UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Report on Form 6-K for February 23, 2021
Commission File Number 1-31615
Sasol Limited
50 Katherine Street
Sandton 2196
South Africa
(Name and address of registrant’s principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F.
Form 20-F __X__
Form 40-F _____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1):
Regulation S-T Rule 101(b)(1):
Yes _____
No __X__
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7):
Regulation S-T Rule 101(b)(7):
Yes _____
No __X__
Indicate by check mark whether the registrant by furnishing the information contained in this
Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes _____
No __X__
ENCLOSURES:
Interim results announcement for the six months ended 31 December 2020
SASOL LIMITED
INTERIM FINANCIAL STATEMENTS
for the six months ended 31 December 2020
(unaudited)
(unaudited)
Sasol Limited Interim Financial Results 2021 1
The unaudited interim financial statements are presented on a condensed consolidated basis.
Income statement
for the period ended
Half year
Half year
Full year
31 Dec 20
31 Dec 19
30 Jun 20
Rm
Rm
Rm
Turnover
91 968
99 170
190 367
Materials, energy and consumables used
(41 247)
(46 373)
(90 109)
Selling and distribution costs
(4 128)
(3 831)
(8 388)
Maintenance expenditure
(5 695)
(5 265)
(10 493)
Employee related expenditure
(14 396)
(16 445)
(30 667)
Exploration expenditure and feasibility costs
(131)
(381)
(608)
Depreciation and amortization
(9 048)
(10 977)
(22 575)
Other expenses and income
1 652
(6 584)
(27 376)
Translation gains/(losses)
4 619
(227)
(6 542)
Other operating expenses and income
(2 967)
(6 357)
(20 834)
Equity accounted profits/(losses), net of tax
156
370
(347)
Operating profit/(loss) before remeasurement items
19 131
9 684
(196)
Remeasurement items affecting operating profit¹
2 519
169
(110 834)
Earnings/(loss) before interest and tax (EBIT/(LBIT))
21 650
9 853
(111 030)
Finance income
421
381
922
Finance costs²
(3 833)
(2 636)
(7 303)
Earnings/(loss) before tax
18 238
7 598
(117 411)
Taxation
(2 950)
(3 092)
26 139
Earnings/(loss) for the period³
15 288
4 506
(91 272)
Attributable to
Owners of Sasol Limited
14 491
4 053
(91 109)
Non controlling interests in subsidiaries
797
453
(163)
15 288
4 506
(91 272)
Rand
Rand
Rand
Per share information
Basic earnings/(loss) per share
23,41
6,56
(147,45)
Diluted earnings/(loss) per share
23,29
6,53
(147,45)
1
Remeasurement items affecting operating profit includes:
•
Loss on disposal of R1,1 billion (proceeds R30,2 billion, net assets sold R31,3 billion) and a corresponding gain on reclassification of foreign currency
translation reserve of R3,1 billion relating to the sale of 50% of our interest in the US LCCP Base Chemicals business. The divestment was successfully
concluded on 1 December 2020 through the creation of the 50/50 owned Louisiana Integrated Polyethylene JV LLC (LIP). Sasol’s 50% interest in LIP is
accounted for as a joint operation and Sasol’s share of assets and liabilities held jointly, revenue from the sale of its share of output and expenses were
reflected within the Sasol results from 1 December 2020 in terms of IFRS 11 ‘Joint Arrangements’; and
translation reserve of R3,1 billion relating to the sale of 50% of our interest in the US LCCP Base Chemicals business. The divestment was successfully
concluded on 1 December 2020 through the creation of the 50/50 owned Louisiana Integrated Polyethylene JV LLC (LIP). Sasol’s 50% interest in LIP is
accounted for as a joint operation and Sasol’s share of assets and liabilities held jointly, revenue from the sale of its share of output and expenses were
reflected within the Sasol results from 1 December 2020 in terms of IFRS 11 ‘Joint Arrangements’; and
•
Profit on disposal of R719 million (proceeds R5,9billion, net assets sold R5,2 billion) and a corresponding gain on reclassification of foreign currency
translation reserve of R246 million relating to the sale of our 50% equity interest in the Gemini HDPE LLC.
translation reserve of R246 million relating to the sale of our 50% equity interest in the Gemini HDPE LLC.
2
The increase in finance costs is due to R1,4 billion lower finance cost capitalised to assets under construction as the LCCP units reached beneficial operation.
3
Earnings increased by more than 100% to R15,3 billion from R4,5 billion in the prior period. These results were underpinned by a strong cash cost and working
capital performance in response to the challenging environment, as well as the gains of R4,6 billion on the translation of monetary assets and liabilities and
gains of R5,0 billion on the valuation of financial instruments and derivative contracts due to a 15% strengthening of the closing rand/US dollar exchange rate
compared to June 2020; and R3,3 billion gain on the reclassification of the foreign currency translation reserve (FCTR), mainly on the divestment of 50%
interest in the US LCCP Base Chemicals business. Remeasurement items in the prior year included the impairment of R72,6 billion (US$4,2 billion) of our Base
Chemicals portfolio within Sasol Chemicals USA which have been classified as disposal groups held for sale at 30 June 2020 and impaired to its fair value less
cost to sell, the impairment of the Synfuels liquid fuels refinery and Sasolburg liquid fuels refinery CGUs of R3,8 billion and R8,6 billion respectively, our Base
Chemicals foundation business in the Southern African value chain of R18,1 billion and our South African wax business and Eurasian wax businesses of R4,6
billion and R2,8 billion respectively.
capital performance in response to the challenging environment, as well as the gains of R4,6 billion on the translation of monetary assets and liabilities and
gains of R5,0 billion on the valuation of financial instruments and derivative contracts due to a 15% strengthening of the closing rand/US dollar exchange rate
compared to June 2020; and R3,3 billion gain on the reclassification of the foreign currency translation reserve (FCTR), mainly on the divestment of 50%
interest in the US LCCP Base Chemicals business. Remeasurement items in the prior year included the impairment of R72,6 billion (US$4,2 billion) of our Base
Chemicals portfolio within Sasol Chemicals USA which have been classified as disposal groups held for sale at 30 June 2020 and impaired to its fair value less
cost to sell, the impairment of the Synfuels liquid fuels refinery and Sasolburg liquid fuels refinery CGUs of R3,8 billion and R8,6 billion respectively, our Base
Chemicals foundation business in the Southern African value chain of R18,1 billion and our South African wax business and Eurasian wax businesses of R4,6
billion and R2,8 billion respectively.
The notes on pages 6 to 17 are an integral part of these condensed consolidated interim financial statements.
2
Sasol Limited Interim Financial Results 2021
Statement of comprehensive income
for the period ended
Half year
Half year
Full year
31 Dec 20
31 Dec 19 30 Jun 20
Rm
Rm
Rm
Earnings/(loss) for the period
15 288
4 506
(91 272)
Other comprehensive income, net of tax
Items that can be subsequently reclassified to the income statement
(14 061)
(1 866)
24 123
Effect of translation of foreign operations
(11 069)
(1 743)
26 720
Effect of cash flow hedges
384
(156)
(2 192)
Foreign currency translation reserve on disposal of business reclassified to
the income statement¹
the income statement¹
(3 313)
–
(801)
Tax on items that can be subsequently reclassified to the income statement
(63)
33
396
Items that cannot be subsequently reclassified to the income
(144)
(35)
(205)
Remeasurements on post retirement benefit obligations
(245)
(128)
(147)
Fair value of investments through other comprehensive income
(30)
75
(112)
Tax on items that cannot be subsequently reclassified to the income
statement
statement
131
18
54
Total comprehensive income/(loss) for the period
1 083
2 605
(67 354)
Attributable to
Owners of Sasol Limited
307
2 155
(67 220)
Non controlling interests in subsidiaries
776
450
(134)
1 083
2 605
(67 354)
1
R3,3 billion gain on the reclassification of the foreign currency translation reserve (FCTR), on the divestments of 50% interest in the US LCCP Base
Chemicals business and our 50% share in the Gemini HDPE LLC.
Chemicals business and our 50% share in the Gemini HDPE LLC.
The notes on pages 6 to 17 are an integral part of these condensed consolidated interim financial statements.
Sasol Limited Interim Financial Results 2021 3
Sasol Limited Group
Statement of financial position
At
Half year
Half year
Full year
31 Dec 20
31 Dec 19
30 Jun 20
Rm
Rm
Rm
Assets
Property, plant and equipment
208 245
282 349
204 470
Assets under construction
26 648
83 474
27 802
Right of use assets
14 356
16 475
13 816
Goodwill and other intangible assets
2 374
3 299
2 800
Equity accounted investments
10 303
10 276
11 812
Post retirement benefit assets
599
1 151
467
Deferred tax assets
26 626
9 686
31 665
Other long term assets
6 583
7 181
8 361
Non current assets
295 734
413 891
301 193
Inventories
26 565
30 475
27 801
Trade and other receivables
29 576
25 724
30 516
Short term financial assets
1 188
2 279
645
Cash and cash equivalents¹
27 758
12 674
34 739
Current assets
85 087
71 152
93 701
Assets in disposal groups held for sale²
16 695
1 302
84 268
Total assets
397 516
486 345
479 162
Equity and liabilities
Shareholders' equity
155 553
222 645
154 307
Non controlling interests
5 490
6 001
4 941
Total equity
161 043
228 646
159 248
Long term debt³
108 391
121 287
147 511
Lease liabilities
14 917
15 939
15 825
Long term provisions
18 104
17 974
21 857
Post retirement benefit obligations
14 465
12 850
14 691
Long term deferred income
342
560
842
Long term financial liabilities
2 980
2 142
5 620
Deferred tax liabilities
19 486
28 791
20 450
Non current liabilities
178 685
199 543
226 796
Short term debt³
19 554
18 380
43 468
Short term financial liabilities
1 113
1 348
4 271
Other current liabilities
32 394
38 013
39 203
Bank overdraft
150
4
645
Current liabilities
53 211
57 745
87 587
Liabilities in disposal groups held for sale²
4 577
411
5 531
Total equity and liabilities
397 516
486 345
479 162
1
Cash and cash equivalents decreased mainly as a result of the settlement of our ZAR banking facilities that were drawn down at 30 June 2020 (R4 billion).
2
The decrease compared to 30 June 2020 relates mainly to the disposal of 50% interest in the US LCCP Base Chemicals business that was classified as a
disposal group held for sale at 30 June 2020. Refer to page 12 for disposal groups held for sale.
disposal group held for sale at 30 June 2020. Refer to page 12 for disposal groups held for sale.
3
The decrease mainly relates to proceeds from our asset divestments utilised to repay the US Dollar syndicated loan, a portion of the Revolving Credit
Facility as well as settlement of our outstanding ZAR banking facilities. This movement is included within the Group Functions segment. The stronger
closing rand/US dollar exchange rate also reduced debt by approximately R23 billion.
