Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 76
combination of higher sales prices and sales volumes
across a broad range of our product offering. Earnings
before interest and tax increased from a loss of R894
million to a profit of R4 680 million mainly as a result
of the absence of the significant impairments recorded
in 2020 of R3 395 million, as well as the generally
improved macroeconomic environment in Europe and
Asia, impacting positively on both sales prices and
volumes, despite certain of our products and markets
still being impacted by COVID-19.
Significant accounting policies and estimates
The preparation of our consolidated financial
statements requires management to make estimates and
assumptions that affect the reported results of our
operations. Some of our accounting policies require the
application of significant judgements and estimates by
management in selecting the appropriate assumptions
for calculating financial estimates. By their nature,
these judgements are subject to an inherent degree of
uncertainty and are based on our historical experience,
terms of existing contracts, management’s view on
trends in the industries in which we operate and
information from outside sources and experts. Actual
results may differ from those estimates. Management
believes that the more significant judgement and
estimates relating to the accounting policies used in the
preparation of Sasol’s consolidated financial statements
could potentially impact the reporting of our financial
results and future financial performance.
Sales volumes increased by 4% compared to
the prior year as demand improved following the easing
of COVID-19 restrictions and supported by our ability
to maintain production output without significant
interruptions during the period. The increase in fixed
cost spending for 2021 was caused by exchange rate
impacts and otherwise above-inflationary targets
mainly as a result of recognition of labour cost-related
accruals which were absent in the prior year.
We evaluate our estimates, including those
relating to environmental rehabilitation and
decommissioning obligations, long-lived assets, trade
receivables, inventories, investments, intangible assets,
income taxes, share-based payment expenses, hedges
and derivatives, pension and other post-retirement
benefits and contingencies and litigation on an ongoing
basis. We base our estimates on historical experience
and on various other assumptions that we believe to be
reasonable under the circumstances, the results of
which form the basis for making our judgements about
carrying values of assets and liabilities that are not
readily available from other sources.
Results of operations 2020 compared to 2019
Turnover decreased by 3% from R41 423
million to R39 989 million mainly due to decreased
sales volumes and reduced sales margins. Earnings
before interest and tax decreased from a profit of
R3 100 million to a loss of R894 million mainly as a
result of higher impairments in 2020 (R3 395 million)
compared to 2019 (R76 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 restrictions caused by the
spread of COVID-19 in the second half of the financial
year.
In addition to the items below, “Item 18—
Financial Statements” are incorporated by reference.
Sales volumes decreased by 4% compared to
the prior year as demand softened during the year and
was then further impacted in a number of product lines
and applications by the COVID-19 pandemic towards
the end of 2020.
For accounting policies and areas of
judgements relating to:
In 2020, the Eurasia region recognised an
impairment of R2,8 billion of the German-based wax
value chain. The Chinese ETO value chain was
impaired by R0,5 billion (RMB 193 million). The
impairments were largely driven by a softer market
outlook, partly due to COVID-19, and unfavourable
assumption forecasts, both impacting margins
negatively.
For further analysis of our results refer
“Integrated Report—Operational performance
summary” as contained in Exhibit 99.6
75
Going concern assumption, refer “Item
18—Financial Statements—Note 2 Going
concern”;
Valuation of share-based payments, refer
“Item 18—Financial Statements—
Note 36 Share-based payment reserve”;
Impairments, refer “Item 18—Financial
Statements—Note 10 Remeasurement
items affecting operating profit”;