EX-99.1 11 a2239924zex-99_1.htm EX-99.1

Exhibit 99.1

Income statement

for the year ended 30 June

|  |  |  | 2019 |  | 2018 |  | 2017 |
|  | Note |  | Rm |  | Rm |  | Rm |
Turnover |  | 2 |  | 203 576 |  | 181 461 |  | 172 407 |
Materials, energy and consumables used |  | 3 |  | (90 589 | ) | (76 606 | ) | (71 436 | )
Selling and distribution costs |  |  |  | (7 836 | ) | (7 060 | ) | (6 405 | )
Maintenance expenditure |  |  |  | (10 227 | ) | (9 163 | ) | (8 654 | )
Employee-related expenditure |  | 4 |  | (29 928 | ) | (27 468 | ) | (24 417 | )
Exploration expenditure and feasibility costs |  |  |  | (663 | ) | (352 | ) | (491 | )
Depreciation and amortisation |  |  |  | (17 968 | ) | (16 425 | ) | (16 204 | )
Other expenses and income |  |  |  | (19 097 | ) | (15 316 | ) | (12 550 | )
Translation gains/(losses) |  | 5 |  | 604 |  | (11 | ) | (1 201 | )
Other operating expenses and income |  | 6 |  | (19 701 | ) | (15 305 | ) | (11 349 | )
Equity accounted profits, net of tax |  | 20 |  | 1 074 |  | 1 443 |  | 1 071 |
Operating profit before remeasurement items and Sasol Khanyisa share-based payment |  |  |  | 28 342 |  | 30 514 |  | 33 321 |
Remeasurement items |  | 9 |  | (18 645 | ) | (9 901 | ) | (1 616 | )
Sasol Khanyisa share-based payment* |  | 35 |  | — |  | (2 866 | ) | — |
Earnings before interest and tax (EBIT) |  |  |  | 9 697 |  | 17 747 |  | 31 705 |
Finance income |  | 7 |  | 787 |  | 1 716 |  | 1 568 |
Finance costs |  | 7 |  | (1 253 | ) | (3 759 | ) | (3 265 | )
Earnings before tax |  |  |  | 9 231 |  | 15 704 |  | 30 008 |
Taxation |  | 12 |  | (3 157 | ) | (5 558 | ) | (8 495 | )
Earnings for the year |  |  |  | 6 074 |  | 10 146 |  | 21 513 |
Attributable to |  |  |  |  |  |  |  |  |
Owners of Sasol Limited |  |  |  | 4 298 |  | 8 729 |  | 20 374 |
Non-controlling interests in subsidiaries |  |  |  | 1 776 |  | 1 417 |  | 1 139 |
|  |  |  | 6 074 |  | 10 146 |  | 21 513 |

|  |  |  | Rand |  | Rand |  | Rand |
Per share information |  |  |  |  |  |  |  |  |
Basic earnings per share |  | 8 |  | 6,97 |  | 14,26 |  | 33,36 |
Diluted earnings per share |  | 8 |  | 6,93 |  | 14,18 |  | 33,27 |

* | 2018 relates to the implementation of Sasol Khanyisa in relation to SOLBE1, Inzalo Public, Inzalo Groups and Khanyisa Public participants.
| The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements.

Sasol Annual Financial Statements 2019

1

Sasol Limited Group

Statement of comprehensive income

for the year ended 30 June

|  | 2019 |  | 2018 |  | 2017 |
|  | Rm |  | Rm |  | Rm |
Earnings for the year |  | 6 074 |  | 10 146 |  | 21 513 |
Other comprehensive income, net of tax |  |  |  |  |  |  |
Items that can be subsequently reclassified to the income statement |  | 1 353 |  | 6 068 |  | (8 931 | )
Effect of translation of foreign operations |  | 1 533 |  | 5 237 |  | (10 074 | )
Effect of cash flow hedges* |  | (287 | ) | 1 233 |  | 1 821 |
Fair value of investments available-for-sale |  | — |  | 13 |  | 11 |
Tax on items that can be subsequently reclassified to the income statement** |  | 107 |  | (415 | ) | (689 | )
Items that cannot be subsequently reclassified to the income statement |  | (265 | ) | (54 | ) | 743 |
Remeasurement on post-retirement benefit obligation*** |  | (531 | ) | (80 | ) | 1 114 |
Fair value of investments through other comprehensive income |  | 136 |  | — |  | — |
Tax on items that cannot be subsequently reclassified to the income statement |  | 130 |  | 26 |  | (371 | )
Total comprehensive income for the year |  | 7 162 |  | 16 160 |  | 13 325 |
Attributable to |  |  |  |  |  |  |
Owners of Sasol Limited |  | 5 377 |  | 14 727 |  | 12 234 |
Non-controlling interests in subsidiaries |  | 1 785 |  | 1 433 |  | 1 091 |
|  | 7 162 |  | 16 160 |  | 13 325 |

* | These amounts include the loss of R1 400 million (2018 – R286 million; 2017 – R302 million) on the revaluation of the cash flow hedge pertaining to the interest rate swap and a gain of R1 115 million relating to the reclassification of the swap to profit and loss on termination of the hedge relationship.
** | The amount is mainly on the cash flow hedge.
*** | Includes the effect of a loss/(gain) of R58 million (2018 – R1 051 million; 2017 – (R105 million)) relating to the movement in the asset limitation, as well as a loss/(gain) of R83 million (2018 – R1 million; 2017 – R50 million) on reimbursive rights related to post-retirement benefits, recognised in long-term receivables.
| The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements.

2

Statement of financial position

at 30 June

|  |  |  | 2019 |  | 2018 |
|  | Note |  | Rm |  | Rm |
Assets |  |  |  |  |  |  |
Property, plant and equipment |  | 17 |  | 233 549 |  | 167 457 |
Assets under construction |  | 18 |  | 127 764 |  | 165 361 |
Goodwill and other intangible assets |  |  |  | 3 357 |  | 2 687 |
Equity accounted investments |  | 20 |  | 9 866 |  | 10 991 |
Other long-term investments |  |  |  | 1 248 |  | 951 |
Post-retirement benefit assets |  | 33 |  | 1 274 |  | 1 498 |
Long-term receivables and prepaid expenses |  | 19 |  | 6 317 |  | 4 646 |
Long-term financial assets |  | 40 |  | 15 |  | 291 |
Deferred tax assets |  | 14 |  | 8 563 |  | 4 096 |
Non-current assets |  |  |  | 391 953 |  | 357 978 |
Assets in disposal groups held for sale |  | 11 |  | 2 554 |  | 113 |
Short-term investments |  |  |  | — |  | 85 |
Inventories |  | 23 |  | 29 646 |  | 29 364 |
Tax receivable |  | 13 |  | 730 |  | 3 302 |
Trade and other receivables |  | 24 |  | 28 578 |  | 29 729 |
Short-term financial assets |  | 40 |  | 630 |  | 1 536 |
Cash and cash equivalents |  | 27 |  | 15 877 |  | 17 128 |
Current assets |  |  |  | 78 015 |  | 81 257 |
Total assets |  |  |  | 469 968 |  | 439 235 |
Equity and liabilities |  |  |  |  |  |  |
Shareholders’ equity |  |  |  | 219 910 |  | 222 985 |
Non-controlling interests |  |  |  | 5 885 |  | 5 623 |
Total equity |  |  |  | 225 795 |  | 228 608 |
Long-term debt |  | 16 |  | 127 350 |  | 89 411 |
Finance leases |  | 16 |  | 7 445 |  | 7 280 |
Long-term provisions |  | 31 |  | 17 622 |  | 15 160 |
Post-retirement benefit obligations |  | 33 |  | 12 708 |  | 11 900 |
Long-term deferred income |  |  |  | 924 |  | 879 |
Long-term financial liabilities |  | 40 |  | 1 440 |  | 133 |
Deferred tax liabilities |  | 14 |  | 27 586 |  | 25 908 |
Non-current liabilities |  |  |  | 195 075 |  | 150 671 |
Liabilities in disposal groups held for sale |  | 11 |  | 488 |  | 36 |
Short-term debt |  | 16 |  | 3 783 |  | 14 709 |
Short-term provisions |  | 32 |  | 3 289 |  | 3 508 |
Tax payable |  | 13 |  | 1 039 |  | 2 318 |
Trade and other payables |  | 25 |  | 39 466 |  | 37 150 |
Short-term deferred income |  |  |  | 210 |  | 220 |
Short-term financial liabilities |  | 40 |  | 765 |  | 1 926 |
Bank overdraft |  | 27 |  | 58 |  | 89 |
Current liabilities |  |  |  | 49 098 |  | 59 956 |
Total equity and liabilities |  |  |  | 469 968 |  | 439 235 |

The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements.

3

Statement of changes in equity

for the year ended 30 June

|  | Share capital |  | Share repurchase programme |  | Share- based payment reserve |  | Investment fair value |
|  | Note 15 |  | Note 15 |  | Note 35 |  | reserve |
|  | Rm |  | Rm |  | Rm |  | Rm |
Balance at 30 June 2016 |  | 29 282 |  | (2 641 | ) | (13 582 | ) | 26 |
Share-based payment expense |  | — |  | — |  | 463 |  | — |
Long-term incentive scheme converted to equity-settled* |  | — |  | — |  | 645 |  | — |
Long-term incentives vested and settled |  | — |  | — |  | (51 | ) | — |
Total comprehensive income for the year |  | — |  | — |  | — |  | 7 |
profit |  | — |  | — |  | — |  | — |
other comprehensive income for the year |  | — |  | — |  | — |  | 7 |
Dividends paid |  | — |  | — |  | — |  | — |
Balance at 30 June 2017 |  | 29 282 |  | (2 641 | ) | (12 525 | ) | 33 |
Transactions with non-controlling shareholders |  | — |  | — |  | — |  | — |
Movement in share-based payment reserve |  | — |  | — |  | 989 |  | — |
Share-based payment expense |  | — |  | — |  | 823 |  | — |
Deferred tax |  | — |  | — |  | 166 |  | — |
Unwind of Sasol Inzalo transaction |  | (12 698 | ) | — |  | 6 999 |  | — |
Repurchase of shares |  | (12 698 | ) | — |  | 12 698 |  | — |
Share-based payment reserve to retained earnings |  | — |  | — |  | (5 699 | ) | — |
Long-term incentives vested and settled |  | — |  | — |  | (605 | ) | — |
Implementation of Sasol Khanyisa transaction |  | 1 832 |  | — |  | 1 121 |  | — |
Share-based payment expense |  | — |  | — |  | 2 953 |  | — |
Shares issued to Sasol Khanyisa Employee Trust |  | 1 832 |  | — |  | (1 832 | ) | — |
Repurchase of shares |  | (2 641 | ) | 2 641 |  | — |  | — |
Total comprehensive income for the year |  | — |  | — |  | — |  | 10 |
profit |  | — |  | — |  | — |  | — |
other comprehensive income for the year |  | — |  | — |  | — |  | 10 |
Dividends paid |  | — |  | — |  | — |  | — |
Balance at 30 June 2018 |  | 15 775 |  | — |  | (4 021 | ) | 43 |
Disposal of business |  | — |  | — |  | — |  | — |
Movement in share-based payment reserve |  | — |  | — |  | 1 552 |  | — |
Share-based payment expense |  | — |  | — |  | 707 |  | — |
Sasol Khanyisa transaction |  | — |  | — |  | 952 |  | — |
Deferred tax |  | — |  | — |  | (107 | ) | — |
Unwind of Sasol Inzalo transaction |  | (5 887 | ) | — |  | 3 452 |  | — |
Repurchase of shares |  | (5 887 | ) | — |  | 5 887 |  | — |
Final distribution to Sasol Inzalo Public |  | — |  | — |  | — |  | — |
Share-based payment reserve to retained earnings |  | — |  | — |  | (2 435 | ) | — |
Long-term incentives vested and settled |  | — |  | — |  | (573 | ) | — |
Total comprehensive income for the year |  | — |  | — |  | — |  | 89 |
profit |  | — |  | — |  | — |  | — |
other comprehensive income for the year |  | — |  | — |  | — |  | 89 |
Dividends paid |  | — |  | — |  | — |  | — |
Balance at 30 June 2019 |  | 9 888 |  | — |  | 410 |  | 132 |

* | Refer to note 35 for further detail on the conversion of the long-term incentive scheme.
The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements.

4

Foreign currency translation reserve |  | Cash flow hedge accounting reserve |  | Remeasurement on post- retirement benefits |  | Retained earnings |  | Shareholders’ equity |  | Non- controlling interests |  | Total equity |
Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
33 316 |  | (1 788 | ) | (2 533 | ) | 164 917 |  | 206 997 |  | 5 421 |  | 212 418 |
— |  | — |  | — |  | — |  | 463 |  | — |  | 463 |
— |  | — |  | — |  | — |  | 645 |  | — |  | 645 |
— |  | — |  | — |  | 51 |  | — |  | — |  | — |
(10 031 | ) | 1 141 |  | 743 |  | 20 374 |  | 12 234 |  | 1 091 |  | 13 325 |
— |  | — |  | — |  | 20 374 |  | 20 374 |  | 1 139 |  | 21 513 |
(10 031 | ) | 1 141 |  | 743 |  | — |  | (8 140 | ) | (48 | ) | (8 188 | )
— |  | — |  | — |  | (8 628 | ) | (8 628 | ) | (989 | ) | (9 617 | )
23 285 |  | (647 | ) | (1 790 | ) | 176 714 |  | 211 711 |  | 5 523 |  | 217 234 |
— |  | — |  | — |  | — |  | — |  | (51 | ) | (51 | )
— |  | — |  | — |  | — |  | 989 |  | — |  | 989 |
— |  | — |  | — |  | — |  | 823 |  | — |  | 823 |
— |  | — |  | — |  | — |  | 166 |  | — |  | 166 |
— |  | — |  | — |  | 6 256 |  | 557 |  | (557 | ) | — |
— |  | — |  | — |  | 557 |  | 557 |  | (557 | ) | — |
— |  | — |  | — |  | 5 699 |  | — |  | — |  | — |
— |  | — |  | — |  | 605 |  | — |  | — |  | — |
— |  | — |  | — |  | — |  | 2 953 |  | — |  | 2 953 |
— |  | — |  | — |  | — |  | 2 953 |  | — |  | 2 953 |
— |  | — |  | — |  | — |  | — |  | — |  | — |
— |  | — |  | — |  | — |  | — |  | — |  | — |
5 215 |  | 827 |  | (54 | ) | 8 729 |  | 14 727 |  | 1 433 |  | 16 160 |
— |  | — |  | — |  | 8 729 |  | 8 729 |  | 1 417 |  | 10 146 |
5 215 |  | 827 |  | (54 | ) | — |  | 5 998 |  | 16 |  | 6 014 |
— |  | — |  | — |  | (7 952 | ) | (7 952 | ) | (725 | ) | (8 677 | )
28 500 |  | 180 |  | (1 844 | ) | 184 352 |  | 222 985 |  | 5 623 |  | 228 608 |
(52 | ) | — |  | — |  | — |  | (52 | ) | — |  | (52 | )
— |  | — |  | — |  | — |  | 1 552 |  | — |  | 1 552 |
— |  | — |  | — |  | — |  | 707 |  | — |  | 707 |
— |  | — |  | — |  | — |  | 952 |  | — |  | 952 |
— |  | — |  | — |  | — |  | (107 | ) | — |  | (107 | )
— |  | — |  | — |  | 1 063 |  | (1 372 | ) | — |  | (1 372 | )
— |  | — |  | — |  | — |  | — |  | — |  | — |
— |  | — |  | — |  | (1 372 | ) | (1 372 | ) | — |  | (1 372 | )
— |  | — |  | — |  | 2 435 |  | — |  | — |  | — |
— |  | — |  | — |  | 573 |  | — |  | — |  | — |
1 530 |  | (180 | ) | (360 | ) | 4 298 |  | 5 377 |  | 1 785 |  | 7 162 |
— |  | — |  | — |  | 4 298 |  | 4 298 |  | 1 776 |  | 6 074 |
1 530 |  | (180 | ) | (360 | ) | — |  | 1 079 |  | 9 |  | 1 088 |
— |  | — |  | — |  | (8 580 | ) | (8 580 | ) | (1 523 | ) | (10 103 | )
29 978 |  | — |  | (2 204 | ) | 181 706 |  | 219 910 |  | 5 885 |  | 225 795 |

5

Statement of cash flows

for the year ended 30 June

|  |  |  | 2019 |  | 2018 |  | 2017 |
|  | Note |  | Rm |  | Rm |  | Rm |
Cash receipts from customers |  |  |  | 203 613 |  | 178 672 |  | 172 061 |
Cash paid to suppliers and employees |  |  |  | (152 215 | ) | (135 795 | ) | (127 992 | )
Cash generated by operating activities |  | 28 |  | 51 398 |  | 42 877 |  | 44 069 |
Dividends received from equity accounted investments |  | 20 |  | 1 506 |  | 1 702 |  | 1 539 |
Finance income received |  | 7 |  | 682 |  | 1 565 |  | 1 464 |
Finance costs paid* |  | 7 |  | (6 222 | ) | (4 797 | ) | (3 612 | )
Tax paid |  | 13 |  | (3 946 | ) | (7 041 | ) | (6 352 | )
Cash available from operating activities |  |  |  | 43 418 |  | 34 306 |  | 37 108 |
Dividends paid |  | 30 |  | (9 952 | ) | (7 952 | ) | (8 628 | )
Dividends paid to non-controlling shareholders in subsidiaries |  |  |  | (1 523 | ) | (725 | ) | (989 | )
Cash retained from operating activities |  |  |  | 31 943 |  | 25 629 |  | 27 491 |
Additions to non-current assets |  |  |  | (56 734 | ) | (55 891 | ) | (56 812 | )
additions to property, plant and equipment |  | 17 |  | (1 229 | ) | (714 | ) | (390 | )
additions to assets under construction |  | 18 |  | (54 552 | ) | (52 635 | ) | (59 892 | )
additions to other intangible assets |  |  |  | (19 | ) | (35 | ) | (61 | )
(decrease)/increase in capital project related payables |  |  |  | (934 | ) | (2 507 | ) | 3 531 |
Net cash movements in equity accounted investments |  |  |  | 66 |  | (164 | ) | (444 | )
Proceeds on disposals and scrappings |  | 10 |  | 567 |  | 2 316 |  | 788 |
Net cash disposed of on disposal of businesses |  | 10 |  | — |  | (36 | ) | — |
Purchase of investments |  |  |  | (222 | ) | (124 | ) | (96 | )
Proceeds from sale of investments |  |  |  | 142 |  | 114 |  | 28 |
Increase in long-term receivables |  |  |  | (231 | ) | (194 | ) | (141 | )
Cash used in investing activities |  |  |  | (56 412 | ) | (53 979 | ) | (56 677 | )
Proceeds from long-term debt |  | 16 |  | 93 884 |  | 24 961 |  | 9 277 |
Repayment of long-term debt |  | 16 |  | (70 000 | ) | (9 199 | ) | (2 364 | )
Proceeds from short-term debt |  |  |  | 977 |  | 1 957 |  | 4 033 |
Repayment of short-term debt |  |  |  | (1 730 | ) | (2 607 | ) | (1 410 | )
Cash generated by financing activities |  |  |  | 23 131 |  | 15 112 |  | 9 536 |
Translation effects on cash and cash equivalents |  |  |  | 162 |  | 954 |  | (3 207 | )
Decrease in cash and cash equivalents |  |  |  | (1 176 | ) | (12 284 | ) | (22 857 | )
Cash and cash equivalents at the beginning of year |  |  |  | 17 039 |  | 29 323 |  | 52 180 |
Reclassification to disposal groups held for sale |  |  |  | (44 | ) | — |  | — |
Cash and cash equivalents at the end of the year |  | 27 |  | 15 819 |  | 17 039 |  | 29 323 |

* | Included in finance costs paid is amounts capitalised to assets under construction. Refer note 18.
The notes on pages 7 to 98 are an integral part of these Consolidated Financial Statements.

6

Notes to the financial statements

The Annual Financial Statements outlined below, provide a full overview of our financial results, in the context of our strategy, while enabling more effective analysis of the group’s performance.

Segment information | 8
Statement of compliance | 14
Earnings generated from operations | 16
Operating activities |
Turnover | 17
Materials, energy and consumables used | 18
Employee-related expenditure | 18
Translation gains/(losses) | 19
Other operating expenses and income | 20
Net finance costs | 20
Earnings and dividends per share | 21
Once-off items |
Remeasurement items affecting operating profit | 23
Disposals and scrapping | 28
Disposal groups held for sale | 29
Taxation |
Taxation | 31
Tax paid | 34
Deferred tax | 34
Sources of capital | 37
Equity |
Share capital | 38
Funding activities and facilities |
Long-term debt and finance leases | 39
Capital allocation and utilisation | 43
Investing activities |
Property, plant and equipment | 44
Assets under construction | 48
Long-term receivables and prepaid expenses | 52
Equity accounted investments | 52
Interest in joint operations | 56
Interest in significant operating subsidiaries | 57
Working capital |
Inventories | 59
Trade and other receivables | 59
Trade and other payables | 61
Decrease/(increase) in working capital | 61
Cash management |
Cash and cash equivalents | 62
Cash generated by operating activities | 63
Cash flow from operations | 63
Dividends paid | 63
Provisions and reserves | 64
Provisions |
Long-term provisions | 65
Short-term provisions | 67
Post-retirement benefit obligations | 67
Cash-settled share-based payment provision | 74
Reserves |
Share-based payment reserve | 76
Other disclosures | 81
Contingent liabilities | 82
Leases and other commitments | 83
Related party transactions | 84
Subsequent events | 85
Financial risk management and financial Instruments | 86

7

Segment information

|  | Mining |  | Exploration and Production International |  | Energy |  | Base Chemicals*** |  | Performance Chemicals*** |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
|  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Statement of financial position |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-current assets |  | 26 485 |  | 25 197 |  | 13 542 |  | 14 217 |  | 67 325 |  | 64 526 |  | 141 160 |  | 124 826 |  | 126 949 |  | 116 945 |
Current assets |  | 1 809 |  | 2 547 |  | 2 475 |  | 2 339 |  | 19 727 |  | 20 657 |  | 19 478 |  | 15 714 |  | 25 007 |  | 26 335 |
Non-current liabilities |  | 1 701 |  | 1 629 |  | 6 782 |  | 5 684 |  | 11 561 |  | 11 616 |  | 10 612 |  | 38 749 |  | 11 763 |  | 36 538 |
Current liabilities |  | 2 601 |  | 2 801 |  | 1 685 |  | 2 371 |  | 13 160 |  | 11 462 |  | 10 234 |  | 9 883 |  | 12 462 |  | 12 584 |

|  | Mining |  | Exploration and Production International |  | Energy |
|  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |
|  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Income statement |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
External turnover |  | 3 222 |  | 3 446 |  | 2 946 |  | 1 815 |  | 1 610 |  | 1 750 |  | 82 977 |  | 69 110 |  | 64 254 |
Total turnover |  | 20 876 |  | 19 797 |  | 18 962 |  | 5 184 |  | 4 198 |  | 4 084 |  | 83 803 |  | 69 773 |  | 64 772 |
Intersegmental turnover |  | (17 654 | ) | (16 351 | ) | (16 016 | ) | (3 369 | ) | (2 588 | ) | (2 334 | ) | (826 | ) | (663 | ) | (518 | )
Earnings before interest and tax |  | 4 701 |  | 5 244 |  | 3 725 |  | (889 | ) | (3 683 | ) | 585 |  | 16 566 |  | 14 081 |  | 11 218 |
Earnings attributable to owners of Sasol Limited |  | 3 021 |  | 3 336 |  | 2 266 |  | (1 800 | ) | (4 168 | ) | 47 |  | 11 970 |  | 8 558 |  | 6 395 |
Effect of remeasurement items* |  | 45 |  | 34 |  | 6 |  | 1 976 |  | 4 241 |  | (6 | ) | 247 |  | 971 |  | 1 844 |
Depreciation and amortisation |  | 1 805 |  | 1 677 |  | 1 905 |  | 1 582 |  | 1 465 |  | 2 053 |  | 5 331 |  | 4 817 |  | 4 496 |
Statement of cash flows |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash flow from operations |  | 7 025 |  | 6 877 |  | 5 401 |  | 2 528 |  | 2 665 |  | 1 726 |  | 23 247 |  | 17 158 |  | 17 996 |
Additions to non-current assets** |  | 2 912 |  | 3 729 |  | 2 839 |  | 1 086 |  | 2 525 |  | 2 600 |  | 7 484 |  | 6 650 |  | 6 781 |
Other disclosures |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital commitments* |  | 2 372 |  | 2 640 |  | 3 099 |  | 19 795 |  | 18 811 |  | 19 431 |  | 10 390 |  | 10 320 |  | 10 327 |

* | Excludes equity accounted investments.
** | Includes capital accruals.
*** | The comparative financial results have been restated for the transfer of the Phenolics, Ammonia and Specialty Gases businesses from Performance Chemicals to Base Chemicals. The restatements were performed to align with the current strategy and to best reflect the basis in which the Chief Operating Decision Maker reviews and makes decisions.

8

Group Functions |  | Total |  | Deferred tax assets and liabilities |  | Net tax receivable/ payable |  | Post-retirement benefit assets |  | Total per statement of financial position |
2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
6 655 |  | 6 673 |  | 382 116 |  | 352 384 |  | 8 563 |  | 4 096 |  | — |  | — |  | 1 274 |  | 1 498 |  | 391 953 |  | 357 978 |
8 789 |  | 10 363 |  | 77 285 |  | 77 955 |  | — |  | — |  | 730 |  | 3 302 |  | — |  | — |  | 78 015 |  | 81 257 |
125 070 |  | 30 547 |  | 167 489 |  | 124 763 |  | 27 586 |  | 25 908 |  | — |  | — |  | — |  | — |  | 195 075 |  | 150 671 |
7 917 |  | 18 537 |  | 48 059 |  | 57 638 |  | — |  | — |  | 1 039 |  | 2 318 |  | — |  | — |  | 49 098 |  | 59 956 |

Base Chemicals*** |  | Performance Chemicals*** |  | Group Functions |  | Total |
2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |
Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
48 113 |  | 43 269 |  | 41 582 |  | 67 389 |  | 63 986 |  | 61 359 |  | 60 |  | 40 |  | 516 |  | 203 576 |  | 181 461 |  | 172 407 |
48 813 |  | 43 951 |  | 42 288 |  | 68 296 |  | 64 887 |  | 62 185 |  | 78 |  | 52 |  | 516 |  | 227 050 |  | 202 658 |  | 192 807 |
(700 | ) | (682 | ) | (706 | ) | (907 | ) | (901 | ) | (826 | ) | (18 | ) | (12 | ) | — |  | (23 474 | ) | (21 197 | ) | (20 400 | )
(1 431 | ) | 918 |  | 6 888 |  | (7 040 | ) | 7 853 |  | 8 737 |  | (2 210 | ) | (6 666 | ) | 552 |  | 9 697 |  | 17 747 |  | 31 705 |
1 622 |  | 2 075 |  | 5 899 |  | (3 516 | ) | 7 434 |  | 7 124 |  | (6 999 | ) | (8 506 | ) | (1 357 | ) | 4 298 |  | 8 729 |  | 20 374 |
3 190 |  | 4 512 |  | (374 | ) | 13 182 |  | 103 |  | 136 |  | 5 |  | 40 |  | 10 |  | 18 645 |  | 9 901 |  | 1 616 |
4 788 |  | 4 422 |  | 4 050 |  | 3 739 |  | 3 299 |  | 2 965 |  | 723 |  | 745 |  | 735 |  | 17 968 |  | 16 425 |  | 16 204 |
6 343 |  | 9 017 |  | 11 476 |  | 9 743 |  | 12 303 |  | 12 272 |  | 102 |  | (1 382 | ) | (2 635 | ) | 48 988 |  | 46 638 |  | 46 236 |
23 065 |  | 20 299 |  | 24 182 |  | 20 403 |  | 19 384 |  | 23 055 |  | 850 |  | 797 |  | 886 |  | 55 800 |  | 53 384 |  | 60 343 |
16 504 |  | 21 125 |  | 30 375 |  | 10 434 |  | 16 432 |  | 26 743 |  | 600 |  | 599 |  | 761 |  | 60 095 |  | 69 927 |  | 90 736 |

9

Geographic segment information

|  | Mining |  | Exploration and Production International |  | Energy |
|  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |
External turnover* |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
· South Africa |  | — |  | — |  | — |  | — |  | — |  | — |  | 77 345 |  | 65 827 |  | 60 814 |
· Rest of Africa |  | — |  | — |  | — |  | 652 |  | 341 |  | 355 |  | 4 665 |  | 3 282 |  | 3 438 |
· Europe |  | 2 819 |  | 2 691 |  | 2 040 |  | 924 |  | 985 |  | 835 |  | 967 |  | 1 |  | 2 |
· North America |  | — |  | — |  | — |  | 239 |  | 284 |  | 560 |  | — |  | — |  | — |
· South America |  | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
· Asia, Australasia and Middle East |  | 403 |  | 755 |  | 906 |  | — |  | — |  | — |  | — |  | — |  | — |
Total operations |  | 3 222 |  | 3 446 |  | 2 946 |  | 1 815 |  | 1 610 |  | 1 750 |  | 82 977 |  | 69 110 |  | 64 254 |

* | The analysis of turnover is based on the location of the customer.
** | The comparative financial results have been restated for the transfer of the Phenolics, Ammonia and Specialty Gases businesses from Performance Chemicals to Base Chemicals. The restatements were performed to align with the current strategy and to best reflect the basis in which the Chief Operating Decision Maker reviews and makes decision.

|  | Mining |  | Exploration and Production International |  | Energy |
Earnings before interest |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |
and tax* |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
· South Africa |  | 3 273 |  | 3 796 |  | 2 775 |  | 1 458 |  | 1 008 |  | 1 307 |  | 15 243 |  | 13 064 |  | 12 248 |
· Rest of Africa |  | — |  | — |  | — |  | 164 |  | (1 282 | ) | 707 |  | 259 |  | 926 |  | (85 | )
· Europe |  | 1 249 |  | 1 131 |  | 658 |  | 223 |  | 194 |  | (503 | ) | 14 |  | — |  | (47 | )
· North America |  | — |  | — |  | — |  | (2 739 | ) | (3 595 | ) | (728 | ) | — |  | (1 010 | ) | (1 756 | )
· South America |  | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
· Asia, Australasia and Middle East |  | 179 |  | 317 |  | 292 |  | 5 |  | (8 | ) | (198 | ) | 1 050 |  | 1 101 |  | 858 |
Total operations |  | 4 701 |  | 5 244 |  | 3 725 |  | (889 | ) | (3 683 | ) | 585 |  | 16 566 |  | 14 081 |  | 11 218 |

* | Includes equity accounted profits/(losses) remeasurement items and once-off share-based payment expenses.
** | The comparative financial results have been restated for the transfer of the Phenolics, Ammonia and Specialty Gases businesses from Performance Chemicals to Base Chemicals. The restatements were performed to align with the current strategy and to best reflect the basis in which the Chief Operating Decision Maker reviews and makes decision.

