
310 |
|
Carrying value of investments |
|
|
|
|
|
|
|
9 866 |
|
10 991 |
|
* The groups investment in Sasol Huntsman GmbH & co KG has been classified as held for sale. Refer to note 11.
** Although the group holds less than 20% of the voting power of EGTL, the group has significant influence with regards to the management and technical support to the plant.
Summarised financial information for the groups share of equity accounted investments which are not material***
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Operating profit |
|
13 |
|
419 |
|
(Loss)/profit before tax |
|
(2 |
) |
427 |
|
Taxation |
|
(56 |
) |
(152 |
) |
(Loss)/profit and total comprehensive income for the year |
|
(58 |
) |
275 |
|
*** The financial information provided represents the groups share of the results of the equity accounted investments.
|
|
2019 |
|
2018 |
|
Capital commitments relating to equity accounted investments |
|
Rm |
|
Rm |
|
Capital commitments, excluding capitalised interest, include all projects for which specific board approval has been obtained up to the reporting date. Projects still under investigation for which specific board approvals have not yet been obtained are excluded from the following: |
|
|
|
|
|
Authorised and contracted for |
|
715 |
|
536 |
|
Authorised but not yet contracted for |
|
1 100 |
|
623 |
|
Less: expenditure to the end of year |
|
(532 |
) |
(266 |
) |
|
|
1 283 |
|
893 |
|
Areas of judgement:
Joint ventures and associates are assessed for materiality in relation to the group using a number of factors such as investment value, strategic importance and monitoring by those charged with governance.
ORYX GTL is considered to be material as it is closely monitored and reported on to the decision makers and is considered to be a strategically material investment.
20 Equity accounted investments continued
Summarised financial information for the groups material equity accounted investments
In accordance with the groups accounting policy, the results of joint ventures and associates are equity accounted. The information provided below represents the groups material joint venture. The financial information presented includes the full financial position and results of the joint venture and includes intercompany transactions and balances.
|
|
Joint venture |
|
||
|
|
ORYX GTL Limited |
|
||
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Summarised statement of financial position |
|
|
|
|
|
Non-current assets |
|
11 964 |
|
12 202 |
|
Current assets |
|
6 722 |
|
6 640 |
|
|
|
|
|
|
|
Total assets |
|
18 686 |
|
18 842 |
|
Other non-current liabilities |
|
378 |
|
360 |
|
Deferred tax liability |
|
(22 |
) |
9 |
|
Other current liabilities |
|
1 337 |
|
1 036 |
|
Tax payable |
|
100 |
|
436 |
|
Total liabilities |
|
1 793 |
|
1 841 |
|
Net assets |
|
16 893 |
|
17 001 |
|
Summarised income statement |
|
|
|
|
|
Turnover |
|
9 977 |
|
10 159 |
|
Depreciation and amortisation |
|
(1 420 |
) |
(1 190 |
) |
Other operating expenses |
|
(5 039 |
) |
(5 313 |
) |
Operating profit before interest and tax |
|
3 518 |
|
3 656 |
|
Finance income |
|
33 |
|
11 |
|
Finance cost |
|
(3 |
) |
(1 |
) |
Profit before tax |
|
3 548 |
|
3 666 |
|
Taxation |
|
(607 |
) |
(628 |
) |
Profit and total comprehensive income for the year |
|
2 941 |
|
3 038 |
|
The groups share of profits of equity accounted investment |
|
1 131 |
|
1 168 |
|
49% share of profit before tax |
|
1 738 |
|
1 796 |
|
Taxation* |
|
(607 |
) |
(628 |
) |
|
|
|
|
|
|
Reconciliation of summarised financial information |
|
|
|
|
|
Net assets at the beginning of the year |
|
17 001 |
|
15 334 |
|
Profit before tax for the year |
|
3 548 |
|
3 666 |
|
Taxation* |
|
(607 |
) |
(628 |
) |
Foreign exchange differences |
|
490 |
|
839 |
|
Dividends paid |
|
(3 539 |
) |
(2 210 |
) |
Net assets at the end of the year |
|
16 893 |
|
17 001 |
|
Additional Sasol specific liabilities* |
|
(79 |
) |
(309 |
) |
Adjusted net assets at the end of the period |
|
16 814 |
|
16 692 |
|
Carrying value of equity accounted investment |
|
8 239 |
|
8 179 |
|
* With effect from 29 April 2017, as a result of change in tax regulations, tax is levied only on Sasols share of profits at a rate of 35%.
The year-end for ORYX GTL Limited is 31 December, however the group uses the financial information at 30 June.
The carrying value of the investment represents the groups interest in the net assets thereof.
Contingent liabilities
There were no contingent liabilities at 30 June 2019 relating to our joint ventures or associates.
20 Equity accounted investments continued
Accounting policies:
The financial results of associates and joint ventures are included in the groups results according to the equity method from acquisition date until the disposal date. Under the equity method, investments in associates and joint ventures are recognised initially at cost. Subsequent to the acquisition date, the groups share of profits or losses of associates and joint ventures is charged to the income statement as equity accounted earnings and its share of movements in equity reserves is recognised as other comprehensive income or equity as appropriate. A joint venture is a joint arrangement in which the parties have joint control with rights to the net assets of the arrangement. An associate is an entity, other than a subsidiary, joint venture or joint operation, in which the group has significant influence, but no control or joint control, over financial and operating policies. Associates and joint ventures whose financial year-ends are within three months of 30 June are included in the consolidated financial statements using their most recently audited financial results. Adjustments are made to the associates and joint ventures financial results for material transactions and events in the intervening period.
21 Interest in joint operations
At 30 June, the groups interest in material joint operations were:
|
|
|
|
|
|
% of equity owned |
|
||
|
|
|
|
|
|
2019 |
|
2018 |
|
Name |
|
Country of incorporation |
|
Nature of activities |
|
Rm |
|
Rm |
|
Gemini HDPE LLC |
|
United States of America |
|
Manufactures high density polyethylene chemicals |
|
50 |
|
50 |
|
Sasol Canada |
|
Canada |
|
Development of shale gas reserves and production and marketing of shale gas |
|
50 |
|
50 |
|
Natref |
|
South Africa |
|
Refining of crude oil |
|
64 |
|
64 |
|
The information provided is Sasols share of joint operations (excluding unincorporated joint operations) and includes intercompany transactions and balances.
|
|
Gemini |
|
Sasol |
|
|
|
|
|
Total |
|
Total |
|
|
|
HDPE LLC |
|
Canada |
|
Natref |
|
Other* |
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Statement of financial position |
|
|
|
|
|
|
|
|
|
|
|
|
|
External non-current assets |
|
4 462 |
|
1 180 |
|
3 531 |
|
1 685 |
|
10 858 |
|
13 055 |
|
External current assets |
|
73 |
|
288 |
|
292 |
|
998 |
|
1 651 |
|
1 503 |
|
Intercompany current assets |
|
18 |
|
1 |
|
18 |
|
72 |
|
109 |
|
1 146 |
|
Total assets |
|
4 553 |
|
1 469 |
|
3 841 |
|
2 755 |
|
12 618 |
|
15 704 |
|
Shareholders equity |
|
1 869 |
|
209 |
|
240 |
|
570 |
|
2 888 |
|
5 389 |
|
Long-term liabilities |
|
2 480 |
|
1 155 |
|
2 887 |
|
1 479 |
|
8 001 |
|
7 710 |
|
Interest-bearing current liabilities |
|
120 |
|
|
|
167 |
|
302 |
|
589 |
|
1 408 |
|
Non-interest-bearing current liabilities |
|
84 |
|
104 |
|
381 |
|
168 |
|
737 |
|
771 |
|
Intercompany current liabilities |
|
|
|
1 |
|
166 |
|
236 |
|
403 |
|
426 |
|
Total equity and liabilities |
|
4 553 |
|
1 469 |
|
3 841 |
|
2 755 |
|
12 618 |
|
15 704 |
|
Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover |
|
441 |
|
239 |
|
2 061 |
|
1 394 |
|
4 135 |
|
3 660 |
|
Operating (loss)/profit |
|
(117 |
) |
(2 747 |
) |
457 |
|
84 |
|
(2 323 |
) |
(3 089 |
) |
Other expenses |
|
(58 |
) |
(13 |
) |
(213 |
) |
(160 |
) |
(444 |
) |
(438 |
) |
Net (loss)/profit before tax |
|
(175 |
) |
(2 760 |
) |
244 |
|
(76 |
) |
(2 767 |
) |
(3 527 |
) |
Taxation |
|
|
|
|
|
(79 |
) |
17 |
|
(62 |
) |
(49 |
) |
Attributable (loss)/profit |
|
(175 |
) |
(2 760 |
) |
165 |
|
(59 |
) |
(2 829 |
) |
(3 576 |
) |
Statement of cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operations |
|
|
|
31 |
|
887 |
|
419 |
|
1 337 |
|
1 189 |
|
Movement in working capital |
|
(25 |
) |
39 |
|
55 |
|
(180 |
) |
(111 |
) |
397 |
|
Tax paid |
|
|
|
|
|
2 |
|
(26 |
) |
(24 |
) |
(5 |
) |
Other expenses |
|
(143 |
) |
|
|
(209 |
) |
(209 |
) |
(561 |
) |
(485 |
) |
Cash available from operations |
|
(168 |
) |
70 |
|
735 |
|
4 |
|
641 |
|
1 096 |
|
Dividends paid |
|
|
|
|
|
(230 |
) |
|
|
(230 |
) |
(111 |
) |
Cash retained from operations |
|
(168 |
) |
70 |
|
505 |
|
4 |
|
411 |
|
985 |
|
Cash flow from investing activities |
|
(80 |
) |
(124 |
) |
(609 |
) |
(30 |
) |
(843 |
) |
(712 |
) |
Cash flow from financing activities |
|
244 |
|
(804 |
) |
142 |
|
(194 |
) |
(612 |
) |
1 575 |
|
(Increase)/decrease in cash requirements |
|
(4 |
) |
(858 |
) |
38 |
|
(220 |
) |
(1 044 |
) |
1 848 |
|
* Includes Central Térmica de Ressano Garcia (CTRG) and Sasol Wilmar Alcohol Industries (Lianyungang) Co Ltd. The group has classified its investment in Sasol Wilmar Alcohol Industries (Lianyungang) Co Ltd as held for sale at 30 June 2019. Refer to note 11.
At 30 June 2019, the groups share of the total capital commitments of joint operations amounted to R1 080 million (2018 R427 million).
22 Interest in significant operating subsidiaries
Sasol Limited is the ultimate parent of the Sasol group of companies. Our wholly-owned subsidiary, Sasol Investment Company (Pty) Ltd, a company incorporated in the Republic of South Africa, holds primarily our interests in companies incorporated outside of South Africa. The following table presents each of the groups significant subsidiaries (including direct and indirect holdings), the nature of activities, the percentage of shares of each subsidiary owned and the country of incorporation at 30 June.
There are no significant restrictions on the ability of the groups subsidiaries to transfer funds to Sasol Limited in the form of cash dividends or repayment of loans or advances.
(1) The cost of these investments represents the holding companys investment in the subsidiaries, which eliminate on consolidation.
(2) Increase relates to equity funding of the LCCP.
(3) Increase relates to notional interest relating to Khanyisa transaction.
(4) Sasol Khanyisa shareholders indirectly have an 18,4% shareholding in Sasol South Africa Limited. Once the Khanyisa funding is settled, the Sasol Khanyisa ordinary shares will be exchanged for Sasol BEE Ordinary (SOLBE1) shares listed on the empowerment segment of the JSE.
22 Interest in significant operating subsidiaries continued
|
|
Country of |
|
|
|
% of equity owned |
|
||
Name |
|
incorporation |
|
Nature of activities |
|
2019 |
|
2018 |
|
Significant operating subsidiaries |
|
|
|
|
|
|
|
|
|
Indirect |
|
|
|
|
|
|
|
|
|
The Republic of Mozambique Pipeline Investment Company (Pty) Ltd (Rompco)* |
|
South Africa |
|
Owning and operating of the natural gas transmission pipeline between Temane in Mozambique and Secunda in South Africa for the transportation of natural gas produced in Mozambique to markets in Mozambique and South Africa |
|
50 |
|
50 |
|
Sasol Financing International Limited |
|
South Africa |
|
Management of cash resources, investment and procurement of loans (for our foreign operations) |
|
100 |
|
100 |
|
Sasol Germany GmbH |
|
Germany |
|
Production, marketing and distribution of chemical products |
|
100 |
|
100 |
|
Sasol Italy SpA |
|
Italy |
|
Trading and transportation of oil products, petrochemicals and chemical products and derivatives |
|
100 |
|
100 |
|
Sasol Mining (Pty) Ltd |
|
South Africa |
|
Coal mining activities |
|
90 |
|
90 |
|
Sasol Canada Holdings Limited |
|
Canada |
|
Exploration, development, production, marketing and distribution of natural oil and gas and associated products in Canada |
|
100 |
|
100 |
|
Sasol Chemicals (USA) LLC |
|
United States of America |
|
Production, marketing and distribution of chemical products |
|
100 |
|
100 |
|
Sasol Financing USA LLC |
|
United States of America |
|
Management of cash resources, investment and procurement of loans (for our North American operations) |
|
100 |
|
|
|
* Through contractual arrangements Sasol exercises control over the relevant activities of Rompco.
Our other interests in subsidiaries are not considered significant.
Non-controlling interests
The group has a number of subsidiaries with non-controlling interests, however none of them were material to the Statement of Financial position.
Guarantees
Sasol Limited has guaranteed the fulfilment of various subsidiaries obligations in terms of contractual agreements. The group has guaranteed the borrowing facilities and banking arrangements of certain of its subsidiaries.
Areas of judgement:
The disclosure of subsidiaries is based on materiality taking into account the contribution to turnover, assets of the group, and the way the business is managed and reported on.
Control is obtained when Sasol is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through our power over the subsidiary.
The financial results of all entities that have a functional currency different from the presentation currency of their parent entity are translated into the presentation currency. Income and expenditure transactions of foreign operations are translated at the average rate of exchange for the year except for significant individual transactions which are translated at the exchange rate ruling at that date. All assets and liabilities, including fair value adjustments and goodwill arising on acquisition, are translated at the rate of exchange ruling at the reporting date. Differences arising on translation are recognised as other comprehensive income and are included in the foreign currency translation reserve.
Working capital
23 Inventories
|
|
2019 |
|
2018 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
|
Carrying value |
|
|
|
|
|
|
Crude oil and other raw materials |
|
3 938 |
|
4 308 |
|
|
Process material |
|
1 890 |
|
1 873 |
|
|
Maintenance materials |
|
5 940 |
|
5 156 |
|
|
Work in progress |
|
2 578 |
|
2 714 |
|
|
Manufactured products |
|
15 087 |
|
15 070 |
|
|
Consignment inventory |
|
213 |
|
243 |
|
|
|
|
29 646 |
|
29 364 |
|
|
Business segmentation |
|
|
|
|
|
|
· |
Mining |
|
1 425 |
|
1 661 |
|
· |
Exploration and Production International |
|
163 |
|
144 |
|
· |
Energy |
|
7 826 |
|
7 680 |
|
· |
Base Chemicals |
|
7 684 |
|
7 427 |
|
· |
Performance Chemicals |
|
12 522 |
|
12 417 |
|
· |
Group Functions |
|
26 |
|
35 |
|
Total operations |
|
29 646 |
|
29 364 |
|
The impact of higher crude oil feedstock prices and lower sales prices for certain chemical products resulted in a net realisable value write-down of R371 million in 2019 (2018 R234 million).
Inventory of R3 113 million (2018 R1 348 million) is held at net realisable value. No inventories were encumbered at 30 June 2019, (2018 R4 099 million).
Accounting policies:
Inventories are stated at the lower of cost and net realisable value. Cost includes expenditure incurred in acquiring, manufacturing and transporting the inventory to its present location. Manufacturing costs include an allocated portion of production overheads which are directly attributable to the cost of manufacturing such inventory. The allocation is determined based on the greater of normal production capacity and actual production. The costs attributable to any inefficiencies in the production process are charged to the income statement as incurred.
By-products are incidental to the manufacturing processes, are usually produced as a consequence of the main product stream, and are immaterial to the group. Revenue from sale of by-products is offset against the cost of the main products.
24 Trade and other receivables
|
|
2019 |
|
2018* |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Trade receivables |
|
23 237 |
|
23 742 |
|
Other receivables** |
|
2 760 |
|
3 231 |
|
Related party receivables equity accounted investments |
|
67 |
|
102 |
|
Impairment of trade and other receivables |
|
(453 |
) |
(427 |
) |
Trade and other receivables |
|
25 611 |
|
26 648 |
|
Duties recoverable from customers |
|
467 |
|
600 |
|
Prepaid expenses and other |
|
1 425 |
|
829 |
|
Value added tax |
|
1 075 |
|
1 652 |
|
|
|
28 578 |
|
29 729 |
|
* Comparative information is based on IAS 39.
** Other receivables include short-term portion of long-term receivables, receivables related to exploration activities, employee-related receivables and short-term deposits.
24 Trade and other receivables continued
Impairment of trade receivables
Trade receivables are considered for impairment under the expected credit loss model. Trade receivables are impaired when there is no reasonable prospect that the customer will pay. Refer to note 40 for detail on the impairments recognised.
No individual customer represents more than 10% of the groups trade receivables.
Fair value of trade receivables
The carrying value approximates fair value because of the short period to maturity of these instruments.
Collateral
The group holds no collateral over the trade receivables which can be sold or pledged to a third party.
Credit risk exposure in respect of trade receivables under IAS39 is analysed as follows:
|
|
Carrying
|
|
Impairment |
|
|
|
2018 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Age analysis of trade receivables |
|
|
|
|
|
Not past due date |
|
21 611 |
|
3 |
|
Past due 0 30 days |
|
1 477 |
|
5 |
|
Past due 31 150 days |
|
257 |
|
18 |
|
Past due 151 days one year |
|
93 |
|
44 |
|
More than one year*** |
|
304 |
|
129 |
|
|
|
23 742 |
|
199 |
|
*** More than one year relates to long outstanding balances for specific customers who have exceeded their contractual repayment terms.
|
|
2019 |
|
2018 |
|
|
|
|
Rm |
|
Rm |
|
|
Business segmentation |
|
|
|
|
|
|
· |
Mining |
|
276 |
|
428 |
|
· |
Exploration and Production International |
|
497 |
|
736 |
|
· |
Energy |
|
10 357 |
|
11 487 |
|
· |
Base Chemicals |
|
7 603 |
|
7 022 |
|
· |
Performance Chemicals |
|
8 071 |
|
8 585 |
|
· |
Group Functions |
|
1 774 |
|
1 471 |
|
Total operations |
|
28 578 |
|
29 729 |
|
Accounting policies:
IFRS 9 applicable in 2019:
Trade and other receivables are recognised initially at transaction price and subsequently stated at amortised cost using the effective interest rate method, less impairment losses. A simplified expected credit loss model is applied for recognition and measurement of impairments in trade receivables, where expected lifetime credit losses are recognised from initial recognition, with changes in loss allowances recognised in profit and loss. The group did not use a provisional matrix. Trade and other receivables are written off where there is no reasonable expectation of recovering amounts due. The trade receivables do not contain a significant financing component.
IAS 39 applicable in 2018:
Trade and other receivables are recognised initially at fair value and subsequently stated at amortised cost using the effective interest rate method, less impairment losses.
25 Trade and other payables
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Trade payables |
|
15 749 |
|
13 510 |
|
Capital project related payables |
|
9 088 |
|
9 780 |
|
Accrued expenses |
|
3 340 |
|
3 062 |
|
Related party payables |
|
324 |
|
166 |
|
third parties |
|
189 |
|
33 |
|
equity accounted investments |
|
135 |
|
133 |
|
|
|
|
|
|
|
Trade payables |
|
28 501 |
|
26 518 |
|
Other payables* |
|
6 282 |
|
6 188 |
|
Duties payable to revenue authorities |
|
4 450 |
|
4 267 |
|
Value added tax |
|
233 |
|
177 |
|
|
|
39 466 |
|
37 150 |
|
* Other payables includes employee-related payables.
No individual vendor represents more than 10% of the groups trade payables.
Fair value of trade and other payables
The carrying value approximates fair value because of the short period to settlement of these obligations.
Accounting policies:
Trade and other payables are initially recognised at fair value and subsequently stated at amortised cost. Capital project related payables are excluded from working capital, as the nature and risks of these payables are not considered to be aligned to operational trade payables.
26 Decrease/(increase) in working capital
|
|
2019 |
|
2018 |
|
2017 |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Increase in inventories |
|
(829 |
) |
(3 413 |
) |
(3 214 |
) |
Decrease/(increase) in trade receivables |
|
37 |
|
(2 789 |
) |
(346 |
) |
Increase in trade payables |
|
3 202 |
|
2 441 |
|
1 393 |
|
Decrease/(increase) in working capital |
|
2 410 |
|
(3 761 |
) |
(2 167 |
) |
Cash management
27 Cash and cash equivalents
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Cash and cash equivalents |
|
15 877 |
|
17 128 |
|
Bank overdraft |
|
(58 |
) |
(89 |
) |
Per the statement of cash flows |
|
15 819 |
|
17 039 |
|
Cash by currency |
|
|
|
|
|
Rand |
|
4 179 |
|
3 982 |
|
Euro |
|
2 080 |
|
2 855 |
|
US Dollar |
|
7 992 |
|
9 040 |
|
Other currencies |
|
1 568 |
|
1 162 |
|
|
|
15 819 |
|
17 039 |
|
Included in cash and cash equivalents:
Cash held in trust that is restricted for use and held in escrow. Includes R432 million (2018 R408 million) for the rehabilitation of various sites and R288 million (2018 R170 million) in various other trusts in the group.
Cash in respect of joint operations can only be utilised for the business activities of the joint operations. This includes Sasols interests in the power plant in Mozambique R322 million (2018 R542 million), the high-density polyethylene (HDPE) plant in North America of R35 million (2018 R38 million) and R227 million (2018 R389 million) relating to exploration and other ventures.
Other cash restricted for use of R1 176 million (2018 R433 million) includes deposits for future abandonment site obligations and decommissioning of pipelines, as well as cash deposits serving as collateral for bank guarantees.
Fair value of cash and cash equivalents
The carrying value of cash and cash equivalents approximates fair value due to the short-term maturity of these instruments.
Accounting policies:
Cash and cash equivalents comprises cash on hand, cash restricted for use, bank overdraft, demand deposits and other short-term highly liquid investments with a maturity period of three months or less at date of purchase. Cash and cash equivalents are stated at carrying amount which is deemed to be fair value. Bank overdrafts are offset against cash and cash equivalents in the statement of cash flows.
Cash restricted for use comprises cash and cash equivalents which are not available for general use by the group, including amounts held in escrow, trust or other separate bank accounts.
28 Cash generated by operating activities
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Cash flow from operations |
|
29 |
|
48 988 |
|
46 638 |
|
46 236 |
|
Decrease/(increase) in working capital |
|
26 |
|
2 410 |
|
(3 761 |
) |
(2 167 |
) |
|
|
|
|
51 398 |
|
42 877 |
|
44 069 |
|
29 Cash flow from operations
Earnings before interest and tax (EBIT) |
|
|
|
9 697 |
|
17 747 |
|
31 705 |
|
Adjusted for |
|
|
|
|
|
|
|
|
|
share of profits of equity accounted investments |
|
20 |
|
(1 074 |
) |
(1 443 |
) |
(1 071 |
) |
equity-settled share-based payment |
|
35 |
|
1 659 |
|
3 776 |
|
463 |
|
depreciation and amortisation |
|
|
|
17 968 |
|
16 425 |
|
16 204 |
|
effect of remeasurement items |
|
9 |
|
18 645 |
|
9 901 |
|
1 616 |
|
movement in long-term provisions |
|
|
|
|
|
|
|
|
|
income statement charge |
|
31 |
|
430 |
|
(596 |
) |
228 |
|
utilisation |
|
31 |
|
(1 099 |
) |
(729 |
) |
(969 |
) |
movement in short-term provisions |
|
|
|
(3 |
) |
25 |
|
(215 |
) |
movement in post-retirement benefits |
|
|
|
635 |
|
(561 |
) |
356 |
|
translation effects |
|
|
|
(199 |
) |
(121 |
) |
(11 |
) |
write-down of inventories to net realisable value |
|
|
|
371 |
|
234 |
|
470 |
|
movement in financial assets and liabilities |
|
|
|
864 |
|
2 415 |
|
(3 120 |
) |
movement in other receivables and payables |
|
|
|
601 |
|
(244 |
) |
50 |
|
other non-cash movements |
|
|
|
493 |
|
(191 |
) |
530 |
|
|
|
|
|
48 988 |
|
46 638 |
|
46 236 |
|
30 Dividends paid
Final dividend prior year |
|
6 269 |
|
4 842 |
|
5 650 |
|
Interim dividend current year |
|
3 683 |
|
3 110 |
|
2 978 |
|
|
|
9 952 |
|
7 952 |
|
8 628 |
|
Forecast cash flow on final dividend current year |
|
|
|
4 898 |
|
4 844 |
|
Notes to the financial statements
PROVISIONS AND RESERVES
Page
65 Provisions
· Long-term provisions
· Short-term provisions
· Post-retirement benefit obligations
· Cash-settled share-based payment provision
76 Reserves
· Share-based payment reserve
Provisions
31 Long-term provisions
|
|
Environmental |
|
Share-
|
|
Other |
|
Total |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
2019 |
|
|
|
|
|
|
|
|
|
Balance at beginning of year |
|
14 933 |
|
1 101 |
|
1 693 |
|
17 727 |
|
Capitalised in property, plant and equipment and assets under construction** |
|
1 925 |
|
|
|
|
|
1 925 |
|
Reduction in rehabilitation provision capitalised |
|
(1 |
) |
|
|
|
|
(1 |
) |
Transfer to held for sale liabilities*** |
|
(51 |
) |
|
|
(3 |
) |
(54 |
) |
Per the income statement |
|
1 095 |
|
(440 |
) |
(225 |
) |
430 |
|
additional provisions and changes to existing provisions |
|
415 |
|
(440 |
) |
64 |
|
39 |
|
reversal of unutilised amounts |
|
(8 |
) |
|
|
(289 |
) |
(297 |
) |
effect of change in discount rate |
|
688 |
|
|
|
|
|
688 |
|
Notional interest |
|
849 |
|
|
|
8 |
|
857 |
|
Utilised during year (cash flow) |
|
(159 |
) |
(397 |
) |
(543 |
) |
(1 099 |
) |
Foreign exchange differences recognised in income statement |
|
109 |
|
|
|
18 |
|
127 |
|
Translation of foreign operations |
|
42 |
|
|
|
6 |
|
48 |
|
Balance at end of year |
|
18 742 |
|
264 |
|
954 |
|
19 960 |
|
Long-term provisions
|
|
Environmental |
|
Share-
|
|
Other |
|
Total |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
2018 |
|
|
|
|
|
|
|
|
|
Balance at beginning of year |
|
15 716 |
|
885 |
|
2 178 |
|
18 779 |
|
Capitalised in property, plant and equipment and assets under construction |
|
350 |
|
|
|
|
|
350 |
|
Reduction in rehabilitation provision capitalised**** |
|
(1 433 |
) |
|
|
|
|
(1 433 |
) |
Per the income statement |
|
(756 |
) |
655 |
|
(495 |
) |
(596 |
) |
additional provisions and changes to existing provisions |
|
241 |
|
655 |
|
(495 |
) |
401 |
|
reversal of unutilised amounts |
|
(194 |
) |
|
|
|
|
(194 |
) |
effect of change in discount rate |
|
(803 |
) |
|
|
|
|
(803 |
) |
Notional interest |
|
953 |
|
|
|
9 |
|
962 |
|
Utilised during year (cash flow) |
|
(249 |
) |
(437 |
) |
(43 |
) |
(729 |
) |
Foreign exchange differences recognised in income statement |
|
225 |
|
(1 |
) |
27 |
|
251 |
|
Translation of foreign operations |
|
127 |
|
(1 |
) |
17 |
|
143 |
|
Balance at end of year |
|
14 933 |
|
1 101 |
|
1 693 |
|
17 727 |
|
* Refer note 34 for accounting policies and areas of judgement used in calculating the share-based payment provision (cash settled).
** Increase in rehabilitation capitalised in 2019 relates to a reassessment of our provision based on discount rates and cost estimates.
*** Relates to rehabilitation provisions of the explosives business classified as held for sale, refer note 11.
**** Reduction in rehabilitation capitalised in 2018 relates to a reassessment of our provision based on legislation changes, discount rates and new rehabilitation methods which resulted in a reduction of R1,4 billion.
31 Long-term provisions continued
|
|
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Expected timing of future cash flows |
|
|
|
|
|
|
|
Within one year |
|
|
|
2 338 |
|
2 567 |
|
One to five years |
|
|
|
3 291 |
|
3 715 |
|
More than five years |
|
|
|
14 331 |
|
11 445 |
|
|
|
|
|
19 960 |
|
17 727 |
|
Short-term portion |
|
32 |
|
(2 338 |
) |
(2 567 |
) |
Long-term provisions |
|
|
|
17 622 |
|
15 160 |
|
Estimated undiscounted obligation |
|
|
|
101 100 |
|
102 952 |
|
|
|
|
|
|
|
|
|
Business segmentation |
|
|
|
|
|
|
|
· Mining |
|
|
|
1 439 |
|
1 324 |
|
· Exploration and Production International |
|
|
|
6 779 |
|
5 677 |
|
· Energy |
|
|
|
3 427 |
|
2 909 |
|
· Base Chemicals |
|
|
|
3 919 |
|
3 321 |
|
· Performance Chemicals |
|
|
|
2 038 |
|
1 909 |
|
· Group Functions |
|
|
|
20 |
|
20 |
|
Total operations |
|
|
|
17 622 |
|
15 160 |
|
Environmental provisions
In accordance with the groups published environmental policy and applicable legislation, a provision for rehabilitation is recognised when the obligation arises, representing the estimated actual cash flows in the period in which the obligation is settled.
The environmental obligation includes estimated costs for the rehabilitation of coal mining, oil, gas and petrochemical sites. The amount provided is calculated based on currently available facts and applicable legislation.
The total environmental provision at 30 June 2019 amounted to R18 742 million (2018 R14 933 million). In line with the requirements of the legislation of South Africa, the utilisation of certain investments is restricted for mining rehabilitation purposes. These investments amounted to R667 million (2018 R649 million). In addition, indemnities of R2 155 million (2018 R2 066 million) are in place.
The following risk-free rates were used to discount the estimated cash flows based on the underlying currency and time duration of the obligation.
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
% |
|
% |
|
South Africa |
|
6,9 to 8,7 |
|
7,3 to 9,2 |
|
Europe |
|
0,0 to 0,7 |
|
0,0 to 1,5 |
|
United States of America |
|
1,7 to 2,3 |
|
2,6 to 3,0 |
|
Canada |
|
1,7 to 2,2 |
|
2,0 to 2,7 |
|
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
A 1% point change in the discount rate would have the following effect on the long-term provisions recognised |
|
|
|
|
|
Increase in the discount rate |
|
(3 351 |
) |
(2 726 |
) |
amount capitalised to property, plant and equipment |
|
(1 930 |
) |
(1 434 |
) |
income recognised in income statement |
|
(1 421 |
) |
(1 292 |
) |
Decrease in the discount rate |
|
4 540 |
|
3 786 |
|
amount capitalised to property, plant and equipment |
|
2 622 |
|
2 058 |
|
expense recognised in income statement |
|
1 918 |
|
1 728 |
|
32 Short-term provisions
|
|
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Other provisions |
|
|
|
552 |
|
552 |
|
Short-term portion of |
|
|
|
|
|
|
|
long-term provisions |
|
31 |
|
2 338 |
|
2 567 |
|
post-retirement benefit obligations |
|
33 |
|
399 |
|
389 |
|
|
|
|
|
3 289 |
|
3 508 |
|
Accounting policies:
Long-term provisions are determined by discounting the expected future cash flows using a pre-tax discount rate to their present value. The increase in discounted long-term provisions as a result of the passage of time is recognised as a finance expense in the income statement.
Estimated long-term environmental provisions, comprising pollution control, rehabilitation and mine closure, are based on the groups environmental policy taking into account current technological, environmental and regulatory requirements. The provision for rehabilitation is recognised as and when the environmental liability arises. To the extent that the obligations relate to the construction of an asset, they are capitalised as part of the cost of those assets. The effect of subsequent changes to assumptions in estimating an obligation for which the provision was recognised as part of the cost of the asset is adjusted against the asset. Any subsequent changes to an obligation which did not relate to the initial construction of a related asset are charged to the income statement. The estimated present value of future decommissioning costs, taking into account current environmental and regulatory requirements, is capitalised as part of property, plant and equipment, to the extent that they relate to the construction of the asset, and the related provisions are raised. These estimates are reviewed at least annually.
Deferred tax is recognised on the temporary differences in relation to both the asset to which the obligation relates to and rehabilitation provision.
Termination benefits are recognised as a liability at the earlier of the date of recognition of restructuring costs or when the group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. In the case of an offer to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits that are expected to be wholly settled more than 12 months after the end of the reporting period are discounted to their present value.
Areas of judgement:
The determination of long-term provisions, in particular environmental provisions, remains a key area where managements judgement is required. Estimating the future cost of these obligations is complex and requires management to make estimates and judgements because most of the obligations will only be fulfilled in the future and contracts and laws are often not clear regarding what is required. The resulting provisions could also be influenced by changing technologies and political, environmental, safety, business and statutory considerations as well as the period in which it will be settled.
It is envisaged that, based on the current information available, any additional liability in excess of the amounts provided will not have a material adverse effect on the groups financial position, liquidity or cash flow.
33 Post-retirement benefit obligations
|
|
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Post-retirement healthcare obligations |
|
33.1 |
|
|
|
|
|
South Africa |
|
|
|
3 825 |
|
3 995 |
|
United States of America |
|
|
|
268 |
|
248 |
|
|
|
|
|
4 093 |
|
4 243 |
|
Pension obligations |
|
33.2 |
|
|
|
|
|
Foreign post-retirement benefit obligation |
|
|
|
9 014 |
|
8 046 |
|
Less short-term portion of post-retirement pension and medical benefit obligations |
|
|
|
(399 |
) |
(389 |
) |
Total post-retirement benefit obligations |
|
|
|
12 708 |
|
11 900 |
|
|
|
|
|
|
|
|
|
Pension assets |
|
33.2 |
|
|
|
|
|
South Africa post-retirement benefit asset |
|
|
|
(555 |
) |
(582 |
) |
Foreign post-retirement benefit asset |
|
|
|
(719 |
) |
(916 |
) |
Total post-retirement benefit assets |
|
|
|
(1 274 |
) |
(1 498 |
) |
Net pension obligations |
|
|
|
7 740 |
|
6 548 |
|
33 Post-retirement benefit obligations continued
The group provides post-retirement medical and pension benefits to certain of its retirees, principally in South Africa, Europe and the United States of America. Generally, medical coverage provides for a specified percentage of most medical expenses, subject to pre-set rules and maximum amounts. Pension benefits are payable in the form of retirement, disability and surviving dependent pensions. The medical benefits are unfunded. The pension benefits in South Africa are funded. In the United States of America certain of our Pension Funds are funded. The pension benefits in Europe are unfunded.
Accounting policies:
The group operates or contributes to defined contribution pension plans and defined benefit pension plans for its employees in certain of the countries in which it operates. These plans are generally funded through payments to trustee-administered funds as determined by annual actuarial calculations.
Defined contribution pension plans are plans under which the group pays fixed contributions into a separate legal entity and has no legal or constructive obligation to pay further amounts. Contributions to defined contribution pension plans are charged to the income statement as an employee expense in the period in which the related services are rendered by the employee.
The groups net obligation in respect of defined benefit pension plans is actuarially calculated separately for each plan by deducting the fair value of plan assets from the gross obligation for post-retirement benefits. The gross obligation is determined by estimating the future benefit attributable to members in return for services rendered to date.
This future benefit is discounted to determine its present value, using discount rates based on government bonds for South African obligations, and corporate bonds in Europe and the US, that have maturity dates approximating the terms of the groups obligations and which are denominated in the currency in which the benefits are expected to be paid. Independent actuaries perform this calculation annually using the projected unit credit method.
Defined contribution members employed before 2009 have an option to purchase a defined benefit pension with their member share. This option gives rise to actuarial risk, and as such, these members are accounted for as part of the defined benefit fund and are disclosed as such.
Past service costs are charged to the income statement at the earlier of the following dates:
· when the plan amendment or curtailment occurs; and
· when the group recognises related restructuring costs or termination benefits.
Actuarial gains and losses arising from experience adjustments and changes to actuarial assumptions, the return on plan assets (excluding amounts included in net interest on the defined benefit liability/(asset)) and any changes in the effect of the asset ceiling (excluding amounts included in net interest on the defined benefit liability/(asset)) are remeasurements that are recognised in other comprehensive income in the period in which they arise.
Where the plan assets exceed the gross obligation, the asset recognised is limited to the lower of the surplus in the defined benefit plan and the asset ceiling, determined using a discount rate based on government bonds.
Surpluses and deficits in the various plans are not offset.
The entitlement to healthcare benefits is usually based on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued on a systematic basis over the expected remaining period of employment, using the accounting methodology described in respect of defined benefit pension plans above. Independent actuaries perform the calculation of this obligation annually.
|
|
Healthcare benefits |
|
Pension benefits |
|
Last actuarial valuation South Africa |
|
31 March 2019 |
|
31 March 2019 |
|
Last actuarial valuation United States of America |
|
30 June 2019 |
|
30 June 2019 |
|
Last actuarial valuation Europe |
|
n/a |
|
1 April 2019 |
|
Full/interim valuation |
|
Full |
|
Full |
|
Valuation method adopted |
|
Projected unit credit |
|
Projected unit credit |
|
The plans have been assessed by the actuaries and have been found to be in sound financial positions.
Principal actuarial assumptions
Weighted average assumptions used in performing actuarial valuations determined in consultation with independent actuaries.
33 Post-retirement benefit obligations continued
|
|
South Africa |
|
United States of America |
|
Europe |
|
||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
at valuation date |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
Healthcare cost inflation |
|
|
|
|
|
|
|
|
|
|
|
|
|
initial |
|
7,5 |
|
7,5 |
|
8,5 |
* |
7,0 |
* |
n/a |
|
n/a |
|
ultimate |
|
7,5 |
|
7,5 |
|
4,5 |
* |
5,5 |
* |
n/a |
|
n/a |
|
Discount rate post-retirement medical benefits |
|
10,5 |
|
9,9 |
|
3,6 |
|
3,9 |
|
n/a |
|
n/a |
|
Discount rate pension benefits |
|
10,0 |
|
9,9 |
|
2,7 |
|
2,7 |
|
1,6 |
|
1,8 |
|
Pension increase assumption |
|
4,7 |
|
4,5 |
|
n/a |
** |
n/a |
** |
1,8 |
|
1,8 |
|
Average salary increases |
|
5,5 |
+ |
5,5 |
+ |
4,2 |
|
4,2 |
|
2,8 |
|
2,8 |
|
Weighted average duration of the obligation post-retirement medical obligation |
|
15 years |
|
15 years |
|
9 years |
|
9 years |
|
n/a |
|
n/a |
|
Weighted average duration of the obligation pension obligation |
|
13 years |
|
13 years |
|
13 years |
|
13 years |
|
18 years |
|
17 years |
|
Assumptions regarding future mortality are based on published statistics and mortality tables.
* The healthcare cost inflation rate in respect of the plans for the United States of America is capped. All additional future increases due to the healthcare cost inflation will be borne by the participants.
** There are no automatic pension increases for the United States of America pension plan.
+ Salary increases are linked to inflation.
33.1 Post-retirement healthcare obligations
Reconciliation of projected benefit obligation to the amount recognised in the statement of financial position
|
|
South Africa |
|
United States of America |
|
Total |
|
||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Projected benefit obligation |
|
3 825 |
|
3 995 |
|
268 |
|
248 |
|
4 093 |
|
4 243 |
|
Less short-term portion |
|
(178 |
) |
(177 |
) |
(20 |
) |
(20 |
) |
(198 |
) |
(197 |
) |
Non-current post-retirement healthcare obligation |
|
3 647 |
|
3 818 |
|
248 |
|
228 |
|
3 895 |
|
4 046 |
|
Reconciliation of the total post-retirement healthcare obligation recognised in the statement of financial position
|
|
South Africa |
|
United States of America |
|
Total |
|
||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Total post-retirement healthcare obligation at beginning of year |
|
3 995 |
|
3 921 |
|
248 |
|
242 |
|
4 243 |
|
4 163 |
|
Movements recognised in the income statement: |
|
459 |
|
542 |
|
26 |
|
18 |
|
485 |
|
560 |
|
current service cost |
|
53 |
|
73 |
|
13 |
|
10 |
|
66 |
|
83 |
|
interest cost |
|
407 |
|
472 |
|
13 |
|
8 |
|
420 |
|
480 |
|
curtailments and settlements |
|
(1 |
) |
(3 |
) |
|
|
|
|
(1 |
) |
(3 |
) |
Actuarial (gains)/losses recognised in other comprehensive income: |
|
(468 |
) |
(258 |
) |
8 |
|
(5 |
) |
(460 |
) |
(263 |
) |
arising from changes in financial assumptions |
|
(293 |
) |
(54 |
) |
7 |
|
(6 |
) |
(286 |
) |
(60 |
) |
arising from changes in actuarial experience |
|
(175 |
) |
(204 |
) |
1 |
|
1 |
|
(174 |
) |
(203 |
) |
Benefits paid |
|
(161 |
) |
(210 |
) |
(20 |
) |
(19 |
) |
(181 |
) |
(229 |
) |
Translation of foreign operations |
|
|
|
|
|
6 |
|
12 |
|
6 |
|
12 |
|
Total post-retirement healthcare obligation at end of year |
|
3 825 |
|
3 995 |
|
268 |
|
248 |
|
4 093 |
|
4 243 |
|
33 Post-retirement benefit obligations continued
Sensitivity analysis
The sensitivity analysis is performed in order to assess how the post-retirement healthcare obligation would be affected by changes in the actuarial assumptions underpinning the calculation.
|
|
South Africa |
|
United States of America |
|
||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
1% point change in actuarial assumptions: |
|
|
|
|
|
|
|
|
|
Increase in the healthcare cost inflation |
|
518 |
|
582 |
|
|
* |
|
* |
Decrease in the healthcare cost inflation |
|
(417 |
) |
(475 |
) |
|
* |
|
* |
Increase in the discount rate |
|
(417 |
) |
(452 |
) |
(23 |
) |
(21 |
) |
Decrease in the discount rate |
|
507 |
|
562 |
|
28 |
|
25 |
|
* A change in the healthcare cost inflation for the United States of America will not have an effect on the above components or the obligation as the employers cost is capped and all future increases due to the healthcare cost inflation are borne by the participants.
