Sasol Ltd 6-K, filed Feb 24, 2020

About this 6-K

Sasol Ltd (SSL)

6-K 2020-02-24 For: 2019-12-31

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Added on April 11, 2026

Derivative financial assets and liabilities¹

Forward rate interpolator model, discounted expected cash flows, numerical approximation, as appropriate

US PPI and US labour index forecast, US dollar and Rand treasury curves, Rand zero swap discount rate

Relates to the embedded derivative contained in the Oxygen Train 17 agreement with Air Liquide, IFRS 16 adoption impact of R624 million and R50 million fair value adjustment at 31 December 2019.

For all other financial instruments, fair value approximates carrying value.

Sasol Ltd filed this 6-K on February 24, 2020.

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The interim financial statements are presented on a condensed consolidated basis.

Income statement
for the period ended
		Half year	Half year	Full year
		31 Dec 19	31 Dec 18	30 Jun 19
		Rm	Rm	Rm
Turnover		99 170	102 944	203 576
Materials, energy and consumables used		(46 373)	(45 960)	(90 589)
Selling and distribution costs		(3 831)	(3 794)	(7 836)
Maintenance expenditure		(5 265)	(4 676)	(10 227)
Employee-related expenditure		(16 445)	(14 789)	(29 928)
Exploration expenditure and feasibility costs		(381)	(167)	(663)
Depreciation and amortisation		(10 977)	(8 392)	(17 968)
Other expenses and income		(6 584)	(5 850)	(19 097)
	Translation (losses)/gains	(227)	454	604
	Other operating expenses and income	(6 357)	(6 304)	(19 701)
Equity accounted profits, net of tax		370	876	1 074
Operating profit before remeasurement items		9 684	20 192	28 342
Remeasurement items¹		169	599	(18 645)
Earnings before interest and tax (EBIT)		9 853	20 791	9 697
Finance income		381	420	787
Finance costs		(2 636)	(252)	(1 253)
Earnings before tax		7 598	20 959	9 231
Taxation		(3 092)	(5 057)	(3 157)
Earnings for the period²		4 506	15 902	6 074
Attributable to
Owners of Sasol Limited		4 053	14 740	4 298
Non-controlling interests in subsidiaries		453	1 162	1 776

		4 506	15 902	6 074

		Rand	Rand	Rand
Per share information
Basic earnings per share		6,56	23,92	6,97
Diluted earnings per share		6,53	23,76	6,93
1	In FY19, remeasurement items included the impairments of the Tetramerization and EO/EG value chains of R7,4 billion (US$526 million) and R5,5 billion (US$388 million), respectively, an impairment of the Ammonia value chain of R3,3 billion and a further impairment of the shale gas assets in Canada of R1,9 billion (CAD181 million).
2	Earnings decreased by 72% to R4,5 billion compared to the prior period. This resulted from a 9% decrease in the rand per barrel price of Brent crude oil, softer global chemical prices and refining margins, lower productivity at our Mining operations and a negative contribution from the LCCP. As the LCCP units progress through the sequential beneficial operation schedule, our revenues do not yet match the costs expensed. We do expect that for the second half of FY20 revenue will match the costs expensed better. The LCCP negatively impacted earnings by R2,8 billion. Earnings were further impacted by approximately R2,0 billion in finance charges for the period as the LCCP units reach beneficial operation.
The notes on pages 10 to 19 are an integral part of these condensed consolidated interim financial statements.

Statement of comprehensive income
for the period ended
	Half year	Half year	Full year
	31 Dec 19	31 Dec 18	30 Jun 19
	Rm	Rm	Rm
Earnings for the period	4 506	15 902	6 074
Other comprehensive income, net of tax
Items that can be subsequently reclassified to the income statement	(1 866)	3 817	1 353
Effect of translation of foreign operations	(1 743)	4 169	1 533
Effect of cash flow hedges	(156)	(452)	(287)
Tax on items that can be subsequently reclassified to the income statement	33	100	107
Items that cannot be subsequently reclassified to the income statement	(35)	56	(265)
Remeasurements on post-retirement benefit obligations	(128)	5	(531)
Fair value of investments through other comprehensive income	75	99	136
Tax on items that cannot be subsequently reclassified to the income statement	18	(48)	130

Total comprehensive income for the period	2 605	19 775	7 162
Attributable to
Owners of Sasol Limited	2 155	18 601	5 377
Non-controlling interests in subsidiaries	450	1 174	1 785
	2 605	19 775	7 162
The notes on pages 10 to 19 are an integral part of these condensed consolidated interim financial statements.