Facility as well as settlement of our outstanding ZAR banking facilities. This movement is included within the Group Functions segment. The stronger
closing rand/US dollar exchange rate also reduced debt by approximately R23 billion.
4
The decrease in long term provisions relates to the change in discount rates applied and the effect of the stronger closing rand/US dollar exchange rate.
The notes on pages 6 to 17 are an integral part of these condensed consolidated interim financial statements.
Sasol Limited Group
4
Sasol Limited Interim Financial Results 2021
Statement of changes in equity
for the period ended
Half year
Half year
Full year
31 Dec 20
31 Dec 19 30 Jun 20
Rm
Rm
Rm
Balance at beginning of period
159 248
225 795
225 795
Adjustment on initial application of IFRS 16, net of tax¹
–
(290)
(290)
Restated balance at beginning of period
159 248
225 505
225 505
Taxation impact on disposal of investment²
48
–
–
Movement in share based payment reserve
899
881
1 938
Share based payment expense
425
396
878
Deferred tax
–
(7)
(8)
Sasol Khanyisa transaction
474
492
1 068
Total comprehensive income/(loss) for the period
1 083
2 605
(67 354)
Dividends paid to shareholders
(8)
(11)
(31)
Dividends paid to non controlling shareholders in subsidiaries
(227)
(334)
(810)
Balance at end of period
161 043
228 646
159 248
Comprising
Share capital
9 888
9 888
9 888
Retained earnings
106 166
186 036
90 890
Share based payment reserve
1 889
713
1 734
Foreign currency translation reserve
41 499
28 240
55 849
Remeasurements on post retirement benefit obligations
(2 456)
(2 286)
(2 332)
Investment fair value reserve
28
180
49
Cash flow hedge accounting reserve
(1 461)
(126)
(1 771)
Shareholders' equity
155 553
222 645
154 307
Non controlling interests in subsidiaries
5 490
6 001
4 941
Total equity
161 043
228 646
159 248
1
The adjustment on initial application of IFRS 16 'Leases' relates the derecognition of the IAS 17 finance lease of Oxygen Train 17 and the
recognition of theembedded derivative in the Oxygen Train 17 service contract with Air Liquide.
recognition of theembedded derivative in the Oxygen Train 17 service contract with Air Liquide.
2
Taxation impact recognised directly in retained earnings related to the disposal of our investment in Aethylen Rohrleitungs Gesellschaft
mbH & Co. KGand the related ARG Verwaltunsgesellschaft mbH carried at fair value through other comprehensive income.
mbH & Co. KGand the related ARG Verwaltunsgesellschaft mbH carried at fair value through other comprehensive income.
The notes on pages 6 to 17 are an integral part of these condensed consolidated interim financial statements.
Sasol Limited Group
Sasol Limited Interim Financial Results 5
Statement of cash flows
for the period ended
Half year
Half year
Full year
31 Dec 20
31 Dec 19 30 Jun 20
Rm
Rm
Rm
Cash receipts from customers
88 890
102 955
196 798
Cash paid to suppliers and employees
(77 144)
(83 322)
(154 414)
Cash generated by operating activities¹
11 746
19 633
42 384
Dividends received from equity accounted investments
3
15
208
Finance income received
406
363
792
Finance costs paid
(3 192)
(2 999)
(7 154)
Tax paid
(1 575)
(3 301)
(5 659)
Cash available from operating activities
7 388
13 711
30 571
Dividends paid
(8)
(11)
(31)
Dividends paid to non controlling shareholders in subsidiaries
(227)
(334)
(810)
Cash retained from operating activities
7 153
13 366
29 730
Total additions to non current assets²
(9 554)
(25 295)
(41 935)
Additions to non current assets
(7 509)
(21 442)
(35 164)
Decrease in capital project related payables
(2 045)
(3 853)
(6 771)
Cash movements in equity accounted investments
–
(137)
(284)
Proceeds on disposals and scrappings³
33 963
2 032
4 285
Acquisition of interest in equity accounted investments
–
–
(512)
Purchase of investments
(67)
(72)
(121)
Other net cash flow from investing activities
5
(459)
17
Cash generated by/(US$ed in) investing activities
24 347
(23 931)
(38 550)
Proceeds from long term debt
21
18 504
36 487
Repayment of long term debt
(15 365)
(23 987)
(28 335)
Repayment of lease liabilities
(1 175)
(1 110)
(2 061)
Proceeds from short term debt
17
15 136
19 998
Repayment of short term debt
(20 578)
(1 270)
(977)
Cash (US$ed in)/generated by financing activities
(37 080)
7 273
25 112
Translation effects on cash and cash equivalents
(543)
132
3 607
(Decrease)/increase in cash and cash equivalents
(6 123)
(3 160)
19 899
Cash and cash equivalents at the beginning of period
34 094
15 819
15 819
Reclassification to held for sale and other long term investments
(363)
11
(1 624)
Cash and cash equivalents at the end of the period
27 608
12 670
34 094
1
Cash generated by operating activities decreased by 40% to R11,7 billion compared to the prior period. Our cash flows were impacted by low crude
oil prices, softer chemical prices, plant downtime and the impact of COVID-19, partly negated by our cash conservation initiative.
oil prices, softer chemical prices, plant downtime and the impact of COVID-19, partly negated by our cash conservation initiative.
2
The movement is mainly as a result of the completion of the LCCP and decreased capital expenditure due to cash conservation initiatives.
3
Includes proceeds received from the disposal of a portion of our US LCCP Base Chemicals business, as well as our 50% equity interest in the
Gemini HDPE LLC (approximately R33 billion).
Gemini HDPE LLC (approximately R33 billion).
4
During the period, we utilised proceeds from our asset divestments to repay the US dollar syndicated loan and a portion of our Revolving credit facility.
Furthermore, we repaid all our ZAR banking facilities.
Furthermore, we repaid all our ZAR banking facilities.
5
Includes bank overdraft.
The notes on pages 6 to 17 are an integral part of these condensed consolidated interim financial statements.
Sasol Limited Group
6
Sasol Limited Interim Financial Results 2021
Segment report
for the period ended
Turnover
Earnings before interest and
tax (EBIT)
Full year
Half year
Half year
Segment analysis
Half year
Half year
Full year
30 Jun 20
31 Dec 19
31 Dec 20
31 Dec 20
31 Dec 19 30 Jun 20
Rm
Rm
Rm
Rm
Rm
Rm
25 095
12 983
12 795
Operating Business Units
2 629
2 397
3 953
19 891
10 348
10 807 Mining
1 732
1 374
2 756
5 204
2 635
1 988 Exploration and Production International
897
1 023
1 197
189 781
98 781
91 337
Strategic Business Units
10 476
6 549
(101 937)
67 901
41 206
30 178 Energy
5 098
6 743
(6 678)
52 683
24 642
27 409 Base Chemicals
3 624
(1 488)
(70 804)
69 197
32 933
33 750 Performance Chemicals
1 754
1 294
(24 455)
30
–
6
Group Functions
8 545
907
(13 046)
214 906
111 764
104 138
Group performance
21 650
9 853
(111 030)
(24 539)
(12 594)
(12 170) Intersegmental turnover
190 367
99 170
91 968
External turnover
Revenue by major product line
Half year
Half year
Full year
31 Dec 20
31 Dec 19 30 Jun 20
Rm
Rm
Rm
Base Chemicals
27 023
24 183
51 868
Polymers
16 491
13 974
30 275
Solvents
7 256
5 965
13 226
Fertilisers and explosives
1 163
2 240
3 820
Other base chemicals
2 113
2 004
4 547
Performance Chemicals
33 318
32 452
68 316
Organics
24 692
24 790
52 189
Waxes
4 943
3 927
8 927
Advanced materials
3 683
3 735
7 200
Upstream, Energy and Other
Coal
935
906
1 343
Liquid fuels and crude oil
25 929
36 884
59 775
Gas (methane rich and natural gas) and condensate
3 203
3 134
5 953
Other (Technology, refinery services)
1 154
1 148
2 313
Revenue from contracts with customers
91 562
98 707
189 568
Revenue from other contracts (franchise rentals, use of fuel tanks and fuel
storage)
storage)
406
463
799
Total external turnover
91 968
99 170
190 367
Sasol Limited Group
Sasol Limited Interim Financial Results 2021 7
Segmental earnings performance i,ii,iii
Mining – maintaining steady safe production
Productivity improved by 2% to 1 162 tons per continuous miner per shift (t/cm/s) compared to the prior period
due to planned management actions, operational efficiencies and a steady improvement in the safety and
reliability of our operations. Our COVID-19 mitigation measures remained in force during the period, ensuring
minimal impact on our operations.
The higher productivity rates have enabled us to temporarily suspend additional external coal purchases, as our
stockpile levels reached our target range of 1,5 million tons to 2,0 million tons.
Encouragingly, we have a strong recovery in demand from both our internal and external customers. Our export
sales increased by 8% compared to the prior period and we anticipate external sales of approximately 3,2 million
tons for the full year, similar to pre COVID-19 levels.
We are targeting a full year productivity rate of approximately 1 160 – 1 210 t/cm/s. We remain committed to
implementing the next phases of our Business Improvement Programme, aimed at maintaining safe and reliable
operations and improved productivity through the conversion to a 365-day continuous shift system.
EBIT increased by 26% for the period to R1,7 billion compared to the prior period, mainly due to higher sales
volumes, lower external coal purchases and lower cash fixed costs than the prior period. Our normalised mining
unit cost increased with 2% to R351/ton due to higher maintenance costs, above inflation utility cost increases
which was partly offset by lower labour costs. We expect our mining unit cost for 2021 to be between R340 to
R360/ton.
Exploration and Production International (E&PI) – consistent operational performance, adversely
impacted by lower sales prices and volumes
EBIT decreased by 12% to R897 million compared to the prior period.
Our Mozambican operations recorded an EBIT of R1,4 billion, a 4% increase compared to the prior period mainly
due to lower cash fixed costs and the impact of a weaker closing rand/US dollar exchange rate on translation of
foreign operations which was partly offset by lower sales prices and volumes. Gas production volumes of
58,7 bscf were slightly lower than the prior period due to lower demand from our Sasolburg and Secunda
Operations due to the COVID-19 impact and production instabilities. Despite this, we still expect gas production
volumes from the Petroleum Production Agreement in Mozambique to be 114 - 118 bscf, in line with previous
market guidance.
Our Gabon producing asset benefitted from higher production volumes, however softer oil prices and lower
sales volumes associated with COVID-19 resulted in a LBIT of R85 million. We expect a strong sales performance
in the second half of the year. In line with our strategy, we are making good progress with the divestment of our
interest in the Gabon assets which is expected to be completed by the end of June 2021.
Our Canadian shale gas asset in Montney recorded a lower LBIT of R95 million, compared to the prior period LBIT
of R142 million, mainly due to higher prices. Canadian gas volumes were lower due to the natural decline in the
production wells. We remain committed to divest from this asset as part of our strategic portfolio optimisation.