A change in the pension increase assumption will not have an effect on the above obligation. In South Africa the post-retirement benefit contributions are linked to medical aid inflation and based on a percentage of income or pension. Where pension increases differ from medical aid inflation, the difference will be need to be allowed for in a change in the percentage of income or pension charged. The are no automatic pension increase for the United states pension plan.
The sensitivities may not be representative of the actual change in the post-retirement healthcare obligation, as it is unlikely that the changes would occur in isolation of one another, and some of the assumptions may be correlated.
Healthcare cost inflation risk
Healthcare cost inflation is CPI inflation plus two percentage points over the long term. An increase in healthcare cost inflation will increase the obligation of the plan.
Discount rate risk
The discount rate is derived from prevailing bond yields. A decrease in the discount rate will increase the obligation of the plan.
Pension increase risk
The South African healthcare plan is linked to pension benefits paid, which are to some extent linked to inflation. Accordingly, increased inflation levels represent a risk that could increase the cost of paying the funds committed to benefits.
Other
Changes in other assumptions used could also affect the measured liabilities. There is also a regulatory risk as well as foreign funds under the jurisdiction of other countries. To the extent that governments can change the regulatory frameworks, there may be a risk that minimum benefits or minimum pension increases may be instituted, increasing the associated cost for the fund.
33.2 Pension benefits
South African operations
Background
In 1994, all members were given the choice to voluntarily transfer to the newly established defined contribution section of the pension fund and approximately 99% of contributing members chose to transfer to the defined contribution section.
Defined benefit option for defined contribution members
In terms of the rules of the fund, on retirement, employees employed before 1 January 2009 have an option to purchase a defined benefit pension with their member share. Should a member elect this option, the group is exposed to actuarial risk. In terms of IAS 19, the classification requirements stipulate that where an employer is exposed to any actuarial risk, the fund must be classified as a defined benefit plan.
Fund assets
The assets of the fund are held separately from those of the company in a trustee administered fund, registered in terms of the South African Pension Funds Act, 1956. Included in the fund assets at 31 March 2019 are 1 681 008 (2018 1 678 808) Sasol ordinary shares valued at R589 million (2018 R844 million) at year-end purchased under terms of an approved investment strategy, and property valued at R1 561 million (2018 R1 543 million) that is currently occupied by Sasol.
Membership
A significant number of employees are covered by union sponsored, collectively bargained, and in some cases, multi-employer defined contribution pension plans. Information from the administrators of these plans offering defined benefits is not sufficient to permit the company to determine its share, if any, of any unfunded vested benefits.
33 Post-retirement benefit obligations continued
Pension fund assets
The assets of the pension funds are invested as follows:
|
|
South Africa |
|
United States of America |
|
||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
at 30 June |
|
% |
|
% |
|
% |
|
% |
|
Equities |
|
53 |
|
53 |
|
38 |
|
32 |
|
resources |
|
6 |
|
6 |
|
7 |
|
5 |
|
industrials |
|
2 |
|
3 |
|
4 |
|
3 |
|
consumer discretionary |
|
10 |
|
12 |
|
4 |
|
4 |
|
consumer staples |
|
11 |
|
12 |
|
3 |
|
2 |
|
healthcare |
|
5 |
|
3 |
|
4 |
|
3 |
|
information technologies |
|
5 |
|
4 |
|
7 |
|
7 |
|
telecommunications |
|
3 |
|
1 |
|
2 |
|
2 |
|
financials (ex real estate) |
|
11 |
|
12 |
|
7 |
|
6 |
|
Fixed interest |
|
13 |
|
10 |
|
49 |
|
59 |
|
Direct property |
|
15 |
|
17 |
|
5 |
|
5 |
|
Listed property |
|
4 |
|
5 |
|
|
|
|
|
Cash and cash equivalents |
|
4 |
|
4 |
|
|
|
|
|
Third party managed assets |
|
11 |
|
11 |
|
|
|
|
|
Other |
|
|
|
|
|
8 |
|
4 |
|
Total |
|
100 |
|
100 |
|
100 |
|
100 |
|
The pension fund assets are measured at fair value at valuation date. The fair value of equity has been calculated by reference to quoted prices in an active market. The fair value of property and other assets has been determined by performing market valuations and using other valuation techniques at the end of each reporting period.
Investment strategy
The trustees target the plans asset allocation within the following ranges within each asset class:
|
|
South Africa(1) |
|
United States of America |
|
||||
|
|
Minimum |
|
Maximum |
|
Minimum |
|
Maximum |
|
Asset classes |
|
% |
|
% |
|
% |
|
% |
|
Equities |
|
|
|
|
|
|
|
|
|
local |
|
30 |
|
45 |
|
|
|
100 |
|
foreign |
|
15 |
|
30 |
|
|
|
100 |
|
Fixed interest |
|
5 |
|
25 |
|
|
|
100 |
|
Property |
|
10 |
|
25 |
|
|
|
100 |
|
Other |
|
|
|
15 |
|
|
|
100 |
|
(1) Members of the defined contribution scheme have a choice of four investment portfolios. The targeted allocation disclosed represents the moderate balanced investment portfolio which the majority of the members of the scheme have adopted. The total assets of the fund under these investment portfolios are R139 million, R52 080 million, R791 million and R1 034 million for the low risk portfolio, moderate balanced portfolio, aggressive balanced portfolio and money market portfolio, respectively. Defined benefit members funds are invested in the moderate balanced portfolio. The money market portfolio is restricted to active members from age 55.
The trustees of the respective funds monitor investment performance and portfolio characteristics on a regular basis to ensure that managers are meeting expectations with respect to their investment approach. There are restrictions and controls placed on managers in this regard.
33 Post-retirement benefit obligations continued
Reconciliation of the projected net pension liability/(asset) recognised in the statement of financial position
|
|
South Africa |
|
Foreign |
|
Total |
|
||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Projected benefit obligation (funded) |
|
51 241 |
|
47 285 |
|
3 697 |
|
3 105 |
|
54 938 |
|
50 390 |
|
defined benefit portion |
|
21 550 |
|
19 970 |
|
3 697 |
|
3 105 |
|
25 247 |
|
23 075 |
|
defined benefit option for defined |
|
|
|
|
|
|
|
|
|
|
|
|
|
contribution members |
|
29 691 |
|
27 315 |
|
|
|
|
|
29 691 |
|
27 315 |
|
Plan assets |
|
(54 115 |
) |
(50 128 |
) |
(4 270 |
) |
(3 890 |
) |
(58 385 |
) |
(54 018 |
) |
defined benefit portion |
|
(24 254 |
) |
(22 502 |
) |
(4 270 |
) |
(3 890 |
) |
(28 524 |
) |
(26 392 |
) |
defined benefit option for defined |
|
|
|
|
|
|
|
|
|
|
|
|
|
contribution members |
|
(29 861 |
) |
(27 626 |
) |
|
|
|
|
(29 861 |
) |
(27 626 |
) |
Projected benefit obligation (unfunded) |
|
|
|
|
|
8 868 |
|
7 915 |
|
8 868 |
|
7 915 |
|
Asset not recognised due to asset limitation |
|
2 319 |
|
2 261 |
|
|
|
|
|
2 319 |
|
2 261 |
|
Net liability/(asset) recognised |
|
(555 |
) |
(582 |
) |
8 295 |
|
7 130 |
|
7 740 |
|
6 548 |
|
The increase of R58 million in the asset limitation (2018 R1 051 million) was recognised as a gain in other comprehensive income.
|
|
South Africa |
|
Foreign |
|
Total |
|
||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Pension asset |
|
(555 |
) |
(582 |
) |
(719 |
) |
(916 |
) |
(1 274 |
) |
(1 498 |
) |
Pension benefit obligation |
|
|
|
|
|
9 014 |
|
8 046 |
|
9 014 |
|
8 046 |
|
long-term portion |
|
|
|
|
|
8 813 |
|
7 854 |
|
8 813 |
|
7 854 |
|
short-term portion |
|
|
|
|
|
201 |
|
192 |
|
201 |
|
192 |
|
Net liability/(asset) |
|
(555 |
) |
(582 |
) |
8 295 |
|
7 130 |
|
7 740 |
|
6 548 |
|
The obligation which arises for the defined contribution members with the option to purchase into the defined benefit fund is limited to the assets that they have accumulated until retirement date. However, after retirement date, there is actuarial risk associated with the members as full defined benefit members.
Based on the latest actuarial valuation of the fund and the approval of the trustees of the surplus allocation, the company has an unconditional entitlement to only the funds in the employer surplus account and the contribution reserve. The estimated surplus due to the company amounted to approximately R1 274 million (2018 R1 498 million) and has been included in the pension asset recognised in the current year.
Investment risk
The actuarial valuation assumes certain asset returns on invested assets. If actual returns on plan assets are below the assumption, this may lead to a strain on the fund, which, over time, may lead to a plan deficit. In order to mitigate the concentration risk, the fund assets are invested across equity securities, property securities and debt securities. Given the long-term nature of the obligations, it is considered appropriate that investment is made in equities and real estate to improve the return generated by the fund. These may result in improved pension benefits to members.
Pension increase risk
Benefits in these plans are to some extent linked to inflation so increased inflation levels represent a risk that could increase the cost of paying the funds committed to benefits. This risk is mitigated as pension benefits are subject to affordability.
Discount rate risk
The discount rate is derived from prevailing bond yields. A decrease in the discount rate used will increase the obligation of the plan.
Other
Changes in other assumptions used could also affect the measured liabilities. There is also a regulatory risk as well as foreign funds under the jurisdiction of other countries. To the extent that governments can change the regulatory frameworks, there may be a risk that minimum benefits or minimum pension increases may be instituted, increasing the associated cost for the fund.
33 Post-retirement benefit obligations continued
Reconciliation of projected benefit obligation
|
|
South Africa |
|
Foreign |
|
Total |
|
||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Projected benefit obligation at beginning of year |
|
47 285 |
|
46 508 |
|
11 020 |
|
9 774 |
|
58 305 |
|
56 282 |
|
Movements recognised in income statement: |
|
5 694 |
|
5 678 |
|
677 |
|
596 |
|
6 371 |
|
6 274 |
|
current service cost |
|
1 042 |
|
1 028 |
|
454 |
|
386 |
|
1 496 |
|
1 414 |
|
curtailments and settlements |
|
3 |
|
|
|
(14 |
) |
|
|
(11 |
) |
|
|
interest cost |
|
4 649 |
|
4 650 |
|
237 |
|
210 |
|
4 886 |
|
4 860 |
|
Actuarial (gains)/losses recognised in other comprehensive income: |
|
262 |
|
(2 950 |
) |
1 098 |
|
462 |
|
1 360 |
|
(2 488 |
) |
arising from changes in demographic |
|
|
|
|
|
|
|
|
|
|
|
|
|
assumptions |
|
|
|
|
|
(7 |
) |
20 |
|
(7 |
) |
20 |
|
arising from changes in financial assumptions |
|
174 |
|
(2 950 |
) |
1 059 |
|
312 |
|
1 233 |
|
(2 638 |
) |
arising from change in actuarial experience |
|
88 |
|
|
|
46 |
|
130 |
|
134 |
|
130 |
|
Member contributions |
|
482 |
|
447 |
|
|
|
|
|
482 |
|
447 |
|
Benefits paid |
|
(2 482 |
) |
(2 398 |
) |
(278 |
) |
(477 |
) |
(2 760 |
) |
(2 875 |
) |
Transferred to held for sale assets |
|
|
|
|
|
|
|
(30 |
) |
|
|
(30 |
) |
Translation of foreign operations |
|
|
|
|
|
48 |
|
695 |
|
48 |
|
695 |
|
Projected benefit obligation at end of year |
|
51 241 |
|
47 285 |
|
12 565 |
|
11 020 |
|
63 806 |
|
58 305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
unfunded obligation* |
|
|
|
|
|
8 868 |
|
7 915 |
|
8 868 |
|
7 915 |
|
funded obligation |
|
51 241 |
|
47 285 |
|
3 697 |
|
3 105 |
|
54 938 |
|
50 390 |
|
* Certain of the foreign defined benefit plans have reimbursement rights under contractually agreed legal binding terms that match the amount and timing of some of the benefits payable under the plan. This reimbursive right has been recognised in long-term receivables at fair value (2019 R217 million; 2018 R305 million). A decrease of R83 million (2018 decrease of R1 million) has been recognised as a loss in other comprehensive income in respect of the reimbursive right.
Reconciliation of plan assets of funded obligation
|
|
South Africa |
|
Foreign |
|
Total |
|
||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Fair value of plan assets at beginning of year |
|
50 128 |
|
48 340 |
|
3 890 |
|
2 514 |
|
54 018 |
|
50 854 |
|
Movements recognised in income statement: |
|
4 702 |
|
4 707 |
|
113 |
|
67 |
|
4 815 |
|
4 774 |
|
interest income |
|
4 927 |
|
4 829 |
|
113 |
|
67 |
|
5 040 |
|
4 896 |
|
interest on asset limitation |
|
(225 |
) |
(122 |
) |
|
|
|
|
(225 |
) |
(122 |
) |
Actuarial gains/(losses) recognised in other comprehensive income: |
|
229 |
|
(1 959 |
) |
285 |
|
180 |
|
514 |
|
(1 779 |
) |
arising from return on plan assets |
|
229 |
|
(1 959 |
) |
285 |
|
180 |
|
514 |
|
(1 779 |
) |
(excluding interest income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan participant contributions* |
|
482 |
|
447 |
|
|
|
|
|
482 |
|
447 |
|
Employer contributions* + |
|
1 056 |
|
991 |
|
6 |
|
1 233 |
|
1 062 |
|
2 224 |
|
Benefit payments |
|
(2 482 |
) |
(2 398 |
) |
(121 |
) |
(314 |
) |
(2 603 |
) |
(2 712 |
) |
Translation of foreign operations |
|
|
|
|
|
97 |
|
210 |
|
97 |
|
210 |
|
Fair value of plan assets at end of year |
|
54 115 |
|
50 128 |
|
4 270 |
|
3 890 |
|
58 385 |
|
54 018 |
|
Actual return on plan assets |
|
4 931 |
|
2 748 |
|
398 |
|
247 |
|
5 329 |
|
2 995 |
|
* Contributions, for the defined contribution section, are paid by the members and Sasol at fixed rates.
+ In 2018, in the United States of America there was a once-off payment R963 million (US$75 million) made by the employer to the fund.
33 Post-retirement benefit obligations continued
Contributions
Funding is based on actuarially determined contributions. The following table sets forth the projected pension contributions of funded obligations for the 2019 financial year.
|
|
South Africa |
|
Foreign |
|
|
|
Rm |
|
Rm |
|
Pension contributions |
|
1 106 |
|
120 |
|
Sensitivity analysis
A sensitivity analysis is performed in order to assess how the post-retirement pension obligation would be affected by changes in the actuarial assumptions underpinning the calculation.
|
|
South Africa |
|
Foreign |
|
||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
1% point change in actuarial assumptions |
|
|
|
|
|
|
|
|
|
Increase in average salaries increase assumption |
|
12 |
|
14 |
|
494 |
|
454 |
|
Decrease in average salaries increase assumption |
|
(12 |
) |
(13 |
) |
(430 |
) |
(368 |
) |
Increase in the discount rate |
|
(1 654 |
) |
(1 447 |
) |
(1 806 |
) |
(1 634 |
) |
Decrease in the discount rate |
|
2 463 |
|
1 981 |
|
2 370 |
|
2 174 |
|
Increase in the pension increase assumption |
|
2 541 |
|
2 035 |
|
1 142 |
* |
1 071 |
* |
Decrease in the pension increase assumption |
|
(1 727 |
) |
(1 523 |
) |
(934 |
)* |
(851 |
)* |
* This sensitivity analysis relates only to the Europe obligations as there are no automatic pension increases for the United States of America pension plan, and thus it is not one of the inputs utilised in calculating the obligation.
The sensitivities may not be representative of the actual change in the post-retirement pension obligation, as it is unlikely that the changes would occur in isolation of one another, and some of the assumptions may be correlated.
34 Cash-settled share-based payment provision
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
During the year, the following cash-settled share-based payment expenses were recognised in the income statement (refer to note 35 for the equity-settled share-based payment disclosure): |
|
|
|
|
|
|
|
Share-based payment expense movement in long-term provisions |
|
|
|
|
|
|
|
Sasol Share Appreciation Rights Scheme |
|
(440 |
) |
655 |
|
(342 |
) |
Share Appreciation Rights with no corporate performance targets (no-CPTs) |
|
(6 |
) |
117 |
|
(110 |
) |
Share Appreciation Rights with corporate performance targets (CPTs) |
|
(434 |
) |
538 |
|
(232 |
) |
Sasol Long-term Incentive Scheme(1) |
|
|
|
|
|
105 |
|
|
|
(440 |
) |
655 |
|
(237 |
) |
(1) On 25 November 2016, the cash-settled LTI scheme was converted to an equity-settled share-based payment scheme.
Sasols share price decreased by 30% over the financial year to a closing price on 30 June 2019 of R350,21. This together with the volatility in the share price has resulted in a R440 million credit being recognised in the current year.
Sasol Share Appreciation Rights Scheme (closed since 2013)
|
|
2019 |
|
2018 |
|
Total rights granted |
|
Number |
|
Number |
|
Share Appreciation Rights |
|
4 928 846 |
|
7 118 321 |
|
34 Cash-settled share-based payment provision continued
The Share Appreciation Rights scheme (SARs) allows eligible senior employees to earn a long-term incentive amount calculated with reference to the increase in the Sasol Limited share price between the offer date of the SARs to the exercise of such vested rights. No shares are issued in terms of this scheme, all rights have vested and all amounts payable in terms of the scheme are settled in cash.
The offer price of these appreciation rights equals the closing market price of the underlying shares on the trading day immediately preceding the granting of the right. The fair value of the cash-settled liability is calculated at each reporting date. On resignation SARs may be exercised at the employees election before their last day of service. On death, the deceaseds estate has a period of 12 months to exercise these rights. On retrenchment or retirement, the employee has a period of 12 months to exercise these rights.
It is group policy that employees should not deal in Sasol Limited securities (and this is extended to the Sasol SARs) for the periods from 1 January for half year-end and 1 July for year-end until two days after publication of the results and at any other time during which they have access to price sensitive information.
|
|
2019 |
|
2018 |
|
||||||||
|
|
SARs with
|
|
SARs with
|
|
Total |
|
SARs with
|
|
SARs with
|
|
Total |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Per statement of financial position |
|
2 |
|
262 |
|
264 |
|
98 |
|
1 003 |
|
1 101 |
|
Total intrinsic value of rights vested, but not yet exercised |
|
2 |
|
50 |
|
52 |
|
98 |
|
987 |
|
1 085 |
|
|
|
|
|
2019 |
|
2018 |
|
||||
|
|
|
|
SARs with
|
|
SARs
|
|
SARs with
|
|
SARs
|
|
|
|
|
|
Binomial |
|
Binomial |
|
Binomial |
|
Binomial |
|
Model |
|
|
|
tree |
|
tree |
|
tree |
|
tree |
|
Risk-free interest rate |
|
(%) |
|
6,96 |
|
6,64 6,96 |
|
6,88 7,09 |
|
6,88 7,63 |
|
Expected volatility |
|
(%) |
|
35,74 |
|
35,83 |
|
28,61 |
|
27,16 |
|
Expected dividend yield |
|
(%) |
|
4,76 |
|
4,99 |
|
3,58 |
|
3,51 |
|
Expected forfeiture rate |
|
(%) |
|
* |
|
* |
|
* |
|
5,00 |
|
* All SARs have vested and therefore no forfeiture is applied.
The risk-free rate for periods within the contractual term of the rights is based on the Rand swap curve in effect at the time of the valuation of the grant.
The expected volatility in the value of the rights granted is determined using the historical volatility of the Sasol share price.
The expected dividend yield of the rights granted is determined using expected dividend payments of the Sasol ordinary shares.
The valuation of the share-based payment expense requires a significant degree of judgement to be applied by management.
Accounting policies:
The cash-settled schemes allow certain senior employees the right to participate in the performance of the Sasol Limited share price, in return for services rendered, through the payment of cash incentives which are based on the market price of the Sasol Limited share. All the rights have vested with a liability recognised at fair value, at each reporting date, in the statement of financial position until the date of settlement.
Areas of judgement:
Fair value is measured using the Binomial tree option pricing models where applicable. The expected life used in the models has been adjusted, based on managements best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations such as volatility, dividend yield and maturity of the award.
Reserves
35 Share-based payment reserve
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
During the year, the following share-based payment expense was recognised in the income statement relating to the equity-settled share-based payment schemes: |
|
|
|
|
|
|
|
|
|
Sasol Khanyisa share transaction(1) |
|
35.1 |
|
952 |
|
2 953 |
|
|
|
Sasol ordinary BEE (SOLBE1) shares issued(2) |
|
|
|
|
|
1 104 |
|
|
|
Khanyisa Public |
|
|
|
|
|
1 762 |
|
|
|
Tier 1 Khanyisa Employee Share Ownership Plan (ESOP) |
|
|
|
628 |
|
52 |
|
|
|
Tier 2 Khanyisa ESOP |
|
|
|
324 |
|
35 |
|
|
|
Long-term incentives(3) |
|
35.2 |
|
707 |
|
789 |
|
387 |
|
Sasol Inzalo share transaction |
|
35.3 |
|
|
|
34 |
|
76 |
|
Equity-settled recognised directly in equity(4) |
|
|
|
1 659 |
|
3 776 |
|
463 |
|
(1) In November 2017, Sasol Khanyisa a new Broad-Based Black Economic Empowerment (B-BBEE) scheme was approved by shareholders at a General Meeting.
(2) IFRS2 expense was recognised immediately on date shares were granted to participants. Shares were not encumbered and could be traded immediately.
(3) On 25 November 2016, the cash-settled LTI scheme was converted to an equity-settled share scheme.
(4) The employee-related share-based payment expense in 2018 was R910 million.
Accounting policies:
To the extent that an entity grants shares or share options in a BEE transaction and the fair value of the cash and other assets received is less than the fair value of the shares or share options granted, such difference is charged to the income statement in the period in which the transaction becomes effective. Where the BEE transaction includes service conditions the difference will be charged to the income statement over the period of these service conditions. Trickle dividends paid to participants during the transaction term are taken into account in measuring the fair value of the award. As the funds to pay the trickle dividend are leaving the Company, a corresponding share of earnings will be allocated to the non controlling shareholders. There was one trickle dividend paid during the current year.
35.1 The Sasol Khanyisa share transaction
Sasol Khanyisa was implemented effectively on 1 June 2018. Sasol Khanyisa has been designed to comply with the revised B-BBEE legislation in South Africa and seeks to ensure on-going and sustainable B-BBEE ownership credentials for Sasol Limited.
Sasol Khanyisa contains a number of elements structured at both a Sasol Limited and at a subsidiary level, Sasol South Africa Limited (SSA) which is a wholly-owned subsidiary of Sasol Limited and houses the majority of the groups South African operations.
At the end of 10 years, or earlier if the underlying funding has been settled, the participants will exchange their SSA shareholding on a fair value-for-value basis for SOLBE1 shares to the extent of any value created during the transaction term.
SOLBE1 shares can only be traded between Black Persons on the Empowerment Segment of the JSE. This transaction will therefore ensure evergreen B-BBEE ownership credentials for Sasol Limited.
35 Share-based payment reserve continued
Remaining components of the transaction:
Tier 1 Khanyisa Employee Share Ownership Plan Eligible Inzalo participants
Former Inzalo Employee Scheme participants, who were still actively employed by Sasol during May 2018 were granted rights in SOL shares or SOLBE1 Shares, at no cost to them, to the value of R100 000, all of which will vest after a three year service period. Black employees were able to choose to receive the award in SOL or SOLBE1 shares, whilst employees who are not black people received an award in SOL shares, as SOLBE1 shares may only be held by qualifying black people. Employees will receive dividends on these shares throughout the 3 year vesting period. This award will be recognised on a straight line basis over the three year vesting period.
An expense of R628 million was recognised in 2019 (2018 R52 million).
Sasol Khanyisa SSA (Tier 2 and Khanyisa Public)
The BEE participation in SSA comprises two groups of participants, being the external public participants (made up of Inzalo Groups, Inzalo Public and electing SOLBE1 shareholders) who participate via Khanyisa Public, and qualifying black employees who participate via the Khanyisa Employee Share Ownership plan (Khanyisa ESOP).
Both Khanyisa Public and the Khanyisa ESOP have a beneficial interest, funded wholly by Sasol (vendor funding), in approximately 9,2% each in SSA. As dividends are declared by SSA, 97,5% of these will be utilised to repay the vendor funding, as well as the related financing cost, calculated at 75% of prime rate. 2,5% of dividends will be distributed to participants as a trickle dividend and accounted for as a non-controlling interest. At the end of the 10 year transaction term, or earlier, if the vendor funding is repaid, the net value in SSA shares will be exchanged for SOLBE1 shares on a fair value-for-value basis which will be distributed to participants. Any vendor funding not yet settled by the end of the transaction term will be settled using the SSA shares, and will reduce any distribution made to participants. Since any ultimate value created for participants will be granted in the form of SOLBE1 shares, the accounting for this transaction is similar to an option over Sasol shares granted for no consideration.
Khanyisa ESOP (Tier 2)
The employees have service conditions over the 10 year transaction term, and as such, the expense will be recognised over this period, with R324 million having been recognised in 2019 (2018 R35 million).
35 Share-based payment reserve continued
|
|
|
|
ESOP Tier 1(1) |
|
ESOP Tier 1(1) |
|
ESOP Tier 2(1)(2)(3) |
|
Sasol Khanyisa
|
|
for the year ended 30 June |
|
|
|
2019 |
|
2019 |
|
2019 |
|
2019 |
|
Grant date |
|
Date |
|
1 June 2018 |
|
1 June 2018 |
|
25 May 2018 |
|
1 June 2018 |
|
Class of shares |
|
|
|
SOL shares |
|
SOLBE1 shares |
|
Khanyisa shares |
|
Khanyisa shares |
|
Shares |
|
Number |
|
2 082 520 |
|
2 396 048 |
|
26 503 642 |
|
26 503 642 |
|
Weighted average fair value on grant date |
|
Rand |
|
481,50 |
|
370,00 |
|
66,48 |
|
66,48 |
|
Total IFRS expense |
|
Rm |
|
1 003 |
|
887 |
|
1 762 |
|
1 762 |
|
IFRS expense recognised for the year |
|
Rm |
|
334 |
|
294 |
|
324 |
|
|
|
(1) The ESOP Tier 1 and 2 options outstanding have a weighted average remaining vesting period of 1,9 and 4,7 years. ESOP Tier 1 vests after 3 years and ESOP Tier 2 has a staggered vesting period, with portions vesting from 3 years, and then each year until the end of the transaction term, being 10 years.
(2) The weighted average fair value price is derived from the Monte-Carlo option pricing model. The price will move closer to the strike price over the transaction period as certainty of dividends declared by SSA is expected to exceed outstanding vendor financing.
(3) The estimated strike price value for Khanyisa Public and ESOP Tier 2 is R326,55 and represents the remaining vendor funding per share at 30 June 2019.
The SSA Khanyisa share-based payment expense was calculated using an option pricing model reflective of the underlying characteristics of each part of the transaction. It was calculated using the following assumptions at grant date:
Average fair value Sasol Khanyisa options granted |
|
|
|
2018 |
|
Model |
|
|
|
Monte-Carlo |
|
Risk-free interest rate |
|
(%) |
|
8,08 |
|
Expected volatility |
|
(%) |
|
28,49 |
|
Expected dividend yield |
|
(%) |
|
1,8 10,1 |
|
The risk-free rate for periods within the contractual term of the share rights is based on a zero-coupon Rand swap curve at the time of the grant.
The expected volatility in the value of the share rights granted is determined using the historical volatility of the Sasol share price.
The dividend yields of the share rights granted is determined using the expected term structure of dividend yields on the underlying equity value over the life of the transaction.
The valuation of the share-based payment expense requires a significant degree of judgement to be applied by management.
Areas of judgement:
The measurement of the Khanyisa SSA share based payment is subject to estimation and judgment, as there are a number of variables affecting the Monte-Carlo option pricing model used in the calculation of the share based payment. The value of the share based payment is determined with reference to the extent the fair value of SSA and any dividends declared by SSA is expected to exceed any outstanding vendor financing at the end of the transaction period.
· Equity value attributable to participants:
The value attributable to the participants by virtue of their shareholding in SSA was calculated with reference to the expected future cash flows and budgets of the SSA Group. The underlying macroeconomic assumptions utilised for this valuation are based on latest forecast and estimates and include brent crude oil prices, US$/Rand exchange rates and pricing assumptions.
· Forecasted dividend yield:
The forecasted dividend yield of the SSA Group was calculated based on a benchmarked EBITDA multiple, and the available free cash flow anticipated over the term of the transaction of 10 years.
· Other assumptions:
Impacts of non-transferability and appropriate minority and liquidity discounts have also been taken into account. Discount rates applied incorporate the relevant debt and equity costs of the group, and are aligned to the WACC rates for the entity.
· A zero-coupon Rand interest rate swap curve was constructed and utilised as an appropriate representation of a risk-free interest rate curve.
· A Rand prime interest rate curve was estimated utilising the historical Rand Prime Index and the 3 month Johannesburg Interbank Agreed Rate.
35 Share-based payment reserve continued
35.2 Sasol Long-term Incentive Scheme
During September 2009, the group introduced the Sasol Long-term Incentive scheme (LTI). The objective of the LTI scheme is to provide qualifying employees the opportunity of receiving an incentive linked to the value of Sasol Limited ordinary shares and to align the interest of employees with the interest of shareholders. The LTI scheme allows certain senior employees to earn a long-term incentive amount linked to certain Corporate Performance Targets (CPTs). Allocations of the LTI are linked to the performance of both the group and the individual. The employer companies make a cash contribution to an independent service provider to enable this ownership plan.
On resignation, LTIs which have not yet vested will lapse. On death, retirement and retrenchment, the LTIs vest immediately, calculated to the extent that the CPTs are anticipated to be met, and are settled within 40 days from the date of termination. Accelerated vesting does not apply to top management. In November 2016, the scheme was converted from cash-settled to equity-settled. All the vesting conditions and all other terms and conditions of the scheme remain the same, including the standard vesting period of three years, with the exception of top management, who have a three and five year vesting period for 50% of the awards respectively.
The maximum number of shares issued under the equity-settled LTI scheme may not exceed 32,5 million representing 5% of Sasol Limiteds issued share capital at the time of approval.
Movements in the number of incentives outstanding |
|
Number of
|
|
Weighted average
|
|
Balance at 30 June 2017 |
|
6 198 589 |
|
337,80 |
|
LTIs granted |
|
2 626 268 |
|
376,73 |
|
LTIs vested |
|
(1 868 963 |
) |
347,93 |
|
Effect of CPTs and LTIs forfeited |
|
(159 406 |
) |
349,95 |
|
Balance at 30 June 2018 |
|
6 796 488 |
|
348,19 |
|
LTIs granted |
|
2 089 674 |
|
555,86 |
|
LTIs vested |
|
(1 600 899 |
) |
308,27 |
|
Effect of CPTs and LTIs forfeited |
|
(665 666 |
) |
360,19 |
|
Balance at 30 June 2019* |
|
6 619 597 |
|
422,20 |
|
* The incentives outstanding as at 30 June 2019 have a weighted average remaining vesting period of 1,4 years. The exercise price of these options is Rnil.
|
|
2019 |
|
2018 |
|
for year ended 30 June |
|
Rand |
|
Rand |
|
Average weighted market price of LTIs vested |
|
507,50 |
|
396,02 |
|
Average fair value of incentives granted |
|
|
|
2019 |
|
2018 |
|
Model |
|
|
|
Monte-Carlo |
|
Monte-Carlo |
|
Risk-free interest rate Rand |
|
(%) |
|
6,90 7,87 |
|
6,98 7,34 |
|
Risk-free interest rate US$ |
|
(%) |
|
0,91 1,56 |
|
1,01 1,47 |
|
Expected volatility |
|
(%) |
|
26,17 |
|
24,73 |
|
Expected dividend yield |
|
(%) |
|
3,43 |
|
3,65 |
|
Expected forfeiture rate |
|
(%) |
|
5 |
|
5 |
|
Vesting period top management |
|
|
|
3/5 years |
|
3/5 years |
|
Vesting period all other participants |
|
|
|
3 years |
|
3 years |
|
The risk-free rate for periods within the contractual term of the rights is based on the Rand and US$ swap curve in effect at the time of the valuation of the grant.
The expected volatility in the value of the rights granted is determined using the historical volatility of the Sasol share price.
The expected dividend yield of the rights granted is determined using expected dividend payments of the Sasol ordinary shares.
The valuation of the share-based payment expense requires a significant degree of judgement to be applied by management.
Accounting policies:
The equity-settled schemes allow certain employees the right to receive ordinary shares in Sasol Limited after a prescribed period. Such equity-settled share-based payments are measured at fair value at the date of the grant. The fair value determined at the grant date of the equity-settled share-based payments is charged as employee costs, with a corresponding increase in equity, on a straight-line basis over the period that the employees become unconditionally entitled to the shares, based on managements estimate of the shares that will vest and adjusted for the effect of non-market-based vesting conditions. These equity-settled share-based payments are not subsequently revalued.
35 Share-based payment reserve continued
35.3 The Sasol Inzalo share transaction
In September 2018 the Sasol Inzalo Public share transaction ended. Sasol repurchased 16 085 199 preferred ordinary shares from Sasol Inzalo Public Funding (RF) (Pty) Ltd at a purchase price for R542,11 per share. This repurchase enabled Sasol Inzalo Public Funding (RF) (Pty) Ltd to repay its external debt and declare a final distribution of R1,4 billion to participants.
On 4 June 2018 the Sasol Inzalo Employee share transaction ended. Sasol repurchased 25 231 686 Sasol Limited (SOL) shares held by the Sasol Inzalo Employee and Management Trusts at a nominal value of R0,01 per share. Consequently the relevant vested participants in the Inzalo Employee Schemes received no distribution of SOL Shares.
On 27 June 2018 the Sasol Inzalo Groups share transaction ended. Sasol repurchased 9 461 882 preferred ordinary shares from Sasol Inzalo Groups Funding (RF) (Pty) Ltd at a purchase price of R475,03 per share. This repurchase enabled Sasol Inzalo Groups Funding (RF) (Pty) Ltd to repay the external debt. No additional funds were available for distribution to Inzalo Groups participants.
The Sasol Inzalo Foundation (renamed to the Sasol Foundation), remains as an unencumbered shareholder of 9 461 882 shares in Sasol Limited as the Board approved that the repurchase right would not be exercised, and there was no recovery of the financing owed to Sasol by the Foundation. The Sasol Foundation continues to be consolidated by the group, and these shares therefore remain accounted for as treasury shares.
OTHER DISCLOSURES
Page
82 Other disclosures
· Contingent liabilities
· Leases and other commitments
· Related party transactions
· Subsequent events
· Financial risk management and financial instruments
Other disclosures
36 Contingent liabilities
36.1 Litigation
Claimed compensation for lung diseases Sasol Mining (Pty) Ltd
On 2 April 2015, 22 plaintiffs (at that time 1 current and 21 former employees) instituted action against Sasol Mining (Pty) Ltd at the High Court in Gauteng, South Africa, for allegedly having contracted lung diseases while working at its collieries. The plaintiffs inter alia allege that they were exposed to harmful quantities of coal dust while working underground for Sasol Mining and that the company failed to comply with various sections of the Mine Health and Safety Act, 1996. All of which the plaintiffs allege, increased the risk for workers to contract coal dust related lung diseases. This lawsuit is not a class action but rather 22 individual cases, each of which will be judged on its own merits. The plaintiffs seek compensation for damages relating to past and future medical costs and loss of income amounting to R82,5 million in total plus interest. Two plaintiffs have since passed away and their claims have been formally withdrawn. The total amount of the claims is R67,2 million plus interest.
Sasol Mining is defending the claim. The merits of each single claim are not clear yet. There is also some uncertainty as to whether some of the claims have prescribed. Therefore it is not possible at this stage to make an estimate of the likelihood that the plaintiffs will succeed with their claim and if successful, what the quantum of damages would be that the court will award. Therefore, no provision has been raised at 30 June 2019.
Construction disputes Fischer Tropsch Wax Expansion Project in Sasolburg (FTWEP)
After the conclusion of construction of FTWEP at the Sasol One site in Sasolburg, a number of contractual claims have been instituted by some contractors who were involved in the construction and project management relating to this project.
Certain of these claims have already been resolved, either through settlement between the parties or through the contractual dispute resolution process. The Fluor SA (Pty) matter is still on-going.
Fluor SA (Pty) Ltd FTWEP
Fluor claimed a total amount of R485,7 million plus interest. This dispute turns on the nature and quantification of Fluors alleged entitlement to a change to the prices and completion dates for delayed access. In June 2015, Fluor referred the claim to adjudication. In September 2015, the adjudicator rejected Fluors entire claim. Thereafter, Fluor notified Sasol of its dissatisfaction with the outcome of the adjudication and Fluors intention to refer the matter to arbitration. The arbitration process commenced with Fluor filing its statement of claim during December 2016. Sasol filed two objections against the statement of claim which had the potential to dispose of the arbitration proceedings. The arbitrator, however, did not decide in favour of Sasol on the objection applications and dismissed the application with costs. The objections will still be raised as a special jurisdictional plea and will be filed with Sasols statement of defence during the arbitration process.
Fluor subsequently amended its claim, inter alia, by reducing the amount claimed from R485,7 million to R448 million excluding interest. On the 12th of March 2019 Fluor filed and served a further amendment to its statement of claim and an amended expert report in terms of which a further reduction in the quantum is being claimed. Fluor now claims an amount of R383,8 million (alternatively the amount of R406,6 million based on an alternative assessment of its claim). The amendment by Fluor resulted in the arbitration being postponed as Sasols experts will be required to deal with the revised expert report and we will be required to file an amendment to our statement of defence. The hearing of the matter is now only anticipated to commence in March 2020.
Sasol believes that Fluors original claim, including the amended claims are not justified. Accordingly, no provision was recognised at 30 June 2019.
Wetback Contracts (Pty) Ltd FTWEP
The dispute regarding Wetback Contracts (Pty) Ltd was concluded during the year.
Legal review of Sasol Gas National Energy Regulator of South Africa (NERSA) maximum price decision and NERSA gas transmission tariff application (March 2013)
In October 2013, following the March 2013 decisions by NERSA (pursuant to the applications by Sasol Gas), seven of the customers of Sasol Gas (customers) brought a legal review application requesting the setting aside of the maximum price methodology used by NERSA in evaluating the maximum price application by Sasol Gas as well as maximum price decision and gas transmission tariff decision. The basis of the challenge to the NERSA price decision is the allegation that the methodology used by NERSA to determine its approval of the maximum gas prices was unreasonable and irrational.
In October 2016 the High Court dismissed the review application The Applicants were subsequently granted consent to appeal this decision to the Supreme Court of Appeal (SCA). On 10 May 2018 the SCA upheld the appeal by the Applicants. NERSA and Sasol Gas each launched an application to the Constitutional Court (CC) to appeal the SCA decision.
Leave to appeal was granted and the matter was heard on 26 February 2019. On 15 July 2019 the CC handed down its decision. The Court upheld the appeal on the ruling by the SCA relating to the transmission tariffs and accordingly the NERSA transmission tariff decision was confirmed.
However, the court dismissed the remainder of the appeal. The Court found that NERSA, in applying the basket of alternatives approach to determine the Maximum Gas Price for Sasol Gas, was irrational as it did not take into account a required material fact for making a rational decision. NERSAs decision to approve maximum gas prices and a trading margin for Sasol Gas for the period 26 March 2014 to 30 June 2017 was therefore reviewed and set aside. In terms of the court order NERSA will have to consider the overturned decisions anew and decide on the approval of a new maximum gas price for Sasol. In accordance with the rules of the regulator, NERSA will, in considering a new maximum gas price application by Sasol, follow a public participation process that will afford Sasol as well as the affected stakeholders and customers the opportunity to provide input into the decision to be made by NERSA.
If the new maximum gas price approved by NERSA for the period of the overturned decision is lower than the actual price charged to customers, then a retrospective liability may arise for Sasol Gas as a result.
36 Contingent liabilities continued
It is not possible to determine at this time what the outcome of such a price decision by NERSA will be. Therefore, the likelihood of a future obligation cannot be determined currently and neither can an amount for such a possible obligation be reliably estimated. Therefore, no provision has been raised at 30 June 2019.
Nhlapo and 941 others versus Sasol Mining (Pty) Ltd
During 2009, the applicants in this matter were charged with participation in an unprotected sit-in, threatening and forcing others to participate in an unprotected strike and for assaulting or attempting to assault others during an unprotected strike and subsequently dismissed. The applicants are disputing their dismissal. On 19 September 2019, the Labour Court passed a judgement directing inter alia Sasol Mining to re-instate the employees and pay certain past benefits. Sasol Mining filed an application for leave to appeal the judgement on 10 October 2019. Once the latter has been obtained the appeal will be heard by the Labour Appeal Court. This date has not been set. Management has applied judgement and believe that there is no present obligation in terms of IAS 37. No provision has been raised at 30 June 2019.
Other litigation and tax matters
From time to time, Sasol companies are involved in other litigation and similar proceedings in the normal course of business. A detailed assessment is performed on each matter and a provision is recognised where appropriate. Although the outcome of these proceedings and claims cannot be predicted with certainty, the company does not believe that the outcome of any of these cases would have a material effect on the groups financial results.
