As filed with the Securities and Exchange Commission on 01 September 2023
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934—for the fiscal year ended 30 June 2023 |
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 001-31615
Sasol Limited
(Exact name of registrant as Specified in its Charter)
Republic of South Africa
(Jurisdiction of Incorporation or Organization)
Sasol Place, 50 Katherine Street, Sandton, 2196
South Africa
(Address of Principal Executive Offices)
Hanré Rossouw, Chief Financial Officer, Tel. No. +27 10 344 3060, Email hanre.rossouw@sasol.com
Sasol Place, 50 Katherine Street, Sandton, 2196, South Africa
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class |
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Trading Symbol |
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Name of Each Exchange on Which Registered |
American Depositary Shares |
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SSL |
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New York Stock Exchange |
Ordinary Shares of no par value* |
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SSL |
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New York Stock Exchange |
5,875% Notes due 2024 issued by Sasol Financing USA LLC |
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SOLJL |
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New York Stock Exchange |
6,500% Notes due 2028 issued by Sasol Financing USA LLC |
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SOLJL |
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New York Stock Exchange |
4,375% Notes due 2026 issued by Sasol Financing USA LLC |
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SOLJL |
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New York Stock Exchange |
5,500% Notes due 2031 issued by Sasol Financing USA LLC |
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SOLJL |
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New York Stock Exchange |
* |
Listed on the New York Stock Exchange not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares (ADS or ADSs) pursuant to the requirements of the Securities and Exchange Commission. |
Securities registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the 634 336 265 Sasol ordinary shares of no par value
annual report:
640 667 612 Sasol shares comprising
6 331 347 Sasol BEE ordinary shares of no par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ◻
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ⌧
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232 405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ⌧ |
Accelerated filer ◻ |
Non-accelerated filer ◻ |
Emerging growth company ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ◻
† |
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ◻
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ◻
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ◻ |
International Financial Reporting Standards as issued |
Other ◻ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ◻ Item 18 ◻
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No ⌧
TABLE OF CONTENTS
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MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
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PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
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DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
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PRESENTATION OF INFORMATION
We are incorporated in the Republic of South Africa as a public company under South African company law. Our audited consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).
As used in this Form 20-F:
● | “rand” or “R” means the currency of the Republic of South Africa; |
● | “US dollars”, “dollars”, “US$” or “$” means the currency of the United States (US); and |
● | “euro”, “EUR” or “€” means the common and currency of the member states of the European Monetary Union. |
We present our financial information in rand, which is our reporting currency. Solely for your convenience, this Form 20-F contains translations of certain rand amounts into US dollars at specified rates as at and for the year ended 30 June 2023. These rand amounts do not represent actual US dollar amounts, nor could they necessarily have been converted into US dollars at the rates indicated.
All references in this Form 20-F to “years” refer to the financial years ended on 30 June. Any reference to a calendar year is prefaced by the word “calendar”.
Besides applying barrels (b or bbl) and standard cubic feet (scf) for reporting oil and gas reserves and production, Sasol applies the Système International (SI) metric measures for all global operations. A ton, or tonne, denotes one metric ton equivalent to 1 000 kilograms (kg). Sasol’s reference to metric tons should not be confused with an imperial ton equivalent to 2 240 pounds (or about 1 016 kg). Barrels per day, or bpd, or bbl/d, is used to refer to our oil and gas production.
In addition, in line with a South African convention under the auspices of the South African Bureau of Standards (SABS), the information presented herein is displayed using the decimal comma (e.g., 3,5) instead of the more familiar decimal point (e.g., 3.5) used in the UK, US and elsewhere. Similarly, a hard space is used to distinguish thousands in numeric figures (e.g., 2 500) instead of a comma (e.g., 2,500).
All references to the “group”, “us”, “we”, “our”, “Company”, or “Sasol” in this Form 20-F are to Sasol Limited, its group of subsidiaries and its interests in associates, joint arrangements and structured entities. All references in this Form 20-F are to Sasol Limited or the companies comprising the group, as the context may require. All references to “(Pty) Ltd” refer to Proprietary Limited, a form of corporation in South Africa which restricts the right of transfer of its shares and prohibits the public offering of its shares.
All references in this Form 20-F to “South Africa” and “the government” are to the Republic of South Africa and its government. All references to the “JSE” are to the JSE Limited or Johannesburg Stock Exchange, the securities exchange of our primary listing. All references to “SARB” refer to the South African Reserve Bank. All references to “PPI” and “CPI” refer to the South African Producer Price Index and Consumer Price Index, respectively, which are measures of inflation in South Africa. All references to “GTL” refer to our gas-to-liquids processes.
Forward-looking and other statements in this Form 20-F including those in relation to our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the US Securities and Exchange Commission (SEC). In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
Future production profiles in this Form 20-F, and its related exhibits, do not yet reflect the impact of our greenhouse gas (GHG) reduction strategy as the programme was still in pre-feasibility phase at 30 June 2023. It is expected that the programme will progress past pre-feasibility during calendar year 2023 with the related impact of disclosure reflected in this Form 20-F.
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Unless otherwise stated, presentation of financial information in this annual report on Form 20-F will be pursuant to IFRS. Our discussion of business segment results follows the basis used by the President and Chief Executive Officer (the company’s chief operating decision maker) for segmental financial decisions, resource allocation and performance assessment, which forms the accounting basis for segmental reporting, that is disclosed to the investing and reporting public.
“Financial Review” means the Chief Financial Officer’s performance overview included in Exhibit 99.3.
“Headline earnings per share (HEPS)” refers to disclosures made under the listings requirements issued by the JSE (JSE Listing Requirements).
“Core headline earnings per share (CHEPS)” refers to a disclosure based on HEPS above, calculated by adjusting headline earnings with non-recurring items, earnings and losses of significant capital projects (exceeding four billion rand) which have reached beneficial operation and are still ramping up, all translation gains and losses (realised and unrealised), all gains and losses on our derivatives and hedging activities (realised and unrealised), and share-based payments on implementation of Broad-Based Black Economic Empowerment (B-BBEE) transactions. Period close adjustments in relation to the valuation of our derivatives at period end are 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 is a useful measure of the group’s sustainable operating performance. However, this is not a defined term under IFRS, should not be viewed as a substitute for earnings for the year or earnings per share and may not be comparable with similarly titled measures reported by other companies. The aforementioned adjustments are the responsibility of the directors of Sasol. The adjustments have been prepared for illustrative purposes only and due to their nature, core headline earnings may not necessarily be indicative of Sasol’s financial position, changes in equity, results of operations or cash flows.
“EBIT” refers to earnings before interest and tax.
“LBIT” refers to loss before interest and tax.
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FORWARD-LOOKING STATEMENTS
We may from time to time make written or oral forward-looking statements, including in this Form 20-F, in other filings with the SEC, in reports to shareholders and in other communications. These statements may 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, expectations, developments and business strategies. Examples of such forward-looking statements include, but are not limited to:
● | rising inflation, supply chain issues volatile commodity costs and other inflationary pressures exacerbated by the Russia/Ukraine war and subsequent sanctions; |
● | the capital cost of our projects, including the Production Sharing Agreement (PSA) project (including material, engineering and construction cost) and the timing of project milestones; |
● | our ability to obtain financing to meet the funding requirements of our capital investment programme, as well as our ongoing business activities and to pay dividends; |
● | statements regarding our future results of operations and financial condition and regarding future economic performance including cost-containment, cash-conservation programmes and business optimisation initiatives; |
● | statements regarding recent and proposed accounting pronouncements and their impact on our future results of operations and financial condition; |
● | statements of our business strategy, business performance outlook, plans, objectives or goals, including those related to products or services; |
● | statements regarding future competition, volume growth and changes in market share in the industries and markets for our products; |
● | statements regarding our existing or anticipated investments (including the Mozambique exploration and development activities, the GTL joint venture in Qatar, chemical projects and joint arrangements in North America and other investments), acquisitions of new businesses or the disposal of existing businesses, including estimates or projections of internal rates of return and future profitability; |
● | statements regarding our estimated oil, gas and coal reserves; |
● | statements regarding the probable future outcomes of litigation and regulatory proceedings and the future development in legal and regulatory matters including statements regarding our ability to comply with future laws and regulations; |
● | statements regarding future fluctuations in refining margins and crude oil, natural gas and petroleum and chemical product prices; |
● | statements regarding the demand, pricing and cyclicality of oil, gas and petrochemical product prices; |
● | statements regarding changes in the fuel and gas pricing mechanisms in South Africa and their effects on prices, our operating results and profitability; |
● | statements regarding future fluctuations in exchange and interest rates and changes in credit ratings; |
● | statements regarding total shareholder return; |
● | statements regarding our growth and expansion plans; |
● | statements regarding our current or future products and anticipated customer demand for these products; |
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● | statements regarding acts of war, terrorism or other events that may adversely affect the group’s operations or those of key stakeholders to the group; |
● | the impact of any pandemics, and the measures taken in response, on Sasol’s business, results of operations, markets, employees, financial condition and liquidity; |
● | the effectiveness of any actions taken by Sasol to address or limit any impact of such pandemics on its business, people and operations; |
● | statements and assumptions relating to macroeconomics including in relation to potential impact of pandemics; |
● | statements regarding climate change, climate change impacts, and our climate change strategies including strategies around disclosure and transparency of climate, energy efficiency improvement, GHG emission reduction targets, our net zero emissions ambition and future low-carbon initiatives, including relating to green hydrogen and sustainable aviation fuel; |
● | statements regarding our estimated carbon tax liability; |
● | statements regarding cyber security; |
● | statements regarding ongoing litigation, including tax litigation and assessments; and |
● | statements of assumptions underlying such statements. |
Words such as “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “endeavour”, “target”, “forecast” and “project” and similar expressions are intended to identify 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 in such forward-looking statements. 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 include among others, and without limitation:
● | the impact of pandemics, and the related response measures, on the Company and on the economies in which we operate; |
● | the outcome in pending and developing regulatory matters and the effect of changes in regulation and government policy; |
● | the political, social and fiscal regime and economic conditions and developments in the world, especially in those countries in which we operate; |
● | the outcome of legal proceedings including tax litigation and assessments; |
● | our ability to maintain key customer relations in important markets; |
● | our ability to improve results despite increased levels of competition; |
● | our ability to utilise our oil gas and coal reserves as anticipated; |
● | the continuation of substantial growth in significant developing markets; |
● | the ability to benefit from our capital investment programme; |
● | the accuracy of our assumptions in assessing the economic viability of our large capital projects and growth in significant developing areas of our business; |
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● | the ability to gain access to sufficient competitively priced gas, coal and other feedstocks and/or other commodities; |
● | the impact of increasingly more stringent environmental legislation and regulation on our operations and access to natural resources; |
● | the risk of potential liability for our operations under existing or future environmental regulations; |
● | our success in continuing technological innovation to address climate change risks; |
● | the success of our B-BBEE ownership transactions; |
● | our ability to maintain sustainable earnings despite fluctuations in oil, gas and commodity prices, foreign currency exchange rates and interest rates; |
● | our ability to maintain sufficient levels of cash at all times; |
● | our ability to attract and retain sufficient and adequately skilled employees; |
● | the risk of completing major projects within budget and schedule; and |
● | our success at managing the foregoing risks. |
The foregoing list of important factors is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider the foregoing factors and other uncertainties and events, and you should not place undue reliance on forward-looking statements. 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. See “Item 3.D—Risk factors”
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ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
We are a public company incorporated under the company law of South Africa. Most of our directors and officers reside outside the US, principally in South Africa. You may not be able, therefore, to effect service of process within the US upon those directors and officers with respect to matters arising under the federal securities laws of the US.
In addition, most of our assets and the assets of most of our directors and officers are located outside the US. As a result, you may not be able to enforce against us or our directors and officers judgements obtained in US courts predicated on the civil liability provisions of the federal securities laws of the US.
There are additional factors to be considered under South African law in respect of the enforceability in South Africa (in original actions or in actions for enforcement of judgements of US courts) of liabilities predicated on the US federal securities laws. These additional factors include, but are not necessarily limited to:
● | South African public policy considerations; |
● | South African legislation regulating the applicability and extent of damages and/or penalties that may be payable by a party; |
● | the applicable rules under the relevant South African legislation which regulate the recognition and enforcement of foreign judgements in South Africa; and |
● | the South African courts’ inherent jurisdiction to intervene in any matter which such courts may determine warrants the courts’ intervention (despite any agreement among the parties to (i) have any certificate or document being conclusive proof of any factor, or (ii) oust the courts’ jurisdiction). |
Based on the foregoing, there is no certainty as to the enforceability in South Africa (in original actions or in actions for enforcement of judgements of US courts) of liabilities predicated on the US federal securities laws.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
3.A [Reserved]
3.B Capitalisation and indebtedness
Not applicable.
3.C Reasons for the offer and use of proceeds
Not applicable.
3.D Risk factors
This section describes some of the risks that could materially affect, separately or in combination, Sasol’s business, operating results, cash flows and financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business operations. Accordingly, investors should carefully consider these risks.
Further background and measures that we use when assessing various risks are set out in the relevant sections of this report, indicated by way of cross references under each risk factor
Summary of Risk Factors
Please carefully consider all of the information discussed in this Report for a more thorough description of these and other risks. The risks described below are organised by risk type and are not listed in order of their priority to us or their impact on us.
Risks related to our business
● | Cyclicality in petrochemical product prices and demand may adversely affect our business, operating results, cash flows and financial condition; |
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● | Our coal, synthetic oil and natural gas reserve estimates may be materially different from quantities and qualities that we eventually recover or ultimately make use of; |
● | We may be unable to access, discover, appraise and develop coal and gas resources at |
a rate and price that is adequate to sustain our
business and/or enable growth;
● | We may not be able to exploit technological advances quickly enough and successfully or competitors may develop superior technologies; and |
● | Our insurance may not sufficiently cover damage or other potential losses, thereby impacting our business and financial condition. |
Risks related to financial matters
● | We may not be able to finance, refinance, extend or repay our indebtedness on time, which would have a material adverse effect on our financial condition and ability to continue as a going concern; |
● | Our access to and cost of funding is affected by our credit rating, which in turn is affected by, among other factors, our financial performance and the sovereign credit rating of the Republic of South Africa; |
● | We may not achieve our Sasol 2.0 transformation programme cash conservation targets; |
● | Fluctuations in coal, crude oil, natural gas, ethane, chemical and petroleum product prices and refining margins may adversely affect our business, operating results, cash flows and financial condition; and |
● | Fluctuations in exchange rates may adversely affect our business, operating results, cashflows and financial condition. |
Risks related to economic, political or social factors
● | Economic, political or social factors affecting the regions in which we operate may have a material adverse effect on our operations and profit. |
Risks related to our capital investments
● | We may not achieve projected benefits of acquisitions or divestments; |
● | Our projects / capital investments are subject to schedule delays and cost overruns, and we may face material changes in market conditions or other business assumptions, which could render our projects unviable or less profitable than planned; |
● | As our service providers supplying the oil and gas industry in Mozambique are concentrated |
and the supplier market is not mature, our
business could be adversely affected;
● | Exposure related to significant investments in associates and joint arrangements may adversely affect our business, operating results, cash flows and financial condition; and |
● | We may not pay dividends or make similar payments to shareholders in the future due to various factors. |
Risks related to the safety of our operations
● | Power and water deficits and poor infrastructure may impact our operations; |
● | We may face potential costs in connection with accidents causing property damage, personal injury or environmental contamination, industry and value chain-related operational interruptions; and |
● | Our facilities may also be subject to deliberate disruptions. |
Risks related to legal, regulatory and governance matters
● | Our shareholders might lose confidence in our financial and other public reporting if we experience material weaknesses or significant deficiencies and fail to maintain an effective system of internal controls over financial reporting which in turn may adversely affect our share price; |
● | Certain factors may result in the recognition of an impairment charge, which could negatively impact our financial condition; |
● | Actual or alleged non-compliance with regulatory requirements could result in criminal or civil enforcement and associated sanctions and/or harm our reputation and negatively impact our licence to operate; |
● | South African legislation relating to mining, petroleum and energy activities may have an adverse effect on our mineral rights and impact our business, operating results, cash flows and financial condition; |
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● | Changes in safety, health, environmental and chemical regulations, other legislation and public opinion may adversely affect our business, operating results, cash flows and financial condition; |
● | We are subject to risks associated with litigation and regulatory proceedings; and |
● | Intellectual property risks may adversely affect |
our freedom to operate our processes and sell
our products and may dilute our competitive
advantage.
Risks related to our sustainability
● | Our strategy to respond to climate change, including compliance with evolving regulatory requirements and policy to reduce GHG emissions and to adequately disclose related risks and impacts, may not be successful and could negatively impact our business and growth as well as result in claims against our business. In addition, laws, policies and societal concerns related to climate change could reduce supply/demand for our products, increase our operational costs, reduce our competitiveness, negatively impact our stakeholder relations, or adversely affect our licence to operate and impede our access to capital and financing. |
Risks related to health, including pandemics
● | Our global operations expose us to pandemics, such as the COVID-19 pandemic, that may adversely affect our workforce and impact business continuity, operating results, cash flows and financial condition. |
Risks related to information management
● | We may face the risk of data privacy breaches or attempts to disrupt critical information technology services, which may adversely impact our operations. |
Risks related to our people
● | Challenges remain around our ability to attract and retain critical skills to fill vacant positions to support current and future business requirements. |
Risks related to our American Depositary Receipts (ADR or ADRs)
● | The exercise of voting rights by holders of ADRs is limited in some circumstances; |
● | Holders of Sasol’s ordinary shares or ADSs may be subject to dilution as a result of any non-preemptive share issuance, and shareholders outside South Africa or ADS holders may not be able to participate in future offerings of securities (including Sasol’s ordinary shares) carried out by or on behalf of Sasol; |
● | Sales of a large amount of Sasol’s ordinary shares and ADSs could adversely affect the prevailing market price of the securities; and |
● | US securities laws do not require Sasol to disclose as much information to investors as a US issuer is required to disclose, and investors may receive less information about the Company than they might otherwise receive from a comparable US company. |
Risks related to our business
Cyclicality in petrochemical product prices and demand may adversely affect our business, operating results, cash flows and financial condition
Sasol’s chemicals portfolio includes several products that are exposed to cyclicality in margins. Margins for polymers, solvents, surfactants and fertilisers trend in a cyclical manner that usually, but not always, coincides with the normal business cycles of regional and global economies.
Cyclicality combined with difficulty forecasting the timing of the industry business cycle, and prices for chemical products during the current volatile market conditions may have a material adverse effect on our business, operating results, cash flows and financial condition.
Loss of competitiveness for Sasol remains a risk, driven by inter alia uncompetitive product prices, insufficient volumes to meet demand, cost of production and production volumes, sub optimal inventory levels, supply chain disruptions, critical feedstock availability, inadequate innovation, loss of customers and ability to place product in the market. This includes the risk of increased competition in the liquid fuels market in Southern Africa should new market entrants emerge who in turn could place refineries with own production at risk.
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Our coal, synthetic oil and natural gas reserve estimates may be materially different from quantities and qualities that we eventually recover or ultimately make use of
Our reported coal, synthetic oil and natural gas reserves are estimated quantities and qualities based on applicable reporting regulations that, under present conditions, have the potential to be economically mined, processed, produced, delivered to market and sold.
There are numerous uncertainties inherent in estimating quantities and qualities of reserves and in projecting future rates of production, including factors that are beyond our control and therefore estimated quantities and qualities of reserves are uncertain. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation, costs to develop and produce, and market prices for related products.
Reserve estimates are adjusted to reflect improved recovery and extensions, and are also revised from time to time based on improved data acquired from actual production experience and other factors. In addition, regulatory changes and market prices may result in a revision to estimated reserves. Revised estimates may have a material adverse effect on our business, operating results, cash flows and financial condition. For example, if quantities and qualities eventually recovered are materially different from estimates, then this could result in us having insufficient quantities to meet demand or supply obligations for such production. See “Item 4.D—Property, plants and equipment”.
We may be unable to access, discover, appraise and develop coal and gas resources at a rate and price that is adequate to sustain our business and/or enable growth
Our natural gas reserves in Mozambique are of particular importance as feedstock for our plants in South Africa, as well as for sales of gas into the markets in Mozambique and South Africa. We continue to develop a portfolio of gas options in Mozambique which includes gas field development of the current Petroleum Production Agreements (PPA) and PSA assets as well as pursuing exploration opportunities such as the recent gas find in PT5C however, we cannot be sure that we will be able to successfully develop such portfolio of gas options
Competition for suitable opportunities, increasing technical difficulty, stringent regulatory and environmental standards, large capital requirements and existing capital commitments may negatively affect our ability to access, appraise and develop new gas resources in a timely manner, which could adversely impact our ability to support and sustain our current business operations while we transition to Future Sasol.
Our future growth could also be impacted by these factors, potentially leading to a material adverse effect on our business, operating results, cash flows and financial condition.
We may not be able to exploit technological advances quickly enough and successfully or competitors may develop superior technologies
Many of our operations, including the manufacture of synthetic fuels and petrochemical products, are dependent on the use of advanced technologies. The development, commercialisation and integration of the appropriate advanced technologies can affect, among others, the competitiveness of our products, the continuity of our operations, our feedstock requirements and the capacity and efficiency of our production.
It is possible that new technologies or novel processes may emerge and that existing technologies may be further developed in the fields in which we operate. Unexpected advances in employed technologies or the development of novel processes can affect our operations and product ranges in that they could render the technologies we utilise or the products we produce obsolete or less competitive in the future. Difficulties in accessing new technologies may impede us from implementing them and competitive and environmental pressures may force us to implement these new technologies at a substantial cost.
In addition to the potential technological challenges, expansion projects are often integrated across our value chain. Delays with the development of an integrated project might, accordingly, have an impact on more than one business segment and could result in a material adverse effect on our business, operating results, cash flows and financial condition.
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Over time, green hydrogen is anticipated to be a feedstock for the sustainable products that Sasol will increasingly look to produce however, this will depend on the affordability of green hydrogen production and electrolysers, scale of renewable energy roll-out and Sasol’s ability to procure the technology cost effectively. Our effort to become a green hydrogen producer may be unsuccessful and the process may lead to increased operational and capital costs and negatively impact other growth strategies. See “—Risks related to our sustainability—Our strategy to respond to climate change, including compliance with evolving regulatory requirements and policy to reduce GHG emissions and to adequately disclose related risks and impacts, may not be successful and could negatively impact our business and growth as well as result in claims against our business. In addition, laws, policies and societal concerns related to climate change could reduce supply/demand for our products, increase our operational costs, reduce our competitiveness, negatively impact our stakeholder relations, or adversely affect our licence to operate and our access to capital and financing” for more information.
Our insurance may not sufficiently cover damage or other potential losses, thereby impacting our business and financial condition.
It is Sasol’s policy to ensure effective service provider management and procure appropriate insurance cover for property damage and business interruption for its production facilities. The policy is to procure cover above acceptable deductible levels at acceptable commercial premiums. However, full cover for all loss scenarios may not be available at acceptable commercial rates, and we cannot give any assurance that the insurance procured for any particular year would cover all potential risks sufficiently or that the insurers will have the financial ability to pay all claims that may arise. In addition, loss and liability in relation to cybersecurity may not be sufficiently covered by any insurance.
The costs we may incur as a result of the above or related factors could have a material adverse effect on our business, operating results, cash flows and financial condition.
Risks related to financial matters
We may not be able to finance, refinance, extend or repay our indebtedness on time, which would have a material adverse effect on our financial condition and ability to continue as a going concern
A number of short to medium-term factors can adversely affect our access to capital and ability to refinance our existing indebtedness or incur future debt on commercially reasonable terms (if at all), which in turn can materially affect our business, results, liquidity and financial condition. These factors include:
● | the increased risk of a prolonged surge in global inflation and interest rates; |
● | financial and operational performance, including operating cash flow, our net debt to earnings before interest, taxes, depreciation and amortisation (EBITDA) ratio and our share price; |
● | prolonged dislocation in the financial and capital markets; |
● | prolonged periods of low oil prices and a decline in fuel and chemicals margins; |
● | inherent business risks, including unplanned production outages, declines in margins for our products, higher than anticipated capital requirements to sustain operations or for projects and supply chain disruptions; |
● | climate change concerns, which may restrict the availability of bank loans or access to the local and global debt capital markets; |
● | changes in financial market regulation; and |
● | adverse global events including impact from pandemics and military conflicts. |
In addition, our principal credit facilities contain restrictive covenants (including financial covenants). These restrictive covenants limit, among other things, our ability to encumber our assets, incur incremental debt and dispose of assets in certain circumstances. In addition, the financial covenants include a requirement to not exceed a maximum net debt to EBITDA ratio. These restrictive covenants could limit our operating and financial flexibility and failure to comply with any covenant may enable the lenders to accelerate repayment obligations.
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Our operating cash flow and credit facilities may also be insufficient to meet our capital requirements and related incremental working capital plans, depending on the timing and cost of development of our existing and future projects and our operating performance. As a result, additional capital may be needed to meet the funding requirements of these projects and ongoing business activities, and any inability to refinance or extend debt maturities may impact our financial condition and ability to continue as a going concern.
Further, we have incurred US dollar denominated indebtedness. To the extent US dollars are not readily available to us we may not be able to fund such repayments.
Moreover, under South African exchange control regulations, we must obtain approval from the Financial Surveillance Department (FSD) of the South African Reserve Bank regarding any capital raising activity involving a currency other than the rand. In granting its approval, the FSD may impose conditions on our use of the proceeds of the capital raising activity outside South Africa, including limits on our ability to retain the proceeds of this capital raising activity outside South Africa or a requirement that we seek further approval by the FSD prior to applying any of these funds to any specific use. Any limitations imposed by the FSD on our use of the proceeds of a capital raising activity could adversely affect our flexibility in financing our investments or our financial needs. For more information regarding exchange controls in South Africa, see “Item 10.D—Exchange controls”.
Our access to and cost of funding is affected by our credit rating, which in turn is affected by, among other factors, our financial performance and the sovereign credit rating of the Republic of South Africa
Any downgrades to our credit rating, be that due to the deterioration of our financial performance or a decline of the sovereign credit rating of the Republic of South Africa, could adversely affect our access to and the cost of funding.
We may not achieve our Sasol 2.0 transformation programme cash conservation targets
In November 2020, Sasol announced the Sasol 2.0 business transformation programme to the market, which is aimed at transforming Sasol’s organisation
and delivering a sustainable, profitable and globally competitive business. The programme has specific targets for cash fixed cost, gross margin, working capital and maintaining and transforming categories of capital spend.
The achievement of the Sasol 2.0 transformation programme is a top priority for Sasol, however, there are factors that may impact the delivery negatively. These include negative macroeconomic developments or further deterioration of market conditions as well as the impact of operational instability and our failure to manage costs appropriately across our operating sites. The actual cash flow improvement achieved may therefore differ significantly from the current targeted amounts. If the anticipated benefits cannot be realised from these efforts, our business, operating results, financial condition, cash flows and ability to execute our growth strategy could be adversely affected.
Fluctuations in coal, crude oil, natural gas, ethane, chemical and petroleum product prices and refining margins may adversely affect our business, operating results, cash flows and financial condition
Market prices are subject to fluctuations due to general economic conditions, industry inventory levels and technology advancements
We depend on coal, crude oil, natural gas, ethane, chemical and petroleum products, among others, as feedstock and process materials. The market prices of these products fluctuate as they are subject to local and international supply and demand fundamentals and other factors over which we have no control. Currency fluctuations and commodity prices can have a joint impact on Sasol’s financial performance and could adversely affect our business, operating results, cash flows and financial condition, including by the delay or cancellation of projects.
In addition, a substantial proportion of our turnover is derived from sales of natural gas, chemical and petroleum products, the prices of which have fluctuated significantly in recent years. These prices are affected primarily by crude oil prices and other factors including changes in product inventory, global production capacity and availability of substitute fuels. Worldwide supply conditions and crude oil prices may be significantly influenced by macroeconomic conditions, industry inventory levels, technology advancements, weather-related damage and disruptions, alternative fuel prices and geopolitical risks, including warfare.
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See “Item 5.A—Operating results” for the impact of the crude oil prices on the results of our operations.
It is inherently difficult to forecast fluctuations in prices for coal, crude oil, natural gas, ethane, chemicals and petroleum products. This risk has been exacerbated by the COVID-19 pandemic and its impact on those product markets as well as the disruption caused by the Russia/ Ukraine war and the consequent inflationary pressures from feedstock costs, impacts on supply chains and uncertainties around changes in monetary policy in high inflationary environments. The macro environment remains highly volatile, with key indicators (such as exchange rate, oil, feedstock cost and inflation) moving with significant variations on a regular basis.
As we are unable to control the price at which these products are purchased or sold, fluctuations in prices of these products, or any inability to obtain or sell these products, may have a material adverse effect on our business, operating results, cash flows and financial condition.
South African regulations and margin erosion
The South African government controls and/or regulates certain fuel prices and our margins may be impacted as a result of changes to the regulations and formulae used to calculate such prices.
South African liquid fuels prices are determined on an import parity principle using the “Basic Fuel Price” (BFP) mechanism. Elements in the BFP formula are updated or adjusted from time to time at the discretion of the Department of Mineral Resources and Energy (DMRE), which may affect margins.
Further, through our equity participation in the National Petroleum Refiners of South Africa (Pty) Ltd (Natref) crude oil refinery, we are exposed to fluctuations in refinery margins resulting from fluctuations in international crude oil and petroleum product prices.
In addition, piped gas prices are regulated through the approval of maximum piped gas prices by the National Energy Regulator of South Africa (NERSA). NERSA uses its Maximum Gas Price Methodology adopted from time to time as the guideline for assessing and deciding on maximum gas price applications by licenced traders. In January 2023, NERSA adopted a revised Maximum Gas Price Methodology. The implementation by NERSA of this revised methodology in relation to future gas price applications by Sasol Gas (Pty) Ltd (Sasol Gas) could have an adverse effect on our business, operating results, cash flows and financial condition. In addition, the outcome of the ongoing litigation in the review application of the 2021 NERSA Maximum Gas Price decision (described under “Item 4.B—Business overview—Legal proceedings and other contingencies”) may also lead to such an adverse effect.
Long term fluctuations in US dollar prices for oil and ethane
While we use derivative financial instruments and engage in hedging activities from time to time to mitigate against downside risk, these do not protect against differing trends in the correlation between crude oil and ethane and chemicals and petroleum product prices and as such, our exposure could result in reduced revenues and may have an adverse effect on our business, operating results, cash flows and financial condition. See “Item 11—Quantitative and Qualitative Disclosures About Market Risk”.
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Fluctuations in exchange rates may adversely affect our business, operating results, cashflows and financial condition
The rand is the principal functional currency of our operations, and we report our financial results in rand. However, a significant portion of our turnover is impacted by the US dollar and the pricing of most petroleum and chemical products is based on global commodity and benchmark prices which are quoted in US dollars. Further, the components of the BFP are US dollar-denominated and converted to rand, which impacts the price at which we sell fuel in South Africa. In addition, a significant part of our borrowings is US dollar-denominated, as these relate to investments outside South Africa or constitute materials, engineering and construction costs imported into South Africa. Fluctuations in the rand/US dollar (ZAR/US$) exchange rate impact our financial leverage and estimated capital expenditure. We also generate turnover and incur operating costs in US dollars, euros and other currencies.
Accordingly, fluctuations in exchange rates between the rand and US dollar, and/or euro may have a material effect on our business, operating results, cash flows and financial condition.
Furthermore, the rand exchange rate is affected by various international and South African economic and political factors. Strengthening of the rand would have an adverse effect on our operating results, cash flows and financial condition. However, given the significance of our foreign currency denominated long-term debt, a weaker rand against the US dollar would have a negative impact on our gearing. See “Item 5.A—Operating results” for further information regarding the effect of exchange rate fluctuations on our results of operations.
Although the exchange rate of the rand is primarily market-determined, its value at any time may not be an accurate reflection of its underlying value, due to the potential effect of, among other factors, exchange controls. For more information regarding exchange controls in South Africa see “Item 10.D—Exchange controls”.
In addition, fluctuations in the exchange rates of the rand against the US dollar, euro and other currencies impact the comparability of our financial statements between periods due to the effects of translating the functional currencies of our foreign subsidiaries into rand at different exchange rates.
Risks related to economic, political or social factors
Economic, political or social factors affecting the regions in which we operate may have a material adverse effect on our operations and profits
Fiscal and monetary policies
Macroeconomic factors, such as inflation and interest rates, could affect our ability to contain costs and obtain cost-effective debt financing.
Global financial conditions, geo-political tensions, commodity price trends, emerging market sentiment swings and domestic sociopolitical and policy developments, could contribute to significant currency volatility.
Further, global economic conditions remain highly uncertain. Macroeconomic and socio-political uncertainties and other potential disruptions to international credit markets and financial systems could cause a loss of investor confidence and any economic recovery may remain limited in geographic scope. The risk also remains that a recovery could be slow or that the global economy could fall into a deep and long-lasting recession.
Political and social uncertainty
We have invested in or are in the process of investing in and/or divesting from, significant operations in Southern African, European, North American, Asian and Middle Eastern countries that are experiencing or have experienced political, social and economic uncertainty. For example, South Africa faces ongoing challenges in improving the country’s growth potential, reducing inequality, weak public finances, corruption and addressing weaknesses at state-owned enterprises, particularly the national power utility, Eskom (Eskom) and Transnet SOC Limited (Transnet) (the state-owned rail, port and pipeline company), and other institutions. It also continues to face events and potential future risks related to civil and social unrest. In 2021, South Africa experienced security threats to operations and people, continuity risks in operations and business, reductions in market demand for products, and interruptions in supply chains which significantly impacted the economy, business generally and us specifically in various ways. These factors remain a risk to South Africa’s business environment, sovereign credit rating outlook and future socioeconomic stability.
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In addition, economic and political instability in regions outside of the jurisdictions in which we operate and other geopolitical events such as the Russia/ Ukraine war may result in unavoidable uncertainties that could negatively affect costs of business and cause volatility in exchange rates, commodity prices, and interest rates. Such events could also impact worldwide political, regulatory, economic or market conditions, as well as causing instability in political institutions, regulatory agencies and financial markets, any of which could have a material adverse effect on our business, operating results, cash flows and financial condition. Furthermore, there has been an increasing trend of coalition governments at the local government (city/town) level in South Africa, resulting in some instability at this level of government. National elections will be held in South Africa in 2024. We are uncertain of the impact national elections will have on national policies relating to the overall business environment and Sasol.
Further, government policies, laws and regulations in countries where we operate, or plan to operate, may change in the future. Governments in those countries have in the past and may in the future pursue policies of resource nationalisation and market intervention, including through protectionism like import tariffs and subsidies. The impact of such changes on our ability to deliver on planned projects cannot be determined with any degree of certainty. Such changes may therefore have an adverse effect on our operations and financial results.
Transformation and local content
Sasol is required to interpret and understand the local content requirements for those countries in which it operates. For example, for the oil and gas industry in the Republic of Mozambique we are required to interpret certain local content requirements to be able to enhance our social licence to operate. As a result, not understanding or complying with the local content requirements pose a risk to Sasol
Further, we cannot assure compliance with local content requirements (including during the empowerment period) or with newly imposed conditions. For example, value creation, if any, to the majority of the Khanyisa shareholders at the conclusion of the Sasol Khanyisa Transaction (as defined below) is exposed to the inherent business risks of Sasol South Africa Limited (SSA) during the empowerment period. The value created is determined with reference to the extent the fair value of SSA and any dividends declared by SSA exceed any outstanding vendor financing related to these Khanyisa shareholders at the end of the transaction period. Any adverse impact on dividend distributions to the Khanyisa shareholders or on the valuation of the SSA business on conclusion of the transaction will reduce the ultimate value created. See “Item 4.B—Empowerment of historically disadvantaged South Africans”.
Disruptive industrial action
While the Sasol employee relations landscape is relatively stable, the South African labour market remains volatile and can be characterised by major industrial actions in key sectors of the economy, especially during the season of wage negotiations.
Other factors affecting our operations
Other specific country risks that are applicable to countries in which we operate, and which may have a material adverse effect on our business include:
● | expropriation of assets; |
● | non-performance by state-owned enterprises in South Africa such as Eskom and Transnet. See “Risks related to the safety of our operations— Power and water deficits and poor infrastructure may impact our operations”; |
● | lack of capacity (financial or otherwise) to deal with emergency response situations; and |
● | terrorism threats. |
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Risks related to our capital investments
We may not achieve projected benefits of acquisitions or divestments
We may, from time to time and subject to favourable market conditions, pursue acquisitions or divestments. Further, the rise of factors and concerns relating to sustainability and environmental, social and governance issues in investment decisions may also result in certain divestments.
With any such transactions, there is the risk that any benefits or synergies identified at the time of acquisition/divestment may not be fully achieved as a result of changing or inappropriate assumptions, materially different market conditions, integration challenges or other factors. Furthermore, we could be found liable, regardless of extensive due diligence reviews, for past acts or omissions of the acquired / disposed business without any adequate right of redress.
In addition, in the event we choose to raise debt capital to finance acquisitions, our leverage will increase. Should we choose to use equity as consideration for an acquisition, existing shareholders may suffer dilution. Alternatively, we may choose to finance any acquisition with our existing resources, which could decrease our ability to fund future capital expenditure and expansion.
Our projects / capital investments are subject to schedule delays and cost overruns, and we may face material changes in market conditions or other business assumptions, which could render our projects unviable or less profitable than planned
Our capital projects were and are subject to the risk of delays and cost overruns inherent in any project, including as a result of:
● | shortages or unforeseen increases in the cost of equipment, labour and raw materials whether as a result of inflation, global supply chain disruptions following geo-political tensions or otherwise; |
● | unforeseen design and engineering problems, contributing to or causing late additions and/or increases to scope; |
● | unforeseen construction problems; |
● | unforeseen failure of mechanical parts or equipment; |
● | unforeseen technical challenges on start-up causing delays in beneficial operations being achieved; |
● | inadequate phasing of activities; |
● | unforeseen process safety issues; |
● | labour disputes; |
● | lack of community support; |
● | inadequate workforce planning or productivity of workforce; |
● | inadequate change management practices; |
● | natural disasters and adverse weather conditions, including excessive winds, higher-than-expected rainfall patterns, tornadoes, cyclones and hurricanes or a pandemic; |
● | failure, or delay to source equipment or materials by third-party suppliers and /or service providers; |
● | significant variations in the assumptions we make in assessing the viability of our projects, including those relating to budget development, capital and operating costs, commodity prices and the prices for our products, exchange rates, import tariffs, interest rates, discount rates (due to changes in country risk premiums) and the demand for our products; and |
● | regulatory approvals and compliance obligations, including changes to regulations, such as environmental regulations, and/or identification of changes to project scope necessary to ensure safety, process safety, and environmental compliance. |
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For example, development of projects such as the Field Development Plan Amendment (FDP) of the PSA in Mozambique (which allows for flexible production from different reservoirs) involved capital-intensive processes carried out over long durations. Any cost overruns, schedule delays, reservoir performance issues, process safety incidents or adverse changes in assumptions affecting the viability of the project could have had a material adverse effect on our business, operating results, cash flows, financial condition and prospects.
In addition, our capital projects are subject to high inflation risk. For the impact of high inflation on costs of operations and the material adverse impact on our financial position, see “Risks related to economic, political or social factors —Economic, political or social factors affecting the regions in which we operate may have a material adverse effect on our operations and profits” and “Risks related to financial matters—Fluctuations in coal, crude oil, natural gas, ethane, chemical and petroleum product prices and refining margins may adversely affect our business, operating results, cash flows and financial condition”
As our service providers supplying the oil and gas industry in Mozambique are concentrated and the supplier market is not mature, our business could be adversely affected
The service provider market supplying the oil and gas industry in Mozambique is not mature and we rely heavily on international contractors to support our projects. With the global oil and gas market booming due to increased activity and global supply chain constraints, supply and demand for services is driving rates up. We depend on those service providers to fulfil their contracts at acceptable rates and should one or more of these contracts be terminated as a result of increased rates, particularly for our well delivery operations, we may be unable to speedily replace these services on terms that are acceptable to us, increasing our costs, disrupting our operations and materially affecting our financial position.
Further, although our procurement policy is to require service providers to acknowledge our requirement that they maintain acceptable corporate values and ethical standards, there is a risk that instances of unethical conduct could occur, and such instances could impact our reputation. In addition, if we identify that a service provider fails to meet these standards, such service provider could be replaced which in turn could cause additional strain on the
supply chain (thereby increasing costs and delivery times) particularly if any of our largest service providers were to be implicated.
Exposure related to significant investments in associates and joint arrangements may adversely affect our business, operating results, cash flows and financial condition
We have invested in a number of associates and joint arrangements, and we continue to consider such opportunities where appropriate. The development of these projects may require investments in associates and joint arrangements, some of which are aimed at facilitating entry into countries and/or sharing risk with third parties.
Although the risks are shared, the objectives of our associates and joint arrangement partners, their ability to meet their financial and/or contractual obligations, behavior and compliance with legal and ethical standards may result in disputes and/or litigation which in turn may have a material adverse effect on our business, operating results, cash flows and financial condition, and may constrain the achievement of our growth objectives.
We may not pay dividends or make similar payments to shareholders in the future due to various factors
As further described under “Item 8––Financial Information”, the Company’s dividend policy takes into consideration various factors, including overall market and economic conditions, the Sasol group’s financial position, capital investment plans and earnings growth.
Whether funds are available for distribution to shareholders depends on a variety of factors, including the amount of cash available, our capital expenditure and other liquidity requirements existing at the time. Given these factors and our board of directors’ discretion to declare cash dividends or other similar payments, dividends may not be paid in the future.
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Risks related to the safety of our operations
Power and water deficits and poor infrastructure may impact our operations
Our operations are located in multiple regions across the world and are reliant upon the stable supply of electricity, availability of water and access to transportation routes in order to optimally run our operations and/or move our products. The infrastructure in South Africa, such as rail infrastructure, inland water systems, electricity and water supply, may need to be further maintained, upgraded and expanded, and in certain instances, possibly at our own cost. Should we not have access to reliable electricity supply, limited access to water or experience infrastructure challenges or should we not identify and obtain the resources required to establish the infrastructure necessary for the development of our projects, this could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth.
Reliable supply of electricity is important to run our plants optimally. Despite attempts from Eskom to restore the reliability of its ageing coal fleet, incidents of energy production shortfalls are increasing. Unplanned power outages will have a negative impact on our production volumes, cost and profitability. While we have the capacity to generate half of our own electricity requirements at our South African operations, we remain dependent on external electricity supply from Eskom. Electricity supply from Eskom can be further curtailed due to severe weather conditions impacting Eskom's power stations (such as weather conditions disrupting supply of coal to Eskom's power stations) resulting in disruptions to its electricity production. In addition, between 2018 and 2023, Eskom implemented intermittent electricity load curtailment and outages as a result of continued poor generation performance. Under load curtailment, only our operations in Sasolburg (Sasolburg Operations) in South Africa are required to reduce power demand which can result in production losses and have a material adverse effect on our business, financial condition and future growth.
Further, water as a resource is becoming increasingly limited as demand for water increases in catchments within which we operate, specifically in South Africa, exacerbated by the effects of climate change. A significant part of our operations requires the use of large volumes of water. South Africa is generally an arid country with a highly variable climate and prolonged periods of drought, sudden floods, significant changes to current water laws or our related permits/authorisations could increase the cost, management or availability of our water use and supplies or otherwise impact our operations. Water use by our operations varies widely depending largely on feedstock and technology applied. Water to our South African operations is supplied from the Integrated Vaal River System (IVRS), currently making up 81% of Sasol’s total water demand. While the water supply to these operations remains secure, expectations are for a worsening of the water supply imbalance. This may lead to issues of water availability or the imposition of restrictions on its use, specifically during periods of drought. Seasonal changes can result in a deterioration in the quality of water supplied from the IVRS, which can lead to feed water that is highly variable and regularly of poor quality, resulting in increased treatment costs. Although various technological advances may improve the water efficiency of our processes, these are capital intensive. We may also experience limited water availability due to periodic drought events aggravated by delays in completing phase 2 of the Lesotho Highlands Water Project which is currently underway. In addition, deterioration in water quality and other infrastructure challenges related to our South African operations, could have a material adverse effect on our business, operating results, cash flows, financial condition, and future growth.
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Lack of infrastructure reliability and availability could equally impact our operations. The transportation of inbound materials to our plants and of products to our customers is reliant on the region’s available workforce and infrastructure. Numerous factors like natural disasters, labour strikes, political unrest, compromised infrastructure, criminal activity, pandemics or extreme weather events may impact on transportation modes which could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth. For further information on operational interruptions impacting our business or value chains, which may have a material adverse effect on volumes produced and costs, see “—Risks related to the safety of our operations— We may face potential costs in connection with accidents causing property damage, personal injury or environmental contamination, industry and value chain-related operational interruptions”.
Moreover, unplanned rail and port outages in South Africa could cause a negative impact on our sales volumes, cost and profitability while exposing the Company to the risk of increased road transport accidents. While we have some of our own infrastructure employed and other options with some products at our South African operations, we remain dependent on Transnet (for example, for exports from South Africa). Transnet often causes transportation delays impacting our ability to timely export our chemicals products, resulting in financial losses and reputational damage.
We may face potential costs in connection with accidents causing property damage, personal injury or environmental contamination, industry and value chain-related operational interruptions
Operational interruptions impacting our business or value chains may have a material adverse effect on volumes produced and costs. These impacts could be caused by the failure of critical assets, extreme weather events or natural disasters, lack of required feedstock volumes and quality (specifically coal, natural gas, crude oil, petroleum, ethane and ethylene), supply chain disruption (inbound and outbound, including critical input or process materials and reliance on third party infrastructure), utility interruption (including electricity, water, oxygen, steam, hydrogen, nitrogen, and reliance on third party suppliers and infrastructure), cleaning costs in relation to contamination or a breach of our social and licence to operate (including non-compliance with regulatory requirements, licences or permits).
We operate coal mines, explore for and produce gas and operate a number of plants and facilities for the manufacture, storage, processing and transportation of crude oil, chemicals and gas, related raw materials, products and waste materials. These facilities and their respective operations are subject to various risks, such as fires, explosions, loss of containment of hazardous substances, soil and water contamination among others. As a result, we are subject to the risk of experiencing, and in the past have experienced, industry-related incidents. Further, if we fail to provide safe working environments for our employees and the public while at our facilities, premises or adequate product transportation, it could lead to injuries, loss of life and work stoppages halting production. Such incidents may lead to inspections conducted by relevant authorities, with the associated potential consequences of enforcement action, including directions to temporarily cease and desist operations and/or the imposition of fines and penalties and potentially could lead to the denial of our licence to operate. For example, in South Africa, section 54 of the Mine Health and Safety Act, 29 of 1996 (Mine Health and Safety Act) allows an inspector who has reason to believe that any occurrence, practice or condition at a mine endangers or may endanger the health or safety of any person at the mine, to give any instruction necessary to protect the health and safety of such person. Most often these instructions will result in the whole or a part of a mine stoppage resulting in significant production losses. Further, Sasol operates the Pande and Temane gas fields in Mozambique. The production of gas through wells, pipelines and a processing plant is inherently exposed to the risk of integrity failures (including legacy well obligations and historical issues) which may result in a loss of containment and/or a disruption of gas supply to our own and/or customers’ operations which in turn could have a material adverse effect on our revenue, cash flows and costs. This may have a material adverse effect on our business. See “Item 4.B—Business overview— Regulation—Safety, health and environment—Regions in which Sasol operates and their applicable legislation”.
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Our facilities may also be subject to deliberate disruptions
Deliberate disruptions such as acts of terror, may result in damage to our facilities and may require the shutdown of the affected facilities, thereby disrupting production and increasing production costs and may in turn disrupt the mining, gas, chemicals and oil businesses which make up a significant portion of our total income. Furthermore, acts of terror at our operations may cause environmental contamination, personal injuries, health impairment or fatalities which expose Sasol to extensive environmental remediation costs, civil litigation, the imposition of fines and penalties and the need to obtain or implement costly pollution-control technology.
Further, while we actively monitor the gas pipeline from Mozambique as well as the gas pipeline network in the parts of South Africa where our pipe-gas business operates, there is no certainty that there will be no third-party encroachment (whether inadvertent or deliberate) along the gas pipeline and such encroachment may cause significant interruptions to our operations.
Our operations in the Southern Africa region are further susceptible to business interruptions which could result from community protests and social unrest. These have from time to time resulted in violent incidents which remain challenging to manage.
The costs we may incur as a result of the above or related factors could have a material adverse effect on our business, operating results, cash flows and financial condition.
Risks related to legal, regulatory and governance matters
Our shareholders might lose confidence in our financial and other public reporting if we experience material weaknesses or significant deficiencies and fail to maintain an effective system of internal controls over financial reporting which in turn may adversely affect our share price
Our management is responsible for establishing and maintaining adequate internal controls over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control. We disclosed a material weakness in internal control over financial reporting for the financial year ended 30 June 2023. The material weakness was
identified in 2020 and relates to the level of precision applied to the impairment assessments performed on the South African integrated value chain cash generating units (CGUs) within one segment of the company and was expanded to all CGUs within the South African integrated value chain. This material weakness is still in the process of being remediated.
We also have identified an increase in deficiencies within our energy business (Energy Business) during the current financial year of which several were rated as significant deficiencies. Although these deficiencies have been considered to not be material, individually or in aggregate our inability to implement remedial measures, could result in future material weaknesses and misstatements.
Even though significant progress on remedial actions has been undertaken on the pre-existing material weakness identified in 2020 and remedial plans have been developed for identified significant deficiencies, we cannot be certain that our internal controls over financial reporting will ensure that we design, implement and maintain adequate controls over our financial processes and reporting in the future.Our failure to implement newly required or improved controls or to adapt our controls, or difficulties encountered in their operation, could prevent us from meeting our financial reporting obligations or result in a restatement of previously disclosed financial statements. These financial reporting obligations include filing our periodic reports with the SEC on a timely basis and maintaining compliance with applicable New York Stock Exchange (NYSE) listing requirements.
In addition, material weaknesses and significant deficiencies, and any resulting restatements, could require additional remedial measures, including additional personnel and system changes which could be costly and time consuming and also could subject us to regulatory scrutiny and to litigation which could have a material adverse effect on our business and our reputation.
Furthermore, if we are unable to maintain an effective system of internal controls over financial reporting or disclosure controls and procedures, investors may lose confidence in the reliability of our financial statements and this may have an adverse impact on investors’ ability to make decisions about their investment.
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Certain factors may result in the recognition of an impairment charge, which could negatively impact our financial condition
An impairment risk arises as a result of one or more uncertainties when preparing the financial statements, such as:
● | Macroeconomic assumptions and commodity prices: Sasol's operating results are heavily dependent on commodity prices, such as crude oil, natural gas, and coal. A significant decline in these prices, as well as volatility in exchange rates, inflation, chemical prices and petroleum product prices, above-inflation related price increases in electricity could result in a reduction in the value of Sasol's assets and operations. |
● | Currency fluctuations: Sasol operates in several countries, and its financial results are impacted by exchange rates. A significant change in exchange rates could lead to an impairment of assets denominated in foreign currencies. |
● | Environmental and carbon cost regulations: Sasol's operations are subject to environmental regulations in the countries where it operates. Changes in these regulations and a failure to comply with them could lead to fines or other penalties that could negatively impact our license to operate and impact Sasol's financial results. Carbon cost regulations including carbon tax rate, tax free allowances and emissions exceeding the carbon budget requirements could also result in an impairment of our assets. |
● | Technological advances: Sasol's operations rely on complex technologies, and advances in technology could render its assets obsolete. This could result in a reduction in the value of its assets and operations. |
● | Economic conditions: Sasol's financial results are impacted by economic conditions in the countries where it operates. A significant economic downturn could result in a reduction in demand for Sasol's products, which could impact its financial results. |
● | Business strategy: Sasol's business strategy is subject to risks and uncertainties; changes in |
the business environment could impact the success of its strategy. If the Company’s strategy is not successful, it could result in an impairment of its assets. |
● | Political and social factors: Sasol operates in countries where political and social factors could impact its operations. Political instability, civil unrest, or changes in government policies could lead to a reduction in the value of Sasol's assets and operations. |
● | Operational factors: lack in the productivity of our coal mining activities resulting in additional external coal purchases, the availability of coal reserves, coal quality and cost of mining activities are among the factors that could impact our financial results. Sasol’s production volumes are also impacted by coal quality, and operational stability, as well as the availability of natural gas reserves, cost of producing or sourcing of natural gas or liquified natural gas and fluctuations in regulated gas selling prices, all of which could lead to an impairment of our assets. Increasing operational costs and costs of sustenance capital may impact our financial results and lead to a risk of not meeting the Sasol 2.0 targets. |
● | Changes in our weighted average cost of capital. |
If any of these uncertainties occur, either alone or in combination, management could be required to recognise an impairment, which could have a material adverse effect on our results of operations and financial condition and harm our reputation.
Actual or alleged non-compliance with regulatory requirements could result in criminal or civil enforcement and associated sanctions and/or harm our reputation and negatively impact our licence to operate
Non-compliance with laws and regulatory requirements, particularly with anti-corruption and anti-bribery laws, sanction laws, environmental laws, competition or anti-trust laws and data privacy laws have been identified as our top five regulatory risks.
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Anti-corruption and anti-bribery laws
Ethical misconduct and non-compliance with applicable anti-corruption/anti-bribery laws could result in criminal or civil sanctions and could have a material adverse impact on our reputation, operations and licence to operate.
We, like other international petrochemical companies, have a geographically diverse portfolio and conduct operations in some countries which have a perceived high prevalence of corruption. Our operations must comply with applicable anti-bribery laws, such as the US Foreign Corrupt Practices Act as well as similar anti-corruption and anti-bribery laws of South Africa and other applicable jurisdictions. Major investments in countries with high corruption exposure create an elevated risk when dealing with private companies, governments or government-controlled entities. There is also a risk associated with the deployment of Sasol sales agents, consultants, customs clearance agencies and other intermediaries, since we could be held liable for any of their actions (including actions in breach of anti-corruption laws and regulations), even if these third parties act independently. While we have an anti-corruption and anti-bribery compliance and training programme in place (including third-party due diligence process) we cannot assure you that there will be no violation and any such violation could result in substantial criminal or civil sanctions and could damage our reputation.
Sanctions laws
Our international operations require compliance with applicable trade and economic sanctions, or other restrictions imposed by governments, such as the US and United Kingdom, and organisations, such as the United Nations, the EU and its member countries. While we closely monitor developments in these sanction programmes, a violation of any of these sanction regimes could lead to a loss of import or export privileges, penalties against or the prosecution of Sasol and our employees, which could have an adverse effect on our reputation, business, operating results, cash flows and financial condition.
While we have a sanctions compliance programme and sanctions screening systems in place, there can be no assurance that we will comply in the future, particularly as the scope of certain laws may be unclear and subject to frequent amendments or changing interpretations.
Environmental laws and regulations
See “Changes in safety, health, environmental and chemical regulations, other legislation and public opinion may adversely affect our business, operating results, cash flows and financial condition”.
Competition laws/Anti-trust laws and Consumer Protection laws
Non-compliance with competition/anti-trust legislation and/or consumer protection laws could expose the Sasol group of companies to administrative penalties, civil claims and damages, including punitive damages by companies and/or consumers who can prove they were harmed by the breach of competition/anti-trust legislation and/or consumer protection laws. Such penalties and damages could be significant and have an adverse impact on Sasol’s business, operating results, cash flows and financial condition. In addition, Sasol’s reputation could be damaged by findings of such contraventions and individuals could be subject to fines and/or imprisonment in countries where competition/anti-trust/consumer protection law violations are a criminal offence.
While it is our policy to comply with all applicable laws and have in place training and compliance programmes, we could inadvertently contravene competition/anti-trust laws and/or consumer protection laws and be subject to the imposition of fines, criminal sanctions and/or civil claims and damages which may have a material adverse impact on our reputation, business, operating results, cash flows and financial condition.
Data privacy laws and regulations
We operate in countries that have data protection laws and regulations. It is our policy to comply with all applicable laws, and we implement numerous training, awareness and data privacy compliance programmes. However, non-compliance with data protection laws could result in fines and/or civil claims and damages. Further, uncoordinated or divergent global legislative standards and regulatory frameworks for digitalisation could heighten this risk, which could have a material adverse impact on our reputation and a consequential financial impact. See “—Risks related to information management-We may face the risk of data privacy breaches or attempts to disrupt critical information technology services, which may adversely impact our operations”.
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South African exchange control and other regulations
South African law provides for exchange control regulations which apply to transactions involving South African residents, including both natural persons and legal entities. These regulations may restrict the export of capital from South Africa, including foreign investments and may require us to obtain regulatory approval from the SARB for certain of our international debt financing. The regulations may also affect our ability to borrow funds from non-South African sources for use in South Africa, including the repayment of these borrowings from South Africa and, in some cases, our ability to guarantee the obligations of our subsidiaries with regard to these funds. These restrictions and inability to obtain SARB approval where required, may affect the manner in which we finance our transactions outside South Africa and the geographic distribution of our debt which could also impact our financial and strategic flexibility.
Tax laws and regulations
We operate in multiple tax jurisdictions globally and are subject to both local and international tax laws and regulations. Although we aim to fully comply with tax laws in all the countries in which we operate, tax is a highly complex area leading to the risk of unexpected tax uncertainties. Tax laws or dispensations, including incentive programmes are changing regularly, and their interpretation may potentially result in ambiguities and uncertainties, in particular in the areas of international taxation and transfer pricing.
Where the tax law is not clear, we interpret our tax obligations in a responsible way, with the support of legal and tax advisors as deemed appropriate. Tax authorities and courts may arrive at different interpretations to those taken by Sasol, which may lead to substantial increases in tax payments. Although we believe we have adequate systems, processes and people in place to assist us with complying with all applicable tax laws and regulations, the outcomes of certain tax disputes and assessments may have a material adverse effect on our business, operating results, cash flows and financial position.
We could also be exposed to significant fines and penalties and to enforcement measures, including, but not limited to, tax assessments, despite our best efforts at compliance. In response to tax assessments or similar tax deficiency notices in particular jurisdictions, we may be required to pay the full amount of the tax assessed (including stated penalties and interest charges) or post security for such amounts notwithstanding that we may contest the assessment and related amounts.
For more information regarding pending tax disputes and assessments see “Item 4.B—Business overview—Legal proceedings and other contingencies”.
Ownership rights
In Africa, ownership of rights in respect of land and resources is uncertain creating the risk that disputes in relation to ownership or other community matters may arise. The impact of these policy intentions and related disputes are not always predictable and may cause disruption to our operations or development plans.
Legal and regulatory uncertainties
Inconsistency of regulations particularly between developed and developing countries increases legal and regulatory uncertainty, which may affect both our decision to pursue opportunities in certain countries and also our cost of operations.
Further, legal and regulatory uncertainties could result from changes in regulatory and legal policies of governments. See “—Risks related to economic, political or social factors—Economic, political or social factors affecting the regions in which we operate may have a material adverse effect on our operations and profits––Political and social uncertainty”.
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South African legislation relating to mining, petroleum and energy activities may have an adverse effect on our mineral rights and impact our business, operating results, cash flows and financial condition
Mining legislation
Certain pieces of South African mining legislation are currently under review and subject to repeal and replacement. For example, once promulgated, the draft Upstream Petroleum Resources Development Bill (UPRDB) currently before parliament will repeal and replace certain mineral and mining related matters currently governed by the Mineral and Petroleum Resource Development Act 28 of 2002 (MPRDA). Such changes, depending on their nature, may impact our operations and compliance costs.
Another example is the 2018 Mining Charter which contains more stringent compliance criteria than the previous Mining Charter, especially in respect of applications for new mining rights and the requirements in respect of the procurement of mining goods. These may have a material adverse effect on Sasol Mining (Pty) Ltd (Sasol Mining). The potential impact on Sasol Mining may be two-fold: higher cost of production and the risk of being in non-compliance with the requirements of the 2018 Mining Charter.
The effect on our mining and petroleum rights of possible future amendments to the MPRDA, associated regulations to be promulgated, the Financial Provisioning Regulations and the 2018 Mining Charter may have a material adverse effect on our business, operating results, cash flows and financial condition. See “Item 4.B—Business overview—Regulation—Empowerment of historically disadvantaged South Africans—The Mining Charter”.
Legislation in relation to petroleum and energy activities
Legislation in South Africa in relation to petroleum and energy activities, such as the Petroleum Products Amendment Act 2 of 2005 (Petroleum Products Act), entitles the minister and government to regulate the prices, specifications and stock holding of petroleum products. Such price regulation and maximum price imposition may have a material adverse effect on our revenue and competitiveness, operating results and cash flows particularly as compared to other suppliers of products such as ours in other jurisdictions with no such price regulations. The Petroleum Products Act also regulates the issue of licences for the manufacturing and trading in petroleum products as well as the operation of retail filling stations and provides for the imposing of fines and other punitive measures for failure to comply with the licence conditions and/or the provisions of the Petroleum Products Act.
Further, the Gas Act 48 of 2001 (Gas Act), in addition to allowing NERSA to approve gas transmission tariffs and maximum gas prices, also provides NERSA with the authority to issue licences for the construction and operation of gas pipelines and impose fines and other punitive measures for failure to comply with the licence conditions and/or the provisions of the Gas Act. Any disagreement or dispute we may have with NERSA regarding gas pricing could impact our licences to operate, subject us to fines and result in a material adverse effect on our business, operating results, cash flows and financial condition.
Changes in safety, health, environmental and chemical regulations, other legislation and public opinion may adversely affect our business, operating results, cash flows and financial condition One of our most material challenges is the ability to anticipate and respond to the rapidly changing legal landscape and associated stakeholder expectations and challenges, in particular relating to environmental legislation in all areas where we operate.
We are subject to a wide range of general and industry-specific environmental, health and safety and other legislation in the jurisdictions in which we operate. See “Item 4.B—Business overview—Regulation—Safety, health and environment—Regions in which Sasol operates and their applicable legislation”.
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Stakeholder challenges in relation to environmental legislation
Evolving legislation imposing more stringent air quality, climate change, water, waste and chemicals management legal requirements applicable to mature plants, may introduce compliance challenges to our existing plants. These laws and regulations and their enforcement are likely to become more stringent over time in all the jurisdictions in which we operate, although these laws in some jurisdictions are already more established and mature than in others.
In recent years, the environmental legislation in South Africa has resulted in significantly stricter emissions controls for operations such as ours. For instance, by 1 April 2020, our existing plants were required to meet the more stringent standards for air quality emissions applicable to newly commissioned plants. Meeting some of these requirements necessitates the retrofitting of some of our existing plants, and accordingly, we obtained postponement from the National Air Quality Officer of the compliance timeframe until 1 April 2025 to implement abatement projects in accordance with our air quality roadmaps which we are accordingly progressing.
We are however not able to comply with the concentration based emission limit for sulphur dioxide emissions from the boilers at the Steam Plants at the Secunda operations by 1 April 2025. To enable the implementation of a reduction roadmap and lawful continued operations, the Secunda Operations require to be regulated in this regard on an alternative load-based limit. Clause 12A of the Minimum Emission Standards (MES) permits existing plants to be regulated on an alternative emission load, as opposed to the current concentration-based limit (the mass of pollutant per cubic metre of air emitted) specified in the MES. On 11 July 2023, Sasol was informed that the National Air Quality Officer (NAQO) had declined Sasol’s Clause 12A application of June 2022 under Clause 12A of the MES that would allow Sasol to be regulated on an alternative emission load basis for the SO2 emissions from the boilers from 2025 onwards. On 31 July 2023, Sasol appealed the decision to the Minister of Forestry, Fisheries and the Environment, as provided for in Section 43(1) of the National Environmental
Management Act. The appeal process allows the Minister to consider the application afresh.
We cannot assure you that that we will be successful in the appeal process and that Sasol will be able to be regulated on an alternative emission load.
Although we continue to assess available legal mechanisms to leverage in case of any potential non-compliance risks that may arise on 1 April 2025, the success of these mechanisms cannot be guaranteed. Any such non-compliance may result in administrative or criminal enforcement action, which may include directions to cease operations, fines and penalties as well as prosecution and sanctions, and could harm our reputation and relationships with stakeholders. In turn, this may have a material adverse impact on our business.
NGOs, activists and other stakeholders increasingly use environmental, health and safety permitting processes, including ours, to challenge a company's practices to promote greater environmental sustainability in both our operations and value chain. We expect this kind of activity to increase over time, which could impede our ability to obtain new or renewed permits or result in more stringent standards imposed in them.
Further, our permits and operational licences require input from stakeholders in certain of the jurisdictions in which we operate and there is an emerging trend by activists to challenge the issuance or renewal of a company’s licences based on climate, health or other impacts associated with the licenced activities. The increased litigation risk for companies exposed to climate change could adversely impact the resilience of Sasol’s operations and our continued licence to operate. See “Item 4.B—Business overview—Regulation” for more detail.
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Compliance costs associated with additional or new regulation
The costs associated with compliance with additional or increased regulation of environmental and climate issues could be significant and could have a material adverse impact on our business, operating results, cash flows and financial condition. For further information on the impact of carbon taxes see “—Risks related to our sustainability—Our strategy to respond to climate change, including compliance with evolving regulatory requirements and policy to reduce GHG emissions and to adequately disclose related risks and impacts, may not be successful and could negatively impact our business and growth as well as result in claims against our business. In addition, laws, policies and societal concerns related to climate change could reduce supply/demand for our products, increase our operational costs, reduce our competitiveness, negatively impact our stakeholder relations or adversely affect our licence to operate and our access to capital and financing”.
From our Chemicals Business perspective, our products must be registered in accordance with regulatory requirements for many of the countries in which we operate and sold in line with permit conditions. For example, in the EU, these include filing of Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) registrations for chemicals we produce in or import into Europe. In other regions, such as the US and China or other Asian countries, chemical notifications have to be filed for new chemicals. Many countries are in the process of revising their chemicals regulations based on the EU REACH regulation, including the United Kingdom. All of these changing chemical regulations come with further obligations and requirements with which Sasol will need to comply, resulting in increased compliance costs and in the event of non-compliance the imposition of fines and other enforcement actions which could materially impact our operations.
Further, South Africa is aligning its regulatory systems with international commitments on safe chemicals management including the globally harmonized system (GHS). The Hazardous Chemical Agent Regulations require South African employers to ensure their workplaces comply with more stringent occupational exposure limits (OELs) for identified substances within a specified transition period. Compliance with some OELs will require Sasol’s mature plants to be retrofitted with the necessary abatement equipment that will require significant capital investment and extended lead-time to complete for certain substances at certain plants. Any such non-compliance may result in administrative or criminal enforcement action, which may include directions to suspend operations, fines and penalties as well as prosecution and sanctions, which could harm our reputation and relationships with employees and stakeholders. In turn, this may have a material adverse impact on our business. We have applied to the relevant authorities for extended time frames for implementation. Whilst some extensions have already been granted, other requests for extension are still pending and we cannot assure the outcome of these applications. Further challenges include compliance with the required disclosure for product information deemed as confidential business information and the practical execution of the GHS labelling system to our pipelines.
At Sasol, systems and processes are in place, monitored and improved upon, to ensure our compliance with laws and regulations applicable to Sasol and its obligations up and down the value chain. However, we cannot assure you that we will be in compliance with all laws and regulations at all times. For example, non-compliance with environmental, health or safety laws may occur from system or human errors in monitoring our emissions of hazardous or toxic substances into the environment, such as the use of incorrect methodologies or defective or inappropriate measuring equipment, errors in manually capturing results, or other mistaken or unauthorized acts of our employees or service providers.
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Public opinion of public health and safety
There is growing public opinion and awareness of public health and safety associated with the manufacturing and use of chemicals and industries reliant on fossil fuels. This related social opposition, which is further heightened through the increased use of social media, other user generated content and online press. As a result, given the nature of our operations, we may be subject to increased scrutiny, and consequently liabilities, due to our use or exposure to these materials and related emissions.
Any such changes in the above safety, health, environmental and chemical regulations, other legislation and public opinion may adversely affect our business, operating results, cash flows and financial condition.
We are subject to risks associated with litigation and regulatory proceedings
As with most large corporations, we are involved from time to time as a party to various lawsuits, arbitrations, regulatory proceedings, investigations or other disputes. Litigation, arbitration and other such legal proceedings or investigations involve inherent uncertainties and, as a result, we face risks associated with adverse judgments or outcomes in these matters. Even in cases where we may ultimately prevail on the merits of any dispute, we may face significant costs of defending our rights, lose certain rights or benefits during the pendency of any proceeding or suffer reputational damage as a result of our involvement. We are currently engaged in a number of legal and regulatory proceedings and arbitrations in various jurisdictions. These include the litigation relating to the Sasol Khanyisa B-BBEE transaction described under “—Economic, political or social factors affecting the regions in which we operate may have a material adverse effect on our operations and profits—Transformation and local content”, the Sasol Financing International Plc (SFI) tax proceedings described under and the Industrial Gas Users Association and the Southern Africa Review Application of the 2021 NERSA Maximum Gas Price decision, together with other litigation matters, described under “Item 4.B—Business overview—Legal proceedings and other contingencies”.
We could also face potential litigation or governmental investigations or regulatory proceedings in connection with the material weakness we identified in 2020 in our internal controls over financial reporting - see “Our shareholders might lose confidence in our financial and other public reporting if we experience material weaknesses or significant deficiencies and fail to maintain an effective system of internal controls over financial reporting which in turn may adversely affect our share price”.
In addition, from time to time we may settle certain proceedings as was the case with regards to the securities class action filed on 5 February 2020 on behalf of US ADR owner Chad Lindsey Moshell and other US ADR holders who purchased Sasol securities from 10 March 2015 to 13 January 2020. This matter was filed in the United States District Court, Southern District of New York against Sasol Limited and five of its current and former executive directors. The complaint alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 promulgated thereunder. Sasol and plaintiffs agreed to a mediation in this matter which was conducted on 16th and 17th February 2022. The parties were able to reach a settlement which was approved by the court on 18 August 2022, bringing the matter to a close.
There can be no assurance as to the outcome of any litigation, arbitration or other legal proceeding or investigation, and an adverse determination of material litigation could have a material adverse effect on our business, operating results, cash flows and financial condition.
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Intellectual property risks may adversely affect our freedom to operate our processes and sell our products and may dilute our competitive advantage
Our various products and processes, including most notably our specialty chemical and energy products and processes, have unique characteristics and chemical structures and, as a result, are subject to confidentiality and/or patent protection, the extent of which varies from country to country. Rapid changes in our technology commercialisation strategy may result in a misalignment between those countries where we apply our intellectual property protection filing strategy and the countries in which we operate. The disclosure of our confidential information and/or the expiry of a patent may result in increased competition in the market in relation to the relevant products and/or processes. In addition, aggressive patenting by our competitors, particularly in countries like the US, China, Japan and in Europe may result in an increased patent infringement risk and may constrain our ability to operate in our preferred markets.
A significant percentage of our products can be regarded as commodity chemicals. Some of our chemical products have unique characteristics and chemical structures which make the products more suitable for applications different from those of typical commodity products. These products are normally utilized by ourselves or our customers, such as feedstock to manufacture specialty chemicals. We have noticed a worldwide trend of increased filing of patents relating to the composition of product formulations and the applications thereof. These patents may create pressure on both Sasol and those of our customers who market these product formulations which may adversely affect our sales to these customers. These patents may also increase our risk of exposure to claims arising from limited indemnities provided to our customers of these products in case there is a patent infringement which may impact the use of the product by our customers. Patent-related pressures may adversely affect our business, market reputation, operating results, cash flows and financial condition.
We believe that our proprietary technology, know-how, confidential information and trade secrets provide us with a competitive advantage. A possible loss of experienced personnel to competitors, and a possible transfer of know-how and trade secrets associated therewith, including the patenting by our competitors of technology built on our know-how obtained through former employees, may negatively impact this advantage.
Similarly, operating and licensing technology in countries in which intellectual property laws are not well established and enforced may result in an inability to effectively enforce our intellectual property rights. The risk of some transfer of our know-how and trade secrets to our competitors is increased by the growth in the number of licences granted for our intellectual property, as well as the increase in the number of licenced plants which are brought into operation through entities which we do not control. As intellectual property warranties and indemnities are provided under each new licence granted, the cumulative risk increases accordingly. These risks may adversely affect our business, operating results, cash flows and financial condition.
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Risks related to our sustainability
Our strategy to respond to climate change, including compliance with evolving regulatory requirements and policy to reduce GHG emissions and to adequately disclose related risks and impacts, may not be successful and could negatively impact our business and growth as well as result in claims against our business. In addition, laws, policies and societal concerns related to climate change could reduce supply/demand for our products, increase our operational costs, reduce our competitiveness, negatively impact our stakeholder relations, or adversely affect our licence to operate and impede our access to capital and financing
Transitional risk
Key manufacturing processes in South Africa, especially coal gasification and combustion, result in GHG emissions. Sasol’s ability to develop and implement appropriate climate change mitigation responses and provide sustainable product and feedstock solutions is a significant transitional risk for our business, most notably in South Africa. This is heightened by the necessity to appropriately address increasing societal pressures to shift away from carbon-intensive processes and products in a just manner, as well as to meet new and anticipated policy and regulatory requirements, including carbon tax, carbon budgets, legislated GHG reduction targets and enhanced disclosure requirements. In addition, meeting Sasol’s committed GHG reduction targets has inherent transitional risks related to, among others, technology availability and cost. It is particularly challenging in South Africa, where access to low-carbon energies is limited and related infrastructure is under-developed. Further, other companies with a proven track record of implementing appropriate climate change mitigation responses and providing more sustainable solutions, which enhance their ability to be granted new operational licences, are likely to achieve higher growth and profitability thus impacting our overall competitive position.
As part of the transition and shift away from carbon-intensive processes, there could be certain closure of mines in the future (particularly in the long term) which could result in rehabilitation and reclamation costs, including redeployment and re-training of employees. Further, cost estimates of such closure of operations may be based on inaccurate assumptions which could adversely affect our operations.
Access to low- carbon opportunities
Delivery of our decarbonisation strategy depends partly on our ability to progress access to low carbon resources such as gas. Our ability to progress access to upstream resources and develop technologies at a level in line with our strategic outlook for hydrocarbon production could impact our future production and financial performance. Furthermore, our ability to access low-carbon opportunities and the commercial terms associated with these opportunities could impact our financial performance and the pace of our transition. In addition, failure to access low-carbon resources and exploit low carbon opportunities at the required speed may lead to loss of customers.
Carbon tax and carbon budgets
A carbon tax was implemented in South Africa on 1 June 2019 and the rates were significantly higher in 2023, increasing from R120/tCO2e in 2019 to R159/tCO2e in 2023. This has increased the operational costs of our South African operations from 1 June 2019 up to date and will continue to increase up to December 31, 2023. In addition, a significant increase in the carbon tax rate by at least US$1/tCO2e each year to 2026 reaching R308 by 2026 and R462 by 2030 has been imposed. In the second phase, the carbon tax is likely to be integrated with a carbon budget. The tax is applicable to an entity’s scope 1 emissions for each calendar year with several allowances providing for a reduction in an entity’s carbon tax liability. Even though the allowances applicable to carbon tax, which could reduce the impact of the carbon tax, have been retained, the South African National Treasury has indicated that the allowance design might be amended. This potential change raises further concerns around the carbon tax implications for our business into the future.
Sasol's net carbon tax payment for 2023 on calendar year 2022's GHG emissions, after offsets and electricity levies, was R1 138 million. The extent of the cost increases resulting from the carbon tax is significant and it is expected that the tax rate will continue to increase beyond 2030.
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The South African government is also developing carbon budgets in parallel within the remit of the Climate Change Bill. Pending the finalisation of the Climate Change Bill and enactment thereof, uncertainty remains regarding the imposition of an additional material cost or penalty in the form of a super tax or criminal penalties for exceeding the allocated carbon budgets in the mandatory phase, in addition to standalone carbon tax. Further, the risk of escalating standalone carbon prices and mandatory carbon budgets will be exacerbated should our fiscal instruments lack effective alignment with mitigation being available in this timeframe.
Risks associated with assumptions used to test resilience to climate change
We use downscaled modelling to improve our understanding of the physical impacts on prioritised operational sites (Secunda, Sasolburg, Vilancoulos in Mozambique and Lake Charles in the US), using the Intergovernmental Panel on Climate Change high emission scenarios (referred to as “Representative Concentration Pathway (RCP)) 8.5) and an intermediate emission scenario (RCP 4.5). Although modeling simulations span multiple decades, they focus on specific indicators such as temperature increases/decreases, changes in rainfall patterns and increased propensity for cyclones/hurricanes and may therefore not identify all potential risks or all potential impacts to these sites.
Further, there are risks associated with the accuracy, completeness and correctness of various assumptions that are used as inputs, including scenarios developed to test resilience to climate change as set out below. In addition, the estimates of required or available capital and other assumptions underpinning necessary investments to make our business sustainable for the long term could prove to be incorrect and lead to delays, cost overruns or the infeasibility of capital expenditure projects. Should all or some of these assumptions prove to be inaccurate or incomplete, our resilience and long-term sustainability may be significantly impacted.
Risks associated with achieving the 2030 GHG reduction target and 2050 net zero ambition.
South Africa’s finalised Nationally Determined Contribution (NDC), targeting an emission range of between 350 - 420 Mt CO2e by 2030, was submitted by the South African government to the United Nations Framework Convention on Climate
Change as part of South Africa’s obligations under the Paris Agreement for the 26th Conference of the Parties. NDC refers to South Africa’s climate change action plan to cut GHG emissions and adapt to climate change. Sasol is targeting a 30% scope 1 and 2 GHG emission reduction by 2030, off a 2017 baseline which, if met together with reductions in other targeted sectors, will assist South Africa to meet its emission reduction range by 2030. Scope 2 GHG emissions are broadly defined as emissions attributable to Sasol's use of purchased energy to conduct its operations. In addition, we set a 20% emission reduction target by 2030 for our scope 3 Category 11 emission (Use of Sold Energy Products). We have also set a net zero ambition by 2050 for our scope 3 category 11 emissions and our scope 1 and 2 emissions. Category 11 accounts for approximately 80% of Sasol’s total scope 3 emissions. The primary risks associated with achieving the 2030 GHG reduction targets and 2050 ambition are the unavailability and unaffordability of gas as feedstock, the potential prohibitive costs of green hydrogen and electrolysers, the lack of enabling policy and legal frameworks, global supply chain challenges in the renewable energy sector and the ability to access markets in the jurisdictions within which we operate and trade to enable the transition. The carbon border adjustment mechanism proposed by the European Union (EU), effective from 1 October 2023 will place an additional burden on imported products (excluding chemical imports at this stage) from emerging economies like South Africa, where carbon pricing is lower than in the EU, and where Sasol’s largest emissions emanate from. In this regard, we can provide no assurances that Sasol’s plans to reduce GHG pursuant to our roadmaps or otherwise will be successful.
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Potential physical impacts of climate change
Further, climate change poses a significant risk for both our South African and global business as it relates to potential physical impacts, including change in weather patterns, water scarcity and extreme weather events, such as cyclones/hurricanes, tornadoes, flooding and sea level rise which can materially impact our costs of operation and growth and cause production outages. For our sites prioritised for reduction (Secunda, Sasolburg, Mozambique and Lake Charles) downscaled modelling indicated that surface temperatures could increase by 1 – 4°C by 2050, with an increasing number of extreme hot days. Projected rainfall patterns differ between the sites. For example, for Sasol’s operations in Mozambique, rainfall is projected to increase, while for sites in South Africa, no change in average rainfall is projected, but rather an increase in the intensity and frequency of extreme rainfall events. For Sasol Chemicals in the United States, a similar rainfall trend to South Africa is likely to be experienced. In Mozambique and the United States, cyclones and hurricanes are expected to become more intense.
Climate change related laws and regulations
In addition, climate change-related laws and regulations may threaten our licences to operate (or ability to obtain new licences to operate), result in stranded production and substantially increase the cost of doing business, including the imposition of higher carbon taxes. Enhanced focus on issues concerning the environment, human rights, environmental justice and climate change is resulting in a more complex regulatory environment, and additional legal risks or similar taxes. For example, our intention to replace coal with natural gas, sustainable biomass, and green hydrogen as sustainable feedstocks for our operations in Secunda is likely to increase the cost of production and reduce our profitability significantly.
Current information indicates that imported liquified natural gas and other gas sources, biomass and green hydrogen are more costly feedstocks than coal for our operations in Secunda. In transitioning to these lower or low GHG intensive feedstocks, we anticipate an impact on the margin of some of our products. These climate change-related requirements could have a material adverse effect particularly on our South African business, operating results, cash flows, financial condition and future growth.
Risks relating to increasing disclosure requirements and scrutiny
Businesses like ours face increasing requirements for public disclosure on climate change risks and impacts associated with their operations. Examples include potential significant changes by the SEC which has proposed rules relating to disclosure by US registered companies of certain risks and impacts. The EU has also adopted the Corporate Sustainability Reporting Directive which imposes requirements for a broader set of companies on disclosure of company social and environmental data and associated impacts on such companies.
Further, environmental and other non-governmental organisations (NGOs) as well as regulators increasingly scrutinize past and current corporate reporting on climate change risks and impacts. We may face regulatory or other claims that we have not sufficiently complied with disclosure requirements or otherwise adequately disclosed climate change risks and impacts, which may affect our ability to maintain current licences or obtain new licences to operate.
In addition, while a significantly lower risk compared to South Africa, global carbon prices and taxes are escalating, which poses a risk for our operations in the EU and potentially the US, should carbon prices rise further, or be implemented.
Stakeholder activism and risk on maintenance of permits and operational licences
Our GHG emissions and the use of coal as a key feedstock could also negatively impact our potential base of shareholders and relationship with stakeholders as well as our ability to source financing in capital and/or financial markets and/or increase our cost of capital.
See “—Risks related to legal, regulatory, and governance matters—Changes in safety, health, environmental and chemical regulations, other legislation and public opinion may adversely affect our business, operating results, cash flows and financial condition—Stakeholder challenges in relation to environmental legislation”
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Risks related to health including pandemics
Our global operations expose us to pandemics, such as the COVID-19 pandemic, that may adversely affect our workforce and impact business continuity, operating results, cash flows and financial condition
Sasol’s global workforce, including service providers, suppliers and customers, are exposed to pandemics, such as the COVID-19 pandemic, which can impact their wellbeing, safety and health with an associated direct or indirect effect on the safety and continuity of our operations. Pandemics and the period of recovery from such events may impact demand for our products and may continue to have a material adverse effect on our business, operating results, cash flows and financial condition.
Another key challenge is the impact of pandemics on the commodity markets, including among others, the demand for our products and ability to obtain raw materials, which is not under our control. As we cannot predict the spread of such viruses and the impact on the economy in the countries in which we operate, pandemics may continue to have a negative impact on our business, operating results, cash flows and financial condition.
Risks related to information management
We may face the risk of data privacy breaches or attempts to disrupt critical information technology services, which may adversely impact our operations
The increasing use of information technology to enable business processes, in particular digital processes in operations, is making all industries, including the energy and chemicals industries, much more susceptible to cyber threats and data privacy breaches. As digitisation expands to include our financial, commercial, transacting and production systems, the cyber security risk increases. While Sasol has an information security programme in place, cyber security threats we face consistently evolve and emerge to expose the organisation, both in business and operations systems, to significant external threats. In addition, we outsource several information technologies functions and applications to third-party vendors. Such engagements may have an impact on our cybersecurity position, such as in the event where a third- party vendor's system is cyber-attacked which in turn could result in loss of certain of our data.
While no material losses related to the increased attempts on our information security systems have been discovered, given the increasing sophistication and evolving nature of this threat, the possibility of successful breaches occurring in the future cannot be ruled out. An extended failure of critical system components, caused by accidental actions, such as failed hardware or failed network infrastructure, or malicious actions, including those resulting from a cyber-security attack, could result in a significant environmental incident, commercial loss or interruption to operations. We may also incur significant costs, including but not limited to, protecting against or repairing damage caused by any successful disruptions or security breaches in the future, such as rebuilding internal systems, implementing additional threat protection measures, defending against litigation, responding to regulatory inquiries or taking remedial steps with respect to third parties, among others.
If there is a violation of data privacy information, or a cyber threat, we could experience disruptions to critical services or may be vulnerable to cyber and ransomware attacks. This could result in financial loss, and have a material adverse effect on our business, operating results, cash flows, financial condition and our disclosure of control processes.
Risks related to our people
Challenges remain around our ability to attract and retain critical skills to fill vacant positions to support current and future business requirements.
It may take time to fill vacant positions in growth areas due to typical slow hiring processes in the energy and upstream sector and due to top candidates in the oil and gas field not being available freely.
In order for Sasol to deliver on its strategic objectives, sustainably grow into the future, and effectively operate and continuously improve existing and future assets and technologies, we are highly dependent on our human capital.
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While Sasol overall maintains a focus on attracting, developing and retaining diverse, skilled and experienced employees (including critical or scarce skills like qualified scientists, engineers, project execution managers, artisans and operators and experienced employees in business and functional roles including specialists required for our green economy and just transition strategies), slow hiring times and a general scarcity of specialist skills may influence our ability to find the most skilled resources.
There is constant competition across global labor markets for these critical or scarce skills. The quality and availability of skills in certain labour markets may also be impacted by the challenges within the education and training systems.
While we prioritise employee development and upskilling, it may take time to develop the required depth of skills and experience of employees to support our transition imperatives.
Risks related to our American Depositary Receipts
The exercise of voting rights by holders of ADRs is limited in some circumstances
Holders of ADRs may exercise voting rights with respect to the ordinary shares underlying their ADSs only in accordance with the provisions of our deposit agreement with J.P. Morgan Chase Bank N.A., as the depositary (the Deposit Agreement and the Depositary respectively). For example, ADR holders will not receive notice of a meeting directly from us. Rather, we will provide notice of a shareholders’ meeting to J.P. Morgan in accordance with the Deposit Agreement. J.P. Morgan has undertaken in turn, as soon as practicable after receipt of our notice, to mail voting materials to holders of ADRs. These voting materials include information on the matters to be voted on as contained in our notice of the shareholders meeting and a statement that the holders of ADRs on a specified date will be entitled, subject to any applicable provision of the laws of South Africa and our Memorandum of Incorporation, to instruct J.P. Morgan as to the exercise of the voting rights pertaining to the shares underlying their respective ADSs.
Upon the written instruction of an ADR holder, J.P. Morgan will endeavour, in so far as practicable, to vote or cause to be voted the shares underlying the ADSs in accordance with the instructions received. If instructions from an ADR holder are not received by J.P. Morgan by the date
specified in the voting materials, J.P. Morgan will not request a proxy on behalf of such holder. J.P. Morgan will not vote or attempt to exercise the right to vote other than in accordance with the instructions received from ADR holders.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct J.P. Morgan to vote the shares underlying your ADSs. In addition, J.P. Morgan and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and there may be no recourse if your voting rights are not exercised as you directed.
Holders of Sasol’s ordinary shares or ADSs may be subject to dilution as a result of any non-pre-emptive share issuance, and shareholders outside South Africa or ADS holders may not be able to participate in future offerings of securities (including Sasol’s ordinary shares) carried out by or on behalf of Sasol
Future share issuances by Sasol, with or without subscription rights, could (depending on how the share issuance is structured) dilute the interests of existing shareholders or require them to invest further funds to avoid such dilution.
In the case of an equity offering with subscription rights, holders of Sasol’s shares in certain jurisdictions may not be entitled to exercise such rights unless the rights and the related shares are registered or qualified for sale under the relevant legislation or regulatory framework. In particular, holders of Sasol’s securities who are located in the United States (including those who hold ordinary shares or ADSs) may not be able to participate in securities offerings by or on behalf of Sasol unless such equity offerings are registered under the U.S. Securities Act of 1933 (the Securities Act) or exempted from registration under the Securities Act. Holders of these shares in these jurisdictions may therefore suffer dilution should they not be permitted to, or otherwise choose not to, participate in future equity offerings with subscription rights.
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Sales of a large amount of Sasol’s ordinary shares and ADSs could adversely affect the prevailing market price of the securities
Historically, trading volumes and the liquidity of shares listed on the JSE have been low in comparison with other major markets. The ability of a holder to sell a substantial number of Sasol’s ordinary shares on the JSE in a timely manner, especially in a large block trade, may be restricted by this limited liquidity. The sales of ordinary shares or ADSs, if substantial, or the perception that these sales may occur and be substantial, could exert downward pressure on the prevailing market prices for Sasol ordinary shares or ADSs, causing their market prices to decline.
US securities laws do not require Sasol to disclose as much information to investors as a US issuer is required to disclose, and investors may receive less information about the Company than they might otherwise receive from a comparable US company.
Sasol is subject to the periodic reporting requirements of the SEC and the NYSE that apply to “foreign private issuers”. The periodic disclosure required of foreign private issuers under applicable rules is more limited than the periodic disclosure required of US issuers. Accordingly, there may be less publicly available information concerning Sasol than there is for US public companies. For example, Sasol is not required to file current reports, periodic reports and financial statements with the SEC as frequently or as promptly as US companies whose securities are registered under the Exchange Act. As a result, investors will also receive less timely financial reports than they otherwise might receive from a comparable US company or from certain of the company’s peers in the industry. This may have an adverse impact on investors’ ability to make decisions about their investment in Sasol
ITEM 4. INFORMATION ON THE COMPANY
4.A History and development of the Company
Sasol Limited, the ultimate holding company of our group, is a public company. It was incorporated under the laws of South Africa in 1979 and has been listed on the JSE since October 1979. Our registered office and corporate headquarters are at Sasol Place, 50 Katherine Street, Sandton, 2196, South Africa, and our telephone number is +27 10 344 5000. Our agent for service of process in the US is Puglisi & Associates,
850 Library Avenue, Suite 204, Newark, Delaware 19711.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding Sasol that we file electronically with the SEC. To find the required information please visit www.sec.gov. For further information please visit www.sasol.com. This website is not incorporated by reference in this annual report.
For a description of the company’s principal capital expenditures and divestitures refer to “Item 5.B—Liquidity and capital resources”.
4.B Business overview
Sasol is a global chemicals and energy company. We harness our knowledge and expertise to integrate sophisticated technologies and processes into world-scale operating facilities. We endeavour to safely and sustainably source, produce and market a range of high-quality products in 22 countries, creating value for stakeholders. Our purpose “Innovating for a better world” compels us to deliver on triple bottom line outcomes of People, Planet and Profit, responsibly and always with the intent to be a force for good.
For details regarding the following sections, refer as indicated.
● | for information regarding our business overview, refer to “Integrated Report— Our distinctive value chains”” as contained in Exhibit 99.4; |
● | for information regarding our strategy, refer to “Integrated Report— Our strategic direction” as contained in Exhibit 99.5; |
● | for a description of the Company’s operations and principal activities refer to “Integrated Report— Our distinctive value chains” as contained in Exhibit 99.4; “Integrated Report—Performance overview” as contained in Exhibit 99.6; and Item 18—“Financial Statements—Segment information”; and |
● | for a description of our principal markets, refer to Item 18—“Financial Statements—Geographic segment information”, which provides information regarding the geographic location of the principal |
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markets in which we generate our turnover, as well as of our asset base. |
Seasonality
Sales volumes of our products are generally not subject to seasonal fluctuations but tend to follow broader global industry trends and are therefore impacted by macro-economic factors. Sasol operates globally and in many diverse markets, and accordingly, no element of seasonality is likely to be material to the results of Sasol as a whole. For further information regarding cyclicality, prices and demand, refer to “Item 3.D—Risk factors”.
Raw materials
In the Southern Africa value chain, the main feedstock components for the production of fuels and chemical products are coal mined and procured from external sources, our Mining segment, natural gas obtained from and procured externally by our Gas segment and crude oil purchased from external suppliers.
In our Chemicals Business, outside of Southern Africa, the main feedstocks used are kerosene, benzene, ethane, ethylene, oleochemicals and aluminium. Feedstocks are purchased externally, with the exception of a portion of ethylene which is produced at our Lake Charles facility and the Fischer-Tropsch-based feedstock used for our South African polymer, solvents, alcohol, wax, ammonia, phenolics, and co-monomer production. The pricing of most of these raw materials follow global market dynamics which relate to crude oil and energy prices.
Marketing channels and principal markets
In our Mining and Gas segments, we make use of direct sales models, long-term marketing gas sales agreements and short-term crude oil purchase agreements. Piped gas is sold to wholesalers and end-users in South Africa.
In our Fuels segment, marketing channels can be divided into the following main areas:
● | liquid fuel sales to licensed wholesalers; |
● | liquid fuels sales to retailers and end-users; and |
● | liquid fuels overland exports into other parts of Southern Africa. |
In our Chemicals Business, our products are sold to customers worldwide with a significant part under annual and multi-year contracts. Marketing channels can be divided into the following main areas per segment:
● | In our Chemicals Africa, segment (Chemicals Africa), our business division, Advanced Materials consist of cobalt catalyst and carbon sold largely to international markets. Base Chemicals produces polymers, fertilisers and explosives, phenolics, methanol and some other products which are sold mainly to customers in South Africa with the exception of polypropylene and phenolics which are mainly exported. Explosives intermediates are sold to our partner Enaex Africa (Pty) Ltd (Enaex) which converts these to final products for supply to the Sub-Saharan Africa mining industry. Essential Care exports the South African-produced C6+ alcohols to international markets for external sales or internal use in surfactant facilities across the globe. Performance Solutions’ products included Fischer Tropsch-based and wax, solvents, comonomers and safol which are substantially exported to international markets for external sales. |
● | In our Chemicals America segment (Chemicals America), Advanced Materials consists of alumina sold largely within North America with some exports to Europe and Asia. For Base Chemicals, polyethylene is produced and marketed on behalf of Sasol by Equistar Chemicals LP an affiliate of our joint venture partner LyondellBasell. The produced ethylene is either consumed internally for derivatives or sold to external customers in the US merchant market. Mono Ethylene Glycol (MEG) is marketed and distributed on behalf of Sasol by a third party. Phenolics are largely exported to international markets. Essential Care includes surfactants, Ethylene Oxide (EO), C6+ alcohols, Linear Alkyl Benzene (LAB) and paraffins and Performance Solutions includes the sale of comonomers, |
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speciality paraffins and speciality alcohols mainly within the Americas region, with some sales to Europe and Asia. |
● | In Chemicals Eurasia segment (Chemicals Eurasia), Advanced Materials includes sales of alumina mainly within Europe with some sales in other regions including the Americas and Asia. Essential Care consists of surfactants, EO, C6+ alcohols, LAB and paraffins sales mainly within Eurasia with some sales in the Americas. Performance Solutions covers the sale and production of speciality alcohols and emulsions. Glycol ethers from Eurasia are largely sold within the region, with some additional global sales. |
Factors which the business depends on
Intellectual property
Our proprietary or licensed technologies, our software licences, procedures and protocols support Sasol’s competitive advantage. These consist of:
● | our patented technologies; |
● | skilled, experienced and technically qualified employees, industry thought leaders and experts that enable Sasol to respond to the constantly changing environment; and |
● | our business processes and management systems. |
Intellectual Capital summary |
|
2023 |
|
2022 |
|
2021 |
Total worldwide patents held |
|
2 282 |
|
2 590 |
|
2 300 |
Investment in research and development |
|
R1 516 million |
|
R1 280 million |
|
R1 249 million |
The Sasol Slurry Phase DistillateTM (Sasol SPDTM) process—Based on our Technology function’s extensive experience in the commercial application of the Fischer-Tropsch (FT) technology, we have successfully commercialised the FT based Sasol SPDTM process for converting natural gas into high quality,
environment-friendly GTL diesel, GTL kerosene and other liquid hydrocarbons.
The Sasol SPDTM process integrates the following three main technologies, each of which is commercially proven.
● | the Haldor Topsøe SynCORTM reforming technology, which converts natural gas and oxygen into syngas; |
● | our Sasol Low Temperature Fischer-TropschTM (Sasol LTFTTM) technology, which converts syngas into hydrocarbons; and |
● | the Chevron IsocrackingTM technology, which converts hydrocarbons into particular products, mainly diesel, naphtha and Liquified Petroleum Gas (LPG). |
Currently we believe, based on our knowledge of the industry and publicly available information, that globally, we have the most extensive experience in the application of FT technology on a commercial scale. The Sasol SPDTM process converts natural gas into diesel and other liquid hydrocarbons, which are generally more environmentally friendly and of higher quality and performance compared to the equivalent crude oil derived products. In view of product specifications gradually becoming more stringent, especially with respect to emissions, we believe that this option is environmentally friendly. The Sasol SPDTM process can further be adopted to produce differentiated value-added products, such as GTL base oils. The superior quality of GTL base oils positions these products firmly as premium components in the formulation of top tier lubricants.
Our Sasol LTFTTM technology can also be integrated into flow schemes utilising green hydrogen and sustainable carbon feedstocks in order to produce green products including sustainable aviation fuel
Key contracts
ORYX GTL, our 49% joint venture in Qatar, purchases natural gas feedstock from Al Khaleej Gas, a joint venture between ExxonMobil Middle East Gas Marketing Limited and Qatar Petroleum, under a gas purchase agreement with a contracted minimum off-take volume. The agreement commenced in November 2005 and is valid for 25 years. The duration of the agreement may be extended by the parties on terms and conditions that are mutually agreed.
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On 9 July 2021, SSA concluded an agreement to sell its sodium cyanide business to a South African, B-BBEE empowered subsidiary of a Czech Republic-based company specialising in cyanide production. The transaction is expected to close in the second half of calendar 2023 subject to the outcome of the appeal process currently underway following the prohibition of the disposal by the South Africa Competition Commission. The acquirer will take over full operational control of the cyanide business. Key feedstocks, utilities and site services will be supplied by Sasol on an arm’s length basis.
On 1 December 2020, Sasol closed a transaction creating a joint venture with LyondellBasell Offtake, LLC called Louisiana Integrated Polyethylene JV LLC (LIP JV). In this transaction, Sasol transferred certain production units at the Lake Charles Chemicals Project to LIP JV and sold 50% of the shares of LIP JV to LyondellBasell. At the same time, both Sasol and LyondellBasell and certain affiliates entered into a series of related agreements providing various services to each other and to LIP JV, one of which was the marketing agreement with Equistar Chemicals, an indirect subsidiary of LyondellBasell. Equistar will market and sell Sasol’s polyethylene along with LyondellBasell polyethylene manufactured by the LIP JV production units.
Refer to “Item 4.D—Property, plants and equipment—Gas” for details regarding key contracts in Mozambique.
Legal proceedings and other contingencies
From time to time, Sasol companies are involved in litigation, regulatory proceedings, arbitrations, tax disputes and similar proceedings in the normal course of business. Although the outcome of these claims and disputes cannot be predicted with certainty, a detailed assessment is performed on each matter, and a provision is recognised, or contingent liability disclosed, where appropriate as guided by IFRS.
Further, from time to time, communities and NGOs challenge our environmental licences and related applications including regarding concerns with potential health and environmental impacts associated with Sasol’s activities
South African Revenue Services (“SARS”) audit on Sasol Financing International plc
As reported previously, SARS conducted an audit over a number of years on SFI which performs an offshore treasury function for Sasol. The audit culminated in the issuance of revised assessments in respect of the 2002 to 2012 tax years and the dispute relates to the place of effective management of SFI. SFI has co-operated fully with SARS during the course of the audit relating to these assessments. The potential tax exposure is R2,75 billion (including interest and penalties as at 30 June 2023), which is disclosed as a contingent liability.
SFI lodged an objection and appeal in the Tax Court against the revised assessments. SFI and SARS agreed that the appeal and related Tax Court processes will be held in abeyance pending the outcome of the judicial review application noted below.
Sasol has launched two judicial review applications respectively against the SARS decision to register SFI as a South African taxpayer and against certain related elements of the revised assessments over which the Tax Court does not have jurisdiction.The two matters were heard together during November 2022 and on 1 August 2023 the court delivered its decision dismissing of both of the SFI review applications. SFI intends to appeal the matter to the Supreme Court of Appeal. The review applications relate to the challenge by SFI of certain administrative decisions of SARS and the High Court decision does not directly affect the merits of the substantive dispute before the Tax Court, which remains in abeyance while the appeal of the review applications continues.
Clause 12A application
Our emission sources at our operations in South Africa are regulated in accordance with atmospheric emission licenses which are based on the MES published in terms of section 21 of the National Environmental Management: Air Quality Act. On 11 July 2023, Sasol was informed that the NAQO had declined its application of June 2022 in terms of Clause 12A of the MES to be regulated on an alternative emission load basis for the Secunda Operations emissions from the boilers at its Secunda Operations’ steam plants from 1 April 2025 onwards.
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On 31 July 2023, Sasol appealed the decision to the Minister of Forestry, Fisheries and the Environment, as provided for in Section 43(1) of the National Environmental Management Act. The appeal process allows the Minister to consider the application afresh. Clause 12A of the MES permits existing plants to be regulated on an alternative emission load, as opposed to the current concentration-based limit (the mass of pollutant per cubic metre of air emitted) specified in the MES.
As part of its Clause 12A application, Sasol has proposed an integrated air quality and GHG reduction solution (“integrated emission reduction solution”) to reduce Secunda Operations and GHG emissions by approximately 30% by 2030. This is contingent on Secunda Operations emissions from the boilers at the steam plants of its Secunda Operations being regulated on an alternative load-based emission limit instead of the concentration limit currently being prescribed in the MES from 1 April 2025 onwards. The integrated emission reduction solution comprises the implementation of multiple projects targeting energy efficiency, reducing coal usage, turning down boilers and integrating 1 200 MW of renewable energy. The assumptions applied in compiling the financial statements, and in particular the testing of the recoverability of the Group's non-financial assets (other than inventories and deferred tax assets), are aligned to the integrated emission reduction solution.
Legal review of NERSA Maximum Gas Price
In 2013, NERSA approved an application from Sasol regarding maximum gas price (MGP) (the 2013 NERSA MGP Decision). In its July 2019 decision, the South African Constitutional Court overturned the 2013 NERSA MGP Decision, ordered NERSA to revise its decision and confirmed that the new MGP)decision by NERSA will apply retrospectively from 26 March 2014. The High Court also overturned a NERSA MGP decision on 3 May 2021.
After the South African Constitutional Court decision, NERSA adopted a new MGP methodology in 2020. Sasol Gas submitted a new maximum gas price application to NERSA in December 2020 and on 6 July 2021 NERSA published its maximum gas price decision (the 2021 NERSA Maximum Gas Price decision), which determined maximum gas prices for Sasol Gas for the period from March 2014 up to 2023.
Because the new maximum gas prices approved by NERSA for this period are lower than the actual prices historically charged to a large number of Sasol Gas’s customers, a retrospective liability of R1,6 billion arose, based on the differences between the newly approved maximum gas prices and actual gas prices charged by Sasol Gas. Sasol Gas resolved these potential claims through settlement agreements with affected customers and as at 30 June 2023 the remaining R93 million of the financial provisions previously recognised by Sasol Gas were reflected in trade payables and accrued expenses.
In December 2021 the Industrial Gas Users Association of Southern Africa launched a legal review application to overturn the NERSA 2021 MGP decision. Both NERSA and Sasol Gas opposed the application. The matter was heard in the High Court at the end of May 2023 and the court decision remains pending. An adverse outcome in this matter may lead to further retrospective liability for Sasol Gas.
Alleged Pricing Conduct Complaints to Competition Commission
During 2022 certain customers of Sasol Gas submitted complaints to the Competition Commission relating to alleged pricing conduct prohibited by the South African Competition Act, 1998 (Act No 89 of 1998). One of the complainants applied for an interdict to restrain Sasol from increasing its gas prices above the ruling maximum price of R68,39/GJ until the conclusion of the investigation of the complaints. In May 2023 an interdict was issued by the Competition Tribunal providing that Sasol Gas can only increase its gas prices after two months’ written notice to the complainant and if the gas price was approved by NERSA.
In September 2022 Sasol Gas launched a legal review application, which clarified the respective jurisdiction of NERSA and the competition authorities insofar as it relates to gas prices that are regulated under the Gas Act. This application is continuing in the Competition Appeal Court (CAC).
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Following the end of the period allowed for the investigation by the Commission and notwithstanding the ongoing litigation in the CAC, the Commission on 10 July 2023 made a referral of the complaints to the Competition Tribunal. The decision in the litigation before the CAC will determine the authority of the Commission regarding the investigation that lead to the referral. An adverse outcome in the review application in the CAC and the referral before the Competition Tribunal may result in possible fines and other sanctions against Sasol Gas. The litigation remains ongoing and the outcome of the legal review application cannot be predicted.
The Gas Amendment Bill was gazetted on 13 April 2021, but has not proceeded through South African Parliament. The ultimate effect of the proposed amendments to the Gas Act on our sales and our financial condition cannot be determined at this time.
Dispute between Sasol Oil, Total and Transnet for tariff applicable to conveyance of crude oil
Sasol Oil (Pty) Ltd (Sasol Oil) and Total South Africa (Pty) Ltd (“Total”) use the crude pipeline owned by Transnet Pipelines a division of Transnet to transport crude oil from Durban to the Natref refinery The tariff for the crude oil conveyance was historically determined through a commercial agreement between the parties, which agreement also included the so-called variation agreement (the Variation Agreement) relating to the inland nature of the Natref refinery. After the petroleum pipeline tariffs started to be determined by NERSA under the Petroleum Pipelines Act, 2003 (Act 60 of 2003) (Petroleum Pipelines Act) a dispute arose between the parties regarding the tariff applicable to the conveyance of crude oil.
In September 2017, Sasol Oil issued summons against Transnet to claim the difference between the tariffs that should have been charged by Transnet under of the Variation Agreement compared to the tariffs that were actually charged by Transnet under the NERSA tariffs. The NERSA tariffs do not distinguish between the tariff for crude oil and the tariff for refined products.
Sasol Oil’s action was combined with a similar action brought earlier by Total. Certain issues in the consolidated matter were previously decided by the High Court in 2015 and the Supreme Court of Appeal in 2016.
The High Court made an order in favour of both Sasol Oil and Total and Transnet took two of the findings in the further High Court decision of October 2020 on appeal to the Constitutional Court.
In June 2022 the Constitutional Court :
● | upheld Transnet’s appeal by declaring that the Variation Agreement was terminated validly by Transnet as from 13 September 2020; and |
● | dismissed Transnet’s application for leave to appeal relating to the cause of action of the claims by Sasol Oil and Total as it did not engage the Court’s jurisdiction. Accordingly, Sasol and Total’s contractual damages claims following Transnet’s breach of the Variation Agreement continue but are now limited to the duration of the Variation Agreement. The High Court litigation regarding the quantum of these claims will proceed as scheduled for trial in October 2023. The revised amount claimed by Sasol Oil up to the date of termination of the Variation Agreement is R 2 billion. |
From December 2020, after the High Court judgement in the matter, Sasol Oil and Total made payment for crude oil conveyance at the reduced tariff specified in the Variation Agreement. These payments constituted a shortfall in respect of the tariff invoiced by Transnet. After the Constitutional Court judgement, Transnet issued summons against Sasol Oil claiming repayment of the shortfall. In May 2023, after NERSA approved the pipeline tariff for Transnet for 2023/4, Transnet further insisted that Sasol Oil pay the full NERSA approved tariff, notwithstanding the fact that the NERSA approval does not provide for differentiated tariffs for crude oil and refined products respectively. As from 1 June 2023 Sasol Oil agreed to pay Transnet the full tariff pending the ongoing litigation. The claim by Transnet for the repayment of the shortfall in the tariff paid is scheduled for trial in November 2023. As at 30 June 2023 Sasol Oil accounted for this claim as a trade payable in the amount of R 1 042 million (including interest).
Subsequently, as part of the trial preparation Transnet notified Sasol Oil that it intends to increase the claim amount with approximately R40 million.
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In July 2023 Sasol Oil initiated a legal review application in the High Court to overturn the NERSA approval of the Transnet pipeline tariff for 2023/4 as the decision does not comply with the requirements of the Petroleum Pipelines Act.
Sasol Oil continues to engage with Transnet in an endeavour to resolve the ongoing dispute between the parties through commercial negotiation.
Litigation of Sasol Mining in three litigation matters relating to occupational diseases
A judgement by the South African Constitutional Court in 2011 confirmed the right of employees in the mining industry who contracted certain occupational diseases to claim damages from their employers. Similar cases have also been threatened against participants in the coal sector of the mining industry. As a result Sasol Mining is currently the defendant in three separate litigation matters.
The plaintiffs in the first matter involving 22 individual cases though not a class action, allege that they contracted coal-dust-related lung diseases, while in Sasol Mining’s employment. The plaintiffs allege that they were exposed to harmful quantities of coal dust while working underground for Sasol Mining and that the company failed to comply with various sections of the Mine Health and Safety Act (including and various regulations issued in relation to the Mine Health and Safety Act) and failed to take effective measures to reduce the exposure of mine workers to coal dust. The plaintiffs allege that all of the above increased the risk for workers to contract coal dust related lung diseases.
The plaintiffs seek compensation for damages relating to past and future medical costs and loss of income amounting to R67,7 million in total. Sasol Mining is defending the claims.
As the trial has not yet commenced and a response from the plaintiffs to our request for further particulars is still being awaited, it is not possible at this stage to estimate the likelihood that the plaintiffs will succeed with their claim and if successful, the quantum of damages that the court would award. Therefore, no provision has been raised of 30 June 2023.
The remaining two matters involve single plaintiffs, in which the legal process is ongoing and no trials have commenced.
Dispute between Solidarity and Sasol Khanyisa in relation to Sasol Khanyisa share scheme
Solidarity -one of our recognised trade unions referred a dispute relating to the Sasol Khanyisa share scheme (see Sasol Khanyisa transaction herein below) to the Commission for Conciliation, Mediation and Arbitration (CCMA) on 17 December 2017, alleging that the issuing of benefits to a certain part of the employee base amounted to racism. Sasol denied that the share scheme was incorrectly constituted. Conciliation proceedings commenced on 11 January 2018 and on 5 February 2018, Solidarity demanded a payment to their members (non-qualifying employees for Phase 2 of Khanyisa) equal to “the market value of the Sasol Khanyisa shares which qualifying employees would be entitled to within seven days after such entitlement (2028) or payment to each member of R500 000 by the end of December 2018.”
Solidarity embarked on a “go-slow” strike on 3 September 2018 with the intention to escalate it to a full-blown strike. On 25 October 2018, Solidarity took the dispute to the CCMA which subsequently certified it as unresolved in February 2019. Solidarity filed a statement of claim with the Labour Court in Johannesburg in May 2019 which we replied to in July 2019. Subsequently the Judge President of the Labour Court invited Sasol and three other respondents in three similar cases where Solidarity is the applicant to meet to consolidate the disputes and set a stated case (that is a combined version setting out the dispute). The parties could not agree on such a formulation and the matter became dormant
The Labour Court issued a directive to prepare a pre-trial minute to be filed with the registrar as an alternative to appearing before a judge of the Labour Court on 10 August, 2022. The parties filed the pre-trial minute and are awaiting the allocation of the trial date.
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Criminal proceeding under the National Environmental Management Act 108 of 1998, the National Environmental Management: Waste Act and the National Water Act against Sasol South Africa Limited
Following the conclusion of a criminal investigation initiated in April 2021 and conducted by the Environmental Management Inspectorate, summons instituting criminal proceedings by the National Prosecuting Agency was served on SSA citing the Company as the defendant. The date of the first court appearance was 20 September 2022. Thereafter the matter was postponed at the request of the State a number of times with the last appearance having been on 7 August 2023 on which date the matter was transferred to the Regional Court. The next appearance will be on 20 November 2023 during which appearance the matter may be postponed to a future date for the trail to commence.
There are six counts specified in the charge and these relate to offences that have allegedly been committed by the Company, through its Secunda Operations, under the National Environmental Management Act 108 of 1998 and the National Environmental Management: Waste Act, 59 of 2008 and the National Water Act, 36 of 1998.
Water Tribunal Dispute over water use license for Sasol Mining.
On 20 June 2022, Sasol Mining was notified that an application for renewal of an existing water use licence(WUL) for its Syferfontein Colliery, was declined by the Department of Water and Sanitation (DWS). The licence authorised certain water uses relating to the storage of water, disposing of water which may be detrimental to a water resource and removing, discharging or disposing of water found underground necessary for the efficient operations and safety of people.
Sasol Mining subsequently filed an appeal against the decision with the Water Tribunal. The matter has not yet been heard by the Water Tribunal and no trial date has been allocated yet. In parallel Sasol Mining had various engagements with DWS in an attempt to resolve the matter.
On 28 July 2023 Sasol Mining had a meeting with the Enforcement Unit of the DWS (DWS Enforcement Unit), in which the DWS Enforcement Unit affirmed its mandate to conduct administrative enforcement on matters of non-compliance with
applicable legal requirements, which include the circumstances at the Syferfontein Colliery where water uses are being undertaken without a valid WUL.
During the meeting, the DWS Enforcement Unit also communicated its intention to issue a pre-directive (notice of intention to issue a directive) to Sasol Mining. Sasol Mining will then have the opportunity to make representations which can include details about the history of the matter and Sasol Mining’s proposals on how to meet DWS’s requirements to enable it to issue a WUL to Sasol Mining’s Syferfontein Colliery. If these proposals are accepted, DWS will have the option to issue a compliance notice that may govern the activities, including the ongoing water uses in question, pending the issuing of a WUL. However the risk posed by the proposed pre-directive can only be assessed once it is received.
Competition law compliance
Sasol continuously evaluates its compliance programmes and controls in general, including its competition law compliance programme and controls. As a consequence of these compliance programmes and controls, including monitoring and review activities, Sasol has adopted appropriate remedial and/or mitigating steps, where necessary or advisable, lodged leniency applications, and made, and will continue to make, disclosures on material findings as and when appropriate. These ongoing compliance activities have already revealed, and may still reveal, competition law contraventions or potential contraventions in respect of which we have taken, or will take, appropriate remedial and/or mitigating steps including lodging leniency applications. Sasol may, from time to time, respond to information requests and/or investigations by competition law authorities. We cooperate with all lawful investigations in a transparent and constructive manner.
Environmental obligation
Sasol’s environmental obligation accrued at 30 June 2023 was R17 293 million compared to R17 207 million at 30 June 2022. Due to uncertainties regarding future costs, the potential loss in excess of the amount accrued cannot be reasonably determined.
43
Regulation
The South African government has, over the past 26 years, introduced a legislative and policy regime with the imperative of redressing historical social and economic inequalities, as stated in the Constitution of the Republic of South Africa Act, 108 of 1996 (Constitution). This is being done, by way of the empowerment of historically disadvantaged South Africans (HDSAs) in the areas of ownership, management and control, employment equity, skills development, procurement, enterprise development and socio-economic development.
Most of our operations are based in South Africa, but we also operate in numerous other countries throughout the world. In South Africa, we operate coal mines and a number of production plants and facilities for the storage, processing and transportation of raw materials, products and wastes related to coal, oil, chemicals and gas. These facilities and the respective operations are subject to various laws and regulations that may become more stringent and may, in some cases, affect our business, operating results, cash flows and financial condition.
Our business activities in South Africa relating to coal mining, petroleum production, distribution and marketing of fuel products, electricity and gas are subject to regulation by various government departments and independent regulators. Refer to “Item 3.D—Risk factors” for details on particular aspects of regulations affecting our business activities.
Empowerment of historically disadvantaged South Africans
Black Economic Empowerment policies and legislation
B-BBEE Act
Sasol is well aligned with the economic transformation and sustainable development objectives embodied in the South African legislative and regulatory framework governing B-BBEE. The key elements of this framework are the B-BBEE Act and the Codes of Good Practice (the new Codes were gazetted on 11 October 2013 and promulgated on 1 May 2015 and further amended during May 2019) for B-BBEE issued by the Minister of Trade and Industry in terms of the B-BBEE Act (Codes), as well as the Charters (i.e. the Mining Charter) and Liquid Fuels Charter (LFC) adopted by the various sectors within
which Sasol operates businesses and the related scorecards.
Our most recent certification in terms of this legislation, issued in December 2022, for both Sasol Limited and SSA puts us at an improved contributor status of level 3 compared to level 4 for SSA in 2021. This improved contributor level makes Sasol a more attractive supplier of products to our customers in South Africa because the contributor level of their suppliers impacts the B-BBEE contributor status of such customers. Plans are in place to maintain and further improve our B-BBEE status.
Sasol continues to entrench transformation within the organisational culture, enhancing its commitment as a good corporate citizen.
Sasol Khanyisa transaction
In phases from March 2018, Sasol implemented a new B-BBEE ownership transaction (Sasol Khanyisa) which was structured to comply with the revised B-BBEE legislation in South Africa when the Sasol Inzalo transaction came to an end in 2018. By implementing the Sasol Khanyisa transaction, the Company sought to ensure ongoing and sustainable B-BBEE ownership credentials.
The accounting recognition and measurement principles applied to the Sasol Khanyisa transaction are the same as those applied to the Sasol Inzalo transaction, as the substance of both transactions was the same. Based on the underlying assumptions made by Sasol, the total IFRS 2 charge associated with Sasol Khanyisa is R6,5 billion over the life of the transaction, to date R6,1 billion has been recognised. The only unvested portion of the transaction relates to the employee share ownership plan.).
With the implementation of Sasol Khanyisa, approximately 18,4% of SSA is in direct Black ownership, which, together with Black ownership at Sasol group level, translates into at least 25% Black ownership credentials at SSA level (for purposes of measuring Black ownership credentials under the current B-BBEE legislation
Refer to “Item 18—Financial Statements—Note 33 Share-based payment reserve” for further information.
44
The Mining Charter
The Mining Charter requires mining companies to meet various criteria intended to promote meaningful participation in the industry of HDSAs. These criteria include ownership, inclusive procurement, supplier and enterprise development, human resource development, employment equity and miner community development. The provision in the Mining Charter that provided that a mining right holder who does not comply with the ownership criteria and falls between levels 6 and 8 of the Mining Charter scorecard shall be in breach of the Mineral and Petroleum Resources Development Act, 28 of 2002, has been set aside by the High Court pursuant to a challenge of various aspects of the Mining Charter including aspects relating to ownership.
The UPRDB
The Minister of Mineral Resources and Energy withdrew the Mineral and Petroleum Resources Development Amendment Bill (MPRDA Bill) from parliament in 2018 with the aim of separating oil and gas matters from those of mining. The draft UPRDB was published in the Government Gazette on 24 December 2019. Sasol submitted comments directly to the DMRE and via the relevant business association (OPASA). Due to the impact of COVID-19, further consultation processes were delayed and the legislative process is ongoing. On 13 May 2021, Cabinet approved the introduction of the UPRDB to parliament. The UPRDB was gazetted and published for public comment on 11 June 2021. Sasol made submissions thereto via OPASA. It is noted that the UPRDB does not specify royalty payments, production bonuses, taxes and the fiscal regime. On 15 December 2021, National Treasury published for industry comment Discussion Document: What is the Most Appropriate Tax Regime for the Oil and Gas Industry (putting forth proposals on the taxation of upstream oil and gas activities). Sasol submitted comments thereto via OPASA. National Treasury held a public consultation on 13 April 2022 to further discuss the oil and gas tax regime. On 17 May 2022, the Portfolio Committee on Minerals and Energy held a briefing on the UPRDB and is currently deliberating; there is a possibility that the UPRDB will be referred for further public consultation
The Liquid Fuels Charter (LFC)
The LFC for the South African Petroleum and Liquid Fuels Industry on Empowering HDSAs in the Petroleum and Liquid Fuels Industry requires liquid fuels companies, including Sasol Oil, to ensure that HDSAs hold at least 25% equity ownership in the South African entity holding their operating assets by the end of a period of 10 years from the date of the signing of the LFC.
In order to meet this equity ownership objective, Sasol Limited entered into a B-BBEE transaction with an HDSA-owned company, Tshwarisano, in terms of which Sasol disposed of 25% of its shareholding in Sasol Oil to Tshwarisano. With effect from 1 July 2006, Sasol Oil met the 25% BEE ownership target, with Tshwarisano holding 25% of the shares in Sasol Oil in line with the Charter.
The DMRE in concurrence with the Department of Trade and Industry initiated a process to establish a Sector Charter (Petroleum and Liquid Fuels Sector Charter) to supersede the LFC in terms of section 12 of the B-BBEE Act. While this process may impact on the B-BBEE obligations of Sasol’s businesses in the South African energy industry, the timing of completion, the outcome and potential effects of this process on Sasol cannot be assessed at this time.
The Restitution of Land Rights Act, 22 of 1994
Our privately held land could be subject to land restitution claims under the Restitution of Land Rights Act, 22 of 1994. Under this Act, any person who was dispossessed of rights to land in South Africa as a result of past racially discriminatory laws or practices is granted certain remedies, including, but not limited to the restoration of the land claimed with or without compensation to the holder.
Mining rights
Sasol Mining is the holder of mining rights granted in accordance with the MPRDA in respect of its operations in the Mpumalanga and Free State provinces in South Africa.
45
In respect of the Secunda mining complex in Mpumalanga, Sasol Mining holds three mining rights situated within the Bethal, Secunda, Highveld Ridge, Balfour and Standerton magisterial districts. These mining rights were granted for periods between 20 and 30 years. The Secunda complex mining right is valid until 28 March 2040 and Sasol Mining can apply to the DMRE for renewal of the right for a further maximum period of 30 years. The Block IV and Alexander Block mining rights are also situated in the Secunda area and remain valid until 27 August 2037 and 21 January 2048 respectively. The Mooikraal mining right near Sasolburg in the Free State is valid until 28 March 2040.
Safety, health and environment
Regions in which Sasol operates and their applicable legislation
South Africa
The majority of our operations are located in South Africa. We operate a number of plants and facilities for the manufacture, storage, processing and transportation of chemical feedstock, products and wastes. These operations are subject to numerous laws and regulations relating to safety, health and the protection of the environment.
Environmental regulation
The Constitution contains the underlying right to an environment which is not harmful to health or well-being of people which right must be given effect to by environmental legislation in South Africa. The South African National Environmental Management Act, 107 of 1998 is therefore the framework act which primarily aims to give effect to the Constitutional environmental right. It also underpins specific environmental management acts, such as the National Environmental Management: Waste Act, 59 of 2000 (National Environment Management: Waste Act), the National Water Act, 36 of 1998, and the Nation Environmental Management: Air Quality Act, 39 of 2004 which all, in turn, regulate specific environmental media and the associated regulation of potential impacts thereon. The National Environmental Management: Waste Act also specifically regulates the process for management of contaminated land. These Acts also provide for enforcement mechanisms as well as provisions for the imposition of criminal sanction. These also apply to mining activities.
Apart from South Africa’s international commitments, the country’s Climate Change Bill is still being finalised for enactment. Sasol continues to engage with the government on the development of the Climate Change Bill as well as the imposition of mandatory carbon budgets. Sasol’s engagement focuses on the need for the alignment of mitigation instruments in an effort to create long-term policy and regulatory certainty. Although not mandatory, Sasol participated in the first phase of the carbon budget process and received and agreed to its allocated carbon budget, which was in place until the end of calendar year 2020. We negotiated the second voluntary carbon budget for the next five years until 2027. A preliminary allocation was received which was reduced based on our national GHG inventory. This budget is subject to review within a year. The GHG and the National Pollution Prevention Plan Regulations were promulgated in April and June 2017 respectively and subsequently revised. Sasol continues to submit its GHG data annually, as well as progress on its approved pollution prevention plans. The Carbon Tax Act, 15 of 2019 was signed into law in May 2019 and came into effect on 1 June 2019. National Treasury has undertaken a process to increase the carbon tax rates (as per the 2022 National Budget) and the consultation process is concluded.
For information see “Item 3.D—Risk factors-Risks related to our sustainability”.
Hazardous substances
Provisions for the protection of humans and the environment against the harmful effects of hazardous substances and preparations are provided for in various laws, regulations and incorporated standards on the use, handling (including classification and labelling), storage and transport thereof. These laws and regulations are aligning with international commitments on safe chemicals management, including the Globally Harmonised System of Classification and Labelling of Chemicals. Primary laws in this regard include the Hazardous Substances Act and the Hazardous Chemicals Agent Regulations under the Occupational Health and Safety Act.
For information regarding our challenges associated with these regulatory requirements refer to “Item 3.D—Risk factors”.
46
Eurasian Operations
In Germany and Italy, we operate a number of plants and facilities for the manufacture, storage, processing and transportation of chemical feedstock, products and waste. These operations are subject to numerous laws and ordinances relating to safety, health and the protection of the environment, and non-compliance with these regulations could lead to a material adverse impact on Sasol’s ability to operate in these countries. In Eurasia, we anticipate continuing to respond to the regulatory environment through existing systems and control technologies as well as through efficiency and control technology reviews and improvement opportunities where appropriate, in order to minimise the impact of the current and future regulations on our Eurasian operations.
Hazardous substances
Provisions for the protection of humans and the environment against the harmful effects of hazardous substances and preparations are provided in the Chemicals Act, and related ordinances on the Prohibition of Certain Chemicals and Hazardous Incidents. All hazardous substances are subject to the requirements of the EU REACH Regulation, including requirements for registration and notification obligation before these substances can be brought onto the market. Hazardous substances and mixtures must be classified, labelled and packed in accordance with the EU classification, labelling and packaging regulation. Further regulations prohibiting and limiting manufacture, marketing and use also apply.
United States
In the US, we operate a number of plants and facilities for the storage and processing of chemical feedstock products. Sasol’s US operations are subject to numerous laws, regulations and ordinances relating to safety, health and the protection of the environment, and non-compliance with these regulations could lead to a material adverse impact on Sasol’s ability to operate in the US. Climate change policy continues to be developed at the federal and state level, and to some extent, through the judicial system. Our operations in the US remain regulated at the federal, state, and local level relating to health, safety, environment, and community impact. In the US, we anticipate continuing to respond to the regulatory environment through existing systems and control technologies as well as through efficiency and control technology reviews and improvement opportunities where appropriate, in order
to minimise the impact of the current and future regulations on our US operations.
Hazardous substances are, regulated pursuant to multiple federal laws including the Toxic Substances Control Act and by a labelling standard that incorporates the requirements of the Globally Harmonised System of Classification and Labelling of Chemicals into occupational health and safety legislations. Chemical manufacturers and importers are required to evaluate the hazards of the chemicals they produce or import and prepare labels and safety data sheets to convey the hazard information to their downstream customers.
Mozambique
A National Environmental Policy (Resolution 5/1995, of 3 August) is the government document outlining the priorities for environmental management and sustainable development in Mozambique, including the required legal framework. The Environmental Law (Law 20/1997, of 1 October as amended by Law 16/2014, of 20 June) and its respective regulations, namely the Regulations on Environmental Impact Assessment (Decree 54/2015 of 31 December) and the Environmental Regulations for Petroleum Operations (Decree 56/2010 of 22 November) provides a legal framework for the use and correct management of the environment and its components and to assure sustainable development in Mozambique.
The Petroleum Law (Law 21/2014, of 18 August) and the Petroleum Operations Regulations (Decree 34/2015, of 31 December, as amended by Decree 48/2018 of 8 August) require holders of exploration and production rights to conduct petroleum operations in compliance with environmental and other applicable legislation. The law makes provision for compensation to be paid under general legislation by the holder of a right to conduct petroleum operations to persons whose assets are damaged. The law establishes strict liability for the holder of the right who causes environmental damage or pollution. The strict liability requirement for environmental damage or pollution could have a material adverse effect on our operations in Mozambique.
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Other countries
In a number of other countries, we are engaged in various activities that are impacted by local and international laws, regulations and treaties. In China and other countries, we operate plants and facilities for the storage, processing and transportation of chemical substances, including feedstock, products and waste. In the United Arab Emirates, and other countries, we are involved, or are in the process of becoming involved, in exploration, extraction, processing or storage and transportation activities in connection with feedstock, products and waste relating to natural oil and gas, petroleum and chemical substances.
In Qatar, we participate in a joint venture owning and operating a GTL facility involving the production, storage and transportation of GTL diesel, GTL naphtha and LPG. These operations are subject to numerous laws and ordinances relating to safety, health and the protection of the environment.
Our operations in the respective jurisdictions are subject to numerous laws and regulations relating to exploration and mining rights and the protection of safety, health and the environment.
4.C Organisational structure
Sasol Limited is the ultimate parent of the Sasol group of companies.
Sasol South Africa Limited, a subsidiary of Sasol Limited and a company incorporated in South Africa, primarily holds our operations located in South Africa. A number of other subsidiaries incorporated in South Africa, including Sasol Oil (Pty) Ltd, Sasol Mining Holdings (Pty) Ltd, Sasol Gas (Pty) Ltd, Sasol Middle East and India (Pty) Ltd and Sasol Africa (Pty) Ltd, also hold our interests in operations in South Africa, other parts of Africa and the Middle East. Sasol Financing Limited and Sasol Financing International Limited, responsible for the management of cash resources and investments and, are wholly owned and incorporated in South Africa.
Our wholly owned subsidiary, Sasol Investment Company (Pty) Ltd, a company incorporated in South Africa, primarily holds our interests in Sasol group companies incorporated outside of South Africa, including Sasol European Holdings Limited (United Kingdom), Sasol (USA) Corporation (United States), Sasol Holdings (Asia Pacific) (Pty) Ltd (South Africa), Sasol Holdings (USA) (Pty) Ltd (South Africa), Sasol Chemical Holdings International (Pty) Ltd (South Africa) and their respective subsidiaries.
See Exhibit 8.1 for a list of our significant subsidiaries and significant jointly controlled entities.
4.D Property, plants and equipment
Refer to “Item 18—Financial Statements—Note 17 Property, plant and equipment” for further information regarding our property, plant and equipment.
Energy Business
Mining
Coal mining facilities
Our main coal mining facilities are located at the Secunda Mining Complex, which consists of underground collieries (Bosjesspruit, Impumelelo, Shondoni, Syferfontein, and Twistdraai Thubelisha) and the Sigma complex consisting of the Mooikraal colliery near Sasolburg.
A map showing the location of our coal properties and major manufacturing plants in South Africa is shown on page M-1 and M-2.
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Our Mining segment operates six collieries for the supply of coal to the Secunda Operations, Sasolburg and Ekandustria operations (utility coal only) and the external market. The annual production of each colliery, the primary market to which it supplies coal and the location of each colliery are indicated in the table below:
|
|
|
|
|
|
Nominated |
|
|
|
|
|
|
|
|
|
|
|
|
capacity |
|
Production (Mt)(3) |
||||
Colliery |
|
Location |
|
Market |
|
per year (Mt)(2) |
|
2023 |
|
2022 |
|
2021 |
Bosjesspruit |
|
Secunda |
|
Secunda Operations |
|
5,3 |
|
5,5 |
|
5,0 |
|
5,7 |
Impumelelo |
|
Secunda |
|
Secunda Operations |
|
5,2 |
|
4,7 |
|
5,3 |
|
5,3 |
Shondoni |
|
Secunda |
|
Secunda Operations |
|
7,0 |
|
6,1 |
|
6,4 |
|
7,0 |
Syferfontein |
|
Secunda |
|
Secunda Operations |
|
8,9 |
|
7,6 |
|
8,5 |
|
9,3 |
Twistdraai Thubelisha |
|
Secunda |
|
Export/Secunda operations (1) |
|
8,4 |
|
7,7 |
|
7,3 |
|
8,2 |
Sigma : Mooikraal |
|
Sasolburg |
|
Sasolburg Operations |
|
1,3 |
|
1,2 |
|
1,1 |
|
1,2 |
|
|
|
|
|
|
|
|
32,8 |
|
33,6 |
|
36,7 |
Production tons per continuous miner (mining production machine) per shift including off-shift production (4) (t/cm/shift) |
|
|
|
|
|
|
|
951 |
|
984 |
|
1,131 |
(1) | The secondary product from the export beneficiation plant is supplied to Secunda Operations. |
(2) | The nominated capacity of the mines is the expected production of that mine and does not represent the total maximum capacity of the mine. |
(3) | Production excludes externally purchased coal. |
(4) | Off-shift production is a legally permitted, voluntary shift system allowing mine workers to produce coal on their non-working shifts. This shift system provides the mine with a flexibility option to catch up on production shortfall. The mine workers are remunerated for this production on a cost per ton basis. |
Processing operations
Coal export business—Secunda Operations. We started the coal export business in August 1996. Run of mine (ROM) coal is sourced from Twistdraai/Thubelisha Colliery (nominated capacity 8,4 Million tons (Mt)). The export beneficiation plant has a design throughput total capacity of 10,5 Mt per annum. In 2023, we produced 7,7 Mt from Twistdraai/ Thubelisha Colliery; of which we beneficiated 6,8 Mt, and 1,2 Mt was bypassed to Sasol Coal Supply.
ROM coal is transported via an overland conveyor belt to the export beneficiation plant from the Twistdraai Thubelisha Colliery. The export product is loaded onto trains by means of a rapid load-out system, and then transported to the Richards Bay Coal Terminal (RBCT) in KwaZulu-Natal.
Sasol Mining has a 4,20% shareholding in RBCT and Sasol Mining’s entitlement on an 81 Mt per year RBCT capacity is 4,29%, which translates to 3,47 Mt per year. Actual export volumes for 2023 of 2,0 Mt per year were significantly constrained by Transnet Freight Rail’s available capacity.
Sasol Coal Supply—Secunda Operations. Sasol Coal Supply operates the coal handling facility
between our Mining segment and Secunda operations by stacking and blending coal on six live stockpiles. The overland conveyors from the mining operations to the coal handling facility are, in total, approximately 120 kilometres (km) long and also form part of the Sasol Coal Supply operation.
The operation has a live stockpile capacity of 720 000 tons, which is turned over around 1,2 times per week. In addition, there is a targeted strategic stockpile capacity of more than 2,0 Mt. The objectives of this facility are:
● | to homogenise the coal quality supplied to Secunda Operations; |
● | to keep mine bunkers empty; |
● | to keep the Secunda Operations bunkers full of a product that conforms to customer requirements; |
● | to supply quality coal within the parameters of ash, sinks and fines; |
● | to maintain a buffer stockpile to ensure even supply; and |
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● | to perform a reconciliation of business with regard to quantity and quality. |
The daily coal supply to Secunda Operations is approximately 100 000 tons for 2023.
Coal exploration techniques
Sasol Mining’s geology department employs several exploration techniques in assessing the geological risks associated with the exploitation of the coal deposits. These techniques are applied in a mutually supportive way to achieve an optimal geological model of the relevant coal seams, targeted for production purposes. The Highveld Basin is considered to be structurally complex when compared to the other coalfields in South Africa where mining activities take place. As a result, Mining bases its geological modelling on sufficient and varied geological information. This approach is utilised in order to achieve a high level of confidence and support to the production environment.
Core recovery exploration drilling. This is the primary exploration technique that is applied in all exploration areas, especially during reconnaissance phases. In and around operational mines, the average vertical borehole density varies from 1:10 to 1:15 (boreholes per hectare), while in medium-term mining areas, the average borehole density is in the order of 1:25. Depths of the boreholes drilled vary, depending on the depth to the Pre-Karoo basement, from 160 metres (m) to 380 m. The major application of this technique is to locate the coal horizons, to determine coal quality and to gather structural information about dolerite dykes and sills, and the associated de-volatilisation and displacement of coal reserves. This information is used to compile geological models and forms the basis of geological interpretation.
Directional drilling. Directional drilling from surface to in-seam has been successfully applied for several years. A circular area with a radius of approximately 1,4 km of coal deposit can be covered by this method from one drill site. The main objective of this approach is to locate dolerite dykes and transgressive dolerite sills, as well as faults with displacements larger than the coal seam thickness.
Horizontal drilling. This technique is applied to all operational underground mines and supplies short-term (minimum three months) exploration coverage per mining section. No core is usually recovered, although core recovery is possible, if required. The main objective is to locate dolerite dykes and transgressive sills intersecting the coal mining horizon, by drilling horizontal holes in the coal seam from a mined-out area. A drilling reach of up to 1 km is possible, although the average length is usually 800 m in undisturbed coal.
Aeromagnetic surveys. Many exploration areas are usually aero-magnetically surveyed before the focused exploration is initiated. The main objective is to locate magnetic dolerite sills and dykes, as well as large-scale fault zones.
Geophysical wireline surveys of directional boreholes. Geophysical surveys are routinely conducted in the completed directional drilled boreholes. This results in the availability of detailed information leading to increased confidence of the surface directional drilling results.
Secunda Operations
The coal supplied to Secunda Operations is the raw coal mined from the four mines supplying Secunda operations exclusively and the secondary product from the export beneficiation plant.
Extensive geological exploration has been carried out in the coal resource areas. Further exploration is undertaken to update and refine the geological models. This allows for accurate forecasting of geological conditions and coal qualities, and also effective planning and utilisation of coal reserves.
Computation and storage of geological information
Geological information is stored in the acQuire database. Regular data validation and quality checking is conducted through several in-house methods. Data modelling is conducted by manual interpretation and computer-derived geological models, using the Minex 6.5 edition of the GEOVIA/ MINEX software. Reserves and composite qualities are computed using established and recognised geo-statistical techniques.
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General stratigraphy
The principal coal horizon, the Number 4 Lower Coal Seam, provides some 90,70% (2022—91,00%) of the total proved and probable reserves. The Number 4 Lower Coal Seam is one of six coal horizons occurring in the Vryheid Formation of the Karoo Supergroup, a permo-carboniferous aged, primarily sedimentary sequence. The coal seams are numbered from the oldest to the youngest from bottom up.
The Number 4 Lower Coal Seam is a bituminous hard coal, characterised by the following borehole statistics as at 31 March 2023:
● | the depth to the base of the seam ranges from 40 m to 241 m with an average depth of 135 m below the surface topography. All the current mining done on this seam is underground; |
● | the floor of the seam dips gently from north to south at approximately 0,5 degrees; |
● | the thickness of the seam varies in a range up to 10 m with a weighted average thickness of 3,7 m. In general, thinner coal is found to the south and thicker coal to the west adjacent to the Pre-Karoo basement highs; |
● | the inherent ash content (air dried basis) is an average 27,33%; |
● | the volatile matter content is tightly clustered around a mean of 22,60% (air dried); and |
● | the total sulphur content (air dried), which primarily consists of mineral sulphur in the form of pyrite and minor amounts of organic sulphur, averages 1,03% of the total mass of the coal. |
The other potential coal seam is:
● | the Number 2 Coal Seam at Shondoni colliery and Impumelelo colliery, which has been included in our reserve base. |
Reserve estimation (remaining reserves at 31 March 2023)
We have approximately 3,7 billion tons (Bt) (2022—3,9 Bt) of gross in situ proved and probable coal reserves in the Secunda Deposit and approximately 1,2 Bt (2022—1,2 Bt) of recoverable reserves. The coal reserve estimations are set out in table 1 that follows. Reported reserves will be converted into synthetic oil reserves, except for reserves which will be used for utilities in Secunda Operations and the majority of the Twistdraai Thubelisha reserves which will be exported. The reserve disclosure in this section includes our Mining segment’s total coal resources and reserves available for mining operations in Secunda. These reserves have not been adjusted for the synthetic oil reserves reported in the supplemental oil and gas information. The different reserve areas are depicted on the map on page M-1, as well as whether a specific reserve area has been assigned to a specific mine.