Energy – liquid fuels recovery following a challenging past six months due to lower demand
We continue to see a strong recovery in demand for our liquid fuels in South Africa following the easing of
COVID-19 lockdown restrictions. Encouragingly, in December 2020, we recorded our highest sales volumes for
the period despite the second wave of the virus starting to escalate. The demand for diesel is currently almost
at pre COVID-19 levels whilst petrol is between 90% - 95% of pre COVID-19 levels. However, jet fuel demand
continues to remain under pressure and is expected to be below pre COVID-19 levels for at least the next 12
months. Liquid fuels sales volumes have declined by 11% compared to the prior period as a consequence, we
have reduced the forecast run rate of Natref whilst running Secunda Synfuels at full rates to maximize margins.
Natural gas sales volumes increased by 6% compared to the prior period, as customers ramped up production
to recoup lockdown related production losses and undertook unplanned shutdown activities resulting in higher
natural gas consumption.
SSO production volumes were 1% higher compared to the prior period due to the postponement of the
September 2020 shutdown.
Natref production was, as expected, 12% lower than the prior period as a result of the decrease in demand,
particularly in jet fuel, due to the COVID-19 lockdown. Consequently, Natref achieved a crude rate of 512 m³/h
due to the refinery being run on low production rates.
due to planned management actions, operational efficiencies and a steady improvement in the safety and
reliability of our operations. Our COVID-19 mitigation measures remained in force during the period, ensuring
minimal impact on our operations.
The higher productivity rates have enabled us to temporarily suspend additional external coal purchases, as our
stockpile levels reached our target range of 1,5 million tons to 2,0 million tons.
Encouragingly, we have a strong recovery in demand from both our internal and external customers. Our export
sales increased by 8% compared to the prior period and we anticipate external sales of approximately 3,2 million
tons for the full year, similar to pre COVID-19 levels.
We are targeting a full year productivity rate of approximately 1 160 – 1 210 t/cm/s. We remain committed to
implementing the next phases of our Business Improvement Programme, aimed at maintaining safe and reliable
operations and improved productivity through the conversion to a 365-day continuous shift system.
EBIT increased by 26% for the period to R1,7 billion compared to the prior period, mainly due to higher sales
volumes, lower external coal purchases and lower cash fixed costs than the prior period. Our normalised mining
unit cost increased with 2% to R351/ton due to higher maintenance costs, above inflation utility cost increases
which was partly offset by lower labour costs. We expect our mining unit cost for 2021 to be between R340 to
R360/ton.
Exploration and Production International (E&PI) – consistent operational performance, adversely
impacted by lower sales prices and volumes
EBIT decreased by 12% to R897 million compared to the prior period.
Our Mozambican operations recorded an EBIT of R1,4 billion, a 4% increase compared to the prior period mainly
due to lower cash fixed costs and the impact of a weaker closing rand/US dollar exchange rate on translation of
foreign operations which was partly offset by lower sales prices and volumes. Gas production volumes of
58,7 bscf were slightly lower than the prior period due to lower demand from our Sasolburg and Secunda
Operations due to the COVID-19 impact and production instabilities. Despite this, we still expect gas production
volumes from the Petroleum Production Agreement in Mozambique to be 114 - 118 bscf, in line with previous
market guidance.
Our Gabon producing asset benefitted from higher production volumes, however softer oil prices and lower
sales volumes associated with COVID-19 resulted in a LBIT of R85 million. We expect a strong sales performance
in the second half of the year. In line with our strategy, we are making good progress with the divestment of our
interest in the Gabon assets which is expected to be completed by the end of June 2021.
Our Canadian shale gas asset in Montney recorded a lower LBIT of R95 million, compared to the prior period LBIT
of R142 million, mainly due to higher prices. Canadian gas volumes were lower due to the natural decline in the
production wells. We remain committed to divest from this asset as part of our strategic portfolio optimisation.
Energy – liquid fuels recovery following a challenging past six months due to lower demand
We continue to see a strong recovery in demand for our liquid fuels in South Africa following the easing of
COVID-19 lockdown restrictions. Encouragingly, in December 2020, we recorded our highest sales volumes for
the period despite the second wave of the virus starting to escalate. The demand for diesel is currently almost
at pre COVID-19 levels whilst petrol is between 90% - 95% of pre COVID-19 levels. However, jet fuel demand
continues to remain under pressure and is expected to be below pre COVID-19 levels for at least the next 12
months. Liquid fuels sales volumes have declined by 11% compared to the prior period as a consequence, we
have reduced the forecast run rate of Natref whilst running Secunda Synfuels at full rates to maximize margins.
Natural gas sales volumes increased by 6% compared to the prior period, as customers ramped up production
to recoup lockdown related production losses and undertook unplanned shutdown activities resulting in higher
natural gas consumption.
SSO production volumes were 1% higher compared to the prior period due to the postponement of the
September 2020 shutdown.
Natref production was, as expected, 12% lower than the prior period as a result of the decrease in demand,
particularly in jet fuel, due to the COVID-19 lockdown. Consequently, Natref achieved a crude rate of 512 m³/h
due to the refinery being run on low production rates.
Sasol Limited Group
8
Sasol Limited Interim Financial Results 2021
EBIT decreased by 24% to R5,1 billion compared to the prior period EBIT of R6,7 billion. The COVID-19 impact saw
reduced sales volumes, lower average Brent crude oil prices and softer refining margins and was partially offset
by the impact of a weaker rand/US dollar exchange rate. Our gross margin percentage increased from 42% to
45% compared to the prior period mainly due to Synfuels producing at full rates and the benefit of Natref
procuring crude at much lower prices at the start of the year. Cash fixed costs were 12% lower due to focused
management actions and cash conservation.
ORYX GTL contributed R118 million to EBIT, a R583 million decrease from R701 million in the prior period and
achieved an average utilisation rate of 69%. An average utilisation rate of 90,7% was achieved in second quarter
of the financial year compared to 48% achieved in the first quarter as train 2 returned to operation post the
extended shutdown. Both trains are currently operating at full capacity, achieving a higher than 100% utilisation
rate in both November and December 2020.
Performance Chemicals – 2021 still negatively impacted by COVID-19 and US Hurricanes
The Performance Chemicals business faced a challenging period with sales volumes 3% lower compared to the
prior period. COVID-19 related restrictions are still negatively impacting many of our key markets, and we
experienced an unplanned outage at our US operations due to Hurricanes Laura and Delta.
Our Organics division experienced a 10% decrease in sales volumes compared to the prior period impacted by
the lost production at our US operations as well as the continuing weak macroeconomic environment, especially
in Europe and Asia.
Our Wax division delivered a strong performance for the period with sales increasing by 20% benefitting from
high demand especially in the furniture, construction, candles and packaging markets.
Our Advanced Materials sales volumes were 20% higher than the prior period driven by carbon sales. Whilst
margins are still healthy, demand in our Aluminas business is currently lower due to the COVID-19 constraints in
certain markets.
We remain at our previous market guidance and estimate our Performance Chemicals full year 2021 sales
volumes to be in line with 2020. The continued COVID-19 pandemic may impact margins and sales volumes
during the second half of 2021.
EBIT of R1 754 million increased by 36% compared to the prior period’s result mainly as a result of the the
positive effect on the weakening of the average rand/US dollar exchange rate, the profit on disposal of 50% of
our US LCCP Base Chemicals business and lower costs, offset by lower product prices. Total external sales
volumes for the period normalised for LCCP, the Heat Transfer Fuels and the China Oleochemicals alcohols
divestitures were lower compared to the corresponding period’s results, mainly due to a soft macro
environment exacerbated by the spread of COVID-19 and the effects of hurricanes on the US business.
The hurricanes also impacted the ramp up of our LCCP plants negatively which caused the sales volumes from
the new units to remain on the same level as in the prior period. Additional costs were incurred for the repairs of
the units that were damaged during the hurricanes which will be reimbursed by our insurance, covering a large
part of property damage as well as some of our operational losses. Losses attributable to the LCCP while in the
final ramp up phase were R1 595 million (US$98 million).
COVID-19 is still impacting our demand and logistics and in some industry applications, e.g. our Aluminas
business, markets remain depressed with healthy margins but lower volumes than the prior year. However,
overall many markets are showing slow recoveries.
Low natural oil prices continued to affect alcohols and surfactants volumes adversely as well as margins across
our portfolio in the beginning of the period. However, our businesses will benefit from the latest surge in prices.
Base Chemicals – higher foundation business sales volumes and prices lifting overall profitability
The Base Chemicals foundation business (excluding Polymers US products) sales volumes for the period were
8% higher than the prior period, due to improved demand. The Polymers US sales volumes for the period were
15% higher than the prior period due to the new ethylene cracker achieving beneficial operation in August 2019.
However, Polymers US second quarter sales volumes were 23% lower than the first quarter due to Hurricanes
Laura and Delta as well as the divestment of our 50% interest in the US LCCP Base Chemicals business. The
divestment was successfully concluded on 1 December 2020 through the creation of the 50/50 owned Louisiana
Integrated Polyethylene JV LLC. Sasol also disposed of its 50% interest in the Gemini HDPE LLC to INEOS Gemini
HDPE LLC, a wholly owned subsidiary of INEOS LLC. This divestment was successfully closed on 31 December 2020.
Average sales prices were 6% lower compared to the prior period largely due to weaker oil prices and the global
COVID-19 pandemic. Polymers US basket prices for the period decreased by 11% compared to the prior period
with margins under further pressure due to the ethane price increasing by 19% compared to the prior period.
reduced sales volumes, lower average Brent crude oil prices and softer refining margins and was partially offset
by the impact of a weaker rand/US dollar exchange rate. Our gross margin percentage increased from 42% to
45% compared to the prior period mainly due to Synfuels producing at full rates and the benefit of Natref
procuring crude at much lower prices at the start of the year. Cash fixed costs were 12% lower due to focused
management actions and cash conservation.
ORYX GTL contributed R118 million to EBIT, a R583 million decrease from R701 million in the prior period and
achieved an average utilisation rate of 69%. An average utilisation rate of 90,7% was achieved in second quarter
of the financial year compared to 48% achieved in the first quarter as train 2 returned to operation post the
extended shutdown. Both trains are currently operating at full capacity, achieving a higher than 100% utilisation
rate in both November and December 2020.
Performance Chemicals – 2021 still negatively impacted by COVID-19 and US Hurricanes
The Performance Chemicals business faced a challenging period with sales volumes 3% lower compared to the
prior period. COVID-19 related restrictions are still negatively impacting many of our key markets, and we
experienced an unplanned outage at our US operations due to Hurricanes Laura and Delta.
Our Organics division experienced a 10% decrease in sales volumes compared to the prior period impacted by
the lost production at our US operations as well as the continuing weak macroeconomic environment, especially
in Europe and Asia.
Our Wax division delivered a strong performance for the period with sales increasing by 20% benefitting from
high demand especially in the furniture, construction, candles and packaging markets.
