Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 70
GTL (EGTL) in Nigeria to Chevron in June 2020 and
therefore no further losses were experienced in 2021.
Financial review 2020
Group results
Remeasurement items
Earnings before interest and tax of R8,4 billion
in 2019 decreased (more than 100%) by R120,4 billion
to a loss before interest and tax of R111,9 billion in
2020. This was largely due to significant
remeasurement items of R112 billion as a result of
economic consequences of lower oil prices, the
impairment of our 50% share in the base chemical
assets which were written down to fair value less cost
to sell, softer chemical prices and the COVID-19
pandemic. During 2020, the rand/US dollar exchange
rate averaged R15,69 compared to R14,20 for the
prior year. The weaker average rand/US dollar
exchange rate significantly impacted the results of our
Chemicals businesses which are more exposed to
foreign currency sales and capital expenditure. In 2020,
oil prices averaged at US$51,22/bbl. The oil price crash
in March 2020 significantly impacted our margins and
results.
For information regarding the remeasurement
items recognised, refer to “Item 18—Financial
Statements—Note 10 Remeasurement items affecting
operating profit”.
Finance costs and finance income
For information regarding finance costs
incurred and finance income earned, refer to
“Item 18—Financial Statements—Note 8 Net finance
costs”.
The decrease in finance costs is mainly due to
lower interest paid as a result of repayment of our
revolving credit facility and term loans.
Tax
Items which materially impacted earnings before
interest and tax
The effective tax rate decreased to 1,7% in
2021 compared to 22,4% in 2020. The decrease is
mainly due to assessed losses utilised in the current
year. For further information regarding the tax charge,
refer to “Item 18—Financial Statements—Note 13
Taxation”.
During 2020, losses were impacted by the
following significant items:
a net remeasurement items expense of
R112 billion compared to a R20,1 billion
expense in the prior year. Included in
remeasurement items is an impairment of
the Base Chemicals assets held for sale of
R72,6 billion to reduce the carrying value
of the disposal group down to its fair
value less costs to sell. Also included is an
impairment of the Synfuels liquid fuels
refinery mainly due to lower crude oil
prices, increase in the WACC rate and a
higher cost to procure gas in the longer
term;
translation losses of R6,5 billion
compared to a R604 million gain in 2019.
This was mainly due to the translation of
monetary assets and liabilities. The rand
weakened against the US dollar
throughout 2020, with the closing
exchange rate having weakened by 23%
to R17,33 at 30 June 2020 compared to
R14,08 at 30 June 2019; and
Non-controlling interests
For information regarding our non-controlling
interests, and their share of profit, refer “Item 18—
Financial Statements—Note 24 Interest in significant
operating subsidiaries”.
Profits attributable to non-controlling interests
in subsidiaries of R1 500 million increased by
R1 663 million, or 1 020%, from losses of R163 million
in 2020, which was a decrease of R1 939 million or
109% from earnings of R1 776 million in 2019.
The increase in earnings attributable to
non-controlling interests in 2021, as compared to the
decrease in 2020, is largely attributable to an increase
in the profits attributable to the non-controlling
interests in ROMPCO and Sasol Oil due to higher sales
volumes resulting from the easing of COVID-19
lockdown restrictions in South Africa, higher BFP
prices and a recovering Southern African economic
performance, partially offset by the impact of the
stronger rand/US dollar exchange rate.
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