Non-current assets

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
· South Africa |  | 147 688 |  | 143 493 |  | 139 398 |
· Rest of Africa |  | 19 323 |  | 18 443 |  | 17 856 |
· Europe |  | 15 944 |  | 15 389 |  | 13 925 |
· North America |  | 189 560 |  | 165 742 |  | 125 983 |
· South America |  | 1 |  | 1 |  | 1 |
· Asia, Australasia and Middle East |  | 9 600 |  | 9 316 |  | 10 118 |
Total operations |  | 382 116 |  | 352 384 |  | 307 281 |
Deferred tax asset |  | 8 563 |  | 4 096 |  | 3 082 |
Post-retirement benefit assets |  | 1 274 |  | 1 498 |  | 622 |
Total non-current assets |  | 391 953 |  | 357 978 |  | 310 985 |

10

Base Chemicals** |  | Performance Chemicals** |  | Group Functions |  | Total |
2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |
Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
22 561 |  | 21 336 |  | 19 891 |  | 1 049 |  | 1 297 |  | 1 292 |  | — |  | — |  | — |  | 100 955 |  | 88 460 |  | 81 997 |
2 573 |  | 2 142 |  | 2 751 |  | 900 |  | 790 |  | 786 |  | 24 |  | — |  | 34 |  | 8 814 |  | 6 555 |  | 7 364 |
7 324 |  | 7 037 |  | 5 922 |  | 33 168 |  | 33 008 |  | 29 261 |  | — |  | — |  | — |  | 45 202 |  | 43 722 |  | 38 060 |
8 039 |  | 5 894 |  | 3 228 |  | 19 459 |  | 16 926 |  | 19 375 |  | — |  | — |  | — |  | 27 737 |  | 23 104 |  | 23 163 |
584 |  | 513 |  | 396 |  | 1 501 |  | 1 415 |  | 1 669 |  | — |  | — |  | — |  | 2 085 |  | 1 928 |  | 2 065 |
7 032 |  | 6 347 |  | 9 394 |  | 11 312 |  | 10 550 |  | 8 976 |  | 36 |  | 40 |  | 482 |  | 18 783 |  | 17 692 |  | 19 758 |
48 113 |  | 43 269 |  | 41 582 |  | 67 389 |  | 63 986 |  | 61 359 |  | 60 |  | 40 |  | 516 |  | 203 576 |  | 181 461 |  | 172 407 |

Base Chemicals** |  | Performance Chemicals** |  | Group Functions |  | Total |
2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |
Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
(843 | ) | (3 213 | ) | 2 899 |  | 449 |  | 1 547 |  | 1 340 |  | (1 004 | ) | (7 617 | ) | (125 | ) | 18 576 |  | 8 585 |  | 20 444 |
120 |  | 416 |  | 220 |  | 189 |  | 22 |  | 86 |  | (25 | ) | 553 |  | 26 |  | 707 |  | 635 |  | 954 |
526 |  | 812 |  | 734 |  | 2 754 |  | 3 530 |  | 2 984 |  | 251 |  | 345 |  | 84 |  | 5 017 |  | 6 012 |  | 3 910 |
(1 724 | ) | 430 |  | 1 221 |  | (11 844 | ) | 1 809 |  | 3 049 |  | (1 436 | ) | 50 |  | 85 |  | (17 743 | ) | (2 316 | ) | 1 871 |
7 |  | 141 |  | 100 |  | 111 |  | 138 |  | 160 |  | — |  | — |  | — |  | 118 |  | 279 |  | 260 |
483 |  | 2 332 |  | 1 714 |  | 1 301 |  | 807 |  | 1 118 |  | 4 |  | 3 |  | 482 |  | 3 022 |  | 4 552 |  | 4 266 |
(1 431 | ) | 918 |  | 6 888 |  | (7 040 | ) | 7 853 |  | 8 737 |  | (2 210 | ) | (6 666 | ) | 552 |  | 9 697 |  | 17 747 |  | 31 705 |

11

Reporting segments

The group has six main reportable segments that reflects the structure used by the Joint Presidents and Chief Executive Officers to make key operating decisions and assess performance. The group’s reportable segments are operating segments that are differentiated by the activities that each undertakes and the products they manufacture and market (referred to as business segments). The group evaluates the performance of its reportable segments based on earnings before interest and tax (EBIT).

The operating model structure reflects how the results are reported to the Chief Operating Decision Maker (CODM). The CODM for Sasol are the Joint Presidents and Chief Executive Officers.

Operating business units

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 Synfuels, for utility purposes to Sasolburg Operations; and to third parties in the export market.

Mining sells coal under both long- and short-term contracts at a price determinable from the agreements. Turnover is recognised upon delivery of the coal to the customer, which, in accordance with the related contract terms is the point at which the control passes to the customer. Prices are fixed or determinable and collectability is probable.

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
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.

The related costs of sales are recognised in the same period as the supply of the coal and include any shipping and handling costs incurred. All inter-segment sales are conducted at market related prices.

Exploration and Production International

Exploration and Production International (E&PI) develops and manages the group’s upstream interests in oil and gas exploration and production in Mozambique, South Africa, Canada and Gabon.

E&PI sells Mozambican gas under long-term contracts to both Sasol and external customers, condensate on short-term contracts and Canadian gas into the market at spot prices. Oil is sold to customers under annual contracts. Turnover is recognised upon delivery to the customer, which, in accordance with the related contract terms is the point at which control passes to the customer. Prices are determinable from the agreements and on the open market.

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 or condensate, or directs the use of it. The customer is responsible for transportation and handling costs.

Strategic business units

Performance Chemicals

Performance Chemicals markets commodity and differentiated performance chemicals. The key product lines are organics, waxes and advanced materials. These are produced in various Sasol production facilities around the world.

Base Chemicals

Base Chemicals markets commodity chemicals based on the group’s upstream Fischer-Tropsch, ethylene, propylene and ammonia value chains. The key product lines are polymers, solvents and ammonia-based explosives and fertilisers. These are produced in various Sasol production facilities around the world.

The Base and Performance Chemicals businesses sell the majority of their products under contracts at prices determinable from such agreements. Turnover is recognised upon delivery which, in accordance with the related contract terms, is the point at which control transfer to the customer. Prices are determinable and collectability is probable.

12

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, freight and insurance: 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.

Energy

Energy is responsible for the sales and marketing of liquid fuels, pipeline gas and electricity. In South Africa, Energy sells approximately nine billion liters of liquid fuels annually, blended from fuel components produced by the Secunda Synfuels operations, crude oil refined at Natref, as well as some products purchased from other refiners. Energy markets approximately 55 billion standard cubic feet (bscf) of natural and methane-rich gas a year.

Energy sells liquid fuel products under both short- and long-term agreements for both retail sales and commercial sales, including sales to other oil companies. The prices for retail sales are regulated and fixed by South African law. 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 for the supply of fuel is based on measurement through a flow-meter into customers’ tanks. Turnover is derived from the sale of goods produced by the operating facilities and is recognised when, in accordance with the related contract terms, control passes to the customer. Prices are fixed or determinable and collectability is probable. Shipping and handling costs are included in turnover when billed to customers in conjunction with the sale of the products. Turnover is also derived from the rendering of engineering services to external partners in joint ventures upon the proof of completion of the service.

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). Gas analysis and tests of the specifications and content are performed prior to delivery.

Turnover is recognised under the following arrangements:

Service/good |  | Delivery terms |  | Control passes to the customer:
Sale of fuel |  | 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.
Sale of gas |  | On-delivery |  | At the point in time when the gas has reached the inlet coupling of the customer’s pipeline.
Sale of electricity |  | On-delivery |  | At the point in time when the electricity passes through the supply points to the customer’s transmission line.

The Energy business 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, and an indirect 10% share in Escravos GTL in Nigeria.

Group Functions

Group Functions includes head office and centralised treasury operations.

13

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, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements and the South African Companies Act, 2008. The consolidated financial statements were approved for issue by the Board of Directors on 28 October 2019 and will be presented to shareholders at the Annual General Meeting on 27 November 2019.

Basis of preparation of financial results

The consolidated financial statements are prepared using the historic cost convention except that, certain items, including derivative instruments, liabilities for cash-settled share-based payment schemes, financial assets at fair value through profit or loss and 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.

The consolidated financial statements are prepared on the going concern basis.

The comparative figures are reclassified or restated as necessary to afford a proper and more meaningful comparison of results as set out in the affected notes to the financial statements.

Certain additional disclosure has been provided in respect of the current year, as described on page 163 “Pro-forma financial information”. To the extent practicable, comparative information has also been provided.

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 2018, except for the adoption of IFRS 9 ‘Financial Instruments’, IFRS 15 ‘Revenue from Contracts with Customers’ and an amendment to IAS 23 ‘Borrowing Costs’ with effect from 1 July 2018. Both IFRS 9 and IFRS 15 were adopted using the modified transition approach, where the comparative financial information is not restated as permitted by the standard. The amendment to IAS 23 is applied prospectively. These accounting policies are consistently applied throughout the group.

Accounting standards, interpretations and amendments to published accounting standards

IFRS 9 ‘Financial Instruments’

IFRS 9 provides a single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. The group’s financial assets are classified as measured at amortised cost, fair value through profit or loss, or fair value through other comprehensive income. The group elected to recognise the fair value gains and losses on its current equity investments through other comprehensive income as they are held for long-term strategic purpose. Due to the limited unlisted investments held, this change in measurement basis from amortised cost to fair value had an insignificant effect on Sasol’s accounting, and therefore no transition adjustment is presented.

For financial liabilities the existing classification and measurement requirements of IAS 39 will remain the same.

Impairments of financial assets classified as measured at amortised cost are recognised on an expected loss basis which incorporates forward-looking information when assessing credit risk, with the expected losses recognised in profit or loss. The effect of the change was inconsequential due to the stringent debtor management policies currently applied by Sasol, and therefore no transition adjustment is presented. Refer to note 40 for the expected credit loss calculation.

The adoption of IFRS 9 did not have a significant impact on the group’s accounting policies relating to financial assets and financial liabilities.

The IFRS 9 hedge accounting requirements are not effective for the group until the International Accounting Standards Board’s macro hedging project is finalised.

IFRS 15 ‘Revenue from contracts with customers’

Under IFRS 15, revenue from contracts with customers is recognised when a performance obligation is satisfied by transferring promised goods or services to customers. Goods or services are transferred when the customer obtains control of the goods or services. The transfer of control of Sasol’s energy and chemical products usually coincides with title passing to the customer and the customer taking physical possession, with the group’s performance obligations primarily satisfied at a point in time. Amounts of revenue recognised relating to performance obligations over time are not significant. The accounting for revenue under IFRS 15 therefore represents an inconsequential change from the group’s previous practice for recognising revenue from sales with customers, and therefore no transition adjustment is presented.

An analysis of revenue from contracts with customers by product is presented on note 2. Amounts presented for comparative periods include revenues determined in accordance with the group’s previous accounting policies, but the differences are inconsequential.

14

1 Statement of compliance continued

IAS 23 ‘Borrowing Costs’

The amendment to IAS 23 clarifies that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. Previously, if any specific borrowing remained outstanding after the related asset was ready for its intended use or sale, Sasol recognised the finance costs related to this borrowing in profit and loss.

The adoption of the amendment has been applied prospectively from 1 July 2018 and had a material impact on the group’s earnings for the period as Sasol has a large number of projects to which borrowing costs are capitalised. The impact of applying the amendment for the period ended 30 June 2019 is:

|  | Results excluding amendment |  | Adjustment on IAS 23 amendment |  | Results after amendments |
|  | Rm |  | Rm |  | Rm |
Non-current assets |  |  |  |  |  |  |
Property, plant, equipment and assets under construction |  | 358 135 |  | 1 998 |  | 360 133 |
Income statement |  |  |  |  |  |  |
Finance costs |  | (3 251 | ) | 1 998 |  | (1 253 | )

Accounting standards, interpretations and amendments not yet effective

IFRS 16 ‘Leases’ (Effective for the group from 1 July 2019)

IFRS 16 introduces a single lease accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right of use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. The finance charge to unwind the lease liability and depreciation of the leased asset are recognised in the income statement based on the implied interest rate and contract terms respectively.

This standard does not apply to leases to explore for or use minerals, oils, natural gas and similar non-regenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained.

Previously, the group planned to adopt the standard from 1 July 2019 on a full retrospective basis and was in the process of completing this adoption method. However, with the new standard indirectly impacting the accounting of a number of other business areas, including the valuation of inventory and the value-in-use of cash generating units, the group decided from a cost/benefit perspective that it would be preferable to apply the modified retrospective approach as applied by almost all of our peers. This approach allow the cumulative effect of initially applying the standard to be recognised at the date of initial application, with no restatement of comparative financial information required.

The identification and classification of leases and the analysis of the effect on the group’s consolidated financial statements have largely been completed. A new software program has been introduced to manage and measure leases going forward and the results from the solution, used to determine the impact disclosed below, is currently being assessed. Accounting policies and processes have been updated and the impact on key performance indicators and financial metrics have been quantified.

The adoption of the standard will have a material effect on the group’s financial statements, significantly increasing the group’s recognised assets and liabilities. Upon adoption, the most significant impact will be the present value of the operating lease commitments as per note 37, which are not currently recognised on the statement of financial position and provides an indication of the magnitude of assets and liabilities that will be recognised on the statement of financial position on adoption. We expect an increase in the depreciation expense and also in cash flows from operating activities as the lease payments will be reflected as financing outflows in our cash flow statement.

The discount rates applied on operating leases in determining the lease liabilities recognised are based on the incremental borrowing rates as appropriate for each lease considering factors such as the lessee country of operation, lease term, nature of asset and commencement date. Currently across the group, the incremental borrowing rates applicable to the significant portion of the undiscounted lease cash flows range from 8,2% – 11,5% (South Africa), 0,9% –3,6% (Eurasia) and 3,7% –5,6% (United States).

Based on the group’s current assessment, the impact on 2020 is expected to be as follows:

· Between R8,4 billion and R9,0 billion of additional lease liabilities would be recognised in the statement of financial position and a corresponding right-of-use asset of between R8,4 billion and R9,0 billion at 1 July 2019.

· Net income before interest and tax would increase between zero and R0,4 billion and interest expense increased by between R0,3 billion and R0,6 billion, the net results having an immaterial impact on earnings. Depreciation would increase by between R1,4 billion and R1,7 billion.

· The additional lease liabilities are expected to add approximately 5% on gearing.

15

SASOL LIMITED GROUP

EARNINGS GENERATED FROM OPERATIONS

Page |  |
17 Operating Activities |  |
· Turnover |  |
· Material, energy and consumables used |  |
· Employee-related expenditure |  |
· Translation gains/(losses) |  |
· Other operating expenses and income |  |
· Net finance costs |  |
· Earnings and dividends per share |  |
23 Once-off items |  |
· Remeasurement items affecting operating profit |  |
· Disposals and scrapping |  |
· Disposal groups held for sale |  |
31 Taxation |  |
· Taxation |  |
· Tax paid |  |
· Deferred tax |  |

16

Operating activities

2 Turnover

|  | 2019 |  | 2018* |  | 2017* |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Revenue by major product line |  |  |  |  |  |  |
Base Chemicals |  | 48 113 |  | 43 262 |  | 41 573 |
Polymers |  | 25 864 |  | 22 332 |  | 22 206 |
Solvents |  | 13 178 |  | 12 948 |  | 11 619 |
Fertilisers and explosives |  | 4 718 |  | 4 145 |  | 4 021 |
Other base chemicals** |  | 4 353 |  | 3 837 |  | 3 727 |
Performance Chemicals |  | 67 228 |  | 63 916 |  | 61 322 |
Organics |  | 51 405 |  | 49 005 |  | 47 122 |
Waxes |  | 8 474 |  | 8 456 |  | 8 197 |
Advanced materials |  | 7 349 |  | 6 455 |  | 6 003 |
Upstream, Energy and Other |  |  |  |  |  |  |
Coal |  | 3 222 |  | 3 446 |  | 2 946 |
Liquid fuels and crude oil*** |  | 75 819 |  | 62 555 |  | 57 640 |
Gas (methane rich and natural gas) and condensate*** |  | 5 986 |  | 5 411 |  | 5 625 |
Other (Technology, refinery services)**** |  | 2 308 |  | 1 933 |  | 2 418 |
Revenue from contracts with customers |  | 202 676 |  | 180 523 |  | 171 524 |
Revenue from other contracts (franchise rentals, use of fuel tanks and fuel storage) |  | 900 |  | 938 |  | 883 |
|  | 203 576 |  | 181 461 |  | 172 407 |

* | Sale of goods (2018 – R178 463 million; 2017 – R169 115 million), services rendered (2018 – R1 612 million; 2017 – R1 549 million) and other trading income (2018 – R1 386 million; 2017 – R1 743 million).
** | Phenolics, Ammonia and Speciality Gases.
*** | Relate to the Exploration and Production International and Energy segments.
**** | Other includes revenue in relation to different insignificant performance obligations mainly for the Energy and Performance Chemicals segments.

Accounting policies:

IFRS 15 applicable in 2019:

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.

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 oil, natural gas and chemical products, services rendered, license fees and royalties. The group allocates revenue based on stand-alone selling price.

The group enters into exchange agreements with the same counterparties for the purchase and sale of inventory that are entered into in contemplation of one another. When the items exchanged are similar in nature, these transactions are combined and accounted for as a single exchange transaction. The exchange is recognised at the carrying amount of the inventory transferred.

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.

For further information on revenue recognition, refer to Segment information on pages 12 to 13.

17

2 Turnover continued

IAS 18 applicable to prior periods:

Revenue is recognised at the fair value of the consideration received or receivable net of indirect taxes, rebates and trade discounts and consists primarily of the sale of products, services rendered, licence fees and royalties.

Revenue is recognised when the following criteria are met:

· evidence of an arrangement exists;

· delivery has occurred or services have been rendered and the significant risks and rewards of ownership have been transferred to the purchaser;

· transaction costs can be reliably measured;

· the selling price is fixed or determinable; and

· collectability is reasonably assured.

The timing of revenue recognition is as follows. Revenue from:

· the sale of products is recognised when the group has substantially transferred all the risks and rewards of ownership and no longer retains continuing managerial involvement associated with ownership or effective control;

· services rendered is based on the stage of completion of the transaction, based on the proportion that costs incurred to date bear to the total cost of the project; and

· licence fees and royalties are recognised on an accrual basis.

The group enters into exchange agreements with the same counterparties for the purchase and sale of inventory that are entered into in contemplation of one another. When the items exchanged are similar in nature, these transactions are combined and accounted for as a single exchange transaction. The exchange is recognised at the carrying amount of the inventory transferred.

3 Materials, energy and consumables used

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Cost of raw materials |  | 79 774 |  | 66 928 |  | 63 291 |
Cost of energy and other consumables used in production process |  | 10 815 |  | 9 678 |  | 8 145 |
|  | 90 589 |  | 76 606 |  | 71 436 |

Costs relating to items that are consumed in the manufacturing process, including changes in inventories and distribution costs up until the point of sale.

4 Employee-related expenditure

|  |  |  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |  | Rm |
Analysis of employee costs |  |  |  |  |  |  |  |  |
Labour |  |  |  | 30 706 |  | 28 448 |  | 26 646 |
salaries, wages and other employee-related expenditure |  |  |  | 28 665 |  | 26 388 |  | 24 814 |
post-retirement benefits |  |  |  | 2 041 |  | 2 060 |  | 1 832 |
Share-based payment expenses |  |  |  | 1 219 |  | 1 565 |  | 226 |
equity-settled |  | 35 |  | 1 659 |  | 910 |  | 463 |
cash-settled |  | 34 |  | (440 | ) | 655 |  | (237 | )
Total employee-related expenditure |  |  |  | 31 925 |  | 30 013 |  | 26 872 |
Costs capitalised to projects |  |  |  | (1 997 | ) | (2 545 | ) | (2 455 | )
Per income statement |  |  |  | 29 928 |  | 27 468 |  | 24 417 |

18

4 Employee-related expenditures continued

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:

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Number |  | Number |  | Number |
Permanent employees |  | 31 112 |  | 31 020 |  | 30 600 |
Non-permanent employees |  | 317 |  | 250 |  | 300 |
|  | 31 429 |  | 31 270 |  | 30 900 |

The number of employees by area of employment is analysed as follows:

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Number |  | Number |  | Number |
Business segmentation |  |  |  |  |  |  |
· Mining |  | 7 402 |  | 7 471 |  | 7 483 |
· Exploration and Production International |  | 419 |  | 430 |  | 416 |
· Energy |  | 5 118 |  | 5 069 |  | 5 008 |
· Base Chemicals |  | 8 090 |  | 7 724 |  | 7 438 |
· Performance Chemicals |  | 5 667 |  | 5 600 |  | 5 435 |
· Group Functions |  | 4 733 |  | 4 976 |  | 5 120 |
Total operations* |  | 31 429 |  | 31 270 |  | 30 900 |

* | Increase mainly due to LCCP.

Accounting policies:

Remuneration of employees is charged to the income statement, except where it is capitalised to projects in line with the accounting policy for assets under construction.

Short-term employee benefits

Short-term employee benefits includes salaries, wages and costs of temporary employees, paid vacation leave, sick leave and incentive bonuses.

Long-term employee benefits

Long-term employee benefits are those benefits that are expected to be wholly settled more than 12 months after the end of the annual reporting period, in which the services have been rendered and are discounted to their present value.

Post-retirement benefits

Further information on these benefits is provided in Note 33, and include defined benefit contribution plans, as well as defined benefit plans.

5 Translation gains/(losses)

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Arising from |  |  |  |  |  |  |
Trade and other receivables |  | 98 |  | 132 |  | (909 | )
Trade and other payables |  | (372 | ) | (354 | ) | 237 |
Foreign currency loans |  | 965 |  | (103 | ) | 313 |
Other |  | (87 | ) | 314 |  | (842 | )
|  | 604 |  | (11 | ) | (1 201 | )
Business segmentation |  |  |  |  |  |  |
· Mining |  | (19 | ) | (18 | ) | (19 | )
· Exploration and Production International |  | (79 | ) | 289 |  | 337 |
· Energy |  | (337 | ) | (45 | ) | (299 | )
· Base Chemicals |  | (124 | ) | (5 | ) | (394 | )
· Performance Chemicals |  | 51 |  | 45 |  | (299 | )
· Group Functions |  | 1 112 |  | (277 | ) | (527 | )
Total operations |  | 604 |  | (11 | ) | (1 201 | )

Differences arising on the translation of monetary assets and liabilities into functional currency.

19

6 Other operating expenses and income

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Rentals |  | 1 845 |  | 1 497 |  | 1 367 |
Insurance |  | 514 |  | 432 |  | 511 |
Computer costs |  | 2 155 |  | 2 042 |  | 1 991 |
Hired labour |  | 786 |  | 838 |  | 878 |
Audit remuneration |  | 97 |  | 88 |  | 89 |
Derivative losses/(gains) (including foreign exchange contracts)(1) |  | 2 465 |  | 3 927 |  | (635 | )
Professional fees |  | 2 226 |  | 1 971 |  | 1 383 |
Enablement of digital and continuous improvement initiatives |  | 454 |  | 409 |  | 17 |
Other |  | 1 772 |  | 1 562 |  | 1 366 |
Changes in rehabilitation provisions |  | 1 096 |  | (804 | ) | 472 |
Other expenses(2) |  | 9 880 |  | 6 724 |  | 6 981 |
Other operating income |  | (1 363 | ) | (1 410 | ) | (1 688 | )
|  | 19 701 |  | 15 305 |  | 11 349 |

(1) | Relates mainly to the group’s hedging activities which includes a loss of R1,5 billion on the reclassification of the interest rate swap to profit and loss on termination of the hedge relationship, refer note 40.
(2) | Increase relates mainly to growth cost relating to the LCCP and high-density polyethyline (HDPE) plants that have reached beneficial operation.

7 Net finance costs

|  |  |  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |  | Rm |
Finance income |  |  |  |  |  |  |  |  |
Dividends received from investments |  |  |  | 42 |  | 520 |  | 59 |
Notional interest received |  |  |  | — |  | 5 |  | 1 |
Interest received on |  |  |  | 745 |  | 1 191 |  | 1 508 |
other long-term investments |  |  |  | 27 |  | 32 |  | 36 |
loans and receivables |  |  |  | 334 |  | 359 |  | 349 |
cash and cash equivalents |  |  |  | 384 |  | 800 |  | 1 123 |
Per income statement |  |  |  | 787 |  | 1 716 |  | 1 568 |
Less: notional interest |  |  |  | — |  | (5 | ) | (1 | )
Less: interest received on tax |  |  |  | (105 | ) | (146 | ) | (103 | )
Per the statement of cash flows |  |  |  | 682 |  | 1 565 |  | 1 464 |
Finance costs |  |  |  |  |  |  |  |  |
Debt |  |  |  | 6 088 |  | 4 166 |  | 3 463 |
debt |  |  |  | 6 044 |  | 3 880 |  | 3 162 |
interest rate swap — net settlements |  |  |  | 44 |  | 286 |  | 301 |
Preference share dividends |  |  |  | 116 |  | 963 |  | 989 |
Finance leases (refer note 16) |  |  |  | 871 |  | 483 |  | 86 |
Other(1) |  |  |  | (462 | ) | 291 |  | 378 |
|  |  |  | 6 613 |  | 5 903 |  | 4 916 |
Amortisation of loan costs |  | 16 |  | 725 |  | 462 |  | 279 |
Notional interest |  | 31 |  | 857 |  | 962 |  | 834 |
Total finance costs |  |  |  | 8 195 |  | 7 327 |  | 6 029 |
Amounts capitalised to assets under construction(2) |  | 18 |  | (6 942 | ) | (3 568 | ) | (2 764 | )
Per income statement |  |  |  | 1 253 |  | 3 759 |  | 3 265 |
Total finance costs before amortisation of loan costs and notional interest |  |  |  | 6 613 |  | 5 903 |  | 4 916 |
Add: modification gain |  |  |  | 109 |  | — |  | — |
Less: interest accrued on long-term debt |  | 16 |  | (1 025 | ) | (878 | ) | (956 | )
Less: interest reversed/(accrued) on tax payable(1) |  |  |  | 525 |  | (228 | ) | (348 | )
Per the statement of cash flows |  |  |  | 6 222 |  | 4 797 |  | 3 612 |

(1) | Interest (reversed)/accrued on tax payable relates mainly to our tax litigation claim. Refer to note 12.
(2) | Finance costs capitalised increased due to higher assets under construction and the adoption of the amendment of IAS23 ‘Borrowing Costs’ on 1 July 2018, which resulted in higher capitalisation of costs.

20

8 Earnings and dividends per share

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rand |  | Rand |  | Rand |
Attributable to owners of Sasol Limited |  |  |  |  |  |  |
Basic earnings per share |  | 6,97 |  | 14,26 |  | 33,36 |
Headline earnings per share |  | 30,72 |  | 27,44 |  | 35,15 |
Diluted earnings per share |  | 6,93 |  | 14,18 |  | 33,27 |
Diluted headline earnings per share |  | 30,54 |  | 27,27 |  | 35,05 |
Dividends per share |  | 5,90 |  | 12,90 |  | 12,60 |
interim |  | 5,90 |  | 5,00 |  | 4,80 |
final* |  | — |  | 7,90 |  | 7,80 |

* | Declared subsequent to 30 June and has been presented for information purposes only.

Earnings per share (EPS)

Earnings per share is derived by dividing attributable earnings by the weighted average number of shares, after taking the long-term incentives (LTIs), the Sasol Inzalo and Sasol Khanyisa share transactions into account. Appropriate adjustments are made in calculating diluted, headline and diluted headline earnings per share.

for the year ended 30 June |  |  |  | 2019 |  | 2018 |  | 2017 |
Weighted average number of shares |  | million |  | 616,6 |  | 612,2 |  | 610,7 |
Earnings attributable to owners of Sasol Limited |  | Rm |  | 4 298 |  | 8 729 |  | 20 374 |
Basic earnings per share |  | Rand |  | 6,97 |  | 14,26 |  | 33,36 |

Headline earnings per share (HEPS)

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | million |  | million |  | million |
Weighted average number of shares |  | 616,6 |  | 612,2 |  | 610,7 |

|  |  |  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |  | Rm |
Headline earnings is determined as follows: |  |  |  |  |  |  |  |  |
Earnings attributable to owners of Sasol Limited |  |  |  | 4 298 |  | 8 729 |  | 20 374 |
Adjusted for: |  |  |  |  |  |  |  |  |
Effect of remeasurement items for subsidiaries and joint operations, net of tax |  | 9 |  | 14 628 |  | 8 058 |  | 1 077 |
gross remeasurement items |  |  |  | 18 645 |  | 9 901 |  | 1 616 |
tax effect and non-controlling interest effect |  |  |  | (4 017 | ) | (1 843 | ) | (539 | )
Effect of remeasurement items for equity accounted investments |  | 9 |  | 15 |  | 11 |  | 14 |
Headline earnings |  |  |  | 18 941 |  | 16 798 |  | 21 465 |

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rand |  | Rand |  | Rand |
Headline earnings attributable to owners of Sasol Limited |  |  |  |  |  |  |
Headline earnings per share |  | 30,72 |  | 27,44 |  | 35,15 |

21

8 Earnings and dividends per share continued

Diluted earnings per share (DEPS) and diluted headline earnings per share (DHEPS)

DEPS and DHEPS are calculated considering the potential dilution that could occur if all of the group’s long-term incentives (LTIs) had vested, if all outstanding share options were exercised and the effect of all dilutive potential ordinary shares resulting from the Sasol Inzalo and Sasol Khanyisa Tier 1 share transactions.

The number of shares outstanding is adjusted to show the potential dilution if the LTI’s and Sasol Khanyisa Tier 1 were settled in Sasol Limited shares.

The Sasol Inzalo share transaction is anti-dilutive for EPS and HEPS in 2019, 2018 and 2017.

The Sasol Khanyisa Tier 2 and Khanyisa Public are anti-dilutive for EPS and HEPS in 2019 and 2018.

|  | Number of shares |
|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | million |  | million |  | million |
Weighted average number of shares |  | 616,6 |  | 612,2 |  | 610,7 |
Potential dilutive effect of long-term incentive scheme* |  | 2,9 |  | 3,7 |  | 1,7 |
Potential dilutive effect of Sasol Khanyisa Tier 1 |  | 0,8 |  | — |  | — |
Diluted weighted average number of shares for DEPS and DHEPS |  | 620,3 |  | 615,9 |  | 612,4 |

* | On 25 November 2016, the cash-settled LTI scheme was converted to an equity-settled share scheme.