36.2 Competition matters
Sasol continuously evaluates its compliance programmes and controls in general, including its competition law compliance programmes and controls. As a consequence of these compliance programmes and controls, including monitoring and review activities, Sasol has adopted appropriate remedial and/or mitigating steps, where necessary or advisable, lodged leniency applications and made disclosures on material findings as and when appropriate. These ongoing compliance activities have already revealed, and may still reveal, competition law contraventions or potential contraventions in respect of which we have taken, or will take, appropriate remedial and/or mitigating steps including lodging leniency applications.
36.3 Environmental orders
Sasols environmental obligation accrued at 30 June 2019 was R18 742 million compared to R14 933 million at 30 June 2018. Included in this balance is an amount accrued of approximately R4 924 million in respect of the costs of remediation of soil and groundwater contamination and similar environmental costs. These costs relate to the following activities: site assessments, soil and groundwater clean-up and remediation, and on-going monitoring. Due to uncertainties regarding future costs the potential loss in excess of the amount accrued cannot be reasonably determined.
Although Sasol has provided for known environmental obligations that are probable and reasonably estimable, the amount of additional future costs relating to remediation and rehabilitation may be material to results of operations in the period in which they are recognised. It is not expected that these environmental obligations will have a material effect on the financial position of the group.
37 Leases and other commitments
Operating leases Minimum future lease payments
The group leases buildings under long-term non-cancellable operating lease agreements and also rents offices and other equipment under operating leases that are cancellable at various short-term notice periods by either party.
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Property, plant and equipment |
|
|
|
|
|
Within one year |
|
2 276 |
|
2 068 |
|
One to five years |
|
6 089 |
|
5 863 |
|
More than five years |
|
15 716 |
|
15 344 |
|
Total minimum future lease payments |
|
24 081 |
|
23 275 |
|
Included in operating leases is the following:
· The lease for the Sasol Corporate office building. The lease term is 20 years with an option to extend for a further five years. This is a significant lease for the group.
· The rental of a rail cars for our North American Operations. The lease period varies from 12 to 18 years with an option to extend for a further six years.
These leasing arrangements do not impose any significant restrictions on the group or its subsidiaries.
The group has contingent rentals in respect of operating leases that are linked to market related data such as inflation.
Finance leases minimum future lease payments
The group leases buildings and other equipment under long-term non-cancellable finance lease agreements. These lease agreements contain terms of renewal and escalation clauses but exclude purchase options.
37 Leases and other commitments continued
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Within one year |
|
1 207 |
|
1 171 |
|
One to five years |
|
4 135 |
|
3 975 |
|
More than five years |
|
20 138 |
|
19 586 |
|
Less amounts representing finance charges |
|
(17 710 |
) |
(17 108 |
) |
Total minimum future lease payments |
|
7 770 |
|
7 624 |
|
The group has contingent rentals in respect of finance leases.
Other commitments
|
|
2019 |
|
2018 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Water reticulation for Secunda Synfuels Operations |
|
|
|
|
|
Within one year |
|
173 |
|
171 |
|
One to five years |
|
713 |
|
847 |
|
More than five years |
|
1 416 |
|
1 798 |
|
|
|
2 302 |
|
2 816 |
|
The water reticulation commitments of Secunda Synfuels Operations relate to a long-term water supply agreement. The rental payments are determined based on the quantity of water consumed over the 20 year period of the agreement.
38 Related party transactions
Parties are considered to be related if one party directly or indirectly has the ability to control or jointly control the other party or exercise significant influence over the other party or is a member of the key management of the reporting entity (Sasol Limited). In particular, this relates to joint ventures and associates. Disclosure in respect of joint ventures and associates is provided in note 20.
Group companies, in the ordinary course of business, entered into various purchase and sale transactions with associates and joint ventures. The effect of these transactions is included in the financial performance and results of the group. Terms and conditions are determined on an arms length basis. Amounts owing (after eliminating intercompany balances) to related parties are disclosed in the respective notes to the financial statements for those statement of financial position items. No impairment of receivables related to the amount of outstanding balances is required.
Material related party transactions
The following table shows the material transactions that are included in the annual financial statements using the equity method for associates and joint ventures.
|
|
2019 |
|
2018 |
|
2017 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Sales and services rendered from subsidiaries to related parties |
|
|
|
|
|
|
|
Joint ventures |
|
1 474 |
|
965 |
|
1 088 |
|
Purchases by subsidiaries from related parties |
|
|
|
|
|
|
|
Joint ventures |
|
718 |
|
671 |
|
617 |
|
Associates |
|
95 |
|
88 |
|
120 |
|
|
|
813 |
|
759 |
|
737 |
|
Identity of related parties with whom material transactions have occurred
Except for the groups interests in joint ventures and associates, there are no other related parties with whom material individual transactions have taken place.
Key management remuneration
Key management comprises of Executive and Non-executive Directors as well as other members of the Group Executive Committee (GEC)/Prescribed Officers.
|
|
|
|
Retirement |
|
Other |
|
Total |
|
Total |
|
Total |
|
|
|
Salary |
|
funding |
|
benefits |
|
2019 |
|
2018(1) |
|
2017(1) |
|
|
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
Executive Directors |
|
32 194 |
|
4 540 |
|
10 214 |
|
46 948 |
|
66 808 |
|
77 333 |
|
(1) |
Total remuneration for the financial year excludes gains derived from the long-term incentive schemes which are separately disclosed. |
38 Related party transactions continued
Gains on Long-term incentives and Share Appreciation Rights for the Executive Directors and former Executive Director were as follows:
|
|
|
|
Share |
|
|
|
|
|
|
|
|
|
Long-term |
|
appreciation |
|
|
|
|
|
|
|
|
|
incentive |
|
rights, with |
|
|
|
|
|
|
|
|
|
rights |
|
and without |
|
Total |
|
Total |
|
Total |
|
|
|
vested(1) |
|
CPTs exercised |
|
2019 |
|
2018 |
|
2017 |
|
|
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
Executive Directors |
|
25 025 |
|
|
|
25 025 |
|
20 515 |
|
24 970 |
|
(1) |
Long-term incentives for the 2019 financial year represent incentives approved on the group results for the 2019 financial year, payable in the 2020 financial year. |
Remuneration and benefits paid and short-term incentives approved for the Prescribed Officers were as follows:
|
|
|
|
Retirement |
|
Other |
|
Total |
|
Total |
|
Total |
|
|
|
Salary |
|
funding |
|
benefits |
|
2019 |
|
2018(1) |
|
2017(1) |
|
|
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
Prescribed Officers |
|
49 335 |
|
6 373 |
|
11 780 |
|
67 488 |
|
89 007 |
|
70 949 |
|
Number of Prescribed Officers |
|
|
|
|
|
|
|
8 |
|
8 |
|
7 |
|
(1) |
Total remuneration for the financial year excludes gains derived from the long-term incentive schemes which are separately disclosed. |
Gains on Long-term incentives and Share Appreciation Rights for the Prescribed Officers were as follows:
|
|
|
|
Share |
|
|
|
|
|
|
|
|
|
Long-term |
|
appreciation |
|
|
|
|
|
|
|
|
|
incentive |
|
rights, with |
|
|
|
|
|
|
|
|
|
rights |
|
and without |
|
Total |
|
Total |
|
Total |
|
|
|
vested(1) |
|
CPTs exercised |
|
2019 |
|
2018 |
|
2017 |
|
|
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
Prescribed Officers |
|
19 628 |
|
48 931 |
|
68 559 |
|
44 962 |
|
23 807 |
|
(1) |
Long-term incentives for the 2019 financial year represent incentives approved on the group results for the 2019 financial year, payable in the 2020 financial year. |
The total IFRS2 charge for Executive Directors and the Prescribed Officers in 2019 amounted to R32 million and R20 million, respectively.
Non-executive Directors emoluments for the year was as follows:
|
|
|
|
|
|
|
|
Ad Hoc |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
|
|
|
|
|
|
|
|
Board |
|
Lead |
|
|
|
Board |
|
|
|
|
|
|
|
|
|
meeting |
|
Director |
|
Committee |
|
Committee |
|
Total |
|
Total |
|
Total |
|
|
|
fees |
|
fees |
|
fees |
|
Meeting |
|
2019 |
|
2018 |
|
2017 |
|
|
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
R000 |
|
Non-executive Directors |
|
24 498 |
|
387 |
|
7 372 |
|
198 |
|
32 455 |
|
27 823 |
|
23 079 |
|
39 Subsequent events
In May 2019, the Board commissioned an independent review into the circumstances that may have delayed the prompt identification and reporting of the LCCP cost and schedule overruns. The report from the Board Review is complete and the Board considered the findings and appropriate steps arising from these.
Sasol and Huntsman Corporation signed a definitive agreement for Sasol to dispose of our 50% equity interest in the Sasol-Huntsman maleic anhydride joint venture. The transaction closed on 30 September 2019. Refer to note 11.
During 2009, 942 employees of Sasol Mining (Pty) Ltd were charged with participation in an unprotected sit-in, threatening and forcing others to participate in an unprotected strike and for assaulting or attempting to assault others during an unprotected strike and they were subsequently dismissed. The applicants are disputing their dismissal. On 19 September 2019, the Labour Court passed a judgement directing inter alia Sasol Mining to re-instate the employees and pay certain past benefits. Refer to note 36.
40 Financial risk management and financial instruments
Financial instruments overview
The following table summarises the groups classification of financial instruments.
|
|
|
|
Carrying value |
|
|
|
||||
|
|
|
|
At fair value through profit and loss |
|
Designated at fair value through other comprehensive income |
|
Amortised
|
|
Fair value |
|
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
Investments in listed securities |
|
|
|
|
|
830 |
|
|
|
830 |
|
Investments in unlisted securities |
|
|
|
|
|
393 |
|
|
|
393 |
|
Other long-term investments |
|
|
|
|
|
|
|
25 |
|
25 |
|
Long-term receivables |
|
19 |
|
|
|
|
|
5 582 |
|
5 582 |
|
Long- and short-term financial assets |
|
|
|
645 |
|
|
|
|
|
645 |
|
Trade and other receivables** |
|
24 |
|
|
|
|
|
25 611 |
|
25 611 |
* |
Cash and cash equivalents* |
|
27 |
|
|
|
|
|
15 877 |
|
15 877 |
* |
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
Listed long-term debt (Bonds issued)+ |
|
16 |
|
|
|
|
|
46 060 |
|
49 421 |
|
Unlisted long-term debt+ |
|
16 |
|
|
|
|
|
91 279 |
|
91 777 |
|
Short-term debt and bank overdraft |
|
|
|
|
|
|
|
1 297 |
|
1 297 |
* |
Long- and short-term financial liabilities |
|
|
|
2 205 |
|
|
|
|
|
2 205 |
|
Trade and other payables+ |
|
25 |
|
|
|
|
|
28 501 |
|
28 501 |
* |
Measurement principles under IFRS 9 remained the same to those previously applied except for investment in unlisted securities that are measured at fair value through other comprehensive income compared to being measured at cost under IAS 39. The cost under IAS 39 was R244 million at 30 June 2018. Both the listed and unlisted investment in securities were classified as available for sale under IAS 39. Refer to note 1 for transition approach.
|
|
|
|
Carrying value |
|
|
|
||||||
|
|
|
|
At fair value
|
|
Available-
|
|
Amortised
|
|
Held-to-
|
|
Fair value |
|
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in listed securities |
|
|
|
|
|
682 |
|
|
|
|
|
682 |
|
Investments in unlisted securities |
|
|
|
|
|
244 |
|
|
|
|
|
244 |
|
Other long-term investments |
|
|
|
|
|
|
|
|
|
25 |
|
25 |
|
Long-term receivables |
|
19 |
|
|
|
|
|
3 824 |
|
|
|
3 824 |
|
Long- and short-term financial assets |
|
|
|
1 827 |
|
|
|
|
|
|
|
1 827 |
|
Trade and other receivables** |
|
|
|
|
|
|
|
26 648 |
|
|
|
26 648 |
* |
Cash and cash equivalents |
|
27 |
|
|
|
|
|
17 128 |
|
|
|
17 128 |
* |
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Listed long-term debt (Bonds issued)+ |
|
16 |
|
|
|
|
|
13 704 |
|
|
|
13 345 |
|
Unlisted long-term debt+ |
|
16 |
|
|
|
|
|
95 750 |
|
|
|
95 984 |
|
Short-term debt and bank overdraft |
|
|
|
|
|
|
|
2 035 |
|
|
|
2 035 |
* |
Long- and short-term financial liabilities |
|
|
|
2 059 |
|
|
|
|
|
|
|
2 059 |
|
Trade and other payables+ |
|
25 |
|
|
|
|
|
26 518 |
|
|
|
26 518 |
* |
* |
The fair value of these instruments approximates carrying value, due to their short-term nature. |
** |
Trade and other receivables includes employee-related and insurance-related receivables. |
+ |
Includes unamortised loan costs. |
40 Financial risk management and financial instruments continued
40.1 Financial risk management
The group is exposed in varying degrees to a number of financial instrument related risks. The Group Executive Committee (GEC) has the overall responsibility for the establishment and oversight of the groups risk management framework. The GEC established the risk and safety, health and environment committee, which is responsible for providing the board with the assurance that significant business risks are systematically identified, assessed and reduced to acceptable levels. A comprehensive risk management process has been developed to continuously monitor and assess these risks. Based on the risk management process Sasol refined its hedging policy and the Sasol Limited Board appointed a subcommittee, the Hedging and Digital Committee that meets regularly to review and, if appropriate, approve the implementation of hedging strategies for the effective management of financial market related risks.
The group has a central treasury function that manages the financial risks relating to the groups operations.
Capital allocation
The groups objectives when managing capital (which includes share capital, borrowings, working capital and cash and cash equivalents) is to maintain a flexible capital structure that reduces the cost of capital to an acceptable level of risk and to safeguard the groups ability to continue as a going concern while taking advantage of strategic opportunities in order to grow shareholder value sustainably.
The group manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, repurchase shares currently issued, issue new shares, issue new debt, issue new debt to replace existing debt with different characteristics and/or sell assets to reduce debt.
The group monitors capital utilising a number of measures, including the gearing ratio. The groups targeted gearing ratio has been lifted to 60% until 2021 and thereafter will be managed down to the long-term target of between 20% and 40%. Gearing takes into account the groups substantial capital investment and susceptibility to external market factors such as crude oil prices, exchange rates and commodity chemical prices. The groups gearing level for 2019 is 56,3% (2018 42,2%; 2017 26,4%).
Financing risk
Financing risk refers to the risk that financing of the groups net debt requirements and refinancing of existing borrowings could become more difficult or more costly in the future. This risk can be decreased by managing the group within the targeted gearing ratio, maintaining an appropriate spread of maturity dates, and managing short-term borrowings within acceptable levels.
The groups target for long-term borrowings include an average time to maturity of at least two years, and an even spread of maturities.
Credit rating
To achieve and keep an optimal capital structure, the group aims to maintain a stable long-term investment grade credit rating, recognising that Sasol, like all South African domiciled entities, is constrained (but not necessarily capped) by the South African sovereign rating. In November 2017 S&P downgraded South Africas sovereign credit rating from BB+ investment grade to BB with a stable outlook. In December 2018, S&P affirmed Sasols rating at BBB-/A-3 with a stable outlook.
In May 2019 Moodys Investors Service affirmed Sasol Limiteds long-term issuer rating at Baa3, however changed the outlook from stable to negative. The national issuer scale rating changed from Aaa.za to Aa1.za.
Risk profile
Risk management and measurement relating to each of these risks is discussed under the headings below (sub-categorised into credit risk, liquidity risk, and market risk) which entails an analysis of the types of risk exposure, the way in which such exposure is managed and quantification of the level of exposure in the statement of financial position.
Credit risk
Credit risk, or the risk of financial loss due to counterparties not meeting their contractual obligations. Credit risk is deemed to be low when based on the forward available information it is highly probably that the customer will service its debt in accordance to the agreement throughout the period.
How we manage the risk
The risk is managed by the application of credit approvals, limits and monitoring procedures. Where appropriate, the group obtains security in the form of guarantees to mitigate risk. Counterparty credit limits are in place and are reviewed and approved by the respective subsidiary credit management committees. The central treasury function provides credit risk management for the group-wide exposure in respect of a diversified group of banks and other financial institutions. These are evaluated regularly for financial robustness especially in the current global economic environment. Management has evaluated treasury counterparty risk and does not expect any treasury counterparties to fail in meeting their obligations. The group maximum exposure is the outstanding carrying amount of the financial asset.
For all financial assets measured at amortised cost, the group calculates the expected credit loss based on contractual payment terms of the asset. The contractual payment terms for receivables vary from 30 days to 120 days. The exposure to credit risk is influenced by the individual characteristics, the industry and geographical area of the counterparty with whom we have transacted. Financial assets at amortised cost are carefully monitored and reviewed on a regular basis for expected credit loss and impairment based on our credit risk policy.
40 Financial risk management and financial instruments continued
Expected credit loss is calculated as a function of probability of default, loss given default and exposure at default. The group allocate probability of default based on the external and internal information. The major portion of the financial assets at amortised cost consist of externally rated customers and the group uses the average of Moodys, Fitch and S&P Corporate and Sovereign probability of defaults, depending on whether the customer or holder of the financial asset is corporate or government related. For customers or debtors that are not rated by the rating agency, the group allocate internal credit ratings and default rates taking into account forward looking information, based on the, debtors profile and financial status. Loss given default is based on the Basel model. The Basel model assumes 35% loss given default for secured financial assets and 45% for unsecured financial assets. Credit enhancement is only taken into account if it is integral to the asset. Trade receivables expected credit loss is calculated over lifetime. Other financial assets expected credit loss is measured over 12 months when the credit risk is low and over lifetime where the credit risk has increased. Credit risk is deemed to have increases when the payment is 30 days overdue and the customer have defaulted, indicating that their inability to honor the debt.
No single customer represents more than 10% of the groups total turnover or more than 10% of total trade receivables for the years ended 30 June 2019, 2018 and 2017. Approximately 50% (2018 49%; 2017 48%) of the groups total turnover is generated from sales within South Africa, while about 22% (2018 24%; 2017 22%) relates to European sales and 14% (2018 13%; 2017 13%) relates to sales within the US. The concentration of credit risk within geographic regions is largely aligned with the geographic regions in which the turnover was earned.
Detail of allowances for credit losses:
|
|
|
|
2019 |
|
2018 |
|
||||
|
|
Life time |
|
12 months |
|
Deductions |
|
Expected
|
|
Impairment |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Long-term receivables |
|
211 |
|
|
|
|
|
211 |
|
38 |
|
Trade receivables |
|
225 |
|
|
|
|
|
225 |
|
199 |
|
Other receivables |
|
204 |
|
24 |
|
|
|
228 |
|
228 |
|
|
|
640 |
|
24 |
|
|
|
664 |
|
465 |
|
Overview of the credit risk profile of financial assets measured at amortised cost is as follows:
|
|
2019 |
|
|
|
% |
|
AAA to A- |
|
85 |
|
BBB to B- |
|
8 |
|
CCC+ and - below |
|
7 |
|
An amount of R465 million has been recognised under IAS 39 as at 30 June 2018. During 2019 additional net impairments of R199 million were recognised.
The effect of the change was inconsequential on Sasols accounting as the expected loss basis is not significantly different from the stringent debtor management policies currently applied by Sasol, and therefore no transition adjustment is presented.
Expected credit loss (in both long-term receivables and trade receivables) mainly relate to exposure to Mozambique.
Liquidity risk
Liquidity risk is the risk that an entity in the group will be unable to meet its obligations as they become due.
How we manage the risk
The group manages liquidity risk by effectively managing its working capital, capital expenditure and cash flows, making use of a central treasury function to manage pooled business unit cash investments and borrowing requirements. Currently the group is maintaining a positive liquidity position, conserving the groups cash resources through continued focus on working capital improvement, cost savings and capital reprioritisation. The group meets its financing requirements through a mixture of cash generated from its operations and, short and long-term borrowings and strives to maintain adequate banking facilities and reserve borrowing capacities.
The group is in compliance with all of the financial covenants per its loan agreements, none of which is expected to present a material restriction on funding or its investment policy in the near future. The group currently has sufficient undrawn borrowing facilities, which could be utilised to settle obligations and is planning for additional facilities to manage the finalisation of the LCCP. Refer to note 16.
40 Financial risk management and financial instruments continued
Our exposure to and assessment of the risk
The maturity profile of the undiscounted contractual cash flows of financial instruments at 30 June were as follows:
|
|
|
|
Contractual
|
|
Within
|
|
One to
|
|
More than
|
|
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
Non-derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
Long-term receivables |
|
19 |
|
5 582 |
|
|
|
4 203 |
|
1 379 |
|
Trade and other receivables |
|
24 |
|
25 611 |
|
25 611 |
|
|
|
|
|
Cash and cash equivalents (excluding restricted cash) |
|
|
|
13 397 |
|
13 397 |
|
|
|
|
|
Investments through other comprehensive income |
|
|
|
1 223 |
|
680 |
|
543 |
|
|
|
Other long-term investments |
|
|
|
25 |
|
|
|
25 |
|
|
|
|
|
|
|
45 838 |
|
39 688 |
|
4 771 |
|
1 379 |
|
Derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
|
|
2 161 |
|
2 161 |
|
|
|
|
|
Interest rate swap |
|
|
|
15 |
|
|
|
8 |
|
7 |
|
Zero cost collar |
|
|
|
582 |
|
582 |
|
|
|
|
|
Ethane swaps |
|
|
|
2 |
|
2 |
|
|
|
|
|
Other commodity derivatives |
|
|
|
31 |
|
31 |
|
|
|
|
|
|
|
|
|
48 629 |
|
42 464 |
|
4 779 |
|
1 386 |
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
Non-derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
Long-term debt*** |
|
16 |
|
(183 445 |
) |
(8 232 |
) |
(138 453 |
) |
(36 760 |
) |
Short-term debt |
|
16 |
|
(1 239 |
) |
(1 239 |
) |
|
|
|
|
Trade and other payables |
|
25 |
|
(28 501 |
) |
(28 501 |
) |
|
|
|
|
Bank overdraft |
|
27 |
|
(58 |
) |
(58 |
) |
|
|
|
|
Financial guarantees** |
|
|
|
(1 326 |
) |
(1 326 |
) |
|
|
|
|
|
|
|
|
(214 569 |
) |
(39 356 |
) |
(138 453 |
) |
(36 760 |
) |
Derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
|
|
(2 190 |
) |
(2 190 |
) |
|
|
|
|
Interest rate swap |
|
|
|
(1 488 |
) |
(213 |
) |
(1 029 |
) |
(246 |
) |
Zero cost collar |
|
|
|
(3 |
) |
(3 |
) |
|
|
|
|
Ethane swaps |
|
|
|
(456 |
) |
(456 |
) |
|
|
|
|
Crude oil futures |
|
|
|
(27 |
) |
(27 |
) |
|
|
|
|
Other commodity derivatives |
|
|
|
(10 |
) |
(10 |
) |
|
|
|
|
|
|
|
|
(218 743 |
) |
(42 255 |
) |
(139 482 |
) |
(37 006 |
) |
* |
Contractual cash flows include interest payments. |
** |
Issued financial guarantees contracts are all repayable on default, however the likelihood of default is considered remote. |
*** |
Of the amounts due in one to five years, R131 billion relates to the repayment of the bonds, the revolving credit facility and the term loan. |
40 Financial risk management and financial instruments continued
|
|
|
|
Contractual |
|
Within |
|
One to |
|
More than |
|
|
|
|
|
cash flows* |
|
one year |
|
five years |
|
five years |
|
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
Non-derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
Long-term receivables |
|
19 |
|
3 786 |
|
|
|
1 586 |
|
2 200 |
|
Trade and other receivables |
|
24 |
|
26 648 |
|
26 648 |
|
|
|
|
|
Cash and cash equivalents (excluding restricted cash) |
|
27 |
|
15 148 |
|
15 148 |
|
|
|
|
|
Investments available-for-sale |
|
|
|
926 |
|
926 |
|
|
|
|
|
Investments held-to-maturity |
|
|
|
25 |
|
|
|
25 |
|
|
|
|
|
|
|
46 533 |
|
42 722 |
|
1 611 |
|
2 200 |
|
Derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
|
|
1 214 |
|
1 214 |
|
|
|
|
|
Interest rate swap |
|
|
|
246 |
|
|
|
|
|
246 |
|
Zero cost collar |
|
|
|
979 |
|
979 |
|
|
|
|
|
Crude oil options |
|
|
|
482 |
|
482 |
|
|
|
|
|
Ethane swaps |
|
|
|
33 |
|
33 |
|
|
|
|
|
|
|
|
|
49 487 |
|
45 430 |
|
1 611 |
|
2 446 |
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
Non-derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
16 |
|
(139 294 |
) |
(16 612 |
) |
(86 415 |
) |
(36 267 |
) |
Short-term debt |
|
16 |
|
(1 946 |
) |
(1 946 |
) |
|
|
|
|
Trade and other payables |
|
25 |
|
(26 518 |
) |
(26 518 |
) |
|
|
|
|
Bank overdraft |
|
27 |
|
(89 |
) |
(89 |
) |
|
|
|
|
Financial guarantees** |
|
|
|
(1 539 |
) |
(1 539 |
) |
|
|
|
|
|
|
|
|
(169 386 |
) |
(46 704 |
) |
(86 415 |
) |
(36 267 |
) |
Derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
|
|
(1 217 |
) |
(1 217 |
) |
|
|
|
|
Coal swaps |
|
|
|
(414 |
) |
(414 |
) |
|
|
|
|
Zero cost collar |
|
|
|
(1 317 |
) |
(1 317 |
) |
|
|
|
|
Crude oil futures |
|
|
|
(91 |
) |
(91 |
) |
|
|
|
|
|
|
|
|
(172 425 |
) |
(49 743 |
) |
(86 415 |
) |
(36 267 |
) |
* |
Contractual cash flows include interest payments. |
** |
Issued financial guarantees contracts are all repayable on default, however the likelihood of default is considered remote. |
Market risk
Market risk is the risk arising from possible market price movements and their impact on the future cash flows of the business. The market price movements that the group is exposed to:
Foreign currency risk
Foreign currency risk is a risk that earnings and cash flows will be affected due to changes in exchange rates.
How we manage the risk
Our Hedging and Digital Committee sets broad guidelines in terms of tenor and hedge cover ratios specifically to assess future currency exposure, which have the potential to materially affect our financial position. These guidelines and our hedging policy are reviewed from time to time. This hedging strategy enables us to better predict cash flows and thus manage our liquidity and key financial metrics more effectively. Foreign currency risks are managed through the groups hedging policy and financing policies and the selective use of various derivatives.
40 Financial risk management and financial instruments continued
Our exposure to and assessment of the risk
The groups transactions are predominantly entered into in the respective functional currency of the individual operations. The construction of the LCCP has largely been financed through funds obtained in US dollar, with a small portion of funds obtained from Rand sources. A large portion of our turnover and capital investments are significantly impacted by the rand/US$ and rand/EUR exchange rates. Some of our fuel products are governed by the BFP, of which a significant variable is the rand/US$ exchange rate. Our export chemical products are mostly commodity products whose prices are largely based on global commodity and benchmark prices quoted in US dollars and consequently are exposed to exchange rate fluctuations that have an impact on cash flows. These operations are exposed to foreign currency risk in connection with contracted payments in currencies not in their individual functional currency. The most significant exposure for the group exists in relation to the US dollar and the Euro. The translation of foreign operations to the presentation currency of the group is not taken into account when considering foreign currency risk.
Zero-cost collars
In line with the risk mitigation strategy, the group hedges a significant portion of its estimated foreign currency exposure in respect of forecast sales and purchases over the following 12 months. The group uses zero-cost collars to hedge its currency risk, most with a maturity of less than one year from the reporting date.
Foreign exchange contracts
Foreign exchange contracts (FECs) are utilised throughout the group to hedge the risk of currency depreciation on committed and highly probable forecast transactions. Transactions hedged with FECs include capital and goods purchases (imports) and sales (exports). Other transactions hedged include certain intercompany loans which expose the group to foreign currency risk.
A number of FECs were entered into during the year and classified as held for trading. FECs are also utilised in the group in cash flow hedge relationships. FECs taken out to hedge exposure to fluctuations in the rand/US$ exchange rate were held over a total notional amount of Rnil million at 30 June 2019 (2018 R33 million (US$nil; EUR2,1 million)).
The following significant exchange rates were applied during the year:
|
|
Average rate |
|
Closing rate |
|
||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
Rand |
|
Rand |
|
Rand |
|
Rand |
|
Rand/Euro |
|
16,19 |
|
15,34 |
|
16,01 |
|
16,04 |
|
Rand/US dollar |
|
14,20 |
|
12,85 |
|
14,08 |
|
13,73 |
|
The table below shows the significant currency exposure where entities within the group have monetary assets or liabilities that are not in their functional currency, have exposure to the US dollar or the Euro. The amounts have been presented in rand by converting the foreign currency amount at the closing rate at the reporting date.
* |
The US$ increase relates to additional funding provided to the LCCP by Sasol Financing International. |
Sensitivity analysis
The following sensitivity analysis is provided to show the foreign currency exposure of the individual entities at the end of the reporting period. This analysis is prepared based on the statement of financial position balances that exist at year-end, for which there is currency risk, before consideration of currency derivatives, which exist at that point in time. The effect on equity is calculated as the effect on profit and loss. The effect of translation of results into presentation currency of the group is excluded from the information provided.
A 10% weakening in the groups significant exposure to the foreign currency at 30 June would have increased either the equity or the profit by the amounts below, before the effect of tax. This analysis assumes that all other variables, in particular, interest rates, remain constant, and has been performed on the same basis for 2018.
40 Financial risk management and financial instruments continued
|
|
2019 |
|
2018 |
|
||||
|
|
|
|
Income |
|
|
|
Income |
|
|
|
Equity |
|
statement |
|
Equity |
|
statement |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Euro |
|
54 |
|
54 |
|
17 |
|
17 |
|
US dollar |
|
(2 143 |
) |
(2 143 |
) |
1 053 |
|
1 053 |
|
A 10% movement in the opposite direction in the groups exposure to foreign currency would have an equal and opposite effect to the amounts disclosed above.
Interest rate risk
Interest rate risk is the risk that the value of short term investments and financial activities will change as a result of fluctuations in the interest rates.
Fluctuations in interest rates impact on the value of short-term investments and financing activities, giving rise to interest rate risk. The group has significant exposure to interest rate risk due to the volatility in South African, European and US interest rates.
How we manage the risk
Our debt is comprised of different instrument notes, which by their nature either bear interest at a floating or a fixed rate. We monitor the ratio of floating and fixed interest in our loan portfolio and manage this ratio, by electing to incur either bank loans, bearing a floating interest rate, or bonds, which bear a fixed interest rate. We may also use interest rate swaps, where appropriate, to convert some of our debt into either floating or fixed rate debt to manage the composition of our portfolio. In some cases, we may also use other interest rate derivatives, which enables us to mitigate the risks associated with this exposure.
In respect of financial assets, the groups policy is to invest cash at floating rates of interest and cash reserves are to be maintained in short-term investments (less than one year) in order to maintain liquidity, while achieving a satisfactory return for shareholders.
Our exposure to and assessment of the risk
The group has exposure to the US dollar London Interbank Overnight Rate (LIBOR) through various instruments, including term loans and revolving credit facilities. In 2015, we entered into an interest rate swap for US$1,95 billion to convert variable LIBOR exposure to a fixed rate. It was designated as the hedging instrument in a cash flow hedge. The swap was novated in June 2019 when the underlying LCCP bank term loan was refinanced. This ended the hedge relationship with hedge accounting discontinued. The swap continues to be an economic hedge that cover a portion of the groups exposure to the LIBOR and we will redesignate the swap as a hedging instrument in a cash flow hedge in financial year 2020.
Developments in respect of the proposed reform of the US dollar LIBOR and the impact thereof on our LIBOR linked debt facilities and interest rate swap are actively monitored. Changes to the interest rate benchmark will be considered in conjunction with the surrounding facts and circumstances at the time and appropriate changes and resetting of rates with counterparties will be negotiated and agreed.
At the reporting date, the interest rate profile of the groups interest-bearing financial instruments, including the effect of the interest rate swap was:
|
|
Carrying value |
|
||
|
|
2019 |
|
2018 |
|
|
|
Rm |
|
Rm |
|
Variable rate instruments |
|
|
|
|
|
Financial assets |
|
16 663 |
|
18 657 |
|
Financial liabilities |
|
(54 542 |
) |
(58 908 |
) |
|
|
(37 879 |
) |
(40 251 |
) |
Fixed rate instruments |
|
|
|
|
|
Financial assets |
|
197 |
|
97 |
|
Financial liabilities |
|
(83 151 |
) |
(51 144 |
) |
|
|
(82 954 |
) |
(51 047 |
) |
Interest profile (variable: fixed rate as a percentage of total financial assets) |
|
99:1 |
|
99:1 |
|
Interest profile (variable: fixed rate as a percentage of total financial liabilities) |
|
40:60 |
|
54:46 |
|
40 Financial risk management and financial instruments continued
Cash flow sensitivity for variable rate instruments
Financial instruments affected by interest rate risk include borrowings, deposits, derivative financial instruments, trade receivables and trade payables. A change of 1% in the prevailing interest rate in a particular currency at the reporting date would have increased/(decreased) earnings by the amounts shown below before the effect of tax. The sensitivity analysis has been prepared on the basis that all other variables, in particular foreign currency rates, remain constant and has been performed on the same basis for 2019. The sensitivity has been calculated including consideration of the effect of existing interest rate swap derivative instruments. Interest is recognised in the income statement using the effective interest rate method. With the swap to be designated as a hedge instrument in financial year 2020, the cash flow hedge reserve will be reclassified to profit and loss on a similar basis. Currently the total notional exposure hedged under the swap is US$1,95 billion (2018 US$2,00 billion).
Income statement 1% increase
|
|
|
|
|
|
United States |
|
|
|
|
|
South Africa |
|
Europe |
|
of America |
|
Other |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
30 June 2019 |
|
27 |
|
15 |
|
(433 |
) |
12 |
|
30 June 2018 |
|
(66 |
) |
6 |
|
(362 |
) |
18 |
|
Income statement 1% decrease
|
|
|
|
|
|
United States |
|
|
|
|
|
South Africa |
|
Europe* |
|
of America* |
|
Other* |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
30 June 2019 |
|
(27 |
) |
(15 |
) |
433 |
|
(12 |
) |
30 June 2018 |
|
66 |
|
(6 |
) |
362 |
|
(18 |
) |
* |
A decrease of 1% in interest rates for the United States of America and Europe will not have an effect on the income statement as it is not considered reasonably possible that the repo interest rates will decrease below 0%. |
|
|
Average
|
|
Expiry |
|
Fair value loss
|
|
Fair value loss
|
|
Recognised in
|
|
Recognised
|
|
Interest rate swap derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
US$ pay fixed rate receive floating rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
North America** |
|
2,78 |
|
December 2026 |
|
(285 |
) |
(950 |
) |
(1 485 |
) |
52 |
|
Mozambique |
|
2,80 |
|
February 2030 |
|
|
|
|
|
10 |
|
|
|
** |
The interest rate swap was novated in June 2019 when the underlying LCCP bank term loan was refinanced. This ended the hedge relationship with hedge accounting discontinued. A loss of R1 400 million was recognised in other comprehensive income on the revaluation of the cash flow hedge that was offset by a gain of R1 115 million on the reclassification of the swap to profit and loss on termination of the hedge relationship. We will redesignate the swap as a hedging instrument in a cash flow hedge in financial year 2020. |
Commodity price risk
Commodity price risk is the risk of fluctuations in our earnings as a result of fluctuation in the price of commodities.
How we manage the risk
Crude oil, ethane and coal price
The group makes use of derivative instruments, including options and commodity swaps as a means of mitigating price movements and timing risks on crude oil purchases and sales, ethane purchases and export coal sales. The group entered into hedging contracts which provide downside protection against decreases in commodity prices.
Our exposure to and assessment of the risk
A substantial proportion of our turnover is derived from sales of petroleum and petrochemical products. Market prices for crude oil fluctuate because they are subject to international supply and demand and political factors. Our exposure to the crude oil price centres primarily around the selling price of the fuel marketed by our Energy business which is governed by the Basic Fuel Price (BFP) formula, the crude oil related raw materials used in our Natref refinery and certain of our offshore operations including were chemical prices are linked to the crude oil price. Key factors in the BFP are the Mediterranean and Singapore or Mediterranean and Arab Gulf product prices for petrol and diesel, respectively.
40 Financial risk management and financial instruments continued
Dated Brent Crude prices applied during the year:
|
|
Dated Brent Crude |
|
||
|
|
2019 |
|
2018 |
|
|
|
US$ |
|
US$ |
|
High |
|
86,16 |
|
80,29 |
|
Average |
|
68,63 |
|
63,62 |
|
Low |
|
50,21 |
|
46,53 |
|
The following futures were in place at 30 June:
|
|
Contract
|
|
Fair value |
|
Within
|
|
Contract
|
|
Fair value |
|
Within
|
|
|
|
2019 |
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Crude oil futures |
|
1 521 |
|
(27 |
) |
(27 |
) |
2 792 |
|
(91 |
) |
(91 |
) |
Other commodity derivatives |
|
254 |
|
21 |
|
21 |
|
|
|
|
|
|
|
Sensitivity analysis
A 10% increase of the commodity prices at 30 June would have increased the fair value losses recognised in other operating costs in the income statement by the amounts shown below, before the effect of tax. This analysis assumes that all other variables remain constant and should not be considered predictive of future performances. This calculation has been performed on the same basis for 2018.
|
|
2019 |
|
2018 |
|
|
|
Rm |
|
Rm |
|
Crude oil |
|
(193 |
) |
(153 |
) |
Sensitivity analysis
A 10% decrease in the commodity prices at 30 June would have the equal but opposite effect on the fair value amounts shown above, on the basis that all other variables remain constant.
Summary of our derivatives
In the normal course of business, the group enters into various derivative transactions to mitigate our exposure to foreign exchange rates, interest rates, and commodity prices Derivative instruments used by the group in hedging activities include swaps, options, forwards and other similar types of instruments.
|
|
2019 |
|
2018 |
|
2017 |
|
Income statement impact |
|
Rm |
|
Rm |
|
Rm |
|
Financial instruments |
|
|
|
|
|
|
|
Net (loss)/gain on derivative instruments |
|
|
|
|
|
|
|
Foreign exchange contracts (losses)/gains |
|
(794 |
) |
121 |
|
(1 107 |
) |
Put option crude oil derivatives |
|
(498 |
) |
(3 303 |
) |
(237 |
) |
Zero cost collar foreign exchange derivatives |
|
323 |
|
936 |
|
1 608 |
|
Crude oil futures |
|
265 |
|
(687 |
) |
277 |
|
Coal swaps |
|
91 |
|
(1 024 |
) |
94 |
|
Ethane swaps |
|
(462 |
) |
29 |
|
|
|
Interest rate swaps |
|
(1 475 |
) |
52 |
|
14 |
|
Other forex derivative |
|
85 |
|
|
|
|
|
|
|
(2 465 |
) |
(3 876 |
) |
649 |
|
40 Financial risk management and financial instruments continued
Statement of financial position impact
|
|
2019 |
|
2018 |
|
|
|
Rm |
|
Rm |
|
Financial instrument |
|
|
|
|
|
Derivative financial assets |
|
|
|
|
|
Foreign exchange contracts |
|
15 |
|
42 |
|
Zero cost collar |
|
582 |
|
979 |
|
Crude oil options |
|
|
|
482 |
|
Interest rate swaps |
|
15 |
|
291 |
|
Ethane swaps |
|
2 |
|
33 |
|
Other commodity derivatives |
|
31 |
|
|
|
|
|
645 |
|
1 827 |
|
Derivative financial liabilities |
|
|
|
|
|
Foreign exchange contracts |
|
(44 |
) |
(45 |
) |
Coal swaps |
|
|
|
(414 |
) |
Crude oil futures |
|
(27 |
) |
(91 |
) |
Zero cost collar |
|
(3 |
) |
(1 317 |
) |
Interest rate swaps |
|
(1 488 |
) |
(45 |
) |
Ethane swaps |
|
(456 |
) |
|
|
Other commodity derivatives |
|
(10 |
) |
|
|
|
|
(2 028 |
) |
(1 912 |
) |
Non-derivative financial liabilities |
|
|
|
|
|
Financial guarantees |
|
(177 |
) |
(147 |
) |
|
|
(2 205 |
) |
(2 059 |
) |
Derivatives designated in the hedge relationships
The group has exposure to the US dollar LIBOR through various instruments, including term loans and revolving credit facilities. In 2015, we entered into an interest rate swap for US$1,95 billion to convert variable LIBOR exposure to a fixed rate. It was designated as the hedging instrument in a cash flow hedge. The swap was novated in June 2019 when the underlying LCCP bank term loan was refinanced. This ended the hedge relationship with hedge accounting discontinued. The swap continues to cover a portion of the groups exposure to the LIBOR and we will redesignate the swap as a hedging instrument in a cash flow hedge in financial year 2020.
The other derivatives within the group are economic hedges to our exposure to the rand/US$ exchange rates and commodity prices that have not been classified as cash flow hedges.
|
|
Fair value
|
|
Fair value
|
|
|
|
2019 |
|
2018 |
|
|
|
Rm |
|
Rm |
|
Interest rate swap derivatives held for trading (2018 cash flow hedge) |
|
(1 473 |
) |
246 |
|
|
|
Fair value |
|
Fair value |
|
Fair value |
|
Fair value |
|
|
|
Contract/ |
|
Contract/ |
|
|
|
of assets |
|
of assets |
|
of liabilities |
|
of liabilities |
|
|
|
Notional |
|
Notional |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
amount* |
|
amount* |
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
|
|
2019 |
|
2018 |
|
Derivatives held for trading |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
15 |
|
42 |
|
(44 |
) |
(45 |
) |
US$m |
|
146 |
|
226 |
|
Crude oil futures |
|
|
|
|
|
(27 |
) |
(91 |
) |
US$m |
|
92 |
|
194 |
|
|
|
15 |
|
42 |
|
(71 |
) |
(136 |
) |
|
|
|
|
|
|
* The notional amount is the sum of the absolute value of all contracts for both derivative assets and liabilities.