Our Advanced Materials sales volumes were 20% higher than the prior period driven by carbon sales. Whilst
margins are still healthy, demand in our Aluminas business is currently lower due to the COVID-19 constraints in
certain markets.
We remain at our previous market guidance and estimate our Performance Chemicals full year 2021 sales
volumes to be in line with 2020. The continued COVID-19 pandemic may impact margins and sales volumes
during the second half of 2021.
EBIT of R1 754 million increased by 36% compared to the prior period’s result mainly as a result of the the
positive effect on the weakening of the average rand/US dollar exchange rate, the profit on disposal of 50% of
our US LCCP Base Chemicals business and lower costs, offset by lower product prices. Total external sales
volumes for the period normalised for LCCP, the Heat Transfer Fuels and the China Oleochemicals alcohols
divestitures were lower compared to the corresponding period’s results, mainly due to a soft macro
environment exacerbated by the spread of COVID-19 and the effects of hurricanes on the US business.
The hurricanes also impacted the ramp up of our LCCP plants negatively which caused the sales volumes from
the new units to remain on the same level as in the prior period. Additional costs were incurred for the repairs of
the units that were damaged during the hurricanes which will be reimbursed by our insurance, covering a large
part of property damage as well as some of our operational losses. Losses attributable to the LCCP while in the
final ramp up phase were R1 595 million (US$98 million).
COVID-19 is still impacting our demand and logistics and in some industry applications, e.g. our Aluminas
business, markets remain depressed with healthy margins but lower volumes than the prior year. However,
overall many markets are showing slow recoveries.
Low natural oil prices continued to affect alcohols and surfactants volumes adversely as well as margins across
our portfolio in the beginning of the period. However, our businesses will benefit from the latest surge in prices.
Base Chemicals – higher foundation business sales volumes and prices lifting overall profitability
The Base Chemicals foundation business (excluding Polymers US products) sales volumes for the period were
8% higher than the prior period, due to improved demand. The Polymers US sales volumes for the period were
15% higher than the prior period due to the new ethylene cracker achieving beneficial operation in August 2019.
However, Polymers US second quarter sales volumes were 23% lower than the first quarter due to Hurricanes
Laura and Delta as well as the divestment of our 50% interest in the US LCCP Base Chemicals business. The
divestment was successfully concluded on 1 December 2020 through the creation of the 50/50 owned Louisiana
Integrated Polyethylene JV LLC. Sasol also disposed of its 50% interest in the Gemini HDPE LLC to INEOS Gemini
HDPE LLC, a wholly owned subsidiary of INEOS LLC. This divestment was successfully closed on 31 December 2020.
Average sales prices were 6% lower compared to the prior period largely due to weaker oil prices and the global
COVID-19 pandemic. Polymers US basket prices for the period decreased by 11% compared to the prior period
with margins under further pressure due to the ethane price increasing by 19% compared to the prior period.
Sasol Limited Group
Sasol Limited Interim Financial Results 9
EBIT for the six months ended 31 December 2020 of R3 624 million increased by R5 112 million compared to the
prior period largely due the higher sales volumes, the positive effect on the weakening of the average rand/US
dollar exchange rate, the profit on disposal of 50% of our US LCCP Base Chemicals business and the profit on
disposal of the Gemini HDPE LLC, offset by lower sales prices. Losses attributable to the LCCP while in the final
ramp up phase were R451 million while a R438 million impairment was recognised on the US Phenolics assets.
During the prior period impairments of R465 million were recognised on MIBK and Blends and Minchem. The
introduction of the Sasol cash conservation initiative in 2020 assisted in keeping cash fixed costs lower than the
prior period.
prior period largely due the higher sales volumes, the positive effect on the weakening of the average rand/US
dollar exchange rate, the profit on disposal of 50% of our US LCCP Base Chemicals business and the profit on
disposal of the Gemini HDPE LLC, offset by lower sales prices. Losses attributable to the LCCP while in the final
ramp up phase were R451 million while a R438 million impairment was recognised on the US Phenolics assets.
During the prior period impairments of R465 million were recognised on MIBK and Blends and Minchem. The
introduction of the Sasol cash conservation initiative in 2020 assisted in keeping cash fixed costs lower than the
prior period.
i
Forward looking statements are the responsibility of the Directors and in accordance with standard practice, it is noted that this statement has not been
reviewed and reported on by the Company’s auditors.
reviewed and reported on by the Company’s auditors.
ii
All comparisons to the prior period refer to the six months ended 31 December 2019. All numbers are quoted on a pre tax basis, except for earnings
attributable to shareholders.
attributable to shareholders.
iii
All other operational and financial measures (such as cash fixed cost) have not been reviewed and reported on by the Company’s auditors.
Salient features
for the period ended
Half year
Half year
Full year
31 Dec 20
31 Dec 19 30 Jun 20
Other financial information
126 341
Total debt (including bank overdraft)
Rm
137 974
189 730
interest bearing
Rm
126 341
137 910
189 730
non interest bearing
Rm
–
64
–
Finance expense capitalised¹
Rm
602
1 974
3 520
Capital commitments (subsidiaries and joint operations)¹
Rm
28 720
49 394
31 950
authorised and contracted
Rm
224 246
217 047
260 620
authorised, not yet contracted
Rm
20 031
37 827
21 136
less expenditure to date
Rm
(215 557) (205 480) (249 806)
Capital commitments (equity accounted investments)
Rm
923
1 957
1 277
authorised and contracted
Rm
765
641
1 936
authorised, not yet contracted
Rm
576
1 912
1 089
less expenditure to date
Rm
(418)
(596)
(1 748)
Effective tax rate²
%
16,2
40,7
22,3
Number of employees³
number
29 187
31 363
31 001
1
Finance expense capitalised and capital commitments decreased as a result of all LCCP units achieving beneficial operation.
2
The decrease in effective corporate tax rate is mainly as a result of tax losses utilised in the current year which are allowed to be set off against
2021 foreign exchange gains, and the Foreign Currency Translation Reserve (FCTR) reclassified on the disposal of business for which no tax is calculated.
2021 foreign exchange gains, and the Foreign Currency Translation Reserve (FCTR) reclassified on the disposal of business for which no tax is calculated.
3
The total number of employees includes permanent and non permanent employees and the Group's share of employees within joint operations,
but excludes contractors and equity accounted investments' employees.
but excludes contractors and equity accounted investments' employees.
Sasol Limited Group
10
Sasol Limited Interim Financial Results 2021
Half year
Half year
Full year
31 Dec 20
31 Dec 19 30 Jun 20
Rm
Rm
Rm
Reconciliation of headline earnings
Earnings/(losses) attributable to owners of Sasol Limited
14 491
4 053
(91 109)
Effect of remeasurement items for subsidiaries and joint operations
(2 519)
(169)
110 834
Impairment of property, plant and equipment
51
464
94 032
Impairment of assets under construction
48
–
13 399
Impairment of right of use assets
5
–
3 322
Impairment of goodwill and other intangible assets
2
–
839
Impairment of other assets¹
439
3
–
Profit on disposal of businesses²
(2 957)
(983)
(1 684)
(Profit)/loss on disposal of non current assets
(91)
(61)
25
(Profit)/loss on disposal of other assets
(60)
–
148
Scrapping of non current assets
39
426
796
Write off of unsuccessful exploration wells
5
(18)
(43)
Tax effects and non controlling interests
(143)
(214)
(27 010)
Effect of remeasurement items for equity accounted investments
29
–
–
Headline earnings/(loss)
11 858
3 670
(7 285)
Headline earnings/(loss) adjustments by segment
Mining
(2)
106
113
Exploration and Production International
70
(18)
(30)
Energy
30
(27)
11 987
Base Chemicals
(1 840)
(352)
70 670
Performance Chemicals
(775)
118
27 863
Group Functions
(2)
4
231
Remeasurement items
(2 519)
(169)
110 834
Headline earnings/(loss) per share³
Rand
19,16
5,94
(11,79)
Diluted headline earnings/(loss) per share
Rand
19,06
5,91
(11,79)
1
Relates mainly to an impairment of R438 million (US$29,8 million) on the US Phenolic assets which were impaired to its fair value less costs to sell.
2
Included is a loss on disposal of R1,1 billion and a corresponding gain on reclassification of foreign currency translation reserve of R3,1 billion relating to the
sale of a portion of our US LCCP Base Chemicals business, as well as a profit on disposal of R719 million and a corresponding gain on reclassification of
foreign currency translation reserve of R246 million relating to the sale of our 50% equity interest in the Gemini HDPE LLC.
sale of a portion of our US LCCP Base Chemicals business, as well as a profit on disposal of R719 million and a corresponding gain on reclassification of
foreign currency translation reserve of R246 million relating to the sale of our 50% equity interest in the Gemini HDPE LLC.
3
Headline earnings per share refers to disclosure made in terms of the JSE Limited Listing Requirements.
Basis of preparation
The condensed consolidated interim financial statements for the six months ended 31 December 2020 have been
prepared in accordance with International Financial Reporting Standard (IFRS), IAS 34 ‘Interim Financial
Reporting’, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the
Companies Act of South Africa, 2008, as amended, and the JSE Limited Listings Requirements.
The condensed consolidated interim financial statements do not include all the disclosures required for
complete annual financial statements prepared in accordance with IFRS as issued by the International
Accounting Standards Board. The condensed consolidated interim financial statements are prepared on a going
concern basis. Refer to page 12 for more detail on the going concern. The Board is satisfied that the liquidity and
solvency of the company is sufficient to support the current operations for the next 12 months.
These condensed consolidated interim financial statements have been prepared in accordance with the historic
cost convention except that certain items, including derivative financial 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 condensed consolidated interim financial statements are presented in South African rand, which is Sasol
Limited’s functional and presentation currency. The accounting policies applied in the preparation of these
condensed consolidated interim 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 2020, except for the adoption of
amendments to certain standards as discussed in more detail below.
prepared in accordance with International Financial Reporting Standard (IFRS), IAS 34 ‘Interim Financial
Reporting’, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the
Companies Act of South Africa, 2008, as amended, and the JSE Limited Listings Requirements.
The condensed consolidated interim financial statements do not include all the disclosures required for
complete annual financial statements prepared in accordance with IFRS as issued by the International
Accounting Standards Board. The condensed consolidated interim financial statements are prepared on a going
concern basis. Refer to page 12 for more detail on the going concern. The Board is satisfied that the liquidity and
solvency of the company is sufficient to support the current operations for the next 12 months.
These condensed consolidated interim financial statements have been prepared in accordance with the historic
cost convention except that certain items, including derivative financial 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 condensed consolidated interim financial statements are presented in South African rand, which is Sasol
Limited’s functional and presentation currency. The accounting policies applied in the preparation of these
condensed consolidated interim 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 2020, except for the adoption of
amendments to certain standards as discussed in more detail below.