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Diluted earnings is determined as follows: |  |  |  |  |  |  |
Earnings attributable to owners of Sasol Limited |  | 4 298 |  | 8 729 |  | 20 374 |
Diluted earnings attributable to owners of Sasol Limited |  | 4 298 |  | 8 729 |  | 20 374 |
Diluted headline earnings is determined as follows: |  |  |  |  |  |  |
Headline earnings attributable to owners of Sasol Limited |  | 18 941 |  | 16 798 |  | 21 465 |
Diluted headline earnings attributable to owners of Sasol Limited |  | 18 941 |  | 16 798 |  | 21 465 |

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rand |  | Rand |  | Rand |
Diluted earnings per share |  | 6,93 |  | 14,18 |  | 33,27 |
Diluted headline earnings per share |  | 30,54 |  | 27,27 |  | 35,05 |

22

Once-off items

9 Remeasurement items affecting operating profit

|  |  |  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |  | Rm |
Effect of remeasurement items for subsidiaries and joint operations |  |  |  |  |  |  |  |  |
Impairment of |  |  |  | 18 451 |  | 9 115 |  | 2 477 |
property, plant and equipment |  | 17 |  | 14 161 |  | 7 623 |  | 415 |
assets under construction |  | 18 |  | 4 272 |  | 1 492 |  | 1 942 |
goodwill and other intangible assets |  |  |  | 11 |  | — |  | 120 |
other assets |  |  |  | 7 |  | — |  | — |
Reversal of impairment of |  |  |  | (949 | ) | (354 | ) | (1 136 | )
property, plant and equipment |  | 17 |  | (650 | ) | — |  | (272 | )
assets under construction |  | 18 |  | (299 | ) | (14 | ) | (849 | )
goodwill and other intangible assets |  |  |  | — |  | (56 | ) | — |
equity accounted investments |  |  |  | — |  | (269 | ) | (15 | )
other assets |  |  |  | — |  | (15 | ) | — |
Fair value write down — assets held for sale |  |  |  | — |  | — |  | 64 |
Loss/(profit) on |  | 10 |  | 1 109 |  | 828 |  | 211 |
disposal of property, plant and equipment |  |  |  | (32 | ) | (3 | ) | (25 | )
disposal of goodwill and other intangible assets |  |  |  | — |  | 11 |  | 4 |
disposal of other assets |  |  |  | — |  | (1 | ) | — |
disposal of businesses |  |  |  | (267 | ) | (833 | ) | (51 | )
scrapping of property, plant and equipment |  |  |  | 556 |  | 454 |  | 183 |
disposal and scrapping of assets under construction |  |  |  | 852 |  | 1 200 |  | 100 |
Write-off of unsuccessful exploration wells |  | 18 |  | 34 |  | 312 |  | — |
Remeasurement items per income statement |  |  |  | 18 645 |  | 9 901 |  | 1 616 |
Tax effect |  |  |  | (4 012 | ) | (1 834 | ) | (532 | )
Non-controlling interest effect |  |  |  | (5 | ) | (9 | ) | (7 | )
Total remeasurement items for subsidiaries and joint operations, net of tax |  |  |  | 14 628 |  | 8 058 |  | 1 077 |
Effect of remeasurement items for equity accounted investments |  |  |  | 15 |  | 11 |  | 14 |
Total remeasurement items for the group, net of tax |  |  |  | 14 643 |  | 8 069 |  | 1 091 |

Impairment/reversal of impairments

The group’s non-financial assets, other than inventories and deferred tax assets, are assessed for impairment at each reporting date or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. 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.

Impairment calculations

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. Key assumptions relating to this valuation include the discount rate and cash flows. 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 a 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.

23

9 Remeasurement items affecting operating profit continued

Main assumptions used for impairment calculations

|  |  |  | 2019 |  | 2018 |  | 2017 |
Long-term average crude oil price (Brent) (nominal)* |  | US$/bbl |  | 71,17 |  | 73,91 |  | 74,29 |
Long-term average gas price (Henry Hub), excluding margins (real)* |  | US$/mmbtu |  | 3,44 |  | 3,49 |  | 3,69 |
Long-term average ethane price (nominal)* |  | US$c/gal |  | 39,04 |  | 37,42 |  | 44,27 |
Long-term average ammonia price* |  | Rand/ton |  | 4 258,54 |  | 5 807,46 |  | 6 392,85 |
Long-term average exchange rate* |  | Rand/US$ |  | 14,29 |  | 13,57 |  | 14,71 |

* | Assumptions are provided on a long-term average basis. Oil price, 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 Henry Hub gas price is calculated until 2041, linked to the plant’s useful life.

|  |  |  | South Africa |  | United States of America |  | Europe |  | Canada |
|  |  |  | % |  | % |  | % |  | % |
Growth rate — long-term Producer Price Index |  | 2019 |  | 5,50 |  | 2,00 |  | 2,00 |  | 2,00 |
Weighted average cost of capital* |  | 2019 |  | 13,12 |  | 7,18 |  | 7,18 – 9,48 |  | 7,18 |
Discount rate — risk adjusted |  | 2019 |  | 13,12 |  | 7,18 |  | 7,18 – 9,48 |  | 10,00 |
Growth rate — long-term Producer Price Index |  | 2018 |  | 5,50 |  | 2,00 |  | 2,00 |  | 2,00 |
Weighted average cost of capital* |  | 2018 |  | 12,71 |  | 7,56 |  | 7,68 – 9,35 |  | 7,68 |
Discount rate — risk adjusted |  | 2018 |  | 12,71 |  | 7,56 |  | 7,68 – 9,35 |  | 10,00 |
Growth rate — long-term Producer Price Index |  | 2017 |  | 5,50 |  | 2,00 |  | 2,00 |  | 2,00 |
Weighted average cost of capital* |  | 2017 |  | 12,50 |  | 6,60 |  | 6,60 – 8,22 |  | 6,60 |
Discount rate — risk adjusted |  | 2017 |  | 12,50 |  | 6,60 |  | 6,60 – 8,22 |  | 9,50 – 9,80 |

* | Calculated using spot market factors on 30 June.

Areas of judgement:

Management determines the expected performance of the assets based on past performance and its expectations of market developments. The weighted average growth rates used are consistent with the increase in the geographic segment long-term Producer Price Index. Estimations are based on a number of key assumptions such as volume, price and product mix which will create a basis for future growth and gross margin. These assumptions are set in relation to historic figures and external reports. 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 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 cash-generating units. 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.

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.

24

9 Remeasurement items affecting operating profit continued

Significant impairment (reversals of impairment) of assets in 2019

|  |  |  | Property, plant and equipment |  | Assets under con- struction |  | Goodwill and other intangible assets |  | Other |  | Total |
|  | Business |  | 2019 |  | 2019 |  | 2019 |  | 2019 |  | 2019 |
Cash-generating unit (CGU) |  | segmentation |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Tetramerization value chain (LCCP) |  | Performance Chemicals |  | 3 929 |  | 3 474 |  | — |  | — |  | 7 403 |
Ethylene Oxide/Ethylene Glycol value chain (LCCP) |  | Performance Chemicals |  | 4 662 |  | 798 |  | — |  | — |  | 5 460 |
Ammonia value chain |  | Base Chemicals |  | 3 347 |  | — |  | — |  | — |  | 3 347 |
Sasol Canada — Shale gas assets |  | Exploration and Production International |  | 1 947 |  | — |  | — |  | — |  | 1 947 |
Chlor Vinyls value chain |  | Base Chemicals |  | (650 | ) | (299 | ) | — |  | — |  | (949 | )
High Purity Alumina assets |  | Performance Chemicals |  | 205 |  | — |  | — |  | — |  | 205 |
Sasol Wilmar Alcohol Industries |  | Performance Chemicals |  | 65 |  | — |  | 11 |  | 7 |  | 83 |
Other |  | Various |  | 6 |  | — |  | — |  | — |  | 6 |
|  |  |  | 13 511 |  | 3 973 |  | 11 |  | 7 |  | 17 502 |

Performance Chemicals — Tetramerization and Ethylene Oxide/Ethylene Glycol (EO/EG) value chains

In 2019, the Tetramerization and EO/EG value chains were impaired by R7,4 billion (US$526 million) and R5,5 billion (US$388 million), respectively. The impairments were driven by an increase in capital cost for the Lake Charles Chemicals Project (LCCP) and lower US ethylene and global mono-ethylene glycol price assumptions as at 30 June 2019. The upstream ethane cracker is a corporate asset and the increase in its capital cost has an impact on the downstream derivative units. All cash generating units linked to the LCCP were assessed for impairment.

Base Chemicals — Ammonia value chain

In 2019, an impairment of R3,3 billion was recognised on our Ammonia value chain mainly as a result of lower international ammonia sales price assumptions in the short- to medium-term and increased gas feedstock prices in the longer term.

Sasol Canada — Shale gas assets

Our shale gas assets in Canada were impaired by a further R1,9 billion (CAD181 million) as at 30 June 2019 to a carrying value of R22 million (CAD2 million), impacted by the depressed Canadian gas price environment. This is aligned with the anticipated fair value. We remain committed to divest from these assets as part of our strategic portfolio optimisation.

These assets were previously impaired (2018 – R2,8 billion (CAD281 million); 2016 – R9,9 billion (CAD880 million); 2015 – R1,3 billion (CAD133 million); 2014 – R5,3 billion (CAD540 million)), mainly due to the declining gas prices.

Base Chemicals — Chlor Vinyls value chain

In 2018, the full carrying value of our Chlor Vinyls value chain in South Africa was impaired by R5,2 billion due to the continued and sustained strengthening of the exchange rate outlook and the resulting impact on Base Chemicals margins.

A structural change in the integrated ethylene value chain led to the extension of the useful life of the Chlor Vinyls CGU in Sasolburg from 2034 to 2050.

Based on the sustained improvement in the impairment calculation due to the useful life extension, R949 million of the previous impairment recognised was reversed on 31 December 2018.

Significant scrapping of assets

Lake Charles Chemicals Project

In 2019, we scrapped R682 million (US$48 million) of cost incurred on the LCCP, mainly relating to rework that was required on the Low Density Polyethylene compression motor that was damaged and a number of heat exchangers that had to be either repaired or replaced due to quality issues. Management considered the scale and complexity of the project, the technology being applied and input from experts to determine the cost incurred on the project which were scrapped.

25

9 Remeasurement items affecting operating profit continued

Significant impairments of assets in prior periods

Sasol Petroleum Mozambique — PSA

In 2018, an impairment of R1,1 billion (US$94 million) was recognised in respect of the PSA asset. The project was still in an early stage of development with the impairment largely driven by lower than expected oil volumes and weaker long-term macroeconomic assumptions. A discount rate of 13,23% (2017: 12,16%) was used which takes into account the project’s exposure to both South Africa and Mozambique operating and fiscal environment.

Base Chemicals — Lake Charles Chemicals Project

In 2016, following the announcement of the US$2 billion cost overrun on the LCCP, we recognised an impairment of R956 million (US$65 million) on the Low-Density Polyethylene (LDPE) unit. In 2017, following a detailed review of the plant economics and on evaluating the results of benchmarking of similar Sasol assets, the useful life of the asset was extended from 25 years to 50 years. Based on this, the previous impairment of R849 million (US$65 million) was reversed.

US Phenolics

In 2017 the US Phenolics assets were impaired by R527 million (US$38,4 million), in addition to R165 million (US$11,2 million) impaired in 2016. These impairments were largely driven by lower forecasted profit margins and lower volumes.

Significant scrapping of assets in prior periods

US Gas-To-Liquids (GTL)

At 31 December 2017 we scrapped the remaining capitalised FEED costs relating to our US GTL assets of R1,1 billion (US$83 million), following our formal strategic decision not to pursue new GTL ventures in future. This is in addition to an impairment recognised in 2017 of R1,7 billion (US$130 million) based on the delay of the US GTL project and the uncertainty around the probability and timing of project execution.

Sensitivity to changes in assumptions:

Management has considered the sensitivity of the impairment calculations to various key assumptions such as crude oil and gas prices, commodity prices and exchange rates. These sensitivities have been taken into consideration in determining the required impairments and reversals of impairments. The following assets are particularly impacted by changes in key assumptions:

Performance Chemicals — Tetramerization and EO/EG value chains

The Tetramerization and EO/EG value chains are highly sensitive to changes in assumptions. A 5% change in the ethane price assumption could change the recoverable amount of these value chains by approximately R85 million (US$6 million) and R774 million (US$55 million), respectively. An increase in overall project cost of US$200 million would decrease the value of the Tetramerization CGU by R70 million (US$5 million) and the EO/EG CGU by R422 million (US$30 million). As the LCCP is nearing completion and with the upstream ethylene cracker having reached beneficial operation in August 2019, these value chains are not expected to incur significant additional capital costs. The pricing factors are outside of the control of management. We continue to monitor these assets, as well as the other derivative units within the LCCP complex for further impairments.

Base Chemicals — Ammonia value chain

The performance of this CGU is highly sensitive to changes in international Ammonia prices driven by changes in the global market conditions. A 5% increase in the ammonia price assumption could increase the recoverable amount of the CGU by approximately R1 138 million. A $1/GJ increase in gas feedstock prices in the long-term will decrease the recoverable amount by approximately R230 million. The pricing factors are outside of the control of management.

Base Chemicals — Chlor Vinyls value chain

The performance of this CGU is highly sensitive to the Rand/US$ exchange rate. A R0,50/US$ weakening in the exchange rate assumption could increase the recoverable amount of the CGU by approximately R872 million. The macro-economic factors are outside of the control of management. The Base Chemicals CGUs are also highly sensitive to variability in product prices driven by changes in the global market conditions. We continue to monitor these assets for signs of recovery indicating a reversal of impairment.

Sasol Petroleum Mozambique — Production Sharing Agreement (PSA)

The PSA is sensitive to changes in assumptions regarding capital, costs, gas prices and discount rates. A capital costs increase of 20% would decrease the recoverable amount by R1 183 million (US$84 million). A 10% increase in gas prices would increase the recoverable amount by approximately R141 – R521 million (US$10 – US$37 million). A 0,5% increase in the discount rate would decrease the recoverable amount by approximately R380 – R408 million (US$27 – US$29 million).

26

9 Remeasurement items affecting operating profit continued

Accounting policies:

Remeasurement items are items of income and expense recognised in the income statement that are less closely aligned to the operating or trading activities of the reporting entity and includes 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 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.

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.

27

10 Disposals and scrapping

|  |  |  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |  | Rm |
Property, plant and equipment |  | 17 |  | 708 |  | 591 |  | 836 |
cost |  |  |  | 7 245 |  | 6 297 |  | 7 037 |
accumulated depreciation and impairment |  |  |  | (6 537 | ) | (5 706 | ) | (6 201 | )
Assets under construction |  | 18 |  | 852 |  | 1 200 |  | 105 |
Goodwill and other intangible assets |  |  |  | 112 |  | 147 |  | 103 |
cost |  |  |  | 336 |  | 319 |  | 173 |
accumulated amortisation and impairment |  |  |  | (224 | ) | (172 | ) | (70 | )
Equity accounted investments |  |  |  | — |  | 1 525 |  | — |
Long-term receivables and prepaid expenses |  |  |  | — |  | — |  | 7 |
Assets in disposal groups held for sale |  |  |  | 94 |  | 215 |  | — |
Trade and other receivables |  |  |  | — |  | 339 |  | 7 |
Cash and cash equivalents |  |  |  | — |  | 36 |  | — |
Liabilities in disposal groups held for sale |  |  |  | (38 | ) | — |  | — |
Short-term provisions |  |  |  | — |  | (24 | ) | — |
Tax payable |  |  |  | — |  | (35 | ) | — |
Trade and other payables |  |  |  | — |  | (208 | ) | (30 | )
|  |  |  | 1 728 |  | 3 786 |  | 1 028 |
Non-controlling interest |  |  |  | — |  | (51 | ) | — |
|  |  |  | 1 728 |  | 3 735 |  | 1 028 |
Total consideration |  |  |  | 567 |  | 2 425 |  | 788 |
consideration received |  |  |  | 567 |  | 2 316 |  | 788 |
long-term supply agreement |  |  |  | — |  | 109 |  | — |
|  |  |  | (1 161 | ) | (1 310 | ) | (240 | )
Realisation of accumulated translation effects |  |  |  | 52 |  | 482 |  | 29 |
Net loss on disposal |  |  |  | (1 109 | ) | (828 | ) | (211 | )
Consideration received comprising |  |  |  |  |  |  |  |  |
Performance Chemicals — Heat Transfer Fuels (HTF) business |  |  |  | 271 |  | — |  | — |
Base Chemicals — Investment in Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd |  |  |  | — |  | 1 918 |  | — |
Energy — Property and mineral rights in the US (Lake de Smet) |  |  |  | — |  | 215 |  | — |
Energy — Sale of Canada land |  |  |  | — |  | — |  | 389 |
Other |  |  |  | 296 |  | 183 |  | 399 |
Consideration received |  |  |  | 567 |  | 2 316 |  | 788 |

Significant disposals and scrappings in 2019

Performance Chemicals — Heat Transfer Fuels (HTF) business

In 2019, we disposed of our HTF business with the producing assets located within the Marl facility in Germany.

Lake Charles Chemicals Project

In 2019, we scrapped R682 million (US$48 million) of cost incurred on the LCCP, mainly relating to rework required. Refer note 9.

Significant disposals in prior periods

Base Chemicals — Investment in Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd

Our divestment from Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd was concluded on 14 March 2018, resulting in a profit on disposal of R864 million, including the reclassification of the Foreign Currency Translation Reserve of R494 million.

Energy — US Gas-To-Liquids (GTL) Scrapping

We have scrapped the US GTL Project amounting to R1,1 billion (US$83 million) during the 2018 financial year.

Energy — Sale of Canada land

In 2017, we disposed of a portion of our land in Canada with a carrying value of R354 million (CAD35 million) for proceeds of R389 million (CAD38 million).

28

11 Disposal groups held for sale

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Assets in disposal groups held for sale |  |  |  |  |
Base Chemicals — Explosives business |  | 1 404 |  | — |
Base Chemicals — Investment in Sasol Huntsman GmbH & co KG |  | 846 |  | — |
Performance Chemicals — Sasol Wilmar Alcohol Industries |  | 290 |  | — |
Performance Chemicals — Heat Transfer Fuels (HTF) business |  | — |  | 110 |
Other |  | 14 |  | 3 |
|  | 2 554 |  | 113 |
Liabilities in disposal groups held for sale |  |  |  |  |
Base Chemicals — Explosives business |  | (398 | ) | — |
Performance Chemicals — Sasol Wilmar Alcohol Industries |  | (90 | ) | — |
Performance Chemicals — Heat Transfer Fuels (HTF) business |  | — |  | (36 | )
|  | (488 | ) | (36 | )
Business segmentation |  |  |  |  |
· Mining |  | — |  | 3 |
· Energy |  | 14 |  | — |
· Base Chemicals |  | 1 852 |  | — |
· Performance Chemicals |  | 200 |  | 74 |
Total operations |  | 2 066 |  | 77 |

Significant disposal group held for sale in 2019

Base Chemicals — Explosives business

In line with the asset review process, Sasol’s Explosives business was identified for partial divestment and collaboration with a world-class Explosives partner. The downstream portion of the explosives business was classified as a disposal group held for sale at 30 June 2019, following approval to commence negotiations with a preferred partner, with the aim of creating a joint venture, managed and operated by the partner. The partial divestment and partnering is expected to be completed within the next 12 months.

Base Chemicals — Investment in Sasol Huntsman GmbH & co KG

On 26 July 2019 Sasol and Huntsman Corporation signed a definitive agreement for Sasol to dispose of our 50% equity interest in the Sasol-Huntsman maleic anhydride joint venture. The transaction closed on 30 September 2019 with a preliminary equity purchase price of EUR90,3 million received by Sasol. The final purchase price will be confirmed on verification of the closing accounts by the independent auditors. The group has classified its investment in Sasol Huntsman GmbH & co KG as held for sale at 30 June 2019.

Performance Chemicals — Sasol Wilmar Alcohol Industries

During May 2019 and based on the results of the recently concluded asset review, the Sasol Investment Committee approved the commencement of negotiations to sell Sasol’s share in Sasol Wilmar Alcohol Industries. A share purchase agreement was signed on 18 October 2019. The agreement is subject to chinese authority approval. Accordingly, the group has classified its investment in Sasol Wilmar Alcohol Industries as held for sale and recorded an impairment on its portion of the assets, down to its fair value less costs to sell. Refer to note 9.

29

11 Disposal groups held for sale continued

Accounting policies:

A non-current asset or disposal group (a business grouping of assets and their related liabilities) is designated as held for sale when its carrying amount will be recovered principally through a sale transaction rather than through continuing use. The classification as held for sale of a non-current asset or disposal group occurs when it is available for immediate sale in its present condition and the sale is highly probable. A sale is considered highly probable if management is committed to a plan to sell the non-current asset or disposal group, an active divestiture programme has been initiated, the non-current asset or disposal group is marketed at a price reasonable to its fair value and the disposal will be completed within one year from classification.

Where a disposal group held for sale will result in the loss of control or joint control of a subsidiary or joint operation, respectively, all the assets and liabilities of that subsidiary or joint operation are classified as held for sale, regardless of whether a non-controlling interest in the former subsidiary or an ongoing interest in the joint operation is to be retained after the sale.

Where a disposal group held for sale will result in the loss of joint control of a joint venture or significant influence of an associate, the full investment is classified as held for sale. Equity accounting ceases from the date the joint venture or associate is classified as held for sale.

Before classification of a non-current asset or disposal group as held for sale, it is reviewed for impairment. The impairment loss charged to the income statement is the excess of the carrying amount of the non-current asset over its expected fair value less costs to sell.

No depreciation or amortisation is provided on non-current assets from the date they are classified as held for sale.

30

Taxation

12 Taxation

|  |  |  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |  | Rm |
South African normal tax |  |  |  | 3 206 |  | 4 035 |  | 4 393 |
current year |  |  |  | 3 804 |  | 4 689 |  | 3 887 |
prior years |  |  |  | (598 | ) | (654 | ) | 506 |
Dividend withholding tax |  |  |  | — |  | 68 |  | 59 |
Foreign tax |  |  |  | 2 640 |  | 2 530 |  | 2 682 |
current year |  |  |  | 2 544 |  | 3 035 |  | 2 680 |
prior years |  |  |  | 96 |  | (505 | ) | 2 |
Income tax |  |  |  | 5 846 |  | 6 633 |  | 7 134 |
Deferred tax — South Africa |  | 14 |  | 2 086 |  | (414 | ) | 2 677 |
current year |  |  |  | 2 069 |  | (545 | ) | 2 634 |
prior years |  |  |  | 17 |  | 131 |  | 43 |
Deferred tax — foreign |  | 14 |  | (4 775 | ) | (661 | ) | (1 316 | )
current year* |  |  |  | (4 831 | ) | (874 | ) | (718 | )
prior years |  |  |  | 55 |  | 485 |  | (127 | )
recognition of previously unrecognised deferred tax assets** |  |  |  | — |  | (49 | ) | (470 | )
tax rate change |  |  |  | 1 |  | (223 | ) | (1 | )
|  |  |  | 3 157 |  | 5 558 |  | 8 495 |

* | Increase in the current year relates mainly to tax losses incurred at our US operations where we anticipate sufficient profits to be generated in future to utilise the deferred tax asset against.
** | Included in the previous years is the recognition of a deferred tax asset relating to the accumulated tax losses in Italy which were previously limited in line with the forecasted utilisation thereof. In 2017, profits and a successful business turnaround strategy have resulted in the recognition of a previously unrecognised deferred tax asset of EUR25,4 million (R377,2 million). Additionally in 2017 R93 million of previously unrecognised tax assets were recognised after the approval of the Production Sharing Agreement (PSA) licence area’s Field Development Plan (FDP) in Mozambique.

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Regional analysis |  |  |  |  |  |  |
· South Africa |  | 5 285 |  | 3 994 |  | 7 013 |
· Rest of Africa |  | 1 465 |  | 854 |  | 951 |
· Europe |  | 1 276 |  | 1 649 |  | 906 |
· United States of America |  | (4 913 | ) | (1 032 | ) | (424 | )
· Other |  | 44 |  | 93 |  | 49 |
Total operations |  | 3 157 |  | 5 558 |  | 8 495 |

31

12 Taxation continued

Contingent liability

Sasol Oil

As previously reported, the South African Revenue Service (SARS) issued revised assessments for Sasol Oil (Pty) Ltd (Sasol Oil) relating to a dispute around our international crude oil procurement activities for the 2005 to 2012 tax years. Sasol Oil raised a provision in its financial statements of R1,3 billion, including penalties and interest, which covers the 2005 to 2014 tax years in relation to these procurement activities. On 9 November 2018, the Supreme Court of Appeal (SCA) upheld an appeal filed by Sasol Oil (in respect of the 2005 to 2007 tax years) and set aside an earlier ruling by the Tax Court. On the basis of this judgement, Sasol Oil has reversed the provision of R1,3 billion.

On 29 November 2018, SARS applied to the Constitutional Court (Con Court) for leave to appeal against the SCA decision. On 4 February 2019, the Con Court dismissed SARS’ application with costs, ruling that the matter falls outside the jurisdiction of the Con Court and, in any event, bears no reasonable prospect of success.

In addition to the above litigation, the potential contingent liability relating to the ongoing dispute with SARS in relation to its revised assessments for the 2013 and 2014 tax years, based on different primary grounds of assessment regarding Sasol Oil’s crude oil procurement activity, amounts to R13,4 billion (including interest and penalties as at 30 June 2019). Sasol Oil disagrees with SARS’ assessment for the 2013 and 2014 periods and hence this tax dispute was the subject of an ongoing appeal with the Tax Court lodged by Sasol Oil.

The impact of the SCA and Con Court judgements on the open years of assessment relating to 1999 to 2004 and 2008 to 2016 (open years), were fully considered by both parties. Consequently SARS and Sasol Oil has come to a mutual agreement resulting in the dispute between the parties being resolved for all the open years of assessment. As a result Sasol is no longer exposed to the contingent liability of R13,4 billion.

Sasol Financing International

Further, as reported previously, SARS conducted an audit over a number of years on Sasol Financing International Plc (SFI) which performs an off-shore 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 of R2,4 billion (including interest and penalties as at 30 June 2019), which is disclosed as a contingent liability, was reduced from the R3,2 billion previously reported, due to the reduction of the penalties applied by SARS.

SFI, in consultation with its tax and legal advisors, does not support the basis of these additional assessments for all the years of assessment. Accordingly, SFI lodged an objection and appeal in the Tax Court against the revised assessments. SFI and SARS has however come to a mutual agreement that the appeal and related Tax Court processes will be held in abeyance pending the outcome of the judicial review application noted below.

In addition, Sasol has also launched a judicial review application against the SARS decision to register SFI as a South African taxpayer. SARS’ answering affidavit in this litigation was submitted on 8 February 2019 and SFI responded accordingly. The legal process is ongoing in this regard.

Sasol is committed to compliance with tax laws and any disputes with tax authorities on the interpretation of tax laws and regulations will be addressed in a transparent and constructive manner.

32

12 Taxation continued

|  | 2019 |  | 2018 |  | 2017 |
|  | % |  | % |  | % |
Reconciliation of effective tax rate |  |  |  |  |  |  |
The table below shows the difference between the South African enacted tax rate (28%) 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 |  | 28,0 |  | 28,0 |  | 28,0 |
Increase in rate of tax due to: |  |  |  |  |  |  |
disallowed preference share dividends |  | 0,3 |  | 0,9 |  | 0,9 |
disallowed expenditure(1) |  | 9,4 |  | 4,2 |  | 2,3 |
disallowed share-based payment expenses(2) |  | 2,9 |  | 5,3 |  | 0,1 |
different tax rates(3) |  | 13,2 |  | 2,6 |  | 0,3 |
effect of tax litigation matters(4) |  | — |  | — |  | 3,2 |
tax losses not recognised(5) |  | 8,6 |  | 9,3 |  | 1,0 |
prior year adjustments |  | 2,0 |  | 0,4 |  | — |
other adjustments |  | 2,0 |  | 1,5 |  | 0,4 |
|  | 66,4 |  | 52,2 |  | 36,2 |
Decrease in rate of tax due to: |  |  |  |  |  |  |
exempt income(6) |  | (1,7 | ) | (4,2 | ) | (0,4 | )
share of profits of equity accounted investments |  | (3,3 | ) | (2,6 | ) | (1,0 | )
effect of tax litigation matters(4) |  | (8,2 | ) | — |  | — |
recognition of previously unrecognised deferred tax assets |  | — |  | — |  | (1,6 | )
utilisation of tax losses |  | (0,3 | ) | (0,4 | ) | — |
investment incentive allowances(7) |  | (17,2 | ) | (6,9 | ) | (2,4 | )
effect of tax rate change in the US |  | — |  | (1,4 | ) | — |
translation differences |  | (0,9 | ) | (0,9 | ) | (0,9 | )
prior year adjustments |  | — |  | — |  | (1,4 | )
other adjustments |  | (0,6 | ) | (0,4 | ) | (0,2 | )
Effective tax rate |  | 34,2 |  | 35,4 |  | 28,3 |
Adjusted effective tax rate(8) |  | 29,6 |  | 27,3 |  | 26,5 |

(1) | Includes non-deductible expenses incurred not deemed to be in the production of taxable income mainly relating to exploration activities and non-productive interest in our treasury function.
(2) | This relates to the share based payment expense on the Sasol Khanyisa transaction.
(3) | Relates mainly to the impact of lower tax rate in the US on the increases in tax losses incurred during the year.
(4) | 2019 includes reversal of tax and interest pertaining to Sasol Oil and 2017, includes tax, interest and penalties.
(5) | Tax losses not recognised resulted mainly from the R1,9 billion (2018 – R2,8 billion) impairment of the Canadian shale gas asset and the Mozambique PSA impairment of R1,1 billion in 2018 for which no deferred tax asset was raised. Refer note 9.
(6) | 2018, includes profit on disposal of our investments in Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd.
(7) | Energy efficiency allowances relating to our South African operations increased by R4,2 billion compared to the prior year.
(8) | Effective tax rate adjusted for equity accounted investments, remeasurement items and once-off items.

