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Financial risk management and financial instruments | 12 Months Ended
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Jun. 30, 2024
Financial risk management and financial instruments |
Financial risk management and financial instruments |
36 | Financial risk management and financial instruments
36.1 Financial instruments classification and fair value measurement The following table shows the classification, carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Level 1Quoted prices in active markets for identical assets or liabilities. Level 2Inputs other than quoted prices that are observable for the asset or liability (directly or indirectly). Level 3Inputs for the asset or liability that are unobservable. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Carrying |  | ​ |  | Carrying |  | ​ |  | ​
​ | ​ | ​ | ​ | value | ​ | Fair value | ​ | value | ​ | Fair value | ​ | Fair value
​ | ​ | ​ | ​ | 2024 | ​ | 2024 | ​ | 2023 | ​ | 2023 | ​ | hierarchy
Financial instrument | ​ | Note | ​ | Rm | ​ | Rm | ​ | Rm | ​ | Rm | ​ | of inputs
Financial assets |  |  |  |  |  |  |  |  |  |  |  |
At amortised cost |  |  |  |  |  |  |  |  |  |  |  |
Long-term restricted cash6 |  |  |  | 1 709 |  | 1 709 |  | 1 447 |  | 1 447 |  | Level 11
Long-term receivables |  | 17 |  | 3 051 |  | 2 906 |  | 2 803 |  | 2 803 |  | Level 32
Trade and other receivables |  | 22 |  | 31 272 |  | 31 272 |  | 30 915 |  | 30 915 |  | Level 33
Cash and cash equivalents |  | 25 |  | 45 383 |  | 45 383 |  | 53 926 |  | 53 926 |  | Level 11
At fair value through profit or loss |  |  |  |  |  |  |  |  |  |  |  |
Long-term and short-term financial assets |  |  |  | 3 978 |  | 3 978 |  | 2 225 |  | 2 225 |  |
Commodity and currency derivative assets |  |  |  | 1 297 |  | 1 297 |  | 472 |  | 472 |  | Level 2
Oxygen supply contract embedded derivative assets |  |  |  | 508 |  | 508 |  | 516 |  | 516 |  | Level 3
Other short-term investments | ​ | ​ | ​ | 2 173 | ​ | 2 173 | ​ | 1 237 | ​ | 1 237 | ​ | Level 11
Other long-term investments6 | ​ | ​ | ​ | 814 | ​ | 814 | ​ | — | ​ | — | ​ | Level 14
Designated at fair value through other comprehensive income |  |  |  | ​ |  |  |  |  |  |  |  |
Investments in listed securities6 |  |  |  | — |  | — |  | 701 |  | 701 |  | Level 14
Investments in unlisted securities6 |  |  |  | 9 |  | 9 |  | 12 |  | 12 |  | Level 35
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |
At amortised cost |  |  |  |  |  |  |  |  |  |  |  |
Total long-term debt |  | 13 |  | 117 031 |  | 113 315 |  | 124 068 |  | 116 533 |  |
Listed long-term debt (USD bonds)7 |  |  |  | 59 687 |  | 55 778 |  | 90 248 |  | 82 768 |  | Level 14
Listed long-term debt (ZAR bonds)7 | ​ | ​ | ​ | 4 530 | ​ | 4 453 | ​ | 2 106 | ​ | 2 079 | ​ | Level 24
Listed convertible bonds7 | ​ | ​ | ​ | 12 099 | ​ | 12 276 | ​ | 12 238 | ​ | 12 072 | ​ | Level 38
Unlisted long-term debt7 |  |  |  | 40 715 |  | 40 808 |  | 19 476 |  | 19 614 |  | Level 32
Lease liabilities9 |  | 14 |  | 17 437 |  | ​ |  | 16 297 |  | ​ |  |
Short-term debt and bank overdraft |  |  |  | 687 |  | 687 |  | 238 |  | 238 |  | Level 33
Trade and other payables |  | 23 |  | 32 551 |  | 32 551 |  | 35 118 |  | 35 118 |  | Level 33
At fair value through profit or loss |  |  |  |  |  |  |  |  |  |  |  |
Long-term and short-term financial liabilities |  |  |  | 619 |  | 619 |  | 3 397 |  | 3 397 |  |
Commodity and currency derivative liabilities |  |  |  | 18 |  | 18 |  | 1 102 |  | 1 102 |  | Level 2
Convertible bond embedded derivative liability |  |  |  | 59 |  | 59 |  | 1 302 |  | 1 302 |  | Level 3
Oxygen supply contract embedded derivative liabilities |  |  |  | 542 |  | 542 |  | 993 |  | 993 |  | Level 3
| 1 | The carrying value of cash and other short-term investments is considered to reflect its fair value.