Statement of financial position
at
	Half year	Half year	Full year
	31 Dec 19	31 Dec 18	30 Jun 19
	Rm	Rm	Rm
Assets
Property, plant and equipment1	282 349	181 552	233 549
Assets under construction2	83 474	184 007	127 764
Right of use assets3	16 475	-	-
Goodwill and other intangible assets	3 299	2 792	3 357
Equity accounted investments	10 276	10 961	9 866
Post-retirement benefit assets	1 151	1 292	1 274
Deferred tax assets4	9 686	4 302	8 563
Other long-term assets	7 181	7 223	7 580
Non-current assets	413 891	392 129	391 953
Assets in disposal groups held for sale	1 302	136	2 554
Inventories	30 475	31 203	29 646
Trade and other receivables	25 724	30 515	29 308
Short-term financial assets5	2 279	2 602	630
Cash and cash equivalents	12 674	15 876	15 877
Current assets	72 454	80 332	78 015
Total assets	486 345	472 461	469 968
Equity and liabilities
Shareholders’ equity	222 645	235 997	219 910
Non-controlling interests	6 001	6 241	5 885
Total equity	228 646	242 238	225 795
Long-term debt	121 287	114 013	127 350
Lease liabilities3	15 939	7 216	7 445

Long-term provisions		17 974	15 621	17 622
Post-retirement benefit obligations		12 850	12 141	12 708
Long-term deferred income		560	850	924
Long-term financial liabilities6		2 142	433	1 440
Deferred tax liabilities4		28 791	28 773	27 586
Non-current liabilities		199 543	179 047	195 075
Liabilities in disposal groups held for sale		411	44	488
Short-term debt7		18 380	10 243	3 783
Short-term financial liabilities		1 348	1 264	765
Other current liabilities8		38 013	39 519	44 004
Bank overdraft		4	106	58
Current liabilities		58 156	51 176	49 098
Total equity and liabilities		486 345	472 461	469 968
1	Includes assets under construction capitalised of R69 billion and depreciation for the period of R10 billion.
2	Actual capital expenditure, including accruals, amounted to R21 billion. This includes R10 billion (US$0,7 billion) relating to the LCCP. R69 billion was capitalised to property, plant and equipment, including R55 billion relating to the LCCP.
3	Refer to page 15 for the impact of the adoption of IFRS 16 ‘Leases’.
4	Deferred tax assets and liabilities are determined based on the tax status and rates of the underlying entities. The increase in deferred tax assets relate to our US Operations.
5	Fair value period end adjustments, mainly the zero-cost foreign exchange collars.
6	Includes R674 million relating to an embedded derivative contained in the Oxygen Train 17 agreement with Air Liquide, which was recognised as a Finance Lease under IAS 17. With the adoption of IFRS 16 the agreement is recognised as a service agreement.
7	Short-term debt includes R14 billion relating to the US$1 billion syndicated loan facility raised in November 2019.
8	The movement mainly relates to the R3,9 billion decrease in capital project related payables as the LCCP nears completion.
The notes on pages 10 to 19 are an integral part of these condensed consolidated interim financial statements.