33

13 Tax paid

|  |  |  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |  | Rm |
Net amounts receivable at beginning of year |  |  |  | (984 | ) | (635 | ) | (1 609 | )
Disposal of businesses |  |  |  | (1 | ) | (35 | ) | — |
Net interest and penalties on tax* |  |  |  | (630 | ) | 92 |  | 245 |
Income tax per income statement |  | 12 |  | 5 846 |  | 6 633 |  | 7 134 |
Reclassification to held for sale |  |  |  | 6 |  | — |  | — |
Foreign exchange differences recognised in income statement |  |  |  | 4 |  | (52 | ) | (8 | )
Translation of foreign operations |  |  |  | 14 |  | 54 |  | (45 | )
|  |  |  | 4 255 |  | 6 057 |  | 5 717 |
Net tax payable per statement of financial position |  |  |  | (309 | ) | 984 |  | 635 |
tax payable |  |  |  | (1 039 | ) | (2 318 | ) | (1 903 | )
tax receivable |  |  |  | 730 |  | 3 302 |  | 2 538 |
Per the statement of cash flows |  |  |  | 3 946 |  | 7 041 |  | 6 352 |
Comprising |  |  |  |  |  |  |  |  |
Normal tax |  |  |  |  |  |  |  |  |
South Africa |  |  |  | 933 |  | 4 681 |  | 3 984 |
Foreign |  |  |  | 3 013 |  | 2 292 |  | 2 309 |
Dividend withholding tax |  |  |  | — |  | 68 |  | 59 |
|  |  |  | 3 946 |  | 7 041 |  | 6 352 |

* | 2019, relates to the reversal of interest pertaining to the Sasol Oil matter.

14 Deferred tax

|  |  |  | 2019 |  | 2018 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |
Reconciliation |  |  |  |  |  |  |
Balance at beginning of year |  |  |  | 21 812 |  | 22 778 |
Current year charge |  |  |  | (2 819 | ) | (851 | )
per the income statement |  | 12 |  | (2 689 | ) | (1 075 | )
per the statement of comprehensive income |  |  |  | (130 | ) | 224 |
Reclassification to held for sale |  |  |  | (6 | ) | — |
Foreign exchange differences recognised in income statement |  |  |  | 22 |  | 34 |
Translation of foreign operations |  |  |  | 14 |  | (149 | )
Balance at end of year |  |  |  | 19 023 |  | 21 812 |
Comprising |  |  |  |  |  |  |
Deferred tax assets |  |  |  | (8 563 | ) | (4 096 | )
Deferred tax liabilities |  |  |  | 27 586 |  | 25 908 |
|  |  |  | 19 023 |  | 21 812 |

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 to our US operations.

34

14 Deferred tax continued

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Attributable to the following tax jurisdictions |  |  |  |  |
· South Africa |  | 25 065 |  | 22 501 |
· United States of America |  | (4 998 | ) | 301 |
· Germany |  | (550 | ) | (431 | )
· Mozambique |  | 559 |  | 766 |
· Other |  | (1 053 | ) | (1 325 | )
|  | 19 023 |  | 21 812 |
Deferred tax is attributable to temporary differences on the following: |  |  |  |  |
Net deferred tax assets: |  |  |  |  |
Property, plant and equipment |  | 2 003 |  | 1 194 |
Short- and long-term provisions |  | (2 851 | ) | (1 296 | )
Calculated tax losses |  | (7 329 | ) | (3 267 | )
Other |  | (386 | ) | (727 | )
|  | (8 563 | ) | (4 096 | )
Net deferred tax liabilities: |  |  |  |  |
Property, plant and equipment |  | 33 342 |  | 32 233 |
Current assets |  | (1 147 | ) | (777 | )
Short- and long-term provisions |  | (4 061 | ) | (4 991 | )
Calculated tax losses |  | (150 | ) | (284 | )
Financial derivatives |  | 59 |  | 57 |
Other |  | (457 | ) | (330 | )
|  | 27 586 |  | 25 908 |

Deferred tax assets have been recognised for the carry forward amount of unused tax losses relating to the group’s operations where, among other things, 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.

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Calculated tax losses |  |  |  |  |
(before applying the applicable tax rate) |  |  |  |  |
Available for offset against future taxable income |  | 48 444 |  | 23 893 |
Utilised against the deferred tax balance |  | (29 745 | ) | (6 272 | )
Not recognised as a deferred tax asset(1) |  | 18 699 |  | 17 621 |
Deferred tax assets not recognised on tax losses mainly relate to Sasol’s exploration and development entities, where future taxable income is uncertain. |  |  |  |  |
Calculated tax losses carried forward that have not been recognised: |  |  |  |  |
Expiry between three and five years |  | 712 |  | 376 |
Expiry thereafter |  | 2 212 |  | 2 052 |
Indefinite life |  | 15 775 |  | 15 193 |
|  | 18 699 |  | 17 621 |

(1) | Included are calculated tax losses of R15,5 billion relating to Sasol Canada.

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 where we anticipate sufficient profits to be generated in future to utilise the deferred tax asset against. These losses do not expire. 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.

35

14 Deferred 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.

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Unremitted earnings at end of year that would be subject to dividend withholding tax |  | 28 150 |  | 45 280 |
Europe |  | 10 808 |  | 12 555 |
Rest of Africa |  | 2 675 |  | 2 346 |
United States of America* |  | 10 486 |  | 23 591 |
Other |  | 4 181 |  | 6 788 |
Tax effect if remitted |  | 1 012 |  | 1 718 |
Europe |  | 241 |  | 267 |
Rest of Africa |  | 213 |  | 188 |
United States of America |  | 524 |  | 1 179 |
Other |  | 34 |  | 84 |

* | Decrease in the current year relates mainly to tax losses incurred at our US operations where we anticipate sufficient profits to be generated in future to utilise the deferred tax asset against.

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.

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Undistributed earnings at end of year subjected to dividend withholding tax withheld by the company on behalf of Sasol Limited shareholders |  | 180 692 |  | 185 064 |
Maximum withholding tax payable by shareholders if distributed to individuals |  | 36 138 |  | 37 013 |

Accounting policies:

The income tax charge is determined based on net income before tax for the year and includes 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. No deferred tax is provided on temporary differences relating to:

· the initial recognition of goodwill;

· the initial recognition (other than in a business combination) of an asset or liability to the extent that neither accounting nor taxable profit is affected on acquisition; and

· investments in subsidiaries, associates and interests in joint arrangements to the extent that the temporary difference will probably not reverse in the foreseeable future and the control of the reversal of the temporary difference lies with the parent, investor, joint venturer or joint operator.

The provision for deferred tax is calculated using enacted or substantively enacted tax rates at the reporting date that are expected to apply when the asset is realised or liability settled.

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.

36

SOURCES OF CAPITAL

GENERATED FROM OPERATIONS

Page

38 Equity

· Share capital

39 Funding activities and facilities

· Long-term debt and finance leases

37

Equity

15 Share capital

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Issued share capital (as per statement of changes in equity)* |  | 9 888 |  | 15 775 |  | 29 282 |

|  | Number of shares |
for the year ended 30 June |  | 2019 |  | 2018 |  | 2017 |
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 value |  | 28 385 646 |  | 28 385 646 |  | 28 385 646 |
Sasol BEE ordinary shares of no par value |  | 158 331 335 |  | 158 331 335 |  | 18 923 764 |
|  | 1 314 407 571 |  | 1 314 407 571 |  | 1 175 000 000 |
Issued |  |  |  |  |  |  |
Shares issued at beginning of year |  | 645 560 928 |  | 679 822 439 |  | 679 775 162 |
Issued in terms of the employee share schemes |  | 1 566 581 |  | 1 776 361 |  | 47 277 |
Repurchase and cancellation of shares* |  | (16 085 199 | ) | (43 503 454 | ) | — |
Issued in terms of Sasol Khanyisa |  | (13 992 | ) | 7 465 582 |  | — |
Shares issued at end of year |  | 631 028 318 |  | 645 560 928 |  | 679 822 439 |
Comprising |  |  |  |  |  |  |
Sasol ordinary shares of no par value |  | 624 696 971 |  | 623 081 550 |  | 651 436 793 |
Sasol preferred ordinary shares of no par value |  | — |  | 16 085 199 |  | 25 547 081 |
Sasol BEE ordinary shares of no par value |  | 6 331 347 |  | 6 394 179 |  | 2 838 565 |
|  | 631 028 318 |  | 645 560 928 |  | 679 822 439 |
Unissued shares |  |  |  |  |  |  |
Sasol ordinary shares of no par value |  | 502 993 619 |  | 504 609 040 |  | 476 253 797 |
Sasol preferred ordinary shares of no par value |  | 28 385 646 |  | 12 300 447 |  | 2 838 565 |
Sasol BEE ordinary shares of no par value |  | 151 999 988 |  | 151 937 156 |  | 16 085 199 |
|  | 683 379 253 |  | 668 846 643 |  | 495 177 561 |

* On 7 September 2018, 16 085 199 preferred ordinary shares were repurchased from Inzalo Public Funding (RF) Proprietary Limited at a purchase price of R542,11 per share as per the shareholders authorisation obtained at the Annual General Meeting held on 17 November 2017, which had the effect that these shares were cancelled and restored to authorised share capital.

On 26 June 2018, 9 461 882 Sasol Limited preferred ordinary shares were repurchased from Inzalo Groups Funding at a purchase price of R475,03 per share as per the shareholders authorisation obtained at the Annual General Meeting held on 17 November 2017, which had the effect that these shares were cancelled and restored to authorised share capital.

On 4 June 2018, 25 231 686 Sasol Limited ordinary shares were repurchased from the Inzalo Employee schemes at a nominal value of R0,01 per share (as per Sasol’s rights of repurchase under the Inzalo Employee schemes trust deeds). The Inzalo Employee scheme participants did not receive a distribution of Sasol Limited ordinary shares.

On 26 February 2018, 8 809 886 Sasol Limited ordinary shares were repurchased from its wholly owned subsidiary, Sasol Investment Company (Pty) Ltd as per shareholders approval obtained at the Annual General Meeting held on 17 November 2017, which had the effect that these shares were cancelled and restored. At 30 June 2016, these shares represented 1,43% of the issued share capital of the company, excluding the Sasol Inzalo share transaction.

At 30 June 2019, 13 969 621 shares were held by the Sasol Foundation Trust and the Sasol Khanyisa Employee Share Ownership Plan.

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.

38

Funding activities and facilities

16 Long-term debt and finance leases

|  |  |  | 2019 |  | 2018 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |
Total long-term debt |  |  |  | 137 339 |  | 109 454 |
Short-term portion |  |  |  | (2 544 | ) | (12 763 | )
|  |  |  | 134 795 |  | 96 691 |
Comprising: |  |  |  |  |  |  |
Long-term debt |  |  |  | 127 350 |  | 89 411 |
Finance leases |  |  |  | 7 445 |  | 7 280 |
|  |  |  | 134 795 |  | 96 691 |
Analysis of long-term debt and finance leases |  |  |  |  |  |  |
At amortised cost |  |  |  |  |  |  |
Secured debt(1) |  |  |  | 6 602 |  | 62 601 |
Preference shares |  |  |  | — |  | 7 493 |
Finance leases |  |  |  | 7 770 |  | 7 624 |
Unsecured debt* |  |  |  | 123 555 |  | 32 513 |
Unamortised loan costs |  |  |  | (588 | ) | (777 | )
|  |  |  | 137 339 |  | 109 454 |
Reconciliation |  |  |  |  |  |  |
Balance at beginning of year |  |  |  | 109 454 |  | 81 405 |
Loans raised |  |  |  | 94 002 |  | 31 061 |
proceeds from new loans* |  |  |  | 93 884 |  | 24 961 |
finance leases acquired |  |  |  | 118 |  | 6 100 |
Loans repaid** |  |  |  | (70 000 | ) | (9 199 | )
Modification gain |  |  |  | (112 | ) | — |
Interest accrued |  | 7 |  | 1 025 |  | 878 |
Amortisation of loan costs |  | 7 |  | 725 |  | 462 |
Translation effect of foreign currency loans |  |  |  | 212 |  | 22 |
Translation of foreign operations |  |  |  | 2 033 |  | 4 825 |
Balance at end of year |  |  |  | 137 339 |  | 109 454 |
Interest-bearing status |  |  |  |  |  |  |
Interest-bearing debt |  |  |  | 136 394 |  | 108 017 |
Non-interest-bearing debt |  |  |  | 945 |  | 1 437 |
|  |  |  | 137 339 |  | 109 454 |
Maturity profile |  |  |  |  |  |  |
Within one year |  |  |  | 2 544 |  | 12 763 |
One to five years |  |  |  | 113 447 |  | 72 899 |
More than five years |  |  |  | 21 348 |  | 23 792 |
|  |  |  | 137 339 |  | 109 454 |
Business segmentation |  |  |  |  |  |  |
· Mining |  |  |  | — |  | 679 |
· Exploration and Production International |  |  |  | — |  | 784 |
· Energy |  |  |  | 8 893 |  | 9 503 |
· Base Chemicals |  |  |  | 5 503 |  | 33 716 |
· Performance Chemicals |  |  |  | 1 466 |  | 27 914 |
· Group Functions |  |  |  | 121 477 |  | 36 858 |
Total operations |  |  |  | 137 339 |  | 109 454 |

(1) The LCCP term loan was repaid with the proceeds from the US dollar bonds issued in September 2018 and the subsequent draw down of the term loan and revolving credit facility.

* Loans raised to fund US growth projects.

** 2019 relate mainly to the settlement of the LCCP term loan, discharging the completion guarantee issued in respect of the LCCP and the settlement of the Inzalo Public debt. 2018 mainly relates to the repayment of the Inzalo Groups debt.

39

16 Long-term debt and finance leases continued

Fair value of long-term debt

The fair value of long-term debt is based on the quoted market price for the same or similar instruments or on the current rates available for debt with the same maturity profile and with similar cash flows. Market related rates ranging between 2,4% and 15,3% were used to discount estimated cash flows based on the underlying currency of the debt.

|  | 2019 |  | 2018 |
|  | Rm |  | Rm |
Total long-term debt (before unamortised loan costs)*** |  | 141 198 |  | 109 984 |

*** The difference in the fair value of long-term debt when compared to the carrying value is mainly due to the prevailing market price of the debt instruments.

In terms of Sasol Limited’s memorandum of incorporation, the group’s borrowing powers are limited to twice the sum of its share capital and reserves (2019 — R440 billion; 2018 — R446 billion).

|  |  |  |  |  |  |  | Interest rate at |  | 2019 |  | 2018 |
Terms of repayment |  | Security |  | Business |  | Currency |  | 30 June 2019 |  | Rm |  | Rm |
Secured debt |  |  |  |  |  |  |  |  |  |  |  |  |
Repayable in bi-annual instalments ending December 2021(1) |  | Secured by assets under construction with a carrying value of 2018 — R140 912 million and other assets with a carrying value of 2018 — R24 368 million |  | Base and Performance Chemicals (US Operations) |  | US dollar |  |  |  | — |  | 54 953 |
Repayable in quarterly instalments ending August 2024 |  | Secured by property, plant and equipment with a carrying value of R4 183 million (2018 — R4 551 million). |  | Base Chemicals |  | US dollar |  | Libor + 2,5% |  | 2 735 |  | 2 765 |
Repayable in bi-annual instalments ending June 2022 |  | Secured by property, plant and equipment with a carrying value of R4 941 million (2018 — R5 415 million) |  | Energy (Rompco) |  | Rand |  | Jibar + 1,75% |  | 2 590 |  | 3 473 |
Repayable in bi-annual instalments ending February 2030 |  | Secured by shares, property, plant and equipment with a carrying value of R1 480 million (2018 — R1 443 million) |  | Energy (CTRG) |  | US dollar |  | Libor + 5,5% |  | 1 093 |  | 1 183 |
|  |  |  | Various |  | Various |  | Various |  | 184 |  | 227 |
|  |  |  |  |  |  |  |  |  | 6 602 |  | 62 601 |
Preference shares |  |  |  |  |  |  |  |  |  |  |  |  |
A preference shares repayable in semi-annual instalments between June 2008 and September 2018(2) |  | Secured by Sasol preferred ordinary shares held by the company |  | Group Functions (Inzalo) |  | Rand |  |  |  | — |  | 828 |
B preference shares repayable between June 2008 and September 2018(2) |  | Secured by Sasol preferred ordinary shares held by the company |  | Group Functions (Inzalo) |  | Rand |  |  |  | — |  | 789 |
C preference shares repayable September 2018(2) |  | Secured by guarantee from Sasol Limited |  | Group Functions (Inzalo) |  | Rand |  |  |  | — |  | 5 822 |
A preference shares repayable between March 2013 and September 2018 |  | Secured by preference shares held in Sasol Mining (Pty) Ltd |  | Mining (Ixia) |  | Rand |  |  |  | — |  | 54 |
|  |  |  |  |  |  |  |  |  | — |  | 7 493 |

(1) The US$4 billion secured term loan was settled during the year with the proceeds from the US$2,25 billion bond issued in September 2018 together with a US$1,65 billion term loan and a RCF of US$150 million incurred in June 2019.

(2) The A, B and C preference share debt relating to the Sasol Inzalo Public share transaction was settled on 10 September 2018.

40

16 Long-term debt and finance leases continued

|  |  |  |  |  |  |  | Interest rate at |  | 2019 |  | 2018 |
Terms of repayment |  | Security |  | Business |  | Currency |  | 30 June 2019 |  | Rm |  | Rm |
Finance leases |  |  |  |  |  |  |  |  |  |  |  |  |
Repayable in monthly instalments over 1 to 37 years ending December 2056 |  | Secured by plant and equipment with a carrying value R7 369 million (2018 – R7 541 million) |  | Energy, Base and Performance Chemicals |  | Various |  | Fixed 2,36% to 16,58% and variable 8% to 9,5% |  | 7 673 |  | 7 521 |
Other finance leases |  | Underlying assets |  | Various |  | Various |  | Various |  | 97 |  | 103 |
|  |  |  |  |  |  |  |  |  | 7 770 |  | 7 624 |
|  |  |  |  |  |  |  |  |  | 14 372 |  | 77 718 |
|  |  |  |  |  |  |  | Interest rate at |  | 2019 |  | 2018 |
Terms of repayment |  |  |  | Business |  | Currency |  | 30 June 2019 |  | Rm |  | Rm |
Unsecured debt |  |  |  |  |  |  |  |  |  |  |  |  |
Various repayment terms ending April 2031 |  | Various |  | Various |  | Various |  | 1 779 |  | 1 567 |
Repayable in July 2018(1) |  | Exploration and Production International |  | Canadian dollar |  |  |  | — |  | 784 |
Various repayment terms |  | Energy |  | Rand |  | Fixed 8,0% |  | 626 |  | 523 |
Various repayment terms from November 2022 to November 2023(2)(3) |  | Group Functions (Sasol Financing International) |  | US dollar |  | Fixed 4,5% and variable Libor + 1% |  | 63 548 |  | 29 014 |
Various repayment terms from June 2024 to September 2028(4)(5) |  | Group Functions (Sasol Financing USA) |  | US dollar |  | Fixed 5,8% to 6,5% and variable Libor + 1% to 1,4% |  | 57 602 |  | — |
Repayable in bi-annual instalments ending December 2018 |  | Mining |  | Rand |  |  |  | — |  | 625 |
Total unsecured debt |  |  |  |  |  |  |  | 123 555 |  | 32 513 |
Total long-term debt |  |  |  |  |  |  |  | 137 927 |  | 110 231 |
Unamortised loan costs (amortised over period of debt using the effective interest rate method) |  |  |  |  |  |  |  | (588 | ) | (777 | )
|  |  |  |  |  |  |  |  |  | 137 339 |  | 109 454 |
Short-term portion of long-term debt |  |  |  | (2 544 | ) | (12 763 | )
|  |  |  |  |  |  |  |  |  | 134 795 |  | 96 691 |

(1) The carry of CAD75 million (R780 million) was repaid on 3 July 2018.

(2) Included in this amount is the US$1 billion (R14 billion) bond, with a fixed interest rate of 4,5% which is listed on the New York Stock Exchange and is recognised in Sasol Financing International Limited, a 100% owned subsidiary of the group. 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.

(3) During the year Sasol Financing International Limited, drew down on its revolving credit facility US$2,6 billion to fund mainly the LCCP.

(4) In September 2018 Sasol Financing USA LLC issued bonds to the value of US$1,50 billion and US$0,75 billion respectively and in June 2019 incurred a term loan of US$1,65 billion and a revolving credit facility of US$150 million. The proceeds were utilised to fully repay the US$4 billion secured term loan.

(5) Included in this amount is the US$2,25 billion (R31,7 billion) bonds, with fixed interest rates of 5,88% and 6,5% which are listed on the New York Stock Exchange and is recognised in Sasol Financing USA LLC, a 100% owned subsidiary of the group. 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.

|  | Total facilities |  | Cash utilised |  | Remaining |  | Rand |
at 30 June 2019 |  | US$m |  | US$m |  | US$m |  | equivalent |
Lake Charles Chemicals Project funding profile |  |  |  |  |  |  |  |  |
Term loan |  | 1 650 |  | 1 650 |  | — |  | — |
Bonds |  | 2 250 |  | 2 250 |  | — |  | — |
Available cash, cash flow from operations and general borrowings |  | 9 000 |  | 7 533 |  | 1 467 |  | 20 655 |
Total funding requirement |  | 12 900 | * | 11 433 |  | 1 467 |  | 20 655 |

* Includes the US$300 million contingency

41

16 Long-term debt and finance leases continued

|  |  |  |  |  | Contract amount |  | Total Rand equivalent |  | Utilised facilities |  | Available facilities |
30 June 2019 |  | Expiry date |  | Currency |  | million |  | Rm |  | Rm |  | Rm |
Banking facilities and debt arrangements |  |  |  |  |  |  |  |  |  |  |
Group treasury facilities |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial paper (uncommitted)(1) |  | None |  | Rand |  | 8 000 |  | 8 000 |  | — |  | 8 000 |
Commercial banking facilities |  | None |  | Rand |  | 10 300 |  | 10 300 |  | 953 |  | 9 347 |
Revolving credit facility |  | November 2023 |  | US dollar |  | 3 900 |  | 54 915 |  | 49 283 |  | 5 632 |
Revolving credit facility(3) |  | June 2024 |  | US dollar |  | 150 |  | 2 112 |  | 2 112 |  | — |
Debt arrangements |  |  |  |  |  |  |  |  |  |  |  |  |
US Dollar Bond |  | November 2022 |  | US dollar |  | 1 000 |  | 14 081 |  | 14 081 |  | — |
US Dollar Bond(2) |  | March 2024 |  | US dollar |  | 1 500 |  | 21 121 |  | 21 121 |  | — |
US Dollar Bond(2) |  | September 2028 |  | US dollar |  | 750 |  | 10 561 |  | 10 561 |  | — |
US Dollar term loan(3) |  | June 2024 |  | US dollar |  | 1 650 |  | 23 233 |  | 23 233 |  | — |
Other Sasol businesses |  |  |  |  |  |  |  |  |  |  |  |  |
Specific project asset finance |  |  |  |  |  |  |  |  |  |  |  |  |
Energy — Republic of Mozambique Pipeline Investments Company (Rompco) |  | June 2022 |  | Rand |  | 2 511 |  | 2 511 |  | 2 511 |  | — |
Energy — Republic of Mozambique Pipeline Investments Company (Rompco) |  | December 2019 |  | Rand |  | 71 |  | 71 |  | 71 |  | — |
Energy — Clean Fuels II (Natref) |  | Various |  | Rand |  | 1 948 |  | 1 948 |  | 1 948 |  | — |
Debt arrangements |  |  |  |  |  |  |  |  |  |  |  |  |
Other debt arrangements |  |  |  | Various |  | — |  | — |  | 11 149 |  | — |
|  |  |  |  |  |  |  |  |  | 137 023 |  | 22 979 |
Available cash |  |  |  |  |  |  |  |  |  |  |  | 13 339 |
Total funds available for use |  |  |  |  |  |  |  |  |  |  |  | 36 318 |
Total utilised facilities |  |  |  |  |  |  |  |  |  |  |  | 137 023 |
Accrued interest |  |  |  |  |  |  |  |  |  |  |  | 1 025 |
Unamortised loan cost |  |  |  |  |  |  |  |  |  |  |  | 588 |
Total debt including accrued interest and unamortised loan cost |  |  |  |  |  |  |  |  |  |  |  | 138 636 |
Comprising |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  |  |  |  |  |  |  |  |  |  |  | 134 795 |
Short-term debt |  |  |  |  |  |  |  |  |  |  |  | 3 783 |
Short-term debt |  |  |  |  |  |  |  |  |  |  |  | 1 239 |
Short-term portion of long-term debt |  |  |  |  |  |  |  |  |  |  |  | 2 544 |
Bank overdraft |  |  |  |  |  |  |  |  |  |  |  | 58 |
|  |  |  |  |  |  |  |  |  |  |  | 138 636 |

(1) In August 2019, Sasol issued its inaugural paper to the value of R2 176 million in the local debt market under the current Domestic Medium Term Note (DMTN) programme, at 130 basis points above 3 month Jibar. The net proceeds from the notes issue will be used for general corporate purposes and to refinance existing facilities.

(2) In September 2018 Sasol Financing USA LLC issued bonds to the value of US$1,50 billion and US$0,75 billion respectively. The net proceeds from the bonds of US$2,24 billion were used to partially repay the US$4,0 billion secured term loan.

(3) In June 2019 Sasol Financing USA LLC obtained a term loan of US$1,65 billion and a revolving credit facility of US$150 million, the proceeds of which were utilised to fully repay the remainder of the US$4 billion secured term 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. 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.

42

CAPITAL ALLOCATION AND UTILISATION

Effective capital management fuelling growth

Page

44 Investing activities

· Property, plant and equipment

· Assets under construction

· Long-term receivables and prepaid expenses

· Equity accounted investments

· Interest in joint operations

· Interest in significant operating subsidiaries

59 Working capital

· Inventories

· Trade and other receivables

· Trade and other payables

· Decrease/(increase) in working capital

62 Cash management

· Cash and cash equivalents

· Cash generated by operating activities

· Cash flow from operations

· Dividends paid

43

Investing Activities

17 Property, plant and equipment

|  | Land |  | Building and improvements |  | Plant, equipment and vehicles |  | Mineral assets |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Carrying amount at 30 June 2018 |  | 2 744 |  | 8 537 |  | 127 336 |  | 28 840 |  | 167 457 |
Additions |  | 6 |  | 395 |  | 959 |  | 1 360 |  | 2 720 |
to sustain existing operations |  | 6 |  | 76 |  | 959 |  | 1 360 |  | 2 401 |
to expand operations |  | — |  | 319 |  | — |  | — |  | 319 |
Net reclassification (to)/from other assets |  | (6 | ) | 19 |  | (97 | ) | (306 | ) | (390 | )
Reduction in rehabilitation provisions capitalised (note 31) |  | — |  | — |  | (1 | ) | — |  | (1 | )
Projects capitalised |  | 1 452 |  | 7 281 |  | 83 768 |  | 3 583 |  | 96 084 |
Reclassification to held for sale |  | (8 | ) | (57 | ) | (438 | ) | — |  | (503 | )
Translation of foreign operations |  | 36 |  | 4 |  | (182 | ) | 78 |  | (64 | )
Disposals and scrapping |  | (22 | ) | (90 | ) | (547 | ) | (49 | ) | (708 | )
Current year depreciation charge |  | — |  | (643 | ) | (13 607 | ) | (3 285 | ) | (17 535 | )
Net impairment of property, plant and equipment |  | — |  | (12 | ) | (11 956 | ) | (1 543 | ) | (13 511 | )
Carrying amount at 30 June 2019 |  | 4 202 |  | 15 434 |  | 185 235 |  | 28 678 |  | 233 549 |

|  | Land |  | Building and improvements |  | Plant, equipment and vehicles |  | Mineral assets |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Carrying amount at 30 June 2017 |  | 1 357 |  | 7 851 |  | 117 699 |  | 31 866 |  | 158 773 |
Additions |  | 5 |  | 367 |  | 6 327 |  | 293 |  | 6 992 |
to sustain existing operations |  | 5 |  | 29 |  | 4 279 |  | 293 |  | 4 606 |
to expand operations |  | — |  | 338 |  | 2 048 |  | — |  | 2 386 |
Net reclassification from/(to) other assets |  | 3 |  | (171 | ) | 169 |  | (1 | ) | — |
Reduction in rehabilitation provisions capitalised (note 31) |  | — |  | (2 | ) | (85 | ) | (874 | ) | (961 | )
Disposal of business |  | — |  | — |  | (24 | ) | — |  | (24 | )
Projects capitalised |  | 1 268 |  | 928 |  | 19 990 |  | 3 130 |  | 25 316 |
Reclassification (to)/from held for sale |  | 15 |  | (6 | ) | (50 | ) | — |  | (41 | )
Translation of foreign operations |  | 113 |  | 151 |  | 1 512 |  | (137 | ) | 1 639 |
Disposals and scrapping |  | (17 | ) | (9 | ) | (428 | ) | (113 | ) | (567 | )
Current year depreciation charge |  | — |  | (572 | ) | (12 445 | ) | (3 030 | ) | (16 047 | )
Net impairment of property, plant and equipment |  | — |  | — |  | (5 329 | ) | (2 294 | ) | (7 623 | )
Carrying amount at 30 June 2018 |  | 2 744 |  | 8 537 |  | 127 336 |  | 28 840 |  | 167 457 |

44

17 Property, plant and equipment continued

|  | Land |  | Building and improvements |  | Plant, equipment and vehicles |  | Mineral assets |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
2019 |  |  |  |  |  |  |  |  |  |  |
Cost |  | 4 403 |  | 23 034 |  | 316 548 |  | 74 769 |  | 418 754 |
Accumulated depreciation and impairment |  | (201 | ) | (7 600 | ) | (131 313 | ) | (46 091 | ) | (185 205 | )
|  | 4 202 |  | 15 434 |  | 185 235 |  | 28 678 |  | 233 549 |
2018 |  |  |  |  |  |  |  |  |  |  |
Cost |  | 3 036 |  | 15 652 |  | 239 262 |  | 70 386 |  | 328 336 |
Accumulated depreciation and impairment |  | (292 | ) | (7 115 | ) | (111 926 | ) | (41 546 | ) | (160 879 | )
|  | 2 744 |  | 8 537 |  | 127 336 |  | 28 840 |  | 167 457 |
2017 |  |  |  |  |  |  |  |  |  |  |
Cost |  | 1 630 |  | 14 231 |  | 215 017 |  | 67 880 |  | 298 758 |
Accumulated depreciation and impairment |  | (273 | ) | (6 380 | ) | (97 318 | ) | (36 014 | ) | (139 985 | )
|  | 1 357 |  | 7 851 |  | 117 699 |  | 31 866 |  | 158 773 |

|  | 2019 |  | 2018 |
|  | Rm |  | Rm |
Business segmentation |  |  |  |  |
· Mining |  | 23 540 |  | 22 584 |
· Exploration and Production International |  | 6 076 |  | 7 646 |
· Energy |  | 48 924 |  | 47 743 |
· Base Chemicals |  | 77 339 |  | 46 874 |
· Performance Chemicals |  | 74 313 |  | 39 274 |
· Group Functions |  | 3 357 |  | 3 336 |
Total operations |  | 233 549 |  | 167 457 |

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Additions to property, plant and equipment (cash flow) |  |  |  |  |  |  |
Current year additions |  | 2 720 |  | 6 992 |  | 1 112 |
Adjustments for non-cash items |  | (1 491 | ) | (6 278 | ) | (722 | )
movement in environmental provisions capitalised |  | (1 387 | ) | (178 | ) | (324 | )
movement in long-term debt* |  | (104 | ) | (6 100 | ) | — |
other non-cash movements |  | — |  | — |  | (398 | )
Per the statement of cash flows |  | 1 229 |  | 714 |  | 390 |

* 2018, additions include the Air Separation Unit at SSO of R3,4 billion and the Lake Charles Chemical Project rail yard and wash bay leases of R1,8 billion that commenced during the year.

