Audited Financial Results for the year ended 30 June 2018
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
Sasol Ordinary Share codes: JSE: SOL NYSE: SSL
Sasol Ordinary ISIN codes: ZAE000006896 US8038663006
Sasol BEE Ordinary Share code: JSE: SOLBE1
Sasol BEE Ordinary ISIN code: ZAE000151817
("Sasol" or "the company")
Audited Financial Results for the year ended 30 June 2018
Sasol creates sustainable
for all stakeholders through a
on our strategy and having the
in how we allocate capital
To create superior value for our customers, shareholders and other
stakeholders. Through our talented people, we use selected technologies
to safely and sustainably source, produce and market chemical and energy
To be a leading integrated global chemical and energy company, proudly
rooted in our South African heritage, delivering superior value to our
We ensure We care for our We value We deliver what
that safety, people and and promote we promise to
health and support their diversity and our customers,
environment is development inclusion shareholders
a top priority and other
We act with We comply We take ownership
respect and with all and accountability
integrity at all applicable legal for our individual and
times requirements team performance
AUDITED FINANCIAL RESULTS
for the year ended 30 June 2018
Sasol is a global integrated chemicals and energy company. Through our
talented people, we use selected technologies to safely and sustainably
source, produce and market chemical and energy products competitively
to create superior value for our customers, shareholders and other
- EBITDA up 10% to R52 billion
- Core headline earnings per share down 6% to R36,03
- Headline earnings per share down 22% to R27,44
- Normalised cash fixed costs remained flat in real terms
- Dividend per share* R12,90 (2,8xCHEPS)
* Our dividend policy is to pay dividends with a dividend cover on core headline earnings per share (CHEPS)
- Plant interruptions lowers Secunda Synfuels Operations volumes by 3%
- Eurasian Operations volumes up 3%
- ORYX GTL utilisation at 95%
- Strong market demand drives 1% increase in Performance Chemicals sales volumes
- Liquid fuels sales volumes down 2%, Base Chemicals volumes down 1% both impacted by Synfuels plant incidents
SOCIAL VALUE AND TRANSFORMATION
- Invested R2 billion in skills and socio-economic development, up 25%
- Implemented Sasol Khanyisa, our new Broad-Based Black Economic Empowerment ownership
transaction to advance our transformation imperative
- 88% complete, tracking schedule and revised cost estimate of US$11,13 billion
- Steam utility system commissioned earlier than planned
* Lake Charles Chemicals Project (LCCP)
Safety Recordable Case Rate (RCR), excluding illnesses,improved to 0,27, our lowest so far, regrettably four fatalities
Joint President and Chief Executive Officer, Bongani Nqwababa said:
Our resilient 2018 performance was underpinned by higher sales and production volumes, in the second half of the
year. This was enabled by our continued focus on factors within our control and higher global oil prices, resulting in
improved product prices and margins, notwithstanding continued exchange rate volatility. Overall, our operational
performance was satisfactory, however unplanned Eskom electricity supply interruptions and two internal outages
at Secunda Synfuels Operations, negatively impacted volumes. Enhancing our foundation businesses, a core aspect
of our value-based strategy, will be delivered through ensuring safe and sustainable operations, robust asset
management strategies, continuous improvement and digitalisation, underscored by disciplined capital allocation.
Joint President and Chief Executive Officer, Stephen Cornell said:
2019 will be a defining year for Sasol with the start-up of the LCCP, a catalyst for transforming our earnings profile(1).
Mozambique, our other key growth area, remains central to our gas strategy where we are stepping up efforts to
secure long-term gas feedstock, while delivering on our stakeholder commitments. Improving the flexibility of our
balance sheet, through increased cash flow and reduced gearing, and managing an optimal capital structure will be
a key focus ahead. We remain confident in delivering on our strategy, which will realise sustainable long-term value
for our stakeholders.
Financial results overview(2,4)
Sasol delivered a resilient set of results, underpinned by satisfactory sales and production volumes, delivering a flat
normalised real cash fixed cost base and benefitting from much higher crude oil and product margins in the second
half of the financial year. Our financial results were negatively impacted by several unplanned Eskom electricity
supply interruptions and two internal outages at our Secunda Synfuels (SSO) and Natref operations that resulted in
lower production volumes, as well as a 6% stronger average rand/US dollar exchange rate compared to the prior period.
Our underlying cash flow performance was robust. Earnings before interest, tax, depreciation and amortisation
(EBITDA(4)) increased by 10% when compared to the prior year. Core headline earnings(3) per share (CHEPS) however
decreased by 6% to R36,03 compared to the prior period and Headline Earnings Per Share decreased by 22% to
R27,44. The difference between core headline earnings and EBITDA in the current year is largely due to depreciation
of approximately R16 billion and employee share-based payment expenses of R1,5 billion due to the marked
improvement of the Sasol share price at the end of the financial year. The share-based payment relating to our
Khanyisa Broad-Based Black Economic Empowerment (B-BBEE) transaction of R3 billion is excluded from core
headline earnings and EBITDA as it is considered to be a once-off and non-cash item.
Sasol's core headline earnings per share were impacted by the following notable once-off and period close items:
% change Rand per Rand per
2018 vs 2017 share share
Headline earnings per share (22) 27,44 35,15
Translation impact of closing exchange rate (106) (0,09) 1,39
Mark-to-market valuation of hedges 3,81 (0,42)
Implementation of Khanyisa B-BBEE transaction 4,82 -
LCCP ramp-up depreciation 0,05 -
Once-off Uzbekistan license fee - (0,59)
Strike action at Mining and related costs - 1,45
Provision for tax litigation matters - 1,49
Core headline earnings per share(3) (6) 36,03 38,47
Earnings attributable to shareholders for the year ended 30 June 2018 decreased by 57% to R8,7 billion from
R20,4 billion in the prior year. This resulted in earnings per share (EPS) decreasing by 57% to R14,26 compared to
the prior year. The stronger average rand/US dollar exchange rate and the negative impact of remeasurement
items, largely driven by the stronger longer-term rand exchange rate, resulted in a much lower profit and earnings
per share for the year.
The closing exchange rate however weakened by 5% which negatively impacted gearing and the valuation of our
derivatives and foreign debtors and loans. Our hedging programme for the 2018 and 2019 financial years is
complete and positions Sasol well to steer through these periods of volatility. The average Brent crude oil price
moved 28% higher compared to the prior year, and, since December 2017, spot prices have moved closer to the
US$75/bbl mark which positively impacted our results. The rand per barrel oil price increased by approximately
20% to R818 per barrel compared to 2017, (refer to table below), and has subsequently increased by approximately
15% - 25% since the end of June 2018. The spot rand per barrel oil price is now ranging between R950 and R1 050
The movement in macroeconomic factors can be summarised as follows:
% change 2018 2017
Rand/US dollar average exchange rate (6) 12,85 13,61
Rand/US dollar closing exchange rate 5 13,73 13,06
Average dated Brent crude oil price (US dollar/barrel) 28 63,62 49,77
Refining margins (US dollar/barrel) (8) 9,32 10,09
Average Henry Hub gas price (US dollar/million British thermal unit) (2) 2,95 3,00
(1) 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.
(2) All comparisons to the prior period refer to the year ended 30 June 2017. All numbers are quoted on a pre-tax basis, except for
earnings attributable to shareholders and the Response Plan cash conservation measures.
(3) Core headline earnings are calculated by adjusting headline earnings with once-off items, period close adjustments and depreciation
and amortisation of significant capital projects, exceeding R4 billion which have reached beneficial operation and are still ramping up
and share-based payments on implementation of B-BBEE transactions. Period close adjustments in relation to the valuation of our
derivatives at period end is to remove volatility from earnings as these instruments are valued using forward curves and other
market factors at the reporting date and could vary from period to period. We believe core headline earnings are a useful measure of
the group's sustainable operating performance. However, this is not a defined term under IFRS and may not be comparable with
similarly titled measures reported by other companies. Core headline earnings constitutes pro-forma financial information in terms
of the JSE Limited Listings Requirements and should be read in conjunction with the basis of preparation set out on page 19.
