Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 22
SASOL LIMITED GROUP
(Sasol Limited: Company registration number 1979/003231/06)
The board of directors is pleased to present the annual financial statements of Sasol Limited for the year ended 30 June 2021.
The Board continued to closely consider Sasol’s strategic direction and longer-term decisions to ensure that we preserve and enhance the
value of Sasol and, in so doing, protect the interests of all our stakeholders.
Nature of business
Sasol Limited, listed on the JSE Limited (JSE) on 31 October 1979 and on the New York Stock Exchange (NYSE) on 9 April 2003¹, is incorporated
and domiciled in the Republic of South Africa and is the ultimate holding company of the Group.
Sasol is a global integrated chemicals and energy company. Through our talented people, we use selected technologies to safely and
sustainably source, produce and market chemical and energy products competitively to create superior value for our customers,
shareholders and other stakeholders.
More detail on the nature of our business and the businesses of our significant operating subsidiaries and incorporated joint arrangements
(set out on pages 99 to 103) can be found in our Integrated Report.
Sasol delivered a strong set of results for the year ended 30 June 2021. Earnings before interest and tax (EBIT) of R16,6 billion increased by
more than 100% compared to the prior year. This performance was underpinned by a strong cost, working capital and capital expenditure
performance, despite the continued impacts of the COVID-19 pandemic and adverse weather events that impacted our operations in North
America and South Africa. A notable gross margin recovery was recorded in the second half of the financial year, supported by the combined
impact of higher Brent crude oil and chemicals prices, offset by a stronger rand/US dollar exchange rate.
The Chemicals business benefitted from higher chemical basket prices, which were 17% higher compared to the prior year. This resulted in
a 6% revenue increase compared to the prior year. Sales volumes were only 3% lower compared to the prior year, notwithstanding adverse
weather events and the divestments of the US base chemicals assets.
EBIT for the Chemicals business increased by more than 100% to R19,8 billion compared to a loss of R95,5 billion in the prior year, with
significantly lower remeasurement items recorded in the financial year. Remeasurement items for the financial year include impairments
related to our Wax (R7,9 billion) and Chlor-Vinyls (R1,1 billion) cash-generating units (CGUs). These were offset by a reversal of a prior year
impairment of R4,9 billion, (US$0,3 billion), relating to the US Ethylene Oxide/Ethylene Glycol (EO/EG) CGU. Excluding remeasurement items,
our EBIT increased by more than 100% compared to the prior year.
The Energy business saw a strong recovery in liquid fuels demand following the easing of lockdown restrictions in South Africa and higher
Brent crude oil prices in the second half of the financial year. EBIT was impacted by an impairment of R24,5 billion on our Secunda liquid fuels
refinery, resulting in a loss of R8,3 billion for the financial year, compared to the prior year loss of R3,3 billion. Excluding remeasurement
items, EBIT increased 63% compared to the prior year, supported by improved sales volumes, higher average oil prices and derivative gains
recorded in current year which were partially offset by the impact of a stronger Rand/US dollar exchange rate and softer refining margins.
Earnings were mainly impacted by the following non-cash adjustments of which the net amounted to R15,4 billion:
• Net impairments of R28,7 billion mainly due to adjustments to our long-term exchange rate outlook and higher cost to procure gas in the
• Net profit on disposal of businesses of R2,2 billion, including the Air Separation Units;
• R3,4 billion gain on the realisation of the foreign currency translation reserve (FCTR), mainly on the divestment of 50% interest in the LCCP
Base Chemicals Business;
• Gains of R5,5 billion on the translation of monetary assets and liabilities due to a 18% strengthening of the closing rand/US dollar
exchange rate compared to June 2020; and
• Gains of R2,3 billion on the valuation of financial instruments and derivative contracts.
Cash generated by operating activities increased by 6% to R45,1 billion compared to the prior year. This, together with the asset divestment
programme, enabled the repayment of approximately R81 billion of debt, including the settlement of our ZAR banking facilities of
approximately R4 billion.
Actual capital expenditure amounted to R16,4 billion compared to R35,2 billion during 2020. The reduction in capital expenditure was not at
the expense of maintaining our asset integrity through an optimised asset risk management process.
Our Net debt to EBITDA ratio at 30 June 2021, based on the Revolving Credit facility and US dollar Term Loan covenant definition, was
1,5 times, significantly below the agreed threshold level. Although this ratio meets our targeted net debt to EBITDA level, we will continue
in our efforts to reduce leverage and absolute debt levels further. This will create valuable financial flexibility as we execute our Future
Sasol strategy in the midst of an uncertain macro-economic environment. Our objective remains to steer the balance sheet metrics toward
restoration of our investment grade levels. Full details of our updated capital allocation framework will be shared at our upcoming Capital
Markets Day presentation.
During the year bonds of US$1,5 billion (R21,4 billion) were issued and listed on the New York Stock Exchange. As at 30 June 2021, our total
debt was R102,9 billion compared to R189,7 billion as at 30 June 2020. During the year, we utilised proceeds from our asset divestments to
repay the US Dollar syndicated loan, a portion of our Revolving credit facility (RCF) and term loans, reducing our US dollar denominated debt
by almost R76 billion (US$5 billion).
Sasol Annual Financial Statements 2021