The coal reserve estimations in this table were compiled under supervision of Mr. Viren Deonarain who is considered a Qualified Person. The “South African Code for Reporting of Minerals Resources and Minerals Reserves (The SAMREC Code 2007 edition)” dealing with competence and responsibility, paragraph 7, states Documentation detailing Exploration Results, Mineral Resources and Mineral reserves from which a Public Report is prepared, must be prepared by, or under the direction of, and signed by a Qualified Person. Paragraph 9 states: A ‘Qualified Person’ is a person who is registered with SACNASP, ECSA or PLATO, or is a Member or Fellow of the SAIMM, the GSS or a Recognised Overseas Professional organisation. The Qualified Person must comply with the provisions of the relevant promulgated Acts. The reserves and resources modelling process and geological models were audited by an independent consultancy, WSP Golder, in August 2022. The audit verified that the geological models, reserves and resources estimates were fair reflection of the data on which they were based and conformed to internationally accepted reporting standards.
The latest coal resource/reserve estimations were determined by following the same process. The estimation of the proved reserves is compliant with the definition and guidelines as stated in the modernized SEC Regulation S-K subpart 1300.
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The following internal controls are used in the exploration and mineral reserve estimation:
● | The Resources and Reserves document is compiled for submission to the Sasol Mining Board for approval by the Company Secretary Energy. Before submission the Vice President (VP) Integrated planning and Optimisation performs a high-level reasonableness review (sense check) to ensure the detailed process was followed. This process includes a mass balance reconciliation. |
● | The VP Integrated planning and Optimisation checks the reconciliation of |
Form 20-F information provided in Table 4 of the Synthetic Oil section of the Supplemental Oil and Gas information to confirm that the information disclosed for the most recently closed financial year is accurate, complete and consistent with the Sasol Mining Board Approved Resource and Reserve Statement and only includes coal to liquid resources and reserves. |
Those involved in the Reserves and Resources estimation process are sufficiently qualified. The Head of Coal Geology signs off on the process and is classified as a Competent Person as defined by the South African Council for Natural and Scientific Professionals
Table 1.
Coal reserve estimations(1) as at 31 March 2023, in the Secunda area where we have converted mining rights (signed on 29 March 2010) in terms of the Mineral and Petroleum Resources Development Act, 28 of 2002.
|
|
Gross in |
|
|
|
Mine |
|
|
|
|
|
|
|
|
|
|
situ coal |
|
Geological |
|
layout |
|
Extraction |
|
Recoverable |
|
Beneficiated |
|
|
|
|
resource(1) |
|
discount |
|
losses |
|
rate |
|
reserves(2) |
|
yield(3) |
|
Proved/ |
Reserve area |
|
(Mt)(4) |
|
(Mt)(4) |
|
(Mt)(4) |
|
(%) |
|
(Mt)(4) |
|
(%) |
|
probable |
Shondoni colliery, number 4 seam |
|
368 |
|
49 |
|
100 |
|
49 |
|
125 |
|
100 |
|
Proved |
Shondoni colliery, number 2 seam |
|
61 |
|
12 |
|
6 |
|
41 |
|
19 |
|
100 |
|
Probable |
Bosjesspruit colliery |
|
115 |
|
8 |
|
54 |
|
61 |
|
39 |
|
100 |
|
Proved |
Bosjesspruit colliery |
|
38 |
|
2 |
|
9 |
|
45 |
|
12 |
|
100 |
|
Probable |
Syferfontein colliery |
|
341 |
|
55 |
|
91 |
|
60 |
|
152 |
|
100 |
|
Proved |
Alexander Block |
|
498 |
|
100 |
|
74 |
|
46 |
|
107 |
|
100 |
|
Proved |
Alexander Block |
|
— |
|
— |
|
— |
|
— |
|
16 |
|
100 |
|
Probable |
Twistdraai Thubelisha colliery |
|
568 |
|
118 |
|
119 |
|
53 |
|
227 |
|
P34,S37 |
|
Proved |
Impumelelo, Block 2, number 4 seam |
|
647 |
|
97 |
|
65 |
|
54 |
|
203 |
|
100 |
|
Proved |
Impumelelo, Block 2, number 2 seam |
|
383 |
|
58 |
|
172 |
|
37 |
|
44 |
|
100 |
|
Probable |
Block 2 South, number 4 seam |
|
363 |
|
98 |
|
49 |
|
54 |
|
123 |
|
100 |
|
Probable |
Block 2 South, number 2 seam |
|
133 |
|
36 |
|
18 |
|
54 |
|
45 |
|
100 |
|
Probable |
Block 3 South |
|
141 |
|
38 |
|
19 |
|
57 |
|
52 |
|
100 |
|
Probable |
Total Secunda area |
|
3 656 |
|
|
|
|
|
|
|
1 164 |
|
|
|
|
52
Table 2.
Coal reserve estimations(1) as at 31 March 2023, in the Sasolburg area where Sasol Mining has converted mining rights (signed on 29 March 2010) in terms of the Mineral and Petroleum Resources Development Act, 28 of 2002.
|
|
Gross in |
|
|
|
Mine |
|
|
|
|
|
|
|
|
|
|
situ coal |
|
Geological |
|
layout |
|
Extraction |
|
Recoverable |
|
Beneficiated |
|
|
|
|
resource(1) |
|
discount |
|
losses |
|
rate |
|
reserves(2) |
|
yield(3) |
|
Proved/ |
Reserve area |
|
(Mt)(4) |
|
(Mt)(4) |
|
(Mt)(4) |
|
(%) |
|
(Mt)(4) |
|
(%) |
|
probable |
Sigma Mooikraal |
|
159 |
|
14 |
|
22 |
|
52 |
|
25 |
|
100 |
|
Proved |
Total Mooikraal area |
|
159 |
|
|
|
|
|
|
|
25 |
|
|
|
|
(1) | The gross in situ coal resource is an estimate of the coal tonnage, contained in the full coal seam above the minimum thickness cut off and relevant coal quality cut off parameters. No loss factors are applied and seam height does not include external dilution or contamination material. |
(2) | The recoverable coal reserve is an estimate of the expected recovery of the mines in these areas and is determined by the subtraction of losses due to geological and mining factors and the addition of dilatants such as moisture and contamination. |
(3) | The P% of P34 refers to the export product yield from the recoverable coal reserve and the S% of S37 refers to secondary product yield, which will be supplied to the Secunda Operations. The balance of this is discard material. |
(4) | Mt refers to 1 million tons. Reference is made of tons, each of which equals 1 000 kilograms, approximately 2 205 pounds or 1 102 short tons. |
Table 3.
Coal qualities, on an air-dry basis, in respective coal reserve areas, where Mining has converted mining rights in respect of the Secunda mining complex in terms of the Mineral and Petroleum Resources Development Act, 28 of 2002.
|
|
|
|
Average |
|
Average |
|
|
|
|
|
Heat |
|
|
|
|
|
|
Inherent |
|
Superficial |
|
|
|
|
|
Value |
|
|
|
|
|
|
Moisture |
|
Moisture |
|
|
|
Steam/ |
|
(air dry) |
|
Sulphur |
|
|
Wet/dry |
|
Content |
|
Content |
|
Assigned/ |
|
metallurgical |
|
basis |
|
(air dry |
Reserve area |
|
tons |
|
(%) |
|
(%) |
|
unassigned |
|
coal |
|
MJ/kg |
|
basis) |
Shondoni colliery |
|
Wet |
|
4,3 |
|
n/a |
|
Assigned |
|
Steam |
|
21,0 |
|
1,0 |
Bosjesspruit colliery |
|
Wet |
|
4,0 |
|
n/a |
|
Assigned |
|
Steam |
|
20,0 |
|
0,8 |
Syferfontein colliery |
|
Wet |
|
4,7 |
|
n/a |
|
Assigned |
|
Steam |
|
22,5 |
|
0,9 |
Twistdraai Thubelisha colliery |
|
Wet |
|
4,4 |
|
n/a |
|
Assigned |
|
Steam |
|
20,9 |
|
1,1 |
Impumelelo, Block 2, number 4 seam |
|
Wet |
|
3,7 |
|
n/a |
|
Assigned |
|
Steam |
|
18,9 |
|
1,3 |
Impumelelo, Block 2, number 2 seam |
|
Wet |
|
4,0 |
|
n/a |
|
Assigned |
|
Steam |
|
21,1 |
|
0,9 |
Alexander Block |
|
Wet |
|
4,5 |
|
n/a |
|
Unassigned |
|
Steam |
|
21,6 |
|
0,8 |
Block 2 South, number 4 seam |
|
Wet |
|
4,1 |
|
n/a |
|
Unassigned |
|
Steam |
|
18,2 |
|
1,2 |
Block 2 South, number 2 seam |
|
Wet |
|
3,6 |
|
n/a |
|
Unassigned |
|
Steam |
|
17,4 |
|
0,7 |
Block 3 South |
|
Wet |
|
3,6 |
|
n/a |
|
Unassigned |
|
Steam |
|
21,9 |
|
0,7 |
53
Table 4.
Coal qualities, on an as received basis, in respective coal reserve areas, where Mining has converted mining rights in the Secunda mining complex in terms of the Mineral and Petroleum Resources Development Act, 28 of 2002.
|
|
|
|
Average |
|
Average |
|
|
|
|
|
Heat |
|
|
|
|
|
|
Inherent |
|
Superficial |
|
|
|
|
|
Value |
|
|
|
|
|
|
Moisture |
|
Moisture |
|
|
|
Steam/ |
|
(as received) |
|
Sulphur |
|
|
Wet/dry |
|
Content |
|
Content |
|
Assigned/ |
|
metallurgical |
|
basis |
|
(as received |
Reserve area |
|
tons |
|
(%) |
|
(%) |
|
unassigned |
|
coal |
|
MJ/kg |
|
basis) |
Shondoni colliery |
|
Wet |
|
4,3 |
|
3,0 |
|
Assigned |
|
Steam |
|
19,7 |
|
0,9 |
Bosjesspruit colliery |
|
Wet |
|
4,0 |
|
4,0 |
|
Assigned |
|
Steam |
|
19,3 |
|
0,9 |
Syferfontein colliery |
|
Wet |
|
4,7 |
|
4,3 |
|
Assigned |
|
Steam |
|
20,9 |
|
0,8 |
Twistdraai Thubelisha colliery |
|
Wet |
|
4,4 |
|
4,7 |
|
Assigned |
|
Steam |
|
20,3 |
|
1,1 |
Impumelelo, Block 2, number 4 seam |
|
Wet |
|
3,7 |
|
4,0 |
|
Assigned |
|
Steam |
|
18,8 |
|
1,2 |
Impumelelo, Block 2, number 2 seam |
|
Wet |
|
4,0 |
|
3,5 |
|
Assigned |
|
Steam |
|
19,8 |
|
0,8 |
Alexander Block |
|
Wet |
|
4,5 |
|
4,5 |
|
Unassigned |
|
Steam |
|
20,4 |
|
0,8 |
Block 2 South, number 4 seam |
|
Wet |
|
4,1 |
|
3,1 |
|
Unassigned |
|
Steam |
|
18,0 |
|
1,1 |
Block 2 South, number 2 seam |
|
Wet |
|
3,6 |
|
2,7 |
|
Unassigned |
|
Steam |
|
17,2 |
|
0,7 |
Block 3 South |
|
Wet |
|
3,6 |
|
3,6 |
|
Unassigned |
|
Steam |
|
21,8 |
|
0,7 |
Table 5.
Coal qualities, on an air-dry basis, in respective coal reserve areas, where Sasol Mining has converted mining rights in respect of the Sasolburg area in terms of the Mineral and Petroleum Resources Development Act, 28 of 2002.
|
|
|
|
Average |
|
Average |
|
|
|
|
|
Heat |
|
|
|
|
|
|
Inherent |
|
Superficial |
|
|
|
|
|
Value |
|
|
|
|
|
|
Moisture |
|
Moisture |
|
|
|
Steam/ |
|
(air dry) |
|
Sulphur |
|
|
Wet/dry |
|
Content |
|
Content |
|
Assigned/ |
|
metallurgical |
|
basis |
|
(air dry |
Reserve area |
|
tons |
|
(%) |
|
(%) |
|
unassigned |
|
coal |
|
MJ/kg |
|
basis) |
Sigma: Mooikraal |
|
Wet |
|
3,8 |
|
n/a |
|
Assigned |
|
Steam |
|
19,3 |
|
0,6 |
54
Table 6.
Coal qualities, on an as received basis, in respective coal reserve areas, where Sasol Mining has converted mining rights in the Sasolburg area in terms of the Mineral and Petroleum Resources Development Act, 28 of 2002.
|
|
|
|
Average |
|
Average |
|
|
|
|
|
Heat |
|
|
|
|
|
|
Inherent |
|
Superficial |
|
|
|
|
|
Value |
|
|
|
|
|
|
Moisture |
|
Moisture |
|
|
|
Steam/ |
|
(as received) |
|
Sulphur |
|
|
Wet/dry |
|
Content |
|
Content |
|
Assigned/ |
|
metallurgical |
|
basis |
|
(as received |
Reserve area |
|
tons |
|
(%) |
|
(%) |
|
unassigned |
|
coal |
|
MJ/kg |
|
basis) |
Sigma: Mooikraal |
|
Wet |
|
3,8 |
|
4,0 |
|
Assigned |
|
Steam |
|
19,0 |
|
0,6 |
Criteria for proved and probable
Over and above the definitions for coal reserves, probable coal reserves and proved coal reserves, set forth in Regulation S-K subpart 1300, promulgated by the SEC, we consider the following criteria to be pertinent to the classification of the reserves:
Probable reserves are those reserve areas where the drill hole spacing is sufficiently close in the context of the deposit under consideration, where conceptual mine design can be applied, and for which all the legal and environmental aspects have been considered. Probable reserves can be estimated with a lower level of confidence than proved coal reserves. Currently this classification results in variable drill spacing depending on the complexity of the area being considered and is generally less than 500m, although in some areas it may extend to 800m. The influence of increased drilling in these areas should not materially change the underlying geostatistics of the area on the critical parameters such as seam floor, seam thickness, ash and volatile content.
Proved reserves are those reserves for which the drill hole spacing is generally less than 350m, for which a complete mine design has been applied which includes layouts and schedules resulting in a full financial estimation of the reserve.
Legal rights on coalfields
Sasol Mining is the holder of various prospecting and mining rights for coal in Mpumalanga and one mining right in the Free State. These prospecting and mining rights are granted by the state acting as custodian of South Africa’s mineral and petroleum resources in accordance with the provisions of MPRDA as amended.
In respect of Mpumalanga, Sasol Mining holds three mining rights for coal situated within the Bethal, Secunda, Highveld Ridge, Balfour and Standerton magisterial districts with DMRE reference numbers MP 30/5/1/2/2/138 MR, MP30/5/1/2/2/10096 MR and MP30/5/1/2/2/10125 MR respectively. These mining rights are valid for periods of between 20 and 30 years, which can be renewed upon application to the DMRE, and allows Sasol Mining to provide a continuous and steady coal supply to SSA, which beneficiates the coal into higher value and in most cases, end line products. The bulk of Sasol Mining’s operations in Secunda falls within the Secunda Complex 138 MR mining right which was converted from old order mining licences. The 138 MR mining right has since its conversion to a new order mining right been amended to include various properties held under prospecting rights and a mining right which were either applied for and granted by the DMRE or were acquired from third parties and ceded to Sasol Mining. The 10096 MR mining right which Sasol Mining refers to as its Block IV mining right was granted in 2017 and the 10125 MR mining right referred to as Alexander was granted by the DMRE in 2018 and ceded to Sasol Mining during the same year.
Gas
Our natural oil and gas operations are managed by Gas Sourcing and Operations (GSO) as part of the Gas segment of our Energy Business. As of 30 June 2023, we held equity in two assets with proved reserves in Mozambique, one producing asset and one non-producing asset. We also have equity in exploration licences in Mozambique and South Africa.
55
In the narrative sections below, unless stated otherwise, all quantitative statements refer to gross figures. The tabular information which follows the narrative provides:
● | total gross and net developed and undeveloped acreage of our natural oil and gas assets and exploration licences by geographic area, at 30 June 2023; |
● | the number of net natural oil and gas wells completed in each of the last three years and the number of wells being drilled, at 30 June 2023; |
● | capitalised natural oil and gas exploratory well costs at the end of the last three years and information about the continued capitalisation of natural oil and gas exploratory well costs, at 30 June 2023; |
● | details about the production capacity of our natural oil and gas production facilities and the number of productive natural oil and gas wells, at 30 June 2023; and |
● | average sales prices and production costs, of natural oil and gas, for the last three years. |
The financial information in these sections has been prepared in accordance with IFRS in order to ensure consistency between this document and the financial statements.
Refer to the “Supplemental Oil and Gas Information” on pages G-1 to G-7 for:
● | costs incurred in natural oil and gas property acquisition, exploration and development activities, for the last three years; |
● | capitalised costs relating to natural oil and gas activities, for the last three years; |
● | the results of operations for natural oil and gas producing activities, for the last three years; |
● | natural oil and gas proved reserves and production quantity information, for the last three years; |
● | standardised measures of discounted future net cash flows relating to natural oil and gas proved reserves, for the last three years; and |
● | changes in the standardised measures of discounted future net cash flows relating to natural oil and gas proved reserves, for the last three years. |
The maps on page M-3 to M-4 show GSO’s global footprint and the location of our assets and exploration licences.
Mozambique
Licence terms
Development and production
In Mozambique, we have interests in two onshore assets, one of which is producing with proved reserves. The other asset consists of two areas under development with proved reserves, one area in early development without proved reserves and other reservoirs that are being assessed for commerciality.
The producing asset is the PandeTemane PPA licence (301,1 thousand developed net acres). Our subsidiary Sasol Petroleum Temane Limitada, the operator, holds a 70% working interest in the PPA. The PPA expires in 2034 and carries two possible five-year extensions. There is no requirement to relinquish any acreage until the expiry of the PPA.
56
The asset under development is the PSA licence (443,4 thousand undeveloped net acres) where we are currently developing oil and gas reservoirs contained in the Pande, Temane and Inhassoro fields. Our subsidiary Sasol Petroleum Mozambique Limitada (SPM), the operator, holds a 100% working interest. Under the terms of the current PSA licence, ENH as the licence holder is entitled to a profit share of production. The PSA field development plan amendment approval for Inhassoro, Temane and Pande was received on 29 September 2020 with a production period of 30 years expiring on 28 September 2050. There is no requirement to relinquish any acreage until the expiry of the individual development areas. The Corvo and Tafula areas remain under the commercial assessment period second renewal to the end of February 2024.
Exploration
We have interests in one offshore exploration licence, Angoche A5-A (non-operated) and one operated onshore licence PT5-C.
Block A5-A in the offshore Angoche Area originally covered an area of 290,5 thousand undeveloped net acres. Our subsidiary, Sasol Mozambique A5-A Limitada (SMA5-A) held a 25,5% participating interest in the licence which is operated by Eni Mozambico S.p.A During January 2022, a farm out agreement was signed whereby SMA5-A would farm out a 15,5% participating interest to Eni Mozambico S.p.A. The transaction reached its closing date on 27 July 2022 after all conditions precedent were met. Upon entry into the second licence period 25% of the acreage (outside any appraisal areas) must be relinquished by December 2023.
The onshore block PT5-C in the Pande-Temane Area originally covered an area 521,0 thousand undeveloped net acres. Our subsidiary, Sasol Mozambique PT5C Limitada (SMPT5-C) holds a 70% working interest, as operator, and ENH holds a 30% interest, carried through the pre-development period. Upon entry into the second licence period 20% of the acreage (outside any appraisal areas) must be relinquished by December 2023.
In the PT5-C licence, two exploration commitment wells were drilled between January 2023 and March 2023. The first Dorado-1 well was plugged and abandoned as a dry well while gas was discovered at the second Bonito-1 well in the G9 reservoir. In the Block A5-A licence, the Raia-1 well was spudded during April 2023. No hydrocarbons were encountered
in the primary and secondary reservoirs and the well was plugged and abandoned as a dry well.
Activities
Development and production
In the PPA licence four new wells in the Pande field were brought into production during the financial year and one well was reinstated in the Temane field increasing production wells from 19 to 24 during the 2023 financial year.
Under the PSA, following approval of the field development plan amendment in September 2020 and final investment decision in February 2021, work to deliver the field development scope (oil and gas wells and gathering system and integrated gas, oil and LPG processing facilities) commenced. The 3-D seismic data acquisition and processing over the Pande and Inhassoro fields was concluded in 2022. Drilling and workover activities commenced on 7 August 2021 using the rig contracted for an integrated drilling campaign, servicing the PPA, PT5-C and PSA licences. Engineering activities for the surface facilities, i.e. well pads, oil and gas gathering system and oil, gas and LPG processing facilities, have mostly been completed with procurement also significantly advanced. The construction works are underway with the Initial Gas Facilities scope having reached readiness for commissioning by 30 June 2023. The project costs are trending within the approved US$760 million, with total field development spend as at 30 June 2023 amounting to US$312,9 million. Development is planned to be completed during the last quarter of the 2024 calendar year.
A stratigraphic test well (exploratory type) was drilled during November 2022. No hydrocarbons were encountered and the well was plugged and abandoned as dry well.
Capitalised exploratory well costs
At 30 June 2023, there were no exploratory well costs capitalised in the Pande-Temane PPA asset or in the A5-A asset. Under the PT5-C licence following the discovery of hydrocarbons, the Bonito-1 well cost of R460,5 million was capitalised.
57
In the PSA Pande area (G6-Corvo and G8-Tafula), exploratory well costs continue to be capitalised for a period greater than one year after the completion of drilling; these costs relate to the exploration drilling activities conducted and completed in 2008, and the follow-up activities.
Total capitalised exploratory well costs capitalised as at 30 June 2023 amounted to R510,5 million.
Facilities and productive wells
Natural gas and condensate is produced from the PandeTemane PPA asset facilities, at the Central Processing Facility (CPF) on a site of approximately 400 000 square metres, located some 700 kilometres north of Maputo, the capital of Mozambique. Production from the Temane and Pande fields, which are managed as a single operational field, is routed from production wells via in-field flowlines and pipelines to the CPF. The design capacity of the CPF is 491 million standard cubic feet per day of sales gas together with small amounts of associated condensate.
At 30 June 2023, there were 24 productive wells in the Pande-Temane PPA asset. Four new infill wells were drilled and one producer well was reinstated increasing the productive wells from 19 to 24 being online. As part of Mozambique Exploration, Remediation and Infill Campaign drilling campaign, several wells have been plugged and abandoned and others remain on schedule for plug and abandonment.
Delivery commitments
Gas produced from the PandeTemane PPA asset, other than royalty gas provided to the Mozambican government, is supplied in accordance with long-term gas sales agreements (GSAs). The gas produced in accordance with GSA1, signed on 27 December 2002 and amended on 3 May 2022 (30-year contract term from 1 April 2004), and GSA2, signed on 10 December 2008 (20 year contract term from 1 January 2010), is sold internally for use as part of the feedstock for our chemical and synthetic fuel operations and to the external market in South Africa, with a daily contract quantity equivalent to 132 PJ/a (119,75 bscf/a) and 27 PJ/a (24,49 bscf/a) for GSA1 and GSA2 respectively. There are four off-takers under the GSA3, which are 20-year contracts that supply gas to the Mozambique market. These satisfy a licence condition that a portion of gas produced is utilised in-country. The contracts are with Matola Gas
Company S.A from 1 July 2014 for 8 PJ/a (7,26 bscf/a), ENH-Kogas from 1 March 2013 for 6 PJ/a (5,44 bscf/a), Central Termica de Ressano Garcia S.A. from end-February 2015 for 11 PJ/a (9,98 bscf/a) and ENH effective from 1 June 2015 for 2PJ/a (1,81 bscf/a).
Production from Proved Reserves is expected to commence declining in 2024, when it will no longer be possible to fully supply gas at currently contracted rates. Technical options are currently being considered to address this issue.
PPA condensate is currently sold to Petróleos de Moçambique, S.A. (Petromoc), which transports the condensate by truck from the CPF for export. The contract terminates on 30 June 2024.
Proved reserves (all quantities are net to Sasol)
Our Mozambique proved reserves are contained in the PandeTemane PPA and PSA assets. These represent the net economic interest volumes that are attributable to Sasol after the deduction of petroleum production tax taken in kind. The primary sales product is natural gas, with minor amounts of associated liquid hydrocarbons.
Changes to proved reserves
There was a decrease of 84 billion cubic feet in proved gas reserves to 730 billion cubic feet due to production of 114 billion cubic feet partially offset by a 12 billion cubic feet upward revision of previous estimates, and improved recovery of 18 billion cubic feet.
Changes to proved developed reserves
Proved developed gas reserves decreased by 55 billion cubic feet to 545 billion cubic feet. The decrease was due to production of 114 billion cubic feet and a 21 billion cubic feet downward revision which was partially offset by improved recovery of 80 billion cubic feet.
Proved undeveloped reserves converted to proved developed reserves
80 billion cubic feet were converted from proved undeveloped to proved developed reserves during 2023.
58
Changes to proved undeveloped reserves
Proved undeveloped gas reserves decreased by 29 billion cubic feet to 185 billion cubic feet due to an upward revision of 33 billion cubic feet of the previous estimates, 80 billion cubic feet matured to developed and 18 billion cubic feet improved recovery.
Proved undeveloped reserves remaining undeveloped
Proved undeveloped gas reserves estimated to be 18 billion cubic feet, in the PandeTemane PPA asset and 166 billion cubic feet in the PandeTemane PSA asset, were first recognised in 2023 and 2022 respectively. It is anticipated that these quantities will be converted to developed reserves in 2024 and 2025 respectively.
South Africa
Licence terms
In South Africa, we have an interest in one exploration licence.
Our subsidiary Sasol Africa (Pty) Ltd holds a 100% working interest (13 758,1 thousand undeveloped net acres) in the ER236 licence, offshore in the Durban Basin. Eni’s equity and operatorship were transferred to Sasol following a decision by Eni South Africa BV not to enter the Third Exploration Period. A decision is pending from the Petroleum Agency of South Africa (PASA) on Sasol’s application to enter the Third Exploration Period.
Activities
Exploration
An environmental impact assessment for future potential drilling activities in the ER236 licence was submitted to PASA and the environmental authorisation was granted by relevant authorities on 26 August 2019 (the Environmental Authorisation). The Environmental Authorisation has been the subject of opposition by NGOs, which submitted an administrative appeal to the Minister of the Department of Forestry, Fisheries and the Environment (DFFE). The Minister however dismissed the appeal and upheld the Environmental Authorisation in a decision dated 18 December 2020. On 15 June 2021, an NGO, the South Durban Community Environmental Alliance, served Sasol and Eni with a Notice of Motion in respect of a Review Application, seeking to set aside the decision to grant the Environmental Authorisation. Sasol has
decided to oppose the motion and filed its answering affidavit on 31 July 2023.
Capitalised exploratory well costs
At 30 June 2023 there were no exploratory well costs capitalised in South Africa.
Tabular natural oil and gas information
Developed and undeveloped acreage
The table below provides total gross and net developed and undeveloped acreage for our natural oil and gas assets by geographic area at 30 June 2023.
Natural oil and gas |
|
|
|
|
|
|
acreage concentrations |
|
|
|
South |
|
|
at 30 June 2023(1) |
|
Mozambique(2) |
|
Africa |
|
Total |
Developed acreage |
|
|
|
|
|
|
Gross |
|
430,1 |
|
— |
|
430,1 |
Net |
|
301,1 |
|
— |
|
301,1 |
Undeveloped acreage |
|
|
|
|
|
|
Gross |
|
2 326,9 |
|
13 758,1 |
|
16 085,0 |
Net |
|
1 078,3 |
|
13 758,1 |
|
14 836,4 |
(1) | The table does not include acreage information (neither net nor gross) pertaining to: licences from which Sasol is in a formal process of withdrawing; licence areas proposed for relinquishment owing to local regulations; or new blocks Sasol is in a process of acquiring. See the map on page M-3 to M-4 for a representation of the affected areas. |
(2) | Certain licences in Mozambique overlap as they relate to specific stratigraphic horizons. |
Drilling activities
The table below provides the number of net wells completed in each of the last three years and the number of wells being drilled or temporarily suspended at 30 June 2023.
Number of wells drilled for the |
|
|
|
year ended 30 June |
|
Mozambique |
|
As at 30 June 2021 |
|
|
|
Wells being drilled—gross(3) |
|
— |
|
Wells being drilled—net(3) |
|
— |
|
2022 |
|
|
|
Net development wells—productive(1) |
|
2,8 |
|
As at 30 June 2022 |
|
|
|
Wells being drilled—gross(3) |
|
1,0 |
|
Wells being drilled—net(3) |
|
1,0 |
|
2023 |
|
|
|
Net exploratory wells—dry(1) |
|
0,8 |
|
Net exploratory wells—productive(1) |
|
0,7 |
|
Net extension wells(4)—productive(1) |
|
— |
|
Net extension wells(4)—dry |
|
— |
|
Net development wells—productive(1) |
|
3,7 |
|
Net development wells—dry(1) |
|
— |
|
Net stratigraphic test wells—exploratory type(2) |
|
1,0 |
|
Net stratigraphic test wells—development type(2) |
|
— |
|
As at 30 June 2023 |
|
|
|
Wells being drilled—gross(3) |
|
1,0 |
|
Wells being drilled—net(3) |
|
0,7 |
|
(1) | A productive well is an exploratory, extension or development well that is not a dry well. A dry well is an exploratory, extension or development well that proves to be incapable of producing either oil or natural gas in sufficient quantities to justify completion. |
(2) | A stratigraphic test well is drilled to obtain information pertaining to a specific geological condition and is customarily drilled without the intent of being completed. Stratigraphic test wells are ‘exploratory type’ if not drilled in a known area or ‘development type’ if drilled in a known area. |
59
(3) | The number of wells being drilled includes wells that have been drilled, but have not yet been mechanically completed to enable production. Wells which are awaiting only surface connection to a production facility are considered to be completed. |
(4) | An extension well is a well drilled to extend the limits of a known reservoir. |
Capitalised exploratory well costs
The table below provides details about natural oil and gas capitalised exploratory well costs at the end of the last three years, showing additions, costs charged to expense and costs reclassified.
|
|
2023 |
|
2022 |
|
2021 |
|
|
|
(Rand in millions) |
|
||||
Capitalised Exploratory Well Costs |
|
|
|
|
|
|
|
Balance at beginning of year |
|
50,0 |
|
59,8 |
|
464,8 |
|
Additions for the year |
|
460,5 |
|
(9,8) |
|
(127,5) |
|
Costs incurred(1) |
|
460,5 |
|
— |
|
5,1 |
|
Asset retirement obligation adjustments |
|
— |
|
(9,8) |
|
(132,6) |
|
Charged to expense for the year |
|
— |
|
— |
|
(5,2) |
|
Costs reclassified to Capital Work in Progress |
|
— |
|
— |
|
(272,6) |
|
Translation of foreign entities |
|
— |
|
— |
|
0,3 |
|
Balance at end of year |
|
510,5 |
|
50,0 |
|
59,8 |
|
Capitalised Exploratory Well costs |
|
|
|
Ageing at 30 June 2023 |
|
Mozambique |
|
|
|
|
|
less than 1 year |
|
460,5 |
|
over 5 years |
|
50,0 |
|
Number of projects |
|
2 |
|
(1) | Including actualisation of exploratory well cost written off in the previous years and excluding impact of Asset retirement obligation adjustments. |
Oil and gas production facilities and productive wells
We operate production facilities in Mozambique.
The table below provides the production capacity at 30 June 2023.
Plant Description |
|
Location |
|
Design Capacity |
Central Processing Facility |
|
Pande-Temane PPA, Mozambique |
|
491 MMscf/day gas |
The table below provides the number of productive gas wells at 30 June 2023. A productive well is a producing well or a well that is mechanically capable of production.
Number of productive |
|
|
|
|
wells 30 June 2023 |
|
Mozambique |
|
|
Productive gas wells |
|
|
|
|
Gross |
|
24,0 |
|
|
Net |
|
16,8 |
|
|
Sales prices and production costs
The table below summarises the average sales prices for natural gas and petroleum liquids produced and the average production cost, not including ad valorem and severance taxes, per unit of production for each of the last three years.
Average sale prices and production costs |
|
|
|
|
|
|
for the year ended 30 June |
|
Mozambique |
|
Gabon(2) |
|
Canada(3) |
|
|
(Rand per unit) |
||||
2021 |
|
|
|
|
|
|
Average sales prices |
|
|
|
|
|
|
Natural gas, per thousand standard cubic feet |
|
24,2 |
|
— |
|
27,0 |
Natural liquids, per barrel |
|
369,2 |
|
737,7 |
|
434,7 |
Average production cost(1) |
|
|
|
|
|
|
Natural gas, per thousand standard cubic feet |
|
6,2 |
|
— |
|
26,5 |
Natural liquids, per barrel |
|
— |
|
425,4 |
|
— |
2022 |
|
|
|
|
|
|
Average sales prices |
|
|
|
|
|
|
Natural gas, per thousand standard cubic feet |
|
36,8 |
|
— |
|
— |
Natural liquids, per barrel |
|
932,0 |
|
— |
|
— |
Average production cost(1) |
|
|
|
|
|
|
Natural gas, per thousand standard cubic feet |
|
10,2 |
|
— |
|
— |
2023 |
|
|
|
|
|
|
Average sales prices |
|
|
|
|
|
|
Natural gas, per thousand standard cubic feet |
|
56,6 |
|
— |
|
— |
Natural liquids, per barrel |
|
970,7 |
|
— |
|
— |
Average production cost(1) |
|
|
|
|
|
|
Natural gas, per thousand standard cubic feet |
|
9,5 |
|
— |
|
— |
(1) | Average production costs per unit of production are calculated according to the primary sales product. Cost excludes depreciation, exploration and rehabilitation costs. |
(2) | Information included up to 25 February 2021, which was the effective date of divestment of our interests in the EMP in Gabon. |
(3) | The transaction to divest of all our interests in Canada was closed on 29 July 2021. |
60
Transportation capacity
The table below provides details of the transportation capacity and location available to our Gas segment.
|
|
|
|
Design |
Plant description |
|
Location |
|
capacity(1) |
Gauteng transmission network |
|
Gauteng |
|
128 bscf/a |
ROMPCO Pipeline |
|
From Central Processing Facility (Mozambique) to Pressure Protection Station (Secunda) (865km)—From Mozambique to Secunda and Sasolburg |
|
191 bscf/a |
Secunda, Witbank and Middelburg pipeline |
|
South Africa |
|
11 bscf/a |
Transnet Pipeline transmission pipeline |
|
South Africa |
|
23 bscf/a |
(1) | Nameplate capacity represents the total saleable production capacity. Due to the integrated nature of these facilities, the requirement for regular statutory maintenance shutdowns and market conditions, actual saleable volumes will be less than the nameplate capacity. |
Fuels—Plants and facilities
Our facilities in South Africa
Our main manufacturing facilities are located at Secunda. Additionally, the Natref refinery, based in Sasolburg, is approximately 2 km2.
Our interests in facilities in Qatar
ORYX GTL is a gas-to-liquids plant, located at Ras Laffan Industrial City, situated along the northeast coast of Qatar.
The following table provides details of the production capacity and location of the main jointly held plants where our Fuels segment has an interest.
Plant description |
|
Location |
|
Design capacity(1) |
ORYX GTL |
|
Ras Laffan Industrial City in Qatar |
|
32 400 bpd (nominal) |
Natref |
|
Sasolburg, South Africa |
|
108 000 bpd (nominal) |
(1) | Nameplate capacity represents the total saleable production capacity. Due to the integrated nature of these facilities, the requirement for regular statutory maintenance shutdowns and market conditions, actual saleable volumes will be less than the nameplate capacity. |
Secunda Operations
Synthetic oil
Refer to “Item 4.D—Property, plants and equipment—Energy Business—Mining” for details on our mining properties and coal exploration techniques used during the estimation of synthetic oil reserves.
The size of Sasol’s total Secunda property is approximately 79 km2 with operating plants accounting for 8 km2. This forms the base for the main manufacturing facilities for our Energy and African Chemicals Businesses.
The following table sets forth a summary of the synthetic oil equivalent average sales price and related production costs for the year shown.
|
|
2023 |
|
2022 |
|
2021 |
Average sales price per barrel (rand per unit) |
|
1 599,23 |
|
1 363,68 |
|
810,79 |
Average production cost per barrel (rand per unit) |
|
1 050,50 |
|
948,36 |
|
779,16 |
Production (millions of barrels) |
|
32,5 |
|
32,6 |
|
35,5 |
Supplemental oil and gas information
Supplemental oil and gas information: See “Item 18—Financial Statements—Supplemental Oil and Gas Information” for supplemental information relating to synthetic oil producing activities.
Chemicals – Plants and facilities
Our facilities in South Africa
Our main manufacturing facilities are located in Secunda and Sasolburg. The size of Sasol’s total Secunda property is approximately 79 km2 with operating plants accounting for 8 km2. Within the Secunda property, a portion of the explosives assets are owned and operated by Enaex in association with Sasol from 1 July 2020. The size of the Sasolburg property is approximately 51 km2.
Our facilities in the United States
Our operation in Lake Charles, Louisiana is our single biggest site in the US with a full size of approximately 6 km2. Within the Lake Charles site, the ethylene cracker on the west side, the linear low-density polyethylene and the low-density polyethylene plants are owned and operated by our 50% owned LIP JV.
Further operation sites in the United States are located in Winnie and Greens Bayou in Texas, and Tucson, Arizona.
Refer to “Item 3.D—Risk factors” and “Item 5.B—Liquidity and capital resources” for further detail on the LCCP.
61
Our facilities in Eurasia
Our German operations are based at two locations, namely Brunsbüttel (site size approximately 1,2 million m2; plant size 500 000 m2) and Marl (site size approximately 160 000 m2; plant size 75 000 m2)
The operations in Italy are based at three locations. The primary facilities are at Augusta (site size approximately 1,36 million m2; plant size 510 000 m2) on the island of Sicily and Terranova (site size approximately 330 000 m2; plant size 160 000 m2) with a smaller site at Sarroch on the island of Sardinia.
The operations in China are based at two locations in Nanjing (Fangshui site size approximately 90 000 m2; plant size 4 000 m2; Zhaoqiaohe site size approximately 143 000 m2; plant size 3 600 m2).
Smaller operations can be found at the site Novaky in Slovakia.
The following table summarises the main production nameplate capacities of the chemicals segment globally. Due to the integrated nature of these facilities, a portion of these products are used in further downstream facilities. Nameplate capacity represents the total saleable production capacity. Due to the integrated nature of these facilities, the requirement for regular statutory maintenance shutdowns and market conditions, actual saleable volumes will be less than the nameplate capacity.
Production capacity at 30 June 2023
Product Groups capacity(1) |
C2-3 Olefins(2) |
C5-8 Alpha Olefins |
Polyolefins (3) |
LAB (4) and Paraffin (5) |
C1-5 Alcohols, Ketones and Acrylates |
C6+ Alcohols (6) |
Surfactants |
EO and Derivatives (7) |
Wax |
Other |
Others Description |
||
Geographic Location |
Main Business Divisions (8) |
BC |
BC |
BC |
ECC |
PS |
ECC |
ECC |
ECC, BC, PS |
PS |
All |
All |
|
|
|
|
(ktpa) |
|
|||||||||
Americas |
1,200 |
100 |
500 |
300 |
|
300 |
300 |
300 |
|
100 |
|
||
|
Lake Charles |
X |
X |
X |
X |
|
X |
X |
X |
|
X |
Inorganics (9) |
|
|
Winnie/ Greens Bayou |
|
|
|
|
|
|
|
|
|
X |
Aromatics (10) |
|
|
Tucson |
|
|
|
|
|
|
|
|
|
X |
Inorganics |
|
Eurasia |
|
|
|
300 |
|
400 |
700 |
300 |
|
100 |
|
||
|
Germany |
Marl |
|
|
|
|
|
X |
X |
X |
|
X |
Aromatics |
|
|
Brunsbüttel |
|
|
|
|
|
X |
|
|
|
X |
Inorganics |
|
Italy |
Augusta |
|
|
|
X |
|
X |
|
|
|
|
|
|
|
Sarroch |
|
|
|
X |
|
|
|
|
|
|
|
|
|
Terranova |
|
|
|
|
|
|
X |
|
|
|
|
|
Slovakia |
Novakv |
|
|
|
|
|
|
X |
|
|
|
|
|
China |
Nanjing |
|
|
|
|
|
|
X |
|
|
|
|
Africa |
1,600 |
400 |
1,200 |
|
1,000 |
100 |
|
|
300 |
900 |
(11) |
||
|
Secunda |
X |
X |
X |
|
X |
X |
|
|
|
X |
Ammonia, Carbon |
|
|
Sasolburg |
X |
|
X |
|
X |
|
|
|
X |
X |
Ammonia, Aromatics |
|
|
Durban |
|
|
|
|
|
|
|
|
X |
|
|
(1) | Within the individual product groupings, capacities are shown integrated. Capacities are rounded to the nearest 100kt. “X” indicates that the location produces the specific product grouping. |
(2) | Ethylene and Propylene: Predominately used for internal production of derivatives. In the Americas, this represents our historic ethylene cracker plus Sasol’s 50% of our LIP JV cracker. |
(3) | Polyethylene, Polypropylene and PVC. In the US, this represents Sasol’s 50% share in the LIP JV. |
(4) | LAB in Eurasia partly used to produce Surfactants internally. |
(5) | Paraffins mainly consumed for LAB production. |
(6) | C6+ Alcohols partly used for production of Surfactants. |
(7) | EO and derivatives such as Butyl Glycol Ether (BGE),MEG and Amines. Ethylene Oxide predominantly used to produce Surfactants. |
62
(8) | Business divisions include Performance Solutions (PS), Essential Care Chemicals (ECC), Advanced Materials (AM) and Base Chemicals (BC). |
(9) | Inorganics in Europe and the US mainly as a co-product from the Alcohol-Ziegler process, part of our AM business division. |
(10) | Aromatics: Further processing of Secunda value chain products in Sasolburg and the US: Phenol, cresylics and derivatives. Total global integrated Aromatics capacity is 100kt. |
(11) | Predominantly Ammonia. |
ITEM 4A. UNRESOLVED STAFF COMMENTS
There are no unresolved written comments from the SEC staff regarding our periodic reports under the Exchange Act received not less than 180 days before 30 June 2023, that are considered material.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
This section should be read in conjunction with our consolidated financial statements included in “Item 18—Financial Statements” as at 30 June 2023 and 2022, and for the years ended 30 June 2023, 2022 and 2021, including the accompanying notes, that are included in this annual report on Form 20-F. The following discussion of operating results and the financial review and prospects as well as our consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB.
For information regarding our financial overview and external factors impacting on our business, refer to the “Integrated Report—Chief Financial Officer’s performance overview” as contained in Exhibit 99.3.
The discussion on the 2021 financial results has not been included as this can be found under Item 5 of our Form 20-F for the year ended 30 June 2022, Certain information contained in the discussion and analysis set forth below and elsewhere in this annual report includes forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements” and see “Item 3.D—Risk factors” for a discussion of significant factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this annual report.
5.A Operating results
Results of operations
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
2023 |
|
2022* |
|
2023/2022 |
|
2021 |
|
2022/2021 |
|
|
(Rand |
|
|
|
(Rand |
|
|
||
|
|
in millions) |
|
(%) |
|
in millions) |
|
(%) |
||
Turnover |
|
289 696 |
|
272 746 |
|
6 |
|
201 910 |
|
35 |
Operating costs and expenses |
|
(236 901) |
|
(224 360) |
|
6 |
|
(162 887) |
|
38 |
Remeasurement items |
|
(33 898) |
|
9 903 |
|
(442) |
|
(23 218) |
|
(143) |
Equity accounted profit, net of tax |
|
2 623 |
|
3 128 |
|
(16) |
|
814 |
|
284 |
Earnings before interest and tax |
|
21 520 |
|
61 417 |
|
(65) |
|
16 619 |
|
270 |
Net finance costs |
|
(7 006) |
|
(5 876) |
|
19 |
|
(5 902) |
|
(0) |
Earnings before tax |
|
14 514 |
|
55 541 |
|
(74) |
|
10 717 |
|
418 |
Taxation |
|
(5 181) |
|
(13 869) |
|
(63) |
|
(185) |
|
7 397 |
Earnings |
|
9 333 |
|
41 672 |
|
(78) |
|
10 532 |
|
296 |
*The Group has revised Turnover and Materials, energy and consumables used by R2 992 million for 2022. The error had no impact on earnings.
Financial review 2023
● | For information regarding our financial condition, and an overview of our results refer “Integrated Report—Performance summary” as contained in Exhibit 99.3. |
● | For information on changes in our financial condition, and overall financial performance refer “Integrated Report— Performance summary” as contained in Exhibit 99.3. |
Turnover
Turnover consists of the following categories.
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
2023 |
|
2022* |
|
2023/2022 |
|
2021 |
|
2022/2021 |
|
|
(Rand |
|
|
|
(Rand |
|
|
||
|
|
in millions) |
|
(%) |
|
in millions) |
|
(%) |
||
Sale of products |
|
285 826 |
|
269 017 |
|
6 |
|
199 210 |
|
35 |
Services rendered |
|
3 870 |
|
3 729 |
|
4 |
|
2 700 |
|
38 |
Turnover |
|
289 696 |
|
272 746 |
|
6 |
|
201 910 |
|
35 |
*The Group has revised Turnover and Materials, energy and consumables used by R2 992 million for 2022. The error had no impact on earnings.
63
The primary factors contributing to the changes in turnover were.
|
|
Change |
|
Change |
||||
|
|
2023/2022* |
|
2022*/2021 |
||||
|
|
(Rand in |
|
|
|
(Rand in |
|
|
|
|
millions) |
|
(%) |
|
millions) |
|
(%) |
Turnover 2022 and 2021 |
|
272 746 |
|
|
|
201 910 |
|
|
Exchange rate effects |
|
46 985 |
|
18 |
|
(5 581) |
|
(3) |
Product prices |
|
(15 090) |
|
(6) |
|
95 963 |
|
48 |
—crude oil |
|
(3 300) |
|
(1) |
|
42 392 |
|
21 |
—other products |
|
(11 790) |
|
(4) |
|
53 571 |
|
27 |
Net volume changes |
|
(15 052) |
|
(6) |
|
(19 192) |
|
(10) |
Other effects |
|
107 |
|
0 |
|
(354) |
|
(1) |
Turnover |
|
289 696 |
|
6 |
|
272 746 |
|
35 |
*The Group has revised Turnover and Materials, energy and consumables used by R2 992 million for 2022. The error had no impact on earnings.
Operating costs and expenses
Operating costs and expense consists of the following categories.
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
2023 |
|
2022* |
|
2023/2022 |
|
2021 |
|
2022/2021 |
|
|
(Rand |
|
(%) |
|
(Rand |
|
(%) |
||
|
|
in millions) |
|
|
|
in millions) |
|
|
||
Materials, energy and consumables used |
|
(152 297) |
|
(123 999) |
|
23 |
|
(85 370) |
|
45 |
Selling and distribution costs |
|
(10 470) |
|
(8 677) |
|
21 |
|
(8 026) |
|
8 |
Maintenance expenditure |
|
(15 076) |
|
(13 322) |
|
13 |
|
(12 115) |
|
10 |
Employee-related expenditure |
|
(33 544) |
|
(32 455) |
|
3 |
|
(32 848) |
|
(1) |
Depreciation and amortisation |
|
(16 491) |
|
(14 073) |
|
17 |
|
(17 644) |
|
(20) |
Other expenses and income |
|
(9 023) |
|
(31 834) |
|
(72) |
|
(6 884) |
|
362 |
Operating costs and expenses |
|
(236 901) |
|
(224 360) |
|
6 |
|
(162 887) |
|
38 |
*The Group has revised Turnover and Materials, energy and consumables used by R2 992 million for 2022. The error had no impact on earnings.
Materials, energy and consumables used. Materials, energy and consumables used in 2023 amounted to R152 297 million, an increase of R28 298 million, or 23%, compared with R123 999 million in 2022, which increased by 45% from R85 370 million in 2021. The increase in these costs between 2023 and 2022 was mainly due to higher product prices of R11 270 million, and a weaker exchange rate of R22 247 million, offset by lower volumes of R5 967 million.
Selling and distribution costs. These costs comprise of marketing and distribution of products, freight and customs and excise duty after the point of sale. Selling and distribution costs in 2023 amounted to R10 470 million, which represents an increase of R 1 793 million, or 21%, compared with R8 677 million in 2022, which increased by R651 million, or 8%, compared with R8 026 million in 2021. The variation in these costs was mainly attributable to increased logistical costs in our South African Chemicals
business of R701 million, as well as the impact of inflation and a weaker exchange rate of R1 385 million. Selling and distribution costs represented 4% of sales in 2023, 3% of sales in 2022, and 4% of sales in 2021.
Maintenance expenditure. Maintenance expenditure in 2023 amounted to R15 076 million, which represents an increase of R1 754 million, or 13%, compared with R13 322 million in 2022, which increased by R1 207 million, or 10%, compared with R12 115 million in 2021. Maintenance expenditure increased in 2023 compared to 2022 mainly due to inflation, and the weaker exchange rate of R1 263 million.
Employee-related expenditure. Employee-related expenditure amounted to R33 544 million, which represents an increase of R1 089 million in 2023, or 3%, compared with R32 455 million in 2022, which decreased by R393 million, or 1%, from 2021.
This amount includes labour costs of R33 655 million (2022 — R32 141 million and 2021— R31 683 million) and a share-based payment charge to the income statement of R1 033 million, (2022 — R1 139 and 2021— R1 905 million).This increase in 2023 is mainly due to increase in the employee headcount of R656 million and weaker exchange rate of R1 086 million.
Depreciation and amortisation. Depreciation and amortisation in 2023 amounted to R16 491 million, which represents an increase of R2 418 million or 17%, compared with R14 073 million in 2022, which decreased by R3 571 million or 20% compared with R17 644 million in 2021. The increase in depreciation relates mainly to the increase in project values capitalised of R1 446 million, and the weaker exchange rate of R905 million.
Other expenses and income. Other expenses and income in 2023 amounted to R9 023 million, a decrease of R22 811 million, compared to R31 834million in 2022, which increased by R24 950 million from R6 884 million in 2021.
This amount includes:
● | Exploration expenditure and feasibility costs of R751 million (2022 — R366 million and 2021 — R295 million); |
64
● | Translation gains of R2 728 million (2022 — R693 million and 2021 — R5 510 million); |
● | Insurance costs of R1 091 million (2022— R710 million and 2021— R739 million); |
● | Information technology cost of R3 078 million (2022— R2 745 million and 2021— R2 563 million); |
● | Hired labour of R856 million (2022— R694 million and 2021— R565 million); |
● | Audit remuneration of R141 million (2022— R131 million and 2021— R136 million); |
● | Professional fees of R2 455 million (2022— R1 916 million and 2021— R2 828 million); |
● | Profit on derivative instruments (including crude oil instruments, foreign exchange instruments, ethane swaps and interest rate swaps) of R3 287 million mainly due to the group’s hedging activities and embedded derivatives, (2022— R18 325million loss and 2021— R2 282million profit; |
● | Decrease in rehabilitation provisions of R870 million (2022—increase of R866 million and 2021— decrease of R361 million); and |
● | Other operating income in 2023 amounted to R5 181 million, which represents an increase of R2 147 million, or 71%, compared with R3 034 million in 2022. In 2021, other operating income amounted to R2 025 million or 50% lower compared to 2022. |
Share of profits from equity accounted investments
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
2023 |
|
2022 |
|
2023/2022 |
|
2021 |
|
2022/2021 |
|
|
(Rand |
|
|
|
(Rand |
|
|
||
|
|
in millions) |
|
(%) |
|
in millions) |
|
(%) |
||
Profit/(loss) before tax |
|
4 035 |
|
4 809 |
|
(16) |
|
1 230 |
|
291 |
Tax |
|
(1 412) |
|
(1 681) |
|
(16) |
|
(416) |
|
304 |
Share of profits/(losses) of equity accounted investments, net of tax |
|
2 623 |
|
3 128 |
|
(16) |
|
814 |
|
284 |
Remeasurement items, net of tax |
|
— |
|
|
|
— |
|
23 |
|
|
The share of profits of equity accounted investments (net of tax) amounted to R2 623 million in 2023 as compared to R3 128 million in 2022 and R814 million in 2021. This is due to a decrease in profit from ORYX GTL partially offset by ROMPCO profit which is equity accounted since 30 June 2022.
For information regarding the Equity accounted profits, refer to “Item 18—Financial Statements—Note 19 Equity accounted investments”.
Finance costs and finance income
For information regarding finance costs incurred and finance income earned, refer to “Item 18—Financial Statements—Note 6 Net finance costs”.
The increase in finance costs in 2023 is mainly due to higher global interest rates to counter inflation and the weaker exchange rate
Tax
The effective tax rate increased to 36% in 2023 compared to 25% in 2022 and 1.7% in 2021. The low rate in 2021 was mainly a result of tax losses utilised. The effective corporate tax rate is 9,0% higher than the South African corporate income tax rate of 27%, mainly due to non-deductible expenses incurred not deemed to be in the production of taxable income, tax losses in Sasol Investment Company (Pty) Ltd, Sasol Mozambique PT5 C Limitada and Sasol China for which no deferred tax asset was raised and translation differences of R845 million arising from exchange rates applied by the South African Revenue Service at the date of assessment. This was offset by the deduction of the share of profits of equity accounted investments. For further information regarding the tax charge, refer to “Item 18—Financial Statements—Note 10 Taxation”.
65
Non-controlling interests
For information regarding our non-controlling interests, and their share of profit, refer to “Item 18—Financial Statements—Note 21 Interest in significant operating subsidiaries”.
Profits attributable to non-controlling interests in subsidiaries of R 534 million in 2023 decreased by R2 182 million, or 80%, from R2 716 million in 2022, which was an increase of R1 216 million or 81% from R1 500 million in 2021.
The decrease in earnings attributable to non-controlling interests in 2023 was largely attributable to ROMPCO which was equity accounted from 30 June 2022.
The increase in earnings attributable to non-controlling interests in 2022 was largely due to higher sales volumes resulting from the easing of COVID-19 lockdown restrictions in South Africa, and higher BFP prices as a result of the Russia/Ukraine war.
Financial review 2022
Group results
Profit before interest and tax of R16 619 million in 2021 increased (more than 100%) by R44 798 million to a profit before interest and tax of R61 417 million in 2022. This was largely due to an increase in revenue (35%) as a result of recovery of economic conditions during 2022, the ZAR/US $ exchange rate averaged R15,21 compared to R15,40 for the prior year. The Chemicals Business benefited from stronger chemical basket prices (US$/t), which were higher compared to the prior year. In 2022, oil prices averaged at US$92,06/bbl compared to US$54,20/bbl in 2021.
Items which materially impacted earnings before interest and tax
During 2022, earnings were impacted by the following significant items:
● | a net remeasurement items gain of R9 903 million compared to a R23 218 million expense in the prior year. Included in the remeasurement items is the impairment reversal of R1 443 million relating to the Chemical Work-up & Heavy Alcohols cash generating unit (CGU), and |
scrapping of property, plant and equipment of R2 500 million at LCCP. |
Segment review—results of operations
Reporting segments are identified in the way in which the President and Chief Executive Officer organises segments within our group for making operating decisions and assessing performance. The segment overview included below is based on our segment results. Inter-segment turnover was entered into under terms and conditions substantially similar to terms and conditions which would have been negotiated with an independent third party. Refer to Business segment information “Item 18—Financial Statements—Segment information” for further detail regarding turnover and EBIT per segment.
Refer also to “Integrated Report— – Our distinctive value chains” as contained in Exhibit 99.4.
Energy Business
Mining
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
2023 |
|
2022 |
|
2023/2022 |
|
2021 |
|
2022/2021 |
|
|
(Rand in |
|
|
|
(Rand in |
|
|
||
|
|
millions) |
|
(%) |
|
millions) |
|
(%) |
||
External turnover |
|
6 386 |
|
6 370 |
|
0 |
|
2 025 |
|
215 |
Inter-segment turnover |
|
21 280 |
|
18 016 |
|
18 |
|
19 679 |
|
(8) |
Total turnover |
|
27 666 |
|
24 386 |
|
13 |
|
21 704 |
|
12 |
Operating costs and expenses(1) |
|
(25 086) |
|
(20 930) |
|
20 |
|
(18 477) |
|
13 |
Earnings before interest and tax |
|
2 580 |
|
3 456 |
|
(25) |
|
3 227 |
|
7 |
EBIT margin % |
|
9 |
|
14 |
|
|
|
15 |
|
|
(1) | Operating costs and expenses net of other income including remeasurement items and depreciation. |
Results of operations 2023 compared to 2022
Total turnover increased by 13% from R24 386 million to R27 666 million mainly due to the increase in sales price of coal supplied to Secunda Operations. Export sales volumes were 13% lower compared to the prior year due to the impact of ongoing operational challenges at Transnet Freight Rail (TFR) and the diversion of export coal to Secunda Operations. External turnover was favourably impacted by the weaker ZAR/US$ exchange rate. The average US dollar export coal price was 2% lower than the prior year due to the impact of the Russia/Ukraine war.
66
Earnings before interest and tax decreased by 25% to R2 580 million compared to the prior year. Mining’s results were adversely affected by lower productivity, higher external coal purchases to meet the demand requirements of Secunda Operations, lower export sales volumes and increased costs to drive the improvement of operations. Productivity of 951 t/cm/s was 3% lower than the prior year due to unplanned safety stoppages and operational challenges experienced during the earlier part of the year.
The Secunda Operations coal stockpile increased from approximately 1,8 mt at the end of the prior year, closing at 2,0 mt for the year.
Results of operations 2022 compared to 2021
Total turnover increased by 12% from R21 704 million to R24 386 million. Earnings before interest and tax of R3 456 million represents an increase of 7% compared to the prior year, mainly due to higher export coal prices which was negated by increased external coal purchases, Transnet Freight Rail performance issues, coal supply challenges to the Secunda market and increases in labour and maintenance cost.
Production was negatively impacted by high severity incidents, as well as the slower ramp-up of the full calendar operations (Fulco) integrated shift system which was implemented during June 2021 at our Secunda collieries. However, productivity increased during the last quarter of the year. The full year productivity was 984 t/cm/s compared to 1 131 t/cm/s for the prior year. Lower productivity resulted in an increase in external coal purchases, negatively impacting earnings before interest and tax.
The Secunda Operations coal stockpile increased during the last quarter of the year, closing at more than 1,8 mt which is above our optimal internal stockpile target range.
For further analysis of our results refer to an “Integrated Report—Performance overview // performance at a glance’’ as contained in Exhibit 99.6.
Gas
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
|
|
|
|
2023/ |
|
|
|
2022/ |
|
|
2023 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
|
|
(Rand in |
|
|
|
(Rand in |
|
|
||
|
|
millions) |
|
(%) |
|
millions) |
|
(%) |
||
External turnover |
|
7 234 |
|
7 789 |
|
(7) |
|
7 321 |
|
6 |
Inter-segment turnover |
|
4 754 |
|
4 152 |
|
14 |
|
3 669 |
|
13 |
Total turnover |
|
11 988 |
|
11 941 |
|
0 |
|
10 990 |
|
9 |
Operating costs and expenses(1) |
|
(5 556) |
|
2 681 |
|
(307) |
|
(4 334) |
|
(162) |
Earnings before interest and tax |
|
6 432 |
|
14 622 |
|
(56) |
|
6 656 |
|
120 |
EBIT margin % |
|
54 |
|
122 |
|
|
|
61 |
|
|
(1) | Operating costs and expenses net of other income including exploration costs, remeasurement items and depreciation. |
Results of operations 2023 compared to 2022
Total turnover of R11 988 remained flat compared to the prior year mainly due to higher gas prices, offset by lower sales volumes due to asset disposals in the prior year as well as lower natural gas and methane rich gas sales volumes in South Africa, by 3% and 1% respectively, resulting from lower customer demand.
Earnings before interest and tax decreased to R6 432 million from R14 622 million in the prior year. The prior year earnings before interest and tax included remeasurement item gains from the disposal of the Canadian shale gas assets of R4 880 million and partial disposal of interest in ROMPCO of R3 728 million. Excluding remeasurement items, earnings before interest and tax increased by 14% mainly due to lower operating costs which was partially offset by the impact of lower earnings before interest and tax from assets disposed in the prior year.
In Mozambique, the gas operations delivered a strong production performance. Production was 2% higher than the prior year due to the additional wells brought online, resulting in increased production capacity.
Results of operations 2022 compared to 2021
Total turnover increased by 9% from R10 990 million to R11 941 million mainly due to a 10% increase in methane rich gas sales volumes as the market started to return to pre-COVID-19 levels and higher gas selling prices in South Africa. This was partially negated by a 1% decrease in natural gas sales volumes compared to the prior year. During the last quarter of the year, overall gas sales volumes were negatively impacted by the severe flooding in the KwaZulu-Natal province of South Africa.
67
Earnings before interest and tax increased by more than 100% to R14 622 million compared to R6 656 million in the prior year and includes a profit of R4 880 million from the disposal of our Canadian sale gas assets mainly related to the realisation of the foreign currency translation reserve, a profit on disposal of R3 728 million related to the sale of 30% of our 50% interest in the Republic of Mozambique Pipeline Investments Company (ROMPCO) and a R156 million profit on disposal of our interest in Central Térmica de Ressano Garcia (CTRG).
Excluding remeasurement items, earnings before interest and tax was further positively supported by lower depreciation compared to the prior year as a result of various asset disposals. This was partially offset by the impact of the weaker closing ZAR/US$ dollar exchange rate on the translation of our Mozambique foreign operations, increase in rehabilitation provisions and higher costs associated with the Mozambique drilling campaign.
In Mozambique, our gas operations performed better than expected. Production volumes of 111,2 bscf were 3% lower than the prior year due to the delay in drilling campaign that started on 7 August 2021. The results from the four wells drilled to date are in line with reservoir quality expectations
For further analysis of our results refer to “Integrated Report—Performance overview // performance at glance” as contained in Exhibit 99.6.
Fuels
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
|
|
|
|
2023/ |
|
|
|
2022/ |
|
|
2023 |
|
2022* |
|
2022 |
|
2021 |
|
2021 |
|
|
(Rand in |
|
|
|
(Rand in |
|
|
||
|
|
millions) |
|
(%) |
|
millions) |
|
(%) |
||
External turnover |
|
116 235 |
|
97 996 |
|
19 |
|
59 393 |
|
65 |
Inter-segment turnover |
|
2 473 |
|
1 976 |
|
25 |
|
1 256 |
|
57 |
Total turnover |
|
118 708 |
|
99 972 |
|
19 |
|
60 649 |
|
65 |
Operating costs and expenses(1) |
|
(125 836) |
|
(72 013) |
|
75 |
|
(78 819) |
|
(9) |
Earnings/(loss) before interest and tax |
|
(7 128) |
|
27 959 |
|
(125) |
|
(18 170) |
|
(254) |
EBIT margin % |
|
(6) |
|
28 |
|
|
|
(30) |
|
|
(1) | Operating costs and expenses net of other income including remeasurement items and depreciation. |
*The Group has revised Turnover and Materials, energy and consumables used by R2 992 million for 2022. The error had no impact on earnings.
Results of operations 2023 compared to 2022
Total turnover increased by 19% from R99 972 million in the prior year to R118 708 million
mainly due the higher rand per barrel oil prices and fuel differentials.
Loss before interest and tax was R7 128 million for the year, mainly due to the recognition of an impairment of R35 316 million relating to the Secunda liquid fuels refinery CGU while a profit of R27 959 million was recorded in the prior year. Excluding the impairment of the Secunda liquid fuels refinery CGU, a profit before interest and tax of R28 188 million was recorded for 2023. Operating costs increased by 11% largely driven by higher inflation and increased maintenance costs in Secunda to restore reliability of operations partly offset by lower electricity costs in favour of own generation.
Secunda Operations production volumes were 6,9 mt, which is 1% higher than the prior year, despite a planned total shutdown during September 2022, the impact of poor coal quality and plant reliability issues during the first half of the year. The increase in production volumes is driven by management’s interventions to reduce the impact of variability in coal quality, volume protection plans yielding positive results and higher natural gas availability. Coal quality remained a key focus area and management continued to implement measures to mitigate poor coal quality and increase operational reliability. Natref delivered an average run rate of 510 m³/h which was 8% lower than the prior year. Natref’s performance was impacted by the shutdown in July 2022 resulting from crude supply shortages.
ORYX GTL contributed R2 007 million to earnings before interest and tax, which was 33% lower than prior year, with a utilisation rate of 70% compared to 89% in the prior year. Dividends received from ORYX GTL amounted to R1 671 million (Sasol’s share) compared to R4 622 million in the prior year. The operational performance at ORYX GTL was impacted by various operational challenges, including the delayed start-up of Air Separation Unit 2 and a diesel tank leak in March 2023.
Results of operations 2022 compared to 2021
Total turnover increased by 65% from R60 649 million in the prior year to R99 972 million mainly due to a favourable macro-economic environment, with higher crude oil prices and refining margins, coupled with increased demand following the easing of COVID-19 lockdown restrictions globally. Liquid fuels sales volumes were 1% lower compared to the prior year.
68
Earnings before interest and tax increased by more than 100% from a loss of R18 170 million in the prior year to a profit of R27 959 million and was further supported by lower depreciation due to impairments recognised in prior years, partially offset by lower production at Secunda operations, associated with coal supply and coal quality, as well as higher electricity costs due to the reallocation of gas to produce final product.
Secunda Operations production volumes of 6,9mt was 10% lower than the prior year, mainly as a result of the shutdown that was postponed in the prior year to 2022, coal supply and coal quality challenges at Mining, as well as other operational instabilities which have largely been resolved. External purchases increased by 3,2 million barrels compared to the prior year to meet demand during the Secunda operations shutdown and to mitigate supply constraints following production challenges and the planned shutdown at Natref. Natref delivered a run rate of 555 m³/h which was 7% higher than the prior year.
ORYX GTL contributed R3 019 million to earnings before interest and tax compared to R719 million during the prior year, mainly as a result of higher Brent crude oil prices and an improvement in the utilisation rate. ORYX GTL achieved an average utilisation rate of 89% for the year.
For further analysis of our results refer to “Integrated Report—Performance overview // performance at glance” as contained in Exhibit 99.6.
Chemicals Business
Chemicals Africa
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
|
|
|
|
2023/ |
|
|
|
2022/ |
|
|
2023 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
|
|
(Rand in |
|
(%) |
|
(Rand in |
|
(%) |
||
|
|
millions) |
|
|
|
millions) |
|
|
||
External turnover |
|
67 772 |
|
64 054 |
|
6 |
|
58 260 |
|
10 |
Inter-segment turnover |
|
2 814 |
|
3 221 |
|
(13) |
|
2 337 |
|
38 |
Total turnover |
|
70 586 |
|
67 275 |
|
5 |
|
60 597 |
|
11 |
Operating costs and expenses(1) |
|
(52 917) |
|
(43 203) |
|
22 |
|
(53 640) |
|
(19) |
Earnings/(loss) before interest and tax |
|
17 669 |
|
24 072 |
|
(27) |
|
6 957 |
|
246 |
EBIT margin % |
|
25 |
|
36 |
|
|
|
11 |
|
|
(1) | Operating costs and expenses net of other income including remeasurement items and depreciation. |
Results of operations 2023 compared to 2022
Total turnover increased by 5% from R67 275 million in 2022 financial year to R70 586 million in 2023, mainly driven by a weaker ZAR/US$ exchange rate and slightly higher sales volumes partly offset by lower sales price. The average sales basket price (US$/ton) for the financial year was 10% lower compared to the prior year resulting from lower oil prices, weaker global demand and associated inventory reduction by customers.
Sales volumes were 1% higher than 2022 financial year mainly due to the absence of flooding in Kwa-Zulu Natal (KZN) which resulted in the declaration of force majeure on the export of certain chemical products in the last quarter of financial year 2022 and despite a Secunda planned total East factory shutdown in 2023 compared to only a partial shutdown in 2022. While supply chain challenges eased in the second half of financial year 2023, close collaboration with Transnet continues, and it remains a risk to our business.
Operating costs and expenses were 22% higher than financial year 2022 due to increased feedstock cost, energy costs and inflation as well as remeasurement items. The Chemicals Africa segment recognised an impairment of R0,9 billion of the South African Wax cash generating unit as a result of the higher future cost to procure gas, lower sales volumes and prices due to an increasingly challenging market environment. This compares to remeasurement items of R1,4 billion in 2022 due to the reversal of impairments related to the Chemical Work-Up and Heavy Alcohols cash generating unit largely due to an improved macro assumptions and price outlook
Earnings before interest and tax decreased by R6 403 million from a profit of R24 072 million in 2022 to of R17 669 million in 2023, and the EBIT margin decreased from 36% to 25%.
The decrease in the earnings before interest and tax is largely attributable to the increase in operating costs.
The disposal of the sodium cyanide business was not concluded in 2023 with an appeal currently underway following the prohibition of the disposal by the South Africa Competition Commission. This transaction is still expected to be concluded within the next financial year, subject to the outcome of the appeal.
69
Results of operations 2022 compared to 2021
Total turnover increased by 11% from R60 597 million in 2021 to R67 275 million in 2022, mainly driven by higher sales prices despite lower sales volumes. The average sales basket price (US$/ton) for the financial year was 29% higher compared to the prior year due to a combination of improved demand, higher oil prices and reduced market supply following the continued global supply chain challenges during the COVID-19 pandemic. Sales volumes were 14% lower than 2021 following operational challenges in Secunda and Sasolburg earlier in the year and lower Q4 of FY22 sales due to supply chain damage caused by the April 2022 floods in KZN, South Africa which resulted in export shipment delays.
Earnings before interest and tax increased by R17 115 million from R6 957 million in 2021 to R24 072 million in 2022, while the EBIT margin increased from 11% to 36%.
The increase in the earnings before interest and tax is largely attributable to the increase in turnover and reduction in impairments recognised year on year. The Chemicals Africa segment recognised a reversal of impairment of R1,4 billion compared to impairment of R9 billion recognised in 2021. The reversal of impairment related to the Chemical Work-Up and Heavy Alcohols cash-generating unit largely due to a higher price outlook on the back of a sustained increase in demand for alcohols into the personal hygiene market during and post the COVID-19 pandemic.
The disposal of the sodium cyanide business was not concluded in 2022 with an appeal process currently underway following the prohibition of the disposal by the South Africa Competition Commission. This transaction is still expected to be concluded within the next six to twelve months, subject to the outcome of the appeal process
For further analysis of our results refer to “Integrated Report—Performance overview // performance at glance” as contained in Exhibit 99.6.
Chemicals America
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
|
|
|
|
2023/ |
|
|
|
2022/ |
|
|
2023 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
|
|
(Rand in |
|
|
|
(Rand in |
|
|
||
|
|
millions) |
|
(%) |
|
millions) |
|
(%) |
||
External turnover |
|
44 492 |
|
41 496 |
|
7 |
|
29 358 |
|
41 |
Inter-segment turnover |
|
450 |
|
430 |
|
5 |
|
2 |
|
|
Total turnover |
|
44 942 |
|
41 926 |
|
7 |
|
29 360 |
|
43 |
Operating costs and expenses(1) |
|
(45 485) |
|
(40 945) |
|
11 |
|
(21 244) |
|
93 |
Loss/earnings before interest and tax |
|
(543) |
|
981 |
|
(155) |
|
8 116 |
|
(88) |
EBIT margin % |
|
(1) |
|
2 |
|
|
|
28 |
|
|
(1) | Operating costs and expenses net of other income. |
Results of operations 2023 compared to 2022
Total turnover increased by 7% from R41 926 million to R44 942 million mainly driven by a weaker ZAR/US$ exchange rate. Sales revenue in US$ was 8% lower driven by lower US$/t sales prices partially negated by higher sales volumes. The average sales basket price (US$/ton) for the financial year was 16% lower compared to the prior year largely due to lower ethylene and polymer prices. Sales volumes for the year were 9% higher than the prior year largely due to the absence of the planned ethylene cracker turnaround in 2022 and improved production performance from the Tetramerization unit in 2023.
Remeasurement items in 2023 of R3,9 billion include the reversal of the impairment of R3,6 billion of the Tetramerization CGU and the sale of an Ethane pipeline of R0,4 billion in 2023. This compares to remeasurement items of negative R2,8 billion in 2022 which included a R2,5 billion scrapping following an asset transfer between Sasol and LIP JV as part of the finalisation of the US Base Chemicals divestment at Lake Charles.
Loss before interest and tax (LBIT) of R543 million was more than 100% lower compared to the prior period earnings before interest and tax of R981 million with both periods impacted by remeasurement items. Excluding remeasurement items, LBIT also decreased by more than 100% compared to the prior period due to lower gross margin driven by lower sales prices and higher cost partially negated by higher sales volumes. Increase in costs were mainly due to increased depreciation after the reversal of the Tetramerization impairment and non-recurring insurance claim proceeds from the 2021 hurricanes.
70
Results of operations 2022 compared to 2021
Total turnover increased by 43% from R29 360 million to R41 926 million mainly driven by higher sales prices despite lower sales volumes. The average sales basket price (US$/ton) for the financial year was 58% higher compared to the prior year due combination of improved demand as COVID-19 restrictions were lifted, higher oil and energy prices and reduced market supply due to residual global supply chain challenges from the COVID-19 pandemic. Sales volumes for the year were 10% lower than the prior year largely due to the divestments of 50% of our Base Chemicals assets in December 2020.
Earnings before interest and tax of R981 million were 88% lower compared to the prior period of R8 116 million with both periods impacted by remeasurement items. EBIT was positively impacted by a reduction in asset disposal costs offset by higher labour-related costs and inflation. Excluding remeasurement items, EBIT increased by more than 100% compared to the prior period.
Remeasurement items for the financial year include a R2,5 billion scrapping following an asset transfer between Sasol and LIP JV as part of the finalisation of the US Base Chemicals divestment at Lake Charles. This compares to remeasurement items of R7,3 billion in 2021 which mainly consists a net reversal of impairment of R4,5 billion and a gain on reclassification of foreign currency translation reserve of R3,1 billion associated with the 2021 divestments.
For further analysis of our results refer “Integrated Report—Performance overview // performance at a glance” as contained in Exhibit 99.6.
Chemicals Eurasia
|
|
|
|
|
|
Change |
|
|
|
Change |
|
|
|
|
|
|
2023/ |
|
|
|
2022/ |
|
|
2023 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
|
|
(Rand in |
|
|
|
(Rand in |
|
|
||
|
|
millions) |
|
(%) |
|
millions) |
|
(%) |
||
External turnover |
|
47 577 |
|
55 011 |
|
(14) |
|
45 539 |
|
21 |
Inter-segment turnover |
|
617 |
|
408 |
|
51 |
|
499 |
|
(18) |
Total turnover |
|
48 194 |
|
55 419 |
|
(13) |
|
46 038 |
|
20 |
Operating costs and expenses(1) |
|
(49 383) |
|
(47 867) |
|
3 |
|
(41 358) |
|
16 |
Loss/(earnings) before interest and tax |
|
(1 189) |
|
7 552 |
|
(116) |
|
4 680 |
|
61 |
EBIT margin % |
|
(2) |
|
14 |
|
|
|
10 |
|
|
(1) | Operating costs and expenses net of other income including remeasurement items and depreciation |
Results of operations 2023 compared to 2022
Total turnover decreased by 13% from R55 419 million to R48 194 million resulting from lower sales volumes despite higher prices for the period. The average sales basket price (US$/ton) for the financial year was 4% higher compared to the prior period reflecting the increase in energy prices and feedstock costs associated with the ongoing Russia/Ukraine war. Sales volumes decreased by 29% compared to the prior period, largely due to reduced wax volumes following the disposal of the European Wax business at the end of February 2022. After normalising for the Wax transaction, sales volumes for 2023 decreased by 19% compared to 2022. The lower sales volumes are due to reduced demand and customer destocking across most of our business divisions while competition increased as supply chain constraints eased post the COVID-19 pandemic.
Operating costs and expenses increased by 3%, also reflecting the sharp increase in energy-, feedstock- and other operating costs, despite the absence of costs related to our disposed Wax business. Remeasurement items for the financial year consist largely of a R0,9 billion loss for the full impairment of our plant in China compared to the prior period containing a R2,9 billion gain on reclassification of foreign currency translation reserves associated with the disposal of the Wax business.
Earnings before interest and tax decreased from R7 552 million to a loss of R1 189 million, mainly as a result of the lower sales volumes, higher feedstock and energy costs suppressing margins and a negative impact from remeasurement items.
71
Results of operations 2022 compared to 2021
Total turnover increased by 20% from R46 038 million to R55 419 million resulting from increased sales prices despite lower sales volumes for the period. The average sales basket price (US$/ton) for the financial year was 37% higher compared to the prior period reflecting the increase in energy prices, feedstock costs and logistic rates associated with the ongoing Russia/Ukraine war, supply chain constraints as well as COVID-19-related market restrictions including lockdowns in China. Sales volumes decreased by 11% compared to the prior period, largely due to reduced Wax volumes within our Performance Solutions division following the disposal of the Wax business at the end of February 2022. Operating costs and expenses increased by 16%, also reflecting the sharp increase in energy-, feedstock- and other operating costs, despite the absence of costs related to our Wax business, since March 2022.
Earnings before interest and tax increased from R4 680 million to R7 552 million, mainly as a result of the remeasurement items recorded in 2022.
Remeasurement items for the financial year consist largely of a R2 924 million gain on reclassification of foreign currency translation reserves associated with the disposal of the Wax business.
For further analysis of our results refer to “Integrated Report— Performance overview // performance at glance” as contained in Exhibit 99.6
Significant accounting policies and estimates
The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported results of our operations. Some of our accounting policies require the application of significant judgements and estimates by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgements are subject to an inherent degree of uncertainty and are based on our historical experience, terms of existing contracts, management’s view on trends in the industries in which we operate and information from outside sources and experts. Actual results may differ from those estimates. Management believes that the more significant judgement and estimates relating to the accounting policies used in the preparation of Sasol’s consolidated financial statements could potentially impact the reporting of our financial results and future financial performance.
We evaluate our estimates, including those relating to environmental rehabilitation and decommissioning obligations, long-lived assets, trade receivables, inventories, investments, intangible assets, income taxes, share-based payment expenses, hedges and derivatives, pension and other post-retirement benefits and contingencies and litigation on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making our judgements about carrying values of assets and liabilities that are not readily available from other sources.
In addition to the items below, “Item 18—Financial Statements” are incorporated by reference.
For accounting policies and areas of judgements relating to:
● | Going concern assumption, refer “Item 18—Financial Statements—Note Statement of Compliance”; |
● | Valuation of share-based payments, refer “Item 18—Financial Statements—Note 33 Share-based payment reserve”; |
● | Impairments, refer “Item 18—Financial Statements—Note 8 Remeasurement items affecting operating profit”; |
● | Valuation of financial instruments (including derivatives), refer “Item 18—Financial Statements—Note 37 Financial risk management and financial instruments”; |
● | Long-term provisions, refer “Item 18—Financial Statements—Note 30 Long-term provisions”; |
● | Post-retirement benefit obligations, refer “Item 18—Financial Statements—Note 32 Post-retirement benefit obligations”; |
● | Useful economic lives of assets and depreciation of coal mining assets, “Item 18—Financial Statements—Note 17 Property, plant and equipment”; |
72
● | Recognition of deferred tax assets and utilisation of tax losses, refer “Item 18—Financial Statements—Note 12 Deferred tax and Note 10 Taxation”; and |
● | Determination of whether an arrangement contains a lease, incorporating optional lease periods and determining the incremental borrowing rate in accordance with IFRS 16 Leases, refer “Item 18—Financial Statements—Note 15 Leases”. |
Estimation of natural oil and gas reserves
In accordance with the SEC regulations, proved oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract hydrocarbons must be approved and must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. Existing economic conditions define prices and costs at which economic producibility is to be determined. The price is the average sales price during the 12-month period prior to the reporting date (30 June), determined as an un-weighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements. Future price changes are limited to those provided by contractual arrangements in existence at year-end.
Our reported natural oil and gas reserves are estimated quantities based on SEC reporting regulations. Additionally, we require that the estimated quantities of oil and gas and related substances to be produced by a project be sanctioned by all internal and external parties to the extent necessary for the project to enter the execution phase and sufficient to allow the consequent products to be brought to market. See “Item 4.D—Property, plants and equipment”.
There are numerous uncertainties inherent in estimating quantities of reserves and in projecting future rates of production, including factors which are beyond our control. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgement. Estimates of oil and gas reserves therefore are subject to future revision, upward or downward, resulting from new data and current interpretation, as well as a result of improved recovery, extensions and discoveries, the purchase or sale of assets, and production. Accordingly, financial and accounting measures (such as the standardised measure of future discounted cash flows, depreciation and amortisation charges and environmental and decommissioning obligations) that are based on proved reserves are also subject to revision and change.
Refer to “Table 5—Standardised measure of discounted future net cash flows relating to proved reserves”, on page G-6 for our standardised discounted future net cash flow information in respect of proved reserves for the year ended 30 June 2023 and to “Table 6—Changes in the standardised measure of discounted net cash flows”, on page G-7.
Depreciation of natural oil and gas assets
Depreciation of mineral assets on producing oil and gas properties and property acquisition costs is based on the units-of-production method. Apart from acquisition costs, which are depreciated using estimated proved reserves, mineral assets are depreciated using estimated proved developed reserves.
Fair value estimations of financial instruments
We base fair values of financial instruments on quoted market prices of identical instruments, where available. If quoted market prices are not available, fair value is determined based on other relevant factors, including dealers’ price quotations and price quotations for similar instruments traded in different markets. Fair value for certain derivatives is based on pricing models that consider current market and contractual prices for the underlying financial instruments or commodities, as well as the time value and yield curve or fluctuation factors underlying the positions. Pricing models and their underlying assumptions impact the amount and timing of unrealised gains and losses recognised, and the use of different pricing models or assumptions could produce different financial results. Refer to “Item 11—Quantitative and qualitative disclosures about market risk”.
73
5.B Liquidity and capital resources
Liquidity, cash flows and borrowings
Based on our funding plan, our liquidity headroom remains well above US$1 billion as at 30 June 2023, with available rand- and US dollar-based funds improving as we advance with our focused management actions. We continue to assess our mix of funding instruments to ensure that we have funding from a range of sources and a balanced maturity profile. We manage our liquidity risk by effectively managing our working capital, capital expenditure and cash flows from both operating cash flows and disposals of assets. We finance our capital expenditure from funds generated out of our business operations and borrowing facilities.
For information regarding our funding cash flows and liquidity, refer “Item 18—Financial Statements—Note 14 Long-term debt, Note 15 Leases, and Note 16 Short-term debt” which includes an overview of our borrowing facilities and debt arrangements.
For more information regarding the impact of liquidity on our going concern assumption—refer “Item 18—Financial Statements—Note 37 Financial risk management”.
For information regarding the Company’s cash flow requirements refer to the “Integrated Report—Chief Financial Officer’s performance overview” as contained in Exhibit 99.3. The following table provides a summary of our cash flows for each of the three years ended 30 June 2023, 2022 and 2021.
|
|
2023 |
|
2022 |
|
2021 |
|
|
(Rand in millions) |
||||
Net cash retained from operating activities |
|
35 422 |
|
40 250 |
|
34 043 |
Net cash(used in) /received from investing activities |
|
(28 234) |
|
(15 077) |
|
25 093 |
Net cash generated by/ (used in) financing activities |
|
1 188 |
|
(14 953) |
|
(58 265) |
Cash flows retained from operating activities include the following significant items.
|
|
2023 |
|
2022 |
|
2021 |
|
|
(Rand in millions) |
||||
Cash generated by operating activities |
|
64 637 |
|
56 138 |
|
45 114 |
Income tax paid |
|
(13 952) |
|
(13 531) |
|
(5 280) |
Dividends paid |
|
(13 754) |
|
(49) |
|
(46) |
The cash generated by our operating activities is applied first to fund our operations, pay our debt and tax commitments and then to provide a return in the form of a dividend to our shareholders. The net cash retained is then invested based on our updated capital allocation framework which is aimed at driving maximum shareholder return.
Operating activities
Cash generated by operating activities in 2023 increased by 15% to R64 637 million, largely attributable to a decrease in working capital, partially offset by lower cash flow from operations mainly as a result of increased costs.
For further information regarding our cash flow generation, refer “Integrated Report—Chief Financial Officer’s statement” as contained in Exhibit 99.3.
Investing activities
Net cash used in investing activities increased to R28 234 million in 2023 as compared to R15 077 million in 2022.
Cash flows utilised in investing activities include the following significant items.
|
|
2023 |
|
2022 |
|
2021 |
|
|
|
(Rand in millions) |
|
||||
Additions to non-current assets(1) |
|
(30 247) |
|
(23 269) |
|
(18 214) |
|
Proceeds on disposals and scrappings |
|
799 |
|
8 484 |
|
43 214 |
|
(1) | Includes additions to property, plant and equipment and other intangible assets. |
For information regarding cash flows from investing activities refer “Integrated Report— Chief Financial Officer’s performance overview” as contained in Exhibit 99.3.
For information regarding cash flows from additions and disposals, refer “Item 18—Financial Statements—Note 17 Property, plant and equipment” and “Note 9 Disposals and scrapping”.
For details of our additions to non-current assets, and the projects to which these relate, refer to “Item 18—Financial Statements—Note 17 Property, plant and equipment ”.
74
For details of our capital commitments refer to “Item 18—Financial Statements—Note 17 Property, plant and equipment”.
Financing activities
Net cash generated by financing activities was R1 188 million in 2023 as compared to net cash used in financing activities of R14 953 million in 2022.
The reason for the variance was mainly that debt raised for the year was approximately the same value as debt repaid. Loans that were raised and bonds that were issued include
● | R26 700 million (US$1.5 billion) drawdowns from the previous revolving credit facility (RCF) |
● | R2 100 million under the new Domestic Medium-Term Note (DMTN) programme |
● | The issue of a R13 200 million (US$750 million) convertible bond |
● | R35 500 million (US$2 billion) drawdown on the new RCF and |
● | Term loan and R17 800 million (US$1 billion) bonds issued in May 2023. |
This was reduced by an outflow as the result of repayments of
● | previous RCF and term loan R53 900 million (US$3,0 billion), |
● | R2 200 million on the previous DMTN, |
● | R17 800 million on the US$1 billion bond that matured in November 2022, and |
● | R17 800 million on the new RCF. |
The group’s operations are financed primarily by means of its operating cash flows. Cash shortfalls are usually short term in nature and are met primarily from short-term banking facilities. Our long-term capital expansion projects are financed by a combination of floating and fixed rate long-term debt, as well as internally generated funds. To the extent possible, this debt is normally financed in the same currency as the underlying project to be funded and the repayment terms are designed to match the cash flows expected from that project. A centralised treasury model enables Sasol to optimise the group’s cash and borrowing facilities wherever it is required.
For information regarding our debt and funding structure, refer “Integrated Report—Chief Financial Officer’s performance overview” as contained in Exhibit 99.3.
Capital resources
Sasol Financing Limited, Sasol Financing International Limited and Sasol Financing USA LLC act as our group’s financing vehicles. All our group treasury, cash management and borrowing activities are facilitated through Sasol Financing Limited, Sasol Financing International Limited and Sasol Financing USA LLC. The group executive committee (GEC) and senior management meet regularly, to review and, if appropriate, approve the implementation of optimal strategies for the effective management of the group’s financial risk.
Our cash requirements for working capital, share repurchases, capital expenditures, debt service charge and acquisitions over the past three years have been primarily financed through a combination of funds generated from operations, borrowings and asset disposals. In our opinion, our working capital is sufficient for our present requirements.
Our debt as at 30 June comprises the following.
|
|
2023 |
|
2022 |
|
2021 |
|
|
(Rand in millions) |
||||
Long-term debt, including current portion |
|
124 068 |
|
104 834 |
|
102 643 |
Lease liabilities, including current portion |
|
16 297 |
|
16 034 |
|
15 677 |
Short-term debt |
|
79 |
|
82 |
|
60 |
Bank overdraft |
|
159 |
|
173 |
|
243 |
Total debt |
|
140 603 |
|
121 123 |
|
118 623 |
Less cash (excluding cash restricted for use) |
|
(51 214) |
|
(40 577) |
|
(28 981) |
Net debt |
|
89 389 |
|
80 546 |
|
89 642 |
As at 30 June 2023, we had R2 712 million (2022— R2 563 million) in cash restricted for use. Refer to “Item 18—Financial Statements—Note 26 Cash and cash equivalents” for a breakdown of amounts included in cash restricted for use.
The group has borrowing facilities with major financial institutions and debt securities of R184 004 million (2022— R164 745 million; 2021— R156 946 million). Of these facilities and debt instruments, R125 505 million (2022— R104 454 million; 2021—R102 295 million) has been utilised at year end.
Long-term debt of R124 068 million increased by R19 234 million compared to 2022 Refer to “Item 18— Financial Statements—Note 14 Long-term debt”, for a breakdown of our banking facilities and the utilisation thereof.
75
Included in the above-mentioned borrowing facilities is our commercial paper programme of R15 000 million with R12 900 million in available facilities at 30 June 2023 and Commercial banking facilities with R8 200 million available facilities. Further, a RCF of R37 400 million is available to the group for further funding requirements.
The net debt: EBITDA ratio as at 30 June 2023 computed to 1.3 times, which was significantly below the covenant level.
Financial instruments and risk
Refer to “Item 11—Quantitative and qualitative disclosures about market risk” for a breakdown of our liabilities summarised by fixed and floating interest rates.
Debt profile and covenants
The information set forth under “Item 18—Financial Statements—Note 14 Long-term debt” is incorporated by reference.
Capital commitments
Refer “Item 18—Financial Statements—Note 17 Property, plant and equipment”.
The discussion below includes forward-looking statements. For a discussion of factors that could cause actual results to differ from those expressed or implied in forward-looking statements, please refer to “Forward Looking Statements” above. You should not place undue reliance on forward-looking statements.
The PSA’s FDP was amended and approved by the GoM on 29 September 2020. The main objectives of the revised PSA development are to enable Central Térmica de Temane (CTT) gas supply, ensure economic production of the gas volumes in excess of those reserved for CTT by selling these to Sasol, optimise LPG production, optimise gas recovery by flexible development of gas reservoirs to ensure optimal field development and optimise liquids recovery. On 19 February 2021, the Board approved the final investment decision (FID) with an estimated project cost of US$760 million. The project execution has been delinked from CTT financial close and execution commenced in quarter three of calendar year 2021. CTT financial close occurred on 8 December 2021. The PSA project’s Initial Gas Production and Integrated Surface Facility schedules are tracking to plan with project cost also within approved commitments.
Contractual obligations/commitments.
The following significant undiscounted contractual obligations existed at 30 June 2023
|
|
Total |
|
Within |
|
1 to 5 |
|
More than |
Contractual obligations |
|
amount |
|
1 year |
|
years |
|
5 years |
|
|
(Rand in millions) |
||||||
Bank overdraft |
|
159 |
|
159 |
|
— |
|
— |
Capital commitments |
|
47 565 |
|
30 941 |
|
16 624 |
|
— |
Environmental and other obligations(2) |
|
18 132 |
|
2 601 |
|
6 060 |
|
9 471 |
External long-term debt(1) |
|
160 266 |
|
36 198 |
|
69 683 |
|
54 385 |
External short-term debt |
|
79 |
|
79 |
|
— |
|
— |
Lease liabilities(1) |
|
34 111 |
|
3 261 |
|
8 923 |
|
21 927 |
Post-retirement healthcare obligations(2) |
|
3 827 |
|
300 |
|
1 041 |
|
2 486 |
Post-retirement pension obligations(2) |
|
8 229 |
|
413 |
|
1 518 |
|
6 298 |
Purchase commitments(3) |
|
325 869 |
|
54 692 |
|
98 035 |
|
173 142 |
|
|
|
|
|
|
|
|
|
Total |
|
598 237 |
|
128 644 |
|
201 884 |
|
267 709 |
(1)Include interest payments.
(2)Represents discounted values.
76
(3) |
The Group enters into off-take agreements as part of its normal operations which have minimum volume requirements (i.e. take or pay contracts). These purchase commitments consist primarily of agreements for procuring raw materials such as coal, gas and electricity.The most significant commitment relates to minimum off-take oxygen supply agreements for Secunda Operations of approximately R219 billion (2022: R88 billion). The increase is mainly due to the variable fee portion of the agreements that came into effect in October 2022. Additionally, Sasol South Africa Limited (SSA), together with Air Liquide Large Industries South Africa Proprietary Limited (ALLISA), signed six Power Purchase Agreements to date, with contractual terms of 20 years each, for the procurement of more than 600 MW of renewable energy from Independent Power Producers. The joint procurement of renewable energy by SSA and ALLISA is primarily aimed at the decarbonisation of the SO site. In addition, SSA has also signed a 20 year long-term power purchase agreement with Msenge Emoyeni Wind Farm Proprietary Limited for the procurement of 69 MW of wind-powered renewable power to our Sasolburg Operations. |
Refer to “Item 18—Financial Statements—” Note 17 Property, plant and equipment” for significant capital commitments and “Note 30 Long-term provisions”.
5.C Research and development, patents and licences
Refer to the “Item 4.B—Business overview— Factors which the business depends on — Intellectual Property” for further information research and development, patents and licences.
5.D Trend information
Refer to the “Integrated Report—Chief Financial Officer’s statement” as contained in Exhibit 99.3.
5.E Critical Accounting Estimates
Not Applicable
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A Directors and senior management
The board of directors and senior management
Name |
|
Year |
|
Position |
|
Appointed to the Sasol |
M J Cuambe |
|
1962 |
|
Independent non-executive Director |
|
1 June 2016 |
M B N Dube |
|
1972 |
|
Independent non-executive Director |
|
1 April 2018 |
M Flöel |
|
1960 |
|
Independent non-executive Director |
|
1 January 2018 |
F R Grobler |
|
1961 |
|
Executive Director (President and Chief Executive Officer) |
|
1 November 2019 |
K C Harper |
|
1963 |
|
Independent non-executive Director |
|
1 April 2020 |
V D Kahla |
|
1970 |
|
Executive Director |
|
1 November 2019 |
G M B Kennealy |
|
1958 |
|
Independent non-executive Director |
|
1 March 2017 |
N N A Matyumza |
|
1963 |
|
Independent non-executive Director |
|
8 September 2014 |
M E K Nkeli |
|
1964 |
|
Independent non-executive Director |
|
1 March 2017 |
S A Nkosi |
|
1954 |
|
Independent non-executive Director |
|
1 May 2019 |
HA Rossouw |
|
1975 |
|
Executive Director (Chief Financial Officer) |
|
1 July 2022 |
A Schierenbeck |
|
1966 |
|
Independent non-executive Director |
|
1 January 2023 |
S Subramoney |
|
1958 |
|
Independent non-executive Director |
|
1 March 2021 |
S Westwell |
|
1958 |
|
Independent non-executive Director, Lead Independent Director |
|
1 June 2012 |
The following is biographical information on each of the persons listed above.
M J Cuambe | |
Nationality: |
Mozambican |
Qualifications: |
BEng Post-graduate Certificate in Management Studies |
Sasol Limited Board Committee Memberships: |
Capital Investment and Digital Committee Safety, Social and Ethics Committee Remuneration Committee |
77
Mr Cuambe is the Managing Director of MC lnvestimentos and Consultoria. He served as the Executive Chairman and Chief Executive Officer of Electricidade de Moçambique (EDM) from November 2005 to March 2012. He was the Chairman of Companhia Electrica do Zambeze, a wholly-owned subsidiary of EDM up to 30 May 2016. He was a Non-executive Director of Companhia de Transmissao de Mozambique, a joint venture between EDM, the Swaziland Electricity Company and Eskom, from 1998 to 2002. He served as the Chairman of the Executive Committee of the Southern Africa Power Pool from November 2005 to April 2008 and is currently an independent non-executive director of Standard Bank Mozambique. |
M B N Dube | |
Nationality: |
South African |
Qualifications: |
BA (Human Sciences) BA (Hons) (Politics) MSc (Environmental Change and Management) |
Sasol Limited Board Committee Memberships: |
Safety, Social and Ethics Committee (Chairman) Capital Investment and Digital Committee Nomination and Governance Committee |
Ms Dube holds a MSc in Environmental Change and Management from Oxford University. She served in, among others, roles of Director: Atmospheric Protection and Chemicals Management at the then Department of Environmental Affairs and Tourism, Chief Negotiator on behalf of the Government of the Republic of South Africa in climate change negotiations under the auspices of the United Nations Framework Convention on Climate Change, Sustainability Manager at BHP Billiton, worked as Vice President at SFM, a London-based forestry and carbon business and held various positions at Anglo American. She was an Investment Banker at Investec plc, London, Group Commercial Director at Bidvest Group and the Chief Executive of Nozala Investments. She is a Non-executive Director of Control Risks in London, and other non-public companies: Bravo Brands, PG Group and is also a member of the audit committee of the PG Group and Chairman of the Audit Committee of Control Risks. She previously served as Non-executive Director of Vodacom South Africa, Bidvest Group Limited and Fluormin plc and Enviroserve. |
M Flöel |
Nationality: |
German |
Qualifications: |
MSc (Chemistry) PhD (Chemistry) |
Sasol Limited Board Committee Memberships: |
Capital Investment and Digital Committee Remuneration Committee Safety, Social and Ethics Committee |
Dr Flöel holds a MSc in Chemistry from the University of Frankfurt and a PhD in Chemistry from the Technische Universität München (University of Munich). With 30 years’ experience in the chemicals industry in roles covering chemical and process research and development, technical innovations, technologies, operations and industrial supply chain, she is a seasoned industrial leader. She concluded her executive leadership career as Managing Director and Chief Executive Officer of OXEA Holdings. She served on the Board of Carl Bechem GmbH and NESTE. |
F R Grobler | |
Nationality: |
South African |
Qualifications: |
BEng (Mech) Advanced Executive Programme |
Sasol Limited Board Committee Memberships: |
Capital Investment and Digital Committee Safety, Social and Ethics Committee |
Mr Grobler was appointed President and Chief Executive Officer of Sasol Limited on 1 November 2019. Prior to his appointment, he was Executive Vice President of Sasol’s Chemicals Business, based in Germany. His association with Sasol began as an engineering student in the early 1980s when he received a Sasol bursary before joining the Group in 1984. Since then, he has worked at most of Sasol’s operating facilities worldwide. In this time, he has been exposed to a broad range of business activities and has extensive experience in Sasol’s international businesses. In March 2010 he was appointed Managing Director of Sasol Olefins and Surfactants (now part of the Chemicals Business), based in Hamburg, Germany. He has been a member of the Sasol Group Executive Committee since 1 December 2013. |
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K C Harper | |
Nationality: |
American |
Qualifications: |
BSc (Industrial Management) MBA |
Sasol Limited Board Committee Memberships: |
Audit Committee |
Ms Harper is a retired Chief Financial Officer of BDP International, a leading privately-held global logistics and transportation solutions company. She has an MBA and a certificate in cyber security oversight from the National Association of Corporate Directors She also serves as a non-executive director and audit committee chairman for Modine and for the American Lung Association. She has most recently served as the interim CFO of the Philadelphia Museum of Art. Prior to BDP she was the Chief Financial Officer of AgroFresh, a produce freshness solutions company. She has also served as the Chief Financial Officer of Tronox and the Chief Financial and Business Development Officer of Rio Tinto Diamonds and Minerals Group. She has served as an audit committee chairman for Lydall,) and non-executive director for Richards Bay Minerals in South Africa, as well as for Hydrogen Energy, a former Rio Tinto/BP joint venture in London. |
V D Kahla | |
Nationality: |
South African |
Qualifications: |
BA LLB |
Sasol Limited Board Committee Memberships: |
Capital Investment and Digital Committee Safety, Social and Ethics Committee |
Mr Kahla was appointed to the Sasol Group Executive Committee on 1 January 2011 and is Sasol’s Executive Vice President: Strategy, Sustainability and Integrated Services. He also served as the Company Secretary of Sasol Limited between 2011 and 2019, prior to his appointment as a director of Sasol Limited to the Sasol Board in November 2019. Previously he served on the Group Executive Committee of Transnet SOC Limited and on the Africa Executive Committee of Standard Bank. He also held various roles in the Government of the Republic of South Africa, including Assistant Legal Advisor to President Nelson Mandela and Director responsible for Corporate Strategy and Transformation at the Department of Justice. He is an alumnus of the University of Cambridge’s Prince of Wales Programme on Sustainability Leadership, |
and the Chairman of the Council of Rhodes University, South Africa. |
G M B Kennealy | |
Nationality: |
South African |
Qualifications: |
BCom (Accountancy) BCom (Accountancy) (Hons) |
Sasol Limited Board Committee Memberships: |
Audit Committee (Chairman) Capital Investment and Digital Committee Nomination and Governance Committee |
Ms Kennealy qualified as a chartered accountant in 1982 and she served as the Chief Financial Officer of the South African Revenue Service from January 2009 until her retirement in December 2013. Before that she served as the Chief Operating Officer of Absa Corporate and Business Bank from 2006 to 2009. Her previous senior financial management positions were at Absa Bank, BHP Billiton South Africa, Samancor Chrome and Foodcorp. Ms Kennealy also chaired the Accounting Standards Board in South Africa from 2012 to 2018. She is the lead independent director of the Standard Bank Group and the chairman of its Audit and Remuneration committees. She also serves on the Board of Standard Bank of South Africa Limited. |
N N A Matyumza | |
Nationality: |
South African |
Qualifications: |
BCom BCompt (Hons) CA(SA) LLB |
Sasol Limited Board Committee Memberships: |
Audit Committee Remuneration Committee |
Ms Matyumza is an Independent non-executive Director of Standard Bank Group Limited, The Standard Bank of South Africa Limited, Volkswagen South Africa (Pty) Ltd and Clicks Group Limited. She has held senior financial management and executive positions in various organisations, including South African Breweries, Transnet and Eskom. She is an ordained minister and director of the African Methodist Episcopal Church. |
79
M E K Nkeli | |
Nationality: |
South African |
Qualifications: |
BSc (Environmental Science) MBA |
Sasol Limited Board Committee Memberships: |
Remuneration Committee (Chairman) Nomination and Governance Committee Safety, Social and Ethics Committee |
Ms Nkeli served Vodacom Group Limited as the Chief Human Resource Officer responsible for Health, Safety, Environment and Facilities and was an Executive Director of Vodacom South Africa (Pty) Limited from 2011 to 2014, having previously served as the Group Human Resources Director of Alexander Forbes from 2005 until 2010. She also served as a Non-executive Director on the Boards of Ellerine Holdings Limited, African Bank Investments Limited and Life Healthcare Group Limited. Ms Nkeli is the executive chairman of Search Partners International and a member of the Board of Impala Platinum Holdings Limited. She also previously chaired the Commission for Employment Equity. |
S A Nkosi | |
Nationality: |
South African |
Qualifications: |
BCom BCom Economics (Hons) MBA |
Sasol Limited Board Committee Memberships: |
Nomination and Governance Committee (Chairman) Remuneration Committee |
Mr Nkosi holds a BCom degree from the University of Zululand, a BCom (Econ) (Hons) degree from the University of South Africa (UNISA) and an MBA from the University of Massachusetts. With over 37 years’ experience in the South African resources industry, with his last role prior to retirement as the Chief Executive Officer of Exxaro Resources from 2006 – 2016. He has extensive experience in the operational, financial, logistics and marketing areas of the resources sector, and more specifically in the energy and coal sectors, both locally and internationally. |
H A Rossouw | |
Nationality: |
South African and British |
Qualifications: |
MBA BCom (Hons) BEng (Chem Eng) |
Sasol Limited Board Committee Memberships: |
Capital Investment and Digital Committee |
Mr Rossouw joined Sasol in April 2022 and was appointed Chief Financial Officer and executive director of Sasol Limited on 1 July 2022. Prior to his appointment he served as the Chief Financial Officer and executive director of Royal Bafokeng Platinum from October 2018 to March 2022. Previously, he was a portfolio manager at Investec Asset Management from 2013 to 2018 and, prior to that, the Chief Financial Officer of Xstrata Alloys. He also held a number of other senior roles at Xstrata plc in London that involved extensive strategy, mergers and acquisitions, business optimisation and capital markets experience. His career started as graduate engineer at Anglo American plc and he later also worked for Accenture and De Beers Group. |
A Schierenbeck | |
Nationality: |
German |
Qualifications: |
AMP (Applied Mathematics and Physics, MA, Electrical Engineering |
Sasol Limited Board Committee Memberships: |
Capital Investment and Digital Committee Safety, Social and Ethics Committee |
Mr Schierenbeck obtained a degree in Applied Mathematics and Physics and an MA (Electrical Engineering). He is the founder and a director of HH2E, a green hydrogen company dedicated to producing green hydrogen for the German market. He was the Chief Executive Officer of international energy company Uniper between 2019 and 2021, where he shaped and started executing the company’s decarbonising strategy with the aim of decarbonising by 2035. Prior to joining Uniper, he was the Chief Executive Officer of ThyssenKrupp Elevator. |
80
S Subramoney | |
Nationality: |
South African |
Qualifications: |
BCompt (Hons) (Accounting Science) CA (SA) |
Sasol Limited Board Committee Memberships: |
Audit Committee Remuneration Committee |
Mr Subramoney has expertise in accounting and auditing and has worked for companies expanding into emerging economies. After qualifying as a Chartered Accountant he was appointed Audit Partner at PricewaterhouseCoopers (PwC) and thereafter, Deputy Chief Executive Officer for PwC Southern Africa and member of the Southern Africa Executive Committee. Throughout his 27 years in the audit profession, he led complex assignments including representing the firm in several African and global organisational structures. These roles provided him with extensive international exposure with global clients. He is currently the Chief Executive Officer of Menston Holdings, a black-owned diversified investment company established in 2015 which focuses on the food and agriculture, construction and technology sectors. He is also an independent non-executive director on Nedbank Group’s Board and is its Audit Committee Chairperson. |
S Westwell | |
Nationality: |
British |
Qualifications: |
BSc (Mech Eng) MSc (Management) MBA |
Sasol Limited Board Committee Memberships: |
Capital Investment and Digital Committee (Chairman) Audit Committee Nomination and Governance Committee Safety, Social and Ethics Committee |
Mr Westwell is an independent director and member of the audit committee of Brookfield Renewable Partners L.P and Brookfield Renewable Corporation. He was the Chief Executive Officer of European Forecourt Retailers from 2015 to 2016 and of Silver Ridge Power Inc from 2013 to 2014. He held various management and executive positions for BP in South Africa, the United States, and the United Kingdom between 1988 and 2011. These executive positions included head of BP’s retail business in South Africa, Director of BP Southern Africa, Chief Executive Officer for BP Solar, and Chief Executive Officer for BP Alternative Energy. He served as Group Chief of Staff and member of BP Plc’s executive management team in the United Kingdom from 2008 to 2011. He has also worked for Eskom Holdings Limited in several operational capacities. |
Senior management—experience
In addition to the three executive directors listed above, we have identified our senior management as the members of our Group Executive Committee GEC.
|
|
|
|
|||||
Name |
|
Year |
|
Position |
|
Nationality |
|
Year |
S Baloyi |
|
1976 |
|
Executive Vice President: Energy Operations and Technology |
|
South African |
|
2022 |
H C Brand1 |
|
1964 |
|
Executive Vice President: Sasol 2.0 and Transformation |
|
South African |
|
2019 |
B V Griffith |
|
1967 |
|
Executive Vice President: Chemicals Business |
|
American |
|
2019 |
B P Mabelane |
|
1973 |
|
Executive Vice President: Energy Business |
|
South African |
|
2020 |
C K Mokoena |
|
1965 |
|
Executive Vice President: Human Resources and Stakeholder Relations |
|
South African |
|
2017 |
C F Rademan |
|
1957 |
|
Executive Vice President: Sasol Mining |
|
South African |
|
2022 |
1 Mr Brand retired on 30 June 2023.
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S Baloyi MSc Eng (Chemical), MSc (Engineering management), Management Programme INSEAD Business School |
Mr Baloyi was appointed as Executive Vice President, Energy Operations and Technology in 2022. He is responsible for Sasol’s entire Energy Operations portfolio which comprises all downstream operations and related infrastructure as well as Technology, Projects and Engineering, Procurement and Sasol EcoFT. This portfolio includes Sasol’s operating facilities in Secunda – which are divided into a synthetic fuel and a chemicals component, as well as in Sasolburg and Ekandustria. Natref, Sasol’s joint-venture inland refinery, is also in his area of responsibility. Since joining Sasol Group in 2002, and he has held various management positions in maintenance, technical and general management fields in Sasol’s South African Operations. He was the Vice President, Operations, Sasol Synfuels (the operations in Secunda) from 2015 to 2017, thereafter he was appointed as Vice President, Engineering, Centralised Maintenance and Operations. Subsequently he was appointed as the Senior Vice President, Secunda Chemicals Operations and Senior Vice President: Regional Operations and Asset Services prior to being appointed as Executive Vice President. |
H C Brand MEng (Mech), MBA |
Mr Brand joined the Group in 1989 and during his career has held various leadership positions at most of Sasol’s South African operating facilities. He has been exposed to a broad range of business activities, including roles in project and plant operations, shared and site services, as Managing Director of Sasol Nitro(Sasol’s then explosives and fertiliser business), programme managing the 2013-2015 Sasol group-wide transformation and low oil price response, and group digitalisation programmes, and managing the Sasol group strategy and projects, engineering and technology functions. Mr Brand held executive responsibility for the programme managing Sasol 2.0 restructuring and the Sasol ecoFT business until his retirement on 30 June 2023. |
B V Griffith BSChE, MBA |
Mr Griffith is based in Houston, Texas, United States. He is Sasol’s senior leader in North America and is responsible for Sasol’s Chemicals Business globally. He is accountable for maintaining safe, reliable and sustainable operations across multiple geographies, driving customer-led growth through innovative marketing and product development and extending sales. Prior to this appointment he was Senior Vice President for Sasol’s Performance Chemicals business from 2017 to 2019 and Base Chemicals business from 2014 to 2017. His Sasol career began in 1992 as an Engineer and during his more than 30-year career with the Group he has held various positions and leadership roles in the United States, Europe and South Africa. |
B P Mabelane BCom (Hons), CA (SA), PGD Accounting, HDip Tax |
Ms Mabelane is responsible for upstream and downstream gas activities as well as distribution, marketing and sales of liquid fuels in Southern Africa. She is leading strategy formulation and delivery of the Energy Business. Previously she worked at Eskom, where she held key roles in finance, tax and general management. She also served as the Operations Director for British Petroleum (BP) UK’s retail business. In 2011, she joined BP Southern Africa as its Chief Financial Officer. Six years later, she was appointed as its CEO. |
C K Mokoena BA Honours(Human Resources Development B Social Sciences), MCom (Leadership Studies) (Cum Laude) |
Ms Mokoena is responsible for the design of global human resources strategies, policies and frameworks at Sasol that enable the organisation to attract, develop and retain key talent. She also focuses on stakeholder relations. Prior to her current role, Ms Mokoena was Human Resources Executive at Tongaat Hulett Limited. She held this position from July 2013. Before this, Ms Mokoena spent 11 years at Telkom South Africa Limited, during which time she held several senior positions spanning the human resources, business consulting and customer services discipline, including Chief of HR and Group Executive: Customer experience management. |
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C F Rademan B.Eng (Mech), MBL, LDP |
Mr Rademan joined the Group initially in 1981 and retired in 2017 as an Executive Vice President and Group Executive Committee member accountable for various enterprise functions and businesses in the Group including Sasol Mining. During this period, he was also accountable for the Phoenix restructuring programme – the Group-wide transformation and low oil price response programme. He re-joined Sasol in March 2022 and is the responsible Executive Vice President, Sasol Mining. |
Family relationship
There are no family relationships between any of our non-executive directors, executive directors or members of our GEC.
Other arrangements
None of our non-executive directors, executive directors or GEC members or other key management personnel is elected or appointed under any arrangement or understanding with any major shareholder, customer, supplier or otherwise.
6.B Compensation
Refer to our Remuneration Report filed as Exhibit 99.2 for details of our directors and senior management compensation.
Long-term incentive schemes applicable to executive directors and senior management
For details regarding our long-term incentive schemes applicable to executive directors and senior management named in Item 6.A—Directors and senior management, refer to our Remuneration Report filed as Exhibit 99.2.
6.C Board practices
Refer to “Item 6.A—Directors and senior management” for our board of directors and information with respect to their terms of office. Refer to our Remuneration Report filed as Exhibit 99.2 for details of our directors’ and senior management service contracts and benefits upon termination of employment.
Refer to “Integrated Report—Governance” as contained in Exhibit 99.7 for details relating to our audit and remuneration committees, as well as the names of committee members; and refer to the “Terms of Reference—Audit Committee and Remuneration Committee” as contained in Exhibit 99.9.2 for summaries of the terms of reference under which these committees operate.
6.D Employees
The information set forth under “Item 18—Financial Statements—Note 4 Employee-related expenditure” is incorporated by reference.
Remuneration of directors and key personnel is contained in the Remuneration Report, contained in Exhibit 99.2.
Our workforce’s geographic location composition at 30 June is presented below.
Region |
|
2023 |
|
2022 |
|
2021 |
|
|
Number of employees |
||||
South Africa |
|
24 475 |
|
24 210 |
|
24 194 |
Europe |
|
2 614 |
|
2 535 |
|
2 856 |
North America |
|
1 327 |
|
1 271 |
|
1 271 |
Other |
|
657 |
|
614 |
|
628 |
Total |
|
29 073 |
|
28 630 |
|
28 949 |
6.E. Share ownership
Refer to our Remuneration Report filed as Exhibit 99.2 for details of share ownership of executive directors and senior management.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A Major shareholders
Refer to “Item 18—Financial Statements—Note 13 Share Capital” for the authorised and issued share capital of Sasol Limited.
To the best of our knowledge, Sasol Limited is not directly or indirectly owned or controlled by another corporation or the government of South Africa, or any other government. We believe that no single person or entity holds a controlling interest in our securities.
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In accordance with the requirements of the South African Companies Act 71 of 2008 (Companies Act), the following beneficial shareholdings equal to or exceeding 5% of the total issued securities during the last three years were disclosed or established from inquiries as of 30 June 2023.
|
|
2023 |
|
2022 |
|
2021 |
||||||
|
|
Number |
|
|
|
Number |
|
|
|
Number |
|
|
|
|
of |
|
% of |
|
of |
|
% of |
|
of |
|
% of |
|
|
shares |
|
securities |
|
shares |
|
securities |
|
shares |
|
securities |
GEPF(1) |
|
119 904 480 |
|
18.72 |
|
112 967 576 |
|
17.77 |
|
107 391 458 |
|
16.93 |
IDC(2) |
|
53 266 887 |
|
8.31 |
|
53 266 887 |
|
8.38 |
|
53 266 887 |
|
8.4 |
(1) | Government Employees Pension Fund (GEPF). |
(2) | Industrial Development Corporation of South Africa Limited (IDC). |
The voting rights of major shareholders do not differ from the voting rights of other shareholders.
As of 31 July 2023, 29 020 464 Sasol ordinary shares, or approximately 4.57 % of our total issued securities, were held in the form of ADRs. As of 31 July 2023, 283 record holders in the US held approximately 15.78 % of our total issued securities in the form of either Sasol ordinary shares or ADRs.
7.B Related party transactions
There have been no material transactions during the most recent three years, other than as described below, nor are there proposed to be any material transactions at present to which we or any of our subsidiaries are or were a party and in which any senior executive or director, or 10% shareholder, or any relative or spouse thereof or any relative of such spouse, who shared a home with this person, or who is a director or executive officer of any parent or subsidiary of ours, had or is to have a direct or indirect material interest. Furthermore, during our three most recent years, there has been no, and at 30 June 2023 there was no, outstanding indebtedness to us or any of our subsidiaries owed by any of our executive or independent directors or any associate thereof.
During this financial year, Sasol group of companies, in the ordinary course of business, entered into various purchase and sale transactions with associates, joint ventures and certain other related parties. The effect of these transactions is included in the financial performance and results of the Sasol group. Terms and conditions are determined on an arm’s length basis.
Amounts due to and from related parties are disclosed in the respective notes to the financial statements for the respective statement of financial position line items. Refer to “Item 18—Financial Statements—Note 35 Related party transactions” for further details.
7.C Interests of experts and counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
8.A Consolidated statements and other financial information
Refer “Item 18—Financial Statements” for our financial statements, related notes and other financial information.
Dividend policy
CHEPS serves as a reference for deciding on the dividend amount. The Company’s dividend policy also takes into consideration various factors, including overall market and economic conditions, the group’s financial position, capital investment plans as well as earnings growth.
We apply a dividend policy to pay dividends with a dividend cover range based on CHEPS. CHEPS reflects the sustainable business operations and is used by the board of directors to measure the business and financial performance. When we make a decision on dividends, we take a number of factors into account. These include the impact of the current volatile macroeconomic environment, capital investment plans, the current strength of the Company’s balance sheet, and the dividend cover range in line with our capital allocation framework.
Refer to “Item 10.B—Memorandum and articles of association—3. Rights and privileges of holders of our securities”.
Legal proceedings
For information regarding our legal proceedings refer to “Item 4.B—Business overview—Legal proceedings and other contingencies”.
8.B Significant changes
Refer to “Item 18—Financial Statements—Note 36 Subsequent events”.
84
ITEM 9. THE OFFER AND LISTING
9.A Offer and listing details
The principal trading market for our shares is the JSE. Our ADSs have been listed on the NYSE since 9 April 2003, each representing one common ordinary share of no par value, under the symbol “SSL”. J.P. Morgan is acting as the depositary for our ADSs and issues our ADRs in respect of our ADSs.
9.B Plan of distribution
Not applicable.
9.C Markets
Refer to “Item 9.A—Offer and listing details” above for further information.
9.D Selling shareholders
Not applicable.
9.E Dilution
Not applicable.
9.F Expenses of the issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
10.A Share capital
Not applicable.
10.B Memorandum and articles of association
1. Registration number, and object and purpose of the Company
The Company is registered in South Africa at the Companies and Intellectual Property Commission under registration number 1979/003231/06.
Refer to “Item 10.B” of our registration statement pursuant to section 12(b) or 12(g) of the Exchange Act, filed with the SEC on 6 March 2003 (the Registration Statement) for the object and purpose of the Company. The objects and purpose are not specifically contained in the Company’s constitution,
its memorandum of incorporation (MOI). Instead, the Company has been given the powers and capacity of an individual, that is to say its powers and capacity, subject to the Companies Act, are unlimited (clause 4.1) and may do anything which the Companies Act and the JSE Listings Requirements empower it to do if so authorised by its MOI (clause 4.3).
The last time the Company’s MOI was amended was on 02 December 2022 by way of a shareholders’ special resolution at the Company’s annual general meeting, filed on the Form S-8 Registration Statement under the Securities Act 8 of 1933 on March 2023.
See Exhibit 1.1 for the Company’s latest MOI.
2. Summary of the MOI with respect to directors
Director’s power to vote in respect of matters in which a director has a material interest. In terms of our MOI and the Companies Act, a director who has a personal financial interest in respect of a matter to be considered at a board meeting, or knows that a related person has a personal financial interest in the matter, may not vote on the matter and must, after giving his/her full views on the matter, recuse himself/herself from the meeting. In terms of our board charter directors are appointed on the express agreement that they may be removed by the board of directors if and when they develop an actual or prospective material, enduring conflict of interest with the Company or another group company. There are no general qualification requirements either in South African law or in the MOI for directors to hold shares in the Company.
Directors’ power to vote on remuneration for themselves.No powers are conferred by our MOI, or by any other means, on the directors who are employees of the Company, to vote on their own remuneration or in the instance of directors in the absence of a disinterested quorum of directors.
Borrowing powers exercisable by directors. Clause 26.2 of our MOI provides that the directors may borrow money and secure the payment or repayment thereof upon terms and conditions which they may deem fit in all respects and, in particular, through the issue of debentures which bind as security all or any part of the property of the Company, both current and future. The borrowing powers may be varied by our shareholders passing a special resolution amending the MOI to that effect.
85
Age limit requirement. There is no mandatory retirement age for directors in South African law or in our MOI.
General qualification requirements for directors to hold shares in the Company. There are no general qualification requirements either in South African law or in the MOI for directors to hold shares in the Company.
3. Rights and privileges of holders of our securities
General
We have ordinary shares and Sasol BEE ordinary shares in issue which rank pari passu in all respects as to voting and financial interests. The only difference between them in principle is that anyone may own ordinary shares but Sasol BEE ordinary shares may only be owned by persons who meet certain B-BBEE credentials. In order to meet such credentials such person must, inter alia, be a South African citizen.
Dividend rights, including any time limit after which dividend entitlement lapses and an indication of the party in whose favour this entitlement operates. In terms of our MOI, the Company may make any type of distributions, including in specie distributions and distributions of capital. Only once a dividend is declared by the board of directors, does a shareholder have a right to receive a dividend which may be enforced against the Company.
For more information regarding the payment of dividends on ordinary shares and to holders of ADRs, refer to our Registration Statement.
In terms of the Companies Act, no dividend may be paid unless it reasonably appears that the Company will satisfy the solvency and liquidity test as defined in the Companies Act immediately after completing the proposed distribution; and the board of directors, by resolution, has acknowledged that it has applied the solvency and liquidity test and has reasonably concluded that the Company’s assets equal or exceed the liabilities of the Company and that the Company will be able to pay its debts as they become due in the ordinary course of business for a period of 12 months following the payment of the dividend. If the board of directors resolves that the solvency and liquidity test has been passed, the board of directors may declare a dividend but it must be paid within 120 business days, failing which it is necessary again for the
board of directors to consider the solvency and liquidity test.
A dividend entitlement lapses if it is unclaimed by any shareholder for a period of not less than 12 years and the board of directors resolves that it be forfeited. If a dividend is forfeited, it belongs to the Company.
For further information on our dividend policy, see “Item 8.A—Consolidated statements and other financial information” and our Registration Statement.
Voting rights including whether directors stand for re-election at staggered intervals and the impact of that arrangement where cumulative voting is permitted or required. Each Sasol BEE ordinary share ranks pari passu with each ordinary share in relation to the right to vote at shareholders’ meetings of the Company.
Our directors are elected by our shareholders at the annual general meeting. Broadly speaking a third of the directors retire each year in rotation but are eligible for re-election however, no director’s term of office shall exceed 12 years. The election is carried out in a series of votes on the candidacy of a single individual to fill a single vacancy. For more details regarding the rotation of directors, see information provided in our Registration Statement.
For details regarding shareholders voting rights, see information provided in our Registration Statement.
Shareholder right to share in the Company profits. There is no absolute right for shareholders to share in profits. They are dependent upon the directors declaring dividends or other distributions
Rights to surplus in the event of liquidation. The ordinary shares and the Sasol BEE ordinary shares each rank pari passu if there is a surplus on winding up.
Redemption provision. There are no redemption provisions relating to the ordinary shares and the Sasol BEE ordinary shares.
Sinking funds. There are no sinking funds.
86
Liability for further capital calls by the Company. The Companies Act allows for partly paid shares to be issued under certain circumstances. The Company is prohibited by our MOI from making use of these provisions.
There are no other types of capital calls which the Company could make against its shareholders
Discriminatory provisions against substantial shareholders. There are no discriminatory provisions in our MOI against any holder of shares as a result of such holder owning a substantial number of shares in the Company.
4. Changing rights of holders of shares
In terms of our MOI, the rights attached to any shares or the conversion of any of our shares (whether issued or not) into shares of another class, may only be effected by a change to the MOI by special resolution.
If the rights, privileges or conditions of any class of shareholders will be adversely affected, then provision is made in the MOI for a separate class meeting of the holders of such class of shares. There is no such requirement in the Companies Act.
In addition, shareholders have appraisal rights under the Companies Act if we amend our MOI by altering the preferences, rights, limitations or other terms of any class of our shares in a manner that is materially adverse to the rights or interests of holders of that class of shares. If the requirements contemplated under the Companies Act for establishing an appraisal right are complied with, the shareholder concerned effectively has the right to be bought out by the Company at fair value.
5. General meeting of shareholders including conditions of admission
The annual general meeting is convened and held in the same manner as any other general meeting. All meetings are general meetings, save for the annual general meeting.
In terms of the Companies Act, the board of directors or any other person specified in the Company’s MOI, including a shareholder/s holding not less than 10% of the voting rights attached to the shares, may call a shareholders’ meeting at any time. A written and signed demand to convene a shareholders meeting must describe the specific purpose for which
the meeting is proposed. The MOI only permits the board of directors or the company secretary (in lieu of the board of directors) and a shareholders/s holding not less than 10% of the voting rights attached to the shares, to convene a shareholders’ meeting.
If the Company is unable to convene a meeting because it has no directors, then in terms of our MOI, any single shareholder entitled to vote may convene a meeting.
If the Company fails to convene a meeting in accordance with its MOI, or as required by the shareholders holding in the aggregate at least 10% of the voting rights as set out above, or within the time periods as required, any shareholder may apply to court for an order to convene a shareholders meeting on a date and subject to such terms as a court considers appropriate.
In terms of our MOI, we are required to deliver written notice of shareholders’ meetings to each shareholder and each beneficial holder (being a person whose name is not on the share register but who has the ultimate right to receive distributions or direct how the shares in question are voted or direct when the shares in question are to be disposed of) at least 15 business days before a meeting. The Companies Act also stipulates that delivery of a notice will be deemed to have taken place on the seventh calendar day following the day on which the notice was posted by way of registered post.
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Before a person will be allowed to attend or participate at shareholder meetings in person or by proxy, that person must present reasonably satisfactory identification and the person presiding at the meeting must reasonably satisfy himself/herself that the right of the person to attend as shareholder or proxy has been verified. Meetings of shareholders may be attended by any person who holds shares in the Company and whose name has been entered into our securities register and any person who is entitled to exercise any voting rights in relation to the Company. Any person entitled to attend and to vote at any meeting may appoint a proxy/ies in writing to attend and to vote at such meeting on his/her/its behalf. In respect of shares which are not subject to the rules of a central securities depository, and in respect of which a person holds a beneficial interest which includes the right to vote on a matter, that beneficial holder may attend and vote on a matter at a meeting of shareholders, but only if that person’s name has been entered in our register of disclosures as the holder of that beneficial interest. Shareholders who have dematerialised their shares other than on an own name basis, are required to contact their Central Securities Depository Participant, as the case may be, for assistance to attend and vote at meetings.
In terms of our MOI, the quorum necessary for the commencement of a shareholders meeting shall be sufficient persons present at the meeting to exercise, in aggregate, at least 25% of all the voting rights that are entitled to be exercised in respect of at least one matter to be decided at the shareholders meeting but the shareholders’ meeting may not begin unless at least three persons entitled to vote are present. In terms of our MOI, if the required quorum of shareholders is not present within 30 minutes from the time appointed for the meeting to begin, the meeting will be postponed to the next business day and if at such adjourned shareholders’ meeting a quorum is not present within 15 minutes from the time appointed for the shareholders’ meeting, then the persons entitled to vote present shall be deemed to be the requisite quorum. In terms of the Companies Act, no further notice is required of a postponed or adjourned meeting unless the location is different from that of the postponed or adjourned meeting, or is different from a location announced at the time of an adjourned meeting.
See our Registration Statement for more information with respect to the holding of an annual general meeting and the proceedings at the annual general meeting.
6. Limitations on the rights to own shares
Non-South African shareholders are treated no differently from South African shareholders as to the ownership of shares under the Company’s MOI. However, Sasol BEE ordinary shares may only be owned by persons who must, inter alia, be South African citizens.
See our Registration Statement for more information with respect to the rights of non-South African shareholders.
7. Provisions of the Company’s MOI that would have the effect of delaying, deferring or preventing a change of control or merger or corporate restructuring
There are no provisions in our MOI which could have the effect of delaying, deferring or preventing a change of control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company or any of its subsidiaries, save perhaps that the requirement that the ownership of Sasol BEE ordinary shares is restricted to certain persons.
8. Disclosure of ownership threshold
The JSE Listings Requirements require a listed company to disclose in its annual financial statements the interest of any shareholder, other than a director, who, insofar as it is known to the company, is directly or indirectly beneficially interested in 5% or more of any class of the company’s capital.
9. Effect of the South African law
With respect to items 2 through 8 above, the effect of the South African law applicable to our company has been explained in those paragraphs.
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10. Stricter conditions imposed by the MOI than the South African law governing changes in the capital of the Company
The requirements of our MOI are stricter than the South African law in that:
● | the directors do not have the power to issue authorised shares (other than capitalisation shares) without the approval of an ordinary resolution or a special resolution being passed by the shareholders, depending on which is required by our MOI. |
● | the board of directors does not have the power to amend the authorisation (including increasing or decreasing the number) and classification of shares (including determining rights, limitations and preferences) which is permitted under the Companies Act, without the authority of a special resolution; and |
● | the permission under the Companies Act to allow rights, privileges or conditions attaching to any class of shares to vary in response to any objectively ascertainable external fact/s, is excluded under our MOI. |
10.C Material contracts
We do not have any material contracts, other than contracts entered into in the ordinary course of business.
10.D Exchange controls
South African exchange control regulations are administered by the FSD of the South African Reserve Bank and are applied throughout the Common Monetary Area (CMA) (South Africa, the Kingdoms of Lesotho and eSwatini and the Republic of Namibia) and regulate transactions involving South African residents, as defined in the Exchange Control Rulings, including natural persons and legal entities.
The following is a general outline of South African exchange controls. The comments below relate to exchange controls in force at the date of this annual report. These controls are subject to change at any time without notice. Investors should consult a professional advisor as to the exchange control implications of their particular investments.
Foreign financing and investments
Foreign debt. We, and our South African subsidiaries, require approval by the FSD to obtain foreign loans with recourse to South Africa.
Funds raised outside the CMA by our non-resident subsidiaries, i.e. a non-resident for exchange control purposes, are not restricted under South African exchange control regulations and may be used for any purpose including foreign investment, as long as such use is without recourse to South Africa. We, and our South African subsidiaries, would, however, require approval by the FSD in order to provide guarantees for the obligations of any of our subsidiaries with regard to funds obtained from nonresidents of the CMA.
Debt raised outside the CMA by our non-resident subsidiaries must be repaid or serviced by those foreign subsidiaries. Without approval by the FSD, we can neither use cash we earn in South Africa to repay or service such foreign debts nor can we provide security on behalf of our non-resident subsidiaries.
We may retain dividends declared by our foreign subsidiaries offshore which we may use for any purpose, without any recourse to South Africa. These funds may, subject to certain conditions, also be invested back into the CMA in the form of equity investments or loans.
Raising capital overseas. A listing by a South African company on any stock exchange requires prior approval by the FSD.
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Under South African exchange control regulations, we must obtain approval from the FSD regarding any capital raising activity involving a currency other than the rand. In granting its approval, the FSD may impose conditions on our use of the proceeds of the capital raising activity outside South Africa, including limits on our ability to retain the proceeds of this capital raising activity outside South Africa or a requirement that we seek further approval by the FSD prior to applying any of these funds to any specific use.
Foreign investments. Under current exchange control regulations, we, and our South African subsidiaries, require approval, either by Authorised Dealers or the FSD to invest offshore.
Although there is no limitation placed on us with regard to the amount of funds that we can transfer from South Africa for an approved foreign investment, the FSD may, however, request us to stagger the capital outflows relating to large foreign investments in order to limit the impact of such outflows on the South African economy and the foreign exchange market.
The FSD also requires us to provide it with an annual report, which will include the results, of all our foreign subsidiaries.
Investment in South African companies
Inward investment. As a general rule, a foreign investor may invest freely in shares in a South African company. Foreign investors may also sell shares in a South African company and transfer the proceeds out of South Africa without restriction. Acquisitions of shares or assets of South African companies by non-South African purchasers are not generally subject to review by the FSD when the consideration is in cash, but may require review by the FSD in certain circumstances, including when the consideration is equity in a non-South African company or when the acquisition is financed by a loan from a South African lender.
Dividends. There are no exchange control restrictions on the remittance of dividends declared out of trading profits to non-residents of the CMA. However, residents of the CMA may under no circumstances have dividends paid outside the CMA without specific approval from the FSD.
Transfer of shares and ADSs. Under South African exchange control regulations, our shares and ADSs are freely transferable outside South Africa among persons who are not residents of the CMA. Additionally, where shares are sold on the JSE on behalf of our shareholders who are not residents of the CMA, the proceeds of such sales will be freely exchangeable into foreign currency and remittable to them. The FSD may also require a review to establish that the shares have been sold at market value and at arm’s length. While share certificates held by non-resident shareholders will be endorsed with the words “non-resident”, such endorsement will, however, not be applicable to ADSs held by non-resident shareholders
10.E Taxation
South African taxation
Corporate Income Tax
The following discussion summarises the South African (SA) tax consequences of the ownership and disposition of shares or ADSs by a US holder (as defined below). This summary is based upon current SA tax law and the convention that has been concluded between the governments of the US and SA for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains, signed on 17 February 1997 (the Treaty). In addition, this summary is based in part upon representations of the depositary (J.P. Morgan, as depositary for our ADSs), and assumes that each obligation provided for in, or otherwise contemplated by the Deposit Agreement and any related agreement, will be performed in accordance with its respective terms.
The summary of the SA tax considerations does not address the tax consequences to a US holder that is resident in SA for SA tax purposes or whose holding of shares or ADSs is effectively connected with a permanent establishment in SA through which such US holder carries on business activities. It equally does not address the scenario where the US holder is not the beneficial recipient of the dividends or returns or, where the source of the transaction is deemed to be in SA, the recipient is not entitled to the full benefits under the Treaty or, in the case of an individual who performs independent person services, who has a fixed base situated in SA.
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The statements of law set forth below are subject to any changes (which may be applied retroactively) in SA law or in the interpretation thereof by the SA tax authorities, or in the Treaty, occurring after the date hereof. Holders are strongly urged to consult their own tax advisors as to the consequences under SA, US federal, state and local, and other applicable laws, of the ownership and disposition of shares or ADSs.
Taxation of dividends
A dividends tax was introduced in S A with effect from 1 April 2012. In terms of these provisions, a dividends tax at the rate of 20% currently is levied on any dividend paid by a company to a shareholder. The liability to pay such dividends tax is on the shareholder, even though the company generally acts as a withholding agent. In the case of listed shares, the regulated intermediary (being the Central Securities Depository Participant referred to below) is liable to withhold the dividends tax.
In the absence of any renegotiation of the Treaty, the tax on the dividends paid to a US holder with respect to shares or ADSs, is limited to 5% of the gross amount of the dividends where a US corporate holder holds directly at least 10% of the voting stock of Sasol. The maximum dividends tax rate is equal to 15% of the gross amount of the dividends in all other cases. The applicable administrative forms need to be completed by the US holder and received by the regulated intermediary by the date of payment of the dividend.
The definition of a dividend currently means any amount, other than a dividend consisting of a distribution of an asset in specie declared and paid as contemplated in section 31(3), transferred or applied by a company that is a resident (including Sasol) for the benefit or on behalf of any person in respect of any share in that company, whether that amount is transferred or applied by way of a distribution made by the company, or as consideration for the acquisition of any share in that company. It specifically excludes any amount transferred or applied by the company that results in a reduction of so-called contributed tax capital (CTC) or constitutes shares in the company or constitutes an acquisition by the company of its own securities by way of a general repurchase of securities in terms of the JSE Listings Requirements. A distinction is thus made between a general repurchase of securities and a specific repurchase of securities. If the Company embarks upon a general repurchase of securities, the proceeds are not deemed to be a dividend whereas, in the case of a specific repurchase of securities where the purchase price is not funded out of CTC, the proceeds are likely to constitute a dividend.
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Taxation of gains on sale or other disposition
SA introduced a tax on capital gains effective 1 October 2001, which applies to SA residents and only to non-residents if the sale is attributable to a permanent establishment in SA of the non-resident or if it relates to an interest in immovable property in SA. With effect from 1 October 2007, gains realised on the sale of ordinary shares are automatically deemed to be on capital account, and therefore, subject to capital gains tax, if the ordinary shares have been held for a continuous period of at least three years by the holder thereof. This deeming provision is limited to ordinary shares and does not extend to preference shares or ADSs. The meaning of the word “resident” is different for individuals and corporations and is governed by the SA Income Tax Act, 58 of 1962 (the Income Tax Act) and by the Treaty. In the event of conflict, the Treaty, which contains a tie breaker clause or mechanism to determine residency if a holder is resident in both countries, will prevail. In terms of the Income Tax Act and the Treaty, a US resident holder of shares or ADSs will not be subject to capital gains tax on the disposal of securities held as capital assets unless the securities are linked to a permanent establishment conducted in SA. In contrast, gains on the disposal of securities which are not capital in nature are usually subject to income tax. However, even in the latter case, a US resident holder will not be subject to income tax unless the US resident holder carries on business in SA through a permanent establishment situated therein. In such a case, this gain may be subject to tax in SA, but only so much as is attributable generally to that permanent establishment.
Dividend stripping and anti-avoidance rules relating to share buy-backs
Anti-avoidance rules relating to share buy backs and dividend stripping were strengthened effective from 19 July 2017 and subsequent years to address avoidance mechanisms utilised to erode the value of the shares through distribution of dividends prior to the disposal of shares. Such anti-avoidance dividend rules apply to situations where excessive dividends are declared prior to disposal of shares and only to the extent that such dividends are treated as exempt dividend therefore not subject to dividend withholding tax. Where exempt dividends qualify as extraordinary dividends, the exempt dividends are re-characterised as proceeds for capital gains tax purposes or revenue for income tax purposes resulting in an increased tax liability for the seller of the shares.
Securities transfer tax
With effect from 1 July 2008, a single security transfer tax of 0,25% was introduced and is applicable to all secondary transfers of shares. No securities transfer tax (STT) is payable on the issue of securities, even though it is payable on the redemption of securities. STT is payable in South Africa regardless of whether the transfer is executed within or outside South Africa. A transfer of a dematerialised share can only occur in South Africa.
A security is also defined as a depositary receipt in a company. Accordingly, STT is payable on the transfer of a depositary receipt issued by a company. Generally, the central securities depository that has been accepted as a participant in terms of the Financial Markets Act, 19 of 2012 (that commenced on 3 June 2013) is liable for the payment of the STT, on the basis that the STT is recoverable from the person to whom the security is transferred.
Withholding taxes
A withholding tax on interest at the rate of 15% is currently applicable. This withholding tax is reduced to zero percent in terms of the Treaty to the extent that the interest is derived and beneficially owned by a resident of the other Contracting State (i.e. state/ party to a bilateral double taxation agreement). The administrative compliance obligation must be adhered to prior to the payment of the interest to benefit from the Treaty rate.
A withholding tax on royalties at the rate of 15% is currently applicable. This withholding tax is reduced to zero percent in terms of the Treaty to the extent that the royalty is derived and beneficially owned by a resident of the other Contracting State. The administrative compliance obligation must be adhered to prior to the payment of the interest to benefit from the Treaty rate.
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Transfer pricing and Base Erosion and Profit Shifting Project
Transfer pricing was introduced in South Africa in 1995, and the transfer pricing principles adopted largely follow the Organisation for Economic Co-operation and Development (the OECD) guidelines on transfer pricing. The main requirement is to ensure that a transaction is concluded at arm’s length and that the transfer pricing between group entities is also at arm’s length (also known as the ‘arm’s length principle’).
The OECD guidelines prescribe methodologies for determining arm’s length pricing which have been adopted by many countries including South Africa for their local transfer pricing regulation.
Where there is a deviation from the arm’s length principle, the price charged between group entities (where one of those entities is a tax resident) which is different from what would have been concluded at an arm’s length basis between unrelated persons and to tax the entity concerned is adjusted to increase the taxable income of the tax resident (also known as a primary adjustment). In addition, the adjusted amount is also deemed to be a dividend (also referred to as a secondary adjustment) that will be subject to dividend withholding tax, as well as the relevant penalties and interest are levied should such an adjustment occur.