(4) EBITDA is calculated by adjusting earnings before interest and taxation for depreciation, amortisation, remeasurement items, share-
based payments and unrealised gains and losses on our hedging activities. We believe EBITDA is a useful measure of the group's
underlying cash flow performance. However, this is not a defined term under IFRS and may not be comparable with similarly titled
measures reported by other companies.
Operational and cost performance
Sasol experienced some challenges with regards to our operational performance during the year, largely due to
planned and unplanned production interruptions at SSO, Natref and Mining which impacted production and sales
volumes across the value chain. Despite these interruptions, we delivered a stronger overall operational
performance in the second half of the year. Our production run-rates during the fourth quarter of financial year
2018, on an annual average basis, supports our internal targeted run-rates.
Sales volumes increased by 1% for our Performance Chemicals business spurred by robust market demand despite
Eskom electricity supply interruptions. Base Chemicals reported a 1% decrease in sales volumes mainly due to
production interruptions at SSO and a stock build for our high density polyethylene joint venture in the US.
Excluding the impact of Eskom electricity supply interruptions, sales volumes increased by 1%. Liquid fuels sales
volumes were down 2% due to lower volumes from SSO and Natref and a challenging South African retail liquid
The highlights of our business performance are summarised below:
- In the first half of the year, our mining operations were focused on ramping up production volumes post the
labour strike in the prior year. However, in the period December 2017 to February 2018 we experienced three
tragic work-related fatalities which significantly slowed us in ramping up our operational performance and
resulted in lower than expected production volumes.
We are committed to ensuring that our mining operations remain safe and have implemented a number of
initiatives to restore our safety performance. Our Business Improvement Programme (BIP), aimed at increasing
productivity and achieving cost efficiency was refocused post the stabilisation of our safety performance in
March 2018 and to date we have seen some positive results. Our production run rate over the past quarter has
improved by more than 20% compared to the previous quarter and is representative of a run rate to achieve
40 million tons per year and match pre strike production rates.
- Production volumes from SSO decreased by 3% to 7,6 million tons mainly as a result of unplanned Eskom supply
interruptions (1%) and internal outages (2%) during the year. Notwithstanding, we continued to improve
operational processes and plant efficiencies to realise better production yields. Our production run rates
achieved during May and June 2018, supports full year production of approximately 7,8 million tons.
- Our Eurasian Operations continued to improve on their operational performance and delivered a 3% increase in
production volumes. This was largely due to stronger product demand and increased plant availability.
- ORYX GTL delivered a strong production performance, with an average utilisation rate of 95% exceeding our
market guidance of 92%.
- Natref's production volumes were 9% lower due to planned shutdowns and an unexpected electricity supply
interruption at the start of the financial period. The second half of the year however yielded much improved
production rates despite a planned shutdown in quarter four. The increased volumes in the second half of 2018
partially offsets the lower production volumes recorded in the first half of the year. The production run rate for
quarter four was 600mï¿½/h resulting in a full year run rate of 536mï¿½/h. This compares to a run rate of 592mï¿½/h in 2017.
A detailed production summary and key business performance metrics for the financial year for all our businesses is
available on our website, <a href="http://www.sasol.com" target="_blank">www.sasol.com</a>.
Turning to our cost performance, cash fixed costs were up 2% in real terms in the first half of the year mainly as a
result of above-mentioned planned and unplanned production interruptions. In the second half of the year, we
increased our focus on improving our cost efficiency and managed to keep our normalised cash fixed costs
(excluding growth and once-off items) for the year flat in real terms. We are of the view that our cost management
processes remain robust to protect and improve our cost competitive position and still positions us in managing
our cost base to within our inflation target, while ensuring that we maintain safe and sustainable operations.
Whilst we have reduced our cost base significantly through our Business Performance Enhancement Programme
(BPEP) and Response Plan (RP), we are continuing to evaluate further opportunities to reduce cost through our
Continuous Improvement (CI) programme. The inflation rate for South Africa remains volatile and has moved from
6,5% over the past two years to 4,7% at 30 June 2018. Against this backdrop, we are targeting an inflation rate of
6% as a more sustainable increase for our cost base. We are well positioned to continue with this improved
operational and cost performance into the 2019 financial year.
Cash and capital performance
Cash generated by operating activities decreased slightly to R42,9 billion compared with R44,1 billion in the prior
year. This is largely attributable to a R3,8 billion increase in working capital. Our trade receivables increased by
R2,8 billion due to higher chemical sales prices and higher volumes in June 2018 which translated into cash in July
2018. In addition, due to the last day of the financial year being on a weekend, R1 billion was received from debtors
in the first three business days of July 2018. Inventory increased by R3,4 billion mainly as a result of higher
feedstock costs as a result of the increase in crude oil prices compared to the previous financial year. Inventory
holding in days were slightly higher compared to the previous financial year.
Actual capital expenditure, including accruals, amounted to R53,4 billion. This includes R30,1 billion (US$2,3 billion)
relating to the LCCP. The capital spending rate is aligned to our internal targets and with previous market guidance provided.
Our net cash position decreased by 42%, from R29,3 billion in the prior period to R17 billion as at 30 June 2018 due
to the funding of the LCCP and investments to fund growth projects. Loans raised during the year amounted to
R25 billion, mainly for the funding of our US growth project. Short-term debt increases relates to the Sasol Inzalo Public
transaction unwinding in September 2018. During the year, we increased our existing US$1,5 billion Revolving Credit
Facility to US$3,9 billion and extended the maturity to five years, with the inclusion of two further extension
options of one year each. In addition, our Domestic Medium Term Note Programme of R8 billion provides us with
access to the South African debt capital markets. The focus on our funding plan will now shift to ensuring that
longer-term debt instruments are put in place.
Due to the funding of the LCCP, more than 80% of our debt is now US dollar denominated. Given the significantly
weaker closing exchange rate of R13,73 and the related translation loss of R4,8 billion arising on the valuation of the
balance sheet at year end, gearing increased to 43,2%, which is slightly below our internal ceiling and market
guidance. Included in net debt is R6,1 billion of new finance leases mainly relating to Oxygen Train 17 in Secunda and
rail storage facilities at the LCCP.
We are actively reviewing our capital structure and funding plan to ensure that we maintain an optimum solvency
and liquidity profile. The unwinding of the Sasol Inzalo transaction has been structured to ensure that our credit ratings
are maintained at investment grade and with the least amount of dilution to our shareholders. The Sasol Limited
Board (the Board) approved that Sasol repurchase the shares from Inzalo Public Funding Limited (RF) and settle the outstanding
debt of R7,4 billion and a cash top-up for value realised of approximately R600 million in September 2018, assuming a share
price of R500. This step will eliminate any Sasol shareholder dilution as a result of the unwind of the Sasol Inzalo B-BBEE
We therefore expect our gearing to remain around peak levels of 40% - 44% in 2019 due to higher debt associated
with the Inzalo unwind. Accordingly, the Board approved that we manage the balance sheet to below our peak
internal gearing ceiling of 44% for the 2019 financial year.
In January 2018, S&P Global Ratings affirmed Sasol's credit rating at a BBB-/A-3 with a stable outlook. This is two
notches above the South African sovereign credit rating and is at investment grade. Similarly Moody's Investors
Service (Moody's) confirmed South Africa's sovereign rating at Baa3 changing the rating from negative to stable in
March 2018, while affirming Sasol's global scale long-term issuer rating at Baa3, adjusting the outlook from
negative to stable. Sasol's national scale long-term rating was affirmed at Aaa.za. Moody's has delinked Sasol from
the South African sovereign rating by one notch.
Our dividend policy is to pay dividends with a dividend cover range based on CHEPS. Taking into account the impact
of the current volatile macroeconomic environment, capital investment plans, the current gearing range of 43,2%,
and the dividend cover range, the Board has declared a gross final dividend of R7,90 per ordinary share and Sasol
BEE ordinary share (1,3% higher compared to the prior year). The dividend cover was 2,8 times at 30 June 2018
(30 June 2017: 2,8 times).