​
36 | Financial risk management and financial instruments continued
36.1 Financial instruments classification and fair value measurement continued
| 2 | Determined with a discounted cash flow model using market related interest rates.
| 3 | The fair value of these instruments approximates their carrying value, due to their short-term nature.
| 4 | Based on quoted market price for the same instrument. The ZAR bonds have been classified as a level 2 fair value measurement due to the relatively low level of liquidity in the local debt market.
| 5 | Determined using discounted cash flows modelling forecasted earnings, capital expenditure and debt cash flows of the underlying business, based on the forecasted assumptions of inflation, exchange rates, commodity prices and an appropriate WACC for the region.
| 6 | Presented as part of Other long-term investments in the Statement of financial position.
| 7 | Carrying value includes interest and unamortised loan costs.
| 8 | The fair value of the amortised cost component of the US$ Convertible Bond is based on the quoted price of the instrument after separating the fair value of the derivative component.
| 9 | Recognised under IFRS 16.
There were no transfers between levels for recurring fair value measurements during the period. There was no change in valuation techniques compared to the previous financial period. For all other financial instruments, fair value approximates carrying value. Commodity and currency derivative assets and liabilities Valued using forward rate interpolator model, appropriate currency specific discount curve, discounted expected cash flows and numerical approximation as appropriate. Significant inputs include forward exchange contracted rates, market foreign exchange rates, forward contract rates and market commodity prices such as crude oil prices, coal prices and ethane prices. ​ Oxygen supply contract embedded derivative assets and liabilities Relates to the US labour and inflation index and ZAR/EUR exchange rate embedded derivatives contained in the SO long-term gas supply agreements. The following table reconciles the opening and closing balance of the net embedded derivative asset/(liability): ​
​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
for the year ended 30 June | ​ | Rm | ​ | Rm
Balance at the beginning of the year |  | (477) |  | 339
Amounts settled during the year | ​ | 1 | ​ | (22)
Unrealised fair value loss recognised in other operating expenses and income | ​ | 442 | ​ | (794)
Balance at the end of the year |  | (34) |  | (477)
​ ​
36 | Financial risk management and financial instruments continued
36.1 Financial instruments classification and fair value measurement continued The fair value of the embedded derivative financial instrument contained in a long-term oxygen supply contract to our SO is impacted by a number of observable and unobservable variables at valuation date. The embedded derivative was valued using a forward rate interpolator model, discounted expected cash flows and numerical approximation, as appropriate. The table below provides a summary of the significant unobservable inputs applied in the valuation together with the expected impact on profit or loss as a result of reasonably possible changes thereto at reporting date, holding other inputs constant: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | Increase/(decrease) in profit or
​ | ​ | ​ | ​ | ​ | ​ | loss and equity
​ | ​ | Inputs | ​ | Change | ​ | 2024 | ​ | 2023
Input |  | applied |  | in input |  | Rm |  | Rm
Rand/US$ Spot price | ​ | R18,19/US$ | ​ | +R1/US$ | ​ | (478) | ​ | (478)
​ |  | (2023: R18,76/US$) | ​ | -R1/US$ |  | 478 |  | 478
US$ Swap curve |  | 3,63% - 5,06% | ​ | +10bps | ​ | 81 |  | 87
​ |  | (2023: 3,30% – 5,60%) | ​ | -10bps | ​ | (82) |  | (89)
Rand Swap curve |  | 7,76% - 10,35% | ​ | +100bps | ​ | (688) |  | (734)
​ |  | (2023: 8,36% – 10,41%) | ​ | -100bps | ​ | 784 |  | 848
​ Convertible bond embedded derivative liability Relates to the embedded derivative contained in the US$750 million convertible bond issued on 8 November 2022. The following table reconciles the opening and closing balance of the embedded derivative liability: ​
​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
for the year ended 30 June | ​ | Rm | ​ | Rm
Balance at the beginning of the year |  | 1 302 |  | —
Recognition of embedded derivative upon issue of bond |  | — |  | 2 089
Unrealised fair value loss recognised in other operating expenses and income |  | (1 233) |  | (867)
Translation of foreign operations |  | (10) |  | 80
Balance at the end of the year |  | 59 |  | 1 302
​ The embedded derivative was valued using quoted bond market prices and binomial tree approach. Significant inputs include conversion price (US$18,79;30 June 2023: 19,86), spot share price (R138,10; 30 June 2023: R233,26), converted to USD at the prevailing USD/ZAR FX spot rate (R18,19/US$; 30 June 2023: R18,83/US$), observable bond market price (90,42% of par; 30 June 2023: 94,7% of par). Although many inputs into the valuation are observable, the valuation method separates the fair value of the derivative from the quoted fair value of the US$ Convertible Bond by adjusting certain observable inputs. These adjustments require the application of judgement and certain estimates. Changes in the relevant inputs impact the fair value gains and losses recognised. The table below provides a summary of these inputs together with the expected impact on profit or loss as a result of reasonably possible changes thereto at reporting date: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | Increase/(decrease) in profit or
​ | ​ | ​ | ​ | ​ | ​ | loss and equity
​ | ​ | Inputs | ​ | Change | ​ | 2024 | ​ | 2023
Input |  | applied |  | in input |  | Rm |  | Rm
Credit spread |  | 372bps | ​ | +100bps | ​ | (364) |  | (433)
​ |  | (2023: 460bps) | ​ | -100bps* | ​ | 59 |  | 455
Calibrated volatility | ​ | 21,39% | ​ | +5 | % | (81) | ​ | (377)
​ | ​ | (2023: 27,84%) | ​ | -5 | % | 45 | ​ | 364
| * | A 100bps decrease in the applied credit spread will result in the bond floor exceeding the market price of the instrument and as such the impact has been limited to the value of the embedded derivative at 30 June 2024.