40 Financial risk management and financial instruments continued
In addition to foreign exchange contract utilised in normal operating activities, the following derivatives were entered into to mitigate the risks associated with the crude oil price, the rand/US$ exchange rate, ethane price and the coal price.
|
|
|
|
2019 |
|
2018 |
|
Brent crude oil Put options |
|
|
|
|
|
|
|
Premium paid |
|
US$m |
|
|
|
207 |
|
Number of barrels |
|
million |
|
48 |
|
98 |
|
Open positions |
|
million |
|
|
|
48 |
|
Settled |
|
million |
|
48 |
|
50 |
|
Average Brent crude oil price floor, net of costs (open positions) |
|
US$/bbl |
|
|
|
53,36 |
|
Realised losses recognised in the income statement |
|
Rm |
|
(1 857 |
) |
(1 605 |
) |
Unrealised (losses)/gains recognised in the income statement |
|
Rm |
|
1 359 |
|
(1 698 |
) |
Amount included in the statement of financial position |
|
Rm |
|
|
|
482 |
|
|
|
|
|
|
|
|
|
Rand/US$ currency Zero-cost collar instruments |
|
|
|
|
|
|
|
US$ exposure open positions |
|
US$bn |
|
4 |
|
4 |
|
Annual average floor |
|
R/US$ |
|
13,84 |
|
13,14 |
|
Annual average cap |
|
R/US$ |
|
16,63 |
|
15,14 |
|
Realised (losses)/gains recognised in the income statement |
|
Rm |
|
(610 |
) |
2 772 |
|
Unrealised gains/(losses) recognised in the income statement |
|
Rm |
|
933 |
|
(1 836 |
) |
Amount included in the statement of financial position |
|
Rm |
|
579 |
|
(338 |
) |
|
|
|
|
|
|
|
|
Export coal Swap options |
|
|
|
|
|
|
|
Number of tons |
|
million |
|
1,40 |
|
4,20 |
|
Open positions |
|
million |
|
|
|
1,40 |
|
Settled |
|
million |
|
1,40 |
|
2,80 |
|
Average coal swap price (open positions) |
|
US$/ton |
|
|
|
81,82 |
|
Realised losses recognised in the income statement |
|
Rm |
|
(337 |
) |
(618 |
) |
Unrealised gains/(losses) recognised in the income statement |
|
Rm |
|
428 |
|
(406 |
) |
Amount included in the statement of financial position |
|
Rm |
|
|
|
(414 |
) |
|
|
|
|
|
|
|
|
Ethane Swap options |
|
|
|
|
|
|
|
Number of barrels |
|
million |
|
16,00 |
|
5,80 |
|
Open positions |
|
million |
|
12,50 |
|
3,50 |
|
Settled |
|
million |
|
3,50 |
|
2,30 |
|
Average ethane swap price (open positions) |
|
US$ c/gal |
|
28 |
|
27 |
|
Realised gains/(losses) recognised in the income statement |
|
Rm |
|
29 |
|
(1 |
) |
Unrealised (losses)/gains recognised in the income statement |
|
Rm |
|
(491 |
) |
30 |
|
Amount included in the statement of financial position |
|
Rm |
|
(454 |
) |
33 |
|
40 Financial risk management and financial instruments continued
Sensitivity analysis
The fair value of significant derivatives held for trading is impacted by a number of market observable variables at valuation date. The sensitivities provided below reflect the impact on fair value as a result of movements in the significant input variables utilised for valuation purposes:
|
|
|
|
Volatility |
|
Commodity price |
|
Rand/US$ |
|
US$ Libor curve |
|
||||||
|
|
|
|
|
|
|
|
+USD 2 |
|
-USD 2 |
|
|
|
|
|
|
|
30 June 2019 |
|
|
|
+2% |
|
-2% |
|
c/gal |
|
c/gal |
|
-R1/US$* |
|
+0,5% |
|
-0,5% |
|
Ethane swap |
|
Rm |
|
90 |
|
(82 |
) |
146 |
|
(146 |
) |
|
|
|
|
|
|
Zero-cost collar |
|
Rm |
|
115 |
|
(125 |
) |
|
|
|
|
2 495 |
|
|
|
|
|
Interest rate swap |
|
Rm |
|
|
|
|
|
|
|
|
|
|
|
754 |
|
(748 |
) |
|
|
|
|
Volatility |
|
Commodity price |
|
Rand/US$ |
|
US$ Libor curve |
|
||||||
30 June 2018 |
|
|
|
+2% |
|
-2% |
|
+USD 2/bbl |
|
-USD 2/bbl |
|
-R1/US$* |
|
+0,5% |
|
-0,5% |
|
Crude oil options |
|
Rm |
|
88 |
|
(80 |
) |
(68 |
) |
81 |
|
|
|
|
|
|
|
Zero-cost collar |
|
Rm |
|
27 |
|
(22 |
) |
|
|
|
|
2 731 |
|
|
|
|
|
Interest rate swap |
|
Rm |
|
|
|
|
|
|
|
|
|
|
|
866 |
|
(865 |
) |
* A weakening of the Rand/US$ spot exchange rate of R2,55, will likely result in the spot price falling within the corridor of the cap and floor rates of the zero-cost collars. No gain or loss will be made if these derivatives are settled at a spot price between the cap and floor. The exchange rate would have to weaken by at least R2,55/US$, up to the cap of R16,63, before losses are incurred on the derivatives.
40.2 Fair value
Various valuation techniques and assumptions are utilised for the purpose of calculating fair value.
The group does not hold any financial instruments traded in an active market, except for the investment in listed equity instruments. Fair value is determined using valuation techniques as outlined below. Where possible, inputs are based on quoted prices and other market determined variables.
Fair value hierarchy
The following table is provided representing the assets and liabilities measured at fair value at reporting date, or for which fair value is disclosed at reporting date.
The calculation of fair value requires various inputs into the valuation methodologies used.
The source of the inputs used affects the reliability and accuracy of the valuations. Significant inputs have been classified into the hierarchical levels in line with IFRS 13, as shown below.
There have been no transfers between levels in the current year. Transfers between levels are considered to have occurred at the date of the event or change in circumstances.
Level 1 Quoted prices in active markets for identical assets or liabilities.
Level 2 Inputs other than quoted prices that are observable for the asset or liability (directly or indirectly).
Level 3 Inputs for the asset or liability that are unobservable.
40 Financial risk management and financial instruments continued
|
|
Fair value |
|
|
|
|
|
Fair value |
|
|
|
30 June |
|
|
|
|
|
hierarchy |
|
Financial instrument |
|
2019 |
|
Valuation method |
|
Significant inputs |
|
of inputs |
|
Financial assets |
|
|
|
|
|
|
|
|
|
Investments in listed securities |
|
830 |
|
Quoted market price for the same instrument |
|
Quoted market price for the same instrument |
|
Level 1 |
|
Investments in unlisted securities |
|
393 |
|
Discounted cash flow |
|
Forecasted earnings, capital expenditure and debt cash flows of the underlying business, based on the forecasted assumptions of inflation, exchange rates, commodity prices etc. Appropriate WACC for the region. |
|
Level 3 |
|
Other long-term investments |
|
25 |
|
Discounted cash flow |
|
Market related interest rates. |
|
Level 3 |
|
Long-term receivables |
|
5 582 |
|
Discounted cash flow |
|
Market related interest rates. |
|
Level 3 |
|
Derivative assets |
|
645 |
|
Forward rate interpolator model, appropriate currency specific discount curve, discounted expected cash flows, numerical approximation |
|
Forward exchange contracted rates, market foreign exchange rates, forward contract rates, market commodity prices, coal prices, crude oil prices |
|
Level 2 |
|
Trade and other receivables |
|
25 611 |
|
Discounted cash flow |
|
Market related interest rates. |
|
Level 3 |
* |
Cash and cash equivalents |
|
15 877 |
|
** |
|
** |
|
Level 1 |
** |
Financial liabilities |
|
|
|
|
|
|
|
|
|
Listed long-term debt |
|
49 421 |
|
Quoted market price for the same instrument |
|
Quoted market price for the same instrument |
|
Level 1 |
|
Unlisted long-term debt |
|
91 777 |
|
Discounted cash flow |
|
Market related interest rates |
|
Level 3 |
|
Short-term debt and bank overdraft |
|
1 297 |
|
Discounted cash flow |
|
Market related interest rates |
|
Level 3 |
* |
Derivative liabilities |
|
2 205 |
|
Discounted net cash flows, using a swap curve to infer the future floating cash flows, forward rate interpolator model, discounted expected cash flows, numerical approximation |
|
US$Overnight Indexed Swap (OIS) curve, recovery probabilities, forward exchange contracted rates, coal prices, market foreign exchange rates |
|
Level 2 |
|
Trade and other payables |
|
28 501 |
|
Discounted cash flow |
|
Market related interest rates |
|
Level 3 |
* |
* The fair value of these instruments approximates their carrying value, due to their short-term nature.
** The carrying value of cash is considered to reflect its fair value.
Report of the Remuneration Committee KEY MESSAGES Engagement with our shareholders on the outcome of the 2018 non-binding advisory votes of the remuneration policy and implementation report Reviewing the impact of business performance on remuneration outcomes Remuneration trends and future focus areas Dear stakeholder On behalf of the Committee, I present the 2019 remuneration report. This report highlights the Sasol remuneration policys key components, which are aligned to the Groups strategic priorities. It also illustrates how this policy translated into reward outcomes over the past year. The Committee is tasked by the Board to independently approve and oversee the implementation of a remuneration policy that will encourage the achievement of the Groups key strategic objectives and grow stakeholder value sustainably. Our remuneration policy is reviewed annually to ensure that it remains relevant and continuously enables the attraction, motivation and retention of skilled resources while maintaining a strong balance with shareholder interests. Non-binding advisory votes on the remuneration policy and implementation report At our 2018 Annual General Meeting (AGM), 78,53% (2017: 92,96%) of votes cast were in favour of the remuneration policy and 75,81% (2017: 89,84%) supported the Implementation Report. This was a significant reduction from the 2017 AGM. Whilst we were not required to engage with shareholders on these results, we felt it appropriate to reach out to them. With 448 million of the 508 million shares voted through the Central Securities Depository Participants (CSDP), it is very difficult to assess which investors voted against the policy and the report. In January 2019, we distributed a questionnaire to our largest institutional investors who represented 65% of the shareholding, requesting these investors to respond with information on whether they voted for or against the policy and the report, reasons supporting their votes and whether they wanted to engage with me, on behalf of the Committee, to discuss their concerns. I am grateful for the shareholder engagements that followed. Mpho Nkeli Chairman
Shareholders were largely complimentary and supportive of the approach taken by Sasol over the last few years both in terms of the engagement with shareholders and the structure and disclosure of remuneration. However, there were a number of key themes that were raised during these meetings which, together with our responses, are summarised in the following table: enable the achievement of strategic priorities. of 30% should be attached to headline or core headline earnings, to ensure that a We have in light of this feedback, reconsidered our views and have agreed to attached to the project delivery target to 15%. on the Group STI scorecard, the execution of the Lake Charles Chemical Project enhancements that will result in the policy being applied in a variety of situations. Leadership role category (it was previously only applicable to our Group Executives satisfied that the policy aligns with the proposed Section 10D of the US Securities low level of achievement against the corporate performance targets. Details are Incentive targets and weightings The 30% weighting attached to core headline earnings is considered too high given that macroeconomic conditions have a major influence on this target. The percentage allocated to project delivery is too low. The targets linked to environmental factors required a review. One of the most difficult decisions for the Committee is to ensure that the incentive scorecard is balanced and encourages appropriate behaviour that will The Committee has for the past five years maintained that a minimum weighting material portion of the incentive is directly aligned with shareholders experience. reduce this weighting for FY20 to 25% in order to increase the weighting that is Even though the weighting linked to the project delivery target appears to be low (LCCP) also directly influences the following targets in our short-term incentive (STI) and our long-term incentive (LTI) plans: Production volumes; Core headline earnings; and Return on invested capital (ROIC). The Sasol share price is also a key determinant for the value to be derived under the LTI plan. In addition, the individual performance factor (IPF), which is an outcome of the personal incentive scorecard and a multiplier in the STI calculation, includes targets on the LCCP cost, schedule and quality, which were included in the personal incentive scorecards of all Prescribed Officers, the project management team, the USA Operations team as well as supporting employees globally. In response to the schedule and budget overruns associated with the LCCP, the Committee has exercised its discretion to apply an additional penalty on the final incentive which resulted in a zero STI for the GEC and senior members of the LCCP project team, as well as a reduction in the STI calculation for senior leaders who supported the project. Lastly, the Group has an increased focus on the environment, climate change and our commitment towards long-term sustainability. This commitment will result in new environmental/climate change targets being applied in the 2021 variable pay plans that will support the sustainability strategy that will be communicated over the first half of 2020. Lack of sufficient detail in our disclosures The disclosure of cost and volume targets and the achievement thereof require more supporting information to assist shareholders to reconcile the incentive outcomes. The enforcement of the Clawback policy is not clearly stated in the disclosures. We have agreed to provide more detail in this years report on the outcome of the cost and volume targets as well as the Clawback policy. The Committee has again reviewed the Clawback policy and made some The Clawback policy has been extended to result in broader application to our and Senior Vice Presidents) and we included a malus clause. The Committee is Exchange Act as well as the recommended practices in Principle 14 of King IV. Achievement of minimum shareholding requirements From the previous remuneration report it appeared that the Executive Directors were not working aggressively enough towards the achievement of the minimum shareholding requirement. Three years after the appointment of our Joint Presidents and CEOs, and the CFO, progress was made towards the attainment of the five-year minimum shareholding requirement targets. Progress has however been hampered by the included in the implementation report. KEY THEMES SASOLS RESPONSE
The impact of business performance on remuneration decisions Sasols performance over the past year has been over-shadowed by the news during the year of the budget and schedule overruns on the LCCP. Sasol is a complex, global organisation and in all other parts of our business we have performed well, but the delays on the LCCP, which is a major investment for Sasol, have led to some difficult decisions for the Committee. Our policies and practices aim to support the achievement of our strategic objectives. The Board is committed to ensuring that there is alignment between performance and the commensurate rewards approved for not only our executive management but for all employees. The following table sets out the outcomes of the Group factors in relation to the STI and LTI over the past 4 years: on the LCCP are the major contributing factors to this low score, it concluded that the result is appropriate in the circumstances and has therefore, as in the past, agreed to not apply its discretion in changing the outcome of the formulaic incentive calculations. The non-payment of short-term incentives to middle management and higher and the additional safety and LCCP penalties on the STI, were the exceptions made to the policy over the past year. Remuneration trends and future focus areas In respect of executive remuneration, we have seen a move toward simplification of reporting on remuneration. This has signalled an environment in which transparency features strongly via reporting mechanisms such as single-figure disclosure, clawback and malus provisions, more focus on minimum shareholding requirements as well as a noticeable growth in shareholder activism (requiring increased shareholder engagement from organisations) and an enhanced focus on environmental issues. As part of our mandate to direct the Board on remuneration matters, we will keep abreast of these trends and adjust our policies in line with our strategic objectives where appropriate. Use of consultants The Committee again appointed Aon as their independent external advisors. Aon is a United Kingdom-based firm that is a signatory to the UK Remuneration Consultants Code of Conduct. The Committee utilises Aon to provide independent input into remuneration policy, trends, proposals and submissions. For the past three years, the non-achievement of the headline earnings target had the biggest negative impact (30%) on the Group Executive Committees (GEC) Group STI score. As far as the STI is concerned, the final incentive outcome mirrors the Sasol financial results for 2019. Production volumes were impacted by an extended shutdown at our Secunda Synfuels Operations as well as the slippage of the LCCP. We are grateful for a much improved safety performance, however, the three fatalities remain a serious concern and led to an additional penalty being applied. An additional LCCP penalty of between 20% and 100% was applied to executives who were either directly accountable for, involved with or supported the LCCP. To protect our cash flows and to prudently manage our costs, the Committee decided against declaring STI payments for senior management and only 50% of the calculated STI amount was paid out to middle management. The rest of the employees received their full STI amount. Not paying STIs in a year in which a number of other objectives have been achieved, was a very difficult decision and the Committee therefore, in order to ensure the retention of key employees approved a special retention LTI award with a three-year vesting period. The GEC and senior project team members on the LCCP did not qualify for the special retention award. The LTI corporate performance target achievement for 2019, which will impact the vesting of incentives in 2020, is 47% for the GEC members, a historic low. The Committee has considered this outcome and as the schedule and cost overruns In closing We are committed to ensuring that Sasols remuneration policy and practices are fair and responsible, supporting the achievement of key strategic priorities. We thank all our shareholders for their ongoing support and we welcome the opportunity to discuss the policy and its outcomes with you. Mpho Nkeli Chairman of the Remuneration Committee 17 October 2019 Our focus areas over the next financial year will be: A review of the design of our incentive plans to ensure ongoing relevance and competitiveness. Inclusion of enhanced environmental targets into our incentive plans. Continued shareholder engagement. LTI Corporate Performance (for GEC)201620172018 2019 Final score against targets 93% 90% 69% 47% STI Group Performance (for GEC)201620172018 2019 Final score against targets 81,99% 72,97%63,01% 65,70%
Key definitions For clarity, the following terms are used for reporting purposes: * Top management includes the Joint CEOs, GEC and Senior Vice Presidents. Remuneration policy In the policy, we strive to offer all our employees a balanced mix of remuneration programmes that are benchmarked to the market median and strongly linked to performance-based outcomes and applied competence. The mix and flexibility of our remuneration options depend on the type of positions in our organisational structure as well as practices distinct to each geography in which we operate. No form of discrimination is tolerated and salary differentials are substantiated through defensible principles included in our remuneration policy. Policy design principles Positioning Sasol as a preferred employer through an attractive and holistic employee value proposition. Fair and responsible remuneration practices, in the context of overall remuneration for all employees including a fair minimum wage. Providing a strong relationship between pay and performance in terms of economic, social and environmental measures that promotes an ethical culture and responsible corporate citizenship: Setting a balanced mix of performance targets at Group, Operating Model Entity (OME) and individual levels that drive performance without placing the organisation under undue risk. Using appropriate benchmarks to inform policy decisions and remuneration mix thus ensuring alignment with the industry on a per country basis. Recognising equal pay for work of equal value within the ambit of this policy. Managing overall employment cost. Enabling global employee mobility through a balanced and market-related expatriation policy. What the policy aims to achieve Align management's interest with that of stakeholders How we achieve policy objectives achievement of strategic priorities with remuneration outcomes Why we do this To drive stakeholder value sustainably Remuneration philosophy Sasols remuneration philosophy is to use internally equitable and externally competitive salary, benefits and incentive structures as a means to attract, retain and motivate qualified, skilled and engaged employees to work towards achieving our strategic objectives in a values-driven manner and create stakeholder value responsibly and sustainably. Description Enterprise-wide The GEC has the SVPs have global or VPs have regional Experienced accountabilityultimate authority end-to-end responsibility or sector-specific professionals, for the Group, within the for an operating responsibility specialists and reporting to the organisation to set model entity or group for a portion of experienced tactical Board. the strategy and function. Positions an an operating leaders. Drives the direction for the operating model entity model entity or achievement of Group. or function within Group function. objectives through the broadly defined Contributes to specialisation or business direction. strategy formulation management of Sets Group policy and and then translates resources. frameworks. Contributes this into tactical to the formulation plans, policies and of organisation-wide processes. strategies. Number of permanent employees 2 8 36 191 968 Role Joint Presidents and CEOs* Group Executive Committee (GEC) (Prescribed Officers & CFO)* Senior Vice President (SVP) Group Leadership* Vice President (VP) Leadership Senior management
Enabling the achievement of key strategic priorities Our remuneration policy sets the foundation for the development of fixed salary, variable pay plans and benefit structures that address our talent needs and enable the achievement of our strategic priorities. Through our variable pay plans, we drive a high performance culture where employees are encouraged to achieve at an individual, OME and Group level. The Committee annually reviews the targets set in our STIs and LTIs to ensure that these are relevant and aligned with the business priorities. The following tables show the alignment between the Groups strategic priorities and the targets that were approved for 2019s STI and LTI awards. foundation Alignment the growth investment determined annually in response to the external and internal environments in which how they link to value creation: fatalities Group STI targets with STI FY19 Top priorities High severity injuries & fatalities Cash fixed growth Production growth Core headline earnings Project delivery Fires, explosions & releases Energy efficiency B-BBEE Pursue zero harm Nurture business Sustainable & future Resilient organisation Drive customer, operational and capital excellence Our top priorities are we operate and focus the or strategic targets. This is ganisation on those key deliverables that will bring us closer to realising our High severity injuries & Safety of our employees is our priority. Our goal is zero harm. Continuous Improvement (Cash fixed costs) Enhancing our foundation business to remain relevant and competitive by improving our gross margin, reducing our cost base and optimising our Statement of Financial Position. Production growth Improving production volumes from our foundation businesses and ramp up production from our new operational facilities in Lake Charles to increase earnings. Core headline earnings We are committed to returning value to the shareholders and stakeholders before committing to further large growth projects. Project delivery We realise that there is room for improvement in our performance and have focused initiatives in place to entrench excellent capital investment and project practices to increase business value. Fires, explosions & releases Nothing matters more than everyone returning home safely and, as such, improving safety in our operations is of the utmost importance. Energy efficiency We have a long-standing commitment towards promoting energy efficiency (EE) as a key business driver. We strive to continuously improve the EE of all our manufacturing operations in support of asset integrity, and this year we committed to the global Energy Productivity 100 initiative. B-BBEE As a responsible corporate citizen, Sasol is committed to promoting inclusivity and diversity while growing the company.
with the These CPTs link to our long-term strategic targets and create value in the following ways: allocation and driving timely project completion. Remuneration governance and fair pay practices Sasol complies with the relevant remuneration governance codes and statutes that apply in the various jurisdictions within which it operates. Recommended practices stated under Principle 14 of the King IV Code are applied and explained throughout this report. The Sasol remuneration policy is designed to support fair pay practices. Risk management Risk management in accordance with the terms of of Executive Directors. We have a Clawback and malus policy in place. the normal course of business, The Remuneration Committee ensures effective risk management oversight in relation to material risks within the Committees scope and will exercise its discretion within the Groups overall risk framework. The remuneration policy is transparent to all stakeholders. All incentive plans and the remuneration mix are reviewed annually. Executives do not approve their own benefits or remuneration. Remuneration risk is reviewed All exceptions are approved by the Committee and by the Board in the case reference of the Committee. In Sasol aligns remuneration Our LTI plan design ensures that top managements awards are subject to decisions with strategic business split vesting of 50% after 3 years and the balance after 5 years. objectives. Maximum earnings exist through the design of our STI and LTI plans. Growth in production volumes per head Through production improvements and an efficient workforce, we increase earnings for our shareholders. Return on Invested Capital (excluding assets under construction AUC) ROIC reflects an earnings return measure in respect of capital investments, effective capital TSR vs MSCI World Energy Index Total shareholder return (TSR) is a measure of the performance of the Groups share price over time relative to peers, and combines both share price appreciation and dividends paid to indicate the total value created to shareholders. TSR vs MSCI Chemicals Index LTI Corporate Performance Targets (CPTs) Alignment LTI 2022 Strategic targets Return on invested capital Total shareholder return MSCI Chemical Index Total shareholder return MSCI World Energy Index Production volume growth/ headcount ROIC EBIT growth Dividend returns Zero ham
The use and application of remuneration benchmarks We use benchmark data for purposes of developing pay bands, incentive plans and for the comparison of employee benefits. One of the Committees key tasks is to preserve the relevance, integrity and consistency of benchmarking. Management also consults survey reports from various large remuneration firms. The data sources for the following employee groups are: Employees in international environment GEC Rest of SA employees Executive remuneration comparator group and data in executive surveys Survey reports from PwC Remchannel and Mercer Survey data from Korn Ferry, ECA, Mercer and Willis Towers Watson In 2019, we used data from the revised peer group that was selected at the end of 2018. Although the peer group had changed extensively, this did not have a big impact on the remuneration benchmarks. This peer group was selected on the basis that it appropriately reflects Sasols business composition, geographical footprint and model, as well as market capitalisation and the inclusion of more specialty chemical companies. We considered for inclusion companies in the MSCI global energy index, chemicals index and the JSE Top 40. We use the following peer group in the benchmarking of executive pay lines and variable pay plans as well as the setting of fees for Non-executive Directors. Anglo American PLC MTN Group Ltd BASF SE Origin Energy Ltd Continental Resources Inc Pioneer Natural Resources Co Evonik Industries AG Air Products & Chemicals Inc Hess Corporation Akzo Nobel NV Imperial Oil Ltd Albemarle Corporation Kumba Iron Ore Ltd Anadarko Petroleum Lyondell basell Industries NV corporation Mondi PLC Apache Corporation Noble Energy Inc BHP Billiton PLC Phillips 66 Covestro AG Solvay SA Devon Energy Corporation Suncor Energy Inc Eastman Chemical Company Williams Companies Inc PEER GROUP The group comprises 26 companies, which represent more relevant size and sector comparators Comparator group rationale We recognised that some of the companies that had been included in the peer group since 2015, were for various reasons, no longer relevant. To allow for more compatibility, we needed to include more chemicals companies from the MSCI World Chemicals Index. We also needed to exclude some of the companies with a market capitalisation much larger than that of Sasol. Comparator companies
Key remuneration elements These are the key components of Sasols remuneration policy: salary payments on a bi-weekly basis in line with local the Committee and set in accordance with market considered for adjustments if justified. bargaining sector as across-the-board increases are applied The beneficiaries of employees who pass away while in the Company and the employee. Allowances are paid in terms of statutory quantum depends on the retirement plan of which they jurisdiction. A number of special allowances including, inter are paid together with salaries. Total guaranteed package or base salary TGP = Total guaranteed package = Employees in countries other than South Africa and Base salary + cost of all employer contributions. employees in the South African collective bargaining Broad pay bands set with reference to location and sectors are paid a base salary rather than a TGP. sector-specific median benchmark points. Salaries are paid monthly to all employees except for The total cost of annual increases is approved by employees in the United States and Canada who receive movement, affordability and forecast inflation. market practice. Employees who are promoted are Performance-based increases are not applied for the with effect from 1 July. For other employees, the effective date is 1 October. The Groups expatriate remuneration policy enables Expatriate salaries are adjusted for cost-of-living and global mobility of key management and specialists. location differences and tax equalisation is mostly applied. Benefits and allowances Benefits include, but are not limited to, Benefits are offered on retirement, for reasons of sickness, membership of a retirement plan, healthcare and disability or death. risk cover to which contributions are made by both service receive additional insurance cover of which the compliance or as is applicable in a sector/ were a member during service. Allowances are linked to roles within specific locations and alia, housing, cost of living, home leave and child education are included in the Groups expatriate There are no allowances paid to positions in senior policy. management and higher, except for expatriates. COMPONENT POLICY APPLICATION
COMPONENT POLICY APPLICATION WEIGHTING (GEC) WEIGHTING (BELOW GEC) STI A single STI structure is applied globally and paid annually in September after Committee approval. Most mining employees earn a production bonus which is paid monthly. Target incentives align with median benchmarks. The STI structure consists of Group, entity and individual performance targets set in advance of every financial year. Group, entity and individual performance targets are reviewed annually to ensure relevance, continuous improvement and alignment with the Groups strategic objectives, which includes safe, sustainable operations. The Committee can exercise its discretion to pay incentives as deemed appropriate, and based on affordability. Growth in core headline earnings 30% 30% Growth in production volumes 20% 30% Cost efficiency to support Continuous Improvement 20% 30% Project delivery 5% 10% Energy efficiency 5% B-BBEE targets (for South African entities in respect of preferential procurement (5%) and employment equity (5%)) 10% Safety and sustainability targets Fatalities, High Severity Injuries (5%), fires, explosions and releases (FERs) (5%) 10% Total 100% 100%* * OME incentive targets are set in line with business plans approved by the responsible EVP. These include safety and energy efficiency targets set at the OME level and for South African OMEs, B-BBEE targets. Sustainability is a key performance objective and measured at Group and OME levels. In addition to the Group targets, the following objectives are included in operational STI scorecards, as applicable: safe transportation of hazardous chemicals, occupational health measures, carbon emissions and leaks or spills of hazardous materials. These measures balance safety, environmental sustainability and operational performance criteria. Individual targets are included in the performance agreement. These also include major project milestones where relevant. The Board has discretion to impose additional penalties for fatalities. Individual targets are agreed in the annual individual performance contract, and performance against objectives is assessed bi-annually. COMPONENT POLICY APPLICATION GEC OTHER PARTICIPANTS Equity-settled awards linked to the market value of a Sasol ordinary share (or American Depository Receipts (ADR) for international employees), subject to vesting conditions. The Committee governs LTI awards and considers these in respect of: Internal promotions to qualifying roles and external appointments; Annual awards to eligible employees; and Discretionary awards for purposes of retention. Awards are linked to the role and individual performance, and vesting is subject to service and performance targets. The vesting period is three years for participants in leadership and senior management. A split vesting period of three and five years applies to participants in top management. Growth in production volumes per head (25%) Return on invested capital (excluding AUC) (25%) TSR vs MSCI World Energy Index (25%) TSR vs MSCI Chemicals Index (25%) Retention shares 0% 40% Performance shares 100% 60% LTI Vesting 50% after 3 years 100% after 3 years except SVPs that have the same vesting periods as members of the GEC 50% after 5 years
Detail of key remuneration components Base salary/total guaranteed package (TGP) and benefits South African employees who are not covered by collective bargaining agreements receive a TGP which includes employer contributions towards retirement, risk and healthcare benefits. In terms of this model, all changes to benefit contribution levels are cost neutral to the employer and increases in the benefit pricing of employee and employer contributions reduce the net cash salary of employees. All other employees receive a basic salary. In some jurisdictions, a thirteenth cheque is payable. Performance-based increases are not applied for the South African collective bargaining sectors as across-the-board increases are applied with effect from 1 July each year. In all other jurisdictions, annual increases are distributed with reference to merit and the positioning in the pay band. Increases are also negotiated with trade unions and works councils in the USA, Germany and Italy. In the SA mining sector, 2019 was the second year of a three-year wage increase agreement for Sasol. The revised minimum monthly salary of R9 300 per month, effective 1 July 2018, translates to an annual minimum total guaranteed package excluding incentives and overtime, of R217 260 or R18 105 per month the difference between this amount and the base salary of R9 300 per month is the cost of employer contributions towards benefit plans as well as allowances payable. Aware that our employees were highly indebted, in 2019 we implemented programmes to assist employees in the process of legally challenging garnishee orders, to restructure debt and to educate employees on financial management. In addition, in 2018/19, we administered a Quality of Life survey in South Africa and Mozambique to assess the living standards of our employees. This survey includes questions on the form of housing employees use, the extent to which they support extended families, and which benefits they value the most and the least. This information was processed and analysed, and then informed the decision by the GEC to implement Sasol Cares. Employees in leadership positions are not eligible for participation in Sasol Cares. Home Ownership Money Matters Share Savings Plan Education Support Sasolmed Support School Bag & Stationery Sasol Cares not only enhances our employee value proposition, but also seeks to help employees alleviate some of the challenges they face. The initiative assists employees in the following areas:
Short-Term Incentive plan (STI) The configuration and weightings attached to the different parts of the STI formula differ to the extent that employees can influence the achievement of performance objectives either directly or indirectly. STI Factors X X X X X * The individual performance factor ranges from 0% to 150%, but must balance at 100% across the Group. Long-Term Incentive plans (LTI) Sasol offers eligible employees in middle management, senior management and top management, the opportunity to participate in a LTI plan to enhance retention over the long term and align these participants interests with that of our shareholders. LTIs form an important part of our pay mix. Equity-settled LTI plan The equity-settled LTI plan gives participating employees the opportunity, subject to the vesting conditions, to receive Sasol ordinary shares or ADRs. Participants have the option to sell or retain the shares after the vesting period. A split vesting period applies to top management, where 50% of the award vests subject to the achievement of CPTs after three years from the date of grant (performance period). The balance is released to the participant after a five-year period subject to the vesting conditions. Accelerated vesting principles in cases of termination for good leavers do not apply to top management. A service penalty is applied for all participants whose services are terminated under good leaver conditions before the end of the performance period. Cash-settled LTI plan In regions where we do not offer an equity-settled plan due to legislative restrictions or logistical reasons, eligible employees may participate in a cash-settled LTI plan with the same conditions that are applicable to equity instruments, except that they are settled with cash. Members below the GEC (0% to 150%)* performance against individual targets Individual portfolio performance factor Assessment of individual project milestones, and OME Score (0% to 100%) Performance measured against financial and non-financial drivers for the specific OME Group performance factor (50% to 150%, 80% to 120%) Performance measured against financial and non-financial drivers STI target % Derived from benchmarking positions of similar complexity in the comparator group Members of the GEC (0% to 150%)* project milestones, Individual portfolio performance factor Assessment of individual performance against individual and OME targets Group performance factor (0% to 150%) Performance measured against financial and non-financial drivers STI target % Derived from benchmarking positions of similar complexity in the comparator group
Pay mix minimum, on-target, and maximum performance for executive management The threshold, target and maximum reward outcomes under the terms of the policy are indicated in the following graph: Retention and sign on payments The sign-on payment and retention policy may be used in the recruitment of candidates in specialised or scarce skill positions, mostly in senior levels, or to retain critical skills. Cash retention payments are linked to retention periods of at least two years. Retention shares are granted under the LTI plan. 800 700 600 500 400 300 200 100 0 Minimum shareholding requirements The share ownership guideline effective 1 July 2016 requires the following holdings: Joint Presidents and Chief Executive Officers: 300% of annual pensionable remuneration. Chief Financial Officer and other Executive Directors: 200% of annual pensionable remuneration. The requirement must be achieved within five years from the date of appointment and the Board holds the directors accountable to meet this requirement. Joint Presidents Joint PresidentsJoint Presidents Executive Executive Executive Director at maximum GEC at threshold GEC at target GEC at maximum and CEOs at threshold and CEOs at and CEOs at target maximum STILTI Director at Director at threshold target TGP The graph indicates a balanced portfolio of rewards allocated in terms of base salary/TGP, short-term and long-term incentives, tied to the achievement of Group and individual targets set over the short and long term to ensure sustainable focus on the Groups strategic objectives. The pay mix is reviewed annually. Clawback and malus policy The Sasol Clawback policy has been in effect since 2015 and was previously applicable to SVPs, EVPs and Executive Directors. The Committee has now extended the application of the policy to include VPs, clarified trigger events, and included a malus clause. The clawback and/or malus clauses can be triggered at the discretion of the Sasol Limited Board or Remuneration Committee, in the event of the following conditions: Where there has been an overpayment of an incentive grant due to a material misstatement in the Companys financial reports; Where the Company discovers that an error was made in the calculation of any performance condition; As a result of events that occurred prior to the grant or vesting that have led to material downturn in performance, corporate failure and/or reputational damage; Serious misconduct on the part of the employee; and Where there has been a material misrepresentation or non-disclosure on the part of the employee. Measurement of Prescribed Officers and Executive Directors performance The Joint CEOs table the performance outcomes of all Prescribed Officers to the Committee to inform the award and vesting of annual increases and incentives. The Chairman of the Board tables the performance outcomes and proposed rewards for the executive directors at the committee which recommends it to the Board. Strategic leadership Executive service contracts The term of office of the Joint Presidents and CEOs is not specified in the companys memorandum of incorporation. Members of the GEC have permanent employment contracts with notice periods of three to six months. The contracts provide for salary and benefits as well as participation in incentive plans on the basis of Group and individual performance and as approved by the Board. EVPs who are members of the South African Sasol Pension Fund are required to retire from the Group and as directors from the Board at the age of 60, unless they are requested by the Board to extend their term. Perquisites available to the members of the GEC are disclosed in the implementation report. Performance against targets Reward outcomes % supported by the performance review are tabled at the Board by the Chairman of the Board, resulting in rewards that are approved by the Board prior to any pay-out or vesting thereof. is assessed bi-annually and the final scores for the directors are recommended by the Chairman of the Board to the Committee for consideration. includes objectives linked to financial and non-financial results, project performance, stakeholder relationships, culture and values, approved at the start of the financial year. 400 300 220 200 259 150 203 110 169 115 90 75 100 100 100 100 100 100 100 100 100
Termination arrangements applicable to GEC the notice period either in exchange for service including a three to six month notice period. subsidy continue to receive the employers offered which may be increased for voluntary year, subject to the achievement of performance the period in service during the financial year executive leaves prior to the end of the financial to be exercised by the last date of service. period not worked during the vesting period. Non-executive Director (NED) fees Non-resident directors (NEDs) are appointed to the Sasol Limited Board based on their ability to contribute competence, insight and experience appropriate to assisting the Group to set and achieve its objectives. Consequently, fees are set at levels to attract and retain the calibre of director necessary to contribute to a highly effective board. They do not receive short-term incentives, nor do they participate in long-term incentive plans. No arrangement exists for compensation in respect of loss of office. NEDs are paid a fixed annual fee in respect of their Board membership, as well as supplementary fees for committee membership and an additional committee fee for special purpose committees of the Board. Actual fees and the fee structure are reviewed annually. A travel allowance is payable for international travel but was not implemented in 2019. The Board was of the view that the different fee structures for resident and non-resident NEDs was not justifiable. Therefore, in 2018, we consulted with our large institutional investors on a proposal for a single currency fee structure. At the November 2018 AGM, shareholders voted on the requisite resolution, which was duly passed. The new structure has been implemented and is being phased in until 2021. The phased approach comprises a staggered progression of fees up to 2021 at which point the standard dollar-based structure will be applied to both resident and non-resident NEDs uniformly. The fee structure and levels were informed by the data collected from the revised peer group. Where current NEDs fees are higher than the new single currency fee structure, their fees are kept unchanged up to a maximum of three years from the implementation date of the new single currency fee structure. Base salary Payable up to the last day of service including Payable up to the last day of service or in lieu of the notice period. Healthcare Benefit continues up to last day of service; Benefit continues up to the last of service. employees who qualify for the post-retirement contribution. Retirement and Risk plans Employer contributions are paid up to the last day of service. The employee is entitled to the full value of the investment fund credit and any returns thereon. Other benefits A severance package equal to three weeks' Not applicable. salary per completed year of service is retrenchments or mutually agreed terminations. Short-term incentive If the executive resigns on or after 30 June, there is an entitlement for consideration of the STI which may be applicable for the past financial A pro rata incentive may be considered for targets. No pro rata incentive is due if the subject to the meeting of performance targets. year for reasons of dismissal, resignation or mutual separation. Long-term incentive The original vesting period remains unchanged up to the normal date of retirement and then vests subject to the achievement of CPTs as well All vested Share Appreciation Rights (SARs)as an application of a service penalty for the All unvested LTIs are forfeited. No accelerated vesting applies to long-term incentives but a service penalty will be applied at the end of the vesting period. No pro rata awards are made. REMUNERATION POLICY COMPONENT VOLUNTARY TERMINATIONINVOLUNTARY TERMINATION (i.e. resignation) (i.e. retrenchment, redundancy, retirement or other reasons included under the definition of good leaver)