Update on hedging activities
As part of our enterprise risk management framework, we entered into a number of hedges to mitigate specific
financial market risks and provide protection of our balance sheet and operating cash flows against unforeseen
movements in oil prices, interest rates, currency movements, commodity and final product prices. A summary of
our group hedges are presented below:
Brent oil - put options
Number of barrels hedged mm bbl 50,25 48,00
Average Brent crude oil price floor, net of costs US$/bbl 47,82 53,36
Premiums paid US$ m 125,00 131,00
Rand/US dollar currency - zero-cost collar instruments
US$ exposure hedged US$bn 4,00 4,00
Annual average floor R/US$ 13,46 13,14
Annual average cap R/US$ 15,51 15,14
Export coal - swaps
Number of tons hedged mm tons 2,80 1,40
Average coal swap price US$/ton 76,11 81,82
Ethane gas - Swaps
Number of barrels hedged mm bbl 2,30 3,50
Average ethane gas swap price US$ c/gal 27,54 27,30
Our hedging strategy has held us in good stead as we have managed to secure a floor of US$48/bbl for 2018 and
US$53/bbl for 2019 which protects our balance sheet against crude oil price volatility. On the exchange rate, we
have realised gains of R2,8 billion (cash flow) in 2018 which protected earnings and the balance sheet given the
average exchange rate of R12,85/US$1.
The current volatility in the crude oil price and exchange rate impacted the valuation of the open hedges at the end
of 2018. The unrealised losses include:
- R0,3 billion loss on the rand/US dollar zero-cost collars;
- R1,2 billion loss on Brent crude oil put options. The open instruments were valued against an average strike of
- R0,4 billion loss on export coal swaps.
These losses are highly dependent on market factors and could change in 2019 depending on the actual oil price
realised and exchange rate performance. We have completed our hedging programme for 2019 and are considering
our hedging strategy for 2020 given the current oil price outlook and exchange rate volatility.
Continuous improvement and digitalisation
Our low oil price RP achieved cumulative cash savings of R85,3 billion since January 2015, exceeding our target
range of R65-75 billion. The RP has delivered sustainable annual cash fixed cost savings of R3,5 billion which is in
addition to the R5,4 billion sustainable cost savings from our BPEP. This brings our cumulative sustainable cost
savings to R8,9 billion. We have now formally closed the RP at the end of June 2018. This proactive initiative
enabled us to manage the balance sheet through periods of oil price volatility, while maintaining our investment
grade and ability to fund our growth projects.
To ensure that we remain relevant and competitive and to reap the benefits of a higher oil price, we have
introduced a CI programme. CI, building on the solid foundation established by the BPEP and the RP, is aimed at
ensuring our continued competitiveness at an oil price of $40/bbl, while enhancing our offering to markets across
all the industries in which we compete. Our medium-term target is to increase our Return on Invested Capital (ROIC)
for our foundation businesses by at least two percentage points by 2022 to 19%. This is off a 2017 actual base,
normalised for remeasurements and once-off items and excluding assets under construction. To date, we have
identified value enhancing opportunities to the value of 50% of the target, which positions us well towards
achieving our 2022 medium-term target.
Value adding digitalisation improvements, process simplification, selective core function repositioning and asset
performance reviews, are considered across all our businesses globally as key enablers to achieving our CI targets.
Our digitalisation objectives are centered around improving asset health management (predictive maintenance),
increasing the effectiveness and efficiency of operations (yield, energy, throughput, plan and schedule
achievement), advancing customer engagement, and extracting value from business process automation. Through
the effective use of data and digital technologies, we are positioning digitalisation to significantly contribute to our
continuous improvement target of a 2% ROIC uplift by 2022. We are making steady progress with our focused
asset review process. Several non-strategic assets have been identified for possible disposal or reduced
shareholding. During the past financial year we successfully disposed of our shareholding in our Base Chemical joint
ventures in Malaysia and several smaller investments. The disposal process for our Canadian shale assets has
commenced. Market updates will be made as sufficient progress is made without negatively impacting the disposal process.
Effective tax rate
Our effective corporate tax rate increased from 28,3% to 35,4% largely as a result of impairments relating to our
shale gas assets in Canada (R2,8 billion) and the Production Sharing Agreement (PSA) in Mozambique (R1,1 billion)
as well as the share-based payment expense (R3 billion) with the implementation of Sasol Khanyisa. The adjusted
effective tax rate, excluding equity accounted investments, remeasurements and once-off items, is 27,3%
compared to 26,5% in the prior year.
Satisfactory operational performance, higher oil and product prices(1,3)
Operating Business Units
Mining - improving productivity, benefitting from higher global coal prices
Earnings before interest and tax (EBIT) increased by 41% to R5,2 billion compared to the prior period, mainly as a
result of the strike action in 2017. Earnings, excluding the strike cost and remeasurement items, increased by 4%
due to higher selling prices to SSO, an increase in export coal sales volumes and a 16% increase in export coal prices,
partially offset by additional external coal purchases of R865 million to restore the stockpile to two million tons. At
30 June 2018, our coal stockpiles were fully restored through own production and additional external coal
purchases. Based on our improved production run rate in the last quarter, we expect our external purchases from
Anglo Coal's Isibonelo Colliery to return to our targeted level of five million tons per year. External coal purchased to
supplement production ceased during July 2018.
Normalised unit cost of production increased by 5% to R284/ton compared to the prior year as a result of
productivity rates not reaching our planned internal targets. This is in line with previous market guidance.
Sasol Mining concluded a three-year wage agreement with all five of our participating trade unions in August 2017.
Exploration and Production International (E&PI) - strong operational delivery from Mozambique and
Gabon, partial impairment of PSA
EBIT adjusted for remeasurement items and the closing rate translation effect (normalised earnings*) amounted to
R270 million for the period.
Our Mozambican producing operations recorded an EBIT of R2 billion largely due to higher sales prices which was
partly negated by lower demand in the Mozambican gas market. The valuation of the PSA was impacted by weaker
long-term macroeconomic assumptions and lower than expected oil volumes. This resulted in a partial impairment
of R1,1 billion (US$94 million). We are currently reviewing the capital spend on the oil field development plan
following the results of the drilling campaign and an update to the PSA approved capital expenditure will be
communicated at the 2019 interim results. We expect lower capital expenditure as a result of the oil development
but the gas development still remains according to our estimates made at FID (Final Investment Decision).
Our Gabon asset recorded an EBIT of R537 million, 82% higher compared to the prior year largely due to higher
sales prices. This was partially offset by a 12% decrease in production volumes resulting from the natural decline of
We impaired our Canadian shale gas assets by R2,8 billion in the first half of the year due to a further decline in
long-term gas prices. The disposal process for these assets has commenced, however these assets have not yet
been classified as held-for-sale. Further announcements will be made once the process develops to an advanced stage.
Strategic Business Units
Performance Chemicals - increased sales volumes, robust market demand, adversely impacted by
Our sales volumes increased by 1% compared to the prior year despite Eskom electricity interruptions at SSO and
Hurricane Harvey. We continued to take advantage of the strong demand for our organics and inorganics products
and expanded our footprint in differentiated markets. The margins for our European and US specialty businesses
remained resilient, benefitting from robust demand and favourable market conditions. Production volumes from
our Eurasian Operations increased by 3% due to stronger demand and increased plant availability.
EBIT decreased by 7% to R8,2 billion compared to the prior year, mainly due to the stronger exchange rate, start-up
costs associated with our growth projects and production interruptions at SSO. Excluding growth costs associated
with our projects in the US and Brunsbï¿½ttel, cash fixed costs were contained to 2,6% for the year, which is below
Base Chemicals - lower volumes, profitability adversely impacted by the stronger rand
Our business benefitted from higher chemical US dollar prices, which improved by 12% due to higher crude oil
prices and favourable conditions prevailing in certain of our Solvents markets. The market demand remained strong
for most of our products, however the impact of the stronger exchange rate offset this benefit in earnings.
Normalised earnings* decreased by 18% to R5,2 billion compared to the prior year mainly due to the stronger
exchange rate which negatively impacted earnings by R1,8 billion or 27%. Our cash fixed costs, normalised for
growth and once-off items increased by only 5,5%, which is below our inflation target. Remeasurement items
includes an impairment of R5,2 billion (R3,7 billion after tax) on our South African Chlor Vinyls cash generating unit,
as a result of the continued and sustained strengthening of the exchange rate outlook and the resulting impact on
Base Chemicals margins.