36 | Financial risk management and financial instruments continued
36.1 Financial instruments classification and fair value measurement continued For purposes of the sensitivity analysis, the market value of the overall instrument was kept stable and so the actively changed variable (e.g., volatility) results in an offsetting change to the other (e.g., credit spread).
36.2 | Financial risk management
​ The group is exposed in varying degrees to a number of financial instrument related risks. The Group Executive Committee (GEC) has the overall responsibility for the establishment and oversight of the Group’s risk management framework. The GEC established the Safety Committee, which is responsible for providing the Board with the assurance that significant business risks are systematically identified, assessed and reduced to acceptable levels. A comprehensive risk management process has been developed to continuously monitor and assess these risks. Based on the risk management process Sasol refined its hedging policy and the Sasol Limited Board appointed a subcommittee, the Audit Committee, that meets regularly to review and, if appropriate, approve the implementation of hedging strategies for the effective management of financial market related risks. The Group has a central treasury function that manages the financial risks relating to the Group’s operations. Capital allocation The Group’s objectives when managing capital (which includes share capital, borrowings, working capital and cash and cash equivalents) is to maintain a flexible capital structure that reduces the cost of capital to an acceptable level of risk and to safeguard the Group’s ability to continue as a going concern while taking advantage of strategic opportunities in order to grow shareholder value sustainably. The Group manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, repurchase shares currently issued, issue new shares, issue new debt, issue new debt to replace existing debt with different characteristics and/or sell assets to reduce debt. The Group monitors capital utilising a number of measures, including the gearing ratio (net debt to shareholders’ equity). Gearing takes into account the Group’s substantial capital investment and susceptibility to external market factors such as crude oil prices, exchange rates and commodity chemical prices. The Group’s gearing level for 2024 increased to 63,6% (2023 – 44,7%; 2022 – 41,7%) largely due to the significant impairment charge in the current period. Financing risk Financing risk refers to the risk that financing of the Group’s net debt requirements and refinancing of existing borrowings could become more difficult or more costly in the future. This risk can be decreased by managing the Group within the targeted gearing ratio, maintaining an appropriate spread of maturity dates, and managing short-term borrowings within acceptable levels. The Group’s target for long-term borrowings include an average time to maturity of at least two years, and an even spread of maturities. ​ Credit rating ​
​ | ​ | ​ | ​ | ​
​ | ​ | Credit rating
Agency | ​ | 2024 | ​ | 2023
S&P |  | BB+ (stable) |  | BB+ (stable)
Moody’s |  | Ba1 (stable) |  | Ba2 (positive)
​ On 28 November 2023, Moody’s upgraded Sasol’s rating to Ba1 from Ba2 and changed the outlook to stable from positive. Moody’s cited that the change in ratings reflects the company’s sustained improvement in credit metrics and reduction in debt levels as a result of sustained higher oil prices, asset disposal proceeds and a resilient business performance.
36 | Financial risk management and financial instruments continued
36.2 | Financial risk management continued
Risk profile Risk management and measurement relating to each of these risks is discussed under the headings below (sub-categorised into credit risk, liquidity risk, and market risk) which entails an analysis of the types of risk exposure, the way in which such exposure is managed and quantification of the level of exposure in the statement of financial position. Credit risk Credit risk refers to the potential for financial loss when a counterparty fails to fulfill their contractual financial obligations. This risk is considered low when, based on current and projected information, the financial instrument has a low risk of default or there is a high likelihood that the counterparty will consistently meet their debt payments as per agreed terms. How we manage the risk The credit risk is managed/mitigated through:
| ● | thorough assessment of the counterparties creditworthiness by analysing their financial statements to determine their financial health and ability to service their debt obligation; and
| ● | periodic review of the credit limits to assess risk exposure and ensuring that the facility is sufficiently secured.
The Group manages risk by securing the debtor’s book through an insurance policy or obtaining security in the form of bank guarantees or insurance guarantees. In the instance of doing business with major corporate or listed entities the unsecured credit facility is supported through a motivational business paper submitted to the signatories as per the delegation of authority (DoA). The counterparties credit limits are reviewed and approved as per the DoA. The Group monitors the age analysis monthly in order to identify any specific provision to be raised for those particular counterparties with adverse information or defaulting in payment of their debt. Expected Credit Loss (ECL) is calculated by considering the probability of default, loss given default, contractual terms of payment and account receivable balance (exclusive of specifically provided debtors) as at a particular time of calculation.
| ● | The probability of default (PD) rate is based on external and internal information. The PD rate is the average of Moody’s, Fitch and S&P Corporate and/or Sovereign rates, depending on whether the customer is corporate, or government related. For customers or debtors that are not rated by a formal rating agency, the group allocates internal credit ratings and default rates taking into account forward looking information, based on the debtor’s profile, security/surety obtained and financial status.
| ● | Loss given default (LGD) is based on the Basel model. World-wide, and especially in South Africa, economies have faced a series of global and local disruptions, including price volatility, elevated energy costs, high inflation, higher cost of debt, etc. As a result, the group applies the Board of Governors of the Federal Reserve System’s formula to derive a downturn LGD to be used for 2024 and 2023, namely 50% for unsecured financial assets and 40% for secured financial assets.