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Leased assets |  |  |  |  |
Carrying value of capitalised leased assets (included in plant, equipment and vehicles) |  | 7 423 |  | 7 547 |
cost |  | 9 316 |  | 9 116 |
accumulated depreciation |  | (1 893 | ) | (1 569 | )

45

17 Property, plant and equipment continued

|  | 2019 |  | 2018 |
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 |  | 212 848 |  | 179 172 |
Authorised but not yet contracted for |  | 43 097 |  | 47 338 |
Less expenditure to the end of year |  | (195 850 | ) | (156 583 | )
|  | 60 095 |  | 69 927 | *
to sustain existing operations |  | 29 654 |  | 26 925 |
to expand operations |  | 30 441 |  | 43 002 |
Estimated expenditure |  |  |  |  |
Within one year |  | 32 194 |  | 44 801 |
One to five years |  | 27 901 |  | 25 126 |
|  | 60 095 |  | 69 927 | *
Business segmentation |  |  |  |  |
· Mining |  | 2 372 |  | 2 640 |
· Exploration and Production International |  | 19 795 |  | 18 811 |
· Energy |  | 10 390 |  | 10 320 |
· Base Chemicals |  | 16 504 |  | 21 125 |
· Performance Chemicals |  | 10 434 |  | 16 432 |
· Group Functions |  | 600 |  | 599 |
Total operations |  | 60 095 |  | 69 927 | *

Significant capital commitments at 30 June comprise of:

|  |  |  |  |  | 2019 |  | 2018 |
Project |  | Project location |  | Business segment |  | Rm |  | Rm |
Lake Charles Chemicals Project* |  | United States |  | Base and Performance Chemicals |  | 11 856 |  | 22 084 |
Mozambique exploration and development |  | Mozambique |  | Exploration and Production International |  | 17 375 |  | 17 108 |
Sixth fine ash dam |  | Secunda |  | Energy |  | 2 302 |  | 3 720 |
Shutdown and major statutory maintenance |  | Various |  | Energy, Base and Performance Chemicals |  | 5 949 |  | 6 172 |
Renewal projects |  | Secunda and Sasolburg |  | Energy, Base and Performance Chemicals |  | 4 578 |  | 5 003 |
Mulalo project: 132 kilo volt electrical infrastructure |  | Secunda |  | Energy, Base and Performance Chemicals |  | 1 329 |  | — |
Steam Station 2 NOx Abatement |  | Sasolburg |  | Base and Performance Chemicals |  | 1 168 |  | 50 |
Steam Station 1 Air Quality Compliance |  | Sasolburg |  | Base and Performance Chemicals |  | 577 |  | — |
Mozambique drilling campaign and infield compression |  | Mozambique |  | Exploration and Production International |  | 915 |  | — |
Clean fuels II: To meet legislated fuel specifications |  | Secunda |  | Energy |  | 418 |  | — |
China Ethoxylation plant |  | China |  | Performance Chemicals |  | 135 |  | 577 |
Air Liquide — air separation unit |  | Secunda |  | Energy, Base and Performance Chemicals |  | — |  | 470 |
Refurbishment of equipment |  | Secunda |  | Mining |  | 409 |  | 445 |
Etame field development |  | Gabon |  | Exploration and Production International |  | 380 |  | — |
Mine geographical expansions |  | Secunda |  | Mining |  | 406 |  | 426 |
Natref air quality compliance projects |  | Sasolburg |  | Energy |  | 353 |  | 17 |
Impumelelo Colliery to maintain Brandspruit Colliery operation |  | Secunda |  | Mining |  | 220 |  | 357 |
Coal tar filtration east and west project |  | Secunda |  | Energy, Base and Performance Chemicals |  | 356 |  | 779 |
Other capital commitments |  | Various |  | Various |  | 11 369 |  | 12 719 |
|  |  |  |  |  | 60 095 |  | 69 927 |

* The LCCP capital commitment excludes the remaining contingency of US$216 million. During the year a misstatement was identified in the calculation of the LCCP capital cost estimate that was included in the capital commitment disclosure as at 30 June 2018. The misstatement related to the inaccurate estimation of the cost still to be incurred on the project. Accordingly, the capital commitments disclosure as at 30 June 2018 that were originally presented as R63 276 million has been revised by R6 651 million (US$484 million) to R69 927 million. Management concluded that the revision is not material to the financial statements.

46

17 Property, plant and equipment continued

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.

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.

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 therefore requires a significant degree of judgement to be applied by management.

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 |  | 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 |  | Units of production over life of related reserve base |

47

18 Assets under construction

|  | Property plant and equipment under construction |  | Other intangible assets under development |  | Exploration and evaluation assets |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
Balance as at 30 June 2018 |  | 163 783 |  | 1 125 |  | 453 |  | 165 361 |
Additions |  | 52 786 |  | 289 |  | 67 |  | 53 142 |
to sustain existing operations |  | 21 739 |  | 245 |  | — |  | 21 984 |
to expand operations |  | 31 047 |  | 44 |  | 67 |  | 31 158 |
Net reclassification from/(to) other assets |  | (93 | ) | — |  | 323 |  | 230 |
Finance costs capitalised |  | 6 942 |  | — |  | — |  | 6 942 |
Net impairment of assets under construction |  | (3 973 | ) | — |  | (34 | ) | (4 007 | )
Reclassification to disposal groups held for sale |  | (153 | ) | — |  | — |  | (153 | )
Projects capitalised |  | (96 084 | ) | (816 | ) | — |  | (96 900 | )
Translation of foreign operations |  | 3 971 |  | 29 |  | 1 |  | 4 001 |
Disposals and scrapping* |  | (852 | ) | — |  | — |  | (852 | )
Balance at 30 June 2019 |  | 126 327 |  | 627 |  | 810 |  | 127 764 |

* Determining as to whether, and 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 input from experts.

|  | Property plant and equipment under construction |  | Other intangible assets under development |  | Exploration and evaluation assets |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
Balance as at 30 June 2017 |  | 129 124 |  | 1 245 |  | 365 |  | 130 734 |
Additions |  | 51 871 |  | 321 |  | 614 |  | 52 806 |
to sustain existing operations |  | 18 889 |  | 238 |  | — |  | 19 127 |
to expand operations |  | 32 982 |  | 83 |  | 614 |  | 33 679 |
Net reclassification from/(to) other assets |  | 42 |  | (33 | ) | — |  | 9 |
Finance costs capitalised |  | 3 568 |  | — |  | — |  | 3 568 |
Net impairment of assets under construction |  | (1 478 | ) | — |  | (312 | ) | (1 790 | )
Reduction in rehabilitation provision capitalised (note 31) |  | (341 | ) | — |  | (131 | ) | (472 | )
Projects capitalised |  | (25 315 | ) | (454 | ) | — |  | (25 769 | )
Translation of foreign operations |  | 7 464 |  | 46 |  | (35 | ) | 7 475 |
Disposals and scrapping |  | (1 152 | ) | — |  | (48 | ) | (1 200 | )
Balance at 30 June 2018 |  | 163 783 |  | 1 125 |  | 453 |  | 165 361 |

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Business segmentation |  |  |  |  |
· Mining |  | 2 268 |  | 2 095 |
· Exploration and Production International |  | 7 426 |  | 6 457 |
· Energy |  | 7 698 |  | 5 993 |
· Base Chemicals |  | 60 927 |  | 75 648 |
· Performance Chemicals |  | 48 764 |  | 74 595 |
· Group Functions |  | 681 |  | 573 |
Total operations |  | 127 764 |  | 165 361 |

48

18 Assets under construction continued

|  | 2019 |  | 2018 |  | 2017 |
for the year ended at 30 June |  | Rm |  | Rm |  | Rm |
Additions to assets under construction (cash flow) |  |  |  |  |  |  |
Current year additions |  | 53 142 |  | 52 806 |  | 60 312 |
Adjustments for non-cash items |  | 1 410 |  | (171 | ) | (420 | )
cash flow hedge accounting |  | — |  | 1 |  | (2 | )
movement in environmental provisions capitalised |  | (537 | ) | (172 | ) | (418 | )
movement in long-term debt |  | (13 | ) | — |  | — |
LCCP investment incentives |  | 1 960 |  | — |  | — |
Per the statement of cash flows* |  | 54 552 |  | 52 635 |  | 59 892 |

|  | 2019 |  | 2018 |
|  | Rm |  | Rm |
Capital expenditure |  |  |  |  |
Projects to sustain operations comprise of: |  |  |  |  |
Secunda Synfuels Operations |  | 10 315 |  | 8 608 |
Shutdown and major statutory maintenance |  | 4 825 |  | 3 775 |
Renewals |  | 1 880 |  | 1 481 |
Oxygen train 17 (Outside Battery Limits portion) |  | 90 |  | 417 |
Sixth fine ash dam (environmental) |  | 1 417 |  | 1 353 |
Volatile organic compounds abatement programme (environmental) |  | 141 |  | 137 |
Coal tar filtration east project (safety) |  | 329 |  | 294 |
Other environmental related expenditure |  | 170 |  | 133 |
Other safety related expenditure |  | 556 |  | 362 |
Other sustain |  | 907 |  | 656 |
Mining (Secunda and Sasolburg) |  | 2 894 |  | 3 720 |
Shondoni Colliery to maintain Middelbult Colliery operation |  | 80 |  | 318 |
Impumelelo Colliery to maintain Brandspruit Colliery operation |  | 157 |  | 258 |
Acquisition of mineral rights |  | — |  | 650 |
Refurbishment of equipment |  | 674 |  | 867 |
Mine geographical expansion |  | 605 |  | 449 |
Other safety related expenditure |  | 355 |  | 196 |
Other sustain |  | 1 023 |  | 982 |
Other (in various locations) |  | 8 758 |  | 6 797 |
Expenditure related to environmental obligations |  | 590 |  | 476 |
Expenditure incurred relating to safety regulations |  | 283 |  | 409 |
Other sustain |  | 7 885 |  | 5 912 |
Capital expenditure cash flow* |  | 21 967 |  | 19 125 |

* Excludes finance costs capitalised to assets under construction.

49

18 Assets under construction continued

|  |  |  |  |  | 2019 |  | 2018 |
|  |  |  |  |  | Rm |  | Rm |
Capital expenditure |  |  |  |  |  |  |  |  |
Projects to expand operations comprise of: |  | Project location |  | Business segment |  |  |  |  |
Lake Charles Chemicals Project |  | United States |  | Base and Performance Chemicals |  | 30 289 |  | 30 100 |
China Ethoxylation plant |  | China |  | Performance Chemicals |  | 489 |  | 398 |
Canadian shale gas asset |  | Canada |  | Exploration and Production International |  | 141 |  | 101 |
High-density polyethylene plant |  | United States |  | Base Chemicals |  | — |  | 265 |
Mozambique exploration and development |  | Mozambique |  | Exploration and Production International |  | 221 |  | 1 002 |
Other projects to expand operations |  | Various |  | Various |  | 1 445 |  | 1 644 |
Capital expenditure cash flow* |  |  |  |  |  | 32 585 |  | 33 510 |

* Excludes finance costs capitalised to assets under construction.

Project-related performance guarantees

With the settlement of the LCCP term loan the completion guarantees and sureties issued in respect of the Lake Charles Chemicals Project have been discharged.

Accounting policies:

Assets under construction

Assets under construction are non-current assets, which includes land and expenditure capitalised for work in progress in respect of activities to develop, expand or enhance items of property, plant and equipment, intangible assets and exploration assets. 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 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.

50

18 Assets under construction continued

Exploration assets

Exploration assets comprise capitalised expenditure relating to the exploration for and evaluation of mineral resources (coal, oil and gas). Mineral assets comprise capitalised expenditure relating to producing coal, oil and gas properties, including development costs and previously capitalised exploration assets.

Oil and gas

The successful efforts method is used to account for natural oil and gas exploration, evaluation and development activities.

Property and licence acquisition costs as well as development cost, including expenditure incurred to drill and equip development wells on proved properties, are capitalised as part of assets under construction and transferred to mineral assets in property, plant and equipment when the assets begin producing.

On completion of an exploratory well or exploratory-type stratigraphic test well, the entity will be able to determine if there are oil or gas resources. The classification of resources as proved reserves depends on whether development of the property is economically feasible and recoverable in the future, under existing economic and operating conditions, and if any major capital expenditure to develop the property as a result of sufficient quantities of additional proved reserves being identified is justifiable, approved and recoverable.

The cost of exploratory wells, through which potential proved reserves may be or have been discovered and the associated exploration costs are capitalised as exploration and evaluation assets in assets under construction. These costs remain capitalised pending the evaluation of results and the determination of whether there are proved reserves.

The following conditions must be met for these exploration costs to remain capitalised:

· Sufficient progress is being made in assessing the oil and gas resources, including assessing the economic and operating viability with regards to developing the property.

· It has been determined that sufficient oil and gas resources or reserves exist which are economically viable based on a range of technical and commercial considerations to justify the capital expenditure required for the completion of the well as a producing well, either individually or in conjunction with other wells.

Progress in this regard is reassessed at each reporting date and is subject to technical, commercial and management review to ensure sufficient justification for the continued capitalisation of such qualifying exploration and evaluation expenditure as an exploration and evaluation asset as part of assets under construction. If both of the above conditions are not met or if information is obtained that raise substantial doubt about the economic or operating viability, the costs are charged to the income statement.

Exploratory wells and exploratory-type stratigraphic test wells can remain suspended on the statement of financial position for several years while additional activity including studies, appraisal, drilling and/or seismic work on the potential oil and gas field is performed or while the optimum development plans and timing are established in the absence of impairment indicators.

Coal mining

Coal mining exploration and evaluation expenditure is charged to the income statement until completion of a final feasibility study supporting proved and probable coal reserves. Expenditure incurred subsequent to proved and probable coal reserves being identified is capitalised as exploration assets in assets under construction.

Expenditure on producing mines or development properties is capitalised when excavation or drilling is incurred to extend reserves or further delineate existing proved and probable coal reserves. All development expenditure incurred after the commencement of production is capitalised to the extent that it gives rise to probable future economic benefits.

A unit is considered to be produced once it has been removed from underground and taken to the surface, passed the bunker and has been transported by conveyor over the scale of the shaft head. The calculation is based on proved and probable reserves assigned to that specific mine (accessible reserves) or complex which benefits from the utilisation of those assets. Inaccessible reserves are excluded from the calculation.

51

19 Long-term receivables and prepaid expenses

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Total long-term receivables |  | 6 007 |  | 3 921 |
Impairment of long-term receivables* |  | (211 | ) | (38 | )
Short-term portion |  | (214 | ) | (97 | )
|  | 5 582 |  | 3 786 |
Long-term prepaid expenses |  | 735 |  | 860 |
|  | 6 317 |  | 4 646 |
Comprising: |  |  |  |  |
Long-term receivables (interest-bearing) — joint operations |  | 1 252 |  | 1 204 |
Long-term loans |  | 2 370 |  | 2 582 |
LCCP investment incentives |  | 1 960 |  | — |
|  | 5 582 |  | 3 786 |

*Impairment of long-term loans and receivables

In 2019 long-term loans and receivables are considered for impairment under the expected credit loss model. Refer to note 40 for detail on the impairments recognised. In 2018 loans and receivables were considered for impairment under IAS 39.

20 Equity accounted investments

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Amounts recognised in the statement of financial position: |  |  |  |  |
Investments in joint ventures and associates |  | 9 866 |  | 10 991 |

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Business segmentation |  |  |  |  |
· | Mining |  | 5 |  | 1 |
· | Energy |  | 9 449 |  | 9 667 |
· | Base Chemicals |  | 273 |  | 1 164 |
· | Performance Chemicals |  | 16 |  | 16 |
· | Group Functions |  | 123 |  | 143 |
Total carrying value of equity accounted investments |  | 9 866 |  | 10 991 |

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Amounts recognised in the income statement: |  |  |  |  |  |  |
Share of profits of equity accounted investments, net of tax |  | 1 074 |  | 1 443 |  | 1 071 |
share of profits |  | 1 089 |  | 1 454 |  | 1 085 |
remeasurement items |  | (15 | ) | (11 | ) | (14 | )
Amounts recognised in the statement of cash flows: |  |  |  |  |  |  |
Dividends received from equity accounted investments |  | 1 506 |  | 1 702 |  | 1 539 |

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.

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 9, to calculate the impairment.

52

20 Equity accounted investments continued

At 30 June, the group’s interest in equity accounted investments and the total carrying values were:

|  | Country of |  |  |  | Interest |  | 2019 |  | 2018 |
Name |  | incorporation |  | Nature of activities |  | % |  | Rm |  | Rm |
Joint ventures |  |  |  |  |  |  |  |  |  |  |
ORYX GTL Limited |  | Qatar |  | GTL plant |  | 49 |  | 8 239 |  | 8 179 |
Sasol Huntsman GmbH & co KG* |  | Germany |  | Manufacturing of chemical products |  | 50 |  | — |  | 893 |
Sasol Dyno Nobel (Pty) Ltd |  | South Africa |  | Manufacturing and distribution of explosives |  | 50 |  | 273 |  | 271 |
Sasol Chevron Holdings Limited |  | Bermuda |  | Marketing of Escravos GTL products |  | 50 |  | 274 |  | 311 |
Associates |  |  |  |  |  |  |  |  |  |  |
Escravos GTL (EGTL)** |  | Nigeria |  | GTL plant |  | 10 |  | 753 |  | 1 027 |
Other equity accounted investments |  |  |  |  |  | Various |  | 327 |  | 310 |
Carrying value of investments |  |  |  |  |  |  |  | 9 866 |  | 10 991 |

* The group’s investment in Sasol Huntsman GmbH & co KG has been classified as held for sale. Refer to note 11.

** Although the group holds less than 20% of the voting power of EGTL, the group has significant influence with regards to the management and technical support to the plant.

Summarised financial information for the group’s share of equity accounted investments which are not material***

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Operating profit |  | 13 |  | 419 |
(Loss)/profit before tax |  | (2 | ) | 427 |
Taxation |  | (56 | ) | (152 | )
(Loss)/profit and total comprehensive income for the year |  | (58 | ) | 275 |

*** The financial information provided represents the group’s share of the results of the equity accounted investments.

|  | 2019 |  | 2018 |
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 |  | 715 |  | 536 |
Authorised but not yet contracted for |  | 1 100 |  | 623 |
Less: expenditure to the end of year |  | (532 | ) | (266 | )
|  | 1 283 |  | 893 |

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 is considered to be material as it is closely monitored and reported on to the decision makers and is considered to be a strategically material investment.

53

20 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. 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 |
|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Summarised statement of financial position |  |  |  |  |
Non-current assets |  | 11 964 |  | 12 202 |
Current assets |  | 6 722 |  | 6 640 |
Total assets |  | 18 686 |  | 18 842 |
Other non-current liabilities |  | 378 |  | 360 |
Deferred tax liability |  | (22 | ) | 9 |
Other current liabilities |  | 1 337 |  | 1 036 |
Tax payable |  | 100 |  | 436 |
Total liabilities |  | 1 793 |  | 1 841 |
Net assets |  | 16 893 |  | 17 001 |
Summarised income statement |  |  |  |  |
Turnover |  | 9 977 |  | 10 159 |
Depreciation and amortisation |  | (1 420 | ) | (1 190 | )
Other operating expenses |  | (5 039 | ) | (5 313 | )
Operating profit before interest and tax |  | 3 518 |  | 3 656 |
Finance income |  | 33 |  | 11 |
Finance cost |  | (3 | ) | (1 | )
Profit before tax |  | 3 548 |  | 3 666 |
Taxation |  | (607 | ) | (628 | )
Profit and total comprehensive income for the year |  | 2 941 |  | 3 038 |
The group’s share of profits of equity accounted investment |  | 1 131 |  | 1 168 |
49% share of profit before tax |  | 1 738 |  | 1 796 |
Taxation* |  | (607 | ) | (628 | )
Reconciliation of summarised financial information |  |  |  |  |
Net assets at the beginning of the year |  | 17 001 |  | 15 334 |
Profit before tax for the year |  | 3 548 |  | 3 666 |
Taxation* |  | (607 | ) | (628 | )
Foreign exchange differences |  | 490 |  | 839 |
Dividends paid |  | (3 539 | ) | (2 210 | )
Net assets at the end of the year |  | 16 893 |  | 17 001 |
Additional Sasol specific liabilities* |  | (79 | ) | (309 | )
Adjusted net assets at the end of the period |  | 16 814 |  | 16 692 |
Carrying value of equity accounted investment |  | 8 239 |  | 8 179 |

* With effect from 29 April 2017, as a result of change in tax regulations, tax is levied only on Sasol’s share of profits at a rate of 35%.

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.

Contingent liabilities

There were no contingent liabilities at 30 June 2019 relating to our joint ventures or associates.

54

20 Equity accounted investments continued

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. Under the equity method, investments in associates and joint ventures are recognised initially at cost. Subsequent to the acquisition date, the group’s share of profits or losses of associates and joint ventures is charged to the income statement as equity accounted earnings and its share of movements in equity reserves is recognised as other comprehensive income or equity as appropriate. A joint venture is a joint arrangement in which the parties have joint control with rights to the net assets of the arrangement. An associate is an entity, other than a subsidiary, joint venture or joint operation, in which the group has significant influence, but no control or joint control, over financial and operating policies. 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.

55

21 Interest in joint operations

At 30 June, the group’s interest in material joint operations were:

|  |  |  |  |  | % of equity owned |
|  |  |  |  |  | 2019 |  | 2018 |
Name |  | Country of incorporation |  | Nature of activities |  | Rm |  | Rm |
Gemini HDPE LLC |  | United States of America |  | Manufactures high density polyethylene chemicals |  | 50 |  | 50 |
Sasol Canada |  | Canada |  | Development of shale gas reserves and production and marketing of shale gas |  | 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.

|  | Gemini |  | Sasol |  |  |  |  |  | Total |  | Total |
|  | HDPE LLC |  | Canada |  | Natref |  | Other* |  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Statement of financial position |  |  |  |  |  |  |  |  |  |  |  |  |
External non-current assets |  | 4 462 |  | 1 180 |  | 3 531 |  | 1 685 |  | 10 858 |  | 13 055 |
External current assets |  | 73 |  | 288 |  | 292 |  | 998 |  | 1 651 |  | 1 503 |
Intercompany current assets |  | 18 |  | 1 |  | 18 |  | 72 |  | 109 |  | 1 146 |
Total assets |  | 4 553 |  | 1 469 |  | 3 841 |  | 2 755 |  | 12 618 |  | 15 704 |
Shareholders’ equity |  | 1 869 |  | 209 |  | 240 |  | 570 |  | 2 888 |  | 5 389 |
Long-term liabilities |  | 2 480 |  | 1 155 |  | 2 887 |  | 1 479 |  | 8 001 |  | 7 710 |
Interest-bearing current liabilities |  | 120 |  | — |  | 167 |  | 302 |  | 589 |  | 1 408 |
Non-interest-bearing current liabilities |  | 84 |  | 104 |  | 381 |  | 168 |  | 737 |  | 771 |
Intercompany current liabilities |  | — |  | 1 |  | 166 |  | 236 |  | 403 |  | 426 |
Total equity and liabilities |  | 4 553 |  | 1 469 |  | 3 841 |  | 2 755 |  | 12 618 |  | 15 704 |
Income statement |  |  |  |  |  |  |  |  |  |  |  |  |
Turnover |  | 441 |  | 239 |  | 2 061 |  | 1 394 |  | 4 135 |  | 3 660 |
Operating (loss)/profit |  | (117 | ) | (2 747 | ) | 457 |  | 84 |  | (2 323 | ) | (3 089 | )
Other expenses |  | (58 | ) | (13 | ) | (213 | ) | (160 | ) | (444 | ) | (438 | )
Net (loss)/profit before tax |  | (175 | ) | (2 760 | ) | 244 |  | (76 | ) | (2 767 | ) | (3 527 | )
Taxation |  | — |  | — |  | (79 | ) | 17 |  | (62 | ) | (49 | )
Attributable (loss)/profit |  | (175 | ) | (2 760 | ) | 165 |  | (59 | ) | (2 829 | ) | (3 576 | )
Statement of cash flows |  |  |  |  |  |  |  |  |  |  |  |  |
Cash flow from operations |  | — |  | 31 |  | 887 |  | 419 |  | 1 337 |  | 1 189 |
Movement in working capital |  | (25 | ) | 39 |  | 55 |  | (180 | ) | (111 | ) | 397 |
Tax paid |  | — |  | — |  | 2 |  | (26 | ) | (24 | ) | (5 | )
Other expenses |  | (143 | ) | — |  | (209 | ) | (209 | ) | (561 | ) | (485 | )
Cash available from operations |  | (168 | ) | 70 |  | 735 |  | 4 |  | 641 |  | 1 096 |
Dividends paid |  | — |  | — |  | (230 | ) | — |  | (230 | ) | (111 | )
Cash retained from operations |  | (168 | ) | 70 |  | 505 |  | 4 |  | 411 |  | 985 |
Cash flow from investing activities |  | (80 | ) | (124 | ) | (609 | ) | (30 | ) | (843 | ) | (712 | )
Cash flow from financing activities |  | 244 |  | (804 | ) | 142 |  | (194 | ) | (612 | ) | 1 575 |
(Increase)/decrease in cash requirements |  | (4 | ) | (858 | ) | 38 |  | (220 | ) | (1 044 | ) | 1 848 |

* Includes Central Térmica de Ressano Garcia (CTRG) and Sasol Wilmar Alcohol Industries (Lianyungang) Co Ltd. The group has classified its investment in Sasol Wilmar Alcohol Industries (Lianyungang) Co Ltd as held for sale at 30 June 2019. Refer to note 11.

At 30 June 2019, the group’s share of the total capital commitments of joint operations amounted to R1 080 million (2018 — R427 million).

56

22 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, holds primarily 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.

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 |  | Investment at cost (Rm)(1) |
Name |  | incorporation |  | Nature of activities |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
Significant operating subsidiaries |  |  |  |  |  |  |  |  |  |  |
Direct |  |  |  |  |  |  |  |  |  |  |  |  |
Sasol Mining Holdings (Pty) Ltd |  | South Africa |  | Holding company of the group’s mining interests |  | 100 |  | 100 |  | 9 163 |  | 9 163 |
Sasol Technology (Pty) Ltd |  | South Africa |  | Engineering services, research and development and technology transfer |  | 100 |  | 100 |  | 316 |  | 316 |
Sasol Financing Ltd |  | South Africa |  | Management of cash resources, investments and procurement of loans (for South African operations) |  | 100 |  | 100 |  | 422 |  | 422 |
Sasol Investment Company (Pty) Ltd(2) |  | South Africa |  | Holding company for foreign investments |  | 100 |  | 100 |  | 65 748 |  | 62 580 |
Sasol South Africa Ltd(3),(4) |  | South Africa |  | Integrated petrochemicals and energy company |  | 100 |  | 100 |  | 32 320 |  | 28 066 |
Sasol Middle East and India (Pty) Ltd |  | South Africa |  | Develop and implement international GTL and CTL ventures |  | 100 |  | 100 |  | 10 092 |  | 10 092 |
Sasol Africa (Pty) Ltd |  | South Africa |  | Exploration, development, production, marketing and distribution of natural oil and gas and associated products |  | 100 |  | 100 |  | 8 069 |  | 8 069 |
Sasol Oil (Pty) Ltd |  | South Africa |  | Marketing of fuels and lubricants |  | 75 |  | 75 |  | 672 |  | 657 |
Sasol New Energy Holdings (Pty) Ltd |  | South Africa |  | Developing lower-carbon energy solutions |  | 100 |  | 100 |  | 792 |  | 932 |

(1) The cost of these investments represents the holding company’s investment in the subsidiaries, which eliminate on consolidation.

(2) Increase relates to equity funding of the LCCP.

(3) Increase relates to notional interest relating to Khanyisa transaction.

(4) 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.

57

22 Interest in significant operating subsidiaries continued

|  | Country of |  |  |  | % of equity owned |
Name |  | incorporation |  | Nature of activities |  | 2019 |  | 2018 |
Significant operating subsidiaries |  |  |  |  |  |  |  |  |
Indirect |  |  |  |  |  |  |  |  |
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 |  | 50 |  | 50 |
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 Canada Holdings Limited |  | Canada |  | Exploration, development, production, marketing and distribution of natural oil and gas and associated products in Canada |  | 100 |  | 100 |
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 |  | — |

* Through contractual arrangements Sasol exercises control over the relevant activities of Rompco.

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.

Guarantees

Sasol Limited has guaranteed the fulfilment of various subsidiaries’ obligations in terms of contractual agreements. The group has guaranteed the borrowing facilities and banking arrangements of certain of its subsidiaries.

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.

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.

58

Working capital

23 Inventories

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Carrying value |  |  |  |  |
Crude oil and other raw materials |  | 3 938 |  | 4 308 |
Process material |  | 1 890 |  | 1 873 |
Maintenance materials |  | 5 940 |  | 5 156 |
Work in progress |  | 2 578 |  | 2 714 |
Manufactured products |  | 15 087 |  | 15 070 |
Consignment inventory |  | 213 |  | 243 |
|  | 29 646 |  | 29 364 |
Business segmentation |  |  |  |  |
· | Mining |  | 1 425 |  | 1 661 |
· | Exploration and Production International |  | 163 |  | 144 |
· | Energy |  | 7 826 |  | 7 680 |
· | Base Chemicals |  | 7 684 |  | 7 427 |
· | Performance Chemicals |  | 12 522 |  | 12 417 |
· | Group Functions |  | 26 |  | 35 |
Total operations |  | 29 646 |  | 29 364 |

The impact of higher crude oil feedstock prices and lower sales prices for certain chemical products resulted in a net realisable value write-down of R371 million in 2019 (2018 — R234 million).