Sales volumes decreased by 1% mainly due to production interruptions at SSO. Improved efficiencies in our Ethylene
and Propylene value chains have however partially negated the impact of production interruptions on sales volumes.
Our 50% joint venture HDPE plant with Ineos Olefins and Polymers USA achieved beneficial operation in November
2017. The plant ramped up production during quarter four and is performing to expectations. We have successfully
completed all guarantee runs and transitioned to bimodal production.
As part of the strategic review of our asset portfolio, we disposed of our 40% interest in the Petronas Chemicals
LDPE plant and our 12% share in Petronas Chemicals Olefins plant in March 2018 for R1,9 billion (US$163 million). We
are continuing to review our other assets and investments in the portfolio to further enhance performance and
improve the ROIC for the group.
Energy - margins improve, but volumes under pressure
Our normalised earnings* margin increased from 21% to 22% mainly as a result of a higher crude oil prices. This was
partially offset by lower liquid fuels volumes of R680 million (6%) and the stronger exchange rate of R1,9 billion
Normalised earnings* increased by 12% to R15,1 billion when compared to the prior year. We continued to focus on
cost containment and identifying opportunities to further reduce our cost base. Normalised for the Power
Purchase Agreement with Eskom coming to an end in 2017, our cash fixed costs increased by only 1,9%, which is
well below inflation.
Natref's production volumes were 9% lower largely due to planned and unplanned production interruptions and an
Eskom electricity supply interruption at the start of the year. The first half of the year was challenging. However,
Natref delivered a strong performance during the last quarter of the year with an improved production run rate of
600mï¿½/h despite a planned shutdown in quarter four. The increased volumes in the second half of the year partially
offsets the lower production volumes recorded in the first half of the year. We expect the positive production run
rate to continue in 2019.
ORYX GTL delivered a strong production performance with an average utilisation rate of 95%. ORYX GTL contributed
R1,2 billion to operating profit with volumes increasing by 1% compared to the prior year.
In Nigeria, Escravos GTL (EGTL), optimisation efforts to reduce costs and improve plant efficiency are progressing
well, with a marked improvement on average utilisation rates. This, together with a higher oil price outlook,
resulted in a reversal of impairment of our investment in EGTL of R254 million.
The challenging economic environment also impacted our gas sales volumes to the external market, resulting in a
reduction of 3% compared to the prior year. The available gas was, however, utilised internally in our integrated
In line with our strategy to grow our South African retail presence and maximise margins, we opened 12 new Sasol
retail convenience centres (RCCs) and divested from 10 non-operating RCCs. We are continuing to accelerate the
growth of our retail network through organic growth and potential acquisitions. We are also improving our retail
offering to meet the changing trends of our customer base through embracing digitalisation. As part of our
commitment to transformation, we continued to focus on procurement, skills and enterprise development
initiatives and improved our B-BBEE score for Sasol Oil from a level 7 to a level 3 in the current year.
* Normalised earnings represent reported EBIT adjusted for remeasurement items and the closing rate translation effects based on
information contained in the published Group consolidated annual financial statements for the year ended 30 June 2018.
Advancing projects to enable future growth
We are making steady progress in delivering on our growth pipeline:
- Growing our footprint in North America:
- We are progressing with LCCP in Lake Charles and indications are that the cost of the project will remain
within the previous market guidance of US$11,13 billion. As at end June 2018, engineering, equipment
fabrication and procurement were substantially complete and construction progress reached 68%
completion. Overall the project is 88% complete with capital expenditure amounting to US$9,8 billion. The
project remains on track to start up the first three manufacturing units in the second half of the 2018
calendar year. A significant milestone was reached when we achieved first steam production in July 2018. The
expected start-up date of the remainder of the manufacturing units remains in the second half of the 2019
We have updated the LCCP economics with the current view of long-term market assumptions obtained from
independent market consultants. Due to the volatile market and differing views of where ethane will
be sourced from, the assumptions from the market consultants differs significantly. In a scenario where
ethane is sourced from the Gulf area, the internal rate of return (IRR) is 8,0% - 8,5% and assumes an ethane
price of between US$30-40 cents per gallon. The alternative view which assumes that ethane is sourced further away
from the Gulf yields an IRR of 5,2% - 5,7% as the ethane price is between US$60-65 cents per gallon. In both of these
scenarios the oil price is assumed to be US$60-80/bbl and the EBITDA at steady state ranges between
US$1,2 billion to US$1,3 billion. At spot prices, using the last quarter of 2018 as a reference, the IRR is 8,5% -
8,9%. The spot WACC rate for the US at 30 June 2018 was 7,68%.
- Focusing on our asset base in Africa:
- Our strategic R14 billion mine replacement programme, which will ensure uninterrupted coal supply to SSO in
order to support Sasol's strategy to operate our Southern African facilities until 2050, is nearing completion.
Phase two of the Impumelelo colliery project is on track to be completed within budget, late in the 2019
calendar year. The Shondoni colliery underground infrastructure was completed during May 2018 and the
colliery was officially inaugurated on 5 July 2018. The phases completed to date were within budget and schedule.
- In Mozambique, the PSA Phase 1 and Phase 2 drilling activities have been completed. In total, 11 wells were
drilled comprising seven oil wells and four gas wells. The Inhassoro oil reservoirs have proved more complex
than expected and, with the reduced expectation of recoverable oil volumes and uncertainty on the oil price,
we are looking to maximise the use of existing processing facilities in the adjacent Petroleum Production
Agreement (PPA) facilities. Phase 1 gas results confirm gas resources cover for Central Termica Temane (CTT),
formerly Mozambique Gas-to-Power Project (MGtP). Phase 2 appraisal drilling results indicate gas volumes to
be at the lower end of our initial estimates. Focused efforts are underway to assess the range of options and
possibilities to sustainably secure and source gas feedstock.
- In continuing to execute our strategy, we have concluded a farm-in into the DE8 block in Gabon where we
now hold 40% working interest of that block. An exploration well drilled during the year was unsuccessful
and written off.
Maintaining our focus on safety and sustainable value creation
We continued to deliver on our broader sustainability and community contributions during the year:
- Safety remains one of our top priorities and is a core value. However, we are deeply saddened to report that we
had four work-related fatalities and six high severity injuries this year. An incident, which resulted in the tragic
death of an employee, was investigated as a fatality and the harm was determined to have been self-inflicted.
The main learnings from this investigation were taken on board and implemented. Our thoughts remain with the
families of our employees who have lost their lives in Sasol's service this year.
A senior executive safety workshop was conducted as a necessary intervention to evaluate industry best
practices and strengthen the standardised approach to prevent fatalities and high severity injuries across the
group. Four focus areas were identified which will form the basis of our safety programme for the next financial
year. Our 12 month rolling Recordable Case Rate for employees and service providers, excluding illnesses,
improved to 0,27, our lowest level ever recorded. We believe our focused programme will also improve our injury
- During the year, we invested R2 billion in skills development and socio-economic development, which includes
our Ikusasa programme, bursaries, learnerships and artisan training programmes. The Ikusasa programme
focuses on education, health and wellbeing, infrastructure, and safety and security in the Secunda and
- This year saw the publication of the draft Carbon Tax and Climate Change Bills, both of which are expected to be
implemented during the course of 2019. Sasol is supportive of the "Just Transition" campaign where a holistic
approach is taken to achieving a lower carbon economy. Sasol continues to constructively engage with
government on both these critical pieces of legislation. Further, we are progressing transparency around our
climate change management, aligned with international initiatives, such as the Task Force for Climate Related
Financial Disclosure requirements. Ongoing engagements with key stakeholders inform the robustness of our
- Our total greenhouse gas (GHG) emissions for all operations globally is slightly lower at 67,43 million tons for
2018 when compared to 67,68 million tons in the prior year. Our GHG emissions intensity (measured in carbon
dioxide equivalent per ton of production) is higher at 3,78 compared to 3,66 in 2017. This is due to lower
production levels in Secunda as a result of production interruptions.
- Sasol supports the objective of the National Environmental Management: Air Quality Act (NEMAQA) to
contribute to an environment that is not harmful to human health or wellbeing. We regularly engage with the
Department of Environmental Affairs on this to achieve a sustainable regulatory framework to support
meaningful improvements in ambient air quality.
