Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 62
SASOL LIMITED GROUP
Reporting Segments continued
Statement of compliance
The consolidated financial statements are prepared in compliance with International Financial Reporting Standards (IFRS) and
Interpretations of those standards, as issued by the International Accounting Standards Board, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting
Standards Council and the South African Companies Act, 2008. The consolidated financial statements were approved for issue by the
Board of Directors on 16 August 2021 and will be presented to shareholders at the Annual General Meeting on 19 November 2021.
Basis of preparation of financial results
The consolidated financial statements are prepared using the historic cost convention except that, certain items, including derivative
instruments, liabilities for cash-settled share-based payments, financial assets at fair value through profit or loss and financial
assets designated at fair value through other comprehensive income, are stated at fair value. The consolidated financial results are
presented in rand, which is Sasol Limited’s functional and presentation currency, rounded to the nearest million.
The consolidated financial statements are prepared on the going concern basis. Refer to note 2.
Certain additional disclosure has been provided in respect of the current year, as described on page 161 “Pro forma financial
information”. To the extent practicable, comparative information has also been provided.
Change in reportable segment information
The reportable segment information has been aligned to the group’s new operating model which came into effect on 1 June 2021.
Our new operating model enables improved decision-making in our two businesses, Energy and Chemicals. The new operating model
structure reflects how the results are reported to the Chief Operating Decision Maker (CODM). Refer to the Segment information on
page 56 for more information.
Change in revenue disaggregation
Pursuant to the change in our operating model, the Chemicals Business has been re-organised into three regional operating
segments i.e. Africa, America and Eurasia, supported by four divisions comprising Advanced Materials, Base Chemicals, Essential Care
Chemicals and Performance Solutions. All internal and external reporting relating to the Chemicals Business have been rearranged
accordingly. Revenue, which was previously disaggregated according to the grouping of product lines under the old operating model,
has been updated to reflect the new divisional product lines. The disaggregation of revenue for the Energy segments did not change
materially. The comparative figures have also been aligned to the new format. Refer to note 3.
Change in presentation of assets under construction (reclassification)
Assets under construction were previously presented as a separate class of assets on the statement of financial position. From the
current year, assets under construction are classified as a separate class of property, plant and equipment. Over the last two years,
the LCCP units reaching beneficial operation has resulted in a significant decrease in the balance of assets under construction.
Accordingly, the separate classification of assets under construction is no longer relevant to understanding the group’s financial
position. The accounting policies in respect of assets under construction have not been amended. The comparative figures have been
reclassified. For this financial reporting period the group has presented a third statement of financial position by including a set of
numbers as at the beginning of the preceding period to assist with the impact of the reclassification.
Errors in calculation of the South African integrated value chain impairments (restatement)
During the year, the Company identified the following prior period errors relating to its impairment calculations:
As part of an independent management review of the South African integrated value chain it was determined that a portion of the
gas feedstock purchase cost has erroneously been omitted from the South African integrated value chain impairment assessment
since 2015, leading to an overstated valuation of the Company’s gas dependent value chains and therefore the incorrect calculation
of impairments to be recognised. This error mainly impacts the Polyethylene, Chlor Vinyls, Chemical Work Up & Heavy Alcohols,
Methanol, Ammonia and Wax value chains. Impairments recognised since the 2017 financial year are impacted by this error and are
accounted for by correcting the 1 July 2019 opening retained earnings.
During the current year it was determined that the Ammonia CGU carrying value used in the 2020 impairment assessment was
understated as a result of an error in the carrying value calculation. The resulting impairment charge was therefore also understated
by R1,3 billion, (R937 million, net of tax). The error only impacted the 2020 financial year.
In order to assess the impact of the prior period errors identified, the Company applied SEC Staff Accounting Bulletin (“SAB”) No 108,
'Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements'.
SAB No 108 states that registrants must quantify the impact of correcting all misstatements on all periods presented,
including both the carryover (iron curtain method) and reversing (rollover method) effects of prior year misstatements on the current
year financial statements, and by evaluating the misstatement measured under each method in light of quantitative and qualitative
factors. Under SAB No 108, prior year misstatements which, if corrected in the current year would be material to the current year,
must be corrected by adjusting prior year financial statements, even though such correction previously was and continues to be
immaterial to the prior year financial statements. Correcting prior year financial statements for such immaterial errors does not
require previously issued or filed financial statements to be amended.
In accordance with SAB No 99 'Materiality', the Company evaluated the effect of the prior period errors, both quantitatively and
qualitatively, and concluded that the correction did not have a material impact on, nor require amendment of, any of the Company’s
previously issued or filed financial statements taken as a whole. However, if the adjustments to correct the cumulative errors had
been recorded in 2021, the Company believes the impact would have been material to the 2021 annual results and would have
impacted comparisons to prior periods.
The conclusions above in terms of SAB No 99 and SAB No 108 are consistent with the requirements of IAS 8 'Accounting Policies,
Changes in Accounting Estimates and Errors', as well as principles of IFRS.
Sasol Annual Financial Statements 2021