Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 100
SASOL LIMITED GROUP
Investing activities (continued)
20 Property, plant and equipment continued
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Land is not
When plant and equipment comprises major components with different useful lives, these components are accounted for as
Depreciation of mineral assets on producing oil and gas properties is based on the units-of-production method calculated using
estimated proved developed reserves.
Life-of-mine coal assets are depreciated using the units-of-production method and is based on proved and probable reserves
assigned to that specific mine (accessible reserves) or complex which benefits from the utilisation of those assets. Other coal
mining assets are depreciated on the straight-line method over their estimated useful lives.
Depreciation of property acquisition costs, capitalised as part of mineral assets in property, plant and equipment, is based on the
units-of-production method calculated using estimated proved reserves.
Property, plant and equipment, other than mineral assets, is depreciated to its estimated residual value on a straight-line basis
over its expected useful life.
Assets under construction
Assets under construction include land and expenditure capitalised for work in progress in respect of activities to develop, expand
or enhance items of property, plant and equipment. The cost of self-constructed assets includes expenditure on materials, direct
labour and an allocated proportion of project overheads. Cost also includes the estimated costs of dismantling and removing the
assets and site rehabilitation costs to the extent that they relate to the construction of the asset as well as gains or losses on
qualifying cash flow hedges attributable to that asset. When regular major inspections are a condition of continuing to operate
an item of property, plant and equipment, and plant shutdown costs will be incurred, an estimate of these shutdown costs are
included in the carrying value of the asset at initial recognition. Land acquired, as well as costs capitalised for work in progress in
respect of activities to develop, expand or enhance items of property, plant and equipment are classified as part of assets under
Finance expenses in respect of specific and general borrowings are capitalised against qualifying assets as part of assets under
construction. Where funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset, the amount of
finance expenses eligible for capitalisation on that asset is the actual finance expenses incurred on the borrowing during the period
less any investment income on the temporary investment of those borrowings.
Where funds are made available from general borrowings and used for the purpose of acquiring or constructing qualifying assets,
the amount of finance expenses eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on
these assets. The capitalisation rate of 4,6% (2020 – 4,9%) is calculated as the weighted average of the interest rates applicable
to the borrowings of the group that are outstanding during the period, including borrowings made specifically for the purpose
of obtaining qualifying assets once the specific qualifying asset is ready for its intended use. The amount of finance expenses
capitalised will not exceed the amount of borrowing costs incurred.
Total long-term receivables¹
Impairment of long-term receivables*
Long-term prepaid expenses
for the year ended 30 June
Long-term receivables and prepaid expenses
Long-term receivables (interest-bearing) – joint operations
LCCP investment incentives
1 Reduction in long-term receivables and impairment of long-term receivables relate mainly to CTRG that transferred to disposal groups held for
sale refer note 12.
* Impairment of long-term loans and receivables
Long-term loans and receivables are considered for impairment under the expected credit loss model. Refer to note 40 for detail on
the impairments recognised.
Sasol Annual Financial Statements 2021