Annual Non-executive Directors (NED) fees: Non-executive Directors $150 000 Remuneration Committee $41 000 $20 500 Notes Safety, Social and Ethics Committee Lead Independent Director $37 000 $18 500 membership of Board Committees and directorship of the company. effect from 16 November 2018. 4 For the fee structure applicable from 16 November 2018 for non-resident fees inclusive of VAT (on a like-for-like basis), are higher than the new structure, Board and Committee meeting (per meeting)7 $1 615 not financially worse off with the implementation of the new fee structure. Sasol Khanyisa Employee Share Ownership Sasol Khanyisa was approved by our shareholders in November 2017. It is a B-BBEE scheme designed to enable Sasol to receive the required accreditation under the Department of Trade and Industry Codes scheme and is not considered to be part of our benefit or reward structures due to the nature thereof. 18 282 employees received a Tier 1 Khanyisa award of R100 000 with a three-year vesting period, and 18 301 employees received a Tier 2 Khanyisa award which has a 10-year vesting period which value will be determined over time. 2018 2019 2018 excl. VATFees incl. VAT (1 July 2017 to with effect from 15 November 2018) 16 November 20182,4 Resident NEDs Non-executive Directors R723 000 Audit Committee R398 000 R199 000 Remuneration Committee R272 000 R136 000 Capital Investment CommitteeR234 000 R117 000 Digital, IM and Hedging Committee R234 000 R117 000 Nomination and Governance Committee R234 000 R117 000 Safety, Social and Ethics Committee R234 000 R117 000 Lead Independent Director (additional fee)8 R253 050 Attendance of out-of-cycle formal Board and Committee meeting (per meeting)7R21 000 Non-resident NEDs Audit Committee $54 000 $27 000 Capital Investment Committee$37 000 $18 500 Digital, IM and Hedging Committee $37 000 $18 500 Nomination and Governance Committee $37 000 $18 500 1 Chairman of the Board fee, inclusive of all fees payable for attendance or 2 Fees including VAT to be phased in over a period of two to three years with (additional fee)8 $52 500 3 Fee introduced as at 16 November 2018. Attendance of out-of-cycle formal Non-executive Directors, the following rule applies: where the total prior year the previous fee will be retained to ensure that the Non-executive Director is 5 Travel allowance implemented for all directors as appropriate when travel is required. 6 Chairman fee of $445 000 to be phased in over a three-year period. 7 Fee removed from 16 November 2018. 8 Lead Independent Director fee prior to 16 November 2018 calculated at 35% of Board fee for both non-resident and resident Lead Independent Director roles. Travel allowance5 Once off allowance payable per cycle Less than 10 hours travel Between 10 and 15 hours travel More than 15 hours travel $5 000 $10 000 $15 000 ChairmanMember Chairman1, 6 Non-executive Directors Audit Committee Remuneration Committee Capital Investment Committee Digital, IM and Hedging Committee Nomination and Governance Committee Safety, Social and Ethics Committee Lead Independent Director (additional fee)8 Member of Special purpose ad hoc Board Committees (per meeting)3 $445 000 $150 000 $40 000 $20 000 $20 000 $12 000 $16 000 $11 000 $16 000 $11 000 $16 000 $11 000 $16 000 $11 000 $40 000 $2 000 ChairmanMember
Implementation report This section provides a view on how our remuneration policy was implemented, and also sets out the relationship between company performance and Executive Directors and Prescribed Officers' remuneration outcomes against incentive plan targets as well as minimum shareholding requirements. The tables contained in this section, provide information on all amounts received/receivable by members of the GEC (including the Presidents and J-CEOs). The structure of the implementation report, is as follows: General Executive Directors Prescribed Officers Other share-holding Non-executive Directors Fees paid over 2019 Khanyisa shareholding Beneficial shareholding Determination of annual STI award which was calculated but not paid Remuneration and benefits paid disclosed in terms of the single total figure methodology Outstanding LTI holdings Determination of annual STI award which was calculated but not paid Remuneration and benefits paid disclosed in terms of the single total figure methodology Outstanding LTI holdings Minimum shareholding requirements Resultant outcomes of the group performance factor for 2019 as well as an overview of performance against targets for the past three financial years Resultant outcomes for the CPTs set for the LTIs that are due to vest in 2020, as at 30 June 2019 as well as an overview of the performance against the CPTs set for the past financial years and unvested LTIs
As indicated in the remuneration policy, Sasol operates a STI and LTI plan, and any value derived from these are tied to value creation in different forms. The following table provides the outcomes against the 2019 group performance targets that were set for the STI plan. Group targets Threshold (Rating = 0%) Target (Rating = 100%) Stretch target (Rating = 150%) Achieve-ment Approved Group FY19 CFC budget including efficiencies derived from Continuous Improvement Projects and Digitisation (2018 CFC + 6,5%) CFC 1,6% below target 2019 = 2018 Core Headline Earnings; this equals the 2019 budget % Core headline earnings growth 2018 Core Headline Earnings + 2% 2018 Core Headline Earnings + 5% Volume growth previous year delivery as estimated at as estimated at as estimated at milestones including fatalities): 0% fatalities): 100% fatalities): 150% severity 19 occupational SHE environmental & sustainability Group Energy Intensity improvements on >1% Group Threshold Target from individual hubs: 0,5% Group Threshold Target from individual hubs: 0,8% equity African appoint employed in the targeted groups employed in the targeted groups employed in the targeted groups 1 2 The cost of STIs not paid, added back to ensure a consistent baseline against 2020. Volumes normalised for planned shutdown periods and factors caused outside of managements control e.g. force majeure declared by service providers in Eurasia and Eskom electricity outages in South Africa. Additional penalty applied for fatalities to reduce the scoring from Stretch to On Target. End-of-Job (EOJ). 3 4 KPI Key performanceWeighting indicator Weighted achieve-ment Cost-efficiency to support Continuous improvement1 Approved Approved Group FY19 CFCGroup FY19 CFC YoY increasesbudget including budget including in Cash fixed efficiencies derived efficiencies derived costs excl LCCP20% from Continuous from Continuous (Foundation Improvement Improvement business) projects and Projects and DigitisationDigitisation (2018 CFC + 5%)(2018 CFC + 4%) 0% YoY growth in Core headline earnings1 Core headline 30% earnings increased by 5,6% 45% YoY growth in production volumes (normalised for planned shut downs; excl Gabon, Natref & Mining)2 0,8% below in fuel equivalent 20% 2018 Volumes + 1%2018 Volumes + 2% 2018 Volumes + 4% tons 0% Project delivery Weighted averageWeighted averageWeighted average of project scoresof project scoresof project scores On time & budget according to EOJ4according to EOJaccording to EOJMissed 6 5% the start of the FYthe start of the FYthe start of the FY Threshold: 50% Target: 80% Stretch: 150% 0% ESG measures ESG: Safety & Environment Safety (high 3 fatalities severity injuries 9 (injuries incl 6 (injuries incl 3 (injuries incl and 2 high 5% fatalities)injuries3 5% SHE safety lagging indicators 5%19 FERs17 FERs15 FERssignificant safety FERs 0% Group EnergyGroup Energy Intensity Intensity improvements on improvements on 2018: Consolidated 2018: Consolidated energy 5%2018: Consolidated improve-efficiency index Group Threshold ment in South African Target from individual operations hubs: 0,3% 7,5% B-BBEE (Group) B-BBEE16,38 for PP on the 17,38 for PP on the 18,38 for PP on the Preferential 5%B-BBEE scorecardB-BBEE scorecardB-BBEE scorecard20,79 procurement (out of 25)(out of 25)(out of 25) 7,5% Utilised 53% of opportuni-Employment 50% of all 70% of all 80% of all ties to opportunitiesopportunitiesopportunities and Coloured5%Coloured appointments in and African senior positions males and females in senior positions 0,7% 100% 65,70%
For comparative purposes the following table sets out the Group's performance on a weighted basis against STI targets for the previous two years. The following table provides the outcomes against the corporate performance targets (CPTs) which were linked to the 2017 Long-Term Incentive awards, which are due to vest in 2020. The vesting percentage is determined by the Groups performance against CPTs over the period 1 July 2016 to 30 June 2019. Achievement 40% to 160%2 = 68,2% 1 2 3 Executive Vice-Presidents, CFO and Joint CEOs. All other participants. AUC = Assets under construction. The following table sets out the outstanding unvested LTI awards that are in issue as well as the weightings linked to the respective CPTs: Outstanding unvested LTI awards 0% to 200%1 2018 2021 & 2023 25% 25% 25% 25% 40% to 160%2 0% to 200%1 2019 25% 25% 25% 25% 2022 to 2024 40% to 160%2 1 Executive Vice-Presidents, CFO and Joint CEOs. 2 All other participants. The following section provides information on how the reward outcomes were determined for Executive Directors: Executive Directors: a. Factors considered in the final calculation of the annual STI amount The Groups performance as well as the individuals performance are considered. The final individual performance factors (IPFs) are disclosed in a range. Although an STI amount could have been paid in terms of the meeting of the different targets, the Board made a decision to not make any payment of STIs to executive directors, prescribed officers and senior members of the LCCP project management team. SR Cornell1 B Nqwababa P Victor $990 000 R10 963 220 R7 700 741 115% 115% 90% 65,70% 65,70% 65,70% <90% <90% 90% 100% $355 297 R4 141 630 R4 553 448 1 Gross US dollar salary. 2 Actual score determined by performance against individual scorecard, in range of 0% 150% (IPF). This penalty was considered in terms of the performance in 2019, as well as the factors that were considered in the respective performance factors in 2018. TGP/BaseIndividual 2019 calculated salary as at performance STI value 30 June 2019 Target % Group factor % factor % range2 (Not paid) Executive Directors ABCDE = AxBxCxD Vesting year Vesting Financial year of allocation (financial year) range TSR vs MSCITSR vs MSCI Return on Increase in tons World Chemicals World Energy invested capital produced/head index Index Weighted achieve-Measure Weighting Threshold (0%) Target (100%) Stretch (200%) Performance ment Increase in tons 0% improvement 1% improvement 2% improvement on 1,45% improvement produced/head 25%on baseon basebaseon base Return on invested Three-year averageThree-year averageThree-year averageThree-year average capital (ROIC)25%ROIC (excl. AUC3) at ROIC (excl. AUC) at 1,3ROIC (excl. AUC) at 1,5ROIC (excl. AUC) at 1 x times WACC (hurdle) times WACC times WACC 9,14% TSR MSCI World EnergyBelow the 40th 60th percentile of 75th percentile of the 41st percentile of the Index25%percentile of the Indexthe IndexIndexIndex TSR MSCI ChemicalsBelow the 40th 60th percentile of 75th percentile of the 6th percentile of the Index25%percentile of the Indexthe IndexIndexIndex 36,2% 0% 10,8% 0% 0% to 200% range1 = 47% Growth in Growth in headlineProduction cash fixed Period earnings volumes costs Working capital and Project Safety & gross margin delivery environment Preferential procurement and employ-ment equity Total 20180% 13,5%18,2%3,7%5,0% 15,1%7,5% 20170% 28% 19,4%4,1%n/a 10,1%11,3% 63% 73%
b. Remuneration and benefits approved and paid in respect of 2019 for Executive Directors Amounts are stated in ZAR even though Mr Stephen Cornell, as a US citizen on an expatriate assignment in South Africa, earns his monthly salary in USD. Mr Cornell received an annual salary increase on 1 October 2018 of 4,76% to increase his annual salary from US$945 000 to US$990 000. Any other increase in costs is as a result of the depreciating ZAR against the USD. SR Cornell3, 4, 5 (JCEO and President) B Nqwababa6 (JCEO and President) P Victor (CFO) From the single total figure table the following can be seen: No cash STI was awarded. The LTI gains, which are calculated at the share price of $19,03 (ADRs), R284,78 (JSE) on 17 October 2019 (but due to vest over 2020), is as a result of the CPT achievement of 47%. These include the on-appointment/promotional LTI awards that were granted in 2016 to on-appointment/promotional LTI awards were granted to the J-CEOs and Presidents as well as the CFO when they were appointed into these positions. As per the policy at the time, the on-appointment/promotional LTI award was linked in full to CPTs although the intention was to provide a significant opportunity for these directors to build-up shareholding in meeting the minimum shareholding requirements. Due to the low vesting, this intention has not been fully achieved. 1 2 No STI payment was approved for 2019. Long-term incentives for 2019 represent the award made on 26 September 2016. The amount is calculated in terms of the number of LTIs x corporate performance target achieved (47%) x closing share price on 17 October 2019. The actual vesting date for the annual awards made on 26 September 2016 is 30 October 2019; which is subject to the company being in an open period. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTIs vest. 50% of the vested LTIs and accrued dividends will be released on 30 October 2019 and the balance in September 2021, subject to the rules of the LTI plan. As there are no further performance conditions attached to the balance of 50%, the full amount is disclosed in the single figure table. The balance of the increase in salaries and benefits stated in ZAR is due to the depreciating ZAR against the USD as Mr Cornell receives his salary in USD. Other benefits include accommodation (R1 494 731), school fees (R275 611), tax consulting fees (R14 871), home leave allowance (R520 000), the third tranche of the staggered sign on payment offered when he joined Sasol and which became due in March 2019 (R1 440 214) and tax on expatriate allowances and benefits (R3 752 962). Salary now includes the cost of tax equalisation. Mr Cornells 2018 Salary was restated to include the expatriate tax on salary (R3 200 644) which was previously disclosed under Other Benefits. The Total Salary and Benefits remain unchanged. Salary now includes the cost of tax equalisation. Mr Cornell participates in an individual Senior Executive Retirement Plan (SERP) in order to adjust for differences between the benefits that would have been payable under his previous employers Defined Benefit retirement fund and the benefits payable under the retirement programmes of Sasol (USA) Corporation. The SERP benefit is payable to Mr Cornell following his death, disability or termination of employment for any reason other than cause. 3 4 5 6 Other benefits include private accommodation and meals (R27 150). 7 LTIs to vest in 2020 will be taken in shares towards meeting the minimum shareholding requirements. The following tables set out the number and intrinsic value of the unvested LTI holdings that have been awarded to the Executive Directors. c. Unvested LTI holdings (number): 1 LTIs granted on 3 September 2018. 2 50% of the award that vest in 2019 is still subject to a continued employment period of two years. Cumulative balance at the beginning Granted1 Executive Directors of the year in 2019 Effect of corporate Long-term Cumulative performance Dividend incentives balance at the targets equivalentssettled2 end of the year SR Cornell125 372 B Nqwababa 122 328 P Victor 76 396 43 555 39 062 20 833 (7 130)1 319(9 254) 153 862 (6 200) 1 277 (8 177)148 290 (1 116) 452(2 894) 93 671 Total 324 096 103 450 (14 446) 3 048 (20 325)395 823 Executive Directors 2019 R000 2018 R000 2019 R000 2018 R000 2019 R000 2018 R000 Salary Risk & Retirement Funding Vehicle benefit Healthcare Vehicle insurance fringe benefit Security benefit Other benefits 17 918 825 332 362 1 228 7 498 15 215 819 309 331 1 266 8 491 9 621 1 029 87 6 467 27 8 955 857 82 6 406 35 4 655 2 686 100 94 6 7 4 538 2 216 100 88 6 Total salary and benefits 28 163 26 431 11 237 10 341 7 548 6 948 Annual short-term incentive1 Long-term incentive gains2, 7 8 972 10 882 8 956 9 173 7 798 7 754 6 880 4 407 2 744 Total annual remuneration 37 135 46 269 20 410 25 893 14 428 14 099
d. Unvested LTI holdings (intrinsic value): SR Cornell B Nqwababa P Victor $4 581 R61 513 R38 416 $1 665 R22 250 R11 867 ($1 841) (R24 622) (R15 519) ($275) (R3 411) (R614) $51 R703 R249 ($357) (R4 498) (R1 592) $3 824 R51 935 R32 807 1 Intrinsic values at beginning and end of year have been determined using the closing share price of R350,21 (US$24,85) and R502,86 (US$36,54) on 30 June 2019 and 30 June 2018. Change in intrinsic value for the year results from changes in share price. Long-term incentives settled represent long-term incentives that vested with reference to the group results for 2018 that was settled in the 2019 financial year. Difference between long-term incentive gains disclosed in 2018 and amount settled in 2019 is due to differences in actual share price at vesting date and the share price on 17 August 2018 being the disclosure date. 2 3 There are no outstanding Share Appreciation Rights to Executive Directors on 30 June 2019. e. Progress against minimum shareholding requirement (MSR): The following table indicates progress against the MSR three years after the appointment of the executive directors. Vested shares subject to continued employment only until 2020/20214 (excluding accrued dividend equivalents) 1 2 3 Mr Cornell has committed to paying in the tax liability on the shares to vest on 30 October 2019. He will thus take ownership of all the shares that vest. Messrs Nqwababa and Victor have committed to take ownership of the vested shares that remain after sufficient shares have been sold to offset the tax liability. Beneficial shareholding balance as at 30 June 2018 valued at R502,86, the holdings acquired during 2019 is valued at the higher of the acquisition price or the closing price on 17 October 2019. Corporate performance conditions have already been applied, the shares are subject to continued employment. This table excludes LTIs to vest in 2021 and 2022 that are subject to CPTs. Valued at closing price of 17 October 2019. 4 5 The following section provides information on how the reward outcomes were determined for the Prescribed Officers: Prescribed Officers a. Factors considered in the final calculation of the annual STI award. The Groups performance as well as the individuals performance are considered. The final individual performance factors (IPFs) are disclosed in a range. The Committee applied its discretion and imposed a 100% penalty on these incentives due to the LCCP cost and schedule overruns. HC Brand² FR Grobler1 JR Harris1 VD Kahla BE Klingenberg CK Mokoena M Radebe SJ Schoeman¹ R5 030 670 R6 400 000 £360 500 R6 871 572 R8 163 664 R5 644 500 R5 927 536 R6 410 001 24,93% 100% 100% 100% 100% 100% 100% 100% 75% 75% 75% 75% 75% 75% 75% 75% 65,70% 65,70% 65,70% 65,70% 65,70% 65,70% 65,70% 65,70% 90% 110% 90% 110% 90% 110% 90% 110% 90% 110% 90% 110% 90% 110% 40% 50% R618 018 R3 468 960 £186 518 R3 555 265 R3 620 381 R2 642 261 R2 774 754 R1 579 264 1 2 3 Calculation shown for illustrative purposes only. According to the Expatriate policy, the STI payable would be calculated on the Net Indicative Assignment Salary. Mr Brand is acting as EVP effective 1 April 2019 pro rata calculation applied. Acting allowance of R750 000 per annum added to his TGP for purposes of calculations. Actual score determined by performance against individual scorecard, in range of 0% 150%. TGP/Base salary as at 30 June 2019 Prescribed Officers A Individual 2019 calculated performance STI value Pro rata %Target % Group factor %factor range3(Not paid) BCDEF=AxBxCxDxE Minimum Shareholding Requirement Post-tax (MSR) to beBeneficial vesting Beneficial achieved shareholding 30 October Shareholding by 2022 30 June 20193 2019 (47%)5 Beneficial shareholding value (including 30 October 2019 post tax % MSR vesting) Achieved Number of shares to vest 21 September 2020 Pre-tax Number Total nr of value of of shares vested shares vested shares to vest subject only subject only 26 Septemberto continued to continued 2021employment employment5 SR Cornell1$2 700 000 $336 584 B Nqwababa2 R19 740 000 R8 944 939R2 836 624 P Victor2 R8 680 000 R851 950 R2 127 468 $336 584 R11 781 563 R2 979 418 12% 7 93514 10022 035 60%6 900 14 10021 000 34%2 44210 57513 017 $419 326 R5 980 380 R3 706 981 Intrinsic cumulativeIntrinsic value Effect of Intrinsic value at of awards Change in corporate cumulative beginning made duringintrinsic value performance Dividend value at end of year1 the year for the year2 targets equivalentsLTIs settled3of year $000 and $000 and $000 and $000 $000 and$000 and$000 and Executive DirectorsR000 R000 R000 and R000 R000 R000 R000
b. Remuneration and benefits approved and paid in respect of 2019 for Prescribed Officers Amounts are stated in ZAR even though Messrs Stephan Schoeman and Fleetwood Grobler were on expatriate assignments to the USA and Germany respectively and earned their salaries in US dollars or Euros. Mr Jon Harris is on an expatriate assignment from the UK to South Africa and earns his salary in British pound sterling. Messrs Schoeman, Grobler and Harris received annual increases of 6%, 7,5% and 3% respectively. Any other increase in costs is as a result of the depreciating ZAR against the US dollar, Euro and British pound sterling. The salary lines include the cost of tax equalisation. HC Brand4 FR Grobler3, 5 JR Harris3, 6, 10 VD Kahla BE Klingenberg CK Mokoena7 M Radebe SJ Schoeman3, 8, 9 1 2 No STI payment was approved for 2019. Long-term incentives for 2019 represent the award made on 26 September 2016. The amount is calculated in terms of the number of LTIs x corporate performance target achieved (47% for Executive Vice-Presidents and 68,2% for Mr Brand relating to this tenure as a Senior Vice-President) x closing share price on 17 October 2019. The actual vesting date for the annual awards made on 26 September 2016 is 30 October 2019. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTIs vest. 50% of the vested LTIs and accrued dividends will be released in October 2019 and the balance in September 2021, subject to the rules of the LTI plan. As there are no further performance conditions attached to the balance of 50%, the full amount is disclosed in the single figure table. Ms Mokoena did not receive an annual award but an on-appointment award partially compensating for shares forfeited when she resigned from her previous employer. The 2018 Salary was restated to include the expatriate tax on salary (Grobler: R3 161 594, Harris: R1 154 354, Schoeman: R2 420 030) previously disclosed under Other Benefits which has been reduced by the corresponding value. The Total Salary and Benefits remain unchanged. Mr Brand was appointed to the GEC as Acting EVP: Group Technology with effect from 1 April 2019. Pro rata earnings disclosed. Other benefits comprise an acting allowance (R187 500) paid over the pro rata period. Long-term incentive gains includes a special LTI award. Other benefits include a housing allowance (R582 953), home leave allowance (R176 576), relocation services (R60 432), social security (R35 246), spousal allowance (R28 134), utilities (R38 864), transport allowance (R3 886), private accommodation (R37 135) and tax on expatriate allowances and benefits (R1 073 487). Other benefits include home leave allowance (R118 410), utilities allowance (R36 210), accommodation (R775 290) and tax on expatriate allowance and benefits (R1 250 179). Mr Harris expatriate assignment commenced in March 2018. 50% of the On-appointment LTI award made in February 2017 due to vest in February 2020; balance in February 2022, subject to the rules of the LTI plan. Other benefits include accommodation (R1 079 715), home leave allowance (R368 239), tax consulting fees (R176 024), social security taxes (R227 590), medicare taxes (R660 988) and tax on expatriate benefits and allowances (R1 590 168). Mr Schoeman has been removed from all his duties to work and is on extended leave. There is an ongoing employment dispute. Mr Harris 2018 salary includes a UK tax gross up on salary (R1 849 945) which is subject to recovery from the UK tax authorities. No UK tax gross up is included for 2019, only SA tax gross up. 3 4 5 6 7 8 9 10 Prescribed Officers 2019 R000 2018 R000 2019 R000 2018 R000 2019 R000 2018 R000 2019 R000 2018 R000 Salary Risk & Retirement Funding Vehicle benefit Healthcare Vehicle insurance fringe benefit Security benefit Other benefits 5 771 1 971 212 94 6 363 5 419 1 857 212 88 6 356 64 4 789 772 103 13 4 641 603 4 095 4 726 764 264 94 6 4 504 660 264 88 6 28 77 9 533 585 264 283 6 4 103 7 151 550 241 304 6 3 211 Total salary and benefits 8 417 8 002 5 677 9 339 5 854 5 627 14 774 11 463 Annual short-term incentive1 Long-term incentive gains2 3 363 3 640 7 173 2 229 2 391 2 752 2 518 5 428 2 752 3 774 9 072 Total annual remuneration 11 780 18 815 7 906 11 730 8 606 13 573 17 526 24 309 Prescribed Officers 2019 R000 2018 R000 2019 R000 2018 R000 2019 R000 2018 R000 2019 R000 2018 R000 Salary Risk & Retirement Funding Vehicle benefit Healthcare Vehicle insurance fringe benefit Security benefit Other benefits 766 224 58 22 2 188 8 391 823 228 195 6 2 037 7 523 750 227 197 6 1 864 9 458 462 254 195 14 2 180 7 920 464 63 73 4 2 763 5 901 772 94 6 490 5 530 729 88 6 451 Total salary and benefits 1 260 11 680 10 567 12 563 11 287 7 263 6 804 Annual short-term incentive1 Long-term incentive gains2 3 028 2 752 4 486 5 234 2 844 2 752 3 202 6 203 Total annual remuneration 4 288 14 432 20 287 12 563 14 131 10 015 16 209
The following tables set out the number and intrinsic value of the unvested LTI holdings that have been awarded to the Prescribed Officers. c. Unvested LTI holdings (number): HC Brand1 FR Grobler JR Harris VD Kahla BE Klingenberg CK Mokoena M Radebe SJ Schoeman 47 609 17 393 51 548 61 445 22 936 45 726 57 869 11 657 12 572 12 321 14 707 11 254 10 709 12 633 (4 185) (4 960) (5 735) (4 340) (6 045) 862 1 021 1 181 894 1 759 (5 519) (6 541) (7 563) (5 724) (10 487) 21 608 21 608 50 424 29 965 53 389 64 035 34 190 47 265 55 729 Total 304 526 85 853 (25 265) 5 717 (35 834) 21 608 356 605 d Unvested LTI holdings (intrinsic value): HC Brand1 FR Grobler JR Harris VD Kahla BE Klingenberg CK Mokoena M Radebe SJ Schoeman R23 941 $635 R25 921 R30 898 R11 534 R22 994 R29 100 R6 640 $482 R7 018 R8 377 R6 411 R6 100 R7 196 (R8 057) ($372) (R8 481) (R10 187) (R5 969) (R7 498) (R9 916) (R2 302) (R2 729) (R3 155) (R2 388) (R3 025) R474 R562 R650 R492 R812 (R3 036) (R3 598) (R4 161) (R3 149) (R4 650) R7 567 R7 567 R17 660 $745 R18 693 R22 422 R11 976 R16 551 R19 517 1 2 3 4 5 Mr Brand was appointed as the Acting EVP: Group Technology effective 1 April 2019. LTIs granted on 3 September 2018. Intrinsic values at beginning and end of year have been determined using the closing share price of R350,21 ($24,85) and R502,86 ($36,54) on 30 June 2019 and 30 June 2018. Change in intrinsic value for the year results from changes in share price. Long-term incentives settled represent long-term incentives that vested with reference to the group results for 2018 that was settled in the 2019 financial year. Difference between long-term incentive gains disclosed in 2018 and amount settled in 2019 is due to differences in actual share price at vesting date and the share price on 17 August 2018 being the disclosure date. e Share appreciation rights holdings outstanding (vested)4 HC Brand FR Grobler BE Klingenberg M Radebe SJ Schoeman 53 913 159 142 100 491 62 813 (18 500) (75 700) (100 491) (45 284) 16 724 16 724 35 413 83 442 17 529 f Fair value of share appreciation rights holdings4 HC Brand1 FR Grobler BE Klingenberg M Radebe SJ Schoeman 9 486 29 698 16 706 10 285 (2 645) (18 455) (18 339) (9 492) (4 894) (6 640) 1 633 149 909 909 1 947 4 603 942 1 2 3 4 Mr Brand was appointed with effect from 1 April 2019. Fair values at the beginning and end of year have been determined using the IFRS 2 option values on 30 June 2018 and 30 June 2019. Change in intrinsic value for the year results from changes in share price. Plan closed since 2015. Total 66 175(48 931)(9 752)909 8 401 Prescribed Officers Gain on exercise Effect of Fair value at of share Change in change in beginning appreciationfair value Prescribed Fair of year2 rightsfor the year3 Officers value R000R000 R000 R000R000 Total 376 359 (239 975) 16 724153 108 Balance at Effect of beginningSARs change in Balance at of year exercised Prescribed end of year Prescribed Officers (number)(number)Officers (number) Cumulative Intrinsic Cumulative Intrinsicvalue of Change in Effect of Intrinsic value at awards intrinsic corporateLong-term value at beginning made during value for performanceDividendincentives Effect of end of of year3, 4 the year3 the year4 targets equivalentssettled5 change in year3 R000 and R000 and R000 and R000 and R000 and R000 andPrescribed R000 and Prescribed Officers $000$000$000$000$000$000Officers $000 CumulativeEffect of balance at corporate Long-term Effect of Cumulative beginning performanceDividend incentives change in balance at of year Granted targets equivalents settled Prescribed end of year Prescribed Officers (number) (number)2 (number) (number) (number) Officers (number)
g Share appreciation rights (SARs) exercised1 FR Grobler FR Grobler BE Klingenberg BE Klingenberg M Radebe M Radebe M Radebe SJ Schoeman SJ Schoeman SJ Schoeman SJ Schoeman SJ Schoeman 17-Sep-09 03-Jun-10 04-Dec-09 04-Dec-09 24-Nov-10 15-Sep-11 13-Sep-12 17-Sep-09 25-Nov-09 16-Sep-10 02-Jun-11 15-Sep-11 05-Sep-18 31-May-19 27-Aug-18 26-Nov-18 31-Aug-18 15-Mar-19 30-Apr-19 22-Aug-18 22-Aug-18 22-Aug-18 22-Aug-18 22-Aug-18 4 500 14 000 67 400 8 300 58 887 19 854 21 750 700 17 300 4 812 19 380 3 092 299,90 278,74 289,99 289,99 322,60 334,53 376,46 299,90 299,98 298,65 352,50 334,53 578,68 378,00 547,00 426,50 562,65 436,75 476,42 534,27 534,27 534,27 534,27 534,27 1 255 1 390 17 322 1 133 14 136 2 029 2 174 164 4 053 1 134 3 523 618 1 Share appreciation rights lapse nine years after the grant date. Beneficial shareholding The aggregate beneficial shareholding at 30 June 2019 of the Directors of the company and the Prescribed Officers and their associates (none of whom have a holding greater than 1%) in the issued ordinary share capital of the company are detailed in the following tables: 1 2 3 4 Unvested Long-term incentives for Executive directors not included. The Sasol Inzalo Public (RF) Limited portion of the Sasol Inzalo transaction reached its maturity on 7 September 2018. Direct beneficial shareholding comprises of Sasol BEE ordinary shares. Resigned with effect from 17 November 2017. 1 2 3 4 Unvested Long-term incentives not included. The Sasol Inzalo Public (RF) Limited portion of the Sasol Inzalo transaction reached its maturity on 7 September 2018. Appointed Acting EVP with effect from 1 April 2019. Retired with effect from 31 October 2017. Beneficial shareholding 20191, 2 20181 Total beneficial shareholding Direct Indirect Total beneficial beneficial2 beneficial shareholding shareholding shareholding Prescribed Officers HC Brand3 FR Grobler M Radebe CF Rademan4 17 700 13 500 15 762 13 500 13 500 5 299 2 850 8 149 1 300 1 300 Total 46 962 20 099 2 850 22 949 Beneficial shareholding 20191, 2 20181 Total beneficial shareholding Direct Indirect Total beneficial beneficial2 beneficial shareholding shareholding shareholding Executive Directors B Nqwababa P Victor Non-executive Directors MBN Dube3 NNA Matyumza3 IN Mkhize4 ZM Mkhize3 17 378 1 549 24 6 181 13 003 13 003 24233257 6 56 62 1 844 18 435 20 279 181330 511 Total 19 138 15 058 19 054 34 112 239 975 48 931 Prescribed Officers Gain on exercise Exerciseof share SARs Offer price price appreciation Grant Exercise exercised per SAR per SAR rights 2019 dates dates (number) (Rand) (Rand) R000s
1 2 3 4 5 Fees include VAT where applicable. Board and Committee fees paid in US Dollars. Mr Dijkgraaf retired from the Board on 30 April 2018. Ms Mkhize retired from the Board on 17 November 2017. Mr Nkosi joined the Board on 1 May 2019. 6 Ad hoc Board or Committee meeting fee terminated 15 November 2018. Special purpose Board Committee fee effective 16 November 2018. 7 Phase-in of fees approved on 16 November 2018. Ad Hoc Leador special Board Independent purpose Meeting Director Committee board Fees1Fees1fees1committee1, 6 Non-Executive Directors R000 R000 R000 R000 Total1, 7 2019 Total1 2018 MSV Gantsho (Chairman) 6 030 MJN Njeke (Lead Independent Director) 1 206 387 363 48 C Beggs 1 206 727 77 MJ Cuambe2 2 186 539 HG Dijkgraaf2, 3 MDN Dube2 2 186 608 M Floël2 2 186 838 GMB Kennealy 1 206 363 NNA Matyumza 1 206 520 48 IN Mkhize4 ZM Mkhize 1 143 218 MEK Nkeli 1 206 582 SA Nkosi5 365 34 PJ Robertson2 2 186 1 108 S Westwell2 2 186 1 472 25 6 030 2 004 2 010 2 725 2 794 3 024 1 569 1 774 1 361 1 788 399 3 294 3 683 5 827 1 374 1 755 2 473 2 805 629 1 082 1 211 1 525 777 943 1 256 2 840 3 326 Total 24 498 3877 372198 32 455 27 823
Finance overview Resilient results from foundation business 2019 final dividend passed to protect and strengthen the balance sheet LCCP debt refinancing improves mix and maturity profile Actively managing liquidity headroom Renewed focus to ensure a strong and robust financial control environment Our foundation business delivered resilient results with a strong volume, cash fixed cost and working capital performance against the backdrop of a challenging macroeconomic climate. Our business was impacted by market and geopolitical risks including subdued global GDP growth. Our gross margin percentage decreased by 2% compared to the prior year driven by the increased supply of chemicals in the US and China resulting in lower chemicals prices. Our Energy Business benefitted from higher crude oil prices and higher diesel differentials. These benefits were partly offset by weaker petrol differentials driven by negative supply-demand fundamentals. Oil prices improved to US$69 per barrel on average in 2019, compared to US$64 per barrel in the prior year, with prices forecast to trend between US$50 and US$70 per barrel in 2020. Oil markets remain exposed to shifts in geopolitical risks as well as supply and demand movements. The chemicals industry has moved into a down cycle during the year based on reduced demand due to the ongoing US-China trade dispute and an increase in supply of commodity chemicals as new Chinese chemical complexes are starting up sooner than expected. During 2019, the rand/US dollar exchange rate averaged R14,20 compared to R12,85 for the prior year. The weaker average rand/US dollar exchange rate significantly impacted the results of our Chemicals businesses as a significant portion of the business is exposed to foreign currency sales and capital expenditure. We remain cautious with regards to the impact of a volatile rand/US dollar exchange rate on our business going forward. To mitigate these risks, we are of the view that our hedging programme is a key component of our financial risk management framework to provide certainty as we manage peak gearing and ensure sufficient liquidity for the company. We intend continuing with a prudent hedging strategy to ensure effective balance sheet management and protect cash flows needed to execute on our value-based strategy. We are pleased that approximately 55% of our hedging programme relating to rand/US dollar cover for 2020 is now complete. We have already hedged 47% of our ethane price exposure out of a target of 50%-70%. Unfortunately during the year under review, we significantly increased our capital project forecast for LCCP and hence it resulted in a sizeable impairment of the assets as well as limiting our balance sheet flexibility. Several control deficiencies have been identified by management since the increased LCCP capital announcement. Remedial actions have been initiated since February 2019 to address project and financial controls and reporting deficiencies. As we are in the process of starting-up the LCCP and ramping-up our volumes, it is evident in 2019 that the revenue generated do not fully cover the operating costs. "Our financial focus has been on protecting and strengthening Sasols balance sheet and improving cash generation. Paul Victor Chief Financial Officer KEY MESSAGES
Key drivers impacting our results Sasols risk management process has enabled us to remain resilient in the volatile macroeconomic environment. We closely monitor the progress of our strategic objectives by considering and planning for various likely financial scenarios in determining whether the risk is within the limits of our risk tolerance and risk appetite as well as testing the robustness of our mitigation actions. In order to assess the impact of the operating environment on our business, it is important to understand those factors that affect the delivery of our results. liquidity has remained available to quality as part of our enterprise risk management activities liquidity. investment ratings. BFP include the crude oil price, rand/US dollar in the crude oil price covering approximately 80% of Executing on capital projects One of the most significant challenges is Our capital allocation principles are used to guide capital excellence delivery of projects within how we systematically invest capital. We have also cost and schedule. Failure to achieve this taken actions to document the lessons learnt from negates our return on invested capital and past projects including the LCCP and will apply them could result in impairments. in future projects. Control deficiencies have been During the year deficiencies relating to the identified and are being remediated. LCCP forecasting process were identified, which resulted in a revised cost estimate. Credit market risk and its impact on our debt profile Despite the volatility in global markets, We monitor our funding requirements continuously borrowers. Market uncertainty has a more to ensure that we maintain appropriate levels of pronounced impact on the availability of liquidity to minimise any adverse impact on our Volatile markets and exchange rates A large portion of our turnover and capital We hedge both our capital investments and foreign investments are significantly impacted by currency-denominated imports by way of forward the rand/US dollar exchange rate. This is also exchange contracts. a significant variable in the basic fuel price We entered into zero-cost collars for approximately (BFP). Our chemical products are mostly US$4,3 billion and US$4,7 billion for 2019 and 2020, commodity products the prices of which arerespectively. This equates to approximately 70% based largely on global prices quoted in of our exposure. This hedging strategy enables us US dollars. to better predict cash flows and thus manage our working capital and debt more effectively. Crude oil Our Energy Business is exposed to the To protect the Group against adverse effects of volatility associated with the selling price of short-term oil price volatility and rand/US dollar fuel. The BFP forms part of the final selling exchange rate fluctuations, we use a combination price which is regulated by the South African of forward exchange contracts and crude oil futures. government. The key factors influencing the We entered into hedges against the downside risk exchange rate and refining margins. the Groups liquid fuel sales for 2019. Chemical prices Our chemical products follow a typical The approach for our commodity Chemicals Business demand cycle. Higher demand results in is to have a diverse portfolio of assets and, wherever higher margins until new production capacity possible, to invest in the value chain from raw is introduced, at which point margins materials to final products. We expand our footprint decrease. Over the longer term, most in differentiated markets. This is aimed at ensuring commodity chemical prices tend to track resilience under a number of different oil price crude oil-based feedstock prices. scenarios and industry cycles. Gas prices Natural gas is a key feedstock in our GTL In times of lower demand for gas, we utilise the businesses. A higher gas price would reduce gas available from Mozambique internally in our our profitability and earnings generation. integrated value chain. In Mozambique some of our revenue is In July 2019 the Constitutional Court overturned the derived from the natural gas price. Lower gas2013 NERSA maximum price decisions and ordered prices would result in reduced cash flows and NERSA to revise its decisions. We are waiting for the profitability. outcome. If gas selling prices are reduced by NERSA it will negatively impact our business. Our cost base The risk of inflationary increases in the We maintain a strict focus on cost and are targeting countries in which we operate could placean inflation rate of 6%. We are further evaluating further pressure on our cost base. Generally,opportunities to reduce cost through our the rate of inflation in most major countries Continuous Improvement programme. has been relatively low. The inflation rate for We have several digitalisation initiatives aimed South Africa remains volatile and has moved at increasing the effectiveness and efficiency of from 4,7% in 2018 to 5,9% at 30 June 2019.operations . Risk Impact on value creation Response
Finance overview (continued) Overview of financial performance Earnings before interest and tax (EBIT) decreased 45% to R9,7 billion, largely due to significant remeasurement items of R18,6 billion recorded in the current year resulting mainly from softer chemical prices as well as the higher than anticipated capital spend on the LCCP. Core headline earnings per share (CHEPS) increased 5% to R38,13 on the back of a 19% higher rand per barrel oil price compared to the prior year. Headline earnings per share (HEPS) increased 12% to R30,72 compared to the prior year. Even though we were unable to convert the full rand oil benefit into earnings due to softer commodity chemical prices and higher feedstock prices in Europe and the US, the increase in core earnings still supports our cash flow generating ability from our foundation businesses. The Sasol Limited Board (the Board) considers core headline earnings as an appropriate indicator of the sustainable operating performance of the Group. The graph below summaries earnings performance for the past four years. Earnings performance 45 40 35 30 25 20 15 10 5 0 Earnings per share Headline earnings per share Core headline earnings per share Dividend per share 2016 2017 2018 2019 Our operational performance saw the positive impact of management interventions resulting in improved performances at Secunda Synfuels Operations, achieving an annualised run-rate of 7,8 mt after the full shutdown, Natref achieving a production run-rate of 637m3/h which is the highest performance in the past eight years and productivity at Mining increasing by 3%. Our final production results were, however, constrained by a longer-than-expected shutdown at Secunda Synfuels Operations and external feedstock supply challenges in Germany. ORYX GTL achieved an 81% utilisation rate due to unplanned maintenance shutdowns during the year. The high-density polyethylene plant (HDPE) in the US produced volumes at the upper end of its design capacity. Liquid fuel sales volumes increased by 2% compared to the prior year from higher volumes placed in wholesale and commercial channels and as a result of a strong performance by Natref. Base Chemicals' sales volumes increased by 4% from the prior year due to the contributions from the HDPE and linear low-density polyethylene (LLDPE) plants in the US, however the positive impact thereof was offset by softer commodity chemical prices. Performance Chemicals' sales volumes decreased by 3% compared to the prior year resulting from external supply constraints experienced during the first half of the year and a softer macroeconomic environment in Europe and Asia during the second half of the year. Rand per share 21,66 33,36 14,26 6,97 41,40 35,15 27,44 30,72 36,77 38,47 36,38 38,13 14,80 12,60 12,90 5,90
Our attributable earnings was significantly impacted by remeasurement items of R18,6 billion. Once-off items include impairments of R7,4 billion (US$526 million) and R5,5 billion (US$388 million) recognised in relation to the Tetramerisation and EO/EG cash generating units, respectively. The impairments were mostly as a result of softer forecast US ethylene and global non-ethylene glycol prices and an increase in capital cost for the LCCP. Softer international ammonia sales prices and higher feedstock prices impacted our ammonia value chain in Southern Africa, with an impairment of R3,3 billion recognised. Our shale gas assets in Canada were impaired by a further R1,9 billion (CAD181 million) as at 30 June 2019 to a carrying value of R22 million (CAD2 million) based on the fair value less cost to sell as we have made significant progress on this divestment as part of our strategic portfolio optimisation.