- While most of Sasol's processes will be able to comply with new plant Minimum Emission Standards by 2025,
there are selected activities that will not. For these specific cases, Sasol relies on applications for postponement
of the applicable compliance timeframes as we continue to investigate technical solutions that will ensure
compliance. In support, we are progressing the implementation of our committed air quality roadmaps.
- The Sasol Group Energy Intensity index (EIi) improved from the 2015 baseline by 6,03% against our internal
target of 3% (1% per year). Our South African Operation's EIi for 2018 is 6,62% and has essentially remained
unchanged from the previous year mainly due to unplanned electricity supply outages resulting in frequent
plant interruptions at our South African operations.
- During the year, we paid R39,5 billion in direct and indirect taxes to the South African government. Sasol
remains one of the largest corporate taxpayers in South Africa, contributing significantly to the country's
- During 2018, Sasol made good progress in terms of Preferential Procurement which resulted in actual spend
with black owned suppliers increasing by R5,2 billion to R12,7 billion from the prior year.
- Sasol is committed to sustainable transformation and Broad-Based Black Economic Empowerment (B-BBEE). In
our recent B-BBEE verification, Sasol achieved a Level 6 contributor status representing a key milestone in our
journey of achieving at least a Level 4 contributor status by 2020.
Unwinding of Inzalo B-BBEE transaction
As announced on 26 June 2018, Sasol settled the Sasol Inzalo Groups preference share debt of approximately
R4,6 billion in June 2018 by utilising existing cash to repurchase up to 9,5 million preferred ordinary shares from
Sasol Inzalo Groups Funding (Pty) Ltd (RF) at a 30 day, volume weighted average price (VWAP) of R475,03, and funded the
residual shortfall on the third party debt of R59 million. The Sasol Inzalo Public Funding Limited (RF) debt becomes
due in September 2018. The Board has approved that Sasol settle the Sasol Inzalo Public debt in the same manner as
Sasol Inzalo Groups so as to limit dilution on our shareholders, while maintaining investment grade ratings by utilising
existing cash or credit facilities to repurchase 16,1 million preferred ordinary shares from
Sasol Inzalo Public Funding Limited (RF). Based on Sasol's current share price and the forecast debt balances, there could
be residual value, after settlement of third party debt, which will be distributed to Sasol Inzalo Public Funding Limited (RF)
Business performance outlook* - strong production performance and cost
reductions to continue
The current economic climate continues to remain highly volatile and uncertain. While oil price and foreign
exchange movements are outside our control and may impact our results, our focus remains firmly on managing
factors within our control, including volume growth, cost optimisation, effective capital allocation, focused financial
risk management and maintaining an investment grade credit rating.
We expect an overall strong operational performance for 2019, with:
- SSO volumes of between 7,6 to 7,7 million tons impacted by a planned full shutdown in 2019;
- Liquid fuels sales of approximately 57 to 58 million barrels due to a planned full shutdown at SSO;
- Base Chemicals sales volumes, excluding US produced products, to be 2%-3% higher than the prior year, with
US dollar product pricing expected to follow Brent crude oil prices. Our US HDPE plant will contribute for the full
year, while LCCP is expected to start contributing during the second half of the year.
- Performance Chemicals sales volumes to be 2%-4% higher, excluding the LCCP;
- Gas production volumes from the Petroleum Production Agreement in Mozambique to be between 114 bscf to
- We expect to achieve an average utilisation rate of 95% at ORYX GTL in Qatar;
- Normalised cash fixed costs to remain in line within our inflation assumption of 6%;
- Capital expenditure, including capital accruals, of R38 billion for 2019 and R30 billion for 2020 as we progress
with the execution of our growth plan and strategy. Capital estimates may change as a result of exchange rate
volatility and other factors;
- Our balance sheet gearing to range between 40%-44%;
- Rand/US dollar exchange rate to range between R12,50 and R13,50; and
- Average Brent crude oil prices to remain between US$65/bbl and US$75/bbl.
* The financial information contained in this business performance outlook is the responsibility of the directors and in accordance
with standard practice, it is noted that this information has not been audited and reported on by the company's auditors.
Competition law compliance
In 2012, the South African Competition Commission referred allegations of price-fixing and market division against
various petroleum products producers, including Sasol to the Competition Tribunal. Sasol and the other companies
involved settled the matter with the Competition Commission on a no fine and no admission of guilt basis and
provided undertakings regarding future exchange of information within the industry. The application for
confirmation of the settlement agreement was heard before the Competition Tribunal on 7 February 2018. On 3 May
2018, the Competition Tribunal approved the settlement agreement. This effectively closed the investigations with
no penalty imposed on Sasol.
Tax litigation and contingency
As previously reported, the South African Revenue Service (SARS) issued revised assessments for Sasol Oil (Pty) Ltd
(Sasol Oil) relating to a dispute around our international crude oil procurement activities for the 2005 to 2012 tax
years. Sasol Oil has co-operated fully with SARS during the course of the audit related to these assessments.
The litigation process in the Tax Court, relating to the international crude oil procurement activities for the 2005 to
2007 years of assessment, was concluded and judgement was delivered on 30 June 2017 in favour of SARS. As a
result, a liability of R1,3 billion has been recognised in the prior year financial statements in respect of the 2005 to
2014 matters that remain the subject of the ongoing litigation. Sasol Oil, in consultation with its tax and legal
advisors, does not support the basis of the judgement and filed an appeal with the Supreme Court of Appeal (SCA).
The SCA hearing will take place on 21 August 2018, and it is anticipated that the judgement will likely be delivered
within a few months thereafter.
SARS has notified Sasol Oil of its intention to place on hold the field audit relating to this issue for the 1999 to 2004
tax years pending the outcome of the litigation. As a result of the judgement handed down on 30 June 2017, a
possible obligation may arise from the field audit, which is regarded as a contingent liability.
In addition, there could be a potential tax exposure of R12,6 billion for the periods 2013 to 2014 on varying tax
principles relating to the aforementioned activities, which remains the subject of an appeal. Supported by specialist
tax and legal advisors, Sasol Oil disagrees with SARS' additional assessments for the 2013 and 2014 periods and has
filed an appeal in the Tax Court, which has been suspended, pending the decision of the SCA. A possible obligation
may arise for the tax years subsequent to 2014, which could give rise to a future contingent liability also depending
to a degree on the outcome of the SCA hearing. SARS' decision to suspend the payment of this disputed tax for the
periods 2005 to 2014 currently remains in force.
In 2010, SARS commenced with a request for information in respect of Sasol Financing International Plc (SFI). This
matter progressed to an audit over the years and has now culminated in SARS issuing a final audit letter on
16 February 2018. Consequently, assessments were issued in respect of the 2002 to 2012 tax years. SARS argues
that the place of effective management of SFI, an offshore treasury function, was South Africa. This approach could
result in potential tax exposure of R3,1 billion (including interest and penalties as at 30 June 2018). SFI has co-
operated fully with SARS during the course of the audit related to these assessments. SFI, in consultation with its
tax and legal advisors, does not support the basis of these additional assessments for all the years. Accordingly, SFI
lodged objections and will submit appeals (as the case may be) to the assessments as the legal process unfolds.
SARS' decision to suspend the payment of this disputed tax for the periods 2002 to 2012 currently remains in force.
Sasol is committed to compliance with tax laws and any disputes with tax authorities on the interpretation of tax
laws and regulations will be addressed in a transparent and constructive manner.
Change in directors
Ms MBN Dube was appointed as an independent director with effect from 1 April 2018 and Mr HG Dijkgraaf retired
as an independent director on 30 April 2018. Mr MJN Njeke was appointed as the lead independent director with
effect from 30 April 2018.
Declaration of cash dividend number 78
A final gross cash dividend of South African 790 cents per share (30 June 2017 - 780 cents per ordinary share) has
been declared for the year ended 30 June 2018. The cash dividend is payable on the ordinary shares and the Sasol
BEE ordinary shares. The Board is satisfied that the liquidity and solvency of the company, as well as capital adequacy
remaining after payment of the dividend is sufficient to support the current operations for the ensuing year. The
dividend has been declared out of retained earnings (income reserves). The South African dividend withholding tax
rate is 20%. At the declaration date, there are 623 081 550 ordinary, 16 085 199 preferred ordinary and 6 394 179
Sasol BEE ordinary shares in issue. The net dividend amount payable to shareholders who are not exempt from the
dividend withholding tax, is 632 cents per share, while the dividend amount payable to shareholders who are
exempt from dividend withholding tax is 790 cents per share.
