Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 122
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SASOL LIMITED GROUP
Reserves continued
36 Share-based payments reserve continued
36.1
Sasol Khanyisa share transaction continued
for the year ended 30 June
Grant date
Date
Class of shares
Shares
Weighted average fair value on grant date
IFRS expense recognised for the year
Number
Rand
Rm
Tier 2²
Khanyisa
shares
2021
Tier 1¹
SOL shares
2021
Tier 1¹
SOLBE shares
2021
1 June 2018
1 June 2018
SOL shares
SOLBE1 shares
25 May 2018
Khanyisa
shares
2 082 520
481,50
304
2 396 048
370,00
263
27 136 679
64,53
318
1 The Tier 1 options vested on 1 June 2021.
2 The Tier 2 options have a staggered vesting period with portions vesting from 3 years, and then each year until the end of the transaction term,
being 10 years. The outstanding options at 30 June 2021 have a weighted average remaining vesting period of 2,6 years. The weighted average fair
value price is derived from the Monte-Carlo option pricing model. The estimated strike price value for Tier 2 is R290,52 and represents the remaining
vendor funding per share at 30 June 2021.
Accounting policies:
To the extent that an entity grants shares or share options in a BEE transaction and the fair value of the cash and other assets
received is less than the fair value of the shares or share options granted, such difference is charged to the income statement
in the period in which the transaction becomes effective. Where the BEE transaction includes service conditions the difference
will be charged to the income statement over the period of these service conditions. Trickle dividends paid to participants during
the transaction term are taken into account in measuring the fair value of the award. As the funds to pay the trickle dividend are
leaving the Company, a corresponding share of earnings will be allocated to the non-controlling shareholders.
Areas of judgement:
The measurement of the Khanyisa SSA share based payment is subject to estimation and judgment, as there are a number of
variables affecting the Monte-Carlo option pricing model used in the calculation of the share based payment. The value of the
share based payment is determined with reference to the extent the fair value of SSA and any dividends declared by SSA is
expected to exceed any outstanding vendor financing at the end of the transaction period.
• ■Equity value attributable to participants:
The value attributable to the participants by virtue of their shareholding in SSA was calculated with reference to the expected
future cash flows and budgets of the SSA Group. The underlying macroeconomic assumptions utilised for this valuation are
based on latest forecast and estimates and include brent crude oil prices, US$/Rand exchange rates and pricing assumptions.
• ■Forecasted dividend yield:
The forecasted dividend yield of the SSA Group was calculated based on a benchmarked EBITDA multiple, and the available free
cash flow anticipated over the term of the transaction of 10 years.
• ■Other assumptions:
Impacts of non-transferability and appropriate minority and liquidity discounts have also been taken into account. Discount
rates applied incorporate the relevant debt and equity costs of the group, and are aligned to the WACC rates for the entity.
• ■A zero-coupon Rand interest rate swap curve was constructed and utilised as an appropriate representation of a risk-free
interest rate curve.
• ■A Rand prime interest rate curve was estimated utilising the historical Rand Prime Index and the 3 month Johannesburg
Interbank Agreed Rate.
36.2 Sasol Long-term Incentive Scheme
The objective of the Sasol Long-term Incentive (LTI) scheme is to provide qualifying employees the opportunity of receiving
an incentive linked to the value of Sasol Limited ordinary shares and to align the interest of employees with the interest of
shareholders. The LTI scheme allows certain senior employees to earn a long-term incentive amount linked to certain Corporate
Performance Targets (CPTs). Allocations of the LTI are linked to the performance of both the group and the individual. The employer
companies make a cash contribution to an independent service provider to enable this ownership plan.
On resignation, LTIs which have not yet vested will lapse. On death, retirement and retrenchment, the LTIs vest immediately,
calculated to the extent that the CPTs are anticipated to be met, and are settled within 40 days from the date of termination.
Accelerated vesting does not apply to top management. In November 2016, the scheme was converted from cash-settled to
equity-settled. All the vesting conditions and all other terms and conditions of the scheme remain the same, including the standard
vesting period of three years, with the exception of top management, who have a three and five year vesting period for 50% of the
awards respectively.
The maximum number of shares issued under the equity-settled LTI scheme may not exceed 32,5 million representing 5% of Sasol
Limited’s issued share capital at the time of approval.
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Sasol Annual Financial Statements 2021