Sasol Limited Group
Sasol Limited Interim Financial Results 2021
11
The condensed consolidated interim financial statements appearing in this announcement are the responsibility
of the directors. The directors take full responsibility for the preparation of the condensed consolidated interim
financial statements. Paul Victor CA(SA), Chief Financial Officer, is responsible for this set of condensed
consolidated interim financial statements and has supervised the preparation thereof in conjunction with the
Senior Vice President: Financial Controlling and Governance, Feroza Syed CA(SA).
of the directors. The directors take full responsibility for the preparation of the condensed consolidated interim
financial statements. Paul Victor CA(SA), Chief Financial Officer, is responsible for this set of condensed
consolidated interim financial statements and has supervised the preparation thereof in conjunction with the
Senior Vice President: Financial Controlling and Governance, Feroza Syed CA(SA).
The condensed consolidated interim financial statements were approved by the Sasol Limited Board on 19 February 2021.
Amendments to International Financial Reporting Standards adopted
The following amendments to IFRS were effective for the first time from 1 July 2020:
•
Amendments to IFRS 3 ‘Business Combinations’;
•
Amendments to IAS 1 ‘Presentation of Financial Statements’; and
•
Amendments to IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’.
No material impact on the condensed consolidated interim financial statements was identified resulting from
the adoption of these amendments.
the adoption of these amendments.
In the prior financial year, the group early adopted the Interest Rate Benchmark Reform Phase 1 Amendments to
IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments: Recognition and Measurement’ and IFRS 7
‘Financial Instruments: Disclosures’ (Phase 1). These amendments modify specific hedge accounting
requirements to allow hedge accounting to continue for affected hedges during the period of uncertainty
before the hedged items or hedging instruments are amended as a result of the interest rate benchmark
reform. In the current year, the group has elected to early adopt the Interest Rate Benchmark Reform – Phase 2
Amendments to IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments: Recognition and Measurement’, IFRS 7
‘Financial Instruments: Disclosures’, IFRS 4 ‘Insurance Contracts’ and IFRS 16 ‘Leases’ (Phase 2) which was
issued in August 2020. In accordance with the transition provisions, the amendments have been adopted
retrospectively to hedging relationships and financial instruments. Comparative amounts have not been
restated, and there was no impact on the current period opening reserves amounts on adoption.
Both the Phase 1 and Phase 2 amendments are relevant to the group as the group has exposure to the variable US
dollar London Interbank Overnight Rate (LIBOR) through various instruments including term loans, revolving
credit facilities, as well as an interest rate swap which has been designated as a hedging instrument in a cash
flow hedge.
The group will continue to apply the Phase 1 amendments until the uncertainty arising from the interest rate
benchmark reform with respect to the timing and the amount of the underlying cash flows to which the group is
exposed ends. The group expects this uncertainty will continue until the contracts that reference Interbank
Overnight Rates (IBORs) are amended to specify the date on which the interest rate benchmark will be replaced
and the basis for the cash flows of the alternative benchmark rate are determined.
As a result of the Phase 2 amendments:
IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments: Recognition and Measurement’ and IFRS 7
‘Financial Instruments: Disclosures’ (Phase 1). These amendments modify specific hedge accounting
requirements to allow hedge accounting to continue for affected hedges during the period of uncertainty
before the hedged items or hedging instruments are amended as a result of the interest rate benchmark
reform. In the current year, the group has elected to early adopt the Interest Rate Benchmark Reform – Phase 2
Amendments to IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments: Recognition and Measurement’, IFRS 7
‘Financial Instruments: Disclosures’, IFRS 4 ‘Insurance Contracts’ and IFRS 16 ‘Leases’ (Phase 2) which was
issued in August 2020. In accordance with the transition provisions, the amendments have been adopted
retrospectively to hedging relationships and financial instruments. Comparative amounts have not been
restated, and there was no impact on the current period opening reserves amounts on adoption.
Both the Phase 1 and Phase 2 amendments are relevant to the group as the group has exposure to the variable US
dollar London Interbank Overnight Rate (LIBOR) through various instruments including term loans, revolving
credit facilities, as well as an interest rate swap which has been designated as a hedging instrument in a cash
flow hedge.
The group will continue to apply the Phase 1 amendments until the uncertainty arising from the interest rate
benchmark reform with respect to the timing and the amount of the underlying cash flows to which the group is
exposed ends. The group expects this uncertainty will continue until the contracts that reference Interbank
Overnight Rates (IBORs) are amended to specify the date on which the interest rate benchmark will be replaced
and the basis for the cash flows of the alternative benchmark rate are determined.
As a result of the Phase 2 amendments:
•
When the contractual terms of the group’s borrowings are amended as a direct consequence of the interest
rate benchmark reform and the new basis for determining the contractual cash flows is economically
equivalent to the basis immediately preceding the change, the group changes the basis for determining the
contractual cash flows prospectively by revising the effective interest rate. If additional changes are made,
which are not directly related to the reform, the applicable requirements of IFRS 9 are applied to the other
amendments.
rate benchmark reform and the new basis for determining the contractual cash flows is economically
equivalent to the basis immediately preceding the change, the group changes the basis for determining the
contractual cash flows prospectively by revising the effective interest rate. If additional changes are made,
which are not directly related to the reform, the applicable requirements of IFRS 9 are applied to the other
amendments.
•
When changes are made to the hedging instruments, hedged item and hedged risk as a result of the interest
rate benchmark reform, the group will update the hedge documentation without discontinuing the hedging
relationship and the cumulative gain or loss in the cash flow hedge accounting reserve will be deemed to be
based on the alternative benchmark rate.
rate benchmark reform, the group will update the hedge documentation without discontinuing the hedging
relationship and the cumulative gain or loss in the cash flow hedge accounting reserve will be deemed to be
based on the alternative benchmark rate.
As at 31 December 2020 no modifications to any of the group’s derivative or non derivative financial
instruments have been made in response to the reform, however, negotiations with counterparties on
appropriate changes and resetting of rates are expected to commence in the near future.
instruments have been made in response to the reform, however, negotiations with counterparties on
appropriate changes and resetting of rates are expected to commence in the near future.
Sasol Limited Group
12
Sasol Limited Interim Financial Results 2021
The following table contains details of all of our financial instruments at 31 December 2020 which reference the US
LIBOR and have not yet transitioned to an alternative interest rate benchmark:
LIBOR and have not yet transitioned to an alternative interest rate benchmark:
Carrying
value
Half year
31 Dec 20
Rm
Financial liabilities measured at amortised cost
US Dollar term loans
26 650
US Dollar Revolving credit facility
47 491
Derivative liability
Interest rate swap
2 955
Total
77 096
Disposal groups held for sale
The table below depicts the disposal groups held for sale at 31 December 2020:
Half year
Full year
31 Dec 20
30 Jun 20
Rm
Rm
Assets in disposal groups held for sale
Segment
US Base Chemicals Assets
Base and Performance Chemicals
–
71 001
Secunda Synfuels Operations Air Separation
Units
Units
Energy, Base and Performance
Chemicals
Chemicals
5 889
5 675
Investment in Republic of Mozambique Pipeline
Investment Company (Pty) Ltd (ROMPCO)
Investment Company (Pty) Ltd (ROMPCO)
Energy
5 999
5 951
Investment in Central Termica De Ressane
Garcia S.A. (CTRG)
Garcia S.A. (CTRG)
Energy
3 099
–
Interests in Etame Marin block and Block DE 8
offshore Gabon
offshore Gabon
Exploration and Production
International
International
1 148
–
Other
560
1 641
16 695
84 268
Liabilities in disposal groups held for sale
Segment
US Base Chemicals Assets
Base and Performance Chemicals
–
(2 425)
Secunda Synfuels Operations Air Separation
Units
Units
Energy, Base and Performance
Chemicals
Chemicals
(18)
(38)
Investment in Republic of Mozambique Pipeline
Investment Company (Pty) Ltd (ROMPCO)
Investment Company (Pty) Ltd (ROMPCO)
Energy
(2 136)
(2 604)
Investment in Central Termica De Ressane
Garcia S.A. (CTRG)
Garcia S.A. (CTRG)
Energy
(1 256)
–
Interests in Etame Marin block and Block DE 8
offshore Gabon
offshore Gabon
Exploration and Production
International
International
(834)
–
Other
(333)
(464)
(4 577)
(5 531)
Going concern
Introduction
In determining the appropriate basis of preparation of the condensed consolidated interim financial statements
for the six months ended 31 December 2020, the Board is required to consider whether the Sasol Group (Group) can
continue in operational existence for the foreseeable future.
Financial performance during the year
Sasol has delivered a strong set of results for the period, underpinned by a strong cash cost, working capital
and capital expenditure performance in response to the effects of the COVID-19 pandemic, a severe decline in
crude oil prices and softer chemical product prices. In addition, our Lake Charles production was impacted by
hurricanes experienced in the US Gulf Coast, resulting in lost production of approximately 300kt for the period.
for the six months ended 31 December 2020, the Board is required to consider whether the Sasol Group (Group) can
continue in operational existence for the foreseeable future.
Financial performance during the year
Sasol has delivered a strong set of results for the period, underpinned by a strong cash cost, working capital
and capital expenditure performance in response to the effects of the COVID-19 pandemic, a severe decline in
crude oil prices and softer chemical product prices. In addition, our Lake Charles production was impacted by
hurricanes experienced in the US Gulf Coast, resulting in lost production of approximately 300kt for the period.
Sasol Limited Group
Sasol Limited Interim Financial Results 13
At 31 December 2020, the balance sheet saw an improvement in the gearing at 76% (30 June 2020: 114,5%) and Net
debt: EBITDA (based on the bank definition) of 2,6 times (30 June 2020: 4,3 times), well below the
negotiated December 2020 covenant level of 4,0 times.
The ability of the Group to meet its debt covenant requirements at 30 June 2021 and repay debt as it becomes
due is dependent on the timing and quantum of cash flows from operations and the ability to realise cash through
a combination of asset disposals, or part thereof.
The Group reported earnings for the six months of R15,3 billion, which compares to earnings of R4,5 billion for the
prior period. These results were underpinned by a good operational performance and effective cost
management in response to the challenging environment, as well as the following non cash adjustments:
debt: EBITDA (based on the bank definition) of 2,6 times (30 June 2020: 4,3 times), well below the
negotiated December 2020 covenant level of 4,0 times.
The ability of the Group to meet its debt covenant requirements at 30 June 2021 and repay debt as it becomes
due is dependent on the timing and quantum of cash flows from operations and the ability to realise cash through
a combination of asset disposals, or part thereof.
The Group reported earnings for the six months of R15,3 billion, which compares to earnings of R4,5 billion for the
prior period. These results were underpinned by a good operational performance and effective cost
management in response to the challenging environment, as well as the following non cash adjustments:
•
Translation gains of R4,6 billion on the translation of monetary assets and liabilities due to a 15%
strengthening of the closing rand/US dollar exchange rate compared to June 2020;
strengthening of the closing rand/US dollar exchange rate compared to June 2020;
•
R5,0 billion gain on the valuation of financial instruments and derivative contracts; and
•
R3,3 billion gain on the reclassification of the foreign currency translation reserve (FCTR), mainly on the
divestment of a 50% interest in the US LCCP Base Chemicals business.
divestment of a 50% interest in the US LCCP Base Chemicals business.
