Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 76
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SASOL LIMITED GROUP
Operating and other activities continued
10 Remeasurement items affecting operating profit continued
Significant impairment/(reversal of impairment) of assets in 2021
Segment and Cash-generating unit (CGU)
Property,
plant and
equipment
2021
Rm
Right of
use assets
2021
Rm
Other
intangible
assets
2021
Rm
Other
2021
Rm
Total
2021
Rm
24 456
–
–
–
24 456
23 232
7 863
1 094
–
–
–
–
–
–
7 863
1 094
2 748
393
351
30
79
–
460
–
(2)
(26)
–
(4 934)
110 113
–
5
–
1
–
112
(521)
314
357
–
33
54
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Fuels Segment
Secunda liquid fuels refinery
Chemicals Africa segment
Southern Africa Wax value chain
Chlor Alkali and PVC
Chemicals America segment
US Phenolics assets
US Ziegler Alcohols Ethylene
Oxide/Ethylene Glycol (EO/EG)
(4 906)
Gas segment
(521)
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Sasol Canada – Shale gas assets
Other
28 533
Recoverable
amount*
2021
Rm
28 732
* The recoverable amounts reflect the CGU's contribution to the integrated value chain and have been determined as described in the accounting
policies below.
Other than for the CGU's specifically mentioned, all of the remaining CGU's have sufficient headroom and no reasonable changes to
assumptions applied would result in any impairment or reversal of impairment.
Description of impairment and sensitivity to changes in assumptions:
Management has considered the sensitivity of the impairment calculations to various key assumptions such as crude oil and gas
prices, commodity prices and exchange rates. These sensitivities have been taken into consideration in determining the required
impairments and reversals of impairments. The following assets are particularly impacted by changes in key assumptions:
Secunda liquid fuels refinery
The Secunda liquid fuels refinery saw a significant decrease in its recoverable amount largely due to higher cost to procure gas
in the longer term as well as a stronger forecasted rand/US dollar exchange rate and lower long-term oil price outlook over the
remaining life of the CGU which impacted negatively on the forecasted Basic Fuel Price (BFP), despite the short-term recovery in
oil prices. The performance of the CGU is highly sensitive to changes in the discount rate, crude oil prices, the rand/US$ exchange
rate and the cost to procure gas in the long-term. A 1% increase (or decrease) in the discount rate would decrease (or increase)
the recoverable amount by approximately R1,7 billion (or R2,0 billion). A US$1 decrease in the price of Dated Brent will decrease
the recoverable amount of the CGU by approximately R2,8 billion. A R0,10/US$ strengthening in the exchange rate would decrease
the recoverable amount by R1,5 billion. A US$1/Gj increase in the longer term cost of natural gas would decrease the recoverable
amount by R942 million.
Southern Africa Wax value chain
The impairment on the Wax value chain was driven by higher cost to procure gas in the longer term, lower sales volumes and
prices due to reduced gas availability in 2022 and 2023 as well as a stronger forecasted rand/US dollar exchange rate. The
performance of this CGU is highly sensitive to changes in the discount rate and cost to procure gas in the long term. A 1%
increase (or decrease) in the discount rate would decrease (or increase) the recoverable amount by approximately R370 million
(or R403 million). A US$1/Gj increase in the longer term cost of natural gas would decrease the recoverable amount by R1,7 billion.
Chlor Alkali and Polyvinyl Chloride (PVC) value chain
The impairment is as a result of the stronger forecasted rand/US dollar exchange rate and the impact of the pending sale of the
Sodium Cyanide business. The performance of this CGU is highly sensitive to the Rand/US$ exchange rate, product sales prices
and changes in the discount rate. A R0,10/US$ strengthening in the exchange rate would decrease the recoverable amount of
the CGU by approximately R240 million while a US$10 per ton movement in sales prices would impact the recoverable amount by
approximately R364 million. The recoverable amount will be reduced (or increase) by approximately R264 million (or R306 million)
if the discount rate were to increase (or decrease) by 1%.
US Ziegler Alcohols Ethylene Oxide/Ethylene Glycol (EO/EG)
The Ziegler Alcohols Unit (Ziegler) reached Beneficial Operation (BO) in June 2020. Ziegler delivers alcohol feed to the Ethoxylates
(ETO) unit. In previous CGU assessments, the Ethylene Oxide and Ethylene Glycol (EO/EG) plant together with the ETO plant were
considered to be a separate CGU from the Alcohol units (Ziegler and Guerbet). During 2021 with all units associated with LCCP
having reached beneficial operation, rates at Ziegler were constrained due to weather events and negatively impacted on the
ability of the EO and ETO plants to run due to reduced Ziegler feed. Given the ETO dependency on Ziegler for alcohol feed and
the integration between the EO and ETO units as well as the change in regulatory environment surrounding EO, the CGUs were
reassessed and now considered to be one integrated CGU. The impairment assessment of the combined CGU showed significant
headroom resulting in the full 2019 impairment of the EO/EG CGU being reversed in the current year. No reasonably possible
change in assumptions applied in estimating the recoverable amount of the combined CGU will significantly impact the amount of
the reversal.
Sasol Canada – Shale gas assets
Sasol signed an agreement to divest of all our interests in Canada. Previous impairments of CAD45 million (R521 million) were
reversed at 30 June 2021 to measure the carrying value of the disposal group at its fair value less cost to sell.
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Sasol Annual Financial Statements 2021