United States federal income taxation
The following is a general summary of the material US federal income tax consequences of the ownership and disposition of shares or ADSs to a US holder (as defined below) that holds its shares or ADSs as capital assets. This summary is based on US tax laws, including the Internal Revenue Code of 1986, as amended (the Code), Treasury regulations, rulings, judicial decisions, administrative pronouncements, all as of the date of this annual report, and all of which are subject to change or changes in interpretation, possibly with retroactive effect. In addition, this summary is based in part upon the representations of the Depositary and the assumption that each obligation in the Deposit Agreement relating to the ADSs and any related agreement will be performed in accordance with its terms.
US holders are strongly urged to consult their own tax advisors regarding the specific US federal, state and local tax consequences of owning and disposing of shares or ADSs in light of their particular circumstances as well as any consequences arising under the laws of any other taxing jurisdiction. In particular, US holders are urged to consult their own tax advisors regarding whether they are eligible for benefits under the Treaty.
This summary does not address all aspects of US federal income taxation that may apply to holders that are subject to special tax rules, including US expatriates, insurance companies, tax-exempt organisations, banks, financial institutions, regulated investment companies, persons subject to the alternative minimum tax or the 3.8% Medicare tax on net investment income, securities broker-dealers, traders in securities who elect to apply a mark-to-market method of accounting, persons holding their shares or ADSs as part of a straddle, hedging transaction or conversion transaction, persons who acquired their shares or ADSs pursuant to the exercise of employee stock options or similar derivative securities or otherwise as compensation, persons who directly or indirectly hold more than 10% of Sasol’s shares (by vote or value), partnerships or other pass-through entities or arrangements or persons whose functional currency is not the US dollar. Such holders may be subject to US federal income tax consequences different from those set forth below.
As used herein, the term “US holder” means a beneficial owner of shares or ADSs that is:
(a) | a citizen or individual resident of the US for US federal income tax purposes; |
(b) | a corporation (or other entity taxable as a corporation for US federal income tax purposes) created or organised in or under the laws of the US, any state thereof or the District of Columbia; |
(c) | an estate whose income is subject to US federal income taxation regardless of its source; or |
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(d) | a trust if a court within the US can exercise primary supervision over the administration of the trust and one or more US persons are authorised to control all substantial decisions of the trust. |
If a partnership (or other entity or arrangement treated as a partnership for US federal income tax purposes) holds shares or ADSs, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partner in a partnership that holds shares or ADSs is urged to consult its own tax advisor regarding the specific tax consequences of the ownership and disposition of the shares or ADSs.
For US federal income tax purposes, a US holder of ADSs should be treated as owning the underlying shares represented by those ADSs. The following discussion (except where otherwise expressly noted) applies equally to US holders of shares and US holders of ADSs. Furthermore, deposits or withdrawals of shares by a US holder for ADSs or ADSs for shares will not be subject to US federal income tax.
Taxation of distributions
Distributions (without reduction of South African withholding taxes, if any) made with respect to shares or ADSs (other than certain pro rata distributions of Sasol’s capital stock or rights to subscribe for shares of Sasol’s capital stock) are includible in the gross income of a US holder as foreign source dividend income on the date such distributions are received by the US holder, in the case of shares, or by the Depositary, in the case of ADSs, to the extent paid out of Sasol’s current or accumulated earnings and profits, if any, as determined for US federal income tax purposes (earnings and profits). Any distribution that exceeds Sasol’s earnings and profits will be treated first as a non-taxable return of capital to the extent of the US holder’s tax basis in the shares or ADSs (thereby reducing a US holder’s tax basis in such shares or ADSs) and thereafter as either long-term or short-term capital gain (depending on whether the US holder has held shares or ADSs, as applicable, for more than one year as of the time such distribution is actually or constructively received).
The amount of any distribution paid in foreign currency, including the amount of any South African withholding tax thereon, will be included in the gross income of a US holder in an amount equal to the US dollar value of the foreign currency calculated by reference to the spot rate in effect on the date the dividend is actually or constructively received by the US holder, in the case of shares, or by the Depositary, in the case of ADSs, regardless of whether the foreign currency is converted into US dollars at such time. If the foreign currency is converted into US dollars on the date of receipt, a US holder of shares generally should not be required to recognise foreign currency gain or loss in respect of the dividend. If the foreign currency received in the distribution is not converted into US dollars on the date of receipt, a US holder of shares will have a basis in the foreign currency equal to its US dollar value on the date of receipt.
Any gain or loss recognised upon a subsequent conversion or other disposition of the foreign currency will be treated as US source ordinary income or loss. In the case of a US holder of ADSs, the amount of any distribution paid in a foreign currency ordinarily will be converted into US dollars by the Depositary upon its receipt. Accordingly, a US holder of ADSs generally will not be required to recognise foreign currency gain or loss in respect of the distribution.
Accrual basis US holders are urged to consult their own tax advisors regarding the requirements and elections available to accrual method taxpayers to determine the US dollar amount includable in income in the case of taxes withheld in a foreign currency.
Subject to certain limitations (including a minimum holding period requirement), South African dividend withholding taxes (as discussed above under “Item 10.E—Taxation—South African taxation—Taxation of dividends”) will be treated as foreign taxes eligible for credit against a US holder’s US federal income tax liability. For this purpose, dividends distributed by Sasol with respect to shares or ADSs generally will constitute foreign source “passive category income” for most US holders. The use of foreign tax credits is subject to complex conditions and limitations. In lieu of a credit, a US holder may instead elect to deduct any such foreign income taxes paid or accrued in the taxable year, provided that the US holder elects to deduct (rather than credit) all foreign income taxes paid or accrued for the taxable year. US holders are urged to consult their own tax advisors regarding the availability of foreign tax credits or the deductibility of foreign taxes.
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Dividends paid by Sasol will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. Certain noncorporate US holders are eligible for preferential rates of US federal income tax in respect of “qualified dividend income”.
Sasol currently believes that dividends paid with respect to its shares and ADSs should constitute qualified dividend income for US federal income tax purposes (and Sasol anticipates that such dividends will be reported as qualified dividends on Form 1099 DIV delivered to US holders) if Sasol was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid, a Passive Foreign Investment Company (PFIC) for US federal income tax purposes. Each individual US holder of shares or ADSs is urged to consult its own tax advisor regarding the availability to such US holder of the preferential dividend tax rate in light of its own particular situation including foreign tax credit limitations with respect to any qualified dividend income paid by Sasol, as applicable.
Sale, exchange or other taxable disposition of shares or ADSs
Upon a sale, exchange or other taxable disposition of shares or ADSs, a US holder generally will recognise a capital gain or loss for US federal income tax purposes in an amount equal to the difference between the US dollar value of the amount realised on the disposition and the US holder’s adjusted tax basis, determined in US dollars, in the shares or ADSs. Such gain or loss generally will be US source gain or loss, and generally will be treated as a long-term capital gain or loss if the holder’s holding period in the shares or ADSs exceeds one year at the time of disposition if Sasol was not, at any time during the holder’s holding period, a PFIC, as discussed below, for US federal income tax purposes. The deductibility of capital losses is subject to significant limitations. If the US holder is an individual, long-term capital gain generally is subject to US federal income tax at preferential rates. Each US holder of shares or ADSs is urged to consult its own tax advisor regarding the potential US tax consequences from the taxable disposition of shares or ADSs, including foreign currency implications arising therefrom and any other South African taxes imposed on a taxable disposition.
Passive foreign investment company considerations
A non-US corporation is a passive foreign investment company in any taxable year in which, after taking into account the income and assets of certain subsidiaries, either (a) at least 75% of its gross income is passive income or (b) at least 50% of the quarterly average of its assets is attributable to assets that produce or are held to produce passive income. Sasol believes that it should not be classified as a PFIC for US federal income tax purposes for the taxable year ended 30 June 2023. US holders are advised, however, that this conclusion is a factual determination that must be made annually and thus may be subject to change. If Sasol were to be classified as a PFIC, the tax on distributions on its shares or ADSs and on any gains realised upon the disposition of its shares or ADSs may be less favourable than as described herein. Furthermore, dividends paid by a PFIC are not “qualified dividend income” and are not eligible for the reduced rates of taxation for certain dividends. In addition, each US person that is a shareholder of a PFIC, may be required to file an annual report disclosing its ownership of shares in a PFIC and certain other information. US holders should consult their own tax advisors regarding the application of the PFIC rules (including applicable reporting requirements) to their ownership of the shares or ADSs.
US information reporting and backup withholding
Dividend payments made to a holder and proceeds paid from the sale, exchange, or other disposition of shares or ADSs through a US intermediary or other US paying agent may be subject to information reporting to the US Internal Revenue Service (IRS). US federal backup withholding generally is imposed on specified payments to persons who fail to furnish required information. Backup withholding will not apply to a holder who furnishes a correct taxpayer identification number or certificate of foreign status and makes any other required certification, or who is otherwise exempt from backup withholding. US persons who are required to establish their exempt status generally must provide IRS Form W-9 (Request for Taxpayer Identification Number and Certification) or applicable substitute form. NonUS holders generally will not be subject to US information reporting or backup withholding. However, these holders may be required to provide certification of non-US status (generally on IRS Form W-8BEN, W-8BEN-E or applicable substitute form) in connection with payments received in the United States or through certain US-related financial intermediaries.
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Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a holder’s US federal income tax liability. A holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.
Additional reporting requirements
US holders who are individuals may be required to report to the IRS on Form 8938 information relating to their ownership of foreign financial assets,
such as the shares or ADSs, subject to certain exceptions (including an exception for shares or ADSs held in accounts maintained by certain financial institutions). US holders should consult their tax advisors regarding the effect, if any, of these rules on their obligations to file information reports with respect to the shares or ADSs.
10.F Dividends and paying agents
Not applicable.
10.G Statement by experts
Not applicable.
10.H Documents on display
All reports and other information that we file with the SEC may be obtained, upon written request, from J.P. Morgan, as depositary for our ADSs at its Corporate Trust office, located at 383 Madison Avenue, Floor 11, New York, New York, 10179. These reports and other information can also be inspected without charge and copied at prescribed rates at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. These reports may also be accessed via the SEC’s website (www.sec.gov). Also, certain reports and other information concerning us will be available for inspection at the offices of the NYSE. In addition, all the statutory records of the company and its subsidiaries may be viewed at the registered address of the company in South Africa.
10.I Subsidiary information
Not applicable. For a list of our subsidiaries see Exhibit 8.1 to this annual report on Form 20-F.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a group, we are exposed to various market risks associated with our underlying assets, liabilities and anticipated transactions. We continuously monitor these exposures and enter into derivative financial instruments to reduce these risks. We do not enter into derivative transactions on a speculative basis. All fair values have been determined using current market pricing models.
The principal market risks (i.e. the risk of losses arising from adverse movements in market rates and prices) to which we are exposed are:
● | foreign exchange rates applicable on conversion of foreign currency transactions as well as on conversion of assets and liabilities to rand; and |
● | commodity prices, mainly crude oil and chemicals prices; |
Refer to “Item 18—Financial Statements—Note 37 Financial risk management and financial instruments” for a qualitative and quantitative discussion of the group's exposure to these market risks. The following is a breakdown of our debt arrangements, a summary of fixed versus floating interest rate exposures for operations and a break-down of derivatives. Liabilities reflect principal payments in each year.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair |
Liabilities—notional |
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
Thereafter |
|
Total |
|
value |
|
|
(Rand in millions) |
||||||||||||||
Fixed rate (Rand) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
669 |
|
669 |
|
669 |
Average interest rate |
|
8,00 |
% |
8,00 |
% |
8,00 |
% |
8,00 |
% |
8,00 |
% |
8,00 |
% |
|
|
|
Variable rate (Rand) |
|
159 |
|
66 |
|
912 |
|
— |
|
1 470 |
|
— |
|
2 607 |
|
2 403 |
Average interest rate |
|
9,52 |
% |
9,49 |
% |
9,52 |
% |
9,57 |
% |
9,57 |
% |
0,00 |
% |
|
|
|
Fixed Rate (US$) |
|
28 245 |
|
1 |
|
1 |
|
12 240 |
|
14 123 |
|
48 959 |
|
103 569 |
|
94 774 |
Average interest rate |
|
6,09 |
% |
6,13 |
% |
6,13 |
% |
6,29 |
% |
6,72 |
% |
7,04 |
% |
|
|
|
Variable rate (US$) |
|
— |
|
— |
|
— |
|
— |
|
18 499 |
|
— |
|
18 499 |
|
18 533 |
Average interest rate |
|
6,80 |
% |
6,80 |
% |
6,80 |
% |
6,80 |
% |
6,80 |
% |
0,00 |
% |
|
|
|
Fixed rate (Euro) |
|
72 |
|
48 |
|
41 |
|
— |
|
0 |
|
0 |
|
161 |
|
154 |
Average interest rate |
|
1,79 |
% |
1,95 |
% |
1,95 |
% |
0,00 |
% |
0,00 |
% |
0,00 |
% |
|
|
|
Fixed rate (Other currencies) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Total |
|
28 476 |
|
115 |
|
954 |
|
12 240 |
|
34 092 |
|
49 628 |
|
125 505 |
|
116 533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2023 |
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
Thereafter |
|
Maturity |
|
|
(Rand in millions) |
||||||||||||
Foreign Currency Derivatives—held for trading* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange zero‑cost collars |
|
(503) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(503) |
Forward exchange contracts |
|
(214) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(214) |
Euro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Contracts |
|
(6) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(6) |
Commodity derivatives—held for trading* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil futures |
|
(12) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(12) |
Crude oil put options |
|
253 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
253 |
Ethane price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ethane swap options |
|
(158) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(158) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other foreign exchange derivatives |
|
5 |
|
15 |
|
15 |
|
19 |
|
19 |
|
(2 786) |
|
(2 715) |
Other commodity derivatives |
|
10 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
10 |
Convertible bond embedded derivative liability |
|
0 |
|
0 |
|
0 |
|
0 |
|
(1 302) |
|
0 |
|
(1 302) |
s
*For more information relating to contract amounts, weighted average strike prices, notional amounts and weighted average pay rate refer to “Item 18—Financial Statements—Note 37 Financial risk management and financial instruments”.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A Debt securities
Not applicable.
12.B Warrants and rights
Not applicable.
12.C Other securities
Not applicable.
12.D American depositary shares
12.D.1 Depositary name and address
J.P. Morgan Chase Bank, N.A.
383 Madison Avenue, Floor 11
New York, New York, 10179
12.D.2 Description of American depositary shares
American depositary shares are evidenced by ADRs that represent the right to receive, and to exercise the beneficial ownership interests in, the number of Sasol ordinary shares specified in the form of ADRs.
Please see Exhibit 2.2 to this annual report on Form 20-F.
97
12.D.3 Depositary fees and charges
J.P. Morgan was appointed as Sasol Limited’s depositary for Sasol’s ADSs, effective 6 May 2019. Prior to J.P. Morgan’s appointment, the Bank of New York Mellon served as the depositary for Sasol’s ADSs. Sasol’s ADSs, each representing one Sasol ordinary share, are traded on the NYSE under the symbol “SSL”. The ADSs are evidenced by ADRs, issued by J.P Morgan, as depositary.
As from 6 May 2019, the Deposit Agreement between J.P Morgan, Sasol Limited and its registered ADR holders, requires that ADR holders pay the following fees.
Service |
|
Fees (USD) |
Depositing or substituting the underlying shares |
|
Up to US$5,00 per 100 ADS |
Receiving or distributing dividend |
|
Up to US$0,05 per ADS |
Selling or exercising rights |
|
Up to US$5,00 per 100 ADS |
Withdrawing an underlying security |
|
Up to US$5,00 per 100 ADS |
In addition, all non-standard out of pocket administration and maintenance expenses, including but not limited to, any and all reasonable legal fees and disbursements incurred by the Depositary (including legal opinions, and any fees and expenses incurred by or waived to third-parties) will be paid by the company. Fees and out-of-pocket expenses for the servicing of non-registered ADR holders and for any special service(s) performed by the Depositary will be paid for by the company.
12.D.4 Depositary payments for 2023
J.P Morgan paid an amount of US$1, 175,731.69 to Sasol on 09 June 2023 in respect of annual contributions.
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
(a) Disclosure controls and procedures
The Company’s President and Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the group’s disclosure controls and procedures (required by paragraph (b) of 17 CFR 240.13a-15) as of the end of the period covered by this annual report on Form 20-F.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were ineffective as of 30 June 2023 due to the existence of a material weakness in internal control over financial reporting as described below in section (b).
Notwithstanding this material weakness, management concluded that the consolidated financial statements included in this annual report on Form 20-F present fairly, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented in accordance with IFRS, as issued by the IASB. Management’s assessment is based upon a number of factors, including, but not limited to:
The substantial progress made on implementation of remediation actions with respect to the level of precision applied to the impairment assessments performed on all the cash generating units across the South African integrated value chain within the Energy and Chemicals Africa segments for the year ended 30 June 2023.
(b) Management’s annual report on internal control over financial reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Under Section 404 of the Sarbanes-Oxley Act, management is required to assess the effectiveness of the Company’s internal control over financial reporting as of the end of each financial year and report, based on that assessment, whether the Company’s internal control over financial reporting is effective.
98
The Company’s internal control over financial reporting is a process designed by, or under the supervision of the President and Chief Executive Officer and Chief Financial Officer, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance as to the reliability of the Company’s financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting includes those policies and procedures that
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those processes of internal control over financial reporting determined to be effective can provide only reasonable assurance with respect to the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of 30 June 2023. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organisations of the Treadway Commission (COSO) in “Internal Control—Integrated Framework (2013)”.
Material Weakness
Based on its assessment, management has determined that the Company’s internal control over financial reporting remains ineffective as of 30 June 2023 due to the existence of the material weakness described below.
Material Weakness with respect to the level of precision applied to the impairment assessments performed on all cash generating units across the South African integrated value chain within the Energy and Chemicals Africa segments.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of financial statements will not be prevented or detected on timely basis
Based on its assessment, management has determined that the Company’s internal control over financial reporting remains ineffective as of 30 June 2023 due to the existence of the material weakness described below. As previously disclosed in our annual report on Form 20-F for the year ended 30 June 2022, we identified an initial material weakness in 2020 that was further expanded in 2021 with respect to the level of precision applied to the impairment assessments performed on all cash generating units across the South African integrated value chain within the Energy and Chemicals Africa segments. Management concluded that the controls designed and implemented to review the results of impairment assessments performed on the South African integrated value chain cash generating units did not operate at the required level of precision to prevent or detect a material misstatement. Specifically, these controls did not effectively function at the level of precision required to ensure that the assumptions applied in determining cash flow projections are reasonable in response to changes in the business environment and that the calculations performed and discounting principles applied were valid and complete. These deficiencies impacted the determination of the recoverable value of these cash generating units for the purpose of impairment assessments. This material weakness resulted in an audit adjustment that was recorded in the Company’s consolidated financial statements for the year ended 30 June 2020 and a revision of the 2021 consolidated financial statement comparative results for 2018, 2019 and 2020 based on the expansion of the material weakness.
99
Management concluded that the material weakness identified above was the result of a number of deficiencies:
● | System design - Inadequate initial design principle applied in the system implementation; |
● | Process design - Inadequate initial process design which was not documented in sufficient detail; |
● | Sequence of process – Inefficient impairment process due to the sequential order of completion of the impairment calculations through the South African integrated value chain; |
● | Manual interventions – Inconsistent and multiple manual interventions across the entire South African integrated value chain impairment process; and |
● | People capability – Lack of understanding and knowledge of the end-to-end South African integrated value chain impairment assessment principles. |
If not remediated, this material weakness could result in misstatements of property, plant and equipment, right of use assets, deferred taxation, remeasurement items affecting operating profit (impairment of property, plant and equipment and right of use assets), account balances and disclosures that would result in a material misstatement to the consolidated financial statements that would not be prevented or detected.
Remediation efforts to address the material weakness with respect to the level of precision applied to the impairment assessments performed on the cash generating units related to the South African integrated value chain.
Management is committed to remediate the material weakness and, with oversight from our Audit Committee, has implemented all planned remediation measures that will address the material weakness in internal controls over financial reporting. The measures implemented to address the underlying causes that gave rise to the material weakness consisted of technology enhancements through an appropriate and standardised impairment model that was used across the South African integrated value chain impairment process for the 2023 year end. They also included process improvements implemented based on a comprehensive review of the entire South African integrated value chain impairment process. In addition, the measures comprised upskilling of the people involved in the process through capability assessments and interventions, supported by training programmes, re-prioritisation of activities during the impairment assessment process and clearly defined roles and responsibilities.
We believe our actions will be effective in remediating the above-noted material weakness, and we continue to devote significant time and attention to these efforts. Notwithstanding the significant progress made to remediate the material weakness, management is of the view that the remedial controls need to operate for another reporting cycle before it can be concluded whether these controls are operating effectively. This is as the comprehensive remediation measures have only been operational for the 2023 year end reporting process and there has been an increase in external market and regulatory factors that are impacting on the impairment assessment of the South African integrated value chain. As we continue to evaluate and work to improve our internal controls over financial reporting, we may take additional measures to address these control deficiencies, or we may modify certain of the remediation measures described above. The material weakness will not be considered remediated until we have completed designing and implementing the longer-term remediation efforts, the applicable remedial controls operate for a sufficient period of time, and management has concluded, through testing, that these controls are operating effectively.
(c)Attestation report of the registered public accounting firm
The effectiveness of the Company’s internal control over financial reporting as of 30 June 2023 was audited by PricewaterhouseCoopers Inc., an independent registered public accounting firm, as stated in its report on page F-1 of this Form 20-F.
100
(d)Changes in internal control over financial reporting
The Company maintains a system of internal control over financial reporting that is designed to provide reasonable assurance that its books and records accurately reflect transactions and that established policies and procedures are followed.
Except for the remediation procedures implemented by the Company as described above, there have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13(a) - 15 during the year ended 30 June 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 16.A AUDIT COMMITTEE FINANCIAL EXPERT
Our Nomination and Governance Committee is satisfied that all members of the Audit Committee have the requisite financial expertise to serve as members of the Audit Committee, and our board of directors has determined Ms GMB Kennealy, appointed as the chairman of the Audit Committee with effect from 1 September 2021, to be a financial expert within the meaning of the Sarbanes Oxley Act.
Item 16.B CODE OF ETHICS
In May 2022, Sasol’s Board of Directors approved an update to the current Code of Conduct. The Code of Conduct adopts a behaviour-based approach which reinforces the importance of linking our day-to-day actions to Sasol’s values and culture. The Code of Conduct is further underpinned by policies and guidance notes to enhance its everyday application. The Code of conduct is intended to apply to every Sasol employee of every Sasol group company worldwide. It is also intended to apply to every director (executive and non-executive) of those companies, except as otherwise stated in the Code of conduct. Joint venture companies in which Sasol is a non-controlling co-venturer and associated companies are encouraged to adopt these or similar principles, practices and standards.
The Code of Conduct is available on our website. The website address is: https://www.sasol.com/sustainability/ethics/sasol-code-
of-conduct. This website is not incorporated by reference in this annual report.
We operate an independent ethics line through external advisors where reports can be made telephonically, via e-mail or from the website. This confidential and anonymous ethics hotline provides an impartial facility for all stakeholders to report alleged deviations from ethical behaviour, as well as breaches of our Code of Conduct, Sasol policies or regulatory requirements, including fraud and unsafe behaviour, environmental misconduct or human rights abuses. Our Code of Conduct and related policies guide our interactions with all government representatives. Our Code of Conduct prohibits contributions from Sasol to political parties or government officials since these may be interpreted as an inducement for future beneficial treatment, and interference in the democratic process.
Item 16.C PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate audit and audit-related fees, tax fees and all other fees billed by our principal accountants (PricewaterhouseCoopers Inc.) for each of the 2023 and 2022 years.
|
|
|
|
Audit‑ |
|
|
|
All |
|
|
|
|
Audit |
|
related |
|
Tax |
|
other |
|
|
|
|
fees |
|
fees (2) |
|
fees (2) |
|
fees (2) |
|
Total |
|
|
(Rand in millions) |
||||||||
2023(1) |
|
139 |
|
1,2 |
|
1,2 |
|
— |
|
141 |
2022(1) |
|
129 |
|
0,5 |
|
1,0 |
|
— |
|
131 |
(1) | In respect of our audit committee approval process, all non-audit and audit fees paid to PricewaterhouseCoopers Inc. have been pre-approved by the audit committee. |
(2) | The Audit Committee approved non-audit services of 2% (2022: 1%) in relation to statutory audit fee. |
Audit fees consist of fees billed for the annual audit of the Company’s consolidated financial statements, review of the group’s internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act and the audit of statutory financial statements of the Company’s subsidiaries, including fees billed for assurance and related services that are reasonably related to the performance of the audit or reviews of the Company’s financial statements that are services that only an external auditor can reasonably provide.
101
Audit-related fees consist of the review of documents filed with regulatory authorities, consultations concerning financial accounting and reporting standards, review of security controls and operational effectiveness of systems, due diligence related to acquisitions and employee benefit plan audits.
Tax fees include fees billed for tax compliance services, including assistance in the preparation of original and amended tax returns; tax consultations, such as assistance in connection with tax audits and appeals; tax advice relating to acquisitions, transfer pricing, and requests for rulings or technical advice from tax authorities; and tax planning services and expatriate tax compliance, consultation and planning services.
All other fees consist of fees billed which are not included under audit fees, audit related fees or tax fees.
Audit committee approval policy
In accordance with our audit committee pre-approval policy, all audit and non-audit services performed for us by our independent accountants were approved by the audit committee of our board of directors, which concluded that the provision of such services by the independent accountants was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.
In terms of our policy, non-audit services not exceeding R500 000 that fall into the categories set out in the pre-approval policy, do not require pre-approval by the audit committee, but are pre-approved by the Senior Vice President: Financial Controlling and Governance. The audit committee is notified of each such service at its first meeting following the rendering of such service. All non-audit services exceeding R500 000 but not exceeding R2 million are pre-approved by the Chief Financial Officer. The audit committee is notified on a monthly basis of services approved within this threshold. Fees in respect of non-audit services exceeding R2 million require pre-approval by the audit committee, prior to engagement.
The total aggregate amount of non-audit fees in any one financial year must be less than 20% of the total audit fees for Sasol’s annual audit engagement, unless otherwise directed by the audit committee. In addition, services to be provided by the independent accountants that are not within the category of
approved services must be approved by the audit committee prior to engagement, regardless of the service being requested and the amount, but subject to the restriction above.
Requests or applications for services that require specific separate approval by the audit committee are required to be submitted to the audit committee by both management and the independent accountants, and must include a detailed description of the services to be provided and a joint statement confirming that the provision of the proposed services does not impair the independence of the independent accountants.
No work was performed by persons other than the principal accountant’s employees on the principal accountant’s engagement to audit Sasol Limited’s financial statements for 2023.
Item 16.D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
Item 16.E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Maximum |
|
|
|
|
|
|
|
|
number of |
|
number of |
|
|
|
|
|
|
|
|
shares |
|
shares |
|
|
Total |
|
Average |
|
Shares |
|
purchased |
|
that may |
|
|
number of |
|
price |
|
cancelled |
|
as part of |
|
yet be |
|
|
ordinary |
|
paid |
|
under the share |
|
publicly |
|
purchased |
|
|
shares |
|
per |
|
repurchase |
|
announced |
|
under the |
Period |
|
repurchased |
|
share |
|
scheme |
|
programmes |
|
programmes |
For the year ended 30 June 2023 |
|
|
|
|
|
|
|
|
|
|
2022-07-01 to 2023-06-30 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
|
— |
|
— |
|
|
Item 16.F CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
102
Item 16.G CORPORATE GOVERNANCE
Sasol maintains a primary listing of its ordinary shares and Sasol BEE ordinary shares on the Johannesburg Stock Exchange operated by the JSE and a listing of ADSs on the NYSE. We have compared our corporate governance practices to those for domestic US companies listed on the NYSE and confirm that we comply substantially with such NYSE corporate governance standards and there were no significant differences at 30 June 2023.
Refer to “Integrated Report—Governance” as contained in Exhibit 99.7, for further details of our corporate governance practices.
Item 16.H MINE SAFETY DISCLOSURE
Not applicable.
Item 16.I DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
Item 16.J INSIDER TRADING POLICIES
We will be required to comply with disclosure requirements under this item for the financial year ending 30 June 2024.
Item 17. FINANCIAL STATEMENTS
Sasol is furnishing financial statements pursuant to the instructions of Item 18 of Form 20-F.
Item 18. FINANCIAL STATEMENTS
The following consolidated financial statements, together with the auditors’ report of
PricewaterhouseCoopers Inc. (PCAOB ID No. 1308) are filed as part of this annual report on Form 20-F:
Index to Consolidated Financial Statements for the years ended 30 June 2023, 2022 and 2021
Report of the Independent Registered Public Accounting Firm (PwC) |
F-1 |
Consolidated Financial Statements* |
F |
G-1 |
* |
Refer to “Item 18—Financial Statements” which have been incorporated by reference. |
103
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Sasol Limited
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Sasol Limited and its subsidiaries (the “Company”) as of 30 June 2023 and 2022, and the related consolidated income statements, statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended 30 June 2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of 30 June 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of 30 June 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended 30 June 2023 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of 30 June 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to the level of precision applied to the impairment assessments performed on all cash generating units across the South African integrated value chain within the Energy and Chemicals Africa segments.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 15(b). We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
F-1
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F-2
Impairment assessment of property, plant and equipment
As described in Note 17 to the consolidated financial statements, the Company’s consolidated property, plant and equipment (“PPE”) at 30 June 2023 amounted to R225 472 million. Furthermore, as described in Note 8 to the consolidated financial statements, management recognised a net impairment of assets of R33 649 million for the year ended 30 June 2023, mainly related to an impairment of the Secunda liquid fuels refinery cash generating unit (“CGU”) of R35 316 million, an impairment of the South African Wax CGU of R932 million, net of a reversal of impairment to the Tetramerization CGU of R3 645 million. Management assesses non-financial assets for impairment indicators, as well as reversal of impairment indicators at each reporting date or whenever events or changes in circumstances indicate that the carrying value may not be recoverable or previous impairment should be reversed. Recoverable amounts are estimated for individual assets or, where an individual asset cannot generate cash inflows independently, the recoverable amount is determined for the larger CGU to which it belongs. Management judgement is applied in identifying CGUs. The recoverable amount of the assets assessed for impairment is determined based on the higher of the fair value less costs to sell or value-in-use calculations. Future cash flow assumptions relating to this valuation are estimated based on financial budgets which reflect the long term plans for the Company. The determination of future cash flows include significant management judgement and assumptions, including crude oil prices, gas prices, chemical prices, exchange rates, growth rates, weighted average cost of capital (“WACC”) rates and carbon tax.
The principal considerations for our determination that performing procedures relating to the impairment assessment of PPE is a critical audit matter are (i) the significant judgements by management when identifying CGUs, as well as in developing their assessment of the recoverable amount for all CGUs where impairment indicators or indicators for the reversal of impairment were identified; (ii) a high degree of auditor judgement, subjectivity and effort in evaluating management’s identification of CGUs and main assumptions, including crude oil prices, gas prices, chemical prices, exchange rates, growth rates, WACC rates and carbon tax; and (iii) the audit effort involved the use of professionals with specialised skill and knowledge. As described in the “Opinions on the Financial Statements and Internal Control over Financial Reporting” section, a material weakness was identified related to this matter.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s budgeting process and impairment calculations, including controls relating to the main assumptions used in these calculations. These procedures also included, among others, an assessment of the appropriateness of the CGUs identified by management, testing management’s process for determining the recoverable amount of the CGUs where impairment indicators or reversal of impairment indicators were identified, evaluating the appropriateness of the methodology used in the impairment models, testing the completeness, accuracy, and relevance of underlying data used in the impairment models, and evaluating the main assumptions used by management. Evaluating the reasonableness of management’s assumptions involved (i) evaluating key market-related assumptions (including crude oil prices, gas prices, chemical prices, exchange rates, growth rates and WACC rates) used in the models to external market and third party data, (ii) evaluating the impact to long term business plans of implementing the Company’s Emission Reduction Roadmap and the impact of carbon tax based on the latest Taxation Laws Amendment Act in South Africa, (iii) performing a retrospective comparison of forecasted cash flows to actual past performance and previous forecasts, and (iv) performing sensitivity analyses. Professionals with specialised skill and knowledge were used to assist in evaluating the appropriateness of the methodology applied in the impairment models and evaluating the reasonableness of the WACC rates assumption.
/s/ PricewaterhouseCoopers Inc.
Johannesburg, Republic of South Africa
1 September 2023
We have served as the Company’s auditor since 2013.
F-3
SUPPLEMENTAL OIL AND GAS INFORMATION (unaudited)
In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Section 932, “Extractive Industries—Oil and Gas”, and regulations of the SEC, this section provides supplemental oil and gas information separately about our natural oil and gas exploration and production operations, as managed by GSO, which forms part of our Gas segment; and about our coal mining operations and the conversion of coal reserves to synthetic oil, as managed by our Mining segment and Secunda Operations.
NATURAL OIL AND GAS
The supplemental information provided below relates to our natural oil and gas operations, which are managed by GSO.
Tables 1 through to 3 present historical information pertaining to costs incurred for property acquisitions, exploration and development, capitalised costs, and results of operations. Table 4 presents estimates of proved developed and proved undeveloped reserves (which are not supplemental). Tables 5 and 6 present information on the standardised measure of estimated discounted future net cash flows related to proved reserves and changes therein.
TABLE 1—COSTS INCURRED FOR PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT ACTIVITIES
The table below presents the costs incurred, during the last three years, in natural oil and gas property acquisition, exploration and development activities, whether capitalised or charged to income directly.
|
|
Natural Oil and Gas (Rand in millions) |
||||||
|
|
|
|
|
|
|
|
|
|
|
Mozambique |
|
Gabon(1) |
|
Canada(2) |
|
Total |
Year ended 30 June 2021 |
|
|
|
|
|
|
|
|
Acquisition of proved properties |
|
— |
|
— |
|
— |
|
— |
Acquisition of unproved properties |
|
— |
|
— |
|
— |
|
— |
Exploration |
|
113,4 |
|
45,6 |
|
— |
|
159,0 |
Development |
|
1 956,7 |
|
198,0 |
|
458,5 |
|
2 613,2 |
Total costs incurred |
|
2 070,1 |
|
243,6 |
|
458,5 |
|
2 772,2 |
Year ended 30 June 2022 |
|
|
|
|
|
|
|
|
Acquisition of proved properties |
|
— |
|
— |
|
— |
|
— |
Acquisition of unproved properties |
|
— |
|
— |
|
— |
|
— |
Exploration |
|
77,5 |
|
— |
|
— |
|
77,5 |
Development |
|
2 885,1 |
|
— |
|
— |
|
2 885,1 |
Total costs incurred |
|
2 962,6 |
|
— |
|
— |
|
2 962,6 |
Year ended 30 June 2023 |
|
|
|
|
|
|
|
|
Acquisition of proved properties |
|
— |
|
— |
|
— |
|
— |
Acquisition of unproved properties |
|
— |
|
— |
|
— |
|
— |
Exploration |
|
1 455,5 |
|
— |
|
— |
|
1 455,5 |
Development |
|
4 186,5 |
|
— |
|
— |
|
4 186,5 |
Total costs incurred |
|
5 642,0 |
|
— |
|
— |
|
5 642,0 |
(1) | Costs incurred up to 25 February 2021, which was the effective date of divestment of our interests in the EMP in Gabon. |
(2) | The transaction to divest of all our interests in Canada was closed on 29 July 2021. |
G-1
TABLE 2—CAPITALISED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
The table below summarises the aggregate amount of property, plant and equipment and intangible assets relating to natural oil and gas exploration and production activities, and the aggregate amount of the related depreciation and amortisation.
|
|
|
|
|
|
|
|
|
|
Mozambique |
|
|
Canada(1) |
|
Total |
Year ended 30 June 2021 |
|
|
|
|
|
|
|
Proved properties |
|
11 215,5 |
|
|
33 045,7 |
|
44 261,2 |
Producing wells and equipment |
|
10 292,5 |
|
|
33 045,7 |
|
43 338,2 |
Non-producing wells and equipment |
|
923,0 |
|
|
— |
|
923,0 |
Unproved properties |
|
8 469,6 |
|
|
— |
|
8 469,6 |
Capitalised costs |
|
19 685,1 |
|
|
33 045,7 |
|
52 730,8 |
Accumulated depreciation |
|
(8 287,5) |
|
|
(31 816,2) |
|
(40 103,7) |
Net book value |
|
11 397,6 |
|
|
1 229,5 |
|
12 627,1 |
Year ended 30 June 2022 |
|
|
|
|
|
|
|
Proved properties |
|
20 885,2 |
|
|
— |
|
20 885,2 |
Producing wells and equipment |
|
10 305,0 |
|
|
— |
|
10 305,0 |
Non-producing wells and equipment |
|
10 580,2 |
|
|
— |
|
10 580,2 |
Unproved properties |
|
1 171,4 |
|
|
— |
|
1 171,4 |
Capitalised costs |
|
22 056,6 |
|
|
— |
|
22 056,6 |
Accumulated depreciation and valuation allowances |
|
(8 611,3) |
|
|
— |
|
(8 611,3) |
Net book value |
|
13 445,3 |
|
|
— |
|
13 445,3 |
Year ended 30 June 2023 |
|
|
|
|
|
|
|
Proved properties |
|
24 635,9 |
|
|
— |
|
24 635,9 |
Producing wells and equipment |
|
11 830,3 |
|
|
— |
|
11 830,3 |
Non-producing wells and equipment |
|
12 805,6 |
|
|
— |
|
12 805,6 |
Unproved properties |
|
2 429,0 |
|
|
— |
|
2 429,0 |
Capitalised costs |
|
27 064,9 |
|
|
— |
|
27 064,9 |
Accumulated depreciation and valuation allowances |
|
(10 524,1) |
|
|
— |
|
(10 524,1) |
Net book value |
|
16 540,8 |
|
|
— |
|
16 540,8 |
(1) | The transaction to divest of all our interests in Canada was closed on 29 July 2021. |
G-2
TABLE 3—RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
The results of operations for natural oil and gas producing activities are summarised in the table below.
|
|
Mozambique |
|
Gabon(1) |
|
Canada(2) |
|
Total |
Year ended 30 June 2021 |
|
|
|
|
|
|
|
|
Sales to unaffiliated parties |
|
253,9 |
|
668,5 |
|
405,1 |
|
1 327,5 |
Transfers to affiliated parties |
|
2 566,5 |
|
— |
|
— |
|
2 566,5 |
Total revenues |
|
2 820,4 |
|
668,5 |
|
405,1 |
|
3 894,0 |
Production Costs(4) |
|
(722,8) |
|
(372,9) |
|
(314,9) |
|
(1 410,6) |
Foreign currency translation losses |
|
1 313,2 |
|
(334,8) |
|
— |
|
978,4 |
Exploration expenses |
|
(286,6) |
|
(50,5) |
|
— |
|
(337,1) |
Farm-out gains |
|
— |
|
277,0 |
|
— |
|
277,0 |
Valuation provision(3) |
|
(1 947,5) |
|
(47,9) |
|
548,3 |
|
(1 447,1) |
Depreciation |
|
(817,8) |
|
(195,3) |
|
(169,9) |
|
(1 183,0) |
Operating profit/(loss) |
|
358,9 |
|
(55,9) |
|
468,6 |
|
771,6 |
Tax |
|
306,6 |
|
(107,1) |
|
— |
|
199,5 |
Results of operations |
|
665,5 |
|
(163,0) |
|
468,6 |
|
971,1 |
Year ended 30 June 2022 |
|
|
|
|
|
|
|
|
Sales to unaffiliated parties |
|
448,3 |
|
— |
|
39,7 |
|
488,0 |
Transfers to affiliated parties |
|
3 743,1 |
|
— |
|
— |
|
3 743,1 |
Total revenues |
|
4 191,4 |
|
— |
|
39,7 |
|
4 231,1 |
Production Costs(4) |
|
(1 514,1) |
|
— |
|
(29,5) |
|
(1 543,6) |
Foreign currency translation losses |
|
(237,6) |
|
— |
|
— |
|
(237,6) |
Exploration expenses |
|
(400,9) |
|
— |
|
— |
|
(400,9) |
Valuation provision |
|
0,2 |
|
— |
|
— |
|
0,2 |
Depreciation |
|
(336,8) |
|
— |
|
— |
|
(336,8) |
Operating profit |
|
1 702,2 |
|
— |
|
10,2 |
|
1 712,4 |
Tax |
|
(526,2) |
|
— |
|
— |
|
(526,2) |
Results of operations |
|
1 176,0 |
|
— |
|
10,2 |
|
1 186,2 |
Year ended 30 June 2023 |
|
|
|
|
|
|
|
|
Sales to unaffiliated parties |
|
1 005,6 |
|
— |
|
|
|
1 005,6 |
Transfers to affiliated parties |
|
5 532,6 |
|
— |
|
— |
|
5 532,6 |
Total revenues |
|
6 538,2 |
|
— |
|
— |
|
6 538,2 |
Production Costs(4) |
|
(270,9) |
|
— |
|
— |
|
(270,9) |
Foreign currency translation losses |
|
(146,9) |
|
— |
|
— |
|
(146,9) |
Exploration expenses |
|
(1 192,4) |
|
— |
|
— |
|
(1 192,4) |
Farm-out gains |
|
269,8 |
|
— |
|
— |
|
269,8 |
Valuation provision(3) |
|
(1 600,5) |
|
— |
|
— |
|
(1 600,5) |
Depreciation |
|
(320,0) |
|
— |
|
— |
|
(320,0) |
Operating profit |
|
3 277,3 |
|
— |
|
— |
|
3 277,3 |
Tax |
|
(1 173,7) |
|
— |
|
— |
|
(1 173,7) |
Results of operations |
|
2 103,6 |
|
— |
|
— |
|
2 103,6 |
(1) | Include results of operation up to the effective date of divestment from our licences in Gabon, being 25 February 2021 for the EMP and 4 May 2021 for the DE-8 permit. |
(2) | The transaction to divest of all our interests in Canada was closed on 29 July 2021. |
(3) | Valuation provision of R1 600,5 million (US$139,3 million) (2022 – none and 2021 – R1 947,5 million (US$136,4 million)) is mainly as a result of the integrated value chain impairment assessment allocation. Valuation provision of R47,9 million (US$2,9 million) for Gabon relates to an impairment of the DE-8 permit offshore Gabon at 31 December 2020. Valuation provision of R548,3 million (CAD45,3 million) for Canada relates to an impairment reversal of our Canada shale gas assets at 30 June 2021. |
(4) | Production cost includes the asset retirement obligation movement of R865,5 million (2022 – (R378,6 million) and 2021 – R23,4 million) for the year. |
G-3
TABLE 4—PROVED RESERVE QUANTITY INFORMATION
The table below summarises the proved developed and proved undeveloped reserves of natural oil and gas, as at 30 June 2023 and the two previous years, along with volumes produced during the year. The table also presents the changes in the proved reserves and the reasons for the changes, over the last three years.
As at 30 June 2023, the total proved reserve estimate for natural oil and gas is 126,8 million barrels in oil equivalent terms (6 000 standard cubic feet of natural gas is equivalent to 1 barrel of oil and 1 tonne of LPG is equivalent to 11,6 barrels of oil).
|
|
Crude oil and condensate(2) |
|
Natural gas(2) |
|
Oil equivalent(2) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mozambique(1) |
|
Gabon(3) |
|
Canada(4) |
|
Total |
|
Mozambique(1) |
|
Canada(4) |
|
Total |
|
Mozambique(1) |
|
Gabon(3) |
|
Canada(4) |
|
Total |
|
|
Millions of barrels |
|
Billions of cubic feet |
|
Equivalent, Millions of barrels |
||||||||||||||||
Balance at 30 June 2020 |
|
1,0 |
|
1,9 |
|
0,4 |
|
3,3 |
|
800,5 |
|
56,9 |
|
857,4 |
|
134,5 |
|
1,9 |
|
9,9 |
|
146,3 |
Revisions |
|
(0,1) |
|
— |
|
0,4 |
|
0,3 |
|
(155,8) |
|
31,9 |
|
(123,9) |
|
(26,1) |
|
— |
|
5,7 |
|
(20,4) |
Sale in place |
|
— |
|
(1,0) |
|
(0,7) |
|
(1,7) |
|
— |
|
(76,4) |
|
(76,4) |
|
— |
|
(1,0) |
|
(13,4) |
|
(14,4) |
Production |
|
(0,2) |
|
(0,9) |
|
(0,1) |
|
(1,2) |
|
(114,5) |
|
(12,4) |
|
(126,9) |
|
(19,3) |
|
(0,9) |
|
(2,2) |
|
(22,4) |
Balance at 30 June 2021 |
|
0,7 |
|
— |
|
— |
|
0,7 |
|
530,2 |
|
— |
|
530,2 |
|
89,1 |
|
— |
|
— |
|
89,1 |
Revisions |
|
0,4 |
|
— |
|
— |
|
0,4 |
|
228,2 |
|
— |
|
228,2 |
|
38,4 |
|
— |
|
— |
|
38,4 |
Extensions/discoveries |
|
4,3 |
|
— |
|
— |
|
4,3 |
|
166,5 |
|
— |
|
166,5 |
|
32,0 |
|
— |
|
— |
|
32,0 |
Production |
|
(0,2) |
|
— |
|
— |
|
(0,2) |
|
(111,2) |
|
— |
|
(111,2) |
|
(18,7) |
|
— |
|
— |
|
(18,7) |
Balance at 30 June 2022 |
|
5,2 |
|
— |
|
— |
|
5,2 |
|
813,7 |
|
— |
|
813,7 |
|
140,8 |
|
— |
|
— |
|
140,8 |
Revisions |
|
— |
|
— |
|
— |
|
— |
|
12,1 |
|
— |
|
12,1 |
|
2,0 |
|
— |
|
|
|
2,0 |
Improved recovery |
|
0,2 |
|
— |
|
— |
|
0,2 |
|
17,5 |
|
— |
|
17,5 |
|
3,1 |
|
— |
|
|
|
3,1 |
Production |
|
(0,2) |
|
— |
|
— |
|
(0,2) |
|
(113,8) |
|
— |
|
(113,8) |
|
(19,1) |
|
— |
|
|
|
(19,1) |
Balance at 30 June 2023 |
|
5,2 |
|
— |
|
— |
|
5,2 |
|
729,5 |
|
— |
|
729,5 |
|
126,8 |
|
— |
|
|
|
126,8 |
Proved developed reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2021 |
|
0,6 |
|
— |
|
— |
|
0,6 |
|
423,8 |
|
— |
|
423,8 |
|
71,3 |
|
— |
|
— |
|
71,3 |
At 30 June 2022 |
|
0,9 |
|
— |
|
— |
|
0,9 |
|
599,3 |
|
— |
|
599,3 |
|
100,8 |
|
— |
|
— |
|
100,8 |
At 30 June 2023 |
|
0,8 |
|
— |
|
— |
|
0,8 |
|
544,7 |
|
— |
|
544,7 |
|
91,6 |
|
— |
|
— |
|
91,6 |
Proved undeveloped reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2021 |
|
0,1 |
|
— |
|
— |
|
0,1 |
|
106,4 |
|
— |
|
106,4 |
|
17,8 |
|
— |
|
— |
|
17,8 |
At 30 June 2022 |
|
4,3 |
|
— |
|
— |
|
4,3 |
|
214,4 |
|
— |
|
214,4 |
|
40,0 |
|
— |
|
— |
|
40,0 |
At 30 June 2023 |
|
4,4 |
|
— |
|
— |
|
4,4 |
|
184,8 |
|
— |
|
184,8 |
|
35,2 |
|
— |
|
— |
|
35,2 |
(1) | Natural oil and gas production in Mozambique in 2021, 2022 and 2023 originated from the single operational Pande-Temane PPA field, which comprises more than 15% of our total proved reserves. |
(2) | Volumes presented in this table are after deduction of royalty taken in kind. |
(3) | Quantities for the EMP asset in Gabon include “tax barrels”. Effective date of divestment of our interests in EMP was 25 February 2021. |
(4) | The transaction to divest of all our interests in Canada was closed on 29 July 2021 |
G-4
Preparation of reserve estimates
To ensure GSO’s internal estimates of natural oil and gas reserves are appropriate, are accurately disclosed and are compliant with current SEC regulations and FASB requirements, GSO has established and maintains an estimation system comprising guidelines, procedures and standards, which are subject to review by suitably experienced independent external consultants, and a set of internal controls, which are in accordance with the requirements of the Sarbanes-Oxley Act. The internal controls cover, among other matters, the segregation of duties between the asset teams which prepare the reserve estimates and, the corporate reserves team which maintains the system and assures the estimates. The controls also include confirmation that the members of the corporate reserves team are appropriately qualified and experienced and that their compensation arrangements are not materially affected by the reserves.
The internal estimation process includes a review of all estimated future production rates and future capital and operating costs to ensure that the assumptions, data, methods and procedures are appropriate; a review of the technologies used in the process to determine reliability; and arrangements to validate the economic assumptions and to ensure that only accurate, complete and consistent data are used in the estimation of reserves.
The technical person within GSO who is primarily responsible for overseeing the internal preparation of natural oil and gas reserves estimates is the Manager: Corporate Reserves and Technical Assurance. The incumbent is a Member of the Energy Institute, a Chartered Petroleum Engineer, holds a MA and MSc in Mathematics and has 44 years’ experience in oil and gas exploration and production activities with 35 years’ experience in reserves estimation. The corporate authority accountable for the internal process, the control environment and the engagement of independent qualified reserves evaluators (if any) is the GSO Senior Vice President under guidance of the GSO Hydrocarbon Resource Committee.
The definitions of categories of natural oil and gas reserves used in this disclosure are consistent with those set forth in the Regulations:
Proved reserves of oil and gas—Those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract hydrocarbons must be approved and must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. Additionally, Sasol requires that natural oil and gas reserves will be produced by a “project sanctioned by all internal and external parties”.
Existing economic conditions define prices and costs at which economic producibility is to be determined. The price is the average sales price during the 12-month period prior to the ending date of the period covered by the report, determined as an un-weighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements. Future price changes are limited to those provided by contractual arrangements in existence at year-end. At the reporting date, product sales prices were determined by existing contracts for the majority of Sasol’s natural oil and gas reserves. Costs comprise development and production expenditure, assessed in real terms, applicable to the reserves class being estimated. Depending upon the status of development proved reserves of oil and gas are subdivided into “Proved Developed Reserves” and “Proved Undeveloped Reserves”.
Proved developed reserves—Those proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods (or in which the cost of the required equipment is relatively minor compared to the cost of a new well) and through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.
Proved undeveloped reserves—Those proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required before production can commence.
G-5
Definitions of Changes to Proved Reserves
The definitions of the changes to Proved Reserves estimates used in this disclosure are consistent with FASB ASC 932-235-50-5.
TABLE 5—STANDARDISED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED RESERVES
The standardised measures of discounted future net cash flows, relating to natural oil and gas proved reserves for the last three years, are shown in the table below.
|
|
Natural Oil and Gas |
|
|
|
|
|
|
|
Mozambique |
|
Year ended 30 June 2021 |
|
|
|
Future cash inflows |
|
12 314,7 |
|
Future production costs |
|
(4 169,1) |
|
Future development costs |
|
(4 031,5) |
|
Future income taxes |
|
(2 486,5) |
|
Undiscounted future net cash flows |
|
1 627,6 |
|
10% annual discount for timing of estimated cash flows |
|
109,8 |
|
Standardised measure of discounted future net cash flows |
|
1 737,4 |
|
Year ended 30 June 2022 |
|
|
|
Future cash inflows |
|
43 159,0 |
|
Future production costs |
|
(9 429,6) |
|
Future development costs |
|
(15 625,7) |
|
Future income taxes |
|
(6 445,5) |
|
Undiscounted future net cash flows |
|
11 658,2 |
|
10% annual discount for timing of estimated cash flows |
|
(6 229,3) |
|
Standardised measure of discounted future net cash flows |
|
5 428,9 |
|
Year ended 30 June 2023 |
|
|
|
Future cash inflows |
|
54 454,1 |
|
Future production costs |
|
(14 933,5) |
|
Future development costs |
|
(17 474,4) |
|
Future income taxes |
|
(8 091,7) |
|
Undiscounted future net cash flows |
|
13 954,5 |
|
10% annual discount for timing of estimated cash flows |
|
(4 873,0) |
|
Standardised measure of discounted future net cash flows |
|
9 081,5 |
|
Standardised measure of discounted future net cash flows
The standardised measure of discounted future net cash flows, relating to the proved reserves in the table above, are calculated in accordance with the requirements of FASB ASC Section 932-235. Future cash inflows are computed by applying the prices used in estimating proved reserves to the year-end quantities of those reserves. Future development and production costs are computed by applying the costs used in estimating proved reserves. Future income taxes are computed by applying the appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, to the future pre-tax net cash flows relating to the reserves, less the tax basis of the properties involved. The future income tax expenses therefore give effect to the tax deductions, tax credits and allowances relating to the reserves.
Discounted future net cash flows are the result of subtracting future development and production costs and future income taxes from the cash inflows. A discount rate of 10 percent a year is applied to reflect the timing of the future net cash flows relating to the reserves.
G-6
The information provided here does not represent management’s estimate of the expected future cash flows or value of the properties. Estimates of reserves are imprecise and will change over time as new information becomes available. Moreover, probable and possible reserves along with other classes of resources, which may become proved reserves in the future, are excluded from the calculations. The valuation prescribed under FASB ASC Section 932 requires assumptions as to the timing and amount of future development and production costs. The calculations are made as of 30 June each year and should not be relied upon as an indication of the company’s future cash flows or value of natural oil and gas reserves.
TABLE 6—CHANGES IN THE STANDARDISED MEASURE OF DISCOUNTED NET CASH FLOWS
The changes in standardised measure of discounted future net cash flows, relating to the Proved Reserves are shown in the table below.
|
|
Natural Oil and Gas (Rand in millions) |
||||||
|
|
|
|
|
|
|
|
|
|
|
Mozambique |
|
Gabon(1) |
|
Canada(2) |
|
Total |
Present value at 30 June 2020 |
|
6 724,8 |
|
(274,1) |
|
(1 003,2) |
|
5 447,5 |
Net changes for the year |
|
(4 987,4) |
|
274,1 |
|
1 003,2 |
|
(3 710,1) |
Sales and transfers of oil and gas produced net of production costs |
|
(2 012,2) |
|
(362,9) |
|
(74,9) |
|
(2 450,0) |
Development costs incurred |
|
211,5 |
|
53,6 |
|
(13,6) |
|
251,5 |
Net change due to current reserves estimates from: |
|
|
|
|
|
|
|
|
Revisions |
|
(1 936,2) |
|
— |
|
1 018,8 |
|
(917,4) |
Sale in place |
|
— |
|
583,4 |
|
255,5 |
|
838,9 |
Others |
|
— |
|
— |
|
(140,4) |
|
(140,4) |
Net changes in prices and costs related to future production |
|
(2 506,8) |
|
— |
|
33,9 |
|
(2 472,9) |
Changes in estimated future development costs |
|
110,1 |
|
— |
|
56,3 |
|
166,4 |
Accretion of discount |
|
1 081,2 |
|
— |
|
(103,2) |
|
978,0 |
Net change in income tax |
|
2 159,2 |
|
— |
|
— |
|
2 159,2 |
Net change due to exchange rate |
|
(2 094,2) |
|
— |
|
(29,2) |
|
(2 123,4) |
Present value at 30 June 2021 |
|
1 737,4 |
|
— |
|
— |
|
1 737,4 |
Net changes for the year |
|
3 691,5 |
|
— |
|
— |
|
3 691,5 |
Sales and transfers of oil and gas produced net of production costs |
|
(3 284,5) |
|
— |
|
— |
|
(3 284,5) |
Development costs incurred |
|
1 750,9 |
|
— |
|
— |
|
1 750,9 |
Net change due to current reserves estimates from: |
|
|
|
|
|
|
|
|
Revisions |
|
4 829,6 |
|
— |
|
— |
|
4 829,6 |
Discoveries |
|
8 360,1 |
|
— |
|
— |
|
8 360,1 |
Others |
|
— |
|
— |
|
— |
|
— |
Net changes in prices and costs related to future production |
|
3 456,3 |
|
— |
|
— |
|
3 456,3 |
Changes in estimated future development costs |
|
(9 648,8) |
|
— |
|
— |
|
(9 648,8) |
Accretion of discount |
|
366,5 |
|
— |
|
— |
|
366,5 |
Net change in income tax |
|
(2 704,7) |
|
— |
|
— |
|
(2 704,7) |
Net change due to exchange rate |
|
566,1 |
|
— |
|
— |
|
566,1 |
Present value at 30 June 2022 |
|
5 428,9 |
|
— |
|
— |
|
5 428,9 |
Net changes for the year |
|
3 652,6 |
|
— |
|
— |
|
3 652,6 |
Sales and transfers of oil and gas produced net of production costs |
|
(5 608,4) |
|
— |
|
— |
|
(5 608,4) |
Development costs incurred |
|
6 779,1 |
|
— |
|
— |
|
6 779,1 |
Net change due to current reserves estimates from: |
|
|
|
|
|
|
|
|
Revisions |
|
(386,7) |
|
— |
|
— |
|
(386,7) |
Improved recovery |
|
1 436,0 |
|
— |
|
— |
|
1 436,0 |
Net changes in prices and costs related to future production |
|
4 443,8 |
|
— |
|
— |
|
4 443,8 |
Changes in estimated future development costs |
|
(4 361,6) |
|
— |
|
— |
|
(4 361,6) |
Accretion of discount |
|
1 012,9 |
|
— |
|
— |
|
1 012,9 |
Net change in income tax |
|
(1 410,7) |
|
— |
|
— |
|
(1 410,7) |
Net change due to exchange rate |
|
1 748,2 |
|
— |
|
— |
|
1 748,2 |
Present value at 30 June 2023 |
|
9 081,5 |
|
— |
|
— |
|
9 081,5 |
(1) | Effective date of divestment of our interests in the EMP in Gabon was 25 February 2021. |
(2) | The transaction to divest of all our interests in Canada was closed on 29 July 2021. |
G-7
SYNTHETIC OIL
TABLE 1—COSTS INCURRED FOR PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT ACTIVITIES
The table below provides the costs incurred during the year in synthetic oil property acquisition, exploration and development activities, whether capitalised or charged to income directly.
|
|
Synthetic oil—South Africa |
||||
|
|
(Rand in millions) |
||||
Year ended 30 June |
|
2023 |
|
2022 |
|
2021 |
Acquisition of proved properties |
|
— |
|
7,3 |
|
— |
Exploration |
|
105,1 |
|
91,7 |
|
77,3 |
Development |
|
2 341,2 |
|
1 897,0 |
|
1 656,9 |
Total costs incurred |
|
2 446,3 |
|
1 996,0 |
|
1 734,2 |
TABLE 2—CAPITALISED COSTS RELATING TO SYNTHETIC OIL ACTIVITIES
The table below summarises the aggregate amount of property, plant and equipment and intangible assets relating to synthetic oil and production activities, and the aggregate amount of the related depreciation and amortisation.
|
|
Synthetic oil—South Africa |
|
||||
|
|
(Rand in millions) |
|
||||
Year ended 30 June |
|
2023 |
|
2022 |
|
2021 |
|
Proved properties |
|
120 267,6 |
|
113 255,5 |
|
107 786,9 |
|
Producing wells and equipment |
|
119 617,2 |
|
112 605,5 |
|
107 136,9 |
|
Non-producing wells and equipment |
|
650,4 |
|
650,0 |
|
650,0 |
|
Unproved properties |
|
15,8 |
|
15,8 |
|
61,1 |
|
Capitalised costs |
|
120 283,4 |
|
113 271,3 |
|
107 848,0 |
|
Accumulated depreciation, amortisation and valuation allowances |
|
(97 635,9) |
|
(69 389,2) |
|
(67 677,5) |
(1) |
Net book value |
|
22 647,5 |
|
43 882,1 |
|
40 170,5 |
|
(1) | As result of the integrated value chain impairment assessment, management has applied discretion in changing the allocation methodology for impairments. This resulted in the correction of the 2020 accumulated depreciation, amortisation and valuation allowances from R47,3 billion to R45,1 billion in financial year 2021, which is immaterial. |
TABLE 3—RESULTS OF OPERATIONS FOR SYNTHETIC OIL ACTIVITIES
The results of operations for synthetic oil activities are summarised in the table below.
|
|
Synthetic oil—South Africa |
|
||||
|
|
(Rand in millions) |
|
||||
Year ended 30 June |
|
2023 |
|
2022 |
|
2021 |
|
Sales to unaffiliated parties |
|
— |
|
— |
|
— |
|
Transfers to affiliated parties |
|
72 224,2 |
|
61 996,5 |
|
41 307,2 |
|
Total revenues |
|
72 224,2 |
|
61 996,5 |
|
41 307,2 |
|
Production costs |
|
(34 153,3) |
|
(30 958,7) |
|
(27 640,6) |
|
Foreign currency translation (losses)/gains |
|
(51,4) |
|
(17,7) |
|
2 098,4 |
|
Exploration expenses |
|
(28,1) |
|
(21,5) |
|
(40,3) |
|
Depreciation, amortisation and valuation provisions |
|
(32 260,1) |
|
(4 638,0) |
|
(23 729,3) |
(1) |
Operating profit/(loss) |
|
5 731,3 |
|
26 360,6 |
|
(8 004,6) |
|
Tax |
|
393,1 |
|
(6 271,8) |
|
2 294,4 |
|
Results of operations |
|
6 124,4 |
|
20 088,8 |
|
(5 710,2) |
|
(1) | As result of the integrated value chain impairment assessment, management has applied discretion in changing the allocation methodology for impairments. This resulted in the correction of the 2020 accumulated depreciation, amortisation and valuation allowances from R14,8 billion to R12,6 billion in financial year 2021, which is immaterial. |
G-8
TABLE 4—PROVED RESERVE QUANTITY INFORMATION
Proved reserves
The table below summarises proved developed and proved undeveloped reserves of synthetic oil as at 30 June, for the last three years. As at 30 June 2023, the total proved reserve estimate for synthetic oil is 1 043,3 million barrels in oil equivalent terms.
|
|
Synthetic oil—South Africa |
||||
|
|
(Millions of barrels) |
||||
|
|
2023 |
|
2022 |
|
2021 |
Opening balance |
|
1 081,2 |
|
1 126,4 |
|
1 171,6 |
Revisions |
|
(5,4) |
|
(12,6) |
|
(9,7) |
Extensions/discoveries |
|
— |
|
— |
|
— |
Production |
|
(32,5) |
|
(32,6) |
|
(35,5) |
Balance at 30 June |
|
1 043,3 |
|
1 081,2 |
|
1 126,4 |
Proved developed reserves |
|
1 043,3 |
|
1 081,2 |
|
1 126,4 |
Proved undeveloped reserves |
|
— |
|
— |
|
— |
TABLE 5—STANDARDISED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED RESERVES
|
|
Synthetic oil—South Africa |
||||
|
|
(Rand in millions) |
||||
Year ended 30 June |
|
2023 |
|
2022 |
|
2021 |
Future cash inflows(1) |
|
1 655 424,1 |
|
1 449 554,7 |
|
913 301,8 |
Future production costs |
|
(879 607,7) |
|
(773 811,3) |
|
(625 923,3) |
Future development costs |
|
(257 579,0) |
|
(203 400,6) |
|
(201 910,1) |
Future income taxes |
|
(139 924,1) |
|
(127 532,5) |
|
(35 537,8) |
Undiscounted future net cash flows |
|
378 313,3 |
|
344 810,3 |
|
49 930,6 |
10% annual discount for timing of estimated cash flows |
|
(242 023,8) |
|
(210 575,2) |
|
(33 932,3) |
Standardised measure of discounted future net cash flows |
|
136 289,5 |
|
134 235,1 |
|
15 998,3 |
(1) | Increase mainly due to an improved outlook on average sales price per barrel resulting from higher global oil prices and the weakening of the rand against the US dollar. |
The standardised measure of discounted future net cash flows, relating to the proved reserves in the table above, are calculated in accordance with the requirements of FASB ASC Section 932-235.
G-9
TABLE 6—CHANGES IN THE STANDARDISED MEASURE OF DISCOUNTED NET CASH FLOWS
|
|
Synthetic oil—South Africa |
||||
|
|
(Rand in millions) |
||||
|
|
2023 |
|
2022 |
|
2021 |
Present value—opening balance |
|
134 235,1 |
|
15 998,3 |
|
(1 472,1) |
Net changes for the year |
|
2 054,4 |
|
118 236,8 |
|
17 470,4 |
Sales and transfers of oil and gas produced net of production costs |
|
(38 070,9) |
|
(31 037,8) |
|
(13 666,7) |
Development costs incurred |
|
8 944,6 |
|
8 485,6 |
|
5 848,1 |
Revisions |
|
(23 074,1) |
|
(12 884,4) |
|
2 096,8 |
Extensions |
|
— |
|
— |
|
— |
Net changes in prices and costs related to future production |
|
(49 261,1) |
|
211 915,7 |
|
(5 925,9) |
Changes in estimated future development costs |
|
(22 153,9) |
|
(3 671,5) |
|
34 264,9 |
Accretion of discount |
|
12 510,6 |
|
1 417,9 |
|
(433,2) |
Net change in income tax |
|
3 867,4 |
|
(36 168,8) |
|
(5 560,8) |
Net change due to exchange rate |
|
109 291,8 |
|
(19 819,9) |
|
847,2 |
Present value at 30 June |
|
136 289,5 |
|
134 235,1 |
|
15 998,3 |
Excluded from the future earnings, capital expenditure and carrying values are the impacts of the sale of the 16 air separation units located in Secunda. Finalisation of the transaction with Air Liquide was concluded in June 2021 following the approval from the South African competition authorities.
Standardised measure of discounted future net cash flows
The standardised measure of discounted future net cash flows, relating to the proved reserves in the table above, are calculated in accordance with the requirements of FASB ASC Section 932-235. Future cash inflows are computed by applying the prices used in estimating proved reserves to the year-end quantities of those reserves. Future development and production costs are computed by applying the costs used in estimating proved reserves. Future income taxes are computed by applying the appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, to the future pre-tax net cash flows relating to the reserves, less the tax basis of the properties involved. The future income tax expenses therefore give effect to the tax deductions, tax credits and allowances relating to the reserves.
Discounted future net cash flows are the result of subtracting future development and production costs and future income taxes from the cash inflows. A discount rate of 10 percent a year is applied to reflect the timing of the future net cash flows relating to the reserves. The information provided here does not represent management’s estimate of the expected future cash flows or value of the properties. Estimates of reserves are imprecise and will change over time as new information becomes available. Moreover, probable and possible reserves along with other classes of resources, which may become proved reserves in the future, are excluded from the calculations. The valuation prescribed under FASB ASC Section 932 requires assumptions as to the timing and amount of future development and production costs. The calculations are made as of 30 June each year and should not be relied upon as an indication of the companies’ future cash flows or value of synthetic oil reserves.
G-10
ITEM 19. EXHIBITS
1.1 |
|
|
2.1 |
|
The amount of long-term debt securities issued by Sasol Limited and its subsidiaries authorised under any given instrument does not exceed 10% of the total assets of Sasol Limited and its subsidiaries on a consolidated basis. Sasol Limited hereby agrees to furnish to the SEC a copy of any such instrument upon its request. |
2.2 |
|
Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 |
4.1 |
|
|
4.2 |
|
Trust Deed constituting the Sasol Khanyisa Employee Share Ownership Plan* |
8.1 |
|
List of significant subsidiaries and significant jointly controlled entities* |
12.1 |
|
|
12.2 |
|
|
13.1 |
|
|
15.1 |
|
Consent of independent registered public accounting firm—PwC |
96.1 |
|
|
99.1 |
|
|
99.2 |
|
|
99.3 |
|
Integrated Report—Performance Overview—Chief Financial Officer’s review |
99.4 |
|
Integrated Report—Preserving and maximising value creation – Our integrated value chains |
99.5 |
|
|
99.6 |
|
|
99.7 |
|
|
99.9.1 |
|
|
99.9.2 |
|
Terms of reference—Audit Committee and Remuneration Committee* |
101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema |
101.CAL |
|
Inline XBRL Taxonomy Extension Schema Calculation Linkbase |
101.DEF |
|
Inline XBRL Taxonomy Extension Schema Definition Linkbase |
101.LAB |
|
Inline XBRL Taxonomy Extension Schema Label Linkbase |
101.PRE |
|
Inline XBRL Taxonomy Extension Schema Presentation Linkbase |
104 |
|
Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101) |
* Previously Filed with Company’s Form 20-F on 31st August 2022
H-1
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
|
|
SASOL LIMITED |
|
|
|
|
|
|
|
By:/s/ FLEETWOOD GROBLER |
|
|
|
|
|
Date: |
01 September 2023 |
|
Fleetwood Grobler |
|
|
President and Chief Executive Officer |
|
|
|
|
|
|
|
Hanré Rossouw |
|
|
|
Chief Financial Officer |
Exhibit 1.1
Republic of South Africa
Companies Act, 2008
MEMORANDUM OF INCORPORATION
Name of company: Sasol Limited
Registration No.: 1979/003231/06
This MOI was adopted by Special Resolution passed on 2 December 2022 in substitution for the existing memorandum of incorporation of the Company.
2
TABLE OF CONTENTS
Clause number and description |
Page |
|
|
|
|
1. |
INTERPRETATION |
4 |
|
|
|
2. |
CALCULATION OF BUSINESS DAYS |
7 |
|
|
|
3. |
PUBLIC COMPANY |
7 |
|
|
|
4. |
POWERS AND CAPACITY OF THE COMPANY |
7 |
|
|
|
5. |
AMENDMENTS TO THE MOI |
8 |
|
|
|
6. |
THE MAKING OF RULES |
8 |
|
|
|
7. |
AUTHORISED SECURITIES, PREFERENCES, RIGHTS AND OTHER SHARE TERMS |
8 |
|
|
|
8. |
AUTHORITY TO ISSUE SECURITIES |
10 |
|
|
|
9. |
PRE-EMPTION ON ISSUE OF EQUITY SECURITIES |
11 |
|
|
|
10. |
CERTIFICATES EVIDENCING ISSUED SECURITIES, UNCERTIFICATED SECURITIES AND SECURITIES REGISTER |
11 |
|
|
|
11. |
PROHIBITION AGAINST THE COMPANY TAKING ANY LIEN |
17 |
|
|
|
12. |
LISTINGS ON OTHER EXCHANGES |
17 |
|
|
|
13. |
COMMISSION |
17 |
|
|
|
14. |
TRANSFER OF SECURITIES |
18 |
|
|
|
15. |
TRANSMISSION OF SECURITIES BY OPERATION OF LAW |
18 |
|
|
|
16. |
FINANCIAL YEAR END |
19 |
|
|
|
17. |
ACCOUNTING RECORDS AND FINANCIAL STATEMENTS |
19 |
|
|
|
18. |
AUDIT COMMITTEE |
20 |
|
|
|
19. |
AUDITOR |
21 |
|
|
|
20. |
SHAREHOLDERS MEETINGS |
22 |
|
|
|
21. |
RECORD DATE |
32 |
|
|
|
22. |
DIRECTORS AND ALTERNATE DIRECTORS, ELECTION, RETIREMENT AND VACANCIES |
33 |
|
|
|
23. |
CESSATION OF OFFICE AS DIRECTOR OR ALTERNATE DIRECTOR |
37 |
|
|
|
24. |
REMUNERATION OF DIRECTORS AND ALTERNATE DIRECTORS AND MEMBERS OF BOARD COMMITTEES |
38 |
|
|
|
25. |
FINANCIAL ASSISTANCE FOR DIRECTORS AND PRESCRIBED OFFICERS AND THEIR RELATED AND INTER-RELATED PARTIES |
39 |
Approved by Special Resolution passed on 2 December 2022
3
26. |
GENERAL POWERS AND DUTIES OF DIRECTORS |
39 |
|
|
|
27. |
BOARD COMMITTEES |
40 |
|
|
|
28. |
PERSONAL FINANCIAL INTERESTS OF DIRECTORS AND PRESCRIBED OFFICERS AND MEMBERS OF BOARD COMMITTEES |
41 |
|
|
|
29. |
PROCEEDINGS OF DIRECTORS |
43 |
|
|
|
30. |
VALIDITY OF ACTS OF DIRECTORS |
46 |
|
|
|
31. |
PRESCRIBED OFFICERS |
46 |
|
|
|
32. |
APPOINTMENT OF COMPANY SECRETARY |
46 |
|
|
|
33. |
DISTRIBUTIONS |
47 |
|
|
|
34. |
LOSS OF DOCUMENTS |
50 |
|
|
|
35. |
NOTICES |
50 |
|
|
|
36. |
INDEMNITY |
51 |
|
|
|
37. |
REPURCHASE OF SECURITIES |
53 |
|
|
|
38. |
WINDING-UP |
53 |
|
|
|
39. |
CONTACT DETAILS |
54 |
|
|
|
40. |
RIGHTS, PRIVILEGES AND RESTRICTIONS ATTACHING TO THE SASOL BEE ORDINARY SHARES |
54 |
|
|
|
Schedule 1 – Definitions in the Companies Act |
55 |
|
|
|
|
Schedule 2 – Ineligible / disqualified in terms of section 69(7) and (8) of the Companies Act read with Regulation 39(3) |
61 |
|
|
|
|
Schedule 3 – Prescribed methods of delivery in the Regulations |
62 |
|
|
|
|
Schedule 4 – Terms which govern Holders of Sasol BEE Ordinary Shares |
66 |
Approved by Special Resolution passed on 2 December 2022
4
1. |
INTERPRETATION |
In this MOI, -
1.1. |
words that are defined in the Companies Act (which are contained in Schedule 1 for easy reference but which do not form part of this MOI for purposes of interpretation) but not defined in this MOI will bear the same meaning in this MOI as in the Companies Act read where necessary with definitions in the Listings Requirements. For ease of reading, such terms have been capitalised in this MOI; |
1.2. |
unless the context otherwise requires – |
1.2.1. |
“Companies Act” means the Companies Act, 2008, as amended or any legislation which replaces it; |
1.2.2. |
“Company” means Sasol Limited (or by whatever other name it may be known from time to time), registration number 1979/003231/06, being a pre-existing Public Company incorporated under the Companies Act, 1973; |
1.2.3. |
“Company Secretary” means the secretary of the Company appointed in terms of section 86 as contemplated in clause 32; |
1.2.4. |
“Deliver” means deliver in the manner in which the Company is entitled to give notice or deliver documents in accordance with clause 35 (Notices), the Companies Act and the Regulations; |
1.2.5. |
“Electronic Address” means any address or contact number furnished to the Company by the Holder or holder of Beneficial Interests in the Securities of the Company to which the Company can send Electronic Communication; |
1.2.6. |
“Equity Securities” means equity securities as defined in the Listings Requirements; |
1.2.7. |
“Financial Markets Act” means the Financial Markets Act, 2012, as amended or any legislation which replaces it; |
1.2.8. |
“Holder” means the registered holder of Securities; |
1.2.9. |
“Ineligible or Disqualified” means ineligible or disqualified as contemplated in the Companies Act (a list of which is in Schedule 2 for easy reference but which does not form part of this MOI for purposes of interpretation) or as contemplated in clause 23.1.11 which shall apply not only to Directors and Alternate Directors |
Approved by Special Resolution passed on 2 December 2022
5
but also to members of Board committees and members of Audit committees and Prescribed Officers and the Company Secretary;
1.2.10. |
“JSE” means the exchange operated by JSE Limited, (Registration No. 2005/022939/06) (or any other name by which it may be known in the future) or its successor body; |
1.2.11. |
“Listings Requirements” means the listings requirements of the JSE from time to time; |
1.2.12. |
“MOI” means this Memorandum of Incorporation; |
1.2.13. |
“Ordinary Share” means no par value ordinary Shares in the Company’s Share capital, listed on the JSE; |
1.2.14. |
“Participant” means a depository institution accepted by a Central Securities Depository as a participant in the Financial Markets Act; |
1.2.15. |
“Regulations” means regulations published pursuant to the Companies Act from time to time; |
1.2.16. |
“Sasol BEE Ordinary Shares” means no par value Shares in the Company’s Share capital designated as “Sasol BEE Ordinary Shares”, having the rights, privileges and restrictions set out in clause 40; |
1.2.17. |
“Uncertificated Securities” means securities as defined in the Financial Markets Act which are by virtue of the Companies Act transferable without a written instrument and are not evidenced by a certificate; |
1.2.18. |
“Writing” includes Electronic Communication but as regards any Holder entitled to vote, only to the extent that such Holder has notified the Company of an Electronic Address and “Written” shall be construed accordingly; |
1.3. |
any reference to an enactment is to that enactment as at the date on which this MOI is adopted and as amended or re-enacted from time to time and includes any subordinate legislation made from time to time under such enactment. Any reference to a particular section in an enactment is to that section as at the date on which this MOI is adopted, and as amended or re-enacted from time to time and/or an equivalent measure in an enactment, provided that if as a result of such amendment or re-enactment, the specific requirements of a section referred to in this MOI are changed, the relevant provision of this MOI shall be read also as if it had been amended as necessary, without the necessity for an actual amendment; |
Approved by Special Resolution passed on 2 December 2022
6
1.4. |
to the extent that any provisions of this MOI are based on any unalterable provisions of the Companies Act or the Regulations and any of those unalterable provisions are amended, the Board is authorised to amend this MOI to reflect such amendments (which amendments will apply to the Company by operation of law), in addition to its rights to amend the MOI in terms of section 17, and in so doing eliminate the risk that if there is a conflict between any provision of this MOI and the unalterable provisions of the Companies Act or the Regulations, as amended, the relevant provision of this MOI will be void to the extent that it contravenes, or is inconsistent with the amended unalterable provisions of the Companies Act or the Regulations, as the case may be; |
1.5. |
if any of the provisions of this MOI have been included as a consequence of the Company’s obligations under the Listings Requirements and the JSE – |
1.5.1. |
amends and relaxes any of those Listings Requirements, this MOI shall be read with reference to such relaxed standard/s; |
1.5.2. |
deletes any of those Listings Requirements, this MOI shall be read as if those provisions of the MOI had been deleted; |
1.6. |
references to Holders represented by proxy shall include Holders entitled to vote represented by an agent appointed under a general or special power of attorney; |
1.7. |
references to Holders entitled to vote Present at a Meeting or acting in Person shall include Juristic Persons represented by a duly authorised representative or acting in the manner prescribed in the Companies Act; |
1.8. |
all references to “section/s” in this MOI refer to the sections of the Companies Act unless the context indicates otherwise; |
1.9. |
the headings are for reference purposes only and shall not affect the interpretation of this MOI; |
1.10. |
words in the singular number shall include the plural, and words in the plural number shall include the singular, words importing the masculine gender shall include the female gender, and words importing Persons shall include created entities (corporate or not); |
1.11. |
if any term is defined within the context of any particular clause in the MOI, the term so defined, unless it is clear from the clause in question that the term so defined has limited application to the relevant clause, shall bear the meaning ascribed to it for all purposes in terms of this MOI, notwithstanding that that term has not been defined in this interpretation provision; |
1.12. |
save to the extent that item 4(4) of Schedule 3 may permit this MOI to prevail, if the provisions of this MOI are in any way inconsistent with the provisions of the Companies Act, the |
Approved by Special Resolution passed on 2 December 2022
7
provisions of the Companies Act shall prevail, and this MOI shall be read in all respects subject to the Companies Act;
1.13. |
in respect of the Sasol BEE Ordinary Shares, if there is a conflict between the rights, privileges and restrictions set out in clause and the remainder of this MOI, the provisions of clause 40 will prevail;– |
1.14. |
the rule of construction that a contract shall be interpreted against the party responsible for the drafting or preparation of the contract, shall not apply to this MOI; |
1.15. |
if and for so long as the Company might be a Wholly-owned Subsidiary, nothing shall be read or interpreted as removing or restricting the rights granted to such a company in terms of section 57(2). |
2. |
CALCULATION OF BUSINESS DAYS |
When a particular number of Business Days is provided for between the happening of one event and another, the number of days must be calculated by —
2.1. |
excluding the day on which the first such event occurs; |
2.2. |
including the day on or by which the second event is to occur; and |
2.3. |
excluding any public holiday (gazetted in South Africa from time to time), Saturday or Sunday that falls on or between the days contemplated in clauses 2.1 and 2.2 respectively. |
3. |
PUBLIC COMPANY |
The Company is a Public Company as it is not a Private Company or a State-Owned Company or a Personal Liability Company.
4. |
POWERS AND CAPACITY OF THE COMPANY |
4.1. |
The Company has the powers and capacity of an Individual. |
4.2. |
No Special Resolution may be put to Holders to ratify any action by the Company or the Directors that is inconsistent with any limit, restriction or qualification regarding the purposes, powers or activities of the Company, or the authority of the Directors to perform an act on behalf of the Company, if that action was contrary to the Listings Requirements, unless otherwise agreed with the JSE. |
4.3. |
Notwithstanding the omission from this MOI of any provision to that effect, the Company may do anything which the Companies Act and the Listings Requirements empower it to do if so authorised by its MOI. |
Approved by Special Resolution passed on 2 December 2022
8
4.4. |
The following corporate actions shall be undertaken in accordance with the Listings Requirements – |
4.4.1. |
issues of Securities (including options) for cash; |
4.4.2. |
repurchases of Securities; and |
4.4.3. |
alterations of authorised Securities and rights attaching to classes of Securities. |
5. |
AMENDMENTS TO THE MOI |
5.1. |
Save for correcting errors substantiated as such from objective evidence or which are self evident errors (including, but without limitation ejusdem generis, spelling, punctuation, reference, grammar or similar defects) in the MOI, which the Board is empowered to do, and the circumstances contemplated in clauses 1.4 and 1.5, all other amendments of the MOI shall be effected in accordance with section 16(1) and a Special Resolution passed by the relevant Holders. |
5.2. |
If errors in the MOI are corrected as referred to in clause 5.1, the Board shall either: |
5.2.1. |
publish a copy of any such correction effected by the Board on the Company’s website; or |
5.2.2. |
furnish Shareholders with Written notice of such correction effected by the Board, |
within 14 (fourteen) days after filing the notice of alteration with the Commission.
6. |
THE MAKING OF RULES |
The Directors’ power to make, amend or repeal Rules as contemplated in section 15(3) is prohibited.
7. |
AUTHORISED SECURITIES, PREFERENCES, RIGHTS AND OTHER SHARE TERMS |
7.1. |
The Company is authorised to issue - |
7.1.1. |
1 127 690 590 (one billion one hundred and twenty seven million six hundred and ninety thousand five hundred and ninety) Ordinary Shares of no par value (which includes Ordinary Shares already issued at any time), each Ordinary Share having associated with it 1 (one) vote as contemplated in clauses 20.5.7 and 20.5.8, which shall have Voting Rights in respect of every matter that may be decided by voting and which shall rank after all other classes of Shares in the Company which do not rank pari passu with the Ordinary Shares as regards Distributions, but save as aforesaid shall be entitled to receive the net assets of the Company upon its liquidation; |
Approved by Special Resolution passed on 2 December 2022
9
7.1.2. |
158 331 335 (one hundred and fifty eight million three hundred and thirty one thousand three hundred and thirty five) Sasol BEE Ordinary Shares of no par value (which includes Sasol BEE Ordinary Shares already issued at any time) which shall have the rights, privileges and restrictions set out in clause 40 and each of which having associated with it 1 (one) vote as contemplated in clauses 20.5.7 and 20.5.8, which shall have Voting Rights in respect of every matter that may be decided by voting and which shall rank after all other classes of Shares in the Company which do not rank pari passu with the Sasol BEE Ordinary Shares as regards Distributions, but save as aforesaid shall be entitled to receive the net assets of the Company upon its liquidation. |
7.2. |
The Board shall not have the power to amend the authorisation (including increasing or decreasing the number) and classification of Shares (including determining rights, limitations and preferences) as contemplated in section 36(2)(b) or 36(3), unless any amendment to the authorisation and classification of Shares has been approved by Special Resolution. |
7.3. |
Preferences, rights, limitations or other terms of any class of Shares may not be varied in response to any objectively ascertainable external fact or facts as contemplated in sections 37(6) and (7) and no resolution may be proposed to Shareholders to include in the rights attaching to any Shares the variation of the preferences, rights, limitations or other terms attaching to those Shares in response to any objectively ascertainable external fact or facts. |
7.4. |
All Securities of a class shall rank pari passu in all respects. |
7.5. |
No rights, privileges or conditions for the time being attached to any class of Securities of the Company nor any interests of that class of Securities may (unless otherwise provided by the terms of issue of the Securities of that class) whether or not the Company is being wound up, be varied in any manner adverse to the Holders of that class of Securities, nor may any variations be made to the rights, privileges or conditions of any class of Securities, such that the interests of another class of Securities is adversely affected unless, the consent in Writing of the Holders of not less than 75% (seventy five per cent) of the issued Securities of that adversely affected class has been obtained, or a Special Resolution has been passed by the Holders of that adversely affected class of Securities with the support of more than 75% (seventy five per cent) of the Voting Rights exercised on the Special Resolution at a separate meeting of the Holders of that class. The provisions of this MOI relating to Shareholders Meetings shall mutatis mutandis apply to any such separate meeting except that – |
7.5.1. |
the necessary quorum shall be 3 (three) Holders Present at the Shareholders Meeting entitled to Exercise at least 50% (fifty per cent) of the Voting Rights on that matter, at the time the matter is called on the agenda; and |
Approved by Special Resolution passed on 2 December 2022
10
7.5.2. |
if at any adjourned meeting of such Holders, the required quorum contemplated in clause 7.5.1 is not present, those Persons entitled to vote who are Present at the Shareholders Meeting shall be a quorum. |
7.6. |
Notwithstanding any implication in this MOI to the contrary, the Board may not authorise any financial assistance by the Company in connection with the subscription for or purchase of its Securities or those of a Related or Inter-Related company without complying with section 44(3). |
8. |
AUTHORITY TO ISSUE SECURITIES |
8.1. |
The Board shall not have the power to issue authorised Securities (other than as contemplated in clause 8.4) without the prior approval contemplated in clause 8.2 and the approval of the JSE (where necessary). |
8.2. |
As regards the issue of – |
8.2.1. |
Shares contemplated in sections 41(1) and (3) or as contemplated in Listings Requirement 5.50, the Board shall not have the power to allot or issue same without the prior approval of a Special Resolution; |
8.2.2. |
Shares, other than those contemplated in clause 8.2.1, and other Securities including options in respect thereof, the Board shall not have the power to allot or issue same without the prior approval of an Ordinary Resolution, |
provided that such issue has been approved by the JSE. No special privileges may be granted to secured and unsecured debt instruments as contemplated in section 43(3).
8.3. |
Any such approval in terms of clause 8.2, may be in the form of a general authority to the Directors, whether conditional or unconditional, to allot or issue any such Securities contemplated in clauses 8.1 and 8.2.2 in their discretion, or in the form of a specific authority in respect of any particular allotment or issue of such Securities contemplated in clauses 8.2.1 and 8.2.2. Such authority shall endure for the period provided in the Ordinary or Special Resolution in question but may be revoked by Ordinary Resolution or Special Resolution, as the case may be, at any time. |
8.4. |
The Shareholders may approve by Ordinary Resolution for the Board to issue, or the Board (without the prior approval of an Ordinary Resolution) may issue, capitalisation Shares or offer a cash payment in lieu of awarding a capitalisation Share in accordance with section 47. |
8.5. |
No Shares of a class which is listed may be issued other than as fully paid. |
Approved by Special Resolution passed on 2 December 2022
11
8.6. |
If the Shareholders at any time approve the establishment of a Share incentive scheme that approval constitutes authority given to the Board to issue Shares pursuant to such scheme, subject to any maximum ceiling on the number of Shares to be issued imposed by the Shareholders in approving the scheme. A Special Resolution is required to approve a Share incentive scheme that does not constitute an Employee Share Scheme. |
9. |
PRE-EMPTION ON ISSUE OF EQUITY SECURITIES |
9.1. |
Equity Securities in the Company which are authorised but unissued and which are intended to be issued for cash, shall be offered to the existing Holders by way of a rights offer pro rata to the Voting Power of that Shareholder’s Voting Rights immediately before the offer was made, with a reasonable time allowed to subscribe, unless - |
9.1.1. |
the approvals contemplated in clause 8.1 have been obtained; |
9.1.2. |
a capitalisation issue, an issue for an acquisition of assets (including another company) or an issue for the purposes of an Amalgamation or Merger, is to be undertaken; |
9.1.3. |
the Equity Securities are to be issued in terms of option or Conversion rights; |
9.1.4. |
the Equity Securities are to be issued to an approved Share incentive scheme or employees of the Company who are participants under an approved Share incentive scheme or pursuant to an approved Share incentive scheme, |
provided that if any fraction of an Equity Security will have to be issued, that allocation of Equity Securities will be rounded down to the nearest whole number (unless the JSE has granted a ruling to permit otherwise) resulting in an allocation of a whole Equity Security and a cash payment for the fraction as determined in terms of the Listings Requirements.
9.2. |
After the expiration of the time within which the offer may be accepted, or on the receipt of an intimation from the Person to whom the offer is made that he declines to accept the Equity Securities offered, the Board may, subject to clause 9.1, issue such Equity Securities in such manner as they think most beneficial to the Company. |
10. |
CERTIFICATES EVIDENCING ISSUED SECURITIES, UNCERTIFICATED SECURITIES AND SECURITIES REGISTER |
10.1. |
The Securities issued by the Company may either be certificated (that is evidenced by a certificate) or uncertificated in which case the Company must not issue certificates evidencing or purporting to evidence title to those Securities. When any new Securities are to be issued by the Company, the subscriber shall, subject to the Companies Act, be entitled to elect |
Approved by Special Resolution passed on 2 December 2022
12
whether all or part of the Securities offered to him shall be in certificated or uncertificated form. Each original certificate issued to a Holder in certificated form shall be issued without charge, but for every subsequent certificate issued in respect of the same Securities to the same Holder, the Directors shall be entitled, as they may deem fit, to require a charge in settlement of the reasonable costs included in such issue.
10.2. |
The Company shall convert its share register into a Securities Register with effect from the Effective Date which shall reflect - |
10.2.1. |
the number of Securities authorised and the number available to be issued and the date of authorisation; |
10.2.2. |
the total number of Securities of a class that have been issued, re-acquired or surrendered to the Company; |
10.2.3. |
the number of Securities of a class that are held in uncertificated form; |
10.2.4. |
the number of Securities of that class that are the subject of options or conversion rights which, if exercised, would require Securities of that class to be issued; |
10.2.5. |
in the case of uncertificated Securities, a unique identifying number of the Person to, from or by whom the Securities were issued, re-acquired or surrendered, as the case may be; |
10.2.6. |
details of any unlisted Securities issued by the Company. |
10.3. |
As soon as practicable after - |
10.3.1. |
issuing any Securities the Company must enter or cause to be entered in its Securities Register, in respect of every class of Securities evidenced by certificates that it has issued — |
10.3.1.1. |
the names and addresses and identity numbers of the Persons to whom the Securities were issued; |
10.3.1.2. |
those Persons’ Electronic Addresses who have furnished them; |
10.3.1.3. |
the number and class of Securities issued to each of them, the date of issue, distinguishing numbers and the subscription Consideration; |
10.3.1.4. |
the total number of Securities of a class held by any Person; |
10.3.1.5. |
the date on which any such Securities were issued or transferred to the Holder, and the date on which any such Securities were |
Approved by Special Resolution passed on 2 December 2022
13
transferred by the Holder or by operation of law to another Person or re-acquired by or surrendered to the Company;
10.3.1.6. |
the number of, and prescribed circumstances relating to, any Securities – |
10.3.1.6.1. |
that have been placed in trust as contemplated in section 40(6)(d) by reason of not having been fully paid for; or |
10.3.1.6.2. |
whose transfer has been restricted; |
10.3.1.7. |
as regards debt instruments as contemplated in section 43 – |
10.3.1.7.1. |
the number of those Securities still in issue; |
10.3.1.7.2. |
the names and addresses of the Holders of the Securities and any holders of a Beneficial Interest in the Securities; |
10.3.1.8. |
the total number of uncertificated Securities from time to time; |
10.3.2. |
the re-acquisition or surrender of any Securities the Company must enter or cause to be entered in its Securities Register, in respect of Securities re-acquired or surrendered – |
10.3.2.1. |
the date on which the Securities were re-acquired by, or surrendered to, the Company; |
10.3.2.2. |
the distinguishing number or numbers of any certificated Securities re-acquired or surrendered to the Company; |
10.3.2.3. |
the Consideration for which the Securities were re-acquired by, or surrendered to, the Company; and |
10.3.2.4. |
the name of the Person from or by whom the Securities were re-acquired or surrendered, as the case may be; |
10.3.3. |
transferring any Securities, the Company must enter or cause to be entered in its Securities Register, in respect of Securities evidenced by certificates that it has transferred - |
10.3.3.1. |
the name and address of the transferee; |
Approved by Special Resolution passed on 2 December 2022
14
10.3.3.2. |
the description of the Securities, or interest transferred; |
10.3.3.3. |
the date of the transfer; |
10.3.3.4. |
the value of any Consideration still to be received by the Company on each Security or interest, in the case of a transfer of Securities the subscription price for which has not been fully paid; |
10.3.3.5. |
any other information contemplated in clause 10.3.1, any reference to issue being read as a reference to transfer, |
provided that such entry may only be made if the transfer –
10.3.3.6. |
is evidenced by a proper instrument of transfer that has been Delivered to the Company; or |
10.3.3.7. |
was effected by operation of law; |
10.3.4. |
any disclosures to the Company of any Beneficial Interests in respect of Securities evidenced by certificates, the Company must enter or cause to be entered in its Securities Register, a record of all such disclosures, including the following information for any Securities in respect of which a disclosure was made – |
10.3.4.1. |
the name and unique identifying number of the Holder of the Securities; |
10.3.4.2. |
the number, class and the distinguishing numbers of the Securities; and |
10.3.4.3. |
for each Person who holds a Beneficial Interest in the Securities, the extent of the Person’s Interest in the Securities, together with that Person’s – |
10.3.4.3.1. |
name and unique identity number; |
10.3.4.3.2. |
business, residential or postal address; |
10.3.4.3.3. |
Electronic Address if available; |
and any other information prescribed in terms of the Companies Act from time to time. If the Company has uncertificated Securities at any time it shall comply with the provisions of sections 52 and 53 and in particular shall enter or cause to be entered in its Securities Register the total number of such uncertificated Securities from time to time.
Approved by Special Resolution passed on 2 December 2022
15
10.4. |
In the case of the death of any one or more of the joint Holders of any Securities, the remaining Holder whose name then appears first in the Securities Register shall be recognised by the Company as being the only Person entitled to such Securities, subject to clause 15, but nothing herein contained shall exempt the estate of a deceased joint Holder from any liability in respect of Securities held jointly by him. |
10.5. |
Securities certificates shall be issued in such manner and form as the Directors shall from time to time prescribe save that they must - |
10.5.1. |
state on the face – |
10.5.1.1. |
the name of the Company; |
10.5.1.2. |
the name of the Person to whom the Securities were issued; |
10.5.1.3. |
the number and class of Shares and the designation of the series, if any, evidenced by that certificate; and |
10.5.1.4. |
any restriction on the transfer of the Securities (which are not listed on the JSE) evidenced by that certificate; |
be signed by either two Directors or the Company Secretary and one Director by autographic, mechanical or electronic means.
10.6. |
Each class of Shares, and any other Securities, must be distinguished by an appropriate numbering system. If all of the Company’s Shares rank equally for all purposes, and are therefore not distinguished by a numbering system each certificate issued in respect of those Shares must be distinguished by a numbering system and if the Share has been transferred, the certificate must be endorsed with a reference number or similar device that will enable each preceding Holder of the Share in succession to be identified. |
10.7. |
Each Holder shall be entitled to 1 (one) certificate for all the Securities of a particular class registered in his name, or to several certificates, each for a part of such Securities. |
10.8. |
A certificate for Securities registered in the names of 2 (two) or more Persons shall be Delivered to the Person first named in the Securities Register and Delivery of a certificate for Securities to that Person shall be a sufficient Delivery to all joint Holders. In the case of the death of any one or more of the joint Holders of any Securities, the remaining Holder whose name then appears first in the Securities Register shall be recognised by the Company as being the only Person entitled to such certificate or any new certificate issued in lieu thereof. |
Approved by Special Resolution passed on 2 December 2022
16
10.9. |
If a certificate for Securities is defaced, lost or destroyed, it may be renewed, on such terms, as to evidence and indemnity and payment of such fee as the Board, a Director authorised by the Board, or the Company Secretary, thinks fit, and (in case of defacement) on Delivery of the old certificate or share warrant to bearer to the Company. |
10.10. |
A Person:- |
10.10.1. |
acquires the rights associated with any particular Securities of the Company when that Person’s name is entered in the Company’s Securities Register as a Person to whom those Securities have been issued or transferred; and |
10.10.2. |
ceases to have the rights associated with any particular Securities of the Company when the transfer to another Person, re-acquisition by the Company, or surrender to the Company of those Securities has been entered in the Company’s Securities Register. |
10.11. |
After receiving a notice from a Central Securities Depository or Participant that a Holder who wishes to withdraw all or part of the uncertificated Securities held by that Person in an uncertificated Securities Register, and obtain a certificate in respect of those withdrawn Securities, the Company must:- |
10.11.1. |
immediately enter the relevant Person’s name and details of that Person’s holding of Securities in the Securities Register and indicate on the Securities Register that the Securities so withdrawn are no longer held in uncertificated form; |
10.11.2. |
within 10 (ten) Business Days, or 20 (twenty) Business Days in the case of a Holder who is not resident within South Africa – |
10.11.2.1. |
prepare and Deliver to the relevant Person a certificate in respect of the Securities; and |
10.11.2.2. |
notify the Central Securities Depository that the Securities are no longer held in uncertificated form, |
and may charge the Holder a reasonable fee to cover the actual costs of issuing a certificate.
10.12. |
If the Company issues Securities and is not granted a listing for such Securities or if, for any reason, certain Securities are delisted, the share certificates for those Securities must be held in trust and stamped with the words “unlisted securities” and may only be released by the Company with the written permission of the JSE. |
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11. |
PROHIBITION AGAINST THE COMPANY TAKING ANY LIEN |
The Company shall not be entitled to take any lien over any Securities issued by it.
12. |
LISTINGS ON OTHER EXCHANGES |
12.1. |
The Company may seek listings on such Exchanges as the Directors may consider appropriate from time to time. |
12.2. |
For so long as the Securities of the Company are listed on any Exchange in addition to the JSE - |
12.2.1. |
if the listing on the JSE is the primary listing and if the Company is obliged to obtain the approval of the JSE in regard to any matter, it shall be obliged also to obtain the consent at the same time of any other Exchanges on which any of its Securities are listed to the extent that the listings requirements of those other Exchanges require the Company to obtain such consent/s; |
12.2.2. |
the Company will comply with:- |
12.2.2.1. |
the most stringent of the same or a similar type of listings requirements of all the Exchanges on which its Securities are listed, to the extent that the listings requirements of those other Exchanges require the Company to comply with their listings requirements; and |
12.2.2.2. |
any legislation which is applicable to the Company as a consequence of any of its Securities being listed on a particular Exchange. |
13. |
COMMISSION |
13.1. |
The Company may pay commission not exceeding 10% (ten per cent) of the subscription price at which Securities of the Company are issued to any Person, in consideration of him subscribing or agreeing to subscribe, whether absolutely or conditionally, for any securities or of him procuring or agreeing to procure subscriptions, whether absolute or conditional, for any Securities, and such commission may be paid or may agreed to be paid out of the profits, whether current or in reserve or transferred or out of profits. Any such commission may be paid in full or in part in fully paid-up Securities of the Company, provided that such commission, or any part thereof, may not be paid without prior authorisation by Ordinary Resolution. |
13.2. |
Should all or any part of the Securities of the Company being offered for subscription be or become underwritten, the provisions of section 100(6) shall be complied with. |
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14. |
TRANSFER OF SECURITIES |
14.1. |
The Ordinary Shares are freely transferrable, but the Sasol BEE Ordinary Shares are subject to the restrictions on transfer set out in clause 40 read with Schedule 4. |
14.2. |
The transfer of any Securities which are certificated shall be implemented in accordance with section 51 using the then common form of transfer (which shall be in Writing) or in such manner as the Board may from time to time decide. Every instrument of transfer shall be signed by the transferor and left at the transfer office of the Company at which it is presented for registration, accompanied by the certificate of the Securities to be transferred, and or such other evidence as the Company may require to prove the title of the transferor or his rights to transfer the Securities. All instruments of transfer which are registered shall be held by the Company, but any deed of transfer which the Board may refuse to register shall be returned on demand to the Person who lodged it (except in the case of fraud). |
14.3. |
All authorities to sign transfer deeds granted by Holders for the purpose of transferring Securities that may be lodged, produced or exhibited with or to the Company at any of its transfer offices shall as between the Company and the grantor of such authorities, be taken and deemed to continue and remain in full force and effect, and the Company may allow the same to be acted upon until such time as express notice in Writing of the revocation of the same shall have been given and lodged at the Company’s transfer offices at which the authority was lodged, produced or exhibited. Even after the giving and lodging of such notices the Company shall be entitled to give effect to any instruments signed under the authority to sign, and certified by any officer of the Company, as being in order before the giving and lodging of such notice. The Company shall not be bound to allow the exercise of any act or matter by an agent of the Holder, unless a duly certified copy of that agent’s authority is produced and lodged with the Company. |
14.4. |
The certificated Securities Register may, upon notice being given by advertisement in the South African Government Gazette and a newspaper circulating in the district in which the office of the Company is situated, be closed during such time as the Board thinks fit, not exceeding in the whole 60 (sixty) days in each year. |
15. |
TRANSMISSION OF SECURITIES BY OPERATION OF LAW |
Subject to the laws relating to securities transfer tax upon or in respect of the estates of deceased Persons and the administration of the estates of insolvent and deceased Persons and Persons under disability -
15.1. |
the parent or guardian or curator of any Holder who is a minor; |
15.2. |
the trustee of an insolvent Holder; |
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15.3. |
the liquidator of a body corporate Holder; |
15.4. |
the tutor or curator of a Holder under disability; |
15.5. |
the executor or administrator of the estate of a deceased Holder; or |
15.6. |
any other Person becoming entitled to any Securities held by a Holder by any lawful means other than transfer in terms of this MOI, |
shall, upon production of such evidence as may be required by the Directors, have the right either-
15.7. |
to exercise the same rights and to receive the same Distributions and other advantages to which he would be entitled if he were the Holder of the Securities registered in the name of the Holder concerned; or |
15.8. |
himself to be registered as the Holder in respect of those Securities and to make such transfer of those Securities as the Holder concerned could have made, but the Board shall have the same right to decline or suspend registration as they would have had in the case of a transfer of the Securities by the Holder. |
16. |
FINANCIAL YEAR END |
The financial year end of the Company is 30 June.
17. |
ACCOUNTING RECORDS AND FINANCIAL STATEMENTS |
17.1. |
The Company shall maintain the necessary Accounting Records which shall be kept at its Registered Office. |
17.2. |
The Company shall prepare its Financial Statements in accordance with the Companies Act, Listings Requirements and the International Financial Reporting Standards and shall have its annual Financial Statements audited. |
17.3. |
The Directors shall from time to time determine at what times and places (save in the case of Accounting Records which shall be accessible from the Registered Office) and under what conditions, subject to the requirements of the Regulations, the Holders and holders of Beneficial Interests not being Directors are entitled to inspect and take copies of the records referred to in section 26(1). No Shareholder (not being a Director) shall have any right to inspect any Accounting Records or book or document of the Company except as permitted in terms of the Companies Act or with the prior approval of an Ordinary Resolution or with the authority of the Board. |
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17.4. |
Access to any other information in addition to the records referred to in section 26(1), which the Holders and holders of Beneficial Interests are not expressly entitled to inspect in terms of the Companies Act or Regulations, will be subject to the provisions of the Promotion of Access to Information Act, 2000. |
17.5. |
Subject to the provisions of the Promotion of Access to Information Act, 2000, apart from the Holders and holders of Beneficial Interests, no other Person shall be entitled to inspect any of the documents of the Company (other than the Securities Register and the register of Directors) unless expressly authorised by the Company Secretary (or his nominee). |
17.6. |
The Company shall notify the Holders and the holders of Beneficial Interests of the publication of any annual Financial Statements of the Company, setting out the steps required to obtain a copy of those Financial Statements. If a Holder or holder of Beneficial Interests demands a copy of the annual Financial Statements, the Company shall make same available to such Holder / holder of Beneficial Interests free of charge. The Company may provide any Person with a summary of any particular Financial Statements in accordance with section 29(3). |
18. |
AUDIT COMMITTEE |
18.1. |
For so long as the Companies Act requires the Company to have an Audit committee, the Company must elect an Audit committee in terms of the Companies Act, each member of which must be a Person who satisfies the criteria set out in section 94(4). |
18.2. |
The Board must appoint an Individual to fill any vacancy on the Audit committee within 40 (forty) Business Days after the vacancy arises. |
18.3. |
The Audit committee’s duties are set out in the Companies Act and the terms of reference applicable to the Audit committee (which terms of reference are approved by the Board from time to time). |
18.4. |
The Company must pay all expenses reasonably incurred by its Audit committee, including, if the Audit committee considers it appropriate, the fees of any consultant or specialist engaged by the Audit committee to assist it in the performance of its functions. |
18.5. |
No Person shall be elected as a member of the Audit committee, if he is Ineligible or Disqualified and any such election shall be a nullity. A Person placed under probation by a court must not serve as a member of the Audit committee unless the order of court so permits. |
18.6. |
A member of the Audit committee shall cease to hold office as such immediately he – |
18.6.1. |
becomes Ineligible or Disqualified in terms of the Companies Act; and / or |
18.6.2. |
ceases to be a Director. |
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18.7. |
The Board, from time to time, may prescribe general qualifications for an Individual to serve as a member of the Audit committee in addition to the requirements of the Companies Act. |
19. |
AUDITOR |
19.1. |
The Company shall appoint in accordance with the Companies Act, an Auditor that satisfies the requirements prescribed in the Companies Act. |
19.2. |
The Auditor shall fulfil the duties set out in the Companies Act and the terms of reference of the Company’s Audit committee and – |
19.2.1. |
has the right of access at all times to the accounting records and all books and documents of the Company, and is entitled to require from the Directors or Prescribed Officers any information and explanations necessary for the performance of the Auditor’s duties; |
19.2.2. |
if the Company is a Holding Company, has the right of access to all current and former financial statements of any Subsidiary and is entitled to require from the Directors or Prescribed Officers of the Company or Subsidiary any information and explanations in connection with any such statements and in connection with the Accounting Records, books and documents of the Subsidiary as necessary for the performance of the Auditor’s duties; and |
19.2.3. |
is entitled to – |
19.2.3.1. |
attend any Shareholders Meeting; |
19.2.3.2. |
receive all notices of and other communications relating to any Shareholders Meeting; and |
19.2.3.3. |
be heard at any Shareholders Meeting on any part of the business of the meeting that concerns the Auditor’s duties or functions; |
19.2.4. |
may not perform any services for the Company – |
19.2.4.1. |
that would place the Auditor in a conflict of interest as prescribed or determined by the Independent Regulatory Board for Auditors in terms of section 44(6) of the Auditing Profession Act; or |
19.2.4.2. |
as may be prescribed by the Audit committee. |
19.3. |
The provisions of clauses 32.4 and 32.5 apply mutatis mutandis to the Auditor. |
Approved by Special Resolution passed on 2 December 2022
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20. |
SHAREHOLDERS MEETINGS |
20.1. |
Convening of Shareholders Meetings |
20.1.1. |
The Company shall convene an Annual General Meeting once in every calendar year within 6 (six) months of the Company’s financial year-end, but no more than 15 (fifteen) months after the date of the previous Annual General Meeting, which must, at a minimum, provide for the following business to be transacted – |
20.1.1.1. |
presentation of – |
20.1.1.1.1. |
the Directors’ report; |
20.1.1.1.2. |
Audited Financial Statements for the immediately preceding financial year; |
20.1.1.1.3. |
an Audit committee report; |
20.1.1.2. |
election of Directors, to the extent required by the Companies Act or the MOI; |
20.1.1.3. |
election of an Audit committee; |
20.1.1.4. |
appointment of an Auditor for the ensuing year; |
20.1.1.5. |
any matters raised by Holders, with or without advance notice to the Company. |
20.1.2. |
The Company shall hold a Shareholders Meeting in order to consider one or more resolutions and shall not permit resolution/s that could be voted on at a Shareholders Meeting to be dealt with in accordance with section 60 by Written resolutions of those Persons entitled to vote. |
20.1.3. |
The Company must hold a Shareholders Meeting at any time that the Board is required by the Companies Act or the MOI to refer a matter to Holders entitled to vote for decision. |
20.1.4. |
Each resolution shall be expressed with sufficient clarity and specificity and accompanied by sufficient information / explanatory material to enable a Person who is entitled to vote on the resolution to determine whether to participate in the Shareholders Meeting, if applicable, and to seek to influence the outcome of the vote on the resolution. Once a resolution has been approved, it may not be challenged or impugned on the ground that it did not comply with the aforegoing. |
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20.1.5. |
The following Persons may convene a Shareholders Meeting – |
20.1.5.1. |
the Board or the Company Secretary, to the extent that the Board is unable to do so or has authorised him to do so; or |
20.1.5.2. |
a Shareholder/s holding not less than 10% (ten per cent) of the Voting Rights attached to the Shares; or |
20.1.5.3. |
if the Company has no Directors, any single Holder entitled to vote, whenever he thinks fit. |
20.1.6. |
A Shareholders Meeting must be convened if one or more Written and signed demands for such a Shareholders Meeting is/are Delivered to the Company, and – |
20.1.6.1. |
each such demand describes the specific purpose for which the Shareholders Meeting is proposed; and |
20.1.6.2. |
in aggregate, demands for substantially the same purpose are made and signed by the Holders at the earliest time specified in any of those demands, of at least 10% (ten per cent) of the Voting Rights entitled to be exercised in relation to the matter proposed to be considered at the Shareholders Meeting. |
20.1.7. |
Every Shareholders Meeting shall be held at the time and where the Board or Company Secretary determines from time to time. The authority of the Company to conduct a Shareholders Meeting entirely by Electronic Communication, or to provide for participation in a Shareholders Meeting by Electronic Communication so long as the Electronic Communication employed satisfies the requirements prescribed in the Companies Act and/or the Regulations, is not limited or restricted. |
20.2. |
Notice of Shareholders Meetings |
20.2.1. |
The Holder of any Securities which are in certificated form and thus not subject to the rules of Strate as the Central Securities Depository in which any Person has a Beneficial Interest must Deliver to each such Person – |
20.2.1.1. |
a notice of any Shareholders Meeting of the Company at which those Securities may be voted within 2 (two) Business Days after receiving such a notice from the Company; and |
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20.2.1.2. |
a proxy appointment to the extent of that Person’s Beneficial Interest, if the Person so demands in compliance with section 56(11). |
20.2.2. |
A Shareholders Meeting shall be called by at least 15 (fifteen) Business Days’ notice Delivered by the Company to all Holders entitled to vote or otherwise entitled to receive notice and at the same time to the JSE. An announcement shall also be made on SENS. The notice convening an Annual General Meeting shall designate the meeting as such. |
20.2.3. |
Shareholders entitled to request that a resolution be proposed shall bear the cost of any notice furnished to Shareholders in relation to that resolution. |
20.2.4. |
A Holder entitled to vote, who is Present at a Shareholders Meeting – |
20.2.4.1. |
is regarded as having received or waived notice of the Shareholders Meeting if at least the required minimum notice was given; |
20.2.4.2. |
has a right to – |
20.2.4.2.1. |
allege a Material defect in the form of notice for a particular item on the agenda for the Shareholders Meeting; and |
20.2.4.2.2. |
participate in the determination whether to waive the requirements for notice, if less than the required minimum notice was given, or to ratify a defective notice; and |
20.2.4.3. |
except to the extent set out in clause 20.2.4.2 is regarded to have waived any right based on an actual or alleged Material defect in the notice of the Shareholders Meeting. |
20.2.5. |
A notice of a Shareholders Meeting must be in Writing, in plain language and must include – |
20.2.5.1. |
the date, time and place for the Shareholders Meeting, and the Record Date for the Shareholders Meeting; |
20.2.5.2. |
the general purpose of the Shareholders Meeting, and any specific purpose contemplated in clause 20.1.5, if applicable; |
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20.2.5.3. |
in the case of the Annual General Meeting a summarised form of the Financial Statements to be presented and directions for obtaining a copy of such complete annual Financial Statements; |
20.2.5.4. |
a copy of any proposed resolution of which the Company has received notice, and which is to be considered at the Shareholders Meeting, and a notice of the percentage of Voting Rights that will be required for that resolution to be adopted; |
20.2.5.5. |
a reasonably prominent statement that – |
20.2.5.5.1. |
a Holder entitled to attend and vote at the Shareholders Meeting shall be entitled to appoint a proxy to attend, participate in, speak and vote at the Shareholders Meeting in the place of the Holder entitled to vote; |
20.2.5.5.2. |
a proxy need not be a Holder; |
20.2.5.5.3. |
a Holder entitled to vote may appoint more than 1 (one) proxy to exercise Voting Rights attached to different Securities held by that Holder entitled to vote in respect of any Shareholders Meeting and may appoint more than 1 (one) proxy to exercise Voting Rights attached to different Securities held by the Holder which entitle him to vote; |
20.2.5.5.4. |
the proxy may not delegate the authority granted to him as proxy to another Person; |
20.2.5.5.5. |
participants in a Shareholders Meeting are required to furnish satisfactory identification in terms of section 63(1) in order to reasonably satisfy the Person presiding at the Shareholders Meeting that the right of that Person to participate and vote, either as a Shareholder, or as a proxy for a Shareholder, has been reasonably verified; |
20.2.5.5.6. |
participation in the Shareholders Meeting by Electronic Communication is available, and provide any necessary information to enable Holders entitled to vote or their proxies to access the available |
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medium or means of Electronic Communication and advise that access to the medium or means of Electronic Communication is at the expense of the Holder entitled to vote or proxy, except to the extent that the Company determines otherwise.
20.2.6. |
A Shareholders Meeting may proceed notwithstanding a Material defect in the giving of the notice, subject to clause 20.2.7, only if every Person who is entitled to exercise Voting Rights in respect of each item on the agenda of the Shareholders Meeting is Present at the Shareholders Meeting and votes to approve the ratification of the defective notice. |
20.2.7. |
If a Material defect in the form or manner of giving notice of a Shareholders Meeting relates only to one or more particular matters on the agenda for the Shareholders Meeting – |
20.2.7.1. |
any such matter may be severed from the agenda, and the notice remains valid with respect to any remaining matters on the agenda; and |
20.2.7.2. |
the Shareholders Meeting may proceed to consider a severed matter, if the defective notice in respect of that matter has been ratified in terms of clause 20.2.6. |
20.2.8. |
An immaterial defect in the form or manner of Delivering notice of a Shareholders Meeting, or an accidental or inadvertent failure in the Delivery of the notice to any particular Holder to whom it was addressed does not invalidate any action taken at the Shareholders Meeting. |
20.3. |
Quorum |
20.3.1. |
Business may be transacted at any Shareholders Meeting only while a quorum is present. |
20.3.2. |
The quorum necessary for the commencement of a Shareholders Meeting shall be sufficient Persons Present at the Shareholders Meeting to exercise, in aggregate, at least 25% (twenty five per cent) of all of the Voting Rights that are entitled to be exercised in respect of at least one matter to be decided at the Shareholders Meeting but – |
20.3.2.1. |
the Shareholders Meeting may not begin unless at least 3 (three) Persons entitled to vote are Present; |
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20.3.2.2. |
if the Company is a Subsidiary of a company, those constituting the quorum must include its Holding Company present in Person. |
20.3.3. |
A matter to be decided at the Shareholders Meeting may not begin to be considered unless those who fulfilled the quorum requirements of clause 20.3.2, continue to be Present. If a resolution is proposed to meet the Listings Requirements, notwithstanding that the Holders of Securities not listed on the JSE shall be entitled to be counted in the quorum as a matter of law, they shall not be taken into account for the purposes of determining whether or not the quorum requirements of the JSE have been attained. |
20.3.4. |
If within 30 (thirty) minutes from the time appointed for the Shareholders Meeting to commence, a quorum is not present, or if the quorum requirements in clause 20.3.3 cannot be achieved for any one or more matters, the Shareholders Meeting shall be postponed, without motion, vote or further notice, subject to clause 20.3.7, to the next Business Day, and if at such adjourned Shareholders Meeting a quorum is not present within 15 (fifteen) minutes from the time appointed for the Shareholders Meeting, then the Person/s entitled to vote Present shall be deemed to be the requisite quorum. |
20.3.5. |
A Shareholders Meeting, or the consideration of any matter being debated at the Shareholders Meeting, may be adjourned from time to time without further notice on a motion supported by Persons entitled to exercise, in aggregate, a majority of the Voting Rights – |
20.3.5.1. |
held by all of the Persons who are Present at the Shareholders Meeting at the time; and |
20.3.5.2. |
that are entitled to be exercised on at least one matter remaining on the agenda of the Shareholders Meeting, or on the matter under debate, as the case may be. |
Such adjournment shall be to the next Business Day at a fixed time and place.
20.3.6. |
A Shareholders Meeting may be adjourned until further notice (in which case a further notice shall be Delivered to Holders), as agreed at a Shareholders Meeting. |
20.3.7. |
No further notice is required to be Delivered by the Company of a Shareholders Meeting that is postponed or adjourned as contemplated in clause 20.3.4, unless the location or time for the Shareholders Meeting is different from – |
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20.3.7.1. |
the location or time of the postponed or adjourned Shareholders Meeting; or |
20.3.7.2. |
a location or time announced at the time of adjournment, in the case of an adjourned Shareholders Meeting; or |
20.3.7.3. |
the location or time for the postponed or adjourned Shareholders Meeting as specified in the notice for the Shareholders Meeting. |
20.3.8. |
The notice for the Shareholders Meeting can specify – |
20.3.8.1. |
one location for the Shareholders Meeting; and |
20.3.8.2. |
the same or a different location for the postponed or adjourned Shareholders Meeting. |
20.3.9. |
No other business shall be transacted at any adjourned meeting other than the business left unfinished at the Shareholders Meeting at which the adjournment took place. |
20.4. |
Chairman |
The chairman, if any, of the Board shall preside as chairman at every Shareholders Meeting. If there is no such chairman, or if at any Shareholders Meeting he is not present within 10 (ten) minutes after the time appointed for holding the Shareholders Meeting or is unwilling to act as chairman, the Directors shall select a Director present at the Shareholders Meeting, or if no Director is present at the Shareholders Meeting, or if all the Directors present decline to take the chair, the Persons entitled to vote shall select one of their number which is Present to be chairman of the Shareholders Meeting.
20.5. |
Voting |
20.5.1. |
At any Shareholders Meeting a resolution put to the vote shall be decided on a show of hands, unless before or on the declaration of the result of the show of hands a poll shall be demanded by – |
20.5.1.1. |
the chairman; |
20.5.1.2. |
not less than 5 (five) Persons having the right to vote on that matter; |
20.5.1.3. |
a Person/s entitled to exercise not less than 1/10th (one tenth) of the total Voting Rights entitled to vote on that matter; or |
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20.5.1.4. |
Person/s entitled to vote at a Shareholders Meeting and holding not less than 1/10th (one tenth) of the issued Share capital of the Company, |
and, unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the minute book of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, such resolution. No objection shall be raised as to the admissibility of any vote except at the Shareholders Meeting or adjourned Shareholders Meeting at which the vote objected to is or may be given or tendered. Every vote not disallowed at such Shareholders Meeting shall be valid for all purposes. Any such objection shall be referred to the chairman of the Shareholders Meeting, whose decision shall be final and conclusive.
20.5.2. |
If a poll is duly demanded it shall be taken in such manner as the chairman directs save that it shall be taken forthwith, and the result of the poll shall be deemed to be the resolution of the Shareholders Meeting at which the poll was demanded. Scrutineers may be appointed by the chairman to declare the result of the poll, and if appointed their decision shall be deemed to be the resolution of the Shareholders Meeting at which the poll is demanded. The demand for a poll shall not prevent the continuation of a Shareholders Meeting for the transaction of any business other than the question upon which the poll has been demanded. The demand for a poll may be withdrawn. |
20.5.3. |
In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the Shareholders Meeting at which the show of hands takes place, or at which the poll is demanded, shall not be entitled to a second or casting vote in addition to the vote or votes to which he is entitled as a Holder. |
20.5.4. |
A minute of resolutions and proceedings at Shareholders Meetings made in one of the minute books of the Company, if signed by the chairman of that Shareholders Meeting to which it relates, or by any Person appointed by the Directors to sign same in his stead, or by the chairman of the next succeeding Shareholders Meeting, shall be accepted as evidence of the facts therein stated. A report of the proceedings of any Shareholders Meeting may be circulated or advertised at the Company’s expense. |
20.5.5. |
Any Person entitled to a Security in terms of clause 15 (Transmission of Securities by Operation of Law) may vote at any Shareholders Meeting in respect thereof in the same manner as if he were the Holder of that Security: provided that (except |
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where the Directors have previously accepted his right to vote in respect of that Security) at least 24 (twenty four) hours (excluding Saturdays, Sundays and public holidays) before the time of holding the Shareholders Meeting at which he proposes to vote, he shall have satisfied the Directors that he is entitled to exercise the right referred to in clause 15 (Transmission of Securities by Operation of Law).
20.5.6. |
Every resolution of Shareholders is either an Ordinary Resolution or a Special Resolution. An Ordinary Resolution, save to the extent expressly provided in respect of a particular matter contemplated in this MOI, shall require to be adopted with the support of more than 50% (fifty per cent) of the Voting Rights exercised on the resolution. A Special Resolution shall require to be adopted with the support of at least 75% (seventy five per cent) of the Voting Rights exercised on the resolution. For so long as the Company is listed on the JSE, if any of the Listings Requirements require an ordinary resolution to be passed with a 75% (seventy five per cent) majority, the resolution shall instead be required to be passed by a Special Resolution. |
20.5.7. |
Subject to clause 20.5.9, on a show of hands a Person entitled to vote Present at the Meeting shall have only 1 (one) vote, irrespective of the number of Voting Rights that Person would otherwise be entitled to Exercise. A proxy shall irrespective of the number of Holders of Securities entitled to vote he represents have only 1 (one) vote on a show of hands. |
20.5.8. |
On a poll every Person entitled to vote who is Present at the Meeting shall have 1 (one) vote for every Share held by him. On a poll, a Shareholder who is entitled to more than 1 (one) vote need not, if he votes, use all his votes or use all his votes in the same manner. |
20.5.9. |
Save for the Holders of Ordinary Shares and any special Shares created for the purposes of black economic empowerment in terms of the Broad-Based Black Economic Empowerment Act, 2003 and the Codes of Good Practice on Black Economic Empowerment (including the Sasol BEE Ordinary Shares), any other Holders of Securities shall not be entitled to vote on any resolution taken by the Company other than as specified in the Listings Requirements, in which case, their votes may not carry any special rights or privileges and they shall be entitled to 1 (one) vote for each Share that they hold, provided that their total Voting Rights may not be more than 24.99% (twenty four comma ninety nine per cent) of the total Voting Rights of all Persons entitled to vote on such resolution. |
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20.5.10. |
If a resolution is proposed to meet the Listings Requirements, notwithstanding that the Holders of Securities not listed on the JSE shall be entitled to vote thereon as a matter of law, their votes shall not be taken into account for the purposes of determining whether or not the Listings Requirements have been attained. |
20.5.11. |
Where there are joint Holders of Shares, any one of such joint Holders may vote at any Shareholders Meeting in respect of such Shares, either in Person or by proxy, as if he were solely entitled thereto; but if more than one of such joint Holders are Present at a Meeting the vote of the Person whose name appears first in the Securities Register in respect of such Shares, whether in Person or by proxy, shall be accepted to the exclusion of the votes of the other joint Holders. Several executors or administrators of a deceased Shareholder in whose name Shares are registered, shall, for the purpose of this clause, be deemed to be joint Holders thereof. |
20.5.12. |
A Person who holds a Beneficial Interest in any Securities may vote in a matter at a Shareholders Meeting, without a proxy only to the extent that – |
20.5.12.1. |
the Beneficial Interest includes the right to vote on the matter; and |
20.5.12.2. |
the Person’s name is on the Company’s register of disclosures as the holder of a Beneficial Interest. |
20.6. |
Proxies |
20.6.1. |
No form appointing a proxy shall be valid after the expiration of 1 (one) year from the date when it was signed unless the proxy itself provides for a longer or shorter duration but it may be revoked at any time. The appointment is revocable unless the proxy appointment expressly states otherwise, and may be revoked by cancelling it in Writing, or making a later inconsistent appointment of a proxy, and Delivering a copy of the revocation instrument to the proxy, and to the Company. The appointment is suspended at any time and to the extent that the Holder entitled to vote chooses to act directly and in Person in the exercise of any rights as a Holder entitled to vote. |
20.6.2. |
The form appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority shall be Delivered to the Company or any Person which it has identified in the notice of meeting as being a Person to whom proxies may be delivered on behalf of the Company, 24 (twenty four) hours (excluding Saturdays, Sundays and public holidays) prior to the time scheduled for the commencement of the |
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Shareholders Meeting (or such shorter period as permitted in the discretion of the Board, chairman or Company Secretary (or his nominee)).
20.6.3. |
A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the death or mental disorder of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Securities in respect of which the proxy is given, provided that no intimation in Writing of such death, insanity, revocation or transfer as aforesaid shall have been received by the Company at its Registered Office before the commencement of the Shareholders Meeting or adjourned Shareholders Meeting at which the proxy is used. |
20.6.4. |
Subject to the provisions of the Companies Act, a form appointing a proxy may be in any form determined by the Company Secretary (or his nominee) provided that it is in Writing, which form shall be supplied by the Company upon request by a Holder entitled to vote. |
20.6.5. |
If a proxy is received duly signed but with no indication as to how the Person named therein should vote on any resolution, the proxy may vote or abstain from voting as he sees fit. |
21. |
RECORD DATE |
21.1. |
The Board shall determine the Record Date in accordance with the Companies Act, the applicable rules of the Central Securities Depository and the Listings Requirements. |
21.2. |
If, at any time, the Board fails to determine a Record Date, the Record Date for the relevant matter is – |
21.2.1. |
in the case of dividends a date subsequent to the declaration date or confirmation of the dividend, whichever is the later; |
21.2.2. |
10 (ten) Business Days before the date on which the action or event is scheduled to occur, in the case of a Shareholders Meeting and in any other case. |
21.3. |
If required in terms of the Companies Act and/or the Regulations, the Company will publish a notice of a Record Date for any matter by – |
21.3.1. |
Delivering a copy to each Holder; and |
21.3.2. |
posting a conspicuous copy of the notice – |
21.3.2.1. |
at its principal office; |
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21.3.2.2. |
on its website, if it has one; and |
21.3.2.3. |
on any automated system of disseminating information maintained by the JSE. |
22. |
DIRECTORS AND ALTERNATE DIRECTORS, ELECTION, RETIREMENT AND VACANCIES |
22.1. |
Number of Directors |
22.1.1. |
The minimum number of Directors shall be 10 (ten) and the maximum 16 (sixteen), provided a maximum of 5 (five) salaried employees of the Company may simultaneously hold the office of Director. This restriction shall not apply to Alternate Directors. |
22.1.2. |
Any failure by the Company at any time to have the minimum number of Directors, does not limit or negate the authority of the Board, or invalidate anything done by the Board or the Company. |
22.2. |
Rotation of Directors |
22.2.1. |
At the Annual General Meeting held in each calendar year 1/3 (one third) of the Directors, or if their number is not a multiple of 3 (three), then the number nearest to, but not less than 1/3 (one third) (excluding those Directors appointed in terms of clause 22.4) shall retire from office. |
22.2.2. |
The Directors who have been longest in office since their last election shall retire at each Annual General Meeting. As between Directors of equal seniority, the Directors to retire shall, in the absence of agreement, be selected from among them in alphabetical order. |
22.2.3. |
Notwithstanding anything herein contained, if, at the date of any Annual General Meeting, a non-executive Director – |
22.2.3.1. |
has held office for a period of 5 (five) years since his last election, which election took place prior to 25 November 2016, he shall retire at such Meeting, either as one of the non-executive Directors to retire in terms of clause 22.2.1 read with clause 22.2.2 or in terms of this clause; or |
22.2.3.2. |
has held office for a period of 9 (nine) years since his first election, which election took place on or after 25 November 2016, he shall retire at such Meeting, either as one of the non-executive Directors to retire in terms of clause 22.2.1, read with clause 22.2.2 or in terms |
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of this clause, provided that the Board may nominate such Director for re-election by the Shareholders for additional periods of one year at a time, but that no Director’s term of office shall exceed 12 (twelve) years.
A retiring non-executive Director shall act as a Director throughout the Annual General Meeting at which he retires. Retiring non-executive Directors may be re-elected, provided they are eligible.
22.3. |
Election of Directors |
22.3.1. |
A Shareholder shall be entitled to nominate by Written notice to the Company any Person as a Director (and an Alternate Director thereto) for election by Shareholders in terms of clause 22.3.8. Such Written notice must – |
22.3.1.1. |
be submitted to the Company Secretary by no later than the end of the 1st (first) week in September each year; |
22.3.1.2. |
include written confirmation from the Person to be nominated that he agrees to be nominated as Director and consents to serve as a Director should he be elected in terms of clause 22.3.8. |
22.3.2. |
The Directors shall, within the minimum and maximum limits stipulated in clause 22.1, determine the number of Directors, provided that there shall be 15 (fifteen) Directors until such time as the Directors determine another number. |
22.3.3. |
Each of the Directors and the Alternate Directors, other than a Director contemplated in clause 22.4, shall be elected (which in the case of a vacancy arising shall take place at the next Annual General Meeting), in accordance with clause 22.3.8. Nominations of Persons to be elected as Alternate Directors at a particular Annual General Meeting in accordance with clause 22.3.8 will only be accepted by the Company if the Board has resolved to permit the election of any Alternate Directors at that particular Annual General Meeting. |
22.3.4. |
An Alternate Director shall serve in the place of 1 (one) or more Director/s named in the resolution appointing or electing him, as the case may be, during the Director’s/s’ absence or inability to act as Director. |
22.3.5. |
If a Person is an Alternate Director to more than 1 (one) Director or if an Alternate Director is also a Director, he shall have a separate vote, on behalf of each Director he is representing in addition to his own vote, if any. |
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22.3.6. |
Alternate Directors will cease to hold office if the Director (who he serves in place of during that Director’s absence or inability to act as Director) ceases to be a Director. |
22.3.7. |
There are no general qualifications prescribed by the Company for a Person to serve as a Director or an Alternate Director in addition to the requirements of the Companies Act. The Board with the assistance of the “Nomination, Governance, Social and Ethics Committee” must make recommendations to the Holders regarding the suitability of Persons nominated for election as Directors, taking into account their past performance and contribution, if applicable. A brief curriculum vita of each Person standing for election or re-election as a Director at a Meeting or the Annual General Meeting, must accompany the notice of the Meeting. |
22.3.8. |
In any election of Directors and Alternate Directors, the election is to be conducted as follows – |
22.3.8.1. |
a series of votes of those entitled to exercise votes regarding such election, each of which is on the candidacy of a single individual to fill a single vacancy, with the series of votes continuing until all vacancies on the Board at that time have been filled; and |
22.3.8.2. |
in each vote to fill a vacancy – |
22.3.8.2.1. |
each Voting Right entitled to be exercised may be exercised once; and |
22.3.8.2.2. |
the vacancy is filled only if a majority of the Voting Rights exercised support the candidate, but if the number of Persons nominated for election exceeds the number of vacancies, the vacancies will be filled by those Persons who receive the highest number of votes in excess of a majority of the Voting Rights exercised in support of each of the candidates. |
22.3.9. |
No Person shall be appointed or elected as a Director or Alternate Director, if he is Ineligible or Disqualified in terms of the Companies Act and Regulations and any such appointment or election shall be a nullity. A Person placed under probation by a court must not serve as a Director or an Alternate Director unless the order of court so permits. |
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22.4. |
Vacancies |
22.4.1. |
Any vacancy occurring on the Board may be filled on a temporary basis by the Board with a Person who satisfies the requirements for election as a Director and is subject to all of the liabilities of any other Director, but so that the total number of the Directors shall not at any time exceed the maximum number fixed, if any, but the Individual so elected shall cease to hold office at the termination of the first Shareholders Meeting to be held after the appointment of such Individual as a Director unless he is elected at such Shareholders Meeting (and for the avoidance of doubt, if the first Shareholders Meeting held after his appointment is the Annual General Meeting, his ceasing to hold office at that Annual General Meeting shall not constitute a retirement by rotation and accordingly he shall not be included in the 1/3 (one third) of the non-executive Directors retiring from office at that Annual General Meeting). |
22.4.2. |
Should the number of Directors fall below the number fixed by or pursuant to this MOI as the minimum, the remaining Directors must, as soon as possible, and, in any event, not later than 3 (three) months from the date that the number of Directors falls below the minimum, fill the vacancies or call a Shareholders Meeting for the purpose of filling the vacancies. A failure by the Company to have the minimum number of Directors during the 3 (three) month period does not limit or negate the authority of the Board or invalidate anything done by the Board. After the expiry of the 3 (three) month period, the remaining Directors shall only be permitted to act for the purpose of filling vacancies or calling Shareholders Meetings. |
22.4.3. |
If there is no Director able and willing to act, then – |
22.4.3.1. |
any Holder entitled to exercise Voting Rights in the election of a Director; or |
22.4.3.2. |
the Company Secretary, |
may convene a Shareholders Meeting for the purpose of electing Directors.
22.5. |
Record of Directors |
22.5.1. |
The Company shall maintain a record of its Directors, including, in respect of each Director, that Person’s - |
22.5.1.1. |
full name, and any former names; |
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22.5.1.2. |
identity number or, if the Person does not have an identity number, the Person’s date of birth; |
22.5.1.3. |
nationality and passport number, if the Person is not a South African; |
22.5.1.4. |
occupation; |
22.5.1.5. |
date of their most recent election or appointment as Director of the Company; |
22.5.1.6. |
name and registration number of every other company or foreign company of which the Person is a director, and in the case of a foreign company, the nationality of that company; and |
22.5.1.7. |
the address for service for that Director; and |
22.5.1.8. |
any professional qualifications and experience of the Director, to the extent necessary to enable the Company to comply with the requirement that at least one–third of the members of the Company’s Audit committee at any particular time must have academic qualifications, or experience in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resource management. |
22.5.2. |
With respect to each past Director, the Company must retain the information in terms of clause 22.5.1 for 7 (seven) years after the past Director retired from the Company. |
23. |
CESSATION OF OFFICE AS DIRECTOR OR ALTERNATE DIRECTOR |
23.1. |
A Director or Alternate Director shall cease to hold office as such – |
23.1.1. |
immediately he becomes Ineligible or Disqualified or the Board resolves to remove him on such basis and in the latter case the Director / Alternate Director has not within the permitted period filed an application for review or has filed such an application but the court has not yet confirmed the removal (during which period he/she shall be suspended); |
23.1.2. |
when his term of office contemplated in clauses 22.2, 22.3 and 22.4 expires; |
23.1.3. |
when he dies; |
23.1.4. |
when he resigns by Written notice to the Company; |
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23.1.5. |
if there are more than 3 (three) Directors in office and if the Board determines that he has become incapacitated to the extent that the Person is unable to perform the functions of a Director, and is unlikely to regain that capacity within a reasonable time, and the Director / Alternate Director has not within the permitted period filed an application for review or has filed such an application but the court has not yet confirmed the removal (during which period he shall be suspended); |
23.1.6. |
if he is declared delinquent by a court, or placed on probation under conditions that are inconsistent with continuing to be a Director of the Company; |
23.1.7. |
if he is removed by Ordinary Resolution; |
23.1.8. |
if there are more than 3 (three) Directors in office and if he is removed by resolution of the Board for being negligent or derelict in performing the functions of a Director or having an interest that conflicts with the interests of the Company, and the Director / Alternate Director has not within the permitted period filed an application for review or has filed such an application but the court has not yet confirmed the removal (during which period he shall be suspended); |
23.1.9. |
if he files a petition for the surrender of his estate or an application for an administration order, or if he commits an act of insolvency as defined in the insolvency law for the time being in force, or if he makes any arrangement or composition with his creditors generally; |
23.1.10. |
if he is otherwise removed in accordance with any provisions of this MOI; |
23.1.11. |
if he is absent from meetings of the Directors for 6 (six) consecutive months without leave of the Directors and is not at any such meeting during such 6 (six) consecutive months represented by an Alternate Director. |
24. |
REMUNERATION OF DIRECTORS AND ALTERNATE DIRECTORS AND MEMBERS OF BOARD COMMITTEES |
24.1. |
The Directors or Alternate Directors or members of Board committees shall be entitled to such remuneration for their services as Directors or Alternate Directors or members of Board Committees, the basis of which must be approved from time to time by Special Resolution within the previous 2 (two) years. |
24.2. |
In addition, the Directors and Alternate Directors shall be entitled to be reimbursed by the Company for all reasonable expenses incurred in travelling to and from meetings of the Directors and Holders, and the members of the Board committees shall be entitled to all reasonable expenses in travelling to and from meetings of the members of the Board |
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committees, as determined by a disinterested quorum of Directors. The Company may pay or grant any type of remuneration contemplated in sections 30(6)(b) to (g) to any executive Directors.
24.3. |
To the extent permitted in terms of the Companies Act, Listings Requirements or the listings requirements of any Exchange on which the Securities of the Company are listed in addition to the JSE, a Director may be employed – |
24.3.1. |
in any other capacity in the Company; or |
24.3.2. |
as a director or employee of a company controlled by, or itself a Subsidiary of, the Company, |
and in that event, his appointment and remuneration in respect of such other office must be determined by a disinterested quorum of Directors of the Company in clause 24.3.1 or the company referred to in clause 24.3.2, as the case may be.
25. |
FINANCIAL ASSISTANCE FOR DIRECTORS AND PRESCRIBED OFFICERS AND THEIR RELATED AND INTER-RELATED PARTIES |
The Board’s powers to provide direct or indirect financial assistance as contemplated in section 45(2) are not limited in any manner, provided all the requirements in section 45 have been met.
26. |
GENERAL POWERS AND DUTIES OF DIRECTORS |
26.1. |
The powers granted to the Directors in terms of section 66(1) are not limited. |
26.2. |
The Directors may borrow money and secure the payment or repayment thereof upon terms and conditions which they may deem fit in all respects and, in particular, through the issue of debentures which bind as security all or any part of the property of the Company, both current and future. |
26.3. |
The Board must appoint a president and chief executive officer and a chief financial officer, both of whom shall be directors (provided always that the number of Directors so appointed as the holders of any such executive office, including a chairman who holds an executive office, but not a chairman who is a non-executive Director, shall at all times comply with clause 22.1.1) at such remuneration (whether by way of salary or commission, or participation in profits or partly in one way and partly in another) and generally on such terms it may think fit, and it may be made a term of his appointment that he be paid a pension, gratuity or other benefit on his retirement from office. |
26.4. |
The Board may from time to time remove or dismiss a Director from any executive office referred to in clause 26.3 and appoint another or others in his or their place or places at such |
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remuneration and on such terms as it may think fit. A Director appointed in an executive office is subject to the same provisions as to retirement by rotation and removal from office as other Directors of the Company. If the president and chief executive officer or the chief financial officer for any reason ceases to hold office as Director, he shall ipso facto immediately cease to be the president and chief executive officer or the chief financial officer, as the case may be.