The Board has no intention to cease trading, curtail operations or liquidate the businesses, other than planned
asset disposals which are aligned with the Group’s revised strategy to create a more focused portfolio.
asset disposals which are aligned with the Group’s revised strategy to create a more focused portfolio.
Timing and success of asset disposals
Since June 2020 the Group has made good progress on the expanded and accelerated asset divestment
programme by securing R33 billion (US$2,4 billion) of proceeds by 31 December 2020 . During the six months
we completed the sale of 50% of our US LCCP Base Chemicals business and our 50% equity interest in the Gemini
HDPE LLC.
Proceeds from these disposals were used to settle the syndicated loan of R15,5 billion (US$1billion) as well
R12,3 billion (US$ 840 million) of the RCF. A further R3,7 billion (US$250 million) of the RCF was settled in January 2021.
The next debt maturity is the R2,2 billion (US$150 million) term loan which matures in November 2021.
The Group has classified R12,1 billion as net assets and liabilities in disposal groups held for sale at
31 December 2020. Sale and purchase agreements amounting to approximately R11 billion (US$ 750 million) have
already been concluded on a number of these assets. The disposal groups that were classified as held for sale
at 30 June 2020, which have not yet been disposed of, remain classified as held for sale at 31 December 2020.It is
highly probable that these disposals will be completed by 30 June 2021. It is highly probable that the disposal
groups classified as held for sale subsequent to 30 June 2020, will be sold by 31 December 2021 . Refer to the
“disposal groups held for sale” note on page 12 for more information.
Rights issue
A decision was made not to pursue a rights issue given the current macroeconomic outlook, and the significant
progress made on our response plan initiatives. The balance sheet deleveraging pathway will continue to be
prioritised to ensure that we operate within our financial covenants and maintain adequate liquidity headroom,
whilst delivering the Sasol 2.0 transformation programme.
Repositioning the business
In repositioning the business to be sustainably profitable, we introduced a new operating model. The transition
to this new operating model commenced from 1 November 2020, providing greater autonomy to the chemicals and
energy businesses. We see Future Sasol as a business focused on areas in which we have competitive
advantages and moving towards leading the energy transition in Southern Africa.
programme by securing R33 billion (US$2,4 billion) of proceeds by 31 December 2020 . During the six months
we completed the sale of 50% of our US LCCP Base Chemicals business and our 50% equity interest in the Gemini
HDPE LLC.
Proceeds from these disposals were used to settle the syndicated loan of R15,5 billion (US$1billion) as well
R12,3 billion (US$ 840 million) of the RCF. A further R3,7 billion (US$250 million) of the RCF was settled in January 2021.
The next debt maturity is the R2,2 billion (US$150 million) term loan which matures in November 2021.
The Group has classified R12,1 billion as net assets and liabilities in disposal groups held for sale at
31 December 2020. Sale and purchase agreements amounting to approximately R11 billion (US$ 750 million) have
already been concluded on a number of these assets. The disposal groups that were classified as held for sale
at 30 June 2020, which have not yet been disposed of, remain classified as held for sale at 31 December 2020.It is
highly probable that these disposals will be completed by 30 June 2021. It is highly probable that the disposal
groups classified as held for sale subsequent to 30 June 2020, will be sold by 31 December 2021 . Refer to the
“disposal groups held for sale” note on page 12 for more information.
Rights issue
A decision was made not to pursue a rights issue given the current macroeconomic outlook, and the significant
progress made on our response plan initiatives. The balance sheet deleveraging pathway will continue to be
prioritised to ensure that we operate within our financial covenants and maintain adequate liquidity headroom,
whilst delivering the Sasol 2.0 transformation programme.
Repositioning the business
In repositioning the business to be sustainably profitable, we introduced a new operating model. The transition
to this new operating model commenced from 1 November 2020, providing greater autonomy to the chemicals and
energy businesses. We see Future Sasol as a business focused on areas in which we have competitive
advantages and moving towards leading the energy transition in Southern Africa.
Sasol Limited Group
14
Sasol Limited Interim Financial Results 2021
The financial targets for Future Sasol will be delivered over the next 3 to 4 years. This will give us a business thatis
competitive, highly cash generative and able to deliver attractive returns even in a US$45/bbl oil price
environment. The milestones allocated to each target, with an objective of delivering most of these targets by
the end of 2023, are:
competitive, highly cash generative and able to deliver attractive returns even in a US$45/bbl oil price
environment. The milestones allocated to each target, with an objective of delivering most of these targets by
the end of 2023, are:
•
A cash fixed cost reduction by the end of 2025 of 15% to 20% (R8 billion to R10 billion);
•
A gross margin improvement of 5% to 10% (R6 billion to R8 billion);
•
A 30% reduction in capital expenditure on sustenance capital, which equates to an annualised spend rate
of R20 billion to R25 billion; and
of R20 billion to R25 billion; and
•
A working capital target of 14% of revenue which is an improvement of 1% from 2019.
Solvency and liquidity
Solvency
At 31 December 2020, after impairments, the valuations of the Group’s assets indicate that their fair values exceed
their carrying values as well as the external debt. The asset base of the Group comprises mainly tangibleassets with
significant value, reflected in the records of the underlying businesses.
As such, the Board is of the view that given the significant headroom in the fair value of the assets over the fair
value of the liabilities (including contingent liabilities), the Group is solvent as at 31 December 2020 and at the date of this report.
their carrying values as well as the external debt. The asset base of the Group comprises mainly tangibleassets with
significant value, reflected in the records of the underlying businesses.
As such, the Board is of the view that given the significant headroom in the fair value of the assets over the fair
value of the liabilities (including contingent liabilities), the Group is solvent as at 31 December 2020 and at the date of this report.
Liquidity management
At 31 December 2020, the Group had cash and cash equivalents of R27,6 billion (30 June 2020: R34,1 billion) and
available facilities of R27,0 billion (30 June 2020: R10,5 billion)
Settlement of debt with proceeds received from the asset disposals and the adjustments as agreed with the
lenders for the impact of Hurricanes Laura and Delta resulted in Net Debt: EBITDA of 2,6, times against a
covenant level of 4 times at 31 December 2020.
Sasol will be released from the covenant amendment agreement signed in November 2020 once the December 2020
covenant compliance certificate is delivered to the lenders indicating a Net Debt: EBITDA of below 4 times
however Sasol still has the obligation to pay down the RCF from proceeds of asset disposals and debt or equity
issuances.
Increased cash generation, through improved earnings, delivery of Sasol’s self-help measures and asset
disposals remain critical to balance sheet de-leveraging and reducing financial and credit ratings risks. The
ability of the Group to meet its debt covenant requirements at 30 June 2021 and repay debt as it becomes due is
dependent on the timing and quantum of cash flows from operations and the ability to realise cash through a
combination of asset disposals, or part thereof.
We continue to actively manage the balance sheet with the objective of maintaining a healthy liquidity position
and a balanced debt maturity profile.
Management has prepared updated forecasts for the remainder of 2021 and 2022 and continues to use a robust
liquidity model which includes detailed cash flow forecasts covering a period of nine months from the date of
the condensed consolidated interim financial statements.
The Group liquidity model is a monthly consolidation of the Group’s individual business cash flow forecasts. The
cash flow forecasts are based on estimated free cash flow from operations, on a monthly basis, for the
upstream Mining and Oil and Gas Exploration entities, the manufacturing operations globally and the selling
business units, being Base Chemicals, Performance Chemicals and Energy. The cash flow forecasts have been
adjusted for planned disposals over the next 12 months
The cash flow forecasts are prepared monthly and reviewed by management. They are evaluated against
forecasted expectations and variances are monitored and scrutinised. Various scenarios and stress testing
analysis are performed to test the robustness of the cash flow forecasts. Performance and liquidity
improvement initiatives undertaken during 2020 have continued into 2021 and already delivered improvements
on the Group’s liquidity position. The forecasts and any variances are presented to the Board at least on a quarterly
basis or more frequently as required
Estimates and judgements considered within the liquidity assessment
Management has considered a number of estimates, judgements and assumptions in performing the liquidity
assessments, the most significant of which are listed and expanded upon below:
available facilities of R27,0 billion (30 June 2020: R10,5 billion)
Settlement of debt with proceeds received from the asset disposals and the adjustments as agreed with the
lenders for the impact of Hurricanes Laura and Delta resulted in Net Debt: EBITDA of 2,6, times against a
covenant level of 4 times at 31 December 2020.
Sasol will be released from the covenant amendment agreement signed in November 2020 once the December 2020
covenant compliance certificate is delivered to the lenders indicating a Net Debt: EBITDA of below 4 times
however Sasol still has the obligation to pay down the RCF from proceeds of asset disposals and debt or equity
issuances.
Increased cash generation, through improved earnings, delivery of Sasol’s self-help measures and asset
disposals remain critical to balance sheet de-leveraging and reducing financial and credit ratings risks. The
ability of the Group to meet its debt covenant requirements at 30 June 2021 and repay debt as it becomes due is
dependent on the timing and quantum of cash flows from operations and the ability to realise cash through a
combination of asset disposals, or part thereof.
We continue to actively manage the balance sheet with the objective of maintaining a healthy liquidity position
and a balanced debt maturity profile.
Management has prepared updated forecasts for the remainder of 2021 and 2022 and continues to use a robust
liquidity model which includes detailed cash flow forecasts covering a period of nine months from the date of
the condensed consolidated interim financial statements.
The Group liquidity model is a monthly consolidation of the Group’s individual business cash flow forecasts. The
cash flow forecasts are based on estimated free cash flow from operations, on a monthly basis, for the
upstream Mining and Oil and Gas Exploration entities, the manufacturing operations globally and the selling
business units, being Base Chemicals, Performance Chemicals and Energy. The cash flow forecasts have been
adjusted for planned disposals over the next 12 months
The cash flow forecasts are prepared monthly and reviewed by management. They are evaluated against
forecasted expectations and variances are monitored and scrutinised. Various scenarios and stress testing
analysis are performed to test the robustness of the cash flow forecasts. Performance and liquidity
improvement initiatives undertaken during 2020 have continued into 2021 and already delivered improvements
on the Group’s liquidity position. The forecasts and any variances are presented to the Board at least on a quarterly
basis or more frequently as required
Estimates and judgements considered within the liquidity assessment
Management has considered a number of estimates, judgements and assumptions in performing the liquidity
assessments, the most significant of which are listed and expanded upon below:
•
The Group has applied conservative macroeconomic assumptions in the cash flow forecast and has modelled
a Brent crude oil price of US45,50/bbl and a rand/US dollar exchange rate of R14,83 for the remainder of
2021 and a Brent crude oil price of US53,58/bbl and a rand/US dollar exchange rate of R15,10 for 2022.
a Brent crude oil price of US45,50/bbl and a rand/US dollar exchange rate of R14,83 for the remainder of
2021 and a Brent crude oil price of US53,58/bbl and a rand/US dollar exchange rate of R15,10 for 2022.