Statement of changes in equity
for the period ended
		Half year	Half year	Full year
		31 Dec 19	31 Dec 18	30 Jun 19
		Rm	Rm	Rm
Balance at beginning of period		225 795	228 608	228 608
Adjustment on initial application of IFRS 16, net of tax1		(290)	–	–
Restated balance at beginning of period		225 505	228 608	228 608
Disposal of business		–	–	(52)
Movement in share-based payment reserve		881	681	1 552
	Share-based payment expense	396	327	707
	Deferred tax	(7)	(122)	(107)
	Sasol Khanyisa transaction	492	476	952
Total comprehensive income for the period		2 605	19 775	7 162
Dividends paid to shareholders		(11)	(4 897)	(8 580)
Final distribution to Sasol Inzalo Public Shareholders		–	(1 372)	(1 372)
Dividends paid to non-controlling shareholders in subsidiaries		(334)	(557)	(1 523)
Balance at end of period		228 646	242 238	225 795
Comprising
Share capital		9 888	9 888	9 888
Retained earnings		186 036	195 789	181 706
Share-based payment reserve		713	(424)	410
Foreign currency translation reserve		28 240	32 653	29 978
Remeasurements on post-retirement benefit obligations		(2 286)	(1 846)	(2 204)
Investment fair value reserve		180	105	132
Cash flow hedge accounting reserve		(126)	(168)	–
Shareholders’ equity		222 645	235 997	219 910
Non-controlling interests in subsidiaries		6 001	6 241	5 885
Total equity		228 646	242 238	225 795

1	The adjustment on initial application of IFRS 16 ‘Leases’ relates the derecognition of the IAS 17 finance lease of Oxygen Train 17 and the recognition of the embedded derivative in the Oxygen Train 17 agreement with Air Liquide. Refer to page 15 for the impact of the adoption of IFRS 16.
The notes on pages 10 to 19 are an integral part of these condensed consolidated interim financial statements.

Statement of cash flows
for the period ended
	Half year	Half year	Full year
	31 Dec 19	31 Dec 18	30 Jun 19
	Rm	Rm	Rm
Cash receipts from customers	102 955	103 145	203 613
Cash paid to suppliers and employees	(83 322)	(78 377)	(152 215)
Cash generated by operating activities1	19 633	24 768	51 398
Dividends received from equity accounted investments	15	1 423	1 506
Finance income received	363	343	682
Finance costs paid2	(2 999)	(2 494)	(6 222)
Tax paid	(3 301)	(1 339)	(3 946)
Cash available from operating activities	13 711	22 701	43 418
Dividends paid	(11)	(4 897)	(9 952)
Dividends paid to non-controlling shareholders in subsidiaries	(334)	(557)	(1 523)
Cash retained from operating activities	13 366	17 247	31 943
Total additions to non-current assets	(25 295)	(31 736)	(56 734)
Additions to non-current assets	(21 442)	(30 433)	(55 800)
Decrease in capital project related payables3	(3 853)	(1 303)	(934)
Additional cash contributions (to)/from equity accounted investments	(137)	54	66
Proceeds on disposals and scrappings4	2 032	53	567
Purchase of investments	(72)	(167)	(222)
Other net cash flow from investing activities	(459)	114	(89)
Cash used in investing activities	(23 931)	(31 682)	(56 412)
Final settlement to Sasol Inzalo Public Shareholders	–	(1 372)	–
Proceeds from long-term debt5	18 504	20 470	93 884
Repayment of long-term debt5	(23 987)	(12 056)	(69 656)
Repayment of lease liabilities	(1 110)	(422)	(344)

Proceeds from short-term debt6		15 136	7 827	977
Repayment of short-term debt		(1 270)	(1 629)	(1 730)
Cash generated by financing activities		7 273	12 818	23 131
Translation effects on cash and cash equivalents		132	348	162
Decrease in cash and cash equivalents		(3 160)	(1 269)	(1 176)
Cash and cash equivalents at the beginning of period		15 819	17 039	17 039
Reclassification to disposal groups held for sale		11	–	(44)
Cash and cash equivalents at the end of the period7		12 670	15 770	15 819
1	Cash generated by operating activities decreased by 21% to R19,6 billion compared to R24,8 billion in the prior period. This was largely due to the softer macroeconomics and losses attributable to the LCCP. The decrease was partially negated by another strong working capital and cost performance from the foundation business. Working capital decreased by R433 million during the period mainly as a result of focused management actions.
2	Included in finance costs paid are amounts capitalised to assets under construction of R1 974 million.
3	The movement is mainly as a result of the LCCP nearing completion.
4	Includes proceeds from the disposal of our investment in Sasol Huntsman GmbH & co KG of EUR91 million (R1 506 million).
5	Includes additional bilateral facilities of US$250 million (R3,7 billion) and R2,2 billion in the local debt market issued under the Domestic Medium Term Note programme offset by net repayment of RCF (US$671 million/R9,9 billion).
6	Short-term debt includes the US$1 billion (R14 billion) syndicated loan facility raised in November 2019.
7	Includes bank overdraft.
The notes on pages 10 to 19 are an integral part of these condensed consolidated interim financial statements.