Trade receivables expected credit loss is calculated over lifetime. Long-term and other receivables that are rated as investment grade are considered to have low credit risk, and the Group considers credit risk to have increased significantly when the customer’s credit rating has been downgraded to a lower grade (e.g. from Investment grade to Speculative grade). The Group considers customers to be in default when the receivable is past its due standard and agreed credit terms. The contractual payment terms for receivables vary according to the credit policy.
36 | Financial risk management and financial instruments continued
36.2 | Financial risk management continued
No single customer represents more than 10% of the Group’s total turnover or more than 10% of total trade receivables for the years ended 30 June 2024, 2023 and 2022. The majority of the Group's turnover is generated from sales within South Africa, Europe, and the United States - refer to the Segment information. The geographical concentration of credit risk is largely aligned with the regions in which the turnover was earned. Detail of allowances for credit losses: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | 12-month |  |
​ | ​ | Lifetime ECL | ​ | ECL | ​ |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | No | ​ | ​
​ | ​ | Significant | ​ | ​ | ​ | ​ | ​ | ​ | ​ | significant | ​ | ​
​ | ​ | increase in | ​ | Simplified | ​ | ​ | ​ | ​ | ​ | increase in | ​ | ​
​ | ​ | credit risk | ​ | approach | ​ | ​ | ​ | ​ | ​ | credit risk | ​ | Total
​ | ​ | since initial | ​ | for trade | ​ | Credit- | ​ | Total lifetime | ​ | since initial | ​ | expected
​ | ​ | recognition | ​ | receivables | ​ | impaired | ​ | ECL | ​ | recognition | ​ | credit loss
​ |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm
2024 |  |  |  |  |  |  |  |  |  |  |  |
Long-term receivables |  | — |  | — |  | 132 |  | 132 |  | 24 |  | 156
Trade receivables |  | — |  | 184 |  | 116 |  | 300 |  | — |  | 300
Other receivables |  | 128 |  | — |  | 438 |  | 566 |  | 4 |  | 570
​ |  | 128 |  | 184 |  | 686 |  | 998 |  | 28 |  | 1 026
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | 12-month |  |
​ | ​ | Lifetime ECL | ​ | ECL | ​ |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | No | ​ | ​
​ | ​ | Significant | ​ | ​ | ​ | ​ | ​ | ​ | ​ | significant | ​ | ​
​ | ​ | increase in | ​ | Simplified | ​ | ​ | ​ | ​ | ​ | increase in | ​ | ​
​ | ​ | credit risk | ​ | approach | ​ | ​ | ​ | ​ | ​ | credit risk | ​ | Total
​ | ​ | since initial | ​ | for trade | ​ | Credit- | ​ | Total lifetime | ​ | since initial | ​ | expected
​ | ​ | recognition | ​ | receivables | ​ | impaired | ​ | ECL | ​ | recognition | ​ | credit loss
​ |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm
2023 |  |  |  |  |  |  |  |  |  |  |  |
Long-term receivables |  | — |  | — |  | 49 |  | 49 |  | 62 |  | 111
Trade receivables |  | — |  | 34 |  | 227 |  | 261 |  | — |  | 261
Other receivables |  | 102 |  | — |  | 385 |  | 487 |  | 4 |  | 491
​ |  | 102 |  | 34 |  | 661 |  | 797 |  | 66 |  | 863
​ The ECL relating to long-term receivables increased despite a decrease in carrying amount due to deteriorating credit ratings as well as a specific allowances against a large defaulting customer. Overview of the credit risk profile of financial assets measured at amortised cost is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
​ | ​ | Low risk | ​ | Medium risk | ​ | High risk | ​ | Low risk | ​ | Medium risk | ​ | High risk
​ | ​ | ​ | ​ | ​ | ​ | CCC+ and | ​ | ​ | ​ | ​ | ​ | CCC+ and
​ | ​ | AAA to A- | ​ | BBB+ to B- | ​ | below | ​ | AAA to A- | ​ | BBB+ to B- | ​ | below
​ |  | % |  | % |  | % |  | % |  | % |  | %
Long-term receivables |  | 19 | ​ | 77 | ​ | 4 |  | 29 | ​ | 59 | ​ | 12
Trade receivables |  | 81 | ​ | 15 | ​ | 4 |  | 77 | ​ | 18 | ​ | 5
Other receivables | ​ | 50 | ​ | 34 | ​ | 15 | ​ | 82 | ​ | 15 | ​ | 3
Cash and cash equivalents* |  | 17 | ​ | 81 | ​ | 2 |  | 20 | ​ | 78 | ​ | 2
| * | Includes long-term restricted cash.