The salient dates for holders of ordinary shares and Sasol BEE ordinary shares are:
Declaration date Monday, 20 August 2018
Last day for trading to qualify for and participate in the final dividend
(cum dividend) Tuesday, 4 September 2018
Trading ex dividend commences Wednesday, 5 September 2018
Record date Friday, 7 September 2018
Dividend payment date (electronic and certificated register) Monday, 10 September 2018
The salient dates for holders of our American Depository Receipts are:(1)
Ex dividend on New York Stock Exchange (NYSE) Wednesday, 5 September 2018
Record date Friday, 7 September 2018
Approximate date for currency conversion Tuesday, 11 September 2018
Approximate dividend payment date Friday, 21 September 2018
(1) All dates approximate as the NYSE sets the record date after receipt of the dividend declaration.
On Monday, 10 September 2018, dividends due to certificated shareholders on the South African registry will either
be electronically transferred to shareholders' bank accounts or, in the absence of suitable mandates, dividend
cheques will be posted to such shareholders. Shareholders who hold dematerialised shares will have their accounts
held by their CSDP or broker credited on Monday, 10 September 2018. Share certificates may not be dematerialised
or rematerialised between 5 September 2018 and 7 September 2018, both days inclusive.
On behalf of the Board
Mandla Gantsho Bongani Nqwababa Stephen Cornell Paul Victor
Chairman Joint President and Joint President and Chief Financial Officer
Chief Executive Officer Chief Executive Officer
17 August 2018
The summarised financial statements are presented on a condensed consolidated basis.
for the year ended 30 June
2016 2017 2018 2018 2017 2016
US$m* US$m* US$m* Rm Rm Rm
11 911 12 668 14 121 Turnover 181 461 172 407 172 942
(4 912) (5 249) (5 961) Materials, energy and consumables used (76 606) (71 436) (71 320)
(476) (471) (549) Selling and distribution costs (7 060) (6 405) (6 914)
(582) (636) (713) Maintenance expenditure (9 163) (8 654) (8 453)
(1 647) (1 794) (2 138) Employee-related expenditure (27 468) (24 417) (23 911)
(20) (36) (27) Exploration expenditure and feasibility (352) (491) (282)
(1 127) (1 190) (1 278) Depreciation and amortisation (16 425) (16 204) (16 367)
(625) (922) (1 192) Other expenses and income (15 316) (12 550) (9 073)
10 (88) (1) Translation (losses)/gains (11) (1 201) 150
(635) (834) (1 191) Other operating expenses and income (15 305) (11 349) (9 223)
35 79 112 Equity accounted profits, net of tax 1 443 1 071 509
2 557 2 449 2 375 Operating profit before remeasurement 30 514 33 321 37 131
items and Sasol Khanyisa share-based
(888) (119) (771) Remeasurement items (9 901) (1 616) (12 892)
- - (223) Sasol Khanyisa share-based payment (2 866) - -
1 669 2 330 1 381 Earnings before interest and tax (EBIT) 17 747 31 705 24 239
125 115 133 Finance income 1 716 1 568 1 819
(161) (240) (292) Finance costs (3 759) (3 265) (2 340)
1 633 2 205 1 222 Earnings before tax 15 704 30 008 23 718
(598) (624) (432) Taxation (5 558) (8 495) (8 691)
1 035 1 581 790 Earnings for the year 10 146 21 513 15 027
911 1 497 679 Owners of Sasol Limited 8 729 20 374 13 225
124 84 111 Non-controlling interests in subsidiaries 1 417 1 139 1 802
1 035 1 581 790 10 146 21 513 15 027
US$ US$ US$ Rand Rand Rand
Per share information
1,49 2,45 1,11 Basic earnings per share 14,26 33,36 21,66
1,49 2,44 1,10 Diluted earnings per share 14,18 33,27 21,66
* Supplementary non-IFRS information. US dollar convenience translation, converted at average exchange rate of R12,85/US$1
(30 June 2017 - R13,61/US$1; 30 June 2016 - R14,52/US$1).
The income statement has been translated from rand to US dollar for convenience purposes in order to enable offshore
shareholders to interpret the financial performance in a universally measured currency. This constitutes pro-forma financial
information, in terms of the JSE Limited Listings Requirements and should be read in conjunction with the basis of preparation set
out on page 19.
Statement of comprehensive income
for the year ended 30 June
2018 2017 2016
Rm Rm Rm
Earnings for the year 10 146 21 513 15 027
Other comprehensive income, net of tax
Items that can be subsequently reclassified to the income statement 6 068 (8 931) 13 253
Effect of translation of foreign operations 5 237 (10 074) 15 112
Effect of cash flow hedges 1 233 1 821 (2 855)
Fair value of investments available-for-sale 13 11 (7)
Tax on items that can be subsequently reclassified to the income statement (415) (689) 1 003
Items that cannot be subsequently reclassified to the income statement (54) 743 (546)
Remeasurements on post-retirement benefit obligations (80) 1 114 (877)
Tax on items that cannot be subsequently reclassified to the income 26 (371) 331
Total comprehensive income for the year 16 160 13 325 27 734
Owners of Sasol Limited 14 727 12 234 25 890
Non-controlling interests in subsidiaries 1 433 1 091 1 844
16 160 13 325 27 734
Statement of financial position
at 30 June
2017 2018 2018 2017
US$m* US$m* Rm Rm
12 157 12 196 Property, plant and equipment 167 457 158 773
10 010 12 044 Assets under construction 165 361 130 734
181 196 Goodwill and other intangible assets 2 687 2 361
904 801 Equity accounted investments 10 991 11 813
48 109 Post-retirement benefit assets 1 498 622
236 298 Deferred tax assets 4 096 3 082
276 429 Other long-term assets 5 888 3 600
23 812 26 073 Non-current assets 357 978 310 985
17 8 Assets in disposal groups held for sale 113 216
- 6 Short-term assets 85 -
1 943 2 139 Inventories 29 364 25 374
2 310 2 406 Trade and other receivables 33 031 30 179
210 112 Short-term financial assets 1 536 2 739
138 144 Cash restricted for use 1 980 1 803
2 117 1 103 Cash and cash equivalents 15 148 27 643
6 735 5 918 Current assets 81 257 87 954
30 547 31 991 Total assets 439 235 398 939
Equity and liabilities
16 211 16 240 Shareholders' equity 222 985 211 711
423 410 Non-controlling interests 5 623 5 523
16 634 16 650 Total equity 228 608 217 234
5 690 7 042 Long-term debt 96 691 74 312
1 275 1 104 Long-term provisions 15 160 16 648
847 867 Post-retirement benefit obligations 11 900 11 069
70 64 Long-term deferred income 879 910
56 10 Long-term financial liabilities 133 733
1 980 1 887 Deferred tax liabilities 25 908 25 860
9 918 10 974 Non-current liabilities 150 671 129 532
- 3 Liabilities in disposal groups held for sale 36 -
744 1 071 Short-term debt 14 709 9 718
57 140 Short-term financial liabilities 1 926 740
3 185 3 147 Other current liabilities 43 196 41 592
9 6 Bank overdraft 89 123
3 995 4 367 Current liabilities 59 956 52 173
30 547 31 991 Total equity and liabilities 439 235 398 939
* Supplementary non-IFRS information. US dollar convenience translation, converted at a closing exchange rate of R13,73/US$1 (30 June 2017 - R13,06/US$1).
The Statement of financial position has been translated from rand to US dollar for convenience purposes in order to enable offshore shareholders to interpret
the financial performance in a universally measured currency. This constitutes pro-forma financial information, in terms of the JSE Limited Listings
Requirements and should be read in conjunction with the basis of preparation set out on page 19.