Segment report
for the period ended

Turnover					Earnings before interest and tax (EBIT)
Full year	Half year	Half year			Half year	Half year	Full year
30 Jun 19	31 Dec 18	31 Dec 19			31 Dec 19	31 Dec 18	30 Jun 19
Rm	Rm	Rm	Segment analysis		Rm	Rm	Rm
26 060	12 584	12 983	Operating Business Units		2 397	3 425	3 812
20 876	9 906	10 348		Mining	1 374	2 661	4 701
5 184	2 678	2 635		Exploration and Production International	1 023	764	(889)
200 912	101 403	98 781	Strategic Business Units		6 549	16 240	8 095
83 803	43 623	41 206		Energy	6 743	9 565	16 566
48 813	23 011	24 642		Base Chemicals	(1 488)	3 076	(1 431)
68 296	34 769	32 933		Performance Chemicals	1 294	3 599	(7 040)
78	26	–		Group Functions	907	1 126	(2 210)
227 050	114 013	111 764		Group performance	9 853	20 791	9 697
(23 474)	(11 069)	(12 594)		Intersegmental turnover
203 576	102 944	99 170		External turnover

	Revenue by major product line
	Half year	Half year	Full year
	31 Dec 19	31 Dec 18	30 Jun 19

	Rm	Rm	Rm
Base Chemicals	24 183	22 668	48 113
Polymers	13 974	12 346	25 864

Solvents	5 965	6 441	13 178
Fertilisers and explosives	2 240	2 333	4 718
Other base chemicals	2 004	1 548	4 353
Performance Chemicals	32 452	34 349	67 228
Organics	24 790	26 193	51 405
Waxes	3 927	4 387	8 474
Advanced materials	3 735	3 769	7 349
Upstream, Energy and Other
Coal	906	1 826	3 222
Liquid fuels and crude oil	36 884	39 633	75 819
Gas (methane rich and natural gas) and condensate	3 134	2 991	5 986
Other (Technology, refinery services)	1 148	991	2 308
Revenue from contracts with customers	98 707	102 458	202 676
Revenue from other contracts (franchise rentals, use of fuel tanks and fuel storage)	463	486	900
Total external turnover	99 170	102 944	203 576

i	Forward-looking statements are the responsibility of the Directors and in accordance with standard practice, it is noted that this statement has not been reviewed and reported on by the Company’s auditors.
ii	All comparisons to the prior period refer to the six months ended 31 December 2018. All numbers are quoted on a pre-tax basis, except for earnings attributable to shareholders.
iii	All other operational and financial measures (such as cash fixed cost) have not been reviewed and reported on by the Company’s auditors.