26.5. |
The Board may from time to time entrust to and confer upon a president and chief executive officer, chief financial officer, manager or Director holding a similar executive office any of the powers vested in the Directors as it may think fit for a period of time and to be exercised for general or specific objects and upon such terms and with such restrictions as it may think fit. |
26.6. |
The Directors may exercise the Voting Rights attached to the shares in any other company held or owned by the Company in all respects in the manner in which they deem fit. |
27. |
BOARD COMMITTEES |
27.1. |
The Directors may appoint any number of Board committees and – |
27.1.1. |
constitute such committees – |
27.1.1.1. |
as required in terms of the Companies Act, Listings Requirements and the listings requirements of any Exchange on which the Securities of the Company are listed in addition to the JSE; and |
27.1.1.2. |
as recommended in terms of any applicable code of good corporate governance; |
27.1.2. |
delegate to such committees any authority of the Board, subject to the delegations of authority set out in the terms of reference applicable to each committee. |
27.2. |
The members of any such committees may include Persons who are not Directors, but such Persons shall not be able to vote. |
27.3. |
A Director may be appointed to more than one Board Committee. |
27.4. |
No Person shall be appointed as a member of a Board committee, if he is Ineligible or Disqualified and any such appointment shall be a nullity. A Person placed under probation by a court must not serve as a member of a Board committee unless the order of court so permits. |
27.5. |
The Board, from time to time, may prescribe general qualifications for an Individual to serve as a member of a Board committee in addition to the requirements of the Companies Act. |
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27.6. |
A member of a Board committee shall cease to hold office as such immediately he becomes Ineligible or Disqualified in terms of the Companies Act. |
27.7. |
Committees of the Board may consult with or receive advice from any Person, provided that the prior written consent of the Company Secretary to any such consultation with, or request for advice from, any such Person has been obtained. |
27.8. |
Meetings and other proceedings of a committee of the Board consisting of more than 1 (one) member shall be governed by the provisions of this MOI regulating the meetings and proceedings of Directors in so far as they are applicable thereto and are not substituted by terms of reference provided for by the Board in terms of clause 27.1. |
27.9. |
The composition of such committees, a brief description of their mandates, the number of meetings held and other relevant information must be disclosed in the annual report of the Company. |
28. |
PERSONAL FINANCIAL INTERESTS OF DIRECTORS AND PRESCRIBED OFFICERS AND MEMBERS OF BOARD COMMITTEES |
28.1. |
For the purposes of this clause 28 (Personal Financial Interests of Directors and Prescribed Officers and Members of Board Committees), - |
28.1.1. |
“Director” includes an Alternate Director, a Prescribed Officer, and a Person who is a member of a committee of the Board, irrespective of whether or not the Person is also a member of the Board; and |
28.1.2. |
“Related Person” when used in reference to a Director, has the meaning set out in section 1, but also includes a second company of which the Director or a Related Person is also a Director, or a close corporation of which the Director or a Related Person is a Member. |
28.2. |
This clause 28 (Personal Financial Interests of Directors and Prescribed Officers and Members of Board Committees) shall not apply to a Director in respect of a decision that may generally affect – |
28.2.1. |
all of the Directors in their capacity as Directors, but in that case all the Directors shall act in accordance with and as if section 75(3) were applicable unless the Directors are acting pursuant to an authorisation given by the Holders for the Directors to make a decision within certain thresholds, relating to their capacity as Directors; or |
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28.2.2. |
a class of Persons, despite the fact that the Director is one member of that class of Persons, unless the only members of the class are the Director or Persons Related or Inter-related to the Director. In such event the Director shall be treated as not having a Personal Financial Interest, unless the class is predominantly made up of Directors and Persons Related or Inter-related to such Directors and in the circumstances the conflict of the Director requires the provisions of this clause 28 (Personal Financial Interests of Directors and Prescribed Officers and Members of Board Committees) to apply. |
28.3. |
If despite the Listings Requirements, there is only 1 (one) Director in office at any time, and since the Company is listed and that Director cannot as a result hold all of the Beneficial Interests of all of the issued Securities of the Company, that Director may not - |
28.3.1. |
approve or enter into any agreement in which the Director or a Related Person has a Personal Financial Interest; or |
28.3.2. |
as a Director, determine any other matter in which the Director or a Related Person has a Personal Financial Interest, |
unless the agreement or determination is approved by an Ordinary Resolution after the Director has disclosed the nature and extent of that Personal Financial Interest to those entitled to vote on such Ordinary Resolution.
28.4. |
At any time, a Director may disclose any Personal Financial Interest in advance, by delivering to the Board, or Holders (if the circumstances contemplated in clause 28.3 prevail), a notice in Writing setting out the nature and extent of that Personal Financial Interest, to be used generally by the Company until changed or withdrawn by further Written notice from that Director. |
28.5. |
If, in the reasonable view of the other non-conflicted Directors, a Director or the Related Person in respect of such Director acts in competition with the Company relating to the matter to be considered at the meeting of the Board, the Director shall only be entitled to such information concerning the matter to be considered at the meeting of the Board as shall be necessary to enable the Director to identify that such Personal Financial Interest exists or continues to exist. |
28.6. |
If a Director (whilst the circumstances contemplated in clause 28.3 are not applicable), has a Personal Financial Interest in respect of a matter to be considered at a meeting of the Board, or Knows that a Related Person has a Personal Financial Interest in the matter, that Director must comply with the requirements set out in section 75(5). |
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28.7. |
If a Director acquires a Personal Financial Interest in an agreement or other matter in which the Company has a Material interest, or Knows that a Related Person has acquired a Personal Financial Interest in the matter, after the agreement or other matter has been approved by the Company, the Director must promptly disclose to the Board, or to the Holders entitled to vote (if the Company is a company contemplated in clause 28.3), the nature and extent of that Personal Financial Interest, and the material circumstances relating to the Director or Related Person’s acquisition of that Personal Financial Interest. |
28.8. |
A decision by the Board, or a transaction or agreement approved by the Board, or by the Holders (if the Company is a company contemplated in clause 28.3), is valid despite any Personal Financial Interest of a Director or Person Related to the Director, only if – |
28.8.1. |
it was approved following the disclosure of the Personal Financial Interest in the manner contemplated in this clause 28 (Personal Financial Interests of Directors and Prescribed Officers and Members of Board Committees); or |
28.8.2. |
despite having been approved without disclosure of that Personal Financial Interest, it has been ratified by an Ordinary Resolution following disclosure of that Personal Financial Interest or has been declared to be valid by a court. |
29. |
PROCEEDINGS OF DIRECTORS |
29.1. |
Convening of Directors Meetings |
29.1.1. |
A Director authorised by the Board (or the Company Secretary on the request of a Director authorised by the Board) – |
29.1.1.1. |
may, at any time, call a meeting of the Directors; and |
29.1.1.2. |
must call a meeting of the Directors if required to do so by at least – |
29.1.1.2.1. |
25% (twenty five per cent) of the Directors, in the case of a Board that has at least 12 (twelve) members; or |
29.1.1.2.2. |
2 (two) Directors, in any other case. |
29.1.2. |
The Board may meet together for the despatch of business, adjourn and otherwise regulate its meetings as its thinks fit. |
29.1.3. |
All meetings shall be held at the place determined by the chairman and in the absence of the chairman, shall be held where the Company’s Registered Office is for the time being situated. A meeting of Directors may be conducted by |
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Electronic Communication and any of the Directors may participate in a meeting by Electronic Communication provided that the Electronic Communication facility employed ordinarily enables all Persons participating in that meeting to communicate concurrently with each other without an intermediary, and to participate effectively in the meeting.
29.2. |
Notice of Directors Meetings |
29.2.1. |
The Directors may determine what period of notice shall be given of meetings of Directors and may determine the means of giving such notice which may include telephone, telefax or Electronic Communication. For matters requiring urgent resolution by the Directors, notice of meetings may be given by telephone or Electronic Communication. It shall be necessary to give notice of a meeting of Directors to all Directors (including Alternate Directors). |
29.2.2. |
If all of the Directors – |
29.2.2.1. |
acknowledge actual receipt of the notice; |
29.2.2.2. |
are present at a meeting of the Directors; or |
29.2.2.3. |
waive notice of the meeting, |
the meeting may proceed even if the Company failed to give the required notice of that meeting, or there was a defect in the giving of the notice.
29.3. |
Quorum |
29.3.1. |
The quorum for a Directors’ meeting is 5 (five) Directors of which not less than 3 (three) Directors shall be non-executive. |
29.3.2. |
A meeting of Directors at which a quorum is present shall be authorised to exercise all or any of the powers and authorities which vest in the Directors or which may be exercised by them in terms of this MOI or the Companies Act. |
29.4. |
Chairman |
29.4.1. |
The Directors may elect a chairman, vice-chairman and/or lead independent non-executive Director of their meetings and determine the period for which they are to hold office. |
29.4.2. |
If no chairman, vice-chairman or lead independent non-executive Director is elected, or if at any meeting the chairman or vice-chairman have given notice of |
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their inability to be present at the meeting, or such chairman or vice-chairman is not present within 5 (five) minutes after the time appointed for holding it, or the chairman or vice-chairman is present at the Directors meeting but is unwilling to act as chairman, the Directors present may choose one of their number to be chairman of the meeting. If an interim vacancy in the office of chairman, vice- chairman or lead independent non-executive Director arises, the Directors may elect a chairman, vice-chairman or lead independent non-executive Director, as the case may be.
29.5. |
Voting |
29.5.1. |
Each Director has 1 (one) vote on a matter before the Board and a majority of the votes cast on a resolution is sufficient to approve that resolution. |
29.5.2. |
In the case of a tied vote the chairman may not cast a deciding vote and the matter being voted on fails. |
29.5.3. |
The Company must keep minutes of the meetings of the Board, and any of its committees as prescribed in the Companies Act. |
29.5.4. |
Resolutions adopted by the Board – |
29.5.4.1. |
must be dated and sequentially numbered; and |
29.5.4.2. |
are effective as of the date of the resolution, unless the resolution states otherwise. |
29.5.5. |
Any minutes of a meeting, or a resolution, or any extract therefrom, signed by the chairman of the meeting, or by the chairman of the next meeting of the Board, or by any Person authorised by the Board to sign same in his stead, or by any 2 (two) Directors, are/is evidence of the proceedings of that meeting, or adoption of that resolution, as the case may be without the necessity for further proof of the facts stated. The Company Secretary or his authorised nominee may sign an extract from the minutes of a Board meeting, or a resolution, which shall constitute evidence of the proceedings of that meeting, or adoption of that resolution, as the case may be without the necessity for further proof of the facts stated. |
29.5.6. |
A Written resolution shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted, provided that each Director who is able to receive notice, has received notice of the matter to be decided. For the purposes hereof a Written resolution means a resolution passed other than at a meeting of Directors, in respect of which, subject to clause 29.5.3, a majority |
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of Directors (for which purpose one or more Alternate Directors shall be entitled to sign a round robin resolution if one or more Directors are not able to sign or timeously return a signed copy of the resolution, and without his vote/s the requisite majority cannot be achieved), voted in favour by signing in Writing a resolution in counterparts or otherwise. Any such resolution may consist of one or more documents, with the same form and contents, which in aggregate have been signed by the required number of Directors or Alternate Directors.
30. |
VALIDITY OF ACTS OF DIRECTORS |
As regards all persons dealing in good faith with the Company, all acts of a Director shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or election.
31. |
PRESCRIBED OFFICERS |
31.1. |
No Person shall act as a Prescribed Officer, if he is Ineligible or Disqualified. A Person placed under probation by a court must not consent to be appointed to an office or undertake any functions which would result in him being a Prescribed Officer nor act in such office nor undertake any such functions unless the order of court so permits. |
31.2. |
A Prescribed Officer shall cease to hold office immediately after he becomes Ineligible or Disqualified in terms of the Companies Act or the Company’s employment policies. |
32. |
APPOINTMENT OF COMPANY SECRETARY |
32.1. |
The Directors must appoint the Company Secretary from time to time, who – |
32.1.1. |
shall be a permanent resident of South Africa and remain so while serving as Company Secretary; and |
32.1.2. |
shall have the requisite knowledge of, or experience in, any law relevant to or affecting the Company; and |
32.1.3. |
may be a Juristic Person subject to the following – |
32.1.3.1. |
every employee of that Juristic Person who provides company secretary services, or partner and employee of that partnership, as the case may be, is not Ineligible or Disqualified; |
32.1.3.2. |
at least 1 (one) employee of that Juristic Person, or one partner or employee of that partnership, as the case may be, satisfies the requirements in clauses 32.1.1 and 32.1.2; |
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32.2. |
Within 60 (sixty) Business Days after a vacancy arises in the office of Company Secretary, the Board must fill the vacancy by appointing a Person whom the Board considers to have the requisite knowledge and experience. A change in the membership of a Juristic Person or partnership that holds office as Company Secretary does not constitute a vacancy in the office of Company Secretary, if the Juristic Person or partnership continues to satisfy the requirements of clause 32.1.3. |
32.3. |
If at any time a Juristic Person or partnership holds office as Company Secretary of the Company – |
32.3.1. |
the Juristic Person or partnership must immediately notify the Board if the Juristic Person or partnership no longer satisfies the requirements of clause 32.1.3, and is regarded to have resigned as Company Secretary upon giving that notice to the Company; |
32.3.2. |
the Company is entitled to assume that the Juristic Person or partnership satisfies the requirements of clause 32.1.3, until the Company has received a notice contemplated in clause 32.3.1; and |
32.3.3. |
any action taken by the Juristic Person or partnership in performance of its functions as Company Secretary is not invalidated merely because the Juristic Person or partnership had ceased to satisfy the requirements of clause 32.1.3 at the time of that action. |
32.4. |
The Company Secretary may resign from office by giving the Company 1 (one) month’s Written notice or less than that with the prior Written approval of the Board. |
32.5. |
If the Company Secretary is removed from office by the Board, the Company Secretary may, by giving Written notice to that effect to the Company by not later than the end of the financial year in which the removal took place, require the Company to include a statement in its annual Financial Statements relating to that financial year, not exceeding a reasonable length, setting out the Company Secretary’s contention as to the circumstances that resulted in the removal. The Company must include this statement in the Directors’ report in its annual Financial Statements. |
33. |
DISTRIBUTIONS |
33.1. |
The Company – |
33.1.1. |
may make Distributions from time to time, provided that – |
33.1.1.1. |
any such Distribution – |
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33.1.1.1.1. |
is pursuant to an existing legal obligation of the Company, or a court order; or |
33.1.1.1.2. |
the Board, by resolution, has authorised the Distribution in accordance with the Companies Act; |
33.1.1.2. |
it reasonably appears that the Company will satisfy the Solvency and Liquidity Test immediately after completing the proposed Distribution; and |
33.1.1.3. |
the Board, by resolution, has acknowledged that it has applied the Solvency and Liquidity Test and reasonably concluded that the Company will satisfy the Solvency and Liquidity Test immediately after completing the proposed Distribution; and |
33.1.1.4. |
no obligation is imposed, if it is a distribution of capital, that the Company is entitled to require it to be subscribed again; |
33.1.1.5. |
any payment to Shareholders which is not pro rata to all Shareholders will be regarded as a specific payment and will require the Company to obtain the approval of its Shareholders at a Shareholders Meeting, which approval is not required in respect of cash dividends paid out of retained income, scrip dividends or capitalisation issues; |
33.1.1.6. |
where the underlying Securities are unlisted when the Company effects a Distribution in specie by way of an unbundling (either by way of pro rata or specific payment) or where such Securities become unlisted as a result of the unbundling, Shareholder approval is required; |
33.1.2. |
must before incurring any debt or other obligation for the benefit of any Holders, comply with the requirements in clause 33.1.1, |
and must complete any such Distribution fully within 120 (one hundred and twenty) Business Days after the acknowledgement referred to in clause 33.1.1, failing which it must again comply with the aforegoing.
33.2. |
No notice of change of address or instructions as to payment received less than 3 (three) Business Days before the date of payment of the dividend of other Distribution shall become effective until after the dividend or other Distribution has been made, unless the Board so determines at the time the dividend or other Distribution is approved. |
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33.3. |
All unclaimed Distributions as contemplated in this clause - |
33.3.1. |
will be held for a period of 3 (three) years without the Company being entitled to use same; and may be invested or otherwise be made use of by the Directors for the benefit of the Company until claimed, without the payment of interest, provided that any dividend or other Distribution remaining unclaimed for a period of not less than 12 (twelve) years from the date on which it became payable may be forfeited by resolution of the Directors for the benefit of the Company. |
33.3.2. |
After the expiry of the 3 (three) year period referred to in clause 33.3.1, may be invested or otherwise be made use of by the Directors for the benefit of the Company, |
without the payment of interest, provided that any dividend or other Distribution remaining unclaimed for a period of not less than 12 (twelve) years from the date on which it became payable may be forfeited by resolution of the Directors for the benefit of the Company and upon the passing of such resolution the Holders concerned shall no longer have any claim against the Company in respect thereof.
33.4. |
The Company shall be entitled at any time to delegate its obligations in respect of unclaimed dividends or other unclaimed Distributions, to any one of the Company’s bankers from time to time. |
33.5. |
Where Shareholders reside outside South Africa, the Directors are empowered, subject to applicable law, to make Distributions in another appropriate currency and in such case to determine the date upon which and the exchange rate at which the Distributions shall be converted into that other currency. |
33.6. |
If any problem arises in connection with a Distribution, the Directors may settle same as they deem fit, and in particular may determine the value in respect of a Distribution in specie of the assets forming part thereof, and may determine to make cash payments as necessary, and may vest any such assets in trustees upon such trust for the Persons entitled to the Distribution as they deem fit. |
33.7. |
If several Persons are registered as the joint Holders of any Security, any one of such Persons may give valid receipts for all the Distributions in respect of such Security. |
33.8. |
Each Holder shall provide the Company with his banking details in Writing and notify the Company in Writing of any changes to such banking details. A Distribution will be paid by electronic funds transfer or otherwise as the Board may from time to time decide. Proof of payment shall be sent to the Electronic Address of the Holder entitled thereto or to any other address requested by him in the case of joint Holders to that one of them named first in the |
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Securities Register in respect of such joint Holding, and such proof of payment exempts the Company of liability in respect of such dividend.
34. |
LOSS OF DOCUMENTS |
The Company shall not be responsible for the loss in transmission of any document sent through the post either to the registered address of any Holder or to any other address requested by the Holder.
35. |
NOTICES |
35.1. |
The Company may give notices, documents, records or statements by personal delivery to the Holder or holder of Beneficial Interests or by sending them prepaid through the post or by transmitting them by fax or by Electronic Communication to such Person’s last known address. The Company must give notice of:- |
35.1.1. |
any Shareholders Meeting in the manner referred to in clause 35.1 to each Person entitled to vote at such Shareholders Meeting, other than proxies and Persons entitled to vote at such Shareholders Meeting who have elected not to receive such notice; |
35.1.2. |
availability of a document, record or statement to the Holder or holder of Beneficial Interests in the manner prescribed in the Companies Act and/or the Regulations. |
35.2. |
Any Holder or holder of Beneficial Interests who/which has furnished an Electronic Address to the Company, by doing so:- |
35.2.1. |
authorises the Company to use Electronic Communication to give notices, documents, records or statements to him; and |
35.2.2. |
confirms that same can conveniently be printed by the Holder / holder of the Beneficial Interests within a reasonable time and at a reasonable cost. |
35.3. |
A Holder or Person entitled to Securities (or his executor) shall be bound by every notice in respect of the Securities Delivered to the Person who was, at the date on which that notice was Delivered, shown in the Securities Register or established to the satisfaction of the Directors (as the case may be) as the Holder of or Person entitled to the Securities, notwithstanding that the Holder or Person entitled to Securities may then have been dead or may subsequently have died or have been or become otherwise incapable of acting in respect of the Securities, and notwithstanding any transfer of the Securities was not registered at that date. The Company shall not be bound to enter any Person in the Securities Register as |
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entitled to any Securities until that Person gives the Company an address for entry on the Securities Register.
35.4. |
If joint Holders are registered in respect of any Securities or if more than 1 (one) Person is entitled to Securities, all notices shall be given to the Person named first in the Securities Register in respect of the Securities, and notice so Delivered shall be sufficient notice to all the Holders of or Persons entitled to or otherwise interested in the Securities. |
35.5. |
The Company shall not be bound to use any method of giving notice, documents, records or statements or notices of availability of the aforegoing, contemplated in the Regulations in respect of which provision is made for deemed delivery, but if the Company does use such a method, the notice, document, record or statement or notice of availability of the aforegoing shall be deemed to be delivered on the day determined in accordance with Table CR3 in the Regulations (which is included as Schedule 3 for easy reference but which does not form part of this MOI for purposes of interpretation). In any other case, when a given number of days’ notice or notice extending over any period is required to be given (which are not Business Days which shall be calculated in accordance with clause 2 (Calculation of Business Days)), the provisions of clause 2 (Calculation of Business Days) shall also be applied. |
35.6. |
The holder of a Share warrant to bearer shall not, unless it be otherwise expressed in the warrant, be entitled in respect thereof to notice of any Shareholders Meeting or otherwise, except by way of advertisement in a Johannesburg daily newspaper, provided that where a branch Securities Register or transfer office has been established, such advertisement shall also be inserted in at least 1 (one) daily newspaper circulating in the district in which any branch Securities Register or transfer office is located, for at least 7 (seven) days. Any notice given by advertisement shall be deemed to have been delivered on the first day when the newspaper containing such advertisement shall be published. |
35.7. |
As regards the signature of an Electronic Communication by a Holder, it shall be in such form as the Directors may specify to demonstrate that the Electronic Communication is genuine, or failing any such specification by the Directors, subject to section 13 of the Electronic Communications and Transactions Act, it shall be constituted by the Holder indicating in the Electronic Communication that it is the Holder’s intention to use the Electronic Communication as the medium to indicate the Holder’s approval of the information in, or the Holder’s signature of the document in or attached to, the Electronic Communication which contains the name of the Holder sending it in the body of the Electronic Communication. |
36. |
INDEMNITY |
36.1. |
For the purposes of this clause 36 (Indemnity), “Director” includes a former Director, an Alternate Director, a Prescribed Officer, a Person who is a member of a committee of the |
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Board, irrespective of whether or not the Person is also a member of the Board and a member of the Audit committee.
36.2. |
The Company may:- |
36.2.1. |
not directly or indirectly pay any fine that may be imposed on a Director, or on a Director of a Related company, as a consequence of that Director having been convicted of an offence in terms of any national legislation unless the conviction was based on strict liability; |
36.2.2. |
advance expenses to a Director to defend litigation in any proceedings arising out of the Director’s service to the Company; and |
36.2.3. |
directly or indirectly indemnify a Director for:- |
36.2.3.1. |
any liability, other than in respect of:- |
36.2.3.1.1. |
any liability arising in terms of section 77(3)(a), (b) or (c) or from wilful misconduct or wilful breach of trust on the part of the Director; or |
36.2.3.1.2. |
any fine contemplated in clause 36.2.1; |
36.2.3.2. |
any expenses contemplated in clause 36.2.2, irrespective of whether it has advanced those expenses, if the proceedings:- |
36.2.3.2.1. |
are abandoned or exculpate the Director; or |
36.2.3.2.2. |
arise in respect of any other liability for which the Company may indemnify the Director in terms of clause 36.2.3. |
36.3. |
The Company may purchase insurance to protect:- |
36.3.1. |
a Director against any liability or expenses contemplated in clause 36.2.2 or 36.2.3; or |
36.3.2. |
the Company against any contingency including but not limited to:- |
36.3.2.1. |
any expenses:- |
36.3.2.1.1. |
that the Company is permitted to advance in accordance with clause 36.2.2; or |
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36.3.2.1.2. |
for which the Company is permitted to indemnify a Director in accordance with clause 36.2.3.2; or |
36.3.2.2. |
any liability for which the Company is permitted to indemnify a Director in accordance with clause 36.2.3.1. |
36.4. |
The Company is entitled to claim restitution from a Director or of a Related company for any money paid directly or indirectly by the Company to or on behalf of that Director in any manner inconsistent with section 78. |
36.5. |
Subject to the provisions of this MOI, no Director is liable for the acts, receipts, neglect or default of any other Director, or for joining, for the sake of conformity, in any receipt or other act, or for loss or expense suffered or incurred by the Company as a result of the insufficiency or deficiency of title to any property acquired by order of the Directors for and on behalf of the Company, or for the insufficiency or deficiency of any security in or upon which any of the money of the Company shall be invested, or for any loss or damage arising from the bankruptcy, insolvency or unlawful act of any Person with whom money or Securities were deposited, or for any loss or damage occasioned by any error of judgement or oversight on his part, or for any other loss, damage or misfortune of whatever nature which occurred in the execution of the duties of his office or in relation thereto, unless same occurred in consequence of his own negligence, neglect, breach of duty or disregard of a trust. |
37. |
REPURCHASE OF SECURITIES |
Subject to clause 39.5, the Company is authorised to repurchase its Securities subject to compliance with the Companies Act and the Listings Requirements, including for the purposes of an odd-lot offer as contemplated in the Listings Requirements.
38. |
WINDING-UP |
Upon winding-up, any part of the assets of the Company remaining after the payment of the debts and liabilities of the Company and the costs of liquidation, including Securities of other companies, may:-
38.1. |
with the sanction of a Special Resolution, be divided in specie among the Shareholders in proportion to the number of Shares respectively held by each of them, provided that the provisions of this MOI shall be subject to the rights of the Holders of Securities issued upon special conditions; or |
38.2. |
with the same sanction, be vested in trustees for the benefit of such Shareholders, and the liquidation of the Company may be finalised and the Company dissolved. |
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54
39. |
CONTACT DETAILS |
The Holder of any class of Shares in the issued Share capital of the Company consents to the release by his Participant, Broker, Nominee Company, and/or Agent, as the case may be, of all his contact details to the Company.
40. |
RIGHTS, PRIVILEGES AND RESTRICTIONS ATTACHING TO THE SASOL BEE ORDINARY SHARES |
The Sasol BEE Ordinary Shares will rank pari passu with the Ordinary Shares in the capital of the Company, save that for so long as the Sasol BEE Ordinary Shares are listed on an exchange licensed pursuant to the Financial Markets Act, or such shorter period as may be determined by the Company in its sole and absolute discretion and notified in one national South African newspaper and, if the Sasol BEE Ordinary Shares are then listed on the JSE, on the Securities Exchange News Service (i.e. the “Empowerment Period”), the Sasol BEE Ordinary Shares shall:-
40.1. |
be beneficially owned by and registered in the name of a BEE Compliant Person (as defined in the JSE Listings Requirements); and |
40.2. |
have the rights, privileges and restrictions set out in Schedule 4. |
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55
Schedule 1- Definitions in the Companies Act
“accounting records” means information in written or electronic form concerning the financial affairs of a company as required in terms of this Act including, but not limited to, purchase and sales records, general and subsidiary ledgers and other documents and books used in the preparation of financial statements;1
“alternate director” means a person elected or appointed to serve, as the occasion requires, as a member of the board of a company in substitution for a particular elected or appointed director of that company;
“amalgamation or merger” means a transaction, or series of transactions, pursuant to an agreement between two or more companies, resulting in-
(a) |
the formation of one or more new companies, which together hold all of the assets and liabilities that were held by any of the amalgamating or merging companies immediately before the implementation of the agreement, and the dissolution of each of the amalgamating or merging companies; or |
(b) |
the survival of at least one of the amalgamating or merging companies, with or without the formation of one or more new companies, and the vesting in the surviving company or companies, together with any such new company or companies, of all of the assets and liabilities that were held by any of the amalgamating or merging companies immediately before the implementation of the agreement; |
“annual general meeting” means the meeting of a public company required by section 61(7);
“audit” has the meaning set out in the Auditing Profession Act, but does not include an “independent review” of annual financial statements, as contemplated in section 30(2)(b)(ii)(bb);
“Auditing Profession Act” means the Auditing Profession Act, 2005 (Act No. 26 of 2005);
“auditor” has the meaning set out in the Auditing Profession Act;
“beneficial interest”, when used in relation to a company’s securities, means the right or entitlement of a person, through ownership, agreement, relationship or otherwise, alone or together with another person to—
(a)receive or participate in any distribution in respect of the company’s securities;
(b)exercise or cause to be exercised, in the ordinary course, any or all of the rights attaching to the company’s securities; or
(c)dispose or direct the disposition of the company’s securities, or any part of a distribution in respect of the securities,
but does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, 2002 (Act No. 45 of 2002);
“board” means the board of directors of a company;
“business days” has the meaning determined in accordance with section 5(3);
1 |
Regulation 25(3) contains requirements as to what the accounting records must include. |
56
“central securities depository” has the meaning set out in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004);
“Commission” means the Companies and Intellectual Property Commission established by section 185;
“company” means a juristic person incorporated in terms of this Act, a domesticated company, or a juristic person that, immediately before the effective date —
(a) |
was registered in terms of the — |
(i) |
Companies Act, 1973 (Act No. 61 of 1973), other than as an external company as defined in that Act; or |
(ii) |
Close Corporations Act, 1984 (Act No. 69 of 1984), if it has subsequently been converted in terms of Schedule 2; |
(b) |
was in existence and recognised as an ‘existing company’ in terms of the Companies Act, 1973 (Act No. 61 of 1973); or |
(c) |
was deregistered in terms of the Companies Act, 1973 (Act No. 61 of 1973), and has subsequently been re-registered in terms of this Act; |
“Competition Act”, means the Competition Act, 1998 (Act No. 89 of 1998);
“consideration”, means anything of value given and accepted in exchange for any property, service, act, omission or forbearance or any other thing of value, including-
(a) |
any money, property, negotiable instrument, securities, investment credit facility, token or ticket; |
(b) |
any labour, barter or similar exchange of one thing for another; or |
(c) |
any other thing, undertaking, promise, agreement or assurance, irrespective of its apparent or intrinsic value, or whether it is transferred directly or indirectly; |
“convertible” when used in relation to any securities of a company, means securities that may, by their terms, be converted into other securities of the company, including—
(a) |
any non-voting securities issued by the company and which will become voting securities— |
(i) |
on the happening of a designated event; or |
(ii) |
if the holder of those securities so elects at some time after acquiring them; and |
(b) |
options to acquire securities to be issued by the company, irrespective of whether those securities may be voting securities, or non-voting securities contemplated in paragraph (a); |
“director” means a member of the board of a company, as contemplated in section 66, or an alternate director of a company and includes any person occupying the position of a director or alternative director, by whatever name designated.
57
“distribution” means a direct or indirect—
(a) |
transfer by a company of money or other property of the company, other than its own shares, to or for the benefit of one or more holders of any of the shares or to the holder of a beneficial interest in any such shares, of that company or of another company within the same group of companies, whether— |
(i) |
in the form of a dividend; |
(ii) |
as a payment in lieu of a capitalisation share, as contemplated in section 47; |
(iii) |
as consideration for the acquisition— |
(aa) |
by the company of any of its shares, as contemplated in section 48; or |
(bb) |
by any company within the same group of companies, of any shares of a company within that group of companies; or |
(iv) |
otherwise in respect of any of the shares of that company or of another company within the same group of companies, subject to section 164(19); |
(b) |
incurrence of a debt or other obligation by a company for the benefit of one or more holders of any of the shares of that company or of another company within the same group of companies; or |
(c) |
forgiveness or waiver by a company of a debt or other obligation owed to the company by one or more holders of any of the shares of that company or of another company within the same group of companies, |
but does not include any such action taken upon the final liquidation of the company;
“effective date”, with reference to any particular provision of this Act, means the date on which that provision came into operation in terms of section 225;
“electronic communication” has the meaning set out in section 1 of the Electronic Communications and Transactions Act;
“Electronic Communications and Transactions Act” means the Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002);
“exchange” when used as a noun, has the meaning set out in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004);
“exercise”, when used in relation to voting rights, includes voting by proxy, nominee, trustee or other person in a similar capacity;
“external company” means a foreign company that is carrying on business, or non-profit activities, as the case may be, within the Republic, subject to section 23(2);
“financial statement” includes—
(a) |
annual financial statements and provisional annual financial statements; |
(b) |
interim or preliminary reports; |
58
(c) |
group and consolidated financial statements in the case of a group of companies; and |
(d) |
financial information in a circular, prospectus or provisional announcement of results, that an actual or prospective creditor or holder of the company’s securities, or the Commission, Panel or other regulatory authority, may reasonably be expected to rely on; |
“group of companies” means a holding company and all of its subsidiaries;
“holding company”, in relation to a subsidiary, means a juristic person that controls that subsidiary as a result of any circumstances contemplated in section 2(2)(a) or 3(1)(a);
“individual” means a natural person;
“inter-related”, when used in respect of three or more persons, means persons who are related to one another in a linked series of relationships, such that two of the persons are related in a manner contemplated in section 2(1) and one of them is related to the third in any such manner, and so forth in an unbroken series;
“juristic person” includes—
(a) |
a foreign company; and |
(b) |
a trust, irrespective of whether or not it was established within or outside the Republic; |
“knowing”, “knowingly” or “knows”, when used with respect to a person, and in relation to a particular matter, means that the person either—
(a) |
Had actual knowledge of the matter; or |
(b) |
Was in a position in which the person reasonably ought to have— |
(i) |
had actual knowledge; |
(ii) |
investigated the matter to an extent that would have provided the person with actual knowledge; or |
(iii) |
taken other measures which, if taken, could reasonably be expected to have provided the person with actual knowledge of the matter; |
“material” when used as an adjective, means significant in the circumstances of a particular matter, to a degree that is-
(a) |
of consequence in determining the matter; or |
(b) |
might reasonably affect a person’s judgement or decision-making in the matter; |
“nominee” has the meaning set out in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004);
“ordinary resolution” means a resolution adopted with the support of more than 50% of the voting rights exercised on the resolution, or a higher percentage as contemplated in section 65(8) — “personal financial interest”, when used with respect to any person—
59
(a) |
at a shareholders meeting; or |
(b) |
by holders of the company’s securities acting other than at a meeting, as contemplated in section 60; “person” includes a juristic person; |
(a) |
means a direct material interest of that person, of a financial, monetary or economic nature, or to which a monetary value may be attributed; but |
(b) |
does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, 2002 (Act No. 45 of 2002), unless that person has direct control over the investment decisions of that fund or investment; |
“prescribed officer” means a person who, within a company, performs any function that has been designated by the Minister in terms of section 66(10);
“present at a meeting” means to be present in person, or able to participate in the meeting by electronic communication, or to be represented by a proxy who is present in person or able to participate in the meeting by electronic communication;
“private company” means a profit company that—
(a) |
is not a public, personal liability or state-owned company; and |
(b) |
satisfies the criteria set out in section 8(2)(b); |
“profit company” means a company incorporated for the purpose of financial gain for its shareholders;
“public company” means a profit company that is not a state-owned company, a private company or a personal liability company;
“record date” means the date established under section 59 on which a company determines the identity of its shareholders and their shareholdings for the purposes of this Act;
“registered auditor” has the meaning set out in the Auditing Profession Act;
“registered office” means the office of a company, or of an external company, that is registered as required by section 23;
“related”, when used in respect of two persons, means persons who are connected to one another in any manner contemplated in section 2(1)(a) to section (c);
“rules” and “rules of a company” means any rules made by a company as contemplated in section 15(3) to (5);
“securities” means any shares, debentures or other instruments, irrespective of their form or title, issued or authorised to be issued by a profit company; “securities register” means the register required to be established by a profit company in terms of section 50(1);
60
“share” means one of the units into which the proprietary interest in a profit company is divided;
“shareholder”, subject to section 57(1), means the holder of a share issued by a company and who is entered as such in the certificated or uncertificated securities register, as the case may be;
“shareholders meeting”, with respect to any particular matter concerning a company, means a meeting of those holders of that company’s issued securities who are entitled to exercise voting rights in relation to that matter;
“solvency and liquidity test” means the test set out in section 4 (1);
“special resolution” means—
(a) |
in the case of a company, a resolution adopted with the support of at least 75% of the voting rights exercised on the resolution, or a different percentage as contemplated in section 65(10) - |
(i)at a shareholders meeting; or
(ii)by holders of the company’s securities acting other than at a meeting, as contemplated in section 60; or
(b) |
in the case of any other juristic person, a decision by the owner or owners of that person, or by another authorised person, that requires the highest level of support in order to be adopted, in terms of the relevant law under which that juristic person was incorporated; |
“subsidiary” has the meaning determined in accordance with section 3;
“voting power”, with respect to any matter to be decided by a company, means the voting rights that may be exercised in connection with that matter by a particular person, as a percentage of all such voting rights;
“voting rights”, with respect to any matter to be decided by a company, means -
(a) |
the rights of any holder of the company’s securities to vote in connection with that matter, in the case of a profit company; or |
(b) |
the rights of a member to vote in connection with the matter, in the case of a non-profit company; |
“voting securities”, with respect to any particular matter, means securities that—
(a) |
carry voting rights with respect to that matter; or |
(b) |
are presently convertible to securities that carry voting rights with respect to that matter. |
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Schedule 2- Ineligible / disqualified in terms of section 69(7) and (8) of the Companies Act read with Regulation 39(3)
1. |
A Person is ineligible to be a Director if the Person – |
1.1. |
is a Juristic Person; |
1.2. |
is an unemancipated minor, or is under a similar legal disability; or |
1.3. |
does not satisfy any qualification set out in the MOI. |
2. |
A person is disqualified to be a Director if – |
2.1. |
a court has prohibited that Person to be a Director, or declared the Person to be delinquent in terms of section 162, or in terms of section 47 of the Close Corporations Act, 1984 (Act No. 69 of 1984); or |
2.2. |
the Person – |
2.2.1. |
is an unrehabilitated insolvent; |
2.2.2. |
is prohibited in terms of any public regulation to be a Director; |
2.2.3. |
has been removed from an office of trust, on the grounds of misconduct involving dishonesty; or |
2.2.4. |
has been convicted, in the Republic or elsewhere, and imprisoned without the option of a fine, or fined more than R1 000,00 (one thousand rand), for theft, fraud, forgery, perjury or an offence – |
2.2.4.1. |
involving fraud, misrepresentation or dishonesty; |
2.2.4.2. |
in connection with the promotion, formation or management of a company, or in connection with any act contemplated in subsection (2) or (5); or |
2.2.4.3. |
under the Companies Act, the Insolvency Act, 1936 (Act No. 24 of 1936), the Close Corporations Act, 1984, the Competition Act, the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001), the Securities Services Act, 2004 (Act No. 36 of 2004), or Chapter 2 of the Prevention and Combating of Corruption Activities Act, 2004 (Act No. 12 of 2004). |
62
Schedule 3- Prescribed methods of delivery in the Regulations
Any Person |
||
Any natural Person |
||
63
|
||
A company or similar body corporate |
||
A municipality |
By handing the notice or a certified copy of the document to the town clerk, assistant town clerk or any Person acting on behalf of that Person. |
On the date and at the time recorded on a receipt for the delivery. |
64
Person to whom the document is to be delivered |
Method of delivery |
Date and Time of Deemed delivery |
A trade union |
||
65
Person to whom the document is to be delivered |
Method of delivery |
Date and Time of Deemed delivery |
|
If the partnership, firm or association has no place of business, by handing the notice or a certified copy of the document to a partner, the owner of the firm, or the chairman or secretary of the managing or other controlling body of the association, as the case may be. |
On the date and at the time recorded on a receipt for the delivery. |
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Schedule 4- Terms which govern Holders of Sasol BEE Ordinary Shares
1. |
INTRODUCTION AND INTERPRETATION |
In this Schedule 4 –
1.1. |
capitalised terms used but not defined herein will bear the same meanings as in clause 1 of the MOI; |
1.2. |
the following terms shall have the following meanings - |
1.2.1. |
“BEE Certificate” means an original or copy of a certificate issued by a verification agency accredited by the accreditation body contemplated in the Codes, certifying that the person identified in the certificate is a BEE Compliant Person; |
1.2.2. |
“BEE Compliant Person” means as interpreted by the courts, from time to time – |
1.2.2.1. |
as regards a natural person, one who falls within the ambit of the definition of “black people” in the Codes; |
1.2.2.2. |
as regards a Juristic Person having a shareholding or similar members’ interests, one who falls within the ambit of the definitions of B-BBEE controlled company or B-BBEE owned company, as defined in the Codes, using the flow-through principle; |
1.2.2.3. |
as regards any other entity, any entity similar to a B-BBEE controlled company or B-BBEE owned company using the flow- through principle which would enable the issuer of Securities owned or controlled by such entity to claim points attributable to the entity’s ownership of the Securities pursuant to the Codes; |
1.2.3. |
“BEE Verification Agent” means the Company itself, or an agent appointed from time to time by the Company in its sole discretion, conducting the BEE Verification Process; |
1.2.4. |
“BEE Verification Process” means the verification of a potential purchaser of Sasol BEE Ordinary Shares by the BEE Verification Agent, with a view to determining whether such potential purchaser - |
1.2.4.1. |
is a BEE Compliant Person; |
1.2.4.2. |
has been advised of the necessary restrictions, limitations and requirements applicable to such Sasol BEE Ordinary Shares from |
67
time to time in order to achieve the continued ownership of Sasol BEE Ordinary Shares by BEE Compliant Persons as set out in the MOI; and
1.2.4.3. |
has accepted the prevailing terms and conditions of the Company’s BEE ownership scheme as set out in the MOI, and has completed and/or signed all documents required in terms of such ownership scheme; |
1.2.5. |
“BEE Verified Person” means any person who has been verified by the BEE Verification Agent as a BEE Compliant Person in the BEE Verification Process; |
1.2.6. |
“Beneficial Owner” means, in respect of the Sasol BEE Ordinary Shares, the person or entity to whom the risks and rewards of ownership are attributable which is typically evidenced by - |
1.2.6.1. |
the right or entitlement to receive any dividend payable in respect of those Sasol BEE Ordinary Shares; or |
1.2.6.2. |
the right to exercise or cause to be exercised in the ordinary course of events, any or all of the voting, conversion, redemption or other rights attached to those Sasol BEE Ordinary Shares; or |
1.2.6.3. |
the right to dispose of or direct the disposition of those Sasol BEE Ordinary Shares, or any part of a distribution in respect of those Sasol BEE Ordinary Shares and to have the benefit of the proceeds; |
1.2.7. |
“Company’s Nominee” means the Sasol Khanyisa Warehousing Trust, IT Reference Number: 001293/2018(G) or such other warehousing or facilitation trust as the Company may appoint from time to time, in its discretion, to acquire Sasol BEE Ordinary Shares in the circumstances contemplated in These Terms; |
1.2.8. |
“Codes” means the Broad-Based Black Economic Empowerment Codes of Good Practice gazetted under the Broad-Based Black Economic Empowerment Act, 2003; |
1.2.9. |
“Custodian” means a custodian of the Sasol BEE Ordinary Shares appointed by the Company from time to time, in its discretion; |
1.2.10. |
“Effective Date” means the date on which These Terms take effect, which date will be determined by the Company, at its sole discretion, and announced to the Holders of the Sasol BEE Ordinary Shares in one national South African newspaper and on Stock Exchange News Service of the JSE; |
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1.2.11. |
“Empowerment Period” the period for so long as the Sasol BEE Ordinary Shares are listed on an exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation), or such shorter period as may be determined by the Company in its sole and absolute discretion and notified in one national South African newspaper and, if the Sasol BEE Ordinary Shares are then listed on the JSE, on the Securities Exchange News Service; |
1.2.12. |
“Encumbrance” means any encumbrance or any other arrangement which has a similar effect as the granting of security and “Encumber” shall be construed accordingly; |
1.2.13. |
“Forced Sale Value” means as regards – |
1.2.13.1. |
Sasol BEE Ordinary Shares which were subscribed for and/or acquired at any time during the period from 7 September 2008, when the Sasol BEE Ordinary Shares were first allotted and issued, to 7 February 2011, being the date on which the Sasol BEE Ordinary Share were first listed on the JSE, and which have since 7 February 2011 continued to be held in certificated form, the 5 (five) day volume weighted average price of a Sasol Ordinary Share, subject to an appropriate adjustment in the event of any corporate action; |
1.2.13.2. |
any other Sasol BEE Ordinary Shares, the 5 (five) day volume weighted average price of a Sasol BEE Ordinary Share, being the total value of the Sasol BEE Ordinary Shares traded for that period divided by the total number of the Sasol BEE Ordinary Shares traded for that period. In the event of any corporate action, the value will be adjusted appropriately if required; |
1.2.14. |
“Off Market” means a sale of Sasol BEE Ordinary Shares other than on an exchange licensed pursuant to the Financial Markets Act, 2012 (or any replacement legislation) on which the Sasol BEE Ordinary Shares are then listed; |
1.2.15. |
“Own Name Client” means a person whose own name is on the main register of the Company and in whom/which the benefits of the bundle of rights attaching to dematerialised Sasol BEE Ordinary Shares so registered in his/her/its name vest, which is typically evidenced by one or more of the following - |
1.2.15.1. |
the right or entitlement to receive any dividend or interest payable in respect of those Sasol BEE Ordinary Shares; |
69
1.2.15.2. |
the right to exercise or cause to be exercised in the ordinary course of events, any or all of the voting, conversion, redemption or other rights attached to those Sasol BEE Ordinary Shares; |
1.2.15.3. |
the right to dispose or direct the disposition of those Sasol BEE Ordinary Shares, or any part of a distribution in respect of those Sasol BEE Ordinary Shares and to have the benefit of the proceeds; |
1.2.16. |
“Sell” means sell or otherwise dispose of or transfer (including, but without limiting the generality of the aforegoing, by way of donation or dividend or distribution of assets) and “Sale” and “Sold” shall be construed accordingly; |
1.2.17. |
“These Terms” means the provisions of this Schedule 4, which must be read with the provisions of clause 40 of the MOI; |
1.2.18. |
“Transfer Secretaries” means a transfer secretary selected by Sasol from time to time in its discretion. |
1.3. |
Any reference in These Terms to a Holder of Sasol BEE Ordinary Shares shall - |
1.3.1. |
if a Holder of Sasol BEE Ordinary Shares is liquidated or sequestrated, as the case may be, be applicable also to and binding upon the liquidator or trustee of such Holder of Sasol BEE Ordinary Shares; or |
1.3.2. |
if a Holder of Sasol BEE Ordinary Shares is a natural person who dies, be applicable also to and binding upon the executor of such Holder’s estate. |
2. |
APPLICATION AND COMING INTO EFFECT OF THESE TERMS |
Notwithstanding the date of filing of the MOI (including These Terms) with the Companies and Intellectual Property Commission, These Terms shall come into effect on the Effective Date and will apply to the Holders of the Sasol BEE Ordinary Shares for the duration of the Empowerment Period.
3. |
OWNERSHIP OF SASOL BEE ORDINARY SHARES |
3.1. |
For purposes of ensuring that the rights, privileges and restrictions attaching to the Sasol BEE Ordinary Shares as set out in these Terms and clause 40 of the MOI are binding on all Beneficial Owners of Sasol BEE Ordinary Shares – |
3.1.1. |
as regards Sasol BEE Ordinary Shares which are held in – |
3.1.1.1. |
certificated form, the Holder shall be the Beneficial Owner and vice versa; |
70
3.1.1.2. |
dematerialised form, they shall only be registered in the name of the Beneficial Owner as an Own Name Client; |
3.1.2. |
to the extent that on the 30th (thirtieth) day prior to the Effective Date any dematerialised Sasol BEE Ordinary Shares are not registered in the name of the Beneficial Owner as an Own Name Client, the Holder authorises the Company, at the Company’s own cost, to register the Sasol BEE Ordinary Shares in the name of the Beneficial Owner as Own Name Client instead of them being registered in the name of the Holder; |
3.2. |
The mere updating by the Company of its Securities Register pursuant to clause 3.1.2 shall not be construed as confirmation by the Company that all the Beneficial Owners are BEE Compliant Persons, and the Company shall, notwithstanding the aforementioned, be entitled to verify whether or not any Beneficial Owner is a BEE Compliant Person. |
4. |
DEMATERIALISATION AND RE-MATERIALISATION OF SASOL BEE ORDINARY SHARES |
4.1. |
Any Holder of Sasol BEE Ordinary Shares who holds any of his/her/its shares in certificated agrees that the share certificate/s in respect of such shares shall continue to be held in custody by the Custodian. |
4.2. |
If a Holder of Sasol BEE Ordinary Shares who/which holds any of his/her/its shares in certificated form at any time wishes to dematerialise his/her/its Sasol BEE Ordinary Shares - |
4.2.1. |
he/she/it shall give written notice to that effect to the Company; |
4.2.2. |
he/she/it authorises the Custodian to – |
4.2.2.1. |
release the share certificate/s in respect of the Sasol BEE Ordinary Shares being dematerialised to the Transfer Secretaries; |
4.2.2.2. |
sign, to the extent necessary, any documents as may be necessary to give effect to the dematerialisation contemplated in clause 4.2. |
4.2.3. |
any proof-of-participation or other similar statement issued by the Company to any Holder of Sasol BEE Ordinary Shares which are held in materialised form and accordingly obliged to be held in safe custody, will cease to be of any force or effect from the date on which his/her/its Sasol BEE Ordinary Shares are dematerialised. |
4.3. |
If any Holder of Sasol BEE Ordinary Shares who holds any of his/her/its Sasol BEE Ordinary Shares in dematerialised form wishes at any time to hold any of such shares in materialised form, he/she/it - |
71
4.3.1. |
shall give written notice to that effect to the Company and his/her/its central securities depository participant; |
4.3.2. |
authorises the Transfer Secretaries to deliver the share certificates to be held in custody by the Custodian. |
5. |
CUSTODIAN AND TRANSFER SECRETARIES |
5.1. |
Each Holder who holds his/her/its Sasol BEE Ordinary Shares in materialised form agrees that - |
5.1.1. |
at his/her/its own risk, the share certificate/s in respect of his/her/its Sasol BEE Ordinary Shares will be deposited with and will be held on his/her/its behalf by the Custodian; |
5.1.2. |
in addition to any express provisions in the MOI, the Holder will be bound by those parts of any agreement which Sasol concludes with the Custodian relating to the Custodian holding the share certificates and which are standard in the market, provided that he/she/it will not in any way be liable for any fees of the Custodian. |
5.2. |
If the Holder holds his/her/its Sasol BEE Ordinary Shares in materialised form Encumbers any of his/her/its Sasol BEE Ordinary Shares in accordance with the requirements of clause 8, the Custodian will hold the share certificate/s on behalf of the person in whose favour the Holder gives the Encumbrance. |
5.3. |
The Holder’s share certificate/s will be released by the Custodian to the Transfer Secretaries for purposes of implementing any transfer of his/her/its Sasol BEE Ordinary Shares as is permitted in terms of - |
5.3.1. |
the MOI; and/or |
5.3.2. |
any agreement providing for an Encumbrance complying with clause 8. |
5.4. |
Subject to clause 9.1, if the transferee contemplated in clause 5.3 wishes to hold the Sasol BEE Ordinary Shares in certificated from, the Transfer Secretaries will issue a new share certificate to the new owner of the Sasol BEE Ordinary Shares which shall be deposited with the Custodian. To the extent that the Holder has not Sold all of his/her/its Sasol BEE Ordinary Shares, a new share certificate in respect of such Sasol BEE Ordinary Shares which have not been Sold will be redeposited with the Custodian. |
5.5. |
After the Empowerment Period, the Holder’s share certificate will be posted by the Custodian to his/her/its address for service selected at the time of acquiring/subscribing for and/or otherwise receiving the Sasol BEE Ordinary Shares, at the Holder’s own risk. |
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6. |
WARRANTIES |
6.1. |
Each Holder of Sasol BEE Ordinary Shares warrants in favour of the Company that - |
6.1.1. |
he/she/it is a BEE Compliant Person; |
6.1.2. |
he/she/it is the Beneficial Owner of such Sasol BEE Ordinary Shares; |
6.1.3. |
the warranty provided in – |
6.1.3.1. |
clause 6.1.1 is and will be true from the date that the Holder acquires/subscribes for and/or otherwise receives Sasol BEE Ordinary Shares |
6.1.3.2. |
clause 6.1.2 is and will be true from the Effective Date, |
and will continue to be true for so long as such Holder holds Sasol BEE Ordinary Shares; and
6.1.4. |
any information provided by him/her/it to the Company regarding whether he/she/it is a BEE Compliant Person will be true and complete unless the Holder advises the Company in writing to the contrary. |
6.2. |
All the warranties given in clause 6.1 are material and the Company will rely on the truth and completeness of such warranties. |
7. |
UNDERTAKINGS |
Each Holder of Sasol BEE Ordinary Shares undertakes -
7.1. |
that he/she/it is a BEE Compliant Person; |
7.2. |
at his/her/its own cost, to provide the Company within 30 (thirty) days of its written request to such Holder, with - |
7.2.1. |
if the Holder is a natural person, any documentation reasonably required by the Company and/or its BEE Verification Agent in order to satisfy itself that such Holder is a BEE Compliant Person; |
7.2.2. |
if the Holder is not a natural person, a BEE Certificate which is unexpired; |
7.3. |
not to Sell his/her/its Sasol BEE Ordinary Shares or any rights or interest therein during the Empowerment Period to anyone who is not a BEE Verified Person. |
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8. |
PLEDGES AND OTHER ENCUMBRANCES |
Holders of Sasol BEE Ordinary Shares may pledge or otherwise Encumber or cause the pledging or Encumbrance of his/her/its Sasol BEE Ordinary Shares subject to compliance with the requirement that each such Holder acknowledges that in order to ensure that those Sasol BEE Ordinary Shares are held only by BEE Compliant Persons, he/she/it is only permitted to Encumber or record the Encumbrance of those Sasol BEE Ordinary Shares, provided that -
8.1. |
if the security is realised, those Sasol BEE Ordinary Shares must only be Sold to a BEE Verified Person; and |
8.2. |
the terms of the agreement in respect of such Encumbrance shall expressly provide that if the security is realised those Sasol BEE Ordinary Shares must only be Sold to a BEE Verified Person and such Holder shall procure that a copy of such agreement in respect of such Encumbrance is delivered to the Company. |
9. |
PROVISIONS APPLICABLE TO OFF MARKET TRANSFERS OF SASOL BEE ORDINARY SHARES |
9.1. |
If a Holder of Sasol BEE Ordinary Shares Sells any Sasol BEE Ordinary Shares or causes any of such shares to be Sold Off Market other than to the Company’s Nominee, such Holder shall be obliged to ensure that the person to whom/which those Sasol BEE Ordinary Shares are Sold, being an Own Name Client in whose name those Sasol BEE Ordinary Shares are to be registered, is in fact a BEE Verified Person; and |
9.2. |
Each Holder of Sasol BEE Ordinary Shares undertakes not to permit the Sale Off Market of any Sasol BEE Ordinary Shares or any rights or interests therein, nor to instruct the central securities depository participant or anyone else, to effect transfer or permit the transfer of those Sasol BEE Ordinary Shares to any person who/which is not a BEE Verified Person. |
10. |
OBLIGATION ON THE HOLDER OF SASOL BEE ORDINARY SHARES TO PROCURE TRANSFER OF SASOL BEE ORDINARY SHARES |
If the Company’s Nominee is the acquirer of Sasol BEE Ordinary Shares in terms of These Terms, the Holder of Sasol BEE Ordinary Shares will be obliged within 10 (ten) days after receipt of notice from the Company, to effect transfer of the Sasol BEE Ordinary Shares out of the account in the Holder’s own name into an account in the name of the Company’s Nominee.
11. |
FORCED SALE IN THE EVENT OF AN OCCURRENCE OF A BREACH EVENT |
11.1. |
If a Holder of Sasol BEE Ordinary Shares at any time - |
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11.1.1. |
misrepresented that he/she/it is a BEE Compliant Person or has in any way committed a breach of any of the warranties given by him/her/it and set out in These Terms; |
11.1.2. |
breached any of his/her/its obligations set out in clauses 6, 7, 8 or 9 of These Terms; or |
11.1.3. |
made a fraudulent or untrue statement regarding whether he/she/it is a BEE Compliant Person in any documents provided by him/her/it to the Company, |
(“Breach Event”), the Holder shall be obliged to immediately notify the Company of the occurrence of such Breach Event in writing.
11.2. |
At any time after learning of the occurrence of a Breach Event, the Company shall be entitled (but shall not be obliged) to buy (or to nominate the Company’s Nominee to buy) from the Holder his/her/its Sasol BEE Ordinary Shares by giving such Holder written notice, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions – |
11.2.1. |
those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the date of the occurrence of the Breach Event; |
11.2.2. |
the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the occurrence of the relevant Breach Event discounted by 25% (twenty five percent); |
11.2.3. |
the purchase price as calculated in terms of clause 11.2.2 less an amount equal to the amount of dividends paid by the Company to the Holder for his/her/its benefit after the occurrence of a Breach Event, shall, - |
11.2.3.1. |
if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Company’s Nominee) has not received the requisite transfer form within 3 (three) days from the date when the Company (or the Company’s Nominee) givessuch Holder the written notice contemplated in clause 11.2, then the Holder agrees that the Company (or the Company’s Nominee) is irrevocably and in rem suam authorised and appointed as his/her/its attorney and agent to sign the necessary transfer forms; |
11.2.3.2. |
if the Sasol BEE Ordinary Shares are held in dematerialised form, be payable against the registration of those shares in the name of the Company’s Nominee, if the Company’s Nominee acquires those |
75
Sasol BEE Ordinary Shares, or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares;
11.2.4. |
those Sasol BEE Ordinary Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that – |
11.2.4.1. |
the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and |
11.2.4.2. |
no person has any right of any nature whatsoever to acquire those Sasol BEE Ordinary Shares. |
12. |
DEATH |
12.1. |
If a Holder of Sasol BEE Ordinary Shares is a natural person who dies, then – |
12.1.1. |
the Company (or the Company’s Nominee) shall not have the right to buy the Sasol BEE Ordinary Shares which were held by such Holder pursuant to clause 11 even though those Sasol BEE Ordinary Shares as a result may then be held in breach of the requirements of These Terms, unless clause 12.1.3 applies; |
12.1.2. |
instead of having to do so immediately, the executor of the Holder’s estate shall have 180 (one hundred and eighty) days commencing on the date of such Holder’s death, to - |
12.1.2.1. |
transfer the Sasol BEE Ordinary Shares to such Holders’ heir/s provided that such heir/s is/are a BEE Verified Person/s ; or |
12.1.2.2. |
Sell the Sasol BEE Ordinary Shares to any BEE Verified Person, |
and the executor of the Holder’s estate shall be obliged to take whatever steps are necessary in order to effect any such transfer or Sale of the Sasol BEE Ordinary Shares, as the case may be.
12.1.3. |
if the executor of the Holder’s estate has not complied with his/her/its obligations in clause 12.1.2 as regards Sasol BEE Ordinary Shares, the Company shall be entitled, but shall not be obliged to buy (or to nominate the Company’s Nominee to buy) from the executor of such Holder’s estate those Sasol BEE Ordinary Shares by written notice to the executor, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions - |
76
12.1.3.1. |
those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the date of such Holder’s death; |
12.1.3.2. |
the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company to the executor of the Holder’s estate discounted by 5% (five percent); |
12.1.3.3. |
the purchase price as calculated in terms of clause 12.1.3.2, less an amount equal to the amount of dividends paid by the Company to the Holder for his/her benefit while the executor of his/her estate was in breach of clause 12.1.2, shall – |
12.1.3.3.1. |
if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Company’s Nominee) has not received the requisite transfer form within 7 (seven) days from the date when the Company (or the Company’s Nominee) gives the executor the notice contemplated in clause 12.1.3, the Holder agrees that the Company (or the Company’s Nominee) is irrevocably and in rem suam authorised and appointed as the Holder’s attorney and agent, or that of his/her executor, to sign the necessary transfer forms; |
12.1.3.3.2. |
if the Sasol BEE Ordinary Shares are held in dematerialised form, be payable against the registration of those Sasol BEE Ordinary Shares in the name of the Company’s Nominee or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares; |
12.1.3.4. |
those Sasol BEE Ordinary Shares shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that – |
12.1.3.4.1. |
the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and |
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12.1.3.4.2. |
no person has any right of any nature whatsoever to acquire those Sasol BEE Ordinary Shares. |
12.2. |
If the Holder is not a natural person and any of its shareholders, members, participants or beneficiaries die, as a result of which, the Holder is no longer a BEE Compliant Person, then - |
12.2.1. |
neither the Company (nor the Company’s Nominees) shall have the right to buy the Sasol BEE Ordinary Shares pursuant to clause 11 even though those Sasol BEE Ordinary Shares as a result may now be held in breach of the requirements of These Terms unless clause 12.2.3 applies; |
12.2.2. |
instead of having to remedy the breach caused by the death immediately, the Holder shall have 180 (one hundred and eighty) days commencing on the date of the death to Sell the Sasol BEE Ordinary Shares to a BEE Verified Person and shall be obliged to take whatever steps are necessary to give effect to any such Sale of the Sasol BEE Ordinary Shares by effecting transfer of the Sasol BEE Ordinary Shares out of the account in the name of the Holder into an account in the name of the registered shareholder of that BEE Verified Person. |
12.2.3. |
if the Sasol BEE Ordinary Shares have not been Sold or the breach caused by the death has not otherwise been remedied within 180 (one hundred and eighty) days commencing on the date of the death in question, the Company shall be entitled, but shall not be obliged to buy from the Holder those Sasol BEE Ordinary Shares by giving such Holder written notice, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions – |
12.2.3.1. |
those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the date of the death in question; |
12.2.3.2. |
the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company (or the Company’s Nominee) to the Holder discounted by 5% (five percent); |
12.2.3.3. |
the purchase price as calculated in terms of clause 12.2.3.2, less an amount equal to the amount of dividends paid by the Company to the Holder for its benefit during the period in which the Holder has been in breach of clause 12.2.2, shall, - |
12.2.3.3.1. |
if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the |
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transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Company’s Nominee) has not received the requisite transfer form within 7 (seven) days from the date when the Company (or the Company’s Nominee) gives the written notice contemplated in clause 12.2.3, then the Holder agrees that the Company (or the Company’s Nominee) is irrevocably and in rem suam authorised and appointed as the its attorney and agent to sign the necessary transfer forms;
12.2.3.3.2. |
if the Sasol BEE Ordinary Shares are held in materialised form, be payable against the registration of those Sasol BEE Ordinary Shares in the name of the Company’s Nominee or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares; |
12.2.3.4. |
those Sasol BEE Ordinary Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that – |
12.2.3.4.1. |
the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and |
12.2.3.4.2. |
no person has any right of any nature whatsoever to acquire those Sasol BEE Ordinary Shares. |
12.3. |
If there is any conflict between the provisions of this 12 and the more general provisions of clause 11, the provisions of clause 12 shall prevail. |
13. |
INVOLUNTARY INSOLVENCY/LIQUIDATION |
13.1. |
If a Holder of Sasol BEE Ordinary Shares is a natural person who is involuntarily sequestrated (whether provisionally or finally), then - |
13.1.1. |
the Company (or the Company’s Nominees) shall not have the right to buy the Sasol BEE Ordinary Shares pursuant to clause 11 even though those Sasol BEE Ordinary Shares as a result may now be held in breach of the requirements of These Terms unless clause 13.1.3 applies; |
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13.1.2. |
instead of having to do so immediately, the trustee shall have 180 (one hundred and eighty) days commencing on the date of such Holder’s provisional sequestration, to Sell the Sasol BEE Ordinary Shares to any BEE Verified Person, subject to compliance with clause 9, and the trustee shall be obliged to take such steps, in order to give effect to any such Sale of the Sasol BEE Ordinary Shares by effecting transfer of the Sasol BEE Ordinary Shares out of the account in his/her name into an account in the name of the registered shareholder of that BEE Verified Person. |
13.1.3. |
If the trustee has not complied with its obligations in clause 13.1.2 as regards Sasol BEE Ordinary Shares, the Company shall be entitled, but shall not be obliged to buy (or to nominate the Company’s Nominee to buy) from such trustee those Sasol BEE Ordinary Shares by written notice to the trustee, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions – |
13.1.3.1. |
those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the Holder’s provisional sequestration; |
13.1.3.2. |
the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company (or the Company’s Nominee) to the trustee, discounted by 5% (five percent); |
13.1.3.3. |
the purchase price as calculated in terms of clause 13.1.3.2, less an amount equal to the amount of dividends paid by the Company to the Holder while the trustee was in breach of clause 13.1.2, shall, - |
13.1.3.3.1. |
if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Company’s Nominee) has not received the requisite transfer form within 7 (seven) days from the date when the Company (or the Company’s Nominee) gives the trustee the written notice contemplated in clause 13.1.3, then the Holder agrees that the Company (or the Company’s Nominee) is irrevocably and in rem suam authorised and appointed as his/her attorney and agent to sign the necessary transfer forms; |
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13.1.3.3.2. |
if the Sasol BEE Ordinary Shares are held in dematerialised form, against the registration of those Sasol BEE Ordinary Shares in the name of the Company’s Nominee or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares; |
13.1.4. |
those Sasol BEE Ordinary Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that – |
13.1.4.1. |
the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and |
13.1.4.2. |
no person has any right of any nature whatsoever to acquire those Sasol BEE Ordinary Shares. |
13.2. |
If a Holder of Sasol BEE Ordinary Shares is not a natural person and either the Holder or any of its shareholders, members, participants or beneficiaries are involuntarily liquidated (provisionally or finally), as a result of which such Holder is no longer a BEE Compliant Person, then – |
13.2.1. |
the Company shall not have the right to buy the Sasol BEE Ordinary Shares pursuant to clause 11 even though those Sasol BEE Ordinary Shares as a result may now be held in breach of the requirements of These Terms unless clause 13.2.4 applies; |
13.2.2. |
if it is not possible for the breach to be remedied, the liquidator of such Holder or the Holder itself (if any of its shareholders, members, participants or beneficiaries are involuntarily liquidated), as the case may be, can Sell the Sasol BEE Ordinary Shares to a BEE Verified Person; |
13.2.3. |
instead of having to do so immediately, the liquidator of such Holder or the Holder itself, as the case may be shall have 180 (one hundred and eighty) days commencing on the date of the provisional liquidation of the Holder or any of its shareholders, members, participants or beneficiaries to Sell the Sasol BEE Ordinary Shares to any BEE Verified Person and the liquidator of the Holder shall instruct such Holder to take whatever steps are necessary, and the Holder shall be obliged to take such steps, in order to effect any such Sale of the Sasol BEE Ordinary Shares; |
13.2.4. |
If the Sasol BEE Ordinary Shares have not been Sold or the breach caused by the liquidation has not otherwise been remedied within 180 (one hundred and |
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eighty) days commencing on the date of the involuntary liquidation of the Holder or of any of its shareholders, members, participants or beneficiaries, the Company shall be entitled, but shall not be obliged to buy (or to nominate the Company’s Nominee to buy) from the Holder of those Sasol BEE Ordinary Shares by giving the liquidator of such Holder or the Holder itself written notice, in which event a Sale of those Sasol BEE Ordinary Shares shall be deemed to have been concluded on the following terms and conditions –
13.2.4.1. |
those Sasol BEE Ordinary Shares shall be acquired with effect from the day prior to the provisional liquidation of the Holder or any of such Holder’s shareholders, members, participants or beneficiaries; |
13.2.4.2. |
the purchase price of those Sasol BEE Ordinary Shares shall be the Forced Sale Value thereof calculated as at the date of the written notice from the Company (or the Company’s Nominee) to the liquidator of the Holder or the Holder itself, as the case may be, discounted by 5% (five percent); |
13.2.4.3. |
the purchase price as calculated in terms of clause 13.2.4.2, less an amount equal to the amount of dividends paid by the Company to the Holder for its benefit while the liquidator of such Holder or the Holder itself, as the case may be was in breach of clause 13.2.2, shall, – |
13.2.4.3.1. |
if the Sasol BEE Ordinary Shares are held in materialised form, be payable against delivery of the transfer form for such Sasol BEE Ordinary Shares. If the Company (or the Company’s Nominee) has not received the requisite transfer form within 7 (seven) days from the date when the Company (or the Company’s Nominee) gives the written notice contemplated in clause 13.2.4, then the Holder agrees that the Company (or the Company’s Nominee) is irrevocably and in rem suam authorised and appointed as its attorney and agent to sign the necessary transfer forms; |
13.2.4.3.2. |
if the Sasol BEE Ordinary Shares are held in dematerialised form, against the registration of those Sasol BEE Ordinary Shares in the name of the Company’s Nominee or upon the cancellation of those Sasol BEE Ordinary Shares if the Company buys back those Sasol BEE Ordinary Shares; |
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13.2.4.4. |
those Sasol BEE Ordinary Shares and claims, if any, shall be purchased voetstoots and without any warranties or representations of any nature whatsoever, save that – |
13.2.4.4.1. |
the Holder is an Own Name Client in whose name those Sasol BEE Ordinary Shares are registered; and |
13.2.4.4.2. |
no person has any right of any nature whatsoever to acquire those Sasol BEE. |
13.3. |
13.3 If there is any conflict between the provisions of this clause 13 and the more general provisions of clause 11, the provisions of clause 13 shall prevail. |
14. |
SECURITIES TRANSFER TAX |
Securities transfer tax shall be borne by the Company or the Company’s Nominee, if it is the purchaser of the Sasol BEE Ordinary Shares contemplated in These Terms.
15. |
CUSTODY AND MANDATE AGREEMENT FOR SASOL BEE ORDINARY SHARES |
15.1. |
Each Holder of Sasol BEE Ordinary Shares who subscribes for and/or acquires and/or otherwise receives transfer of the Sasol BEE Ordinary Shares in dematerialised form, and who does not appoint a Participant, shall be deemed to have appointed the Participant selected at the relevant time by the Company, but shall be entitled to replace such Participant at any time thereafter with a different Participant selected by him/her/it provided that: |
15.2. |
the Holder concludes an agreement in respect of the Sasol BEE ordinary Shares for which his selected Participant will be providing securities services; |
15.3. |
the Holder procures that a copy of such agreement in respect of such securities services is delivered to the Company. |
Exhibit 2.2
DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 (THE “EXCHANGE ACT”)
As of 30 June 2023, Sasol Limited ("Sasol") had the following series of securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class |
|
Trading Symbols |
|
Name of each exchange on which registered |
|
American Depositary Shares |
|
SSL |
|
New York Stock Exchange |
|
Ordinary Shares of no par value |
|
SSL |
|
New York Stock Exchange |
|
5.875% Notes due 2024 |
|
SOLJL |
|
New York Stock Exchange |
|
4.375% Notes due 2026 |
|
SOLJL |
|
New York Stock Exchange |
|
6.500% Notes due 2028 |
|
SOLJL |
|
New York Stock Exchange |
|
Sasol is the issuer of the ordinary shares and the ordinary shares represented by the American Depositary Shares, as described below. The $1,500,000,000 5.875% Notes due 2024 (the "2024 Notes"), the $750,000,000 6.500% Notes due 2028 (the "2028 Notes"), the $650,000,000 4.375% Notes due 2026 (the "2026 Notes") and the $850,000,000 5.500% Notes due 2031 (the "2031 Notes") were issued by Sasol Financing USA LLC ("Sasol USA"), a wholly owned subsidiary of Sasol. Sasol is a guarantor of each of the 2024 Notes, the 2028 Notes and the 2031 Notes.
Sasol's ordinary shares ("Sasol ordinary shares") are described in [—Description of Ordinary Shares—], Sasol's American Depositary Shares ("ADSs") are described below under [—Description of American Depositary Shares—] and the debt securities of Sasol Financing International Plc, a wholly owned subsidiary of Sasol (“Sasol Financing”) and Sasol USA are described below under "[—Description of Debt Securities—].
Capitalized terms used but not defined herein have the meanings given to them in Sasol's Annual Report on Form 20-F for the fiscal year ended 30 June 20232 (the “2023 Form 20-F”). Terms that are defined below retain such definitions solely for purposes of the relevant description of securities.
A. |
Description of Ordinary Shares |
Refer to Sasol's 2023 Form 20F, Item 10B.3 (Rights and privileges of holders of our securities).
B. |
Description of American Depositary Shares |
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
American Depositary Receipts
The ADRs are issued by JPMorgan Chase Bank, N.A. (“JPMorgan”), as depositary. Each ADS represents an ownership interest in a designated number of shares which are deposited with the custodian, as agent of the depositary, under the deposit agreement among ourselves, the depositary, holders of ADRs, and all beneficial owners of an interest in the ADSs evidenced by ADRs from time to time.
The depositary’s office is located at 383 Madison Avenue, Floor 11, New York, NY 10179.
Each ADS represents one share. The ADS to share ratio is subject to amendment as provided in the form of ADR (which may give rise to fees contemplated by the form of ADR). In the future, each ADS will also represent any securities, cash or other property deposited with the depositary but which they have not distributed directly to you.
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A beneficial owner is any person or entity having a beneficial ownership interest ADSs. A beneficial owner need not be the holder of the ADR evidencing such ADS. If a beneficial owner of ADSs is not an ADR holder, it must rely on the holder of the ADR(s) evidencing such ADSs in order to assert any rights or receive any benefits under the deposit agreement. A beneficial owner shall only be able to exercise any right or receive any benefit under the deposit agreement solely through the holder of the ADR(s) evidencing the ADSs owned by such beneficial owner. The arrangements between a beneficial owner of ADSs and the holder of the corresponding ADRs may affect the beneficial owner’s ability to exercise any rights it may have.
An ADR holder shall be deemed to have all requisite authority to act on behalf of any and all beneficial owners of the ADSs evidenced by the ADRs registered in such ADR holder’s name for all purposes under the deposit agreement and ADRs. The depositary’s only notification obligations under the deposit agreement and the ADRs is to registered ADR holders. Notice to an ADR holder shall be deemed, for all purposes of the deposit agreement and the ADRs, to constitute notice to any and all beneficial owners of the ADSs evidenced by such ADR holder’s ADRs.
Unless certificated ADRs are specifically requested, all ADSs will be issued on the books of our depositary in book-entry form and periodic statements will be mailed to you which reflect your ownership interest in such ADSs. In our description, references to American depositary receipts or ADRs shall include the statements you will receive which reflect your ownership of ADSs.
You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold the ADSs through your broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are.
As an ADR holder or beneficial owner, we will not treat you as a shareholder of ours and you will not have any shareholder rights. The law of the Republic of South Africa governs shareholder rights. Because the depositary or its nominee will be the shareholder of record for the shares represented by all outstanding ADSs, shareholder rights rest with such record holder. Your rights are those of an ADR holder or of a beneficial owner. Such rights derive from the terms of the deposit agreement entered into among us, the depositary and all holders and beneficial owners from time to time of ADRs issued under the deposit agreement and, in the case of a beneficial owner, from the arrangements between the beneficial owner and the holder of the corresponding ADRs. The obligations of the depositary and its agents are also set out in the deposit agreement. Because the depositary or its nominee will actually be the registered owner of the shares, you must rely on it to exercise the rights of a shareholder on your behalf.
The deposit agreement and the ADSs are governed by New York law. Under the deposit agreement, by holding an ADS or an interest therein, ADR holders and beneficial owners each irrevocably agree that any legal suit, action or proceeding against or involving us or the depositary, arising out of or based upon the deposit agreement, the ADSs, the ADRs or the transactions contemplated thereby, may be instituted in a state or federal court in New York, New York, irrevocably waive any objection which you may have to the laying of venue of any such proceeding, and irrevocably submit to the exclusive jurisdiction of such courts in any such suit, action or proceeding.
The following is a summary of what we believe to be the material terms of the deposit agreement. Notwithstanding this, because it is a summary, it may not contain all the information that you may otherwise deem important. For more complete information, you should read the entire deposit agreement and the form of ADR which contains the terms of your ADSs. You can read a copy of the deposit agreement which is filed as an exhibit to the registration statement on Form F-6, which is available on the SEC’s website at http://www.sec.gov.
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Share Dividends and Other Distributions
How will I receive dividends and other distributions on the shares underlying my ADSs?
We may make various types of distributions with respect to our securities. The depositary has agreed that, to the extent practicable, it will pay to you the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after converting any cash received into U.S. dollars (if it determines such conversion may be made on a reasonable basis) and, in all cases, making any necessary deductions provided for in the deposit agreement. The depositary may utilize a division, branch or affiliate of JPMorgan to direct, manage and/or execute any public and/or private sale of securities under the deposit agreement. Such division, branch and/or affiliate may charge the depositary a fee in connection with such sales, which fee is considered an expense of the depositary. You will receive these distributions in proportion to the number of underlying securities that your ADSs represent.
Except as stated below, the depositary will deliver such distributions to ADR holders in proportion to their interests in the following manner:
● | Cash. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain registered ADR holders, and (iii) deduction of the depositary’s and/or its agents’ expenses in (1) converting any foreign currency to U.S. dollars to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution. |
● | Shares. In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such shares. Only whole ADSs will be issued. Any shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR holders entitled thereto. |
● | Rights to receive additional shares. In the case of a distribution of rights to subscribe for additional shares or other rights, if we timely provide evidence satisfactory to the depositary that it may lawfully distribute such rights, the depositary will distribute warrants or other instruments in the discretion of the depositary representing such rights. However, if we do not timely furnish such evidence, the depositary may: |
o | sell such rights if practicable and distribute the net proceeds in the same manner as cash to the ADR holders entitled thereto; or |
o | if it is not practicable to sell such rights by reason of the non-transferability of the rights, limited markets therefor, their short duration or otherwise, do nothing and allow such rights to lapse, in which case ADR holders will receive nothing and the rights may lapse. |
● | Other Distributions. In the case of a distribution of securities or property other than those described above, the depositary may either (i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, sell such securities or property and distribute any net proceeds in the same way it distributes cash. |
● | Elective Distributions. In the case of a dividend payable at the election of our shareholders in cash or in additional shares, we will notify the depositary at least 30 days prior to the proposed distribution stating |
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whether or not we wish such elective distribution to be made available to ADR holders. The depositary shall make such elective distribution available to ADR holders only if (i) we shall have timely requested that the elective distribution is available to ADR holders, (ii) the depositary shall have determined that such distribution is reasonably practicable and (iii) the depositary shall have received satisfactory documentation within the terms of the deposit agreement including any legal opinions of counsel that the depositary in its reasonable discretion may request. If the above conditions are not satisfied, the depositary shall, to the extent permitted by law, distribute to the ADR holders, on the basis of the same determination as is made in the local market in respect of the shares for which no election is made, either (x) cash or (y) additional ADSs representing such additional shares. If the above conditions are satisfied, the depositary shall establish procedures to enable ADR holders to elect the receipt of the proposed dividend in cash or in additional ADSs. There can be no assurance that ADR holders generally, or any ADR holder in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of shares.
If the depositary determines in its discretion that any distribution described above is not practicable for the purpose of effecting such distribution with respect to any specific registered ADR holder entitled thereto, the depositary may choose any method of distribution that it deems practicable for such ADR holder, including the distribution of foreign currency, securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.
Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the depositary in accordance with its then current practices.
The depositary is not responsible if it fails to determine that any distribution or action is lawful or reasonably practicable.
There can be no assurance that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time period. All purchases and sales of securities will be handled by the depositary in accordance with its then current policies, which are currently set forth in the “Depositary Receipt Sale and Purchase of Security” section of https://www.adr.com/Investors/FindOutAboutDRs, the location and contents of which the depositary shall be solely responsible for.
Deposit, Withdrawal and Cancellation
How does the depositary issue ADSs
The depositary will issue ADSs if you or your broker deposit shares or evidence of rights to receive shares with the custodian and pay the fees and expenses owing to the depositary in connection with such issuance.
Shares deposited in the future with the custodian must be accompanied by certain delivery documentation and shall, at the time of such deposit, be registered in the name of JPMorgan Chase Bank, N.A., as depositary for the benefit of holders of ADRs or in such other name as the depositary shall direct.
The custodian will hold all deposited shares (including those being deposited by or on our behalf in connection with the offering to which this prospectus relates) for the account and to the order of the depositary, in each case for the benefit of ADR holders. ADR holders and beneficial owners thus have no direct ownership interest in the shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred to as “deposited securities”.
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Deposited securities are not intended to, and shall not, constitute proprietary assets of the depositary, the custodian or their nominees. Beneficial ownership in deposited securities is intended to be, and shall at all times during the term of the deposit agreement continue to be, vested in the beneficial owners of the ADSs representing such deposited securities. Notwithstanding anything else contained herein, in the deposit agreement, in the form of ADR and/or in any outstanding ADSs, the depositary, the custodian and their respective nominees are intended to be, and shall at all times during the term of the deposit agreement be, the record holder(s) only of the deposited securities represented by the ADSs for the benefit of the ADR holders. The depositary, on its own behalf and on behalf of the custodian and their respective nominees, disclaims any beneficial ownership interest in the deposited securities held on behalf of the ADR holders.
Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name or upon the order of the person entitled thereto evidencing the number of ADSs to which such person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the depositary’s direct registration system, and a registered holder will receive periodic statements from the depositary which will show the number of ADSs registered in such holder’s name. An ADR holder can request that the ADSs not be held through the depositary’s direct registration system and that a certificated ADR be issued.
How do ADR holders cancel an ADS and obtain deposited securities?
When you turn in your ADR certificate at the depositary’s office, or when you provide proper instructions and documentation in the case of direct registration ADSs, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying shares to you or upon your written order. Delivery of deposited securities in certificated form will be made at the custodian’s office. At your risk, expense and request, the depositary may deliver deposited securities at such other place as you may request.
The depositary may only restrict the withdrawal of deposited securities in connection with:
● | temporary delays caused by closing our transfer books or those of the depositary or the deposit of shares in connection with voting at a shareholders’ meeting, or the payment of dividends; |
● | the payment of fees, taxes and similar charges; or |
● | compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities. |
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Record Dates
The depositary may, after consultation with us if practicable, fix record dates (which, to the extent applicable, shall be as near as practicable to any corresponding record dates set by us) for the determination of the registered ADR holders who will be entitled (or obligated, as the case may be):
● | to receive any distribution on or in respect of deposited securities, |
● | to give instructions for the exercise of voting rights at a meeting of holders of shares, or |
● | to pay the fee assessed by the depositary for administration of the ADR program and for any expenses as provided for in the ADR, |
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● | to receive any notice or to act or be obligated in respect of other matters, all subject to the provisions of the deposit agreement. |
Voting Rights
How do I vote?
If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the shares which underlie your ADSs. Subject to the next sentence, as soon as practicable after receiving notice from us of any meeting at which the holders of shares are entitled to vote, or of our solicitation of consents or proxies from holders of shares, the depositary shall fix the ADS record date in accordance with the provisions of the deposit agreement, provided that if the depositary receives a written request from us and at least 30 days prior to the date of such vote or meeting, the depositary shall, at our expense, distribute to the registered ADR holders a “voting notice” stating (i) final information particular to such vote and meeting and any solicitation materials, (ii) that each ADR holder on the record date set by the depositary will, subject to any applicable provisions of South African law, be entitled to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the deposited securities represented by the ADSs evidenced by such ADR holder’s ADRs and (iii) the manner in which such instructions may be given, including instructions for giving a discretionary proxy to a person designated by us. Each ADR holder shall be solely responsible for the forwarding of voting notices to the beneficial owners of ADSs registered in such ADR holder’s name. There is no guarantee that ADR holders and beneficial owners generally or any holder or beneficial owner in particular will receive the notice described above with sufficient time to enable such ADR holder or beneficial owner to return any voting instructions to the depositary in a timely manner.
Following actual receipt by the ADR department responsible for proxies and voting of ADR holders’ instructions (including, without limitation, instructions of any entity or entities acting on behalf of the nominee for DTC), the depositary shall, in the manner and on or before the time established by the Depositary for such purpose, endeavour to vote or cause to be voted the deposited securities represented by the ADSs evidenced by such ADR holders’ ADRs in accordance with such instructions insofar as practicable and permitted under the provisions of or governing deposited securities.
Holders are strongly encouraged to forward their voting instructions to the depositary as soon as possible. Voting instructions will not be deemed received until such time as the ADR department responsible for proxies and voting has received such instructions, notwithstanding that such instructions may have been physically received by the depositary prior to such time. The depositary will not itself exercise any voting discretion in respect of deposited securities. The depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast, including, without limitation, any vote cast by a person to whom the depositary is required to grant a discretionary proxy, or for the effect of any such vote. Notwithstanding anything contained in the deposit agreement or any ADR, the depositary may, to the extent not prohibited by any law, rule or regulation or the rules and/or requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of deposited securities, distribute to the registered holders of ADRs a notice that provides such holders with, or otherwise publicizes to such holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).
There is no guarantee that you will receive voting materials in time to instruct the depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.
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Reports and Other Communications
Will ADR holders be able to view our reports?
The depositary will make available for inspection by ADR holders at the offices of the depositary and the custodian the deposit agreement, the provisions of or governing deposited securities, and any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities.
Additionally, if we make any written communications generally available to holders of our shares, and we furnish copies thereof (or English translations or summaries) to the depositary, it will distribute the same to registered ADR holders.
Fees and Expenses
What fees and expenses will I be responsible for paying?
The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of shares, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities or whose ADSs are cancelled or reduced for any other reason, $5.00 for each 100 ADSs (or any portion thereof) issued, delivered, reduced, cancelled or surrendered. The depositary may sell (by public or private sale) sufficient securities and property received in respect of a share distribution, rights and/or other distribution prior to such deposit to pay such charge.
The following additional charges shall also be incurred by the ADR holders, the beneficial owners, by any party depositing or withdrawing shares or by any party surrendering ADSs and/or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADSs or the deposited securities or a distribution of ADSs), whichever is applicable:
● | a fee of U.S.$0.05 or less per ADS held (i) upon which any cash distribution is made pursuant to the deposit agreement or (ii) in the case of an elective cash/stock dividend, upon which a cash distribution or an issuance of additional ADSs is made as a result of such elective dividend; |
● | an aggregate fee of U.S.$0.05 or less per ADS per calendar year (or portion thereof) for services performed by the depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as of the record date or record dates set by the depositary during each calendar year and shall be payable in the manner described in the next succeeding provision); |
● | a fee for the reimbursement of such fees, charges and expenses as are incurred by the depositary and/or any of its agents (including, without limitation, the custodian and expenses incurred on behalf of ADR holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the shares or other deposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against ADR holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such ADR holders or by deducting such charge from one or more cash dividends or other cash distributions); |
● | a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal to the $0.05 per ADS issuance fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those ADR holders entitled thereto; |
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● | stock transfer or other taxes and other governmental charges; |
● | SWIFT, cable, telex and facsimile transmission and delivery charges incurred at your request in connection with the deposit or delivery of shares, ADRs or deposited securities; |
● | transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities; |
● | in connection with the conversion of foreign currency into U.S. dollars, JPMorgan Chase Bank, N.A. shall deduct out of such foreign currency the fees, expenses and other charges charged by it and/or its agent (which may be a division, branch or affiliate) so appointed in connection with such conversion; and |
● | fees of any division, branch or affiliate of the depositary utilized by the depositary to direct, manage and/or execute any public and/or private sale of securities under the deposit agreement. |
JPMorgan Chase Bank, N.A. and/or its agent may act as principal for such conversion of foreign currency. For further details see https://www.adr.com.
We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary.
The right of the depositary to receive payment of fees, charges and expenses survives the termination of the deposit agreement, and shall extend for those fees, charges and expenses incurred prior to the effectiveness of any resignation or removal of the depositary.
The fees and charges described above may be amended from time to time by agreement between us and the depositary.
The depositary may make available to us a set amount or a portion of the depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as we and the depositary may agree from time to time. The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, or by directly billing investors, or by charging the book-entry system accounts of participants acting for them. The depositary will generally set off the amounts owing from distributions made to holders of ADSs. If, however, no distribution exists and payment owing is not timely received by the depositary, the depositary may refuse to provide any further services to ADR holders that have not paid those fees and expenses owing until such fees and expenses have been paid. At the discretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when declared owing by the depositary.
Payment of Taxes
ADR holders or beneficial owners must pay any tax or other governmental charge payable by the custodian or the depositary on any ADS or ADR, deposited security or distribution. If any taxes or other governmental charges (including any penalties and/or interest) shall become payable by or on behalf of the custodian or the depositary with respect to any ADR, any deposited securities represented by the ADSs evidenced thereby or any distribution thereon, such tax or other governmental charge shall be paid by the ADR holder thereof to the depositary and by holding or having held an ADR or any ADSs evidenced thereby, the ADR holder and all beneficial owners thereof, and all prior ADR holders and beneficial owners thereof, jointly and severally, agree to indemnify, defend and save harmless each of the depositary and its agents in respect of such tax or other governmental charge.
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Each ADR holder and beneficial owner of the ADSs evidenced thereby, and each prior ADR holder and beneficial owner thereof (collectively, the “Tax Indemnitors”), by holding or having held an ADR or an interest in ADSs, the ADR holder thereof (and prior ADR holder thereof) acknowledges and agrees that the depositary shall have the right to seek payment of amounts owing from any one or more Tax Indemnitor(s) as determined by the depositary in its sole discretion, without any obligation to seek payment from any other Tax Indemnitor(s). If an ADR holder owes any tax or other governmental charge, the depositary may (i) deduct the amount thereof from any cash distributions, or (ii) sell deposited securities (by public or private sale) and deduct the amount owing from the net proceeds of such sale. In either case the ADR holder remains liable for any shortfall. If any tax or governmental charge is unpaid, the depositary may also refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities until such payment is made. If any tax or governmental charge is required to be withheld on any cash distribution, the depositary may deduct the amount required to be withheld from any cash distribution or, in the case of a non- cash distribution, sell the distributed property or securities (by public or private sale) in such amounts and in such manner as the depositary deems necessary and practicable to pay such taxes and distribute any remaining net proceeds or the balance of any such property after deduction of such taxes to the ADR holders entitled thereto.
As an ADR holder or beneficial owner, you will be agreeing to indemnify us, the depositary, its custodian and any of our or their respective officers, directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.
Reclassifications, Recapitalizations and Mergers
If we take certain actions that affect the deposited securities, including (i) any change in par value, split-up, consolidation, cancellation or other reclassification of deposited securities or (ii) any distributions of shares or other property not made to holders of ADRs or (iii) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all of our assets, then the depositary may choose to, and shall if reasonably requested by us:
● | amend the form of ADR; |
● | distribute additional or amended ADRs; |
● | distribute cash, securities or other property it has received in connection with such actions; |
● | sell any securities or property received and distribute the proceeds as cash; or |
● | none of the above. |
If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities and each ADS will then represent a proportionate interest in such property.
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the ADSs without your consent for any reason. ADR holders must be given at least 30 days’ notice of any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, SWIFT, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or otherwise prejudices any substantial existing right of ADR holders or beneficial owners. Such notice need not describe in detail the specific amendments effectuated thereby, but must identify to ADR holders and beneficial owners a means to access the text of such amendment.
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If an ADR holder continues to hold an ADR or ADRs after being so notified, such ADR holder and any beneficial owner are deemed to agree to such amendment and to be bound by the deposit agreement as so amended. No amendment, however, will impair your right to surrender your ADSs and receive the underlying securities, except in order to comply with mandatory provisions of applicable law.
Any amendments or supplements which (i) are reasonably necessary (as agreed by us and the depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act of 1933 or (b) the ADSs or shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by ADR holders, shall be deemed not to prejudice any substantial rights of ADR holders or beneficial owners. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the deposit agreement or the form of ADR to ensure compliance therewith, we and the depositary may amend or supplement the deposit agreement and the ADR at any time in accordance with such changed laws, rules or regulations. Such amendment or supplement to the deposit agreement in such circumstances may become effective before a notice of such amendment or supplement is given to ADR holders or within any other period of time as required for compliance.
Notice of any amendment to the deposit agreement or form of ADRs shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the ADR holders identifies a means for ADR holders and beneficial owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the SEC’s, the depositary’s or our website or upon request from the depositary).
How may the deposit agreement be terminated?
The depositary may, and shall at our written direction, terminate the deposit agreement and the ADRs by mailing notice of such termination to the registered holders of ADRs at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the depositary shall have (i) resigned as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered ADR holders unless a successor depositary shall not be operating under the deposit agreement within 60 days of the date of such resignation, and (ii) been removed as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered holders of ADRs unless a successor depositary shall not be operating under the deposit agreement on the 60th day after our notice of removal was first provided to the depositary.
After the date so fixed for termination, the depositary and its agents will perform no further acts under the deposit agreement or the ADRs, except to receive and hold (or sell) distributions on deposited securities and deliver deposited securities being withdrawn. As soon as practicable after the date so fixed for termination, the depositary shall use its reasonable efforts to sell the deposited securities and shall thereafter (as long as it may lawfully do so) hold in an account (which may be segregated or unsegregated account) the net proceeds of such sales, together with any other cash then held by it under the deposit agreement, without liability for interest, in trust for the pro rata benefit of the holders of ADRs not theretofore surrendered. After making such sale, the depositary shall be discharged from all obligations in respect of the deposit agreement and the ADR, except to account for such net proceeds and other cash.
Limitations on Obligations and Liability to ADR holders
Limits on our obligations and the obligations of the depositary; limits on liability to ADR holders and holders of ADSs
Prior to the issue, registration, registration of transfer, split-up, combination, or cancellation of any ADRs, or the delivery of any distribution in respect thereof, and from time to time in the case of the production of proofs as described below, we or the depositary or its custodian may require:
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● | payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the deposit agreement; |
● | the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial or other ownership of any securities, compliance with applicable law, regulations, provisions of or governing deposited securities and terms of the deposit agreement and the ADRs, as it may deem necessary or proper; and |
● | compliance with such regulations as the depositary may establish consistent with the deposit agreement. |
The issuance of ADRs, the acceptance of deposits of shares, the registration, registration of transfer, split-up or combination of ADRs or the withdrawal of shares, may be suspended, generally or in particular instances, when the ADR register or any register for deposited securities is closed or when any such action is deemed advisable by the depositary; provided that the ability to withdraw shares may only be limited under the following circumstances: (i) temporary delays caused by closing transfer books of the depositary or our transfer books or the deposit of shares in connection with voting at a shareholders’ meeting, or the payment of dividends, (ii) the payment of fees, taxes, and similar charges, and (iii) compliance with any laws or governmental regulations relating to ADRs or to the withdrawal of deposited securities.
The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents, provided, however, that no disclaimer of liability under the Securities Act of 1933 is intended by any of the limitations of liabilities provisions of the deposit agreement. The deposit agreement provides that each of us, the depositary and our respective agents will:
● | incur no liability to holders or beneficial owners of ADRs if any present or future law, rule, regulation, fiat, order or decree of the United States, the Republic of South Africa or any other country or jurisdiction, or of any governmental or regulatory authority or securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism, nationalization, expropriation, currency restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, computer failure or circumstance beyond our, the depositary’s or our respective agents’ direct and immediate control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the deposit agreement or the ADRs provide shall be done or performed by us, the depositary or our respective agents (including, without limitation, voting); |
● | incur no liability to holders or beneficial owners of ADRs by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or things which by the terms of the deposit agreement it is provided shall or may be done or performed or any exercise or failure to exercise discretion under the deposit agreement or the ADRs including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable; |
● | not incur or assume any liability to holders or beneficial owners of ADRs if it performs its obligations under the deposit agreement and ADRs without gross negligence or wilful misconduct and the depositary shall not be a fiduciary or have any fiduciary duty to holders or beneficial owners of ADRs; |
● | in the case of the depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs; |
● | in the case of us and our agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs, which in our or our agents’ |
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opinion, as the case may be, may involve it in expense or liability, unless indemnity satisfactory to us or our agent, as the case may be against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be requested;
● | not be liable to holders or beneficial owners of ADRs for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting shares for deposit, any registered holder of ADRs, any other person believed by it to be competent to give such advice or information, or in the case of the depositary only, us; or |
● | may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by it to be genuine and to have been signed, presented or given by the proper party or parties. |
Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense (including fees and disbursements of counsel) and liability is furnished as often as may be required. The depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the deposit agreement, any registered holder or holders of ADRs, any ADRs or otherwise related to the deposit agreement or ADRs to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators. The depositary shall not be liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system. Furthermore, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any custodian that is not a branch or affiliate of JPMorgan.
Notwithstanding anything to the contrary contained in the deposit agreement or any ADRs, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the custodian except to the extent that any registered ADR holder has incurred liability directly as a result of the custodian having (i) committed fraud or wilful misconduct in the provision of custodial services to the depositary or (ii) failed to use reasonable care in the provision of custodial services to the depositary as determined in accordance with the standards prevailing in the jurisdiction in which the custodian is located. The depositary and the custodian(s) may use third party delivery services and providers of information regarding matters such as pricing, proxy voting, corporate actions, class action litigation and other services in connection with the ADRs and the deposit agreement, and use local agents to provide extraordinary services such as attendance at annual meetings of issuers of securities. Although the depositary and the custodian will use reasonable care (and cause their agents to use reasonable care) in the selection and retention of such third party providers and local agents, they will not be responsible for any errors or omissions made by them in providing the relevant information or services. The depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale.
The depositary has no obligation to inform ADR holders or beneficial owners about the requirements of the laws, rules or regulations or any changes therein or thereto of any country or jurisdiction or of any governmental or regulatory authority or any securities exchange or market or automated quotation system.
Additionally, none of us, the depositary or the custodian shall be liable for the failure by any registered holder of ADRs or beneficial owner therein to obtain the benefits of credits or refunds of non-U.S. tax paid against such ADR holder’s or beneficial owner’s income tax liability. The depositary is under no obligation to provide the ADR holders and beneficial owners, or any of them, with any information about our tax status. Neither we nor the depositary shall incur any liability for any tax or tax consequences that may be incurred by registered ADR holders or beneficial owners on account of their ownership or disposition of ADRs or ADSs.
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Neither the depositary nor its agents will be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast, including, without limitation, any vote cast by a person to whom the depositary is required to grant a discretionary proxy, or for the effect of any such vote. The depositary may rely upon instructions from us or our counsel in respect of any approval or license required for any currency conversion, transfer or distribution. The depositary shall not incur any liability for the content of any information submitted to it by us or on our behalf for distribution to ADR holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the deposited securities, for the validity or worth of the deposited securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the deposit agreement or for the failure or timeliness of any notice from us. The depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary.
Neither us, the depositary nor any of its agents shall be liable for any indirect, special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity (including, without limitation holders or beneficial owners of ADRs and ADSs), whether or not foreseeable and regardless of the type of action in which such a claim may be brought.
No provision of the deposit agreement or the ADRs is intended to constitute a waiver or limitation of any rights which an ADR holder or any beneficial owner may have under the Securities Act of 1933 or the Securities Exchange Act of 1934, to the extent applicable.
The depositary and its agents may own and deal in any class of securities of our company and our affiliates and in ADRs.
Disclosure of Interest in ADSs
To the extent that the provisions of or governing any deposited securities may require disclosure of or impose limits on beneficial or other ownership of, or interests in, deposited securities, other shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, you as ADR holders or beneficial owners agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable instructions we may provide in respect thereof.
Books of Depositary
The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which register shall include the depositary’s direct registration system. Registered holders of ADRs may inspect such records at the depositary’s office at all reasonable times, but solely for the purpose of communicating with other ADR holders in the interest of the business of our company or a matter relating to the deposit agreement. Such register may be closed at any time or from time to time, when deemed expedient by the depositary or, in the case of the issuance book portion of the ADR Register, when reasonably requested by the Company solely in order to enable the Company to comply with applicable law.
The depositary will maintain facilities for the delivery and receipt of ADRs.
Appointment
In the deposit agreement, each registered holder of ADRs and each beneficial owner, upon acceptance of any ADSs or ADRs (or any interest in any of them) issued in accordance with the terms and conditions of the deposit agreement will be deemed for all purposes to:
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● | be a party to and bound by the terms of the deposit agreement and the applicable ADR or ADRs, |
● | appoint the depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the deposit agreement and the applicable ADR or ADRs, to adopt any and all procedures necessary to comply with applicable laws and to take such action as the depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the deposit agreement and the applicable ADR and ADRs, the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof; and |
● | acknowledge and agree that (i) nothing in the deposit agreement or any ADR shall give rise to a partnership or joint venture among the parties thereto, nor establish a fiduciary or similar relationship among such parties, (ii) the depositary, its divisions, branches and affiliates, and their respective agents, may from time to time be in the possession of non-public information about us, ADR holders, beneficial owners and/or their respective affiliates, (iii) the depositary and its divisions, branches and affiliates may at any time have multiple banking relationships with us, ADR holders, beneficial owners and/or the affiliates of any of them, (iv) the depositary and its divisions, branches and affiliates may, from time to time, be engaged in transactions in which parties adverse to us or ADR holders or beneficial owners may have interests, (v) nothing contained in the deposit agreement or any ADR(s) shall (A) preclude the depositary or any of its divisions, branches or affiliates from engaging in such transactions or establishing or maintaining such relationships, or (B) obligate the depositary or any of its divisions, branches or affiliates to disclose such transactions or relationships or to account for any profit made or payment received in such transactions or relationships, (vi) the depositary shall not be deemed to have knowledge of any information held by any branch, division or affiliate of the depositary and (vii) notice to an ADR holder shall be deemed, for all purposes of the deposit agreement and the ADRs, to constitute notice to any and all beneficial owners of the ADSs evidenced by such ADR holder’s ADRs. For all purposes under the deposit agreement and the ADRs, the ADR holders thereof shall be deemed to have all requisite authority to act on behalf of any and all beneficial owners of the ADSs evidenced by such ADRs. |
Governing Law
The deposit agreement, the ADSs and the ADRs are governed by and construed in accordance with the internal laws of the State of New York. In the deposit agreement, we have submitted to the non-exclusive jurisdiction of the courts of the State of New York and appointed an agent for service of process on our behalf. Any action based on the deposit agreement, the ADSs, the ADRs or the transactions contemplated therein or thereby may be instituted by the depositary against us in any competent court in the Republic of South Africa and/or the United States.
Under the deposit agreement, by holding an ADR or an interest therein, ADR holders and beneficial owners each irrevocably agree that any legal suit, action or proceeding against or involving us or the depositary, arising out of or based upon the deposit agreement, the ADSs, the ADRs or the transactions contemplated thereby, may only be instituted in a state or federal court in New York, New York, and by holding an ADS or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.
Jury Trial Waiver
In the deposit agreement each party thereto (including, for avoidance of doubt, each holder and beneficial owner and/or holder of interests in ADSs and ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any suit, action or proceeding against the depositary and/or us directly or indirectly arising out of or relating to the shares or other deposited securities, the ADSs or the ADRs, the deposit agreement or any transaction contemplated therein, or the breach thereof (whether based on contract, tort, common law or any other theory), including any claim under the U.S. federal securities laws.
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If we or the depositary were to oppose a jury trial demand based on such waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in accordance with applicable state and federal law, including whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. The waiver to right to a jury trial of the deposit agreement is not intended to be deemed a waiver by any holder or beneficial owner of ADSs of the Company’s or the depositary’s compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.
C. |
Description of Debt Securities |
The 2024 Notes, the 2026 Notes, the 2028 Notes and the 2031 Notes set forth on the cover page to the 2023 Form 20-F were issued by Sasol USA and guaranteed by Sasol.
Each of these series of notes was issued pursuant to an effective registration statement and a related base prospectus and prospectus supplement setting forth the terms of the relevant series of notes and related guarantees.
The 2024 Notes, the 2026 Notes, the 2028 Notes and the 2031 Notes were issued under the indenture, dated as of 27 September 2018, amongst Sasol USA as issuer, Sasol Limited as guarantor and Citibank, N.A. as trustee, as modified by an agreement of resignation, appointment and acceptance dated as of 5 August 2020 by and among the Sasol USA, Sasol, Citibank, N.A., as resigning trustee and Wilmington Savings Fund Society, FSB, as successor trustee (the "2018 Indenture").
The following table sets forth the dates of the registration statements, dates of the base prospectuses and date of issuance for each relevant series of notes (the "Notes").
Title of each class |
Registration Statement |
Date of Base Prospectus |
Date of Issuance |
|
|
|
|
5.875% Notes due 2024 and 6.500% Notes due 2028 |
333-227263 and 333-227263-01 |
10 September 2018 |
27 September 2018 |
4.375% Notes due 2026 and 5.500% Notes due 2031 |
333-227263 |
10 September 2018 |
18 March 2021 |
The following description of our Notes is a summary and does not purport to be complete and is qualified in its entirety by the full terms of the relevant Noes. For a complete description of the terms and provisions of the Notes, refer to the 2018 Indenture filed as an exhibit to Sasol's Registration Form F-3 (333-227263) filed with the SEC on 10 September 2018.
DESCRIPTION OF THE 2024 AND 2028 NOTES
This section describes the specific financial and legal terms of the 5.875% notes due 2024 and the 6.500% notes due 2028 under the 2018 Indenture. The following description is a summary of material provisions of the notes and the 2018 Indenture and does not purport to be complete. Except where the context clearly refers to Sasol Limited ("Sasol"), references to "we", "us" and "our" in this section refer to Sasol Financing USA LLC ("Sasol USA"). References to "holder", "you" and "your" in this section refers to holders of the notes.
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General
The notes were issued under the indenture among Sasol USA, Sasol as guarantor and Citibank, N.A. as trustee, as modified by an agreement of resignation, appointment and acceptance dated as of 5 August 2020 by and among the Sasol Financing, Sasol, Citibank, N.A., as resigning trustee and Wilmington Savings Fund Society, FSB, as successor trustee. Book-entry interests in the notes will be issued in minimum denominations of $200,000 and in integral multiples of $1,000 in excess thereof. Interest on the notes will be computed on the basis of a 360-day year of twelve 30-day months. The indenture is, and the notes and the guarantee will be, governed by the laws of the State of New York.
The 2024 Notes were initially issued in an aggregate principal amount of $1,500,000,000 and mature on 27 March 2024. The 2024 Notes bear interest at a rate of 5.875% per annum, payable semi-annually in arrears on 27 March and 27 September of each year, commencing 27 March 2019. The regular record dates for the notes are every 15 March and 15 September of each year.
The 2028 Notes were initially be issued in an aggregate principal amount of $750,000,000 and mature on 27 September 2028. The 2028 Notes bear interest at a rate of 6.500% per annum, payable semi-annually in arrears on 27 March and 27 September of each year, commencing 27 March 2019. The regular record dates for the notes are every March 15 and September 15 of each year.
If any scheduled interest payment date is not a business day, Sasol USA will pay interest on the next business day, but interest on that payment will not accrue during the period from and after the scheduled interest payment date. If the scheduled maturity date or date of redemption or repayment is not a business day, Sasol may pay interest and principal and premium, if any, on the next succeeding business day, but interest on that payment will not accrue during the period from and after the scheduled maturity date or date of redemption or repayment.
A "business day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York City or in the City of London.
The notes are unsecured and unsubordinated indebtedness of Sasol USA and rank equally with all of its other unsecured and unsubordinated indebtedness from time to time outstanding. The notes are or will be effectively subordinated to any of Sasol USA's existing and future secured debt, to the extent of the value of the assets securing such debt.
The trustee's corporate trust office in New York City is designated as the principal paying agent. Sasol USA may at any time designate additional paying agents or rescind the designation of paying agents or approve a change in the office through which any paying agent acts.
Further Issuances
Sasol USA may, without the consent of the holders of the notes, issue additional notes of a series having the same ranking and same interest rate, maturity date, redemption terms and other terms as the notes except for the price to the public and issue date, provided, however, that such additional notes that have the same CUSIP, ISIN, Common Code or other identifying numbers as the notes offered hereunder must be fungible with such notes for US federal income tax purposes. Any such additional notes, together with the notes, will constitute a single series of securities under the 2018 Indenture and are included in the definition of "notes" in this section where the context requires. There is no limitation on the amount of notes or other debt securities that Sasol USA may issue under the 2018 Indenture.
Optional Redemption
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Prior to 27 February 2024 (the "2024 Notes Par Call Date") for the 2024 Notes and prior to 27 June 2028 (the "2028 Notes Par Call Date") for the 2028 Notes, the relevant series of notes will be redeemable as a whole or in part, at the option of Sasol USA or Sasol at any time and from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the notes, assuming for such purpose that the 2024 Notes were called on the 2024 Notes Par Call Date and the 2028 Notes were called on the 2028 Notes Par Call Date (exclusive of interest accrued and unpaid to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus the Make-whole Spread, plus, in each case, accrued and unpaid interest thereon to, but not including, the date of redemption. Further instalments of interest on the notes to be redeemed that are due and payable on the interest payment dates falling on or prior to a redemption date shall be payable on the interest payment date to the registered holders as of the close of business on the relevant regular record date according to the notes and the 2018 Indenture.
On or after the 2024 Notes Par Call Date for the 2024 Notes and on or after the 2028 Notes Par Call Date for the 2028 Notes, the relevant series of notes will be redeemable in whole (but not in part), at the option of Sasol USA or Sasol at any time, at a redemption price equal to 100% of the principal amount of such series of notes plus, in each case, accrued and unpaid interest thereon to, but not including, the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means the US Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of the notes, assuming for such purpose that the 2024 Notes mature on the 2024 Notes Par Call Date and the 2028 Notes mature on the 2028 Notes Par Call Date.
"Independent Investment Banker" means one of the Reference Treasury Dealers appointed by Sasol USA.
"Comparable Treasury Price" means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if Sasol USA obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means each of Citigroup Global Markets Inc., J.P. Morgan Securities plc, Merrill Lynch, Pierce, Fenner & Smith Incorporated or their respective affiliates that are primary US government securities dealers and two other primary US government securities dealers in New York City selected by Sasol USA, and their respective successors; provided, however, that if any of the foregoing or their affiliates shall cease to be a primary US government securities dealer in New York City, Sasol USA shall substitute therefor another such primary US government securities dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by Sasol USA, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to Sasol USA by such Reference Treasury Dealer at 3:30 p.m. New York City time on the third business day preceding such redemption date.
"Make-whole Spread" means 50 basis points.
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Sasol USA will give notice to each holder of notes to be redeemed of any redemption that Sasol USA or Sasol propose to make at least 10 days, but not more than 60 days, before the redemption date or request that the trustee send such notice of redemption to each holder of notes to be redeemed in the name of Sasol USA and at its expense. If fewer than all of the notes are to be redeemed, the notes to be redeemed shall be selected in accordance with DTC procedures.
Unless Sasol USA or Sasol defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the notes or portions thereof called for redemption.
Optional Tax Redemption
We or the guarantor may redeem each series of guaranteed debt securities at our option in whole but not in part at any time (except in the case of debt securities that have a variable rate of interest, which may be redeemed on any interest payment date), if:
● | we or the guarantor would be required to pay additional amounts, as a result of any change in the tax laws or treaties (including the official application or interpretation thereof) of a Taxing Jurisdiction or, in the case of a treaty, to which a Taxing Jurisdiction is a party that, in the case of any of us, becomes effective on or after the date of issuance of that series (or, in the case of a successor, that becomes effective after the date such successor becomes such, or, in the case of assumption by the guarantor, the date of such assumption), as explained below under "—Payment of Additional Amounts ", or |
● | there is a change in the official application or interpretation of a treaty to which a Taxing Jurisdiction is a party, this change is proposed and becomes effective on or after a date on which one of our affiliates borrows money from us, and because of the change this affiliate would be required to deduct or withhold tax on payments to us to enable us to make any payment of principal, premium, if any, or interest. |
In both of these cases, however, we will not be permitted to redeem a series of debt securities if we can avoid either the payment of additional amounts, or deductions or withholding, as the case may be, by using reasonable measures available to us. For the avoidance of doubt, reasonable measures shall not include changing our jurisdiction of incorporation.
Except in the case of outstanding original issue discount debt securities, which may be redeemed at the redemption price specified by the terms of that series of debt securities, the redemption price will be equal to the principal amount plus accrued interest to the date of redemption.
Change of Control Repurchase Event
If a change of control repurchase event occurs in respect of the notes of a series, unless either Sasol USA or Sasol has exercised its right to redeem in whole the then-outstanding notes as described under "—Optional Redemption" or "—Optional Tax Redemption" above, Sasol USA will be required to make an offer to each holder of the notes of a series to repurchase all or any part (in minimal denominations of $200,000 and integral multiples of $1,000 in excess thereof) of that holder's notes at a repurchase price in cash equal to 101% of the aggregate principal amount of the notes repurchased plus any accrued and unpaid interest on the notes repurchased to, but not including, the date of repurchase. Within 30 days following any change of control repurchase event or, at the Sasol USA's option, prior to any change of control, but after the public announcement of the proposed change of control, Sasol USA will mail a notice to each holder, with a copy to the trustee, describing the transaction or transactions that constitute or may constitute the change of control repurchase event and offering to repurchase the notes on the payment date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law. The notice shall, if mailed prior to the date of consummation of the change of control, state that the offer to purchase is conditioned on a change of control repurchase event occurring on or prior to the payment date specified in the notice.
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Holders of the notes electing to have their notes purchased pursuant to a change of control repurchase event offer will be required to surrender their notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the note completed, to the paying agent at the address specified in the notice, or transfer their notes to the paying agent by book-entry transfer pursuant to the applicable procedures of the paying agent, prior to the close of business on the third business day prior to the repurchase payment date. Sasol USA will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a change of control repurchase event. To the extent that the provisions of any applicable securities or corporate laws or regulations conflict with the change of control repurchase event provisions of the notes, Sasol USA will comply with the applicable securities or corporate laws and regulations and will not be deemed to have breached its obligations under the change of control repurchase event provisions of the notes by virtue of such conflict.
On the repurchase date following a change of control repurchase event, Sasol USA will, to the extent lawful:
(1) | accept for payment all notes or portions of the notes properly tendered pursuant to Sasol USA' offer; |
(2) | deposit with the paying agent an amount equal to the aggregate purchase price in respect of all the notes or portions of the notes properly tendered; and |
(3) | deliver or cause to be delivered to the trustee the notes properly accepted, together with an officers' certificate stating the aggregate principal amount of notes being purchased by Sasol USA. |
The paying agent will promptly mail to each holder of notes properly tendered the purchase price for the notes (or make payment through the depositary), and the trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a new note equal in principal amount to any unpurchased portion of any notes surrendered; provided, however, that each new note will be in a minimum principal amount of $200,000 and integral multiples of $1,000 in excess thereof.
Sasol USA will not be required to make an offer to repurchase the notes issued by it upon a change of control repurchase event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by Sasol USA and such third party purchases all notes properly tendered and not withdrawn under its offer.
For purposes of the foregoing discussion of a repurchase at the option of holders, the following definitions are applicable:
"change of control" means the occurrence of any of the following:
(1) | the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger, scheme of arrangement, amalgamation or consolidation), in one or a series of related transactions, of all or substantially all of the assets of Sasol and its subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) other than to Sasol or one of its subsidiaries; |
(2) | the consummation of any transaction (including, without limitation, any merger, scheme of arrangement, amalgamation or consolidation) the result of which is that any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) (other than a subsidiary of Sasol) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the combined voting power of Sasol's voting stock or other voting stock into which Sasol's voting stock is reclassified, consolidated, exchanged or changed measured by voting power rather than number of shares; |
(3) | Sasol consolidates with, or merges with or into, or enters into a scheme of arrangement with or amalgamates with, any "person" (as that term is used in Section 13(d)(3) of the Exchange Act), or any person consolidates with, or merges with or into, or enters into a plan or arrangement with, Sasol, in any such event pursuant to a transaction in which any of the outstanding voting stock of Sasol or such other person is converted into or exchanged for cash, securities or other property, other than any such |
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transaction where the shares of the voting stock of Sasol outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the voting stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; or
(4) | the adoption of a plan relating to the liquidation or dissolution of Sasol. |
Notwithstanding the foregoing, a transaction will not be deemed to involve a change of control if (1) Sasol becomes a direct or indirect wholly owned subsidiary of a holding company and (2)(A) the direct or indirect holders of the voting stock of such holding company immediately following that transaction are substantially the same as the holders of Sasol's voting stock immediately prior to that transaction or (B) immediately following that transaction, no "person" (as that term is used in Section 13(d)(3) of the Exchange Act) (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the voting stock of such holding company.
The definition of change of control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of "all or substantially all" of Sasol and its subsidiaries' assets taken as a whole. Although there is a limited body of case law interpreting the phrase "substantially all", there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to require Sasol USA to repurchase such holder's notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of Sasol's and its subsidiaries' assets taken as a whole to another person or group may be uncertain. Holders may not be entitled to require Sasol Financing to purchase their notes in certain circumstances involving a significant change in the composition of the board of directors of Sasol, including in connection with a proxy contest, where the board of directors of Sasol initially publicly opposes the election of a dissident slate of directors, but subsequently approves such directors for the purposes of the 2018 Indenture governing the notes. This may result in a change in the composition of the board of directors of Sasol that, but for such subsequent approval, would have otherwise constituted a change of control under the terms of the 2018 Indenture governing the notes.
"change of control repurchase event" means the occurrence of both a change of control and a rating event.
"investment grade" means a rating of Baa3 or better by Moody's (or its equivalent under any successor rating categories of Moody's); a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P); and the equivalent investment grade credit rating from any additional rating agency or rating agencies selected by Sasol as a replacement rating agency or replacement ratings agencies.
"Moody's" means Moody's Investors Service, Inc., a subsidiary of Moody's Corporation, and its successors.
"rating agency" means each of Moody's and S&P; provided, however, that if either Moody's or S&P ceases to rate the notes or fails to make a rating of the notes publicly available for reasons outside of Sasol's control, Sasol may select (as certified by a resolution of Sasol's board of directors) a "nationally recognized statistical rating organization" within the meaning of Section 3(a)(62) of the Exchange Act, as a replacement agency for Moody's or S&P, or both of them, as the case may be.
"rating category" means (i) with respect to S&P, any of the following categories: BBB, BB, B, CCC, CC, C and D (or equivalent successor categories) and (ii) with respect to Moody's, any of the following categories: Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories). In determining whether the rating of the notes has decreased by one or more gradations, gradations within rating categories (+ and – for S&P; 1, 2 and 3 for Moody's; or the equivalent gradations for another rating agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from BB– to B+, will constitute a decrease of one gradation).
"rating date" means the date that is 60 days prior to the earlier of (1) the occurrence of a change of control; or (2) the public notice of the intention by Sasol to effect a change of control.
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"rating event" means the occurrence of the events in (A) or (B) of this definition on any date during the 60-day period (which period shall be extended so long as the rating of the notes is under publicly announced consideration for a possible downgrade by any of the rating agencies) after the earlier of (1) the occurrence of a change of control; or (2) the public notice of the intention by Sasol to effect a change of control if (A) the notes are rated on the ratings date by each rating agency as investment grade, the rating of the notes shall be reduced so that the notes are rated below investment grade by at least one rating agency, or (B) the notes are rated on the ratings date below investment grade by at least one rating agency, the rating of the notes by at least one rating agency shall be reduced by one or more gradations (including gradations within rating categories, as well as between rating categories). Notwithstanding the foregoing, a rating event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular change of control (and thus shall not be deemed a rating event for purposes of the definition of change of control repurchase event hereunder) if (i) the rating agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the trustee or Sasol in writing at its request that the reduction was the result, in whole or in part, of the applicable change of control (whether or not the applicable change of control shall have occurred at the time of the rating event) or (ii) the rating of the notes by the rating agency making the reduction in rating to which this definition would otherwise apply is within the relevant 60-day period subsequently upgraded to an investment grade rating.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
"voting stock" of any specified "person" (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date means the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.
The change of control repurchase event feature of the notes may in certain circumstances make more difficult or discourage a sale or takeover of Sasol and, thus, the removal of incumbent management. Subject to the limitations discussed below, Sasol could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a change of control repurchase event under the notes, but that could increase the amount of indebtedness outstanding at such time or otherwise affect Sasol's capital structure or credit ratings on the notes. Restrictions on Sasol's ability to incur liens are contained in the covenants as described under "—Limitation on Liens" below.
Sasol USA may not have sufficient funds to repurchase all the notes upon a change of control repurchase event.
Payment of Additional Amounts
We will pay all amounts of principal of, and any premium and interest on, any debt securities, and all payments pursuant to the guarantee shall be made, without deduction or withholding for any taxes, assessments or other charges imposed by the government of South Africa, the United States or any other jurisdiction where we or the guarantor are organized or tax resident or in which we are treated as being engaged in a trade or business, as the case may be, or the government of a jurisdiction in which a successor to any of us, as the case may be, is organized or tax resident ("Taxing Jurisdiction"). If deduction or withholding of any of these charges is required by a Taxing Jurisdiction, we (or the guarantor) will pay any additional amounts necessary to make the net amount paid to the affected holders equal the amount the holders would have received in the absence of the deduction or withholding. However, these "additional amounts" will not include:
● | the amount of any tax, assessment or other governmental charge imposed by any government of any jurisdiction other than a Taxing Jurisdiction; |
● | the amount of any tax, assessment or other governmental charge that is only payable because either: |
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o | some present or former connection exists between the holder or beneficial owner of the debt security and a Taxing Jurisdiction other than as a result of holding a note or enforcing its rights thereunder (including, but not limited to, the holder or beneficial owner of the debt security being or having been a citizen, resident or national thereof, or being or having been present or engaged in business therein, or having or having had a permanent establishment therein); or |
o | the holder presented the debt security for payment more than 30 days after the date on which the relevant payment becomes due or was provided for, whichever is later; |
● | any estate, inheritance, gift, sale, transfer, personal property, value added, excise or similar tax, duty, assessment or other governmental charge; |
● | the amount of any tax, assessment or other governmental charge that is payable other than by deduction or withholding from a payment on the debt securities; |
● | the amount of any tax, assessment or other governmental charge that is imposed or withheld due to the holder or beneficial owner of the debt security failing to accurately comply with a request from us either to provide information concerning the beneficial owner's nationality, residence or identity or make any claim or to satisfy any information or reporting requirement, if the completion of either is required by statute, treaty, regulation or administrative practice of the Taxing Jurisdiction as a precondition to exemption from the applicable governmental charge; |
● | the amount of any tax, assessment or other governmental charge imposed, deducted or withheld pursuant to section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended (the "Code") or otherwise imposed pursuant to sections 1471 through 1474 of the Code, in each case, as of the date of issuance (and any amended or successor version that is substantively comparable), any current or future regulations or agreements thereunder, official interpretations thereof or similar law or regulation implementing an intergovernmental agreement relating thereto; |
● | the amount of any tax, assessment or other governmental charge imposed by reason of the holder's past or present status as a passive foreign investment company, a controlled foreign corporation, a foreign tax exempt organization or a personal holding company with respect to the United States or as a corporation that accumulates earnings to avoid U.S. federal income tax; |
● | the amount of any tax, assessment or other governmental charge imposed on interest received by (1) a 10% shareholder (as defined in section 871(h)(3)(B) of Code, and the regulations promulgated thereunder) of Sasol USA or (2) a controlled foreign corporation that is related to Sasol USA within the meaning of section 864(d)(4) of the Code, or (3) a bank receiving interest described in section 881(c)(3)(A) of the Code, to the extent such tax, assessment or other governmental charge would not have been imposed but for the holder's status as described in clauses (1) through (3) of this bullet; |
● | in the case of a holder that is a U.S. Person (as defined below), the amount of any withholding tax or deduction, or any similar tax, imposed by the United States or a political subdivision thereof; or |
● | any combination of the withholdings, taxes, assessments or other governmental charges described above. |
Additionally, additional amounts shall not be paid with respect to any payment to a holder who is a fiduciary or partnership or any person other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner of such payment would not have been entitled to such additional amounts had it been the holder.
The prospectus supplement will describe any additional circumstances under which additional amounts will not be paid with respect to guaranteed debt securities.
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Limitation on Liens
Sasol covenants in the 2018 Indenture that it will not, nor will it permit any "Restricted Subsidiary" to, create, incur, issue, assume or guarantee any indebtedness for money borrowed ("Debt") if such Debt is secured by any mortgage, security interest, pledge, lien or other similar encumbrance (a "lien" or "liens") upon any "Principal Property" of it or any Restricted Subsidiary or any shares of stock of or debt owed to any Restricted Subsidiary, whether owned at the date of the 2018 Indenture or thereafter acquired, without effectively securing the securities issued under the 2018 Indenture equally and ratably with or prior to the secured Debt. See further below for definitions of "Restricted Subsidiary" and "Principal Property".
This lien restriction will not apply to, among other things:
● | liens on property, shares of stock or indebtedness of any corporation existing at the time it becomes a subsidiary of Sasol provided that any such lien was not created in contemplation of becoming a subsidiary; |
● | liens on property or shares of stock existing at the time of acquisition thereof or to secure the payment of all or any part of the purchase price thereof or all or part of the cost of the improvement, construction, alteration or repair of any building, equipment or facilities or of any other improvements on, all or any part of the property or to secure any Debt incurred prior to, at the time of, or within 12 months after, in the case of shares of stock, the acquisition of such shares and, in the case of property, the later of the acquisition, the completion of construction (including any improvements, alterations or repairs on an existing property) or the commencement of commercial operation of such property, which Debt is incurred for the purpose of financing all or any part of the purchase price thereof or all or part of the cost of improvement, construction, alteration or repair thereon; |
● | liens on any Principal Property or on shares of stock or indebtedness of any Restricted Subsidiary, to secure all or any part of the cost of exploration, drilling, development, improvement, construction, alteration or repair of any part of the Principal Property or to secure any Debt incurred to finance or refinance all or any part of such cost; |
● | liens existing at the date of the 2018 Indenture; |
● | liens that secure debt owing by a Restricted Subsidiary to Sasol or any subsidiary of Sasol; |
● | liens on property owned or held by any corporation or on shares of stock or indebtedness of any corporation, in either case existing at the time such corporation is merged into or consolidated or amalgamated with Sasol or a Restricted Subsidiary, or at the time of a sale, lease or other disposition of the properties of a corporation as an entirety or substantially as an entirety to Sasol or a Restricted Subsidiary; |
● | liens arising by operation of law (other than by reason of default); |
● | liens to secure Debt incurred in the ordinary course of business and maturing not more than 12 months from the date incurred; |
● | liens arising pursuant to the specific terms of any license, joint operating agreement, unitization agreement or other similar document evidencing the interest of Sasol or a Restricted Subsidiary in any mine or any oil or gas producing property or related facilities (including pipelines), provided that any such lien is limited to such interest; |
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● | liens on any Principal Property or on shares of stock or indebtedness of any Restricted Subsidiary in relation to which Project Finance Indebtedness (as defined below) has been incurred, to secure that Project Finance Indebtedness; |
● | liens created in accordance with normal practice to secure Debt of Sasol whose main purpose is the raising of finances under any options, futures, swaps, short sale contracts or similar or related instruments which relate to the purchase or sale of securities, commodities or currencies; and |
● | any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any liens referred to above, or of any Debt secured thereby; provided that the principal amount of Debt secured thereby shall not exceed the principal amount of Debt so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement lien shall be limited to all or any part of the same property, shares of stock or indebtedness that secured the lien extended, renewed or replaced (plus improvements on such property), or property received or shares of stock issued in substitution or exchange therefor. |
In addition, the lien restriction does not apply to Debt secured by a lien, if the Debt, together with all other Debt secured by liens on Principal Property of Sasol or any Restricted Subsidiary (not including permitted liens described above) and the Attributable Debt (generally defined as the discounted present value of net rental payments, but excluding payments on bona fide operating leases) associated with Sale and Lease Back Transactions entered into after our first issuance of debt securities under the 2018 Indenture (but not including "Sale and Lease Back Transactions" pursuant to which debt has been retired), does not exceed a certain percentage of the consolidated net tangible assets of Sasol and its consolidated subsidiaries, as shown on the audited consolidated balance sheet prepared in accordance with International Financial Reporting Standards. The specific percentage will be determined at the time we issue any debt and will be described in the applicable prospectus supplement.
The following types of transactions shall not be deemed to create Debt secured by a lien:
● | the sale or other transfer, by way of security or otherwise, of (a) coal, oil, gas or other minerals in place or at the wellhead or a right or license granted by any governmental authority to explore for, drill, mine, develop, recover or get such coal, oil, gas or other minerals (whether such license or right is held with others or not) for a period of time until, or in an amount such that, the purchaser will realize therefrom a specified amount of money (however determined) or a specified amount of such coal, oil, gas or other minerals, or (b) any other interest in property of the character commonly referred to as a "production payment"; "royalty" or "stream"; and |
● | liens on property in favour of the United States or any state thereof, or the Republic of South Africa, or any other country, or any political subdivision of any of the foregoing, or any department, agency or instrumentality of the foregoing, to secure partial, progress, advance or other payments pursuant to the provisions of any contract or statute including, without limitation, liens to secure indebtedness of the pollution control or industrial revenue bond type, or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or cost of construction of the property or acquisition of equipment subject to such liens. |
The term "Restricted Subsidiary" is defined in the 2018 Indenture to mean any wholly owned subsidiary of Sasol which owns a Principal Property, unless the subsidiary is primarily engaged in the business of a finance company and any other subsidiary designated as a "Restricted Subsidiary" in the applicable prospectus supplement.
The term "Principal Property" is defined in the 2018 Indenture to mean (a) oil or gas producing property (including leases, rights or other authorizations to conduct operations over any producing property), (b) any refining or manufacturing plant, (c) any mine, mineral deposit or processing plant, or (d) any building, pipeline, structure, dam or other facility, together with the land upon which it is erected and fixtures comprising a part thereof, in each case whose net book value exceeds a certain percentage of consolidated net tangible assets of Sasol, unless the board of directors of Sasol thinks that the property is not of material importance to its overall business or that the portion of a property in question is not of material importance to the rest of such property.
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The specific percentage will be determined at the time we issue any debt and will be described in the applicable prospectus supplement.
The term "Project Finance Indebtedness" is defined in the 2018 Indenture to mean any indebtedness incurred in relation to any asset for the purposes of financing the whole or any part of the acquisition, creation, construction, expansion, operation, improvement or development of such asset where the financial institution(s) or other persons to whom such indebtedness is owed (and any trustees or other agents therefor) has or have recourse to (i) the applicable project borrower (where such project borrower is formed solely or principally for the purpose of the relevant project) and any or all of its rights and assets and/or (ii) such asset (or any derivative asset thereof) but, in either case, does not or do not have recourse to Sasol or any of its subsidiaries other than in respect of (a) Sasol's or such subsidiary's interests in the equity or indebtedness of the applicable project borrower or the interests of Sasol or any other of its subsidiaries in the equity or indebtedness of any subsidiary that holds, directly or indirectly, interests in the equity or indebtedness of the applicable project borrower, (b) the rights of the applicable project borrower under any contract with Sasol or any of its other subsidiaries, (c) obligations of Sasol or such subsidiary pursuant to completion or performance guarantees or price support, cost overrun support or other support obligations, in each case, in connection with the relevant project or (d) claims for indemnity or damages arising from breach of representations or covenants made by Sasol or such subsidiary to such financial institution or other person.
Limitation on Sale and Lease Back Transactions
Sasol covenants in the 2018 Indenture that it will not, nor will it permit any Restricted Subsidiary, to enter into any arrangement with any party providing for the leasing to it or any Restricted Subsidiary of any Principal Property (except for temporary leases for a term, including renewals, of not more than three years) which has been or is to be sold by it or the Restricted Subsidiary to the party (a "Sale and Lease Back Transaction"), unless:
● | the Attributable Debt (generally defined as the discounted present value of net rental payments, but excluding payments on bona fide operating leases) of the Sale and Lease Back Transaction, together with the Attributable Debt of all other Sale and Lease Back Transactions entered into since the first issuance of debt securities under the 2018 Indenture and the aggregate principal amount of its debt secured by liens on Principal Property of Sasol or any Restricted Subsidiary or any shares of stock of or debt owed to any Restricted Subsidiary (but excluding debt secured by permitted liens bulleted under "—Limitation on Liens" above, and excluding Sale and Lease Back Transactions pursuant to which debt has been retired) would not exceed a certain percentage of the consolidated net tangible assets of Sasol, as shown on the audited balance sheet prepared in accordance with International Financial Reporting Standards, which percentage will be determined at the time we issue any debt and will be described in the applicable prospectus supplement; |
● | Sasol or the Restricted Subsidiary would be entitled to incur debt secured by a lien on the Principal Property to be leased without securing the securities issued under the 2018 Indenture, as described in the bullet points under "—Limitation on Liens" above; |
● | Sasol applies an amount equal to the fair value of the Principal Property that is the subject of a Sale and Leaseback Transaction to the retirement of the securities, or to the retirement of long-term indebtedness of Sasol or a Restricted Subsidiary that is not subordinated to the debt securities issued; or |
● | Sasol enters into a bona fide commitment to expend for the acquisition or improvement of a Principal Property an amount at least equal to the fair value of the Principal Property leased. |
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In addition, the limitation on sale and leaseback transactions does not apply if attributable debt (generally defined as the discounted present value of net rental payments, but excluding payments on bona fide operating leases) associated with the sale and lease back transaction, together with the attributable debt of all other sale and lease back transactions entered into after this first issuance of debt securities under the 2018 Indenture and the aggregate principal amount of Sasol's debt secured by liens on Principal Property of Sasol or any restricted subsidiary (but not including permitted liens described under "—Limitation on Liens", and sale and lease back transactions pursuant to which debt has been retired) would not exceed 15% of the consolidated net tangible assets of Sasol and its consolidated subsidiaries (as set forth on the most recent balance sheet but, in any event, as of a date within 150 days of the date of determination) prepared in accordance with IFRS.
Events of Default
You will have special rights if an Event of Default occurs in respect of the debt securities of your series and is not cured, as described later in this subsection.
What Is an Event of Default? Unless we specify otherwise in the applicable prospectus supplement, the term "Event of Default" in respect of the debt securities of your series means any of the following:
● | failure to pay the principal of, or any premium on, a debt security of that series on its due date; |
● | failure to pay interest or additional amounts on a debt security of that series within 30 days of its due date; |
● | failure to deposit any sinking fund payment in respect of debt securities of that series on its due date; |
● | we or the guarantor remain in breach of a covenant in respect of debt securities of that series for 90 days after we receive a written notice of default stating we are in breach. The notice must be sent by either the trustee or holders of at least 25 percent of the principal amount of debt securities of that series; |
● | we or the guarantor file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur; |
● | the guarantee ceases to be in full force and effect; or |
● | any other Event of Default in respect of debt securities of that series described in the prospectus supplement occurs. |
An Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series of debt securities issued under the 2018 Indenture. The trustee may withhold notice to the holders of debt securities of any default, except in the payment of principal or interest, if it considers the withholding of notice to be in the interests of the holders of the affected series.
Remedies if an Event of Default Occurs. If an Event of Default has occurred and has not been cured, the trustee or the holders of at least 25 percent in principal amount of the debt securities of the affected series may declare the entire principal amount of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity. A declaration of acceleration of maturity may be cancelled by the holders of at least a majority in principal amount of the debt securities of the affected series.
Except in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the 2018 Indenture at the request of any holders unless the holders offer the trustee protection from expenses and liability (called an "indemnity") satisfactory to the trustee. If an indemnity reasonably satisfactory to the trustee is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee.
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The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or remedy will be treated as a waiver of that right, remedy or Event of Default.
Before you are allowed to bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the debt securities, the following must occur:
● | you must give your trustee written notice that an Event of Default has occurred and remains uncured● |
● | the holders of at least 25 percent in principal amount of all outstanding debt securities of the relevant series must make a written request that the trustee take action because of the default and must offer indemnity to the trustee reasonably satisfactory to the trustee against the cost and other liabilities of taking that action; |
● | the trustee must not have taken action for 60 days after receipt of the above notice and offer of indemnity; and |
● | the holders of a majority in principal amount of the debt securities of the relevant series must not have given the trustee a direction inconsistent with the above notice. |
However, you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date.
Holders of a majority in principal amount of the debt securities of the affected series may waive any past defaults other than:
● | the payment of principal, any premium or interest; and |
● | in respect of a covenant that cannot be modified or amended without the consent of each holder. |
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST OF THE TRUSTEE AND HOW TO DECLARE OR CANCEL AN ACCELERATION.
Each year, we and the guarantor will furnish to the trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance with the 2018 Indenture and the debt securities, or else specifying any default.
Merger or Consolidation
Under the terms of the 2018 Indenture, each of Sasol USA and Sasol is generally permitted to consolidate or merge with another entity. In addition, each of Sasol USA and Sasol is also permitted to sell all or substantially all of its assets to another entity. However, neither Sasol USA nor Sasol may take any of these actions unless all the following conditions are met:
● | where Sasol USA (or Sasol, as the case may be) merges out of existence or sells its assets, the resulting or acquiring entity must agree to be legally responsible for the notes (or the guarantee, as the case may be); |
● | immediately after giving effect to the merger or sale of assets, no default on the debt securities shall have occurred and be continuing; and |
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● | Sasol USA (or Sasol or the acquiring entity, as the case may be) must deliver certain certificates and documents to the trustee. |
Modification or Waiver
There are three types of changes we can make to the 2018 Indenture and the debt securities issued under the 2018 Indenture.
Changes Requiring Your Approval
First, there are changes that we cannot make to your debt securities without your specific approval. Following is a list of those types of changes unless we specify otherwise in the applicable prospectus supplement:
● | change the stated maturity of the principal of (or premium, if any) or interest on a debt security; |
● | reduce any amounts due on a debt security; |
● | reduce the amount of principal payable upon acceleration of the maturity of a security following a default; |
● | adversely affect any right of repayment at the holder's option; |
● | change the place or currency of payment on a debt security |
● | impair your right to sue for payment; |
● | adversely affect any right to convert or exchange a debt security in accordance with its terms; |
● | reduce the percentage in principal amount of holders of debt securities whose consent is needed to modify or amend the 2018 Indenture; |
● | reduce the percentage in principal amount of holders of debt securities whose consent is needed to waive compliance with certain provisions of the 2018 Indenture or to waive certain defaults under the 2018 Indenture; |
● | modify any other aspect of the provisions of the 2018 Indenture dealing with modification and waiver of past defaults, changes to the quorum or voting requirements or the waiver of certain covenants; and |
● | change any obligation to pay additional amounts, as explained above under "—Payment of Additional Amounts ". |
Changes Not Requiring Approval
The second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications and certain other changes that would not adversely affect holders of the outstanding debt securities in any material respect. We also do not need any approval to make any change that affects only debt securities to be issued under the 2018 Indenture after the change takes effect.
Changes Requiring Majority Approval
Any other change to the 2018 Indenture or the debt securities would require the following approval unless we specify otherwise in the applicable prospectus supplement:
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● | if the change affects only one series of debt securities, it must be approved by the holders of a majority in principal amount of that series; |
● | if the change affects more than one series of debt securities, it must be approved by the holders of a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class for this purpose. |
In each case, any resolution passed or decision taken at any meeting of the holders of a series of debt securities must be in writing.
The holders of a majority in principal amount of any series of debt securities issued under the 2018 Indenture may waive our and the guarantor's compliance with some of our covenants in the 2018 Indenture. However, we cannot obtain a waiver of a payment default or of any of the matters covered by the bullet points included above under "—Changes Requiring Your Approval".
Further Details Concerning Voting
We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding securities that are entitled to vote or take other action under the 2018 Indenture. If we set a record date for a vote or other action to be taken by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding securities of those series on the record date, and the vote or other action must be taken within eleven months following the record date. Unless otherwise specified in the applicable prospectus supplement, the holder of a debt security will be entitled to one vote for each $1,000 principal amount of the debt security that is outstanding and held by it. Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption. Debt securities will also not be eligible to vote if they have been fully defeased as described later under "—Defeasance—Full Defeasance".