During the year we refinanced the US$4 billion LCCP asset-based facility in two phases, initially by the issue of US$2,25 billion of US dollar denominated bonds (US$1,5 billion 5,5 year bond and US$0,75 billion 10-year bond) and thereafter by a US$1,8 billion 5 year bank loan financing. This refinancing enabled Sasol to optimise its mix of funding instruments between bank loans and bond market, while at the same time extending the maturity of the debt profile from 2021 to as far out as 2028. Long-term debt maturity profile We have implemented a dynamic funding plan which is based on our latest assumptions and capital requirements. We review the plan on an ongoing basis and report on it to the Audit Committee and Sasol Limited Board to ensure that we have sufficient liquidity and headroom on the balance sheet in the foreseeable future. Solvency and liquidity The Group meets its financing requirements through a mixture of cash generated from its operations and short-and long-term borrowings. We maintain adequate banking facilities and reserve borrowing capacities. Sasol is in compliance with all of the financial covenants of its loan agreements, none of which is expected to present a material restriction on funding or its investment policy in the near future. Credit ratings Our credit ratings are influenced by some of our more significant risks. These include crude oil price volatility, movements in the sovereign credit rating of South Africa, our investments in developing countries and their particular associated economic risks, the potential for significant debt increase and the execution challenges associated with a number of our planned growth projects if they materialise simultaneously, as well as the risks arising from potential increases in capital costs associated with these projects. Analysing our shareholding and returns to shareholders Shareholding Sasols shareholder base consists primarily of large institutional shareholders, with varying investment styles, concentrated in South Africa. With the LCCP coming online, our international portfolio is becoming more significant. As a result, our aim is to achieve a broad correlation between the distribution of our shareholder base and the sources of cash-generation for Group. This means that we will specifically target a larger number of US-based investors in future. Total shareholder return We return value to our shareholders by way of both dividends and share price appreciation. Total shareholder return (TSR) is a measure of the performance of the Groups shares over time, and combines both share price appreciation and dividends paid to indicate the total return to a shareholder over the period. Sasols TSR for the five-year period ending 30 June 2019 was negative 34% in rand terms and negative 51% in US dollar terms, which is in the bottom range of our peers. 120 000 100 000 80 000 60 000 40 000 20 000 0 Within 1 year 3 to 5 years 4 to 5 years Over 5 years Our debt profile analysed by currency: 2019 2018 2017 Due to the funding of the LCCP, 93% of our debt is now US dollar denominated. Given the significantly weaker closing exchange rate of R14,08 and the related translation loss arising on the valuation of the balance sheet at year-end, the impairments recognised during the year and the higher-than-planned capital expenditure on the LCCP, our gearing increased to 56,3%. As part of our debt refinancing strategy we have agreed with our financiers to amend the net debt: EBITDA covenant from 2,5 times to 3,0 times under the US$3,9 billion Revolving Credit Facility (RCF) entered into during 2017. The covenant amendment provides us with financial flexibility during the peak gearing period over the next 12 24 months. The graph below illustrates our gearing and net debt: EBITDA ratio as at 30 June 2019. Gearing and net debt: EBITDA ratio 70 60 50 40 30 20 10 0 3,0 2,5 2,0 1,5 1,0 0,5 0,0 16 Gearing 17 18 19 RCF maintenance covenant Net Debt: EBITDA 91 Gearing % R million Net Debt: EBITDA (times 2,63 1,83 56 1,17 42 0,56 26 15 Rm % Rm%Rm% Rand US dollar Other 9 7247 128 468 93 444 19 044 17 20 922 25 91 1318159 39171 1 31423 840 4 Total 138 636 111 489 84 153 2 544 5 190 108 257 21 348
During the year we refinanced the US$4 billion LCCP asset-based facility in two phases, initially by the issue of US$2,25 billion of US dollar denominated bonds (US$1,5 billion 5,5 year bond and US$0,75 billion 10-year bond) and thereafter by a US$1,8 billion 5 year bank loan financing. This refinancing enabled Sasol to optimise its mix of funding instruments between bank loans and bond market, while at the same time extending the maturity of the debt profile from 2021 to as far out as 2028. Long-term debt maturity profile We have implemented a dynamic funding plan which is based on our latest assumptions and capital requirements. We review the plan on an ongoing basis and report on it to the Audit Committee and Sasol Limited Board to ensure that we have sufficient liquidity and headroom on the balance sheet in the foreseeable future. Solvency and liquidity The Group meets its financing requirements through a mixture of cash generated from its operations and short-and long-term borrowings. We maintain adequate banking facilities and reserve borrowing capacities. Sasol is in compliance with all of the financial covenants of its loan agreements, none of which is expected to present a material restriction on funding or its investment policy in the near future. Credit ratings Our credit ratings are influenced by some of our more significant risks. These include crude oil price volatility, movements in the sovereign credit rating of South Africa, our investments in developing countries and their particular associated economic risks, the potential for significant debt increase and the execution challenges associated with a number of our planned growth projects if they materialise simultaneously, as well as the risks arising from potential increases in capital costs associated with these projects. Analysing our shareholding and returns to shareholders Shareholding Sasols shareholder base consists primarily of large institutional shareholders, with varying investment styles, concentrated in South Africa. With the LCCP coming online, our international portfolio is becoming more significant. As a result, our aim is to achieve a broad correlation between the distribution of our shareholder base and the sources of cash-generation for Group. This means that we will specifically target a larger number of US-based investors in future. Total shareholder return We return value to our shareholders by way of both dividends and share price appreciation. Total shareholder return (TSR) is a measure of the performance of the Groups shares over time, and combines both share price appreciation and dividends paid to indicate the total return to a shareholder over the period. Sasols TSR for the five-year period ending 30 June 2019 was negative 34% in rand terms and negative 51% in US dollar terms, which is in the bottom range of our peers. 120 000 100 000 80 000 60 000 40 000 20 000 0 Within 1 year 3 to 5 years 4 to 5 years Over 5 years Our debt profile analysed by currency: 2019 2018 2017 Due to the funding of the LCCP, 93% of our debt is now US dollar denominated. Given the significantly weaker closing exchange rate of R14,08 and the related translation loss arising on the valuation of the balance sheet at year-end, the impairments recognised during the year and the higher-than-planned capital expenditure on the LCCP, our gearing increased to 56,3%. As part of our debt refinancing strategy we have agreed with our financiers to amend the net debt: EBITDA covenant from 2,5 times to 3,0 times under the US$3,9 billion Revolving Credit Facility (RCF) entered into during 2017. The covenant amendment provides us with financial flexibility during the peak gearing period over the next 12 24 months. The graph below illustrates our gearing and net debt: EBITDA ratio as at 30 June 2019. Gearing and net debt: EBITDA ratio 70 60 50 40 30 20 10 0 3,0 2,5 2,0 1,5 1,0 0,5 0,0 16 Gearing 17 18 19 RCF maintenance covenant Net Debt: EBITDA 91 Gearing % R million Net Debt: EBITDA (times 2,63 1,83 56 1,17 42 0,56 26 15 Rm % Rm%Rm% Rand US dollar Other 9 7243 128 468 93 444 19 044 17 20 922 25 91 1318159 39171 1 31423 840 4 Total 138 636 111 489 84 153 2 544 5 190 108 257 21 348
Finance overview (continued) Acknowledgement 2019 has been a challenging year in many respects and I would like to thank the Board and Group Executive Committee for their support and leadership. I also would like to acknowledge the dedication and hard work of our finance team who are supporting the business in the dual challenge of delivering value to shareholders and managing our balance sheet. Finally, I am looking forward to the year ahead as we unlock value from the LCCP for our shareholders. The factors that influenced the performance of the share price included the markets reaction to the increased LCCP cost estimate, challenging global markets with ongoing macro uncertainty and our operational efficiency and cost containment initiatives. The volatility of the crude oil price, coupled with the rand/US dollar exchange rate, further contributed to the lower share price performance. To maximise TSR, the Group has put measures in place to: improve project execution by implementing lessons learnt from the LCCP and previous projects; actively manage the balance sheet to address external volatility; update our strategy to reflect sustainability as a key measure of resilience; execute per our disciplined capital allocation framework for improving shareholder returns; focus on Continuous Improvement to improve the efficiency of our operations; and work with government and other stakeholders to manage the impact of regulations on Sasols South African business. Paul Victor Chief Financial Officer 28 October 2019 Dividend Our dividend policy is to pay dividends within a dividend cover range based on core HEPS. After careful consideration of our current leverage and the volatility in the macroeconomic environment, the Board made a very tough decision to pass the final dividend for 2019. This helps to protect and strengthen our balance sheet while also ensuring we deliver the key elements of our strategy, particularly the final completion of the LCCP. The Board may consider to pass the interim dividend for 2020 based on the health of the balance sheet metrics at that stage. During February 2019 a gross interim dividend was declared of R5,90 per ordinary share and Sasol BEE ordinary share. New accounting standard The Group will transition to the new accounting standard IFRS 16, Leases, effective 1 July 2019, applying the modified retrospective approach given the significance of the impact. Refer to the Annual Financial Statements AFS for detail disclosure of the impact. Governance Unfortunately during the year under review, we significantly increased our capital project forecast for the LCCP which resulted in a sizeable impairment of our assets and limiting our balance sheet flexibility. Several control deficiencies were identified by management since the increased LCCP capital announcement. Refer to the Governance overview on page 60 for more details. We have initiated several remedial actions since February 2019 to address project and financial controls and reporting deficiencies. 92
How we structure ourselves to create value Our foundation businesses (our existing operations) and functions are arranged along an integrated value chain that draws on each businesss unique capabilities and areas of specialisation to enable integrated thinking and decision-making in the organisation. Source Make Sell feedstock products products ation and Secunda Sasolburg Mozambique - gas Canada Gabon - oil Secunda Synfuels Natref Secunda Chemicals North American Sasolburg Operations Operations Satellite Operations Eurasian Operations Liquid fuels Electricity Gas ORYX GTL Escravos GTL Base Chemicals Performance Chemicals Supported by Group functions to enable business What differentiates us Our highly cash generative and diverse asset portfolio Our distinctly skilled people with upstream, engineering and technical capabilities Our ability to manage complex integrated value chains and production facilities Value to stakeholders Strong global customer relationships Strong US and EU presence in specialty chemicals Formidable Energy brand in South Africa Energy Chemicals Explor Mining Production International Operations Strategic business units Regional operating hubs Operating business units
Progressing on our value-based strategy In developing our strategy, we considered both opportunities and risks, informed by developments in the world in which we operate. Our strategy keeps us focused, setting a clear path to deliver sustainable growth, accelerated shareholder returns and ongoing value for all our stakeholders over the near, medium and long term. We have a strong foundation business which will enable us to grow and deliver further value in our existing assets. Our vision Our purpose Our strategy Enabled by: Zero harm at all our operations globally Aspirational Culture to ensure engagement of all our employees ROIC (US$) >12% through-the-cycle >2% uplift by 2022 Targets to measure strategic delivery High-performing people Digitalisation and modernisation of our information systems Continuous Improvement to improve efficiency and extract further value Chemicals Upstream Energy Our foundation business Leveraging competitive advantage for long-term sustainably by: Pursuing world-class operations Continuously improving value chain performance Delivering on focused programmes to respond to a changing environmental and clean fuels landscape Delivering incremental value growth enabled by digitalisation Continue to drive safe, stable and reliable operations Business of today Business of the future Deliver quality growth in Southern Africa by increasing margin in liquid fuels marketing Maximising value of Southern Africa gas value chain Selective gas-to-power opportunities Explore, develop and produce gas in Southern Africa to its full potential, together with our partners Progressively grow a risk balanced upstream portfolio in Mozambique (gas) and West Africa (oil) Secure coal and gas feedstock to 2050+ Deliver value by optimising and leveraging existing chemicals assets Focusing on growth in high-value specialty chemicals in differentiated markets
As part of our growth strategy we are focusing on the completion of the LCCP which will enable us to become a more chemicals-biased company. During 2019 progress on the execution of our strategy was impacted by capital constraints and lack of liquidity of the balance sheet. In the short term we continue to focus on our top priorities. EBIT growth (US$ real) >5% through-the-cycle Dividend returns stepping up payout to 45% of Core HEPS (2,2x cover) Strong governance and rebuilding trust with stakeholders Inclusive stakeholder relationships Disciplined capital allocation Update on near, medium and long-term objectives term account potential air quality our environmental impact emission reduction roadmap Long term 2030 Extract further value from existing assets Accelerate exploration and production growth Grow in adjacent specialty chemicals markets Build on our socio-economic contribution Focused investments to reduce our environmental impact Continue with capacity optimisation across asset portfolio Build our capabilities and execute on long-term sustainable revenue streams Continue with GHG emission reduction roadmap taking into improvement benefits Medium 2022+ Reinforce our pursuit of zero harm Embed our Aspirational Culture Debottleneck the LCCP to extract maximum value Extract full value from existing operations Progressively grow specialty chemicals through mergers and acquisitions Progressively grow value in oil and gas portfolio in West and Southern Africa Increase returns to shareholders Pursue value-accretive retail acquisitions Secure long-term gas feedstock Active management of asset portfolio to achieve growth targets Focused investments to reduce Continue to execute GHG Short term 2020+ Pursue zero harm and reduce high-severity injuries remains a priority Continue to drive safe, stable and reliable operations Strengthen stakeholder relationships and deliver sustainable value to society Drive organisational culture shift Deliver on LCCP and drive operational and marketing excellence Secure long-term gas supply to our Southern Africa operations Manage the balance sheet to maintain investment grade rating Grow retail fuels incrementally with a shift to a customer-centric organisation Develop a greenhouse gas (GHG) emission reduction roadmap to achieve our 2030 target Build and strengthen our mergers and acquisition capabilities Drive digitalisation
Our integrated value chain to leverage off the benefits of the value chains, as well as improve our processes to Our integrated value chains, centred on our gas-to-liquids, coal-to-liquids, ethane cracker and chemical processes, are at the heart of our differentiated value proposition. As we are becoming a more chemicals-biased company, we will continue ensure safe, reliable and efficient operations with reduced environmental impacts. Operations Feedstocks Processes Ethylene Paraffin, LAB*, Wax and Alcohols Ethane Sasolburg Operations Coal Coal-to-liquids Natural gas (CTL) process Mining Exploration and Production International Gas-to-liquids Natural gas (GTL) process Coal Crude oil * Linear alkyl benzene Natref Secunda Synfuels and Chemicals Operations GTL and CTL processes North American Operations Chemicals processes Eurasian Operations
*Lake Charles Chemicals Project. Products Performance Chemicals Organics WaxAdvanced materials The LCCP* will produce base and performance chemicals and will further strengthen our position as a global player in the chemicals market. Base Chemicals Polymers Solvents Explosives Fertilisers Sasol joined the Alliance to End Plastic Waste (AEPW), an organisation that will bring the collective knowledge, resources and experience of many companies to address the issue of plastic waste discarded in the environment. Fuels Electricity Gas Fuels Energy Vehicle fuel Jet fuel Energy for Gas-to-factories/homes power We need to secure long-term gas feedstock to our facilities, this supports our efforts to reduce our greenhouse gas emissions. To meet cleaner fuel specifications we have finalised the roadmap for conversion of Secunda Synfuels Operations and made significant progress to the potential conversion of Natref. Chemicals
Operational and strategic overviews How our Upstream Business will deliver on strategy Advancing our strategy in phases to 2050 oil and gas portfolio in West and diversity, transformation and social Strategic objective Explore and produce gas in Southern Africa Safely produce coal feedstock Progressively grow value-adding Southern Africa ESG focus areas Mining Safe working environment, proactive promotion of diversity, transformation and social upliftment E&PI Proactive promotion of upliftment, social contribution in Mozambique, maintain highest levels of governance Medium term 2022+ Continue to invest in the early part of exploration life cycle and farm down for value Acquire producing assets and development-ready opportunities in line with our risk appetite Active management of portfolio to deliver long-term absolute EBIT growth while remaining within the remit of Group ROIC through-the-cycle Near term 2020+ Continue to develop Southern Mozambique to its full potential together with our partners Maximise the value from our existing assets in Mozambique through additional compression and in-field development Explore and evaluate partnerships to fully develop the gas business in Southern Africa together with Energy Deliver full potential of our Gabon asset Continue to develop a risk balanced portfolio of growth options to execute in line with balance sheet flexibility Safely produce coal feedstock to 2050 Overview Mozambique and gas portfolio in West Exploration and Production (E&PI) Continue as a strategic partner in Mozambique Focus on maintaining gas production and optimising resources in Southern Progressively grow our oil and Southern Africa Strengthen our value-based partnership in Gabon Actively manage and optimise our portfolio; divest Canadian shale assets Mining Cost and safety leadership position in South Africa Sustainable feedstock to South African value chain Continuous Improvement mindset delivering value R14 bn mine replacement programme completed below budget and without supply disruption Successful B-BBEE partnership in place with Ixia Coal Jon Harris Executive Vice President: Upstream Business
Operational and strategic overviews (continued) Mining Mining is responsible for producing coal feedstock for our Southern Africa integrated value chain to convert coal into higher-value products. supporting safe and reliable operations. We continued to prioritise our community relationships, assisting municipalities with various infrastructure projects. We also extended home ownership among employees, handing over another 63 houses in the year. To further improve the efficiency of our mines and increase productivity, we implemented Siyenza, a programme that is aimed at mitigating the greater complexity of mining geology as well as the increasing regulatory expectations. The programme entails creating integrated operations, fundamentally changing our operating system and organisational culture to improve safety, increase productivity and reducing our cost base as well as the more active sharing of practices, people and other resources. Performance summary Productivity improved by 3% in the year as we continued to focus on improving our operational efficiency while striving to achieve zero harm. Supply to our internal value chain remained sufficient and we reduced our stockpile levels as part of our working capital management initiative. We reduced our external coal purchases to acceptable levels. We also paid higher royalty taxes compared to the previous year, as we fell into a different royalty tax bracket. Normalised unit cost of production increased above inflation mainly due to lower overall production levels. Safety update Our operations were affected by two tragic work-related fatalities in the year. Safety remains our top priority and following these incidents we implemented various corrective actions. Delivering on our strategic objectives Because of the high emissions associated with burning coal, it is referred to globally as a dirty resource. However in South Africa, we are heavily dependent on coal as a feedstock and as such have to ensure that we can sustainably source and deliver coal to our operations at the lowest cost. We successfully completed our 11-year, R14 billion mine replacement programme by inaugurating our new Shondoni and Impumelelo collieries in July 2018 and April 2019 respectively, these mines sustain some 4 000 jobs and secure coal supply to our Secunda Operations. As the existing mines reached the end of their useful lives, we continued work to decommission, close and rehabilitate shafts and associated infrastructure. At Shondoni, as part of our digitalisation efforts, we are rolling out a pilot project to enable wireless connectivity underground. Here, we installed Wi-Fi and enabled smart devices for mobile communication and data capturing. This facilitates integrated mining operations that allow for more accurate and timeous monitoring of machines and people, Saleable production External purchases Unit cost per production ton 8,0 70 60 50 40 30 20 10 0 8 7 6 5 4 3 2 1 0 400 300 270 40,3 39,2 37,2 36,0 36,1 200 100 0 15 16 17 18 19 15 16 17 18 19 15 16 17 18 19 mm tons mm tons R/ton 313 284 226 227 5,15,0 6,7 5,2 Looking ahead Achieving safe operations remains our top priority. We are working to ensure our long-term sustainability by securing our compliance with Broad-Based Black Economic Empowerment ownership requirements and are engaging the authorities in this regard. We remain focused on strengthening our relationships with recognised trade unions, government and our fence-line communities. Ahead of the expiry of our multi-year wage agreement in June 2020, we will engage in negotiations with all our participating trade unions. Salient features Safety performance marred by two tragic work-related fatalities Transformation programme yields 3% productivity improvement as we worked towards more integrated operations Rolling out pilot project to enable wireless connectivity underground Completed R14 billion mine replacement programme, officially opened last two mines Extended home ownership programme to benefit a further 63 employees
Exploration and Production International Exploration and Production International (E&PI) develops and manages the Groups upstream interests in oil and gas exploration and production. We have assets in South Africa, Mozambique, Gabon and Canada. offshore concession located centrally in the country. We are in the process of acquiring seismic data on PT5-C and planning for our first well on A5-A together with our partners. In exploring new avenues to import gas into South Africa, we established a dedicated team to engage parties involved in the development of the substantial natural gas fields of the offshore Rovuma Basin. Mozambique remains at the core of our strategy and we aim to maximise shared value with the government of Mozambique. To this end, we agreed a five-year plan for local content development that incorporates procurement spend, capacity building, employment, training and research. Among other initiatives, we committed to spend approximately US$17 million over two years on various social projects. In Gabon, we maintained oil production from our joint venture Etame Marin Permit asset and secured a licence extension for another 10 years with two further five-year renewal periods. In other parts of West Africa, we made good progress identifying opportunities to participate in low entry cost exploration acreage and built relationships with key stakeholders. Delivering on our strategic objectives Working with our partners, we continued to prioritise gas-based growth in Southern Africa and oil-based growth in West Africa. In Mozambique, we continued to produce safely and reliably from our Petroleum Production Agreement (PPA) licence area facilities. We executed several projects to maintain the supply of gas feedstock to our Southern Africa value chain as well as support Sasols lower-carbon agenda. These projects included low-pressure compression at our plant and the drilling of an additional well. More projects of a similar nature have been sanctioned and are progressing towards execution in coming months. The Production Sharing Agreement (PSA) reservoirs have proved to be more complex than anticipated resulting in reduced expected recoverable oil volumes but with confirmed recoverable gas volumes. Work continues on the integrated oil, gas and LPG feasibility study. We have also made progress in our plans to supply gas to enable the 400MW Central Termica de Temane (CTT) power station formerly known as the Mozambique gas-to-power project (MGtP). This new facility, along with the Central Térmica de Ressano Garcias 175MW plant, will supply approximately 40% of Mozambiques electricity. During 2019, we signed exploration and production concession contracts on two new blocks in Mozambique; PT5-C which is adjacent to our existing producing licence and A5-A which is an Performance summary Higher gas and crude oil sales prices benefitted our earnings in our Mozambique operations and in Gabon. Despite our positive cash profit, earnings before interest and tax were lower due to the impairment of our Canadian shale gas operations of R1,9 billion aligned with the anticipated fair value. Looking ahead Driven to deliver on Sasols sustainability agenda and emission reduction roadmap, we are committed to sourcing more sustainable gas supply alternatives. We are continuing with numerous low-pressure compression interventions as well as the drilling of more wells in the PPA licence area. This will maintain gas supply at current levels. We plan to increase the recovery of gas from the reservoir capital projects currently in assess phase. We also continue to explore in PT5-C and A5-A. In Gabon, we are preparing to drill additional wells in the Etame Marin Permit area. Salient features Further improved our safety performance as a top priority Heightened focus on sustainably sourcing gas feedstock to the Southern Africa value chain Spent R88,1 million on social investment in Mozambique; jointly developed a local-content plan with the government to increase our goods and services purchases from Mozambican companies Secured 10-year extension of Etame Marin Permit in Gabon
Operational and strategic overviews (continued) How our Chemicals Business will deliver on strategy Fleetwood Grobler Executive Vice President: Chemicals Business Advancing our strategy in phases in differentiated markets Guide plastics waste consumers on use of plastics, Strategic objective Optimise existing assets Grow specialty chemicals ESG focus areas management, educate and collect it to reduce, recycle and re-use Medium term 2022+ Progressively grow specialty chemicals through internal growth and acquisitions levers Debottleneck LCCP and capitalise on associated infrastructure to support chemicals growth Continued capacity optimisation across chemicals portfolio Near term 2020+ Deliver value from LCCP Invest in capacity optimisation and differentiation across full chemicals portfolio Maximise position from existing operations and technology platforms Overview variety of polyethylene and Base Chemicals Produces and markets commodity chemicals from integrated South African and North American value chains Global sales of 4 million tons per annum Proven experience with a polypropylene licensed technologies Performance Chemicals Produces and markets commodity and specialty chemical products which include organics, advanced materials and wax as key value chains Sales of more than 2,6 million tons per annum in over 50 diversified markets Long-term global customer relationships
Chemicals Business We are a truly global business supplied from operations in Europe, the United States, South Africa and China. Base Chemicals markets commodity chemicals from our upstream Fischer-Tropsch (FT), ethylene and propylene value chains. Performance Chemicals markets commodity and differentiated chemicals including organics, advanced materials and wax value chains. 5 000 fewer trucks transporting our products on the roads every year, supporting our safety efforts. We advanced our programme to transform the customer experience using digital platforms, recording improvements in our piloted net promoter index through our new portal for easy ordering and improved order tracking as well as our revitalised internet product catalogue. We also made greater use of data analytics for enhanced process efficiency and applied statistical methods to improve the quality of planning. A customer relationship management tool was rolled-out in North America with further roll-outs planned in South Africa and Eurasia in the coming year. We made good progress in our work to advance the sustainability of plastics became a founding member and the only company in Africa of the Alliance to End Plastic Waste. We developed plans to address the global plastic waste issue and will be ready to act on these in 2020. We are reviewing our asset portfolio to ensure that it is focused and remains core to our strategic objectives. Our recent announcement of our plans with Enaex S.A, a subsidiary of the Sigdo Koppers Group, to grow our explosive business through a possible partnership is evidence of this. Delivering on our strategic objectives 2019 was a important year for us as we started-up two of the LCCP units, the polymer unit and the EO/EG unit. The start-up of these units will diversify our earnings base and provide additional returns to our shareholders. Similarly, we expanded our operations in China a new ethoxylation unit reached beneficial operation 26 months after the investment decision was made, within the approved budget. Most pleasing of all is that the project was completed without any recordable injuries, which is testament to a high safety awareness and commitment from Sasol and our contractors. This project is Sasols largest expansion project in the region. The new plant has a capacity of approximately 150 kilotons per annum, with the option of using either branched or linear alcohols to meet differentiated customer requirements in applications such as personal care, textiles and leather, metal working and lubrication. With Chinas economy forecast to represent about 40% of the worlds chemical demand by 2025, it is an important growth market for Sasol. The new production unit will more than double Sasols production capacity in the region and allow us to meet both the growth as well as the increasingly sophisticated quality requirements of an exciting market. Furthermore, it will strengthen our position as a reliable solution supplier with strong R&D support for customers. With the opening of a new wax warehouse in Sasolburg, we improved the overall supply chain cost as well as the quality and service to our export wax customers. The new warehouse, and the introduction of new rail tank cars, will result in Lake Charles Chemicals Complex, United States Salient features Base Chemicals sales volumes increased by 4% Performance Chemicals sales volumes decreased by 3% New linear low-density polyethylene and ethylene oxide/ ethylene glycol (EO/EG) units add to our earnings growth HDPE joint venture facility in the US adds first full year of earnings New ethoxylation unit in China reached beneficial operation 26 months after the investment decision was made, within the approved budget EO/EG and Tetramerisation cash-generating units (CGU) in the US impaired by R5,5 billion (US$388 million) and R7,4 billion (US$526 million) respectively Ammonia CGU in the Southern African value chain impaired by R3,3 billion Driving a focused programme on plastics sustainability Improving customer experience by accelerating roll-out of digital tools and platforms Fostering a growth and innovation mindset in Performance Chemicals
Operational and strategic overviews (continued) Performance summary 2019 was a challenging year for the Chemicals Business, marked by supply interruptions in South Africa and Europe and the impact of heightened international trade tensions on sales. Performance Chemicals sales volumes were 3% lower compared to the prior year mainly due to external feedstock supply constraints in Europe during the first half of 2019. We realised strong margins in the specialty organics and advanced materials portfolios, offset by a softer macro environment in Europe and Asia in the second half of 2019 impacting the remainder of the portfolio. Normalised EBIT*+, remained flat at R7,9 billion compared to the prior year. This excludes R1,8 billion of operating losses attributable to the LCCP incurring depreciation and cash fixed costs without corresponding gross margin realised while in the ramp-up phase. The EO/EG and Tetramerisation cash-generating units (CGU) were impaired by R5,5 billion (US$388 million) and R7,4 billion (US$526 million) respectively. The impairments were mostly as a result of softer forecast US ethylene over ethane margins and global mono-ethylene glycol prices and an increase in the capital cost for the LCCP. Base Chemicals business benefitted from 4% higher sales volumes largely from US polymers with our high-density polyethylene (HDPE) plant contributing for the full year and our linear low-density polyethylene (LLDPE) plant achieving beneficial operation in February 2019. The Base Chemicals' foundation business sales volumes were largely in line with 2018. Normalised EBIT*+, decreased 33% to R3,8 billion compared to the prior year. This excludes R1,9 billion operating losses attributable to the LCCP incurring depreciation and cash fixed cost without corresponding gross margin realised returns while in ramp-up phase. The Ammonia CGU in the Southern African value chain was impaired by R3,3 billion, mainly attributable to the outlook of softer international ammonia sales prices and higher feedstock costs. We reversed an impairment amounting to R949 million on our integrated ethylene assets in Sasolburg due to the useful life extension from 2034 to 2050. This is in line with the detailed study undertaken that proved the viability of non-gas-dependent operations beyond 2034 as feedstock is supplied from Secunda which has an approved useful life up to 2050. +In line with Sasols updated strategy, we have reorganised the Chemical portfolio to support our value-based growth strategy. Consequently, we have transferred the Phenolics, Ammonia and Specialty Gases (PASG) results from Performance Chemicals to Base Chemicals, effective 1 July 2018. Ammonia and Specialty Gases are managed by Energy. The metrics have been restated for the transfer. Looking ahead International trade tensions, should they continue, will continue to place pressure on chemical prices. In addition, new expansions in China are driving commodity chemical markets into oversupply and margins could be lower in the short term. Market fundamentals however remain robust and macro-trends such as a growing population, mobility and urbanisation are expected to continue to support mid-term growth in chemical markets. We continue to drive growth and innovation, focusing on markets where Performance Chemicals has proprietary technologies, competitive feedstocks and develop products for new applications in collaboration with customers. In the near term, we will work to deliver value from the LCCP, as well as invest in incremental growth and capacity optimisation and differentiation across the chemical portfolio, building on existing technology platforms. We continue to develop the market for the new FT wax streams. With the start-up of the LCCPs second polyethylene plant in the second half of the 2019 calendar year, Base Chemicals' polymers capacity in the region will exceed one million tons. We also see opportunities for incremental growth in our foundation businesses through debottlenecking, as well as supply chain optimisation and increased sales in West Africa.
How our operations will deliver on strategy Bernard Klingenberg Executive Vice President Operations linear low-density polyethylene unit in February 2019 and the ethylene oxide/ethylene glycol unit in May 2019. We are however, disappointed with the increase in cost to bring the LCCP units online and will work relentlessly to ensure that we have reflected and acted upon the lessons learnt and deliver the full earnings potential from this mega asset. In Europe, ethylene feedstock supply interruptions and a planned shutdown of the ethylene oxide unit at Marl contributed significantly to a 8% decline in Eurasian operations production volumes for the year. In China, our new ethoxylation facility reached beneficial operation in April within approved budget and are ramping up to increase our output more than twofold, when compared to the existing facility. We made progress in executing our compliance roadmaps to meet South African environmental requirements, including commissioning Secundas first phase of the sixth fine ash dam and the new nitro effluent handling plant. Together with Group Technology, we have insulated 3 305 houses in the past two years as part of an offset project. We continued to support numerous social investment projects in our fenceline communities and ensured that an increasing number of the approximately 20 000 contractors on site during our Secunda shutdown came from these areas. Safety performance Driven to secure our long-term sustainability, Sasol operations focused on optimising processes and ensuring safe, stable and environmentally compliant facilities. While the overall safety performance improved, operations were affected by a tragic work-related fatality at Natref. We continue to prioritise safety. Performance overview We recorded slightly lower-than-expected production volumes in the first half of the year largely due to an extended total shutdown at the west plant in Secunda in September 2018 and an Eskom power supply interruption in July 2018. However, in the second half of the year, we had an excellent performance and almost made up the lost volumes with many plants achieving record throughput rates. Secunda Synfuels reported an annualised run-rate of 7,8 million tons after making good progress on asset renewals, as well as carrying out maintenance work on piping and pipelines. Natref significantly improved performance and achieved a production volume increase of 20%, through improved plant reliability, availability and utilisation. In the US, after more than six years of planning and construction, we started to commission the first units of the defining Lake Charles Chemicals Project (LCCP) and integrated them smoothly into existing operations. At times, we had more than 7 500 people at any one time on site, constructing or commissioning new facilities or operating existing facilities. We updated our business processes to accommodate the changes brought about by the LCCP, testing them following the start-up of the first steam unit in August 2018, the new ESG focus areas Reduction of greenhouse gas emissions with particular focus on Secunda, proactive promotion of diversity, transformation and social upliftment; fenceline community supplier strategy to accelerate achievement of small business enterprises and preferential procurement targets, energy efficiency improvement. Looking ahead 2020 will be a watershed year for Sasols operations in the United States, as we bring online our 1,5 million ton per year ethane cracker as well as other LCCP facilities, representing a materialisation of the Groups value-based growth strategy. While the LCCP will lower Sasols emissions intensity, we continue to investigate solutions to meet South Africas new plant standards for air quality as well as new waste legislation. Secunda Synfuels has some 41 environmental and 31 safety projects in progress planned for the next two years. We are also proceeding with projects to deliver clean fuels from Secunda Synfuels and are considering our options in this regard at Natref. Natrefs air quality improvement projects are in execution, with the first project reaching beneficial operation in the new financial year. Across our operations, we continue to work on various digitalisation options, including systems to manage the health of our equipment digitally. Salient features Improved safety performance but one tragic fatality at Natref Started-up first units of the LCCP, while maintaining stable existing Lake Charles operations Lower overall production volumes due to extended Secunda shutdown and external supply constraints in Europe, despite new US production and greater Natref volumes Commissioned various environmental compliance projects in South Africa Operations In Southern Africa, our operations include Secunda Synfuels, Secunda Chemicals, Sasolburg, Satellite and Natref Operations. Internationally, we have facilities in the US, Europe and Asia. The value proposition of these operating hubs lies in our ability to integrate and operate complex technologies at scale, with world-class product quality and cost advantages.
Operational and strategic overviews (continued) How our Energy Business will deliver on strategy Maurice Radebe Executive Vice President: Energy Business and Safety, Health and Environment (SHE) Advancing our strategy in phases marketing margins power opportunities growth Strategic objectives Increase liquid fuels Maximise value of Southern Africa gas Pursue select gas-to-Respond to changing environmental and clean fuels landscape ESG focus area Contribute to economic Medium term 2022+ Gas market development anchored by Secunda and Sasolburg Operations Investigating all sustainable gas monetisation options in Mozambique, targeting gas-to-power Longer-term gas-to-power will play an important role in the Southern African energy mix Ramp-up mega and minor inorganic growth Deliver an optimal clean fuels solution Near term 2020+ Increased value through volume shift to higher yielding products and markets Organic growth continues with 10 new RCCs sites planned for 2020 which will include greenfield developments as well as other oil company conversions Grow through organic and inorganic opportunities Overview Energy Major market presence Sales and marketing of 58 mm/bbl 60 mm/bbl of liquid fuels per annum in South Africa Markets 150 mmscf/day of natural and methane-rich gas Global GTL businesses with partners in Qatar and Nigeria Strong brand of Retail Convenience Centres (RCCs) in South Africa 410 RCCs, Sasols estimated retail market share nationally is 10% 11%* Sustainable position with strong cash flow Electricity: 71% capacity of our own needs in South Africa 19% of Mozambican supply through our Central Termica de Ressano Garcia (CTRG) partnership *Source: Sasol analysis of Slate data
Energy Business In Southern Africa, the Energy Business markets and sells liquid fuels, pipeline gas and electricity. Internationally, we manage Sasols gas-to-liquids (GTL) investments. Performance summary Total liquid fuel sales volumes increased by 2% due to higher production from Natref and natural gas sales increased by 5% due to higher market demand. ORYX GTL benefitted from higher Brent crude oil prices and a weaker exchange rate, contributing R1,1 billion to EBIT. This was 3% lower than the prior year due to 16% lower production volumes related to unplanned shutdowns. NERSA matter Following the decision by the Constitutional Court overturning the 2013 NERSA maximum price decision and ordering NERSA to revise its decision, Sasol will submit a new maximum gas price application to NERSA. The actual gas prices as agreed in the current contracts with customers remain in place. However, the future implementation of a new NERSA approved maximum gas price could have an adverse effect on our business. Tax litigation We reached an agreement with the South African Revenue Services (SARS) for the withdrawal of all issued and pending assessments for the crude oil procurement matter relating to Sasol Oil for the financial years 1999 to 2016. As a result we are no longer exposed to the contingent liability of R13,4 billion. Delivering on our strategic objectives With the completion of 15 new Centres (RCCs) in South Africa during the year, we made good progress in extracting more value from our brand-leading retail assets. This is despite challenging market conditions due to increasing prices and reduced petrol demand. We are piloting a number of new initiatives in our retail sites to deliver on an enhanced store experience. We divested from four sites as part of our strategic site management process. Sasol remains one of the strongest brands in South Africa, supported by the launch of our new fuels advertising campaign This is GlugGlug®. We marketed a third of Sasol fuels' production through our own retail outlets and commercial channels, benefitting from the wider associated margins. We made significant progress in developing a cost-effective solution to meet new market and regulatory requirements for cleaner fuels from Secunda Synfuels Operations and started work on the first of numerous projects. Through the work of a focused team that was put together to solve this challenge, we are confident that we will be ready for the cleaner fuel specifications at a cost that is acceptable to all of our shareholders. At Natref, we understand what is required to enable compliance with new clean fuels specifications and are considering our options. Retail Convenience Centres Liquid fuels sales 410 420 399 65 397 60,0 60,0 58,7 52 315 39 210 26 105 13 0 0 17 18 19 17 18 19 Number mmbbl Looking ahead We continue with the expansion of our Southern Africa retail marketing channel through organic growth as well as possible acquisitions. We continue to explore opportunities to better tailor our retail offering to various market segments as well as enhance our value proposition to customers at the forecourt, including by introducing new loyalty scheme partners and by making greater use of digital technologies. We are embedding our Continuous Improvement initiative in terms of new ways of work, building our marketing skills and further reducing costs. In advancing Sasols sustainability, we are working on providing cleaner fuels to ensure that we remain both relevant and competitive in a rapidly changing environment. In Nigeria, we continue to support the increased utilisation of EGTL. Salient features Improved our safety performance as our top priority Pursuing our retail growth strategy, completed 15 new RCCs Normalised earnings* increased by 13% to R17,1 billion Higher Natref production and run-rates supported increased liquid fuel sales Launched cost-effective solution to meet new clean fuels requirements Sasol Oil achieved a level 2 B-BBEE score, up from level 3 in 2018 ORYX GTL capacity utilisation declined to 81% after extended shutdown SARS and Sasol Oil came to a mutual agreement resulting in the dispute between the parties being resolved for all the open years of assessment Constitutional Court overturned the 2013 NERSA maximum price decisions and ordered NERSA to revise its decisions; new maximum gas price to be approved for Sasol by NERSA will apply retrospectively from 26 March 2014
Our Board of Directors MANDLA GANTSHO South African | Born 1962 INDEPENDENT NON-EXECUTIVE DIRECTOR AND CHAIRMAN BCom (Hons), CA(SA), MSc, MPhil, PhD Appointed to the Board in 2003 and Chairman of the Board in 2013 Dr MSV Gantsho is the Executive Chairman of Africa Rising Capital, the Chairman of Kumba Iron Ore Limited and the Chairman of the Remuneration Committee of Impala Platinum Holdings Limited. He was the Vice President Operations: Infrastructure, Private Sector & Regional Integration of the African Development Bank from 2006 to 2009, and before that the Chief Executive Officer and Managing Director of the Development Bank of Southern Africa. In 1997, he was appointed as a Commissioner of the Finance and Fiscal Commission, a body set up in terms of the South African Constitution to advise the South African Parliament on intergovernmental fiscal transfers. In 2002, he was appointed as a Member of the Myburgh Commission of Enquiry into the rapid depreciation of the rand during 2001. He served as a Director of the South African Reserve Bank from 2011 to 2013. SIPHO NKOSI South African | Born 1954 INDEPENDENT NON-EXECUTIVE DIRECTOR AND CHAIRMAN DESIGNATE BCom (Economics) (Hons), MBA Appointed to the Board in 2019 Mr SA Nkosi holds a BCom degree from the University of Zululand, a BCom (Econ) (Hons) degree from the University of South Africa (UNISA) and an MBA from the University of Massachusetts. With over 36 years' experience in the South African resources industry, with his last role prior to retirement as the Chief Executive Officer of Exxaro Resources from 2006 2016. He has extensive experience in the operational, financial, logistics and marketing areas of the resources sector, and more specifically in the energy and coal sectors, both locally and internationally. STEPHEN CORNELL American | Born 1956 EXECUTIVE DIRECTOR AND JOINT PRESIDENT AND CHIEF EXECUTIVE OFFICER BSc Chem. Eng Appointed to the Board in 2016 Mr SR Cornell became our Joint President and CEO on 1 July 2016. He joined Sasol as Executive Vice President, International Operations on 1 February 2014, and was responsible for all Sasols operational activities outside Africa. Prior to that, Stephen held senior positions at BP North America. He was Chief Operating Officer for US Fuels, responsible for production, sales, marketing and logistics of BP fuel products in the US. In addition to this, Stephen was also BPs Global Head of major downstream projects, providing oversight to all large capital projects in the petrochemicals and fuels businesses. Prior to BP, he was employed with Total, holding various executive positions in petrochemical businesses in Europe, Asia and the US. Stephen began his career with the Exxon Corporation. COLIN BEGGS South African | Born 1948 INDEPENDENT NON-EXECUTIVE DIRECTOR BCom (Hons), CA(SA) Appointed to the Board in 2009 Mr C Beggs was the Chief Executive Officer of PricewaterhouseCoopers until the end of June 2009. He is a former Chairman of the Board of the South African Institute of Chartered Accountants (SAICA). He served as Chairman of the Accounting Practices Committee, was a member of the Accounting Practices Board and is a Director of the Ethics Institute of South Africa. He is a Director and Audit Committee member of Absa Bank Limited, Absa Group Limited and SAB Zenzele Holdings Limited. BONGANI NQWABABA South African | Born 1966 EXECUTIVE DIRECTOR AND JOINT PRESIDENT AND CHIEF EXECUTIVE OFFICER BAcc (Hons), FCA(Z), MBA Appointed to the Board in 2013, as an Executive Director in 2015 and as Joint President and Chief Executive Officer in 2016 Mr B Nqwababa became our Joint President and CEO on 1 July 2016. He was previously Group Chief Financial Officer, having been appointed to the Group Executive Committee on 1 March 2015. Before joining Sasol, he was Finance Director at Anglo American Platinum Limited. Bongani is also a previous Finance Director of Eskom Holdings and Chief Financial Officer of Shell Southern Africa, and served as a Non-executive Director of Old Mutual plc and as Chairman of the South African Revenue Service Audit Committee. In previous roles, he has worked in many countries across the world including The Netherlands and United Kingdom. From December 2013 to September 2014, he served as an independent Non-executive Director of Sasol. PAUL VICTOR South African | Born 1972 EXECUTIVE DIRECTOR AND CHIEF FINANCIAL OFFICER BCompt (Hons), CA(SA), International Tax Law (Hons) Appointed to the Board in 2016 Mr P Victor became our Chief Financial Officer (CFO) on 1 July 2016. He was previously Senior Vice President: Financial Control Services at Sasol, and served as Acting CFO from 10 September 2013 to 28 February 2015. During this period Paul was instrumental in implementing the cost containment programme. Paul also provided thought leadership and pro-actively supported the Group Executive Committee in implementing a cash conservation response plan in reaction to the significant drop in the crude oil price. He gained invaluable experience during his 10 years as Chief Financial Officer of Sasol Synfuels a position Paul held until 2011, when he was appointed to head up the Groups financial governance and reporting. MPHO NKELI South African | Born 1964 INDEPENDENT NON-EXECUTIVE DIRECTOR BSc (Environmental Science), MBA Appointed to the Board in 2017 Ms MEK Nkeli served Vodacom Group Limited as the Chief Human Resource Officer responsible for Health, Safety, Environment and Facilities and was an Executive Director of Vodacom South Africa (Pty) Limited from 2011 to 2014, having previously served as the Group Human Resources Director of Alexander Forbes from 2005 until 2010. She also served as a Non-executive Director on the Boards of Ellerine Holdings Limited, African Bank Investments Limited and Life Healthcare Group Limited. Ms Nkeli is a member of the Board of Impala Platinum Holdings Limited, and she previously chaired the Commission for Employment Equity. JJ NJEKE South African | Born 1958 INDEPENDENT NON-EXECUTIVE DIRECTOR AND LEAD INDEPENDENT DIRECTOR BCompt (Hons), CA(SA), HDip Tax Law Appointed to the Board in 2009 and Lead Independent Director in 2018 Mr MJN Njeke is a past Chairman of the South African Institute of Chartered Accountants. He was the Managing Director of Kagiso Trust Investments from 1994 to 2010. He previously served as a member of the Katz Commission of Inquiry in to Taxation in South Africa, the General Committee of the JSE Limited, the Audit Commission - Supervisory Body of the Office of Auditor General, and the Audit Committee of National Treasury. He is the Executive Chairman of Silver Unicorn Coal and Minerals (Pty) Limited. He chairs the Board of MMI Group Limited and MMI Holdings Limited. He also serves on the Boards of Datatec Limited and Delta Property Fund. MURIEL DUBE South African | Born 1972 INDEPENDENT NON-EXECUTIVE DIRECTOR BA (Human Sciences), BA (Hons) (Politics), MSc Appointed to the Board in 2018 With a professional career spanning the public and private sectors, Ms MBN Dube has served in, among others, roles of Director: Atmospheric Protection and Chemicals Management at the then Department of Environmental Affairs and Tourism, Chief Negotiator on behalf of the Government of the Republic of South Africa in climate change negotiations under the auspices of the United Nations Framework Convention on Climate Change, Sustainability Manager at BHP Billiton, Banker at Investec plc, London and Group Commercial Director at Bidvest Group. Muriel is a Non-executive Director of PG Group, RTT and EnviroServ Holdings. She previously served as Non-executive Director of Vodacom South Africa, Bidvest Group Limited and Fluormin plc.