•
The Group assumed a working capital percentage of 15,6%, which is conservative in relation to the 14,9%
achieved at 31 December 2020.
achieved at 31 December 2020.
Sasol Limited Group
Sasol Limited Interim Financial Results 15
•
Continued positive results in the short term from the comprehensive response plan for the remainder of 2021 and 2022; and
•
The reduction in debt through the sale of assets to meet the debt reduction milestones. We have made
significant progress on divestments, with announced asset divestment proceeds totaling US$3,3 billion to date.
significant progress on divestments, with announced asset divestment proceeds totaling US$3,3 billion to date.
Conclusion
The Group’s ability to meet its debt covenant requirements 30 June 2021 and repay debt as it becomes due is
dependent on the timing and quantum of cash flows from operations and the ability to realise cash througha
combination of asset disposals, or part thereof, that raise substantial doubt about its ability to continue as a
going concern. The Group intends to realise cash through a combination of asset disposals, or part thereof.
Management believes that the net proceeds of any such transactions, together with cash flows from operations
of the business, will be sufficient to meet its debt covenants at 30 June 2021. There can be no assurance,
however, that the Group will be able to complete these transactions.
The accompanying condensed consolidated interim financial statements are prepared on a going concern basis
and therefore do not include any adjustments that might result from the outcome of this uncertainty.
Tax litigation and other legal matters
Sasol Financing International (SFI) / SARS
Apart from the parties exchanging further pleadings in the matter, there has been no change to the SFI/SARS
matter contained in the Group’s annual financial statements for the year ended 30 June 2020.
A contingent liability of R2,54 billion (including interest and penalties) is reported in respect of this matter as at
31 December 2020.
Securities class action against Sasol Limited and some of its current and former executive directors
A class action lawsuit was filed against Sasol Limited and several of its current and former officers in a Federal
District Court in New York (the Court).
The lawsuit alleges that Sasol violated U.S. federal securities laws by allegedly making false or misleading public
statements regarding the LCCP between 2015 and 2020, specifically with respect to timing, costs, and control
procedures, (refer to the Group’s annual financial statements for the year ended 30 June 2020).
The Court dismissed the claims based on alleged misrepresentations about the effectiveness of internal
controls over financial reporting and the management of the LCCP, but found that the portions of the case
related to the allegations of violations of U.S. securities laws based on alleged misrepresentations about LCCP
cost estimates and schedules could move forward.
On 30 October 2020, Sasol filed a Motion for Reconsideration of the Court’s order denying Sasol’s Motion to
Dismiss. On 15 December 2020 Sasol filed a supplemental brief in support of its Motion. Plaintiffs filed an
opposition on 19 January 2021, and Sasol filed a reply on 1 February 2021.
The plaintiff has not specified any amount of damages to date. In the amended complaint, a compensatory
claim for damages for the members of the class was left for the trial to be determined. Therefore, no potential
loss can be reliably estimated at this stage. Consequently, no provision has been recognised at 31 December 2020.
In this context, it is important to also note that Sasol’s Directors and Officers insurance has indicated coverage
under the policy for this matter.
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 the National Energy Regulator of South Africa (NERSA)
(pursuant to the applications by Sasol Gas (Pty) Ltd), seven of the customers of Sasol Gas 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 the Maximum Price decision and Gas Transmission Tariff
decision.
The basis of the challenge to the NERSA price decision was the allegation that the methodology used by NERSA
to determine its approval of the Maximum Gas Prices was unreasonable and irrational.
The original decision in the High Court was appealed to the Supreme Court of Appeal (SCA) and the matter
ultimately concluded in the decision by the Constitutional Court handed down on 15 July 2019.
In terms of the order, the NERSA Maximum Price decision of March 2013 has been set aside.
dependent on the timing and quantum of cash flows from operations and the ability to realise cash througha
combination of asset disposals, or part thereof, that raise substantial doubt about its ability to continue as a
going concern. The Group intends to realise cash through a combination of asset disposals, or part thereof.
Management believes that the net proceeds of any such transactions, together with cash flows from operations
of the business, will be sufficient to meet its debt covenants at 30 June 2021. There can be no assurance,
however, that the Group will be able to complete these transactions.
The accompanying condensed consolidated interim financial statements are prepared on a going concern basis
and therefore do not include any adjustments that might result from the outcome of this uncertainty.
Tax litigation and other legal matters
Sasol Financing International (SFI) / SARS
Apart from the parties exchanging further pleadings in the matter, there has been no change to the SFI/SARS
matter contained in the Group’s annual financial statements for the year ended 30 June 2020.
A contingent liability of R2,54 billion (including interest and penalties) is reported in respect of this matter as at
31 December 2020.
Securities class action against Sasol Limited and some of its current and former executive directors
A class action lawsuit was filed against Sasol Limited and several of its current and former officers in a Federal
District Court in New York (the Court).
The lawsuit alleges that Sasol violated U.S. federal securities laws by allegedly making false or misleading public
statements regarding the LCCP between 2015 and 2020, specifically with respect to timing, costs, and control
procedures, (refer to the Group’s annual financial statements for the year ended 30 June 2020).
The Court dismissed the claims based on alleged misrepresentations about the effectiveness of internal
controls over financial reporting and the management of the LCCP, but found that the portions of the case
related to the allegations of violations of U.S. securities laws based on alleged misrepresentations about LCCP
cost estimates and schedules could move forward.
On 30 October 2020, Sasol filed a Motion for Reconsideration of the Court’s order denying Sasol’s Motion to
Dismiss. On 15 December 2020 Sasol filed a supplemental brief in support of its Motion. Plaintiffs filed an
opposition on 19 January 2021, and Sasol filed a reply on 1 February 2021.
The plaintiff has not specified any amount of damages to date. In the amended complaint, a compensatory
claim for damages for the members of the class was left for the trial to be determined. Therefore, no potential
loss can be reliably estimated at this stage. Consequently, no provision has been recognised at 31 December 2020.
In this context, it is important to also note that Sasol’s Directors and Officers insurance has indicated coverage
under the policy for this matter.
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 the National Energy Regulator of South Africa (NERSA)
(pursuant to the applications by Sasol Gas (Pty) Ltd), seven of the customers of Sasol Gas 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 the Maximum Price decision and Gas Transmission Tariff
decision.
The basis of the challenge to the NERSA price decision was the allegation that the methodology used by NERSA
to determine its approval of the Maximum Gas Prices was unreasonable and irrational.
The original decision in the High Court was appealed to the Supreme Court of Appeal (SCA) and the matter
ultimately concluded in the decision by the Constitutional Court handed down on 15 July 2019.
In terms of the order, the NERSA Maximum Price decision of March 2013 has been set aside.
Sasol Limited Group
16
Sasol Limited Interim Financial Results 2021
During June 2020, IGUA, an industry association whose members include a number of large gas customers,
launched an application to review and overturn the November 2017 NERSA Maximum Gas Price decision, which
approved maximum gas prices for Sasol Gas for the period 1 July 2017 up to 30 June 2020. Because the basis for this
NERSA decision was similar to that of the previously overturned 2013 NERSA decision, neither Sasol Gas nor
NERSA will oppose the application.
After the Constitutional Court judgement, NERSA completed its review of the Maximum Gas Price Methodology.
Following a public participation process, in which Sasol Gas participated, NERSA adopted a new Maximum Price
Methodology that was published during June 2020.
After participating in the NERSA engagements with stakeholders on the implementation of the new Maximum
Gas Price Methodology, Sasol Gas prepared and submitted a Maximum Gas Price application for the period from
26 March 2014 up to 30 June 2023. The Constitutional Court confirmed that the Methodology is only a guideline to
be followed by NERSA in considering Maximum Gas Price applications and that all relevant facts and
circumstances relating to the application by a particular licensee have to be considered. The Sasol Gas
application is currently pending before NERSA and the consideration thereof will also involve a public
participation process in accordance with the applicable NERSA rules.
It is currently not determinable with certainty what the relation will be between the new Maximum Gas Price to
be approved by NERSA for Sasol Gas and the actual gas prices charged to customers, or whether the approval
by NERSA of a new Maximum Gas Price would lead to any possible change in respect of the retrospective
portion of the Maximum Gas Price Period. Therefore, any liability cannot be reliably estimated. Accordingly, no
provision has been raised in respect of this matter as at 31 December 2020.
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 Group’s
financial results.
Related party transactions
The group, in the ordinary course of business, entered into various sale and purchase transactions on an arm’s
length basis at market rates with related parties.
Significant events and transactions since 30 June 2020
launched an application to review and overturn the November 2017 NERSA Maximum Gas Price decision, which
approved maximum gas prices for Sasol Gas for the period 1 July 2017 up to 30 June 2020. Because the basis for this
NERSA decision was similar to that of the previously overturned 2013 NERSA decision, neither Sasol Gas nor
NERSA will oppose the application.
After the Constitutional Court judgement, NERSA completed its review of the Maximum Gas Price Methodology.
Following a public participation process, in which Sasol Gas participated, NERSA adopted a new Maximum Price
Methodology that was published during June 2020.
After participating in the NERSA engagements with stakeholders on the implementation of the new Maximum
Gas Price Methodology, Sasol Gas prepared and submitted a Maximum Gas Price application for the period from
26 March 2014 up to 30 June 2023. The Constitutional Court confirmed that the Methodology is only a guideline to
be followed by NERSA in considering Maximum Gas Price applications and that all relevant facts and
circumstances relating to the application by a particular licensee have to be considered. The Sasol Gas
application is currently pending before NERSA and the consideration thereof will also involve a public
participation process in accordance with the applicable NERSA rules.
It is currently not determinable with certainty what the relation will be between the new Maximum Gas Price to
be approved by NERSA for Sasol Gas and the actual gas prices charged to customers, or whether the approval
by NERSA of a new Maximum Gas Price would lead to any possible change in respect of the retrospective
portion of the Maximum Gas Price Period. Therefore, any liability cannot be reliably estimated. Accordingly, no
provision has been raised in respect of this matter as at 31 December 2020.
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 Group’s
financial results.
Related party transactions
The group, in the ordinary course of business, entered into various sale and purchase transactions on an arm’s
length basis at market rates with related parties.
Significant events and transactions since 30 June 2020
In accordance with IAS 34 ‘Interim Financial Reporting’, we have included below explanations of events and
transactions which are significant to obtain an understanding of the changes in our financial position and
performance since 30 June 2020:
transactions which are significant to obtain an understanding of the changes in our financial position and
performance since 30 June 2020:
•
Sasol continued to face significant challenges during the past six months with sustained low crude oil prices,
softer chemical prices, prolonged plant downtime in the Gulf Coast due to hurricanes and the continued
effects of the COVID-19 pandemic on product demand.
softer chemical prices, prolonged plant downtime in the Gulf Coast due to hurricanes and the continued
effects of the COVID-19 pandemic on product demand.