36 | Financial risk management and financial instruments continued
36.2 | Financial risk management continued
Liquidity risk Liquidity risk is the risk that an entity in the Group will be unable to meet its obligations as they become due. The global economic landscape remains volatile, including fluctuating oil and petrochemical prices, an unstable product demand environment and inflationary pressure. In South Africa, the underperformance of state-owned enterprises and socio-economic challenges continues to impact volumes, margins and resultant profitability. How we manage the risk The Group manages liquidity risk by effectively managing its working capital, capital expenditure and cash flows, making use of a central treasury function to manage pooled business unit cash investments and borrowing requirements. Currently the Group is maintaining a positive liquidity position, conserving the Group’s cash resources through continued focus on working capital improvement, cost savings and capital reprioritisation. The Group’s is largely financed through USD - denominated debt. The Group meets its financing requirements through a mixture of cash generated from its operations and, short and long-term borrowings and strives to maintain adequate banking facilities and reserve borrowing capacities. Adequate banking facilities and reserve borrowing capacities are maintained. In the prior year, the Group has refinanced its existing banking facilities, due to mature in calendar year 2024, into a new banking facility totaling nearly US$3 billion comprising of a revolving credit facility and term loan facility, both with a five-year maturity and with two extension options of one year each. The Group is in compliance with all of the financial covenants per its loan agreements, none of which are expected to present a material restriction on funding or its investment policy in the near future. A net debt to EBITDA covenant level of 3 times is applicable to the term loan and revolving credit facility. The Group was within this threshold at 30 June 2024. Protection of downside risk for the balance sheet was a key priority for the Group during volatile times, resulting in the execution of our hedging programme to address oil price, ethane price and currency exposure. ​
36 | Financial risk management and financial instruments continued
36.2 | Financial risk management continued
Our exposure to and assessment of the risk The maturity profile of the undiscounted contractual cash flows of financial instruments at 30 June were as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Carrying |  | Contractual |  | Within one | ​ | One to | ​ | Three to |  | More than
​ | ​ | ​ | ​ | amount | ​ | cash flows* | ​ | year | ​ | three years | ​ | five years | ​ | five years
​ | ​ | Note | ​ | Rm | ​ | Rm | ​ | Rm |  | Rm | ​ | Rm | ​ | Rm
2024 |  |  |  |  |  |  |  |  | ​ |  | ​ | ​ |  |
Financial assets |  |  |  |  |  |  |  |  | ​ |  | ​ | ​ |  |
Non-derivative instruments |  |  |  |  |  |  |  |  | ​ |  | ​ | ​ |  |
Long-term receivables |  | 17 |  | 3 051 |  | 3 283 |  | 90 | ​ | 1 630 | ​ | 588 |  | 975
Trade and other receivables |  | 22 |  | 31 272 |  | 31 272 |  | 31 272 | ​ | — | ​ | — |  | —
Cash and cash equivalents |  | 25 |  | 45 383 |  | 45 383 |  | 45 383 | ​ | — | ​ | — |  | —
Investments through other comprehensive income |  |  |  | 9 |  | 9 |  | 9 | ​ | — | ​ | — |  | —
Long-term and short-term investments through profit or loss | ​ | ​ | ​ | 2 987 | ​ | 2 987 | ​ | 2 987 | ​ | — | ​ | — | ​ | —
Long-term restricted cash |  |  |  | 1 709 |  | 1 709 |  | — | ​ | — | ​ | — |  | 1 709
​ | ​ | ​ |  | 84 411 |  | 84 643 |  | 79 741 | ​ | 1 630 | ​ | 588 |  | 2 684
Derivative instruments |  |  |  | ​ |  |  |  | ​ | ​ |  | ​ | ​ |  |
Forward exchange contracts |  |  |  | 711 | ​ | 22 090 | ​ | 22 090 | ​ | — | ​ | — |  | —
Crude oil put options |  |  |  | 279 | ​ | 279 | ​ | 279 | ​ | — | ​ | — |  | —
Foreign exchange zero cost collars | ​ | ​ | ​ | 302 | ​ | 302 | ​ | 302 | ​ | — | ​ | — | ​ | —
Other commodity derivatives |  |  |  | 5 | ​ | 5 | ​ | 5 | ​ | — | ​ | — |  | —
Oxygen supply contract embedded derivative | ​ | ​ | ​ | 508 | ​ | 822 | ​ | 69 | ​ | 138 | ​ | 138 | ​ | 477
​ | ​ | ​ |  | 86 216 |  | 108 141 |  | 102 486 | ​ | 1 768 | ​ | 726 |  | 3 161
Financial liabilities |  |  |  |  |  |  |  |  | ​ |  | ​ | ​ |  |
Non-derivative instruments |  |  |  |  |  |  |  |  | ​ |  | ​ | ​ |  |
Long-term debt** |  | 13 |  | (117 031) |  | (153 995) |  | (7 805) | ​ | (28 914) | ​ | (99 312) |  | (17 964)
Lease liabilities |  | 14 |  | (17 437) |  | (37 769) |  | (3 718) | ​ | (5 595) | ​ | (4 289) |  | (24 167)
Short-term debt |  | 15 |  | (566) |  | (566) |  | (566) | ​ | — | ​ | — |  | —