BEATRIX KENNEALY South African | Born 1958 INDEPENDENT NON-EXECUTIVE DIRECTOR BCom (Accountancy) (Hons) Appointed to the Board in 2017 Ms GMB Kennealy served as the Chief Financial Officer of the South African Revenue Service from January 2009 until her retirement in December 2013. Before that she served as the Chief Operating Officer of Absa Corporate and Business Bank from 2006 to 2009. Her previous senior financial management positions were at Absa Bank, BHP Billiton South Africa, Samancor Chrome and Foodcorp. She also serves on the Board of Standard Bank Group Limited and The Standard Bank of South Africa Limited. NOMGANDO MATYUMZA South African | Born 1963 INDEPENDENT NON-EXECUTIVE DIRECTOR BCom, BCompt (Hons), CA(SA), LLB Appointed to the Board in 2014 Ms NNA Matyumza is a Non-executive Director of Hulamin Limited and a member of its Audit Committee. She is an Independent Non-executive Director of Standard Bank Group Limited and The Standard Bank of South Africa Limited. She has held senior financial management and executive positions in various organisations, including South African Breweries, Transnet and Eskom. She is an ordained minister and director of the African Methodist Episcopal Church. STEPHEN WESTWELL British | Born 1958 INDEPENDENT NON-EXECUTIVE DIRECTOR BSc (Mech Eng), MSc (Management), MBA Appointed to the Board in 2012 Mr S Westwell is a Director and Chairman of the Audit Committee of Control Risk Limited. He was the Chief Executive Officer of Europena Forecourt Retailers from 2015 to 2016 and of Silver Ridge Power Inc from 2013 to 2014. He held various management and executive positions for BP in South Africa, the United States, and the United Kingdom between 1988 and 2011. These executive positions included head of BPs retail business in South Africa, Director of BP Southern Africa, Chief Executive Officer for BP Solar, and Chief Executive Officer for BP Alternative Energy. He served as Group Chief of Staff and member of BP Plcs executive management team in the United Kingdom from 2008 to 2011. He has also worked for Eskom Holdings Limited in several operational capacities. MARTINA FLÖEL German | Born 1960 INDEPENDENT NON-EXECUTIVE DIRECTOR MSc (Chemistry), PhD (Chemistry) Appointed to the Board in 2018 Dr M Flöel holds a MSc in Chemistry from the University of Frankfurt and a PhD in Chemistry from the Technische Universität Munchen (University of Münich). With 30 years experience in the chemicals industry in roles covering chemical and process research and development, technical innovations, technologies, operations and industrial supply chain, she is a seasoned industrial leader. She concluded her executive leadership career as Managing Director and Chief Executive Officer of OXEA Holdings. She serves on the Board of NESTE Corporation and is a member of its Audit Committee. Additionally, she serves on the Board of Carl Bechem GmbH. MANUEL CUAMBE Mozambican | Born 1962 INDEPENDENT NON-EXECUTIVE DIRECTOR B.Eng, Post-graduate Certificate in Management Studies Appointed to the Board in 2016 Mr MJ Cuambe is the Managing Director of MC lnvestimentos and Consultoria. He served as the Executive Chairman and Chief Executive Officer of Electricadade de Moçambique (EDM) from November 2005 to March 2012. Manuel was the Chairman of Companhia Electrica do Zambeze, a wholly-owned subsidiary of EDM up to 30 May 2016. He was a Non-executive Director of Companhia de Transmissao de Mozambique, a joint venture between EDM, the Swaziland Electricity Company and Eskom, from 1998 to 2002 and served as the Chairman of the Executive Committee of the Southern Africa Power Pool from November 2005 to April 2008. PETER ROBERTSON American and British | Born 1947 INDEPENDENT NON-EXECUTIVE DIRECTOR BSc (Mech Eng), MBA Appointed to the Board in 2012 Mr PJ Robertson held various positions ranging from management to executive leadership for Chevron Corporation in the United Kingdom and the United States between 1973 and 2009. These executive positions included Vice President: Finance, Chevron USA, President: Chevron Exploration and Production Company, and President: Chevron Overseas Petroleum. He served as Executive Vice President and Vice Chairman of the Chevron Corporation Board of Directors from 2002 to 2009. He has served as the Chairman of the US Energy Association, Chairman of the World Affairs Council of Northern California, Chairman of the US Saudi Arabian Business Council and as a Non-executive Director of Sasol Chevron Holdings Limited. Peter is also a Director Jacobs Engineering Group. Audit Committee MOSES MKHIZE South African | Born 1961 INDEPENDENT NON-EXECUTIVE DIRECTOR BCom (Hons), Higher Diploma (Electrical Engineering) Appointed to the Board in 2011 Mr ZM Mkhize holds a BCom (Hons) degree from UNISA and a Higher Diploma in Electrical Engineering from Durban University of Technology. He is the Executive Director: Manufacturing, Rolled Products of Hulamin Limited and also serves as Director of a number of subsidiaries of Hulamin. Capital Investment Committee Digital Information Management and Hedging Committee Nomination and Governance Committee Remuneration Committee Safety, Social and Ethics Committee
Our Group Executive Committee From left: Jon Harris, Bernard Klingenberg, Fleetwood Grobler and Maurice Radebe JON HARRIS British | Born 1966 EXECUTIVE VICE PRESIDENT: UPSTREAM MEng (Fuels and Energy Engineering) Appointed to the GEC in 2017 Prior to his current role Mr Harris was most recently involved in a private business venture. Prior to this, he was with BG Group, a British multinational oil and gas company for 25 years, up to 2016. His last position at BG Group was Executive Vice President: BG Technical. FLEETWOOD GROBLER South African | Born 1961 EXECUTIVE VICE PRESIDENT: CHEMICALS BUSINESS BEng (Mech) Appointed to the GEC in 2013 Prior to his appointment to the GEC, he was Managing Director of Sasol Olefins and Surfactants. Mr Grobler joined Sasol in 1984 and has served in most of our South African operating facilities and has extensive experience in Sasols international businesses. MAURICE RADEBE South African | Born 1960 EXECUTIVE VICE PRESIDENT: ENERGY BUSINESS AND SAFETY, HEALTH AND ENVIRONMENT BSc (Applied mathematics and physics), MBA Appointed to the GEC in 2010 Mr Radebe joined Sasol Oil in January 2004, when Sasol Oil purchased Exel Petroleum, where he was Managing Director. He served as Managing Director of Sasol Oil from December 2006 until October 2010. He was Chairman of the South African Petroleum Industry Association from 2015 and 2016. Prior to his current role, Mr Radebe was Sasols Group Executive responsible for Global Corporate Affairs, Government Relations and Enterprise Development. BERNARD KLINGENBERG South African | Born 1962 EXECUTIVE VICE PRESIDENT: OPERATIONS MSc Eng (Mech) Appointed to the GEC in 2009 Since joining the Sasol Group in 1986, he has held various positions in maintenance, technical and general management fields in some of the South African Energy and the global chemical businesses of the Group. Prior to his current role Mr Klingenberg was the Managing Director first of Sasol Nitro and then Sasol Polymers for the period from 2005 to 2009. After his appointment to the GEC in 2009 he was responsible for the Group Human Resources for two years from 2009 to 2011. Operations Operations *Executive Director of Sasol Limited. **Company Secretary of Sasol Limited. Project and Engineering North America North American Operations Eurasian Operations Natref Satellite Operations Alternative Gas Supply Programme Sasolburg Operations Project Mozambique Safety, Health and Environment (SHE) Lake Charles Chemicals Project (LCCP) Secunda Chemicals Exploration and Production Clean Fuels and Octane Programme Performance Chemicals Secunda Synfuels Mining Energy Base Chemicals Joint Presidents and Chief Executive Officers Bongani Nqwababa* and Stephen Cornell*
From left: Charlotte Mokoena, Marius Brand, Vuyo Kahla and Paul Victor PAUL VICTOR* South African | Born 1972 EXECUTIVE DIRECTOR AND CHIEF FINANCIAL OFFICER BCompt (Hons), CA (SA), International Tax Law (Hons) Appointed to the GEC in 2016 Mr Victor became our Chief Financial Officer (CFO) on 1 July 2016. He was previously Senior Vice President: Financial Control Services at Sasol, and served as Acting CFO from 10 September 2013 to 28 February 2015. Prior to this, Mr Victor gained invaluable experience during his 10 years as Chief Financial Officer of Sasol Synfuels a position he held until 2011. Financial Control Services Mergers and Acquisitions Corporate Finance and Portfolio Management Investor Relations Information Management VUYO KAHLA** South African | Born 1970 EXECUTIVE VICE PRESIDENT: ADVISORY, ASSURANCE AND SUPPLY CHAIN BA, LLB Appointed to the GEC in 2011 From June 2004 to November 2010, Mr Kahla held executive positions at Transnet SOC Limited, with responsibility for legal services, risk management, compliance, company secretarial services, strategy and business modelling, corporate and public affairs and public policy and regulation. The World Economic Forum recognised him as a Young Global Leader and he is an alumnus of the Prince of Wales University of Cambridge Programme on Sustainability Leadership. Mr Kahla is the Chairman of Sasol South Africa and Chairman of the Council of Rhodes University. Legal, Intellectual Property and Regulatory Services Governance, Compliance and Ethics Assurance Services Corporate Advisory and Disclosure Enablement Supply Chain and Real Estate Services CHARLOTTE MOKOENA South African | Born 1965 EXECUTIVE VICE PRESIDENT: HUMAN RESOURCES AND CORPORATE AFFAIRS BA (Human Resources Development and Social Sciences) Appointed to the GEC in 2017 Prior to this role, Ms Mokoena was Human Resources Executive at Tongaat Hulett Limited. She held this position from July 2013. Before this, Ms Mokoena spent 11 years at Telkom South Africa Limited, during which time she held several senior positions spanning the human resources (HR), business consulting and customer services disciplines including Chief of HR and Group Executive: Customer experience management. Human Resources: Group Human Capital Human Resources: Global Operations Global Rewards, Benefits and HR Information Systems Corporate Affairs Project and Engineering Research and Technology Planning and Optimisation Sustainability and Risk-effective 1 July 2019 MARIUS BRAND South African | Born 1964 ACTING EXECUTIVE VICE PRESIDENT: TECHNOLOGY MEng (Mech), MBA Appointed in an acting role to the GEC in April 2019 Mr Brand is Acting Executive Vice President, Technology. He is responsible for Sasols Technology function, with specific focus on repositioning Research and Technology, and Projects and Engineering activities to ensure delivery of world-class offerings to support our value-based growth strategy. In addition, he is accountable for advancing the value-add offering of Group Planning and Optimisation as Sasol expands its operations globally and driving Sasol's sustainability agenda. The Joint Presidents and CEOs are jointly and severally liable and accountable and there is joint oversight in all decision-making. However, to ensure that the business is managed effectively, our leadership model uses dual reporting lines, allocating responsibilities into portfolios which comprise a balance across business, functions and regions. 71
Governance overview Sasol is a values-based organisation, committed to high standards of business integrity and ethics. The Board steers and sets the direction of the Group and brings independent, informed and effective judgement and leadership to bear on material decisions reserved for the Board, while ensuring that strategy, risk, performance and sustainable development considerations are effectively integrated and appropriately balanced. For more details on the responsibilities, powers, policies, practices and processes of the Board, Directors and the Groups Executives and other officials, refer to the Board Charter as well as the Groups Memorandum of Incorporation on our website, www.sasol.com. Primary tasks of the Board in 2019 included: 60 Sasol Integrated Report 2019 Develop a sustainability strategy The Board has responded to concerns about our significant environmental footprint and the companys resilience in a lower-carbon future, expressed by our stakeholders and shareholders at the 2018 Annual General Meeting (AGM), among other engagements. We have accelerated resilience testing of our corporate strategy against various climate change scenarios, including the Paris Agreement goal, which we support. In our 2019 Climate Change Report we provide an account of our approach to climate change management and how we intend progressing our greenhouse gas emission-reduction roadmap to be communicated by November 2020. Climate change is a Group top risk, hence we have prioritised our focus on climate change; however, we continue to progress our efforts on water, waste and air emissions reductions. CCR Cost, schedules and controls on the Lake Charles Chemicals Project (LCCP) In May 2019, the Board commissioned an independent review into the circumstances that may have delayed the prompt identification and reporting of the Lake Charles Chemicals Project (LCCP) cost and schedule overruns. The purpose of the Review was to consider the circumstances that may have delayed the prompt identification and reporting of these developments, root causes, and the legal consequences thereof. The review has now been concluded. The Board has made the following key findings: The primary responsibility for shortcomings in relation to LCCP lies with the former leadership of the LCCPs Project Management Team (PMT), which engaged in conduct that was inappropriate, demonstrated a lack of competence, and was not transparent. However, on balance, the Board finds that there is not sufficient evidence to conclude that these individuals acted with an intent to defraud. In addition, certain governance shortcomings relating to LCCP also contributed, including a culture of excess deference within the project-related control environment and governance structures that oversaw LCCP. Certain persons within the PMT responsible for the management of the company reported inaccurate capital cost projections to senior executives and the Board. In accordance with the South African Auditing Profession Act 26 of 2005, these findings constitute a reportable irregularity on the basis that such persons may not have acted with the necessary care, skill and diligence required, which failure has caused, or is likely to cause material financial loss to the entity or stakeholders in its dealings with the entity, or, alternatively, this activity may have constituted a material breach of fiduciary duties by such persons. As a result of this activity, the company removed all work responsibilities and initiated disciplinary action against one individual and negotiated the separation of three additional individuals, and took other remedial actions. Management believe that these actions effectively remediate the activities that gave rise to a reportable irregularity, however this did not remediate all the deficiencies which, in aggregate, resulted in a material weakness as described below. In accordance with Section 404 of the Sarbanes-Oxley Act of 2002, management is required to assess the effectiveness of the companys internal control over financial reporting. Management has determined that, as of 30 June 2019, the companys internal control over financial reporting was ineffective due to the existence of a material weakness with respect to the capital cost estimation process implemented in connection with the LCCP, which resulted from the aggregation of a series of individual control and project-related control environment deficiencies, the remediation of which had not been fully implemented and validated as of year-end. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of financial statements will not be prevented or detected on timely basis. Notwithstanding the material weakness, management believes that the consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows as of and for the period presented. While significant progress has been made to remediate the material weakness, as of 30 June 2019, the company is still in the process of testing the operating effectiveness of certain of the new and enhanced controls, and is continuing with the implementation of some of the longer-term remediation efforts. We believe our actions will be effective in remediating the material weakness, and we continue to devote significant time and attention to these efforts. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and managemen
Areas of focus perspectives. The Board recognises and embraces the benefits of having 35 21 target 40% 7 0 a diverse and inclusive culture at Board level where directors believe Result underpinned by the relevant skills as well as business, geographic and 50 30 10 17 18 19 maintaining a minimum representation of 50% Black directors. Ethical and effective leadership Ethical and effective leadership underpins the Boards oversight and strategic steer. The Board embraces and promotes value-creating governance through a deliberate and structured approach. Through the activities of the Board and Board Committees, the Board ensures that value is created and protected Development and performance Ongoing training and development is an important contributor to an effective Board. The development of industry and group knowledge is a continuous process and Directors are briefed on legal developments and changes in the risk and general business environment on an ongoing basis. We apprise newly appointed Directors of Sasols business and their duties and responsibilities through a structured induction programme which includes site visits, meetings with management and induction material on topics related to, among others, governance and our business. Focused insight sharing sessions are provided on key topics throughout the year. The Board, our Board Committees as well as any Director are entitled to seek independent professional advice concerning the companys affairs and to gain access to any information they may require in discharging their duties. The Board and its Nomination and Governance Committee specifically consider the independence of directors and their other commitments when they are first appointed, as well as annually, or at any other time when a Directors circumstances change and warrant re-evaluation. This is done to determine whether a Director has sufficient time to discharge his or her duties effectively and is free from conflicts that cannot be managed satisfactorily. The Board, Board Committees and individual Director's performance were assessed in 2018 and will be assessed again in 2020. The Joint Presidents and Chief Executive Officers, Company Secretary and the Chief Financial Officers performance is assessed annually and their short-term incentive was reduced to zero. Good corporate governance King IV principles and outcomes: ethical culture, good performance, effective control and legitimacy Responsiveness and engagement Creating value for shareholders and stakeholders Commitment to ethical and effective leadership Risk and opportunity management Fair and responsible remuneration For more details of Sasols application of King IV principles and governance of ethics refer to Sasols website: www.sasol.com. for all shareholders and stakeholders. Tenure and succession planning The Boards succession plans aim to achieve an optimal balance between independence and continuity on both the Board and our Board Committees. It is for this reason that the Board extended the tenure of the outgoing Chairman of the Board, the outgoing Lead Independent Director (LID) and the Chairman of the Audit Committee beyond the nine years considered the norm for independence in relation to tenure. The Board has determined that directors may serve on the Board for up to nine years, Extendable annually up to a maximum of 12 years, and five years as Chairman, extendable annually up to a maximum of seven years. Dr Mandla Gantsho, our Chairman, and Mr JJ Njeke, our LID, will retire from the Board after Sasols Annual General Meeting (AGM) on 27 November 2019. Mr Sipho Nkosi joined the Board on 1 May 2019 as Independent Non-executive Director and Chairman designate and will succeed Dr Gantsho after the AGM on 27 November 2019. The Board has elected Mr Stephen Westwell, who has been Tenure Maximum tenure Non-executive9 12 Tenure Chairman 5 7 serving on the Board for seven years, as the LID designate. The Nomination and Governance Committee has commenced the search for a suitably qualified director to replace Mr Njeke on the Board and the Audit Committee. Diversity Effective oversight and decision-making requires a range of Female representation a diverse Board, appreciates that diversity at Board level is essential 28 2022 for sustaining a competitive advantage and is committed to ensuring % 14 Target that their views are heard, their concerns are attended to free from 171819 bias, discrimination and harassment. Race, age and gender diversity, Black representation academic experience and background, enhance the composition of a40 truly diverse Board. All Board appointments are made on merit, having % 20 due regard for the benefits of diversity in its widest sense.0 Result In 2017 the Board set a target of 30% representation of women by 30 June 2019. We achieved 33% representation in 2018, with five women serving on the Board, three of whom are Black. During MaTye2n0u19r,ethae nBodarsduscect eneswsidoivnerpsiltay ntanrgientgs for gender and race, targeting a minimum of 40% female directors by 2022 and Maintain target of 50%
Governance overview (continued) The Board and its Committees The Board delegates certain responsibilities to well-structured Board Committees without abdicating accountability. The delegation is formal in terms of Board-approved Terms of Reference for each Committee. The Board appoints the members for the skills required to effectively provide strategic direction to the Sasol Group, as well as monitor and oversee the activities of the Group. The Board receives reports and minutes of each Committee meeting. The Board has established a framework for the delegation of authority to the Joint Presidents and Chief Executive Officers, which also sets out the material decisions in respect of which it has reserved the decision-making authority as the ultimate holding company of the Group. The composition and mandate of the various Board Committees contribute to the effective discharge of the Boards duties and responsibilities to grow and protect value for our stakeholders. Sasol Limited Board PJ Robertson MSV Gantsho ittee 28 99,2% 24 May 2019 Strategy/Risk/Opportunity Chairman MSV Gantsho Membership Non-executive DirectorsExecutive Directors C BeggsZM MkhizeSR Cornell MJ CuambeMJN NjekeB Nqwababa MBN DubeMEK Nkeli P Victor M FlöelSA Nkosi OVERALL GMB KennealyS Westwell NNA Matyumza Attendance 7 meetings 100% attendance 17 August 201822 February 2019Number of Comm 15 November 2018* 21 May 2019* meetings: 16 November 201823 May 2019* *Special/Strategy meetings attendance SASOL LIMITED SHAREHOLDERS and Ethics GROUP EXECUTIVE COMMITTEE (GEC) Assurance and and Stakeholder STAKEHOLDERS SENIOR VICE PRESIDENTS SUBSIDIARIES I OPERATING MODEL ENTITIES I ASSOCIATES I JOINT VENTURES I FOUNDATIONS EXECUTIVE VICE PRESIDENTS GEC SUB-COMMITTEES Combined Safety InvestmentPolicy, Sustainability Disclosure Committee Committee Committee Relations Committee JOINT PRESIDENTS AND CHIEF EXECUTIVE OFFICERS Audit Committee Safety, Social Committee Capital Investment Committee Nomination and Governance Committee Remuneration Committee Digital, Information Management and Hedging Committee SASOL LIMITED BOARD COMMITTEES SASOL LIMITED BOARD Control/Assurance Disclosures
Audit Committee How the Committee contributes to value creation Assists the Board in overseeing Sasols integrated reporting (incorporating financial statements, sustainability reporting and public announcements on financial results); the qualification and independence of external auditors; the scope and effectiveness of the external audit function; the effectiveness of the Groups internal controls and internal audit function; and compliance with legal and regulatory requirements that have an impact on the financial statements and the accounting and financial reporting systems of the Group. Going concern, solvency, liquidity and capital adequacy assessments. Material matters Capital Investment Committee How the Committee contributes to value creation Considers and provides direction and assurance to the Board on strategic considerations and risks in respect of proposed investments and divestments of more than R4 billion. Approves deviations of up to 10%, but not exceeding US$100 million, from the capital budget of large projects. Monitors the execution of any Board-approved projects, as well as Group mergers, acquisitions and divestments to ensure alignment with Sasols strategy. It also takes into account financial viability, financing, feasibility and sustainability, including ensuring effective risk management oversight. Proposed mergers, acquisitions and divestments. Material matters Sasol Integrated Report 2019 63 Performance overview Our leadership and governance Our strategic business context Sasol at a glance Introduction Attendance 5 meetings 100% attendance Mandate: Capital investments and project status reports, in particular the Lake Charles Chemicals Project (LCCP) and Sasols projects in Mozambique. Asset classification and reviews. Members PJ Robertson SR Cornell MJ Cuambe MBN Dube M Flöel GMB Kennealy B Nqwababa P Victor S Westwell Chairman PJ Robertson Attendance 6 meetings 100% attendance Mandate: Group funding and refinancing matters. Combined Assurance Model framework and plan. Significant financial reporting, accounting, tax and financial compliance matters. Macroeconomic risks and its impact on Sasols sustainability and ability to execute its growth strategy. Interim and final dividend proposals. Statutory financial reporting, integrated reporting and Form 20-F. Evaluation of the independence and performance of the external auditors and recommendation of appointment to shareholders. Evaluation of internal controls over financial reporting and the remediation of identified deficiencies. Members C Beggs GMB Kennealy NNA Matyumza MJN Njeke S Westwell Chairman C Beggs
Governance overview (continued) Digital, Information Management and Hedging Committee How the Committee contributes to value creation Evaluates and recommends Sasols digital strategy and technology solutions. Provides direction on and monitors Sasols information and technology (IT) risk management and control environment. Monitors Sasols financial market risks and approves the hedging policy and proposed hedging mandates as well as deviations from the policy. Monitors the execution of hedges and ensures effective risk management oversight in relation to material risks within its scope. Management of financial market risk. Cyber risk, IT controls and business continuity. Material matters Nomination and Governance Committee How the Committee contributes to value creation Considers the appropriateness and effectiveness of Sasols corporate governance mechanisms and framework. Makes recommendations on the appointment of Directors and members of the Group Executive Committee. Reviews the Board structure, size and composition taking into account, among others, independence as well as diversity in relation to skills, experience, age, race and gender. Nominates candidates to fill Board and Committee vacancies, puts in place succession plans and evaluates the performance of the Board, Committees and Directors, and ensures their continuous development to effectively execute their responsibilities. Monitors Sasols compliance with various laws, rules and regulations. Supports the Board in effective risk management oversight in relation to material risks within its scope. Material matters Attendance 4 meetings 100% attendance Mandate: Board succession and diversity. Executive succession planning. Matters for referral to shareholders, including a request for an ordinary resolution on climate change to be presented to shareholders. Legal compliance matters. Investor feedback on financial performance, including LCCP performance. Members MSV Gantsho M Flöel MJN Njeke MEK Nkeli SA Nkosi PJ Robertson Chairman MSV Gantsho Attendance 4 meetings 100% attendance Mandate: Hedging execution updates and hedging mandates. Information management strategy and project status reports. Digital strategy execution and embedding. LCCP systems-readiness and performance. Members S Westwell C Beggs SR Cornell NNA Matyumza B Nqwababa P Victor Chairman S Westwell
Remuneration Committee How the Committee contributes to value creation Is responsible for the governance of remuneration by setting the direction of how remuneration is approached and addressed within the Group. Assists the Board in ensuring that employees are remunerated fairly, responsibly and transparently by implementing affordable, competitive and fair reward practices to promote the achievement of the Groups strategy. This includes approving material human resources policies, the principles of the mix between guaranteed and variable components of remuneration, annual salary adjustments, Sasols benchmarking methodology, all retention schemes and standard conditions of services. Material matters Safety, Social and Ethics Committee How the Committee contributes to value creation Performs the role of a Social and Ethics Committee as contemplated in the Companies Act and its regulations and oversees safety, health, environmental (SHE) and climate change matters. Approves the Sasol Code of Conduct. Monitors the ethical conduct of the company, its executives and senior officials. Reviews any statements on ethical standards or requirements. Monitors the strategies, policies, performance and implementation of the SHE policy. Considers reports covering matters relating to substantive SHE risks and liabilities. Monitor Sasols key safety indicators and ensures there is a systematic approach to prevent their recurrence. Reviews high-severity incidents. Considers the impact of Sasols operations on society and the environment and, where appropriate, amends its policy or approach. Considers progress in Sasols sustainability journey reporting process and evaluates disclosure on sustainability issues. Supports the Board in ensuring effective risk management oversight within the Committees scope. Safety, health, environmental and climate change matters for the Group, and reporting Material matters Sasol Integrated Report 2019 65 Performance overview Our leadership and governance Our strategic business context Sasol at a glance Introduction Attendance 5 meetings 100% attendance Mandate: thereon. Integrity of tailings dams. Group ethics reporting system. Sasols anti-bribery and corruption policy. Review of Code of Conduct and adoption of Modern Slavery Act statement. All matters as per statutory requirements. Reviewed the outcomes of culture survey and management's approach to remediation of areas requiring attention. Members MBN Dube C Beggs SR Cornell MJ Cuambe ZM Mkhize MEK Nkeli B Nqwababa S Westwell Chairman MBN Dube Attendance 4 meetings 95% attendance Mandate: Alignment of strategic priorities. Engagement with institutional investors. Enhanced employee value proposition. Clawback and malus policy. Members MEK Nkeli MSV Gantsho M Flöel NNA Matyumza PJ Robertson Chairman MEK Nkeli
Sasol Limited (Sasol or the Company)
Board Charter
Revised: 24 May 2019 effective 25 May 2019
Table of Contents
1. |
INTRODUCTION |
1 |
|
2. |
PURPOSE OF THE BOARD CHARTER |
1 |
|
3. |
THE BOARD, OTHER ORGANS OF THE COMPANY AND COMPANY OFFICIALS |
2 |
|
|
3.1 |
The Shareholders |
2 |
|
3.2 |
The Board |
2 |
|
3.2.1 |
General powers of the Board |
2 |
|
3.2.2 |
The role, functions and responsibilities of the Board |
3 |
|
3.2.3 |
Matters reserved for decision-making by the Board |
4 |
|
3.2.4 |
Composition of the Board, diversity policy, appointment, rotation and independence |
5 |
|
3.2.5 |
Board committees |
8 |
|
3.2.6 |
Board meetings and documentation |
9 |
|
3.2.6.1 |
Frequency |
9 |
|
3.2.6.2 |
Agenda, meeting papers and minutes |
9 |
|
3.2.6.3 |
Attendance |
10 |
|
3.2.6.4 |
Quorum |
10 |
|
3.2.6.5 |
Written Resolutions |
10 |
|
3.3 |
The Chairman |
11 |
|
3.4 |
Deputy Chairman and Lead Independent Director |
12 |
|
3.5 |
The Joint Presidents and Chief Executive Officers |
13 |
|
3.6 |
The rights and duties of individual directors |
16 |
|
3.7 |
The Company Secretary |
16 |
4. |
GROUP COMPANIES |
18 |
|
5. |
DISCLOSURE AND CONFLICTS OF INTEREST |
18 |
|
6. |
POLICY IN RESPECT OF CORPORATE GOVERNANCE AND RISK MANAGEMENT |
19 |
|
7. |
DEALING IN THE SECURITIES OF THE COMPANY |
19 |
|
8. |
PERFORMANCE EVALUATION: BOARD, BOARD COMMITTEES AND INDIVIDUAL DIRECTORS AND MEMBERS OF COMMITTEES |
20 |
|
9. |
POLICY IN RESPECT OF BUSINESS RESCUE PROCEEDINGS OR OTHER TURNAROUND MECHANISMS |
20 |
|
10. |
POLICY IN RESPECT OF DISPUTE RESOLUTION |
20 |
|
11. |
MEMORANDUM OF INCORPORATION |
21 |
1. INTRODUCTION
1.1 This Board Charter is subject to the provisions of the South African Companies Act, 71 of 2008, (the Companies Act), the Companys Memorandum of Incorporation (MOI) and any other applicable law or regulatory provision. This charter does not replace or amend the MOI in any way whatsoever. References to the male gender are intended to equally reflect as references to the female gender.
2. PURPOSE OF THE BOARD CHARTER
2.1 The purpose of the Board Charter is to provide a concise overview of:
2.1.1 the roles, responsibilities, functions and powers of the Sasol Limited Board (the Board), individual directors and the officials and executives of the Company;
2.1.2 the powers delegated to various Board committees of the Company;
2.1.3 relevant principles of the Companys limits and delegations of authority and matters reserved for final decision-making or pre-approval by the Board; and
2.1.4 the policies and practices of the Board in respect of matters such as corporate governance, trading by directors in the securities of the Company, declarations and conflicts of interest, Board meeting documentation and procedures, composition of the Board and the nomination, appointment, induction, training and evaluation of directors and members of Board committees.
3 THE BOARD, OTHER ORGANS OF THE COMPANY AND COMPANY OFFICIALS
3.1 The Shareholders
3.1.1 Matters reserved for decision-making by the shareholders of the Company are set out in the MOI(1) and the Companies Act.
3.1.2 A matter reserved for decision-making by the shareholders is considered by the Board before it is recommended to the shareholders for decision-making. The Board will, where appropriate, provide the shareholders with its recommendation and the relevant material information in respect of resolutions proposed for shareholder approval.
3.1.3 It is the policy of the Company to accurately disclose company information to shareholders and potential investors in such a way that the shareholders are apprised of all material aspects of the business of the Company and its direct and indirect subsidiaries (Group companies).
3.1.4 Directors and executive management are expected to attend shareholders meetings. The Chairmen of all Board committees are expected to be available at the Companys annual general meeting to respond to relevant questions or queries.
3.1.5 Proceedings at meetings of shareholders are governed by the provisions of the Companies Act and the MOI.
3.2 The Board
3.2.2 General powers of the Board
3.2.2.1 The role, function and powers of the Board, its members and its committees as well as its relationship vis-à-vis other organs of the Company and its direct and indirect subsidiaries and joint ventures are determined by law, the MOI of the Company, agreements such as shareholders agreements (where relevant), corporate governance best practices and decisions and policies of the Board.
(1) See attachment 9 for a copy of the MOI adopted by shareholders on 30 November 2012 and as amended by subsequent special resolutions
3.2.2.2 The Board is responsible for steering the Company and setting its strategic direction(2). In managing or directing the affairs of the Company the Board has authority to exercise all of the powers and perform any of the functions of the Company except to the extent that the Companies Act or MOI provide otherwise(3).
3.2.2.3 The Board accordingly has the power to make any decision in respect of the Company which has not been specifically reserved for decision-making by the shareholders. This power includes the power to exercise the rights as direct or indirect shareholder of Group companies.
3.2.2.4 The Board exercises its powers responsibly:
a. in the best interests of the Company with due regard to the interest of stakeholders of the Company; and
b. in compliance with the requirements of the law, the listings requirements of the stock exchanges on which the securities of the Company are listed, principles of sound corporate governance and Board policies and procedures.
3.2.3 The role, functions and responsibilities of the Board
3.2.3.1 Within the powers conferred upon the Board by the MOI and the Companies Act, the Board has determined its main function and responsibility as being to add significant value to the Company by:
a. Retaining full and effective control over the Company and providing effective and ethical leadership in the best interest of the Company;
b. Informing and setting the strategic direction of the Company and ensuring that strategy, risk, performance and sustainability considerations are effectively integrated and appropriately balanced;
c. Determining and setting the tone of the Company values including principles of ethical business practice, human rights considerations and the requirements of being a responsible corporate citizen, which includes assessing and responsibly responding to the negative consequences of the Companys activities and outputs on the triple context(4) in which it operates and the capitals(5) to which it applies;
d. Bringing independent, informed and effective judgment to bear on material decisions of the Company and Group
(2) King IV Report on Corporate Governance for South Africa 2016 (King IV)
(3) Section 66 Companies Act and paragraph 26.1 of the MOI
(4) Defined in King IV as the combined context of the economy, society and environment in which the Company operates
(5) Defined in King IV as the stocks of value on which all organisations depend for their success as inputs to their business model, and which are increased, decreased or transformed through the organisations business activities and outputs
companies including material Company and group policies, the group framework of delegated authorities, appointment and removal of the Presidents and Chief Executive Officers (Joint CEOs(6)), approval of the appointment or removal of Group Executive Committee members, capital expenditure, material transactions and Company and consolidated group budgets;
e. Satisfying itself that the Company and Group companies are governed effectively in accordance with corporate governance best practices, appropriate and relevant non-binding industry rules, codes and standards and internal control systems to:
e.1 maximise returns sustainably;
e.2 safeguard the people, assets and reputation of the group; and
e.3 ensure an effective control environment and compliance with applicable laws and regulations;
f. Monitoring and implementation by Group companies, Board committees and executive management of the Boards strategies, decisions, values and policies with a structured approach to governance, integrated reporting, risk management and combined assurance;
g. Ensuring that the Company has duly constituted and effective Board committees as required by the Companies Act, MOI and recommended by best corporate governance practice that the Company chooses to apply;
h. Ensuring that there is an effective risk based internal audit;
i. Governing the disclosure control processes of the Company including ensuring the integrity of the Companys integrated report(7) and reporting on the effectiveness of the Companys system of internal controls;
j. Ensuring that disputes are resolved as effectively, efficiently and expeditiously as possible; and
k. Monitoring of the relationship between the Company and its stakeholders.
3.2.4 Matters reserved for decision-making by the Board
3.2.4.1 Without derogating in any way from the general powers of the Board(8), the Board from time to time determines, in terms of the
(6) Joint Presidents and Chief Executive Officers appointed with effect from 1 July 2016. See para 3.5
(7) King IV defines integrated reporting as a process founded on integrated thinking that results in a periodic integrated report by an organisation about value creation over time. It includes related communications regarding aspects of value creation. An integrated report could be a standalone report which connects the more detailed information I other reports.
(8) See 3.2.2 above and par 26.1 of the MOI
governance framework and delegated authorities, which matters are:
a. reserved for final decision-making by the Board or Board committees; or
b. require the Boards or Board committees consent before a final decision is made.
3.2.4.2 With effect from 1 July 2016, the Board delegated authority, not expressly reserved for the Board, to the Joint CEOs(9), who shall be jointly and severally liable and accountable to the Board, subject to the obligation to report all material matters to the Board.
3.2.5 Composition of the Board, diversity policy, appointment, rotation and independence
3.2.5.1 The Board comprises a balance of executive and non-executive directors, with a majority of non-executive directors. A majority of the non-executive directors are independent. The Board should at all times be suitably constituted and do everything necessary to appropriately fulfill its role and responsibilities.
3.2.5.2 The Board may determine the number of directors on the Board at any time, subject to the proviso that the Board may comprise a maximum of sixteen (16) directors and a minimum of ten (10) directors. A maximum of five (5) salaried employees of the Company may simultaneously hold the office of director(10).
3.2.5.3 The directors may elect a Chairman, Deputy Chairman and/ or Lead Independent Director and determine the period for which they are to hold office(11). In addition, the Board must appoint a Chief Executive Officer and an executive financial director(12).
3.2.5.4 The Board is empowered to fill vacancies on the Board(13).
3.2.5.5 Only individuals with sound ethical reputations and business or professional acumen and who have sufficient time to effectively fulfill their role as Board member, will be considered for appointment to the Board. In order to determine whether a director is over committed the following criteria, amongst others, will be considered:
a. If the director is not an executive office holder of any public company, he may hold the chairmanship of the Company as well as that of two other public listed companies.
(9) Joint Presidents and Chief Executive Officers appointed with effect from 1 July 2016. See para 3.5
(10) See par 22.1 of the MOI
(11) See par 29.4 of the MOI
(12) See par 26.3 of the MOI
(13) See par 22.4 of the MOI
b. Non-executive directors of the Company should not hold more than five (5) directorships of public listed companies.
c. If the director is an executive office holder (including an executive director) of a public company, he cannot hold any other directorships of a public listed company.
3.5.5.6 Should the Nomination and Governance Committee be of the view that a director is over committed, the Chairman will meet with that director to discuss the resolution of the matter to the satisfaction of the Committee.
3.5.5.7 Individuals with material enduring conflicts of interest with the Company or any Group company that cannot be reasonably managed by the normal methods of declaration of interests and temporary recusal from meetings will not be considered for appointment.
3.5.5.8 The Board recognises and embraces the benefits of having a diverse Board, appreciates that diversity at Board level is an essential component for sustaining a competitive advantage and is committed to ensuring a diverse and inclusive culture at Board level where directors believe that their views are heard, their concerns are attended to and they serve in an environment where bias, discrimination and harassment are not tolerated.
3.5.5.9 Race, age and gender diversity, underpinned by the relevant skills as well as business, geographic and academic experience and background, enhance the composition of a truly diverse Board. All facets of diversity will be considered in determining the optimal composition of the Board. All Board appointments are made on merit, having due regard for the benefits of diversity, including race, age, gender, skills and experience, to enable the Board to be effective in the exercise of its responsibilities.
3.5.5.10 Directors are appointed through a formal process and the Nomination and Governance Committee assists with the process of identifying suitable candidates to be proposed to the Board and shareholders. The Nomination and Governance Committee also assists with the review of Board effectiveness, which includes, amongst others, its composition.
a. The Board composition should reflect:
(i) a majority of independent non-executive directors;
(ii) racial and gender diversity; and
(iii) diversity in respect of the relevant business, geographic and academic backgrounds.
b. In reviewing independence, the Nomination and Governance Committee considers the listings requirements of the Johannesburg Stock Exchange (JSE) and New York Stock Exchange (NYSE) as well as the Companies Act and King IV.
In particular King IV provides that a director can be determined to be independent if, when judged from the perspective of a reasonable and informed third party, that the director has no interest, position, association or relationship which is likely to unduly influence or cause bias in decision-making in the best interests of the Company.
In addition to the indicators to be considered to determine independence; friendships, and long-standing relationships, will also be considered to determine whether it may unduly influence the independence of a director.
c. In reviewing Board composition, the Nomination and Governance Committee will consider the benefits of all aspects of diversity in order to enable the Board to discharge its duties and responsibilities effectively.
d. In identifying suitable candidates for appointment to the Board, the Nomination and Governance Committee will consider candidates on merit against objective criteria and with due regard for the benefits of diversity on the Board.
e. As part of the performance evaluation of the effectiveness of the Board, its committees and individual directors, the Nomination and Governance Committee will consider the balance of diversity requirements and representation on the Board, including gender and other factors relevant to its effectiveness.
3.5.5.11 The Nomination and Governance Committee will annually review and agree measurable objectives for achieving diversity on the Board that are appropriate for the Company and recommend such objectives to the Board for adoption. Progress against these objectives will be disclosed in the annual corporate governance report.
3.5.5.12 Directors appointed by the Board, retire as directors at the first subsequent annual general meeting unless elected at such shareholder meeting(14). At least one third of incumbent directors retire by rotation at each annual general meeting and is eligible for re-election, unless shareholders have nominated additional candidates for election. A director that has held office for a period of five (5) years since his last election, which election took place prior to 25 November 2016, or if he has held office for a period of nine (9) years since his first election, which election took place on or after 25 November 2016, shall retire at the annual general meeting if not included as one of the directors to retire by rotation. Retiring directors may be re-elected provided they are eligible(15). The Board may nominate a director who served for nine (9) years for re-election for additional periods of one year at a time, but no such directors term of office shall exceed twelve (12) years.
(14) See par 22.4.1 of the MOI
(15) See par 22.2 of the MOI for greater clarity on director rotation
3.5.5.13 There is no age restriction and directors are allowed to serve irrespective of their age.
3.5.5.14 Executive directors retire as members of management at the age of sixty (60), unless the Board agrees to a later retirement age in the interests of the Company. Such extensions will only be agreed to in very exceptional circumstances and will not be for long periods of time.
3.5.5.15 This Board Charter is considered to be an integral part of the conditions of appointment of all directors. Future letters of appointment should attach the Board Charter and specifically incorporate it by reference.
3.2.6 Board committees
3.2.6.1 In terms of the MOI(16) the Board is empowered to appoint Board committees and to delegate powers to such committees. The Board delegates certain functions to well-structured committees but without abdicating its own responsibilities.