Salient features
for the period ended
			Half year	Half year	Full year
			31 Dec 19	31 Dec 18	30 Jun 19
Other financial information
Total debt (including bank overdraft)		Rm	155 610	131 578	138 636
interest-bearing		Rm	155 546	130 800	137 691
non-interest-bearing		Rm	64	778	945
Finance expense capitalised		Rm	1 974	3 440	6 942
Capital commitments (subsidiaries and joint operations)¹		Rm	49 394	71 248	60 095
authorised and contracted		Rm	217 047	187 515	212 848
authorised, not yet contracted		Rm	37 827	53 163	43 097
less expenditure to date		Rm	(205 480)	(169 430)	(195 850)
Capital commitments (equity accounted investments)		Rm	1 957	1 018	1 283
authorised and contracted		Rm	641	618	715
authorised, not yet contracted		Rm	1 912	620	1 100
less expenditure to date		Rm	(596)	(220)	(532)
Effective tax rate²		%	40,7	24,1	34,2
Number of employees³		number	31 363	31 430	31 429
1	During FY19 a misstatement was identified in the calculation of the LCCP capital cost estimate that was included in the capital commitment disclosure as at 31 December 2018 and 30 June 2018. The misstatement related to the inaccurate estimation of the cost still to be incurred on the project. Accordingly, the capital commitments disclosure as at 31 December 2018 that were originally presented as R58 640 million has been revised by R12 608 million (US$878 million) to R71 248 million. Management concluded that the revision is not material to interim financial results.
2	Our effective corporate tax rate increased from 24,1% to 40,7%. The effective corporate tax rate is 12,7% higher than the South African corporate income tax rate of 28%, mainly due to non-deductible finance costs as a result of increased funding required for the LCCP and the increase in US tax losses at a lower US corporate income tax rate. The positive benefit of the lower US corporate income tax rate will dilute our effective corporate tax rate as soon as the LCCP is generating taxable profits.
3	The total number of employees includes permanent and non-permanent employees and the group’s share of employees within joint operations, but excludes contractors and equity accounted investments’ employees.

2	Headline earnings per share refers to disclosure made in terms of the JSE Limited Listing Requirements.
The reader is referred to the definitions contained in the 2019 Sasol Limited financial statements.

Level 1	Quoted prices in active markets for identical assets or liabilities.
Level 2	Inputs other than quoted prices that are observable for the asset or liability (directly or indirectly).
Level 3	Inputs for the asset or liability that are unobservable.

	IFRS 13 fair value hierarchy	Carrying value	Fair value
		Carrying value	Fair value
Instrument		Rm	Rm	Valuation method	Significant inputs
Listed long-term debt	Level 1	45 829	49 001	Fair value	Quoted market price for the same or similar instruments
Derivative financial assets and liabilities	Level 2	(537)	(537)	Forward rate interpolator model, discounted expected cash flows, numerical approximation, as appropriate	Foreign exchange rates, market commodity prices, US$ swap curve, as appropriate

Date: 24 February 2020	By:	/s/ MML Mokoka
	Name:	Lucy Mokoka
	Title:	Company Secretary

	30 June	IFRS 16	1 July
	2019	Impact	2019
	Rm	Rm	Rm
Statement of financial position
Assets
Property, plant and equipment	233 549	(7 417)	226 132
Assets under construction	127 764	(71)	127 693
Right of use assets	–	16 045	16 045
Goodwill and other intangible assets	3 357	–	3 357
Equity accounted investments	9 866	–	9 866
Post-retirement benefit assets	1 274	–	1 274
Deferred tax assets	8 563	–	8 563
Other long-term assets	7 580	(191)	7 389
Non-current assets	391 953	8 366	400 319
Assets in disposal groups held for sale	2 554	–	2 554
Inventories	29 646	–	29 646
Trade and other receivables	29 308	(13)	29 295
Short-term financial assets	630	–	630
Cash and cash equivalents	15 877	–	15 877
Current assets	78 015	(13)	78 002
Total assets	469 968	8 353	478 321
Equity and liabilities
Shareholders’ equity	219 910	(290)	219 620
Non-controlling interests	5 885	–	5 885
Total equity	225 795	(290)	225 505
Long-term debt	127 350	(1 005)	126 345

Lease liabilities	7 445	7 933	15 378
Long-term provisions	17 622	–	17 622
Post-retirement benefit obligations	12 708	–	12 708
Long-term deferred income	924	(152)	772
Long-term financial liabilities	1 440	624	2 064
Deferred tax liabilities	27 586	(111)	27 475
Non-current liabilities	195 075	7 289	202 364
Liabilities in disposal groups held for sale	488	–	488
Short-term debt	3 783	1 383	5 166
Short-term financial liabilities	765	–	765
Other current liabilities	44 004	(29)	43 975
Bank overdraft	58	–	58
Current liabilities	49 098	1 354	50 452
Total equity and liabilities	469 968	8 353	478 321