Inventory of R3 113 million (2018 — R1 348 million) is held at net realisable value. No inventories were encumbered at 30 June 2019, (2018 — R4 099 million).

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

24 Trade and other receivables

|  | 2019 |  | 2018* |
for the year ended 30 June |  | Rm |  | Rm |
Trade receivables |  | 23 237 |  | 23 742 |
Other receivables** |  | 2 760 |  | 3 231 |
Related party receivables — equity accounted investments |  | 67 |  | 102 |
Impairment of trade and other receivables |  | (453 | ) | (427 | )
Trade and other receivables |  | 25 611 |  | 26 648 |
Duties recoverable from customers |  | 467 |  | 600 |
Prepaid expenses and other |  | 1 425 |  | 829 |
Value added tax |  | 1 075 |  | 1 652 |
|  | 28 578 |  | 29 729 |

* Comparative information is based on IAS 39.

** Other receivables include short-term portion of long-term receivables, receivables related to exploration activities, employee-related receivables and short-term deposits.

59

24 Trade and other receivables continued

Impairment of trade receivables

Trade receivables are considered for impairment under the expected credit loss model. Trade receivables are impaired when there is no reasonable prospect that the customer will pay. Refer to note 40 for detail on the impairments recognised.

No individual customer represents more than 10% of the group’s trade receivables.

Fair value of trade receivables

The carrying value approximates fair value because of the short period to maturity of these instruments.

Collateral

The group holds no collateral over the trade receivables which can be sold or pledged to a third party.

Credit risk exposure in respect of trade receivables under IAS39 is analysed as follows:

|  | Carrying value |  | Impairment |
|  | 2018 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Age analysis of trade receivables |  |  |  |  |
Not past due date |  | 21 611 |  | 3 |
Past due 0 – 30 days |  | 1 477 |  | 5 |
Past due 31 – 150 days |  | 257 |  | 18 |
Past due 151 days – one year |  | 93 |  | 44 |
More than one year*** |  | 304 |  | 129 |
|  | 23 742 |  | 199 |

*** More than one year relates to long outstanding balances for specific customers who have exceeded their contractual repayment terms.

|  | 2019 |  | 2018 |
|  | Rm |  | Rm |
Business segmentation |  |  |  |  |
· | Mining |  | 276 |  | 428 |
· | Exploration and Production International |  | 497 |  | 736 |
· | Energy |  | 10 357 |  | 11 487 |
· | Base Chemicals |  | 7 603 |  | 7 022 |
· | Performance Chemicals |  | 8 071 |  | 8 585 |
· | Group Functions |  | 1 774 |  | 1 471 |
Total operations |  | 28 578 |  | 29 729 |

Accounting policies:

IFRS 9 applicable in 2019:

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.

IAS 39 applicable in 2018:

Trade and other receivables are recognised initially at fair value and subsequently stated at amortised cost using the effective interest rate method, less impairment losses.

60

25 Trade and other payables

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Trade payables |  | 15 749 |  | 13 510 |
Capital project related payables |  | 9 088 |  | 9 780 |
Accrued expenses |  | 3 340 |  | 3 062 |
Related party payables |  | 324 |  | 166 |
third parties |  | 189 |  | 33 |
equity accounted investments |  | 135 |  | 133 |
Trade payables |  | 28 501 |  | 26 518 |
Other payables* |  | 6 282 |  | 6 188 |
Duties payable to revenue authorities |  | 4 450 |  | 4 267 |
Value added tax |  | 233 |  | 177 |
|  | 39 466 |  | 37 150 |

* Other payables includes employee-related payables.

No individual vendor represents more than 10% of the group’s trade payables.

Fair value of trade and other payables

The carrying value approximates fair value because of the short period to se ttlement of these obligations.

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.

26 Decrease/(increase) in working capital

|  | 2019 |  | 2018 |  | 2017 |
|  | Rm |  | Rm |  | Rm |
Increase in inventories |  | (829 | ) | (3 413 | ) | (3 214 | )
Decrease/(increase) in trade receivables |  | 37 |  | (2 789 | ) | (346 | )
Increase in trade payables |  | 3 202 |  | 2 441 |  | 1 393 |
Decrease/(increase) in working capital |  | 2 410 |  | (3 761 | ) | (2 167 | )

61

Cash management

27 Cash and cash equivalents

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Cash and cash equivalents |  | 15 877 |  | 17 128 |
Bank overdraft |  | (58 | ) | (89 | )
Per the statement of cash flows |  | 15 819 |  | 17 039 |
Cash by currency |  |  |  |  |
Rand |  | 4 179 |  | 3 982 |
Euro |  | 2 080 |  | 2 855 |
US Dollar |  | 7 992 |  | 9 040 |
Other currencies |  | 1 568 |  | 1 162 |
|  | 15 819 |  | 17 039 |

Included in cash and cash equivalents:

Cash held in trust that is restricted for use and held in escrow. Includes R432 million (2018 – R408 million) for the rehabilitation of various sites and R288 million (2018 – R170 million) in various other trusts in the group.

Cash in respect of joint operations can only be utilised for the business activities of the joint operations. This includes Sasol’s interests in the power plant in Mozambique R322 million (2018 – R542 million), the high-density polyethylene (HDPE) plant in North America of R35 million (2018 – R38 million) and R227 million (2018 – R389 million) relating to exploration and other ventures.

Other cash restricted for use of R1 176 million (2018 – R433 million) includes deposits for future abandonment site obligations and decommissioning of pipelines, as well as cash deposits serving as collateral for bank guarantees.

Fair value of cash and cash equivalents

The carrying value of cash and cash equivalents approximates fair value due to the short-term maturity of these instruments.

Accounting policies:

Cash and cash equivalents comprises cash on hand, cash restricted for use, bank overdraft, demand deposits and other short-term highly liquid investments with a maturity period of three months or less at date of purchase. Cash and cash equivalents are stated at carrying amount which is deemed to be fair value. Bank overdrafts are offset against cash and cash equivalents in the statement of cash flows.

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.

62

28 Cash generated by operating activities

|  |  |  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |  | Rm |
Cash flow from operations |  | 29 |  | 48 988 |  | 46 638 |  | 46 236 |
Decrease/(increase) in working capital |  | 26 |  | 2 410 |  | (3 761 | ) | (2 167 | )
|  |  |  | 51 398 |  | 42 877 |  | 44 069 |

29 Cash flow from operations

Earnings before interest and tax (EBIT) |  |  |  | 9 697 |  | 17 747 |  | 31 705 |
Adjusted for |  |  |  |  |  |  |  |  |
share of profits of equity accounted investments |  | 20 |  | (1 074 | ) | (1 443 | ) | (1 071 | )
equity-settled share-based payment |  | 35 |  | 1 659 |  | 3 776 |  | 463 |
depreciation and amortisation |  |  |  | 17 968 |  | 16 425 |  | 16 204 |
effect of remeasurement items |  | 9 |  | 18 645 |  | 9 901 |  | 1 616 |
movement in long-term provisions |  |  |  |  |  |  |  |  |
income statement charge |  | 31 |  | 430 |  | (596 | ) | 228 |
utilisation |  | 31 |  | (1 099 | ) | (729 | ) | (969 | )
movement in short-term provisions |  |  |  | (3 | ) | 25 |  | (215 | )
movement in post-retirement benefits |  |  |  | 635 |  | (561 | ) | 356 |
translation effects |  |  |  | (199 | ) | (121 | ) | (11 | )
write-down of inventories to net realisable value |  |  |  | 371 |  | 234 |  | 470 |
movement in financial assets and liabilities |  |  |  | 864 |  | 2 415 |  | (3 120 | )
movement in other receivables and payables |  |  |  | 601 |  | (244 | ) | 50 |
other non-cash movements |  |  |  | 493 |  | (191 | ) | 530 |
|  |  |  | 48 988 |  | 46 638 |  | 46 236 |

30 Dividends paid

Final dividend — prior year |  | 6 269 |  | 4 842 |  | 5 650 |
Interim dividend — current year |  | 3 683 |  | 3 110 |  | 2 978 |
|  | 9 952 |  | 7 952 |  | 8 628 |
Forecast cash flow on final dividend — current year |  | — |  | 4 898 |  | 4 844 |

Notes to the financial statements

63

PROVISIONS AND RESERVES

Page

65 Provisions

· Long-term provisions

· Short-term provisions

· Post-retirement benefit obligations

· Cash-settled share-based payment provision

76 Reserves

· Share-based payment reserve

64

Provisions

31 Long-term provisions

|  | Environmental |  | Share- based payments* |  | Other |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
2019 |  |  |  |  |  |  |  |  |
Balance at beginning of year |  | 14 933 |  | 1 101 |  | 1 693 |  | 17 727 |
Capitalised in property, plant and equipment and assets under construction** |  | 1 925 |  | — |  | — |  | 1 925 |
Reduction in rehabilitation provision capitalised |  | (1 | ) | — |  | — |  | (1 | )
Transfer to held for sale liabilities*** |  | (51 | ) | — |  | (3 | ) | (54 | )
Per the income statement |  | 1 095 |  | (440 | ) | (225 | ) | 430 |
additional provisions and changes to existing provisions |  | 415 |  | (440 | ) | 64 |  | 39 |
reversal of unutilised amounts |  | (8 | ) | — |  | (289 | ) | (297 | )
effect of change in discount rate |  | 688 |  | — |  | — |  | 688 |
Notional interest |  | 849 |  | — |  | 8 |  | 857 |
Utilised during year (cash flow) |  | (159 | ) | (397 | ) | (543 | ) | (1 099 | )
Foreign exchange differences recognised in income statement |  | 109 |  | — |  | 18 |  | 127 |
Translation of foreign operations |  | 42 |  | — |  | 6 |  | 48 |
Balance at end of year |  | 18 742 |  | 264 |  | 954 |  | 19 960 |

Long-term provisions

|  | Environmental |  | Share- based payments |  | Other |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
2018 |  |  |  |  |  |  |  |  |
Balance at beginning of year |  | 15 716 |  | 885 |  | 2 178 |  | 18 779 |
Capitalised in property, plant and equipment and assets under construction |  | 350 |  | — |  | — |  | 350 |
Reduction in rehabilitation provision capitalised**** |  | (1 433 | ) | — |  | — |  | (1 433 | )
Per the income statement |  | (756 | ) | 655 |  | (495 | ) | (596 | )
additional provisions and changes to existing provisions |  | 241 |  | 655 |  | (495 | ) | 401 |
reversal of unutilised amounts |  | (194 | ) | — |  | — |  | (194 | )
effect of change in discount rate |  | (803 | ) | — |  | — |  | (803 | )
Notional interest |  | 953 |  | — |  | 9 |  | 962 |
Utilised during year (cash flow) |  | (249 | ) | (437 | ) | (43 | ) | (729 | )
Foreign exchange differences recognised in income statement |  | 225 |  | (1 | ) | 27 |  | 251 |
Translation of foreign operations |  | 127 |  | (1 | ) | 17 |  | 143 |
Balance at end of year |  | 14 933 |  | 1 101 |  | 1 693 |  | 17 727 |

* Refer note 34 for accounting policies and areas of judgement used in calculating the share-based payment provision (cash settled).

** Increase in rehabilitation capitalised in 2019 relates to a reassessment of our provision based on discount rates and cost estimates.

*** Relates to rehabilitation provisions of the explosives business classified as held for sale, refer note 11.

**** Reduction in rehabilitation capitalised in 2018 relates to a reassessment of our provision based on legislation changes, discount rates and new rehabilitation methods which resulted in a reduction of R1,4 billion.

65

31 Long-term provisions continued

|  |  |  | 2019 |  | 2018 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |
Expected timing of future cash flows |  |  |  |  |  |  |
Within one year |  |  |  | 2 338 |  | 2 567 |
One to five years |  |  |  | 3 291 |  | 3 715 |
More than five years |  |  |  | 14 331 |  | 11 445 |
|  |  |  | 19 960 |  | 17 727 |
Short-term portion |  | 32 |  | (2 338 | ) | (2 567 | )
Long-term provisions |  |  |  | 17 622 |  | 15 160 |
Estimated undiscounted obligation |  |  |  | 101 100 |  | 102 952 |
Business segmentation |  |  |  |  |  |  |
· Mining |  |  |  | 1 439 |  | 1 324 |
· Exploration and Production International |  |  |  | 6 779 |  | 5 677 |
· Energy |  |  |  | 3 427 |  | 2 909 |
· Base Chemicals |  |  |  | 3 919 |  | 3 321 |
· Performance Chemicals |  |  |  | 2 038 |  | 1 909 |
· Group Functions |  |  |  | 20 |  | 20 |
Total operations |  |  |  | 17 622 |  | 15 160 |

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.

The total environmental provision at 30 June 2019 amounted to R18 742 million (2018 – R14 933 million). 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 R667 million (2018 – R649 million). In addition, indemnities of R2 155 million (2018 – R2 066 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.

|  | 2019 |  | 2018 |
for the year ended 30 June |  | % |  | % |
South Africa |  | 6,9 to 8,7 |  | 7,3 to 9,2 |
Europe |  | 0,0 to 0,7 |  | 0,0 to 1,5 |
United States of America |  | 1,7 to 2,3 |  | 2,6 to 3,0 |
Canada |  | 1,7 to 2,2 |  | 2,0 to 2,7 |

|  | 2019 |  | 2018 |
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 |  | (3 351 | ) | (2 726 | )
amount capitalised to property, plant and equipment |  | (1 930 | ) | (1 434 | )
income recognised in income statement |  | (1 421 | ) | (1 292 | )
Decrease in the discount rate |  | 4 540 |  | 3 786 |
amount capitalised to property, plant and equipment |  | 2 622 |  | 2 058 |
expense recognised in income statement |  | 1 918 |  | 1 728 |

66

32 Short-term provisions

|  |  |  | 2019 |  | 2018 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |
Other provisions |  |  |  | 552 |  | 552 |
Short-term portion of |  |  |  |  |  |  |
long-term provisions |  | 31 |  | 2 338 |  | 2 567 |
post-retirement benefit obligations |  | 33 |  | 399 |  | 389 |
|  |  |  | 3 289 |  | 3 508 |

Accounting policies:

Long-term provisions are determined by discounting the expected future cash flows using a pre-tax discount rate to their present value. 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.

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 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.

It is envisaged that, based on the current information available, any additional liability in excess of the amounts provided will not have a material adverse effect on the group’s financial position, liquidity or cash flow.

33 Post-retirement benefit obligations

|  |  |  | 2019 |  | 2018 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |
Post-retirement healthcare obligations |  | 33.1 |  |  |  |  |
South Africa |  |  |  | 3 825 |  | 3 995 |
United States of America |  |  |  | 268 |  | 248 |
|  |  |  | 4 093 |  | 4 243 |
Pension obligations |  | 33.2 |  |  |  |  |
Foreign — post-retirement benefit obligation |  |  |  | 9 014 |  | 8 046 |
Less short-term portion of post-retirement pension and medical benefit obligations |  |  |  | (399 | ) | (389 | )
Total post-retirement benefit obligations |  |  |  | 12 708 |  | 11 900 |
Pension assets |  | 33.2 |  |  |  |  |
South Africa — post-retirement benefit asset |  |  |  | (555 | ) | (582 | )
Foreign — post-retirement benefit asset |  |  |  | (719 | ) | (916 | )
Total post-retirement benefit assets |  |  |  | (1 274 | ) | (1 498 | )
Net pension obligations |  |  |  | 7 740 |  | 6 548 |

67

33 Post-retirement benefit obligations continued

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 coverage 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. The pension benefits in Europe are unfunded.

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; and

· 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.

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 2019 |  | 31 March 2019 |
Last actuarial valuation — United States of America |  | 30 June 2019 |  | 30 June 2019 |
Last actuarial valuation — Europe |  | n/a |  | 1 April 2019 |
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.

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33 Post-retirement benefit obligations continued

|  | South Africa |  | United States of America |  | Europe |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
at valuation date |  | % |  | % |  | % |  | % |  | % |  | % |
Healthcare cost inflation |  |  |  |  |  |  |  |  |  |  |  |  |
initial |  | 7,5 |  | 7,5 |  | 8,5 | * | 7,0 | * | n/a |  | n/a |
ultimate |  | 7,5 |  | 7,5 |  | 4,5 | * | 5,5 | * | n/a |  | n/a |
Discount rate — post-retirement medical benefits |  | 10,5 |  | 9,9 |  | 3,6 |  | 3,9 |  | n/a |  | n/a |
Discount rate — pension benefits |  | 10,0 |  | 9,9 |  | 2,7 |  | 2,7 |  | 1,6 |  | 1,8 |
Pension increase assumption |  | 4,7 |  | 4,5 |  | n/a | ** | n/a | ** | 1,8 |  | 1,8 |
Average salary increases |  | 5,5 | + | 5,5 | + | 4,2 |  | 4,2 |  | 2,8 |  | 2,8 |
Weighted average duration of the obligation — post-retirement medical obligation |  | 15 years |  | 15 years |  | 9 years |  | 9 years |  | n/a |  | n/a |
Weighted average duration of the obligation — pension obligation |  | 13 years |  | 13 years |  | 13 years |  | 13 years |  | 18 years |  | 17 years |

Assumptions regarding future mortality are based on published statistics and mortality tables.

* 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.

+ Salary increases are linked to inflation.

33.1 Post-retirement healthcare obligations

Reconciliation of projected benefit obligation to the amount recognised in the statement of financial position

|  | South Africa |  | United States of America |  | Total |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Projected benefit obligation |  | 3 825 |  | 3 995 |  | 268 |  | 248 |  | 4 093 |  | 4 243 |
Less short-term portion |  | (178 | ) | (177 | ) | (20 | ) | (20 | ) | (198 | ) | (197 | )
Non-current post-retirement healthcare obligation |  | 3 647 |  | 3 818 |  | 248 |  | 228 |  | 3 895 |  | 4 046 |

Reconciliation of the total post-retirement healthcare obligation recognised in the statement of financial position

|  | South Africa |  | United States of America |  | Total |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Total post-retirement healthcare obligation at beginning of year |  | 3 995 |  | 3 921 |  | 248 |  | 242 |  | 4 243 |  | 4 163 |
Movements recognised in the income statement: |  | 459 |  | 542 |  | 26 |  | 18 |  | 485 |  | 560 |
current service cost |  | 53 |  | 73 |  | 13 |  | 10 |  | 66 |  | 83 |
interest cost |  | 407 |  | 472 |  | 13 |  | 8 |  | 420 |  | 480 |
curtailments and settlements |  | (1 | ) | (3 | ) | — |  | — |  | (1 | ) | (3 | )
Actuarial (gains)/losses recognised in other comprehensive income: |  | (468 | ) | (258 | ) | 8 |  | (5 | ) | (460 | ) | (263 | )
arising from changes in financial assumptions |  | (293 | ) | (54 | ) | 7 |  | (6 | ) | (286 | ) | (60 | )
arising from changes in actuarial experience |  | (175 | ) | (204 | ) | 1 |  | 1 |  | (174 | ) | (203 | )
Benefits paid |  | (161 | ) | (210 | ) | (20 | ) | (19 | ) | (181 | ) | (229 | )
Translation of foreign operations |  | — |  | — |  | 6 |  | 12 |  | 6 |  | 12 |
Total post-retirement healthcare obligation at end of year |  | 3 825 |  | 3 995 |  | 268 |  | 248 |  | 4 093 |  | 4 243 |

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33 Post-retirement benefit obligations continued

Sensitivity analysis

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 |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
1% point change in actuarial assumptions: |  |  |  |  |  |  |  |  |
Increase in the healthcare cost inflation |  | 518 |  | 582 |  | — | * | — | *
Decrease in the healthcare cost inflation |  | (417 | ) | (475 | ) | — | * | — | *
Increase in the discount rate |  | (417 | ) | (452 | ) | (23 | ) | (21 | )
Decrease in the discount rate |  | 507 |  | 562 |  | 28 |  | 25 |

* 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.

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 be need to be allowed for in a change in the percentage of income or pension charged. The are no automatic pension increase for the United states pension plan.

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 CPI inflation plus two percentage points over the long term. An increase in healthcare cost inflation will increase the obligation of the plan.

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.

33.2 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, 1956. Included in the fund assets at 31 March 2019 are 1 681 008 (2018 – 1 678 808) Sasol ordinary shares valued at R589 million (2018 – R844 million) at year-end purchased under terms of an approved investment strategy, and property valued at R1 561 million (2018 – R1 543 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.

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33 Post-retirement benefit obligations continued

Pension fund assets

The assets of the pension funds are invested as follows:

|  | South Africa |  | United States of America |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |
at 30 June |  | % |  | % |  | % |  | % |
Equities |  | 53 |  | 53 |  | 38 |  | 32 |
resources |  | 6 |  | 6 |  | 7 |  | 5 |
industrials |  | 2 |  | 3 |  | 4 |  | 3 |
consumer discretionary |  | 10 |  | 12 |  | 4 |  | 4 |
consumer staples |  | 11 |  | 12 |  | 3 |  | 2 |
healthcare |  | 5 |  | 3 |  | 4 |  | 3 |
information technologies |  | 5 |  | 4 |  | 7 |  | 7 |
telecommunications |  | 3 |  | 1 |  | 2 |  | 2 |
financials (ex real estate) |  | 11 |  | 12 |  | 7 |  | 6 |
Fixed interest |  | 13 |  | 10 |  | 49 |  | 59 |
Direct property |  | 15 |  | 17 |  | 5 |  | 5 |
Listed property |  | 4 |  | 5 |  | — |  | — |
Cash and cash equivalents |  | 4 |  | 4 |  | — |  | — |
Third party managed assets |  | 11 |  | 11 |  | — |  | — |
Other |  | — |  | — |  | 8 |  | 4 |
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.

Investment strategy

The trustees target the plans’ asset allocation within the following ranges within each asset class:

|  | South Africa(1) |  | United States of America |
|  | Minimum |  | Maximum |  | Minimum |  | Maximum |
Asset classes |  | % |  | % |  | % |  | % |
Equities |  |  |  |  |  |  |  |  |
local |  | 30 |  | 45 |  | — |  | 100 |
foreign |  | 15 |  | 30 |  | — |  | 100 |
Fixed interest |  | 5 |  | 25 |  | — |  | 100 |
Property |  | 10 |  | 25 |  | — |  | 100 |
Other |  | — |  | 15 |  | — |  | 100 |

(1) Members of the defined contribution scheme have a choice of four investment portfolios. The targeted allocation disclosed represents the moderate balanced investment portfolio which the majority of the members of the scheme have adopted. The total assets of the fund under these investment portfolios are R139 million, R52 080 million, R791 million and R1 034 million 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 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.

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33 Post-retirement benefit obligations continued

Reconciliation of the projected net pension liability/(asset) recognised in the statement of financial position

|  | South Africa |  | Foreign |  | Total |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Projected benefit obligation (funded) |  | 51 241 |  | 47 285 |  | 3 697 |  | 3 105 |  | 54 938 |  | 50 390 |
defined benefit portion |  | 21 550 |  | 19 970 |  | 3 697 |  | 3 105 |  | 25 247 |  | 23 075 |
defined benefit option for defined |  |  |  |  |  |  |  |  |  |  |  |  |
contribution members |  | 29 691 |  | 27 315 |  | — |  | — |  | 29 691 |  | 27 315 |
Plan assets |  | (54 115 | ) | (50 128 | ) | (4 270 | ) | (3 890 | ) | (58 385 | ) | (54 018 | )
defined benefit portion |  | (24 254 | ) | (22 502 | ) | (4 270 | ) | (3 890 | ) | (28 524 | ) | (26 392 | )
defined benefit option for defined |  |  |  |  |  |  |  |  |  |  |  |  |
contribution members |  | (29 861 | ) | (27 626 | ) | — |  | — |  | (29 861 | ) | (27 626 | )
Projected benefit obligation (unfunded) |  | — |  | — |  | 8 868 |  | 7 915 |  | 8 868 |  | 7 915 |
Asset not recognised due to asset limitation |  | 2 319 |  | 2 261 |  | — |  | — |  | 2 319 |  | 2 261 |
Net liability/(asset) recognised |  | (555 | ) | (582 | ) | 8 295 |  | 7 130 |  | 7 740 |  | 6 548 |

The increase of R58 million in the asset limitation (2018 – R1 051 million) was recognised as a gain in other comprehensive income.

|  | South Africa |  | Foreign |  | Total |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Pension asset |  | (555 | ) | (582 | ) | (719 | ) | (916 | ) | (1 274 | ) | (1 498 | )
Pension benefit obligation |  | — |  | — |  | 9 014 |  | 8 046 |  | 9 014 |  | 8 046 |
long-term portion |  | — |  | — |  | 8 813 |  | 7 854 |  | 8 813 |  | 7 854 |
short-term portion |  | — |  | — |  | 201 |  | 192 |  | 201 |  | 192 |
Net liability/(asset) |  | (555 | ) | (582 | ) | 8 295 |  | 7 130 |  | 7 740 |  | 6 548 |

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 company has an unconditional entitlement to only the funds in the employer surplus account and the contribution reserve. The estimated surplus due to the company amounted to approximately R1 274 million (2018 – R1 498 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.

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33 Post-retirement benefit obligations continued

Reconciliation of projected benefit obligation

|  | South Africa |  | Foreign |  | Total |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Projected benefit obligation at beginning of year |  | 47 285 |  | 46 508 |  | 11 020 |  | 9 774 |  | 58 305 |  | 56 282 |
Movements recognised in income statement: |  | 5 694 |  | 5 678 |  | 677 |  | 596 |  | 6 371 |  | 6 274 |
current service cost |  | 1 042 |  | 1 028 |  | 454 |  | 386 |  | 1 496 |  | 1 414 |
curtailments and settlements |  | 3 |  | — |  | (14 | ) | — |  | (11 | ) | — |
interest cost |  | 4 649 |  | 4 650 |  | 237 |  | 210 |  | 4 886 |  | 4 860 |
Actuarial (gains)/losses recognised in other comprehensive income: |  | 262 |  | (2 950 | ) | 1 098 |  | 462 |  | 1 360 |  | (2 488 | )
arising from changes in demographic |  |  |  |  |  |  |  |  |  |  |  |  |
assumptions |  | — |  | — |  | (7 | ) | 20 |  | (7 | ) | 20 |
arising from changes in financial assumptions |  | 174 |  | (2 950 | ) | 1 059 |  | 312 |  | 1 233 |  | (2 638 | )
arising from change in actuarial experience |  | 88 |  | — |  | 46 |  | 130 |  | 134 |  | 130 |
Member contributions |  | 482 |  | 447 |  | — |  | — |  | 482 |  | 447 |
Benefits paid |  | (2 482 | ) | (2 398 | ) | (278 | ) | (477 | ) | (2 760 | ) | (2 875 | )
Transferred to held for sale assets |  | — |  | — |  | — |  | (30 | ) | — |  | (30 | )
Translation of foreign operations |  | — |  | — |  | 48 |  | 695 |  | 48 |  | 695 |
Projected benefit obligation at end of year |  | 51 241 |  | 47 285 |  | 12 565 |  | 11 020 |  | 63 806 |  | 58 305 |
unfunded obligation* |  | — |  | — |  | 8 868 |  | 7 915 |  | 8 868 |  | 7 915 |
funded obligation |  | 51 241 |  | 47 285 |  | 3 697 |  | 3 105 |  | 54 938 |  | 50 390 |

* 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 (2019 – R217 million; 2018 – R305 million). A decrease of R83 million (2018 — decrease of R1 million) has been recognised as a loss in other comprehensive income in respect of the reimbursive right.

Reconciliation of plan assets of funded obligation

|  | South Africa |  | Foreign |  | Total |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Fair value of plan assets at beginning of year |  | 50 128 |  | 48 340 |  | 3 890 |  | 2 514 |  | 54 018 |  | 50 854 |
Movements recognised in income statement: |  | 4 702 |  | 4 707 |  | 113 |  | 67 |  | 4 815 |  | 4 774 |
interest income |  | 4 927 |  | 4 829 |  | 113 |  | 67 |  | 5 040 |  | 4 896 |
interest on asset limitation |  | (225 | ) | (122 | ) | — |  | — |  | (225 | ) | (122 | )
Actuarial gains/(losses) recognised in other comprehensive income: |  | 229 |  | (1 959 | ) | 285 |  | 180 |  | 514 |  | (1 779 | )
arising from return on plan assets |  | 229 |  | (1 959 | ) | 285 |  | 180 |  | 514 |  | (1 779 | )
(excluding interest income) |  |  |  |  |  |  |  |  |  |  |  |  |
Plan participant contributions* |  | 482 |  | 447 |  | — |  | — |  | 482 |  | 447 |
Employer contributions* + |  | 1 056 |  | 991 |  | 6 |  | 1 233 |  | 1 062 |  | 2 224 |
Benefit payments |  | (2 482 | ) | (2 398 | ) | (121 | ) | (314 | ) | (2 603 | ) | (2 712 | )
Translation of foreign operations |  | — |  | — |  | 97 |  | 210 |  | 97 |  | 210 |
Fair value of plan assets at end of year |  | 54 115 |  | 50 128 |  | 4 270 |  | 3 890 |  | 58 385 |  | 54 018 |
Actual return on plan assets |  | 4 931 |  | 2 748 |  | 398 |  | 247 |  | 5 329 |  | 2 995 |

* Contributions, for the defined contribution section, are paid by the members and Sasol at fixed rates.

+ In 2018, in the United States of America there was a once-off payment R963 million (US$75 million) made by the employer to the fund.

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33 Post-retirement benefit obligations continued

Contributions

Funding is based on actuarially determined contributions. The following table sets forth the projected pension contributions of funded obligations for the 2019 financial year.

|  | South Africa |  | Foreign |
|  | Rm |  | Rm |
Pension contributions |  | 1 106 |  | 120 |

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 |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
1% point change in actuarial assumptions |  |  |  |  |  |  |  |  |
Increase in average salaries increase assumption |  | 12 |  | 14 |  | 494 |  | 454 |
Decrease in average salaries increase assumption |  | (12 | ) | (13 | ) | (430 | ) | (368 | )
Increase in the discount rate |  | (1 654 | ) | (1 447 | ) | (1 806 | ) | (1 634 | )
Decrease in the discount rate |  | 2 463 |  | 1 981 |  | 2 370 |  | 2 174 |
Increase in the pension increase assumption |  | 2 541 |  | 2 035 |  | 1 142 | * | 1 071 | *
Decrease in the pension increase assumption |  | (1 727 | ) | (1 523 | ) | (934 | )* | (851 | )*

* 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.