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO CHANGE THE 2018 INDENTURE OR THE DEBT SECURITIES OR REQUEST A WAIVER.
Sinking Fund
The notes of each series will not be entitled to the benefit of a sinking fund.
Defeasance
The following provisions will be applicable to the notes.
Covenant Defeasance
Under current U.S. federal tax law, we or the guarantor can make the deposit described below and be released from some of the restrictive covenants in the 2018 Indenture under which a particular series was issued. This is called "covenant defeasance". In that event, you would lose the protection of those restrictive covenants but would gain the protection of having cash and U.S. government securities set aside in trust to repay your debt securities. In order to achieve covenant defeasance, we must do the following:
● | we must deposit in trust for the benefit of all holders of the debt securities of the particular series a combination of cash and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities of the particular series on their various due dates; |
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● | the "covenant defeasance" must not otherwise result in a breach of the 2018 Indenture or any of our or the guarantor's material agreements; |
● | no Event of Default must have occurred and remain uncured; |
● | we must deliver to the trustee a legal opinion of our counsel confirming that, under current federal income tax law, we may make the above deposit without causing you to be taxed on the debt securities of the particular series any differently than if we did not make the deposit and just repaid the debt securities of the particular series ourselves at maturity; and |
● | we must deliver to the trustee a legal opinion and officer's certificate, each stating that all conditions precedent to "covenant defeasance" under the 2018 Indenture have been met. |
If we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there is a shortfall in the trust deposit or the trustee is prevented from making payment. In fact, if one of the remaining Events of Default occurred (such as our bankruptcy) and the debt securities became immediately due and payable, there might be a shortfall. Depending on the event causing the default, you may not be able to obtain payment of the shortfall.
Full Defeasance
Under certain circumstances as described below, we or the guarantor can legally release ourselves from all payment and other obligations on the debt securities of a particular series (called "full defeasance") if we put in place the following arrangements for you to be repaid:
● | we must deposit in trust for the benefit of all holders of the debt securities of the particular series a combination of cash and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities of the particular series on their various due dates; |
● | the "full defeasance" must not otherwise result in a breach of the 2018 Indenture or any of our or the guarantor's material agreements; |
● | no Event of Default must have occurred and remain uncured; |
● | we must deliver to the trustee a legal opinion confirming that there has been a change in current federal tax law or an IRS ruling that lets us make the above deposit without causing you to be taxed on the debt securities of the particular series any differently than if we did not make the deposit and just repaid the debt securities of the particular series ourselves at maturity. Under current U.S. federal tax law, the deposit and our legal release from the debt securities of the particular series would be treated as though we paid you your share of the cash and notes or bonds at the time the cash and notes or bonds were deposited in trust in exchange for your debt securities and you would recognize gain or loss on the debt securities at the time of the deposit; and |
● | we must deliver to the trustee an opinion of counsel and an officer's certificate, each stating that all conditions precedent to "full defeasance" under the 2018 Indenture have been met. |
If we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt securities. You could not look to us for repayment in the unlikely event of any shortfall.
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Listing
The notes of each series are listed on the New York Stock Exchange.
Guarantee
Sasol fully and unconditionally guarantees the debt securities issued by Sasol USA under a guarantee of the payment of principal of, and any premium, interest and "additional amounts" on, these debt securities when due, whether at maturity or otherwise. Sasol has obtained the approval of the SARB to provide this guarantee.
DESCRIPTION OF THE 2026 AND 2031 NOTES
This section describes the specific financial and legal terms of the 4.375% notes due 2026 and the 5.500% notes due 2031 under the 2018 Indenture. The following description is a summary of material provisions of the notes and the 2018 Indenture and does not purport to be complete. Except where the context clearly refers to Sasol Limited ("Sasol"), references to "we", "us" and "our" in this section refer to Sasol Financing USA LLC ("Sasol USA"). References to "holder", "you" and "your" in this section refers to holders of the notes.
General
The notes were issued under the 2018 Indenture. Book-entry interests in the notes will be issued in minimum denominations of $200,000 and in integral multiples of $1,000 in excess thereof. Interest on the notes will be computed on the basis of a 360-day year of twelve 30-day months. The 2018 Indenture is, and the notes and the guarantee will be, governed by the laws of the State of New York.
The 2026 Notes were initially issued in an aggregate principal amount of $650,000,000 and mature on 18 September 2026. The 2026 Notes bear interest at a rate of 4.375% per annum, payable semi-annually in arrears on 18 March and 18 September of each year, commencing 18 September 2021. The regular record dates for the notes are every 1 March and 15 September of each year.
The 2031 Notes were initially be issued in an aggregate principal amount of $850,000,000 and mature on 18 March 2031. The 2031 Notes bear interest at a rate of 5.500% per annum, payable semi-annually in arrears on 18 March and 18 September of each year, commencing 18 September 2021. The regular record dates for the notes are every 1 March and 1 September of each year.
If any scheduled interest payment date is not a business day, Sasol USA will pay interest on the next business day, but interest on that payment will not accrue during the period from and after the scheduled interest payment date. If the scheduled maturity date or date of redemption or repayment is not a business day, Sasol may pay interest and principal and premium, if any, on the next succeeding business day, but interest on that payment will not accrue during the period from and after the scheduled maturity date or date of redemption or repayment.
A "business day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York City, Wilmington, Delaware or in London, England.
The notes are unsecured and unsubordinated indebtedness of Sasol USA and rank equally with all of its other unsecured and unsubordinated indebtedness from time to time outstanding. The notes are or will be effectively subordinated to any of Sasol USA's existing and future secured debt, to the extent of the value of the assets securing such debt.
The trustee's corporate trust office in Wilmington, Delaware is designated as the principal paying agent. Sasol USA may at any time designate additional paying agents or rescind the designation of paying agents or approve a change in the office through which any paying agent acts.
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Further Issuances
Sasol USA may, without the consent of the holders of the notes, issue additional notes of a series having the same ranking and same interest rate, maturity date, redemption terms and other terms as the notes except for the price to the public and issue date, provided, however, that such additional notes that have the same CUSIP, ISIN, Common Code or other identifying numbers as the notes offered hereunder must be fungible with such notes for US federal income tax purposes. Any such additional notes, together with the notes, will constitute a single series of securities under the 2018 Indenture and are included in the definition of "notes" in this section where the context requires. There is no limitation on the amount of notes or other debt securities that Sasol USA may issue under the 2018 Indenture.
Optional Redemption
Prior to 18 August 2026 (the "2026 Notes Par Call Date") for the 2026 Notes and prior to 18 December 2030 (the "2031 Notes Par Call Date") for the 2031 Notes, the relevant series of notes will be redeemable as a whole or in part, at the option of Sasol USA or Sasol at any time and from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the notes, assuming for such purpose that the 2026 Notes were called on the 2026 Notes Par Call Date and the 2031 Notes were called on the 2031 Notes Par Call Date (exclusive of interest accrued and unpaid to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus the Make-whole Spread, plus, in each case, accrued and unpaid interest thereon to, but not including, the date of redemption. Further instalments of interest on the notes to be redeemed that are due and payable on the interest payment dates falling on or prior to a redemption date shall be payable on the interest payment date to the registered holders as of the close of business on the relevant regular record date according to the notes and the 2018 Indenture.
On or after the 2026 Notes Par Call Date for the 2026 Notes and on or after the 2031 Notes Par Call Date for the 2031 Notes, the relevant series of notes will be redeemable in whole (but not in part), at the option of Sasol USA or Sasol at any time, at a redemption price equal to 100% of the principal amount of such series of notes plus, in each case, accrued and unpaid interest thereon to, but not including, the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means the US Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of the notes, assuming for such purpose that the 2026 Notes mature on the 2026 Notes Par Call Date and the 2031 Notes mature on the 2031 Notes Par Call Date.
"Independent Investment Banker" means one of the Reference Treasury Dealers appointed by Sasol USA.
"Comparable Treasury Price" means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if Sasol USA obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.
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"Reference Treasury Dealer" means each of BofA Securities Inc., Citigroup Global Markets Inc, Mizuho International plc, a Primary Treasury Dealer (as defined below) selected by MUFG Securities EMEA plc or their respective affiliates that are primary US government securities dealers (a "Primary Treasury Dealer") and two other Primary Treasury Dealers in New York City, selected by Sasol USA, and their respective successors; provided however, that if any of the foregoing or their affiliates shall cease to be a Primary Treasury Dealer in New York Citi, Sasol USA shall substitute therefor another such Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by Sasol USA, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to Sasol USA by such Reference Treasury Dealer at 3:30 p.m. New York City time on the third business day preceding such redemption date.
"Make-whole Spread" means 50 basis points.
Sasol USA will give notice to each holder of notes to be redeemed of any redemption that Sasol USA or Sasol propose to make at least 10 days, but not more than 60 days, before the redemption date or request that the trustee send such notice of redemption to each holder of notes to be redeemed in the name of Sasol USA and at its expense. If fewer than all of the notes are to be redeemed, the notes to be redeemed shall be selected in accordance with DTC procedures.
Unless Sasol USA or Sasol defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the notes or portions thereof called for redemption.
Optional Tax Redemption
We or the guarantor may redeem each series of guaranteed debt securities at our option in whole but not in part at any time (except in the case of debt securities that have a variable rate of interest, which may be redeemed on any interest payment date), if:
● | we or the guarantor would be required to pay additional amounts, as a result of any change in the tax laws or treaties (including the official application or interpretation thereof) of a Taxing Jurisdiction or, in the case of a treaty, to which a Taxing Jurisdiction is a party that, in the case of any of us, becomes effective on or after the date of issuance of that series (or, in the case of a successor, that becomes effective after the date such successor becomes such, or, in the case of assumption by the guarantor, the date of such assumption), as explained above under "—Payment of Additional Amounts", or |
● | there is a change in the official application or interpretation of a treaty to which a Taxing Jurisdiction is a party, this change is proposed and becomes effective on or after a date on which one of our affiliates borrows money from us, and because of the change this affiliate would be required to deduct or withhold tax on payments to us to enable us to make any payment of principal, premium, if any, or interest. |
In both of these cases, however, we will not be permitted to redeem a series of debt securities if we can avoid either the payment of additional amounts, or deductions or withholding, as the case may be, by using reasonable measures available to us. For the avoidance of doubt, reasonable measures shall not include changing our jurisdiction of incorporation.
Except in the case of outstanding original issue discount debt securities, which may be redeemed at the redemption price specified by the terms of that series of debt securities, the redemption price will be equal to the principal amount plus accrued interest to the date of redemption.
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Change of Control Repurchase Event
If a change of control repurchase event occurs in respect of the notes of a series, unless either Sasol USA or Sasol has exercised its right to redeem in whole the then-outstanding notes as described under "—Optional Redemption" or "—Optional Tax Redemption" above, Sasol USA will be required to make an offer to each holder of the notes of a series to repurchase all or any part (in minimal denominations of $200,000 and integral multiples of $1,000 in excess thereof) of that holder's notes at a repurchase price in cash equal to 101% of the aggregate principal amount of the notes repurchased plus any accrued and unpaid interest on the notes repurchased to, but not including, the date of repurchase. Within 30 days following any change of control repurchase event or, at the Sasol USA's option, prior to any change of control, but after the public announcement of the proposed change of control, Sasol USA will mail a notice to each holder, with a copy to the trustee, describing the transaction or transactions that constitute or may constitute the change of control repurchase event and offering to repurchase the notes on the payment date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law. The notice shall, if mailed prior to the date of consummation of the change of control, state that the offer to purchase is conditioned on a change of control repurchase event occurring on or prior to the payment date specified in the notice. Holders of the notes electing to have their notes purchased pursuant to a change of control repurchase event offer will be required to surrender their notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the note completed, to the paying agent at the address specified in the notice, or transfer their notes to the paying agent by book-entry transfer pursuant to the applicable procedures of the paying agent, prior to the close of business on the third business day prior to the repurchase payment date. Sasol USA will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a change of control repurchase event. To the extent that the provisions of any applicable securities or corporate laws or regulations conflict with the change of control repurchase event provisions of the notes, Sasol USA will comply with the applicable securities or corporate laws and regulations and will not be deemed to have breached its obligations under the change of control repurchase event provisions of the notes by virtue of such conflict.
On the repurchase date following a change of control repurchase event, Sasol USA will, to the extent lawful:
(1) | accept for payment all notes or portions of the notes properly tendered pursuant to Sasol USA' offer; |
(2) | deposit with the paying agent an amount equal to the aggregate purchase price in respect of all the notes or portions of the notes properly tendered; and |
(3) | deliver or cause to be delivered to the trustee the notes properly accepted, together with an officers' certificate stating the aggregate principal amount of notes being purchased by Sasol USA. |
The paying agent will promptly mail to each holder of notes properly tendered the purchase price for the notes (or make payment through the depositary), and the trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a new note equal in principal amount to any unpurchased portion of any notes surrendered; provided, however, that each new note will be in a minimum principal amount of $200,000 and integral multiples of $1,000 in excess thereof.
Sasol USA will not be required to make an offer to repurchase the notes issued by it upon a change of control repurchase event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by Sasol USA and such third party purchases all notes properly tendered and not withdrawn under its offer.
For purposes of the foregoing discussion of a repurchase at the option of holders, the following definitions are applicable:
"change of control" means the occurrence of any of the following:
(1) | the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger, scheme of arrangement, amalgamation or consolidation), in one or a series of related transactions, of all |
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or substantially all of the assets of Sasol and its subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) other than to Sasol or one of its subsidiaries;
(2) | the consummation of any transaction (including, without limitation, any merger, scheme of arrangement, amalgamation or consolidation) the result of which is that any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) (other than a subsidiary of Sasol) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the combined voting power of Sasol's voting stock or other voting stock into which Sasol's voting stock is reclassified, consolidated, exchanged or changed measured by voting power rather than number of shares; |
(3) | Sasol consolidates with, or merges with or into, or enters into a scheme of arrangement with or amalgamates with, any "person" (as that term is used in Section 13(d)(3) of the Exchange Act), or any person consolidates with, or merges with or into, or enters into a plan or arrangement with, Sasol, in any such event pursuant to a transaction in which any of the outstanding voting stock of Sasol or such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the voting stock of Sasol outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the voting stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; or |
(4) | the adoption of a plan relating to the liquidation or dissolution of Sasol. |
Notwithstanding the foregoing, a transaction will not be deemed to involve a change of control if (1) Sasol becomes a direct or indirect wholly owned subsidiary of a holding company and (2)(A) the direct or indirect holders of the voting stock of such holding company immediately following that transaction are substantially the same as the holders of Sasol's voting stock immediately prior to that transaction or (B) immediately following that transaction, no "person" (as that term is used in Section 13(d)(3) of the Exchange Act) (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the voting stock of such holding company.
The definition of change of control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of "all or substantially all" of Sasol and its subsidiaries' assets taken as a whole. Although there is a limited body of case law interpreting the phrase "substantially all", there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to require Sasol USA to repurchase such holder's notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of Sasol's and its subsidiaries' assets taken as a whole to another person or group may be uncertain. Holders may not be entitled to require Sasol USA to purchase their notes in certain circumstances involving a significant change in the composition of the board of directors of Sasol, including in connection with a proxy contest, where the board of directors of Sasol initially publicly opposes the election of a dissident slate of directors, but subsequently approves such directors for the purposes of the 2018 Indenture governing the notes. This may result in a change in the composition of the board of directors of Sasol that, but for such subsequent approval, would have otherwise constituted a change of control under the terms of the 2018 Indenture governing the notes.
"change of control repurchase event" means the occurrence of both a change of control and a rating event.
"investment grade" means a rating of Baa3 or better by Moody's (or its equivalent under any successor rating categories of Moody's); a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P); and the equivalent investment grade credit rating from any additional rating agency or rating agencies selected by Sasol as a replacement rating agency or replacement ratings agencies.
"Moody's" means Moody's Investors Service, Inc., a subsidiary of Moody's Corporation, and its successors.
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"rating agency" means each of Moody's and S&P; provided, however, that if either Moody's or S&P ceases to rate the notes or fails to make a rating of the notes publicly available for reasons outside of Sasol's control, Sasol may select (as certified by a resolution of Sasol's board of directors) a "nationally recognized statistical rating organization" within the meaning of Section 3(a)(62) of the Exchange Act, as a replacement agency for Moody's or S&P, or both of them, as the case may be.
"rating category" means (i) with respect to S&P, any of the following categories: BBB, BB, B, CCC, CC, C and D (or equivalent successor categories) and (ii) with respect to Moody's, any of the following categories: Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories). In determining whether the rating of the notes has decreased by one or more gradations, gradations within rating categories (+ and – for S&P; 1, 2 and 3 for Moody's; or the equivalent gradations for another rating agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from BB– to B+, will constitute a decrease of one gradation).
"rating date" means the date that is 60 days prior to the earlier of (1) the occurrence of a change of control; or (2) the public notice of the intention by Sasol to effect a change of control.
"rating event" means the occurrence of the events in (A) or (B) of this definition on any date during the 60-day period (which period shall be extended so long as the rating of the notes is under publicly announced consideration for a possible downgrade by any of the rating agencies) after the earlier of (1) the occurrence of a change of control; or (2) the public notice of the intention by Sasol to effect a change of control if (A) the notes are rated on the ratings date by each rating agency as investment grade, the rating of the notes shall be reduced so that the notes are rated below investment grade by at least one rating agency, or (B) the notes are rated on the ratings date below investment grade by at least one rating agency, the rating of the notes by at least one rating agency shall be reduced by one or more gradations (including gradations within rating categories, as well as between rating categories). Notwithstanding the foregoing, a rating event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular change of control (and thus shall not be deemed a rating event for purposes of the definition of change of control repurchase event hereunder) if (i) the rating agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the trustee or Sasol in writing at its request that the reduction was the result, in whole or in part, of the applicable change of control (whether or not the applicable change of control shall have occurred at the time of the rating event) or (ii) the rating of the notes by the rating agency making the reduction in rating to which this definition would otherwise apply is within the relevant 60-day period subsequently upgraded to an investment grade rating.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
"voting stock" of any specified "person" (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date means the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.
The change of control repurchase event feature of the notes may in certain circumstances make more difficult or discourage a sale or takeover of Sasol and, thus, the removal of incumbent management. Subject to the limitations discussed below, Sasol could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a change of control repurchase event under the notes, but that could increase the amount of indebtedness outstanding at such time or otherwise affect Sasol's capital structure or credit ratings on the notes. Restrictions on Sasol's ability to incur liens are contained in the covenants as described under "—Limitation on Liens" below.
Sasol USA may not have sufficient funds to repurchase all the notes upon a change of control repurchase event.
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Payment of Additional Amounts
We will pay all amounts of principal of, and any premium and interest on, any debt securities, and all payments pursuant to the guarantee shall be made, without deduction or withholding for any taxes, assessments or other charges imposed by the government of South Africa, the United States or any other jurisdiction where we or the guarantor are organized or tax resident or in which we are treated as being engaged in a trade or business, as the case may be, or the government of a jurisdiction in which a successor to any of us, as the case may be, is organized or tax resident ("Taxing Jurisdiction"). If deduction or withholding of any of these charges is required by a Taxing Jurisdiction, we (or the guarantor) will pay any additional amounts necessary to make the net amount paid to the affected holders equal the amount the holders would have received in the absence of the deduction or withholding. However, these "additional amounts" will not include:
● | the amount of any tax, assessment or other governmental charge imposed by any government of any jurisdiction other than a Taxing Jurisdiction; |
● | the amount of any tax, assessment or other governmental charge that is only payable because either: |
o | some present or former connection exists between the holder or beneficial owner of the debt security and a Taxing Jurisdiction other than as a result of holding a note or enforcing its rights thereunder (including, but not limited to, the holder or beneficial owner of the debt security being or having been a citizen, resident or national thereof, or being or having been present or engaged in business therein, or having or having had a permanent establishment therein); or |
o | the holder presented the debt security for payment more than 30 days after the date on which the relevant payment becomes due or was provided for, whichever is later; |
● | any estate, inheritance, gift, sale, transfer, personal property, value added, excise or similar tax, duty, assessment or other governmental charge; |
● | the amount of any tax, assessment or other governmental charge that is payable other than by deduction or withholding from a payment on the debt securities; |
● | the amount of any tax, assessment or other governmental charge that is imposed or withheld due to the holder or beneficial owner of the debt security failing to accurately comply with a request from us either to provide information concerning the beneficial owner's nationality, residence or identity or make any claim or to satisfy any information or reporting requirement, if the completion of either is required by statute, treaty, regulation or administrative practice of the Taxing Jurisdiction as a precondition to exemption from the applicable governmental charge; |
● | the amount of any tax, assessment or other governmental charge imposed, deducted or withheld pursuant to section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended (the "Code") or otherwise imposed pursuant to sections 1471 through 1474 of the Code, in each case, as of the date of issuance (and any amended or successor version that is substantively comparable), any current or future regulations or agreements thereunder, official interpretations thereof or similar law or regulation implementing an intergovernmental agreement relating thereto; |
● | the amount of any tax, assessment or other governmental charge imposed by reason of the holder's past or present status as a passive foreign investment company, a controlled foreign corporation, a foreign tax exempt organization or a personal holding company with respect to the United States or as a corporation that accumulates earnings to avoid U.S. federal income tax; |
● | the amount of any tax, assessment or other governmental charge imposed on interest received by (1) a 10% shareholder (as defined in section 871(h)(3)(B) of Code, and the regulations promulgated thereunder) of Sasol USA or (2) a controlled foreign corporation that is related to Sasol USA within the meaning of section 864(d)(4) of the Code, or (3) a bank receiving interest described in |
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section 881(c)(3)(A) of the Code, to the extent such tax, assessment or other governmental charge would not have been imposed but for the holder's status as described in clauses (1) through (3) of this bullet;
● | in the case of a holder that is a U.S. Person (as defined below), the amount of any withholding tax or deduction, or any similar tax, imposed by the United States or a political subdivision thereof; or |
● | any combination of the withholdings, taxes, assessments or other governmental charges described above. |
Additionally, additional amounts shall not be paid with respect to any payment to a holder who is a fiduciary or partnership or any person other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner of such payment would not have been entitled to such additional amounts had it been the holder.
The prospectus supplement will describe any additional circumstances under which additional amounts will not be paid with respect to guaranteed debt securities.
Limitation on Liens
Sasol covenants in the 2018 Indenture that it will not, nor will it permit any "Restricted Subsidiary" to, create, incur, issue, assume or guarantee any indebtedness for money borrowed ("Debt") if such Debt is secured by any mortgage, security interest, pledge, lien or other similar encumbrance (a "lien" or "liens") upon any "Principal Property" of it or any Restricted Subsidiary or any shares of stock of or debt owed to any Restricted Subsidiary, whether owned at the date of the 2018 Indenture or thereafter acquired, without effectively securing the securities issued under the 2018 Indenture equally and ratably with or prior to the secured Debt. See further below for definitions of "Restricted Subsidiary" and "Principal Property".
This lien restriction will not apply to, among other things:
● | liens on property, shares of stock or indebtedness of any corporation existing at the time it becomes a subsidiary of Sasol provided that any such lien was not created in contemplation of becoming a subsidiary; |
● | liens on property or shares of stock existing at the time of acquisition thereof or to secure the payment of all or any part of the purchase price thereof or all or part of the cost of the improvement, construction, alteration or repair of any building, equipment or facilities or of any other improvements on, all or any part of the property or to secure any Debt incurred prior to, at the time of, or within 12 months after, in the case of shares of stock, the acquisition of such shares and, in the case of property, the later of the acquisition, the completion of construction (including any improvements, alterations or repairs on an existing property) or the commencement of commercial operation of such property, which Debt is incurred for the purpose of financing all or any part of the purchase price thereof or all or part of the cost of improvement, construction, alteration or repair thereon; |
● | liens on any Principal Property or on shares of stock or indebtedness of any Restricted Subsidiary, to secure all or any part of the cost of exploration, drilling, development, improvement, construction, alteration or repair of any part of the Principal Property or to secure any Debt incurred to finance or refinance all or any part of such cost; |
● | liens existing at the date of the 2018 Indenture; |
● | liens that secure debt owing by a Restricted Subsidiary to Sasol or any subsidiary of Sasol; |
● | liens on property owned or held by any corporation or on shares of stock or indebtedness of any corporation, in either case existing at the time such corporation is merged into or consolidated or amalgamated with Sasol or a Restricted Subsidiary, or at the time of a sale, lease or other disposition of |
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the properties of a corporation as an entirety or substantially as an entirety to Sasol or a Restricted Subsidiary;
● | liens arising by operation of law (other than by reason of default); |
● | liens to secure Debt incurred in the ordinary course of business and maturing not more than 12 months from the date incurred; |
● | liens arising pursuant to the specific terms of any license, joint operating agreement, unitization agreement or other similar document evidencing the interest of Sasol or a Restricted Subsidiary in any mine or any oil or gas producing property or related facilities (including pipelines), provided that any such lien is limited to such interest; |
● | liens on any Principal Property or on shares of stock or indebtedness of any Restricted Subsidiary in relation to which Project Finance Indebtedness (as defined below) has been incurred, to secure that Project Finance Indebtedness; |
● | liens created in accordance with normal practice to secure Debt of Sasol whose main purpose is the raising of finances under any options, futures, swaps, short sale contracts or similar or related instruments which relate to the purchase or sale of securities, commodities or currencies; and |
● | any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any liens referred to above, or of any Debt secured thereby; provided that the principal amount of Debt secured thereby shall not exceed the principal amount of Debt so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement lien shall be limited to all or any part of the same property, shares of stock or indebtedness that secured the lien extended, renewed or replaced (plus improvements on such property), or property received or shares of stock issued in substitution or exchange therefor. |
In addition, the lien restriction does not apply to Debt secured by a lien, if the Debt, together with all other Debt secured by liens on Principal Property of Sasol or any Restricted Subsidiary (not including permitted liens described above) and the Attributable Debt (generally defined as the discounted present value of net rental payments, but excluding payments on bona fide operating leases) associated with Sale and Lease Back Transactions entered into after our first issuance of debt securities under the 2018 Indenture (but not including "Sale and Lease Back Transactions" pursuant to which debt has been retired), does not exceed a certain percentage of the consolidated net tangible assets of Sasol and its consolidated subsidiaries, as shown on the audited consolidated balance sheet prepared in accordance with International Financial Reporting Standards. The specific percentage will be determined at the time we issue any debt and will be described in the applicable prospectus supplement.
The following types of transactions shall not be deemed to create Debt secured by a lien:
● | the sale or other transfer, by way of security or otherwise, of (a) coal, oil, gas or other minerals in place or at the wellhead or a right or license granted by any governmental authority to explore for, drill, mine, develop, recover or get such coal, oil, gas or other minerals (whether such license or right is held with others or not) for a period of time until, or in an amount such that, the purchaser will realize therefrom a specified amount of money (however determined) or a specified amount of such coal, oil, gas or other minerals, or (b) any other interest in property of the character commonly referred to as a "production payment"; "royalty" or "stream"; and |
● | liens on property in favour of the United States or any state thereof, or the Republic of South Africa, or any other country, or any political subdivision of any of the foregoing, or any department, agency or instrumentality of the foregoing, to secure partial, progress, advance or other payments pursuant to the |
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provisions of any contract or statute including, without limitation, liens to secure indebtedness of the pollution control or industrial revenue bond type, or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or cost of construction of the property or acquisition of equipment subject to such liens.
The term "Restricted Subsidiary" is defined in the 2018 Indenture to mean any wholly owned subsidiary of Sasol which owns a Principal Property, unless the subsidiary is primarily engaged in the business of a finance company and any other subsidiary designated as a "Restricted Subsidiary" in the applicable prospectus supplement.
The term "Principal Property" is defined in the 2018 Indenture to mean (a) oil or gas producing property (including leases, rights or other authorizations to conduct operations over any producing property), (b) any refining or manufacturing plant, (c) any mine, mineral deposit or processing plant, or (d) any building, pipeline, structure, dam or other facility, together with the land upon which it is erected and fixtures comprising a part thereof, in each case whose net book value exceeds a certain percentage of consolidated net tangible assets of Sasol, unless the board of directors of Sasol thinks that the property is not of material importance to its overall business or that the portion of a property in question is not of material importance to the rest of such property. The specific percentage will be determined at the time we issue any debt and will be described in the applicable prospectus supplement.
The term "Project Finance Indebtedness" is defined in the 2018 Indenture to mean any indebtedness incurred in relation to any asset for the purposes of financing the whole or any part of the acquisition, creation, construction, expansion, operation, improvement or development of such asset where the financial institution(s) or other persons to whom such indebtedness is owed (and any trustees or other agents therefor) has or have recourse to (i) the applicable project borrower (where such project borrower is formed solely or principally for the purpose of the relevant project) and any or all of its rights and assets and/or (ii) such asset (or any derivative asset thereof) but, in either case, does not or do not have recourse to Sasol or any of its subsidiaries other than in respect of (a) Sasol's or such subsidiary's interests in the equity or indebtedness of the applicable project borrower or the interests of Sasol or any other of its subsidiaries in the equity or indebtedness of any subsidiary that holds, directly or indirectly, interests in the equity or indebtedness of the applicable project borrower, (b) the rights of the applicable project borrower under any contract with Sasol or any of its other subsidiaries, (c) obligations of Sasol or such subsidiary pursuant to completion or performance guarantees or price support, cost overrun support or other support obligations, in each case, in connection with the relevant project or (d) claims for indemnity or damages arising from breach of representations or covenants made by Sasol or such subsidiary to such financial institution or other person.
Limitation on Sale and Lease Back Transactions
Sasol covenants in the 2018 Indenture that it will not, nor will it permit any Restricted Subsidiary, to enter into any arrangement with any party providing for the leasing to it or any Restricted Subsidiary of any Principal Property (except for temporary leases for a term, including renewals, of not more than three years) which has been or is to be sold by it or the Restricted Subsidiary to the party (a "Sale and Lease Back Transaction"), unless:
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the Attributable Debt (generally defined as the discounted present value of net rental payments, but excluding payments on bona fide operating leases) of the Sale and Lease Back Transaction, together with the Attributable Debt of all other Sale and Lease Back Transactions entered into since the first issuance of debt securities under the 2018 Indenture and the aggregate principal amount of its debt secured by liens on Principal Property of Sasol or any Restricted Subsidiary or any shares of stock of or debt owed to any Restricted Subsidiary (but excluding debt secured by permitted liens bulleted under "—Limitation on Liens" above, and excluding Sale and Lease Back Transactions pursuant to which debt has been retired) would not exceed a certain percentage of the consolidated net tangible assets of Sasol, as shown on the audited balance sheet prepared in accordance with International Financial Reporting Standards, which percentage will be determined at the time we issue any debt and will be described in the applicable prospectus supplement; |
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● | Sasol or the Restricted Subsidiary would be entitled to incur debt secured by a lien on the Principal Property to be leased without securing the securities issued under the 2018 Indenture, as described in the bullet points under "—Limitation on Liens" above; |
● | Sasol applies an amount equal to the fair value of the Principal Property that is the subject of a Sale and Leaseback Transaction to the retirement of the securities, or to the retirement of long-term indebtedness of Sasol or a Restricted Subsidiary that is not subordinated to the debt securities issued; or |
● | Sasol enters into a bona fide commitment to expend for the acquisition or improvement of a Principal Property an amount at least equal to the fair value of the Principal Property leased. |
In addition, the limitation on sale and leaseback transactions does not apply if attributable debt (generally defined as the discounted present value of net rental payments, but excluding payments on bona fide operating leases) associated with the sale and lease back transaction, together with the attributable debt of all other sale and lease back transactions entered into after this first issuance of debt securities under the 2018 Indenture and the aggregate principal amount of Sasol's debt secured by liens on Principal Property of Sasol or any restricted subsidiary (but not including permitted liens described under "—Limitation on Liens", and sale and lease back transactions pursuant to which debt has been retired) would not exceed 15% of the consolidated net tangible assets of Sasol and its consolidated subsidiaries (as set forth on the most recent balance sheet but, in any event, as of a date within 150 days of the date of determination) prepared in accordance with IFRS.
Events of Default
You will have special rights if an Event of Default occurs in respect of the debt securities of your series and is not cured, as described later in this subsection.
What Is an Event of Default? Unless we specify otherwise in the applicable prospectus supplement, the term "Event of Default" in respect of the debt securities of your series means any of the following:
● | failure to pay the principal of, or any premium on, a debt security of that series on its due date; |
● | failure to pay interest or additional amounts on a debt security of that series within 30 days of its due date; |
● | failure to deposit any sinking fund payment in respect of debt securities of that series on its due date; |
● | we or the guarantor remain in breach of a covenant in respect of debt securities of that series for 90 days after we receive a written notice of default stating we are in breach. The notice must be sent by either the trustee or holders of at least 25 percent of the principal amount of debt securities of that series; |
● | we or the guarantor file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur; |
● | the guarantee ceases to be in full force and effect; or |
● | any other Event of Default in respect of debt securities of that series described in the prospectus supplement occurs. |
An Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series of debt securities issued under the 2018 Indenture. The trustee may withhold notice to the holders of debt securities of any default, except in the payment of principal or interest, if it considers the withholding of notice to be in the interests of the holders of the affected series.
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Remedies if an Event of Default Occurs. If an Event of Default has occurred and has not been cured, the trustee or the holders of at least 25 percent in principal amount of the debt securities of the affected series may declare the entire principal amount of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity. A declaration of acceleration of maturity may be cancelled by the holders of at least a majority in principal amount of the debt securities of the affected series.
Except in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the 2018 Indenture at the request of any holders unless the holders offer the trustee protection from expenses and liability (called an "indemnity") satisfactory to the trustee. If an indemnity reasonably satisfactory to the trustee is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or remedy will be treated as a waiver of that right, remedy or Event of Default.
Before you are allowed to bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the debt securities, the following must occur:
● | you must give your trustee written notice that an Event of Default has occurred and remains uncured; |
● | the holders of at least 25 percent in principal amount of all outstanding debt securities of the relevant series must make a written request that the trustee take action because of the default and must offer indemnity to the trustee reasonably satisfactory to the trustee against the cost and other liabilities of taking that action; |
● | the trustee must not have taken action for 60 days after receipt of the above notice and offer of indemnity; and |
● | the holders of a majority in principal amount of the debt securities of the relevant series must not have given the trustee a direction inconsistent with the above notice. |
However, you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date.
Holders of a majority in principal amount of the debt securities of the affected series may waive any past defaults other than:
● | the payment of principal, any premium or interest; and |
● | in respect of a covenant that cannot be modified or amended without the consent of each holder. |
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST OF THE TRUSTEE AND HOW TO DECLARE OR CANCEL AN ACCELERATION.
Each year, we and the guarantor will furnish to the trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance with the 2018 Indenture and the debt securities, or else specifying any default.
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Merger or Consolidation
Under the terms of the 2018 Indenture, each of Sasol USA and Sasol is generally permitted to consolidate or merge with another entity. In addition, each of Sasol USA and Sasol is also permitted to sell all or substantially all of its assets to another entity. However, neither Sasol USA nor Sasol may take any of these actions unless all the following conditions are met:
● | where Sasol USA (or Sasol, as the case may be) merges out of existence or sells its assets, the resulting or acquiring entity must agree to be legally responsible for the notes (or the guarantee, as the case may be); |
● | immediately after giving effect to the merger or sale of assets, no default on the debt securities shall have occurred and be continuing; and |
● | Sasol USA (or Sasol or the acquiring entity, as the case may be) must deliver certain certificates and documents to the trustee. |
Modification or Waiver
There are three types of changes we can make to the 2018 Indenture and the debt securities issued under the 2018 Indenture.
Changes Requiring Your Approval
First, there are changes that we cannot make to your debt securities without your specific approval. Following is a list of those types of changes unless we specify otherwise in the applicable prospectus supplement:
● | change the stated maturity of the principal of (or premium, if any) or interest on a debt security; |
● | reduce any amounts due on a debt security; |
● | reduce the amount of principal payable upon acceleration of the maturity of a security following a default; |
● | adversely affect any right of repayment at the holder's option; |
● | change the place or currency of payment on a debt security |
● | impair your right to sue for payment; |
● | adversely affect any right to convert or exchange a debt security in accordance with its terms; |
● | reduce the percentage in principal amount of holders of debt securities whose consent is needed to modify or amend the 2018 Indenture; |
● | reduce the percentage in principal amount of holders of debt securities whose consent is needed to waive compliance with certain provisions of the 2018 Indenture or to waive certain defaults under the 2018 Indenture; |
● | modify any other aspect of the provisions of the 2018 Indenture dealing with modification and waiver of past defaults, changes to the quorum or voting requirements or the waiver of certain covenants; and |
· |
change any obligation to pay additional amounts, as explained above under "Payment of Additional Amounts ". |
43
Changes Not Requiring Approval
The second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications and certain other changes that would not adversely affect holders of the outstanding debt securities in any material respect. We also do not need any approval to make any change that affects only debt securities to be issued under the 2018 Indenture after the change takes effect.
Changes Requiring Majority Approval
Any other change to the 2018 Indenture or the debt securities would require the following approval unless we specify otherwise in the applicable prospectus supplement:
● | if the change affects only one series of debt securities, it must be approved by the holders of a majority in principal amount of that series; |
● | if the change affects more than one series of debt securities, it must be approved by the holders of a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class for this purpose. |
In each case, any resolution passed or decision taken at any meeting of the holders of a series of debt securities must be in writing.
The holders of a majority in principal amount of any series of debt securities issued under the 2018 Indenture may waive our and the guarantor's compliance with some of our covenants in the 2018 Indenture. However, we cannot obtain a waiver of a payment default or of any of the matters covered by the bullet points included above under "—Changes Requiring Your Approval".
Further Details Concerning Voting
We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding securities that are entitled to vote or take other action under the 2018 Indenture. If we set a record date for a vote or other action to be taken by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding securities of those series on the record date, and the vote or other action must be taken within eleven months following the record date. Unless otherwise specified in the applicable prospectus supplement, the holder of a debt security will be entitled to one vote for each $1,000 principal amount of the debt security that is outstanding and held by it. Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption. Debt securities will also not be eligible to vote if they have been fully defeased as described later under "—Defeasance—Full Defeasance".
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO CHANGE THE 2018 INDENTURE OR THE DEBT SECURITIES OR REQUEST A WAIVER.
Sinking Fund
The notes of each series will not be entitled to the benefit of a sinking fund.
Defeasance
The following provisions will be applicable to the notes.
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Covenant Defeasance
Under current U.S. federal tax law, we or the guarantor can make the deposit described below and be released from some of the restrictive covenants in the 2018 Indenture under which a particular series was issued. This is called "covenant defeasance". In that event, you would lose the protection of those restrictive covenants but would gain the protection of having cash and U.S. government securities set aside in trust to repay your debt securities. In order to achieve covenant defeasance, we must do the following:
● | we must deposit in trust for the benefit of all holders of the debt securities of the particular series a combination of cash and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities of the particular series on their various due dates; |
● | the "covenant defeasance" must not otherwise result in a breach of the 2018 Indenture or any of our or the guarantor's material agreements; |
● | no Event of Default must have occurred and remain uncured; |
● | we must deliver to the trustee a legal opinion of our counsel confirming that, under current federal income tax law, we may make the above deposit without causing you to be taxed on the debt securities of the particular series any differently than if we did not make the deposit and just repaid the debt securities of the particular series ourselves at maturity; and |
● | we must deliver to the trustee a legal opinion and officer's certificate, each stating that all conditions precedent to "covenant defeasance" under the 2018 Indenture have been met. |
If we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there is a shortfall in the trust deposit or the trustee is prevented from making payment. In fact, if one of the remaining Events of Default occurred (such as our bankruptcy) and the debt securities became immediately due and payable, there might be a shortfall. Depending on the event causing the default, you may not be able to obtain payment of the shortfall.
Full Defeasance
Under certain circumstances as described below, we or the guarantor can legally release ourselves from all payment and other obligations on the debt securities of a particular series (called "full defeasance") if we put in place the following arrangements for you to be repaid:
● | we must deposit in trust for the benefit of all holders of the debt securities of the particular series a combination of cash and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities of the particular series on their various due dates; |
● | the "full defeasance" must not otherwise result in a breach of the 2018 Indenture or any of our or the guarantor's material agreements; |
● | no Event of Default must have occurred and remain uncured; |
● | we must deliver to the trustee a legal opinion confirming that there has been a change in current federal tax law or an IRS ruling that lets us make the above deposit without causing you to be taxed on the debt securities of the particular series any differently than if we did not make the deposit and just repaid the debt securities of the particular series ourselves at maturity. Under current U.S. federal tax law, the deposit and our legal release from the debt securities of the particular series would be treated as though we paid you your share of the cash and notes or bonds at the time the cash and notes or bonds were |
45
deposited in trust in exchange for your debt securities and you would recognize gain or loss on the debt securities at the time of the deposit; and
● | we must deliver to the trustee an opinion of counsel and an officer's certificate, each stating that all conditions precedent to "full defeasance" under the 2018 Indenture have been met. |
If we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt securities. You could not look to us for repayment in the unlikely event of any shortfall.
Listing
The notes of each series are listed on the New York Stock Exchange.
Guarantee
Sasol fully and unconditionally guarantees the debt securities issued by Sasol USA under a guarantee of the payment of principal of, and any premium, interest and "additional amounts" on, these debt securities when due, whether at maturity or otherwise. Sasol has obtained the approval of the SARB to provide this guarantee.
46
Exhibit 4.1
Sasol Limited
Registration No 1979/003231/06
THE SASOL 2022 LONG-TERM INCENTIVE PLAN
(“The Plan”)
Approved by the Shareholders of Sasol Limited on 2 December 2022 and amended by the Remuneration Committee in terms of Rule 15.3 on [15 February 2023]
1
TABLE OF CONTENTS
1. |
INTRODUCTION |
3 |
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2. |
INTERPRETATION |
3 |
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3. |
OPERATION OF THIS PLAN |
13 |
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3.1. |
Basis of Awards |
13 |
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4. |
PLAN LIMITS |
14 |
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4.1. |
Overall Company Limit |
14 |
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4.2. |
Individual limit |
15 |
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4.3. |
Adjustments |
15 |
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5. |
AWARDS OF CONDITIONAL SHARES |
17 |
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5.1. |
Time when Awards may be made |
17 |
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5.2. |
Award Letter |
17 |
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6. |
SETTING OF PERFORMANCE CONDITION(S) |
18 |
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7. |
REVIEW OF PERFORMANCE CONDITION(S) AND VESTING OF AWARDS |
19 |
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8. |
ELECTION AND SETTLEMENT |
21 |
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9. |
TERMINATION OF EMPLOYMENT |
26 |
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9.1. |
Bad leavers |
26 |
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9.2. |
Good leavers |
27 |
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10. |
CHANGE OF CONTROL |
29 |
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11. |
VARIATION IN SHARE CAPITAL AND EFFECT ON AWARDS |
31 |
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11.1. |
Rights Issue, Capitalisation Issue, subdivision or consolidation of Shares, liquidation, etc. |
31 |
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12. |
FORFEITURE AND LAPSE OF AWARDS |
32 |
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13. |
FURTHER CONDITIONS |
32 |
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14. |
DISCLOSURE IN ANNUAL FINANCIAL STATEMENTS |
34 |
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15. |
AMENDMENTS AND TERMINATION |
35 |
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16. |
DOMICILIUM AND NOTICES |
36 |
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17. |
DISPUTES |
38 |
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18. |
GOVERNING LAW |
40 |
2
1. |
INTRODUCTION |
1.1. |
The purpose of this Plan is for the Company to provide Executives and selected other senior Employees of the Employer Companies with the opportunity to receive Shares in the Company in the form of Awards. The Plan will furthermore provide Participants with the opportunity to share in the success of the Company, provide alignment between the interests of senior employees of the Group and shareholders of the Company and act as a retention tool for Participants that are high performers and those with critical and scarce skills. |
1.2. |
The Plan could be used to make: |
1.2.1. |
annual awards of Long-Term Incentives to Employees; and |
1.2.2. |
ad hoc awards of Long-Term Incentives to Employees for reasons of appointment, promotion and/or retention, |
the Vesting of which will be subject to the satisfaction by Participants of Employment Conditions and Performance Conditions as determined by RemCom in accordance with Rule 7.2.
1.3. |
Participants who received awards between 1 September 2022 and the date of approval of the Plan by the Company’s shareholders, will be deemed to be Participants under this Plan, and the Rules of this Plan will apply to such Participants, notwithstanding this Plan having been approved by the Company’s shareholders after 1 September 2022. |
2. |
INTERPRETATION |
2.1. |
In these Rules, unless inconsistent with the context, the following words and expressions shall have the following meanings set out hereafter - |
2.1.1. |
“Accept” the deemed acceptance of an Award by an Employee in terms of Rule 5.2.3, unless the Employee specifically rejects the |
3
Award and “Accepted” or “Acceptance” shall be construed accordingly;
2.1.2. |
“Act” the Companies Act No. 71 of 2008; |
2.1.3. |
“Additional Shares” such additional number of Shares (rounded down to the nearest whole number in the case of fractions) equal in value to the dividends that that Participant would have received on such number of the Conditional Shares that Vest had he been the owner of the Vested Conditional Shares, during the period from the Award Date to the Vesting Date by reference to the dividend record dates occurring in that period; |
2.1.4. |
“ADR” an American Depository Receipt, which is a negotiable certificate issued by a US Bank representing one ordinary share each in the share capital of the Company and which is traded on the New York Stock Exchange; |
2.1.5. |
“Auditors” the auditors of the Company from time to time; |
2.1.6. |
“Award” or “Long-Term Incentive” or “LTI” a right granted by the Company to a Participant to receive, subject to the satisfaction by Participants of the Employment Condition and Performance Condition(s), a specified number of Conditional Shares, commonly referred to by the Company in its communiques to Participants, as “Long-Term Incentives” or “LTIs”, together with the right to receive any Additional Shares relating thereto; |
2.1.7. |
“Award Date” the date, specified in an Award Letter, on which an Award is made to an Employee, being a date not earlier than the date on which it was resolved to make such an Award to the Employee, subject to Rule 1.3; |
4
2.1.8. |
“Award Letter” a letter containing the information specified in Rule 5.2, sent by the Company, or its nominee, to an Employee, informing the Employee of the Award that has been made to him by the Company; |
2.1.9. |
“Business Day” any day on which the JSE is open for the transaction of its business; |
2.1.10. |
“Capitalisation Issue” an issue of capitalisation shares as contemplated in section 47 of the Act; |
2.1.11. |
“Change of Control” where a person (or persons acting together in concert), who did not have Control of the Company prior to the Change of Control Date, on the Change of Control Date through a transaction, or series of transactions, acquire/s Control of the Company; |
2.1.12. |
“Change of Control Date” the date on which a Change of Control of the Company becomes effective; |
2.1.13. |
“Closed Period” a closed period as defined in terms of the JSE Listings Requirements; |
2.1.14. |
“Company” Sasol Limited, Registration No 1979/003231/06; a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa; |
2.1.15. |
“Company Secretary” the company secretary of the Company as appointed in terms of the Act from time to time; |
2.1.16. |
“Conditional Shares” as regards any Participant, Shares, the Vesting of which is subject to the fulfilment of the Employment |
5
Condition and Performance Condition(s) as specified in the Award Letter, as adjusted if applicable, in accordance with Rule 11;
2.1.17. |
“Control” shall have the meaning assigned to it in sections 2(2)(a), (b) and (c) of the Act, save that “company” when used in section 2(2) shall, in relation to these Rules, be deemed to include a juristic person incorporated in any jurisdiction outside of South Africa; |
2.1.18. |
“Costs and Expenses” any – |
2.1.18.1. |
taxation on the Awards and/or the Vesting of the Conditional Shares and Additional Shares relating thereto; |
2.1.18.2. |
other taxes due by the Participant, whether related to this Plan or not, in respect of which liability is imposed on the Company and/or any Employer Company; |
2.1.18.3. |
social security charges in respect of which the Participant is liable; and |
2.1.18.4. |
costs incurred by the Company or any Employer Company or the nominee company contemplated in Rule 7.5.1 in effecting any sales contemplated in Rule 8.1, including brokerage and Securities Transfer Tax; |
2.1.19. |
“Country Schedule” a schedule to these Rules to be adopted as directed by the RemCom, governing participation in the Plan by Participants employed by the Group in jurisdictions other than South Africa. Such Country Schedule shall form part of the Rules, and will govern the Award made in terms hereof; |
6
2.1.20. |
“Date of Termination of Employment” the date upon which a Participant is no longer permanently employed by any Employer Company, being the date upon which the termination of permanent salaried employment of a Participant with the last Employer Company takes effect; |
2.1.21. |
“Directors” the directors of the Company from time to time; |
2.1.22. |
“Employee” any person holding permanent salaried employment with an Employer Company, and who is appointed to a position linked to role category “Operational or Functional Execution” or higher, but excluding any non-executive director of any Employer Company; |
2.1.23. |
“Employer Company” the Company or any Subsidiary which employs a Participant; |
2.1.24. |
“Employment Condition” the condition of continued employment of the Participant by any one or more of the Employer Company within the Group for the duration of the Employment Period(s), such Employment Period(s) being specified in the Award Letter; |
2.1.25. |
“Employment Period” subject to Rule 9, the period commencing on the Award Date and ending on the date as specified in the Award Letter (both dates included) during which the Participant is required to fulfil the Employment Condition, being a period of not less than 3 (three) years (save as contemplated expressly in this Plan); |
2.1.26. |
“Executive” a Participant who, at the time of receiving an Award, is: |
7
2.1.26.1. |
an Executive Vice President (which, for purposes of the interpretation of the Rules, includes the President and Chief Executive Officer of the Company), executive directors of the Company and other members of the Group Executive Committee; or a Senior Vice President which comprises members of the group leadership team of the Group, being the role category layer below an Executive Vice President; |
2.1.27. |
“Financial Year” the financial year of the Company, currently commencing on 1 July of each year, as amended from time to time; |
2.1.28. |
“Group” the Company and its Subsidiary/ies from time to time; |
2.1.29. |
“JSE” the exchange operated by JSE Limited, Registration No 2005/022939/06, a public company duly registered and incorporated with limited liability in accordance with the company laws of South Africa, licensed as an exchange under the Financial Markets Act, No. 19 of 2012; |
2.1.30. |
“JSE Listings Requirements” the Listings Requirements of the JSE, as amended from time to time whether by way of practice note or otherwise; |
2.1.31. |
“Liquidation Date” the date on which any application for the final liquidation of the Company is successful; |
2.1.32. |
“Majority of Operations” all or the greater part of the assets or undertaking of the Company; |
2.1.33. |
“Participant” an Employee to whom an Award has been made under this Plan, including the executor of the Participant’s |
8
deceased estate, unless, pursuant to Rule 5.2.3, he has specifically declined the Award;
2.1.34. |
“Performance Condition(s)” if applicable, condition(s) to be complied with in order for an Award (or relevant portion thereof) to Vest, in addition to the Employment Condition, as contemplated in Rule 6 and set out in the Award Letter; |
2.1.35. |
“Performance Period” the period (which cannot be less than 3 (three) years (save as contemplated expressly in this Plan) during which the Performance Condition(s) is(are) required to be satisfied as regards the relevant Conditional Shares, as provided for in the applicable Award Letter; |
2.1.36. |
“Plan” the Sasol 2022 Long-Term Incentive Plan established by the Company pursuant to, and governed by, these Rules; |
2.1.37. |
“Prohibited Period” - |
2.1.37.1. |
a Closed Period; |
2.1.37.2. |
a period prescribed by statute, order, regulation or directive, or by any corporate governance code adopted by the Company relating to dealings in securities, or the JSE Listings Requirements, as the case may be; |
2.1.37.3. |
any other period, as determined by the Company, when in the Company’s sole and absolute discretion, there exists any circumstance which constitutes or may constitute, price sensitive information in relation to the Company’s securities; and |
9
2.1.37.4. |
an additional buffer period determined by the Company in its sole and absolute discretion to permit any price sensitive information being absorbed by the market; |
2.1.38. |
“Recharge Policy” a policy or agreement in force from time to time between the Company and an Employer Company regulating the funding of the Settlement; |
2.1.39. |
“RemCom” the remuneration committee of the Company’s board of Directors for so long as it is responsible for the governance and implementation of the Plan or any other committee of the Company’s board of Directors which becomes responsible for the governance and/or implementation of the Plan; |
2.1.40. |
“Retirement” in relation to a Participant, normal or early retirement as determined by the rules of any applicable Employer Company’s retirement funds; |
2.1.41. |
“Rights Issue” a rights offer as defined in section 95(1)(l) of the Act and the JSE Listings Requirements; |
2.1.42. |
“Rules” these rules of the Plan, as amended from time to time; |
2.1.43. |
“Settlement” the delivery of Shares and/or cash to a Participant as contemplated in Rule 8 and the words “Settle” and “Settled” shall bear a corresponding meaning; |
2.1.44. |
“Settlement Date” the date on which Settlement shall occur as contemplated in Rule 8, but which cannot occur during a Prohibited Period, unless the Participant made the election set out in Rule 8.1 prior to the start of such Prohibited Period, which applies even as regards Participants who have |
10
retired or are otherwise no longer employed unless the Company determines otherwise in its sole and absolute discretion;
2.1.45. |
“Share” an ordinary share in the share capital of the Company listed on the main board of the JSE or in the case of certain employees as determined by the Company in its sole and absolute discretion, an ADR, as the case may be; |
2.1.46. |
“Subsidiary” a company incorporated under the Act or a juristic person incorporated in a jurisdiction other than South Africa, which is controlled by the Company as contemplated in section 3 of the Act; |
2.1.47. |
“Vest” the unconditional entitlement to Settlement as regards the Conditional Shares together with any Additional Shares relating thereto as determined according to Rule 7.1 and “Vesting” and “Vested” shall be construed accordingly; and |
2.1.48. |
“Vesting Date(s)” the date on which Vesting occurs, which cannot occur during a Prohibited Period (and if the Prohibited Period covers a Closed Period, which cannot occur until the 3rd (third) Business Day after the end of that Closed Period, even if the Prohibited Period has ended), which applies even as regards Participants who have retired or are otherwise no longer employed unless the Company determines otherwise in its sole and absolute discretion; |
2.1.49. |
“Vesting Notice” the written notice given by the Company to Participants whose Conditional Shares have Vested or will Vest at their last known addresses in each case, notifying them that their Conditional Shares have Vested or will Vest as contemplated in Rules 7.1 and 7.3. |
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2.2. |
The headings in these Rules are inserted for reference purposes only and shall in no way govern or affect the interpretation hereof. |
2.3. |
If any provision in a definition is a substantive provision conferring rights or imposing obligations on any party, effect shall be given to it as if it were a substantive provision in the body of these Rules. |
2.4. |
Unless the context indicates otherwise, an expression that denotes any gender includes the others; a natural person includes a created entity (corporate or unincorporated) and the singular includes the plural, and vice versa in each case. |
2.5. |
References in these Rules to any statutory provisions include a reference to those provisions as amended or replaced from time to time and include any regulations made under them. |
2.6. |
When any number of days is prescribed in this Plan, same shall be reckoned exclusively of the first and inclusively of the last day unless the last day falls on a day which is not a Business Day, in which case the last day shall be the next succeeding day which is a Business Day. |
2.7. |
Unless a contrary intention clearly appears - |
2.7.1. |
if figures are referred to in numbers and in words and if there is any conflict between the two, the words shall prevail; |
2.7.2. |
the words "include", "including" and "in particular" shall be construed as being by way of example or emphasis only and shall not be construed as, nor shall they take effect as, limiting the generality of any preceding word/s; |
2.7.3. |
any reference in this plan to another agreement or document shall be construed as a reference to such other agreement or |
12
document as same may have been, or may from time to time be, amended, varied, novated or supplemented; and
2.7.4. |
the words "other" and "otherwise" shall not be construed eiusdem generis with any preceding words if a wider construction is possible. |
3. |
OPERATION OF THIS PLAN |
3.1. |
Basis of Awards |
3.1.1. |
The Directors have delegated to RemCom the final authority to decide: |
3.1.1.1. |
which category of Employees will participate in the Plan from time to time; |
3.1.1.2. |
subject to Rule 4.1, the aggregate number of Conditional Shares to comprise Awards to those Employees who become Participants; |
3.1.1.3. |
subject to Rule 4.2, the number of Conditional Shares that may comprise an Award to be granted to an Employee by taking into consideration the Employee’s basic salary or total guaranteed package, role category, performance, potential, retention requirements and market benchmarks; |
3.1.1.4. |
the Employment Period and Vesting Date or Vesting Dates as determined by RemCom; |
3.1.1.5. |
the terms of the Performance Condition(s); |
3.1.1.6. |
the Performance Period(s); |
3.1.1.7. |
any other terms; and |
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3.1.1.8. |
all other issues relating to the governance and administration of the Plan. |
3.2. |
The Company or its nominee shall issue an Award Letter to every Employee who becomes eligible for participation in the Plan in terms of these Rules. |
3.3. |
Pursuant to the Recharge Policy, the Company or Employer Companies will remain responsible for procuring the Settlement of Shares under the Plan in respect of the Participants employed by them on the Settlement Date, or as may otherwise be regulated under the Recharge Policy. |
3.4. |
A Participant will not be entitled to any beneficial rights in and to the Shares which are the subject of an Award and any Additional Shares relating thereto, including voting rights, dividend rights, the right to transfer the Shares and rights arising on the liquidation of the Company, prior to the Vesting of such an Award or relevant portion thereof. |
3.5. |
The Vesting of the Conditional Shares which comprise an Award in terms of Rule 3.1.1.3 will in all instances be subject to the fulfilment of the Employment Condition and in some cases to the satisfaction of the Performance Condition(s) as determined by RemCom in accordance with Rule 7.2. |
4. |
PLAN LIMITS |
4.1. |
Overall Company Limit |
4.1.1. |
Subject to Rule 4.3, the maximum aggregate number of Shares which may at any time be Settled in respect of this Plan to all Participants shall not exceed 32 000 000 (thirty two million) Shares representing approximately 5% (five per cent) of the Company’s total issued share capital as at 30 June 2022. |
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4.1.2. |
To determine whether the limit referred to in Rule 4.1.1 has been reached, only the actual number of new Shares allotted and issued by the Company in Settlement of the Awards under this Plan shall be taken to account. |
4.1.3. |
For the avoidance of doubt, the limit referred to in Rule 4.1.1 shall exclude the following: |
4.1.3.1. |
Shares purchased in the market as contemplated in Rule 7.5.1 in Settlement of this Plan; and |
4.1.3.2. |
Conditional Shares comprising Awards under the Plan to the extent that the Awards (or parts thereof) are forfeited by a Participant, as no Shares would have been Settled as consequence of the forfeiture of these Awards (or parts thereof). |
4.2. |
Individual limit |
Subject to the provisions of Rule 4.3.2, the maximum number of Shares which are Settled in respect of any single Participant under this Plan over any given period of 5 (five) years shall not exceed 320 000 (three hundred and twenty thousand) Shares being 1% (one per cent) of 32 000 000 (thirty two million) Shares. At the end of each 5 (five) year period the Participant in question shall be subject to a new limitation of 1% (one per cent) of 32 000 000 (thirty two million) Shares. For the avoidance of doubt, Conditional Shares which are the subject of Awards which are forfeited and accordingly, are not Settled, will not be included in the aforementioned limit. In the event of a discrepancy between the number of Shares and the percentage of the amount of 320 000 (three hundred and twenty thousand) Shares, which such number represents, the number will prevail.
4.3. |
Adjustments |
4.3.1. |
The RemCom must, where required by the board of Directors, |
15
adjust the number of Shares available for the Plan stated in Rule 4.1 (without the necessity for the prior approval of shareholders of the Company), to take account of a sub-division or consolidation of the Shares of the Company, a Capitalisation Issue, a dividend in specie, a Rights Issue or a scheme of arrangement as contemplated in section 114 of the Act, including a reduction in the capital of the Company. Such adjustment should give a Participant entitlement to the same proportion of the Shares available to the Plan to which a Participant was previously entitled.
4.3.2. |
The RemCom must, where required by the board of Directors, adjust the number of Shares which comprise the individual limit stated in Rule 4.2 (without the necessity for the prior approval of shareholders of the Company) to take account of a Capitalisation Issue, a dividend in specie, a Rights Issue or a scheme of arrangement as contemplated in section 114 of the Act, including a reduction in the capital of the Company. Such adjustment should give a Participant entitlement to the same proportion of the Shares available to the Plan to which a Participant was previously entitled. |
4.3.3. |
The Auditors, or other independent advisor acceptable to the JSE, shall confirm to the JSE in writing that any adjustment made in terms of Rules 4.3.1 and 4.3.2 has been made in accordance with the Rules. |
4.3.4. |
The issue of Shares as consideration for an acquisition, and the issue of Shares for cash (other than a Rights Issue) or a vendor consideration placing will not be regarded as a circumstance that requires any adjustment to the limits stated in Rules 4.1 and 4.2. |
16
4.3.5. |
Any adjustments made in terms of Rules 4.3.1 and 4.3.2 must be reported on in the Company’s annual financial statements in the year during which the relevant adjustment is made. |
5. |
AWARDS OF CONDITIONAL SHARES |
5.1. |
Time when Awards may be made |
An Employee may be selected for participation in the Plan, and an Award may be made to an Employee in accordance with Rule 3 on any day which does not fall in a Prohibited Period.
5.2. |
Award Letter |
5.2.1. |
Award Letters shall be in writing and shall specify the terms of the Award including, as applicable: |
5.2.1.1. |
the name of the Employee; |
5.2.1.2. |
the Award Date; |
5.2.1.3. |
the number of Conditional Shares which comprise the Award; |
5.2.1.4. |
the Vesting Date(s); |
5.2.1.5. |
the Employment Period(s); |
5.2.1.6. |
the Performance Condition(s) and Performance Period(s); and |
5.2.1.7. |
any other relevant terms. |
5.2.2. |
An Award shall be personal to the Employee to whom the Award Letter is addressed and may only be acted on by such Employee. |
5.2.3. |
An Award Letter shall: |
5.2.3.1. |
indicate that the Employee will be deemed to have Accepted the Award unless declined by the Employee |
17
in writing to the Employer Company within a period of not more than 10 (ten) days after the Award Date; and
5.2.3.2. |
state that the Award is made on the terms and subject to the conditions of the Rules of the Plan. |
5.3. |
If an Award Letter specifies any period which would end during a Prohibited Period, the period specified in the Award Letter shall be postponed until the third business day following the expiry of the Prohibited Period concerned. |
5.4. |
The Participant will give no consideration to the Company for the Award. |
5.5. |
The Award Letter will also stipulate the various options which the Participant has in respect of settling any Costs and Expenses arising from the Vesting of his Conditional Shares. |
6. |
SETTING OF PERFORMANCE CONDITION(S) |
6.1. |
The Vesting of an Award may, in addition to the fulfilment of the Employment Condition, be subject to the satisfaction of Performance Conditions, and any other terms specified by the RemCom. |
6.2. |
Any such Performance Conditions and further condition(s) imposed under Rule 6.1 shall be: |
6.2.1. |
objective; and |
6.2.2. |
set out in, or attached in the form of a schedule to, the relevant Award Letter. |
6.3. |
Should an event occur at any time during the Performance Period(s) which causes the RemCom to consider that the Performance Condition(s) imposed under Rule 6.1 is(are) no longer appropriate, the RemCom may substitute or vary the Performance Condition(s) in such a manner as: |
6.3.1. |
is reasonable in the circumstances; and |
18
6.3.2. |
produces a fairer measure of performance and is not materially less or materially more difficult to satisfy. |
6.4. |
The relevant Award will then continue to be effective as of the Award Date, but subject to the imposition of the Performance Condition(s) as so substituted or varied and communicated in writing by the Company to the Participant. |
6.5. |
The maximum vesting which is permissible under any Performance Condition is 200% (two hundred percent) of the Conditional Shares comprising an Award. |
7. |
REVIEW OF PERFORMANCE CONDITION(S) AND VESTING OF AWARDS |
7.1. |
Subject to Rule 9.2.4 and Rule 10, an Award (or part thereof if different Employment Periods and/or Performance Conditions have been specified as regards different portions of the Conditional Shares subject to the Award) will Vest on the later of: |
7.1.1. |
the date or dates on which the Participant has satisfied the Employment Condition(s) as specified in the Award Letter; and |
7.1.2. |
to the extent applicable, the date on which the RemCom determines that the Performance Condition(s) which have been imposed by the RemCom, have been satisfied by the relevant Participant, provided that if that determination occurs during a Prohibited Period or a Prohibited Period commences before the Vesting Notice is given, the Vesting shall be deferred until the 3rd (third) Business Day after the end of the Prohibited Period. |
7.2. |
As soon as reasonably practicable after the end of the Performance Period in relation to an Award, the RemCom shall review the Performance Condition(s) as specified in the relevant Award Letter and any other |
19
conditions specified by the RemCom in terms of Rule 6.1 and determine the extent to which these Performance Condition(s) and any other conditions has(have) been satisfied.
7.3. |
If the RemCom is satisfied that the Performance Condition(s) and any other conditions specified by the RemCom in terms of Rule 6.1, have been satisfied or partially satisfied as regards any Conditional Shares (if different Employment Periods and/or Performance Conditions have been specified as regards different portions of the Conditional Shares subject to the Award), the RemCom shall in its sole and absolute discretion determine the number of Conditional Shares that will Vest for that Participant as a result of such satisfaction, as well as the number of Additional Shares that will Vest as a result, and notify that Participant in writing of this fact and the Vesting Date and the period within which the elections contemplated in Rule 8.1 may be made, as soon as is reasonably practicable after the RemCom’s determination pursuant to this Rule 7.3 has been made and the Vesting Date is known. If after having given the Vesting Notice, a Prohibited Period intervenes during the period within which the elections contemplated in Rule 8.1 may be made, the Company shall give written notice of that intervening Prohibited Period to the Participants to whom the Vesting Notice was given and who are affected by that Prohibited Period. |
7.4. |
If the RemCom is satisfied that the Performance Condition(s) and any other conditions specified by the RemCom in terms of Rule 6.1 have not been fulfilled, the portion of the Award linked to the Performance Condition(s) and any other conditions specified by the RemCom in terms of Rule 6.1, will not Vest. The Participant will be notified in writing by the Employer Company of such fact. |
7.5. |
Following the Vesting of an Award, the Company shall – |
7.5.1. |
unless RemCom decides that the Shares should be acquired in |
20
the market (in which case they will be acquired, subject to any Prohibited Period), as soon as reasonably possible after the Vesting Date, subject to any Prohibited Period, allot and issue the Conditional Shares which have Vested as regards a Participant in the name of a nominee company, as nominee for the Participants unless they are Participants awarded ADRs, in which case as nominee for the depositary bank which will issue the ADRs to the Participant, in order to facilitate Settlement. To ensure that the benefits of the Conditional Shares accrue for the benefit of Participants from the Vesting Date, the Company may borrow sufficient Shares until the allotment and issue and listing of the requisite Shares occurs, and in such event the allotment and issue shall be made to the securities lender as principal to enable repayment of the securities loan. The costs of the borrowing will be for the account of the Employer Companies concerned; and
7.5.2. |
apply for the listing of those Shares which it allots and issues. |
8. |
ELECTION AND SETTLEMENT |
8.1. |
Following the Vesting of an Award and the issuing of the Vesting Notice, the Participant shall be entitled by written notice to be given by the Participant to the Company by completing the electronic form on the Sasol website (or by such other means as may be determined by the Company from time to time) within the period specified in the Vesting Notice (provided that if after the Vesting Notice is given, a new Prohibited Period intervenes, no written election may be made by a Participant affected by such Prohibited Period during such Prohibited Period, but the period referred to in the Vesting Notice for making the elections contained in this Rule 8.1, shall be extended, as regards any Participant affected by that Prohibited Period, to the 3rd (third) day after such new Prohibited Period, to instruct the Company, |
21
subject to Rule 8.4, either that –
8.1.1. |
all the Shares notified in the Vesting Notice to that Participant, shall be sold by the Company and the Participant authorises the Company to use the proceeds, to the extent necessary, to settle the Costs and Expenses; |
8.1.2. |
some of the Shares notified in the Vesting Notice to that Participant, shall be sold by the Company. The balance of the Shares shall be transferred as contemplated in Rule 8.10.2, provided that unless the Participant pays an amount equal to the Costs and Expenses to the Company prior to Settlement or authorises the Company in writing prior to Settlement to deduct the amount due in respect of Costs and Expenses from the Participant’s remuneration or any other amount due by the Employer Company to the Participant, the Participant will, notwithstanding that the Participant may have made the election in this Rule 8.1.2 in respect of a lesser number of Shares than would be necessary to cover the Costs and Expenses, be deemed to have authorised the Company to sell as many Shares as will cover the Costs and Expenses and to use the proceeds to settle the Costs and Expenses; |
8.1.3. |
the Shares shall be transferred as contemplated in Rule 8.10.3, provided that unless the Participant pays an amount equal to the Costs and Expenses to the Company prior to Settlement or authorises the Company in writing prior to Settlement to deduct the amount due in respect of Costs and Expenses from the Participant’s remuneration or any other amount due by the Employer Company to the Participant, the Participant will, notwithstanding that the Participant may have made the election in this Rule 8.1.3, be deemed to have authorised the Company to |
22
sell as many Shares as will cover the Costs and Expenses and to use the proceeds to settle the Costs and Expenses.
8.2. |
If any Participant does not give the notice contemplated in Rule 8.1 within the period referred to in that Rule, that Participant shall be deemed to have elected the option in Rule 8.1.1, unless that would have the result that the Participant would not be in compliance with the minimum shareholding requirement or post-retirement holding period referred to in Rule 8.4, in which case the Participant’s election shall be deferred in respect of such portion that will enable the Participant to be in compliance with such minimum shareholding requirement or post-retirement holding period, save to the extent necessary to cover Costs and Expenses. |
8.3. |
The Company will not give any reminders to Participants about exercising the elections in Rule 8.1. |
8.4. |
No Participant who is required, by reason of his employment or office or otherwise, to hold a minimum number of Shares in the Company and/or retain Shares after termination of employment, shall be entitled to give any notice referred to in Rule 8.1.1 or Rule 8.1.2, if any sale would have the result that the Participant would not be in compliance with that requirement, save to the extent necessary to cover Costs and Expenses. |
8.5. |
After the period for making the election in Rule 8.1, the Company will act in accordance with those elections or where elections are not timeously made, in accordance with Rule 8.2, in a manner that in the Company’s sole and absolute discretion results in the relevant group of Participants referred to in Rule 8.6, being treated in the fairest manner possible. Sales will be delayed until the 3rd (third) day after the end of Prohibited Period, unless the Participant made the election referred to in Rule 8.1 before the commencement of the Prohibited Period and the Company is unable to reverse the sales process. |
23
8.6. |
For the purpose of determining the fairest manner referred to in Rule 8.5, all Participants requiring Shares to be sold and who received a Vesting Notice on or around the same date and who – |
8.6.1. |
do not become subject to a Prohibited Period which occurs after the Vesting Notice shall be treated as a group; and |
8.6.2. |
become subject to the same Prohibited Period which occurs after the Vesting Notice, shall be treated as a group. |
8.7. |
If the Remcom directs that Shares should be acquired in the market, the Employer Company will incur an expense by paying for such acquisition. In any other case, the Employer Company will make a cash contribution to the Company equal to the subscription price of the total number of Shares which Vested in respect of any Participants employed by that Employer Company. |
8.8. |
In circumstances where the tax and/or regulatory requirements of a particular jurisdiction where a Participant is employed by an Employer Company makes Settlement impossible or impractical, the Company can determine in its sole and absolute discretion alternative arrangements for Settlement. Where appropriate, the terms and conditions of such Award may be set out in a separate Country Schedule, approved by the Employer Company. |
8.9. |
The Participant is liable for all Costs and Expenses. In order for the Participant to meet the Costs and Expenses, the Company is authorised to deduct from the proceeds of any sales contemplated in Rule 8.1.1 or 8.1.2 (read with Rule 8.10.3) or the proviso contemplated in Rule 8.1.3, all such Costs and Expenses. |
8.10. |
No Settlement will take place unless and until a final tax directive, if applicable, has been obtained from the relevant tax authority(ies) as to the |
24
tax due by such Participant whether with regard to any Award or otherwise. When there is a shortfall relating to a Participant’s tax liability, further Shares may be sold to enable Rule 8.8 to be complied with.
8.11. |
Settlement shall not occur until all the Shares required to be sold by Participants who received a Vesting Notice on or around the same date, have been sold. Settlement shall occur on the Settlement Date, subject in the case of each Participant to compliance with Rules 8.4 and 8.8, if the Participant makes the election in – |
8.11.1. |
Rule 8.1.1, by the deduction to the extent necessary of the Costs and Expenses from the proceeds of the sale and as to the balance by payment to the Participant; |
8.11.2. |
Rule 8.1.2, by the deduction to the extent necessary of the Costs and Expenses from the proceeds of the sale and if the proceeds were not sufficient from an additional disposal applying the proviso in Rule 8.1.3 mutatis mutandis and as to the balance, if any, by payment to the Participant and as to the Shares not sold, in the case of – |
8.11.2.1. |
Participants awarded ADRs, they will be transferred on the Settlement Date to the depositary bank which will issue the ADRs to the Participant concerned; |
8.11.2.2. |
the other Participants, will be transferred on the Settlement Date into the name of the Participant or its CSDP, as directed in the written notice given by the Participant; |
8.11.3. |
Rule 8.1.3, to the extent that the proviso applies, by the deduction to the extent necessary of the Costs and Expenses from the proceeds of the sale and as to the balance, if any, to the |
25
Participant and as to the Shares not sold, in the case of –
8.11.3.1. |
Participants awarded ADRs, they will be transferred on the Settlement Date to the depositary bank which will issue the ADRs to the Participant concerned; |
8.11.3.2. |
the other Participants, will be transferred on the Settlement Date into the name of the Participant or its CSDP, as directed in the written notice given by the Participant. |
8.12. |
The Company shall use reasonable endeavours to ensure that Settlement occurs within 30 (thirty) days from the Vesting Date, subject to the provisions of this Plan. |
8.13. |
No interest shall be payable to any Participant for any reason whatsoever. |
9. |
TERMINATION OF EMPLOYMENT |
9.1. |
Bad leavers |
If a Participant’s employment with any Employer Company terminates before the Vesting Date as a consequence of:
9.1.1. |
his resignation; |
9.1.2. |
his dismissal by the Employer Company on grounds of misconduct, proven poor performance or proven dishonesty or fraudulent conduct or conduct against the interest of the Group or its shareholders; |
9.1.3. |
an agreement entered between the Employer Company and the Participant in terms of which a Participant’s employment is terminated by mutual agreement, other than retrenchment; |
9.1.4. |
his abscondment; or |
26
9.1.5. |
any other reason other than those stated in Rule 9.2, |
then, unless otherwise determined by Remcom in its sole and absolute discretion, all unvested Awards allocated to that Participant will be forfeited in their entirety by that Participant immediately on the Date of Termination of Employment. For the avoidance of doubt, any Awards allocated to that Participant which have already Vested will be unaffected by this Rule 9.1.
9.2. |
Good leavers |
9.2.1. |
If a Participant’s employment with any Employer Company terminates before the Vesting Date as a consequence of: |
9.2.1.1. |
his death; |
9.2.1.2. |
his Retirement; |
9.2.1.3. |
his retrenchment, as determined to the satisfaction of the RemCom; |
9.2.1.4. |
his being injured, having a disability or ill-health, in each case as certified by a qualified medical practitioner nominated by the relevant Employer Company or otherwise determined to the satisfaction of the RemCom; |
9.2.1.5. |
the Participant’s Employer Company ceasing to be a member of the Group or the undertaking in which he is employed being transferred to a transferee which is not a member of the Group; or |
9.2.1.6. |
the Employer Company making a determination to terminate his employment, in its sole and absolute discretion, for any other reason, |
27
the unvested Awards allocated to that Participant will be dealt with by the Company pursuant to Rules 9.2.2 and/or 9.2.3, as the case may be.
9.2.2. |
If the Participant’s employment with an Employer Company is terminated for any of the reasons referred to in Rule 9.2.1 within 270 (two hundred and seventy) days of the Award Date (calculated by applying Rule 2.6), the Award made to the Participant on that Award Date will be forfeited in its entirety on the Date of Termination of Employment. For the avoidance of doubt, any Awards allocated to that Participant which have already Vested will be unaffected by this Rule 9.2.2. |
9.2.3. |
If the Participant’s employment is terminated as contemplated in Rule 9.2.1.2, 9.2.1.3, 9.2.1.4, 9.2.1.5 or 9.2.1.6, as the case may be, after 270 (two hundred and seventy) days of the Award Date (calculated by applying Rule 2.6), the Participant will continue to participate in the Plan, in terms of the Rules, beyond the Date of Termination of Employment except that the Employment Condition(s) will no longer apply, unless the Remcom determines in its sole and absolute discretion that the relevant portion of his Award(s) shall Vest in accordance with Rule 9.2.4. |
9.2.4. |
If the Participant’s employment is terminated as contemplated in Rule 9.2.1.1 occurring after 270 (two hundred and seventy) days of the Award Date (calculated by applying Rule 2.6), the relevant portion of his Award(s) shall Vest as soon as reasonably possible after the Date of Termination of Employment, but after the RemCom has determined in its sole and absolute discretion the extent to which the Performance Condition(s) and any other |
28
conditions specified by the RemCom in terms of Rule 6.1 have been satisfied in accordance with Rule 7.2 and the portion which shall Vest. The remaining portion of the Award will be forfeited in its entirety on the Date of Termination of Employment; provided that the RemCom may decide that the complete Award (and not a portion thereof) will Vest in that Participant pursuant to Rule 7.1.
9.3. |
For the purposes of this Rule 9, a Participant will not be treated as ceasing to be an Employee of an Employer Company if, on the same date on which he ceases to be an Employee of an Employer Company, he is employed by another Employer Company. |
10. |
CHANGE OF CONTROL |
10.1. |
In the event of a Change of Control of the Company occurring before a particular Vesting Date which directly results in: |
10.1.1. |
the Shares ceasing to be listed on the JSE; |
10.1.2. |
the Majority of Operations of the Company being merged with those of another company or companies; or |
10.1.3. |
the Plan being terminated; |
a portion of the Award held by a Participant will Vest as soon as reasonably practicable after the Change of Control Date, provided that the RemCom has determined in its sole and absolute discretion the extent to which the Performance Condition(s) set by the RemCom in terms of Rule 6.1 have been met in accordance with Rule 7 and the portion of the Award which will Vest.
10.2. |
To the extent that there is more than one Vesting Date and more than one Employment/Performance Period in respect of a particular Award, the |
29
determination of what portion of the Award which shall Vest in the Participant shall be carried out in respect of each such Condition /Period by the RemCom in its sole and absolute discretion.
10.3. |
The portion of the Award that does not Vest in a Participant as a result of the Change of Control will, except on the termination of the Plan as envisaged in Rule 10.1.3 in which case such Award will be forfeited by the Participant, continue to be subject to the terms of the Award Letter relating thereto unless the RemCom determines that the terms of the Award Letter relating thereto are no longer appropriate. In that case the RemCom shall make such adjustments to the number of Conditional Shares or convert Awards into awards in respect of shares in one or more other companies in the Group, provided that the Participants are no worse off than they would have been had there been no Change of Control. The RemCom may also vary the Performance Condition(s) relating to the Award in accordance with Rule 6. |
10.4. |
If any other event happens which may affect the Awards, including the Shares ceasing to be listed on the JSE (unless pursuant to a Change of Control as referred to in Rule 10.1.1), there being an internal restructuring of the Group or any other event which does not involve: |
10.4.1. |
any Change of Control; or |
10.4.2. |
any change in the ultimate Control of the Company; or |
10.4.3. |
a Change of Control which does not result directly in an event specified in Rule 10.1.1, 10.1.2 or 10.1.3, |
the Award held by a Participant shall not Vest as a consequence of that event and shall continue to be governed by the Rules of the Plan. However, the RemCom may take such action as it considers appropriate in its sole and absolute discretion to protect the interests of Participants following the occurrence of such event, including converting Awards into awards in respect of shares in one or more other companies in the Group, provided that the Participant is no worse off than he would have been had had there been no occurrence of such event.
30
The RemCom may also vary the Performance Condition(s) relating to Conditional Shares in accordance with Rule 6.3 as long as the Participant in aggregate is not worse off.
11. |
VARIATION IN SHARE CAPITAL AND EFFECT ON AWARDS |
11.1. |
Rights Issue, Capitalisation Issue, subdivision or consolidation of Shares, liquidation, etc. |
11.1.1. |
In the event of a: |
11.1.1.1. |
Rights Issue; or |
11.1.1.2. |
Capitalisation Issue; or |
11.1.1.3. |
subdivision of Shares; or |
11.1.1.4. |
consolidation of Shares; or |
11.1.1.5. |
the Company entering into a scheme of arrangement as contemplated in section 114 of the Act; or |
11.1.1.6. |
the Company making distributions, including a reduction of capital and a distribution in specie, |
Participants shall continue to participate in the Plan. The RemCom may make such adjustment as it considers appropriate to the number of Conditional Shares (excluding Additional Shares) comprised in the relevant Award to place Participants in no worse a position than they were prior to the occurrence of the relevant event. For the avoidance of doubt, no adjustment shall apply to any Additional Shares. The Auditors, or other independent advisor acceptable to the JSE, shall confirm to the JSE in writing that any adjustment made in terms of Rule 11 has been properly calculated, in accordance with the Rules.
31
11.2. |
The issue of Shares as consideration for an acquisition, and the issue of Shares for cash (other than a Rights Issue) and the issue of Shares for a vendor consideration placing will not be regarded as a circumstance that requires any adjustment to Awards. |
11.3. |
The Company shall notify the Participants of any adjustments which are made under Rule 11.1. |
12. |
FORFEITURE AND LAPSE OF AWARDS |
12.1. |
Notwithstanding any other provision of the Rules, an Award shall lapse on the earliest of: |
12.1.1. |
the date on which the RemCom determines in its sole and absolute discretion that the Performance Condition(s) imposed by RemCom under Rule 6.1, in relation to Conditional Shares, has(have) not been satisfied either in whole or in part in respect of the Award and can no longer be satisfied; |
12.1.2. |
subject to Rules 8 and 10, the Date of Termination of Employment; |
12.1.3. |
the Liquidation Date; and |
12.1.4. |
any other date provided for under these Rules. |
12.2. |
If the Company is placed into liquidation, other than for purposes of reorganisation, an Award of Conditional Shares shall ipso facto lapse as from the Liquidation Date. |
13. |
FURTHER CONDITIONS |
13.1. |
Where the Company incurs costs in relation to the Settlement of an Award, |
32
whether in the form of the cash contribution or otherwise which do not form part of the Costs and Expenses recoverable from a Participant, the Company will recharge such costs to the relevant Employer Company in terms of the applicable Recharge Policy.
13.2. |
If Vesting or Settlement should - |
13.2.1. |
be in contravention of any code adopted by the Company relating to dealings in securities by Directors; or |
13.2.2. |
be prohibited by insider trading legislation or any other legislation or regulations, |
Vesting or Settlement shall be postponed until the 3rd (third) Business Day following the expiry of such event.
13.3. |
The rights of Participants under this Plan are determined exclusively by these Rules as read with the Award Letters. |
13.4. |
Except as otherwise provided in the Rules, the Participant has no right to any compensation, damages or any other sum or benefit by reason of the fact that: |
13.4.1. |
he ceased to be a Participant in the Plan; or |
13.4.2. |
any of his rights or expectations under this Plan were reduced or lost; or |
13.4.3. |
in the past the Company had notified him of his options contemplated in Rule 8.1, but the Company failed to do so on any one or more other occasions; or |
13.4.4. |
the Company failed to sell any of the Shares in respect of which a notice contemplated in Rule 8.1.1 or 8.1.2 was given by a Participant or in respect of which a deemed election to sell became applicable as contemplated in the proviso to Rule 8.1.2 |
33
or Rule 8.1.3, within a reasonable time or sold them at a price which was less than the price which would have been obtained had the Company sold those Shares at an earlier or a later date.
13.5. |
Where a Participant is transferred from one Employer Company to another Employer Company: |
13.5.1. |
all Awards granted to such Participant by the first Employer Company shall remain in force on the same terms and conditions as set out in these Rules and the relevant Award Letter; and |
13.5.2. |
the second Employer Company shall assume a pro rata portion of the first Employer Company's obligations in respect of the relevant Awards in consideration for obtaining the Participant's services from the first Employer Company. |
14. |
DISCLOSURE IN ANNUAL FINANCIAL STATEMENTS |
The Company shall disclose in its annual financial statements, to the extent required by the Act or the JSE Listings Requirements, the number of Shares that may be utilised for purposes of the Plan at the beginning of the accounting period, changes in such number during the accounting period (including by reason of consolidations or sub-divisions) and the balance of Shares available for utilisation for purposes of the Plan at the end of the accounting period.
34
15. |
AMENDMENTS AND TERMINATION |
15.1. |
Subject to the provisions of this Rule 15, the RemCom may at any time, alter, vary or add to these Rules as it thinks fit. Amendments to these Rules may only affect Awards to Participants that have already been made, subject to the respective applicable JSE Listings Requirements; provided that, if an amendment is to the material disadvantage of Participants, as proven to the Company by any Participants, a majority of Participants materially disadvantaged by the amendment shall have approved such amendment. |
15.2. |
Except as provided in Rule 15.3 the provisions relating to: |
15.2.1. |
the category of persons who are eligible for participation in the Plan as envisaged in Rule 2.1.22; |
15.2.2. |
the number of Shares that may be utilised for the Plan as envisaged in Rule 4.1; |
15.2.3. |
the individual limitations on benefits or maximum entitlements to Shares envisaged in Rule 4.2; |
15.2.4. |
the voting, dividend and other rights attached to the Awards, including those arising on a liquidation of the Company, envisaged in Rules 3.4 and 12.1.3; |
15.2.5. |
the basis for determining Awards as stipulated in Rule 3.1; |
15.2.6. |
the adjustment of Awards and price in the event of a variation of capital of the Company as stipulated in Rule 4.3; |
15.2.7. |
the procedure to be adopted in respect of the Vesting of Conditional Shares in the event of a Change of Control as stipulated in Rule 10.1, or in any other event which may affect the Awards (excluding a Change of Control) as stipulated in Rule 10.4; |
35
15.2.8. |
the procedure to be adopted in respect of the Vesting of Conditional Shares in the event of the termination of employment as envisaged in Rule 9; and |
15.2.9. |
the terms of this Rule 15.2, |
may not be amended without the prior approval of the JSE and by ordinary resolution of shareholders of the Company entitled to exercise at least 75% (seventy five percent) of the voting rights exercisable on that decision, excluding all of the votes attached to all Shares owned and controlled by persons who are existing Participants in the Plan and which have been acquired under the Plan.
15.3. |
The RemCom may make minor amendments to these Rules for ease of the administration of the Plan, to comply with, or take account of, the provisions of any proposed or existing legislation or, subject to JSE approval, to obtain or maintain favourable taxation or regulatory treatment of any Company or any Employer Company or any present or future Participant. |
15.4. |
The RemCom may terminate the Plan at any time, but Awards granted to Participants before such termination will continue to be valid and shall be dealt with in terms of the Rules of the Plan. |
16. |
DOMICILIUM AND NOTICES |
16.1. |
The parties choose domicilium citandi et executandi for all purposes arising from this Plan, including, without limitation, the giving of any notice, the delivery of Shares, the serving of any process, as follows: |
36
16.1.1. |
the Company, the Company Secretary and the |
RemCom: Sasol Place
50 Katherine Street
Sandton
Tel: +27 010 3445000
16.1.2. |
each Participant - The physical address and electronic address from time to time reflected in the Employer Company's payroll system. |
16.2. |
Any of the above parties shall be entitled from time to time, by written notice to the other, to vary its domicilium to any other physical address within the Republic of South Africa and/or (in the case of a Participant) his electronic address; provided that in the case of a Participant such variation is also made to his details on the Employer Company's payroll system. |
16.3. |
Any notice given and any delivery made by any of the above persons to any other which: |
16.3.1. |
is delivered by hand during the normal business hours of the addressee at the addressee's domicilium for the time being shall be rebuttably presumed to have been received by the addressee at the time of delivery; |
16.3.2. |
is delivered by courier during the normal business hours of the addressee at the addressee's domicilium for the time being shall be rebuttably presumed to have been received by the addressee on the 3rd (third) day after the date of the instruction to the courier to deliver to the addressee; and |
37
16.3.3. |
is posted by prepaid registered post from an address within the Republic of South Africa to the addressee at the addressee's domicilium for the time being shall be rebuttably presumed to have been received by the addressee on the 7th (seventh) day after the date of posting. |
16.4. |
Any notice given that is transmitted by electronic mail to the addressee at the addressee's electronic address for the time being shall be rebuttably presumed until the contrary is proved by the addressee to have been received by the addressee on the date of successful transmission thereof. |
16.5. |
In the case of any notice or document given to the Company pursuant to the Plan, delivered or sent by post to its registered office or such other address as may be specified by the Company, such notice or document: |
16.5.1. |
must be marked for the attention of the Company Secretary; and |
16.5.2. |
will not be deemed to have been received before actual receipt by the Company Secretary. |
16.6. |
Notwithstanding anything to the contrary herein contained, a written notice or document which is actually received by a person shall be adequate for purposes of this Plan notwithstanding that such notice or document was not received at that party’s domicilium citandi et executandi. |
17. |
DISPUTES |
17.1. |
Any dispute arising under the Plan shall be decided by arbitration in the manner set out in this Rule 17 (other than where an interdict is sought or urgent relief may be obtained from a court of competent jurisdiction). |
38
17.2. |
The arbitration shall be held subject to the provisions of this Plan - |
17.2.1. |
at Johannesburg (participating in person or by electronic communication); |
17.2.2. |
informally; |
17.2.3. |
otherwise in accordance with the provisions of the Arbitration Act, No. 42 of 1965, |
it being the intention of the parties that, if possible, the arbitration shall be held and concluded within 21 (twenty-one) Business Days, after it has been demanded.
17.3. |
The arbitrator shall be, if the question in issue is: |
17.3.1. |
primarily an accounting matter, an independent accountant with not less than 15 (fifteen) years’ experience agreed upon between the parties. In the event that the parties cannot agree within 7 (seven) Business Days, a chartered accountant to be nominated by the Chairperson (or if his title has changed, or if this office no longer exists, the equivalent office no matter what it may be titled) for the time being of the South African Institute of Chartered Accountants; |
17.3.2. |
primarily a legal matter, a practising senior counsel or attorney with no less than 15 (fifteen) years standing agreed upon between the parties. In the event that the parties cannot agree within 7 (seven) Business Days, a practising attorney nominated by the President (or if this title has changed, or if this office no longer exists, the equivalent office no matter what it may be titled) for time being of the Law Society of the Northern Provinces or instead the relevant Provincial Council once established under the Legal Practices Act, 2014; |
39
17.3.3. |
any other matter, an independent person agreed upon between the parties. |
17.4. |
An aggrieved party may appeal against the arbitration award within 10 (ten) Business Days after receipt of the arbitration award by lodging a notice of appeal with the other party. |
17.5. |
Any party to the arbitration shall be entitled to have the arbitration award made an order of court of competent jurisdiction. |
17.6. |
Where an appeal is made, 2 (two) practising senior counsel of at least 15 (fifteen) years standing shall be appointed as chairpersons of the appeal. If the parties are unable to agree on the chairpersons for the appeal the provisions of Rule 17.3 shall mutatis mutandis apply with the changes required by the context. The chairpersons shall meet the parties within 7 (seven) Business Days after their appointment to determine the procedure for the appeal. |
18. |
GOVERNING LAW |
South African law governs the Plan.
This Plan was duly adopted at the annual general meeting of Sasol Limited held on 2 December 2022 and was available for inspection at the Company’s registered office for at least 14 (fourteen) days prior to the annual general meeting.
|
|
|
Group Company Secretary |
40
Exhibit 12.1
CERTIFICATIONS
I, Fleetwood Grobler, certify that:
1. | I have reviewed this annual report on Form 20-F of Sasol Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarise and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: 01 September 2023 |
|
|
|
By: |
/s/ FLEETWOOD GROBLER |
|
|
Fleetwood Grobler |
|
|
President and Chief Executive Officer |
Exhibit 12.2
CERTIFICATIONS
I, Hanré Rossouw, certify that:
1. |
I have reviewed this annual report on Form 20-F of Sasol Limited; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. |
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
5. |
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarise and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: 01 September 2023 |
|
|
|
By: |
/s/ HANRÉ ROSSOUW |
|
|
Hanré Rossouw |
|
|
Chief Financial Officer |
Exhibit 13.1
CERTIFICATION PURSUANT TO 18
U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Sasol Limited (the “Company”) on Form 20-F for the period ending 30 June 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify that to the best of our knowledge:
1. | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: 01 September 2023 |
|
|
|
By: |
/s/ FLEETWOOD GROBLER |
|
|
Fleetwood Grobler |
|
|
President and Chief Executive Officer |
Date: 01 September 2023 |
|
|
|
By: |
/s/ HANRÉ ROSSOUW |
|
|
Hanré Rossouw |
|
|
Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to and will be retained by Sasol Limited and furnished to the Securities and Exchange Commission or its staff upon request.
This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. This certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, even if the document with which it is submitted to the Securities and Exchange Commission is so incorporated by reference.
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-270369) and Form F-3 (No. 333-259716) of Sasol Limited of our report dated September 1, 2023 relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers Inc. |
|
Johannesburg, Republic of South Africa |
|
September 1, 2023 |
|
Exhibit 99.1
Consolidated financial statements
for the year ended 30 June 2023
Content
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
5 |
|
|
|
6 |
|
|
|
7 |
1 Sasol Annual Financial Statements 2023
Income statement
for the year ended 30 June
|
|
|
|
2023 |
|
2022* |
|
2021 |
|
|
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
|
Turnover |
|
2 |
|
|
289 696 |
|
272 746 |
|
201 910 |
|
Materials, energy and consumables used |
|
3 |
|
|
(152 297) |
|
(123 999) |
|
(85 370) |
|
Selling and distribution costs |
|
|
|
|
(10 470) |
|
(8 677) |
|
(8 026) |
|
Maintenance expenditure |
|
|
|
|
(15 076) |
|
(13 322) |
|
(12 115) |
|
Employee-related expenditure |
|
4 |
|
|
(33 544) |
|
(32 455) |
|
(32 848) |
|
Depreciation and amortisation |
|
|
|
|
(16 491) |
|
(14 073) |
|
(17 644) |
|
Other expenses and income** |
|
5 |
|
|
(9 023) |
|
(31 834) |
|
(6 884) |
|
Equity accounted profits, net of tax |
|
19 |
|
|
2 623 |
|
3 128 |
|
814 |
|
Operating profit before remeasurement items |
|
|
|
|
55 418 |
|
51 514 |
|
39 837 |
|
Remeasurement items affecting operating profit |
|
8 |
|
|
(33 898) |
|
9 903 |
|
(23 218) |
|
Earnings before interest and tax (EBIT) |
|
|
|
|
21 520 |
|
61 417 |
|
16 619 |
|
Finance income |
|
6 |
|
|
2 253 |
|
1 020 |
|
856 |
|
Finance costs |
|
6 |
|
|
(9 259) |
|
(6 896) |
|
(6 758) |
|
Earnings before tax |
|
|
|
|
14 514 |
|
55 541 |
|
10 717 |
|
Taxation |
|
10 |
|
|
(5 181) |
|
(13 869) |
|
(185) |
|
Earnings for the year |
|
|
|
|
9 333 |
|
41 672 |
|
10 532 |
|
Attributable to |
|
|
|
|
|
|
|
|
|
|
Owners of Sasol Limited |
|
|
|
|
8 799 |
|
38 956 |
|
9 032 |
|
Non-controlling interests in subsidiaries |
|
|
|
|
534 |
|
2 716 |
|
1 500 |
|
|
|
|
|
|
9 333 |
|
41 672 |
|
10 532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rand |
|
Rand |
|
Rand |
|
Per share information |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
7 |
|
|
14,00 |
|
62,34 |
|
14,57 |
|
Diluted earnings per share |
|
7 |
|
|
13,02 |
|
61,36 |
|
14,39 |
|
* |
The Group has revised Turnover and Materials, energy and consumables used by R2 992 million for 2022. The error had no impact on earnings, refer note 1. |
** |
From the current year, certain items which were considered immaterial, namely Exploration expenditure and feasibility costs and Translation gains/(losses), previously presented as separate lines in the Income statement, are presented as part of Other expenses and income. Comparative amounts have been reclassified accordingly. Refer to note 5 for the amounts of Exploration expenditure and feasibility costs and Translation gains/(losses) for the current and preceding two years. |
The notes on pages 9 to 118 are an integral part of these Consolidated Financial Statements.
2 Sasol Annual Financial Statements 2023
Statement of comprehensive income
for the year ended 30 June
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
|
|
|
|
Rm |
|
Rm |
|
Rm |
|
|
Earnings for the year |
|
|
|
|
9 333 |
|
41 672 |
|
10 532 |
|
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
Items that can be subsequently reclassified to the income statement |
|
|
|
|
11 909 |
|
(92) |
|
(16 246) |
|
Effect of translation of foreign operations |
|
|
|
|
12 061 |
|
7 026 |
|
(13 741) |
|
Effect of cash flow hedges1 |
|
|
|
|
— |
|
1 110 |
|
1 072 |
|
Foreign currency translation reserve on disposal of business reclassified to the income statement2 |
|
|
|
|
(251) |
|
(8 024) |
|
(3 388) |
|
Tax on items that can be subsequently reclassified to the income statement |
|
|
|
|
99 |
|
(204) |
|
(189) |
|
Items that cannot be subsequently reclassified to the income statement |
|
|
|
|
331 |
|
1 616 |
|
623 |
|
Remeasurement on post-retirement benefit obligation |
|
|
|
|
427 |
|
2 415 |
|
834 |
|
Fair value of investments through other comprehensive income |
|
|
|
|
23 |
|
(54) |
|
(12) |
|
Tax on items that cannot be subsequently reclassified to the income statement |
|
|
|
|
(119) |
|
(745) |
|
(199) |
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income/(loss) for the year |
|
|
|
|
21 573 |
|
43 196 |
|
(5 091) |
|
Attributable to |
|
|
|
|
|
|
|
|
|
|
Owners of Sasol Limited |
|
|
|
|
21 057 |
|
40 485 |
|
(6 578) |
|
Non-controlling interests in subsidiaries |
|
|
|
|
516 |
|
2 711 |
|
1 487 |
|
|
|
|
|
|
21 573 |
|
43 196 |
|
(5 091) |
|
The notes on pages 9 to 118 are an integral part of these Consolidated Financial Statements.
3 Sasol Annual Financial Statements 2023
Statement of financial position
at 30 June
|
|
|
|
2023 |
|
2022 |
|
|
Note |
|
Rm |
|
Rm |
Assets |
|
|
|
|
|
|
Property, plant and equipment |
|
17 |
|
225 472 |
|
221 308 |
Right of use assets |
|
15 |
|
11 685 |
|
12 629 |
Goodwill and other intangible assets |
|
|
|
3 191 |
|
3 051 |
Equity accounted investments |
|
19 |
|
14 804 |
|
12 684 |
Other long-term investments |
|
|
|
2 164 |
|
2 024 |
Post-retirement benefit assets |
|
32 |
|
784 |
|
633 |
Long-term receivables and prepaid expenses |
|
18 |
|
3 040 |
|
3 210 |
Long-term financial assets |
|
37 |
|
453 |
|
555 |
Deferred tax assets |
|
12 |
|
37 716 |
|
31 198 |
Non-current assets |
|
|
|
299 309 |
|
287 292 |
Inventories |
|
22 |
|
42 205 |
|
41 110 |
Tax receivable |
|
11 |
|
411 |
|
732 |
Trade and other receivables |
|
23 |
|
35 905 |
|
46 671 |
Short-term financial assets |
|
37 |
|
1 772 |
|
313 |
Cash and cash equivalents |
|
26 |
|
53 926 |
|
43 140 |
Current assets |
|
|
|
134 219 |
|
131 966 |
Assets in disposal groups held for sale |
|
|
|
310 |
|
290 |
Total assets |
|
|
|
433 838 |
|
419 548 |
Equity and liabilities |
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
196 904 |
|
188 623 |
Non-controlling interests |
|
|
|
4 620 |
|
4 574 |
Total equity |
|
|
|
201 524 |
|
193 197 |
Long-term debt |
|
14 |
|
94 304 |
|
82 500 |
Lease liabilities |
|
15 |
|
14 382 |
|
14 266 |
Long-term provisions |
|
30 |
|
15 531 |
|
16 550 |
Post-retirement benefit obligations |
|
32 |
|
11 343 |
|
10 063 |
Long-term deferred income |
|
|
|
465 |
|
372 |
Long-term financial liabilities |
|
37 |
|
2 235 |
|
276 |
Deferred tax liabilities |
|
12 |
|
5 294 |
|
10 549 |
Non-current liabilities |
|
|
|
143 554 |
|
134 576 |
Short-term debt* |
|
16 |
|
31 758 |
|
24 184 |
Short-term provisions |
|
31 |
|
4 319 |
|
3 144 |
Tax payable |
|
11 |
|
1 876 |
|
3 142 |
Trade and other payables |
|
24 |
|
48 518 |
|
53 555 |
Short-term deferred income |
|
|
|
966 |
|
724 |
Short-term financial liabilities |
|
37 |
|
1 162 |
|
6 851 |
Bank overdraft |
|
26 |
|
159 |
|
173 |
Current liabilities |
|
|
|
88 758 |
|
91 773 |
Liabilities in disposal groups held for sale |
|
|
|
2 |
|
2 |
Total equity and liabilities |
|
|
|
433 838 |
|
419 548 |
* |
Includes short-term portion of long-term debt and lease liabilities. |
The notes on pages 9 to 118 are an integral part of these Consolidated Financial Statements.
4 Sasol Annual Financial Statements 2023
Statement of changes in equity
for the year ended 30 June
|
|
|
|
|
Share- |
|
|
|
Foreign |
|
Cash flow |
|
Remeasurement |
|
|
|
|
|
|
|
|
|
|
|
Share |
|
based |
|
Investment |
|
currency |
|
hedge |
|
on post- |
|
|
|
|
|
Non- |
|
|
|
|
|
|
capital |
|
payment |
|
fair value |
|
translation |
|
accounting |
|
retirement |
|
Retained |
|
Shareholders’ |
|
controlling |
|
Total |
|
|
|
|
Note 13 |
|
reserve |
|
reserve |
|
reserve |
|
reserve |
|
benefits |
|
earnings |
|
equity |
|
interests |
|
equity |
|
|
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
|
Balance at 30 June 2020 |
|
|
9 888 |
|
1 734 |
|
49 |
|
55 849 |
|
(1 771) |
|
(2 332) |
|
87 559 |
|
150 976 |
|
4 941 |
|
155 917 |
|
Liquidation of businesses |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
148 |
|
148 |
|
— |
|
148 |
|
Taxation impact on disposal of investment |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
44 |
|
44 |
|
— |
|
44 |
|
Movement in share-based payment reserve |
|
|
— |
|
1 945 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 945 |
|
— |
|
1 945 |
|
Share-based payment expense |
|
|
— |
|
1 927 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 927 |
|
— |
|
1 927 |
|
Deferred tax |
|
|
— |
|
18 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
18 |
|
— |
|
18 |
|
Long-term incentives vested and settled |
|
|
— |
|
(890) |
|
— |
|
— |
|
— |
|
— |
|
890 |
|
— |
|
— |
|
— |
|
Sasol Khanyisa Tier 1 transaction vested and settled |
|
|
— |
|
(1 889) |
|
— |
|
— |
|
— |
|
— |
|
1 889 |
|
— |
|
— |
|
— |
|
Total comprehensive (loss)/income for the year |
|
|
— |
|
— |
|
(10) |
|
(17 097) |
|
864 |
|
633 |
|
9 032 |
|
(6 578) |
|
1 487 |
|
(5 091) |
|
profit |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
9 032 |
|
9 032 |
|
1 500 |
|
10 532 |
|
other comprehensive loss for the year |
|
|
— |
|
— |
|
(10) |
|
(17 097) |
|
864 |
|
633 |
|
— |
|
(15 610) |
|
(13) |
|
(15 623) |
|
Dividends paid |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(46) |
|
(46) |
|
(446) |
|
(492) |
|
Balance at 30 June 2021 |
|
|
9 888 |
|
900 |
|
39 |
|
38 752 |
|
(907) |
|
(1 699) |
|
99 516 |
|
146 489 |
|
5 982 |
|
152 471 |
|
Disposal of businesses |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
456 |
|
(4) |
|
452 |
|
(3 141) |
|
(2 689) |
|
Other movements |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(72) |
|
(72) |
|
(119) |
|
(191) |
|
Movement in share-based payment reserve |
|
|
— |
|
1 318 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 318 |
|
— |
|
1 318 |
|
Share-based payment expense (refer note 33) |
|
|
— |
|
1 164 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 164 |
|
— |
|
1 164 |
|
Deferred tax |
|
|
— |
|
154 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
154 |
|
— |
|
154 |
|
Long-term incentives vested and settled |
|
|
— |
|
(904) |
|
— |
|
— |
|
— |
|
— |
|
904 |
|
— |
|
— |
|
— |
|
Total comprehensive (loss)/income for the year |
|
|
— |
|
— |
|
(35) |
|
(999) |
|
907 |
|
1 656 |
|
38 956 |
|
40 485 |
|
2 711 |
|
43 196 |
|
profit |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
38 956 |
|
38 956 |
|
2 716 |
|
41 672 |
|
other comprehensive (loss)/income for the year |
|
|
— |
|
— |
|
(35) |
|
(999) |
|
907 |
|
1 656 |
|
— |
|
1 529 |
|
(5) |
|
1 524 |
|
Dividends paid |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(49) |
|
(49) |
|
(859) |
|
(908) |
|
Balance at 30 June 2022 |
|
|
9 888 |
|
1 314 |
|
4 |
|
37 753 |
|
— |
|
413 |
|
139 251 |
|
188 623 |
|
4 574 |
|
193 197 |
|
Other movements |
|
|
— |
|
— |
|
— |
|
1 |
|
— |
|
(17) |
|
61 |
|
45 |
|
(37) |
|
8 |
|
Movement in share-based payment reserve |
|
|
— |
|
933 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
933 |
|
— |
|
933 |
|
Share-based payment expense (refer note 33) |
|
|
— |
|
1 033 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 033 |
|
— |
|
1 033 |
|
Deferred tax |
|
|
— |
|
(100) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(100) |
|
— |
|
(100) |
|
Long-term incentives vested and settled |
|
|
— |
|
(1 349) |
|
— |
|
— |
|
— |
|
— |
|
1 349 |
|
— |
|
— |
|
— |
|
Total comprehensive income for the year |
|
|
— |
|
— |
|
16 |
|
11 932 |
|
— |
|
310 |
|
8 799 |
|
21 057 |
|
516 |
|
21 573 |
|
profit |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
8 799 |
|
8 799 |
|
534 |
|
9 333 |
|
other comprehensive income/(loss) for the year |
|
|
— |
|
— |
|
16 |
|
11 932 |
|
— |
|
310 |
|
— |
|
12 258 |
|
(18) |
|
12 240 |
|
Dividends paid |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(13 754) |
|
(13 754) |
|
(433) |
|
(14 187) |
|
Balance at 30 June 2023 |
|
|
9 888 |
|
898 |
|
20 |
|
49 686 |
|
— |
|
706 |
|
135 706 |
|
196 904 |
|
4 620 |
|
201 524 |
|
The notes on pages 9 to 118 are an integral part of these Consolidated Financial Statements.
5 Sasol Annual Financial Statements 2023
Statement of cash flows
for the year ended 30 June
|
|
|
|
2023 |
|
2022* |
|
2021 |
|
|
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
|
Cash receipts from customers |
|
|
|
|
298 698 |
|
263 332 |
|
194 712 |
|
Cash paid to suppliers and employees |
|
|
|
|
(234 061) |
|
(207 194) |
|
(149 598) |
|
Cash generated by operating activities |
|
27 |
|
|
64 637 |
|
56 138 |
|
45 114 |
|
Dividends received from equity accounted investments |
|
|
|
|
3 765 |
|
3 043 |
|
37 |
|
Finance income received |
|
6 |
|
|
2 242 |
|
986 |
|
837 |
|
Finance costs paid1 |
|
6 |
|
|
(7 083) |
|
(5 478) |
|
(6 173) |
|
Tax paid |
|
11 |
|
|
(13 952) |
|
(13 531) |
|
(5 280) |
|
Cash available from operating activities |
|
|
|
|
49 609 |
|
41 158 |
|
34 535 |
|
Dividends paid |
|
29 |
|
|
(13 754) |
|
(49) |
|
(46) |
|
Dividends paid to non-controlling shareholders in subsidiaries |
|
|
|
|
(433) |
|
(859) |
|
(446) |
|
Cash retained from operating activities |
|
|
|
|
35 422 |
|
40 250 |
|
34 043 |
|
Additions to non-current assets |
|
|
|
|
(30 247) |
|
(23 269) |
|
(18 214) |
|
additions to property, plant and equipment |
|
17 |
|
|
(30 726) |
|
(22 593) |
|
(15 945) |
|
additions to other intangible assets |
|
|
|
|
(128) |
|
(120) |
|
(3) |
|
Increase/(decrease) in capital project related payables |
|
|
|
|
607 |
|
(556) |
|
(2 266) |
|
Cash movements in equity accounted investments |
|
|
|
|
(95) |
|
(67) |
|
— |
|
Proceeds on disposals and scrappings |
|
9 |
|
|
799 |
|
8 484 |
|
43 214 |
|
Movement in assets held for sale2 |
|
|
|
|
3 |
|
(549) |
|
(427) |
|
Acquisition of interest in equity accounted investments |
|
19 |
|
|
— |
|
(56) |
|
— |
|
Purchase of investments |
|
|
|
|
(243) |
|
(95) |
|
(124) |
|
Proceeds from sale of investments |
|
|
|
|
156 |
|
26 |
|
168 |
|
Decrease in long-term receivables |
|
|
|
|
1 393 |
|
449 |
|
476 |
|
Cash (used in)/received from investing activities |
|
|
|
|
(28 234) |
|
(15 077) |
|
25 093 |
|
Proceeds from long-term debt3 |
|
14 |
|
|
95 035 |
|
88 |
|
26 057 |
|
Repayment of long-term debt |
|
14 |
|
|
(91 564) |
|
(12 086) |
|
(61 454) |
|
Payment of lease liabilities |
|
15 |
|
|
(2 269) |
|
(2 264) |
|
(2 180) |
|
Repayment of debt held for sale2 |
|
|
|
|
— |
|
(704) |
|
(980) |
|
Proceeds from short-term debt |
|
|
|
|
1 787 |
|
28 |
|
9 |
|
Repayment of short-term debt |
|
|
|
|
(1 801) |
|
(15) |
|
(19 717) |
|
Cash generated by/(used in) financing activities |
|
|
|
|
1 188 |
|
(14 953) |
|
(58 265) |
|
Translation effects on cash and cash equivalents |
|
|
|
|
2 424 |
|
1 759 |
|
(2 916) |
|
Increase/(decrease) in cash and cash equivalents |
|
|
|
|
10 800 |
|
11 979 |
|
(2 045) |
|
Cash and cash equivalents at the beginning of year |
|
|
|
|
42 967 |
|
30 988 |
|
34 094 |
|
Reclassification to disposal groups held for sale and other long-term investments |
|
|
|
|
— |
|
— |
|
(1 061) |
|
Cash and cash equivalents at the end of the year |
|
26 |
|
|
53 767 |
|
42 967 |
|
30 988 |
|
* |
The Group has revised cash receipts from customers and cash paid to suppliers by R2 992 million respectively for 2022, refer note 1. |
1 |
Included in finance costs paid are amounts capitalised to assets under construction a class of Property, plant and equipment. |
2 |
Prior years relate to disposal groups held for sale at 30 June, sold during the year. |
3 |
Proceeds from long-term debt includes the issue of a R13,2 billion (US$750 million) convertible bond. |
The notes on pages 9 to 118 are an integral part of these Consolidated Financial Statements.
6 Sasol Annual Financial Statements 2023
Notes to the financial statements |
|
|
|
|
|
|
9 |
|
|
16 |
|
20 |
|
|
|
|
|
21 |
|
|
21 |
|
|
22 |
|
|
23 |
|
|
24 |
|
|
25 |
|
|
26 |
|
|
28 |
|
|
35 |
|
|
|
|
|
38 |
|
|
38 |
|
|
40 |
|
|
41 |
|
45 |
|
|
|
|
|
46 |
|
|
46 |
|
|
|
|
|
47 |
|
|
47 |
|
|
50 |
|
|
53 |
7 Sasol Annual Financial Statements 2023
|
54 |
|
|
|
|
|
55 |
|
|
55 |
|
|
59 |
|
|
59 |
|
|
64 |
|
|
65 |
|
|
|
|
|
66 |
|
|
66 |
|
|
67 |
|
|
68 |
|
|
68 |
|
|
|
|
|
69 |
|
|
69 |
|
|
69 |
|
|
70 |
|
|
70 |
|
71 |
|
|
|
|
|
72 |
|
|
72 |
|
|
73 |
|
|
75 |
|
|
|
|
|
85 |
|
|
85 |
|
90 |
|
|
|
|
|
91 |
|
|
95 |
|
|
102 |
|
|
103 |
8 Sasol Annual Financial Statements 2023
Segment information
|
|
Energy |
|
Chemicals |
|
Corporate |
|
Consolidation |
|
|
||||||||
|
|
Mining |
|
Gas |
|
Fuels |
|
Africa |
|
America |
|
Eurasia |
|
Centre |
|
Adjustments |
|
Total |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External turnover |
|
6 386 |
|
7 234 |
|
116 235 |
|
67 772 |
|
44 492 |
|
47 577 |
|
— |
|
— |
|
289 696 |
Segment turnover |
|
27 666 |
|
11 988 |
|
118 708 |
|
70 586 |
|
44 942 |
|
48 194 |
|
— |
|
(32 388) |
|
289 696 |
Intersegmental turnover |
|
(21 280) |
|
(4 754) |
|
(2 473) |
|
(2 814) |
|
(450) |
|
(617) |
|
— |
|
32 388 |
|
— |
Materials, energy and consumables used |
|
(8 508) |
|
(3 834) |
|
(76 043) |
|
(27 548) |
|
(28 605) |
|
(39 427) |
|
(210) |
|
31 878 |
|
(152 297) |
Selling and distribution costs |
|
— |
|
— |
|
(43) |
|
(4 974) |
|
(3 773) |
|
(1 717) |
|
— |
|
37 |
|
(10 470) |
Maintenance expenditure |
|
(4 056) |
|
(345) |
|
(4 361) |
|
(3 565) |
|
(2 324) |
|
(1 120) |
|
(719) |
|
1 414 |
|
(15 076) |
Employee-related expenditure |
|
(6 743) |
|
(637) |
|
(4 544) |
|
(5 426) |
|
(4 588) |
|
(5 403) |
|
(6 394) |
|
191 |
|
(33 544) |
Depreciation and amortisation |
|
(2 394) |
|
(569) |
|
(2 242) |
|
(4 197) |
|
(4 645) |
|
(1 699) |
|
(745) |
|
— |
|
(16 491) |
Other expenses and income |
|
(3 441) |
|
(73) |
|
(5 211) |
|
(6 303) |
|
(5 466) |
|
884 |
|
11 719 |
|
(1 132) |
|
(9 023) |
Equity accounted profits, net of tax |
|
2 |
|
439 |
|
2 038 |
|
144 |
|
— |
|
— |
|
— |
|
— |
|
2 623 |
Remeasurement items affecting operating profit |
|
54 |
|
(537) |
|
(35 430) |
|
(1 048) |
|
3 916 |
|
(900) |
|
47 |
|
— |
|
(33 898) |
Earnings/(loss) before interest and tax (EBIT/LBIT) |
|
2 580 |
|
6 432 |
|
(7 128) |
|
17 669 |
|
(543) |
|
(1 188) |
|
3 698 |
|
— |
|
21 520 |
Statement of cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to non-current assets1 |
|
2 979 |
|
5 600 |
|
8 909 |
|
8 202 |
|
2 491 |
|
1 827 |
|
846 |
|
— |
|
30 854 |
1Excludes capital project related payables.
9 Sasol Annual Financial Statements 2023
|
|
Energy |
|
Chemicals |
|
Corporate |
|
Consolidation |
|
|
||||||||
|
|
Mining |
|
Gas |
|
Fuels* |
|
Africa |
|
America |
|
Eurasia |
|
Centre |
|
Adjustments |
|
Total* |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
20221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External turnover |
|
6 370 |
|
7 789 |
|
97 996 |
|
64 054 |
|
41 496 |
|
55 011 |
|
30 |
|
— |
|
272 746 |
Segment turnover |
|
24 386 |
|
11 941 |
|
99 972 |
|
67 275 |
|
41 926 |
|
55 419 |
|
56 |
|
(28 229) |
|
272 746 |
Intersegmental turnover |
|
(18 016) |
|
(4 152) |
|
(1 976) |
|
(3 221) |
|
(430) |
|
(408) |
|
(26) |
|
28 229 |
|
— |
Materials, energy and consumables used |
|
(6 063) |
|
(2 055) |
|
(59 525) |
|
(22 681) |
|
(21 243) |
|
(40 094) |
|
(162) |
|
27 824 |
|
(123 999) |
Selling and distribution costs |
|
— |
|
— |
|
(49) |
|
(3 934) |
|
(2 920) |
|
(1 811) |
|
— |
|
37 |
|
(8 677) |
Maintenance expenditure |
|
(3 492) |
|
(728) |
|
(3 602) |
|
(3 063) |
|
(2 078) |
|
(956) |
|
(589) |
|
1 186 |
|
(13 322) |
Employee-related expenditure |
|
(5 826) |
|
(772) |
|
(4 491) |
|
(5 424) |
|
(4 003) |
|
(5 454) |
|
(6 611) |
|
126 |
|
(32 455) |
Depreciation and amortisation |
|
(2 230) |
|
(500) |
|
(1 468) |
|
(3 667) |
|
(3 917) |
|
(1 576) |
|
(715) |
|
— |
|
(14 073) |
Other expenses and income |
|
(3 090) |
|
(1 759) |
|
(5 704) |
|
(5 867) |
|
(3 977) |
|
(941) |
|
(9 552) |
|
(944) |
|
(31 834) |
Equity accounted (losses)/profits, net of tax |
|
(1) |
|
(4) |
|
3 043 |
|
90 |
|
— |
|
— |
|
— |
|
— |
|
3 128 |
Remeasurement items affecting operating profit |
|
(228) |
|
8 499 |
|
(217) |
|
1 343 |
|
(2 807) |
|
2 965 |
|
348 |
|
— |
|
9 903 |
Earnings/(loss) before interest and tax (EBIT/LBIT) |
|
3 456 |
|
14 622 |
|
27 959 |
|
24 072 |
|
981 |
|
7 552 |
|
(17 225) |
|
— |
|
61 417 |
Statement of cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to non-current assets2 |
|
2 552 |
|
2 569 |
|
6 325 |
|
7 308 |
|
1 909 |
|
1 402 |
|
648 |
|
— |
|
22 713 |
* | The Group has revised Turnover and Materials, energy and consumables used for the Fuels segment by R2 992 million respectively for 2022. The error had no impact on earnings, refer note 1. |
1 |
The comparative information has been enhanced to include material items of expenses that impact on the profit measure. Comparative amounts have been provided. |
2 |
Excludes capital project related payables. |
10 Sasol Annual Financial Statements 2023
|
|
Energy |
|
Chemicals |
|
Corporate |
|
Consolidation |
|
|
||||||||
|
|
Mining |
|
Gas |
|
Fuels |
|
Africa |
|
America |
|
Eurasia |
|
Centre |
|
Adjustments |
|
Total |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
20211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External turnover |
|
2 025 |
|
7 321 |
|
59 393 |
|
58 260 |
|
29 358 |
|
45 539 |
|
14 |
|
— |
|
201 910 |
Segment turnover |
|
21 704 |
|
10 990 |
|
60 649 |
|
60 597 |
|
29 360 |
|
46 038 |
|
26 |
|
(27 454) |
|
201 910 |
Intersegmental turnover |
|
(19 679) |
|
(3 669) |
|
(1 256) |
|
(2 337) |
|
(2) |
|
(499) |
|
(12) |
|
27 454 |
|
— |
Materials, energy and consumables used |
|
(5 066) |
|
(1 185) |
|
(41 476) |
|
(22 126) |
|
(12 965) |
|
(29 675) |
|
(133) |
|
27 256 |
|
(85 370) |
Selling and distribution costs |
|
— |
|
— |
|
(21) |
|
(3 836) |
|
(2 289) |
|
(1 910) |
|
— |
|
30 |
|
(8 026) |
Maintenance expenditure |
|
(3 104) |
|
(364) |
|
(3 181) |
|
(2 985) |
|
(1 966) |
|
(1 021) |
|
(381) |
|
887 |
|
(12 115) |
Employee-related expenditure |
|
(5 232) |
|
(826) |
|
(4 311) |
|
(6 788) |
|
(4 173) |
|
(6 063) |
|
(5 759) |
|
304 |
|
(32 848) |
Depreciation and amortisation |
|
(2 223) |
|
(1 463) |
|
(3 401) |
|
(4 461) |
|
(3 637) |
|
(1 687) |
|
(772) |
|
— |
|
(17 644) |
Other expenses and income |
|
(2 803) |
|
(1 151) |
|
(3 975) |
|
(5 638) |
|
(3 550) |
|
(1 089) |
|
12 345 |
|
(1 023) |
|
(6 884) |
Equity accounted (losses)/profits, net of tax |
|
(3) |
|
— |
|
742 |
|
83 |
|
— |
|
1 |
|
(9) |
|
— |
|
814 |
Remeasurement items affecting operating profit |
|
(46) |
|
655 |
|
(23 196) |
|
(7 889) |
|
7 336 |
|
86 |
|
(164) |
|
— |
|
(23 218) |
Earnings/(loss) before interest and tax (EBIT/LBIT) |
|
3 227 |
|
6 656 |
|
(18 170) |
|
6 957 |
|
8 116 |
|
4 680 |
|
5 153 |
|
— |
|
16 619 |
Statement of cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to non-current assets2 |
|
2 704 |
|
711 |
|
3 549 |
|
5 508 |
|
1 152 |
|
1 796 |
|
528 |
|
— |
|
15 948 |
1 |
The comparative information has been enhanced to include material items of expenses that impact on the profit measure. Comparative amounts have been provided. |
2 |
Excludes capital project related payables. |
11 Sasol Annual Financial Statements 2023
Geographic region information*
|
|
South |
|
|
|
|
|
|
|
|
|
|
|
|
Africa** |
|
Mozambique |
|
United States |
|
Europe |
|
Rest of World |
|
Total** |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
External turnover1 |
|
142 804 |
|
1 146 |
|
46 334 |
|
55 996 |
|
43 416 |
|
289 696 |
Earnings before interest and tax (EBIT)2 |
|
7 872 |
|
1 051 |
|
1 899 |
|
4 957 |
|
5 741 |
|
21 520 |
Tax paid |
|
11 516 |
|
1 837 |
|
12 |
|
493 |
|
94 |
|
13 952 |
Non-current assets3 |
|
67 389 |
|
18 915 |
|
143 714 |
|
19 708 |
|
11 083 |
|
260 809 |
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
External turnover1 |
|
130 411 |
|
1 921 |
|
44 080 |
|
58 177 |
|
38 157 |
|
272 746 |
Earnings before interest and tax (EBIT)2 |
|
29 305 |
|
965 |
|
4 644 |
|
12 406 |
|
14 097 |
|
61 417 |
Tax paid |
|
11 739 |
|
1 001 |
|
36 |
|
657 |
|
98 |
|
13 531 |
Non-current assets3 |
|
90 524 |
|
15 036 |
|
123 618 |
|
16 161 |
|
10 122 |
|
255 461 |
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
External turnover1 |
|
84 844 |
|
1 799 |
|
31 247 |
|
48 529 |
|
35 491 |
|
201 910 |
(Loss)/earnings before interest and tax ((LBIT)/EBIT)2 |
|
(7 523) |
|
2 323 |
|
9 616 |
|
5 354 |
|
6 849 |
|
16 619 |
Tax paid/(received) |
|
6 622 |
|
927 |
|
(3 340) |
|
997 |
|
74 |
|
5 280 |
Non-current assets3 |
|
76 070 |
|
14 100 |
|
113 088 |
|
16 748 |
|
10 471 |
|
230 477 |
* |
In the current year, the geographic area information was reorganised to separately disclose information relating to Mozambique (which was previously grouped under Rest of Africa) while information relating to the rest of the countries in Africa and North America were aggregated with countries in the Rest of World column. Comparative amounts have been adjusted accordingly. |
** |
The Group has revised Turnover for South Africa by R2 992 million for 2022. The error had no impact on earnings, refer note 1. |
1 |
The analysis of turnover is based on the location of the customer. |
2 |
Includes equity accounted profits remeasurement items. |
3 |
Excludes deferred tax assets and post-retirement benefit assets. |
12 Sasol Annual Financial Statements 2023
Reporting segments
The Group’s operating model comprises of two distinct businesses, Energy and Chemicals. The Energy business manages the marketing and sales of all fuel, coal, gas and oil products in Southern Africa. The Chemicals business includes the marketing and sales of all chemical products in Africa, America and Eurasia. The operating model structure reflects how the results are reported to the Chief Operating Decision Maker (CODM). The CODM for Sasol is the President and Chief Executive Officer. The Energy business reportable segments are operating segments that are differentiated by the activities that each undertakes and the products they manufacture and market. The Chemicals business reportable segments are differentiated by the regions in which they operate. The Group has six main reportable segments that reflect the structure used by the President and Chief Executive Officer to make key operating decisions and assess performance. The Group evaluates the performance of its reportable segments based on earnings before interest and tax (EBIT).
Energy business
The Energy business operates integrated value chains with feedstock sourced from the Mining and Gas operating segments and processed at our operations in Secunda, Sasolburg and National Petroleum Refiners of South Africa (Pty) Ltd (Natref). There are also associated assets outside South Africa which include the Pande-Temane Petroleum Production Agreement in Mozambique and ORYX GTL (gas to liquids) in Qatar.
Mining
Mining is responsible for securing coal feedstock for the Southern African value chain, mainly for gasification, but also to generate electricity and steam. Coal is sold for gasification and utility purposes to Secunda Operations (SO), for utility purposes to Sasolburg Operations and to third parties in the export market. Coal is supplied to SO on arms-length terms and to Sasolburg Operations based on a long-term supply contract with inflation linked escalation. The price of export coal is based on the Free on Board Richards Bay index.
The date of delivery related to Mining is determined in accordance with the contractual agreements entered into with customers. These are summarised as follows:
Delivery terms |
|
Control passes to the customer |
On delivery |
|
At the point in time when the coal is delivered to the customer. |
|
|
|
Free on Board |
|
At the point in time when the coal is loaded onto the vessel at Richards Bay Coal Terminal; the customer is responsible for shipping and handling costs. |
Gas
The Gas segment reflects the upstream feedstock, transport of gas through the Republic of Mozambique Pipeline Investments Company (ROMPCO) pipeline, and external natural and methane rich gas sales.
Mozambican gas is sold under long-term contracts to the Sasol operations and to external customers. Condensate is sold on short-term contracts. In South Africa, gas is sold under long-term contracts at a price determinable from the supply agreements in accordance with the pricing methodology used by the National Energy Regulator of South Africa (NERSA).
13 Sasol Annual Financial Statements 2023
Analysis of gas and tests of the specifications and content are performed prior to delivery. Turnover from all gas sales is recognised on delivery.
Delivery terms |
|
Control passes to the customer |
|
|
|
On-delivery |
|
At the point in time when the: |
|
|
· Gas reaches the inlet coupling of the customer’s pipeline. |
|
|
· Condensate is loaded onto the customer’s truck. |
|
|
These are the points when the customer controls the gas, condensate or oil, or directs the use of it. The customer is responsible for transportation and handling costs in terms of gas, condensate and oil. |
Fuels
The Fuels segment comprises the sales and marketing of liquid fuels produced in South Africa. Sasol supplies approximately 40% of South Africa’s domestic fuel needs through retail and wholesale channels. Liquid fuels are blended from fuel components produced by the SO, crude oil refined at Natref, as well as some products purchased from other refiners as well as fuel imports. Liquid fuel products are sold under both short- and long-term agreements for both retail sales and commercial sales, including sales to other oil companies.
Liquid fuel prices are mainly driven by the Basic Fuel Price (BFP). Sales through wholesale is at BFP plus costs such as transportation and storage. For commercial sales and sales to other oil companies, the prices are fixed and determinable according to the specific contract, with periodic price adjustments.
Turnover is recognised as follows:
Delivery terms |
|
Control passes to the customer: |
|
|
|
On-delivery |
|
At the point in time when the fuel is delivered onto the rail tank car, road tank truck or into the customer pipeline. |
Free Carrier |
|
At the point in time when the goods are unloaded to the port of shipment; Sasol is not responsible for the freight and insurance. |
Carriage Paid To |
|
Products: At the point in time when the product is delivered to a specified location or main carrier. Freight: Over the period of transporting the goods to the customer’s nominated place – where the seller is responsible for freight costs, which are included in the contract. |
The Fuels segment also develops, implements and manages the Group’s international business ventures based on Sasol’s proprietary gas-to-liquids (GTL) technology. Sasol holds 49% in ORYX GTL in Qatar.
Chemicals business
Chemical products are grouped into Advanced Materials, Base Chemicals, Essential Care Chemicals and Performance Solutions.
The Chemicals businesses sell the majority of their products under contracts at prices determinable from such agreements. Turnover is recognised in accordance with the related contract terms, at the point at which control transfers to the customer and prices are determinable and collectability is probable.
14 Sasol Annual Financial Statements 2023
The point of delivery is determined in accordance with the contractual agreements entered into with customers which are as follows:
Delivery terms |
|
Control passes to the customer: |
|
|
|
Ex-tank sales |
|
At the point in time when products are loaded into the customer’s vehicle or unloaded from the seller’s storage tanks. |
|
|
|
Ex-works |
|
At the point in time when products are loaded into the customer’s vehicle or unloaded at the seller’s premises. |
|
|
|
Carriage Paid To (CPT); Cost Insurance Freight (CIF); Carriage and Insurance Paid (CIP); and Cost Freight Railage (CFR) |
|
Products — CPT: At the point in time when the product is delivered to a specified location or main carrier. |
|
|
|
|
Products — CIF, CIP and CFR: At the point in time when the products are loaded into the transport vehicle. |
|
|
|
|
|
Carriage, insurance and freight: Over the period of transporting the products to the customer’s nominated place – where the seller is responsible for carriage, freight and insurance costs, which are included in the contract. |
|
|
|
|
Free on Board |
|
At the point in time when products are loaded into the transport vehicle; the customer is responsible for shipping and handling costs. |
|
|
|
Delivered at Place |
|
At the point in time when products are delivered to and signed for by the customer. |
|
|
|
Consignment Sales |
|
As and when products are consumed by the customer. |
Corporate Centre
The Corporate Centre includes head office and centralised treasury operations.
15 Sasol Annual Financial Statements 2023
1 |
Statement of compliance |
The consolidated financial statements are prepared in compliance with International Financial Reporting Standards (IFRS) and Interpretations of those standards, as issued by the International Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council and the Companies Act, 2008. The consolidated financial statements were approved for issue by the Board on 22 August 2023 and will be presented to shareholders at the Company’s annual general meeting on 17 November 2023.
Basis of preparation of financial results
The consolidated financial statements are prepared using the historic cost convention except that, certain items, including derivative instruments, financial assets at fair value through profit or loss and financial assets designated at fair value through other comprehensive income, are stated at fair value. The consolidated financial results are presented in rand, which is Sasol Limited’s functional and presentation currency, rounded to the nearest million, unless indicated otherwise.
The consolidated financial statements are prepared on the going concern basis.
Error in recording of product exchange contracts
During the year, the Company identified a prior period error relating to purchases and sales of inventory with the same counterparty that are entered into in contemplation of one another to facilitate sales to customers. These transactions were recorded on a gross basis instead of being accounted for as a single exchange transaction. The error relates to the 2022 financial year.
In accordance with SAB No 99 ‘Materiality’, the Company evaluated the effect of the prior period error, both quantitatively and qualitatively, and concluded that the correction did not have a material impact on, nor require amendment of, any of the Company’s previously issued or filed financial statements for the year ended 30 June 2022, taken as a whole. However, if the error remained uncorrected, the Company believes it would have impacted comparisons between reporting periods.
The conclusion above in terms of SAB No 99 is consistent with the requirements of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’, as well as principles of IFRS. As a result, the Company has revised its previously reported results and disclosures as follows:
|
|
As reported on |
|
|
|
As revised on |
|
|
30 June 2022 |
|
Revision |
|
30 June 2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
Income statement |
|
|
|
|
|
|
Turnover |
|
275 738 |
|
(2 992) |
|
272 746 |
Materials, energy and consumables used |
|
(126 991) |
|
2 992 |
|
(123 999) |
Earnings before interest and tax (EBIT) |
|
61 417 |
|
— |
|
61 417 |
Statement of cash flows |
|
|
|
|
|
|
Cash receipts from customers |
|
266 324 |
|
(2 992) |
|
263 332 |
Cash paid to suppliers and employees |
|
(210 186) |
|
2 992 |
|
(207 194) |
Cash generated by operating activities |
|
56 138 |
|
— |
|
56 138 |
The revision had no impact on earnings for the year, the statement of comprehensive income, statement of financial position and statement of changes in equity.
16 Sasol Annual Financial Statements 2023
1 |
Statement of compliance continued |
Climate change
Climate change is a defining challenge of our time, with impacts threatening our critical ecosystems, habitats and resources. Sasol supports the Paris Agreement and its calls for higher ambition. In 2021, we launched our 2050 Net Zero emissions ambition (“Net Zero”) and Future Sasol strategy, which places us on a trajectory towards a significantly reduced GHG emissions profile. We have plans to deliver significant reductions in scope 1, 2 and 3 (Category 11) emissions by 2030. Future Sasol is premised on producing sustainable fuels and chemicals, using our proprietary technology and expertise, while contributing to a thriving planet, society and enterprise. This will see Sasol transform and decarbonise, in particular our Secunda and Sasolburg Operations as outlined in our roadmaps.
As we progress towards Net Zero by 2050, we have set targets to reduce our absolute scope 1 and 2 emissions by 30% by 2030 for the Sasol Energy and Chemicals Businesses. The Energy Business has a further scope 3 target to reduce Category 11 emissions by 20% by 2030.
Where reasonable and supportable, management has considered the impact of these 2030 targets on a number of key estimates within the financial statements including the estimates of future cash flows used in impairment assessments of non-current assets (refer to note 8), useful lives of property, plant and equipment (refer to note 17), purchase and capital commitments (refer to note 3 and 17), the estimates of future profitability used in our assessment of the recoverability of deferred tax assets (refer to note 12) and the timing and amount of environmental obligations (refer to note 30).
IBOR reform
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as IBOR reform). The Group’s remaining exposure to IBORs is concentrated to the Johannesburg Interbank Average Rate (JIBAR) through certain debt instruments. The South African Reserve Bank (SARB) has indicated their intention to move away from JIBAR and to create an alternative reference rate for South Africa. In November 2022, the SARB commenced publishing the South African Rand Overnight Index Average (ZARONIA), the preferred successor rate that will replace JIBAR in future. The ZARONIA is a financial benchmark that reflects the interest rate at which rand-denominated overnight wholesale funds are obtained by commercial banks. ZARONIA is based on actual transactions and calculated as a trimmed, volume-weighted mean of interest rates paid on eligible unsecured overnight deposits.
Market participants are not yet using ZARONIA in financial contracts until such time as the SARB indicate otherwise. The duration of the observation period will be communicated in due time and may depend on the Market Practitioners Group’s information needs, transition plans, as well as the SARB’s decision regarding the cessation date for JIBAR. Accordingly, there is uncertainty surrounding the timing and manner in which the transition would occur and how this would affect various financial instruments held by the Group. The Group’s treasury function monitors and manages the transition to ZARONIA and evaluates the extent to which contracts reference JIBAR cash flows, whether such contracts will need to be amended and how to manage communication about the reform with counterparties.
Accounting policies
The accounting policies applied in the preparation of these 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 2022 except for the retrospective adoption of the following amendments which had an immaterial impact on the Group’s financial statements:
● | Proceeds before Intended Use (Amendments to IAS 16 ‘Property, Plant and Equipment’); and |
● | Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’). |
17 Sasol Annual Financial Statements 2023
1 |
Statement of compliance continued |
Amendments to IAS 12 ‘Income Taxes’
Additionally, the Group applied the amendments to IAS 12 'Income Taxes' which give companies temporary relief from accounting for deferred taxes arising from the Organisation for Economic Co-operation and Development’s (OECD) international tax reform. The OECD published the Pillar Two model rules in December 2021 to ensure that large multinational companies would be subject to a minimum 15% tax rate. More than 135 countries and jurisdictions representing more than 90% of global gross domestic product have agreed to the Pillar Two model rules.
The amendments introduce:
● | a temporary exception to the accounting for deferred taxes arising from jurisdictions implementing the global tax rules; and |
● | targeted disclosure requirements to help investors better understand a company’s exposure to income taxes arising from the reform, particularly before legislation implementing the rules is in effect. |
Companies can benefit from the temporary exception immediately but are required to provide the disclosures to investors for annual reporting periods beginning on or after 1 January 2023.
The adoption of the amendments resulted in the Group not having to account for any deferred tax impact as a result of the tax reform at 30 June 2023. Except for Japan (effective years of assessments commencing on or after 1 April 2024), none of the other jurisdictions in which the Group operates have promulgated the Pillar Two model regulations as at 30 June 2023. The Group is currently assessing the future impact of the tax reform and amendments on its financial statements.
Accounting standards, amendments and interpretations issued which are relevant to the Group, but not yet effective
The Group continuously evaluates the impact of new accounting standards, amendments to accounting standards and interpretations. It is expected that where applicable, these standards and amendments will be adopted on each respective effective date as indicated below. The new accounting standards and amendments to accounting standards issued which are relevant to the Group, but not yet effective on 30 June 2023, include:
IFRS 17 ‘Insurance Contracts’
IFRS 17 supersedes IFRS 4 ‘Insurance Contracts’ which currently permits a wide variety of practices in accounting for insurance contracts. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. IFRS 17 applies to all types of insurance contracts (i.e. life, non-life, direct insurance and re-insurance) regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. Certain scope exceptions will apply. The Group has assessed all material contracts where it has potentially accepted significant insurance risk including cell captive insurance arrangements and issued performance guarantees. The Group will continue to apply the requirements of IFRS 9 ‘Financial Instruments’ to issued financial guarantee contracts. The Group has not identified any material contracts in scope of IFRS 17 and implementation of the new standard is not expected to have a material impact on the Group’s results. The Group will apply IFRS 17 from 1 July 2023 using the full retrospective approach.
18 Sasol Annual Financial Statements 2023
1 |
Statement of compliance continued |
Amendments to IAS 1 ‘Presentation of Financial Statements’
The amendments provide guidance on the classification of liabilities as current or non-current in the statement of financial position and does not impact the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. The amendments clarify that the classification of liabilities as current or non-current should be based on rights that are in place at the end of the reporting period which enable the reporting entity to defer settlement by at least twelve months. The amendments further make it explicit that classification is unaffected by expectations or events after the reporting date. The amendments are effective for the Group from 1 July 2024, will be applied retrospectively and are not expected to significantly impact the Group.
