Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 75
in 2020 (R72,8 billion) compared to 2019 (R12,9
million) as well as the generally soft macroeconomic
environment in Europe and Asia, impacting sales
negatively in the first half of 2020, exacerbated by the
spread of COVID-19 in the second half of the financial
year. Start-up costs associated with the LCCP units had
a further adverse impact on our financial performance.
The LDPE unit at Lake Charles achieved
beneficial operation on 15 November 2020. This unit
was the last of seven units related to the construction of
the LCCP. On 1 December 2020, the divestment of a
50% interest in Sasol’s Base Chemicals business at
Lake Charles to LyondellBasell was successfully closed
through the creation of the 50/50 owned LIP JV LLC.
On 31 December 2020, Sasol Base Chemicals business
disposed of its investment in the Gemini HDPE to
INEOS Gemini HDPE LLC, a wholly owned subsidiary
of INEOS LLC. A loss on disposal of R1,1 billion and
a gain on reclassification of foreign currency translation
reserve of R3,1 billion relating to the sale of a portion
of Sasol’s Base Chemicals business has been
recognised, as well as a profit on disposal of R0,7
billion and a corresponding gain on reclassification of
foreign currency translation reserve of R0,25 billion
relating to the sale of the 50% equity interest in
Sales volumes increased by 110% compared to
the prior year as the LCCP EO/EG plant continues to
produce as planned and the new LCCP ETO unit,
which achieved beneficial operation in January 2020,
ramped-up smoothly, facing robust demand. After the
ETO expansion achieved beneficial operation, the
alcohol expansion and the alumina expansion, as well
as the new Guerbet unit, achieved beneficial operation
in June 2020. As a result, 100% of the LCCP’s
Specialty Chemicals units are online, and 86% of total
nameplate capacity of the LCCP is operational. In
addition, the business benefitted from the LCCP
Ethylene unit reaching beneficial operation in August
and the ramping up of our LLDPE and HDPE plants.
Excluding LCCP volumes, total sales volumes
decreased by 3%.
Earnings before interest and tax increased
from a loss of R77,6 billion to a profit of R8,1 billion
mainly due to the aforementioned higher prices, gains
from asset divestitures and a reduction of net
impairments recognised year on year. The increase in
cash fixed cost was largely in line with inflation despite
the recognition of labour-related accruals which were
absent in the prior year and further influenced by the
aforementioned divestments, hurricane repair costs,
beneficial operation of the LCCP units in 2020 and
2021 cash conservation efforts.
In 2020, as a result of the decision to
undertake a partnering process, the assets and liabilities
relating to our Base Chemicals portfolio within
Chemicals America were classified as disposal groups
held for sale at 30 June 2020. An impairment of R72,6
billion was recognised, reducing the carrying value of
the disposable asset down to its fair value less cost to
A net reversal in impairments was recognised
in 2021 totalling R4,5 billion compared to the
impairment in 2020 of R72,8 billion. The 2021 net
reversal in impairments is mainly due to reversal of
previously recognised impairment of the ethylene
oxide/ethylene glycol (EO/EG) CGU (R4,9 billion)
following a reassessment of the CGU’s post beneficial
operation of all the LCCP units combining the EO/EG
and ethoxylates (ETO) units with the Alcohol units due
to the integrated nature of the value chain. In addition,
the Phenolics assets were written down and a R0,4
billion impairment has been recognised.
For further analysis of our results refer
“Integrated Report—Operational performance
summary” as contained in Exhibit 99.6.
External turnover . . . . . . . . . .
Inter-segment turnover . . . . . .
Total turnover . . . . . . . . . . .
Operating costs and expenses(1) .
Earnings/(loss) before interest
and tax . . . . . . . . . . . . . .
EBIT margin % . . . . . . . . . . .
Results of operations 2020 compared to 2019
Turnover increased by 34% from R21,4 billion
to R28,8 billion mainly due to increased sales volumes
due to the LCCP units reaching beneficial operation
which was partially offset by lower sales prices due to
softer market conditions. Earnings before interest and
tax decreased from a loss of R15,4 billion to a loss of
R77,6 billion mainly as a result of higher impairments
(41 358) (40 883)
Operating costs and expenses net of other income.
Results of operations 2021 compared to 2020
Turnover increased by 15% from R39 989
million to R46 038 million resulting from a