34 Cash-settled share-based payment provision

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
During the year, the following cash-settled share-based payment expenses were recognised in the income statement (refer to note 35 for the equity-settled share-based payment disclosure): |  |  |  |  |  |  |
Share-based payment expense — movement in long-term provisions |  |  |  |  |  |  |
Sasol Share Appreciation Rights Scheme |  | (440 | ) | 655 |  | (342 | )
Share Appreciation Rights with no corporate performance targets (no-CPTs) |  | (6 | ) | 117 |  | (110 | )
Share Appreciation Rights with corporate performance targets (CPTs) |  | (434 | ) | 538 |  | (232 | )
Sasol Long-term Incentive Scheme(1) |  | — |  | — |  | 105 |
|  | (440 | ) | 655 |  | (237 | )

(1) On 25 November 2016, the cash-settled LTI scheme was converted to an equity-settled share-based payment scheme.

Sasol’s share price decreased by 30% over the financial year to a closing price on 30 June 2019 of R350,21. This together with the volatility in the share price has resulted in a R440 million credit being recognised in the current year.

Sasol Share Appreciation Rights Scheme (closed since 2013)

|  | 2019 |  | 2018 |
Total rights granted |  | Number |  | Number |
Share Appreciation Rights |  | 4 928 846 |  | 7 118 321 |

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34 Cash-settled share-based payment provision continued

The Share Appreciation Rights scheme (SARs) allows eligible senior employees to earn a long-term incentive amount calculated with reference to the increase in the Sasol Limited share price between the offer date of the SARs to the exercise of such vested rights. No shares are issued in terms of this scheme, all rights have vested and all amounts payable in terms of the scheme are settled in cash.

The offer price of these appreciation rights equals the closing market price of the underlying shares on the trading day immediately preceding the granting of the right. The fair value of the cash-settled liability is calculated at each reporting date. On resignation SARs may be exercised at the employee’s election before their last day of service. On death, the deceased’s estate has a period of 12 months to exercise these rights. On retrenchment or retirement, the employee has a period of 12 months to exercise these rights.

It is group policy that employees should not deal in Sasol Limited securities (and this is extended to the Sasol SARs) for the periods from 1 January for half year-end and 1 July for year-end until two days after publication of the results and at any other time during which they have access to price sensitive information.

|  | 2019 |  | 2018 |
|  | SARs with no CPTs |  | SARs with CPTs |  | Total |  | SARs with no CPTs |  | SARs with CPTs |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Per statement of financial position |  | 2 |  | 262 |  | 264 |  | 98 |  | 1 003 |  | 1 101 |
Total intrinsic value of rights vested, but not yet exercised |  | 2 |  | 50 |  | 52 |  | 98 |  | 987 |  | 1 085 |

|  |  |  | 2019 |  | 2018 |
|  |  |  | SARs with no CPTs |  | SARs with CPTs |  | SARs with no CPTs |  | SARs with CPTs |
|  |  |  | Binomial |  | Binomial |  | Binomial |  | Binomial |
Model |  |  |  | tree |  | tree |  | tree |  | tree |
Risk-free interest rate |  | (%) |  | 6,96 |  | 6,64 – 6,96 |  | 6,88 – 7,09 |  | 6,88 – 7,63 |
Expected volatility |  | (%) |  | 35,74 |  | 35,83 |  | 28,61 |  | 27,16 |
Expected dividend yield |  | (%) |  | 4,76 |  | 4,99 |  | 3,58 |  | 3,51 |
Expected forfeiture rate |  | (%) |  | * |  | * |  | * |  | 5,00 |

* All SARs have vested and therefore no forfeiture is applied.

The risk-free rate for periods within the contractual term of the rights is based on the Rand 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 valuation of the share-based payment expense requires a significant degree of judgement to be applied by management.

Accounting policies:

The cash-settled schemes allow certain senior employees the right to participate in the performance of the Sasol Limited share price, in return for services rendered, through the payment of cash incentives which are based on the market price of the Sasol Limited share. All the rights have vested with a liability recognised at fair value, at each reporting date, in the statement of financial position until the date of settlement.

Areas of judgement:

Fair value is measured using the Binomial tree option pricing models where applicable. The expected life used in the models has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations such as volatility, dividend yield and maturity of the award.

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Reserves

35 Share-based payment reserve

|  |  |  | 2019 |  | 2018 |  | 2017 |
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: |  |  |  |  |  |  |  |  |
Sasol Khanyisa share transaction(1) |  | 35.1 |  | 952 |  | 2 953 |  |  |
Sasol ordinary BEE (SOLBE1) shares issued(2) |  |  |  | — |  | 1 104 |  |  |
Khanyisa Public |  |  |  | — |  | 1 762 |  |  |
Tier 1 — Khanyisa Employee Share Ownership Plan (ESOP) |  |  |  | 628 |  | 52 |  |  |
Tier 2 — Khanyisa ESOP |  |  |  | 324 |  | 35 |  |  |
Long-term incentives(3) |  | 35.2 |  | 707 |  | 789 |  | 387 |
Sasol Inzalo share transaction |  | 35.3 |  | — |  | 34 |  | 76 |
Equity-settled — recognised directly in equity(4) |  |  |  | 1 659 |  | 3 776 |  | 463 |

(1) In November 2017, Sasol Khanyisa a new Broad-Based Black Economic Empowerment (B-BBEE) scheme was approved by shareholders at a General Meeting.

(2) IFRS2 expense was recognised immediately on date shares were granted to participants. Shares were not encumbered and could be traded immediately.

(3) On 25 November 2016, the cash-settled LTI scheme was converted to an equity-settled share scheme.

(4) The employee-related share-based payment expense in 2018 was R910 million.

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. There was one trickle dividend paid during the current year.

35.1 The Sasol Khanyisa share transaction

Sasol Khanyisa was implemented effectively on 1 June 2018. Sasol Khanyisa has been designed to comply with the revised B-BBEE legislation in South Africa and seeks to ensure on-going 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.

At the end of 10 years, or earlier if the underlying funding has been settled, the participants will exchange their SSA shareholding on a fair value-for-value basis for SOLBE1 shares to the extent of any value created during the transaction term.

SOLBE1 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.

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35 Share-based payment reserve continued

Remaining components of the transaction:

Tier 1 — Khanyisa Employee Share Ownership Plan — Eligible Inzalo participants

Former Inzalo Employee Scheme participants, who were still actively employed by Sasol during May 2018 were granted rights in SOL shares or SOLBE1 Shares, at no cost to them, to the value of R100 000, all of which will vest after a three year service period. Black employees were able to choose to receive the award in SOL or SOLBE1 shares, whilst employees who are not black people received an award in SOL shares, as SOLBE1 shares may only be held by qualifying black people. Employees will receive dividends on these shares throughout the 3 year vesting period. This award will be recognised on a straight line basis over the three year vesting period.

An expense of R628 million was recognised in 2019 (2018 – R52 million).

Sasol Khanyisa — SSA (Tier 2 and Khanyisa Public)

The BEE participation in SSA comprises two groups of participants, being the external public participants (made up of Inzalo Groups, Inzalo Public and electing SOLBE1 shareholders) who participate via Khanyisa Public, and qualifying black employees who participate via the Khanyisa Employee Share Ownership plan (Khanyisa ESOP).

Both Khanyisa Public and the Khanyisa ESOP have a beneficial interest, funded wholly by Sasol (vendor funding), in approximately 9,2% each 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 will be 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.

Khanyisa ESOP (Tier 2)

The employees have service conditions over the 10 year transaction term, and as such, the expense will be recognised over this period, with R324 million having been recognised in 2019 (2018 – R35 million).

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35 Share-based payment reserve continued

|  |  |  | ESOP — Tier 1(1) |  | ESOP — Tier 1(1) |  | ESOP — Tier 2(1)(2)(3) |  | Sasol Khanyisa Public(3) |
for the year ended 30 June |  |  |  | 2019 |  | 2019 |  | 2019 |  | 2019 |
Grant date |  | Date |  | 1 June 2018 |  | 1 June 2018 |  | 25 May 2018 |  | 1 June 2018 |
Class of shares |  |  |  | SOL shares |  | SOLBE1 shares |  | Khanyisa shares |  | Khanyisa shares |
Shares |  | Number |  | 2 082 520 |  | 2 396 048 |  | 26 503 642 |  | 26 503 642 |
Weighted average fair value on grant date |  | Rand |  | 481,50 |  | 370,00 |  | 66,48 |  | 66,48 |
Total IFRS expense |  | Rm |  | 1 003 |  | 887 |  | 1 762 |  | 1 762 |
IFRS expense recognised for the year |  | Rm |  | 334 |  | 294 |  | 324 |  | — |

(1) The ESOP Tier 1 and 2 options outstanding have a weighted average remaining vesting period of 1,9 and 4,7 years. ESOP Tier 1 vests after 3 years and ESOP Tier 2 has a staggered vesting period, with portions vesting from 3 years, and then each year until the end of the transaction term, being 10 years.

(2) The weighted average fair value price is derived from the Monte-Carlo option pricing model. The price will move closer to the strike price over the transaction period as certainty of dividends declared by SSA is expected to exceed outstanding vendor financing.

(3) The estimated strike price value for Khanyisa Public and ESOP Tier 2 is R326,55 and represents the remaining vendor funding per share at 30 June 2019.

The SSA Khanyisa share-based payment expense was calculated using an option pricing model reflective of the underlying characteristics of each part of the transaction. It was calculated using the following assumptions at grant date:

Average fair value Sasol Khanyisa options granted |  |  |  | 2018 |
Model |  |  |  | Monte-Carlo |
Risk-free interest rate |  | (%) |  | 8,08 |
Expected volatility |  | (%) |  | 28,49 |
Expected dividend yield |  | (%) |  | 1,8 – 10,1 |

The risk-free rate for periods within the contractual term of the share rights is based on a zero-coupon Rand swap curve at the time of the grant.

The expected volatility in the value of the share rights granted is determined using the historical volatility of the Sasol share price.

The dividend yields of the share rights granted is determined using the expected term structure of dividend yields on the underlying equity value over the life of the transaction.

The valuation of the share-based payment expense requires a significant degree of judgement to be applied by management.

Areas of judgement:

The measurement of the Khanyisa SSA share based payment is subject to estimation and judgment, 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, US$/Rand 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.

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35 Share-based payment reserve continued

35.2 Sasol Long-term Incentive Scheme

During September 2009, the group introduced the Sasol Long-term Incentive scheme (LTI). The objective of the LTI scheme is to provide qualifying employees the opportunity of receiving an incentive linked to the value of Sasol Limited ordinary shares and to align the interest of employees with the interest of shareholders. The LTI scheme allows certain senior employees to earn a long-term incentive amount linked to certain Corporate Performance Targets (CPTs). 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.

On resignation, LTIs which have not yet vested will lapse. On death, retirement and retrenchment, the LTIs vest immediately, calculated to the extent that the CPTs are anticipated to be met, and are settled within 40 days from the date of termination. Accelerated vesting does not apply to top management. In November 2016, the scheme was converted from cash-settled to equity-settled. All the vesting conditions and all other terms and conditions of the scheme remain the same, including the standard vesting period of three years, with the exception of top management, who have a three and five year vesting period for 50% of the awards respectively.

The maximum number of shares issued under the equity-settled LTI scheme may not exceed 32,5 million representing 5% of Sasol Limited’s issued share capital at the time of approval.

Movements in the number of incentives outstanding |  | Number of incentives |  | Weighted average fair value Rand |
Balance at 30 June 2017 |  | 6 198 589 |  | 337,80 |
LTIs granted |  | 2 626 268 |  | 376,73 |
LTIs vested |  | (1 868 963 | ) | 347,93 |
Effect of CPTs and LTIs forfeited |  | (159 406 | ) | 349,95 |
Balance at 30 June 2018 |  | 6 796 488 |  | 348,19 |
LTIs granted |  | 2 089 674 |  | 555,86 |
LTIs vested |  | (1 600 899 | ) | 308,27 |
Effect of CPTs and LTIs forfeited |  | (665 666 | ) | 360,19 |
Balance at 30 June 2019* |  | 6 619 597 |  | 422,20 |

* The incentives outstanding as at 30 June 2019 have a weighted average remaining vesting period of 1,4 years. The exercise price of these options is Rnil.

|  | 2019 |  | 2018 |
for year ended 30 June |  | Rand |  | Rand |
Average weighted market price of LTIs vested |  | 507,50 |  | 396,02 |

Average fair value of incentives granted |  |  |  | 2019 |  | 2018 |
Model |  |  |  | Monte-Carlo |  | Monte-Carlo |
Risk-free interest rate — Rand |  | (%) |  | 6,90 – 7,87 |  | 6,98 – 7,34 |
Risk-free interest rate — US$ |  | (%) |  | 0,91 – 1,56 |  | 1,01 – 1,47 |
Expected volatility |  | (%) |  | 26,17 |  | 24,73 |
Expected dividend yield |  | (%) |  | 3,43 |  | 3,65 |
Expected forfeiture rate |  | (%) |  | 5 |  | 5 |
Vesting period — top management |  |  |  | 3/5 years |  | 3/5 years |
Vesting period — all other participants |  |  |  | 3 years |  | 3 years |

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 valuation of the share-based payment expense requires a significant degree of judgement to be applied by management.

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.

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35 Share-based payment reserve continued

35.3 The Sasol Inzalo share transaction

In September 2018 the Sasol Inzalo Public share transaction ended. Sasol repurchased 16 085 199 preferred ordinary shares from Sasol Inzalo Public Funding (RF) (Pty) Ltd at a purchase price for R542,11 per share. This repurchase enabled Sasol Inzalo Public Funding (RF) (Pty) Ltd to repay its external debt and declare a final distribution of R1,4 billion to participants.

On 4 June 2018 the Sasol Inzalo Employee share transaction ended. Sasol repurchased 25 231 686 Sasol Limited (SOL) shares held by the Sasol Inzalo Employee and Management Trusts at a nominal value of R0,01 per share. Consequently the relevant vested participants in the Inzalo Employee Schemes received no distribution of SOL Shares.

On 27 June 2018 the Sasol Inzalo Groups share transaction ended. Sasol repurchased 9 461 882 preferred ordinary shares from Sasol Inzalo Groups Funding (RF) (Pty) Ltd at a purchase price of R475,03 per share. This repurchase enabled Sasol Inzalo Groups Funding (RF) (Pty) Ltd to repay the external debt. No additional funds were available for distribution to Inzalo Groups participants.

The Sasol Inzalo Foundation (renamed to the Sasol Foundation), remains as an unencumbered shareholder of 9 461 882 shares in Sasol Limited as the Board approved that the repurchase right would not be exercised, and there was no recovery of the financing owed to Sasol by the Foundation. The Sasol Foundation continues to be consolidated by the group, and these shares therefore remain accounted for as treasury shares.

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OTHER DISCLOSURES

Page

82 Other disclosures

· Contingent liabilities

· Leases and other commitments

· Related party transactions

· Subsequent events

· Financial risk management and financial instruments

81

Other disclosures

36 Contingent liabilities

36.1 Litigation

Claimed compensation for lung diseases — Sasol Mining (Pty) Ltd

On 2 April 2015, 22 plaintiffs (at that time 1 current and 21 former employees) instituted action against Sasol Mining (Pty) Ltd at the High Court in Gauteng, South Africa, for allegedly having contracted lung diseases while working at its collieries. The plaintiffs inter alia 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, 1996. All of which the plaintiffs allege, increased the risk for workers to contract coal dust related lung diseases. This lawsuit is not a class action but rather 22 individual cases, each of which will be judged on its own merits. The plaintiffs seek compensation for damages relating to past and future medical costs and loss of income amounting to R82,5 million in total plus interest. Two plaintiffs have since passed away and their claims have been formally withdrawn. The total amount of the claims is R67,2 million plus interest.

Sasol Mining is defending the claim. The merits of each single claim are not clear yet. There is also some uncertainty as to whether some of the claims have prescribed. Therefore it is not possible at this stage to make an estimate of the likelihood that the plaintiffs will succeed with their claim and if successful, what the quantum of damages would be that the court will award. Therefore, no provision has been raised at 30 June 2019.

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 have been 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) matter is still on-going.

Fluor SA (Pty) Ltd — FTWEP

Fluor claimed a total amount of R485,7 million plus interest. This dispute turns on the nature and quantification of Fluor’s alleged entitlement to a change to the prices and completion dates for delayed access. In June 2015, Fluor referred the claim to adjudication. In September 2015, the adjudicator rejected Fluor’s entire claim. Thereafter, Fluor notified Sasol of its dissatisfaction with the outcome of the adjudication and Fluor’s intention to refer the matter to arbitration. The arbitration process commenced with Fluor filing its statement of claim during December 2016. Sasol filed two objections against the statement of claim which had the potential to dispose of the arbitration proceedings. The arbitrator, however, did not decide in favour of Sasol on the objection applications and dismissed the application with costs. The objections will still be raised as a special jurisdictional plea and will be filed with Sasol’s statement of defence during the arbitration process.

Fluor subsequently amended its claim, inter alia, by reducing the amount claimed from R485,7 million to R448 million excluding interest. On the 12th of March 2019 Fluor filed and served a further amendment to its statement of claim and an amended expert report in terms of which a further reduction in the quantum is being claimed. Fluor now claims an amount of R383,8 million (alternatively the amount of R406,6 million based on an alternative assessment of its claim). The amendment by Fluor resulted in the arbitration being postponed as Sasol’s experts will be required to deal with the revised expert report and we will be required to file an amendment to our statement of defence. The hearing of the matter is now only anticipated to commence in March 2020.

Sasol believes that Fluor’s original claim, including the amended claims are not justified. Accordingly, no provision was recognised at 30 June 2019.

Wetback Contracts (Pty) Ltd — FTWEP

The dispute regarding Wetback Contracts (Pty) Ltd was concluded during the year.

Legal review of Sasol Gas National Energy Regulator of South Africa (NERSA) maximum price decision and NERSA gas transmission tariff application (March 2013)

In October 2013, following the March 2013 decisions by NERSA (pursuant to the applications by Sasol Gas), seven of the customers of Sasol Gas (“customers”) brought a legal review application requesting the setting aside of the maximum price methodology used by NERSA in evaluating the maximum price application by Sasol Gas as well as maximum price decision and gas transmission tariff decision. The basis of the challenge to the NERSA price decision is the allegation that the methodology used by NERSA to determine its approval of the maximum gas prices was unreasonable and irrational.

In October 2016 the High Court dismissed the review application The Applicants were subsequently granted consent to appeal this decision to the Supreme Court of Appeal (“SCA”). On 10 May 2018 the SCA upheld the appeal by the Applicants. NERSA and Sasol Gas each launched an application to the Constitutional Court (“CC”) to appeal the SCA decision.

Leave to appeal was granted and the matter was heard on 26 February 2019. On 15 July 2019 the CC handed down its decision. The Court upheld the appeal on the ruling by the SCA relating to the transmission tariffs and accordingly the NERSA transmission tariff decision was confirmed.

However, the court dismissed the remainder of the appeal. The Court found that NERSA, in applying the basket of alternatives approach to determine the Maximum Gas Price for Sasol Gas, was irrational as it did not take into account a required material fact for making a rational decision. NERSA’s decision to approve maximum gas prices and a trading margin for Sasol Gas for the period 26 March 2014 to 30 June 2017 was therefore reviewed and set aside. In terms of the court order NERSA will have to consider the overturned decisions anew and decide on the approval of a new maximum gas price for Sasol. In accordance with the rules of the regulator, NERSA will, in considering a new maximum gas price application by Sasol, follow a public participation process that will afford Sasol as well as the affected stakeholders and customers the opportunity to provide input into the decision to be made by NERSA.

If the new maximum gas price approved by NERSA for the period of the overturned decision is lower than the actual price charged to customers, then a retrospective liability may arise for Sasol Gas as a result.

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36 Contingent liabilities continued

It is not possible to determine at this time what the outcome of such a price decision by NERSA will be. Therefore, the likelihood of a future obligation cannot be determined currently and neither can an amount for such a possible obligation be reliably estimated. Therefore, no provision has been raised at 30 June 2019.

Nhlapo and 941 others versus Sasol Mining (Pty) Ltd

During 2009, the applicants in this matter were charged with participation in an unprotected sit-in, threatening and forcing others to participate in an unprotected strike and for assaulting or attempting to assault others during an unprotected strike and subsequently dismissed. The applicants are disputing their dismissal. On 19 September 2019, the Labour Court passed a judgement directing inter alia Sasol Mining to re-instate the employees and pay certain past benefits. Sasol Mining filed an application for leave to appeal the judgement on 10 October 2019. Once the latter has been obtained the appeal will be heard by the Labour Appeal Court. This date has not been set. Management has applied judgement and believe that there is no present obligation in terms of IAS 37. No provision has been raised at 30 June 2019.

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.

36.2 Competition 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.

36.3 Environmental orders

Sasol’s environmental obligation accrued at 30 June 2019 was R18 742 million compared to R14 933 million at 30 June 2018. Included in this balance is an amount accrued of approximately R4 924 million in respect of the costs of remediation of soil and groundwater contamination and similar environmental costs. These costs relate to the following activities: site assessments, soil and groundwater clean-up and remediation, and on-going monitoring. Due to uncertainties regarding future costs the potential loss in excess of the amount accrued cannot be reasonably determined.

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.

37 Leases and other commitments

Operating leases — Minimum future lease payments

The group leases buildings under long-term non-cancellable operating lease agreements and also rents offices and other equipment under operating leases that are cancellable at various short-term notice periods by either party.

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Property, plant and equipment |  |  |  |  |
Within one year |  | 2 276 |  | 2 068 |
One to five years |  | 6 089 |  | 5 863 |
More than five years |  | 15 716 |  | 15 344 |
Total minimum future lease payments |  | 24 081 |  | 23 275 |

Included in operating leases is the following:

· The lease for the Sasol Corporate office building. The lease term is 20 years with an option to extend for a further five years. This is a significant lease for the group.

· The rental of a rail cars for our North American Operations. The lease period varies from 12 to 18 years with an option to extend for a further six years.

These leasing arrangements do not impose any significant restrictions on the group or its subsidiaries.

The group has contingent rentals in respect of operating leases that are linked to market related data such as inflation.

Finance leases — minimum future lease payments

The group leases buildings and other equipment under long-term non-cancellable finance lease agreements. These lease agreements contain terms of renewal and escalation clauses but exclude purchase options.

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37 Leases and other commitments continued

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Within one year |  | 1 207 |  | 1 171 |
One to five years |  | 4 135 |  | 3 975 |
More than five years |  | 20 138 |  | 19 586 |
Less amounts representing finance charges |  | (17 710 | ) | (17 108 | )
Total minimum future lease payments |  | 7 770 |  | 7 624 |

The group has contingent rentals in respect of finance leases.

Other commitments

|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
Water reticulation for Secunda Synfuels Operations |  |  |  |  |
Within one year |  | 173 |  | 171 |
One to five years |  | 713 |  | 847 |
More than five years |  | 1 416 |  | 1 798 |
|  | 2 302 |  | 2 816 |

The water reticulation commitments of Secunda Synfuels Operations relate to a long-term water supply agreement. The rental payments are determined based on the quantity of water consumed over the 20 year period of the agreement.

38 Related party transactions

Parties are considered to be related if one party directly or indirectly has the ability to control or jointly control the other party or exercise significant influence over the other party or is a member of the key management of the reporting entity (Sasol Limited). In particular, this relates to joint ventures and associates. Disclosure in respect of joint ventures and associates is provided in note 20.

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 is 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.

Material related party transactions

The following table shows the material transactions that are included in the annual financial statements using the equity method for associates and joint ventures.

|  | 2019 |  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |
Sales and services rendered from subsidiaries to related parties |  |  |  |  |  |  |
Joint ventures |  | 1 474 |  | 965 |  | 1 088 |
Purchases by subsidiaries from related parties |  |  |  |  |  |  |
Joint ventures |  | 718 |  | 671 |  | 617 |
Associates |  | 95 |  | 88 |  | 120 |
|  | 813 |  | 759 |  | 737 |

Identity of related parties with whom material transactions have occurred

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.

Key management remuneration

Key management comprises of Executive and Non-executive Directors as well as other members of the Group Executive Committee (GEC)/Prescribed Officers.

|  |  |  | Retirement |  | Other |  | Total |  | Total |  | Total |
|  | Salary |  | funding |  | benefits |  | 2019 |  | 2018(1) |  | 2017(1) |
|  | R’000 |  | R’000 |  | R’000 |  | R’000 |  | R’000 |  | R’000 |
Executive Directors |  | 32 194 |  | 4 540 |  | 10 214 |  | 46 948 |  | 66 808 |  | 77 333 |

(1) | Total remuneration for the financial year excludes gains derived from the long-term incentive schemes which are separately disclosed.

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38 Related party transactions continued

Gains on Long-term incentives and Share Appreciation Rights for the Executive Directors’ and former Executive Director were as follows:

|  |  |  | Share |  |  |  |  |  |  |
|  | Long-term |  | appreciation |  |  |  |  |  |  |
|  | incentive |  | rights, with |  |  |  |  |  |  |
|  | rights |  | and without |  | Total |  | Total |  | Total |
|  | vested(1) |  | CPTs exercised |  | 2019 |  | 2018 |  | 2017 |
|  | R’000 |  | R’000 |  | R’000 |  | R’000 |  | R’000 |
Executive Directors |  | 25 025 |  | — |  | 25 025 |  | 20 515 |  | 24 970 |

(1) | Long-term incentives for the 2019 financial year represent incentives approved on the group results for the 2019 financial year, payable in the 2020 financial year.

Remuneration and benefits paid and short-term incentives approved for the Prescribed Officers were as follows:

|  |  |  | Retirement |  | Other |  | Total |  | Total |  | Total |
|  | Salary |  | funding |  | benefits |  | 2019 |  | 2018(1) |  | 2017(1) |
|  | R’000 |  | R’000 |  | R’000 |  | R’000 |  | R’000 |  | R’000 |
Prescribed Officers |  | 49 335 |  | 6 373 |  | 11 780 |  | 67 488 |  | 89 007 |  | 70 949 |
Number of Prescribed Officers |  |  |  |  |  |  |  | 8 |  | 8 |  | 7 |

(1) | Total remuneration for the financial year excludes gains derived from the long-term incentive schemes which are separately disclosed.

Gains on Long-term incentives and Share Appreciation Rights for the Prescribed Officers were as follows:

|  |  |  | Share |  |  |  |  |  |  |
|  | Long-term |  | appreciation |  |  |  |  |  |  |
|  | incentive |  | rights, with |  |  |  |  |  |  |
|  | rights |  | and without |  | Total |  | Total |  | Total |
|  | vested(1) |  | CPTs exercised |  | 2019 |  | 2018 |  | 2017 |
|  | R’000 |  | R’000 |  | R’000 |  | R’000 |  | R’000 |
Prescribed Officers |  | 19 628 |  | 48 931 |  | 68 559 |  | 44 962 |  | 23 807 |

(1) | Long-term incentives for the 2019 financial year represent incentives approved on the group results for the 2019 financial year, payable in the 2020 financial year.

The total IFRS2 charge for Executive Directors and the Prescribed Officers in 2019 amounted to R32 million and R20 million, respectively.

Non-executive Directors’ emoluments for the year was as follows:

|  |  |  |  |  |  |  | Ad Hoc |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Special |  |  |  |  |  |  |
|  | Board |  | Lead |  |  |  | Board — |  |  |  |  |  |  |
|  | meeting |  | Director |  | Committee |  | Committee |  | Total |  | Total |  | Total |
|  | fees |  | fees |  | fees |  | Meeting |  | 2019 |  | 2018 |  | 2017 |
|  | R’000 |  | R’000 |  | R’000 |  | R’000 |  | R’000 |  | R’000 |  | R’000 |
Non-executive Directors |  | 24 498 |  | 387 |  | 7 372 |  | 198 |  | 32 455 |  | 27 823 |  | 23 079 |

39 Subsequent events

In May 2019, the Board commissioned an independent review into the circumstances that may have delayed the prompt identification and reporting of the LCCP cost and schedule overruns. The report from the Board Review is complete and the Board considered the findings and appropriate steps arising from these.

Sasol and Huntsman Corporation signed a definitive agreement for Sasol to dispose of our 50% equity interest in the Sasol-Huntsman maleic anhydride joint venture. The transaction closed on 30 September 2019. Refer to note 11.

During 2009, 942 employees of Sasol Mining (Pty) Ltd were charged with participation in an unprotected sit-in, threatening and forcing others to participate in an unprotected strike and for assaulting or attempting to assault others during an unprotected strike and they were subsequently dismissed. The applicants are disputing their dismissal. On 19 September 2019, the Labour Court passed a judgement directing inter alia Sasol Mining to re-instate the employees and pay certain past benefits. Refer to note 36.

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40 Financial risk management and financial instruments

Financial instruments overview

The following table summarises the group’s classification of financial instruments.

|  |  |  | Carrying value |  |  |
|  |  |  | At fair value through profit and loss |  | Designated at fair value through other comprehensive income |  | Amortised cost |  | Fair value |
|  | Note |  | Rm |  | Rm |  | Rm |  | Rm |
2019 |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |
Investments in listed securities |  |  |  | — |  | 830 |  | — |  | 830 |
Investments in unlisted securities |  |  |  | — |  | 393 |  | — |  | 393 |
Other long-term investments |  |  |  | — |  | — |  | 25 |  | 25 |
Long-term receivables |  | 19 |  | — |  | — |  | 5 582 |  | 5 582 |
Long- and short-term financial assets |  |  |  | 645 |  | — |  | — |  | 645 |
Trade and other receivables** |  | 24 |  | — |  | — |  | 25 611 |  | 25 611 | *
Cash and cash equivalents* |  | 27 |  | — |  | — |  | 15 877 |  | 15 877 | *
Financial liabilities |  |  |  |  |  |  |  |  |  |  |
Listed long-term debt (Bonds issued)+ |  | 16 |  | — |  | — |  | 46 060 |  | 49 421 |
Unlisted long-term debt+ |  | 16 |  | — |  | — |  | 91 279 |  | 91 777 |
Short-term debt and bank overdraft |  |  |  | — |  | — |  | 1 297 |  | 1 297 | *
Long- and short-term financial liabilities |  |  |  | 2 205 |  | — |  | — |  | 2 205 |
Trade and other payables+ |  | 25 |  | — |  | — |  | 28 501 |  | 28 501 | *

Measurement principles under IFRS 9 remained the same to those previously applied except for investment in unlisted securities that are measured at fair value through other comprehensive income compared to being measured at cost under IAS 39. The cost under IAS 39 was R244 million at 30 June 2018. Both the listed and unlisted investment in securities were classified as available for sale under IAS 39. Refer to note 1 for transition approach.

|  |  |  | Carrying value |  |  |
|  |  |  | At fair value through profit and loss |  | Available- for-sale |  | Amortised cost |  | Held-to- maturity |  | Fair value |
|  | Note |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
2018 |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |
Investments in listed securities |  |  |  | — |  | 682 |  | — |  | — |  | 682 |
Investments in unlisted securities |  |  |  | — |  | 244 |  | — |  | — |  | 244 |
Other long-term investments |  |  |  | — |  | — |  | — |  | 25 |  | 25 |
Long-term receivables |  | 19 |  | — |  | — |  | 3 824 |  | — |  | 3 824 |
Long- and short-term financial assets |  |  |  | 1 827 |  | — |  | — |  | — |  | 1 827 |
Trade and other receivables** |  |  |  | — |  | — |  | 26 648 |  | — |  | 26 648 | *
Cash and cash equivalents |  | 27 |  | — |  | — |  | 17 128 |  | — |  | 17 128 | *
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |
Listed long-term debt (Bonds issued)+ |  | 16 |  | — |  | — |  | 13 704 |  | — |  | 13 345 |
Unlisted long-term debt+ |  | 16 |  | — |  | — |  | 95 750 |  | — |  | 95 984 |
Short-term debt and bank overdraft |  |  |  | — |  | — |  | 2 035 |  | — |  | 2 035 | *
Long- and short-term financial liabilities |  |  |  | 2 059 |  | — |  | — |  | — |  | 2 059 |
Trade and other payables+ |  | 25 |  | — |  | — |  | 26 518 |  | — |  | 26 518 | *

* | The fair value of these instruments approximates carrying value, due to their short-term nature.
** | Trade and other receivables includes employee-related and insurance-related receivables.
+ | Includes unamortised loan costs.