•
Significant disposals were concluded during the period:
•
On 1 December 2020 the sale of 50% of our interest in the US LCCP Base Chemicals business was
successfully concluded through the creation of the 50/50 owned Louisiana Integrated Polyethylene JV LLC
(LIP). Sasol’s 50% interest in LIP is accounted for as a joint operation and Sasol’s share of assets and
liabilities held jointly, revenue from the sale of its share of output and expenses were reflected within the
Sasol results from 1 December 2020 in terms of IFRS 11 ‘Joint Arrangements’; and
successfully concluded through the creation of the 50/50 owned Louisiana Integrated Polyethylene JV LLC
(LIP). Sasol’s 50% interest in LIP is accounted for as a joint operation and Sasol’s share of assets and
liabilities held jointly, revenue from the sale of its share of output and expenses were reflected within the
Sasol results from 1 December 2020 in terms of IFRS 11 ‘Joint Arrangements’; and
•
The divestment of our 50% equity interest in the Gemini HDPE LLC successfully closed on 31 December 2020.
•
Significant assets and liabilities in disposal groups held for sale at 31 December 2020:
•
Our 16 air separation units, including the cooling tower linked to train 16, located in Secunda;
•
Our 50% shareholding in Republic of Mozambique Pipeline Investment Company;
•
Our full shareholding in Central Termica De Ressane Garcia S.A. (CTRG), the gas to power plant located in
Ressano Garcia, Mozambique; and
Ressano Garcia, Mozambique; and
•
Our 27,8% working interest in the Etame Marin block offshore Gabon (producing asset with proven
reserves), as well as our 40% non-operated participating interest in Block DE-8 offshore Gabon
(exploration permit.
reserves), as well as our 40% non-operated participating interest in Block DE-8 offshore Gabon
(exploration permit.
Subsequent events
There were no events that occurred subsequent to 31 December 2020.
Sasol Limited Group
Sasol Limited Interim Financial Results 17
Financial instruments
Fair value
Fair value is determined using valuation techniques as outlined unless the instrument is listed in an active
market. Where possible, inputs are based on quoted prices and other market determined variables.
market. Where possible, inputs are based on quoted prices and other market determined variables.
Fair value hierarchy
The table below represents significant financial instruments measured at fair value at the reporting date, or for
which fair value is disclosed at 31 December 2020. This includes the US dollar bonds, interest rate swap, ethane
swap, Brent crude oil put options, Brent crude oil zero cost collars and zero cost foreign exchange collars which
were considered to be significant financial instruments for the group based on the amounts recognised in the
statement of financial position and the fact that these instruments are traded in an active market. 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.
which fair value is disclosed at 31 December 2020. This includes the US dollar bonds, interest rate swap, ethane
swap, Brent crude oil put options, Brent crude oil zero cost collars and zero cost foreign exchange collars which
were considered to be significant financial instruments for the group based on the amounts recognised in the
statement of financial position and the fact that these instruments are traded in an active market. 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.
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.
Level 3 Inputs for the asset or liability that are unobservable.
Half year
Full year
31 Dec 20
30 Jun 20
IFRS 13
fair
value
hierarchy
Carrying
value
Fair
value
Carrying
value
Fair
value
Instrument
Rm
Rm
Rm
Rm Valuation method Significant inputs
Listed long
term debt
term debt
Level 1
50 373
52 710
56 760
50 701 Fair value
Quoted market
price for the same
or similar
instruments
price for the same
or similar
instruments
Derivative
financial
assets and
liabilities¹
financial
assets and
liabilities¹
Level 2
2 237
2 237
7 078
7 078
Forward rate
interpolator model,
discounted
expected cash
flows, numerical
approximation, as
appropriate
interpolator model,
discounted
expected cash
flows, numerical
approximation, as
appropriate
Foreign exchange
rates, market
commodity prices,
US dollar swap
curve, as
appropriate
rates, market
commodity prices,
US dollar swap
curve, as
appropriate
Derivative
financial
liabilities²
financial
liabilities²
Level 3
668
668
2 168
2 168
Forward rate
interpolator model,
discounted
expected cash
flows, numerical
approximation, as
appropriate
interpolator model,
discounted
expected cash
flows, numerical
approximation, as
appropriate
US PPI and US
labour index
forecast, US dollar
and Rand treasury
curves, Rand zero
swap discount rate
labour index
forecast, US dollar
and Rand treasury
curves, Rand zero
swap discount rate
1
Includes derivative financial assets of R1,2 billion (2020: R0,6 billion) and derivative financial liabilities of R3,4 billion (2020: R7,7 billion). Refer to foot note 3
on page 1.
on page 1.
2
Relates to the embedded derivative contained in the Oxygen Train 17 service contract with Air Liquide. Refer to foot note 3 on page 1.
For all other financial instruments, fair value approximates carrying value.
Sasol Limited Group
18
Sasol Limited Interim Financial Results 2021
Registered office: Sasol Place, 50 Katherine Street, Sandton, Johannesburg,
Private Bag X10014, Sandton, 2196, South Africa
Share registrar: JSE Investor Services Proprietary Limited
13 th Floor, 19 Ameshoff Street, Braamfontein, 2001, Republic of SouthAfrica
PO Box4884, Johannesburg, 2000, Republic of South Africa
Tel: 0800 800 010, Email: sasol@jseinvestorservices.co.za
JSE Sponsor: Merrill Lynch South Africa Proprietary Limited
Directors (Independent Non executive):
Mr SA Nkosi (Chairman), Mr C Beggs, Mr MJ Cuambe (Mozambican), Ms
MBN Dube, Dr M Flöel (German), Ms KC Harper (American), Ms GMB Kennealy, Ms NNA Matyumza, Mr ZM Mkhize,
Ms MEK Nkeli, Mr PJ Robertson (British and American), Mr S Westwell (British)^
Directors (Executive):
Mr FR Grobler (President and Chief Executive Officer), Mr VD Kahla (Executive Director
and Executive Vice President: Strategy, Sustainability and Integrated Services), Mr P Victor (Chief Financial
Officer)
^Lead independent director
Company Secretary: Ms M du Toit
Company registration number: 1979/003231/06, incorporated in the Republic of South Africa
Income tax reference number: 9520/018/60/8
Private Bag X10014, Sandton, 2196, South Africa
Share registrar: JSE Investor Services Proprietary Limited
13 th Floor, 19 Ameshoff Street, Braamfontein, 2001, Republic of SouthAfrica
PO Box4884, Johannesburg, 2000, Republic of South Africa
Tel: 0800 800 010, Email: sasol@jseinvestorservices.co.za
JSE Sponsor: Merrill Lynch South Africa Proprietary Limited
Directors (Independent Non executive):
Mr SA Nkosi (Chairman), Mr C Beggs, Mr MJ Cuambe (Mozambican), Ms
MBN Dube, Dr M Flöel (German), Ms KC Harper (American), Ms GMB Kennealy, Ms NNA Matyumza, Mr ZM Mkhize,
Ms MEK Nkeli, Mr PJ Robertson (British and American), Mr S Westwell (British)^
Directors (Executive):
Mr FR Grobler (President and Chief Executive Officer), Mr VD Kahla (Executive Director
and Executive Vice President: Strategy, Sustainability and Integrated Services), Mr P Victor (Chief Financial
Officer)
^Lead independent director
Company Secretary: Ms M du Toit
Company registration number: 1979/003231/06, incorporated in the Republic of South Africa
Income tax reference number: 9520/018/60/8
Ordinary shares
JSE
NYSE
Share code:
SOL
SSL
ISIN:
ZAE000006896
US8038663006
Sasol BEE Ordinary shares
Share code:
SOLBE1
ISIN:
ZAE000151817
American depository receipts (ADR) program:
Cusip number 803866300
ADR to ordinary share
Depositary:
J.P. Morgan Depositary Receipts, 383 Madison Avenue, Floor 11, New York, NY10179, United States of America
Sandton, 19 February 2021
Sasol Limited Group
Sasol Limited Interim Financial Results
19
Disclaimer Forward looking statements
Sasol may, in this document, make certain statements that are not historical facts and 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, expectations, developments and
business strategies. Examples of such forward looking statements include, but are not limited to, the impact of
the novel coronavirus (COVID-19) pandemic on Sasol’s business, results of operations, financial condition and
liquidity and statements regarding the effectiveness of any actions taken by Sasol to address or limit any
impact of COVID-19 on its business; statements regarding exchange rate fluctuations, changing crude oil prices ,
volume growth, increases in market share, total shareholder return, executing our growth projects (including
LCCP), oil and gas reserves, cost reductions, our climate change strategy and business performance outlook.
Words such as “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “endeavour”,
“target”, “forecast” and “project” and similar expressions are intended to identify such 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. 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 and others are discussed more fully in our most recent
annual report on Form 20 F filed on 24 August 2020 and in other filings with the United States Securities and
Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward looking
statements to make investment decisions, you should carefully consider both these factors and other
uncertainties and events. 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.
Please note: One billion is defined as one thousand million, bbl – barrel, bscf – billion standard cubic feet, mmscf
– million standard cubic feet, oil references brent crude, mmboe – million barrels oil equivalent. All references to
years refer to the financial year ended 30 June. Any reference to a calendar year is prefaced by the word
“calendar”.
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, expectations, developments and
business strategies. Examples of such forward looking statements include, but are not limited to, the impact of
the novel coronavirus (COVID-19) pandemic on Sasol’s business, results of operations, financial condition and
liquidity and statements regarding the effectiveness of any actions taken by Sasol to address or limit any
impact of COVID-19 on its business; statements regarding exchange rate fluctuations, changing crude oil prices ,
volume growth, increases in market share, total shareholder return, executing our growth projects (including
LCCP), oil and gas reserves, cost reductions, our climate change strategy and business performance outlook.
Words such as “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “endeavour”,
“target”, “forecast” and “project” and similar expressions are intended to identify such 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. 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 and others are discussed more fully in our most recent
annual report on Form 20 F filed on 24 August 2020 and in other filings with the United States Securities and
Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward looking
statements to make investment decisions, you should carefully consider both these factors and other
uncertainties and events. 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.
Please note: One billion is defined as one thousand million, bbl – barrel, bscf – billion standard cubic feet, mmscf
– million standard cubic feet, oil references brent crude, mmboe – million barrels oil equivalent. All references to
years refer to the financial year ended 30 June. Any reference to a calendar year is prefaced by the word
“calendar”.
Comprehensive additional information is available on our website: www.sasol.com
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, Sasol Limited,
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.
Date: 23 February 2021
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.
Date: 23 February 2021
By:
/s/ M du Toit
M du Toit
Name:
Title:
Group Company Secretary