Trade and other payables |  | 23 |  | (32 551) |  | (32 551) |  | (32 551) | ​ | — | ​ | — |  | —
Bank overdraft |  | 25 |  | (121) |  | (121) |  | (121) | ​ | — | ​ | — |  | —
​ | ​ | ​ |  | (167 706) |  | (225 002) |  | (44 761) | ​ | (34 509) | ​ | (103 601) |  | (42 131)
Derivative instruments |  |  |  |  |  | ​ |  | ​ | ​ |  | ​ | ​ |  |
Forward exchange contracts |  |  |  | (11) |  | (21 390) |  | (21 390) | ​ | — | ​ | — |  | —
Other commodity derivatives | ​ | ​ | ​ | (7) | ​ | (7) | ​ | (7) | ​ | — | ​ | — | ​ | —
Oxygen supply contract embedded derivative |  |  |  | (542) |  | (3 654) |  | (34) | ​ | (35) | ​ | 14 |  | (3 599)
​ | ​ | ​ |  | (168 266) |  | (250 053) |  | (66 192) | ​ | (34 544) | ​ | (103 587) |  | (45 730)
| * | Contractual cash flows include interest payments.
​
| ** | The repayment of the notional amount of the convertible bonds is included in the one to three years category, in line with the contractual maturity date, based on obtaining the requisite shareholder approval for the convertible bonds to be settled in Sasol ordinary shares.
​
36 | Financial risk management and financial instruments continued
​
36.2 | Financial risk management continued
​ Current financial assets are sufficient to cover financial liabilities for the next year. The shortfall beyond one year will be funded through cash generated from operations, utilisation of available facilities and the refinancing of existing debt. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Carrying |  | Contractual |  | Within one | ​ | One to |  | Three to | ​ | More than
​ | ​ | ​ | ​ | amount | ​ | cash flows* | ​ | year | ​ | three years | ​ | five years | ​ | five years
​ | ​ | Note | ​ | Rm | ​ | Rm | ​ | Rm |  | Rm | ​ | Rm | ​ | Rm
2023 |  |  |  |  |  |  |  |  | ​ | ​ |  | ​ | ​ |
Financial assets |  |  |  |  |  |  |  |  | ​ | ​ |  | ​ | ​ |
Non-derivative instruments |  |  |  |  |  |  |  |  | ​ | ​ |  | ​ | ​ |
Long-term receivables |  | 17 |  | 2 803 |  | 3 105 |  | — | ​ | 1 119 |  | 273 | ​ | 1 713
Trade and other receivables |  | 22 |  | 30 915 |  | 30 915 |  | 30 915 | ​ | — |  | — | ​ | —
Cash and cash equivalents |  | 25 |  | 53 926 |  | 53 926 |  | 53 926 | ​ | — |  | — | ​ | —
Investments through other comprehensive income |  |  |  | 713 |  | 713 |  | 713 | ​ | — |  | — | ​ | —
Investments through profit or loss |  |  |  | 1 237 |  | 1 237 |  | 1 237 | ​ | — |  | — | ​ | —
Long-term restricted cash |  |  |  | 1 447 |  | 1 447 |  | — | ​ | — |  | — | ​ | 1 447
​ | ​ | ​ |  | 91 041 |  | 91 343 |  | 86 791 | ​ | 1 119 |  | 273 | ​ | 3 160
Derivative instruments |  |  |  | ​ |  | ​ |  | ​ | ​ | ​ |  | ​ | ​ |
Forward exchange contracts |  |  |  | 133 |  | 17 866 |  | 17 866 | ​ | — |  | — | ​ | —
Crude oil put options |  |  |  | 253 |  | 253 |  | 253 | ​ | — |  | — | ​ | —
Foreign exchange zero cost collars |  |  |  | 76 | ​ | 76 |  | 76 | ​ | — |  | — | ​ | —
Other commodity derivatives |  |  |  | 10 |  | 10 |  | 10 | ​ | — |  | — | ​ | —
Oxygen supply contract embedded derivative | ​ | ​ | ​ | 516 | ​ | 891 | ​ | 69 | ​ | 138 | ​ | 138 | ​ | 546
​ | ​ | ​ |  | 92 029 |  | 110 439 |  | 105 065 | ​ | 1 257 |  | 411 | ​ | 3 706
Financial liabilities |  |  |  | ​ |  | ​ |  | ​ | ​ | ​ |  | ​ | ​ |
Non-derivative instruments |  |  |  | ​ |  | ​ |  | ​ | ​ | ​ |  | ​ | ​ |
Long-term debt** |  | 13 |  | (124 068) |  | (152 653) |  | (44 932) | ​ | (11 970) |  | (41 366) | ​ | (54 385)
Lease liabilities |  | 14 |  | (16 297) |  | (34 111) |  | (3 261) | ​ | (5 364) |  | (3 559) | ​ | (21 927)
Short-term debt |  | 15 |  | (79) |  | (79) |  | (79) | ​ | — |  | — | ​ | —
Trade and other payables |  | 23 |  | (35 118) |  | (35 118) |  | (35 118) | ​ | — |  | — | ​ | —
Bank overdraft |  | 25 |  | (159) |  | (159) |  | (159) | ​ | — |  | — | ​ | —
​ | ​ | ​ |  | (175 721) |  | (222 120) |  | (83 549) | ​ | (17 334) |  | (44 925) | ​ | (76 312)
Derivative instruments |  |  |  |  |  |  |  |  | ​ | ​ |  | ​ | ​ |
Forward exchange contracts |  |  |  | (353) |  | (18 086) |  | (18 086) | ​ | — |  | — | ​ | —
Foreign exchange zero cost collars | ​ | ​ | ​ | (579) | ​ | (579) | ​ | (579) | ​ | — | ​ | — | ​ | —
Crude oil futures | ​ | ​ | ​ | (12) | ​ | (12) | ​ | (12) | ​ | — | ​ | — | ​ | —
Ethane swap options |  |  |  | (158) |  | (158) |  | (158) | ​ | — |  | — | ​ | —
Oxygen supply contract embedded derivative |  |  |  | (993) |  | (3 606) |  | (64) | ​ | (109) |  | (101) | ​ | (3 332)
​ | ​ | ​ |  | (177 816) |  | (244 561) |  | (102 448) | ​ | (17 443) |  | (45 026) | ​ | (79 644)
| * | Contractual cash flows include interest payments.