3.2.6.2 Delegation is formal and involves the following:-
a. formal Terms of Reference are established and approved for each committee of the Board;
b. the committees Terms of Reference are reviewed once a year;
c. the committees are appropriately constituted with due regard to the skills required by each committee;
d. the Board establishes a framework for the delegation of authority to management;
e. the Board notes reports from and/or minutes of the meetings of each committee of the Board; and
f. the Board monitors the activities of committees and individuals with delegated authority.
3.2.6.3 The Board has the following committees:
a. Audit Committee
b. Remuneration Committee
c. Nomination and Governance Committee
d. Safety, Social and Ethics Committee
(16) See par 27.1 of the MOI
e. Capital Investment Committee
f. Digital, IM and Hedging Committee
3.2.6.4 Refer to attachments 1 - 6 for the terms of reference of these committees.
i. Board meetings and documentation
1. Frequency
a. The Board must hold a sufficient number of meetings to discharge all its duties as set out in this Charter. The Board meets quarterly and at such additional ad hoc times as may be required.
2. Agenda, meeting papers and minutes
a. The Board must establish an annual work plan for each year to ensure that all relevant matters are covered by the agendas of the meetings planned for the year.
b. A detailed agenda, together with supporting documentation must be circulated approximately five (5) business days prior to each meeting to the members of the Board and other invitees. The Chairman, with the assistance of the Company Secretary, must ensure that the agenda, as prepared, raises all relevant issues requiring attention in such a way and sequence that effective proceedings are facilitated.
c. The Nomination and Governance Committee shall annually consider whether the format and content of standard Board reports and submissions are appropriate and recommend to the Board such changes to Board reports or submissions as would improve the Boards efficiency.
d. All meeting papers and submissions made at the Board meeting are strictly confidential and directors must under no circumstances circulate them to any other parties. Directors are expected to manage their security passwords providing electronic access to their meeting packs with due care and vigilance. All hard copies of meeting papers and Board submissions must be left in the Boardroom on conclusion of the meeting. A record of Board submissions shall be maintained and held by the Company Secretary in line with the retention policy. Directors may arrange with the Company Secretary to obtain access to records of Board documentation and minutes if required by them in the course of discharging their duties as directors of the Company.
e. The minutes must be completed as soon as possible after the meeting and circulated to the Chairman of the Board for review thereof.
3. Attendance
a. Board members will use their best endeavours to attend all meetings of the Board, including meetings called on an ad hoc basis for special matters, unless prior apology with reasons have been submitted to the Chairman or Company Secretary. Board members must be fully prepared for Board meetings to be able to provide appropriate and constructive input on matters for discussion. They are expected to participate fully, frankly, and constructively in Board discussions and to bring the benefit of their particular knowledge, experience, skills and abilities to bear in discharging their duties as directors.
b. The Chairman may at his or her discretion authorise the use of audio or video conferencing facilities to make participation in a Board meeting possible should attendance in person not be possible.
c. If the nominated Chairman of the Board is absent from a meeting, the Lead Independent Director will act as Chairman.
d. Executive management, assurance providers and advisors may be in attendance at meetings, but by invitation only and they may not vote.
4. Quorum
a. A representative quorum for meetings is five (5) directors of which not less than three (3) directors shall be non-executive.(17)
5. Written Resolutions
a. It is the policy of the Board to limit the use of written resolutions to instances where the resolution is a mere formality or where the matter requiring decision by written resolution is of such an urgent nature that it cannot be deferred until the next Board meeting. The Chairman, with the assistance of the Company Secretary, should consider in respect of each written resolution whether an urgent extra-ordinary Board meeting would be a more appropriate decision-making procedure than a written resolution. Each member of the Board who is able to receive notice must receive notice of the matter to be decided by written resolution.
(17) See par 29.3.1 of the MOI
b. Decisions taken by written resolution other than at a meeting are valid decisions of the Board if signed by a majority of directors(18).
b. The Chairman
3.3.1 The Chairman is elected by members of the Board(19) and should be a non-executive director of the Board with no executive or management responsibilities. The Chairman provides leadership at Board level, represents the Board to the shareholders and is responsible for ensuring the integrity and effectiveness of the Board and its committees. The Chairman is also the Chairman of the meetings of shareholders.
3.3.2 To this end the Chairman is required to:
3.3.2.1 Set the ethical tone for the Board and the Company;
3.3.2.2 Provide overall leadership to the Board without limiting the principle of collective responsibility for Board decisions, while at the same time being aware of the individual duties of Board members;
3.3.2.3 Oversee the formal succession plan for the Board, the Joint CEOs and certain executive management appointments, such as the Chief Financial Officer;
3.3.2.4 Maintain regular dialogue with the Joint CEOs in respect of all material matters affecting the Company and the group and to consult with the other Board members promptly when considered appropriate;
3.3.2.5 Identify and participate in selecting Board members (via the Nomination and Governance Committee);
3.3.2.6 Formulate, in consultation with the Joint CEOs and Company Secretary, the yearly work plan for the Board against agreed objectives, and play an active part in setting the agenda for Board meetings - ensure that material matters in respect of the business or governance of the Company or group that he is aware of, are tabled at Board meetings;
3.3.2.7 Preside over Board meetings and ensure that material issues for consideration are tabled and interrogated effectively to ensure optimal Board decision-making and governance, manage conflicts of interest and act as a link between the Board and management, particularly the Board and the Joint CEOs;
3.3.2.8 Ensure that directors play a full and constructive role in the affairs of the Company and take a leading role in the process for removing non-performing or unsuitable directors from the Board;
(18) See par 29.5.6 of the MOI
(19) See par 29.4.1 of the MOI
3.3.2.9 Monitor how the Board works together and how individual directors perform and interact at meetings and ensure that a formal performance evaluation of the Board, Board committees and individual directors is conducted at least every two years and that every alternate year, an opportunity is provided for reflection and discussion by the Board of its performance and that of its committees, it chair and its members as a whole;
3.3.2.10 Ensure that all directors are appropriately made aware of their responsibilities through a tailored induction programme, and ensuring that a formal programme of continual professional education is adopted at Board level;
3.3.2.11 Be accessible to the Joint CEOs between Board meetings to provide counsel and advice;
3.3.2.12 In consultation with the Remuneration Committee and the Board determine the performance objectives of the Joint CEOs and their performance against the objectives;
3.3.2.13 Ensure that good relations are maintained with the Companys major shareholders and strategic stakeholders, and preside over shareholders meetings; and
3.3.2.14 Attend to administrative approvals in respect of the Joint CEOs may not be a member of the Audit Committee;
3.3.3 The Chairman:
3.3.3.1 may be a member of, but not chair the Remuneration Committee;
3.3.3.2 must be a member of, and chair the Nomination and Governance Committee; and
3.3.3.3. may be a member of, but not chair the Safety, Social and Ethics Committee.
3.3.4 The Chairmans ability to add value to the Company, and the Chairmans actual performance against criteria developed from his/her formalised role and functions should form part of an evaluation by the Board led by the Lead Independent Director or another independent non-executive director appointed by the Board at least every two years. The evaluation should take into account other external chairmanships to determine whether the Chairman has the capacity to discharge his duties to the Company.
3.4 Deputy Chairman and Lead Independent Director
3.4.1 The Board may appoint a Deputy Chairman and / or Lead Independent Director to assist the Chairman in the execution of his duties and such other functions as the Board may wish to delegate to the Deputy Chairman or Lead Independent Director.
3.4.2 Where the Chairman is absent or unable to perform his duties or where the independence of the Chairman is questionable or impaired, the Lead Independent Director must serve in this capacity for as long as the circumstances that caused the Chairmans absence, inability or conflict exists.
3.4.3 The Lead Independent Director is appointed to:
3.4.3.1 Assist the Board to deal with management of any actual or perceived conflicts of interest that arise on the part of the Chairman;
3.4.3.2 Preside at all meetings of the Board at which the Chairman is not present or where the Chairman is conflicted, including any sessions of the independent directors;
3.4.3.3 Call meetings of the independent directors where necessary;
3.4.3.4 Serve as principal liaison between the independent directors and the Chairman;
3.4.3.5 Perform all such functions that cannot be performed by the Chairman due to his absence or the existence of a conflict of interest;
3.4.3.6 Liaise with major shareholders if requested by the Board in circumstances or transactions in which the Chairman is conflicted; and
3.4.3.7 Perform other duties that the Board may from time to time delegate.
3.5 The Joint Presidents and Chief Executive Officers
3.5.1 With effect from 1 July 2016, the Board appointed Joint Presidents and Chief Executive Officers.
3.5.2 The Joint CEOs, who are jointly and severally the highest executive decision-making authority of the Company and the Sasol group, and are jointly and severally delegated with authority from, and jointly and severally accountable to the Board for the development and successful implementation of the group strategy and the overall management and performance of the Sasol group within the framework of its policies, reserved powers and routine reporting requirements, consistent with the primary aim of enhancing long-term shareholder value.
3.5.3 The Joint CEOs can act separately or jointly. The Board has instituted a procedure to resolve a deadlock between the Joint CEOs in respect of any matter pertaining to their delegated authority or regarding the development and implementation of the group strategy and the overall management and performance of the Sasol group within the framework of its policies, reserved
powers and routine reporting requirements, consistent with the primary aim of sustainably enhancing long-term shareholder value.
3.5.3 The Joint CEOs are supported by the Group Executive Committee (GEC) which is accountable to them subject to the authority of the Joint CEOs. The groups Limits and Delegation of Authority Framework authorises any member of the GEC to sign and execute any documents required to implement a decision taken by the CEOs, the GEC or the Board, unless specifically indicated otherwise by the Joint CEOs, the GEC or the Board respectively.
3.5.4 The Joint CEOs:
3.5.4.1 provide executive leadership;
3.5.4.2 must inform the Board of any material matter, which may have a significant impact on the financial results or substantially impact the reputation of the group;
3.5.4.3 may sub-delegate any of the powers delegated to them to the GEC, the Chief Financial Officer and any Executive Vice President or other committee, forum or individual within the group; and
3.5.4.4 may exercise power and authority on, or sub-delegate, any matter necessary for the effective management and performance of the group, which is not specifically reserved for the Board or the Companys shareholders.
3.5.5 Their roles are formalised and their performance are evaluated against criteria developed for their roles.
3.5.6 The Joint CEOs are accountable to the Board to, amongst other things:
3.5.6.1 Agree and recommend for approval to the Board matters specified in the group limits and delegation of authority framework which amongst others relate to:
a. The vision, mission, values, strategy, long term plans and policy of the Company;
b. Annual budgets, group funding and financial management;
c. Significant mergers, acquisitions, divestitures, plant closures and asset disposal as well as material capital expenditure/projects;
d. Risk policy and profile; and
e. Statutory, JSE and NYSE required reports;
3.5.6.2 Recommend the appointment of members of the executive team (members of the GEC) and ensure proper succession planning and performance appraisals of members of the executive team;
3.5.6.3 Develop and recommend to the Board the long-term strategy and vision of the Company and its quantified expression by way of critical short-term and long-term performance and sustainability targets;
3.5.6.4 Develop and recommend to the Board the capital expenditure programme of the Company;
3.5.6.5 Develop and recommend to the Board the annual business plans and budgets that support the Companys long term strategy and approach to sustainability;
3.5.6.6 Ensure that the Company and Group companies have effective management teams and management structures;
3.5.6.7 Ensure that appropriate Company and group policies are formulated and implemented;
3.5.6.8 Monitor and report to the Nomination and Governance Committee and the Board on the effectiveness of legal compliance controls, processes, systems and resource capacity;
3.5.6.9 Monitor the performance of the Company and the Group companies against agreed performance and sustainability targets and report appropriately to the Board about such performance;
3.5.6.10 Establish an organisational structure and operating model for the Company and the group to ensure effective execution of the strategy, sustainability, governance and control imperatives;
3.5.6.11 Set the tone in providing ethical leadership and creating an ethical environment;
3.5.6.12 Ensure that effective internal Company and group controls, legal compliance and governance measures are deployed;
3.5.6.13 Ensure adherence to the relevant industry best practices standards unless there are cogent reasons for not implementing such standards and best practices; and
3.5.6.14 Serve as chief spokespersons of the Company.
3.5.7 The Joint CEOs are appointed by the Board on recommendation of the Nomination and Governance Committee. The duration of their appointment, terms of appointment and compensation are determined by the Board upon recommendation of the Remuneration Committee. The Board is accountable for ensuring, with the assistance of the Nomination and Governance Committee, that succession plans are in place for the Joint CEOs and other members of the GEC.
3.5.8 The Joint CEOs may not be members of the Remuneration-, Audit- or Nomination and Governance Committees but may attend on invitation and
recuse themselves when conflicts arise, particularly when their performance and remuneration are discussed.
3.5.9 The Board should ensure that a succession plan is in place for the Joint CEOs.
3.6 The rights and duties of individual directors
3.6.1 The Board exercises its functions jointly and no director has any authority to severally perform any act on behalf of the Company or the business unless specifically authorised or requested by the Board or authorised nominees of the Board. Directors are jointly accountable for the decisions of the Board.
3.6.2 Directors duties, standards of conduct and liabilities are captured in the Companies Act(20). Directors have a legal obligation to act in the best interest of the Company, to act with due care, diligence and skill in discharging their duties as directors, to declare and avoid conflicts of interest with the Company and the group and to account to the Company for any advantages gained in discharging their duties on behalf of the Company.
3.6.3 Directors may at any time request a meeting with the Chairman and will individually meet with the Chairman on an annual basis to discuss the Board and committee matters. The Chairman will invite non-executive directors from time to time to indicate whether they have a need to meet as a group without him/her and/or the executive management.
3.6.4 The Board is of the view that the interests of the Company are better served if the Board functions as a team rather than a fractious, uneasy coalition of executive, non-executive and independent factions.
3.6.5 Directors have access to top management and the Company Secretary for advice about the governance of the Company, group and Board procedures and may after consultation with the Chairman, obtain such external advice as they may consider necessary to properly discharge their duties to the Company.
3.6.6 The Nomination and Governance Committee is required to consider and approve the induction and training programme of directors.
3.7 The Company Secretary
3.7.1 The decision to appoint or remove the Company Secretary is a Board decision. The Board should be assisted by a competent, suitably qualified and experienced Company Secretary.
3.7.2 The Company Secretary provides a central source of guidance and support to the Board and within the Company on matters of good governance and changes in legislation. The Board is aware of the duties of the Company Secretary and empowers him to fulfill those duties. As gatekeeper of good governance, the Company Secretary maintains an arms length relationship with the Board and its directors as far as is reasonably possible.
(20) See sections 76 and 77 Companies Act
3.7.3 The Company Secretary is not a director of the Company and has a direct channel of communication to the Chairman.
3.7.4 The Company Secretary is accountable to the Board to:
3.7.4.1 Ensure that Board procedures are followed and reviewed regularly;
3.7.4.2 Ensure that the applicable rules and regulations for the conduct of the affairs of the Board are complied with;
3.7.4.3 Maintain statutory records in accordance with legal requirements;
3.7.4.4 Provide the Board as a whole, and individual Board members with detailed guidance as to how their responsibilities should be properly discharged in the best interest of the Company and on good governance;
3.7.4.5 Keep abreast of, and inform the Board of current corporate governance thinking and practice;
3.7.4.6 Assist the Nomination and Governance Committee with the appointment of directors;
3.7.4.7 Advise the Nomination and Governance Committee on all legal and regulatory matters, including legal frameworks and processes;
3.7.4.8 Advise the Nomination and Governance Committee with respect to all regulatory filing and public disclosure relating to the Companys governance processes;
3.7.4.9 Assist with director induction and training programmes;
3.7.4.10 Ensure that the Board Charter and the Terms of Reference of Board committees are kept up to date;
3.7.4.11 Prepare and circulate Board and Board committee papers;
3.7.4.12 Elicit responses, input, feedback for Board and Board committee meetings;
3.7.4.13 Assist in drafting annual Work Plans;
3.7.4.14 Ensure preparation and circulation of minutes of Board and committee meetings; and
3.7.4.15 Assist with the evaluation of the Board, committees and individual directors.
4. GROUP COMPANIES
4.1 The Company has several direct and indirect subsidiaries(21).
4.2 As direct or indirect shareholder of these subsidiaries, the Company exercises its shareholder rights to ensure that the Company approves material decisions of its subsidiaries and that the groups minimum requirements in respect of matters such as governance, internal controls, financial management, disclosure controls, risk management, legal compliance, safety, health and environmental management, internal audit, ethics management, human resource management, information management, stakeholder relationships and sustainability are complied with.
4.3 Group functions design the systems, processes and capacity to ensure adherence by all Group companies in the group to minimum group requirements.
5. DISCLOSURE AND CONFLICTS OF INTEREST
5.1 In terms of the Companies Act(22) and the MOI(23) a director who has a personal financial interest in respect of a matter to be considered at a Board meeting, or knows that a related person has a personal financial interest in the matter:
5.1.1 must disclose the general nature of the interest before the matter is considered;
5.1.2 must disclose all material information known to the director to the meeting;
5.1.3 may disclose observations and insights relating to the matter if requested by the other directors to do so; and
5.1.4 may not be present at the meeting where the matter is discussed, and may not participate in the consideration of the matter.
5.2 A director may disclose any personal financial interest in advance by delivering to the Company Secretary a notice setting out the nature and extent of the financial interest to be used until changed or withdrawn. A director who acquires a direct personal financial interest after an agreement or other matter has been approved by the Company, must promptly disclose the nature and extent of that interest to the Board.
5.3 Failure to make disclosure of interest in compliance with the Companies Act will render decisions, transactions or agreements invalid, unless subsequently ratified by shareholders or a court.
5.4 A director may disclose any personal financial interest in advance by delivering to the Company Secretary a notice setting out the nature and extent of the financial interest to be used until changed or withdrawn. The Company Secretary will submit all disclosures of interest to the Nomination and Governance Committee and the Board at the first subsequent meeting. The Nomination and Governance Committee is required to:
5.4.1 Consider all declarations of interest;
(21) See attachment 7
(22) Section 75 of the Companies Act
(23) clause 28 of the MOI
5.4.2 Report to the Board any conflicts of interest which require specific action by the Board;
5.4.3 Recommend to the Board which directors should be categorised for governance purposes as executive directors, non-executive directors and independent non-executive directors.
5.5 Enduring material conflicts of interest are regarded by the Board as incompatible with the fiduciary duties of directors. Directors are appointed on the express understanding and agreement that they may be removed by the Board if and when they develop an actual or prospective material, enduring conflict of interest with the Company or a Group company.
6 POLICY IN RESPECT OF CORPORATE GOVERNANCE AND RISK MANAGEMENT
6.1 The Company complies with all applicable corporate governance legislation. It is also the policy of the Company to apply the principles of the King IV Report on Corporate Governance for South Africa 2016 to the extent that they advance effective business leadership. In addition the Companys corporate governance practices are reviewed frequently in view of changes to the Company and national and international developments in respect of corporate governance in order to proactively adapt the corporate governance practices of the Company should it be in the best interests of the Company to do so.
6.2 The Board directly assumes responsibility for the governance of risk; it approves Sasols risk policy that gives effect to its set direction on risk, ensuring that Sasols strategy takes account of the risks and opportunities Sasol may be exposed to. The Board also approves Sasols risk profile(24) and risk appetite and tolerance levels, ensuring that risks are managed within these levels and considers the risk environment from time to time, as deemed appropriate and based on materiality and changes in the external, transactional and internal environments.
6.3 To support the Board in ensuring effective risk management oversight, the Board Committees are responsible for ensuring the effective monitoring of risks, in compliance with Sasols Enterprise Risk Management Framework, risk policy and profile, within the ambit of each Committees scope. In monitoring and providing oversight on Sasols risk, each committee will consider potential opportunities as appropriate.
7 DEALING IN THE SECURITIES OF THE COMPANY
7.1 All directors of the Company and its major subsidiaries are required to adhere to the Companys policy on dealing in the Companys securities, which is designed to prevent insider trading in terms of the Financial Markets Act, 2012.(25)
7.2 The Company Secretary should be notified of any dealing by a director in the securities of the Company. In terms of the JSE, NYSE and SEC requirements the Company is required to promptly announce all dealings in the securities of the Company.
(24) Also referred to as the Sasol risk landscape
(25) See Attachment 8
8 PERFORMANCE EVALUATION: BOARD, BOARD COMMITTEES AND INDIVIDUAL DIRECTORS AND MEMBERS OF COMMITTEES
8.1 A formal evaluation of the Board, its committees and individual directors, including the Chairman, must be performed, either externally facilitated or not in accordance with methodology approved by the Nomination and Governance Committee, at least every two years. Every alternate year, opportunity is provided for reflection and discussion by the Board of its performance and that of its committees, its chair and its members as a whole.
8.2 The Nomination and Governance Committee is responsible to review the effectiveness of the Board and Board committees and its individual members. For this purpose the Nomination and Governance Committee adopts an appropriate methodology to perform the performance evaluations.
8.3 The Lead Independent Director, or in the absence of a Lead Independent Director, an independent non-executive director appointed by the Board, shall ensure that the performance of the Chairman is evaluated and shall chair those portions of meetings at which the Chairmans performance appraisal is discussed.
9 POLICY IN RESPECT OF BUSINESS RESCUE PROCEEDINGS OR OTHER TURNAROUND MECHANISMS
9.1 The Board shall continuously monitor the solvency and liquidity of the Company and shall obtain adequate assurances from management about the solvency and liquidity of Group companies.
9.2 As soon as the Company is financially distressed as defined in the Companies Act the Board shall consider business rescue proceedings or other turnaround mechanism and implement such steps as required by the Companies Act.
10 POLICY IN RESPECT OF DISPUTE RESOLUTION
10.1 It is the policy of the Company to ensure that internal and external disputes are resolved as effectively and expeditiously as possible. To this end consideration shall be given in respect of each financial and reputational material dispute whether settlement, litigation, arbitration, mediation or other forms of alternative dispute resolution would be the most effective methodology to resolve a dispute in the best interests of the Company.
10.2 The merits of claims against the Company or Group companies or allegations of misconduct or non-compliance against the Company or a Group company should be investigated thoroughly before a final decision is made to defend the claim or not to act in respect of an allegation of misconduct or non-compliance.
10.3 If non-compliances are uncovered, consideration should be given to engage with the relevant authorities or, if relevant, to apply for leniency if it would be in the interest of the Company or a Group company.
10.4 The validity and veracity of reasons for defending a claim against the Company or the Sasol group should be confirmed by written external legal advice before the commencement of formal legal proceedings to institute a legal action by way of formal legal proceedings.
10.5 The authority to make decisions in respect of dispute resolution and to represent the Company or a Group company is governed by the delegations of authority as approved by the Board from time to time.
11 MEMORANDUM OF INCORPORATION
11.1 This Board Charter is not intended to replace or amend the MOI in any way whatsoever. In the event of a conflict between the MOI and the Board Charter, the provisions of the MOI shall prevail. The Board Charter is also not intended to contain a comprehensive summary of the applicable legal principles. Board members requiring advice in respect of any matter referred to in this Charter should consult the Company Secretary in this regard.
TERMS OF REFERENCE
SASOL LIMITED
AUDIT COMMITTEE
1. PURPOSE AND OBJECTIVES
1.1 The Audit Committee (the Committee) is constituted as a statutory committee of Sasol Limited (the Company) in respect of its statutory duties in terms of section 94(7) of the Companies Act, 71 of 2008 (the Act) (as set out in Appendix 1) and a committee of the Sasol Limited Board of Directors (the Board) in respect of all other duties assigned to it by the Board.
1.2 These Terms of Reference are subject to the provisions of the Act, the Companys Memorandum of Incorporation (MOI) and any other applicable law or regulatory provision.
1.3 The Committee shall perform the functions listed below and perform, on behalf of all subsidiaries of the Company that are required in terms of the Act to have audit committees (collectively herein referred to as the South African subsidiaries), the functions listed in section 94(7) of the Act.
1.4 The Committee was established primarily to assist the Board in overseeing the:
1.4.1 quality and integrity of the Companys integrated reporting, incorporating the financial statements (including the consolidated Sasol group (the Group) financial statements), sustainability reporting, and public announcements in respect of the financial results;
1.4.2 the qualification and independence of the external auditors for the Company and all Group companies;
1.4.3 the scope and effectiveness of the external audit function for the Company and all Group companies;
1.4.4 the effectiveness of the Groups internal controls and internal audit function; and
1.4.5 compliance with legal and regulatory requirements to the extent that it might have an impact on financial statements.
2. CONSTITUTION AND MEMBERSHIP
2.1 The Committee shall comprise no less than three members nominated by the Board and elected annually by shareholders, all of whom shall be independent non-executive directors.
2.2 The Board shall, taking into consideration the minimum number of directors required as stipulated in clause 2.1, determine the number of members who shall constitute this Committee.
2.3 Each member of the Committee shall meet all applicable independence, financial literacy and other requirements prescribed by law, the Johannesburg Stock Exchange Limited (JSE) and the New York Stock Exchange (NYSE). At least one member of the Committee must meet the applicable Securities and Exchange Commissions (SEC) definition of a financial expert.
2.4 The Board shall appoint a Chairman of the Committee and determine the period for which he shall hold office. The Chairman of the Board shall not be eligible to serve as a member of the Committee.
2.5 The Board must fill any vacancy on the Committee within 40 business days after the vacancy arises, but may not remove any member elected by shareholders from the Committee.
2.6 The Company Secretary of Sasol Limited shall be the secretary of the Committee.
3. MANDATE
3.1 Integrated reporting(1)
3.1.1 The Committee will oversee integrated reporting, having regard to all factors and risks that may impact on the integrity of the integrated report, and will approve the Companys annual Integrated Report on behalf of the Board. In this regard, the Committee will also consider and review the findings and recommendations of the Group Executive Committee (GEC) sub-committees and Board committees insofar as they are relevant to the functions of the Committee.
3.2 Financial statements
The Committee will:
3.2.1 examine, review and approve the annual report to be filed with the US Securities and Exchange Commission under Form 20-F; and
(1) King IV defines integrated reporting as a process founded on integrated thinking that results in a periodic integrated report by an organisation about value creation over time. It includes related communications regarding aspects of value creation. An integrated report could be a standalone report which connects the more detailed information in other reports.
3.2.2 examine and review the Annual Financial Statements of the Company (including consolidated Group financial statements), the interim reports, the preliminary announcement of results and any other announcement regarding the Companys results or other financial information to be made public, prior to submission and approval by the Board, focusing particularly on:
(a) compliance with accounting standards, local and international, compliance with stock exchange and legal requirements (in respect to compliance with stock exchange and legal requirements, the Committee will consider the recommendations of the Nomination and Governance Committee);
(b) major judgemental areas and significant adjustments resulting from the audit;
(c) the basis on which the company has been determined a going concern as well as solvency and liquidity;
(d) capital adequacy;
(e) any changes in accounting policies and practices;
(f) the appropriateness of major adjustments processed at year end;
(g) compliance with the financial conditions of loan covenants; and
(h) tax and litigation matters.
3.3 The Committee will review all documents that contain material financial information or other information which could impact materially on the financial results or performance of the Company, such as:
3.3.1 circulars and prospectuses;
3.3.2 press releases on earnings;
3.3.3 trading statements; and
3.4 Disclosure controls and procedures
3.4.1 The Committee shall review with management, and any outside professionals as the Committee considers appropriate, the effectiveness of the Companys disclosure controls and procedures.
3.5 Sustainability reporting
3.5.1 The Committee will ensure that assurance is provided on material sustainability issues, the scope of which and engagement of external assurance provider(s), as appropriate, to be approved by the Safety, Social and Ethics Committee.
3.5.2 The Committee shall be entitled to place reliance on the assurance obtained as presented to the Safety, Social and Ethics Committee regarding the integrity, reliability and validation of the sustainable development information as well as the review and approval of the sustainable development information, incorporated into the integrated report or published on the Sasol website, by the Safety, Social and Ethics Committee.
3.5.3 The Committee shall consider recommendations by the Safety, Social and Ethics Committee that may have an impact on the financial statements.
3.6 External audit and auditors
The Committee will, with regard to all Group companies:
3.6.1 consider and make recommendations on the appointment and retention of the external auditor(s), subject to the applicable laws and the rules of any stock exchange on which the Companys shares are listed;
3.6.2 evaluate the independence and performance of the external auditor(s), and consider whether any non-audit services rendered by such auditors substantively impair their independence;
3.6.3 pre-approve all permissible non-audit services in line with approved thresholds, to be provided by the external auditors, and where such services are to be rendered to the Company or one of its subsidiaries, any proposed contract for the provision of such services;
3.6.4 discuss and review, with the external auditor(s) before the audit commences, the auditor(s) engagement letter, the terms, nature and scope of the audit function and the audit fee and where more than one auditor is involved, the maintenance of a professional relationship and co-ordination between them;
3.6.5 approve the external auditor(s) engagement letter, the terms, nature and scope of the audit function and the audit fee;
3.6.6 make suggestions on areas of emphasis that the audit should address;
3.6.7 consider any accounting treatments, significant unusual transactions or accounting judgements, that could be contentious;
3.6.8 consider the effects of significant ventures, investments or operations which are not subject to external audit;
3.6.9 review the overall audit role, minimise duplication, discuss implications of new auditing standards and ensure that the external audit fee will sustain a proper audit and provide value for money;
3.6.10 obtain assurance from the external auditor(s) that adequate accounting records are being maintained;
3.6.11 obtain and review with the lead audit partner and a more senior representative of the independent auditor, annually or more frequently as the Committee considers appropriate, a report by the external auditor describing: the external auditors internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review of the external auditor, or by any inquiry, review or investigation by governmental, professional or other regulatory authorities, within the preceding five years, in respect of independent audits carried out by the external auditor, and any steps taken to deal with these issues;
3.6.12 pre-approve the hiring of any senior employee or former senior employee of the external auditors who was a member of the audit team during the preceding financial year; In addition, the Committee shall pre-approve the hiring of any employee or former employee of the external auditors for top management positions within the Company, regardless of whether that person was a member of the Companys audit team or not;
3.6.13 receive and consider, in accordance with a formalised procedure, any Reportable Irregularities identified and reported by the external auditors in terms of the Auditing Profession Act 26 of 2005;
3.6.14 consider the use of technology to improve audit coverage and efficiency;
3.6.15 obtain assurance from management in respect of the functions specifically performed by the Committee for South African subsidiaries in terms of section 94(7) of the Act (see Appendix 1); and
3.6.16 liaise with and monitor the activities of any committee in the Group that performs the functions normally performed by an audit committee.
3.7 Internal control and assurance services(2)
3.7.1 An important role of the Committee will be to monitor the effective functioning of the Groups internal audit, ensuring that the roles and functions of the external audit and internal audit are sufficiently clarified and co-ordinated to provide an objective overview of the operational effectiveness of the Groups systems of internal control and reporting. This will include:
(a) quarterly assessing the independence and effectiveness of the internal audit function including the adequacy of available internal audit resources;
(b) reviewing the internal audit functions compliance with the internal audit charter as approved by the Committee;
(c) quarterly assessing the report of internal audit on the effectiveness of the Groups systems of internal control, including internal financial control and business risk management and maintaining effective internal control systems;
(d) considering the appointment, dismissal or re-assignment of the head of the internal audit function;
(e) assessing the performance of the head of the internal audit function;
(f) ensuring that the internal audit function is subject to an independent quality review, at least every four years;
(g) [Deleted];
(h) ensuring that the internal audit plan is in accordance with the internal audit charter and that it is executed timely;
(i) reviewing the adequacy of corrective action taken in response to significant internal audit findings;
(j) reviewing significant matters reported by the internal audit function;
(k) reviewing the co-operation and co-ordination between the internal and external audit functions and co-ordinating the formal internal audit work plan with external auditors to avoid duplication of work;
(2) Assurance services is a collective term for Sasols internal audit and forensic services.
(l) reviewing significant differences of opinion between management and the internal audit function;
(m) reporting on the maintenance of proper and adequate accounting records;
(n) reporting on the overall operational and financial reporting environment;
(o) reporting on the systems to safeguard the Companys assets against unauthorised use or disposal;
(p) requesting investigations into matters within its scope, for example, evaluations of the effectiveness of the Groups internal controls, significant cases of employee fraud, misconduct or conflict of interest; and
(q) reviewing forensic audit reports that relate to matters that could have a material impact on the financial statements.
3.8 Compliance of the Group with legal and regulatory requirements to the extent that it may have an impact on financial statements. The Committee shall:
3.8.1 review with management, and any internal or external counsel as the Committee considers appropriate, any legal matters (including the status of pending litigation) that may have a material impact on the Group and any material reports or inquiries from regulatory or governmental agencies;
3.8.2 review with management:
(a) the receipt, retention and treatment of complaints received by the Group regarding accounting matters, internal audit, internal accounting controls, content of the financial statements, auditing matters or potential violations of law relating to matters within the mandate of the Committee; and
(b) the confidential, anonymous submission by employees of the Group of concerns regarding questionable accounting or auditing matters and potential violations of law relating to matters within the mandate of the Committee.
3.9 Risk management and information technology
3.9.1 The Committee is an integral part of the risk management process. In this regard the Committee will also consider and review the findings and recommendations of the Safety, Social and Ethics Committee and any other Board committee insofar as they are relevant to the functions of the Committee.
3.10 In addition to the responsibilities set out with respect to the financial statements and internal controls and in support of ensuring effective risk management oversight, specifically in relation to material risks within its scope, the Committee is also responsible for:
3.10.1 ensuring the effective monitoring of these risks and that potential opportunities are considered as appropriate;
3.10.2 considering and reviewing executive managements reports on the design and implementation of appropriate risk responses, overseeing that the risks are managed within the levels of appetite and tolerance and the integration and embedding of risk management in the business activities and culture of the Company;
3.10.3 obtaining confirmation that there is adequate assurance and that controls in relation to these risks are appropriate in design and effectiveness;
3.10.4 overseeing fraud risks in so far as such risks relate to or have an impact on financial reporting;
3.10.5 assisting the Board in carrying out its information and communication technology responsibilities by ensuring the ethical and responsible use of technology and information and compliance with relevant laws and to ensure an appropriate control environment and management of material information and communication technology risks;
3.10.6 reviewing the enterprise risk framework annually, for recommendation to and approval by the Board and subsequent publication on the Companys intranet; and
3.10.6 reviewing the adequacy of insurance coverage.
3.11 Coordination of assurance activities
3.11.1 The Committee, shall ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities.
3.11.2 The Committee will receive quarterly reports from the Combined Assurance and Disclosure Committee, a sub-committee of the GEC, providing management oversight, assurance and alignment on Group-wide, high risk activities and responsible for ensuring that the information publicly disclosed complies with requirements of the JSE, NYSE and SEC rules.
3.12 The Committee will:
3.12.1 ensure that the combined assurance received is appropriate to address all the significant risks facing the Company;
3.12.2 ensure the independence of the external service providers appointed by the Company to provide assurance on internal audit or the integrated report; and
3.12.3 monitor the relationship between the external service providers and the Company.
3.13 Finance function
3.13.1 The Committee shall review the expertise, resources and experience of the finance function annually and shall include a report on the results of the review in the annual Integrated Report. The review shall include a review of the expertise and experience of the Chief Financial Officer as may be required from time to time by any stock exchange on which the securities of the Company are listed.
3.14 Annual performance assessment
3.14.1 The Committee shall assess its and its members effectiveness at least once every two years.
3.15 Reporting
3.15.1 The Committee shall annually insert in the financial statements of the Company and where required, those of its South African subsidiaries, a report:
(a) describing how the Committee carried out its functions;
(b) stating whether the Committee is satisfied that the external auditor is independent of the Company and subsidiaries and its views on the quality of the external audit;
(c) significant matters that the Committee has considered in relation to the annual financial statements and how these were addressed by the Committee; and
(d) commenting in any way the Committee considers appropriate on the financial statements, the accounting practices and the internal financial control of the Company.
3.15.2 In addition, the Committee shall prepare such reports as may be required from time to time in terms of the Act or applicable corporate governance requirements.
3.16 The Chairman of the Committee shall report to the Board on its activities and make recommendations to the Board concerning the adoption of the
annual and interim financial statements and any other matters arising from the work of the Committee; and
3.17 The Chairman (or, in his/her absence, another member) of the Committee shall attend the annual general meeting to report to shareholders on how the Committee discharged its responsibilities and mandate for the year under review.
4. REMUNERATION AND AUDIT
4.1 Members of the Committee will be paid such additional remuneration for their service as members of the Committee, as may be determined by the Board and approved by shareholders.
5. MEETINGS AND PROCEEDINGS
5.1 Meetings of the Committee will be held as frequently as the Committee considers appropriate, but it will normally meet not less than four times a year. The Board or any member thereof, including members of the Committee, the external auditors, and the head of internal audit may, through the Chairman, call further meetings of the Committee. The Committee shall periodically have separate meetings with management, internal audit and the external auditors.
5.2 The meetings of the Committee may be held in person, by telephone, or other form of long distance conference facility as circumstances may require (such person shall be deemed as being present at the meeting), provided that the required quorum is met.
5.3 Reasonable notice of meetings and the business to be conducted shall be given to the members of the Committee, the Chairman of the Board, the Joint Presidents and Chief Executive Officers (JCEO), executives and managers responsible for finance, the head of internal audit and the external auditor to make proposals as necessary.
5.4 The quorum of the Committee shall be a majority of independent members present for decisions. A decision shall be deemed as passed if a majority vote on the matter for decision is passed by the members present at the Committee.
5.5 A decision that could be voted on at a meeting of the Committee may instead be adopted by written consent of a quorum of members, given in person, or by electronic means, provided that each member received notice of the matter to be decided. A decision made in such manner has the same effect as if it had been approved at a meeting.
5.6 Where decisions are required by way of written resolution, a quorum shall be a majority of independent members, one of whom shall be the Committee Chairman.
5.7 The Chief Financial Officer, Chief Risk Officer senior audit partner in charge of the external audit and head of internal audit shall be in attendance at meetings of the Committee and shall have unrestricted access to the Chairman or any other member of the Committee as is required in relation to any matter falling within the remit of the Committee.
5.8 The Chairman, in his discretion, may invite other executives to attend and to be heard at meetings of the Committee.
5.9 No attendee shall have a vote at meetings of the Committee.
5.10 The minutes of all meetings of the Committee, or summaries thereof, shall be submitted to the Board at the next Board meeting and the agenda for each such Board meeting shall provide an opportunity for the Chairman of the Committee to report verbally on any matters of importance as well as on the Committees findings and recommendations.
5.11 Unless varied by these Terms of Reference, meetings and proceedings of the Committee will be governed by the Companys MOI regulating the meetings and proceedings of directors and committees.
5.12 The Committee Secretary shall take minutes of meetings. These minutes shall be reviewed and approved by the members of the Committee.
6 AUTHORITY OF THE COMMITTEE AND RESOURCES AVAILABLE
6.1 The Committee has decision-making authority with regard to its statutory duties and is accountable in this regard to both the Board and the shareholders. On all responsibilities delegated to it by the Board outside of the statutory duties, the Committee makes recommendations for approval by the Board or approves, to the extent that such duty has been delegated to the Committee by the Board.
6.2 The Committee, in carrying out its tasks under these Terms of Reference:
6.2.1 is authorised to investigate any activity within its Terms of Reference;
6.2.2 may, at the discretion of the Committee, require other employees of the Company to attend meetings or parts of meetings;
6.2.3 may consult with and seek any information it required from any employees, and all employees shall be required to co-operate with any request made by the Committee in the course of its duties;
6.2.4 shall at least quarterly meet separately with the external and internal auditors without any executive member of the Board in attendance; and
6.2.5 shall have the power to delegate its authority and duties to subcommittees or individual members of the Committee as it deems appropriate, provided it is not precluded by legal or regulatory requirements from doing so.
7. LIMITED LIABILITY
7.1 The deliberations of the Committee do not reduce the individual and collective responsibilities of Board members, with regard to their fiduciary duties and responsibilities, and they must continue to exercise due care, skill and judgment, in accordance with their legal and statutory obligations.
7.2 Subject to the above provisions and any relevant legislation and codes of best practice, the members of the Committee shall not attract any personal liability arising from their appointment and the Company shall indemnify members of the Committee to the extent possible in terms of its approved directors and officers liability insurance coverage.
8. GENERAL
8.1 The Committee, in carrying out its tasks under these Terms of Reference, may obtain such outside or other independent professional advice as it considers necessary to carry out its duties.
8.2 The Board will ensure that the Committee will have access to professional advice both internal and external to the Company in order for it to perform its duties.
9. REVIEW
The Committee shall review these Terms of Reference annually and make recommendations with respect to amendments, if any, to the Nomination and Governance Committee, for approval by the Board.
Appendix 1
STATUTORY PRESCRIBED FUNCTIONS OF AN AUDIT COMMITTEE
The statutory prescribed functions of an audit committee are listed in section 94(7) of the Companies Act, 71 of 2008 as follows:
(7) An audit committee of a company has the following duties:
(a) To nominate, for appointment as auditor of the company under section 90, a registered auditor who, in the opinion of the audit committee, is independent of the company;
(b) to determine the fees to be paid to the auditor and the auditors terms of engagement;
(c) to ensure that the appointment of the auditor complies with the provisions of this Act and any other legislation relating to the appointment of auditors;
(d) to determine, subject to the provisions of this Chapter, the nature and extent of any non-audit services that the auditor may provide to the company, or that the auditor must not provide to the company, or a related company;
(e) to pre-approve any proposed agreement with the auditor for the provision of non-audit services to the company;
(f) to prepare a report, to be included in the Annual Financial Statements for that financial year
(i) describing how the audit committee carried out its functions;
(ii) stating whether the audit committee is satisfied that the auditor was independent of the company; and
(iii) commenting in any way the committee considers appropriate on the financial statements, the accounting practices and the internal financial control of the company;
(g) to receive and deal appropriately with any concerns or complaints, whether from within or outside the company, or on its own initiative, relating to
(i) the accounting practices and internal audit of the company;
(ii) the content or auditing of the companys financial statements;
(iii) the internal financial controls of the company; or
(iv) any related matter;
(h) to make submissions to the Board on any matter concerning the companys accounting policies, financial control, records and reporting; and
(i) to perform such other oversight functions as may be determined by the Board.