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40 Financial risk management and financial instruments continued

40.1 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 risk and safety, health and environment 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 Sasol Limited Board appointed a subcommittee, the Hedging and Digital 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. The group’s targeted gearing ratio has been lifted to 60% until 2021 and thereafter will be managed down to the long-term target of between 20% and 40%. 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 2019 is 56,3% (2018 – 42,2%; 2017 – 26,4%).

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

To achieve and keep an optimal capital structure, the group aims to maintain a stable long-term investment grade credit rating, recognising that Sasol, like all South African domiciled entities, is constrained (but not necessarily capped) by the South African sovereign rating. In November 2017 S&P downgraded South Africa’s sovereign credit rating from BB+ investment grade to BB with a stable outlook. In December 2018, S&P affirmed Sasol’s rating at BBB-/A-3 with a stable outlook.

In May 2019 Moody’s Investors Service affirmed Sasol Limited’s long-term issuer rating at Baa3, however changed the outlook from stable to negative. The national issuer scale rating changed from Aaa.za to Aa1.za.

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, or 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 probably that the customer will service its debt in accordance to 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.

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40 Financial risk management and financial instruments continued

Expected credit loss is calculated as a function of probability of default, loss given default and exposure at default. The group allocate probability of default based on the external and internal information. The major portion of the financial assets at amortised cost consist 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 the rating agency, the group allocate internal credit ratings and default rates taking into account forward looking information, based on the, debtors profile and financial status. Loss given default is based on the Basel model. The Basel model assumes 35% loss given default for secured financial assets and 45% for unsecured 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. Credit risk is deemed to have increases when the payment is 30 days overdue and the customer have defaulted, indicating that their inability to honor the debt.

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 2019, 2018 and 2017. Approximately 50% (2018 – 49%; 2017 – 48%) of the group’s total turnover is generated from sales within South Africa, while about 22% (2018 – 24%; 2017 – 22%) relates to European sales and 14% (2018 – 13%; 2017 – 13%) 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:

|  |  |  | 2019 |  | 2018 |
|  | Life time |  | 12 months |  | Deductions |  | Expected credit loss |  | Impairment |
|  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Long-term receivables |  | 211 |  | — |  | — |  | 211 |  | 38 |
Trade receivables |  | 225 |  | — |  | — |  | 225 |  | 199 |
Other receivables |  | 204 |  | 24 |  | — |  | 228 |  | 228 |
|  | 640 |  | 24 |  | — |  | 664 |  | 465 |

Overview of the credit risk profile of financial assets measured at amortised cost is as follows:

|  | 2019 |
|  | % |
AAA to A- |  | 85 |
BBB to B- |  | 8 |
CCC+ and - below |  | 7 |

An amount of R465 million has been recognised under IAS 39 as at 30 June 2018. During 2019 additional net impairments of R199 million were recognised.

The effect of the change was inconsequential on Sasol’s accounting as the expected loss basis is not significantly different from the stringent debtor management policies currently applied by Sasol, and therefore no transition adjustment is presented.

Expected credit loss (in both long-term receivables and trade receivables) mainly relate to exposure to Mozambique.

Liquidity risk

Liquidity risk is the risk that an entity in the group will be unable to meet its obligations as they become due.

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.

The group is in compliance with all of the financial covenants per its loan agreements, none of which is expected to present a material restriction on funding or its investment policy in the near future. The group currently has sufficient undrawn borrowing facilities, which could be utilised to settle obligations and is planning for additional facilities to manage the finalisation of the LCCP. Refer to note 16.

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40 Financial risk management and financial instruments 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:

|  |  |  | Contractual cash flows* |  | Within one year |  | One to five years |  | More than five years |
|  | Note |  | Rm |  | Rm |  | Rm |  | Rm |
2019 |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |
Non-derivative instruments |  |  |  |  |  |  |  |  |  |  |
Long-term receivables |  | 19 |  | 5 582 |  | — |  | 4 203 |  | 1 379 |
Trade and other receivables |  | 24 |  | 25 611 |  | 25 611 |  | — |  | — |
Cash and cash equivalents (excluding restricted cash) |  |  |  | 13 397 |  | 13 397 |  | — |  | — |
Investments through other comprehensive income |  |  |  | 1 223 |  | 680 |  | 543 |  | — |
Other long-term investments |  |  |  | 25 |  | — |  | 25 |  | — |
|  |  |  | 45 838 |  | 39 688 |  | 4 771 |  | 1 379 |
Derivative instruments |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  | 2 161 |  | 2 161 |  | — |  | — |
Interest rate swap |  |  |  | 15 |  | — |  | 8 |  | 7 |
Zero cost collar |  |  |  | 582 |  | 582 |  | — |  | — |
Ethane swaps |  |  |  | 2 |  | 2 |  | — |  | — |
Other commodity derivatives |  |  |  | 31 |  | 31 |  | — |  | — |
|  |  |  | 48 629 |  | 42 464 |  | 4 779 |  | 1 386 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |
Non-derivative instruments |  |  |  |  |  |  |  |  |  |  |
Long-term debt*** |  | 16 |  | (183 445 | ) | (8 232 | ) | (138 453 | ) | (36 760 | )
Short-term debt |  | 16 |  | (1 239 | ) | (1 239 | ) | — |  | — |
Trade and other payables |  | 25 |  | (28 501 | ) | (28 501 | ) | — |  | — |
Bank overdraft |  | 27 |  | (58 | ) | (58 | ) | — |  | — |
Financial guarantees** |  |  |  | (1 326 | ) | (1 326 | ) | — |  | — |
|  |  |  | (214 569 | ) | (39 356 | ) | (138 453 | ) | (36 760 | )
Derivative instruments |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  | (2 190 | ) | (2 190 | ) | — |  | — |
Interest rate swap |  |  |  | (1 488 | ) | (213 | ) | (1 029 | ) | (246 | )
Zero cost collar |  |  |  | (3 | ) | (3 | ) | — |  | — |
Ethane swaps |  |  |  | (456 | ) | (456 | ) | — |  | — |
Crude oil futures |  |  |  | (27 | ) | (27 | ) | — |  | — |
Other commodity derivatives |  |  |  | (10 | ) | (10 | ) | — |  | — |
|  |  |  | (218 743 | ) | (42 255 | ) | (139 482 | ) | (37 006 | )

* | Contractual cash flows include interest payments.
** | Issued financial guarantees contracts are all repayable on default, however the likelihood of default is considered remote.
*** | Of the amounts due in one to five years, R131 billion relates to the repayment of the bonds, the revolving credit facility and the term loan.

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40 Financial risk management and financial instruments continued

|  |  |  | Contractual |  | Within |  | One to |  | More than |
|  |  |  | cash flows* |  | one year |  | five years |  | five years |
|  | Note |  | Rm |  | Rm |  | Rm |  | Rm |
2018 |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |
Non-derivative instruments |  |  |  |  |  |  |  |  |  |  |
Long-term receivables |  | 19 |  | 3 786 |  | — |  | 1 586 |  | 2 200 |
Trade and other receivables |  | 24 |  | 26 648 |  | 26 648 |  | — |  | — |
Cash and cash equivalents (excluding restricted cash) |  | 27 |  | 15 148 |  | 15 148 |  | — |  | — |
Investments available-for-sale |  |  |  | 926 |  | 926 |  | — |  | — |
Investments held-to-maturity |  |  |  | 25 |  | — |  | 25 |  | — |
|  |  |  | 46 533 |  | 42 722 |  | 1 611 |  | 2 200 |
Derivative instruments |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  | 1 214 |  | 1 214 |  | — |  | — |
Interest rate swap |  |  |  | 246 |  | — |  | — |  | 246 |
Zero cost collar |  |  |  | 979 |  | 979 |  | — |  | — |
Crude oil options |  |  |  | 482 |  | 482 |  | — |  | — |
Ethane swaps |  |  |  | 33 |  | 33 |  | — |  | — |
|  |  |  | 49 487 |  | 45 430 |  | 1 611 |  | 2 446 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |
Non-derivative instruments |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  | 16 |  | (139 294 | ) | (16 612 | ) | (86 415 | ) | (36 267 | )
Short-term debt |  | 16 |  | (1 946 | ) | (1 946 | ) | — |  | — |
Trade and other payables |  | 25 |  | (26 518 | ) | (26 518 | ) | — |  | — |
Bank overdraft |  | 27 |  | (89 | ) | (89 | ) | — |  | — |
Financial guarantees** |  |  |  | (1 539 | ) | (1 539 | ) | — |  | — |
|  |  |  | (169 386 | ) | (46 704 | ) | (86 415 | ) | (36 267 | )
Derivative instruments |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  |  | (1 217 | ) | (1 217 | ) | — |  | — |
Coal swaps |  |  |  | (414 | ) | (414 | ) | — |  | — |
Zero cost collar |  |  |  | (1 317 | ) | (1 317 | ) | — |  | — |
Crude oil futures |  |  |  | (91 | ) | (91 | ) | — |  | — |
|  |  |  | (172 425 | ) | (49 743 | ) | (86 415 | ) | (36 267 | )

* | Contractual cash flows include interest payments.
** | Issued financial guarantees contracts are all repayable on default, however the likelihood of default is considered remote.

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

Our Hedging and Digital 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.

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40 Financial risk management and financial instruments continued

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 uses zero-cost collars to hedge its currency risk, most with a maturity of less than one year from the reporting date.

Foreign exchange contracts

Foreign 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). Other transactions hedged include certain intercompany loans which expose the group to foreign currency risk.

A number of FECs were entered into during the year and classified as held for trading. FECs are also utilised in the group in cash flow hedge relationships. FECs taken out to hedge exposure to fluctuations in the rand/US$ exchange rate were held over a total notional amount of Rnil million at 30 June 2019 (2018 — R33 million (US$nil; EUR2,1 million)).

The following significant exchange rates were applied during the year:

|  | Average rate |  | Closing rate |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |
|  | Rand |  | Rand |  | Rand |  | Rand |
Rand/Euro |  | 16,19 |  | 15,34 |  | 16,01 |  | 16,04 |
Rand/US dollar |  | 14,20 |  | 12,85 |  | 14,08 |  | 13,73 |

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.

|  | 2019 |  | 2018 |
|  | Euro |  | US dollar |  | Euro |  | US dollar |
|  | Rm |  | Rm |  | Rm |  | Rm |
Trade and other receivables |  | 515 |  | 2 375 |  | 586 |  | 2 500 |
Cash and cash equivalents |  | 1 470 |  | 1 256 |  | 2 257 |  | 1 452 |
Net exposure on assets |  | 1 985 |  | 3 631 |  | 2 843 |  | 3 952 |
Long-term debt |  | (122 | ) | (1 851 | ) | (153 | ) | (1 651 | )
Short-term debt |  | — |  | — |  | — |  | (23 | )
Trade and other payables |  | (186 | ) | (1 077 | ) | (128 | ) | (1 248 | )
Net exposure on liabilities |  | (308 | ) | (2 928 | ) | (281 | ) | (2 922 | )
Exposure on external balances |  | 1 677 |  | 703 |  | 2 562 |  | 1 030 |
Net exposure on balances between group companies* |  | (1 135 | ) | (22 132 | ) | (2 391 | ) | 9 584 |
Total net exposure |  | 542 |  | (21 429 | ) | 171 |  | 10 614 |

* | The US$ increase relates to additional funding provided to the LCCP by Sasol Financing International.

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.

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 2018.

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|  | 2019 |  | 2018 |
|  |  |  | Income |  |  |  | Income |
|  | Equity |  | statement |  | Equity |  | statement |
|  | Rm |  | Rm |  | Rm |  | Rm |
Euro |  | 54 |  | 54 |  | 17 |  | 17 |
US dollar |  | (2 143 | ) | (2 143 | ) | 1 053 |  | 1 053 |

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. In some cases, we may also use other interest rate derivatives, which enables us to mitigate the risks associated with this exposure.

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.

Our exposure to and assessment of the risk

The group has exposure to the US dollar London Interbank Overnight Rate (LIBOR) through various instruments, including term loans and revolving credit facilities. In 2015, we entered into an interest rate swap for US$1,95 billion to convert variable LIBOR exposure to a fixed rate. It was designated as the hedging instrument in a cash flow hedge. The swap was novated in June 2019 when the underlying LCCP bank term loan was refinanced. This ended the hedge relationship with hedge accounting discontinued. The swap continues to be an economic hedge that cover a portion of the group’s exposure to the LIBOR and we will redesignate the swap as a hedging instrument in a cash flow hedge in financial year 2020.

Developments in respect of the proposed reform of the US dollar LIBOR and the impact thereof on our LIBOR linked debt facilities and interest rate swap are actively monitored. Changes to the interest rate benchmark will be considered in conjunction with the surrounding facts and circumstances at the time and appropriate changes and resetting of rates with counterparties will be negotiated and agreed.

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 |
|  | 2019 |  | 2018 |
|  | Rm |  | Rm |
Variable rate instruments |  |  |  |  |
Financial assets |  | 16 663 |  | 18 657 |
Financial liabilities |  | (54 542 | ) | (58 908 | )
|  | (37 879 | ) | (40 251 | )
Fixed rate instruments |  |  |  |  |
Financial assets |  | 197 |  | 97 |
Financial liabilities |  | (83 151 | ) | (51 144 | )
|  | (82 954 | ) | (51 047 | )
Interest profile (variable: fixed rate as a percentage of total financial assets) |  | 99:1 |  | 99:1 |
Interest profile (variable: fixed rate as a percentage of total financial liabilities) |  | 40:60 |  | 54:46 |

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Cash flow sensitivity for variable rate instruments

Financial instruments affected by interest rate risk include borrowings, deposits, derivative financial instruments, 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 2019. The sensitivity has been calculated including consideration of the effect of existing interest rate swap derivative instruments. Interest is recognised in the income statement using the effective interest rate method. With the swap to be designated as a hedge instrument in financial year 2020, the cash flow hedge reserve will be reclassified to profit and loss on a similar basis. Currently the total notional exposure hedged under the swap is US$1,95 billion (2018 — US$2,00 billion).

Income statement – 1% increase

|  |  |  |  |  | United States |  |  |
|  | South Africa |  | Europe |  | of America |  | Other |
|  | Rm |  | Rm |  | Rm |  | Rm |
30 June 2019 |  | 27 |  | 15 |  | (433 | ) | 12 |
30 June 2018 |  | (66 | ) | 6 |  | (362 | ) | 18 |

Income statement – 1% decrease

|  |  |  |  |  | United States |  |  |
|  | South Africa |  | Europe* |  | of America* |  | Other* |
|  | Rm |  | Rm |  | Rm |  | Rm |
30 June 2019 |  | (27 | ) | (15 | ) | 433 |  | (12 | )
30 June 2018 |  | 66 |  | (6 | ) | 362 |  | (18 | )

* | A decrease of 1% in interest rates for the United States of America and Europe will not have an effect on the income statement as it is not considered reasonably possible that the repo interest rates will decrease below 0%.

|  | Average fixed rate % |  | Expiry |  | Fair value loss recognised in other comprehensive income 2019 Rm |  | Fair value loss recognised in other comprehensive income 2018 Rm |  | Recognised in profit and loss 2019 Rm |  | Recognised in profit and loss 2018 Rm |
Interest rate swap derivatives |  |  |  |  |  |  |  |  |  |  |  |  |
US$ — pay fixed rate receive floating rate |  |  |  |  |  |  |  |  |  |  |  |  |
North America** |  | 2,78 |  | December 2026 |  | (285 | ) | (950 | ) | (1 485 | ) | 52 |
Mozambique |  | 2,80 |  | February 2030 |  | — |  | — |  | 10 |  | — |

** | The interest rate swap was novated in June 2019 when the underlying LCCP bank term loan was refinanced. This ended the hedge relationship with hedge accounting discontinued. A loss of R1 400 million was recognised in other comprehensive income on the revaluation of the cash flow hedge that was offset by a gain of R1 115 million on the reclassification of the swap to profit and loss on termination of the hedge relationship. We will redesignate the swap as a hedging instrument in a cash flow hedge in financial year 2020.

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

Crude oil, ethane and coal price

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, ethane purchases and export coal sales. The group entered into hedging contracts which provide downside protection against decreases in commodity prices.

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 were 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.

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Dated Brent Crude prices applied during the year:

|  | Dated Brent Crude |
|  | 2019 |  | 2018 |
|  | US$ |  | US$ |
High |  | 86,16 |  | 80,29 |
Average |  | 68,63 |  | 63,62 |
Low |  | 50,21 |  | 46,53 |

The following futures were in place at 30 June:

|  | Contract amount |  | Fair value |  | Within one year |  | Contract amount |  | Fair value |  | Within one year |
|  | 2019 |  | 2019 |  | 2019 |  | 2018 |  | 2018 |  | 2018 |
|  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |
Crude oil futures |  | 1 521 |  | (27 | ) | (27 | ) | 2 792 |  | (91 | ) | (91 | )
Other commodity derivatives |  | 254 |  | 21 |  | 21 |  | — |  | — |  | — |

Sensitivity analysis

A 10% increase of the commodity prices at 30 June would have increased the fair value losses recognised in other operating costs in the income statement by the amounts shown below, before the effect of tax. This analysis assumes that all other variables remain constant and should not be considered predictive of future performances. This calculation has been performed on the same basis for 2018.

|  | 2019 |  | 2018 |
|  | Rm |  | Rm |
Crude oil |  | (193 | ) | (153 | )

Sensitivity analysis

A 10% decrease in the commodity prices at 30 June would have the equal but opposite effect on the fair value amounts shown above, on the basis that all other variables remain constant.

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.

|  | 2019 |  | 2018 |  | 2017 |
Income statement impact |  | Rm |  | Rm |  | Rm |
Financial instruments |  |  |  |  |  |  |
Net (loss)/gain on derivative instruments |  |  |  |  |  |  |
Foreign exchange contracts (losses)/gains |  | (794 | ) | 121 |  | (1 107 | )
Put option crude oil derivatives |  | (498 | ) | (3 303 | ) | (237 | )
Zero cost collar foreign exchange derivatives |  | 323 |  | 936 |  | 1 608 |
Crude oil futures |  | 265 |  | (687 | ) | 277 |
Coal swaps |  | 91 |  | (1 024 | ) | 94 |
Ethane swaps |  | (462 | ) | 29 |  | — |
Interest rate swaps |  | (1 475 | ) | 52 |  | 14 |
Other forex derivative |  | 85 |  | — |  | — |
|  | (2 465 | ) | (3 876 | ) | 649 |

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40 Financial risk management and financial instruments continued

Statement of financial position impact

|  | 2019 |  | 2018 |
|  | Rm |  | Rm |
Financial instrument |  |  |  |  |
Derivative financial assets |  |  |  |  |
Foreign exchange contracts |  | 15 |  | 42 |
Zero cost collar |  | 582 |  | 979 |
Crude oil options |  | — |  | 482 |
Interest rate swaps |  | 15 |  | 291 |
Ethane swaps |  | 2 |  | 33 |
Other commodity derivatives |  | 31 |  | — |
|  | 645 |  | 1 827 |
Derivative financial liabilities |  |  |  |  |
Foreign exchange contracts |  | (44 | ) | (45 | )
Coal swaps |  | — |  | (414 | )
Crude oil futures |  | (27 | ) | (91 | )
Zero cost collar |  | (3 | ) | (1 317 | )
Interest rate swaps |  | (1 488 | ) | (45 | )
Ethane swaps |  | (456 | ) | — |
Other commodity derivatives |  | (10 | ) | — |
|  | (2 028 | ) | (1 912 | )
Non-derivative financial liabilities |  |  |  |  |
Financial guarantees |  | (177 | ) | (147 | )
|  | (2 205 | ) | (2 059 | )

Derivatives designated in the hedge relationships

The group has exposure to the US dollar LIBOR through various instruments, including term loans and revolving credit facilities. In 2015, we entered into an interest rate swap for US$1,95 billion to convert variable LIBOR exposure to a fixed rate. It was designated as the hedging instrument in a cash flow hedge. The swap was novated in June 2019 when the underlying LCCP bank term loan was refinanced. This ended the hedge relationship with hedge accounting discontinued. The swap continues to cover a portion of the group’s exposure to the LIBOR and we will redesignate the swap as a hedging instrument in a cash flow hedge in financial year 2020.

The other derivatives within the group are economic hedges to our exposure to the rand/US$ exchange rates and commodity prices that have not been classified as cash flow hedges.

|  | Fair value of assets/ (liabilities) |  | Fair value of assets/ (liabilities) |
|  | 2019 |  | 2018 |
|  | Rm |  | Rm |
Interest rate swap derivatives — held for trading (2018 — cash flow hedge) |  | (1 473 | ) | 246 |

|  | Fair value |  | Fair value |  | Fair value |  | Fair value |  |  |  | Contract/ |  | Contract/ |
|  | of assets |  | of assets |  | of liabilities |  | of liabilities |  |  |  | Notional |  | Notional |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  |  |  | amount* |  | amount* |
|  | Rm |  | Rm |  | Rm |  | Rm |  |  |  | 2019 |  | 2018 |
Derivatives held for trading |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | 15 |  | 42 |  | (44 | ) | (45 | ) | US$m |  | 146 |  | 226 |
Crude oil futures |  | — |  | — |  | (27 | ) | (91 | ) | US$m |  | 92 |  | 194 |
|  | 15 |  | 42 |  | (71 | ) | (136 | ) |  |  |  |  |  |

* The notional amount is the sum of the absolute value of all contracts for both derivative assets and liabilities.

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In addition to foreign exchange contract utilised in normal operating activities, the following derivatives were entered into to mitigate the risks associated with the crude oil price, the rand/US$ exchange rate, ethane price and the coal price.

|  |  |  | 2019 |  | 2018 |
Brent crude oil — Put options |  |  |  |  |  |  |
Premium paid |  | US$m |  | — |  | 207 |
Number of barrels |  | million |  | 48 |  | 98 |
Open positions |  | million |  | — |  | 48 |
Settled |  | million |  | 48 |  | 50 |
Average Brent crude oil price floor, net of costs (open positions) |  | US$/bbl |  | — |  | 53,36 |
Realised losses recognised in the income statement |  | Rm |  | (1 857 | ) | (1 605 | )
Unrealised (losses)/gains recognised in the income statement |  | Rm |  | 1 359 |  | (1 698 | )
Amount included in the statement of financial position |  | Rm |  | — |  | 482 |
Rand/US$ currency — Zero-cost collar instruments |  |  |  |  |  |  |
US$ exposure — open positions |  | US$bn |  | 4 |  | 4 |
Annual average floor |  | R/US$ |  | 13,84 |  | 13,14 |
Annual average cap |  | R/US$ |  | 16,63 |  | 15,14 |
Realised (losses)/gains recognised in the income statement |  | Rm |  | (610 | ) | 2 772 |
Unrealised gains/(losses) recognised in the income statement |  | Rm |  | 933 |  | (1 836 | )
Amount included in the statement of financial position |  | Rm |  | 579 |  | (338 | )
Export coal — Swap options |  |  |  |  |  |  |
Number of tons |  | million |  | 1,40 |  | 4,20 |
Open positions |  | million |  | — |  | 1,40 |
Settled |  | million |  | 1,40 |  | 2,80 |
Average coal swap price (open positions) |  | US$/ton |  | — |  | 81,82 |
Realised losses recognised in the income statement |  | Rm |  | (337 | ) | (618 | )
Unrealised gains/(losses) recognised in the income statement |  | Rm |  | 428 |  | (406 | )
Amount included in the statement of financial position |  | Rm |  | — |  | (414 | )
Ethane — Swap options |  |  |  |  |  |  |
Number of barrels |  | million |  | 16,00 |  | 5,80 |
Open positions |  | million |  | 12,50 |  | 3,50 |
Settled |  | million |  | 3,50 |  | 2,30 |
Average ethane swap price (open positions) |  | US$ c/gal |  | 28 |  | 27 |
Realised gains/(losses) recognised in the income statement |  | Rm |  | 29 |  | (1 | )
Unrealised (losses)/gains recognised in the income statement |  | Rm |  | (491 | ) | 30 |
Amount included in the statement of financial position |  | Rm |  | (454 | ) | 33 |

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40 Financial risk management and financial instruments continued

Sensitivity analysis

The fair value of significant derivatives held for trading is impacted by a number of market observable variables at valuation date. The sensitivities provided below reflect the impact on fair value as a result of movements in the significant input variables utilised for valuation purposes:

|  |  |  | Volatility |  | Commodity price |  | Rand/US$ |  | US$ Libor curve |
|  |  |  |  |  |  |  | +USD 2 |  | -USD 2 |  |  |  |  |  |  |
30 June 2019 |  |  |  | +2% |  | -2% |  | c/gal |  | c/gal |  | -R1/US$* |  | +0,5% |  | -0,5% |
Ethane swap |  | Rm |  | 90 |  | (82 | ) | 146 |  | (146 | ) |  |  |  |  |  |
Zero-cost collar |  | Rm |  | 115 |  | (125 | ) |  |  |  |  | 2 495 |  |  |  |  |
Interest rate swap |  | Rm |  |  |  |  |  |  |  |  |  |  |  | 754 |  | (748 | )

|  |  |  | Volatility |  | Commodity price |  | Rand/US$ |  | US$ Libor curve |
30 June 2018 |  |  |  | +2% |  | -2% |  | +USD 2/bbl |  | -USD 2/bbl |  | -R1/US$* |  | +0,5% |  | -0,5% |
Crude oil options |  | Rm |  | 88 |  | (80 | ) | (68 | ) | 81 |  |  |  |  |  |  |
Zero-cost collar |  | Rm |  | 27 |  | (22 | ) |  |  |  |  | 2 731 |  |  |  |  |
Interest rate swap |  | Rm |  |  |  |  |  |  |  |  |  |  |  | 866 |  | (865 | )

* A weakening of the Rand/US$ spot exchange rate of R2,55, will likely result in the spot price falling within the corridor of the cap and floor rates of the zero-cost collars. No gain or loss will be made if these derivatives are settled at a spot price between the cap and floor. The exchange rate would have to weaken by at least R2,55/US$, up to the cap of R16,63, before losses are incurred on the derivatives.

40.2 Fair value

Various valuation techniques and assumptions are utilised for the purpose of calculating fair value.

The group does not hold any financial instruments traded in an active market, except for the investment in listed equity instruments. Fair value is determined using valuation techniques as outlined below. Where possible, inputs are based on quoted prices and other market determined variables.

Fair value hierarchy

The following table is provided representing the assets and liabilities measured at fair value at reporting date, or for which fair value is disclosed at reporting date.

The calculation of fair value requires various inputs into the valuation methodologies used.

The source of the inputs used affects the reliability and accuracy of the valuations. Significant inputs have been classified into the hierarchical levels in line with IFRS 13, as shown below.

There have been no transfers between levels in the current year. Transfers between levels are considered to have occurred at the date of the event or change in circumstances.

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs other than quoted prices that are observable for the asset or liability (directly or indirectly).

Level 3 Inputs for the asset or liability that are unobservable.

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40 Financial risk management and financial instruments continued

|  | Fair value |  |  |  |  |  | Fair value |
|  | 30 June |  |  |  |  |  | hierarchy |
Financial instrument |  | 2019 |  | Valuation method |  | Significant inputs |  | of inputs |
Financial assets |  |  |  |  |  |  |  |  |
Investments in listed securities |  | 830 |  | Quoted market price for the same instrument |  | Quoted market price for the same instrument |  | Level 1 |
Investments in unlisted securities |  | 393 |  | Discounted cash flow |  | Forecasted earnings, capital expenditure and debt cash flows of the underlying business, based on the forecasted assumptions of inflation, exchange rates, commodity prices etc. Appropriate WACC for the region. |  | Level 3 |
Other long-term investments |  | 25 |  | Discounted cash flow |  | Market related interest rates. |  | Level 3 |
Long-term receivables |  | 5 582 |  | Discounted cash flow |  | Market related interest rates. |  | Level 3 |
Derivative assets |  | 645 |  | Forward rate interpolator model, appropriate currency specific discount curve, discounted expected cash flows, numerical approximation |  | Forward exchange contracted rates, market foreign exchange rates, forward contract rates, market commodity prices, coal prices, crude oil prices |  | Level 2 |
Trade and other receivables |  | 25 611 |  | Discounted cash flow |  | Market related interest rates. |  | Level 3 | *
Cash and cash equivalents |  | 15 877 |  | ** |  | ** |  | Level 1 | **
Financial liabilities |  |  |  |  |  |  |  |  |
Listed long-term debt |  | 49 421 |  | Quoted market price for the same instrument |  | Quoted market price for the same instrument |  | Level 1 |
Unlisted long-term debt |  | 91 777 |  | Discounted cash flow |  | Market related interest rates |  | Level 3 |
Short-term debt and bank overdraft |  | 1 297 |  | Discounted cash flow |  | Market related interest rates |  | Level 3 | *
Derivative liabilities |  | 2 205 |  | Discounted net cash flows, using a swap curve to infer the future floating cash flows, forward rate interpolator model, discounted expected cash flows, numerical approximation |  | US$Overnight Indexed Swap (OIS) curve, recovery probabilities, forward exchange contracted rates, coal prices, market foreign exchange rates |  | Level 2 |
Trade and other payables |  | 28 501 |  | Discounted cash flow |  | Market related interest rates |  | Level 3 | *

* The fair value of these instruments approximates their carrying value, due to their short-term nature.

** The carrying value of cash is considered to reflect its fair value.

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