Statement of changes in equity
for the year ended 30 June
2018 2017 2016
Rm Rm Rm
Balance at beginning of year 217 234 212 418 196 483
Movement in share-based payment reserve 3 942 1 108 177
Share-based payment expense 823 463 123
Deferred tax 166 - -
Implementation of Sasol Khanyisa transaction 2 953 - -
Shares issued on implementation of long-term incentive scheme - - 54
Long-term incentive scheme converted to equity-settled - 645 -
Total comprehensive income for the year 16 160 13 325 27 734
Transactions with non-controlling shareholders (51) - -
Dividends paid to shareholders (7 952) (8 628) (10 680)
Dividends paid to non-controlling shareholders in subsidiaries (725) (989) (1 296)
Balance at end of year 228 608 217 234 212 418
Share capital 15 775 29 282 29 282
Share repurchase programme - (2 641) (2 641)
Retained earnings 184 352 176 714 164 917
Share-based payment reserve (4 021) (12 525) (13 582)
Foreign currency translation reserve 28 500 23 285 33 316
Remeasurements on post-retirement benefit obligations (1 844) (1 790) (2 533)
Investment fair value reserve 43 33 26
Cash flow hedge accounting reserve 180 (647) (1 788)
Shareholders' equity 222 985 211 711 206 997
Non-controlling interests in subsidiaries 5 623 5 523 5 421
Total equity 228 608 217 234 212 418
Statement of cash flows
for the year ended 30 June
2018 2017 2016
Rm Rm Rm
Cash receipts from customers 178 672 172 061 175 994
Cash paid to suppliers and employees (135 795) (127 992) (121 321)
Cash generated by operating activities 42 877 44 069 54 673
Dividends received from equity accounted investments 1 702 1 539 887
Finance income received 1 565 1 464 1 633
Finance costs paid (4 797) (3 612) (3 249)
Tax paid (7 041) (6 352) (9 329)
Cash available from operating activities 34 306 37 108 44 615
Dividends paid (7 952) (8 628) (10 680)
Cash retained from operating activities 26 354 28 480 33 935
Total additions to non-current assets (55 891) (56 812) (70 497)
Additions to non-current assets (53 384) (60 343) (73 748)
(Decrease)/increase in capital project related payables (2 507) 3 531 3 251
Additional cash contributions to equity accounted investments (164) (444) (548)
Proceeds on disposals and scrappings 2 280 788 569
Purchase of investments (124) (96) (223)
Other net cash flow from investing activities (80) (113) (335)
Cash used in investing activities (53 979) (56 677) (71 034)
Share capital issued on implementation of share options - - 54
Dividends paid to non-controlling shareholders in subsidiaries (725) (989) (1 296)
Proceeds from long-term debt 24 961 9 277 34 008
Repayment of long-term debt (9 199) (2 364) (3 120)
Proceeds from short-term debt 1 957 4 033 2 901
Repayment of short-term debt (2 607) (1 410) (3 369)
Cash generated by financing activities 14 387 8 547 29 178
Translation effects on cash and cash equivalents 954 (3 207) 7 069
Decrease in cash and cash equivalents (12 284) (22 857) (852)
Cash and cash equivalents at the beginning of year 29 323 52 180 53 032
Cash and cash equivalents at the end of the year 17 039 29 323 52 180
for the year ended 30 June
Earnings before interest
Turnover and tax (EBIT)
R million R million
2016* 2017* 2018 Segment analysis 2018 2017* 2016*
21 186 23 046 23 995 Operating Business Units 1 561 4 310 (6 975)
16 975 18 962 19 797 Mining 5 244 3 725 4 739
4 211 4 084 4 198 Exploration and Production International (3 683) 585 (11 714)
173 042 170 413 179 630 Strategic Business Units 22 852 26 843 29 831
64 341 64 772 69 773 Energy 14 081 11 218 14 069
37 795 38 414 40 091 Base Chemicals 588 6 862 5 606
70 906 67 227 69 766 Performance Chemicals 8 183 8 763 10 156
108 516 52 Group Functions (6 666) 552 1 383
194 336 193 975 203 677 Group performance 17 747 31 705 24 239
(21 394) (21 568) (22 216) Intersegmental turnover
172 942 172 407 181 461 External turnover
* Restated for the transfer of the US ethylene business from Performance Chemicals to Base Chemicals.
2018 2017* 2016*
Operating Business Units 9 146 8 299 7 737
Mining 7 060 5 658 6 443
Exploration and Production International 2 086 2 641 1 294
Strategic Business Units 41 647 40 080 43 771
Energy 20 045 17 590 19 343
Base Chemicals 9 212 9 685 10 598
Performance Chemicals 12 390 12 805 13 830
Group Functions 1 620 (752) 2 484
Group performance 52 413 47 627 53 992
for the year ended 30 June
2018 2017 2016
Earnings before interest and tax margin % 9,8 18,4 14,0
Finance costs cover times 4,1 9,2 8,0
Net borrowings to shareholders' equity (gearing) % 43,2 26,7 14,6
Dividend cover - Core headline earnings per share(1) times 2,8 2,8 2,8
Total shares in issue million 645,6 679,8 679,8
Sasol ordinary shares in issue million 623,1 651,4 651,4
Treasury shares (share repurchase programme) million - 8,8 8,8
Weighted average number of shares million 612,2 610,7 610,7
Diluted weighted average number of shares million 615,9 612,4 610,7
Share price (closing) Rand 502,86 366,50 397,17
Market capitalisation - Sasol ordinary shares Rm 313 323 238 738 258 717
Market capitalisation - Sasol BEE ordinary shares Rm 1 918 866 892
Net asset value per share Rand 359,60 348,27 340,51
Dividend per share Rand 12,90 12,60 14,80
- interim Rand 5,00 4,80 5,70
- final Rand 7,90 7,80 9,10
(1) With effect from 23 February 2018, the Board approved a change in dividend policy from HEPS to CHEPS.
2018 2017 2016
Other financial information
Total debt (including bank overdraft) Rm 109 454 81 405 80 151
- interest-bearing Rm 108 017 80 352 79 175
- non-interest-bearing Rm 1 437 1 053 976
Finance expense capitalised Rm 3 568 2 764 2 253
Capital commitments (subsidiaries and joint operations) Rm 63 276 90 736 137 286
- authorised and contracted Rm 179 172 154 739 143 380
ï¿½ authorised, not yet contracted Rm 40 687 61 673 95 590
- less expenditure to date Rm (156 583) (125 676) (101 684)
Capital commitments (equity accounted investments) Rm 893 584 608
- authorised and contracted Rm 536 292 175
- authorised, not yet contracted Rm 623 573 756
- less expenditure to date Rm (266) (281) (323)
Guarantees (excluding treasury facilities)
- maximum potential exposure Rm 80 260 81 896 98 312
- related debt recognised on the balance sheet Rm 76 199 64 057 71 252
Effective tax rate % 35,4 28,3 36,6
Adjusted effective tax rate(2) % 27,3 26,5 28,2
Number of employees(3) number 31 270 30 900 30 100
Average crude oil price - dated Brent US$/barrel 63,62 49,77 43,37
Average rand/US$ exchange rate 1US$ = Rand 12,85 13,61 14,52
Closing rand/US$ exchange rate 1US$ = Rand 13,73 13,06 14,71
(2) Effective tax rate adjusted for equity accounted investments, remeasurement items and once-off items.
(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.
2018 2017 2016
Rm Rm Rm
Reconciliation of headline earnings
Earnings attributable to owners of Sasol Limited 8 729 20 374 13 225
Effect of remeasurement items for subsidiaries and joint operations(1) 9 901 1 616 12 892
Impairment of property, plant and equipment 7 623 415 8 424
Impairment of assets under construction 1 492 1 942 3 586
Impairment of goodwill and other intangible assets - 120 310
Reversal of impairment (354) (1 136) -
Fair value write down - assets held for sale - 64 -
Loss/(profit) on disposal of non-current assets 7 (21) (389)
(Profit)/loss on disposal of investment in businesses (833) (51) 226
Scrapping of non-current assets 1 654 283 1 099
Write-off of unsuccessful exploration wells 312 - (3)
Realisation of foreign currency translation reserve - - (361)
Tax effects and non-controlling interests (1 843) (539) (846)
Effect of remeasurement items for equity accounted investments 11 14 13
Headline earnings 16 798 21 465 25 284
Headline earnings adjustments per above
Mining 34 6 31
Exploration and Production International 4 241 (6) 9 963
Energy 971 1 844 1 267
Base Chemicals 4 499 (901) 1 723
Performance Chemicals 116 663 55
Group Functions 40 10 (147)
Remeasurement items 9 901 1 616 12 892
Headline earnings per share Rand 27,44 35,15 41,40
Diluted headline earnings per share Rand 27,27 35,05 41,40
(1) Includes the impact of the full impairment of our Chlor Vinyls value chain of R5,2 billion in South Africa, the impairment of the PSA
asset of R1,1 billion (US$94 million) in Mozambique, the partial impairment of our Canadian shale gas assets of R2,8 billion
(CAD281 million) and the scrapping of our US GTL project amounting to R1,1 billion (US$83 million).