Amendment to IFRS 16 ‘Leases’
These amendments include requirements for sale and leaseback transactions in IFRS 16 to explain how an entity accounts for a sale and leaseback after the date of the transaction. Sale and leaseback transactions where some or all the lease payments are variable lease payments that do not depend on an index or rate are most likely to be impacted. The amendments are effective for annual reporting periods beginning on or after 1 January 2024, can be early adopted and are not expected to materially impact the Group.
19 Sasol Annual Financial Statements 2023
Earnings generated from operations
21 |
|
|
|
21 |
|
|
|
22 |
|
|
|
23 |
|
|
|
24 |
|
|
|
25 |
|
|
|
26 |
|
|
|
28 |
|
|
|
35 |
|
|
|
38 |
|
|
|
38 |
|
|
|
40 |
|
|
|
41 |
20 Sasol Annual Financial Statements 2023
Operating and other activities
2 |
Turnover |
|
|
2023 |
|
2022 |
|
2021 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
|
Revenue by major product line |
|
|
|
|
|
|
|
|
Energy business |
|
|
128 850 |
|
105 998 |
|
65 676 |
|
Coal1 |
|
|
6 386 |
|
6 370 |
|
2 025 |
|
Liquid fuels and crude oil (revised, refer to note 1)2 |
|
|
115 311 |
|
93 044 |
|
58 265 |
|
Gas (methane rich and natural gas) and condensate3 |
|
|
7 153 |
|
6 584 |
|
5 386 |
|
Chemicals business |
|
|
159 520 |
|
160 407 |
|
133 136 |
|
Advanced materials6 |
|
|
9 699 |
|
7 249 |
|
7 380 |
|
Base chemicals6 |
|
|
50 663 |
|
51 223 |
|
45 684 |
|
Essential care6 |
|
|
63 468 |
|
62 989 |
|
44 314 |
|
Performance solutions6 |
|
|
35 690 |
|
38 946 |
|
35 758 |
|
Other (Technology, refinery services)4 |
|
|
1 626 |
|
2 550 |
|
2 288 |
|
Revenue from contracts with customers |
|
|
289 996 |
|
268 955 |
|
201 100 |
|
Revenue from other contracts5 |
|
|
(300) |
|
3 791 |
|
810 |
|
Total external turnover |
|
|
289 696 |
|
272 746 |
|
201 910 |
|
1 |
Derived from Mining segment. |
2 |
Derived from Fuels segment. |
3 |
Derived primarily from Gas segment. |
4 |
Relates primarily to the Gas, Fuels and Chemicals Eurasia segments. |
5 |
Relates to the Fuels segment and includes franchise rentals, use of fuel tanks, fuel storage and Sasol Oil slate. The current year negative slate revenue is due to a reduction in the slate balance of R1,2 billion as a result of an over recovery in the basic fuel price (BFP) charged to customers for the period 1 July 2022 to 30 June 2023. |
6 |
Chemicals business analysis: |
Accounting policies:
Revenue from contracts with customers is recognised when the control of goods or services has transferred to the customer through the satisfaction of a performance obligation. Group performance obligations are satisfied at a point in time and over time, however the Group mainly satisfies its performance obligations at a point in time. For further information on revenue recognition, refer to Segment information on pages 18 to 19.
21 Sasol Annual Financial Statements 2023
2 |
Turnover continued |
Revenue recognised reflects the consideration that the Group expects to be entitled to for each distinct performance obligation after deducting indirect taxes, rebates and trade discounts and consists primarily of the sale of fuels, oil, natural gas and chemical products, services rendered, license fees and royalties. The Group allocates revenue based on stand-alone selling prices.
Purchases and sales of inventory with the same counterparty that are entered into in contemplation of one another to facilitate sales to customers are combined and recorded on a net basis when the items exchanged are similar in nature.
Revenue from arrangements that are not considered contracts with customers, mainly pertaining to franchise rentals, use of fuel tanks and fuel storage, is presented as revenue from other contracts.
The period between the transfer of the goods and services to the customer and the payment by the customer does not exceed 12 months and the Group does not adjust for time value of money.
3 |
Materials, energy and consumables used* |
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
Cost of raw materials (revised, refer to note 1) |
|
126 338 |
|
100 607 |
|
71 016 |
Cost of energy and other consumables used in production process |
|
25 959 |
|
23 392 |
|
14 354 |
|
|
152 297 |
|
123 999 |
|
85 370 |
* |
Costs relating to items that are consumed in the manufacturing process, including changes in inventories and distribution costs up until the point of sale. A significant increase was noted due to higher basic fuel prices, higher crude oil and other product costs, as well as higher utility prices. Included in materials, energy and consumables used is carbon taxes of R1,7 billion (2022 - R1,2 billion). Under the carbon tax regulations, South African companies are able to buy carbon credits from third parties to offset a portion of their carbon tax liability. To this end, Sasol enters into strategic and cost-effective long term agreements with reputable suppliers for credible high-quality carbon offset credits. The ultimate amount of credits acquired will depend on the development of projects under the applicable standards, delivering the credits within the agreed timeframe, and will be subject to audit/verification by an independent party. |
Purchase commitments
The Group enters into off-take agreements as part of its normal operations which have minimum volume requirements (i.e. take or pay contracts). These purchase commitments consist primarily of agreements for procuring raw materials such as coal, gas and electricity.
The most significant commitment relates to minimum off-take oxygen supply agreements for SO of approximately R219 billion (2022: R88 billion). The increase is mainly due to the variable fee portion of the agreements that came into effect in October 2022.
● | The Oxygen Train 17 oxygen supply agreement runs to 2037, with an option to renew the contract to 2050. The renewal option is not taken into account in the calculation of the commitments. |
● | The Oxygen Trains 1 – 16 arrangement is managed through various agreements, including the Gas Sales Agreement, Utilities Agreement and a suite of other contracts. In terms of the Utilities Agreement, Sasol is contractually bound to buy oxygen and other derivative gasses from Air Liquide annually, while Air Liquide is bound to buy utilities from Sasol for the same amount for 15 years. The ultimate amount of the commitment is dependent on expected future increases in the regulated price of electricity in South Africa and is presented on an undiscounted basis. |
22 Sasol Annual Financial Statements 2023
3Materials, energy and consumables used* continued
Additionally, Sasol South Africa Limited (SSA), together with Air Liquide Large Industries South Africa Proprietary Limited (ALLISA), signed six Power Purchase Agreements (PPAs) to date, with contractual terms of 20 years each, for the procurement of more than 600 MW of renewable energy from Independent Power Producers. The joint procurement of renewable energy by SSA and ALLISA is primarily aimed at the decarbonisation of the SO site.
Subject to financial and grid connection approvals, the projects are expected to reach financial close within the 2024 financial year and commercial operation by 2025.
SSA also signed a 20 year PPA with Msenge Emoyeni Wind Farm Proprietary Limited, for the procurement of 69 MW of wind capacity from the Msenge project, located in the Eastern Cape. The project reached financial close in March 2023, and commercial operation is targeted for early 2024.
Furthermore, Sasol is party to long-term gas purchase agreements of approximately R38 billion (2022: R40 billion) which commits Sasol Gas (Pty) Ltd (Sasol Gas) to purchase a minimum quantity of gas until 2034.
Contractual purchase commitments are taken into account in testing the recoverability of the carrying amounts of property, plant and equipment. At 30 June 2023 and 30 June 2022, there were no onerous contracts relating to these off-take commitments.
4 |
Employee-related expenditure |
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
|
Analysis of employee costs |
|
|
|
|
|
|
|
|
|
|
Labour |
|
|
|
|
33 655 |
|
32 141 |
|
31 683 |
|
salaries, wages and other employee-related expenditure |
|
|
|
|
31 415 |
|
30 068 |
|
29 786 |
|
post-retirement benefits |
|
32 |
|
|
2 240 |
|
2 073 |
|
1 897 |
|
Share-based payment expenses |
|
|
|
|
1 033 |
|
1 139 |
|
1 905 |
|
equity-settled |
|
33 |
|
|
1 033 |
|
1 164 |
|
1 927 |
|
cash-settled |
|
|
|
|
— |
|
(25) |
|
(22) |
|
Total employee-related expenditure |
|
|
|
|
34 688 |
|
33 280 |
|
33 588 |
|
Costs capitalised to projects |
|
|
|
|
(1 144) |
|
(825) |
|
(740) |
|
Per income statement |
|
|
|
|
33 544 |
|
32 455 |
|
32 848 |
|
The total number of permanent and non-permanent employees, in approved positions, including the Group’s share of employees within joint operation entities and excluding contractors, joint ventures’ and associates’ employees, is analysed below:
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Number |
|
Number |
|
Number |
Permanent employees |
|
28 657 |
|
28 279 |
|
28 725 |
Non-permanent employees |
|
416 |
|
351 |
|
224 |
|
|
29 073 |
|
28 630 |
|
28 949 |
23 Sasol Annual Financial Statements 2023
5 |
Other expenses and income* |
|
|
2023 |
|
2022 |
|
2021 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Includes: |
|
|
|
|
|
|
|
Derivative (gains)/losses1 |
|
|
(3 287) |
|
18 325 |
|
(2 282) |
Translation (gains)/losses2 |
|
|
(2 728) |
|
(693) |
|
(5 510) |
Trade and other receivables |
|
|
(1 436) |
|
(456) |
|
1 233 |
Trade and other payables |
|
|
171 |
|
(147) |
|
(158) |
Foreign currency loans |
|
|
161 |
|
785 |
|
(6 318) |
Other3 |
|
|
(1 624) |
|
(875) |
|
(267) |
Exploration expenditure and feasibility costs |
|
|
751 |
|
366 |
|
295 |
Professional fees |
|
|
2 455 |
|
1 916 |
|
2 828 |
Expected credit losses raised/(released) |
|
|
234 |
|
(39) |
|
(87) |
* |
From the current year certain items were considered immaterial, namely Exploration expenditure and feasibility costs and Translation (gains)/losses. These items were previously presented as separate lines in the Income statement and are now presented as part of Other expenses and income. |
1 |
Relates mainly to the Group’s hedging activities and embedded derivatives. Refer to page 118. |
2 |
Relates mainly to the effect of the weakening of the Rand on the translation of foreign operations and intergroup exposure on foreign currency loans. |
3 |
Other translation gains includes translation of intergroup treasury balances which increased during the year. |
Research and development expenditure amounting to R1 388 million (2022: R1 160 million; 2021: R1 246 million) was expensed and is included in Employee-related expenditure, Depreciation and amortisation and Other expenses and income in the Income statement.
24 Sasol Annual Financial Statements 2023
6 |
Net finance costs |
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
|
Finance income |
|
|
|
|
|
|
|
|
|
|
Notional interest received |
|
|
|
|
— |
|
29 |
|
4 |
|
Interest received on |
|
|
|
|
2 253 |
|
991 |
|
852 |
|
other long-term investments |
|
|
|
|
58 |
|
49 |
|
40 |
|
loans and receivables |
|
|
|
|
89 |
|
141 |
|
199 |
|
cash and cash equivalents |
|
|
|
|
2 106 |
|
801 |
|
613 |
|
Per income statement |
|
|
|
|
2 253 |
|
1 020 |
|
856 |
|
Less: notional interest |
|
|
|
|
— |
|
(29) |
|
(4) |
|
Less: interest received on tax |
|
|
|
|
(11) |
|
(5) |
|
(15) |
|
Per the statement of cash flows |
|
|
|
|
2 242 |
|
986 |
|
837 |
|
Finance costs |
|
|
|
|
|
|
|
|
|
|
Debt |
|
|
|
|
7 408 |
|
5 419 |
|
5 238 |
|
debt |
|
|
|
|
7 408 |
|
5 066 |
|
4 855 |
|
interest rate swap – net settlements |
|
|
|
|
— |
|
353 |
|
383 |
|
Interest on lease liabilities |
|
|
|
|
1 451 |
|
1 357 |
|
1 488 |
|
Other |
|
|
|
|
146 |
|
95 |
|
84 |
|
|
|
|
|
|
9 005 |
|
6 871 |
|
6 810 |
|
Amortisation of loan costs |
|
14 |
|
|
212 |
|
132 |
|
160 |
|
Notional interest |
|
|
|
|
1 116 |
|
633 |
|
668 |
|
Total finance costs |
|
|
|
|
10 333 |
|
7 636 |
|
7 638 |
|
Amounts capitalised to assets under construction, a class of property, plant and equipment |
|
17 |
|
|
(1 074) |
|
(740) |
|
(880) |
|
Per income statement |
|
|
|
|
9 259 |
|
6 896 |
|
6 758 |
|
Total finance costs before amortisation of loan costs and notional interest |
|
|
|
|
9 005 |
|
6 871 |
|
6 810 |
|
Add: modification gain |
|
|
|
|
— |
|
74 |
|
— |
|
Add: amortisation of modification gain |
|
|
|
|
194 |
|
— |
|
— |
|
Less: unwinding of loan costs1 |
|
|
|
|
(144) |
|
— |
|
— |
|
Less: interest accrued on long-term debt, lease liabilities and short-term debt |
|
|
|
|
(1 966) |
|
(1 463) |
|
(637) |
|
Less: interest raised on tax payable |
|
|
|
|
(6) |
|
(4) |
|
— |
|
Per the statement of cash flows |
|
|
|
|
7 083 |
|
5 478 |
|
6 173 |
|
1 | RCF loan costs expensed upon refinancing of banking facilities. |
25 Sasol Annual Financial Statements 2023
7 |
Earnings and dividends per share |
|
|
|
2023 |
|
2022 |
|
2021 |
|
for the year ended 30 June |
|
|
Rand |
|
Rand |
|
Rand |
|
Attributable to owners of Sasol Limited |
|
|
|
|
|
|
|
|
Basic earnings per share |
|
|
14,00 |
|
62,34 |
|
14,57 |
|
Headline earnings per share |
|
|
53,75 |
|
47,58 |
|
39,53 |
|
Diluted earnings per share |
|
|
13,02 |
|
61,36 |
|
14,39 |
|
Diluted headline earnings per share |
|
|
50,76 |
|
46,83 |
|
39,03 |
|
Dividends per share |
|
|
17,00 |
|
14,70 |
|
— |
|
interim |
|
|
7,00 |
|
— |
|
— |
|
final* |
|
|
10,00 |
|
14,70 |
|
— |
|
* |
Declared subsequent to 30 June and presented for information purposes only. |
Basic earnings per share (EPS) and headline earnings per share (HEPS)
EPS is derived by dividing earnings attributable to owners of Sasol Limited by the weighted average number of shares outstanding during the period. HEPS is derived by dividing the headline earnings attributable to the owners of Sasol Limited by the weighted average number of shares outstanding during the period.
Diluted earnings per share (DEPS) and diluted headline earnings per share (DHEPS)
DEPS and DHEPS are calculated by dividing the diluted earnings and diluted headline earnings attributable to owners of Sasol Limited by the diluted number of Sasol ordinary shares and Sasol BEE ordinary shares in issue during the year. DEPS and DHEPS are calculated considering the potentially dilutive ordinary shares that could be issued as a result of share options granted to employees under the Sasol Long-Term Incentive (LTI) and Sasol Khanyisa Tier 2 plans (refer to note 33) and as a result of the potential conversion of the US$750 million Convertible Bond (refer to note 14).
The Sasol Khanyisa Tier 2 and Khanyisa Public are anti-dilutive for DEPS and DHEPS in all years presented.
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Earnings and headline earnings |
|
|
|
|
|
|
|
|
|
Earnings attributable to owners of Sasol Limited |
|
|
|
8 799 |
|
38 956 |
|
9 032 |
|
Total remeasurement items for the Group, net of tax |
|
8 |
|
24 978 |
|
(9 221) |
|
15 471 |
|
Headline earnings attributable to owners of Sasol Limited |
|
|
|
33 777 |
|
29 735 |
|
24 503 |
|
|
|
Number of shares |
||||
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
million |
|
million |
|
million |
Basic weighted average number of shares |
|
|
|
|
|
|
Issued shares |
|
640,7 |
|
635,7 |
|
634,2 |
Effect of treasury shares held |
|
(10,4) |
|
(10,2) |
|
(9,5) |
Effect of long-term incentives exercised |
|
(1,9) |
|
(0,5) |
|
(0,7) |
Effect of Sasol Khanyisa Tier 2 options exercised |
|
— |
|
(0,1) |
|
(4,1) |
Basic weighted average number of shares for EPS and HEPS |
|
628,4 |
|
624,9 |
|
619,9 |
26 Sasol Annual Financial Statements 2023
7 |
Earnings and dividends per share continued |
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
Diluted earnings |
|
|
|
|
|
|
Earnings attributable to owners of Sasol Limited |
|
8 799 |
|
38 956 |
|
9 032 |
Impact of convertible bonds |
|
(179) |
|
— |
|
— |
Diluted earnings attributable to owners of Sasol Limited |
|
8 620 |
|
38 956 |
|
9 032 |
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
Diluted headline earnings |
|
|
|
|
|
|
Headline earnings attributable to owners of Sasol Limited |
|
33 777 |
|
29 735 |
|
24 503 |
Impact of convertible bonds |
|
(179) |
|
— |
|
— |
Diluted headline earnings attributable to owners of Sasol Limited |
|
33 598 |
|
29 735 |
|
24 503 |
|
|
|
|
|
|
|
|
|
Number of shares |
||||
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
million |
|
million |
|
million |
Diluted weighted average number of shares |
|
|
|
|
|
|
Weighted average number of shares |
|
628,4 |
|
624,9 |
|
619,9 |
Potential dilutive effect of convertible bond |
|
24,2 |
|
— |
|
— |
Potential dilutive effect of long-term incentive scheme |
|
9,3 |
|
9,9 |
|
3,8 |
Potential dilutive effect of Sasol Khanyisa Tier 1 |
|
– |
|
0,1 |
|
4,1 |
Diluted weighted average number of shares for DEPS and DHEPS |
|
661,9 |
|
634,9 |
|
627,8 |
27 Sasol Annual Financial Statements 2023
8 |
Remeasurement items affecting operating profit |
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
|
Effect of remeasurement items for subsidiaries and joint operations |
|
|
|
|
|
|
|
|
|
|
Impairment of assets |
|
|
|
|
37 298 |
|
77 |
|
34 200 |
|
property, plant and equipment |
|
17 |
|
|
36 496 |
|
70 |
|
33 973 |
|
right of use assets |
|
15 |
|
|
546 |
|
6 |
|
35 |
|
other intangible assets |
|
|
|
|
256 |
|
1 |
|
80 |
|
equity accounted investment |
|
|
|
|
— |
|
— |
|
112 |
|
Reversal of impairment of assets |
|
|
|
|
(3 649) |
|
(1 520) |
|
(5 468) |
|
property, plant and equipment |
|
17 |
|
|
(3 649) |
|
(1 505) |
|
(5 440) |
|
right of use assets |
|
15 |
|
|
— |
|
(15) |
|
(2) |
|
other intangible assets |
|
|
|
|
— |
|
— |
|
(26) |
|
(Profit)/loss on |
|
9 |
|
|
(650) |
|
(8 460) |
|
(5 520) |
|
disposal of property, plant and equipment1 |
|
|
|
|
(500) |
|
(67) |
|
(96) |
|
disposal of other intangible assets |
|
|
|
|
3 |
|
2 |
|
(130) |
|
disposal of other assets |
|
|
|
|
— |
|
— |
|
52 |
|
disposal of businesses2 |
|
|
|
|
(516) |
|
(11 850) |
|
(5 615) |
|
scrapping of property, plant and equipment |
|
|
|
|
363 |
|
3 366 |
|
269 |
|
sale and leaseback transactions |
|
|
|
|
— |
|
89 |
|
— |
|
Write-off of unsuccessful exploration wells3 |
|
|
|
|
899 |
|
— |
|
6 |
|
Remeasurement items per income statement |
|
|
|
|
33 898 |
|
(9 903) |
|
23 218 |
|
Tax impact |
|
|
|
|
(8 951) |
|
702 |
|
(7 771) |
|
impairment of assets |
|
|
|
|
(9 831) |
|
(2) |
|
(9 513) |
|
reversal of impairment of assets |
|
|
|
|
854 |
|
421 |
|
1 228 |
|
profit/loss on disposals, scrapping and sale and leaseback transactions |
|
|
|
|
26 |
|
283 |
|
516 |
|
write-off of unsuccessful exploration wells |
|
|
|
|
— |
|
— |
|
(2) |
|
Non-controlling interest effect |
|
|
|
|
8 |
|
(20) |
|
1 |
|
Effect of remeasurement items for equity accounted investments |
|
|
|
|
23 |
|
— |
|
23 |
|
Total remeasurement items for the Group, net of tax |
|
|
|
|
24 978 |
|
(9 221) |
|
15 471 |
|
1 | Relates mainly to the Chemicals America segment. |
2 | Relates mainly to the Gas segment. |
3 | Relates to the Gas segment. The Production Sharing Agreement (PSA) Inhasorro Deep Prospect (R307 million or $17,2 million), PT5-C Dorado-1 (R423 million or $23,8 million) and A5-A Raia-1 (R169 million or $9,5 million) wells were plugged and abandoned after being declared unsuccessful during the current year. |
Impairment/reversal of impairments
The Group’s non-financial assets, other than inventories and deferred tax assets, are assessed for impairment indicators, as well as reversal of impairment indicators at each reporting date or whenever events or changes in circumstances indicate that the carrying value may not be recoverable or previous impairment should be reversed. At 30 June 2023, the Group’s net asset value exceeding its market capitalisation was identified as an impairment indicator. Recoverable amounts are estimated for individual assets or, where an individual asset cannot generate cash inflows independently, the recoverable amount is determined for the larger cash generating unit to which it belongs.
28 Sasol Annual Financial Statements 2023
8 |
Remeasurement items affecting operating profit continued |
Impairment calculations
The recoverable amount of the assets reviewed for impairment is determined based on the higher of the fair value less costs to sell or value-in-use calculations. Key assumptions relating to this valuation include the discount rate and cash flows used to determine the recoverable amount. Future cash flows are estimated based on financial budgets covering a five year period and extrapolated over the useful life of the assets to reflect the long term plans for the Group using the estimated growth rate for the specific business or project. Where reliable cash flow projections are available for period longer than five years, those budgeted cash flows are used in the impairment calculation. The estimated future cash flows and discount rate are post-tax, based on the assessment of current risks applicable to the specific entity and country in which it operates. Discounting post-tax cash flows at a post-tax discount rate yields the same results as discount pre-tax cash flows at a pre-tax discount rate, assuming there are no significant temporary tax differences.
Main assumptions used for impairment calculations
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
Long-term average crude oil price (Brent)* |
|
US$/bbl |
|
88,02 |
|
93,24 |
|
70,09 |
Long-term average ethane price* |
|
US$c/gal |
|
42,33 |
|
43,15 |
|
37,18 |
Long-term average ammonia price* |
|
Rand/ton |
|
9 046,19 |
|
10 173,00 |
|
5 297,00 |
Long-term average Southern African gas purchase price (real)* |
|
US$/Gj |
|
10,93 |
|
8,94 |
|
8,41 |
Long-term average refining margin* |
|
US$/bbl |
|
12,34 |
|
12,23 |
|
9,67 |
Long-term average exchange rate* |
|
Rand/US$ |
|
17,40 |
|
15,95 |
|
14,57 |
* |
Assumptions are provided on a long-term average basis in nominal terms unless indicated otherwise. Oil and ammonia price and exchange rate assumptions are calculated based on a five year period, while the ethane price is based on a ten year period. The refining margin is calculated until 2034, linked to the Sasolburg refinery’s useful life. The Southern African gas purchase price is calculated from 2030 until 2050 being the point at which gas from the existing gas fields in Mozambique are fully utilised and is linked to the South African integrated value chain’s useful life. The gas price is based on current observable market prices and are not comparable to the production cost of our own field development. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United |
|
|
|
|
|
|
|
|
South |
|
States of |
|
|
|
|
|
|
|
|
Africa |
|
America |
|
Europe |
||
|
|
|
|
% |
|
% |
|
% |
||
Growth rate — long-term Producer Price Index |
|
2023 |
|
5,50 |
|
2,00 |
|
|
|
2,00 |
Weighted average cost of capital* |
|
2023 |
|
15,20 |
|
9,07 |
|
9,07 |
– |
10,68 |
Growth rate — long-term Producer Price Index |
|
2022 |
|
5,50 |
|
2,00 |
|
|
|
2,00 |
Weighted average cost of capital* |
|
2022 |
|
14,41 |
|
8,13 |
|
8,13 |
– |
9,57 |
Growth rate — long-term Producer Price Index |
|
2021 |
|
5,50 |
|
2,00 |
|
|
|
2,00 |
Weighted average cost of capital* |
|
2021 |
|
14,03 |
|
7,70 |
|
7,70 |
– |
9,05 |
* |
Calculated using spot market factors on 30 June. |
29 Sasol Annual Financial Statements 2023
8 |
Remeasurement items affecting operating profit continued |
Significant impairment/(reversal of impairment) of assets in 2023
|
|
|
|
|
|
|
|
|
|
|
Property, |
|
|
|
Other |
|
|
|
|
plant and |
|
Right of |
|
intangible |
|
|
|
|
equipment |
|
use assets |
|
assets |
|
Total |
|
|
2023 |
|
2023 |
|
2023 |
|
2023 |
Segment and Cash-generating unit (CGU) |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Fuels segment |
|
|
|
|
|
|
|
|
Secunda liquid fuels refinery |
|
34 634 |
|
436 |
|
246 |
|
35 316 |
Chemicals Africa |
|
|
|
|
|
|
|
|
South African Wax |
|
928 |
|
— |
|
4 |
|
932 |
Chemicals Eurasia |
|
|
|
|
|
|
|
|
China Essential Care Chemicals (ECC) |
|
766 |
|
110 |
|
— |
|
876 |
Chemicals America |
|
|
|
|
|
|
|
|
Tetramerization |
|
(3 645) |
|
— |
|
— |
|
(3 645) |
Other (net) |
|
164 |
|
— |
|
6 |
|
170 |
|
|
32 847 |
|
546 |
|
256 |
|
33 649 |
Other than for the CGUs specifically mentioned, all of the Group’s remaining CGUs have significant headroom and reasonable changes to the assumptions applied would not result in any impairment.
Description of sensitivity to changes in assumptions:
Key sources of estimation uncertainty include discount rates, commodity prices, exchange rates, carbon tax (and related allowances) and chemical prices. Management has considered the sensitivity of the recoverable amount calculations to these key assumptions and these sensitivities have been taken into consideration in determining the required impairments and reversals of impairments in the current period. Except when indicated below, reasonable changes to key assumptions would not result in a materially different outcome.
The following CGUs were impaired or a previous impairment was reversed at 31 December 2022:
South African Wax
The full impairment on the Wax CGU in Southern Africa was driven by higher cost to procure gas and lower sales volumes and prices due to an increasingly challenging market environment. A WACC rate of 14,66% was applied in estimating the recoverable amount of the CGU.
Chemicals Eurasia: China ECC
The full impairment on the CGU was driven by a combination of lower unit margins and higher costs resulting from the prolonged impact of COVID-19 on China’s economy. A WACC rate of 9,21% was applied in estimating the recoverable amount of the CGU.
Chemicals America: Tetramerization CGU
The Tetramerization CGU was impaired in 2019. Over the past year, a sustained improvement in plant reliability has resulted in increased volumes available for sale while longer-term contracts signed with several customers improved the overall profitability of the cash-generating unit. A WACC rate of 8,33% was applied in estimating the recoverable amount of the CGU.
30 Sasol Annual Financial Statements 2023
8 |
Remeasurement items affecting operating profit continued |
The following CGU was impaired at 31 December 2022 and at 30 June 2023:
Secunda liquid fuels refinery
The Secunda liquid fuels refinery was impaired by R8,1 billion at 31 December 2022 after being negatively impacted by an update in macroeconomic price assumptions including higher electricity price forecasts and lower gas selling prices. The forecasted short-term production was also updated to reflect the production challenges impacted by coal quality. The WACC rate applied in calculating the recoverable amount was 14,66%.
At 30 June 2023, the Group has made further progress with the development of its ERR to achieve a 30% reduction in GHG emissions by 2030 and comply with the requirements of the National Environmental Management: Air Quality Act , 39 of 2004 (Air Quality Act). The ERR involves the turning down of boilers, implementing energy efficiency projects, reducing coal usage and integrating 1 200 MW of renewable energy into our operations by 2030. With no significant additional gas to restore volumes back to historic levels, the ERR assumes lower production volumes of 6,7 mt/a post 2030 (2022: 7,5 mt/a) and as such a full impairment of R27,2 billion was recognised on the liquid fuels component of the Secunda refinery. The increasing cost of coal, capital investment to implement the ERR and cost of compliance were also included in the impairment calculation. Optimisation of the ERR is ongoing and there are a number of technology and feedstock solutions being evaluated to partially recover volume, however the maturity thereof needs to be progressed before it can be incorporated in the impairment calculation. Although the chemical CGUs in the Secunda complex were also negatively impacted, their respective recoverable amounts remained above carrying values given the products’ higher derivative value.
Management considered multiple cash flow scenarios in quantifying the recoverable amount of the CGU which is highly sensitive to changes in Brent crude prices, the rand/US$ exchange rate and production volumes. A 10% increase in the price of Brent crude and a R1 weakening in the rand/US$ exchange rate will have a positive impact on the recoverable amount of R25,7 billion and R15,3 billion respectively. A movement in the above mentioned inputs in the opposite direction would result in a similar but negative impact on the recoverable amounts compared to the values disclosed above. An improvement of Secunda volumes of 4% from 2024 to 2029 improves the recoverable amount by approximately R6,4 billion.
These sensitivity analyses do not fully incorporate consequential changes that may arise, such as changes in costs and business plans or absorption of carbon taxes by the market.
Significant (reversal of impairment)/impairment of assets in prior periods
|
|
|
|
|
Segment and Cash-generating unit |
|
|
|
2022 |
(CGU) |
|
Description |
|
Rm |
Chemicals Africa |
|
|
|
|
Chemical Work-up & Heavy Alcohols |
|
The CGU recognised impairments of R1,7 billion during 2020 largely due to the reduced-price outlook as a result of the low oil price environment and the COVID-19 pandemic. A higher price outlook on the back of a sustained increase in demand for alcohols into the personal hygiene market during and post the COVID-19 pandemic, resulted in the reversal of impairment at 31 December 2021. |
|
(1 396) |
Other (net) |
|
|
|
(47) |
|
|
|
|
(1 443) |
31 Sasol Annual Financial Statements 2023
8 |
Remeasurement items affecting operating profit continued |
Segment and Cash-generating unit |
|
|
|
2021 |
(CGU) |
|
Description |
|
Rm |
Fuels segment |
|
|
|
|
Secunda liquid fuels refinery |
|
The impairment was largely due to a stronger forecasted rand/US$ exchange rate which impacted negatively on the forecasted Basic Fuel Price (BFP). |
|
24 456 |
Chemicals America |
|
|
|
|
Ethylene Oxide/Ethylene Glycol (EO/EG) |
|
The Ziegler Alcohols Unit (Ziegler) delivers alcohol feed to the Ethoxylates (ETO) unit. In previous CGU assessments, the EO and EG plant together with the ETO plant were considered to be a separate CGU from the Alcohol units (Ziegler and Guerbet). During 2021 the CGUs were reassessed to be one integrated CGU. The impairment assessment of the combined CGU showed significant headroom resulting in the full remaining FY19 impairment of the EO/EG CGU being reversed. |
|
(4 934) |
Chemicals Africa |
|
|
|
|
Chlor Alkali and PVC |
|
The impairment of the Chlor Alkali and PVC CGUs is as a result of the stronger forecast of the rand against the US dollar exchange rate and lower sales volumes. In addition, this CGU was further negatively impacted by the pending sale of the Sodium Cyanide business. |
|
1 094 |
Southern Africa Wax value chain |
|
The impairment on the Wax value chain was driven by higher future LNG gas imports and SPT gas costs, lower sales volumes and prices due to reduced gas availability in 2022 and 2023 and the strengthening of the rand against the US dollar. |
|
7 863 |
Gas Segment |
|
|
|
|
Sasol Canada – Shale gas assets |
|
Sasol signed an agreement to divest of all our interests in Canada to Canadian Natural Resources Limited. Previous impairments of CAD45 million were reversed at 30 June 2021 to measure the carrying value of the disposal group at its fair value less cost to sell. |
|
(521) |
Other |
|
|
|
774 |
|
|
|
|
28 732 |
32 Sasol Annual Financial Statements 2023
8 |
Remeasurement items affecting operating profit continued |
Areas of judgement:
Determining as to whether, and by how much, cost incurred on a project is abnormal and needs to be scrapped involves judgement. The factors considered by management include the scale and complexity of the project, the technology being applied and guidance from experts in terms of what constitute abnormal wastage on the project.
Determination as to whether, and by how much, an asset, CGU, or group of CGUs is impaired, or whether previous impairment should be reversed, involves management estimates on highly uncertain matters such as the effects of inflation on operating expenses, discount rates, capital expenditure, carbon tax and related allowances, production profiles and future commodity prices, including the outlook for global or regional market supply-and-demand conditions for crude oil, natural gas and refined products. Judgement is also required when determining the appropriate grouping of assets into a CGU or the appropriate grouping of CGUs for impairment testing purposes.
The future cash flows were determined using the assumptions included in the latest budget as approved by the Board. If necessary, these cash flows are then adjusted to take into account any changes in assumptions or operating conditions that have been identified subsequent to the preparation of the budgets.
The weighted average growth rates used are consistent with the increase in the geographic segment long-term Producer Price Index.
The weighted average cost of capital rate (WACC) is derived from a pricing model. The variables used in the model are established on the basis of management judgement and current market conditions. Management judgement is also applied in estimating future cash flows and defining of CGUs. These values are sensitive to the cash flows projected for the periods for which detailed forecasts are not available and to the assumptions regarding the long-term sustainability of the cash flows thereafter.
As a significant emitter of GHG emissions, South Africa made commitments under the Paris Agreement to further reduce GHG emissions and to contribute to global efforts to limit global warming to well below 2°c above pre-industrial levels and to pursue efforts to achieve the 1,5°c temperature goal. The Group is targeting a 30% reduction in GHG emissions by 2030 which will pave the way to a Net Zero ambition by 2050. The Group has a clear roadmap to 2030 with capital and resources allocated to achieve the significant reduction in emissions. Where reasonable, supportable and permissible under IFRS, management has included the costs and capital from these initiatives in its cash flow forecasts.
Phase 1 of the South African Carbon Tax comes to an end in December 2025 with the Climate Change Bill currently undergoing public consultation. Management is required to reflect its best estimate of any expected applicable carbon taxes payable by the Group. This requires judgement of how future changes to relevant carbon tax policies and/or legislation are likely to affect the future cash flows of the Group’s CGUs, whether currently enacted or not. The future potential carbon taxes included in the recoverable amount calculations are based on the latest Taxation Laws Amendment Act.
Climate change and the transition to a low carbon economy are also likely to impact the future prices of commodities such as oil and natural gas which in turn may affect the recoverable amount of the Group’s property, plant and equipment and other non-current assets. Management has updated its best estimate of oil price assumptions used in determining the recoverable amounts of its CGUs in June 2023. The revised estimates reflect lower real oil price in the longer term as demand is expected to decrease as the transition to a low carbon economy progresses. The revised assumptions are based on the average June 2023 views obtained from two independent consultancies that reflect their views on market development. The energy transition may impact demand for certain refined products in the future.
Management will continue to review price assumptions as the energy transition progresses and this may result in impairment charges or reversals in the future.
33 Sasol Annual Financial Statements 2023
8Remeasurement items affecting operating profit continued
Accounting policies:
Remeasurement items are amounts recognised in profit or loss relating to any change (whether realised or unrealised) in the carrying amount of non-current assets or liabilities that are less closely aligned to the normal operating or trading activities of the Group such as the impairment of non-current assets, profit or loss on disposal of non-current assets including businesses and equity accounted investments, and scrapping of assets.
The Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, to determine whether there is any indication of impairment. An impairment test is performed on all goodwill, intangible assets not yet in use and intangible assets with indefinite useful lives at each reporting date.
The recoverable amount of an asset or cash generating unit is defined as the amount that reflects the greater of the fair value less costs of disposal and value-in-use that can be attributed to an asset as a result of its ongoing use by the entity. Value-in-use is estimated using a discounted cash flow model. The future cash flows are adjusted for risks specific to the asset and is adjusted where applicable to take into account any specific risks relating to the country where the asset or cash-generating unit is located. The rate applied in each country is reassessed each year. The recoverable amount may be adjusted to take into account recent market transactions for a similar asset.
Some assets are an integral part of the value chain but are not capable of generating independent cash flows because there is no active market for the product streams produced from these assets, or the market does not have the ability to absorb the product streams produced from these assets or it is not practically possible to access the market due to infrastructure constraints that would be costly to construct. Product streams produced by these assets form an input into another process and accordingly do not have an active market. These assets are classified as corporate assets in terms of IAS 36 when their output supports the production of multiple product streams that are ultimately sold into an active market.
The Group’s corporate assets are allocated to the relevant cash-generating unit based on a cost or volume contribution metric. Costs incurred by the corporate asset are allocated to the appropriate cash generating unit at cost. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the cash-generating unit to which the corporate asset belongs.
In Southern Africa, the coal value chain starts with feedstock mined in Secunda and Sasolburg and continues along the integrated processes of the operating business units, ultimately resulting in fuels and chemicals-based product lines. Similarly, the gas value chain starts with the feedstock obtained in Mozambique and continues along the conversion processes in Secunda and Sasolburg, ultimately resulting in fuels and chemicals-based product lines.
The groups of assets which support the different product lines, including corporate asset allocations, are considered to be separate cash-generating units.
In the US, the ethylene value chain results in various chemicals-based product lines, sold into active markets. The assets which support the different chemicals-based product lines, including corporate asset allocations, are considered to be separate cash-generating units.
In Europe, the identification of separate cash-generating units is based on the various product streams that have the ability to be sold into active markets by the European business units.
Certain products are sometimes produced incidentally from the main conversion processes and can be sold into active markets. When this is the case, the assets that are directly attributable to the production of these products, are classified as separate cash-generating units. The cost of conversion of these products is compared against the revenue when assessing the asset for impairment.
34 Sasol Annual Financial Statements 2023
8 |
Remeasurement items affecting operating profit continued |
Exploration assets are tested for impairment when development of the property commences or whenever facts and circumstances indicate impairment. An impairment loss is recognised for the amount by which the exploration assets carrying amount exceeds their recoverable amount.
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. Any gain or loss on disposal will comprise that attributed to the portion disposed of and the remeasurement of the portion retained.
9 |
Disposals and scrapping |
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
|
Property, plant and equipment1 |
|
17 |
|
|
632 |
|
3 802 |
|
7 064 |
|
Goodwill and other intangible assets |
|
|
|
|
6 |
|
2 |
|
947 |
|
Equity accounted investments |
|
|
|
|
— |
|
— |
|
370 |
|
Assets in disposal groups held for sale |
|
|
|
|
12 |
|
16 586 |
|
67 662 |
|
Inventories |
|
|
|
|
— |
|
— |
|
814 |
|
Trade and other receivables |
|
|
|
|
5 |
|
— |
|
174 |
|
Cash and cash equivalents |
|
|
|
|
— |
|
— |
|
57 |
|
Liabilities in disposal groups held for sale |
|
|
|
|
— |
|
(6 321) |
|
(2 577) |
|
Long-term debt |
|
|
|
|
— |
|
— |
|
(2 673) |
|
Non-controlling interest |
|
|
|
|
— |
|
(3 141) |
|
— |
|
Long-term financial liabilities |
|
|
|
|
— |
|
— |
|
(477) |
|
Trade and other payables |
|
|
|
|
— |
|
— |
|
(67) |
|
|
|
|
|
|
655 |
|
10 928 |
|
71 294 |
|
Total consideration |
|
|
|
|
1 054 |
|
11 364 |
|
73 426 |
|
consideration received |
|
|
|
|
799 |
|
8 484 |
|
43 214 |
|
consideration receivable at time of disposal |
|
|
|
|
255 |
|
127 |
|
116 |
|
fair value of retained investment |
|
|
|
|
— |
|
2 753 |
|
— |
|
establishment of Joint operation* |
|
|
|
|
— |
|
— |
|
30 096 |
|
|
|
|
|
|
399 |
|
436 |
|
2 132 |
|
Realisation of accumulated translation effects |
|
|
|
|
251 |
|
8 024 |
|
3 388 |
|
Net profit on disposal |
|
|
|
|
650 |
|
8 460 |
|
5 520 |
|
Consideration received comprising |
|
|
|
|
|
|
|
|
|
|
Gas – Area A5-A offshore exploration license in Mozambique |
|
|
|
|
26 |
|
— |
|
— |
|
Gas – Investment in Republic of Mozambique Pipeline Investment Company (Pty) Ltd (ROMPCO) |
|
|
|
|
— |
|
4 129 |
|
— |
|
Fuels – Central Térmica De Ressano Garcia S.A (CTRG) |
|
|
|
|
— |
|
2 577 |
|
— |
|
Gas – Canadian Montney assets |
|
|
|
|
— |
|
387 |
|
— |
|
Chemicals America – US LCCP Base Chemicals business |
|
|
|
|
— |
|
— |
|
29 894 |
|
Fuels & Chemicals Africa – Air separation units |
|
|
|
|
— |
|
— |
|
8 051 |
|
Chemicals America – interest in Gemini HDPE LLC |
|
|
|
|
— |
|
— |
|
3 456 |
|
Gas – Gabon oil producing assets |
|
|
|
|
— |
|
— |
|
424 |
|
Chemicals Eurasia – ARG Investment |
|
|
|
|
— |
|
— |
|
316 |
|
Chemicals Africa – Share in Enaex Africa |
|
|
|
|
— |
|
— |
|
175 |
|
Other |
|
|
|
|
773 |
|
1 391 |
|
898 |
|
Consideration received |
|
|
|
|
799 |
|
8 484 |
|
43 214 |
|
1Refer to note 8 for detail on the scrapping of property, plant and equipment.
35 Sasol Annual Financial Statements 2023
9 |
Disposals and scrapping continued |
Significant disposals in 2023
Area A5-A offshore exploration license in Mozambique
On 27 July 2022 Sasol disposed of 15,5% of its interest in the Area A5-A offshore exploration license in Mozambique. A profit on disposal of R266 million was recognised. The consideration receivable (R255 million) is not settled in cash, but the benefit will be received in the form of a reduction in future cost as the asset is constructed.
Significant disposals in prior periods
Canadian shale gas assets
On 29 July 2021 Sasol divested of all our interests in Canada. A gain of R4,9 billion mainly due to the realisation of the foreign currency translation reserve (FCTR) was recognised.
European wax business
On 1 March 2022 Sasol sold its European wax business based in Hamburg Germany. A gain mainly on the reclassification of the FCTR of R2,9 billion was recognised.
Central Térmica de Ressano Garcia S.A. (CTRG)
The divestment of our full shareholding in CTRG, the gas-to-power plant located in Ressano Garcia, Mozambique, to Azura Power Limited for a consideration of R2,6 billion (US$163,8 million). The transaction closed on 28 April 2022. A profit of R156 million has been recognised on the divestment.
Investment in Republic of Mozambique Pipeline Investment Company (Pty) Ltd (ROMPCO)
On 29 June 2022 the sale of 30% of our interest in ROMPCO was successfully completed. The loss of voting and contractual rights associated with the transaction resulted in the Group losing control over ROMPCO and the derecognition of all the assets and liabilities of the subsidiary. Sasol has retained a 20% equity stake in ROMPCO which has been measured at fair value at the transaction date, which references to the transaction price. This is considered a level 3 fair value input. The proceeds on the disposal was an initial amount of R4,1 billion and a contingent consideration of up to R1 billion, which is payable if certain agreed milestones are achieved by 30 June 2024. The fair value of the contingent consideration at transaction date and at 30 June 2023 is valued at zero considering the low probability of meeting the milestones as assessed on the transaction date. A profit of R3,7 billion on the disposal has been recognised of which R1,9 billion relates to the fair value adjustment on retained interest. Refer to note 19.
*US LCCP Base Chemicals business
On 1 December 2020 the sale of 50% of our interest in the US LCCP Base Chemicals business was successfully concluded through the creation of the 50/50 owned Louisiana Integrated Polyethylene JV LLC (LIP). The proceeds on the disposal was approximately R30 billion (US$2 billion), resulting in a loss on disposal of R1,1 billion, the loss was mainly attributable to further clarification of the transaction perimeter subsequent to the held for sale classification. This did not impact the value of the remaining business materially. A corresponding gain on the reclassification of foreign currency translation reserve of R3,1 billion was also recognised. Sasol’s 50% interest in LIP is accounted for as a joint operation and Sasol’s share of assets and liabilities held jointly, revenue from the sale of its share of output and expenses are reflected within the Sasol results from 1 December 2020 in terms of IFRS 11 ‘Joint Arrangements’. Refer note 20.
36 Sasol Annual Financial Statements 2023
9 |
Disposals and scrapping continued |
Air separation units
The sale of Sasol’s sixteen air separation units (ASUs) and associated business located in Secunda was concluded on 24 June 2021, resulting in a profit on disposal of R2 726 million. As part of the transaction, the Group entered into a supply contract for the supply of gas for 15 years. In determining whether the gas supply agreement was a lease or a supply contract, management applied judgement. The most significant judgement is that Air Liquide has taken full ownership and overall responsibility for managing the ASUs to maintain the agreed quantity and quality of gases supplied to Sasol.
Interest in Gemini HDPE LLC
The divestment of our 50% equity interest in the Gemini HDPE LLC successfully closed on 31 December 2020. Sasol recognised a profit on disposal of R683 million and a corresponding gain on reclassification of foreign currency translation reserve of R246 million.
Gabon oil producing assets
The sale of Sasol’s 27,8% working interest in the Etame Marin block offshore Gabon (producing asset with proven reserves), as well as Sasol’s 40% non-operated participating interest in Block DE-8 offshore Gabon (exploration permit) was concluded on 25 February 2021 and 4 May respectively. Sasol recognised a profit on disposal of R145 million and a corresponding gain on reclassification of foreign currency translation reserve of R132 million.
Share in Enaex Africa
The sale of 26% of Sasol’s 49% interest in Enaex Africa (Pty) Ltd to Afris Subco (Pty) Ltd, resulting in a loss of R115 million. After the transaction, Sasol’s remaining interest in Enaex Africa (Pty) Ltd is 23%.
37 Sasol Annual Financial Statements 2023
Taxation
10 |
Taxation |
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
|
South African normal tax |
|
|
|
|
10 271 |
|
13 399 |
|
7 430 |
|
current year1 |
|
|
|
|
10 671 |
|
13 303 |
|
7 478 |
|
prior years2 |
|
|
|
|
(400) |
|
96 |
|
(48) |
|
Dividend withholding tax |
|
|
|
|
— |
|
(24) |
|
— |
|
Foreign tax |
|
|
|
|
2 654 |
|
2 856 |
|
2 079 |
|
current year |
|
|
|
|
2 507 |
|
2 737 |
|
2 106 |
|
prior years |
|
|
|
|
147 |
|
119 |
|
(27) |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax |
|
11 |
|
|
12 925 |
|
16 231 |
|
9 509 |
|
Deferred tax – South Africa |
|
12 |
|
|
(4 721) |
|
(2 535) |
|
(9 779) |
|
current year3 |
|
|
|
|
(5 687) |
|
(2 356) |
|
(9 464) |
|
prior years4 |
|
|
|
|
966 |
|
(108) |
|
(315) |
|
reduction in corporate tax rate5 |
|
|
|
|
— |
|
(71) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax – foreign |
|
12 |
|
|
(3 023) |
|
173 |
|
455 |
|
current year6 |
|
|
|
|
(2 845) |
|
(132) |
|
339 |
|
prior years |
|
|
|
|
(172) |
|
306 |
|
124 |
|
tax rate change |
|
|
|
|
(6) |
|
(1) |
|
(8) |
|
|
|
|
|
|
5 181 |
|
13 869 |
|
185 |
|
1 | The increase in 2022 year mainly relates to increased profits, as well as capital gains tax on the ROMPCO asset disposal. |
2 | 2023 mainly relates to Section 12L allowances, as well as differences in provisions. |
3 | The current year number is impacted by impairments. The decrease in 2022 relates to the recognition of a deferred tax asset relating to derivative losses in Sasol Financing International Limited. |
4 | Current year impacted by a translation difference of R845 million arising from exchange rates applied by the South African Revenue Service (SARS) at the date of assessment. |
5 | On 23 February 2022, a decrease in the South African corporate tax rate from 28% to 27% was announced, effective from 1 July 2022. |
6 | The increase in the current year relates mainly to tax losses incurred at our US Operations and Sasol Italy where we anticipate sufficient profits to be generated in future to utilise the deferred tax asset against. |
Contingent liability
Sasol Financing International (SFI)/SARS
As reported previously, SARS conducted an audit over a number of years on SFI which performs an offshore treasury function for Sasol. The audit culminated in the issue by SARS of revised tax assessments, based on the interpretation of the place of effective management of SFI. A contingent liability of R2,75 billion (including interest and penalties) is reported in respect of this matter as at 30 June 2023.
38 Sasol Annual Financial Statements 2023
10 |
Taxation continued |
SARS dismissed Sasol’s objection to the revised assessments and Sasol appealed this decision to the Tax Court. In parallel Sasol launched a review application in respect of certain elements of the revised assessments in respect of which the Tax Court does not have jurisdiction. Sasol also brought a review application against the SARS decision to register SFI as a South African taxpayer. SFI and SARS have agreed that the Tax Court related processes will be held in abeyance, pending the outcome of the judicial review applications. The two review applications were heard in the High Court on 16 and 17 November 2022. On 1 August 2023, the High Court handed down its decision dismissing both the SFI review applications. SFI intends to appeal the matter to the Supreme Court of Appeal. As mentioned above, the review applications relate to the challenge by SFI of certain administrative decisions of SARS and the High Court decision does not directly affect the merits of the substantive dispute before the Tax Court, which remains in abeyance while the appeal in the review applications continues.
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
% |
|
% |
|
% |
Reconciliation of effective tax rate |
|
|
|
|
|
|
The table below shows the difference between the South African enacted tax rate compared to the effective tax rate in the income statement. Total income tax expense differs from the amount computed by applying the South African normal tax rate to profit before tax. The reasons for these differences are: |
|
|
|
|
|
|
|
|
|
|
|
|
|
South African normal tax rate |
|
27,0 |
|
28,0 |
|
28,0 |
Increase in rate of tax due to: |
|
|
|
|
|
|
disallowed expenditure1 |
|
6,1 |
|
1,1 |
|
11,4 |
disallowed share-based payment expenses2 |
|
0,2 |
|
0,1 |
|
2,3 |
different tax rates3 |
|
3,1 |
|
0,5 |
|
0,5 |
tax losses not recognised4 |
|
4,8 |
|
0,8 |
|
— |
translation differences5 |
|
4,3 |
|
— |
|
— |
capital gains and losses6 |
|
— |
|
1,6 |
|
— |
prior year adjustments |
|
— |
|
0,7 |
|
(2,2) |
other adjustments7 |
|
2,1 |
|
0,3 |
|
— |
Decrease in rate of tax due to: |
|
|
|
|
|
|
exempt income8 |
|
(2,7) |
|
(5,9) |
|
(10,0) |
share of profits of equity accounted investments |
|
(4,9) |
|
(1,6) |
|
(2,1) |
utilisation of tax losses9 |
|
(0,7) |
|
(0,1) |
|
(20,9) |
investment incentive allowances10 |
|
(1,3) |
|
(0,1) |
|
(0,4) |
translation differences |
|
— |
|
(0,3) |
|
(1,9) |
capital gains and losses6 |
|
(0,2) |
|
— |
|
(1,8) |
change in South African corporate income tax rate |
|
— |
|
(0,1) |
|
— |
prior year adjustments11 |
|
(2,1) |
|
— |
|
— |
other adjustments |
|
— |
|
— |
|
(1,2) |
Effective tax rate |
|
35,7 |
|
25,0 |
|
1,7 |
1 | Includes non-deductible expenses incurred not deemed to be in the production of taxable income mainly relating to non-productive interest in our treasury function and project costs. |
2 | This relates to the share based payment expense on the Sasol Khanyisa transaction. |
3 | Mainly relates to the lower tax rate in the US (23%) on increased tax losses incurred during the current year and the higher tax rate for Sasol Petroleum Temane Limitada in Mozambique (32%) on higher taxable income. |
4 | Relates mainly to tax losses in Sasol Investment Company (Pty) Ltd, Sasol Mozambique PT5 C Limitada and Sasol China for which no deferred tax asset was raised. |
5 | Current year impacted by a translation difference of R845 million arising from exchange rates applied by SARS at the date of assessment. |
39 Sasol Annual Financial Statements 2023
10 |
Taxation continued |
6 | 2022 capital gains tax payable in South Africa and Mozambique on the disposal of 30% of our equity interest in the ROMPCO pipeline. 2021 related mainly to the disposal of the Air Separation Units. |
7 | Included in the current year is a taxable gain on the settlement of an intercompany loan as well as controlled foreign companies tax imputations. |
8 | Current year mainly relates to Italian tax credit for energy and gas consuming companies and FCTR reclassified on the liquidation of businesses. 2022 relates to the FCTR reclassified on the disposal of the Canadian and Wax businesses and the profit on disposal of the ROMPCO pipeline. 2021 related mainly to the FCTR reclassified on the divestment of 50% of our US LCCP Base Chemicals business, our 50% interest in Gemini HDPE LLC, our 50% equity interest in Sasol Chevron Holdings Limited, our 27,8% working interest in the Etame Marin block offshore Gabon, as well as our 40% non-operated participating interest in Block DE-8 offshore Gabon. |
9 | 2021 relates to tax losses utilised which are allowed to be set off against foreign exchange gains on intergroup foreign currency loans. |
10 | Current year mainly relates to South African research and development incentive and Energy Efficiency allowances. |
11 | 2023 relates mainly to tax return adjustments on provisions. |
11 |
Tax paid |
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
|
Net amounts payable/(receivable) at beginning of year |
|
|
|
|
2 410 |
|
(307) |
|
(4 754) |
|
Disposal of businesses |
|
|
|
|
— |
|
— |
|
40 |
|
Net interest and penalties on tax |
|
|
|
|
(5) |
|
(1) |
|
(17) |
|
Income tax per income statement |
|
10 |
|
|
12 925 |
|
16 231 |
|
9 509 |
|
Reclassification from/(to) held for sale1 |
|
|
|
|
— |
|
34 |
|
(304) |
|
Foreign exchange differences recognised in income statement |
|
|
|
|
104 |
|
25 |
|
(14) |
|
Translation of foreign operations |
|
|
|
|
(17) |
|
(41) |
|
513 |
|
|
|
|
|
|
15 417 |
|
15 941 |
|
4 973 |
|
Net tax (payable)/receivable per statement of financial position |
|
|
|
|
(1 465) |
|
(2 410) |
|
307 |
|
tax payable |
|
|
|
|
(1 876) |
|
(3 142) |
|
(806) |
|
tax receivable |
|
|
|
|
411 |
|
732 |
|
1 113 |
|
|
|
|
|
|
|
|
|
|
|
|
Per the statement of cash flows |
|
|
|
|
13 952 |
|
13 531 |
|
5 280 |
|
Comprising |
|
|
|
|
|
|
|
|
|
|
Normal tax |
|
|
|
|
|
|
|
|
|
|
South Africa |
|
|
|
|
11 500 |
|
11 739 |
|
6 622 |
|
Foreign |
|
|
|
|
2 452 |
|
1 860 |
|
(1 342) |
|
Dividend withholding tax |
|
|
|
|
— |
|
(68) |
|
— |
|
|
|
|
|
|
13 952 |
|
13 531 |
|
5 280 |
|
1 | 2021 mainly due to ROMPCO tax payable that was transferred to liabilities held for sale. |
40 Sasol Annual Financial Statements 2023
12 |
Deferred tax |
|
|
|
|
2023 |
|
2022 |
|
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
|
Reconciliation |
|
|
|
|
|
|
|
|
Balance at beginning of year |
|
|
|
|
(20 649) |
|
(16 718) |
|
Current year charge |
|
|
|
|
(7 624) |
|
(1 572) |
|
per the income statement |
|
10 |
|
|
(7 744) |
|
(2 362) |
|
per the statement of comprehensive income |
|
|
|
|
120 |
|
790 |
|
Reclassification from held for sale1 |
|
|
|
|
— |
|
665 |
|
Foreign exchange differences recognised in income statement |
|
|
|
|
(19) |
|
23 |
|
Translation of foreign operations |
|
|
|
|
(4 130) |
|
(3 047) |
|
Balance at end of year |
|
|
|
|
(32 422) |
|
(20 649) |
|
|
|
|
|
|
|
|
|
|
Comprising |
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
|
|
(37 716) |
|
(31 198) |
|
Deferred tax liabilities |
|
|
|
|
5 294 |
|
10 549 |
|
|
|
|
|
|
(32 422) |
|
(20 649) |
|
1 |
2022 relates to deferred tax of assets that were classified as held for sale and disposed of, namely our full shareholding in Central Térmica de Ressano Garcia S.A. (CTRG), our European wax business and 30% of our equity interest in the Republic of Mozambique Pipeline Investment Company (Pty) Ltd (ROMPCO). |
41 Sasol Annual Financial Statements 2023
12 |
Deferred tax continued |
Deferred tax assets and liabilities are determined based on the tax status and rates of the underlying entities. The increase in deferred tax assets relates mainly to our US operations which saw an increase as a result of the weakening exchange rate and loss carry-forwards. The deferred tax liability in South Africa decreased as a result of the Synref impairment. We anticipate sufficient profits to be generated in future to utilise the deferred tax asset against. These US and SA tax losses do not expire.
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Attributable to the following tax jurisdictions |
|
|
|
|
South Africa |
|
(5 054) |
|
447 |
United States of America |
|
(27 973) |
|
(21 462) |
Germany |
|
1 059 |
|
1 084 |
Mozambique |
|
(679) |
|
(400) |
Other |
|
225 |
|
(318) |
|
|
(32 422) |
|
(20 649) |
Deferred tax is attributable to temporary differences on the following: |
|
|
|
|
Net deferred tax assets: |
|
|
|
|
Property, plant and equipment |
|
25 974 |
|
13 047 |
Right of use assets |
|
1 697 |
|
587 |
Short- and long-term provisions |
|
(4 566) |
|
(811) |
Calculated tax losses |
|
(50 580) |
|
(37 953) |
Financial liabilities |
|
(270) |
|
(1 930) |
Lease liabilities |
|
(2 729) |
|
(911) |
Other |
|
(7 242) |
|
(3 227) |
|
|
(37 716) |
|
(31 198) |
Net deferred tax liabilities: |
|
|
|
|
Property, plant and equipment |
|
7 471 |
|
17 963 |
Right of use assets |
|
338 |
|
1 617 |
Current assets |
|
(604) |
|
(1 376) |
Short- and long-term provisions |
|
(1 877) |
|
(5 676) |
Calculated tax losses |
|
(4) |
|
(47) |
Financial liabilities |
|
107 |
|
206 |
Lease liabilities |
|
(481) |
|
(2 197) |
Other |
|
344 |
|
59 |
|
|
5 294 |
|
10 549 |
42 Sasol Annual Financial Statements 2023
12Deferred tax continued
Deferred tax assets have been recognised for the carry forward amount of unutilised tax losses relating to the Group’s operations where, among other things, some taxation losses can be carried forward indefinitely and there is compelling evidence that it is probable that sufficient taxable profits will be available in the future to utilise all tax losses carried forward.
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Calculated tax losses |
|
|
|
|
(before applying the applicable tax rate) |
|
|
|
|
Available for offset against future taxable income |
|
256 462 |
|
164 474 |
Utilised against the deferred tax balance |
|
(251 397) |
|
(160 244) |
Not recognised as a deferred tax asset |
|
5 065 |
|
4 230 |
Calculated tax losses carried forward that have not been recognised:* |
|
|
|
|
Expiry within 1 year |
|
207 |
|
167 |
Expiry between one and five years |
|
— |
|
1 085 |
Expiry thereafter |
|
1 307 |
|
763 |
Indefinite life |
|
3 551 |
|
2 215 |
|
|
5 065 |
|
4 230 |
* |
Included in 2023 are tax losses of R2,8 billion (2022: R1,2 billion) relating to Sasol Investment Company (Pty) Ltd mainly due to intergroup exposure on foreign currency loans. |
Areas of judgement:
Sasol companies are involved in tax litigation and tax disputes with various tax authorities in the normal course of business. A detailed assessment is performed regularly on each matter and a provision is recognised where appropriate. Although the outcome of these claims and disputes cannot be predicted with certainty, Sasol believes that open engagement and transparency will enable appropriate resolution thereof.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the deferred tax asset can be utilised. This includes the significant tax losses incurred at our US operations and Sasol Financing International Limited where we anticipate sufficient profits to be generated in future to utilise the deferred tax asset against. These losses do not expire. The assumptions used in estimating future taxable profits are consistent with the main assumptions disclosed in note 8. Where appropriate, the expected impact of climate change was considered in estimating the future taxable profits. The provision of deferred tax assets and liabilities reflects the tax consequences that would follow from the expected recovery or settlement of the carrying amount of its assets and liabilities.
43 Sasol Annual Financial Statements 2023
12Deferred tax continued
Unremitted earnings at end of year that would be subject to foreign dividend withholding tax and after tax effect if remitted
Deferred tax liabilities are not recognised for the income tax effect that may arise on the remittance of unremitted earnings by foreign subsidiaries, joint operations and incorporated joint ventures. It is management’s intention that, where there is no double taxation relief, these earnings will be permanently re-invested in the Group.
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
|
Unremitted earnings at end of year that would be subject to dividend withholding tax |
|
|
38 910 |
|
32 268 |
|
Europe |
|
|
26 123 |
|
22 788 |
|
Rest of Africa |
|
|
4 984 |
|
2 580 |
|
Other |
|
|
7 803 |
|
6 900 |
|
|
|
|
|
|
|
|
Tax effect if remitted |
|
|
1 012 |
|
724 |
|
Europe |
|
|
587 |
|
489 |
|
Rest of Africa |
|
|
399 |
|
206 |
|
Other |
|
|
26 |
|
29 |
|
Dividend withholding tax
Dividend withholding tax is payable at a rate of 20% on dividends distributed to shareholders. Dividends paid to companies and certain other institutions and certain individuals are not subject to this withholding tax. This tax is not attributable to the company paying the dividend but is collected by the company and paid to the tax authorities on behalf of the shareholder.
On receipt of a dividend, the company includes the dividend withholding tax in its computation of the income tax expense.
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Undistributed earnings at end of year that would be subjected to dividend withholding tax withheld by the company on behalf of Sasol Limited shareholders |
|
134 442 |
|
138 275 |
|
Maximum withholding tax payable by shareholders if distributed to individuals |
|
26 889 |
|
27 655 |
|
Accounting policies:
The income tax charge is determined based on net income before tax for the year and includes current tax, deferred tax and dividend withholding tax.
The current tax charge is the tax payable on the taxable income for the financial year applying enacted or substantively enacted tax rates and includes any adjustments to tax payable in respect of prior years.
Deferred tax is provided for using the liability method, on all temporary differences between the carrying amount of assets and liabilities for accounting purposes and the amounts used for tax purposes and on any tax losses using enacted or substantively enacted tax rates at the reporting date that are expected to apply when the asset is realised or liability settled. The decrease in the South African corporate tax rate is considered substantively enacted and is effective from 1 July 2022.
Deferred tax assets and liabilities are offset when the related income taxes are levied by the same taxation authority, there is a legally enforceable right to offset and there is an intention to settle the balances on a net basis.
44 Sasol Annual Financial Statements 2023
45 Sasol Annual Financial Statements 2023
Equity
13 |
Share capital |
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
Issued share capital (as per statement of changes in equity)1 |
|
9 888 |
|
9 888 |
|
9 888 |
|
|
Number of shares |
|
||||
for the year ended 30 June |
|
2023 |
|
2022 |
|
2021 |
|
Authorised |
|
|
|
|
|
|
|
Sasol ordinary shares of no par value |
|
1 127 690 590 |
|
1 127 690 590 |
|
1 127 690 590 |
|
Sasol preferred ordinary shares of no par value2 |
|
— |
|
28 385 646 |
|
28 385 646 |
|
Sasol BEE ordinary shares of no par value |
|
158 331 335 |
|
158 331 335 |
|
158 331 335 |
|
|
|
1 286 021 925 |
|
1 314 407 571 |
|
1 314 407 571 |
|
Issued |
|
|
|
|
|
|
|
Shares issued at beginning of year |
|
635 676 817 |
|
634 244 336 |
|
632 365 757 |
|
Issued in terms of the employee share schemes |
|
4 990 795 |
|
1 432 481 |
|
1 878 579 |
|
Shares issued at end of year |
|
640 667 612 |
|
635 676 817 |
|
634 244 336 |
|
Comprising |
|
|
|
|
|
|
|
Sasol ordinary shares of no par value |
|
634 336 265 |
|
629 345 470 |
|
627 912 989 |
|
Sasol BEE ordinary shares of no par value |
|
6 331 347 |
|
6 331 347 |
|
6 331 347 |
|
|
|
640 667 612 |
|
635 676 817 |
|
634 244 336 |
|
Unissued shares |
|
|
|
|
|
|
|
Sasol ordinary shares of no par value |
|
493 354 325 |
|
498 345 120 |
|
499 777 601 |
|
Sasol preferred ordinary shares of no par value2 |
|
— |
|
28 385 646 |
|
28 385 646 |
|
Sasol BEE ordinary shares of no par value |
|
151 999 988 |
|
151 999 988 |
|
151 999 988 |
|
|
|
645 354 313 |
|
678 730 754 |
|
680 163 235 |
|
1 | At 30 June 2023, treasury shares amounted to 10 373 430 (2022: 10 243 580; 2021: 10 469 584) shares held largely by the Sasol Foundation Trust. |
2 | In the current year, the unissued Sasol preferred ordinary shares were cancelled. |
Accounting policies:
When Sasol Limited’s shares are repurchased by a subsidiary, the amount of consideration paid, including directly attributable costs, is recognised as a deduction from shareholders’ equity. Repurchased shares are classified as treasury shares and are disclosed as a deduction from total equity. Where such shares are subsequently reissued, any consideration received is included in the statement of changes in equity.
46 Sasol Annual Financial Statements 2023
Funding activities and facilities
14 |
Long-term debt |
|
|
|
|
|
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Total long-term debt |
|
124 068 |
|
104 834 |
Short-term portion |
|
(29 764) |
|
(22 334) |
|
|
94 304 |
|
82 500 |
Analysis of long-term debt |
|
|
|
|
At amortised cost |
|
|
|
|
Secured debt |
|
29 |
|
67 |
Unsecured debt |
|
124 742 |
|
105 142 |
Unamortised loan costs |
|
(703) |
|
(375) |
|
|
124 068 |
|
104 834 |
Reconciliation |
|
|
|
|
Balance at beginning of year |
|
104 834 |
|
102 643 |
Loans raised1 |
|
92 946 |
|
88 |
Loans repaid2 |
|
(91 564) |
|
(12 086) |
Interest accrued |
|
1 673 |
|
936 |
Amortisation of loan costs |
|
212 |
|
132 |
Amortisation of loan modification |
|
(194) |
|
— |
Translation of foreign operations |
|
16 161 |
|
13 121 |
Balance at end of year |
|
124 068 |
|
104 834 |
Interest-bearing status |
|
|
|
|
Interest-bearing debt |
|
124 068 |
|
104 834 |
Maturity profile |
|
|
|
|
Within one year |
|
29 764 |
|
22 334 |
One to five years |
|
44 732 |
|
55 936 |
More than five years |
|
49 572 |
|
26 564 |
|
|
124 068 |
|
104 834 |
1 | Relates mainly to the drawdown on the previous revolving credit facility (RCF) of R26,7 billion (US$1,5 billion), R2,1 billion raised under the new Domestic Medium Term Note (DMTN) programme, the issue of a R13,2 billion (US$750 million) convertible bond, R35,5 billion (US$2 billion) drawdown on the new RCF and term loan and R17,8 billion (US$1 billion) bonds issued in May 2023. R11,1 billion proceeds from the convertible bond is included in long-term debt and R2,1 billion is included in long-term financial liabilities. Refer to note 37. |
2 | Current year relates mainly to the repayment of the previous RCF and term loan of R53,9 billion (US$3,0 billion), repayment of R2,2 billion on the previous DMTN, repayment of R17,8 billion on the US$1 billion bond, as well as repayment of R17,8 billion (US$1 billion) on the new RCF. 2022 relates mainly to repayments on the previous RCF. |
47 Sasol Annual Financial Statements 2023
14 |
Long-term debt continued |
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
||||||
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
Contract |
|
Rand |
|
Available |
|
Utilised |
|
Utilised |
|
|
|
|
|
|
|
rate |
|
amount |
|
equivalent |
|
facilities |
|
facilities |
|
facilities |
|
for the year ended 30 June |
|
Expiry date |
|
Currency |
|
% |
|
million |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Banking facilities and debt arrangements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group treasury facilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper (uncommitted) |
|
None |
|
Rand |
|
3 months |
|
— |
|
— |
|
— |
|
— |
|
2 176 |
|
Commercial paper (uncommitted)1 |
|
None |
|
Rand |
|
3 months |
|
15 000 |
|
15 000 |
|
12 934 |
|
2 066 |
|
— |
|
Commercial banking facilities |
|
None |
|
Rand |
|
* |
|
8 150 |
|
8 150 |
|
8 150 |
|
— |
|
— |
|
Revolving credit facility |
|
June 2024 |
|
US dollar |
|
SOFR+ Credit |
|
— |
|
— |
|
— |
|
— |
|
2 442 |
|
Revolving credit facility2 |
|
April 2028 |
|
US dollar |
|
SOFR+ Credit |
|
1 987 |
|
37 415 |
|
37 415 |
|
— |
|
— |
|
Debt arrangements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Dollar Bond |
|
November 2022 |
|
US dollar |
|
4,50% |
|
— |
|
— |
|
— |
|
— |
|
16 280 |
|
US Dollar Bond3 |
|
March 2024 |
|
US dollar |
|
5,88% |
|
1 500 |
|
28 245 |
|
— |
|
28 245 |
|
24 420 |
|
US Dollar term loan |
|
June 2024 |
|
US dollar |
|
SOFR+ Credit |
|
— |
|
— |
|
— |
|
— |
|
20 919 |
|
US Dollar Bond3 |
|
September 2026 |
|
US dollar |
|
4,38% |
|
650 |
|
12 240 |
|
— |
|
12 240 |
|
10 582 |
|
US Dollar Convertible Bond4 |
|
November 2027 |
|
US dollar |
|
4,50% |
|
750 |
|
14 123 |
|
— |
|
14 123 |
|
— |
|
US Dollar term loan2 |
|
April 2028 |
|
US dollar |
|
SOFR+ Credit |
|
982 |
|
18 499 |
|
— |
|
18 499 |
|
— |
|
US Dollar Bond3 |
|
September 2028 |
|
US dollar |
|
6,50% |
|
750 |
|
14 123 |
|
— |
|
14 123 |
|
12 210 |
|
US Dollar Bond5 |
|
May 2029 |
|
US dollar |
|
8,75% |
|
1 000 |
|
18 830 |
|
— |
|
18 830 |
|
— |
|
US Dollar Bond3 |
|
March 2031 |
|
US dollar |
|
5,50% |
|
850 |
|
16 006 |
|
— |
|
16 006 |
|
13 838 |
|
Other Sasol businesses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specific project asset finance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy — Clean Fuels II (Natref) |
|
Various |
|
Rand |
|
Various |
|
901 |
|
901 |
|
— |
|
901 |
|
875 |
|
Debt arrangements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other debt arrangements |
|
|
|
Various |
|
Various |
|
— |
|
— |
|
— |
|
472 |
|
712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
58 499 |
|
125 505 |
|
104 454 |
|
Available cash excluding restricted cash |
|
|
|
|
|
|
|
|
|
|
|
51 055 |
|
|
|
|
|
Total funds available for use |
|
|
|
|
|
|
|
|
|
|
|
109 554 |
|
|
|
|
|
Accrued interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 673 |
|
1 010 |
|
Unamortised loan cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
(703) |
|
(375) |
|
Cumulative fair value gains on convertible bond embedded derivative financial liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
(867) |
|
— |
|
Total debt including accrued interest and unamortised loan cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
125 608 |
|
105 089 |
|
Comprising |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
94 304 |
|
82 500 |
|
Short-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
29 843 |
|
22 416 |
|
Short-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
79 |
|
82 |
|
Short-term portion of long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
29 764 |
|
22 334 |
|
Bank overdraft |
|
|
|
|
|
|
|
|
|
|
|
|
|
159 |
|
173 |
|
Convertible bond derivative financial liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 302 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125 608 |
|
105 089 |
|
48 Sasol Annual Financial Statements 2023
14 |
Long-term debt continued |
*Interest rate only available when funds are utilised.
1 | In October 2022 Sasol issued its paper to the value of R2 066 million in the local debt market under the R15 billion DMTN programme. The previous DMTN has been fully repaid. |
2 | In April 2023 Sasol Financing International Limited and Sasol Financing USA LLC obtained a RCF of US$1 987 million and a term loan of US$982 million respectively. |
3 | Included in this amount is the US$3,8 billion (R70,6 billion) bonds with fixed interest rates of between 4,38% and 6,5% which are listed on the New York Stock Exchange and is recognised in Sasol Financing USA LLC (SFUSA), a 100% owned subsidiary of the Group. Sasol Limited has fully and unconditionally guaranteed the bonds. There are no restrictions on the ability of Sasol Limited to obtain funds from the finance subsidiary, SFUSA, by dividend or loan. |
4 | In November 2022, Sasol launched and priced an offering of US$750 million guaranteed senior unsecured convertible bonds due in 2027. The proceeds from the convertible bond were used primarily to repay a portion of the US$ term loan. The convertible bonds, subject to the receipt of the requisite approvals at a general meeting of the shareholders of Sasol, are convertible into ordinary shares of Sasol at the election of the holders if the Sasol share price appreciates above a specified conversion price (representing a conversion premium of 30%) ahead of the maturity of the bond. The convertible bonds can be settled in cash at the election of Sasol. |
5 | In May 2023, Sasol launched and priced a US$1 billion (R18,8 billion) bond, with a fixed interest rate of 8,75%, due in 2029. The bond is recognised in SFUSA. Sasol Limited has fully and unconditionally guaranteed the bond. There are no restrictions on the ability of Sasol Limited to obtain funds from the finance subsidiary by dividend or loan. |
Accounting policies:
Debt, which constitutes a financial liability, includes short-term and long-term debt. Debt is initially recognised at fair value, net of transaction costs incurred and is subsequently stated at amortised cost using the effective interest rate method. Debt is classified as short-term unless the borrowing entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Debt is derecognised when the obligation in the contract is discharged, cancelled or has expired. Premiums or discounts arising from the difference between the fair value of debt raised and the amount repayable at maturity date are charged to the income statement as finance expenses based on the effective interest rate method. A debt modification gain or loss is recognised immediately when a debt measured at amortised cost has been modified. The convertible bonds are hybrid financial instruments consisting of a non-derivative host representing the obligation to make interest payments and to deliver cash to the holder on redemption of the bond (‘the bond component’); and a conversion feature which is accounted for as an embedded derivative financial liability. The bond component was recognised at fair value at inception date. The fair value was determined by subtracting the fair value attributable to the embedded derivative from the fair value of the combined instrument. The bond component is measured subsequently at amortised cost using the effective interest rate of 8,5%. The option component is recognised as a derivative financial liability, measured at fair value, with changes in fair value recorded in profit or loss and reported separately in the statement of financial position in long-term financial liabilities.
Refer to note 37 for the accounting policies relating to embedded derivatives.
49 Sasol Annual Financial Statements 2023
15 |
Leases |
|
|
|
|
|
|
Plant, |
|
|
|
|
|
|
|
|
|
|
equipment |
|
Mineral |
|
|
|
|
Land |
|
Buildings |
|
and vehicles |
|
assets |
|
Total |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Right of use assets |
|
|
|
|
|
|
|
|
|
|
Carrying amount at 30 June 2022 |
|
217 |
|
5 180 |
|
7 231 |
|
1 |
|
12 629 |
Additions |
|
1 |
|
410 |
|
967 |
|
— |
|
1 378 |
Modifications and reassessments |
|
(2) |
|
28 |
|
324 |
|
— |
|
350 |
Reclassification to assets |
|
— |
|
(65) |
|
(46) |
|
— |
|
(111) |
Translation of foreign operations |
|
21 |
|
185 |
|
671 |
|
— |
|
877 |
Terminations |
|
— |
|
(14) |
|
(528) |
|
— |
|
(542) |
Current year depreciation charge |
|
(11) |
|
(647) |
|
(1 692) |
|
— |
|
(2 350) |
Impairment of right of use assets (note 8) |
|
(99) |
|
(365) |
|
(82) |
|
— |
|
(546) |
Carrying amount at 30 June 2023 |
|
127 |
|
4 712 |
|
6 845 |
|
1 |
|
11 685 |
|
|
|
|
|
|
Plant, |
|
|
|
|
|
|
|
|
|
|
equipment |
|
Mineral |
|
|
|
|
Land |
|
Buildings |
|
and vehicles |
|
assets |
|
Total |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Right of use assets |
|
|
|
|
|
|
|
|
|
|
Carrying amount at 30 June 2021 |
|
241 |
|
5 153 |
|
7 508 |
|
1 |
|
12 903 |
Additions |
|
1 |
|
674 |
|
900 |
|
2 |
|
1 577 |
Modifications and reassessments |
|
— |
|
(5) |
|
(17) |
|
— |
|
(22) |
Reclassification to held for sale |
|
(28) |
|
(42) |
|
(39) |
|
— |
|
(109) |
Translation of foreign operations |
|
11 |
|
70 |
|
451 |
|
— |
|
532 |
Terminations |
|
— |
|
(17) |
|
(24) |
|
— |
|
(41) |
Current year depreciation charge |
|
(11) |
|
(655) |
|
(1 552) |
|
(2) |
|
(2 220) |
Reversal of impairment of right of use assets (note 8) |
|
3 |
|
2 |
|
4 |
|
— |
|
9 |
Carrying amount at 30 June 2022 |
|
217 |
|
5 180 |
|
7 231 |
|
1 |
|
12 629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant, |
|
|
|
|
|
|
|
|
|
|
equipment |
|
Mineral |
|
|
|
|
Land |
|
Buildings |
|
and vehicles |
|
assets |
|
Total |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
2023 |
|
|
|
|
|
|
|
|
|
|
Cost |
|
333 |
|
8 264 |
|
13 174 |
|
4 |
|
21 775 |
Accumulated depreciation and impairment |
|
(206) |
|
(3 552) |
|
(6 329) |
|
(3) |
|
(10 090) |
|
|
127 |
|
4 712 |
|
6 845 |
|
1 |
|
11 685 |
2022 |
|
|
|
|
|
|
|
|
|
|
Cost |
|
301 |
|
7 616 |
|
11 842 |
|
7 |
|
19 766 |
Accumulated depreciation and impairment |
|
(84) |
|
(2 436) |
|
(4 611) |
|
(6) |
|
(7 137) |
|
|
217 |
|
5 180 |
|
7 231 |
|
1 |
|
12 629 |
2021 |
|
|
|
|
|
|
|
|
|
|
Cost |
|
549 |
|
7 389 |
|
10 763 |
|
4 |
|
18 705 |
Accumulated depreciation and impairment |
|
(308) |
|
(2 236) |
|
(3 255) |
|
(3) |
|
(5 802) |
|
|
241 |
|
5 153 |
|
7 508 |
|
1 |
|
12 903 |
50 Sasol Annual Financial Statements 2023
15Leases continued
|
|
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
Lease liabilities |
|
|
|
|
|
|
Total long-term lease liabilities |
|
|
|
14 382 |
|
14 266 |
Short-term portion (included in short-term debt) |
|
16 |
|
1 915 |
|
1 768 |
|
|
|
|
16 297 |
|
16 034 |
Reconciliation |
|
|
|
|
|
|
Balance at beginning of year |
|
|
|
16 034 |
|
15 677 |
New lease contracts |
|
|
|
1 385 |
|
1 979 |
Payments made on lease liabilities |
|
|
|
(2 269) |
|
(2 264) |
Modifications and reassessments |
|
|
|
349 |
|
(23) |
Interest accrued |
|
|
|
293 |
|
453 |
Termination of lease liability |
|
|
|
(517) |
|
(63) |
Transfer to disposal groups held for sale |
|
|
|
— |
|
(362) |
Translation of foreign operations |
|
|
|
1 022 |
|
637 |
Balance at end of year |
|
|
|
16 297 |
|
16 034 |
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
Amounts recognised in income statement |
|
|
|
|
|
|
Interest expense (included in net finance cost) |
|
1 451 |
|
1 357 |
|
1 488 |
Expense relating to short-term leases* |
|
596 |
|
474 |
|
423 |
Expense relating to leases of low-value assets that are not shown above as short-term leases* |
|
87 |
|
79 |
|
65 |
Expense relating to variable lease payments not included in lease liabilities (included in other operating expenses and income)* |
|
49 |
|
32 |
|
58 |
Amounts recognised in statement of cash flows |
|
|
|
|
|
|
Total cash outflow on leases |
|
4 159 |
|
3 753 |
|
3 882 |
* |
Included in cash paid to suppliers and employees in the statement of cash flows. |
The Group leases a number of assets as part of its activities. These primarily include corporate office buildings in Sandton and Houston, rail yard, rail cars, retail convenience centres and storage facilities. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. A maturity analysis of lease liabilities is provided in note 37.
Areas of judgement:
Various factors are considered in assessing whether an arrangement contains a lease including whether a service contract includes the implicit right to substantially all of the economic benefits from assets used in providing the service and whether the Group directs how and for what purpose such assets are used. In performing this assessment, the Group considers decision-making rights that will most affect the economic benefits that will be derived from the use of the asset such as changing the type, timing, or quantity of output that is produced by the asset.
Incorporating optional lease periods where there is reasonable certainty that the option will be extended is subject to judgement and has an impact on the measurement of the lease liability and related right of use asset. Management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option, including consideration of the significance of the underlying asset to the operations and the expected remaining useful life of the operation where the leased asset is used.
51 Sasol Annual Financial Statements 2023
15 |
Leases continued |
The incremental borrowing rate that the Group applies is the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions. The estimation of the incremental borrowing rate is determined for each lease contract using the risk-free rate over a term matching that of the lease, adjusted for other factors such as the credit rating of the lessee, a country risk premium and the borrowing currency. A higher incremental borrowing rate would lead to the recognition of a lower lease liability and corresponding right of use asset.
The range of incremental borrowing rates of lease contracts entered into during the year are as follows:
Southern Africa |
|
9,33 - 16,91% (2022: 4,96 - 14,38%) |
North America |
|
6,33 - 8,86% (2022: 1,46 - 5,77%) |
Eurasia |
|
2,33 - 11,73% (2022: 1,12 - 4,73%) |
Accounting policies:
At contract inception all arrangements are assessed to determine whether it is, or contains, a lease. At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include:
● | fixed payments (including in-substance fixed payments) less any lease incentives receivable; |
● | variable lease payments that depend on an index or a rate; |
● | amounts expected to be paid under residual value guarantees; |
● | the exercise price of a purchase option reasonably certain to be exercised; |
● | payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate; and |
● | lease payments to be made under reasonably certain extension options. |
Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are capitalised as part of the cost of inventories or assets under construction) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is generally not readily determinable. The incremental borrowing rate is the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions.
After the commencement date, finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Group applies the recognition exemptions to short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option) and leases of assets that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expenses over the lease term.
52 Sasol Annual Financial Statements 2023
15 |
Leases continued |
Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes:
● | the amount of the initial measurement of lease liability; |
● | any lease payments made at or before the commencement date less any lease incentives received; |
● | any initial direct costs; and |
● | restoration costs. |
Right of use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right of use asset is depreciated over the underlying asset’s useful life. The depreciation charge is recognised in the income statement unless it is capitalised as part of the cost of inventories or assets under construction.
The right of use assets are also subject to impairment. Refer to the accounting policies in note 8 on Remeasurement items affecting profit or loss.
Where the Group transfers control of an asset to another entity (buyer-lessor) and leases that same asset back from the buyer-lessor, the Group derecognises the underlying asset and recognises a right-of-use asset at the proportion of the previous carrying amount of the transferred asset that relates to the right of use retained by the Group. The Group also recognises a lease liability measured at the present value of all expected future lease payments with the resulting gain or loss being included in remeasurement items.
16 |
Short-term debt |
|
|
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
Short-term debt |
|
|
|
79 |
|
82 |
Short-term portion of |
|
|
|
|
|
|
long-term debt1 |
|
14 |
|
29 764 |
|
22 334 |
lease liabilities |
|
15 |
|
1 915 |
|
1 768 |
|
|
|
|
31 758 |
|
24 184 |
1 | At 30 June 2023, R28 billion was classified as short-term, relating to the US$1,5 billion US Dollar bond that is repayable in March 2024. At 30 June 2022, R16 billion (US$1 billion) US Dollar bond as well as R2,2 billion relating to the DMTN were classified as short-term, these were repayable in November and August 2022 respectively. |
53 Sasol Annual Financial Statements 2023
Capital allocation and utilisation
55 |
|
|
|
55 |
|
|
|
59 |
|
|
|
59 |
|
|
|
64 |
|
|
|
65 |
|
|
|
66 |
|
|
|
66 |
|
|
|
67 |
|
|
|
68 |
|
|
|
68 |
|
|
|
69 |
|
|
|
69 |
|
|
|
69 |
|
|
|
70 |
|
|
|
70 |
54 Sasol Annual Financial Statements 2023
Investing Activities
17 |
Property, plant and equipment |
|
|
|
|
|
Building |
|
Plant, |
|
|
|
Assets |
|
|
|
|
|
|
|
|
and |
|
equipment |
|
Mineral |
|
under |
|
|
|
|
|
Land |
|
improvements |
|
and vehicles |
|
assets |
|
construction* |
|
Total |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
|
Carrying amount at 30 June 2022 |
|
|
4 010 |
|
11 121 |
|
150 575 |
|
24 980 |
|
30 622 |
|
221 308 |
|
Additions |
|
|
89 |
|
32 |
|
807 |
|
62 |
|
29 953 |
|
30 943 |
|
to sustain existing operations |
|
|
89 |
|
32 |
|
732 |
|
62 |
|
23 549 |
|
24 464 |
|
to expand operations |
|
|
— |
|
— |
|
75 |
|
— |
|
6 404 |
|
6 479 |
|
Reduction in rehabilitation provisions capitalised (note 30) |
|
|
— |
|
— |
|
(265) |
|
(14) |
|
(365) |
|
(644) |
|
Finance costs capitalised |
|
|
— |
|
— |
|
— |
|
— |
|
1 074 |
|
1 074 |
|
Assets capitalised or reclassified |
|
|
(33) |
|
498 |
|
23 502 |
|
4 518 |
|
(28 697) |
|
(212) |
|
Reclassification to held for sale |
|
|
(8) |
|
(10) |
|
(7) |
|
— |
|
— |
|
(25) |
|
Translation of foreign operations |
|
|
577 |
|
1 298 |
|
18 817 |
|
— |
|
534 |
|
21 226 |
|
Disposals and scrapping |
|
|
(9) |
|
(41) |
|
(432) |
|
(45) |
|
(1 004) |
|
(1 531) |
|
Current year depreciation charge |
|
|
— |
|
(556) |
|
(10 631) |
|
(2 633) |
|
— |
|
(13 820) |
|
Net impairment of property, plant and equipment (note 8)** |
|
|
(34) |
|
(1 084) |
|
(13 190) |
|
(12 859) |
|
(5 680) |
|
(32 847) |
|
Carrying amount at 30 June 2023 |
|
|
4 592 |
|
11 258 |
|
169 176 |
|
14 009 |
|
26 437 |
|
225 472 |
|
*Includes intangible assets under construction.
**The reversal of impairment of the Tetramerization CGU relates predominantly to Plant, equipment and vehicles.
|
|
|
|
|
Building |
|
Plant, |
|
|
|
Assets |
|
|
|
|
|
|
|
|
and |
|
equipment |
|
Mineral |
|
under |
|
|
|
|
|
Land |
|
improvements |
|
and vehicles |
|
assets |
|
construction* |
|
Total |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
|
Carrying amount at 30 June 2021 |
|
|
3 871 |
|
11 554 |
|
128 986 |
|
27 476 |
|
26 134 |
|
198 021 |
|
Additions |
|
|
20 |
|
80 |
|
701 |
|
58 |
|
21 754 |
|
22 613 |
|
to sustain existing operations |
|
|
20 |
|
75 |
|
671 |
|
58 |
|
20 091 |
|
20 915 |
|
to expand operations |
|
|
— |
|
5 |
|
30 |
|
— |
|
1 663 |
|
1 698 |
|
Reduction in rehabilitation provisions capitalised (note 30) |
|
|
— |
|
— |
|
(33) |
|
(56) |
|
(395) |
|
(484) |
|
Finance costs capitalised |
|
|
— |
|
— |
|
— |
|
— |
|
740 |
|
740 |
|
Assets capitalised or reclassified |
|
|
(170) |
|
(445) |
|
17 482 |
|
88 |
|
(17 203) |
|
(248) |
|
Reclassification to held for sale |
|
|
(51) |
|
(22) |
|
(340) |
|
— |
|
(59) |
|
(472) |
|
Translation of foreign operations |
|
|
407 |
|
908 |
|
13 527 |
|
— |
|
195 |
|
15 037 |
|
Disposals and scrapping |
|
|
(10) |
|
(533) |
|
(2 565) |
|
(87) |
|
(607) |
|
(3 802) |
|
Current year depreciation charge |
|
|
— |
|
(434) |
|
(8 599) |
|
(2 499) |
|
— |
|
(11 532) |
|
Net impairment of property, plant and equipment (note 8) |
|
|
(57) |
|
13 |
|
1 416 |
|
— |
|
63 |
|
1 435 |
|
Carrying amount at 30 June 2022 |
|
|
4 010 |
|
11 121 |
|
150 575 |
|
24 980 |
|
30 622 |
|
221 308 |
|
* |
Includes intangible assets under construction. |
55 Sasol Annual Financial Statements 2023
17 |
Property, plant and equipment continued |
|
|
|
|
|
Building |
|
Plant, |
|
|
|
Assets |
|
|
|
|
|
|
|
and |
|
equipment |
|
Mineral |
|
under |
|
|
|
|
Land |
|
improvements |
|
and vehicles |
|
assets |
|
construction |
|
Total |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
|
5 023 |
|
24 252 |
|
399 595 |
|
53 259 |
|
26 437 |
|
508 566 |
Accumulated depreciation and impairment |
|
|
(431) |
|
(12 994) |
|
(230 419) |
|
(39 250) |
|
— |
|
(283 094) |
|
|
|
4 592 |
|
11 258 |
|
169 176 |
|
14 009 |
|
26 437 |
|
225 472 |
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
|
4 357 |
|
21 466 |
|
356 420 |
|
49 388 |
|
30 622 |
|
462 253 |
Accumulated depreciation and impairment |
|
|
(347) |
|
(10 345) |
|
(205 845) |
|
(24 408) |
|
— |
|
(240 945) |
|
|
|
4 010 |
|
11 121 |
|
150 575 |
|
24 980 |
|
30 622 |
|
221 308 |
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
|
4 145 |
|
20 462 |
|
334 432 |
|
47 606 |
|
26 134 |
|
432 779 |
Accumulated depreciation and impairment |
|
|
(274) |
|
(8 908) |
|
(205 446) |
|
(20 130) |
|
— |
|
(234 758) |
|
|
|
3 871 |
|
11 554 |
|
128 986 |
|
27 476 |
|
26 134 |
|
198 021 |
|
|
2023 |
|
2022 |
|
2021 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Additions to property, plant and equipment (cash flow) |
|
|
|
|
|
|
|
Current year additions |
|
30 943 |
|
22 613 |
|
16 022 |
|
Adjustments for non-cash items |
|
(217) |
|
(20) |
|
(77) |
|
movement in environmental provisions capitalised |
|
(50) |
|
(20) |
|
(77) |
|
reduction in Area A5-A receivable (refer note 8) |
|
(167) |
|
— |
|
— |
|
Per the statement of cash flows |
|
30 726 |
|
22 593 |
|
15 945 |
|
|
|
2023 |
|
2022 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
|
Capital commitments (excluding equity accounted investments) |
|
|
|
|
|
|
Capital commitments, excluding capitalised interest, include all projects for which specific board approval has been obtained. Projects still under investigation for which specific board approvals have not yet been obtained are excluded from the following: |
|
|
|
|
|
|
Authorised and contracted for |
|
|
47 596 |
|
41 892 |
|
Authorised but not yet contracted for |
|
|
34 246 |
|
35 830 |
|
Less expenditure to the end of year |
|
|
(34 277) |
|
(32 438) |
|
|
|
|
47 565 |
|
45 284 |
|
|
|
|
|
|
|
|
to sustain existing operations |
|
|
35 749 |
|
30 805 |
|
to expand operations |
|
|
11 816 |
|
14 479 |
|
Estimated expenditure |
|
|
|
|
|
|
Within one year |
|
|
30 941 |
|
27 719 |
|
One to five years |
|
|
16 624 |
|
17 565 |
|
|
|
|
47 565 |
|
45 284 |
|
56 Sasol Annual Financial Statements 2023
17Property, plant and equipment continued
Significant capital commitments and expenditure at 30 June comprise mainly of:
|
|
|
|
|
|
Capital commitments |
|
Capital expenditure |
||||
|
|
|
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Project |
|
Project location |
|
Business segment |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Projects to sustain operations |
|
|
|
|
|
|
|
|
|
|
|
|
Shutdown and major statutory maintenance |
|
Various |
|
Various |
|
8 875 |
|
7 963 |
|
7 785 |
|
6 082 |
Environmental projects |
|
Various |
|
Various |
|
6 497 |
|
3 449 |
|
2 295 |
|
1 520 |
Clean fuels II |
|
Various |
|
Fuels |
|
3 134 |
|
2 632 |
|
1 284 |
|
893 |
Projects to expand operations |
|
|
|
|
|
|
|
|
|
|
|
|
Environmental projects |
|
South Africa |
|
Fuels |
|
— |
|
640 |
|
389 |
|
— |
Mozambique exploration and development |
|
Mozambique |
|
Gas |
|
10 544 |
|
11 448 |
|
5 465 |
|
1 377 |
Areas of judgement:
The depreciation methods, estimated remaining useful lives and residual values are reviewed at least annually. The estimation of the useful lives of property, plant and equipment is based on historic performance as well as expectations about future use and the impact of climate change and therefore requires a significant degree of judgement to be applied by management. The remaining useful lives of property, plant and equipment have been reassessed considering the Group’s targeted reduction in GHG emissions and remain appropriate.
The following depreciation rates apply in the Group:
|
|
|
|
Buildings and improvements |
|
1 - 17%, units of production over life of related reserve base |
|
Retail convenience centres (included in buildings and improvements) |
|
3 – 5 |
% |
Plant |
|
2 – 50 |
% |
Equipment |
|
3 – 91 |
% |
Vehicles |
|
5 – 33 |
% |
Mineral assets |
|
Units of production over life of related reserve base |
|
Life-of-mine coal assets (included in mineral assets) |
|
Units of production over life of related reserve base |
|
Accounting policies:
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Land is not depreciated.
When plant and equipment comprises major components with different useful lives, these components are accounted for as separate items.
Depreciation of mineral assets on producing oil and gas properties is based on the units-of-production method calculated using estimated proved developed reserves.
57 Sasol Annual Financial Statements 2023
17 |
Property, plant and equipment continued |
Life-of-mine coal assets are depreciated using the units-of-production method and is based on proved and probable reserves assigned to that specific mine (accessible reserves) or complex which benefits from the utilisation of those assets. Other coal mining assets are depreciated on the straight-line method over their estimated useful lives.
Depreciation of property acquisition costs, capitalised as part of mineral assets in property, plant and equipment, is based on the units-of-production method calculated using estimated proved reserves.
Property, plant and equipment, other than mineral assets, is depreciated to its estimated residual value on a straight-line basis over its expected useful life.
Assets under construction
Assets under construction include land and expenditure capitalised for work in progress in respect of activities to develop, expand or enhance items of property, plant and equipment. The cost of self-constructed assets includes expenditure on materials, direct labour and an allocated proportion of project overheads. Cost also includes the estimated costs of dismantling and removing the assets and site rehabilitation costs to the extent that they relate to the construction of the asset as well as gains or losses on qualifying cash flow hedges attributable to that asset. When regular major inspections are a condition of continuing to operate an item of property, plant and equipment, and plant shutdown costs will be incurred, an estimate of these shutdown costs are included in the carrying value of the asset at initial recognition. Land acquired, as well as costs capitalised for work in progress in respect of activities to develop, expand or enhance items of property, plant and equipment are classified as part of assets under construction.
Finance expenses in respect of specific and general borrowings are capitalised against qualifying assets as part of assets under construction. Where funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset, the amount of finance expenses eligible for capitalisation on that asset is the actual finance expenses incurred on the borrowing during the period less any investment income on the temporary investment of those borrowings.
Where funds are made available from general borrowings and used for the purpose of acquiring or constructing qualifying assets, the amount of finance expenses eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on these assets. The capitalisation rate of 6,7% (2022 – 5,5)% is calculated as the weighted average of the interest rates applicable to the borrowings of the Group that are outstanding during the period, including borrowings made specifically for the purpose of obtaining qualifying assets once the specific qualifying asset is ready for its intended use. The amount of finance expenses capitalised will not exceed the amount of borrowing costs incurred.
58 Sasol Annual Financial Statements 2023
18 |
Long-term receivables and prepaid expenses |
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Total long-term receivables |
|
3 202 |
|
4 230 |
Impairment of long-term receivables* |
|
(111) |
|
(85) |
Short-term portion |
|
(288) |
|
(1 122) |
|
|
2 803 |
|
3 023 |
Long-term prepaid expenses |
|
237 |
|
187 |
|
|
3 040 |
|
3 210 |
Comprising: |
|
|
|
|
Long-term receivables (interest-bearing) - joint operations |
|
683 |
|
584 |
Long-term loans |
|
2 120 |
|
2 016 |
LCCP investment incentives |
|
— |
|
423 |
|
|
2 803 |
|
3 023 |
The decrease in long-term receivables is as a result of repayments made during the year. There were no significant non-cash movements in long-term receivables and prepaid expenses during the year. Non-cash movements relate largely to foreign exchange differences.
* |
Impairment of long-term loans and receivables |
Long-term loans and receivables are considered for impairment under the expected credit loss model. Refer to note 37 for detail on the impairments recognised.
19 |
Equity accounted investments |
At 30 June, the Group’s interest in equity accounted investments and the total carrying values were:
|
|
Country of |
|
|
|
Interest |
|
2023 |
|
2022 |
Name |
|
incorporation |
|
Nature of activities |
|
% |
|
Rm |
|
Rm |
Joint ventures |
|
|
|
|
|
|
|
|
|
|
ORYX GTL Limited |
|
Qatar |
|
GTL plant |
|
49 |
|
10 693 |
|
8 920 |
Sasol Dyno Nobel (Pty) Ltd |
|
South Africa |
|
Manufacturing and distribution of explosives |
|
50 |
|
304 |
|
267 |
Associates |
|
|
|
|
|
|
|
|
|
|
Enaex Africa (Pty) Ltd |
|
South Africa |
|
Manufacturing and distribution of explosives |
|
23 |
|
402 |
|
309 |
The Republic of Mozambique Pipeline Investment Company (Pty) Ltd (ROMPCO) |
|
South Africa |
|
Owning and operating of the natural gas transmission pipeline between Temane in Mozambique and Secunda in South Africa for the transportation of natural gas produced in Mozambique to markets in Mozambique and South Africa |
|
20 |
|
2 823 |
|
2 753 |
Other equity accounted investments |
|
|
|
|
|
Various |
|
582 |
|
435 |
Carrying value of investments |
|
|
|
|
|
|
|
14 804 |
|
12 684 |
There are no significant restrictions on the ability of the joint ventures or associate to transfer funds to Sasol Limited in the form of cash dividends or repayment of loans or advances.
59 Sasol Annual Financial Statements 2023
19 |
Equity accounted investments continued |
Impairment testing of equity accounted investments
Based on impairment indicators at each reporting date, impairment tests in respect of investments in joint ventures and associates are performed. The recoverable amount of the investment is compared to the carrying amount, as described in note 8, to calculate the impairment.
Summarised financial information for the Group’s share of equity accounted investments which are not material*
|
|
|
|
|
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Operating profit |
|
218 |
|
114 |
Profit before tax |
|
250 |
|
159 |
Taxation |
|
(72) |
|
(50) |
Profit for the year |
|
178 |
|
109 |
* |
The financial information provided represents the Group’s share of the results of the equity accounted investments. |
|
|
2023 |
|
2022 |
Capital commitments relating to equity accounted investments |
|
Rm |
|
Rm |
Capital commitments, excluding capitalised interest, include all projects for which specific board approval has been obtained up to the reporting date. Projects still under investigation for which specific board approvals have not yet been obtained are excluded from the following: |
|
|
|
|
Authorised and contracted for |
|
1 357 |
|
688 |
Authorised but not yet contracted for |
|
972 |
|
884 |
Less: expenditure to the end of year |
|
(981) |
|
(562) |
|
|
1 348 |
|
1 010 |
Areas of judgement:
Joint ventures and associates are assessed for materiality in relation to the Group using a number of factors such as investment value, strategic importance and monitoring by those charged with governance.
ORYX GTL and ROMPCO are considered to be material as they are closely monitored by and reported on to the decision makers and are considered to be strategically material investments.
60 Sasol Annual Financial Statements 2023
19 |
Equity accounted investments continued |
Summarised financial information for the Group’s material equity accounted investments
In accordance with the Group’s accounting policy, the results of joint ventures and associates are equity accounted. The information provided below represents the Group’s material joint venture and associate. The financial information presented includes the full financial position and results of the joint venture and includes intercompany transactions and balances.
|
|
Joint venture |
|
|||
|
|
ORYX GTL Limited |
|
|||
|
|
2023 |
|
2022 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
|
Summarised statement of financial position |
|
|
|
|
|
|
Non-current assets |
|
|
14 621 |
|
13 723 |
|
Deferred tax asset |
|
|
423 |
|
292 |
|
Cash and cash equivalents |
|
|
2 897 |
|
4 208 |
|
Other current assets |
|
|
7 905 |
|
7 775 |
|
Total assets |
|
|
25 846 |
|
25 998 |
|
Non-current liabilities |
|
|
751 |
|
704 |
|
Other current liabilities |
|
|
1 629 |
|
4 594 |
|
Tax payable |
|
|
1 642 |
|
2 496 |
|
Total liabilities |
|
|
4 022 |
|
7 794 |
|
Net assets |
|
|
21 824 |
|
18 204 |
|
Summarised income statement |
|
|
|
|
|
|
Turnover |
|
|
13 761 |
|
16 620 |
|
Depreciation and amortisation |
|
|
(2 148) |
|
(1 625) |
|
Other operating expenses |
|
|
(5 434) |
|
(5 497) |
|
Operating profit before interest and tax |
|
|
6 179 |
|
9 498 |
|
Finance income |
|
|
154 |
|
33 |
|
Finance cost |
|
|
(43) |
|
(42) |
|
Profit before tax |
|
|
6 290 |
|
9 489 |
|
Taxation |
|
|
(2 193) |
|
(3 329) |
|
Profit and total comprehensive income for the year |
|
|
4 097 |
|
6 160 |
|
The Group’s share of profits of equity accounted investment |
|
|
2 007 |
|
3 019 |
|
49% share of profit before tax |
|
|
3 082 |
|
4 650 |
|
Taxation |
|
|
(1 075) |
|
(1 631) |
|
|
|
|
|
|
|
|
Reconciliation of summarised financial information |
|
|
|
|
|
|
Net assets at the beginning of the year |
|
|
18 204 |
|
19 039 |
|
Earnings before tax for the year |
|
|
6 290 |
|
9 489 |
|
Taxation |
|
|
(2 193) |
|
(3 329) |
|
Foreign exchange differences |
|
|
2 934 |
|
2 438 |
|
Dividends paid1 |
|
|
(3 411) |
|
(9 433) |
|
Net assets at the end of the year |
|
|
21 824 |
|
18 204 |
|
Carrying value of equity accounted investment |
|
|
10 693 |
|
8 920 |
|
1 |
In 2022 ORYX GTL Limited declared a dividend of R4,6 billion (Sasol’s share) of which R3 billion was received by 30 June 2022. |
The year-end for ORYX GTL Limited is 31 December, however the Group uses the financial information at 30 June.
The carrying value of the investment represents the Group’s interest in the net assets thereof.
61 Sasol Annual Financial Statements 2023
19 |
Equity accounted investments continued |
|
|
Associate |
||
|
|
The Republic of |
||
|
|
Mozambique Pipeline |
||
|
|
Investment Company |
||
|
|
(Pty) Ltd (ROMPCO) |
||
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Summarised statement of financial position |
|
|
|
|
Non-current assets |
|
4 334 |
|
3 881 |
Cash and cash equivalents |
|
1 070 |
|
1 056 |
Other current assets |
|
613 |
|
373 |
Total assets |
|
6 017 |
|
5 310 |
Non-current liabilities |
|
736 |
|
812 |
Other current liabilities |
|
116 |
|
125 |
Tax payable |
|
493 |
|
51 |
Total liabilities |
|
1 345 |
|
988 |
Net assets |
|
4 672 |
|
4 322 |
Summarised income statement |
|
|
|
|
Turnover |
|
4 270 |
|
— |
Depreciation and amortisation |
|
(563) |
|
— |
Other operating expenses |
|
(266) |
|
— |
Operating profit before interest and tax |
|
3 441 |
|
— |
Finance income |
|
85 |
|
— |
Finance cost |
|
(10) |
|
— |
Profit before tax |
|
3 516 |
|
— |
Taxation |
|
(1 330) |
|
— |
Earnings and total comprehensive income for the period |
|
2 186 |
|
— |
The Group’s share of profits of equity accounted investment |
|
437 |
|
— |
20% share of profit before tax |
|
703 |
|
— |
Taxation |
|
(266) |
|
— |
Reconciliation of summarised financial information |
|
|
|
|
Net assets at the beginning of the year |
|
4 322 |
|
— |
Acquisition |
|
— |
|
4 322 |
Earnings before tax for the year |
|
3 516 |
|
— |
Taxation |
|
(1 330) |
|
— |
Other movements |
|
140 |
|
— |
Dividends paid |
|
(1 976) |
|
— |
Net assets at the end of the year |
|
4 672 |
|
4 322 |
Carrying value of equity accounted investment1 |
|
2 823 |
|
2 753 |
Historical net asset value |
|
934 |
|
864 |
Fair value adjustment on acquisition of investment |
|
1 889 |
|
1 889 |
1 |
Carrying value comprising 20% of historical net asset value, as well as the fair value adjustment on acquisition of investment. |
The carrying value of the investment represents the Group’s interest in the net assets thereof.
Contingent liabilities
ORYX GTL Limited has disclosed a contingent liability for site decommissioning and restoration obligations relating to the leased land on which its facilities are located. Under the lease agreement, the lessor may require the company to remove the facilities from the land and to restore it to the condition in which it was delivered. There were no other contingent liabilities at 30 June relating to our joint ventures or associates.
62 Sasol Annual Financial Statements 2023
19Equity accounted investments continued
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
Transactions with joint ventures and associates |
|
|
|
|
|
|
Total sales and services rendered from subsidiaries to joint ventures and associates |
|
3 667 |
|
2 737 |
|
2 635 |
Total purchases by subsidiaries from joint ventures and associates* |
|
3 448 |
|
157 |
|
108 |
* Includes purchases from ROMPCO which is accounted for as an associate from 29 June 2022.
Accounting policies:
The financial results of associates and joint ventures are included in the Group’s results according to the equity method from acquisition date until the disposal date. Associates and joint ventures whose financial year-ends are within three months of 30 June are included in the consolidated financial statements using their most recently audited financial results. Adjustments are made to the associates’ and joint ventures financial results for material transactions and events in the intervening period.
63 Sasol Annual Financial Statements 2023
20 |
Interest in joint operations |
At 30 June, the Group’s interest in material joint operations were:
|
|
|
|
|
|
% of equity owned |
||
|
|
|
|
|
|
2023 |
|
2022 |
Name |
|
Country of incorporation |
|
Nature of activities |
|
% |
|
% |
Louisiana Integrated Polyethylene JV LLC |
|
United States of America |
|
Manufactures ethylene and polyethylene chemicals |
|
50 |
|
50 |
Natref |
|
South Africa |
|
Refining of crude oil |
|
64 |
|
64 |
The information provided is Sasol’s share of joint operations (excluding unincorporated joint operations) and includes intercompany transactions and balances.
|
|
Louisiana |
|
|
|
|
|
|
|
|
Integrated |
|
|
|
|
|
|
|
|
Polyethylene |
|
|
|
Total |
|
Total |
|
|
JV LLC* |
|
Natref |
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Statement of financial position |
|
|
|
|
|
|
|
|
External non-current assets |
|
35 190 |
|
3 846 |
|
39 036 |
|
34 149 |
External current assets |
|
1 123 |
|
414 |
|
1 537 |
|
1 357 |
Intercompany current assets |
|
187 |
|
2 |
|
189 |
|
72 |
Total assets |
|
36 500 |
|
4 262 |
|
40 762 |
|
35 578 |
Shareholders’ equity |
|
35 482 |
|
304 |
|
35 786 |
|
31 081 |
Long-term liabilities |
|
33 |
|
2 710 |
|
2 743 |
|
2 454 |
Interest-bearing current liabilities |
|
12 |
|
168 |
|
180 |
|
237 |
Non-interest-bearing current liabilities |
|
785 |
|
703 |
|
1 488 |
|
1 201 |
Intercompany current liabilities |
|
188 |
|
377 |
|
565 |
|
605 |
Total equity and liabilities |
|
36 500 |
|
4 262 |
|
40 762 |
|
35 578 |
* |
The joint operation with LyondellBasell operates as a tolling arrangement. Sasol retains control of our portion of the goods during the toll processing, for which a fee is paid, and only recognises revenue when the finished goods are transferred to a final customer. Equistar, a subsidiary of LyondellBasell, acts as an independent agent, for a fee, to exclusively market and sell all of Sasol’s Linear low-density polyethylene and Low-density polyethylene produced by the joint operation to customers. |
At 30 June 2023, the Group’s share of the total capital commitments of joint operations amounted to R1 155 million (2022 - R977 million).
Accounting policies:
The Group recognises its share of any jointly held or incurred assets, liabilities, revenues and expenses along with the Group’s income from the sale of its share of the output and any liabilities and expenses that the Group has incurred in relation to the joint operation. These have been incorporated in the financial statements under the appropriate headings.
64 Sasol Annual Financial Statements 2023
21 |
Interest in significant operating subsidiaries |
Sasol Limited is the ultimate parent of the Sasol group of companies. Our wholly-owned subsidiary, Sasol Investment Company (Pty) Ltd, a company incorporated in the Republic of South Africa, primarily holds our interests in companies incorporated outside of South Africa. The following table presents each of the Group’s significant subsidiaries (including direct and indirect holdings), the nature of activities, the percentage of shares of each subsidiary owned and the country of incorporation at 30 June 2023.
There are no significant restrictions on the ability of the Group’s subsidiaries to transfer funds to Sasol Limited in the form of cash dividends or repayment of loans or advances.
|
|
Country of |
|
|
|
% of equity owned |
||
Name |
|
incorporation |
|
Nature of activities |
|
2023 |
|
2022 |
Significant operating subsidiaries |
|
|
|
|
|
|
|
|
Direct |
|
|
|
|
|
|
|
|
Sasol Mining Holdings (Pty) Ltd |
|
South Africa |
|
Holding company of the Group’s mining interests |
|
100 |
|
100 |
Sasol Technology (Pty) Ltd |
|
South Africa |
|
Engineering services, research and development and technology transfer |
|
100 |
|
100 |
Sasol Financing Limited |
|
South Africa |
|
Management of cash resources, investments and procurement of loans (for South African operations) |
|
100 |
|
100 |
Sasol Investment Company (Pty) Ltd |
|
South Africa |
|
Holding company for foreign investments |
|
100 |
|
100 |
Sasol South Africa Limited1 |
|
South Africa |
|
Integrated petrochemicals and energy company |
|
100 |
|
100 |
Sasol Middle East and India (Pty) Ltd |
|
South Africa |
|
Develop and implement international GTL and CTL ventures |
|
100 |
|
100 |
Sasol Africa (Pty) Ltd |
|
South Africa |
|
Exploration, development, production, marketing and distribution of natural oil and gas and associated products |
|
100 |
|
100 |
Sasol Oil (Pty) Ltd |
|
South Africa |
|
Marketing of fuels and lubricants |
|
75 |
|
75 |
Sasol New Energy Holdings (Pty) Ltd |
|
South Africa |
|
Developing lower-carbon energy solutions |
|
100 |
|
100 |
Sasol Venture Capital (Pty) Ltd |
|
South Africa |
|
Investment into new emerging technology areas |
|
100 |
|
— |
1 | Sasol Khanyisa shareholders indirectly have an 18,4% shareholding in Sasol South Africa Limited. Once the Khanyisa funding is settled, the Sasol Khanyisa ordinary shares will be exchanged for Sasol BEE Ordinary (SOLBE1) shares listed on the empowerment segment of the JSE. |
|
|
Country of |
|
|
|
% of equity owned |
||
Name |
|
incorporation |
|
Nature of activities |
|
2023 |
|
2022 |
Significant operating subsidiaries |
|
|
|
|
|
|
|
|
Indirect |
|
|
|
|
|
|
|
|
Sasol Financing International Limited |
|
South Africa |
|
Management of cash resources, investment and procurement of loans (for our foreign operations) |
|
100 |
|
100 |
Sasol Germany GmbH |
|
Germany |
|
Production, marketing and distribution of chemical products |
|
100 |
|
100 |
Sasol Italy SpA |
|
Italy |
|
Trading and transportation of oil products, petrochemicals and chemical products and derivatives |
|
100 |
|
100 |
Sasol Mining (Pty) Ltd |
|
South Africa |
|
Coal mining activities |
|
90 |
|
90 |
Sasol Chemicals (USA) LLC |
|
United States of America |
|
Production, marketing and distribution of chemical products |
|
100 |
|
100 |
Sasol Financing USA LLC |
|
United States of America |
|
Management of cash resources, investment and procurement of loans (for our North American operations) |
|
100 |
|
100 |
Our other interests in subsidiaries are not considered significant.
Non-controlling interests
The Group has a number of subsidiaries with non-controlling interests, however none of them were material to the Statement of Financial position.
Areas of judgement:
The disclosure of subsidiaries is based on materiality taking into account the contribution to turnover, assets of the Group, and the way the business is managed and reported on.
65 Sasol Annual Financial Statements 2023
21 |
Interest in significant operating subsidiaries continued |
Control is obtained when Sasol is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through our power over the subsidiary.
The financial results of all entities that have a functional currency different from the presentation currency of their parent entity are translated into the presentation currency. Income and expenditure transactions of foreign operations are translated at the average rate of exchange for the year except for significant individual transactions which are translated at the exchange rate ruling at that date. All assets and liabilities, including fair value adjustments and goodwill arising on acquisition, are translated at the rate of exchange ruling at the reporting date. Differences arising on translation are recognised as other comprehensive income and are included in the foreign currency translation reserve until there is a disposal of the foreign operation. When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal and included in remeasurement items.
Working capital
22 |
Inventories |
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Carrying value |
|
|
|
|
Crude oil and other raw materials |
|
5 622 |
|
6 515 |
Process material |
|
3 220 |
|
2 079 |
Maintenance materials |
|
6 889 |
|
5 636 |
Work in progress |
|
2 614 |
|
2 661 |
Manufactured products |
|
23 658 |
|
23 988 |
Consignment inventory |
|
202 |
|
231 |
|
|
42 205 |
|
41 110 |
A net realisable value write-down of R948 million was recognised in 2023 (2022 – R451 million).
Inventory of R7 739 million (2022 – R1 803 million) is held at net realisable value. This relates mainly to manufactured products.
Accounting policies:
Inventories are stated at the lower of cost and net realisable value. Cost includes expenditure incurred in acquiring, manufacturing and transporting the inventory to its present location. Manufacturing costs include an allocated portion of production overheads which are directly attributable to the cost of manufacturing such inventory. The allocation is determined based on the greater of normal production capacity and actual production. The costs attributable to any inefficiencies in the production process are charged to the income statement as incurred.
By-products are incidental to the manufacturing processes, are usually produced as a consequence of the main product stream, and are immaterial to the Group. Revenue from sale of by-products is offset against the cost of the main products.
Cost is determined as follows:
Crude oil and other raw materials |
First-in-first-out valuation method (FIFO) |
Process, maintenance and other materials |
Weighted average purchase price |
Work-in-progress |
Manufacturing costs incurred |
Manufactured products including consignment inventory |
Manufacturing costs according to FIFO |
66 Sasol Annual Financial Statements 2023
23 |
Trade and other receivables |
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Trade receivables1 |
|
27 296 |
|
32 778 |
Other receivables (financial assets) |
|
4 082 |
|
4 546 |
Related party receivables — equity accounted investments2 |
|
289 |
|
2 074 |
Impairment of trade and other receivables* |
|
(752) |
|
(462) |
|
|
30 915 |
|
38 936 |
Other receivables (non-financial assets)3 |
|
355 |
|
2 571 |
Duties recoverable from customers |
|
— |
|
485 |
Prepaid expenses and other |
|
2 507 |
|
2 115 |
Value added tax |
|
2 128 |
|
2 564 |
|
|
35 905 |
|
46 671 |
1 | Decrease mainly as a result of lower sales volumes and prices at year end. |
2 | Included in 2022 related party receivables is a dividend receivable from ORYX GTL Limited of R1,6 billion. |
3 | In 2022 the Sasol Oil Slate balance reflected an under recovery of R2,6 billion mainly as a result of increased international crude oil prices coupled with a weak rand/US$ exchange rate. The slate balance was recovered through the Department of Mineral Resources and Energy’s slate levy mechanism (R1,7 billion) and under recoveries due to BFP price changes (R1,2 billion). For 2023 the slate balance is in an over-recovery position and is therefore recognised under Other payables (non-financial liabilities). |
*Impairment of trade receivables
Trade receivables are considered for impairment under the expected credit loss model. Trade receivables are written off when there is no reasonable prospect that the customer will pay. Refer to note 37 for detail on the impairments recognised.
No individual customer represents more than 10% of the Group’s trade receivables.
Collateral
The Group holds no collateral over the trade receivables which can be sold or pledged to a third party.
Accounting policies:
Trade and other receivables are recognised initially at transaction price and subsequently stated at amortised cost using the effective interest rate method, less impairment losses. A simplified expected credit loss model is applied for recognition and measurement of impairments in trade receivables, where expected lifetime credit losses are recognised from initial recognition, with changes in loss allowances recognised in profit and loss. The Group did not use a provisional matrix. Trade and other receivables are written off where there is no reasonable expectation of recovering amounts due. The trade receivables do not contain a significant financing component.
67 Sasol Annual Financial Statements 2023
24 |
Trade and other payables |
|
|
2023 |
|
2022 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
|
Trade payables |
|
|
26 311 |
|
26 888 |
|
Capital project related payables1 |
|
|
1 155 |
|
457 |
|
Accrued expenses |
|
|
4 712 |
|
4 807 |
|
Other payables (financial liabilities)2 |
|
|
2 295 |
|
6 611 |
|
Related party payables |
|
|
645 |
|
1 110 |
|
third parties |
|
|
40 |
|
191 |
|
equity accounted investments |
|
|
605 |
|
919 |
|
|
|
|
|
|
|
|
|
|
|
35 118 |
|
39 873 |
|
Other payables (non-financial liabilities)3 |
|
|
9 228 |
|
9 037 |
|
Duties payable to revenue authorities |
|
|
4 051 |
|
4 172 |
|
Value added tax |
|
|
121 |
|
473 |
|
|
|
|
48 518 |
|
53 555 |
|
1 | Increase mainly due to ramp up of development cost on the Production Sharing Agreement (PSA) project in Mozambique. |
2 | In 2022 other payables (financial liabilities) included payables for mainly crude oil derivatives that settled out of the money. |
3 | Other payables (non-financial liabilities) include employee-related payables. |
Accounting policies:
Trade and other payables are initially recognised at fair value and subsequently stated at amortised cost. Capital project related payables are excluded from working capital, as the nature and risks of these payables are not considered to be aligned to operational trade payables.
25 |
Decrease/(increase) in working capital |
|
|
2023 |
|
2022 |
|
2021 |
|
|
Rm |
|
Rm |
|
Rm |
Decrease/(increase) in inventories |
|
1 913 |
|
(12 281) |
|
(4 872) |
Decrease/(increase) in trade receivables |
|
9 002 |
|
(9 414) |
|
(7 198) |
(Decrease)/increase in trade payables |
|
(2 865) |
|
10 159 |
|
4 916 |
Decrease/(increase) in working capital |
|
8 050 |
|
(11 536) |
|
(7 154) |
68 Sasol Annual Financial Statements 2023
Cash management
26 |
Cash and cash equivalents |
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Cash and cash equivalents |
|
51 214 |
|
40 577 |
Restricted cash and cash equivalents |
|
2 712 |
|
2 563 |
|
|
53 926 |
|
43 140 |
Bank overdraft |
|
(159) |
|
(173) |
Per the statement of cash flows |
|
53 767 |
|
42 967 |
Cash by currency |
|
|
|
|
Rand |
|
31 155 |
|
27 122 |
Euro |
|
3 457 |
|
2 835 |
US dollar |
|
18 478 |
|
12 289 |
Other currencies |
|
677 |
|
721 |
|
|
53 767 |
|
42 967 |
Included in restricted cash and cash equivalents are cash in respect of various special purpose entities and joint operations in the Group for use within those entities.
Accounting policies:
Cash includes cash on hand and demand deposits that can be withdrawn at any time without prior notice or penalty.
Cash equivalents include short-term highly liquid investments with a maturity period of three months or less at date of purchase.
Cash restricted for use comprises cash and cash equivalents which are not available for general use by the Group, including amounts held in escrow, trust or other separate bank accounts.
Cash, cash equivalents and cash restricted for use are stated at carrying amount which is deemed to be fair value.
Bank overdrafts that are repayable on demand and that are integral to the Group's cash management are offset against cash and cash equivalents in the statement of cash flows.
The Statement of cash flows is presented on the direct method. Notes are supplied as supplemental information to the Statement of cash flows. Finance income and expenses and dividends received and paid are presented under operating activities in the Statement of cash flows.
27 |
Cash generated by operating activities |
|
|
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
Cash flow from operations |
|
28 |
|
56 587 |
|
67 674 |
|
52 268 |
Decrease/(increase) in working capital |
|
25 |
|
8 050 |
|
(11 536) |
|
(7 154) |
|
|
|
|
64 637 |
|
56 138 |
|
45 114 |
69 Sasol Annual Financial Statements 2023
28 |
Cash flow from operations |
|
|
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
Earnings before interest and tax (EBIT) |
|
|
|
21 520 |
|
61 417 |
|
16 619 |
Adjusted for |
|
|
|
|
|
|
|
|
share of profits of equity accounted investments |
|
|
|
(2 623) |
|
(3 128) |
|
(814) |
equity-settled share-based payment |
|
33 |
|
1 033 |
|
1 164 |
|
1 927 |
depreciation and amortisation |
|
|
|
16 491 |
|
14 073 |
|
17 644 |
effect of remeasurement items |
|
8 |
|
33 898 |
|
(9 903) |
|
23 218 |
movement in long-term provisions |
|
|
|
|
|
|
|
|
income statement charge |
|
30 |
|
(718) |
|
643 |
|
(3) |
utilisation |
|
30 |
|
(811) |
|
(310) |
|
(388) |
movement in short-term provisions |
|
|
|
(261) |
|
(2 182) |
|
2 839 |
movement in post-retirement benefits |
|
|
|
381 |
|
443 |
|
880 |
translation effects |
|
|
|
(1 821) |
|
(886) |
|
(5 047) |
write-down of inventories to net realisable value |
|
|
|
948 |
|
451 |
|
83 |
movement in financial assets and liabilities |
|
|
|
(6 708) |
|
2 760 |
|
(4 225) |
movement in other receivables and payables |
|
|
|
(5 205) |
|
3 223 |
|
(240) |
other non-cash movements |
|
|
|
463 |
|
(91) |
|
(225) |
|
|
|
|
56 587 |
|
67 674 |
|
52 268 |
29 |
Dividends paid |
|
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
Final dividend — prior year |
|
9 295 |
|
23 |
|
16 |
Interim dividend — current year |
|
4 459 |
|
26 |
|
30 |
|
|
13 754 |
|
49 |
|
46 |
Forecast cash flow on final dividend — current year |
|
6 407 |
|
|
|
|
The forecast cash flow on the final dividend is calculated based on the net number of Sasol ordinary shares and BEE ordinary shares in issue at 30 June 2023 of 641 million. The actual dividend payment will be determined on the record date of 12 September 2023.
70 Sasol Annual Financial Statements 2023
71 Sasol Annual Financial Statements 2023
Provisions
30 |
Long-term provisions |
|
|
|
|
|
|
|
|
|
|
|
|
Environmental |
|
Other |
|
Total |
|
|
|
|
2023 |
|
2023 |
|
2023 |
|
for the year ended 30 June |
|
|
Rm |
|
Rm |
|
Rm |
|
Balance at beginning of year |
|
|
17 207 |
|
808 |
|
18 015 |
|
Capitalised to property, plant and equipment |
|
|
50 |
|
— |
|
50 |
|
Reduction in rehabilitation provision capitalised1 |
|
|
(644) |
|
— |
|
(644) |
|
Per the income statement |
|
|
(708) |
|
(10) |
|
(718) |
|
additional provisions and changes to existing provisions |
|
|
121 |
|
(1) |
|
120 |
|
reversal of unutilised amounts |
|
|
(36) |
|
— |
|
(36) |
|
effect of change in discount rate |
|
|
(793) |
|
(9) |
|
(802) |
|
Notional interest |
|
|
1 099 |
|
10 |
|
1 109 |
|
Utilised during year (cash flow) |
|
|
(741) |
|
(70) |
|
(811) |
|
Translation of foreign operations |
|
|
172 |
|
88 |
|
260 |
|
Foreign exchange differences recognised in income statement |
|
|
858 |
|
13 |
|
871 |
|
Balance at end of year |
|
|
17 293 |
|
839 |
|
18 132 |
|
1 |
Decrease in rehabilitation provision capitalised in 2023 relates primarily to an increase in discount rates. |
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Expected timing of future cash flows |
|
|
|
|
|
|
|
Within one year |
|
|
|
2 601 |
|
1 465 |
|
One to five years |
|
|
|
6 060 |
|
5 429 |
|
More than five years |
|
|
|
9 471 |
|
11 121 |
|
|
|
|
|
18 132 |
|
18 015 |
|
Short-term portion |
|
31 |
|
(2 601) |
|
(1 465) |
|
Long-term provisions |
|
|
|
15 531 |
|
16 550 |
|
Estimated undiscounted obligation* |
|
|
|
114 986 |
|
105 792 |
|
* |
Increase relates mainly to a reassessment of cost estimates and volumes used in the environmental provisions. |
Environmental provisions
In accordance with the Group’s published environmental policy and applicable legislation, a provision for rehabilitation is recognised when the obligation arises, representing the estimated actual cash flows in the period in which the obligation is settled.
The environmental obligation includes estimated costs for the rehabilitation of coal mining, oil, gas and petrochemical sites. The amount provided is calculated based on currently available facts and applicable legislation.
72 Sasol Annual Financial Statements 2023
30 |
Long-term provisions continued |
In line with the requirements of the legislation of South Africa, the utilisation of certain investments is restricted for mining rehabilitation purposes. These investments amounted to R749 million (2022 – R700 million). In addition, indemnities of R2 527 million (2022 – R2 314 million) are in place.
The following risk-free rates were used to discount the estimated cash flows based on the underlying currency and time duration of the obligation.
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
% |
|
% |
South Africa |
|
8,7 to 10,9 |
|
6,6 to 10,1 |
Europe |
|
2,0 to 4,0 |
|
0,6 to 2,4 |
United States of America |
|
2,7 to 5,7 |
|
2,2 to 3,3 |
|
|
2023 |
|
2022 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
|
A 1% point change in the discount rate would have the following effect on the long-term provisions recognised |
|
|
|
|
|
|
Increase in the discount rate |
|
|
(4 250) |
|
(4 405) |
|
amount capitalised to property, plant and equipment |
|
|
(858) |
|
(1 237) |
|
income recognised in income statement |
|
|
(3 392) |
|
(3 168) |
|
Decrease in the discount rate |
|
|
5 338 |
|
5 474 |
|
amount capitalised to property, plant and equipment |
|
|
1 518 |
|
1 646 |
|
expense recognised in income statement |
|
|
3 820 |
|
3 828 |
|
31 |
Short-term provisions |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
Other provisions1 |
|
|
|
1 005 |
|
1 126 |
Short-term portion of |
|
|
|
|
|
|
long-term provisions |
|
30 |
|
2 601 |
|
1 465 |
post-retirement benefit obligations |
|
32 |
|
713 |
|
553 |
|
|
|
|
4 319 |
|
3 144 |
1 |
Includes emission right provisions of R605 million (2022 – R609 million). |
73 Sasol Annual Financial Statements 2023
31 |
Short-term provisions continued |
Accounting policies:
Estimated long-term environmental provisions, comprising pollution control, rehabilitation and mine closure, are based on the Group’s environmental policy taking into account current technological, environmental and regulatory requirements. The provision for rehabilitation is recognised as and when the environmental liability arises. To the extent that the obligations relate to the construction of an asset, they are capitalised as part of the cost of those assets. The effect of subsequent changes to assumptions in estimating an obligation for which the provision was recognised as part of the cost of the asset is adjusted against the asset. Any subsequent changes to an obligation which did not relate to the initial construction of a related asset are charged to the income statement. The increase in discounted long-term provisions as a result of the passage of time is recognised as a finance expense in the income statement.
The estimated present value of future decommissioning costs, taking into account current environmental and regulatory requirements, is capitalised as part of property, plant and equipment, to the extent that they relate to the construction of the asset, and the related provisions are raised. These estimates are reviewed at least annually.
Deferred tax is recognised on the temporary differences in relation to both the asset to which the obligation relates to and rehabilitation provision.
Termination benefits are recognised as a liability at the earlier of the date of recognition of restructuring costs or when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. In the case of an offer to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits that are expected to be wholly settled more than 12 months after the end of the reporting period are discounted to their present value.
Areas of judgement:
The determination of long-term provisions, in particular environmental provisions, remains a key area where management’s judgement is required. Estimating the future cost of these obligations is complex and requires management to make estimates and judgements because most of the obligations will only be fulfilled in the future and contracts and laws are often not clear regarding what is required. The resulting provisions could also be influenced by changing technologies and political, environmental, safety, business and statutory considerations as well as the period in which it will be settled. The pace of transition to a low carbon economy will impact the anticipated time period over which decommissioning liabilities are expected to be incurred in future.
74 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations |
|
|
|
|
Non-current |
|
Current |
|
Total |
||||||
|
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Post-retirement healthcare obligations |
|
32.1 |
|
|
|
|
|
|
|
|
|
|
|
|
South Africa |
|
|
|
3 286 |
|
3 300 |
|
281 |
|
256 |
|
3 567 |
|
3 556 |
United States of America |
|
|
|
241 |
|
228 |
|
19 |
|
20 |
|
260 |
|
248 |
|
|
|
|
3 527 |
|
3 528 |
|
300 |
|
276 |
|
3 827 |
|
3 804 |
Pension obligations |
|
32.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign — post-retirement benefit obligation |
|
|
|
7 816 |
|
6 535 |
|
413 |
|
277 |
|
8 229 |
|
6 812 |
Total post-retirement benefit obligations |
|
|
|
11 343 |
|
10 063 |
|
713 |
|
553 |
|
12 056 |
|
10 616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension assets |
|
32.2 |
|
|
|
|
|
|
|
|
|
|
|
|
South Africa — post-retirement benefit asset |
|
|
|
(84) |
|
(64) |
|
— |
|
— |
|
(84) |
|
(64) |
Foreign — post-retirement benefit asset |
|
|
|
(700) |
|
(569) |
|
— |
|
— |
|
(700) |
|
(569) |
Total post-retirement benefit assets |
|
|
|
(784) |
|
(633) |
|
— |
|
— |
|
(784) |
|
(633) |
Net pension obligations |
|
|
|
7 032 |
|
5 902 |
|
413 |
|
277 |
|
7 445 |
|
6 179 |
|
|
|
|
Loss/(gain) recognised in the income |
|
Loss/(gain) recognised in other |
||||||||
|
|
|
|
statement |
|
comprehensive income |
||||||||
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Post-retirement benefit obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-retirement healthcare obligations |
|
32.1 |
|
477 |
|
442 |
|
407 |
|
(222) |
|
(131) |
|
201 |
Pension benefits - projected benefit obligation |
|
32.2 |
|
9 310 |
|
7 934 |
|
7 248 |
|
(1 835) |
|
(3 184) |
|
5 715 |
Pension benefits - plan asset of funded obligation |
|
32.2 |
|
(8 259) |
|
(6 699) |
|
(6 115) |
|
2 884 |
|
(963) |
|
(7 062) |
Interest on asset limitation |
|
|
|
712 |
|
396 |
|
357 |
|
— |
|
— |
|
— |
Net movement on asset limitation and reimbursive right |
|
|
|
— |
|
— |
|
— |
|
(1 254) |
|
1 863 |
|
312 |
|
|
|
|
2 240 |
|
2 073 |
|
1 897 |
|
(427) |
|
(2 415) |
|
(834) |
The Group provides post-retirement medical and pension benefits to certain of its retirees, principally in South Africa, Europe and the United States of America. Generally, medical cover provides for a specified percentage of most medical expenses, subject to pre-set rules and maximum amounts. Pension benefits are payable in the form of retirement, disability and surviving dependent pensions. The medical benefits are unfunded. The pension benefits in South Africa are funded. In the United States of America certain of our Pension Funds are funded.
75 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations continued |
Accounting policies:
The Group operates or contributes to defined contribution pension plans and defined benefit pension plans for its employees in certain of the countries in which it operates. These plans are generally funded through payments to trustee-administered funds as determined by annual actuarial calculations.
Defined contribution pension plans are plans under which the Group pays fixed contributions into a separate legal entity and has no legal or constructive obligation to pay further amounts. Contributions to defined contribution pension plans are charged to the income statement as an employee expense in the period in which the related services are rendered by the employee.
The Group’s net obligation in respect of defined benefit pension plans is actuarially calculated separately for each plan by deducting the fair value of plan assets from the gross obligation for post-retirement benefits. The gross obligation is determined by estimating the future benefit attributable to members in return for services rendered to date.
This future benefit is discounted to determine its present value, using discount rates based on government bonds for South African obligations, and corporate bonds in Europe and the US, that have maturity dates approximating the terms of the Group’s obligations and which are denominated in the currency in which the benefits are expected to be paid. Independent actuaries perform this calculation annually using the projected unit credit method.
Defined contribution members employed before 2009 have an option to purchase a defined benefit pension with their member share. This option gives rise to actuarial risk, and as such, these members are accounted for as part of the defined benefit fund and are disclosed as such.
Past service costs are charged to the income statement at the earlier of the following dates:
● | when the plan amendment or curtailment occurs; or |
● | when the Group recognises related restructuring costs or termination benefits. |
Actuarial gains and losses arising from experience adjustments and changes to actuarial assumptions, the return on plan assets (excluding amounts included in net interest on the defined benefit liability/(asset)) and any changes in the effect of the asset ceiling (excluding amounts included in net interest on the defined benefit liability/(asset)) are remeasurements that are recognised in other comprehensive income in the period in which they arise.
Where the plan assets exceed the gross obligation, the asset recognised is limited to the lower of the surplus in the defined benefit plan and the asset ceiling, determined using a discount rate based on government bonds.
Surpluses and deficits in the various plans are not offset.
76 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations continued |
The entitlement to healthcare benefits is usually based on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued on a systematic basis over the expected remaining period of employment, using the accounting methodology described in respect of defined benefit pension plans above. Independent actuaries perform the calculation of this obligation annually.
|
|
Healthcare benefits |
|
Pension benefits |
Last actuarial valuation — South Africa |
|
31 March 2023 |
|
31 March 2023 |
Last actuarial valuation — United States of America |
|
30 June 2023 |
|
30 June 2023 |
Last actuarial valuation — Europe |
|
n/a |
|
30 April 2023 |
Full/interim valuation |
|
Full |
|
Full |
Valuation method adopted |
|
Projected unit credit |
|
Projected unit credit |
The plans have been assessed by the actuaries and have been found to be in sound financial positions.
Principal actuarial assumptions
Weighted average assumptions used in performing actuarial valuations determined in consultation with independent actuaries.
|
|
|
|
|
|
United States of |
|
|
|
|
||
|
|
South Africa |
|
America |
|
Europe |
||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
at valuation date |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
Healthcare cost inflation |
|
7,5 |
|
7,5 |
|
n/a |
* |
n/a |
* |
n/a |
|
n/a |
Discount rate — post-retirement medical benefits |
|
13,0 |
|
12,4 |
|
4,9 |
|
4,3 |
|
n/a |
|
n/a |
Discount rate — pension benefits |
|
12,9 |
|
12,4 |
|
4,9 |
|
4,2 |
|
3,7 |
|
2,5 |
Pension increase assumption |
|
5,8 |
|
5,1 |
|
n/a |
** |
n/a |
** |
2,2 |
|
2,2 |
Average salary increases |
|
5,5 |
|
5,5 |
|
4,2 |
|
4,2 |
|
3,2 |
|
3,2 |
Weighted average duration of the obligation — post-retirement medical obligation |
|
13 years |
|
14 years |
|
10 years |
|
10 years |
|
n/a |
|
n/a |
Weighted average duration of the obligation — pension obligation |
|
11 years |
|
12 years |
|
4 years |
|
4 years |
|
15 years |
|
16 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
The healthcare cost inflation rate in respect of the plans for the United States of America is capped. All additional future increases due to the healthcare cost inflation will be borne by the participants. |
** |
There are no automatic pension increases for the United States of America pension plan. |
Assumptions regarding future mortality are based on published statistics and mortality tables.
77 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations continued |
32.1 |
Post-retirement healthcare obligations |
In South Africa, certain healthcare and life assurance benefits are provided to South African employees hired prior to 1 January 1998, who retire and satisfy the necessary requirements of the medical fund.
