Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 4
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SASOL LIMITED GROUP
MESSAGE FROM OUR GROUP CFO
Team Sasol delivered an excellent
performance in 2021, leading to a
strong balance sheet and solid cash flow
generation. As we continue with our
business transformation programme, we
are excited at Future Sasol’s prospects as
a greener, more sustainable business that
protects and grows shareholder value in a
lower-carbon world.
Paul Victor
Chief Financial Officer
Our financial position
KEY MESSAGE
▪ Strong financial results delivered
▪ Significant progress in resetting the balance sheet
▪ Maintaining focus on the factors within our control
Performance overview
Sasol’s earnings before interest and tax (EBIT) of R16,6 billion
increased compared to the prior year loss before interest and tax
(LBIT) of R112 billion. The 2021 EBIT includes remeasurement items
of R23 billion compared to R112 billion in the prior year. Excluding
remeasurement items, EBIT increased by more than 100%,
supported by the combined impact of higher Brent crude oil and
chemicals prices particularly in the second half of the year, lower
depreciation, gains on hedging and derivatives and translation
effects offset by higher cost. Significant non-recurring operational
items include net impairments of R28,7 billion, gains on disposal
of assets of R5,6 billion and gains on financial instruments and
derivative contracts of R2,3 billion. The net impairments include
an impairment of R24,5 billion on the Secunda liquid fuels refinery
cash generating unit (CGU), largely due to a stronger forecasted
rand/US dollar exchange rate which impacted negatively on the
forecasted Basic Fuel Price.
In 2021 Oil prices continued to strengthen, up from US$43/bbl in
July 2020 to US$73/bbl by June 2021 and averaged US$54,20/bbl
for the year. This was however partly offset by a decline in refining
margins and a strengthening in the average rand/US dollar
exchange rate which averaged R15,40 compared to R15,69 in the
prior year. Chemical prices have continued to strengthen into 2021
due to a combination of improved demand, higher oil prices and
reduced market supply resulting from weather-related events
in the USA and global supply chain challenges impacted by the
continued COVID-19 pandemic. 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.
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At 30 June 2021, the balance sheet saw an improvement in the
gearing ratio to 61,5% from 117% in 2020 and Net debt: EBITDA
of 1,5 times, well below the re-instated June 2021 covenant level
of 3,0 times. This was achieved through the repayment of debt
with the realisation of cash from asset disposals as well as cash
conservation initiatives as per our response plan strategy. We
delivered over US$1 billion of cash conservation savings in financial
year 2020, and once again exceeded the target in financial year
2021 by more than 100%.
As at 30 June 2021, our liquidity headroom was in excess of
US$5,8 billion, well above our outlook to maintain liquidity in
excess of US$1 billion. We continue to assess our mix of funding
instruments to ensure that we have funding from a range of
sources and a balanced maturity profile. We have no significant
debt maturities before November 2022 when the US$1 billion bond
becomes due.
Outlook for 2022
The current economic climate continues to remain highly volatile
and uncertain. Oil and chemical prices, the impacts of the
continued COVID-19 pandemic, gross domestic product growth
and foreign exchange movements are outside our control and
may impact our results. We remain focused on managing factors
within our control, including volume growth, cash fixed cost,
further deleveraging of the balance sheet and focused financial risk
management. This is essential to ensure business sustainability
and position us to deliver value to all our stakeholders.
Sasol Annual Financial Statements 2021