Basis of preparation
The summarised consolidated financial statements are prepared in accordance with the JSE Limited's (JSE) Listings
Requirements for summary financial statements, and the requirements of the Companies Act applicable to
summary financial statements. The JSE requires summary financial statements to be prepared in accordance with
the framework concepts and the measurement and recognition requirements of International Financial Reporting
Standards as issued by the International Accounting Standards Board (IFRS), the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34, Interim
The summarised consolidated financial statements do not include all the disclosure required for complete annual
financial statements prepared in accordance with IFRS as issued by the International Accounting Standards Board.
These summarised consolidated financial statements have been prepared in accordance with the historic cost
convention except that certain items, including derivative instruments, liabilities for cash-settled share-based
payment schemes, financial assets at fair value through profit or loss and available-for-sale financial assets, are
stated at fair value.
The summarised consolidated financial statements are presented in South African rand, which is Sasol Limited's
functional and presentation currency. The accounting policies applied in the preparation of these summarised
consolidated financial statements are in terms of IFRS and are consistent with those applied in the consolidated
annual financial statements for the year ended 30 June 2018.
The summarised consolidated financial statements appearing in this announcement are the responsibility of the
directors. The directors take full responsibility for the preparation of the summarised consolidated financial
statements. Paul Victor CA(SA), Chief Financial Officer, is responsible for this set of summarised consolidated
financial statements and has supervised the preparation thereof in conjunction with the Senior Vice President:
Financial Control Services, Brenda Baijnath CA(SA).
Pro-forma financial information
Core headline earnings and US dollar convenience translations included in this announcement constitutes pro-
forma financial information.
The pro-forma financial information is the responsibility of the board of directors and is presented for illustrative
purposes only. Because of its nature, the pro-forma financial information may not fairly present Sasol's financial
position, changes in equity, results of operations or cash flows. The underlying information, used in the preparation
of the pro-forma financial information, has been prepared using accounting policies which comply with IFRS and
are consistent with those applied in the published group consolidated annual financial statements for the year
ended 30 June 2018.
This pro-forma information has been reported on by the group's auditors, being PricewaterhouseCoopers Inc. Their
unqualified reporting accountant's report thereon is available for inspection at the company's registered address.
Related party transactions
The group, in the ordinary course of business, entered into various sale and purchase transactions on an arm's
length basis at market rates with related parties.
The Sasol Limited Board approved that Sasol repurchase the shares from Inzalo Public Funding Limited (RF) in
September 2018 and settle the outstanding debt of R7,4 billion and a cash top-up for value realised of approximately
R 600 million in September 2018, assuming a shape price of R500. This will then conclude the unwinding of the
Sasol Inzalo transaction.
Fair value is determined using valuation techniques as outlined unless the instrument is listed in an active market.
Where possible, inputs are based on quoted prices and other market determined variables.
Fair value hierarchy
The table below represents significant financial instruments measured at fair value at reporting date, or for which
fair value is disclosed at 30 June 2018. The US dollar bond, the interest rate swap, the crude oil put options, the
zero-cost foreign exchange collars and the coal swaps were considered to be significant financial instruments for
the group based on the amounts recognised in the statement of financial position. The calculation of fair value
requires various inputs into the valuation methodologies used. The source of the inputs used affects the reliability
and accuracy of the valuations. Financial instruments have been classified into the hierarchical levels in line with
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 Carrying Fair
fair value value value
Instrument hierarchy Rm Rm Valuation method Significant inputs
Listed long-term Level 1 13 704 13 345 Fair value Quoted market price for the
debt same or similar instruments
Derivative financial Level 2 (232) (232) Forward rate interpolator Foreign exchange rates,
assets and model, discounted market commodity prices, US$
liabilities expected cash flows, swap curve, as appropriate
For all other financial instruments, fair value approximates carrying value.
Independent audit by the auditors:
These summarised consolidated financial statements, including the segment report for the year
ended 30 June 2018, have been audited by PricewaterhouseCoopers Inc., who expressed an
unmodified opinion thereon. The individual auditor assigned to perform the audit is Mr PC Hough.
The auditor also expressed an unmodified opinion on the annual financial statements from which
these summarised consolidated financial statements were derived. A copy of the auditor's report on
the summarised consolidated financial statements and of the auditor's report on the annual
consolidated financial statements are available for inspection at the company's registered office,
together with the financial statements identified in the respective auditor's reports. The auditor's
report does not necessarily report on all of the information contained in this announcement of
financial results. Shareholders are therefore advised that in order to obtain a full understanding of
the nature of the auditor's engagement they should obtain a copy of the auditor's report together
with the accompanying summarised consolidated financial statements from the company's registered office.
Registered office: Sasol Place, 50 Katherine Street, Sandton, Johannesburg 2090
PO Box 5486, Johannesburg 2000, South Africa
Share registrars: Computershare Investor Services (Pty) Ltd, 15 Biermann Avenue, Rosebank 2196
PO Box 61051, Marshalltown 2107, South Africa, Tel: +27 11 370 5000 Fax: +27 11 688 5248
JSE Sponsor: Deutsche Securities (SA) Proprietary Limited
Directors (Non-executive): Dr MSV Gantsho* (Chairman), Mr C Beggs*, Mr MJ Cuambe (Mozambican)*,
Ms MBN Dube*, Dr M Flï¿½el (German)*, Ms GMB Kennealy*, Ms NNA Matyumza*, Mr ZM Mkhize*,
Mr MJN Njeke^*, Ms ME Nkeli*, Mr PJ Robertson (British and American)*, Mr S Westwell (British)*
Directors (Executive): Mr SR Cornell (Joint President and Chief Executive Officer) (American),
Mr B Nqwababa (Joint President and Chief Executive Officer), Mr P Victor (Chief Financial Officer)
*Independent ^Lead independent director
Company Secretary: Mr VD Kahla
Company registration number: 1979/003231/06, incorporated in the Republic of South Africa
Income tax reference number: 9520/018/60/8
Share code: SOL SSL
ISIN: ZAE000006896 US8038663006
Sasol BEE Ordinary shares
Share code: SOLBE1
American depository receipts (ADR) program:
Cusip number 803866300 ADR to ordinary share 1:1
Depositary: The Bank of New York Mellon, 22nd Floor, 101 Barclay Street, New York, NY 10286,United States of America
Sasol may, in this document, make certain statements that are not historical facts and relate to analyses and other information which
are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our
future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to,
statements regarding exchange rate fluctuations, volume growth, increases in market share, total shareholder return, executing our
growth projects (including LCCP) oil and gas reserves and cost reductions, including in connection with our Business Performance
Enhancement Programme, Response Plan, Continuous Improvement programme and our business performance outlook. Words such as
"believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "endeavour", "target", "forecast", "project" and similar
expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks
that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks
materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You
should understand that a number of important factors could cause actual results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward looking statements. These factors are discussed more fully in our
most recent annual report on Form 20-F filed on 28 August 2017 and in other filings with the United States Securities and Exchange
Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment
decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking statements apply only
as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of
new information, future events or otherwise.
Please note: One billion is defined as one thousand million, bbl - barrel, bscf - billion standard cubic feet, mmscf - million standard
cubic feet, oil references brent crude, mmboe - million barrels oil equivalent. All references to years refer to the financial year ended
30 June. Any reference to a calendar year is prefaced by the word "calendar".
Comprehensive additional information is available on our website: <a href="http://www.sasol.com" target="_blank">www.sasol.com</a>
Date: 20/08/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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