| ** | The Long-term debt maturity analysis was revised to allocate the US$750 million convertible bond contractual cash flows to the earliest maturity period presented to reflect the counterparty call option which is exercisable at any time. Refer to note 1.1. An amount of R9,4 billion is included in the Contractual cash flows and within one year categories above. The prevailing conversion price at 1 July 2023, the date of the presumed conversion, was US$19,8595. Bondholders would realise a loss when exercising their conversion rights at this date given that the average share price traded significantly lower than the conversion price, and conversion at this date is therefore considered unlikely. Previously, the maturity analysis was presented on the basis that the convertible bond is repaid in accordance with its maturity date of November 2027. The amounts previously included in the maturity analysis relating to the convertible bond were as follows: R17,0 billion under Contractual cash flows, R0,6 billion under Within one year, R1,3 billion under One to three years and R15,1 billion under Three to five years.
​
36 | Financial risk management and financial instruments continued
36.2 | Financial risk management continued
Market risk Market risk is the risk arising from possible market price movements and their impact on the future cash flows of the business. The Group's financial market risk management objectives, which inform the hedging philosophy of the Group, are:
| ● | To prudently manage the Group’s financial market risks in order to reduce the financial impact due to adverse movements in market rates/prices (i.e. protect cash flows), contributing to Sasol meeting its strategic financial objectives and remaining within Sasol Ltd Board’s approved risk appetite and risk tolerance levels; and
| ● | To reduce earnings volatility in order to increase certainty and predictability of future cash flows for planning purposes.
The market price movements that the Group is exposed to include: Foreign currency risk Foreign currency risk is a risk that earnings and cash flows will be affected due to changes in exchange rates. How we manage the risk The Audit Committee sets broad guidelines in terms of tenor and hedge cover ratios specifically to assess future currency exposure, which have the potential to materially affect our financial position. These guidelines and our hedging policy are reviewed from time to time. This hedging strategy enables us to better predict cash flows and thus manage our liquidity and key financial metrics more effectively. Foreign currency risks are managed through the Group’s hedging policy and financing policies and the selective use of various derivatives. Our exposure to and assessment of the risk The Group’s transactions are predominantly entered into in the respective functional currency of the individual operations. The construction of the LCCP has largely been financed through funds obtained in US dollar, with a small portion of funds obtained from Rand sources. A large portion of our turnover and capital investments are significantly impacted by the rand/US$ and rand/EUR exchange rates. Some of our fuel products are governed by the BFP, of which a significant variable is the rand/US$ exchange rate. Our export chemical products are mostly commodity products whose prices are largely based on global commodity and benchmark prices quoted in US dollars and consequently are exposed to exchange rate fluctuations that have an impact on cash flows. These operations are exposed to foreign currency risk in connection with contracted payments in currencies not in their individual functional currency. The most significant exposure for the Group exists in relation to the US dollar and the Euro. The translation of foreign operations to the presentation currency of the Group is not taken into account when considering foreign currency risk. Zero-cost collars In line with the risk mitigation strategy, the Group hedges a significant portion of its estimated foreign currency exposure in respect of forecast sales and purchases over the following 12 months. The Group mainly uses zero-cost collars to hedge its currency risk, most with a maturity of less than one year from the reporting date. Forward exchange contracts Forward exchange contracts (FECs) are utilised throughout the Group to hedge the risk of currency depreciation on committed and highly probable forecast transactions. Transactions hedged with FECs include capital and goods purchases (imports) and sales (exports). Refer to the summary of our derivatives below. ​
36 | Financial risk management and financial instruments continued
36.2 Financial risk management continued The following significant exchange rates were applied during the year: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Average rate | ​ | Closing rate