Reconciliation of the total post-retirement healthcare obligation recognised in the statement of financial position
|
|
|
South Africa |
|
United States of America |
|
Total |
||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
for the year ended 30 June |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Total post-retirement healthcare obligation at beginning of year |
|
|
3 556 |
|
3 456 |
|
248 |
|
257 |
|
3 804 |
|
3 713 |
Movements recognised in the income statement: |
|
|
452 |
|
421 |
|
25 |
|
21 |
|
477 |
|
442 |
current service cost |
|
|
25 |
|
30 |
|
13 |
|
14 |
|
38 |
|
44 |
interest cost |
|
|
427 |
|
391 |
|
12 |
|
7 |
|
439 |
|
398 |
Actuarial (gains)/losses recognised in other comprehensive income: |
|
|
(191) |
|
(91) |
|
(31) |
|
(40) |
|
(222) |
|
(131) |
arising from changes in financial assumptions |
|
|
(197) |
|
(284) |
|
(14) |
|
(41) |
|
(211) |
|
(325) |
arising from changes in actuarial experience |
|
|
6 |
|
193 |
|
(17) |
|
1 |
|
(11) |
|
194 |
Benefits paid |
|
|
(250) |
|
(230) |
|
(19) |
|
(22) |
|
(269) |
|
(252) |
Translation of foreign operations |
|
|
— |
|
— |
|
37 |
|
32 |
|
37 |
|
32 |
Total post-retirement healthcare obligation at end of year |
|
|
3 567 |
|
3 556 |
|
260 |
|
248 |
|
3 827 |
|
3 804 |
The sensitivity analysis is performed in order to assess how the post-retirement healthcare obligation would be affected by changes in the actuarial assumptions underpinning the calculation.
|
|
|
|
|
|
|
|
|
|
|
|
South Africa |
|
United States of America |
|
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
1% point change in actuarial assumptions: |
|
|
|
|
|
|
|
|
|
Increase in the healthcare cost inflation |
|
361 |
|
387 |
|
— |
* |
— |
* |
Decrease in the healthcare cost inflation |
|
(310) |
|
(325) |
|
— |
* |
— |
* |
Increase in the discount rate |
|
(293) |
|
(309) |
|
(22) |
|
(21) |
|
Decrease in the discount rate |
|
346 |
|
373 |
|
27 |
|
28 |
|
* |
A change in the healthcare cost inflation for the United States of America will not have an effect on the above components or the obligation as the employer’s cost is capped and all future increases due to the healthcare cost inflation are borne by the participants. There are no automatic pension increases for the United States of America pension plan. |
A change in the pension increase assumption will not have an effect on the above obligation. In South Africa the post-retirement benefit contributions are linked to medical aid inflation and based on a percentage of income or pension. Where pension increases differ from medical aid inflation, the difference will need to be allowed for in a change in the percentage of income or pension charged.
The sensitivities may not be representative of the actual change in the post-retirement healthcare obligation, as it is unlikely that the changes would occur in isolation of one another, and some of the assumptions may be correlated.
Healthcare cost inflation risk
Healthcare cost inflation is consumer price index inflation plus two percentage points over the long term. An increase in healthcare cost inflation will increase the obligation of the plan.
78 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations continued |
32.1 |
Post-retirement healthcare obligations continued |
Discount rate risk
The discount rate is derived from prevailing bond yields. A decrease in the discount rate will increase the obligation of the plan.
Pension increase risk
The South African healthcare plan is linked to pension benefits paid, which are to some extent linked to inflation. Accordingly, increased inflation levels represent a risk that could increase the cost of paying the funds committed to benefits.
Other
Changes in other assumptions used could also affect the measured liabilities. There is also a regulatory risk as well as foreign funds under the jurisdiction of other countries. To the extent that governments can change the regulatory frameworks, there may be a risk that minimum benefits or minimum pension increases may be instituted, increasing the associated cost for the fund.
32.2 |
Pension benefits |
South African operations
Background
In 1994, all members were given the choice to voluntarily transfer to the newly established defined contribution section of the pension fund and approximately 99% of contributing members chose to transfer to the defined contribution section.
Defined benefit option for defined contribution members
In terms of the rules of the fund, on retirement, employees employed before 1 January 2009 have an option to purchase a defined benefit pension with their member share. Should a member elect this option, the Group is exposed to actuarial risk. In terms of IAS 19, the classification requirements stipulate that where an employer is exposed to any actuarial risk, the fund must be classified as a defined benefit plan.
Fund assets
The assets of the fund are held separately from those of the Company in a trustee administered fund, registered in terms of the South African Pension Funds Act, 24 of 1956. Included in the fund assets at 31 March 2023 are 2 080 048 (2022 – 2 077 048) Sasol ordinary shares valued at R485 million (2022 – R772 million) at year-end purchased under terms of an approved investment strategy, and property valued at R1 533 million (2022 – R1 533 million) that is currently occupied by Sasol.
Membership
A significant number of employees are covered by union sponsored, collectively bargained, and in some cases, multi-employer defined contribution pension plans. Information from the administrators of these plans offering defined benefits is not sufficient to permit the Company to determine its share, if any, of any unfunded vested benefits.
79 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations continued |
32.2 |
Pension benefits continued |
Pension fund assets
The assets of the pension funds are invested as follows:
|
|
|
South Africa |
|
United States of America |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
at 30 June |
|
% |
|
% |
|
% |
|
% |
|
Equities |
|
|
52 |
|
55 |
|
35 |
|
35 |
resources |
|
|
7 |
|
7 |
|
6 |
|
5 |
industrials |
|
|
4 |
|
3 |
|
4 |
|
4 |
consumer discretionary |
|
|
9 |
|
9 |
|
4 |
|
4 |
consumer staples |
|
|
7 |
|
7 |
|
2 |
|
2 |
healthcare |
|
|
5 |
|
5 |
|
4 |
|
4 |
information technologies |
|
|
7 |
|
8 |
|
8 |
|
8 |
telecommunications |
|
|
2 |
|
4 |
|
2 |
|
3 |
financials (ex real estate) |
|
|
11 |
|
12 |
|
5 |
|
5 |
Fixed interest |
|
|
19 |
|
18 |
|
39 |
|
40 |
Direct property |
|
|
11 |
|
10 |
|
9 |
|
9 |
Listed property |
|
|
3 |
|
3 |
|
— |
|
— |
Cash and cash equivalents |
|
|
3 |
|
2 |
|
— |
|
— |
Third party managed assets |
|
|
11 |
|
11 |
|
— |
|
— |
Other |
|
|
1 |
|
1 |
|
17 |
|
16 |
Total |
|
|
100 |
|
100 |
|
100 |
|
100 |
The pension fund assets are measured at fair value at valuation date. The fair value of equity has been calculated by reference to quoted prices in an active market. The fair value of property and other assets has been determined by performing market valuations and using other valuation techniques at the end of each reporting period.
80 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations continued |
32.2 |
Pension benefits continued |
Investment strategy
The trustees target the plans’ asset allocation within the following ranges within each asset class:
|
|
South Africa¹ |
|
United States of America |
||||
|
|
Minimum |
|
Maximum |
|
Minimum |
|
Maximum |
Asset classes |
|
% |
|
% |
|
% |
|
% |
Equities |
|
|
|
|
|
|
|
|
local |
|
25 |
|
35 |
|
— |
|
100 |
foreign |
|
25 |
|
35 |
|
— |
|
100 |
Fixed interest |
|
10 |
|
25 |
|
— |
|
100 |
Property |
|
10 |
|
20 |
|
— |
|
100 |
Other |
|
— |
|
15 |
|
— |
|
100 |
1 | Members of the defined contribution scheme have a choice of four investment portfolios. The portion of fund assets invested in each portfolio is 0,4%, 96,8%, 1,9% and 0,9% for the low risk portfolio, moderate balanced portfolio, aggressive balanced portfolio and money market portfolio, respectively. Defined benefit members’ funds are invested in the moderate balanced portfolio. The money market portfolio is restricted to active members from age 55. The targeted allocation disclosed represents the moderate balanced investment portfolio which the majority of the members of the scheme have adopted. |
The trustees of the respective funds monitor investment performance and portfolio characteristics on a regular basis to ensure that managers are meeting expectations with respect to their investment approach. There are restrictions and controls placed on managers in this regard.
Reconciliation of the projected net pension liability/(asset) recognised in the statement of financial position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Africa |
|
Foreign |
|
Total |
|
||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
|
Projected benefit obligation (funded) |
|
|
64 049 |
|
60 478 |
|
3 778 |
|
3 218 |
|
67 827 |
|
63 696 |
|
defined benefit portion |
|
|
30 632 |
|
29 569 |
|
3 778 |
|
3 218 |
|
34 410 |
|
32 787 |
|
defined benefit option for defined contribution members |
|
|
33 417 |
|
30 909 |
|
— |
|
— |
|
33 417 |
|
30 909 |
|
Plan assets |
|
|
(69 291) |
|
(66 284) |
|
(4 478) |
|
(3 787) |
|
(73 769) |
|
(70 071) |
|
defined benefit portion |
|
|
(35 874) |
|
(35 375) |
|
(4 478) |
|
(3 787) |
|
(40 352) |
|
(39 162) |
|
defined benefit option for defined contribution members |
|
|
(33 417) |
|
(30 909) |
|
— |
|
— |
|
(33 417) |
|
(30 909) |
|
Projected benefit obligation (unfunded) |
|
|
— |
|
— |
|
8 229 |
|
6 812 |
|
8 229 |
|
6 812 |
|
Asset not recognised due to asset limitation |
|
|
5 158 |
|
5 742 |
|
— |
|
— |
|
5 158 |
|
5 742 |
|
Net liability/(asset) recognised |
|
|
(84) |
|
(64) |
|
7 529 |
|
6 243 |
|
7 445 |
|
6 179 |
|
81 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations continued |
32.2 |
Pension benefits continued |
The decrease of R1 296 million in the asset limitation (2022 – increase of R1 775 million) was recognised as a gain (2022 – loss) in other comprehensive income while interest expense thereon of R712 million (2022 – R396 million) was recognised in the income statement.
The obligation which arises for the defined contribution members with the option to purchase into the defined benefit fund is limited to the assets that they have accumulated until retirement date. However, after retirement date, there is actuarial risk associated with the members as full defined benefit members.
Based on the latest actuarial valuation of the fund and the approval of the trustees of the surplus allocation, the Group has an unconditional entitlement to only the funds in the employer surplus account and the contribution reserve. The remaining estimated surplus due to the Company amounted to approximately R84 million (2022 — R64 million) and has been included in the pension asset recognised in the current year.
Investment risk
The actuarial valuation assumes certain asset returns on invested assets. If actual returns on plan assets are below the assumption, this may lead to a strain on the fund, which, over time, may lead to a plan deficit. In order to mitigate the concentration risk, the fund assets are invested across equity securities, property securities and debt securities. Given the long-term nature of the obligations, it is considered appropriate that investment is made in equities and real estate to improve the return generated by the fund. These may result in improved pension benefits to members.
Pension increase risk
Benefits in these plans are to some extent linked to inflation so increased inflation levels represent a risk that could increase the cost of paying the funds committed to benefits. This risk is mitigated as pension benefits are subject to affordability.
Discount rate risk
The discount rate is derived from prevailing bond yields. A decrease in the discount rate used will increase the obligation of the plan.
Other
Changes in other assumptions used could also affect the measured liabilities. There is also a regulatory risk as well as foreign funds under the jurisdiction of other countries. To the extent that governments can change the regulatory frameworks, there may be a risk that minimum benefits or minimum pension increases may be instituted, increasing the associated cost for the fund.
82 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations continued |
32.2 |
Pension benefits continued |
Reconciliation of projected benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Africa |
|
Foreign |
|
Total |
|
||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
|
Projected benefit obligation at beginning of year |
|
|
60 478 |
|
57 054 |
|
10 030 |
|
13 268 |
|
70 508 |
|
70 322 |
|
Movements recognised in income statement: |
|
|
8 426 |
|
7 326 |
|
884 |
|
608 |
|
9 310 |
|
7 934 |
|
current service cost |
|
|
1 066 |
|
1 115 |
|
498 |
|
434 |
|
1 564 |
|
1 549 |
|
interest cost |
|
|
7 360 |
|
6 211 |
|
386 |
|
174 |
|
7 746 |
|
6 385 |
|
Actuarial (gains)/losses recognised in other comprehensive income: |
|
|
(1 482) |
|
(533) |
|
(353) |
|
(2 651) |
|
(1 835) |
|
(3 184) |
|
arising from changes in financial assumptions |
|
|
421 |
|
(2 133) |
|
(562) |
|
(2 654) |
|
(141) |
|
(4 787) |
|
arising from change in actuarial experience |
|
|
(1 903) |
|
1 600 |
|
209 |
|
3 |
|
(1 694) |
|
1 603 |
|
Member contributions |
|
|
562 |
|
536 |
|
— |
|
— |
|
562 |
|
536 |
|
Benefits paid |
|
|
(3 935) |
|
(3 905) |
|
(450) |
|
(496) |
|
(4 385) |
|
(4 401) |
|
Disposal of business1 |
|
|
— |
|
— |
|
— |
|
(1 223) |
|
— |
|
(1 223) |
|
Translation of foreign operations |
|
|
— |
|
— |
|
1 896 |
|
524 |
|
1 896 |
|
524 |
|
Projected benefit obligation at end of year |
|
|
64 049 |
|
60 478 |
|
12 007 |
|
10 030 |
|
76 056 |
|
70 508 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
unfunded obligation2 |
|
|
— |
|
— |
|
8 229 |
|
6 812 |
|
8 229 |
|
6 812 |
|
funded obligation |
|
|
64 049 |
|
60 478 |
|
3 778 |
|
3 218 |
|
67 827 |
|
63 696 |
|
1 | Relates to the disposal of Sasol’s European wax business in Germany in the prior year. |
2 | Certain of the foreign defined benefit plans have reimbursement rights under contractually agreed legal binding terms that match the amount and timing of some of the benefits payable under the plan. This reimbursive right has been recognised in long-term receivables at fair value of R137 million (2022 – R135 million). A loss of R42 million (2022 – R88 million) has been recognised as a loss in other comprehensive income in respect of the reimbursive right offset by the translation impact of the weakening Rand. |
83 Sasol Annual Financial Statements 2023
32 |
Post-retirement benefit obligations continued |
32.2 |
Pension benefits continued |
Reconciliation of plan assets of funded obligation
|
|
|
South Africa |
|
Foreign |
|
Total |
|
||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
|
Fair value of plan assets at beginning of year |
|
|
66 284 |
|
60 671 |
|
3 787 |
|
3 732 |
|
70 071 |
|
64 403 |
|
Movements recognised in income statement: |
|
|
8 084 |
|
6 610 |
|
175 |
|
89 |
|
8 259 |
|
6 699 |
|
interest income |
|
|
8 084 |
|
6 610 |
|
175 |
|
89 |
|
8 259 |
|
6 699 |
|
Actuarial (losses)/gains recognised in other comprehensive income: |
|
|
(2 939) |
|
1 200 |
|
55 |
|
(237) |
|
(2 884) |
|
963 |
|
arising from return on plan assets (excluding interest income) |
|
|
(2 939) |
|
1 200 |
|
55 |
|
(237) |
|
(2 884) |
|
963 |
|
Plan participant contributions1 |
|
|
562 |
|
536 |
|
— |
|
— |
|
562 |
|
536 |
|
Employer contributions1 |
|
|
1 235 |
|
1 172 |
|
71 |
|
27 |
|
1 306 |
|
1 199 |
|
Benefit payments |
|
|
(3 935) |
|
(3 905) |
|
(212) |
|
(312) |
|
(4 147) |
|
(4 217) |
|
Translation of foreign operations |
|
|
— |
|
— |
|
602 |
|
488 |
|
602 |
|
488 |
|
Fair value of plan assets at end of year |
|
|
69 291 |
|
66 284 |
|
4 478 |
|
3 787 |
|
73 769 |
|
70 071 |
|
Actual return on plan assets |
|
|
5 145 |
|
7 810 |
|
231 |
|
(148) |
|
5 376 |
|
7 662 |
|
1 |
Contributions, for the defined contribution section, are paid by the members and Sasol at fixed rates. |
Contributions
Funding is based on actuarially determined contributions. The following table sets forth the projected pension contributions of funded obligations for the 2024 financial year.
|
|
South Africa |
|
Foreign |
|
|
Rm |
|
Rm |
Pension contributions |
|
1 305 |
|
75 |
Sensitivity analysis
A sensitivity analysis is performed in order to assess how the post-retirement pension obligation would be affected by changes in the actuarial assumptions underpinning the calculation.
|
|
South Africa |
|
Foreign |
|
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
for the year ended 30 June |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
1% point change in actuarial assumptions |
|
|
|
|
|
|
|
|
|
Increase in average salaries increase assumption |
|
5 |
|
6 |
|
297 |
|
312 |
|
Decrease in average salaries increase assumption |
|
(5) |
|
(6) |
|
(227) |
|
(271) |
|
Increase in the discount rate |
|
(1 251) |
|
(1 161) |
|
(1 169) |
|
(1 199) |
|
Decrease in the discount rate |
|
1 471 |
|
1 364 |
|
1 445 |
|
1 507 |
|
Increase in the pension increase assumption |
|
1 561 |
|
1 453 |
|
897 |
* |
929 |
* |
Decrease in the pension increase assumption |
|
(1 354) |
|
(1 261) |
|
(690) |
* |
(737) |
* |
* |
This sensitivity analysis relates only to the Europe obligations as there are no automatic pension increases for the United States of America pension plan, and thus it is not one of the inputs utilised in calculating the obligation. |
The sensitivities may not be representative of the actual change in the post-retirement pension obligation, as it is unlikely that the changes would occur in isolation of one another, and some of the assumptions may be correlated.
84 Sasol Annual Financial Statements 2023
Reserves
33 |
Share-based payment reserve |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
for the year ended 30 June |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year, the following share-based payment expense was recognised in the income statement relating to the equity-settled share-based payment schemes: |
|
|
|
|
|
|
|
|
|
|
Long-term incentives |
|
33.1 |
|
|
909 |
|
1 001 |
|
1 042 |
|
Sasol Khanyisa Employee Share Ownership Plan (ESOP) |
|
33.2 |
|
|
124 |
|
163 |
|
885 |
|
Tier 1 — Eligible Inzalo participants |
|
|
|
|
— |
|
— |
|
567 |
|
Tier 2 — Qualifying employees |
|
|
|
|
124 |
|
163 |
|
318 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity-settled — recognised directly in equity |
|
|
|
|
1 033 |
|
1 164 |
|
1 927 |
|
33.1 |
Long-term incentive plans |
The objective of the Sasol Long-Term Incentive (LTI) plans is to provide qualifying senior employees the opportunity of receiving an incentive linked to the value of Sasol Limited ordinary shares and to align the interest of participants with the interest of shareholders. The LTI plans allow certain senior employees to earn a long-term incentive amount subject to the achievement of vesting conditions. Allocations of the LTI are linked to the performance of both the Group and the individual. The employer companies make a cash contribution to an independent service provider to enable this ownership plan.
In terms of the 2016 plan, LTIs which have not yet vested will lapse on resignation. On death, unvested LTIs vest immediately. For terminations due to retrenchment or retirement, vesting depends on the role category of the participant. Accelerated vesting does not apply to top management. The standard vesting period is three years, with the exception of top management, who have a three and five year vesting period for 50% of the awards respectively. Restricted LTIs offered to members of the Group Executive Committee (GEC), have 5-year vesting period.
In November 2022, shareholders approved the 2022 Sasol LTI plan to replace the 2016 plan. The 2022 plan mirrors the 2016 plan except for the following changes:
● | the enforcement of minimum shareholding requirements for Executive Vice Presidents (EVPs); |
● | the introduction of post-employment shareholding requirements for EVPs; |
● | the removal of accelerated vesting of awards except in the event of the death of a participant; and |
● | the removal of the service penalty in respect of good leavers who have been employed for more than 270 days from award date. |
85 Sasol Annual Financial Statements 2023
33 |
Share-based payment reserve continued |
33.1 |
Long-term incentive plans continued |
The maximum number of shares issued under the 2022 plan may not exceed 32 million representing 5% of Sasol Limited’s issued share capital at the time of approval.
|
|
|
|
Weighted average |
|
|
Number of |
|
fair value |
Movements in the number of incentives outstanding |
|
incentives |
|
Rand |
Balance at 30 June 2021 |
|
13 472 670 |
|
256,68 |
LTIs granted |
|
3 822 529 |
|
246,26 |
LTIs exercised |
|
(1 488 900) |
|
461,96 |
Effect of CPTs and LTIs forfeited |
|
(1 544 102) |
|
351,79 |
Balance at 30 June 2022 |
|
14 262 197 |
|
222,16 |
LTIs granted |
|
3 179 896 |
|
322,43 |
LTIs exercised* |
|
(4 862 497) |
|
280,69 |
Effect of CPTs and LTIs forfeited |
|
(655 706) |
|
244,41 |
Balance at 30 June 2023** |
|
11 923 890 |
|
223,80 |
* |
LTIs exercised in 2023 include 2 415 744 LTIs that were issued in October 2019 to qualifying employees who did not receive short-term incentives due to cash conservation measures. |
** |
The incentives outstanding as at 30 June 2023 have a weighted average remaining vesting period of 1,3 years (2022: 1,4 years). The exercise price of these options is Rnil. |
|
|
2023 |
|
2022 |
for year ended 30 June |
|
Rand |
|
Rand |
Average weighted market price of LTIs vested |
|
300,94 |
|
230,48 |
|
|
|
|
|
|
|
Average fair value of incentives granted |
|
|
|
2023 |
|
2022 |
Model |
|
|
|
Monte-Carlo |
|
Monte-Carlo |
Risk-free interest rate — Rand |
|
(%) |
|
6,76 - 8,21 |
|
4,96 – 7,28 |
Risk-free interest rate — US$ |
|
(%) |
|
1,45 - 2,37 |
|
0,32 – 1,45 |
Expected volatility |
|
(%) |
|
50,24 |
|
78,67 |
Expected dividend yield |
|
(%) |
|
6,37 |
|
2,90 |
Expected forfeiture rate |
|
(%) |
|
5 |
|
5 |
Expected vesting percentage |
|
(%) |
|
98,65 |
|
97,27 |
Vesting period — top management |
|
|
|
3/5 years |
|
3/5 years |
Vesting period — all other participants |
|
|
|
3 years |
|
3 years |
86 Sasol Annual Financial Statements 2023
33 |
Share-based payment reserve continued |
33.1 |
Long-term incentive plans continued |
Accounting policies:
The equity-settled schemes allow certain employees the right to receive ordinary shares in Sasol Limited after a prescribed period. Such equity-settled share-based payments are measured at fair value at the date of the grant. The fair value determined at the grant date of the equity-settled share-based payments is charged as employee costs, with a corresponding increase in equity, on a straight-line basis over the period that the employees become unconditionally entitled to the shares, based on management’s estimate of the shares that will vest and adjusted for the effect of non-market-based vesting conditions. These equity-settled share-based payments are not subsequently revalued.
Areas of judgement:
The valuation of the share-based payment expense requires a significant degree of judgement to be applied by management.
The risk-free rate for periods within the contractual term of the rights is based on the Rand and US$ swap curve in effect at the time of the valuation of the grant.
The expected volatility in the value of the rights granted is determined using the historical volatility of the Sasol share price.
The expected dividend yield of the rights granted is determined using expected dividend payments of the Sasol ordinary shares.
The overall expected vesting percentage takes into consideration service, market and non-market conditions.
33.2 |
The Sasol Khanyisa share transaction |
Sasol Khanyisa was implemented on 1 June 2018. Sasol Khanyisa has been designed to comply with the revised B-BBEE legislation in South Africa and seeks to ensure ongoing and sustainable B-BBEE ownership credentials for Sasol Limited.
Sasol Khanyisa contains a number of elements structured at both a Sasol Limited and at a subsidiary level, Sasol South Africa Limited (SSA) which is a wholly-owned subsidiary of Sasol Limited and houses the majority of the Group’s South African operations. Sasol Khanyisa Tier 1 was concluded in 2021.
At the end of 10 years, or earlier if the underlying funding has been settled, the participants in Khanyisa Tier 2, will exchange their SSA shareholding on a fair value-for-value basis for Sasol BEE ordinary shares to the extent that value was created during the transaction term.
Sasol BEE ordinary shares can only be traded between Black Persons on the Empowerment Segment of the JSE. This transaction will therefore ensure evergreen B-BBEE ownership credentials for Sasol Limited.
87 Sasol Annual Financial Statements 2023
33 |
Share-based payment reserve continued |
33.2 |
The Sasol Khanyisa share transaction continued |
Remaining components of the transaction:
Tier 2 — SSA qualifying employees
Qualifying Black employees participate via the Khanyisa Employee Share Ownership plan (Khanyisa ESOP) through a beneficial interest, funded wholly by Sasol (vendor funding), in approximately 9,2% in SSA. As dividends are declared by SSA, 97,5% of these will be utilised to repay the vendor funding, as well as the related financing cost, calculated at 75% of prime rate. 2,5% of dividends are distributed to participants as a trickle dividend and accounted for as a non-controlling interest. At the end of the 10 year transaction term, or earlier, if the vendor funding is repaid, the net value in SSA shares will be exchanged for SOLBE1 shares on a fair value-for-value basis which will be distributed to participants. Any vendor funding not yet settled by the end of the transaction term will be settled using the SSA shares, and will reduce any distribution made to participants. Since any ultimate value created for participants will be granted in the form of SOLBE1 shares, the accounting for this transaction is similar to an option over Sasol shares granted for no consideration.
The Tier 2 options have a staggered vesting period with portions vesting from 3 years, and then each year until the end of the transaction term, being 10 years. The outstanding options at 30 June 2023 have a weighted average remaining vesting period of 2,2 years (2022: 2,5 years). The weighted average fair value of the outstanding options is R61,69 (2022: R62,95) and was derived from the Monte-Carlo option pricing model. The estimated strike price value for Tier 2 is R196,19 (2022: R258,85) and represents the remaining vendor funding per share at 30 June 2023.
Accounting policies:
To the extent that an entity grants shares or share options in a BEE transaction and the fair value of the cash and other assets received is less than the fair value of the shares or share options granted, such difference is charged to the income statement in the period in which the transaction becomes effective. Where the BEE transaction includes service conditions, the difference will be charged to the income statement over the period of these service conditions. Trickle dividends paid to participants during the transaction term are taken into account in measuring the fair value of the award. As the funds to pay the trickle dividend are leaving the Company, a corresponding share of earnings will be allocated to the non-controlling shareholders.
88 Sasol Annual Financial Statements 2023
33 |
Share-based payment reserve continued |
33.2 |
The Sasol Khanyisa share transaction continued |
Areas of judgement:
The measurement of the Khanyisa SSA share based payment is subject to estimation and judgement, as there are a number of variables affecting the Monte-Carlo option pricing model used in the calculation of the share based payment. The value of the share based payment is determined with reference to the extent the fair value of SSA and any dividends declared by SSA is expected to exceed any outstanding vendor financing at the end of the transaction period.
● | Equity value attributable to participants: |
The value attributable to the participants by virtue of their shareholding in SSA was calculated with reference to the expected future cash flows and budgets of the SSA Group. The underlying macroeconomic assumptions utilised for this valuation are based on latest forecast and estimates and include brent crude oil prices, rand/US$ exchange rates and pricing assumptions.
● | Forecasted dividend yield: |
The forecasted dividend yield of the SSA Group was calculated based on a benchmarked EBITDA multiple, and the available free cash flow anticipated over the term of the transaction of 10 years.
● | Other assumptions: |
Impacts of non-transferability and appropriate minority and liquidity discounts have also been taken into account. Discount rates applied incorporate the relevant debt and equity costs of the Group, and are aligned to the WACC rates for the entity.
● | A zero-coupon Rand interest rate swap curve was constructed and utilised as an appropriate representation of a risk-free interest rate curve. |
● | A Rand prime interest rate curve was estimated utilising the historical Rand Prime Index and the 3 month Johannesburg Interbank Agreed Rate. |
89 Sasol Annual Financial Statements 2023
90 Sasol Annual Financial Statements 2023
Other disclosures
34 |
Contingent liabilities |
34.1 |
Litigation |
Construction disputes — Fischer Tropsch Wax Expansion Project in Sasolburg (FTWEP)
After the conclusion of construction of FTWEP at the Sasol One site in Sasolburg, a number of contractual claims were instituted by some contractors who were involved in the construction and project management relating to this project. Certain of these claims have already been resolved, either through settlement between the parties or through the contractual dispute resolution process. The Fluor SA (Pty) Ltd arbitration was the final disputed matter to be resolved. The matter served before the Arbitrator and in June 2023 the Arbitrator ruled in favour of Sasol dismissing the entirety of Fluor’s claim.
Dispute by Solidarity Trade Union relating to Sasol Khanyisa share scheme
Solidarity referred a dispute relating to the Sasol Khanyisa share scheme to the Commission for Conciliation, Mediation and Arbitration (CCMA) on 17 December 2017, whereafter conciliation proceedings commenced on 11 January 2018. On 5 February 2018, Sasol received a letter from Solidarity demanding a payment to their members (non-qualifying employees for Phase 2 of Khanyisa) equal to “the market value of the Sasol Khanyisa shares which qualifying employees will be entitled to within seven days after such entitlement (2028) or payment to each member of R500 000 by the end of December 2018.” A second referral to the CCMA was received on 8 March 2018, conciliation was attempted on two occasions, on 9 and 25 May 2018, but was unsuccessful and a certificate to this effect was issued on 14 June 2018. This would entitle Solidarity to conduct a lawful strike provided picketing rules are in place.
On 25 October 2018, Solidarity served Sasol with its referral of the dispute to the CCMA in terms which Solidarity seeks the dispute be conciliated as an unfair discrimination matter. If unsuccessfully conciliated by the CCMA, it will be referred to the Labour Court for adjudication. This process was originally proposed by Sasol, but unheeded by Solidarity. The matter was referred to the CCMA and was subsequently certified as unresolved in February 2019. On 6 May 2019, Sasol received Solidarity’s statement of claim filed with the Labour Court in Johannesburg. Sasol filed its replying documentation to Solidarity’s statement of claim on the last day of July 2019.
Subsequently the Judge President of the Labour Court invited Sasol and three other respondents (PPC, ArcelorMittal and Minopex) in three other cases where Solidarity is the Applicant on similar grounds, to meet. The purpose of the meeting was to make attempts to consolidate the disputes and set a stated case (combined version setting out the dispute) to afford the court to save time by hearing similar matters simultaneously. The various legal teams gathered at a meeting during the first week of October 2019 and a draft Statement of Case was prepared. The Labour Court was scheduled to hear the matter on 17 September 2020 in Johannesburg.
A few weeks prior to this hearing, the prepared Statement of Case formulation was amended by Solidarity and the other parties unsuccessfully objected to the amended wording. Sasol and the parties, save for PPC who had the date of 17 September 2020 allocated to them originally, decided to withdraw and apply for separate dates to foster their cases individually. No new date has been received yet, and since Solidarity is the applicant in this matter, it will be responsible for the application of dates. The Labour Court issued a directive to prepare a pre-trial minute to be filed with the registrar alternatively to appear before a judge of the Labour Court. The parties filed the pre-trial minute and are awaiting the allocation of the trial date.
91 Sasol Annual Financial Statements 2023
34 |
Contingent liabilities continued |
34.1 |
Litigation continued |
Due to the current status of the matter no provision was recognised at 30 June 2023.
Legal review of Sasol Gas National Energy Regulator of South Africa (NERSA) maximum price decision and NERSA gas transmission tariff application (March 2013)
Following the legal review applications in terms of which the 2013 and 2017 NERSA Maximum Gas Price decisions were overturned, NERSA in 2020 adopted a Maximum Gas Price Methodology in terms of which Maximum Gas Prices for Sasol Gas is determined with reference to international benchmark prices. Pursuant to the Sasol Gas price application submitted to NERSA in December 2020, NERSA, on 6 July 2021 published its maximum gas price decision in which it approved maximum gas prices for Sasol Gas for the period from 2014 up to 2021 and determined how the maximum prices are to be determined for 2022 and 2023. With effect from 1 September 2021 Sasol Gas adopted a revised actual gas price methodology in terms of its supply agreements with customers in order to comply with the new NERSA maximum gas price decision.
Because the new maximum gas prices approved by NERSA for the period of the overturned decision is lower than the actual price charged to a large number of Sasol Gas’ customers, the risk of a retrospective liability for Sasol Gas was identified in the event that customers institute claims for compensation based on the differences between the new approved maximum gas prices and actual gas prices historically charged by Sasol Gas. In May 2022 Sasol Gas pro-actively approached its customers with a bespoke settlement offer for each affected customer to resolve this retrospective liability. By 30 June 2023 final and provisional settlements with an aggregate value of R1,5 billion have been reached with customers, which refunds were credited to the customer accounts. The remaining R93 million of the anticipated liability was reflected as an accrued expense as at 30 June 2023.
In December 2021 the Industrial Gas Users Association of Southern Africa (IGUA-SA) launched a legal review application in which it seeks to overturn the 2021 NERSA maximum gas price decision that approved Maximum Gas Prices for Sasol Gas for the period from 2014 – 2023. Both NERSA and Sasol Gas opposed this further litigation. The applicant alleged that the NERSA decision is unreasonable and irrational as the decision does not mimic a competitive market and fails to comply with the directives contained in the abovementioned Constitutional Court decision. The matter was heard by the High Court on 30 and 31 May 2023 and the court decision is pending. If the 2021 NERSA decision is overturned entirely or in part and NERSA determines lower Maximum Gas Prices a potential further retrospective liability may arise for Sasol Gas. Pending the court decision and the NERSA decisions that may follow thereafter, the probability and extent of such further liability (if any) is indeterminable.
During 2022, Sasol Gas was informed of certain complaints by customers to the Competition Commission relating to alleged anticompetitive practices in the market for piped gas supply in South Africa. As part of the proceedings in relation to these investigations, the Competition Commission issued a summons against Sasol Gas for the submission of information to the Commission. Sasol Gas launched a review application in the Competition Appeal Court to overturn the decisions by the Competition Commission relating to its investigation of the complaints as it relates to the gas prices because in terms of the Gas Act, NERSA is the industry regulator with the applicable jurisdiction for the regulation of gas prices in the South African piped gas market as long as there is inadequate competition in the market. This review application is ongoing. On 10 July 2023 the Competition Commission referred the complaint of excessive pricing by Sasol Gas for piped gas to the Competition Tribunal. The outcome of the ongoing review application before the Competition Appeal Court will determine the ability of the Commission to investigate the gas pricing complaints that are the subject of the complaint referral that it made on 10 July 2023.
IGUA-SA during August 2022 filed an application with the Competition Tribunal to interdict and restrain Sasol from increasing its gas prices above the current NERSA approved maximum price applicable to 2022. Sasol Gas opposed this application on the basis that it should not be prevented from charging gas prices that are compliant with valid price decisions by NERSA. On 12 May 2023 the Competition Tribunal issued an order in terms of which Sasol Gas may not increase its gas prices unless it provides IGUA-SA with two months’ written notice of the intended gas price and whether the gas price was approved by NERSA.
92 Sasol Annual Financial Statements 2023
34 |
Contingent liabilities continued |
34.1 |
Litigation continued |
On 18 July 2023 NERSA published Sasol Gas’s Amendment Maximum Gas Price (MGP) Application for the period 1 July 2022 up to 30 June 2023 and published its Consultation Document. It has also published Sasol Gas’s MGP application for the period 1 July 2023 to 30 June 2024 together with its Consultation Document. This pricing application has followed the cost plus 2023 MGP methodology, which NERSA published in February 2023. Gas price regulation in terms of the Gas Act is aimed at determining a competitive price for gas and should strike a balance between the interests of gas suppliers and consumers, while fostering the viability of the supply in South Africa and investment in new sources of supply.
Sasol Gas has continued to charge customers at R68.39/GJ from 2022, notwithstanding the additional expenditure and cost increases exceeding 40% that Sasol has faced during this period. To date, Sasol has invested over $300 million in capital expenditure since 2021 to maintain gas supply from Mozambique to 2026. Therefore, Sasol does not agree with the preliminary conclusion by NERSA that the maximum price of R120/GJ for 2023 applied for by Sasol is excessive. Sasol maintains that apart from operational cost increases, NERSA also has to take into account the risk associated with extensive investments which Sasol is currently making to extend supply and the incentives to develop new resources.
Sasol will continue its engagement in the commentary phase of the 2023 price application and trusts that NERSA will duly fulfil its mandate to determine an appropriate, reasonable and competitive gas price for 2023 in the interests of consumers and gas supply in South Africa.
Sasol Oil (Pty) Ltd & Total South Africa (Pty) Ltd v Transnet SOC Ltd – Crude Oil Transportation Tariff dispute
Sasol Oil uses Transnet Pipelines to transport crude oil to NATREF for processing and is charged for this service at a specific crude oil tariff per liter. This tariff was historically determined through a commercial agreement between the Parties, which agreement also included the so-called Variation Agreement relating to the inland nature of the NATREF refinery. After the tariffs started to be determined by NERSA in terms of the Petroleum Pipelines Act, 2003 (Act 60 of 2003) a dispute arose between the parties regarding the tariff applicable to the conveyance of crude oil.
On 18 September 2017, Sasol Oil issued summons against Transnet SOC Limited (“Transnet”) for payment in the amount of R1 billion this being the difference between the transportation costs that should have been charged by Transnet in terms of the Variation Agreement compared to the tariffs that were actually charged by Transnet in terms of the NERSA approved tariffs. The NERSA approved tariffs do not distinguish between the tariff for crude oil and the tariff for refined products. Total South Africa (Pty) Ltd (Total) instituted legal proceedings of a similar nature against Transnet in 2013.
Transnet defended the matter. Sasol Oil and Total’s actions have been consolidated. Certain issues in the consolidated matter have already been decided by the High Court in 2015 and the Supreme Court of Appeal (“SCA”) in 2016.
After certain separated issues in the ongoing litigation were heard by the Court, the High Court on 9 October 2020 made an order in favour of both Sasol Oil and Total. A subsequent appeal by Transnet to the SCA of two of the High Court’s findings, namely (i) that the High Court erred in finding that Transnet’s termination of the Variation Agreement was invalid and ineffectual and (ii) that the High Court erred in not finding that Sasol’s and Total’s claims did not disclose a cause of action was dismissed by the SCA in March 2021.
93 Sasol Annual Financial Statements 2023
34 |
Contingent liabilities continued |
34.1 |
Litigation continued |
Thereafter, in April 2021, Transnet approached the Constitutional Court with an application for leave to appeal, which both. Sasol Oil and Total opposed. The Constitutional Court handed down judgement on 21 June 2022:
● | The Constitutional Court did not grant Transnet leave to appeal on the cause of action issue as it did not engage the Court’s jurisdiction of general public importance. In the circumstances, Sasol and Total’s contractual damages claims following Transnet’s breach of the Variation Agreement remain intact at least until the Variation Agreement was validly terminated, which the Court held was 13 September 2020 (see below); |
● | The Constitutional Court granted Transnet leave to appeal in respect of the termination issue, allowed Transnet’s appeal and declared that the Variation Agreement was terminable, was terminated validly and came to an end on 13 September 2020. The Constitutional Court set aside the High Court’s order in so far as it related to the termination issue. |
Sasol Oil resumed with the next steps in the legal proceedings to deal with the quantum of its contractual damages claim in the High Court and has amended the amount of its claim to R1 975 million for the period up to and including the termination of the Variation Agreement on 13 September 2020. The matter has been set down for trial from 2 October to 13 October 2023.
After the High Court judgement mentioned above, Sasol Oil and Total proceeded to apply their own calculation of the corrected crude oil tariff in line with the High Court judgement and made payment for crude oil conveyance from December 2020 in accordance with this calculation. The calculation has been adjusted for each tariff year. These payments are at the reduced tariff and therefore constitute a shortfall to Transnet in respect of the tariff invoiced by Transnet over this period. In July 2022, Transnet instituted legal proceedings against Sasol Oil for payment of the aggregate shortfall in the tariff in the amount of R815,6 million. Sasol Oil is defending these proceedings. Sasol Oil has also delivered its plea and pleads its defence that the tariffs charged by Transnet are unlawful as they do not comply with the Petroleum Pipelines Act 60 of 2003, that Transnet is not obliged to charge the maximum tariff set by NERSA.
Pursuant to Transnet’s persistent threats to not accept crude oil orders from Sasol Oil unless Sasol Oil makes payment of the full NERSA tariff on a pre-payment basis, Sasol Oil agreed with Transnet to make payment of Transnet’s invoices in full in respect of crude oil conveyance from 1 June 2023, but under protest so as to not compromise the legal proceedings. The Transnet claim is set down for trial from 13 to 22 November 2023.
In June 2023 Sasol Oil also launched a legal review application against the 2023/4 Transnet Tariff approval by NERSA to set the NERSA decision aside in which NERSA persisted with a single tariff and did not differentiate between the tariffs for crude oil and white product conveyance respectively.
An amount of R1 042 million (which includes interest) has been included in trade payables at 30 June 2023.
Other litigation and tax matters
From time to time, Sasol companies are involved in other litigation and similar proceedings in the normal course of business.
A detailed assessment is performed on each matter and a provision is recognised where appropriate. Although the outcome of these proceedings and claims cannot be predicted with certainty, the Company does not believe that the outcome of any of these cases would have a material effect on the Group’s financial results.
94 Sasol Annual Financial Statements 2023
34 |
Contingent liabilities continued |
34.2Competition matters
Sasol continuously evaluates its compliance programmes and controls in general, including its competition law compliance programmes and controls. As a consequence of these compliance programmes and controls, including monitoring and review activities, Sasol has adopted appropriate remedial and/or mitigating steps, where necessary or advisable, lodged leniency applications and made disclosures on material findings as and when appropriate. These ongoing compliance activities have already revealed, and may still reveal, competition law contraventions or potential contraventions in respect of which we have taken, or will take, appropriate remedial and/or mitigating steps including lodging leniency applications.
34.3Environmental orders
Sasol’s environmental obligation accrued at 30 June 2023 was R17 293 million compared to R17 207 million at 30 June 2022.
Although Sasol has provided for known environmental obligations that are probable and reasonably estimable, the amount of additional future costs relating to remediation and rehabilitation may be material to results of operations in the period in which they are recognised. It is not expected that these environmental obligations will have a material effect on the financial position of the Group.
35 |
Related parties |
35.1 |
Transactions with related parties |
Group companies, in the ordinary course of business, entered into various purchase and sale transactions with associates and joint ventures. The effect of these transactions are included in the financial performance and results of the Group. Terms and conditions are determined on an arm’s length basis. Amounts owing (after eliminating intercompany balances) to related parties are disclosed in the respective notes to the financial statements for those statement of financial position items. No impairment of receivables related to the amount of outstanding balances is required. Disclosure in respect of transactions with joint ventures and associates is provided in note 19.
Except for the Group’s interests in joint ventures and associates, there are no other related parties with whom material individual transactions have taken place.
95 Sasol Annual Financial Statements 2023
35 |
Related party transactions continued |
35.2 |
Key management remuneration |
Key management comprises Directors and members of the Group Executive Committee (GEC), who have been determined to be Prescribed Officers of Sasol Limited.
Executive directors’ remuneration and benefits
|
|
FR Grobler |
|
VD Kahla3 |
|
HA Rossouw4 |
|
P Victor5 |
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Executive Directors |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
Salary |
|
13 117 |
|
11 328 |
|
7 762 |
|
7 301 |
|
7 468 |
|
1 737 |
|
— |
|
8 351 |
Risk and Retirement funding |
|
— |
|
— |
|
380 |
|
373 |
|
844 |
|
196 |
|
— |
|
391 |
Vehicle benefit |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
100 |
Healthcare |
|
143 |
|
117 |
|
114 |
|
108 |
|
— |
|
— |
|
— |
|
56 |
Vehicle insurance fringe benefit |
|
6 |
|
6 |
|
6 |
|
6 |
|
— |
|
— |
|
— |
|
6 |
Security benefits |
|
18 |
|
30 |
|
507 |
|
515 |
|
— |
|
— |
|
— |
|
— |
Other benefits |
|
20 |
|
5 |
|
122 |
|
1 |
|
25 |
|
8 001 |
|
— |
|
1 998 |
Total salary and benefits |
|
13 304 |
|
11 486 |
|
8 891 |
|
8 304 |
|
8 337 |
|
9 934 |
|
— |
|
10 902 |
Annual short-term incentive1 |
|
10 364 |
|
10 008 |
|
4 242 |
|
5 272 |
|
5 060 |
|
— |
|
— |
|
7 411 |
Long-term incentive gains2 |
|
17 028 |
|
21 451 |
|
14 681 |
|
9 399 |
|
— |
|
— |
|
— |
|
— |
Total annual remuneration |
|
40 696 |
|
42 945 |
|
27 814 |
|
22 975 |
|
13 397 |
|
9 934 |
|
— |
|
18 313 |
1 | Short-term incentives approved based on the Group results for FY23 and payable in FY24. Incentives are calculated as a percentage of total guaranteed package/base salary as at 30 June 2023 x Group and BU STI achievement (as appropriate) x Individual Performance Achievement. |
2 | Long-term incentives for 2023 represent the annual award made on 4 December 2020 and Mr Kahla's on-appointment award, in terms of his appointment as an executive director, made on 6 October 2020. The illustrative amount is calculated in terms of the number of LTIs x Corporate performance target achieved where relevant (67,34%) x June 2023 average share price. The vesting date is during FY24, 3 years after the award date in FY21, subject to the company being in an open period. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTIs vest. 50% of the vested LTIs and accrued dividends will be released on 4 December 2023 and the balance on 4 December 2025, subject to the rules of the LTI plan. As there are no further performance conditions attached to the balance of the 50%, the full amount is disclosed in the single figure table. |
3 | Other benefits for Mr Kahla include the private use of the Company owned accommodation in London (R121 255) on which fringe benefit tax was charged and paid by Mr Kahla. |
4 | The 2022 disclosed earnings of Mr Rossouw are for the period 4 April to 30 June 2022, in the position of Chief Financial Officer (CFO) designate. From 1 July 2022 Mr Rossouw was appointed as CFO. |
96 Sasol Annual Financial Statements 2023
35 |
Related party transactions continued |
35.2Key management remuneration continued
Other benefits for Mr Rossouw in 2022 include a buy-out payment of R8 000 000, tied to a retention period of twenty-four months from date of payment, as compensation for incentives forfeited upon resigning from his previous employer.
5 | Mr Victor resigned as CFO effective 30 June 2022. Other benefits in the prior year include accumulated leave encashment as well as other additional benefits in line with Sasol's contractual commitment. |
Executive directors’ unvested LTI holdings (number & intrinsic value) for 2023 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FR Grobler |
|
VD Kahla |
|
HA Rossouw |
||||||
|
|
|
|
Intrinsic |
|
|
|
Intrinsic |
|
|
|
Intrinsic |
|
|
Number |
|
value1 |
|
Number |
|
value1 |
|
Number |
|
value1 |
Executive Directors |
|
|
|
R'000 |
|
|
|
R'000 |
|
|
|
R'000 |
Balance at beginning of the year |
|
313 344 |
|
116 464 |
|
184 205 |
|
68 465 |
|
— |
|
— |
Awards granted2 |
|
57 976 |
|
17 407 |
|
28 728 |
|
8 625 |
|
— |
|
— |
Change in value1 |
|
— |
|
(43 725) |
|
— |
|
(25 774) |
|
— |
|
(4 531) |
Effect of corporate performance targets |
|
(45 494) |
|
(13 081) |
|
(19 934) |
|
(5 732) |
|
— |
|
— |
Dividend equivalents |
|
3 025 |
|
870 |
|
1 391 |
|
400 |
|
— |
|
— |
Awards settled3 |
|
(32 156) |
|
(8 728) |
|
(15 519) |
|
(4 261) |
|
— |
|
— |
Effect of changes in Executive Directors4 |
|
— |
|
— |
|
— |
|
— |
|
32 734 |
|
12 167 |
Balance at the end of the year |
|
296 695 |
|
69 207 |
|
178 871 |
|
41 723 |
|
32 734 |
|
7 636 |
1 | Change in intrinsic value for the year results from changes in share price. Intrinsic values at the beginning and end of the year have been determined using the closing price of: |
30 June 2023 R233,26
30 June 2022 R371,68
2 | LTIs granted on 10 November 2022. |
3 | LTIs settled represent long-term incentives that vested with reference to the Group results for 2022 that was settled in the 2023 financial year. Difference between the long-term incentive gains disclosed in 2022 and the amount settled in 2023 is due to difference in actual share price at vesting date and the share price at date of disclosure. 50% of the award that vested in 2023 is still subject to a continued employment period of two years. |
4 | Mr Rossouw was appointed as CFO and Executive Director on 1 July 2022. |
97 Sasol Annual Financial Statements 2023
35 |
Related party transactions continued |
35.2Key management remuneration continued
Prescribed Officers’ remuneration and benefits
|
|
S Baloyi3 |
|
HC Brand4 |
|
BE Klingenberg5 |
|
BP Mabelane6 |
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Prescribed Officers |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
Salary |
|
4 773 |
|
956 |
|
5 088 |
|
4 704 |
|
— |
|
6 647 |
|
7 778 |
|
7 317 |
Risk and Retirement funding |
|
1 017 |
|
215 |
|
1 492 |
|
1 487 |
|
— |
|
2 074 |
|
380 |
|
372 |
Vehicle benefit |
|
300 |
|
75 |
|
234 |
|
234 |
|
— |
|
212 |
|
— |
|
— |
Healthcare |
|
126 |
|
29 |
|
101 |
|
92 |
|
— |
|
136 |
|
60 |
|
56 |
Vehicle insurance fringe benefit |
|
6 |
|
2 |
|
6 |
|
6 |
|
— |
|
6 |
|
— |
|
— |
Security benefits |
|
— |
|
— |
|
— |
|
6 |
|
— |
|
200 |
|
— |
|
— |
Other benefits |
|
173 |
|
332 |
|
2 525 |
|
4 |
|
— |
|
7 |
|
1 008 |
|
5 004 |
Total salary and benefits |
|
6 395 |
|
1 609 |
|
9 446 |
|
6 533 |
|
— |
|
9 282 |
|
9 226 |
|
12 749 |
Annual short-term incentive1 |
|
3 672 |
|
2 494 |
|
3 553 |
|
4 415 |
|
— |
|
4 390 |
|
4 227 |
|
5 389 |
Long-term incentive gains2 |
|
4 103 |
|
3 687 |
|
6 045 |
|
13 169 |
|
— |
|
9 912 |
|
15 876 |
|
— |
Total annual remuneration |
|
14 170 |
|
7 790 |
|
19 044 |
|
24 117 |
|
— |
|
23 584 |
|
29 329 |
|
18 138 |
1 | Short-term incentives approved based on the Group results for FY23 and payable in FY24. Incentives are calculated as a percentage of total guaranteed package/base salary as at 30 June 2023 x Group and BU STI achievement (as appropriate) x Individual Performance Achievement. |
2 | Long-term incentives for 2023 represent the annual award made on 4 December 2020 and Ms Mabelane's on-appoinment award made on 6 October 2020. The illustrative amount is calculated in terms of the number of LTIs x Corporate performance target achieved where relevant (67,34)% x June 2023 average share price. The vesting date is during FY24, 3 years after the award date in FY21, subject to the company being in an open period. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTIs vest. 50% of the vested LTIs and accrued dividends will be released on 4 December 2023 and the balance on 4 December 2025, subject to the rules of the LTI plan. As there are no further performance conditions attached to the balance of the 50%, the full amount is disclosed in the single figure table. |
3 | Other benefits for Mr Baloyi include the taxation gross up of the relocation allowance paid in terms of the Sasol Relocation policy, in the previous financial year and R150 000 toward reimbursement of property transfer fees per relocation policy. |
4 | Mr Brand retired on 30 June 2023. Other Benefits include a R2 516 801 accumulated leave encashment, paid out in terms of his employment agreement. |
5 | Mr Klingenberg resigned as member of the GEC on 31 March 2022 but remained in service until 31 August 2022. In the interest of transparency his 2022 remuneration was disclosed for the full financial year. |
6 | Other benefits for Ms Mabelane include her subsidised business transport (R6 427) and the final payment of her sign-on/buy-out award partially compensating for the loss of incentives and shares when she resigned from her previous employer (R1 000 000). |
Other benefits for Ms Mabelane in 2022 include her subsidised business transport (R2 150), sign-on/buy-out award partially compensating for the loss of incentives and shares when she resigned from her previous employer (R5 000 000).
98 Sasol Annual Financial Statements 2023
35 |
Related party transactions continued |
35.2Key management remuneration continued
|
|
CK Mokoena |
|
CF Rademan3 |
|
BV Griffith⁴ |
||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Prescribed Officers |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
Salary |
|
6 283 |
|
5 927 |
|
6 753 |
|
2 027 |
|
11 023 |
|
8 745 |
Risk and Retirement funding |
|
357 |
|
350 |
|
— |
|
— |
|
812 |
|
618 |
Healthcare |
|
143 |
|
115 |
|
— |
|
— |
|
365 |
|
314 |
Security benefits |
|
12 |
|
9 |
|
— |
|
— |
|
— |
|
— |
Other benefits |
|
3 |
|
2 |
|
2 |
|
1 500 |
|
546 |
|
409 |
Total salary and benefits |
|
6 798 |
|
6 403 |
|
6 755 |
|
3 527 |
|
12 746 |
|
10 086 |
Annual short-term incentive1 |
|
3 380 |
|
3 740 |
|
3 200 |
|
1 503 |
|
6 087 |
|
6 418 |
Long-term incentive gains2 |
|
5 929 |
|
6 985 |
|
— |
|
— |
|
7 169 |
|
11 940 |
Total annual remuneration |
|
16 107 |
|
17 128 |
|
9 955 |
|
5 030 |
|
26 002 |
|
28 444 |
1 |
Short-term incentives approved based on the Group results for FY23 and payable in FY24. Incentives are calculated as a percentage of total guaranteed package/base salary as at 30 June 2023 x Group and BU STI achievement (as appropriate) x BU achievement x Individual performance achievement. |
2 |
Long-term incentives for 2023 represent the annual award made on 4 December 2020. The illustrative amount is calculated in terms of the number of LTIs x Corporate performance target achieved where relevant (67,34)% x June 2023 average share price. The vesting date is during FY24, 3 years after the award date in FY21, subject to the company being in an open period. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTIs vest. 50% of the vested LTIs and accrued dividends will be released on 4 December 2023 and the balance on 4 December 2025, subject to the rules of the LTI plan. As there are no further performance conditions attached to the balance of the 50%, the full amount is disclosed in the single figure table. |
3 |
Other benefits for Mr Rademan in 2022 include a sign-on payment of R1 500 000 compensating for the incentive which he would have received from his previous employer if he did not resign. |
4 |
Mr Griffith is appointed in the USA. Dollar denominated salary and benefits have been converted to ZAR using the monthly average of daily closing exchange rates. ZAR/USD depreciation contributes to increase in year-on-year totals. |
Prescribed Officers’ unvested LTI holdings (number & intrinsic value) for 2023
|
|
S Baloyi |
|
HC Brand4 |
|
BP Mabelane |
||||||
|
|
|
|
Intrinsic |
|
|
|
Intrinsic |
|
|
|
Intrinsic |
|
|
|
|
value1 |
|
|
|
value1 |
|
|
|
value1 |
Prescribed Officers |
|
Number |
|
R'000 |
|
Number |
|
R'000 |
|
Number |
|
R'000 |
Balance at beginning of the year |
|
52 040 |
|
19 342 |
|
139 064 |
|
51 687 |
|
120 403 |
|
44 751 |
Awards granted2 |
|
10 681 |
|
3 207 |
|
24 060 |
|
7 224 |
|
28 595 |
|
8 585 |
Change in value1 |
|
— |
|
(7 393) |
|
— |
|
(18 589) |
|
— |
|
(18 581) |
Effect of corporate performance targets |
|
(1 943) |
|
(559) |
|
(23 152) |
|
(6 657) |
|
— |
|
— |
Dividend equivalents |
|
448 |
|
129 |
|
1 860 |
|
535 |
|
— |
|
— |
Awards settled3 |
|
(6 463) |
|
(1 952) |
|
(23 346) |
|
(6 562) |
|
— |
|
— |
Awards forfeited4 |
|
— |
|
— |
|
(24 060) |
|
(5 612) |
|
— |
|
— |
Effect of changes in Prescribed Officers4 |
|
— |
|
— |
|
(94 426) |
|
(22 026) |
|
— |
|
— |
Balance at the end of the year |
|
54 763 |
|
12 774 |
|
— |
|
— |
|
148 998 |
|
34 755 |
1 | Change in intrinsic value for the year results from changes in share price. Intrinsic values at the beginning and end of the year have been determined using the closing price of: |
99 Sasol Annual Financial Statements 2023
35 |
Related party transactions continued |
35.2Key management remuneration continued
30 June 2023 R233,26 ($12,38)
30 June 2022 R371,68 ($23,06)
2 | LTIs granted on 10 November 2022. |
3 | LTIs settled represent long-term incentives that vested with reference to the Group results for 2022 that was settled in the 2023 financial year. Difference between the long-term incentive gains disclosed in 2022 and the amount settled in 2023 is due to difference in actual share price at vesting date and the share price at date of disclosure. |
4 | Mr Brand retired effective 30 June 2023. In terms of the 2022 LTI Plan rules, his 10 November 2022 award lapsed on 30 June 2023 as retirement was within 270 days of the award date. The balance of unvested awards at 30 June 2023 is 94 426 with an intrinsic value of R22 025 809. |
Prescribed Officers' unvested LTI holdings (number & intrinsic value) for 2023
|
|
CK Mokoena |
|
BV Griffith |
||||
|
|
Number |
|
Intrinsic value1 |
|
|
|
Intrinsic value1 |
Prescribed Officers |
|
|
|
R'000 |
|
Number |
|
US$'000 |
Balance at beginning of the year |
|
113 178 |
|
42 066 |
|
144 426 |
|
3 330 |
Awards granted2 |
|
23 598 |
|
7 085 |
|
37 603 |
|
654 |
Change in value1 |
|
— |
|
(16 069) |
|
— |
|
(1 588) |
Effect of corporate performance targets |
|
(14 815) |
|
(4 260) |
|
(14 043) |
|
(228) |
Dividend equivalents |
|
1 001 |
|
288 |
|
1 389 |
|
23 |
Awards settled3 |
|
(10 836) |
|
(2 955) |
|
(22 513) |
|
(373) |
Balance at the end of the year |
|
112 126 |
|
26 155 |
|
146 862 |
|
1 818 |
1 | Change in intrinsic value for the year results from changes in share price. Intrinsic values at the beginning and end of the year have been determined using the closing price of: |
30 June 2023 R233,26 ($12,38)
30 June 2022 R371,68 ($23,06)
2 | LTIs granted on 10 November 2022. |
3 | LTIs settled represent long-term incentives that vested with reference to the Group results for 2022 that was settled in the 2023 financial year. Difference between the long-term incentive gains disclosed in 2022 and the amount settled in 2023 is due to difference in actual share price at vesting date and the share price at date of disclosure. |
100 Sasol Annual Financial Statements 2023
35 |
Related party transactions continued |
35.2Key management remuneration continued
The total IFRS2 charge for LTIs awarded to the Executive Directors and the Prescribed Officers in 2023 amounted to R29 million (2022: R14 million) and R45 million (2022: R32 million).
Non-executive Directors’ remuneration
|
|
|
|
|
|
|
|
Ad Hoc or |
|
|
|
|
|
|
|
|
|
|
|
|
Lead inde- |
|
|
|
special |
|
|
|
|
|
|
|
|
|
|
Board |
|
pendent |
|
|
|
purpose |
|
|
|
|
|
|
|
|
|
|
meeting |
|
Director |
|
Committee |
|
board |
|
|
|
|
|
Total |
|
Total |
|
|
fees1 2 3 |
|
fees1 2 |
|
fees1 2 3 |
|
committee |
|
VAT |
|
Other |
|
20234 |
|
2022 |
Non-executive Directors |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
|
R'000 |
SA Nkosi (Chairman) |
|
4 394 |
|
— |
|
— |
|
— |
|
659 |
|
— |
|
5 053 |
|
5 127 |
S Westwell (Lead Independent Director) |
|
2 194 |
|
878 |
|
1 408 |
|
— |
|
— |
|
— |
|
4 480 |
|
3 913 |
MJ Cuambe5 |
|
1 829 |
|
— |
|
658 |
|
— |
|
373 |
|
— |
|
2 860 |
|
2 577 |
MBN Dube5 |
|
2 194 |
|
— |
|
969 |
|
— |
|
— |
|
— |
|
3 163 |
|
2 701 |
M Flöel |
|
2 194 |
|
— |
|
795 |
|
— |
|
— |
|
— |
|
2 989 |
|
2 494 |
K Harper6 |
|
2 194 |
|
— |
|
439 |
|
— |
|
— |
|
— |
|
2 633 |
|
1 996 |
GMB Kennealy |
|
1 542 |
|
— |
|
833 |
|
— |
|
356 |
|
— |
|
2 731 |
|
2 473 |
NNA Matyumza |
|
1 542 |
|
— |
|
493 |
|
— |
|
305 |
|
— |
|
2 340 |
|
2 226 |
MEK Nkeli |
|
1 542 |
|
— |
|
678 |
|
— |
|
333 |
|
— |
|
2 553 |
|
2 405 |
A Schierenbeck7 |
|
1 152 |
|
— |
|
141 |
|
— |
|
— |
|
— |
|
1 293 |
|
— |
S Subramoney |
|
1 542 |
|
— |
|
493 |
|
— |
|
305 |
|
— |
|
2 340 |
|
2 181 |
C Beggs8 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
372 |
ZM Mkhize8 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
795 |
PJ Robertson8 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 146 |
Total |
|
22 319 |
|
878 |
|
6 907 |
|
— |
|
2 331 |
|
— |
|
32 435 |
|
30 406 |
1 | Fees for Q3 and Q4 were adjusted with inflation as per the approved AGM resolution at the November 2021 AGM. |
2 | Fees exclude VAT. |
3 | Board and Committee fees are based in USD, thus impacted by USD/ZAR foreign exchange rates at date of payment for resident non-executive directors. For Non-executive directors permanently residing outside of the UK, Europe and North America, effective 1 January 2023, the exchange rate was fixed for the following 12 month period, using the average exchange rate from 1 July 2021 to December 2022. A cost-of-living factor between jurisdictions, account for differences in fees. |
4 | As the fees are based in USD, the ZAR value of the Non executive director fees increased from FY22 to FY23, mainly due to the CPI increase and significant devaluation of the Rand. |
5 | Mr Cuambe was appointed to the Remuneration Committee effective 19 November 2021 and Ms Dube to the Nomination Governance committee effective 1 October 2021. |
6 | In addition to the CPI and exchange rate increase, Ms Harper received the reduced 2018 approved directors fees for Q1 and Q2 of FY22 as she was appointed to the Board after 2018, compared to her peers who remained on the approved 2016 fee (where their fees were higher than those approved in 2018). |
7 | Mr A Schierenbeck was appointed effective 1 January 2023. |
8 | Mr C Beggs retired effective 31 August 2021. Messrs ZM Mkhize and PJ Robertson retired from the Board effective 19 November 2021. |
101 Sasol Annual Financial Statements 2023
36 |
Subsequent events |
Clause 12A application
Sasol’s emission sources at our operations in South Africa are regulated in accordance with atmospheric emission licenses which are based on the Minimum Emission Standards (MES) published in terms of section 21 of the National Environmental Management: Air Quality Act. On 11 July 2023, Sasol was informed that the National Air Quality Officer (NAQO) had declined its application of June 2022 in terms of Clause 12A of the MES to be regulated on an alternative emission load basis for the SO2 emissions from the boilers at its SO’s steam plants from 1 April 2025 onwards.
On 31 July 2023, Sasol appealed the decision to the Minister of Forestry, Fisheries and the Environment, as provided for in Section 43(1) of the National Environmental Management Act. The appeal process allows the Minister to consider the application afresh. Clause 12A of the MES permits existing plants to be regulated on an alternative emission load, as opposed to the current concentration-based limit (the mass of pollutant per cubic metre of air emitted) specified in the MES.
As part of its Clause 12A application, Sasol has proposed an integrated air quality and GHG reduction solution (“integrated emission reduction solution”) to reduce SO2 and GHG emissions by approximately 30% by 2030. This is contingent on SO2 emissions from the boilers at the steam plants of its SO being regulated on an alternative load-based emission limit instead of the concentration limit currently being prescribed in the MES from 1 April 2025 onwards. The integrated emission reduction solution comprises the implementation of multiple projects targeting energy efficiency, reducing coal usage, turning down boilers and integrating 1 200 MW of renewable energy. The assumptions applied in compiling the financial statements, and in particular the testing of the recoverability of the Group's non-financial assets (other than inventories and deferred tax assets), are aligned to the integrated emission reduction solution.
Sasol Financing International / SARS
Refer to note 10 for events that occurred subsequent to 30 June 2023 on the SFI tax matter.
NERSA Maximum Gas Price application
Refer to note 34.1 for events that occurred subsequent to 30 June 2023 on the NERSA maximum gas price application.
102 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments |
37.1Financial instruments classification and fair value measurement
The following table shows the classification, carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1Quoted prices in active markets for identical assets or liabilities.
Level 2Inputs other than quoted prices that are observable for the asset or liability (directly or indirectly).
Level 3Inputs for the asset or liability that are unobservable.
|
|
|
|
Carrying |
|
|
|
Carrying |
|
|
|
|
|
|
|
|
value |
|
Fair value |
|
value |
|
Fair value |
|
Fair value |
|
|
|
|
2023 |
|
2023 |
|
2022 |
|
2022 |
|
hierarchy |
Financial instrument |
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
of inputs |
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
At amortised cost |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term restricted cash6 |
|
|
|
1 447 |
|
1 447 |
|
1 531 |
|
1 531 |
|
Level 11 |
Long-term receivables |
|
18 |
|
2 803 |
|
2 803 |
|
3 023 |
|
3 023 |
|
Level 32 |
Trade and other receivables |
|
23 |
|
30 915 |
|
30 915 |
|
38 936 |
|
38 936 |
|
Level 33 |
Cash and cash equivalents |
|
26 |
|
53 926 |
|
53 926 |
|
43 140 |
|
43 140 |
|
Level 11 |
At fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term and short-term financial assets |
|
|
|
2 225 |
|
2 225 |
|
868 |
|
868 |
|
|
Commodity and currency derivative assets |
|
|
|
472 |
|
472 |
|
247 |
|
247 |
|
Level 2 |
Oxygen supply contract embedded derivative assets |
|
|
|
516 |
|
516 |
|
621 |
|
621 |
|
Level 3 |
Other short-term investments |
|
|
|
1 237 |
|
1 237 |
|
— |
|
— |
|
Level 11 |
Designated at fair value through other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
Investments in listed securities6 |
|
|
|
701 |
|
701 |
|
480 |
|
480 |
|
Level 14 |
Investments in unlisted securities6 |
|
|
|
12 |
|
12 |
|
13 |
|
13 |
|
Level 35 |
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
At amortised cost |
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt |
|
14 |
|
124 068 |
|
116 533 |
|
104 834 |
|
98 491 |
|
|
Listed long-term debt (Bonds issued)7 |
|
|
|
90 248 |
|
82 768 |
|
78 076 |
|
71 667 |
|
Level 14 |
Listed convertible bonds |
|
|
|
12 238 |
|
12 072 |
|
— |
|
— |
|
Level 38 |
Unlisted long-term debt7 |
|
|
|
21 582 |
|
21 693 |
|
26 758 |
|
26 824 |
|
Level 32 |
Lease liabilities |
|
15 |
|
16 297 |
|
|
|
16 034 |
|
|
|
|
Short-term debt and bank overdraft |
|
|
|
238 |
|
238 |
|
255 |
|
255 |
|
Level 33 |
Trade and other payables |
|
24 |
|
35 118 |
|
35 118 |
|
39 873 |
|
39 873 |
|
Level 33 |
At fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term and short-term financial liabilities |
|
|
|
3 397 |
|
3 397 |
|
7 127 |
|
7 127 |
|
|
Commodity and currency derivative liabilities |
|
|
|
1 102 |
|
1 102 |
|
6 845 |
|
6 845 |
|
Level 2 |
Convertible bond embedded derivative liability |
|
|
|
1 302 |
|
1 302 |
|
— |
|
— |
|
Level 3 |
Oxygen supply contract embedded derivative liabilities |
|
|
|
993 |
|
993 |
|
282 |
|
282 |
|
Level 3 |
1 | The carrying value of cash, other short-term deposits and other short-term investments is considered to reflect its fair value. |
103 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.1Financial instruments classification and fair value measurement continued
2 | Determined with a discounted cash flow model using market related interest rates. |
3 | The fair value of these instruments approximates their carrying value, due to their short-term nature. |
4 | Based on quoted market price for the same instrument. |
5 | Determined using discounted cash flows modelling forecasted earnings, capital expenditure and debt cash flows of the underlying business, based on the forecasted assumptions of inflation, exchange rates, commodity prices and an appropriate WACC for the region. |
6 | Presented as part of Other long-term investments on the Statement of financial position. |
7 | Includes unamortised loan costs. |
8 | The fair value of the amortised cost component of the US$Convertible Bond is based on the quoted price of the instrument after separating the fair value of the derivative component. |
There were no transfers between levels for recurring fair value measurements during the year.
Commodity and currency derivative assets and liabilities
Valued using forward rate interpolator model, appropriate currency specific discount curve, discounted expected cash flows and numerical approximation as appropriate. Significant inputs include forward exchange contracted rates, market foreign exchange rates, forward contract rates and market commodity prices such as crude oil prices, coal prices and ethane prices. A weakening of the assumed rand/US$ exchange rate will result in additional losses of R964 million.
Oxygen supply contract embedded derivative assets and liabilities
Relates to the US labour and inflation index and ZAR/EUR exchange rate embedded derivatives contained in the SO long-term gas supply agreements. The following table reconciles the opening and closing balance of the net embedded derivative asset/(liability):
|
|
|
|
|
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Balance at the beginning of the year |
|
339 |
|
373 |
Amounts settled during the year |
|
(22) |
|
(98) |
Fair value loss recognised in other operating expenses and income |
|
(794) |
|
64 |
Balance at the end of the year |
|
(477) |
|
339 |
104 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.1Financial instruments classification and fair value measurement continued
The fair value of the embedded derivative is impacted by a number of observable and unobservable variables at valuation date. The embedded derivative was valued using a forward rate interpolator model, discounted expected cash flows and numerical approximation, as appropriate. Significant inputs include US PPI index, US labour index, US dollar and ZAR treasury curves, Rand zero swap discount rate, and interpolated EUR/ZAR forward rate. The sensitivities provided below reflect the impact on fair value through profit or loss as a result of movements in the significant input variables utilised for valuation purposes:
|
|
|
Increase/(decrease) in profit or |
|||
|
|
|
loss |
|||
|
|
Change |
|
2023 |
|
2022 |
Input |
|
in input |
|
Rm |
|
Rm |
Rand/US$ Spot price |
|
+R1/US$ |
|
(478) |
|
(513) |
|
|
-R1/US$ |
|
478 |
|
513 |
US$ Swap curve |
|
+0,10 |
% |
87 |
|
86 |
|
|
-0,10 |
% |
(89) |
|
(87) |
Rand Swap curve |
|
+1,00 |
% |
(734) |
|
(786) |
|
|
-1,00 |
% |
848 |
|
911 |
Convertible bond embedded derivative liability
Relates to the embedded derivative contained in the US$750 million convertible bond issued on 8 November 2022. The following table reconciles the opening and closing balance of the embedded derivative liability:
|
|
2023 |
|
2022 |
for the year ended 30 June |
|
Rm |
|
Rm |
Recognition of embedded derivative upon issue of bond |
|
2 089 |
|
— |
Fair value loss recognised in other operating expenses and income |
|
(867) |
|
— |
Translation of foreign operations |
|
80 |
|
— |
Balance at the end of the year |
|
1 302 |
|
— |
The embedded derivative was valued at 30 June 2023 and at inception date using quoted bond market prices and binomial tree approach. Significant inputs include conversion price (US$19,86; inception: US$20,39), spot share price (R233,26; inception R285,95), converted to USD at the prevailing USD/ZAR FX spot rate (R18,83/US$; inception: R18,23/US$), observable bond market price (94,7% of par; inception: 100% of par), credit spread (460bps; inception: 427bps) and volatility (27,84%; inception 28,44%). Although many inputs into the valuation are observable, the valuation method separates the fair value of the derivative from the quoted fair value of the US$ Convertible Bond by adjusting certain observable inputs. These adjustments require the application of judgement and certain estimates. Changes in the relevant inputs impact the fair value gains and losses recognised. This instrument is most sensitive to changes in the calibrated volatility and credit spread. The sensitivities provided below reflect the impact on fair value through profit or loss as a result of movements in key inputs:
|
|
|
|
Increase/(decrease) in profit or |
||
|
|
|
|
loss |
||
|
|
Change |
|
2023 |
|
2022 |
Input |
|
in input |
|
Rm |
|
Rm |
Credit spread |
|
+100bps |
|
(433) |
|
— |
|
|
-100bps |
|
455 |
|
— |
Calibrated volatility |
|
+5 |
% |
(377) |
|
— |
|
|
-5 |
% |
364 |
|
— |
There was no change in valuation techniques compared to the previous financial year.
105 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management |
The Group is exposed in varying degrees to a number of financial instrument related risks. The Group Executive Committee (GEC) has the overall responsibility for the establishment and oversight of the Group’s risk management framework. The GEC established the Safety Committee, which is responsible for providing the Board with the assurance that significant business risks are systematically identified, assessed and reduced to acceptable levels. A comprehensive risk management process has been developed to continuously monitor and assess these risks. Based on the risk management process Sasol refined its hedging policy and the Board appointed a subcommittee, the Audit Committee, that meets regularly to review and, if appropriate, approve the implementation of hedging strategies for the effective management of financial market related risks.
The Group has a central treasury function that manages the financial risks relating to the Group’s operations.
Capital allocation
The Group’s objectives when managing capital (which includes share capital, borrowings, working capital and cash and cash equivalents) is to maintain a flexible capital structure that reduces the cost of capital to an acceptable level of risk and to safeguard the Group’s ability to continue as a going concern while taking advantage of strategic opportunities in order to grow shareholder value sustainably.
The Group manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, repurchase shares currently issued, issue new shares, issue new debt, issue new debt to replace existing debt with different characteristics and/or sell assets to reduce debt.
The Group monitors capital utilising a number of measures, including the gearing ratio (net debt to shareholders’ equity). Gearing takes into account the Group’s substantial capital investment and susceptibility to external market factors such as crude oil prices, exchange rates and commodity chemical prices. The Group’s gearing level for 2023 increased to 44,7% (2022 – 41,7%; 2021 – 61,5%) largely due to the weaker closing exchange rate.
Financing risk
Financing risk refers to the risk that financing of the Group’s net debt requirements and refinancing of existing borrowings could become more difficult or more costly in the future. This risk can be decreased by managing the Group within the targeted gearing ratio, maintaining an appropriate spread of maturity dates, and managing short-term borrowings within acceptable levels.
The Group’s target for long-term borrowings include an average time to maturity of at least two years, and an even spread of maturities.
Credit rating
|
|
Credit rating |
||
Agency |
|
2023 |
|
2022 |
S&P |
|
BB+ (stable) |
|
BB (positive) |
Moody’s |
|
Ba2 (positive) |
|
Ba2 (positive) |
On 28 October 2022, S&P upgraded Sasol’s rating from BB to BB+ on the back of debt reduction, and improved cash flow generation supported by stronger commodity prices and improved efficiency; revising the outlook from positive to stable. The stable outlook reflects that recent debt reduction and supportive oil prices will offset near-term headwinds and allow Sasol to maintain Funds From Operations to debt above 45% on average in the coming years.
106 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management continued |
Risk profile
Risk management and measurement relating to each of these risks is discussed under the headings below (sub-categorised into credit risk, liquidity risk, and market risk) which entails an analysis of the types of risk exposure, the way in which such exposure is managed and quantification of the level of exposure in the statement of financial position.
Credit risk
Credit risk is the risk of financial loss due to counterparties not meeting their contractual obligations. Credit risk is deemed to be low when, based on the forward available information, it is highly probable that the customer will service its debt in accordance with the agreement throughout the period.
How we manage the risk
The risk is managed by the application of credit approvals, limits and monitoring procedures. Where appropriate, the Group obtains security in the form of guarantees to mitigate risk. Counterparty credit limits are in place and are reviewed and approved by the respective subsidiary credit management committees. The central treasury function provides credit risk management for the group-wide exposure in respect of a diversified group of banks and other financial institutions. These are evaluated regularly for financial robustness especially in the current global economic environment. Management has evaluated treasury counterparty risk and does not expect any treasury counterparties to fail in meeting their obligations. The Group maximum exposure is the outstanding carrying amount of the financial asset.
For all financial assets measured at amortised cost, the Group calculates the expected credit loss based on contractual payment terms of the asset. The contractual payment terms for receivables vary from 30 days to 120 days. The exposure to credit risk is influenced by the individual characteristics, the industry and geographical area of the counterparty with whom we have transacted. Financial assets at amortised cost are carefully monitored and reviewed on a regular basis for expected credit loss and impairment based on our credit risk policy.
Expected Credit Loss (ECL) is calculated as a function of probability of default, loss given default and exposure at default. The Group allocates probability of default based on external and internal information. The major portion of the financial assets at amortised cost consists of externally rated customers and the Group uses the average of Moody’s, Fitch and S&P Corporate and Sovereign probability of defaults, depending on whether the customer or holder of the financial asset is corporate or government related. For customers or debtors that are not rated by a formal rating agency, the Group allocates internal credit ratings and default rates taking into account forward looking information, based on the debtors profile and financial status. Loss given default (LGD) is based on the Basel model. World-wide, and especially in South Africa, economies have faced a series of global and local disruptions, including price volatility, elevated energy costs, high inflation, higher cost of debt, etc. As a result the Group applied the Board of Governors of the Federal Reserve System’s formula to derive a downturn LGD to be used for 2023 and 2022, namely 50% for unsecured financial assets and 40% for secured financial assets. Credit enhancement is only taken into account if it is integral to the asset. Trade receivables expected credit loss is calculated over lifetime. Other financial assets expected credit loss is measured over 12 months when the credit risk is low and over lifetime where the credit risk has increased significantly. The Group considers credit risk to have increased significantly when the customer’s credit rating has been downgraded to a lower grade (e.g. A grade to B grade). The Group considers customers to be in default when the receivable is more than 30 days overdue or the customer has failed to honour a repayment arrangement.
107 Sasol Annual Financial Statements 2023
37Financial risk management and financial instruments continued
37.2 |
Financial risk management continued |
No single customer represents more than 10% of the Group’s total turnover or more than 10% of total trade receivables for the years ended 30 June 2023, 2022 and 2021. Approximately 49% (2022 — 48%; 2021 — 42%) of the Group’s total turnover is generated from sales within South Africa, while about 19% (2022 — 21%; 2021 — 24%) relates to European sales and 16% (2022 — 16%; 2021 — 18%) relates to sales within the US. The concentration of credit risk within geographic regions is largely aligned with the geographic regions in which the turnover was earned.
Detail of allowances for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12-month |
|
|
|
|
Lifetime ECL |
|
ECL |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
No |
|
|
|
|
Significant |
|
|
|
|
|
|
|
significant |
|
|
|
|
increase in |
|
Simplified |
|
|
|
|
|
increase in |
|
|
|
|
credit risk |
|
approach |
|
|
|
|
|
credit risk |
|
Total |
|
|
since initial |
|
for trade |
|
Credit- |
|
Total lifetime |
|
since initial |
|
expected |
|
|
recognition |
|
receivables |
|
impaired |
|
ECL |
|
recognition |
|
credit loss |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term receivables |
|
— |
|
— |
|
49 |
|
49 |
|
62 |
|
111 |
Trade receivables |
|
— |
|
34 |
|
227 |
|
261 |
|
— |
|
261 |
Other receivables |
|
102 |
|
— |
|
385 |
|
487 |
|
4 |
|
491 |
|
|
102 |
|
34 |
|
661 |
|
797 |
|
66 |
|
863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12-month |
|
|
|
|
Lifetime ECL |
|
ECL |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
No |
|
|
|
|
Significant |
|
|
|
|
|
|
|
significant |
|
|
|
|
increase in |
|
Simplified |
|
|
|
|
|
increase in |
|
|
|
|
credit risk |
|
approach |
|
|
|
|
|
credit risk |
|
Total |
|
|
since initial |
|
for trade |
|
Credit- |
|
Total lifetime |
|
since initial |
|
expected |
|
|
recognition |
|
receivables |
|
impaired |
|
ECL |
|
recognition |
|
credit loss |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term receivables |
|
— |
|
— |
|
41 |
|
41 |
|
44 |
|
85 |
Trade receivables |
|
— |
|
30 |
|
101 |
|
131 |
|
— |
|
131 |
Other receivables |
|
1 |
|
— |
|
272 |
|
273 |
|
58 |
|
331 |
|
|
1 |
|
30 |
|
414 |
|
445 |
|
102 |
|
547 |
The ECL relating to trade and other receivables increased despite decreases in their respective carrying amounts mainly due to allowances against specific defaulting customers.
Overview of the credit risk profile of financial assets measured at amortised cost is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
||||||||
|
|
Low risk |
|
Medium risk |
|
High risk |
|
Low risk |
|
Medium risk |
|
High risk |
|
|
|
|
|
|
CCC+ and |
|
|
|
|
|
CCC+ and |
|
|
AAA to A- |
|
BBB+ to B- |
|
below |
|
AAA to A- |
|
BBB+ to B- |
|
below |
|
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
Long-term receivables |
|
29 |
|
59 |
|
12 |
|
51 |
|
43 |
|
6 |
Trade receivables |
|
77 |
|
18 |
|
5 |
|
73 |
|
24 |
|
3 |
Other receivables |
|
82 |
|
15 |
|
3 |
|
83 |
|
15 |
|
2 |
Cash and cash equivalents* |
|
20 |
|
78 |
|
2 |
|
18 |
|
81 |
|
1 |
* | Includes long-term restricted cash. |
108 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management continued |
Liquidity risk
Liquidity risk is the risk that an entity in the Group will be unable to meet its obligations as they become due.
The global economic landscape remains volatile, including fluctuating oil and petrochemical prices, an unstable product demand environment and inflationary pressure. In South Africa, the underperformance of state-owned enterprises and socio-economic challenges continues to impact volumes, margins and resultant profitability.
How we manage the risk
The Group manages liquidity risk by effectively managing its working capital, capital expenditure and cash flows, making use of a central treasury function to manage pooled business unit cash investments and borrowing requirements. Currently the Group is maintaining a positive liquidity position, conserving the Group’s cash resources through continued focus on working capital improvement, cost savings and capital reprioritisation.
The Group meets its financing requirements through a mixture of cash generated from its operations and, short and long-term borrowings and strives to maintain adequate banking facilities and reserve borrowing capacities. Adequate banking facilities and reserve borrowing capacities are maintained. The Group has refinanced its existing banking facilities, due to mature in calendar year 2024, into a new banking facility totaling nearly USD3 billion comprising of a revolving credit facility and term loan facility, both with a five-year maturity and with two extension options of one year each. Refer to note 14. The Group is in compliance with all of the financial covenants per its loan agreements, none of which are expected to present a material restriction on funding or its investment policy in the near future.
Protection of downside risk for the balance sheet was a key priority for the Group during volatile times, resulting in the execution of our hedging programme to address oil price, ethane price and currency exposure.
The net debt to EBITDA (bank definition) at 30 June 2023 was 1,2 times (2022 – 0,8 times), significantly below the covenant threshold level of 3 times.
109 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management continued |
Our exposure to and assessment of the risk
The maturity profile of the undiscounted contractual cash flows of financial instruments at 30 June were as follows:
|
|
|
|
Carrying |
|
Contractual |
|
Within one |
|
One to |
|
Three to |
|
More than |
|
|
|
|
amount |
|
cash flows* |
|
year |
|
three years |
|
five years |
|
five years |
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term receivables |
|
18 |
|
2 803 |
|
3 105 |
|
— |
|
1 119 |
|
273 |
|
1 713 |
Trade and other receivables |
|
23 |
|
30 915 |
|
30 915 |
|
30 915 |
|
— |
|
— |
|
— |
Cash and cash equivalents |
|
26 |
|
53 926 |
|
53 926 |
|
53 926 |
|
— |
|
— |
|
— |
Investments through other comprehensive income |
|
|
|
713 |
|
713 |
|
713 |
|
— |
|
— |
|
— |
Investments through profit or loss |
|
|
|
1 237 |
|
1 237 |
|
1 237 |
|
— |
|
— |
|
— |
Long-term restricted cash |
|
|
|
1 447 |
|
1 447 |
|
— |
|
— |
|
— |
|
1 447 |
|
|
|
|
91 041 |
|
91 343 |
|
86 791 |
|
1 119 |
|
273 |
|
3 160 |
Derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts |
|
|
|
133 |
|
17 866 |
|
17 866 |
|
— |
|
— |
|
— |
Crude oil put options |
|
|
|
253 |
|
253 |
|
253 |
|
— |
|
— |
|
— |
Foreign exchange zero cost collars |
|
|
|
76 |
|
76 |
|
76 |
|
— |
|
— |
|
— |
Other commodity derivatives |
|
|
|
10 |
|
10 |
|
10 |
|
— |
|
— |
|
— |
Oxygen supply contract embedded derivative |
|
|
|
516 |
|
891 |
|
69 |
|
138 |
|
138 |
|
546 |
|
|
|
|
92 029 |
|
110 439 |
|
105 065 |
|
1 257 |
|
411 |
|
3 706 |
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt** |
|
14 |
|
(124 068) |
|
(160 266) |
|
(36 198) |
|
(13 241) |
|
(56 442) |
|
(54 385) |
Lease liabilities |
|
15 |
|
(16 297) |
|
(34 111) |
|
(3 261) |
|
(5 364) |
|
(3 559) |
|
(21 927) |
Short-term debt |
|
16 |
|
(79) |
|
(79) |
|
(79) |
|
— |
|
— |
|
— |
Trade and other payables |
|
24 |
|
(35 118) |
|
(35 118) |
|
(35 118) |
|
— |
|
— |
|
— |
Bank overdraft |
|
26 |
|
(159) |
|
(159) |
|
(159) |
|
— |
|
— |
|
— |
|
|
|
|
(175 721) |
|
(229 733) |
|
(74 815) |
|
(18 605) |
|
(60 001) |
|
(76 312) |
Derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts |
|
|
|
(353) |
|
(18 086) |
|
(18 086) |
|
— |
|
— |
|
— |
Foreign exchange zero cost collars |
|
|
|
(579) |
|
(579) |
|
(579) |
|
— |
|
— |
|
— |
Ethane swap options |
|
|
|
(158) |
|
(158) |
|
(158) |
|
— |
|
— |
|
— |
Crude oil futures |
|
|
|
(12) |
|
(12) |
|
(12) |
|
— |
|
— |
|
— |
Oxygen supply contract embedded derivative |
|
|
|
(993) |
|
(3 606) |
|
(64) |
|
(109) |
|
(101) |
|
(3 332) |
|
|
|
|
(177 816) |
|
(252 174) |
|
(93 714) |
|
(18 714) |
|
(60 102) |
|
(79 644) |
* |
Contractual cash flows include interest payments. |
** |
The repayment of the notional amount of the convertible bonds is included in the one to three years category, in line with the contractual maturity date. The convertible bonds are convertible into ordinary shares of Sasol at the election of the holders if the Sasol share price appreciates above a specified conversion price. Refer to note 14 for more information. |
The impact of the refinancing activities can be seen in the significant increase in contractual payments due beyond three years.
Current financial assets are sufficient to cover financial liabilities for the next year. The shortfall beyond one year will be funded through cash generated from operations, utilisation of available facilities and the refinancing of existing debt.
110 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management continued |
|
|
|
|
Carrying |
|
Contractual |
|
Within one |
|
One to |
|
Three to |
|
More than |
|
|
|
|
amount |
|
cash flows* |
|
year |
|
three years |
|
five years |
|
five years |
|
|
Note |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term receivables |
|
18 |
|
3 023 |
|
3 316 |
|
— |
|
1 447 |
|
777 |
|
1 092 |
Trade and other receivables |
|
23 |
|
38 936 |
|
38 936 |
|
38 936 |
|
— |
|
— |
|
— |
Cash and cash equivalents |
|
26 |
|
43 140 |
|
43 140 |
|
43 140 |
|
— |
|
— |
|
— |
Investments through other comprehensive income |
|
|
|
493 |
|
493 |
|
493 |
|
— |
|
— |
|
— |
Long-term restricted cash |
|
|
|
1 531 |
|
1 531 |
|
— |
|
— |
|
— |
|
1 531 |
|
|
|
|
87 123 |
|
87 416 |
|
82 569 |
|
1 447 |
|
777 |
|
2 623 |
Derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts |
|
|
|
68 |
|
9 005 |
|
9 005 |
|
— |
|
— |
|
— |
Crude oil futures |
|
|
|
25 |
|
25 |
|
25 |
|
— |
|
— |
|
— |
Foreign exchange zero cost collars |
|
|
|
76 |
|
76 |
|
76 |
|
— |
|
— |
|
— |
Crude oil zero cost collars |
|
|
|
17 |
|
17 |
|
17 |
|
— |
|
— |
|
— |
Other commodity derivatives |
|
|
|
61 |
|
61 |
|
61 |
|
— |
|
— |
|
— |
Oxygen supply contract embedded derivative |
|
|
|
621 |
|
1 236 |
|
69 |
|
135 |
|
142 |
|
890 |
|
|
|
|
87 991 |
|
97 836 |
|
91 822 |
|
1 582 |
|
919 |
|
3 513 |
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
14 |
|
(104 834) |
|
(123 107) |
|
(25 980) |
|
(51 730) |
|
(14 527) |
|
(30 870) |
Lease liabilities** |
|
15 |
|
(16 034) |
|
(31 386) |
|
(2 941) |
|
(4 778) |
|
(3 550) |
|
(20 117) |
Short-term debt |
|
16 |
|
(82) |
|
(82) |
|
(82) |
|
— |
|
— |
|
— |
Trade and other payables |
|
24 |
|
(39 873) |
|
(39 873) |
|
(39 873) |
|
— |
|
— |
|
— |
Bank overdraft |
|
26 |
|
(173) |
|
(173) |
|
(173) |
|
— |
|
— |
|
— |
|
|
|
|
(160 996) |
|
(194 621) |
|
(69 049) |
|
(56 508) |
|
(18 077) |
|
(50 987) |
Derivative instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts |
|
|
|
(50) |
|
(8 986) |
|
(8 986) |
|
— |
|
— |
|
— |
Foreign exchange zero cost collars |
|
|
|
(454) |
|
(454) |
|
(454) |
|
— |
|
— |
|
— |
Crude oil zero cost collar |
|
|
|
(6 176) |
|
(6 176) |
|
(6 176) |
|
— |
|
— |
|
— |
Coal swap options |
|
|
|
(112) |
|
(112) |
|
(112) |
|
— |
|
— |
|
— |
Oxygen supply contract embedded derivative |
|
|
|
(282) |
|
(1 850) |
|
(6) |
|
— |
|
— |
|
(1 844) |
Other commodity derivatives |
|
|
|
(53) |
|
(53) |
|
(53) |
|
— |
|
— |
|
— |
|
|
|
|
(168 123) |
|
(212 252) |
|
(84 836) |
|
(56 508) |
|
(18 077) |
|
(52 831) |
* |
Contractual cash flows include interest payments. |
** |
During the year a misstatement was identified in the calculation of the contractual cash flows in relation to certain lease liabilities. Contractual cash flows presented as R27 107 million have been revised by R4 279 million to R31 386 million for 2022. The maturity profile was also adjusted accordingly. |
111 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management continued |
Market risk
Market risk is the risk arising from possible market price movements and their impact on the future cash flows of the business. The market price movements that the Group is exposed to:
Foreign currency risk
Foreign currency risk is a risk that earnings and cash flows will be affected due to changes in exchange rates.
How we manage the risk
The Audit Committee sets broad guidelines in terms of tenor and hedge cover ratios specifically to assess future currency exposure, which have the potential to materially affect our financial position. These guidelines and our hedging policy are reviewed from time to time. This hedging strategy enables us to better predict cash flows and thus manage our liquidity and key financial metrics more effectively. Foreign currency risks are managed through the Group’s hedging policy and financing policies and the selective use of various derivatives.
Our exposure to and assessment of the risk
The Group’s transactions are predominantly entered into in the respective functional currency of the individual operations. The construction of the LCCP has largely been financed through funds obtained in US dollar, with a small portion of funds obtained from Rand sources. A large portion of our turnover and capital investments are significantly impacted by the rand/US$ and rand/EUR exchange rates. Some of our fuel products are governed by the BFP, of which a significant variable is the rand/US$ exchange rate. Our export chemical products are mostly commodity products whose prices are largely based on global commodity and benchmark prices quoted in US dollars and consequently are exposed to exchange rate fluctuations that have an impact on cash flows. These operations are exposed to foreign currency risk in connection with contracted payments in currencies not in their individual functional currency. The most significant exposure for the Group exists in relation to the US dollar and the Euro. The translation of foreign operations to the presentation currency of the Group is not taken into account when considering foreign currency risk.
Zero-cost collars
In line with the risk mitigation strategy, the Group hedges a significant portion of its estimated foreign currency exposure in respect of forecast sales and purchases over the following 12 months. The Group mainly uses zero-cost collars to hedge its currency risk, most with a maturity of less than one year from the reporting date.
Forward exchange contracts
Forward exchange contracts (FECs) are utilised throughout the Group to hedge the risk of currency depreciation on committed and highly probable forecast transactions. Transactions hedged with FECs include capital and goods purchases (imports) and sales (exports).
Refer to the summary of our derivatives below.
112 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2Financial risk management continued
The following significant exchange rates were applied during the year:
|
|
Average rate |
|
Closing rate |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
Rand |
|
Rand |
|
Rand |
|
Rand |
Rand/Euro |
|
18,62 |
|
17,15 |
|
20,55 |
|
17,07 |
Rand/US$ |
|
17,77 |
|
15,21 |
|
18,83 |
|
16,28 |
The table below shows the significant currency exposure where entities within the Group have monetary assets or liabilities that are not in their functional currency, have exposure to the US dollar or the Euro. The amounts have been presented in rand by converting the foreign currency amount at the closing rate at the reporting date.
|
|
2023 |
|
2022 |
||||
|
|
Euro |
|
US dollar |
|
Euro |
|
US dollar |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Long-term receivables |
|
— |
|
339 |
|
— |
|
336 |
Trade and other receivables1 |
|
544 |
|
3 520 |
|
739 |
|
4 961 |
Cash and cash equivalents1 |
|
2 835 |
|
1 872 |
|
2 158 |
|
3 359 |
Net exposure on assets |
|
3 379 |
|
5 731 |
|
2 897 |
|
8 656 |
Trade and other payables2 |
|
(302) |
|
(2 129) |
|
(166) |
|
(4 552) |
Net exposure on liabilities |
|
(302) |
|
(2 129) |
|
(166) |
|
(4 552) |
Exposure on external balances |
|
3 077 |
|
3 602 |
|
2 731 |
|
4 104 |
Net exposure on balances between Group companies |
|
(2 323) |
|
8 484 |
|
1 981 |
|
8 286 |
Total net exposure |
|
754 |
|
12 086 |
|
4 712 |
|
12 390 |
1 | The US$ amounts in 2022 related to proceeds generated through exports from South Africa. |
2 | The above-average US$ amount in 2022 was due to purchases of crude oil at higher prices which normalised in the current year. |
Sensitivity analysis
The following sensitivity analysis is provided to show the foreign currency exposure of the individual entities at the end of the reporting period. This analysis is prepared based on the statement of financial position balances that exist at year-end, for which there is currency risk, before consideration of currency derivatives, which exist at that point in time. The effect on equity is calculated as the effect on profit and loss. The effect of translation of results into presentation currency of the Group is excluded from the information provided.
113 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management continued |
A 10% weakening in the Group’s significant exposure to the foreign currency at 30 June would have increased either the equity or the profit by the amounts below, before the effect of tax. This analysis assumes that all other variables, in particular, interest rates, remain constant, and has been performed on the same basis for 2022.
|
|
2023 |
|
2022 |
||||
|
|
Euro |
|
US dollar |
|
Euro |
|
US dollar |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Equity |
|
75 |
|
1 209 |
|
325 |
|
1 239 |
Income statement |
|
75 |
|
1 209 |
|
325 |
|
1 239 |
A 10% movement in the opposite direction in the Group’s exposure to foreign currency would have an equal and opposite effect to the amounts disclosed above.
Interest rate risk
Interest rate risk is the risk that the value of short-term investments and financial activities will change as a result of fluctuations in the interest rates.
Fluctuations in interest rates impact on the value of short-term investments and financing activities, giving rise to interest rate risk. The Group has significant exposure to interest rate risk due to the volatility in South African, European and US interest rates.
How we manage the risk
Our debt is comprised of different instrument notes, which by their nature either bear interest at a floating or a fixed rate. We monitor the ratio of floating and fixed interest in our loan portfolio and manage this ratio, by electing to incur either bank loans, bearing a floating interest rate, or bonds, which bear a fixed interest rate. We may also use interest rate swaps, where appropriate, to convert some of our debt into either floating or fixed rate debt to manage the composition of our portfolio. There were no open interest rate swaps at 30 June 2023 and consequently no hedge accounting was applied in the current year.
In respect of financial assets, the Group’s policy is to invest cash at floating rates of interest and cash reserves are to be maintained in short-term investments (less than one year) in order to maintain liquidity, while achieving a satisfactory return for shareholders.
114 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management continued |
Our exposure to and assessment of the risk
At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments, including the effect of the interest rate swap was:
|
|
Carrying value |
||
|
|
2023 |
|
2022 |
|
|
Rm |
|
Rm |
Variable rate instruments |
|
|
|
|
Financial assets |
|
50 123 |
|
40 250 |
Financial liabilities |
|
(20 911) |
|
(26 094) |
|
|
29 212 |
|
14 156 |
Fixed rate instruments |
|
|
|
|
Financial assets |
|
7 005 |
|
7 121 |
Financial liabilities* |
|
(103 317) |
|
(78 913) |
|
|
(96 312) |
|
(71 792) |
Interest profile (variable: fixed rate as a percentage of total financial assets) |
|
88:12 |
|
85:15 |
Interest profile (variable: fixed rate as a percentage of total financial liabilities) |
|
17:83 |
|
25:75 |
* |
The increase in fixed exposure is due to the issuance of additional fixed-rate debt in the current period. |
Cash flow sensitivity for variable rate instruments
Financial instruments affected by interest rate risk include borrowings, deposits, trade receivables and trade payables. A change of 1% in the prevailing interest rate in a particular currency at the reporting date would have increased/(decreased) earnings by the amounts shown below before the effect of tax. The sensitivity analysis has been prepared on the basis that all other variables, in particular foreign currency rates, remain constant and has been performed on the same basis for 2022. Interest is recognised in the income statement using the effective interest rate method.
|
|
|
|
|
|
|
|
|
|
|
Income statement — 1% increase |
||||||
|
|
|
|
|
|
United States |
|
|
|
|
South Africa |
|
Europe |
|
of America |
|
Other |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
30 June 2023 |
|
300 |
|
28 |
|
(63) |
|
26 |
30 June 2022 |
|
257 |
|
22 |
|
(153) |
|
16 |
A 1% decrease in interest rates would have an equal and opposite effect to the amounts disclosed above.
The Group had exposure to the variable US dollar London Interbank Overnight Rate (LIBOR) through the USD term loan and revolving credit facilities. In the prior period, the Group has entered into USD interest rate swaps to convert a portion of the Group’s exposure to the variable LIBOR to a fixed rate. The swaps were designated as hedging instruments in a cash flow hedge.
115 Sasol Annual Financial Statements 2023
37. |
Financial risk management and financial instruments continued |
37.2Financial risk management continued
Effective 15 March 2022, the term loan and revolving credit facilities as well as two of the swaps were transitioned to the Secured Overnight Financing Rate (SOFR). The transition also entailed the addition of a fixed credit adjustment spread to the SOFR and new fallback clauses. The fixed credit adjustment spread is based on the rate published by Bloomberg Index Services Limited following the Financial Conduct Authority’s Cessation Announcement on 5 March 2021. The Group qualified for and has applied the reliefs provided by IBOR reform Phase 2 that allowed the Group’s hedging relationships to continue. For the remaining swaps, the Phase 1 amendments allowed hedge accounting to continue for affected hedges during the period of uncertainty before the hedged items or hedging instruments are amended as a result of the interest rate benchmark reform.
Throughout 2022, the Group has continued to make significant progress in repaying variable USD debt, to the extent that the forecasted future interest payments over the remaining term of the interest rate swap are largely no longer probable. Hedge accounting was discontinued prospectively from 30 April 2022 and the remaining balance of R1,1 billion in the hedge reserve was reclassified to profit as a derivative gain included in other operating expenses.
The Group’s remaining exposure to IBORs relate mainly to loans denominated in JIBAR. Refer to note 1.
Commodity price risk
Commodity price risk is the risk of fluctuations in our earnings as a result of fluctuation in the price of commodities.
How we manage the risk
The Group makes use of derivative instruments, including options and commodity swaps as a means of mitigating price movements and timing risks on crude oil purchases and sales and ethane purchases and export coal sales. The Group entered into hedging contracts which provide downside protection against decreases in commodity prices. Refer to the summary of our derivatives below.
Our exposure to and assessment of the risk
A substantial proportion of our turnover is derived from sales of petroleum and petrochemical products. Market prices for crude oil fluctuate because they are subject to international supply and demand and political factors. Our exposure to the crude oil price centres primarily around the selling price of the fuel marketed by our Energy business which is governed by the Basic Fuel Price (BFP) formula, the crude oil related raw materials used in our Natref refinery and certain of our offshore operations including where chemical prices are linked to the crude oil price. Key factors in the BFP are the Mediterranean and Singapore or Mediterranean and Arab Gulf product prices for petrol and diesel, respectively.
Dated Brent crude oil prices applied during the year:
|
|
|
|
|
|
|
Dated Brent Crude |
||
|
|
2023 |
|
2022 |
|
|
US$ |
|
US$ |
High |
|
124,79 |
|
137,64 |
Average |
|
87,34 |
|
92,06 |
Low |
|
71,70 |
|
66,17 |
116 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management continued |
Summary of our derivatives
In the normal course of business, the Group enters into various derivative transactions to mitigate our exposure to foreign exchange rates, interest rates and commodity prices. Derivative instruments used by the Group in hedging activities include swaps, options, forwards and other similar types of instruments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial |
|
Financial |
|
Financial |
|
Financial |
|
|
|
|
|
|
|
|
asset |
|
liability |
|
asset |
|
liability |
|
Income statement gain/(loss) |
||||
|
|
2023 |
|
2023 |
|
2022 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
|
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
|
Rm |
Commodity and currency derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap options |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 029 |
|
(37) |
Crude oil put options |
|
253 |
|
— |
|
— |
|
— |
|
(507) |
|
— |
|
(1 545) |
Crude oil zero cost collars |
|
— |
|
— |
|
17 |
|
(6 176) |
|
3 953 |
|
(11 349) |
|
(1 871) |
Crude oil swap options |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(5 140) |
|
(1 267) |
Crude oil futures |
|
— |
|
(12) |
|
25 |
|
— |
|
401 |
|
(1 049) |
|
(774) |
Ethane swap options |
|
— |
|
(158) |
|
— |
|
— |
|
(272) |
|
279 |
|
680 |
Coal swap options |
|
— |
|
— |
|
— |
|
(112) |
|
1 099 |
|
691 |
|
— |
Other commodity derivatives |
|
10 |
|
— |
|
61 |
|
(53) |
|
180 |
|
(593) |
|
— |
Forward exchange contracts |
|
133 |
|
(353) |
|
68 |
|
(50) |
|
(1 339) |
|
(677) |
|
1 011 |
Foreign exchange zero cost collars |
|
76 |
|
(579) |
|
76 |
|
(454) |
|
(301) |
|
(1 580) |
|
4 027 |
Embedded derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible bond embedded derivative |
|
— |
|
(1 302) |
|
— |
|
— |
|
867 |
|
— |
|
— |
Oxygen supply contract embedded derivatives* |
|
516 |
|
(993) |
|
621 |
|
(282) |
|
(794) |
|
64 |
|
2 058 |
Non-derivative financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at fair value through profit or loss** |
|
1 237 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
2 225 |
|
(3 397) |
|
868 |
|
(7 127) |
|
3 287 |
|
(18 325) |
|
2 282 |
* |
Relates to a US dollar derivative that is embedded in long-term oxygen supply contracts to our SO. |
** |
Fair value gains and losses are presented in other operating income and expenses, separately from derivative gains and losses. |
|
|
|
|
Contract/Notional amount* |
|
|
|
Average price** |
||||||||||||
|
|
|
|
Open |
|
Settled |
|
Open |
|
Settled |
|
|
|
Floor |
|
Cap |
|
Floor |
|
Cap |
|
|
|
|
2023 |
|
2023 |
|
2022 |
|
2022 |
|
|
|
2023 |
|
2023 |
|
2022 |
|
2022 |
|
|
|
|
Million |
|
Million |
|
Million |
|
Million |
|
|
|
|
|
|
|
|
|
|
Fair value hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil put options purchased*** |
|
barrels |
|
16,3 |
|
— |
|
— |
|
10,0 |
|
US$/bbl |
|
49,4 |
|
— |
|
— |
|
— |
Crude oil put options sold |
|
barrels |
|
— |
|
— |
|
— |
|
10,0 |
|
US$/bbl |
|
— |
|
— |
|
— |
|
— |
Crude oil zero cost collars |
|
barrels |
|
— |
|
29,0 |
|
29,0 |
|
24,0 |
|
US$/bbl |
|
— |
|
— |
|
63,3 |
|
96,6 |
Crude oil swap options |
|
barrels |
|
— |
|
— |
|
— |
|
18,0 |
|
US$/bbl |
|
— |
|
|
|
— |
|
|
Crude oil futures |
|
US$ |
|
2 |
|
21 |
|
1 |
|
29 |
|
US$/bbl |
|
75,0 |
|
|
|
109,9 |
|
|
Ethane swap options |
|
barrels |
|
3,6 |
|
1,3 |
|
— |
|
4,0 |
|
US$ c/gal |
|
30,1 |
|
— |
|
— |
|
— |
Coal swaps |
|
ton |
|
— |
|
0,9 |
|
0,4 |
|
1,0 |
|
US$/ton |
|
— |
|
— |
|
293,7 |
|
— |
Forward exchange contracts |
|
US$ |
|
836 |
|
— |
|
334 |
|
— |
|
R/US$ |
|
18,61 |
|
|
|
16,24 |
|
|
Forward exchange contracts |
|
EUR |
|
30 |
|
— |
|
70 |
|
— |
|
US$/EUR |
|
1,10 |
|
|
|
1,07 |
|
|
Foreign exchange zero cost collars |
|
US$ |
|
2 760 |
|
4 400 |
|
4 400 |
|
3 900 |
|
R/US$ |
|
16,72 |
|
20,71 |
|
15,04 |
|
18,06 |
* The notional amount is the sum of the absolute value of all contracts for both derivative assets and liabilities.
** For open positions.
*** Total premium paid for contracts entered into in the year US$42,0 million (2022: US$nil million).
117 Sasol Annual Financial Statements 2023
37 |
Financial risk management and financial instruments continued |
37.2 |
Financial risk management continued |
Accounting policies:
Derivative financial instruments and hedging activities
The Group is exposed to market risks from changes in interest rates, foreign exchange rates and commodity prices. The Group uses derivative instruments to hedge its exposure to these risks. Additionally, there are embedded derivatives that have been bifurcated in certain of the Group’s long-term supply agreements and borrowings.
All derivative financial instruments are initially recognised at fair value and are subsequently stated at fair value at the reporting date. Attributable transaction costs are recognised in the income statement when incurred. Resulting gains or losses on derivative instruments, excluding designated and effective hedging instruments, are recognised in the income statement.
To the extent that a derivative instrument has a maturity period of longer than one year, the fair value of these instruments will be reflected as a non-current asset or liability.
Contracts to buy or sell non-financial items (e.g. gas or electricity) that were entered into and continue to be held for the purpose of the receipt of the non‑financial items in accordance with the Group’s expected purchase or usage requirements are not accounted for as derivative financial instruments. Purchase commitments relating to these contracts are disclosed in note 3.
Hedge accounting
The Group continues to apply the hedge accounting requirements of IAS 39 ‘Financial Instruments: Recognition and Measurement’.
Where a derivative instrument is designated as a cash flow hedge of an asset, liability or highly probable forecast transaction that could affect the income statement, the effective part of any gain or loss arising on the derivative instrument is recognised as other comprehensive income and is classified as a cash flow hedge accounting reserve until the underlying transaction occurs. The ineffective part of any gain or loss is recognised in the income statement. If the hedging instrument no longer meets the criteria for cash flow hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively.
If the forecast transaction results in the recognition of a non-financial asset or non-financial liability, the associated gain or loss is transferred from the cash flow hedge accounting reserve, as other comprehensive income, to the underlying asset or liability on the transaction date. If the forecast transaction is no longer expected to occur, then the cumulative balance in other comprehensive income is recognised immediately in the income statement as reclassification adjustments. Other cash flow hedge gains or losses are recognised in the income statement at the same time as the hedged transaction occurs.
Economic hedges
When derivative instruments, including forward exchange contracts, are entered into as fair value hedges, no hedge accounting is applied. All gains and losses on fair value hedges are recognised in the income statement.
