Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 137
Euro
Rm
(13)
(13)
Equity
Income statement
2020
US Dollar
Rm
(511)
(511)
Euro
Rm
US Dollar
Rm
(56)
(56)
(2 968)
(2 968)
A 10% movement in the opposite direction in the group's exposure to foreign currency would have an equal and opposite effect to
the amounts disclosed above.
SASOL LIMITED GROUP
CONSOLIDATED FINANCIAL STATEMENTS
2021
Interest rate risk
Interest rate risk is the risk that the value of short-term investments and financial activities will change as a result of fluctuations in
the interest rates.
How we manage the risk
Our debt is comprised of different instrument notes, which by their nature either bear interest at a floating or a fixed rate. We
monitor the ratio of floating and fixed interest in our loan portfolio and manage this ratio, by electing to incur either bank loans,
bearing a floating interest rate, or bonds, which bear a fixed interest rate. We may also use interest rate swaps, where appropriate, to
convert some of our debt into either floating or fixed rate debt to manage the composition of our portfolio.
In respect of financial assets, the group’s policy is to invest cash at floating rates of interest and cash reserves are to be maintained
in short-term investments (less than one year) in order to maintain liquidity, while achieving a satisfactory return for shareholders.
Our exposure to and assessment of the risk
At the reporting date, the interest rate profile of the group’s interest-bearing financial instruments, including the effect of the
interest rate swap was:
Carrying value
2021
Rm
2020
Rm
NOTES TO THE FINANCIAL STATEMENTS
Fluctuations in interest rates impact on the value of short-term investments and financing activities, giving rise to interest rate risk.
The group has significant exposure to interest rate risk due to the volatility in South African, European and US interest rates.
Variable rate instruments
Financial assets
Financial liabilities
30 062
(7 898)
36 140
(97 531)
22 164
(61 391)
Financial assets
Financial liabilities
Interest profile (variable: fixed rate as a percentage of total financial assets)
Interest profile (variable: fixed rate as a percentage of total financial liabilities)
1 788
(110 803)
525
(109 919)
(109 015)
(109 394)
94:6
7:93
99:1
47:53
Cash flow sensitivity for variable rate instruments
OTHER
Financial instruments affected by interest rate risk include borrowings, deposits, derivative financial instruments, trade receivables
and trade payables. A change of 1% in the prevailing interest rate in a particular currency at the reporting date would have increased/
(decreased) earnings by the amounts shown below before the effect of tax. The sensitivity analysis has been prepared on the basis
that all other variables, in particular foreign currency rates, remain constant and has been performed on the same basis for 2020. The
sensitivity has been calculated including consideration of the effect of existing interest rate swap derivative instruments. Interest
is recognised in the income statement using the effective interest rate method. The US interest rate swap is designated as a hedge
instrument, the cash flow hedge reserve will be reclassified to profit and loss on a similar basis.
SASOL LIMITED COMPANY
Fixed rate instruments
135
Sasol Annual Financial Statements 2021