118 Sasol Annual Financial Statements 2023
SASOL INTEGRATED REPORT 2023 72 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION REMUNERATION REPORT CONTINUED REMUNERATION AT A GLANCE CONTINUED Remuneration Policy summary and outcomes STRATEGIC INTENT Fixed pay Short-term incentives1 Long-term incentives1 • Attraction and retention of key employees • Internal equity and external competitiveness • Recognition of relative individual performance, experience and competence • Benchmarked to location market median • Promote value creation including safe and sustainable performance • Alignment with Group and Business financial and non-financial performance targets • Personal performance is used as a multiplier in the final calculation • Additional penalty for fatalities • Attraction and retention of senior employees and scarce and critical skills • Alignment with shareholders’ long-term interests • Market related total package • Three- to-five-year vesting periods • Additional performance targets are linked to 65% of the award which have to be achieved to trigger vesting of the award • Minimum shareholding and post-cessation shareholding requirements for Executive Directors and Prescribed Officers ELIGIBILITY Fixed pay Short-term incentives Long-term incentives • All permanent employees • All permanent employees excluding Mining employees participating in a production bonus plan • Senior management and above FREQUENCY OF PAYMENT/SETTLEMENT Fixed pay Short-term incentives Long-term incentives • Monthly/bi-weekly (United States only) • Annually in September • Subject to achievement of performance and time targets: • Senior management and leadership: three years • Senior leadership performance shares: • 50% after three years • 50% after additional two years • Group Executive Committee (GEC) performance shares: • 50% after three years • 50% after additional two years • restricted shares after five years EMOLUMENTS Fixed pay Short-term incentives Long-term incentives • Cash/base salary and benefits • Cash • Cash or equity-settled (Region dependent) MINIMUM SHAREHOLDING REQUIREMENT (MSR) % OF ANNUAL PENSIONABLE REMUNERATION AT THE TIME OF APPOINTMENT • President and CEO: 300% • Chief Financial Officer: 200% • Other Executive Directors and Prescribed Officers: 100% • Vested LTIs to be retained (after settlement of taxes) until MSR is achieved • 18-month post-cessation shareholding requirements OUTCOMES Fixed pay Short-term incentives Long-term incentives (LTIs) Non-bargaining unit • Annual salary increases granted were aligned with or below inflation for employees outside of collective bargaining sectors Bargaining unit • Typically for employees covered by collective bargaining agreements increases awarded were slightly higher than the consumer price index (CPI) inflation • President and CEO and CFO: 65,5% (after adjusting for fatalities) • Other Executive Directors and Prescribed Officers varying between 64% and 69,82% (after adjusting for fatalities) • Rest of employees: calculated on a weighted average basis dependent on combined Group and Business performance varying between 60,17% and 75,34% (after adjusting for fatalities, to be applied in accordance with policy) • LTIs granted in FY21, subject to corporate performance targets (CPTs) will vest at 67,34% in FY24. This excludes the performance against the climate change target. As previously reported, among these CPTs was a target of implementing 200 MW of renewable energy capacity by 30 November 2023. Despite, by 12 June 2023, having signed Power purchase agreements (PPAs) for nearly 775 MW of renewable projects, Sasol’s ability to deliver on this target was hampered by a number of factors which included the inclusion of Air Liquide as a partner in our Secunda renewable energy programme (post the sale of the air separation units), severely restricted grid capacity and being one of the largest renewable energy (RE) procurers in the country, setting the benchmark for securing these type of transactions. Although the most recent relaxation of the NERSA licensing requirement benefitted the programme, the June 2023 Eskom announcement on the Interim grid capacity allocation rules (IGCAR) has led to the Committee deciding to postpone an assessment of performance against the renewable energy target, until more clarity is available in this regard. • The Committee pro-actively requested an independent assessment of potential windfall gains on the FY21 LTI awards. On the basis of the independent assessment, the Committee agreed that no windfall gain arose as the subsequent recovery of the share price coincides with the business recovery as well as the corresponding improvement in total shareholders’ return over the period. 1 Clawback and Malus policy applies to all variable pay awards and is being reviewed to align with latest SEC and NYSE requirements |
SASOL INTEGRATED REPORT 2023 73 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION REMUNERATION COMMITTEE CHAIRMAN’S STATEMENT REMUNERATION REPORT CONTINUED The Committee is tasked primarily with ensuring that management delivers on the performance objectives set by the Board delivering value for all stakeholders and is consequently appropriately rewarded for such performance within the ambit of the Remuneration Policy. We are confident that the reward outcomes approved by the Committee for FY23, reflects the performance outcomes. Engaging with shareholders At our AGM in December 2022, support for the policy increased to 92,92% from 86,90% in FY21 and 71,46% in FY20. There was also an increase in shareholder support for the Implementation Report, with 94,89% of votes in support of the non-binding advisory resolution, compared to 86,11% in FY21 and a low of 43,21% in FY20. The consistent improvement in the level of support received over the past two years for our policy and the way it is implemented is encouraging; it shows that most shareholders believe that our approach to remuneration and the interests of our shareholders are now better aligned. Through targeted engagements, Sasol continued to engage with investors, although not required, to discuss the policy, hear any concerns, and explain the rationale behind any policy decisions. In the year we engaged with shareholders representing ~44% of Sasol shares. We greatly appreciate this feedback which is duly considered by management and the Committee and plays an active role in the shaping of our decisions. Mpho Nkeli // Chairman of Remuneration Committee Reward outcomes aligned with Company performance. Reward acts as an important anchor in the comprehensive EmpVP and people promise. Pay gaps are reviewed and addressed as appropriate. Executive and non-Executive remuneration benchmarked against a diverse group of peer companies reflecting the business model of Sasol. Implemented the revised long-term incentive plan (LTIP) rules as approved by shareholders at the 2022 AGM. Executive Directors and Prescribed Officers progress positively to meeting the minimum shareholding requirements. T t o s r t r r M KEY MESSAGES Dear stakeholders An overview Reward outcomes are assessed in consideration of business performance in the context of macro-economic dynamics and factors outside and inside of management’s control. The Committee takes its responsibility to ensure that management is fairly and appropriately rewarded very seriously, balancing this with the need to ensure that there is shareholder value creation over the same period. The performance outcomes on the Group STI plan, aligned with the Group’s performance over the period. The Committee was again very concerned with the plan outcomes being below target. Performance against safety, climate change, net working capital and the capital expenditure targets were satisfactory, but energy efficiency, sales volumes, cash fixed costs and free cash flow generation over turnover results were below target. Energy efficiency directly relates to the performance of our operations. The Committee will in FY24 further scrutinise the setting of targets and specifically whether these are too ambitious in the context of our daily realities. The Committee was pleased that performance improved against the LTI targets although the external factors which hamper our efforts to implement renewable energy projects remain concerning. |
SASOL INTEGRATED REPORT 2023 74 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION REMUNERATION COMMITTEE CHAIRMAN'S STATEMENT CONTINUED REMUNERATION REPORT CONTINUED Key Remuneration Committee decisions FIXED PAY In a year in which global inflation remained persistently high, increases awarded to employees were higher than in previous years. For employees outside collective bargaining sectors, the Committee approved annual salary increases mostly aligned with market increases. For those employees covered by collective bargaining agreements, settlements were reached on salary increases higher than inflation. Additional budget was approved to address pay gaps, as well as adjustments for salaries which are uncompetitive, compared to similar key skill roles in the market. SHORT-TERM INCENTIVES Performance against the Group STI targets was mostly below target, with a total score of 71,5% of the 150% maximum on the Group STI scorecard. The Committee applied no discretion on the final score. Details are provided in the Implementation Report. IR For more detail refer to the Implementation Report on page 83 Following the tragic fatalities of Mr Kgauta Mhlaba, a service provider employee, at our Secunda Polypropylene Bagging Warehouse, and Mr Stiffi Ndlovu an underground mobile diesel machine operator at our Thubelisha Colliery in Secunda, a 6% fatality penalty was applied to the Group STI score for the GEC. Excluding the President and CEO and the CFO, members of the GEC also participated in Business scorecards. The STI score for Business EVPs, was calculated on a combination of the Group (60%) score and the respective Businesses' (40%) score; the Corporate Centre EVPs’ STI scores was a weighted average between the Group and the three Businesses' STI scores. The final approved score for Chemicals was 71,1%, for Energy 76,3% and for Mining was 59,7%. Individual performance is assessed against a balanced scorecard, in the range of 0% – 150% which is a multiplier in the STI calculation. IR For more detail refer to the calculations provided in the Implementation Report on page 83 The Committee believes that these STI outcomes are a fair representation of the results achieved across all financial and non-financial metrics in FY23. LONG-TERM INCENTIVES For GEC members, subject to performance and service criteria being met, LTIs granted will vest in FY24, at 67,34%. The performance period was from 1 July 2020 – 30 June 2023. As previously reported, among these CPTs was a target of implementing 200 MW of renewable energy capacity by 30 November 2023. Despite, by 12 June 2023, having signed PPAs for nearly 775 MW of renewable projects, Sasol’s ability to deliver on this target is hampered by a number of factors which included the inclusion of Air Liquide as a partner in our Secunda renewable energy programme (post the sale of the air separation units), severely restricted grid capacity and being one of the largest RE procurers in the country, setting the benchmark for securing these type of transactions. Although the most recent relaxation of the NERSA licensing requirement benefitted the programme, the June 2023 Eskom announcement on the IGCAR has led to the Committee deciding to postpone an assessment of performance against the renewable energy target, until more clarity is available in this regard. The Committee also considered that in light of the PPAs already signed, should grid access be available, Sasol should be in a position to exceed its 2025 energy emission reduction targets; however, there are many moving goal posts in this regard which hamper progress. The Committee remains firmly committed to incentivising progress against our renewable energy and energy reduction targets; a key strategic priority. As part of our role to determine vesting, the Committee also considered whether a windfall gain occurred for FY21 awards as a result of awards having been granted at a share price which was negatively impacted by the outbreak of the Covid-19 pandemic. The Committee noted that Sasol’s share price experienced significant volatility in the periods before and after the awards were made in FY21; however, no awards were made when the share price dropped below R100 in this period. Furthermore, the Committee noted that Sasol’s share price stabilised from 1 June 2020; for the rest of the year, it averaged R130,60; and all FY21 LTI grants were made when the share price was close to or above this level. As a result, supported by the independent assessment, the Committee is satisfied that a windfall gain did not occur for any of the LTI awards granted in FY21. PROGRESSING A SUSTAINABLE FUTURE SASOL In FY23 the Committee devoted much time and energy to the Group’s overall reward related initiatives and their role in addressing the material matters identified in the year. The year under review Prioritising our people and reward principles In line with the Company’s focus on ‘Progressing a Sustainable Future Sasol’, in FY23 the Board devoted much time and energy to the Group’s overall reward related initiatives and their role in addressing the material matters identified in the year. This included a review of the EmpVP; updates to Sasol’s wellbeing programmes; a continued commitment to safety; and the adherence to our clearly defined remuneration principles. The feedback from our engagement survey, the ‘Heartbeat survey’ was considered by the Safety, Social and Ethics Committee. All decisions on people related policies and benefits are taken considering the holistic sustainability strategy of the Company. The Committee also annually reviews the status of all benefit plans offered in the Group ensuring well-governed plans enhancing the EmpVP. Following shareholder approval at the 2022 AGM of the new LTI plan, Sasol took the lead in the South African market by introducing an 18-month post-termination shareholding requirement for members of the GEC to ensure longer-term exposure to the Sasol share price, even after service termination. The Committee is pleased with the progress made towards meeting the minimum shareholding requirements for members of the GEC. The Committee also reviewed the portion of the LTIs which have both performance and continued employment conditions attached and approved changes in this regard for FY24, reducing the percentage allocation related to restricted shares. BOARD FEES In 2021, Sasol reduced Board remuneration after an extensive review of the structure and quantum of non-Executive Directors‘ (NED) fees. As approved, the fees were adjusted in line with inflation in January 2023. An inflationary adjustment to the Board fees will be proposed for shareholder approval at the 2023 AGM. This increase follows a comprehensive review of the NED fees. EXTENDED NOTICE PERIOD In the year, the Committee extended the notice period for new appointees in Group leadership and leadership role categories from one month to three months. This was to ensure sufficient time for a smooth handover of responsibilities as well as longer lead times to appoint suitable external candidates. |
SASOL INTEGRATED REPORT 2023 75 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION REMUNERATION REPORT CONTINUED REMUNERATION COMMITTEE CHAIRMAN’S STATEMENT CONTINUED Social and risk considerations Conscious of widening inequality across the world, we continuously monitor internal pay gaps – comparing the median Total Target Remuneration (TTR) of the highest 10% of Sasol earners with that of the lowest 10% – and approved interim adjustments in April 2023 to address pay gaps where identified. Line manager and employee training material on understanding how salaries are determined, and how salaries can be interpreted within pay bands, have been developed to ensure that educated discussions on pay can be held ahead of the pay gap information being reported publicly. We have also added the proposed pay gap methodology stated in the draft Companies Amendment Bill, 2023 to our existing assessments. The Group top risk theme of ‘People’ IR refer to page 34, includes key risks relating to the retention of critical skills, emigration, labour instability due to socio-economic factors specifically in South Africa, and employee wellbeing with a specific emphasis on an increase in the number of mental health cases reported. Mitigating plans are in place and these risks are monitored on a continuous basis. One of the mitigating plans, is the introduction of a progressive pay and career model for our engineers, an enhanced employee wellbeing programme focusing on mental, financial and physical health and further enhancements to the EmpVP. The historically low levels of unemployment in our northern hemisphere locations sometimes lead to difficulty in immediately finding suitable candidates to place in vacancies, as well as longer lead times. This has led to a decision to increase the notice period for our Leadership and Group Leadership categories to three months where the legislative framework permits. On 1 July 2023, we were the first South African headquartered company that introduced a global cloud-based people management platform to enhance the delivery of our human resources services, enabling the business to make better data-driven decisions and improve the overall employee experience in digital HR solutions. Mindful of employee feedback from our Heartbeat survey in 2022, in the year ahead we will remain focused on delivering on our People Promise. The Group Executive Committee (GEC) The initial 16 month contract period for Mr CF Rademan as EVP: Sasol Mining was extended to 31 October 2023 to allow sufficient time for handover to his successor and to use his experience over many decades to help stabilise the Mining business. Mr Rademan will continue to support Mining as a consultant on an ad hoc basis until June 2024. Mr HC Brand retired effective 30 June 2023 and will continue to support the Sasol/Topsoe Joint Venture which is still subject to approval by the relevant authorities, as a consultant on an ad hoc basis until June 2024. Independent advisors Mr David Tuch, Managing Director at Alvarez & Marsal Taxand UK LLP (A&M), continued to act as an Independent External Advisor to the Committee in FY23. A&M provided information on global reward trends as well as market insights into discussions on executive reward matters. It did not provide any other services to Sasol and the Committee was satisfied with A&M’s independence. Looking forward FY23/FY24 Mindful of employee feedback from our Heartbeat survey in 2022, in the year ahead we will remain focused on delivering on our People Promise. We will ensure that our key performance indicators (KPIs) are aligned to our Group top priorities, strategic objectives and address our material matters. We will continue to embed our Values, culture, enhance our EmpVP and promote diversity, equity and inclusion in the workplace to ensure that we attract and retain the skills we need to deliver on our strategic objectives. Additionally, we will focus delivery on our targets by prioritising shareholder returns as we restore the foundation business and reset. Safety will continue to be positioned as the foundation across which all elements of the priorities are to be delivered. The Committee continually strives to simplify reward practices in order to enhance the effectiveness thereof in our organisation. In closing The improved voting outcomes at the 2022 AGM regarding remuneration at Sasol indicated that a substantial majority of our shareholders are satisfied with the work of the Committee. We do not take this endorsement for granted and remain committed to ensuring that the policy and the implementation thereof is fair and responsible; supports the delivery of the Group’s strategy; addresses material matters; and creates and preserves value for our stakeholders. The Committee is satisfied that the Policy meets the agreed objectives. It is also satisfied that the remuneration outcomes for FY23 reflect alignment between the ‘pay for performance’ requirements of both Sasol and our shareholders. On behalf of the Committee, I would like to express appreciation to all Sasol’s people for their dedication to create value under often trying conditions. I thank shareholders for their continued engagement and look forward to their endorsement of the advisory votes on our Remuneration Policy and Implementation Report at the 2023 AGM. I extend my thanks to the Committee members for their wise counsel in FY23. The Committee is grateful to management, and specifically the Reward team for their assistance. Mpho Nkeli Chairman of Remuneration Committee 25 August 2023 |
SASOL INTEGRATED REPORT 2023 76 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION FIXED PAY STRATEGIC INTENT Attraction and retention of key employees Internal equity and external competitiveness Affordability Recognition of competence and/or individual performance Base salary or total guaranteed package (TGP) depending on location. Broad pay bands set with reference to location and sector median benchmarks that reflect the complexity, scope and scale of our business to ensure that we attract and retain the employees required to drive the Group’s strategic objectives. The Committee approves the cost of annual increases after considering market and economic data as well as affordability. Mandates are provided for salary increase negotiations with recognised trade unions and works councils. Policy Employees in countries other than South Africa and employees in the South African bargaining sectors are paid a base salary rather than a TGP. In South Africa, the minimum wage we pay is compared with the living wage for a family as provided by Trading Economics. Salaries are paid monthly to all employees except for those in the United States who receive bi-weekly payments. Employees who are promoted are considered for salary adjustments as justified. Increases are applicable as follows: • Employees outside the collective bargaining sectors: effective 1 October. • Employees in collective bargaining structures receive across-the-board increases effective 1 July or 1 October. • Outside South Africa, annual salary increases are also negotiated with trade unions and/or works councils in the United States, Germany, Italy and Mozambique. Application Outcomes FY23 An executive remuneration benchmarking exercise was conducted and market adjustments, where appropriate, were implemented. In South Africa, the cost of increases, which include market adjustments, for staff outside of collective bargaining units was 6,24% of the South African salary bill. Of this, 5,2% was allocated towards annual inflation-linked adjustments, and 1,04% was used to address internal and external pay inequity. Employees in collective bargaining structures received increases of between 4% and 8,1% across various countries, as well as adjustments to allowances. International increase costs were in line with the organisation’s forecast inflation numbers and applicable market progression practices. Increases awarded were higher than in previous years, influenced by the persistent high levels of global inflation. A separate budget was approved to address internal equity matters. REMUNERATION REPORT CONTINUED OVERVIEW OF REMUNERATION ELEMENTS FIXED PAY SHORT-TERM INCENTIVE (STI) LONG-TERM INCENTIVE (LTI) PLAN BENEFITS AND ALLOWANCES We provide a comprehensive overview of remuneration elements, the strategic intent of each component and the decisions taken in FY23: REMUNERATION POLICY // |
SASOL INTEGRATED REPORT 2023 77 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION BENEFITS AND ALLOWANCES SHORT-TERM INCENTIVE (STI) PLAN An increase in the funeral benefit value for South African employees was approved in FY23. Sasol uses different options to provide healthcare to employees and their families by means of medical insurance and/or public health plans, as well as additional insurance in different countries as appropriate. The Committee confirmed that in all countries where employees participate in private retirement funds, the governance of these funds meets fiduciary requirements, and all defined benefit fund liabilities are appropriately detailed. WWW AFS For more detail refer to our Annual Financial Statements – Statement of Financial Position, available on our website, www.sasol.com REMUNERATION REPORT CONTINUED OVERVIEW OF REMUNERATION ELEMENTS CONTINUED STRATEGIC INTENT Compliance with legislation or co-determination agreements Strengthening of the EmpVP To protect cost of living for employees on expatriate assignments Benefits include, but are not limited to, membership of a retirement plan, healthcare and risk cover which in some cases are partly subsidised by the Company. Allowances are paid in terms of statutory compliance or as are applicable in a sector/ jurisdiction. Several special allowances including housing, cost of living, home-leave and child education are included in the Group’s Expatriate Policy. Policy STRATEGIC INTENT Enable delivery of performance targets in a safe and sustainable manner Promote value creation for all stakeholders against pre-determined targets in the short term For most of our permanent employees across the world, we apply a single STI structure. The exception is the non-managerial mining employees who earn a production bonus which is processed bi-weekly, subject to safe production volumes against mining targets. Target incentive levels align with the market median. The STI structure consists of a weighting towards Group and Business STI scorecards; the weighting depends on the employee’s role category. Individual performance is a multiplier in the range of 0% – 150%, applied to the final STI score. All targets are approved at the start of the new financial year. A safety penalty of 3,0 percentage points per fatality is deducted from the final STI score. The Committee can exercise discretion to vary incentive outcomes as deemed appropriate and based on affordability. Approved pay-outs are processed with the September salary. Policy Benefits are offered for retirement, for reasons of sickness, disability or death. Beneficiaries of employees who pass away while in service receive an additional insurance payout. The quantum depends on which retirement plan they belonged to. Allowances are linked to roles within specific locations and are paid together with salaries. Expatriate benefits and allowances are offered in terms of country and assignment policies. Employee wellbeing is the core of labour stability. Sasol continues to roll out emotional, financial management, physical and safety culture interventions as both preventative and reactive measures to matters identified in the workplace. The employee assistance programme (EAP) is offered in most countries where we have large operations. Application Every quarter, the Committee reviews year-to-date performance against the Group and Business STI scorecards to ensure ongoing focus and commitment on key priorities. Individual performance is assessed informally on a regular basis and formally at least twice in the financial year. To ensure appropriate line of sight, people metrics are included in Business and individual scorecards. The Committee approves the final Group and Business STI outcomes in the August meeting after the end of the financial year, also considering affordability after all factors were taken into account. No discretion was applied by the Committee in FY23. Application Outcomes FY23 The Committee approved a Group STI scorecard focused on achieving the Future Sasol priorities. In addition to the Group factor, Business scorecards were approved as applicable. 100% of the STI weighting for both the President and CEO and the Group CFO was based on the Group scorecard. For other members of the GEC, the split was 60% Group and 40% Business factor. For GEC members who do not head up a Business, the weighted average score in respect of the Chemicals (40%), Mining (20%) and Energy (40%) Business’ STI outcomes was used. In line with our commitment to actively reduce greenhouse gas emissions (GHG), relevant incentive targets have been included in the Group, Business and individual scorecards to ensure that milestones achieved on the climate change journey receive the appropriate focus. In addition to people, leadership, safety and sustainability metrics, the following metrics are included in the individual performance scorecards: • safe transportation of hazardous chemicals; • occupational health measures; and • leaks or spills of hazardous materials. These metrics balance safety, other people KPIs, environmental sustainability, and financial and operational performance criteria. The Group STI score was reduced by 6% for members of the GEC and 3% for leadership roles in Mining and Secunda Operations. The individual performance factor (in a range of 0% – 150%), is a multiplier in the final calculation. IR STI performance outcomes for FY23 are set out on page 84 Outcomes FY23 |
SASOL INTEGRATED REPORT 2023 78 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION LONG-TERM INCENTIVE (LTI) PLAN STRATEGIC INTENT Attraction and retention of senior employees and scarce and critical skills Alignment with shareholders’ long-term interests with reference to the Sasol share price and the underlying performance metrics Equity- or cash-settled awards are granted annually, on appointment or upon promotion to an eligible role category, where the underlying value is tied to the market value of a Sasol ordinary share or American Depository Receipt (ADR) for international participants, subject to vesting conditions. Annual awards are made with reference to a percentage of base salary or TGP, which is role category dependent; the eligible employee’s performance over the preceding year; and the organisation’s requirement for skills retention. Vesting of awards is subject to the achievement of CPTs and/or service criteria. A split vesting period of three to five years applies to performance shares awarded to members of the GEC and Senior Vice Presidents. For members of the GEC, 35% of the annual award is granted in the form of restricted shares with a cliff vesting period of five years. The use of restricted shares supports the achievement of MSR as well as improved alignment with shareholders’ interests over the long term. For FY24 this percentage will reduce to 30% of the award. Post-cessation shareholding requirements were introduced in FY23 for members of the GEC. Policy LTIs form an important part of our reward mix and target awards are reviewed annually to ensure ongoing market competitiveness. Participants may sell or retain the vested shares once vesting conditions and MSR have been met. MSRs are in place for Executive Directors and Prescribed Officers. The MSRs are extended to 18 months post-service termination date for Executive Directors and Prescribed Officers. The Committee reviews the LTI targets every year to ensure continued alignment with strategic objectives. Application REMUNERATION REPORT CONTINUED OVERVIEW OF REMUNERATION ELEMENTS CONTINUED Outcomes FY23 The performance shares awarded to members of the GEC in FY21, will vest in FY24, subject to the achievement of performance and time vesting conditions. The performance period was set from 1 July 2020 – 30 June 2023. Subject to the meeting of these targets, 50% of the performance shares will vest in FY24, and the balance in FY26. Restricted shares awarded in FY20 will vest, subject to time vesting conditions, in FY25. The vesting percentage for the performance shares was approved at 67,34%, subject to a further review of the renewable energy targets later in FY24. Participants who leave the Group for reasons other than retirement, retrenchment, death, disability or ill-health, or for any other reason approved by the Committee, will forfeit unvested awards. IR For more detail refer to the FY23 metrics set out on page 86 Members of the GEC have made good progress towards meeting the requirements set under the minimum shareholding requirement policy. GEC members have only sold vested shares to settle tax liabilities in respect of the vesting of the award, or once the MSR was met. IR For more detail refer to the MSR disclosed on page 88 and 90 |
SASOL INTEGRATED REPORT 2023 79 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION Pay gaps Globally, there is an increased focus on pay gap reporting as many believe, as we do, that this will promote a fairer and more equal society. The Group's pay gap methodology compares the median TTR of 10% of the highest Sasol earners per country with the median TTR of the lowest 10% Sasol earners per country. This is similar to the methodology used in Form EEA4 which has to be submitted annually to the South African Department of Employment and Labour. Target remuneration rather than actual remuneration is used for year-on-year comparisons to exclude the impact of, in particular, macroeconomic factors that impact on the LTI awards. The Committee regularly reviews the internal pay gaps to ensure that there are no systemic adverse practices. In FY23, a separate increase budget was made available to address salaries which are low in the pay range. As an additional lens, the proposed methodology under the draft Companies Amendment Bill, 2023, was also applied and assessed. The Committee committed to ensuring that the wages of our lowest-paid employees are sufficient to accommodate a decent standard of living. We will continue to track the pay gap from this perspective. Regulatory compliance Our reporting complies with: • South African Companies Act and other relevant statutory requirements; • Principles and recommended practices of King IVTM; • Requirements of the United States Securities and Exchange Commission (SEC) for foreign private issuers; and • The Johannesburg Stock Exchange (JSE) Listings Requirements. Remuneration Committee Risk and Governance Sasol complies with applicable remuneration governance codes and statutes that apply in the various jurisdictions within which it operates. The Committee is appointed by the Board to assist in ensuring that the Group remunerates its employees fairly, responsibly and transparently by implementing affordable, competitive and fair reward practices to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term. WWW The Committee’s Terms of Reference and the Group Remuneration Policy are available at www.sasol.com All incentive pay-outs and the vesting of performance LTIs are approved after due consideration of performance against the pre-approved targets that were set for the performance period. The President and CEO, EVP: Human Resources and Stakeholder Relations, and VP: Group Reward and Human Resources Information System (HRIS) attend Committee meetings by invitation. Members of management are recused from meetings when matters impacting their own remuneration is discussed. In all meetings, the Committee discusses and confirms all decisions taken without management present. A&M Managing Director Mr D Tuch acts as an independent advisor for the Committee. The Committee is comfortable with Mr Tuch’s independence. The contract with A&M has been extended for a further two years. At the end of each financial year, the President and CEO tables the performance of all Prescribed Officers to inform the decisions on annual increases and incentive pay-outs. External market benchmark data is also provided to the Committee to ensure competitive reward practices. The Chairman of the Board tables the performance outcomes and proposed rewards for the Executive Directors and the Company Secretary. The Committee then recommends them for approval to the Board. REMUNERATION REPORT CONTINUED Globally, there is an increased focus on pay gap reporting as many believe, as we do, that this will promote a fairer and more equal society. OVERVIEW OF REMUNERATION ELEMENTS CONTINUED The Board (excluding the NEDs) considers and recommends for approval by shareholders any fee adjustments for the NEDs. The Committee ensures effective risk management oversight in relation to material remuneration risks within its scope and will exercise its discretion within the Group’s overall risk framework. The following processes mitigate against unintended outcomes: • The policy is transparent and made available to all stakeholders. • All executive reward policy exceptions are approved by the Committee or the Board, as appropriate. • Incentive plan design principles and targets as well as the reward mix are reviewed annually. • The vesting of LTI plans is subject to performance and/or time-based criteria and awards are never backdated. • Executives do not approve their own benefits or remuneration and are recused from all discussions relating to their own remuneration. • The maximum incentive awards, based on performance outcomes, are capped by a pre-approved formula. • The Committee retains discretion to alter any reward outcome. • MSRs and post-cessation shareholding requirements are implemented for Executive Directors and Prescribed Officers. • A comprehensive Clawback and Malus Policy is in place. • Except in the case of death, there is no accelerated vesting of LTIs for executives at retirement, and the vesting periods of three and five years continue post the date of retirement allowing for continued exposure to the share price performance, as well as the application of the Clawback and Malus Policy if required. • The Committee considers reward-related risks on a quarterly basis which includes a five year forecast reward heat map. The use and application of remuneration benchmarks One of the Committee’s key tasks is to preserve the relevance, integrity and consistency of benchmarking. Management also consults survey reports from various large remuneration firms. In addition to survey data, we use benchmark data from the approved peer group to develop pay bands and incentive plans as well as for the comparison of employee benefits. For the remuneration of GEC members and the Chairman and NED fees, we select a peer group of companies which includes those with a broadly similar geographic footprint and/or product suite and/or size. The peer group includes a balanced combination of companies that have a primary listing on the JSE Ltd and international chemicals and energy companies. The following peer group was adopted for Executive and NED remuneration benchmarking effective 1 July 2021 and no changes were made for FY23. JSE primary listed companies Chemicals companies Energy companies Anglo American Platinum Albemarle Corp Continental Resources AngloGold Ashanti Covestro AG Devon Energy Corporation Gold Fields Eastman Chemicals Co Hess Corporation Impala Platinum Holdings Evonik Industries AG Imperial Oil MTN Group Lanxess AG Origin Energy Sibanye Stillwater Solvay SA Repsol |
SASOL INTEGRATED REPORT 2023 80 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION LONG-TERM INCENTIVE (LTI) PLAN The LTI Plan gives participating employees the opportunity, subject to the vesting conditions, to receive Sasol ordinary shares or ADRs. After the vesting period, which varies between three and five years, participants may sell or retain the shares. In jurisdictions where we do not offer an equity-settled award due to legislative restrictions, or where we choose not to make an equity-settled award, eligible employees may participate in a cash-settled LTI plan with the same conditions that are applicable to equity instruments, except that they are settled with cash. The maximum number of shares to be made available for awards to eligible participants equated to approximately 5% of the issued shares of the Group at the time. Variable pay plans SHORT-TERM INCENTIVE (STI) PLAN The President and CEO’s and the Group CFO’s STI calculations are based on the Group STI Scorecard, with a multiplier in respect of individual performance. For all other Executive Directors and Prescribed Officers differentiated weightings are applied in respect of Group and Business STI scorecard outcomes, as indicated: Designation Group scorecard weighting % Business scorecard weighting % President and CEO and CFO 100% – Business Prescribed Officers1 60% 40% Other Executive Directors and Prescribed Officers in the Corporate Centre2 60% 40% All other role categories in the Corporate Centre3 50% 50% All other role categories Business4 20% 80% 1 Mr Rademan’s STI is calculated on Mining’s performance only. He was appointed on a fixed-term contract specifically to lead the turnaround of Sasol Mining. 2 The Business calculation for Corporate Centre Prescribed Officers and Executive Directors are done on a weighted average of the Energy, Chemicals and Mining STI outcomes. 3 Applicable to employees in Corporate Centre. 4 Applicable to employees in Businesses. THE FOLLOWING FORMULAE WAS APPROVED FOR SHORT-TERM INCENTIVES: STI Award = Annual Base Salary or Annual TGP X Role Category Target STI % X Group Performance Factor (0% – 150%)1 Weighting + Business Performance Factor (0% – 150%)1 Weighting X Individual Performance Factor (0% – 150%)2 1 Outperformance in respect of financial and non-financial targets must be achieved to provide funding for the score > 100%. 2 Unless otherwise agreed for specific countries, or within collective bargaining structures. REMUNERATION REPORT CONTINUED Special retention awards and sign-on or buy-out awards The Sign-on Payment and Retention Policy may be used in the recruitment and retention of candidates in specialised or scarce skill positions. Cash retention payments are linked to retention periods of at least two years. Retention shares may be granted under the LTI Plan. Executive service contracts • Members of the GEC have permanent employment contracts with notice periods of three to six months. • The contracts provide for salary and benefits as well as participation in incentive plans based on Group, Business and individual performance as approved by the Board. • EVPs who are members of the South African Sasol Pension Fund are required to retire from the Group and as Directors from the Board at the age of 60, unless they are requested by the Board to extend their term. • Perquisites offered to the members of the GEC are disclosed in the Implementation Report. OVERVIEW OF REMUNERATION ELEMENTS CONTINUED Effective 1 July 2021, the Committee considered and approved a separate peer group to be used for the relative total shareholder return (rTSR) measurement in our LTI award. Some larger competitors (not included for benchmarking purposes) were also included in place of some smaller companies. No changes were made to the peer group for FY23. JSE primary listed companies Chemicals companies Energy companies AECI BASF Continental Resources Anglo American Platinum Dow Chemicals Devon Energy AngloGold Ashanti Eastman Chemicals Co Hess Corporation Glencore Lanxess AG Imperial Oil MTN Group Lyondell Basel Origin Energy Sibanye Stillwater Solvay SA Repsol |
SASOL INTEGRATED REPORT 2023 81 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION REMUNERATION REPORT CONTINUED Termination arrangements applicable to Group Executive Committee (GEC) Remuneration policy component Voluntary termination i.e., resignation Involuntary termination i.e., retrenchment, redundancy, retirement or other reasons included under the definition of ‘good leaver’ Base salary Payable up to the last day of service including the notice period either in exchange for service or in lieu of the notice period. Payable up to the last day of service including a three-to-six-month notice period. Health insurance Benefit continues up to the last day of service. Benefit continues up to the last day of service; SA employees who qualify for a post-retirement subsidy continue to receive the employer’s contribution post retirement. Retirement and risk plans Employer contributions are paid up to the last day of service. In most countries, the employee is entitled to the full value of the investment fund credit and any returns thereon; alternatively benefits under (now closed) Defined Benefit Funds in our European operations. Other benefits Not applicable. A severance package equal to three weeks’ salary per completed year of service is offered which may be increased for voluntary retrenchments or mutually agreed terminations. STI If the executive resigns on or after 30 June there is an entitlement for consideration of the STI which may have been approved for the previous financial year, subject to the achievement of performance targets. No pro-rata incentive is due if the executive leaves prior to the end of the financial year for reasons of dismissal, resignation or mutual separation. A pro-rata incentive may be considered for the period in service during the financial year subject to the meeting of performance targets and only if approved for the rest of employees. LTI All unvested LTIs are forfeited. All vesting conditions remain unchanged. Chairman and NED remuneration NEDs are appointed to the Sasol Limited Board based on their competencies as well as insight and experience appropriate to assist the Group in setting the long-term strategy, providing independent oversight in respect of performance against Group top priorities and holding Executives accountable to deliver business results over the short, medium and long term. Consequently, fees are set at levels to attract and retain the calibre of NEDs necessary to contribute to a highly effective board of a complex, multi-dimensional and multinational organisation. NEDs do not receive STIs and do not participate in LTI plans. No arrangement exists for compensation in respect of loss of office. NEDs are paid a fixed annual fee in respect of their Board membership and supplementary fees for Committee membership or Chairmanship. The annual fee is divided by four and a quarterly fee is paid at the end of every Board cycle regardless of the number of meetings held in that quarter. Board fees tabled at the 2021 AGM were approved effective 1 January 2022. The approved fees will be effective until the 2021 resolution is replaced, but no longer than two years from the date that the resolution was passed. The approved NED fees include a cost-of-living factor which is applied to the fees payable to NEDs who live outside of Europe, United Kingdom and North America. Furthermore, a fixed exchange rate is used to convert the US dollar fees to the denomination used for payment to eliminate significant exchange rate variances. In accordance with the resolution passed at the 2021 AGM, a 4,5% adjustment equal to an average consumer price index percentage was implemented effective 1 January 2023. JANUARY 2022 TO DECEMBER 2022 JANUARY 2023 TO DECEMBER 2023 A. NEDs permanently residing outside of Europe, the United Kingdom and North America1,2,3 B. NEDs residing permanently in Europe, the United Kingdom and North America2,3,4,5 C. NEDs permanently residing outside of Europe, the United Kingdom and North America1,2,3 D. NEDs residing permanently in Europe, the United Kingdom and North America2,3,4,5 Chairman of the Sasol Limited Board (all inclusive) US$285,000 US$345,000 US$297,824 US$360,524 NED US$100,000 US$120,000 US$104,500 US$125,400 Lead Independent Director (additional fee) US$40,000 US$48,000 US$41,800 US$50,160 Audit Committee Chairman US$30,000 US$35,000 US$31,352 US$36,576 Audit Committee member US$20,000 US$24,000 US$20,900 US$25,080 Remuneration Committee Chairman US$20,000 US$24,000 US$20,900 US$25,080 Remuneration Committee member US$12,000 US$14,500 US$12,540 US$15,152 Other Committee Chairman US$20,000 US$24,000 US$20,900 US$25,080 Other Committee member US$12,000 US$14,500 US$12,540 US$15,152 1 Included solely for comparative purposes. 2 Fees are stated as an annual amount but were paid in quarterly instalments. 3 Fees are exclusive of value added tax (VAT) which was added for Directors who are registered for VAT. 4 Fees were adjusted effective 1 January 2023 as approved at the November 2021 AGM. As the fees are stated in US dollars, a CPI adjustment of 4,5%, aligned with what has been implemented for employees in our Northern hemisphere offices. 5 The exchange rate between the US dollar fee and home country currency was fixed for a period of 12 months, using the USD:ZAR of 1:15,6 (average exchange rate for preceding 18-month period), to prevent exchange rate fluctuations in the actual fees paid. OVERVIEW OF REMUNERATION ELEMENTS CONTINUED |
SASOL INTEGRATED REPORT 2023 82 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION REMUNERATION REPORT CONTINUED ALIGNMENT BETWEEN THE GROUP TOP PRIORITIES AND THE TARGETS SET FOR FY23 AND FY24 STI AND LTI AWARDS The combination of financial and non-financial metrics allows for value to be created for our shareholders, customers, employees and communities in a sustainable manner. This means that Sasol will be able to provide chemicals and energy products in a responsible way // Respect people, their health and safety, and the environment // Contribute to the socio-economic development of the countries within which we operate. • Continue to embed our Values, culture and enhance our EmpVP • Promote diversity, equity, and inclusion in the workplace • Deliver on our capability building inclusive of leadership development programs • Strengthen stakeholder trust through continued delivery on community, regulatory, and shareholder promises • Deliver on 2030 GHG emissions reduction program and environmental compliance commitments • Progress opportunities to enable sustainable growth by strengthening our innovation and technology, partnering and sustainability solutions • Deliver Sasol 2.0 commitments • Deliver coal deployment and quality remediation plans • Enhance operational reliability, efficiency and effectiveness • Maintain balance sheet flexibility, cash flow management while driving selective growth • Unlock value by continuously improving service delivery and customer excellence PEOPLE PLANET PROFIT • Ensure safety, operational discipline and care for our people in our strive for Zero Harm • Continue to strengthen our Values, culture and enhance our EmpVP • Promote diversity, equity and inclusion in the workplace • Accelerate our capability-building programme to enable our strategy • Strengthen stakeholder trust through continued delivery on community, regulatory and shareholder promises • Define people and community plans for decarbonisation roadmaps and emerging value pools STI: Health and safety of our employees and communities Process safety Operational safety Safety Remediation plan Just transition roadmap Broad based black economic empowerment diversity, equity and inclusion Preferential Procurement Customer Centricity STI: Energy efficiency improvement Sourcing of carbon credits Shifting to lower-carbon products and green hydrogen Renewable energy sourcing strategy Advancing climate action Advance circular solutions LTI: Reduction in scope 1 and 2 emissions STI: Sales volumes Cash fixed costs Free cash flow/turnover Sustainable net working capital Capital expenditure LTI: Return on invested capital (ROIC) > WACC +1% for SA and the US respectively rTSR to exceed peer group median FY23 GROUP TOP PRIORITIES FY24 GROUP TOP PRIORITIES FY23 GROUP AND BUSINESS INCENTIVE KEY PERFORMANCE INDICATORS • Deliver Sasol 2.0 in a prioritised, sequenced manner and mature the value creation plan for FY24/25 • Maintain balance sheet flexibility through all aspects of cash flow management while maintaining dividends • Advance our future growth value streams and deliver sustainable returns through disciplined capital allocation • Enhance operational discipline, efficiency and effectiveness, and drive reliable feedstock supply and operations across all value chains • Continuously improve our service delivery and customer experience • Deliver on 2030 GHG emissions reduction programme and environmental compliance commitments • Define pathways to meet 2050 Net Zero GHG ambition • Progress opportunities to enable sustainable growth by strengthening our technology, partnering and sustainability solutions (including coal value chain) • Deliver optionality relating to flexible, sustainable feedstock opportunities PURSUE ZERO HARM AND ENHANCE AN INCLUSIVE PERFORMANCE CULTURE Continue to enhance our EmpVP Promote diversity, equity and inclusion in the workplace Deliver on our capability building leadership and critical skills development programmes Operational Safety Continuously improve our service delivery and customer experience ADVANCE SUSTAINABILITY TOWARDS MEETING OUR ENVIRONMENTAL ROADMAP COMMITMENTS Deliver on 2030 GHG emissions reduction programme and environmental compliance commitments through carbon offset frameworks Improved energy efficiency DELIVER AND MAXIMISE VALUE Deliver Sasol 2.0 ‘Reset’ commitments Deliver coal deployment and quality remediation plans Enhance operational and functional performance, efficiency and effectiveness Maintain balance sheet flexibility, cash flow, cost management while ensuring reliable operations FY24 KEY INCENTIVE PERFORMANCE INDICATORS1 PEOPLE PLANET PROFIT 1 Performance indicators are included in the Group scorecard and individual performance agreements of employees as appropriate |
SASOL INTEGRATED REPORT 2023 83 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION This section provides an overview of the implementation of the Remuneration Policy. It sets out the relationship between company performance and Executive Directors’ and Prescribed Officers’ remuneration outcomes as well as progress against the MSR. The tables in this section provide information on all amounts received or receivable by members of the GEC for FY23 (including the President and CEO, Executive Directors and Prescribed Officers). The structure of the Implementation Report, is as follows: Incentive Plan outcomes • Group performance targets for STI awards made in FY23 and performance results. • Performance vs. Corporate Performance Targets in respect of LTIs that are due to vest in FY24, as at the end of the performance period 30 June 2023. Executive Directors and Prescribed Officers (tabulated separately) • Disclosure of remuneration and benefits paid in terms of the single total figure methodology including the STI amount awarded for FY23 and an estimated value relating to the vesting of LTIs in FY24, in respect of the performance period ended 30 June 2023. • Outstanding LTI holdings. • Progress against MSR. NEDs • Fees paid during FY23. Key Remuneration Outcomes1 Salary/TGP adjustments Included a market review as well as consideration of the fact that for two years, low or no increases were granted, in a period of high inflation. STI (excluding fatality penalty) Group: Energy: Chemicals: Mining: Outcomes in respect of Group and Business scorecards: 71,5% (CEO and CFO) 76,3% 71,1% 59,7% LTI 67,34% out of 75%; performance assessment on the balance of 25% postponed until more clarity is obtained on Eskom's grid access. 1 In total, the actual total remuneration for members of the GEC, varied between 51% and 84% of target remuneration for FY23 REMUNERATION REPORT CONTINUED REMUNERATION REPORT // IMPLEMENTATION REPORT SASOL INTEGRATED REPORT 2023 83 IMPLEMENTATION REPORT // |
INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION SASOL INTEGRATED REPORT 2023 84 REMUNERATION REPORT CONTINUED KPI – KEY PERFORMANCE INDICATOR FY23 WEIGHTING FY23 THRESHOLD TARGET STRETCH ACHIEVEMENT WEIGHTED ACHIEVEMENT ESG (10%) PROCESS SAFETY 5% 21 18 16 Fires, Explosions and Releases amounted to 15 7,5% OCCUPATIONAL SAFETY 5% 14 12 9 Sasol achieved a high-severity injury – severity rate (HSI-SR) of 9,96 6,7% ESG (20%) ADVANCING SUSTAINABILITY: CLIMATE CHANGE 7,5% Energy Efficiency Improvement using 30 June 2022 as the basis for assessment of FY23 FY23 Energy Efficiency Improvement = 1% FY23 Energy Efficiency Improvement = 1,5% An energy efficiency improvement of 0,05% was achieved as compared to prior year 0,34% 7,5% 1. Sign cooperation agreement with at least one partner to support global sourcing of quality carbon credits 2. Obtain Sasol Ltd Board approval for medium-term Just Transition roadmap by 30 June 2023 Approved RE Sourcing Strategy for Energy Business delivered by 30 June 2023 which aligns with the Group’s energy transition plans Sasol signed one cooperation agreement during the year. The board approved the medium-term Just Transition roadmap Renewable energy sourcing strategy delivered by 30 June 2023 11,25% 5% The achievement of a FEED milestone for at least one PtX partner project by start Q4 FY23 Achieve FEED milestone (CSAC considered) on two partner PtX projects by 30 June 2023 Realise external/grant funding on one of the PtX projects by 30 June 2023 Sign one MoU for a prefeasibility or Feasibility study, equity opportunity in support of development of SAF (pathway based on FT PtL or biomass or MSW gasification followed by FT or HEFA pathway) by 30 June 2023 Threshold and target partially achieved. Realised external/grant funding, and achieved one FEED milestone 3,75% Group Financials (70%) SALES VOLUMES PRODUCED 15% Actual Fuels and Chemicals sales volumes (excl imports), from 5% below target to target (scoring range of 0% – 7,4% in respect of each of the Chemicals and Fuels sales volumes targets) FY23 Fuels sales volumes = 52.3mm bbls Actual Fuels & Chemicals Sales volumes from target to 5% over FY23 sales volumes’ targets (scoring range from 7.5% – 11.25% in respect of each of Chemicals and Fuels sales volumes targets) FY23 Fuels and Chemicals sales volumes 3% and 12% below target, respectively 3,20% CASH COST OPTIMISATION 15% CFC of <=R63,9bn FY23 CFC target = R61,9bn FY23 CFC > = R59,9bn Cash Fixed Costs were 2,1% above target 5,11% CASH FLOW GENERATION 20% 3% below the targeted FY23 FCF (before growth)/Turnover ratio FY23 FCF (before growth)/Turnover = 10% Up to 3% over the FY23 FCF (before growth)/Turnover ratio We achieved a Free Cash Flow before growth to turnover ratio of 8,86% 12,4% AVERAGE NET WORKING CAPITAL 10% Average NWC % = 19% Average NWC % = 18% Average NWC % = 17% Average Net Working Capital for the year of 16,6% 15% CAPITAL ALLOCATION 10% FY23 First order capital expenditure <=R21bn or >R30bn Capital expenditure = R23,5bn or R28,5bn First order capital expenditure between R25bn and R27bn Capital Expenditure target partially achieved at R29,1bn. Normalised for exchange rate impact 6,23% 100% SAFETY ADJUSTMENT – PENALTY FOR FATALITIES (6%) FINAL SCORE 65,5% The Short-term Incentive Policy allows for the normalisation of performance outcomes for macroeconomic factors (Brent crude oil price, ZAR/$ exchange rate), factors impacting performance outside of management’s control (eg Eskom outages, extreme weather events, force majeures) and alignment of baselines or budgets with the impact of divestitures or acquisitions. The Committee did not apply any discretion to performance outcomes. Short-term incentive (STI) plan outcomes The following table provides the outcomes against the FY23 performance targets that were set for the Group STI plan. PROFIT PLANET PEOPLE IMPLEMENTATION REPORT CONTINUED |
SASOL INTEGRATED REPORT 2023 85 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION Component Group (0 – 150%) Chemicals (0 – 150%) Energy (0 – 150%) Mining (0-150%) People Safety 14,2% 10,8% 7,5% 12,5% Safety remediation plan ––– 4,8% Environmental incidents ––– 3,8% Health: Dust Compliance ––– 3,1% Customer Experience/Centricity – 12,5% 0% – Preferential Procurement – – 7,5% 5,2% B-BBEE/Diversity and inclusion – 11,7% 5,8% 4,8% Planet Climate Change 0,3% 7,5% – 3% Circular & Sustainable solutions – 5% – – Reduce GHG emissions/Progress green hydrogen 11,3% – 20,6% – Advance renewable energy – – 1,2% – Shifting to lower carbon products and green hydrogen 3,8% ––– Develop solutions to address GHG scope 3 emissions – 2,5% – – Profit Gross Margin – 0% 5,5% – Controllable Cash fixed costs – 9,8% 11,2% – Working Capital – 6,3% – – Production volumes – – 3,7% 0% Inventory days – – 5,8% – Receivables – – 7,5% – Sales volumes 3,2% ––– Absolute cash fixed costs 5,1% ––– Free cash flow 12,4% ––– Net working capital to Turnover 15% ––– Capital expenditure 6,2% 5% 0% 5% Mining cost per ton ––– 0% Mine reliability ––– 15% Fulco programme ––– 2,5% Achieved score (excluding fatalities) 71,5% 71,1% 76,3% 59,7% Role Split Group/ Business Group score (including fatality penalty) Chemicals score Energy score Weighted average of Chemicals, Energy and Mining score Final incentive multiplier (including fatalities, excluding IPF) President and CEO and CFO 100% Group 65,5% ––– 65,5% EVP Chemicals Business 60% Group/ 40% Business 65,5% 71,1% – – 67,74% EVPs Energy Business 60% Group/ 40% Business 65,5% – 76,3% – 69,82% EVPs Corporate centre 60% Group/ 40% Business1 65,5% – – 70,9% 67,66% EVP Mining 100% Mining2 –––– 64% 1 Combined weighted percentage of the Energy, Chemicals and Mining Business’ final score respectively, calculated as (40% x 76.3%)+(40% x 71.1%)+(20% x 59.7%). 2 Performance agreement focused on agreed targets to be delivered at Sasol Mining. Other than for the President and CEO, CFO and EVP Mining, the STI amount approved is a combination of performance under the Energy business, Chemical business, Mining business and Group STI scorecards for FY23; finally modified by the individual performance factor (IPF), which is an outcome of achievements against the personal performance contract. The following outcomes are applicable to the President and CEO, CFO and Executive Vice Presidents as indicated in the table below: PROFIT PEOPLE REMUNERATION REPORT CONTINUED PLANET IMPLEMENTATION REPORT CONTINUED |
SASOL INTEGRATED REPORT 2023 86 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION REMUNERATION REPORT CONTINUED Long-term incentive (LTI) plan outcomes The following table provides the outcomes against the corporate performance targets (CPTs) which were linked to the FY21 LTI awards, which are due to vest in FY24 in respect of the performance period 1 July 2020 – 30 June 2023. Measure Weighting Threshold3 Target3 (100%) Stretch Target3 (200%) Achievement Weighted Achievement Climate Change 25% Deliver 150 MW of renewable energy by 30 June 2023 Deliver 200 MW of renewable energy by 30 June 2023 Deliver 300 MW of renewable energy by 30 June 2023 The measurement of the renewable energy target has been deferred4 – ROIC2 Rest of Sasol 35% ROIC (excl AUC) at SA WACC of 13,5% per annum ROIC (excl AUC) at SA WACC of 13,5% + 1% = 14,5% per annum ROIC (excl AUC) at SA WACC 13,5% + 2% = 15,5% per annum FY21 and FY23 were impacted by impairments. Sasol achieved ROIC stretch target for FY22 23,34% ROIC2 USA 10% ROIC (excl AUC) at US WACC of 8% per annum ROIC (excl AUC) at US WACC 8% + 0,5% = 8,5% per annum ROIC (excl AUC) at US WACC 8% + 1% = 9% per annum Below threshold, averaging 1,5% over three years 0% Relative TSR measured against the new peer group 30% Below the 50th percentile of the index 60th percentile of the index 75th percentile of the index Above target achievement at 67th percentile against the peer group 44% Achievement 0 – 200% range1 = 67,34% 1 In respect of LTIs issued to members of the Group Executive Committee including the Executive Directors, 100% of the award was subject to the achievement of CPTs. Of the vested portion, 50% will be released in FY24 and the balance in FY26 subject to continued employment. 2 ROIC was measured annually. 3 Straight line vesting is applied between threshold, target and stretch target. 4 The Committee has decided to postpone the assessment of performance against the renewable energy target until more clarity is available in respect of Eskom's grid access. FY23 LTI awards For members of the GEC including Executive Directors, 65% of the LTI awards granted in September 2022 are subject to the achievement of the following CPTs in addition to time-based vesting criteria of between three and five years. The balance of the award (35%) is subject to a five-year, time-based vesting criteria. The performance targets for the FY23 award are as follows: KPI – Key performance indicator Weighting Threshold (Rating = 0%)1 Target (Rating = 100%) Stretch (Rating = 200%) Holistic focus on ESG matters 25% (equally divided between Energy and Chemicals targets) Achieve a sustainable 3,55% reduction (equating to 2,3mtpa CO2e) in scope 1 and scope 2 emissions off a 2017 baseline by end FY25 Achieve a sustainable 4,18% reduction (equating to 2,7mtpa CO2e) in scope 1 and scope 2 emissions off a 2017 baseline by end FY25 Achieve a sustainable 4,9% reduction (equating to 3,2mtpa CO2e) in scope 1 and scope 2 emissions off a 2017 baseline by end FY25 Return on Invested Capital (ROIC)2 Sasol SA 30% ROIC (excl AUC) at SA WACC of 13,5% per annum ROIC (excl AUC) at SA WACC of 13,5% +1% = 14,5% per annum ROIC (excl AUC) at SA WACC of 13,5% +2% = 15,5% per annum Offshore 10% ROIC (excl AUC) at US WACC of 8% per annum ROIC (excl AUC) at US WACC of 8% +0,5% = 8,5% per annum ROIC (excl AUC) at US WACC of 8% +1% = 9% per annum Relative TSR vs the peer group3 35% 50th percentile of the index1 60th percentile of the index 75th percentile of the index Total 100% 1 Threshold = 50% vesting at median performance for rTSR; 0% for ROIC; 50% for ESG targets - straight line scoring to be applied between threshold, target and stretch. 2 ROIC will be measured at the end of each FY. The extent to which the target is met, or not, will be assessed and the performance period will be restarted on 1 July of the following year. Three different assessments to be done over the performance period. 3 TSR peer group as approved by the Sasol Remcom for FY22. IMPLEMENTATION REPORT CONTINUED |
SASOL INTEGRATED REPORT 2023 87 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION REMUNERATION REPORT CONTINUED FR Grobler VD Kahla3 HA Rossouw4 P Victor5 2023 2022 2023 2022 2023 2022 2023 2022 Executive Director R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 Salary 13 117 11 328 7 762 7 301 7 468 1 737 – 8 351 Risk and Retirement funding – – 380 373 844 196 – 391 Vehicle benefit – – – – – – – 100 Healthcare 143 117 114 108 – – – 56 Vehicle insurance fringe benefit 6 6 6 6 – – – 6 Security benefit 18 30 507 515 – – – – Other benefits 20 5 122 1 25 8 001 – 1 998 Total salary and benefits 13 304 11 486 8 891 8 304 8 337 9 934 – 10 902 Annual short-term incentive1 10 364 10 008 4 242 5 272 5 060 – – 7 411 Long-term incentive gains2 17 028 21 451 14 681 9 399 – – – – Total annual remuneration 40 696 42 945 27 814 22 975 13 397 9 934 – 18 313 1 Short-term incentives approved based on the Group results for FY23 and payable in FY24. Incentives are calculated as a percentage of total guaranteed package/base salary as at 30 June 2023 x Group and BU STI achievement (as appropriate) x Individual Performance achievement. 2 LTIs for FY23 represent the annual award made on 4 December 2020 and Mr Kahla's on-appointment award, in terms of his appointment as an Executive Director, made on 6 October 2020. The illustrative amount is calculated in terms of the number of LTIs x Corporate performance target achieved where relevant (67,34%) x June 2023 average share price. The vesting date is during FY24, 3 years after the award date in FY21, subject to the Company being in an open period. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTIs vest. 50% of the vested LTIs and accrued dividends will be released on 4 December 2023 and the balance in 4 December 2025, subject to the rules of the LTI plan. As there are no further performance conditions attached to the balance of the 50%, the full amount is disclosed in the single figure table. 3 Other benefits for Mr Kahla include the private use of the Company-owned accommodation in London (R121 255) on which fringe benefit tax was charged and paid by Mr Kahla. 4 The 2022 disclosed earnings of Mr Rossouw are for the period 4 April to 30 June 2022, in the position of CFO designate. From 1 July 2022 Mr Rossouw was appointed as CFO. Other benefits for Mr Rossouw in 2022 include a buy-out payment of R8 000 000, tied to a retention period of twenty-four months from date of payment, as compensation for incentives forfeited upon resigning from his previous employer. 5 Mr Victor resigned as CFO effective 30 June 2022. Other benefits in the prior year include accumulated leave encashment as well as other additional benefits in line with Sasol's contractual commitment. Executive Directors A. Executive Directors’ remuneration and benefits B. Unvested long-term incentive holdings (number) Executive Directors Cumulative balance at the beginning of the year Granted in 20231 Effect of corporate performance targets Dividend equivalents Long-term incentives settled2 Effect of changes in Executive Directors Cumulative balance at the end of the year FR Grobler 313 344 57 976 (45 494) 3 025 (32 156) – 296 695 VD Kahla 184 205 28 728 (19 934) 1 391 (15 519) – 178 871 HA Rossouw3 – – – – – 32 734 32 734 Total 497 549 86 704 (65 428) 4 416 (47 675) 32 734 508 300 1 LTIs granted on 10 November 2022. 2 50% of the award that vested in FY23 is still subject to a continued employment period of two years. 3 Mr Rossouw was appointed as CFO and Executive Director on 1 July 2022. C. Unvested long-term incentive holdings (intrinsic value) Executive Directors Intrinsic cumulative value at beginning of year1 R’000 Intrinsic value of awards made during the year2 R’000 Change in intrinsic value for the year1 R’000 Effect of corporate performance targets R’000 Dividend equivalents R’000 LTIs settled3 R’000 Effect of changes in Executive Directors4 R’000 Intrinsic cumulative value at end of year1 R’000 FR Grobler 116 464 17 407 (43 725) (13 081) 870 (8 728) – 69 207 VD Kahla 68 465 8 625 (25 774) (5 732) 400 (4 261) – 41 723 HA Rossouw4 – – (4 531) – –– 12 167 7 636 1 Change in intrinsic value for the year results from changes in share price. Intrinsic values at the beginning and end of the year have been determined using the closing price of: 30 June 2023 R233,26 30 June 2022 R371,68 2 LTIs granted on 10 November 2022. 3 LTIs settled represent LTIs that vested with reference to the Group results for FY22 that was settled in FY23. Difference between the long-term incentive gains disclosed in FY22 and the amount settled in FY23 is due to difference in actual share price at vesting date and the share price at date of disclosure. 4 Mr Rossouw was appointed as CFO and Executive Director on 1 July 2022. IMPLEMENTATION REPORT CONTINUED |
SASOL INTEGRATED REPORT 2023 88 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION REMUNERATION REPORT CONTINUED Outstanding shares subject to continued employment only until 2027 (excluding accrued dividend equivalents, includes RLTIs) Beneficial Shareholding Minimum Shareholding Requirement (MSR) (R’000) MSR Achievement period (CY) Units Beneficial share-holding – 30 June 2023 (R’000) Post tax vesting – September to December 20231, 2, 9 (R’000) Beneficial shareholding value (including CY2023 post tax vesting) (R’000) % MSR Achieved – end CY202310 Number of shares to vest in CY20243 Number of shares to vest CY2025 – 20274, 5, 6, 7, 8 Total number of vested shares subject only to continued employment Pre-tax value of vested shares subject only to continued employment (up to CY2027)9 (R’000) FR Grobler 22 050 2024 45 299 16 240 5 248 21 488 97% – 152 427 152 427 37 347 VD Kahla 5 099 2025 16 419 6 282 2 458 8 740 171% – 68 331 68 331 16 742 HA Rossouw 11 200 2027 – – – – – – 11 457 11 457 2 807 1 Includes the 2nd tranche of the award made in September 2018. The CPT applied to this award was 44,7%. 2 Includes the 1st tranche of the award made in December 2020. The CPT applied to this award is 67,34%. (The annual September award of 2020 was delayed to December 2020 for EVPs who were subject to a closed trading period). 3 Awards made in September 2021, vesting in CY24 remain subject to the CPT outcome. 4 Includes the 2nd tranche of the award made in March 2020. The CPT applied to this award is 54,31%. 5 Includes the Restricted award made in December 2020. This award is only subject to a 5 year vesting period, no CPTs. 6 Includes the 2nd tranche of the award made in December 2020. The CPT applied to this award is 67,34%. (The annual September award of 2020 was delayed to December 2020 for EVPs who were subject to a closed trading period). 7 Includes the Restricted awards made in September 2021 and November 2022. These awards are only subject to a 5 year vesting period, no CPTs. 8 Includes the Restricted portion of the on-appointment award made to Mr Rossouw in May 2022. This award is only subject to a 5 year vesting period, no CPTs. 9 Average June 2023 share price used of R245,01. 10 Once the MSR has been achieved, the executive will be allowed to sell vested shares held in excess of the MSR. Executive Directors CONTINUED D. Progress against Minimum Shareholding Requirement (MSR) IMPLEMENTATION REPORT CONTINUED |
SASOL INTEGRATED REPORT 2023 89 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION Prescribed Officers A. Prescribed Officers’ remuneration and benefits S Baloyi3 HC Brand4 BV Griffith5 BE Klingenberg6 2023 2022 2023 2022 2023 2022 2023 2022 Prescribed Officers R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 Salary 4 773 956 5 088 4 704 11 023 8 745 – 6 647 Risk and Retirement funding 1 017 215 1 492 1 487 812 618 – 2 074 Vehicle benefit 300 75 234 234 – – – 212 Healthcare 126 29 101 92 365 314 – 136 Vehicle insurance fringe benefit 6 2 6 6 – – – 6 Security benefit – – – 6 – – – 200 Other benefits 173 332 2 525 4 546 409 – 7 Total salary and benefits 6 395 1 609 9 446 6 533 12 746 10 086 – 9 282 Annual short-term incentive1 3 672 2 494 3 553 4 415 6 087 6 418 – 4 390 Long-term incentive gains2 4 103 3 687 6 045 13 169 7 169 11 940 – 9 912 Total annual remuneration 14 170 7 790 19 044 24 117 26 002 28 444 – 23 584 BP Mabelane7 CK Mokoena CF Rademan8 2023 2022 2023 2022 2023 2022 Prescribed Officers R’000 R’000 R’000 R’000 R’000 R’000 Salary 7 778 7 317 6 283 5 927 6 753 2 027 Risk and Retirement funding 380 372 357 350 – – Healthcare 60 56 143 115 – – Security benefit – – 12 9 – – Other benefits 1 008 5 004 3 2 2 1 500 Total salary and benefits 9 226 12 749 6 798 6 403 6 755 3 527 Annual short-term incentive1 4 227 5 389 3 380 3 740 3 200 1 503 Long-term incentive gains2 15 876 – 5 929 6 985 – – Total annual remuneration 29 329 18 138 16 107 17 128 9 955 5 030 Prescribed Officers Cumula-tive balance at beginning of year Granted in 20231 Effect of corporate perform-ance targets Dividend equiva-lents Long-term incen-tives settled Awards forfeited Effect of change in Prescribed Officers Cumula-tive balance at the end of the year S Baloyi 52 040 10 681 (1 943) 448 (6 463) – – 54 763 HC Brand 139 064 24 060 (23 152) 1 860 (23 346) (24 060) (94 426) – BV Griffith 144 426 37 603 (14 043) 1 389 (22 513) – – 146 862 BP Mabelane 120 403 28 595 – – – – – 148 998 CK Mokoena 113 178 23 598 (14 815) 1 001 (10 836) – – 112 126 Total 569 111 124 537 (53 953) 4 698 (63 158) (24 060) (94 426) 462 749 1 LTIs granted on 10 November 2022. B. Unvested long-term incentive holdings (number) REMUNERATION REPORT CONTINUED IMPLEMENTATION REPORT CONTINUED Prescribed Officers' remuneration and benefits notes 1 Short-term incentives approved based on the Group results for FY23 and payable in FY24. Incentives are calculated as a percentage of total guaranteed package/base salary as at 30 June 2023 x Group and BU STI achievement (as appropriate) x Individual Performance achievement. 2 Long-term incentives for FY23 represent the annual award made on 4 December 2020 and Ms Mabelane's on-appointment LTI award on 6 October 2020, at time of her appointment as EVP: Energy Business. The illustrative amount is calculated in terms of the number of LTIs x Corporate performance target achieved where relevant (67,34%) x June 2023 average share price. The vesting date is during FY24, 3 years after the award date in FY21, subject to the Company being in an open period. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTIs vest. 50% of the vested LTIs and accrued dividends will be released on 4 December 2023 and the balance in 4 December 2025, subject to the rules of the LTI plan. As there are no further performance conditions attached to the balance of the 50%, the full amount is disclosed in the single figure table. 3 Other benefits for Mr Baloyi include the taxation gross up of the relocation allowance paid in terms of the Sasol Relocation policy, in the previous financial year and R150 000 toward reimbursement of property transfer fees per the Relocation policy. 4 Mr Brand retired on 30 June 2023. Other benefits include accumulated leave encashment to the value of R2 516 801 in line with Sasol's contractual commitment. 5 Mr Griffith is appointed in the USA. Dollar denominated salary and benefits have been converted to ZAR using the monthly average of daily closing exchange rates. ZAR/USD depreciation contributes to increase in year-on-year totals. 6 Mr Klingenberg, stepped down from the position of EVP Energy Operations on 31 March 2022, but remained in service until his retirement on 31 August 2022. In the interest of transparency his remuneration was disclosed for the 2022 financial year. 7 Other benefits for Ms Mabelane include her subsidised business transport (R8 299) and the final payment of her sign-on/buy-out award partially compensating for the loss of incentives and shares when she resigned from her previous employer (R1 000 000). Other benefits for Ms Mabelane in 2022 include her subsidised business transport (R2 150), sign-on/buy-out award partially compensating for the loss of incentives and shares when she resigned from her previous employer (R5 000 000). 8 Other benefits for Mr Rademan in 2022 include a sign-on payment of R1 500 000 compensating for the incentive which he would have received from his previous employer if he did not resign. |
SASOL INTEGRATED REPORT 2023 90 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION Vested shares subject to continued employment only until (excluding accrued dividend equivalents, including RLTIs) Beneficial Shareholding Minimum Shareholding Requirement (MSR) ($’000) (R’000) MSR Achievement period (CY) Units Beneficial share-holding – 30 June 2023 ($’000) (R’000) Post tax vesting - October and December 20231, 2, 13 ($’000) (R’000) Beneficial shareholding value (including CY2023 post tax vesting) ($’000) (R’000) % MSR Achieved – CY202314 Number of shares to vest in CY20243, 4, 5 Number of shares to vest in CY2025 – CY20276, 7, 8, 9, 10, 11 Total number of vested shares subject only to continued employment Pre-tax value of vested shares subject only to continued employment (up to CY2027)13 ($’000) (R’000) S Baloyi 3 570 2028 2 474 979 1 176 2 155 60% 6 570 19 741 26 311 6 446 HC Brand15 4 270 2026 17 591 4 779 2 008 6 787 159% – 52 641 52 641 12 898 BV Griffith5 $465 2026 18 821 $432 $124 $556 120% 5 017 66 518 71 535 $938 BP Mabelane 5 075 2026 68 21 4 549 4 570 90% – 60 266 60 266 14 766 CK Mokoena 4 188 2026 12 298 4 008 2 055 6 063 145% – 55 202 55 202 13 525 CF Rademan12 – –– – – – – – – – – 1 Includes the 2nd tranche of the award made in September 2018. The CPT applied to this award was 44,7%. 2 Includes the 1st tranche of the award made in December 2020. The CPT applied to this award is 67,34%. (The annual September award of 2020 was delayed to December 2020 for EVPs who were subject to a closed trading period). 3 Includes the 1st tranche of the September 2021 award, 30% was subject to CPTs, that Mr Baloyi received as an SVP. 4 Includes the 2nd tranche of the award made in October 2019 to Mr Baloyi and Mr Griffith (in their previous roles as SVPs). The CPT applied to this award is 54,31%. 5 Other LTI awards made in September 2021, vesting in CY24 remain subject to the CPT outcome. 6 Includes the 2nd tranche of the award made in March 2020. The CPT applied to this award is 54,31%. 7 Includes the Restricted award made in December 2020. This award is only subject to a 5 year vesting period, no CPTs. 8 Includes the 2nd tranche of the award made in December 2020. The CPT applied to this award is 67,34%. (The annual September award of 2020 was delayed to December 2020 for EVPs who were subject to a closed trading period). 9 Includes the Restricted awards made in September 2021 and November 2022. These awards are only subject to a 5 year vesting period, no CPTs. 10 Includes the 2nd tranche of the September 2021 award, 30% was subject to CPTs, that Mr Baloyi received as an SVP. 11 Includes the restricted portion of the on-appointment award made to Mr Baloyi in May 2022. This award is only subject to a 5 year vesting period, no CPTs. 12 Mr Rademan is excluded from the minimum shareholding requirement as he does not participate in the LTI plan. 13 Average June 2023 share price used of R245,01 (ADR: $13,11). 14 Once the MSR is achieved, the executive will be allowed to sell vested shares held in excess of the MSR. 15 Mr Brand retired on 30 June 2023. Prescribed Officers Cumulative intrinsic value at beginning of year1 $’000 and R’000 Intrinsic value of awards made during the year2 $’000 and R’000 Change in intrinsic value for the year1 $’000 and R’000 Effect of corporate performance targets $’000 and R’000 Dividend equivalents $’000 and R’000 LTIs settled3 $’000 and R’000 LTIs settled3 $’000 and R’000 Effect of change in Prescribed Officers $’000 and R’000 Cumulative intrinsic value at end of year1 $’000 and R’000 S Baloyi 19 342 3 207 (7 393) (559) 129 (1 952) – – 12 774 HC Brand4 51 687 7 224 (18 589) (6 657) 535 (6 562) (5 612) (22 026) – BV Griffith $3 330 $654 ($1 588) ($228) $23 ($373) – – $1 818 BP Mabelane 44 751 8 585 (18 581) – – – – – 34 755 CK Mokoena 42 066 7 085 (16 069) (4 260) 288 (2 955) – – 26 155 Prescribed Officers CONTINUED C. Unvested long-term incentive holdings (intrinsic value) D. Progress against Minimum Shareholding Requirement (MSR) IMPLEMENTATION REPORT CONTINUED 1 Change in intrinsic value for the year results from changes in share price. Intrinsic values at the beginning and end of the year have been determined using the closing price of: 30 June 2023 R233,26 ($12,38) 30 June 2022 R371,68 ($23,06) 2 LTIs granted on 10 November 2022. 3 LTIs settled represent long-term incentives that vested with reference to the Group results for FY22 that was settled in FY23. Difference between the long-term incentive gains disclosed in FY22 and the amount settled in FY23 is due to differences in actual share price at vesting date and the share price at date of disclosure. 4 Mr Brand retired effective 30 June 2023. In terms of the 2022 LTI Plan rules, his 10 November 2022 award lapsed on 30 June 2023 as retirement was within 270 days of the award date. The balance of unvested awards at 30 June 2023 is 94 426 with an intrinsic value of R22 025 809. REMUNERATION REPORT CONTINUED |
SASOL INTEGRATED REPORT 2023 91 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION 2023 2022 Beneficial shareholding1 Total beneficial shareholding Total beneficial shareholding Executive Directors FR Grobler 45 299 27 524 VD Kahla 16 419 8 348 Non-Executive Directors2 MBN Dube 24 24 NNA Matyumza 6 6 S Subramoney 2 548 2 548 Total 64 296 38 636 2023 2022 Beneficial shareholding1 Total beneficial shareholding Total beneficial shareholding Prescribed Officers S Baloyi 2 474 8 HC Brand3 17 591 14 091 BV Griffith4 18 821 4 268 BP Mabelane 68 68 CK Mokoena 12 298 6 662 CF Rademan 1 – Total 51 253 25 097 1 Unvested Long-term incentives for Executive Directors and Prescribed Officers not included. 2 Direct beneficial shareholding comprises Sasol Ordinary and Sasol BEE ordinary shares. 3 Mr Brand retired with effect from 30 June 2023. 4 Mr Griffith’s shareholding comprises ADRs. Non-Executive Directors Board Meeting Fees 1,2,3 Lead Independent Director Fees1,2 Committee Fees1,2,3 VAT Total 20234 Total 2022 R’000 R’000 R’000 R’000 R’000 R’000 SA Nkosi (Chairman) 4 394 – – 659 5 053 5 127 S Westwell (Lead Independent Director) 2 194 878 1 408 – 4 480 3 913 MJ Cuambe5 1 829 – 658 373 2 860 2 577 MBN Dube5 2 194 – 969 – 3 163 2 701 M Flöel 2 194 – 795 – 2 989 2 494 KC Harper6 2 194 – 439 – 2 633 1 996 GMB Kennealy 1 542 – 833 356 2 731 2 473 NNA Matyumza 1 542 – 493 305 2 340 2 226 MEK Nkeli 1 542 – 678 333 2 553 2 405 A Schierenbeck7 1 152 – 141 – 1 293 – S Subramoney 1 542 – 493 305 2 340 2 181 C Beggs8 – – – – – 372 ZM Mkhize8 – – – – – 795 PJ Robertson8 – – – – – 1 146 Total 22 319 878 6 907 2 331 32 435 30 406 1 Fees for Q3 and Q4 were adjusted with inflation as per the approved AGM resolution at the November 2021 AGM. 2 Fees exclude VAT. 3 Board and Committee fees are based in USD, thus impacted by USD/ZAR foreign exchange rates at date of payment for resident non-Executive Directors. For non-Executive Directors permanently residing outside of the UK, Europe and North America, effective 1 January 2023, the exchange rate was fixed for the following 12 month period, using the average exchange rate from 1 July 2021 to December 2022. A cost-of-living factor between jurisdictions, account for differences in fees. 4 As the fees are based in USD, the ZAR value of the non-Executive Directors fees increased from FY22 to FY23, mainly due to the CPI increase and significant devaluation of the Rand. 5 Mr Cuambe was appointed to the Remuneration Committee effective 19 November 2021 and Ms Dube to the Nomination Governance committee effective 1 October 2021. 6 In addition to the CPI and exchange rate increase, Ms Harper received the reduced 2018 approved Directors’ fees for Q1 and Q2 of FY22 as she was appointed to the Board after 2018, compared to her peers who remained on the approved 2016 fee (where their fees were higher than those approved in 2018). 7 Mr Schierenbeck was appointed effective 1 January 2023. 8 Mr Beggs retired effective 31 August 2021. Messrs Mkhize and Robertson retired from the Sasol Limited Board effective 19 November 2021. F. Non-Executive Directors’ remuneration REMUNERATION REPORT CONTINUED Prescribed Officers CONTINUED E. Beneficial shareholding (number of shares) IMPLEMENTATION REPORT CONTINUED |
SASOL INTEGRATED REPORT 2023 26 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION CHIEF FINANCIAL OFFICER’S STATEMENT Hanré Rossouw // Chief Financial Officer KEY MESSAGES We believe Sasol can make a significant global contribution to innovating for a better world. Mixed financial performance Balance sheet resilience Continued capital returns to shareholders Additional Sasol 2.0 commitments Continued refinement of emission reduction roadmap Disciplined capital allocation PROFITABILITY ROBUST BALANCE SHEET CONTINUED CAPITAL RETURNS R17,00 per ordinary share SELF-FUNDED TRANSITION R15 – 25 billion capital expenditure*** (in FY23 real terms) delivering 2030 greenhouse gas emission reduction target Dear stakeholders As we reflect on our financial results it is important to recognise that profitability was impacted not only by factors within our control, but also by many factors beyond it. We faced various operational challenges as well as a volatile global landscape that impacted on macroeconomic conditions and market dynamics. Business performance was further affected by the underperformance of state-owned enterprises in South Africa, which constrained our supply chains and sales volumes and placed further pressure on our operations. However, our Sasol 2.0 transformation programme (Sasol 2.0) yielded positive results, countering the impacts of some of these challenges. In the first half of the financial year, we benefitted from the rising oil price. In the second half, however, Sasol was negatively impacted by a 16% softening in the oil price which led to an overall decrease for the year of 5%. The impact of this was offset by a 17% weakening in the rand/US dollar exchange rate to an average of R17,77 for the year. Our commodity chemical prices decreased on poor demand. Polyethylene prices declined by 29% compared to the previous year. Lower ethane and energy prices in the latter part of the year contributed positively to margins in our Chemicals Business, however overall chemical margins and global demand remained depressed, negatively impacting this business, particularly in the United States and Europe. In the second half, we made notable improvements in operational performance, underpinned by focused mitigation plans to address the production instabilities earlier in the year. We remain committed to improving the coal quality of our Mining business and restoring volumes at our Secunda Operations, as well as improving overall productivity at our operations. We continue to engage with Transnet to address those hurdles that impact our ability to transport certain chemical products. The challenging macroeconomic environment affecting our Eurasia operations is expected to continue into the next financial year. While the net margin and demand remain constrained, we will continue to manage our production rates in response to the lower demand and to avoid a build-up in inventory. We faced various operational challenges as well as a volatile global landscape that impacted on macroeconomic conditions and market dynamics. However, our Sasol 2.0 transformation programme yielded positive results, countering the impacts of some of these challenges. * Represents ‘Transform’ capital expenditure which is included in the R26 – R32 billion (in FY23 real terms) annual Sasol 2.0 capital targets. |
SASOL INTEGRATED REPORT 2023 27 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION CHIEF FINANCIAL OFFICER’S STATEMENT CONTINUED Earnings before interest and tax (EBIT) of R21,5 billion declined 65% compared to the prior year, mainly due to the impairment of assets, inflationary impact on costs, the softening of the Brent crude oil price and refining margins in the latter part of the year. Excluding inflation and exchange rates, costs increased by R0,4 billion (1%), led by higher labour cost, study costs and maintenance costs. The higher costs were offset by savings from Sasol 2.0 initiatives and the impact of business disposals in FY22. Cash generated by operating activities increased by 15% compared to the prior year and was largely driven by a year-on-year decrease in working capital, the latter achieved through focused management intervention to conserve cash. We will continue to monitor working capital to ensure that it remains below or within our target of 15,5% to 16,5% on a 12-month rolling average basis. Maintaining the flexibility of the balance sheet to navigate the evolving global financial landscape remained a key focus. During FY23, we worked to strengthen our balance sheet by issuing a convertible bond of US$750 million in November 2022 and executing several debt refinancing transactions to address our 2024 maturities. Our liquidity headroom was R109,6 billion (US$5,8 billion) – well above our target of maintaining liquidity of more than US$1 billion. At 30 June 2023, our total debt excluding leases increased to R124,3 billion from R105,1 billion. This was largely driven by the weaker rand/US dollar closing rate (R18,83 compared to R16,28 in FY22) which had an impact of increasing net debt by R16,2 billion. We continue to protect the downside risk of the balance sheet, given that net debt has not reduced significantly since FY22. The hedging programme remains in place to mitigate the risk of adverse movements in the oil price and the rand/US dollar exchange rate. The hedging programme did well to manage our price risk during the 2023 financial year. We update it regularly to address changes in our commodity and currency exposure and will continue to reduce the hedge cover ratio as our balance sheet strengthens. MIXED FINANCIAL PERFORMANCE Maintaining the flexibility of the balance sheet to navigate the evolving global financial landscape remained a key focus. During FY23, we worked to strengthen our balance sheet by issuing a convertible bond of US$750 million in November 2022 and executing several debt refinancing transactions to address our 2024 maturities. 0 100 200 300 400 Jun 21 Jun 22 Jun 23 Turnover (Rand billion) 201,9 289,7 272,7 Rbn % 0 10 20 30 40 50 60 55,1 52,3 44,4 Turnover Gross margin % |
SASOL INTEGRATED REPORT 2023 28 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION CHIEF FINANCIAL OFFICER’S STATEMENT CONTINUED Sasol 2.0 transformation programme and Reset The Sasol 2.0 transformation programme’s objectives are to enable the business to be more competitive, cash generative and able to deliver attractive and sustainable returns even in a low oil price environment. The EBITDA contribution of our Sasol 2.0 transformation programme to date is R13,5 billion versus a target of R8,5 billion by FY23. This has given us some headroom to withstand the impact of the volatile economic landscape and higher inflation and was mainly achieved through the implementation and continuous assessment and refinement of the operating model as well as embedding market-driven strategies to improve customer experience and increase the profitability of our products. Given the impact of the external operating environment, we acknowledge the need to intensify our efforts to remain resilient and profitable. We therefore revise our Reset targets The increased targets will require innovation and focused delivery. Our focus for Sasol 2.0 remains to bolster the strength and maturity of initiatives and we are confident that we will maintain momentum in achieving the targets for the coming financial years. Continued refinement of emission reduction roadmap We remain committed to the decarbonisation of our current assets and have made good progress in the further development of our 2030 greenhouse gas emission (GHG) reduction roadmap. For our Energy Business, we have selected a fine coal solution – briquetting – as a potential key enabler for the main reduction lever of coal-fired boiler turndown resulting in more efficient use of our feedstock. We have progressed our ambition to integrate 1 200 MW of renewable energy into our operations by 2030 by signing more than 600 MW of power purchase agreements which will progressively come online by 2026 or earlier. We have also narrowed down the options to reduce our steam demand and increase our waste heat recovery to produce more steam to close the steam gap resulting from the boiler turndown. Remeasurement items increased significantly in FY23 to a loss of R33,9 billion compared to a gain of R9,9 billion in the prior year. This is mainly due to the full impairment of the Secunda liquid fuels refinery cash generating unit (CGU) at year end. The main drivers resulting in the impairment were the higher weighted average cost of capital rate on the back of higher global interest rates and its associated impact on the cost of debt, higher feedstock cost assumptions and the revised production profile based on the updated emission reduction roadmap. Macroeconomic conditions have led to a sharp increase in liquid natural gas (LNG) commodity prices, and we therefore deem LNG unaffordable as a substitute for coal in our process. As a result, we have placed on hold the expenditure on additional gas reforming capacity and are exploring a number of technology and feedstock solutions to partially recover volume post FY30, estimated at 6,7mt/a (FY22: 7,5 mt/a). However, the maturity thereof needs to be progressed before it can be incorporated in the impairment evaluation of our Secunda liquid fuels refinery CGU, thus a full impairment of the CGU was recognised. Although the chemical CGUs in the Secunda complex were also negatively impacted, their respective recoverable amounts remained above carrying values given the products‘ higher derivative value. Continued capital returns to shareholders We remain committed to delivering sustainable shareholder returns and stepping up cash returns as we reach our net debt targets. In FY22, we reinstated dividends to shareholders and continued in FY23 with an interim dividend of R7,00 per ordinary share. We are pleased to declare a final dividend of R10,00 per ordinary share for the year ended 30 June 2023. We continue to look at further deleveraging the balance sheet in support of a sustainable dividend of between 2,8 to 2,5 times cover of core headline earnings per share. DISCIPLINED CAPITAL MANAGEMENT AND LAUNCH OF SASOL VENTURES At our Capital Markets Day in 2021, we communicated an updated capital allocation framework and governance structure to give clarity on our approach to optimising risk-weighted returns for the long term. We remain on track to keep the level of capital spending to maintain and transform the business within a R26 billion – R32 billion per annum range (in FY23 real terms). At these levels, we continue to safeguard capital investment to ensure safe and reliable operations and meet our self-funded 2030 GHG reduction targets. The capital required for our 30% GHG emission reduction is a cumulative R15 billion – R25 billion (in FY23 real terms) up to 2030 and is included in the R26 billion – R32 billion annual capital targets. There was very limited capital spend in this category in FY23. ‘Transform’ capital spend of R0,5 billion is planned for FY24, with peak transform capital spending forecast for FY26 to FY28. Discretionary cash flow generation will start to build steadily over the next few years as we further de-lever the balance sheet and realise the incremental benefits of Sasol 2.0. In our second order of allocation, our approach to discretionary growth capital will revolve around prioritising delivery of competitive and sustainable quality earnings through long-term growth initiatives in collaboration with partners, such as through our proposed joint venture with Topsoe JV (subject to approval by relevant authorities), and other smaller high yield growth projects. A further capital efficient manner in which we will support the Transition and Reinvent horizons of our strategy is through Sasol Ventures, which we launched in February 2023. Sasol Ventures is aimed at investment in new and emerging technologies aligned to Sasol’s sustainability journey. The activities of Sasol Ventures will complement and support the internal Research and Technology function, and we look forward to strong synergistic and strategic benefits from this integration. Environmental, social and governance (ESG) reporting We are progressing with the evaluation of our ESG reporting framework in relation to the future requirements of various standard-setting bodies including the International Sustainability Standards Board and the European Corporate Sustainability Reporting Directive. In this way, we continue to drive compliance and the integration of sustainability in our reporting. We are required to commence reporting in this respect from the 2025 financial year end. |
SASOL INTEGRATED REPORT 2023 29 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION CHIEF FINANCIAL OFFICER’S STATEMENT CONTINUED Sasol BEE ordinary shares (%) 6 331 347 ˇ 99,52 (99,59) 0,48 (0,41) Non-Public ˇNumber of shares in issue Public Conclusion While the year was challenging, we remain positive that the progress we achieved in improving operations in the second half will extend and be further improved in the next financial year. Our capital allocation framework serves as the foundation for our investment decisions. This framework ensures a well-rounded strategy for addressing our capital requirements across competing priorities. We continue to prioritise our ‘Maintain’ capital to ensure we have stable and reliable operations well into the future. As we progress our emission reduction roadmap, our pathways are becoming increasingly defined. We continuously evaluate and enhance our ‘Transform’ capital spend towards our roadmap, ensuring that we make the most cost-effective decisions. Looking ahead, we expect the uncertain global economic environment to continue weighing on prices and demand in the short to medium term, with continued volatility in oil prices and weak margins for refined products and chemicals. We anticipate ongoing high inflation, which requires careful management of costs and capital strategies. SASOL’S BROAD-BASED BLACK ECONOMIC EMPOWERMENT Sasol Khanyisa was implemented on 1 June 2018. Sasol Khanyisa has been designed to comply with the revised B-BBEE legislation in South Africa and seeks to ensure ongoing and sustainable Broad-Based Black Economic Empowerment (B-BBEE) ownership credentials for Sasol Limited. Sasol Khanyisa contains a number of elements structured at both a Sasol Limited and at a subsidiary level, Sasol South Africa Limited (SSA) which is a wholly-owned subsidiary of Sasol Limited and houses the majority of the Group’s South African operations. Sasol Khanyisa Tier 1 was concluded in 2021. At the end of 10 years, or earlier if the underlying funding has been settled, the participants in Khanyisa Tier 2, will exchange their SSA shareholding on a fair value-for-value basis for Sasol BEE ordinary shares to the extent that value was created during the transaction term. Sasol BEE ordinary shares can only be traded between Black Persons on the Empowerment Segment of the JSE. This transaction will therefore ensure evergreen B-BBEE ownership credentials for Sasol Limited. Our strategic response is based on three pillars to navigate the challenging landscape and ensure our resilience. Adaptability to market dynamics: Our ability to swiftly adjust our strategies and operations in response to changing market conditions is critical. By staying agile, we effectively mitigate risks. Margin optimisation: We are committed to optimising our margins by identifying operational efficiencies, streamlining processes and exploring innovative value-added solutions. Cost competitiveness: We will continue to drive strict cost and capital discipline through our Sasol 2.0 programme. Despite the many uncertainties of our external and operating environment, I have the utmost confidence in Team Sasol’s ability to adapt, thrive and deliver. Hanré Rossouw Chief Financial Officer 3 1 August 2023 The Ixia Coal transaction, which became effective on 29 September 2010, is a B-BBEE transaction, in line with Sasol Mining’s empowerment strategy and its commitment to comply with the objectives of legislation in South Africa. The members of Ixia Coal, through WipCoal (Pty) Ltd and Sasol Mining Holdings (Pty) Ltd, subscribed to a 20% share in Sasol Mining. The members contributed in cash in their respective shareholding of 51% and 49% to Ixia Coal, while the balance of the contribution was funded through preference share debt. The transaction resulted in WipCoal effectively owning 10,2% of the equity in Sasol Mining. The Tshwarisano B-BBEE transaction came into effect on 1 July 2006. In terms of the agreement, Tshwarisano LFB Investment (Pty) Limited (Tshwarisano), an independent third party which does not form part of the Sasol Group, acquired a 25% shareholding in Sasol Oil (Pty) Limited. Sasol provided considerable facilitation and support for Tshwarisano’s financing requirements. Acknowledging the need to broaden the participation in the economy of previously disadvantaged South Africans, over the years Sasol has implemented a number of Broad-Based Black Economic Empowerment (B-BBEE) transactions in South Africa. These include: |
SASOL INTEGRATED REPORT 2023 10 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS ADMINISTRATION PERFORMANCE SOURCE Feedstock/ utilities BUSINESS MODEL MARKET Supplying customers globally PRODUCE Leveraging unique technologies Sasol’s unique operating model is ‘integrated’ in two distinct ways. First, vertically – as we not only turn coal, oil and gas into refined fuels, but we also source a notable proportion of our coal and gas feedstock needs from our own mines and gas fields. Second, horizontally – in that we not only produce refined fuels, but also more specialised chemicals in multiple jurisdictions worldwide. We are a customer-centric organisation, providing chemical and energy solutions based on our unique proprietary technologies. SASOL CHEMICALS Chemicals processes Ethane, kerosene and aluminium Ethylene, kerosene, wax and aluminium Coal and gas from Energy Operations CHEMICALS AFRICA SOUTH AFRICA Secunda Sasolburg Durban CHEMICALS AMERICA UNITED STATES Lake Charles, Louisiana Houston, Texas Winnie, Texas Tucson, Arizona CHEMICALS EURASIA GERMANY Brunsbüttel Marl ITALY Terranova Augusta, Sicily Sarroch, Sardinia CHINA Nanjing SLOVAKIA Nováky Essential Care Chemicals Performance Solutions Advanced Materials Base Chemicals Gas-to-liquids Coal-to- liquids Refining Coal Natural gas Crude oil SOUTH AFRICA SOUTH AFRICA Secunda NATIONAL PETROLEUM REFINERS OF SOUTH AFRICA (PTY) LTD (NATREF) SOUTH AFRICA Sasolburg SOUTHERN AFRICA SOUTH AFRICA (Gas processed) Secunda MOZAMBIQUE (Gas sourced) Maputo, Matola, Ressano Garcia, Chokwe, Temane, Pande, Inhassoro MIDDLE EAST QATAR (Gas sourced and processed) Ras Laffan SASOL ENERGY Coal Electricity Fuels Gas Sustainable sources of carbon and renewable energy Power-to-X Power-to-liquids SASOL ecoFT Sustainable aviation fuels Low-carbon fuels Sustainable chemicals GLOBALLY Progressing joint venture OUR DISTINCTIVE VALUE CHAINS |
INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS ADMINISTRATION PERFORMANCE SASOL INTEGRATED REPORT 2023 15 Our strategy to realise Future Sasol transition OUR STRATEGIC DIRECTION Step change performance (Sasol 2.0, Lake Charles Chemicals Complex ramp-up, stabilising Secunda Operations, improving mining productivity and coal quality) Strengthen balance sheet Shift to gas as transition feedstock and procure renewables Bring sustainable Energy and Chemical Businesses to maturity Incubate and scale new sustainable Energy and Chemical Businesses Shift portfolio towards more sustainable solutions (customer-led innovation, portfolio reshaping) Continue to decarbonise assets (options across gas, green hydrogen) Our strategy established a clear path along three horizons. We have to RE SET our business enabling us to TRAN SITION and to ultimately REINVENT ourselves into a more sustainable company. Resetting the business will strengthen our balance sheet, creating financial headroom to manage our transition and enable continuous decarbonisation. During the year we faced several headwinds and we now have to redouble our efforts to deliver on the RE SET phase to ensure we are able to fund our TRAN SITI O N and REINVENTI ON. Our focus on the activities and initiatives during the RESET is immediate and as this will not be an easy path, we will have to: BE REALISTIC about our challenges and opportunities FOCUS on what will take us forward DELIVER against targets and market promises Our focus is on building a resilient company with a strong foundation business that can propel us into the future. Focusing attention on RESET phase to build a resilient company SAFETY AND OPERATIONAL DISCIPLINE 1 6 LAKE CHARLES RAMP-UP OF SPECIALITY CHEMICAL UNITS 2 CONTINUED SASOL 2.0 DELIVERY 5 SECUNDA OPERATIONS OUTPUT CUSTOMER CENTRICITY AND PROFITABILITY 3 UPLIFTMENT 4 MINING PRODUCTIVITY AND COAL QUALITY RESET TRANSITION REINVENT Continue to drive energy efficiency Lay foundations for future sustainable businesses |
SASOL INTEGRATED REPORT 2023 16 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION OUR STRATEGIC DIRECTION CONTINUED RESETTING OUR BUSINESS TO ENABLE OUR OTHER FUTURE STRATEGIC HORIZONS Resetting our foundation business We continue to face several headwinds due to unfavourable macroeconomic conditions and internal challenges. This is resulting in an emerging gap to targets and needs to be managed to achieve competitive returns. We are responding to this rapidly evolving operating landscape through our ‘Living Strategy’ approach. We are redoubling efforts on the identified initiatives in the Reset phase to manage the gap, ensure delivery of our financial targets and a sustainable path for the company. The role of the Board The Board held 11 meetings during the year and an additional two meetings were held to discuss and debate the impact of the external and internal factors on the execution of the Group’s strategy. The Board, having considered the impact, approved the redoubling of efforts on the Reset horizon so as to enable the two other horizons and to deliver Future Sasol. Sasol’s contribution to the Decade of Action, the SDGs and the Ten Principles Having prioritised five SDGs we measure our contribution to the Decade of Action as it is closely linked to our sustainability focus areas. We also consider the effectiveness of relevant company policies with respect to the Ten Principles. Our Sustainability Report considers this in detail. WWW SR For more detail refer to our Sustainability Report available on our website, www.sasol.com Transitioning and reinventing our business We have commenced transitioning our business by investing in renewables and driving energy efficiency. We will selectively deploy growth projects while managing balance sheet risk, through our capital allocation framework and accelerating high return opportunities. The further development of our Fischer-Tropsch (FT) sustainable solutions remains on our radar. We will therefore continue to pursue collaborations and partnerships that, together with our advantaged FT technology, uniquely position us to thrive in a world contending with global efforts to minimise the use of fossil fuels. IR For more detail refer to Sasol ecoFT at a glance – page ;; A holistic approach to sustainability to improve our performance We take a holistic approach to sustainability that goes beyond mitigating and adapting to climate change. It is one that encompasses other environmental, social and governance (ESG) aspects. Reflective of this approach is founded in our ESG aspiration, which is to improve our ratings year-on-year and be included in the Dow Jones Sustainability Index. In pursuit of this aspiration: • short-term water targets have been set which we monitor and take action where we deviate; • biodiversity footprint assessments have been undertaken at both our Secunda and Sasolburg facilities; • process of understanding Sasol’s circularity baseline is ongoing; • constantly improve our governance and disclosure processes; • delivering on our Sasol Promise to society will remain key in elevating the role we play in our communities; – actively involved in the communities where our facilities are located, ensuring that we not only capacitate and empower but also create meaningful opportunities; – work in order to create a positive and measurable socio-economic impact and respond to key societal and environmental challenges in the communities where we operate; and • be actively involved in the activities of the United Nations (UN) Global Compact. Delivery agenda Develop agenda PERFORMANCE AMBITION, VALUE CREATION LEVERS AND MULTI-YEAR OUTLOOK ‘LIVING STRATEGY’ APPROACH Initiatives ready for execution Focused dashboards with a few critical key performance indicators Collaborative delivery dialogues to track progress and accelerate delivery/ remove roadblocks Monitoring of signposts Frequent updating and assessment of unresolved strategic issues Dynamically adapt the strategy to keep pace with our operating reality DYNAMIC RESOURCE ALLOCATION Target commitment for financial year 2025 delivery Cash fixed cost reduction R8 – R10 billion Working capital optimised 16,5% Gross margin uplift R6 – R8 billion Capital range* R26 – R32 billion per annum Financial year 2024 targets – Reset for financial year 2025 delivery Working capital optimised 15,5 – 16,5% average Gross margin uplift R8 – R10 billion Capital range* R26 – R32 billion per annum * Maintain and transform capital only (no selective or expansionary growth included) in FY23 real terms |
SASOL INTEGRATED REPORT 2023 17 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS ADMINISTRATION PERFORMANCE OUR STRATEGY IS FLEXIBLE IN AN EVER-CHANGING ENVIRONMENT ROBUSTNESS We continuously test our strategy against a range of future scenarios ADAPTABILITY We have built flexibility in our strategic choices and pathways to adapt to external changes and internal learnings FORWARD-LOOKING We monitor signposts that inform our future choices Our ambition Grow shared value while we transition to Net Zero* by 2050 THROUGH THE STRATEGIES OF PORTFOLIO BUSINESSES SUPPORTED BY A LEAN AND COST-EFFICIENT CORPORATE CENTRE Our ambition, supported by our updated strategy, sets a clear path for us towards Net Zero*. We will undertake this by: resetting our business in order to decarbonise and transition; enhancing our focus on innovation to drive sustainability; substantially increasing our focus on partnerships to build credibility, momentum and augment competitive advantages; and leveraging our Fischer-Tropsch (FT) technology for sustainable growth at scale. SASOL ENERGY Leading the energy transition in Southern Africa STRATEGIC OBJECTIVES Decarbonise our operations Grow new value pools Preserve competitive and sustainable returns SASOL ecoFT Developing sustainable aviation fuel (SAF) ventures globally using our advantaged FT technology STRATEGIC OBJECTIVES Leverage advanced and differentiated Sasol FT technology for sustainable products Play a key role in SAF commercialisation SASOL CHEMICALS Growing with our unique chemistry STRATEGIC OBJECTIVES Bring Lake Charles Chemicals Complex (LCCC) to full potential Innovate with customers for sustainable solutions Shift to higher margin speciality solutions FOCUSED ON VALUE-ADDING ACTIVITIES TO BUILD PARENTING ADVANTAGE Assess impact of material matters Review Group top priorities Orchestrate programmatic transformation to secure value Oversee strategy and shape portfolio via disciplined capital allocation Unlock cost and revenue synergies across Businesses Drive technology innovation OUR STRATEGIC DIRECTION CONTINUED * Net Zero for Sasol is to significantly reduce emissions to the point where only hard-to-abate emissions remain or are zero. Any residual emissions will be neutralised using carbon dioxide removal offsets. |
SASOL INTEGRATED REPORT 2023 18 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS ADMINISTRATION PERFORMANCE OUR STRATEGIC DIRECTION CONTINUED // Our decarbonisation journey REDUCE EMISSIONS • Short- to medium-term reductions, including switching to low-carbon energy sources and additional process and energy efficiency improvements. • Introduce and scale renewable energy into operations. SHIFT PORTFOLIO • Creating sustainable products for new value pools using our FT technology. • Actively reviewing equity in assets not aligned with our long-term strategy. • Enabling the creation of a new green hydrogen production and market footprint. TRANSFORM OPERATIONS • Integrating cleaner alternative feedstocks such as gas and green hydrogen. • Employing optimised processes and sustainable carbon feedstocks to reduce our emissions profile, where viable. • Collaboratively finding opportunities to beneficiate our concentrated carbon dioxide (CO2) sources. OUR THREE-PILLAR EMISSION-REDUCTION FRAMEWORK Reduce absolute scope 1 and 2 emissions by 30% by 20301 Reduce absolute scope 3 emissions by 20% by 20302 TARGETS AND AMBITION 1 For the Sasol Energy and Sasol Chemicals Businesses (excluding Natref and Mozambique) 2 For Category 11; applicable to Sasol Energy HIGHLIGHTS // Achieved an ~5% reduction off the combined Sasol Energy and Sasol Chemicals 2017 scope 1 and 2 baseline, equating to ~3,5 MtCO2e reduction, through ongoing mitigation interventions. Product volumes were lower relative to 2017. Higher production rates than in 2022 contributed to marginally higher year-on-year emissions. These were anticipated and mostly the result of process inefficiencies, external power interruptions and shortage of natural gas, eroding emission reductions relative to 2022. Maintained energy-efficiency projects and introduced additional measures. The nitrous oxide abatement project delivered some reductions, albeit not to full potential. Achieved an ~13,4% energy-efficiency saving from 2005, which was lower than expected, as a result of external power disruptions, poor coal quality leading to operational instabilities and natural gas availability. PROGRESSING OUR TARGETS Commissioned the ~3 MW solar farm in Sasolburg to produce our first volumes of green hydrogen Advanced the pre-feasibility study for the Boegoebaai green hydrogen export hub project Extended the Mozambique gas plateau from 2026 to 2028 and discovered additional gas at PT5-C Demonstrated that our proprietary fourth generation (G4) catalyst can achieve 10% higher SAF yields than our reference commercial catalyst through the CARE-O-SENE research programme Entered into a partnership with ArcelorMittal South Africa to study green steel production in Saldanha and carbon capture, usage and storage development in Vanderbijlpark SASOL CHEMICALS Received the first solar energy at our Augusta, Italy site from a virtual PPA Signed several renewable electricity PPAs for Sasol Italy Completed studies on carbon capture utilisation storage for Lake Charles to produce solvents using CO2 process vent gas SASOL ecoFT Announced the establishment of 50/50 joint venture with Topsoe* for the production of SAF to exploit the competitive advantages of our FT technology and Topsoe’s reforming and related technologies Advanced the SkyFuelH2 project with Uniper for demonstration-scale production of ~2 350 bbl/d biomass-based SAF in Sweden SASOL LIMITED Established Sasol Ventures, a corporate venture capital fund, to advance our decarbonisation ambition SASOL ENERGY Jointly, with Air Liquide, signed Power Purchase Agreements (PPAs) for >600 MW of renewable energy Signed a 69 MW 20-year wind energy PPA with the Msenge Emoyeni project (currently under construction) for the Sasolburg green hydrogen pilot project PROGRESSING A SUSTAINABLE FUTURE SASOL WWW CCR For more detail on our decarbonisation journey refer to our Climate Change Report on our website, www.sasol.com * Subject to approval by relevant authorities Ramping up of Lake Charles contributed to higher greenhouse gas emissions. However, we are beginning to reap the benefits of a shift to renewable energy at our Eurasian Operations. Significant decreases in scope 3 Category 11 emissions mostly due to lower production of liquid fuels. Production levels are expected to increase in 2024 due to an enhanced focus on our foundation business, which will likely result in a higher emissions for Secunda Operations. Overall, we continue to progress our emission-reduction roadmaps towards achieving a 30% GHG reduction by 2030. |
SASOL INTEGRATED REPORT 2023 53 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL CHEMICALS AT A GLANCE // Growing with our unique chemistry Brad Griffith // Executive Vice President: Chemicals Business While the year was difficult, the value we have unlocked progressing our Sasol 2.0 initiatives has made us a more resilient business able to withstand volatile times and better positioned to deliver value to all of our stakeholders over the long term. Overview The results for Sasol Chemicals reflected challenges posed by a combination of difficult market conditions and internal setbacks that we are successfully addressing. The first half of the year was particularly challenging, but we are encouraged by second half improvements in areas within our control, particularly in operational excellence and cash management. The global external environment featured an economic slowdown, decreasing consumer tolerance for inflationary prices resulting in reduced demand, increased energy and feedstock prices, and lingering supply chain difficulties. Although overall demand and supply chain constraints began to improve in the last few months of the fiscal year, prices, unit margins and demand remained below historical levels. Internally, we also experienced operational issues in the United States and South Africa that impacted our ability to supply products to customers. These also improved in the last few months of the year. SALIENT FEATURES Solid safety performance Soft demand in most markets due to global economic conditions Continued supply chain challenges and high energy and feedstock costs Strong operating results in the United States in the second half of the financial year following operational setbacks in first half Production rates adjusted proactively in response to lower demand and to avoid inventory build STRATEGIC FOCUS Sasol Chemicals’ priorities for the year ahead reflect our long-term optimism for the business, balanced with short-term realism regarding the difficult market conditions that we anticipate lasting at least through the first half of the next financial year. Continue to emphasise process safety in our operating facilities and personal safety wherever our work takes place. Unlock cash flow through operational, supply chain and commercial excellence, building on the progress made in the second half of the year. Maintain a relentless focus on managing fixed costs, with every employee acting with an owner’s mindset. Continuously improve our business by simplifying, standardising and digitising our processes and implementing a state-of-the art enterprise resource planning system. Advance our sustainability ambitions, focusing in the near term on integrating renewable electricity into our operations and becoming increasingly energy efficient, and on integrating more low-carbon feedstocks into our supply chain to the extent enabled by market demand. Build a culture of inclusivity and belonging. e year mism hort-term |
SASOL INTEGRATED REPORT 2023 54 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL CHEMICALS AT A GLANCE // Growing with our unique chemistry CONTINUED Safety Sasol Chemicals had a solid safety performance, with all our lagging indicators improving and below targets, except for the fires, explosions and releases severity rate which ended slightly above target. We also implemented technology to enable reporting, risk assessment and incident management. The tracking of leading indicators and combined assurances has provided valuable insights to identify and fix potential issues early. Operating context CHEMICALS AFRICA Our Southern Africa operations, hosted by Sasol Energy, remained the largest contributor to our profitability. Sales volumes were 1% higher than previous year. This despite a planned total East factory shutdown at Secunda site compared to only a phase shutdown last year. The absence of the force majeure declaration on the export of certain chemical products following the flooding in KwaZulu-Natal, South Africa during the last quarter of FY22 further contributed to increased sales volumes although second quarter sales were negatively impacted by strike action at Transnet, South Africa’s state-owned port and rail operator. While supply chain challenges eased in the latter part of the year, they remain a risk to our business, and close collaboration with Transnet continues. The average US$ sales basket price was 10% lower than FY22. This is largely attributable to lower polymer and solvents prices resulting from lower oil prices, weaker global demand, and associated inventory reduction by customers. CHEMICALS AMERICA Both operational and financial performance improved in the second half of the year after a very tough first half when record low margins led to a reduction in ethylene and derivative production rates and associated Base Chemicals’ sales volumes. In addition, Essential Care Chemicals’ volumes were negatively impacted by planned turnarounds as well as the impact of the fire that occurred at the Ziegler alcohol unit at the Lake Charles Chemicals Complex in October 2022 which led to a force majeure declaration on alcohols and derivatives. During the second half of the year the force majeure declaration on alcohols and derivatives was lifted after all sections of the Ziegler alcohol unit started up while ethylene and derivative margins improved allowing production rates to be increased and resulted in monthly production records being set across several units at our Lake Charles Chemicals Complex. The improved margins and production performance saw an improvement in overall profitability although still below levels seen in FY22. Despite tough conditions total sales volumes were 9% higher than FY22 mainly due to the planned ethylene cracker turnaround and improved production performance from the comonomers unit. The average sales basket price was 16% lower than FY22 due to the lower ethylene and derivative prices. CHEMICALS EURASIA Sales volumes within our Eurasia segment were 29% lower than FY22, partly due to the absence of wax volumes within our Performance Solutions division following the disposal of the European Wax business at the end of February 2022. After normalising for the wax transaction, sales volumes decreased by 19% compared to FY22 due to reduced demand and customer destocking across most of our business divisions, while competition increased as supply chain constraints eased post the pandemic. Production rates at several of our units were adjusted proactively in response to this lower demand and to avoid inventory build. Because of the soft market and higher cost of capital experienced across our industry, we see future-proofing Sasol Chemicals by driving continuous improvement and efficiency as a key FY24 priority. While delivering on our Sasol 2.0 commitments, we have unlocked significant value, enhancing our operations and making our business more market-and customer-oriented. Sasol Chemicals is led by an experienced team that has successfully managed through both up and down cycles in our business. Our focus on safety, operational excellence, capital discipline, cost management, customer service and continuous improvement will help ensure that we can deliver results regardless of the cycle and be ready to grow smartly when market conditions improve and opportunities present themselves. OUTLOOK A tough operating environment which improved in the second half of the financial year with better production and supply chain performance in both Africa and America. Market demand in Eurasia however remained weak. The average sales basket price was 4% higher than FY22 reflecting the higher energy costs in Europe because of the Russia/Ukraine war. Energy prices have subsequently decreased but remain volatile and above pre-conflict levels. Overall margins and associated profitability remained under pressure due to weak demand. |
SASOL INTEGRATED REPORT 2023 55 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL CHEMICALS AT A GLANCE // CONTINUED Fighting fires – while protecting the environment The traditional foam products firefighters use against industrial fires save lives and property. But these foams contain toxic, fluorinated surfactants that remain in the environment long after the fire has been extinguished – in fact, forever. Now, thanks to an innovative fluorine-free formulation developed by Sasol Chemicals’ research and development team in Lake Charles, Louisiana, fire departments across the United States may soon be able to switch to a more sustainable and effective product. In response to new rules phasing out older types of foam, Sasol’s team developed a new product in less than 12 months, combining both nonionic and anionic surfactants to create a foam of equal quality and volume as the old fluorine-based options, without the lasting, harmful impacts to the environment. We collaborated with a major customer to demonstrate the product’s effectiveness in a field test and the foam was pilot-tested by a fire department in California. Fire protection foam is a new market for us and an example of how working together with customers to find innovative solutions to today’s challenges can deliver benefits far beyond the bottom line. Market-based solutions for enhanced sustainability Innovation that enables customers to operate more sustainably is a key driver at Sasol Chemicals. For example, Fischer-Tropsch waxes created by our Polymer Additives group are helping producers of building/construction products, automotive parts and packaging achieve faster production rates at lower temperatures, resulting in more sustainable operations. Polyvinyl chloride, commonly known as PVC, is a key component of many building materials, including piping for potable water transport, vinyl siding and windows, and wiring and cable. Using SASOLWAX as a processing agent enables PVC manufacturers to improve production rates by 10% to 25% and reduce the amount of energy used in manufacturing. In addition, polyolefin manufacturers can lower processing temperatures by 20 to 40 degrees Celsius, depending on the end product, reducing energy usage. We are now collaborating with customers on PVC-O, a new form of polyvinyl chloride that uses 50% less material to manufacture while being stronger, more flexible and easier to install and maintain than traditional PVC. PVC-O outperforms all piping materials for the delivery of potable water, and SASOLWAX B-52 is a key processing agent in the manufacture of this next-generation product. Sasol Chemicals is developing optimised catalysts to enable the scale-up of sustainable aviation fuels (SAFs). The aviation industry accounts for about 3% of all human-made emissions. By 2050, emissions from air transportation are expected to grow to around 3,1 billion tons of CO2 annually. Unlike other forms of transportation, however, commercial aviation, with its long-distance flights, cannot rely on electric power as a significant energy source. That is why Sasol Chemicals – together with five German and South African partners – is participating in a consortium known as CARE-O-SENE, collaborating to develop optimised catalysts to use in making green kerosene that can transform the aviation industry. As a global leader in Fischer-Tropsch (FT) catalysts with more than 70 years of related expertise, Sasol Chemicals is ideally positioned to enable CARE-O-SENE to achieve its goal of significantly increasing the process yield of green kerosene by as much as 80% – producing more fuel with the same resource input. The development of novel FT catalysts will be instrumental in converting green hydrogen and carbon dioxide into commercial-scale synthetic fuels such as SAFs. In addition to reducing greenhouse gas emissions, SAFs derived from the FT-production process also lower harmful nitrogen oxides, soot and condensation trails from the jet engine combustion process, which also contribute to global warming. Importantly, the move to synthetic SAFs will require only minimal changes to the aviation industry’s infrastructure. Transforming the fuel that airlines use every day to keep the world moving will require teamwork and innovation. Along with our partners in CARE-O-SENE, Sasol researchers and scientists in Brunsbüttel, Germany, and Sasolburg, South Africa, are working to make that goal a reality. Changing how the world flies With an approach centred on partnership – coupled with innovation derived from our talented employees, unique chemistry and proprietary technology – Sasol Chemicals solves our customers’ biggest challenges and turns problems into opportunities. PROGRESSING A SUSTAINABLE FUTURE SASOL UED Figh The traditio against ind novation d mers’ |
SASOL INTEGRATED REPORT 2023 56 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL CHEMICALS AT A GLANCE // Attractive markets; unique opportunities Growing our portfolio Our unique chemistry and asset base give us a distinct advantage in growing our specialty chemical portfolio with high-value, high-margin offerings. By understanding and adapting to evolving consumer and industrial needs, we create growth by extending our product line into new end uses and industries. An example of this line extension is in the renewable power generation market, where we work with customers to develop lubricant packages for wind turbines based on our specialty Guerbet alcohols. Another platform for growth is our feedstock flexibility in our assets in the Americas, Eurasia and Southern Africa. Because of that flexibility, we can continue to offer conventional feedstock-based products that enable waste reduction, enhance efficiency and reduce energy usage – while progressing toward recycled and biomass feedstocks that will be increasingly important to the marketplace. Embedding sustainability We continue to make significant progress in enhancing the sustainability of Sasol Chemicals’ assets while making it possible for our customers – and their customers – to do more with less. That mindset is embedded in our operations, in how we think, and in the creative way we collaborate with our customers. In the years ahead, we will be well-positioned to grow our business through continuous improvement and innovation to help our customers offer products that use less energy, produce less waste and have a smaller environmental footprint. Specialty chemicals are formulated to create a specific effect in an end-use product. They are found in a wide range of industrial and consumer products, including adhesives, cleaning materials, fragrances, lubricants, paints, polymers and personal care products. Specialty chemicals – and the advances they make possible – are vital to our modern way of life. Sasol is at the forefront of developing these highly customisable building blocks for customers across a range of industries. Relationships make a difference Sasol’s long-standing relationships with global customers play a major role in our market leadership. Understanding our customers’ business needs – both short- and long-term – and our employees’ willingness to go above and beyond to provide excellent service make us a partner of choice for the world’s largest manufacturers of fabric, home care, health and beauty products. We pride ourselves on collaborating with customers to help them solve business issues and enhance their product offerings. As our customers have moved to enhance the sustainability of their offerings, they have engaged us to create meaningful solutions, and we have responded. One example is our line of branched alcohols, which enhance the effectiveness of low-temperature laundry washing, requiring less energy. That is just one way we are creating opportunities for our customers and the consumers they serve around the world. In addition, our high-quality calcined coke is a preferred source for battery materials, making us a strategic supplier in a rapidly growing industry. Given our focus on collaboration and teamwork, we have been honoured with supplier awards for our commitment to innovation and sustainability. Sasol Chemicals’ advantages With proprietary technologies, a global asset base and a history of customer-focused innovation, we are uniquely positioned to take advantage of the long-term potential that the specialty chemicals market presents. Our customers benefit from our: • Significant investments in our asset base in China, Europe, South Africa and the United States over the past decade. • Diverse alcohols and surfactants portfolio, the broadest and most customisable in the world. • Innovation ecosystems that focus on high-margin opportunities, including a Ziegler process that has been used in more than 400 customisable specialty aluminas. • 60+ years of knowledge and experience in the Fischer-Tropsch chemicals production, which is critical in the creation of many types of specialty chemicals. • History of innovation, often in cooperation with our customers, to help them create more effective and sustainable end products. PROGRESSING A SUSTAINABLE FUTURE SASOL s y rgin o create ew rs |
SASOL INTEGRATED REPORT 2023 57 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL ENERGY AT A GLANCE // Leading the energy transition in Southern Africa The Energy Business is innovating for a better world by investing and transforming the energy economy in South Africa. We are striving to provide energy security while stimulating the economy in Southern Africa. We see a clear path to support the region by investing in our operations, reducing our greenhouse gas emissions and accelerating the transition to low-carbon feedstocks. Simon Baloyi // Executive Vice President: Energy Operations and Technology Riaan Rademan // Executive Vice President: Mining Priscillah Mabelane // Executive Vice President: Energy Business SALIENT FEATURES Regrettably two fatalities. Our pursuit of Zero Harm remains at the core of our business Heightened focus and decisive action taken to address coal challenges – ‘full potential’ programme initiated and technology solutions under investigation to improve coal quality Advanced programme on culture, diversity and promoting inclusion and belonging in the workplace Produced first green hydrogen from existing assets at Sasolburg complex – a first for South Africa Secured >600 MW of renewable energy; on track for 1 200 MW by 2030 Progressed with the hybrid refinery at Natref Production sharing agreement (PSA) project's initial gas facility completed, within cost and time targets; beneficial operation imminent Made new gas discovery in PT5-C, close to facilities in southern Mozambique Improved convenience offerings for fuel customers; loyalty programme yielding positive results Addressing legal and regulatory challenges Spent R137 million on enterprise supplier development OUR COMPELLING PROPOSITION We are uniquely positioned to convert a wide range of feedstocks into diverse product pools. This allows us to meet the changing energy needs of our customers, leveraging our positions in mining and gas as well as our facilities in Secunda, Sasolburg and Natref. By using South Africa’s endowment of renewable resources, we can offer all South Africans a vision of a just, low-carbon, more sustainable energy future. At the same time, we can assist in putting South Africa on a competitive footing to take its place in the global energy transition. |
SASOL INTEGRATED REPORT 2023 58 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL ENERGY AT A GLANCE // Leading the energy transition in Southern Africa CONTINUED Energy landscape Energy markets are fundamentally shifting towards low-carbon and are impacted by ongoing supply chain challenges and geopolitical tensions. Crude oil prices and refining margins have declined from the highs of 2022 amid an easing of supply uncertainty. In South Africa, supply dynamics have fundamentally shifted with the shutdown of the South African Petroleum Refineries (SAPREF) and Engen Oil Refinery (ENREF), while energy demand has been impacted by frequent loadshedding. Diesel demand has surpassed pre-pandemic levels, driven by power demand and increased use of road freight transport due to constraints in rail logistics. Petrol demand remains weak, with a shift towards work-from-home, high prices and the improved efficiency in technology. The outlook for petrol is not encouraging as sales of smaller and more fuel-efficient passenger cars are likely to continue, exacerbated by hybrid and electric vehicles in the latter part of the decade. Electric vehicles will not require petrol but rather electricity from charging units. A significant part of our product slate is petrol, we are assessing various technological options to mitigate the risk of an oversupply of petrol to the country. The global energy transition is gaining momentum with several partnerships announced. Gas is seen to be a transitionary feedstock and as such we continue with exploration and drilling activities in Mozambique to ensure a sustainable gas supply to external customers and our own operations. Challenging legal and regulatory issues The regulatory and legal landscape is very challenging particularly relating to the uncertainty on the National Energy Regulator of South Africa (NERSA) Maximum Gas Price (MGP) regulation. Despite the impact of rising inflation, higher capital costs and commodity prices, we have charged R68,60/GJ for two years. Sasol submitted FY23 and FY24 MGP applications to NERSA, both of which were published for public comment. We await NERSA's approval of the MGP for both applications. On 11 July 2023, the Competition Commission referred to the Competition Tribunal complaints regarding excessive pricing from certain Sasol Gas customers. Sasol launched review proceedings, currently before the Competition Appeal Court so that the Court may consider NERSA’s jurisdiction to regulate gas prices. As communicated, Sasol’s application in terms of Clause 12A of the Minimum Emission Standards (MES) for alternative emission load basis for sulphur dioxide from the SO boilers has recently been declined by the National Air Quality Officer (NAQO). Sasol appealed the decision to the Minister of Forestry, Fisheries and the Environment and submitted its appeal to the Appeals Directorate on 31 July 2023 as provided for in Section 43(1) of the National Environmental Management Act, 107 of 1998. Decarbonising and developing low-carbon energy solutions In 2023, we made significant progress on the execution of our 2030 greenhouse gas roadmap. Notably, we signed power purchase agreements (PPAs) to procure renewables of more than 600 MW for delivery in 2026 or earlier. We are also investing US$1 billion over the next few years in Mozambique to ensure a stable supply of gas to South Africa while also progressing with several energy efficiency projects. We are shaping the development of South Africa’s green hydrogen ecosystem, which includes applications in fuel cell hydrogen mobility studies to reigniting the steel industry and creating a global sustainable aviation hub at OR Tambo International Airport in Johannesburg. The re-purposing of existing assets presents opportunities to fulfil the growing demand for sustainable products. The prefeasibility study on the Boegoebaai green hydrogen project in the Northern Cape Province has advanced and nearing completion as we await certainty on the port development from Transnet. An update on the port was provided by Transnet in July 2023, however further details are required before the prefeasibility study can be concluded. There has been good momentum by the South African government to develop a green hydrogen economy for South Africa and we are supporting this through various studies. IR Refer to green hydrogen export – Boegoebaai feature, page 60 STRATEGIC FOCUS N OUR PRIORITIES FOR THE YEAR AHEAD REFLECT: Overview The first half of the year was extremely challenging, marked by a combination of coal feedstock, plant reliability and regulatory challenges. We implemented a number of interventions and allocated our best resources to address the issues. As such, we are encouraged by the significant improvement across the business in the second half, particularly operational excellence, gas production, cost containment and cash management. We have exceeded our production, working capital and sales volume forecasts guided to the market across most areas. Our focus on customer centricity remains paramount as we transform the business to low-carbon solutions. The global economic landscape remains volatile, including fluctuating oil and petrochemical prices, an unstable product demand environment and inflationary pressure. In South Africa, the underperformance of state-owned enterprises, loadshedding and socio-economic challenges continue to impact volumes, margins and resultant profitability. Despite this, we were able to increase our sales volumes to the higher yielding margin channels through our Sasol Rewards loyalty programme and improved customer convenience offerings. CT An immediate focus is on safe and reliable operations A reset of our business to maximise profitability in existing operations by increasing production volumes, unlocking cash through operational and commercial excellence and driving a lower cash break even Advancing our decarbonisation ambition to 2030 to reduce greenhouse gas emissions by 30%, integrating 1 200 MW of renewable energy and low-carbon feedstocks into our operations and progressing our green hydrogen projects at a more measured pace Building a culture of diversity, inclusivity and belonging with a One Sasol mindset Safety is a top priority for Sasol Energy. We are focusing on strengthening process safety in our operating facilities, embedding leading indicators in the business and promoting personal safety across the organisation. We believe that Zero Harm is possible. Since 2020, we have taken several steps to reset and position Sasol Energy for long-term success. This includes resizing the portfolio through the divestment of non-core assets; delivering on Sasol 2.0; growing the mobility and commercial businesses which will position us to extend our market leadership by 2030; and building key capabilities. The success of this business is dependent on Mining. Our focus in FY24 therefore remains on improving the quality of coal from Mining. We are far advanced with a technological solution which will reduce the amount of sinks in existing coal supply. We aim to make a final investment decision later this calendar year. IR Refer to Sasol Mining feature, page 61 To remain competitive, we are considering investing in a hybrid refinery at Natref that will bring the first hybrid fuel to the country and comply with Clean Fuels 2 at a low capital investment. IR Refer to Natref feature, page 60 Our focus on the break-even cost at Secunda Operations (SO) remains undimmed and we are investigating options to improve our cost position. |
SASOL INTEGRATED REPORT 2023 59 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION RESET ACTIVITIES // SASOL ENERGY AT A GLANCE // Leading the energy transition in Southern Africa CONTINUED In the year, the business recorded an impairment of R35,3 billion relating to the liquid fuels component of the Secunda refinery. The implementation of the emission reduction roadmap (ERR) to achieve a 30% reduction in greenhouse gas emissions by 2030 and comply with the requirements of the Air Quality Act results in lower production volumes post 2030 and as such an impairment was recognised on the liquid fuels component of the Secunda complex. Further, the increasing cost of coal, capital investment to implement the ERR and cost of compliance was included in the impairment calculation. Optimisation of the ERR is ongoing and there are a number of technology and feedstock solutions underway to partially recover volume post 2030 however, the maturity thereof needs to be progressed before it can be incorporated in the impairment calculation. The chemical assets in the Secunda complex however remain resilient given the higher margin yielding products that are produced. In our upstream gas operations in Mozambique, we delivered a strong production performance achieving the upper end of our market guidance range of 111 – 114 bscf. Production was 2% higher than the prior year, underpinned by additional wells being brought online. Construction on the gas supply infrastructure of the PSA project was completed, and we await third party verification to confirm volume estimates before beneficial operation is achieved. We have invested US$530 million in Mozambique in our plateau extension projects, securing future gas supply to South Africa. More recently we had a discovery in PT5-C in Mozambique close to our operations. This was the first discovery for Sasol since 2008. Natural gas and methane-rich gas sales volumes in South Africa were 3% and 1% lower respectively when compared to the prior year due to lower customer demand largely associated with loadshedding. In marketing and sales, we continued to progress our work to place molecules in the highest yielding margin portfolios. Liquid fuels sales volumes for the year was 53,7 million barrels, which is within our market guidance range of 52 – 55 million barrels and 2% lower than previous year. The improved performance in the second half of this year was underpinned by the implementation of our approach to shift volumes to higher margin portfolios in mobility and commercial, and supported by improved customer convenience offerings and marketing initiatives, in turn supported by higher production at SO. We continued to invest in enhancing customer offerings, scaling of the loyalty programme and driving the use of digitalisation. The changing liquid fuels landscape – marked by a decline in demand for petrol and the rapid increase of new entrants into the market – continues to pose a risk to our inland refineries. Safety We are relentless in our commitment to pursuing Zero Harm as an operational reality. Regrettably, we lost two colleagues in work-related incidents – one at Sasol Mining, one at Secunda Operations (SO). Secunda Operations volume improvement plan Over the past 24 months, our production volumes at SO have been significantly impacted by the erratic quality and availability of coal as well as by issues of plant reliability. We implemented comprehensive plans to restore plant stability and have seen a significant improvement since January 2023. To increase productivity, we implemented a ‘full potential’ plan at Mining which – along with additional gas supply into the facility – enabled improved production volumes at SO. Advancing Mozambique gas production We made good progress at our operations in Mozambique where gas production is coming off its plateau in 2028. The drilling campaign was executed safely amid dire weather, including Cyclone Freddy. The team completed five new wells, bringing the total well count to 24. To ensure security of supply to South Africa, the drilling campaign will continue and OUTLOOK we will extend drilling to other areas adjacent to the existing fields. Our exploration also resulted in a positive gas discovery in PT5-C, which is in southern Mozambique with closer integration to our existing facility. Delivery of Sasol 2.0 COST MANAGEMENT – We made progress in delivering on our Sasol 2.0 targets by focusing on efficiency, digitalisation and by challenging external spend through dedicated programmes using agile principles and global category benchmarks. We embedded Sasol 2.0 as a way of working and are on track to deliver on the FY25 full ambition target. GROSS MARGIN – We made very good progress in identifying opportunities that increase volumes and margins. These include a review of the product slate from SO as well as improving the operational performance of the production assets. We will continue our efforts and capture higher margins through improved customer offerings and improved yields, efficiencies and throughput. CAPITAL – Our Southern Africa business is capital intensive and in the year we continued to invest in statutory maintenance, a full shutdown at SO, compliance activities and advancing the drilling programme in Mozambique. As such, our capital spend was slightly higher than in prior years. Performance The improvement in our performance in the second half of the year was significant. We have seen a notable improvement in operational reliability and have progressed with the external coal purchasing programme to supplement Mining’s production and meet the coal demand for our Secunda Operations (SO). Secunda Operation’s production increased by 14% in the second half and we exceeded the volume targets communicated in December 2022. The volume recovery plan and demonstrated performance over the past six months confirms our ability to run complex plants efficiently and reliably consistent with our historical performance. This recovery gives us a clear path forward to consistently run our operations at maximum rates. Coal quality however remains a key variable and focus area. We have demonstrated that our asset base in South Africa is strong and can deliver maximum proven volumes with the optimum coal quality. Our asset reliability issues have improved and the run-rates over the past six months demonstrated that the plants are capable of running at historically high production rates. However, we need to focus on fixing the coal quality and have made good progress with a technology solution on which we anticipate taking a final investment decision by the end of calendar 2023. We see the ‘Reset’ as a critical priority for FY24 to build resilience in the business. While delivering on our Sasol 2.0 commitments, we have unlocked significant value by enhancing our operations and making our business more market and customer oriented. We have a highly experienced technical, commercial and marketing team who can navigate through the challenges associated with coal quality, free cash flow generation, legal and regulatory matters and progressing the emission reduction roadmap with technical solutions that are affordable. We see the potential in this business and are excited by the opportunity to reinvent and provide sustainable energy solutions to the country. Our focus in FY24 on safety, operational excellence, capital discipline, cost management, customer service and continuous improvement will help ensure that we can deliver results and be ready to grow smartly when market conditions improve and opportunities present themselves. |
SASOL INTEGRATED REPORT 2023 60 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL ENERGY AT A GLANCE // CONTINUED Sasolburg green hydrogen Focusing on customer experience to grow our mobility channel Green hydrogen export – Boegoebaai Progressing Sasol’s renewable energy programme Natref hybrid refinery PROGRESSING A SUSTAINABLE FUTURE SASOL Renewable energy is a key lever for reducing Sasol’s GHG emissions and moving towards producing products in a more sustainable manner in Southern Africa. In our effort to decarbonise our operations, we aim to procure up to ~1 200 MW of renewable energy by 2030. In January 2023, we signed a long-term power purchase agreement (PPA) for 69 MW of wind-powered renewable power to our Sasolburg Operations. Financial close was achieved in March 2023. This is key to achieving the scaled production of green hydrogen from renewable energy sources at Sasolburg complex, progressing our ambition of a green hydrogen economy in Southern Africa. As part of the decarbonisation of Sasol’s South African value chain, Sasol and Air Liquide jointly signed PPAs for more than 600 MW of renewable energy comprising of solar photovoltaic (PV) and wind with deployment expected from 2025. Natref is a joint venture between Sasol (64%) and TotalEnergies (36%). Our share out of the refinery is ~3 billion litres of fuels and related product s per annum. This refinery uses crude oil to produce liquid fuels. In response to the tighter Clean Fuel specifications (CF2) and high carbon intensity of the product, we are considering investing to convert the refinery to a hybrid (crude and biofuels) green facility. This provides an e-fuel solution for the country and will aid in reducing emissions while at the same time complying with CF2. Our customers, particularly in the mining sector, are demanding a low-carbon intensity fuel and this hybrid solution could address expectations. The initial investment was estimated to be R9 – 11 billion to meet the CF2 compliance requirements however, through innovation and technology, we are advancing with a low-carbon solution. We are working to decarbonise and repurpose Sasolburg complex’s grey assets to produce green hydrogen and derivatives. This entails producing first-to-market green hydrogen at scale to stimulate local demand and catalyse local industry value chains (including fuel cells). We have three focus areas: pilots and demonstrations; green hydrogen mobility; and studies to repurposing Sasolburg Operations. We produced the first green hydrogen from our Sasolburg assets in June 2023 by converting an existing chlor-alkali electrolyser, powered by greenfield renewable energy, to produce green hydrogen. Further, while construction of the 69 MW renewable energy wind farm (via the PPA) is under way, the team designed and implemented our own solar PV plant on site to be able to produce green hydrogen in June 2023. This demonstrates the innovation and skill of our people and ability to consider building our own solar PV renewables. The Boegoebaai Green Hydrogen Hub is part of South Africa’s national Green Hydrogen programme to produce low-cost green hydrogen for the export market. Situated in the Northern Cape, the project is well-located for accessing export markets through a new deepwater port (to be developed by private-sector partners under a process initiated by Transnet in 2022) to serve the green hydrogen and mining industries. In 2021, Sasol signed a Memorandum of Understanding with the Northern Cape provincial government to lead a prefeasibility study exploring the potential for the region to serve as an export hub for green hydrogen derivatives. It is expected that, initially, Boegoebaai exports will focus on green ammonia (a rapidly expanding global market as a wide range of value chains need to move away from the grey equivalent). The prefeasibility study on the Boegoebaai green hydrogen project has advanced and is nearing completion as we await certainty on the port development from Transnet. Sasol is supporting the Northern Cape government’s masterplan to develop the region as a green hydrogen industrial cluster. SASOL REWARDS 1 234 5678 91 01 1121 Call us: 031 001 5703 sasolrewards.co.za Our focus is to change the Sasol forecourt from a typical fuel station to an omni-channel customer experience. As customer demands are changing, we too need to innovate and offer our customers a differentiated service that focuses on convenience, loyalty to enable cash back with the customer and strategic partnerships where customers can benefit. Sasol Rewards The Sasol Rewards programme ended the year with 1,3 million registered customers. Since April 2022 launch, our customers earned points valued at R219 million. Best forecourt and convenience stores Sasol was awarded Best Convenience Store and Best Forecourt in the Petrol Station Industry category at the Ask Afrika Orange Index® 2022/23 Awards. The Pantry by Marble was named Best Forecourt Store in the recent Best of Joburg Readers’ Choice Awards to honour how Sasol and The Pantry have revolutionised the fuel-stop shopping experience. |
SASOL INTEGRATED REPORT 2023 61 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL ENERGY AT A GLANCE // Sasol Mining * ‘Non-coal’ or inorganic rock within Run-of-Mine (ROM) coal with a relative density >1.95 Our operations Sasol’s Sigma Colliery was established at Sasolburg in 1950, initially producing 2 Mt a year, with production peaking at 7,4 Mt in 1991. Coal mining activities in Secunda started in 1975 and we currently produce approximately 32 Mt per annum at our five Secunda mines and 1,2 Mt at Sigma’s Mooikraal Colliery – making us the third-largest coal producer in South Africa. To supplement our production volumes and improve the coal quality blend, we purchase coal from the neighbouring Isibonelo Colliery in Secunda, as well as from other coal producers. Our customers Coal supplied to SO from our Secunda collieries is mainly used as gasification feedstock and to generate electricity. Our Sigma Mooikraal Colliery supplies coal to the Sasolburg complex for the generation of electricity and steam. Coal from our Thubelisha Colliery is beneficiated at our Twistdraai Export Plant in Secunda, generating high-value thermal coal which is exported to international power-generation customers. RESET ACTIVITIES // Safety Safety remains our indisputable priority. After the tragic fatalities that occurred in the past few years, we are making good progress in implementing our safety remediation programme and addressing findings from high-severity incidents. The programme includes technical and cultural interventions, with a focus on humanising safety through a bottom-up employee engagement approach. We are seeing a positive impact of the culture change towards high care and high standards with more employees taking ownership at the coalface and speaking up on safety issues. We are encouraged by the positive trend. Long-term coal deployment We are evaluating various alternatives to address coal supply when the Thungela coal sales agreement for Isibonelo Colliery comes to an end in June 2025. A decision on the best option will be taken during FY24. The planned reduction in coal usage from 2030 has been incorporated into our long-term mining complex deployment and coal sourcing plans and production from existing mines is aligned with the long-term coal demand profile. ‘Full potential’ programme To improve productivity we implemented the first phase of our ‘full potential’ programme at Syferfontein Colliery from January 2023, noting incremental improvements in productivity and the quality of the coal delivered. The programme’s objective is to improve productivity and realise the potential of our mines and focus on optimising and embedding safe production processes, capability upliftment and prioritising basic mining process skills. The initiative was prompted by a range of factors influencing productivity in the broader South African coal mining industry. These include coal resource depletion; mining progressing into geologically challenging areas; improved safety standards requiring a significant increase in roof support; and shortages in underground coal mining skills. We are on track with the phased roll-out. Implementation at our four remaining Secunda collieries will commence in the first half of the new financial year and is planned to be completed by the end of June 2024. In the meantime, we are continuing with complex-wide initiatives to improve cutting time and reduce production losses. Coal quality Since 2020, there has been a structural shift of increased ash and sinks* in the coal we have delivered. We have an enhanced understanding of these coal-quality issues and are working to rectify them through a combination of interventions, namely improving in-section quality controls; securing better quality coal through external coal purchase contracts; and implementing technological solutions. Technological solutions such as coal destoning have the potential to become major enablers for better value chain performance by reducing ash and sinks* content. We will continue with operator training to improve quality awareness; implementing mechanical horizon control technologies on our in-section mining equipment; and improvements in our coal quality sampling processes. Our Integrated Quality Management centre will leverage digital and Artificial Intelligence technologies to influence the blending of coal at mine source and improve the quality of the overall blended product. Cost management To realise cost savings we have established a dedicated cost task team focusing on pinpointing and implementing cost management measures. To support the stability and resilience of our South African value chain, we will continue with initiatives to improve the performance of our Mining operations. We aim for the continuous supply of suitable coal so that Secunda Operations (SO) can achieve its production targets. Maintaining a healthy stockpile level and improving coal quality through operational controls and external coal purchases are key. Mining productivity in the year declined due to unplanned safety and operational stoppages in the first half. In the second half, productivity and coal quality delivered to SO improved, albeit at a slower pace than planned. Nevertheless the coal stockpile remained above our target throughout the year, which supported consistency in coal blending and supply to SO. In the last quarter, the stockpile increased to end the year at 2,0 mt. To supplement volumes from our Secunda collieries and improve overall coal quality, we increased external coal purchases by 9% compared to 2022. Export sales were lower mainly because of logistical challenges and the diversion of export coal to SO. PROGRESSING A SUSTAINABLE FUTURE SASOL |
SASOL INTEGRATED REPORT 2023 62 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL ecoFT AT A GLANCE // Developing sustainable aviation fuel ventures globally using our advantaged FT technology Marius Brand // Executive Vice President: Sasol 2.0 Transformation Airline manufacturers and operation alike are favouring drop-in sustainable aviation fuel (SAF) solutions with minimum engine and infrastructure adaptation requirements. Sasol’s Fischer-Tropsch technology can provide such SAF solutions based on our proven technology and wealth of project and operational experience. Overview Our 70-year-old institutional knowledge in applying Fischer-Tropsch (FT) technology to produce synthetic fuels and chemicals can provide sustainable aviation fuel (SAF) solutions that have exceptional abatement characteristics as well as feedstock adaptability, and in the future can be produced from almost unlimited sustainable feedstocks as renewable energy costs are expected to become increasingly more competitive. The global power-to-X (PtX) market, which is a combination of power-to-liquids and power-to-chemicals technology, is developing rapidly through increasing demand for SAF. It presents a global growth opportunity as power-to-liquids is likely to be one of the first and most attractive applications of our FT technology. Our FT technology has scalable potential as it provides solutions in hard-to-abate sectors. Having led the industry in large-scale FT technology applications, we are well positioned to succeed in the emerging SAF market. We will do this by providing differentiated solutions across the globe and playing a key role in the defossilisation/decarbonisation of the aviation industry. This, as drop-in aviation fuels are deemed to be the preferred long-term energy solution for long-distance flights. Operating context Sustainable aviation fuel is seen as an essential lever in the decarbonisation of the aviation sector. Globally, considerable advances have been made in providing the enabling policy and regulatory environment for SAF. The European Union is setting standards through its renewable energy directive (RED) and SAF-specific policies like ReFuelEU, which specifies SAF blending mandates and tax penalties for fossil jet fuel use. These standards could influence global regulatory guidelines and mandates. Sasol participates in policy consultation platforms in the European Union, United States, United Kingdom and Canada. These advocate for a level playing field that will allow more SAF solution providers to participate in the fast developing global SAF market. In the United States and European Union the level of ambition for the reduction of greenhouse gases in the aviation transport sector is favourable for Sasol ecoFT’s feasibility project studies. * Net Zero for Sasol is to significantly reduce emissions to the point where only hard-to-abate emissions remain or are zero. Any residual emissions will be neutralised using carbon dioxide removal offsets OUTLOOK We are committed to accelerate our transition to a low-carbon world in support of the objectives of the Paris Agreement and our ambition to achieve Net Zero* emissions by 2050. We are driving our intention to produce low-carbon fuels and chemicals globally through Sasol ecoFT. This will help us build sustainable businesses and leverage our advantaged FT technology. Sasol ecoFT’s focus is to develop, build and operate assets that produce SAF and market the products globally. We are driving efforts to maximise catalyst yields and maintain operational efficiencies of our complex integrated facilities. By reinforcing strong value chain partnerships, we aim to deliver value through licensing our FT technology. STRATEGIC FOCUS The production costs for sustainable fuels and chemicals will remain higher than existing alternatives. As a result, financing will be a challenge and fuel producers will need public funding in the initial phase of developing the industry if they are to meet future demand. Initially, the emerging industry will rely on legislated blending mandates and grant funding from governments, although country-specific CO2 commitments and regulatory frameworks are driving demand for both sustainable fuels and chemicals. celerate our on world in support of OC erate our CUS |
SASOL INTEGRATED REPORT 2023 63 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE GOVERNANCE AND REWARDS PERFORMANCE ADMINISTRATION SASOL ecoFT AT A GLANCE // CONTINUED Exploring new value pools Expanding licensing structures We signed several ‘Single Point Licence studies’ with third parties for our FT and Topsoe’s hydrocracking technology solutions. One opportunity in Denmark entered the front-end engineering phase. Joint venture established with Topsoe* Sasol and Topsoe, leaders in greenhouse gas emission reduction technologies, signed a landmark agreement to establish a 50/50 joint venture, solidifying a commitment to produce SAF and contribute to global efforts in combatting climate change. The joint venture* will go beyond the unique combination of technologies, capabilities and deep industry experience, to lay the foundation for industrial-scale SAF production facilities. The aspiration is to develop, build, own and operate SAF assets and market sustainable aviation fuels derived primarily from non-fossil feedstocks, utilising green hydrogen, sustainable sources of CO2 and/or biomass with a specific focus on Sasol’s FT and Topsoe’s related technologies. The joint venture will seek partnerships with feedstock suppliers, technology and service providers, and long-term customers to develop projects in geographies with favourable policy and regulatory environments. * Subject to approval by relevant authorities The Inflation Reduction Act (IRA) PROGRESSING A SUSTAINABLE FUTURE SASOL We accelerated the exploration of new value pools to strengthen our competitive advantage. We also established several new key relationships with players across the value chain. Our focus is to create a diversified and resilient portfolio of SAF asset opportunities in attractive geographies with competitive feedstock offerings. These include abundant renewable energy and supportive regulatory dispensations. We are pursuing prefeasibility studies in the United States and feasibility studies in Europe to accelerate the development of SAF asset opportunities and to support our proprietary FT technology. Managing capital demands and mitigating risk exposure, Sasol ecoFT has from inception focused on pursuing partnerships through co-ownership models, coupled with grant funding for the development and execution of projects. In the United States, we prioritised a number of new opportunity assessments based on the supportive regulatory landscape emanating from the Inflation Reduction Act (IRA). These included power-to-liquids and biomass power-to-liquids FT opportunities. The IRA lowers the costs of adopting clean technologies and accelerates the deployment of clean electricity generation, electric vehicles and several emerging technologies, including carbon capture and hydrogen. We are considering an early United States SAF market entry play, using hydroprocessed esters and fatty acids (HEFA) technology. |
SASOL INTEGRATED REPORT 2023 64 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION GOVERNANCE // GOVERNANCE AT A GLANCE SASOL INTEGRATED REPORT 2023 64 Reliable governance We encourage an open, honest environment that promotes structured planning, agility in execution and encourages investment in the sustainability of the organisation. Good governance is embedded in the sound judgement and good behaviour of those who are charged with ensuring the success of Sasol. The focus of the Board is to ensure that strategy, sustainability, risk and performance considerations are appropriately balanced and effectively integrated in all we do. WE REMAIN COMMITTED TO: The safety of our people. The sustainability of our organisation and promoting environmental, social and governance (ESG) considerations. Ensuring an ethical culture. Sustainability Stakeholder communication Our commitment to sustainability is unwavering, driven by our Purpose to ‘innovate for a better world’. We are committed to improving the social, economic and environmental wellbeing of the communities in which we operate. The Board takes the legitimate interests and expectations of stakeholders into account when making decisions. We are committed to maintaining transparency and engaging extensively with our stakeholders to help us understand stakeholders’ concerns and expectations in order to make informed decisions regarding Sasol’s sustainability approach, reporting and other matters of importance to stakeholders. Human Rights We align our practices with the United Nations Guiding Principles on Business and Human Rights and, as asserted in our Code of Conduct, we do business in an ethical way. |
SASOL INTEGRATED REPORT 2023 65 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION GOVERNANCE CONTINUED 1 The Board appoints Group Executive Committee members on the recommendation of the CEO and the Nomination and Governance Committee WWW For more detail on the responsibilities, powers, policies and processes of the Board, its Directors and the Company’s executives and other officials, refer to the Board Charter, together with the Company’s memorandum of incorporation on our website, www.sasol.com Our governance structure The Group’s governance structures are reviewed regularly and provide for the assignment of authority while enabling the Board to retain effective control. The structures support ethical and efficient leadership and good corporate citizenship and are applied in the best interests of Sasol and its stakeholders. The necessary policies and processes are in place to ensure all entities in the Group adhere to essential Group requirements and minimum governance standards. As ultimate shareholder of all subsidiaries in the Sasol Group, Sasol Limited exercises its rights and is involved in the decision-making of its subsidiaries on material matters. Subsidiaries have adopted the governance framework as appropriate and have aligned their memoranda of incorporation and shareholder agreements with the Group’s governance framework. SASOL LIMITED SHAREHOLDERS PRESIDENT AND CHIEF EXECUTIVE OFFICER GROUP EXECUTIVE COMMITTEE1 STAKEHOLDERS SASOL LIMITED BOARD Capital Structuring and Allocation Committee Disclosure Working Group Ad hoc GEC Mandating and Steering Committees Safety Committee Sanctions Compliance Committee ETHICAL FOUNDATION Audit Committee Capital Investment and Digital Committee Nomination and Governance Committee Remuneration Committee Safety, Social and Ethics Committee DISCLOSURES CONTROL/ASSURANCE EXECUTIVE VICE PRESIDENTS Subsidiaries (wholly-owned), Sasol Energy, Sasol Chemicals and Sasol ecoFT Businesses and Corporate Centre Subsidiaries (wherein external shareholder) and JV Boards and shareholders RISKS/OPPORTUNITIES Compliance The Board confirms that Sasol complies in most significant respects with the governance standards imposed on domestic United States’ companies listed on the NYSE and that we apply all the principles of the King IVTM Report on Corporate Governance for South Africa 2016 (King IVTM). WWW A statement on Sasol’s application of the principles of King IVTM is available on www.sasol.com The Board further confirms that the Company is in compliance with the provisions of the Companies Act 71 of 2008 (the Companies Act) specifically relating to its incorporation and is operating in conformity with its Memorandum of Incorporation. As a company listed on the Johannesburg Stock Exchange (JSE) and on the New York Stock Exchange (NYSE) for purposes of our American Depositary Receipt programme, Sasol is subject to, and has implemented controls to provide, reasonable assurance of its compliance with all relevant requirements in respect of its listings. Specific areas of law that have been identified as key Group legal compliance risk areas (safety, health and environmental laws, anti-bribery and anti-corruption laws and competition law). We have implemented controls, aimed at achieving a balanced approach to compliance and to mitigate the risks in these areas. The Board and its Committees closely monitor the implementation of the Company’s legal compliance policy and processes and improve thereon, as and when required, to mitigate the risk of non-compliance with the laws in the various jurisdictions in which Sasol does business. In the year under review, there were no material violations of any laws or regulations, nor were any material penalties or fines imposed on the Company or its Directors for contraventions of any laws or regulations. Governance The Board is satisfied that it fulfilled all its duties and obligations during the 2023 financial year. We are a values-based organisation and are committed to the highest standards of business integrity and ethics in all our activities. The Board ensures that Sasol is governed effectively through ethical consciousness and conduct, in accordance with good corporate governance practice, appropriate and relevant non-binding industry rules, codes and standards and internal control systems. The Company Secretary The effective functioning of the Board is facilitated and supported by the Company Secretary, Ms Michelle du Toit, who was appointed as the Group Company Secretary of Sasol Limited on 1 January 2021. The Company Secretary is not a Director of Sasol Limited and provides a central source of guidance and support to the Board on matters of good governance and changes in legislation while maintaining an arm’s length relationship with the Board and the Directors. Having considered the competence, qualifications and experience of Ms du Toit, the Board is satisfied that she is competent and has the appropriate qualifications and experience to serve as the Company Secretary. |
SASOL INTEGRATED REPORT 2023 66 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION In terms of our memorandum of incorporation, the Board shall consist of a maximum of 16 Directors. Up to five may be Executive Directors. One-third of Directors must retire at every Annual General Meeting and are eligible for re-election. The Board determined that it would comprise a maximum of 14 Directors. WWW The roles and functions of the Chairman, the Lead Independent Director and the President and CEO are described in the Board Charter available on our website, www.sasol.com GOVERNANCE // Our Board Our Board of Directors is responsible for the strategic direction and control of the Company and brings independent, informed and effective judgement to bear on material decisions reserved for the Board. Our Directors set the tone for ethical and effective leadership to ensure value creation that is accomplished in a sustainable manner. Vuyo Kahla Executive Director (appointed: 2019) Date of birth: 1970 (53) Nationality: South African Qualifications: BA, LLB, AMP Committee member: • Capital Investment and Digital Committee • Safety, Social and Ethics Committee Kathy Harper Independent non-Executive Director (appointed: 2020) Date of birth: 1963 (60) Nationality: American Qualifications: BSc (Industrial Management), MBA, Certificate in cyber security oversight (NACD) Committee member: • Audit Committee Fleetwood Grobler Executive Director and President and Chief Executive Officer (appointed: 2019) Date of birth: 1961 (62) Nationality: South African Qualifications: BEng (Mechanical) Committee member: • Capital Investment and Digital Committee • Safety, Social and Ethics Committee Martina Flöel Independent non-Executive Director (appointed: 2018) Date of birth: 1960 (63) Nationality: German Qualifications: MSc (Chemistry), PhD (Chemistry) Committee member: • Capital Investment and Digital Committee • Safety, Social and Ethics Committee • Remuneration Committee Muriel Dube Independent non-Executive Director (appointed: 2018) Date of birth: 1972 (51) Nationality: South African Qualifications: BA (Human Sciences), BA (Hons) (Politics), MSc (Environmental Change and Management), Executive Certificate: Climate Change and Development, HIID Chairman of the Safety, Social and Ethics Committee Committee member: • Capital Investment and Digital Committee • Nomination and Governance Committee Manuel Cuambe Independent non-Executive Director (appointed: 2016) Date of birth: 1962 (61) Nationality: Mozambican Qualifications: BEng (Electrical), Postgraduate Certificate in Management Studies Committee member: • Capital Investment and Digital Committee • Safety, Social and Ethics Committee • Remuneration Committee Sipho Nkosi Independent non-Executive Director and Chairman (appointed: 2019) Date of birth: 1954 (69) Nationality: South African Qualifications: BCom, BCom Economics (Hons), MBA Chairman of the Nomination and Governance Committee Committee member: • Remuneration Committee Mpho Nkeli Independent non-Executive Director (appointed: 2017) Date of birth: 1964 (59) Nationality: South African Qualifications: (Environmental Science), MBA Chairman of the Remuneration Committee Committee member: • Safety, Social and Ethics Committee • Nomination and Governance Committee Trix Kennealy Independent non-Executive Director (appointed: 2017) Date of birth: 1958 (65) Nationality: South African Qualifications: BCom (Accountancy), (Hons) Chairman of the Audit Committee Committee member: • Capital Investment and Digital Committee • Nomination and Governance Committee Nomgando Matyumza Independent non-Executive Director (appointed: 2014) Date of birth: 1963 (60) Nationality: South African Qualifications: BCom, BCompt (Hons), CA(SA) LLB Committee member: • Remuneration Committee • Audit Committee Andreas Schierenbeck Independent non-Executive Director (appointed: 2023) Date of birth: 1966 (57) Nationality: German Qualifications: AMP (Applied Mathematics and Physics), MA, Electrical Engineering Committee member: • Capital Investment and Digital Committee • Safety, Social and Ethics Committee Hanré Rossouw Executive Director and Chief Financial Officer (appointed: 2022) Date of birth: 1975 (48) Nationality: South African Qualifications: BEng (Chemical), BCom (Hons), MBA Committee member: • Capital Investment and Digital Committee Stanley Subramoney Independent non-Executive Director (appointed: 2021) Date of birth: 1958 (64) Nationality: South African Qualifications: BCompt (Hons) (Accounting Science), CA(SA) Committee member: • Audit Committee • Remuneration Committee Stephen Westwell Independent non-Executive Director and Lead Independent Director (appointed: 2012) Date of birth: 1958 (65) Nationality: British Qualifications: BSc (Mechanical) MSc (Management), MBA Chairman of the Capital Investment and Digital Committee Committee member: • Audit Committee • Safety, Social and Ethics Committee • Nomination and Governance Committee COMMITTEE COMMITTEE |
SASOL INTEGRATED REPORT 2023 67 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION GOVERNANCE CONTINUED Policy on diversity The Board’s diversity and skills ensure that it guides Sasol to deliver a sustainable organisation. Directors are chosen by the Board with the support of the Nomination and Governance Committee for their corporate leadership skills, experience and expertise. A combination of different business, geographic and academic backgrounds as well as diversity in age, gender and race allow for robust debate and more considered decision-making, supporting the sustainable growth of the business. It is the Board’s policy that broader diversity at Board level is promoted; all facets of diversity are considered in determining the optimal composition of the Board and, where possible, are balanced appropriately. All Board appointments are made on merit, having due regard for the benefits of diversity, which the Board as a whole requires to be effective. Tenure, independence and succession All non-Executive Directors are considered to be independent. The Board has determined that Directors may serve on the Board for up to nine years, extendable annually up to a maximum of 12 years. The Board’s succession plans aim to achieve an optimal balance between independence and continuity on both the Board and its Committees. It is for this reason that the Board extended the terms of Mr S Westwell and Ms NNA Matyumza following a review and confirmation of their independence. Their experience, knowledge and independent judgement continue to benefit the Company. The Nomination and Governance Committee is of the view that no Director is over-committed. The Nomination and Governance Committee considers the other commitments of Directors when they are first appointed, as well as annually, or at any other time when a Director’s circumstances change and warrant re-evaluation. This is done to determine whether a Director has sufficient time to discharge his/hers duties effectively and is free from conflicts that cannot be managed satisfactorily. Should the Nomination and Governance Committee be of the view that a Director is over-committed or has an unmanageable conflict, the Chairman will meet with that Director to discuss the resolution of the matter to the satisfaction of the Committee. Focus areas of the Board and its Committees The Board Charter and the terms of reference of its Committees are reviewed as and when required but at least every second year to ensure they remain relevant and aligned with all relevant regulatory requirements and governance best practices. The Board uses its meetings to discharge its governance and regulatory responsibilities. Its work plan and those of its Committees outline the matters which should be dealt with at meetings and are aligned with the responsibilities and requirements set out in the Board Charter and the terms of reference of its Committees. Matters considered include safety, operational and financial performance, matters of strategy, risk and opportunity, ESG and compliance. The Board has purposefully assumed direct responsibility for the governance of risk. To support the Board in ensuring effective risk management oversight, not only one Committee, but all Board Committees are responsible for ensuring the effective monitoring of risks within the ambit of each Committee’s scope. In monitoring and providing oversight on Sasol’s risks, each Committee will consider potential opportunities as appropriate. There are seven Board meetings a year. The Board also meets twice a year to discuss strategy. For the reporting period, the Board held eight meetings, two strategy meetings and three additional special meetings. Women (%) 42% Achieved 40% Target Historically disadvantaged individuals (% of South African Directors) 67% Achieved 50% Target Age (years) 1 40 – 50 years 6 51 – 60 years 7 61 – 70 years Independence 11 Non-Executive Directors 3 Executive Directors MEETINGS AND ATTENDANCE 13 meetings 97% attendance* * Due to prior commitments, Ms KC Harper, Ms NNA Matyumza, Mr SA Nkosi and Mr S Westwell could not attend certain of the additional meetings. Our Board has the following skills and experience (% of Directors) Capital projects Social, SHE and sustainability Engineering Chemicals Sales and manufacturing Mergers and acquisitions Digital, including cyber security Public Policy and regulatory Legal and compliance Global experience Human Resources and remuneration Strategy and risk management Finance Oil, gas and upstream business 50 43 36 71 43 29 86 36 21 71 43 50 50 93 20-F For more details refer to our Form 20-F available on our website, www.sasol.com for the skills and experience of each Director Diversity SKILLS AND EXPERIENCE OF OUR BOARD Maintaining an ethical culture and collective perspective are essential. The Board follows a risk-based approach. Our Directors must: have strong values, ethics and integrity; ask critical questions; and facilitate open and frank communication with each other and management. By setting an example of doing business responsibly, Directors demonstrate their continued commitment to Sasol’s Values. AVERAGE TENURE OF DIRECTORS 4,7 years |
SASOL INTEGRATED REPORT 2023 68 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION Key issues the Board focused on in 2023 and remains invested in going forward Safety of our people Making sure our people return home safely is the top priority of the Board. Fatalities are unacceptable. Significant time is devoted to monitor processes implemented to ensure Zero Harm. Transforming for resilience Resilience, operational stability and performance and cash flow improvement remain essential, especially in view of continued market volatility, geopolitical uncertainty and disruptions, and the deepening global energy crisis. Progressing Sasol 2.0 is a priority. We are also re-focusing on Sasol Mining’s performance and on improving the stability of our South African value chain. Caring for our planet We have invested significant time in implementing our air quality improvement plans, including the development of an integrated air quality and greenhouse gas (GHG) reduction solution, and plotting our path to deliver on our GHG emission-reduction targets. It is essential that we align with an integrated just transition programme and incorporate localisation and economic empowerment in our journey. We need to expand our growth opportunities through partnerships and source affordable feedstock; for this we need capital to invest in new technologies and attract suitable talent. Strengthening relationships with stakeholders and regulators Our people are the cornerstone to realising our ambitions, thus capability retention is a key focus area. Strengthening our partnerships and co-developing sustainable solutions with our stakeholders for economic transformation and localisation remain crucial. Delivering on our commitments is essential and we are committed to maintain regular and transparent communication with our stakeholders. GOVERNANCE CONTINUED Board effectiveness Newly appointed Directors are apprised of Sasol’s business and their duties and responsibilities as Directors. Our Directors are also given the opportunity to visit Sasol’s plants and operations. The development of industry and Group knowledge is a continuous process and Directors are briefed on legal developments and changes in the risk and general business environment on an ongoing basis. The Board, its Committees and Directors are entitled to seek independent professional advice concerning the Company’s affairs and to gain access to any information they may require in discharging their duties as Directors. The Board formally evaluates its performance and effectiveness, and that of its Committees, Directors and the Chairman, every second year. A formal evaluation was conducted this year, firstly to assess whether there had been improvement in the areas identified during the evaluation conducted in 2021 and secondly, to identify any further areas to enhance. The Board concluded that it is effective and the Directors are satisfied that the evaluation process is contributing to the improvement of the Board’s performance and effectiveness. Progress was made on the following key considerations identified to be addressed during the previous formal evaluation in 2021: • The quantity and focus of material being provided to the Board and its Committees were reviewed to ensure the material enables constructive dialogue and prioritisation during meetings. The number of meetings has also been increased to ensure that Directors are kept abreast of developments. • Key skills and competencies have been identified that would be required for Future Sasol. The succession plan takes into consideration these required skills and competencies. As a first step, Mr Andreas Schierenbeck has been appointed and we are comfortable that his past experience as a Chief Executive Officer in charge of an energy company’s transition will greatly benefit the Board. • The Board determined that the maximum number of Directors will be 14 for the time being. The ideal size of the Board is an ongoing matter for consideration, especially given the key skillsets and competencies required, the composition of the Committees, as well as international footprint and complexity. • Respect and open and honest discussions enhance trust. Team dynamics and culture remain key focus areas for the Board. A number of engagements took place during the year to strengthen cohesion among Directors and promote engagement with executives. OUR COMBINED ASSURANCE MODEL Management Internal assurance providers External assurance providers INTERNAL CONTROL FRAMEWORK AND ASSESSMENT The Board, with the support of the Audit Committee, is ultimately responsible for Sasol’s system of internal control, designed to identify, evaluate, manage and provide reasonable assurance against material misstatement and loss. We apply a combined assurance model, which seeks to optimise the assurance obtained from management as well as internal and external assurance providers while fostering a strong ethical context and mechanisms to ensure compliance. Through the Risk Policy and strategic intent of risk management approved by the Board, management identifies key risks facing Sasol and implements the necessary internal controls. The process is monitored and evaluated under the direction of internal audit, while external audit teams cover key controls and accounting matters in the course of their audits. Other levels of external assurance are obtained as and when required. The consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows as of and for the period. However, the Company’s internal control over financial reporting was ineffective due to the continued existence of the material weakness with respect to the South African Integrated Value Chain impairment process, identified during financial years 2020 and 2021. PEOPLE 1 2 3 4 PLANET PROFIT Some key questions considered to ensure the Board remains effective and adds value included: • What can be done to ensure the success of our current and future leaders? The Board should ensure that there is focus not only on the succession of executives, but the level below them. Our people are the cornerstone to realising the Company’s ambitions. • What are we missing? The Board will continue to focus on the nature and extent of risks faced by the organisation, the impact of these risks on the strategy, performance and sustainability of the Company and the effectiveness of the risk management process. • Are we agile enough and solutions driven? Adaptation of our strategic direction taking into consideration risks, opportunities, market dynamics and performance is crucial to ensure the sustainability of the Company. Another key consideration identified to further enhance the value of the Board going forward was: • Further evolving the Board’s role of overseeing the effective execution of strategy and ensuring that the strategy translates into adding value to shareholders and building a sustainable business. Enhancing data based strategic decision-making and the outside, diverse perspective provided by Directors to add value to management’s integrated thinking is crucial to ensure resilience. AFS Refer to the report from the Audit Committee in the Annual Financial Statements for more information in relation to the material weakness that was identified in financial year 2020. |
SASOL INTEGRATED REPORT 2023 69 INTRODUCTION ABOUT SASOL STRATEGIC OVERVIEW CREATING VALUE PERFORMANCE GOVERNANCE AND REWARDS ADMINISTRATION Audit Committee Capital Investment and Digital Committee Nomination and Governance Committee Remuneration Committee Safety, Social and Ethics Committee CHAIRMAN: GMB Kennealy CHAIRMAN: S Westwell CHAIRMAN: SA Nkosi CHAIRMAN: MEK Nkeli CHAIRMAN: MBN Dube KC Harper NNA Matyumza S Subramoney S Westwell MJ Cuambe MBN Dube M Flöel FR Grobler VD Kahla GMB Kennealy HA Rossouw* A Schierenbeck** * Appointed as Executive Director and member on 1 July 2022 ** Appointed as member of the Committee on 1 April 2023 MBN Dube GMB Kennealy MEK Nkeli S Westwell MJ Cuambe* M Flöel SA Nkosi NNA Matyumza S Subramoney** * Appointed as a member on 19 November 2022 ** Appointed as a member on 1 October 2022 MJ Cuambe M Flöel FR Grobler VD Kahla MEK Nkeli A Schierenbeck* S Westwell * Appointed as member on 1 April 2023 7 meetings 99% attendance Due to a prior commitment, Ms KC Harper could not attend a special meeting that had not been scheduled in advance 6 meetings 99% attendance Due to a prior commitment, Mr Cuambe could not attend a special meeting that had not been scheduled in advance 4 meetings 100% attendance 4 meetings 100% attendance 7 meetings 100% attendance Mandate • To oversee the quality and integrity of Sasol’s integrated and financial reporting • To oversee the qualification, independence and effectiveness of the internal and external audit functions • To oversee compliance with legal and regulatory requirements to the extent that it might have an impact on financial statements • To oversee financial market risk management and hedging matters Mandate • To evaluate mergers, acquisitions, investments, divestments and disposals prior to approval by the Board • To monitor these mergers, acquisitions and Board-approved investments, divestments and disposals, as well as the Company’s capital allocation and asset review programmes • To lead the strategic direction of digital and Information Management (IM) development in a manner that supports the Group in achieving its strategic objectives and ensures the optimal return on digital and IM investment • To oversee that the control environment of information and technology is appropriately managed and that any risks posed by pursuing or not advancing certain digital strategies are addressed Mandate • To ensure effective corporate governance • To assist with the composition of the Board and its Committees, succession planning and the appointment of Directors • To manage the performance of the Board, its Committees and the Directors • To monitor compliance and provide reasonable assurance regarding the quality, integrity and reliability of compliance risk management • To assist with ensuring all stakeholders’ needs and interests are taken into account and are balanced Mandate • To ensure the Group remunerates employees fairly, responsibly, and transparently • Ensuring the implementation of affordable, competitive, and fair reward principles to promote the achievements of strategic objectives and positive outcomes in the short, medium and long term • To monitor and ensure remuneration related governance is maintained • To provide a channel of communication between the Board and management on remuneration matters Mandate • To perform the role of a Social and Ethics Committee as required in terms of the Companies Act • To ensure that the manner in which Sasol governs social and ethics performance promotes an ethical culture and that Sasol conducts itself as a responsible corporate citizen • To monitor the Group’s policies and standing in relation to ethical and optimal labour and employment practices and care for our people • To monitor Sasol’s strategies, policies, performance and the progressive implementation of its sustainability, SHE, social and ethics practices • To ensure effective risk management oversight, specifically in relation to material risks within the Committee’s scope • To review assurance obtained regarding the integrity, reliability and validation of the Sustainability Report • To provide strategic oversight of matters relating to people within the organisation, with the main objective of creating a globally competitive workforce and to ensure employees work towards accomplishing the strategic objectives of the Company Key matters dealt with in 2023 and focus areas for 2024 • Successfully managing the mandatory audit firm rotation and recommending the nomination for appointment of KPMG with effect from 1 July 2023 • Ensuring the integrity and effectiveness of reporting • Financial management, key audit matters and significant areas of judgement. The Committee will continue to ensure financial systems, processes and controls operate effectively and respond to changes in the operating and regulatory environment • Financial performance, specifically considering the impact of market volatility, geopolitical uncertainty and disruption • Balance sheet and liquidity management. It is key to drive resilience and cash flow improvement through the delivery of Sasol 2.0 targets. • Ensuring effective combined assurance, internal control and risk management AFS For more detail refer to the Report of the Audit Committee in our Annual Financial Statements available on our website www.sasol.com Key matters dealt with in 2023 and focus areas for 2024 • Overseeing investments and divestments and ensuring prioritisation of investments that best support the sustainability of the organisation • Overseeing the further development of Sasol’s digital strategies and technology solutions and monitoring cyber security and information and operating technology issues • Monitoring progress of Mozambique projects and strategic approaches to developing large-scale natural gas import opportunities of South Africa • Monitoring the Group’s capital performance and guiding on prioritised capital expenditure Key matters dealt with in 2023 and focus areas for 2024 • Ensuring general corporate governance mechanisms and the framework are appropriate and effective in view of developments in the Group and its business environment • Reviewing the composition of the Board and its Committees and succession planning • Ensuring optimal performance by the Board and its Committees, the Directors and addressing areas identified for improvement during the evaluation process • Strengthening our stakeholder relationships to ensure – among others – economic transformation, localisation and a Just Transition and balancing our stakeholders’ needs and interests while also maintaining regular and transparent communication and disclosure • Chief Executive Officer succession Key matters dealt with in 2023 and focus areas for 2024 • Ensuring effective reward practices and governance around execution of the Remuneration Policy • Continuing to engage in relation to the Group’s key focus areas with our shareholders on our Remuneration Policy and Implementation Report and ensuring the appropriateness of our reward • Comprehensive review of the long-term incentive plan rules as well as the introduction of the post-termination service shareholding requirements for members of the Group Executive Committee including Executive Directors • Reviewing short-term and long-term incentive plan targets and design principles to ensure ongoing relevance • Reviewing the status of healthcare and retirement plans in the Group • Reviewing people retention risks and approved mitigation plans • Reviewing NED fees as presented by management IR For more detail refer to the Remuneration Report on page 70 Key matters dealt with in 2023 and focus areas for 2024 • Ensuring processes are in place to promote an ethical culture which encourages safety • Humanising safety and ensuring the safety of our employees, suppliers, customers and communities – the Committee continues to closely monitor the processes being put in place to avoid the occurrence of high-severity incidents • Driving transformation and an ethical work environment • Monitoring the Group’s activities relating to good corporate citizenship • Ensuring Sasol’s sustainability, specifically focusing on climate change, biodiversity and Sasol's impact on the environment as well as air and water compliance obligations • Delivering on our emission-reduction targets and meeting our air quality compliance obligations is of utmost importance • Continuing with identifying, assessing and monitoring stakeholders’ expectations and ensuring meaningful engagement • Reviewing existing business risk profiles with the intention to integrate human rights into our business processes with follow up monitoring and reporting on human rights MEMBERS MANDATE KEY MATTERS DEALT WITH IN 2023 AND FOCUS AREAS FOR 2024 WWW The complete terms of reference of the Committees are available on Sasol’s website, www.sasol.com. The CEO is not a member of the Audit Committee, Remuneration Committee nor the Nomination and Governance Committee but attends meetings by invitation. He is requested to leave the meeting, where appropriate, before any decisions are made that relate to him personally. GOVERNANCE // Our Board Committees The Committees established by the Board play an important role in enhancing standards of governance and effectiveness within the Group SR For more detail refer to the Report of the Chairman of the Safety, Social and Ethics Committee in our Sustainability Report available on our website, www.sasol.com |