​ |  | 2024 |  | 2023 |  | 2024 |  | 2023
​ | ​ | Rand | ​ | Rand | ​ | Rand | ​ | Rand
Rand/Euro |  | 20,24 |  | 18,62 |  | 19,49 |  | 20,55
Rand/US$ |  | 18,71 |  | 17,77 |  | 18,19 |  | 18,83
​ 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. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 2024 | ​ | 2023
​ |  | Euro |  | US dollar |  | Euro |  | US dollar
​ |  | Rm | ​ | Rm |  | Rm | ​ | Rm
Long-term receivables |  | 67 |  | 745 |  | — |  | 339
Trade and other receivables |  | 564 |  | 2 595 |  | 544 |  | 3 520
Cash and cash equivalents |  | 3 319 |  | 1 241 |  | 2 835 |  | 1 872
Net exposure on assets |  | 3 950 |  | 4 581 |  | 3 379 |  | 5 731
Trade and other payables |  | (227) |  | (2 949) |  | (302) |  | (2 129)
Net exposure on liabilities |  | (227) |  | (2 949) |  | (302) |  | (2 129)
Exposure on external balances |  | 3 723 |  | 1 632 |  | 3 077 |  | 3 602
Net exposure on balances between Group companies1 |  | (2 014) |  | 25 769 |  | (2 323) |  | 8 484
Total net exposure |  | 1 709 |  | 27 401 |  | 754 |  | 12 086
| 1 | The US$ exposure relates to cash deposits made by Sasol Financing Limited to Sasol Financing International Limited.
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. ​
36 | Financial risk management and financial instruments continued
36.2 | Financial risk management continued
A 10% weakening in the Group’s significant exposure to the foreign currency at 30 June would have increased either the equity or the profit by the amounts below, before the effect of tax. This analysis assumes that all other variables, in particular, interest rates, remain constant, and has been performed on the same basis for 2023. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 2024 | ​ | 2023
​ | ​ | Euro | ​ | US dollar | ​ | Euro | ​ | US dollar
​ |  | Rm |  | Rm |  | Rm |  | Rm
Equity |  | 171 |  | 2 740 |  | 75 |  | 1 209
Income statement |  | 171 |  | 2 740 |  | 75 |  | 1 209
​ A 10% movement in the opposite direction in the Group’s exposure to foreign currency would have an equal and opposite effect to the amounts disclosed above. Interest rate risk Interest rate risk is the risk that the value of short-term investments and financial activities will change as a result of fluctuations in the interest rates. Fluctuations in interest rates impact on the value of short-term investments and financing activities, giving rise to interest rate risk. The Group has significant exposure to interest rate risk due to the volatility in South African, European and US interest rates. How we manage the risk Our debt is comprised of different instrument notes, which by their nature either bear interest at a floating or a fixed rate. We monitor the ratio of floating and fixed interest in our loan portfolio and manage this ratio, by electing to incur either bank loans, bearing a floating interest rate, or bonds, which bear a fixed interest rate. We may also use interest rate swaps, where appropriate, to convert some of our debt into either floating or fixed rate debt to manage the composition of our portfolio. There were no open interest rate swaps at 30 June 2024 or 30 June 2023. 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. ​
36 | Financial risk management and financial instruments continued
36.2 | Financial risk management continued
Our exposure to and assessment of the risk At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was: ​
​ | ​ | ​ | ​ | ​
​ | ​ | Carrying value
​ | ​ | 2024 | ​ | 2023
​ |  | Rm |  | Rm
Variable rate instruments |  |  |  |
Financial assets |  | 42 053 |  | 50 123
Financial liabilities1 |  | (44 471) |  | (20 911)
​ |  | (2 418) |  | 29 212
Fixed rate instruments |  | ​ |  | ​
Financial assets |  | 7 046 |  | 7 005
Financial liabilities2 |  | (72 680) |  | (103 317)
​ |  | (65 634) |  | (96 312)
Interest profile (variable: fixed rate as a percentage of total financial assets) |  | 86:14 |  | 88:12
Interest profile (variable: fixed rate as a percentage of total financial liabilities) |  | 38:62 |  | 17:83
| 1 | The increase in variable exposure is mainly due to the draw down on the RCF. Refer to note 13.
| 2 | The decrease in fixed exposure is mainly due to the repayment of a US$1,5 billion fixed-rate bond during the period.
Cash flow sensitivity for variable rate instruments Financial instruments affected by interest rate risk include borrowings, deposits, trade receivables and trade payables. A change of 1% in the prevailing interest rate in a particular currency at the reporting date would have increased/(decreased) earnings by the amounts shown below before the effect of tax. The sensitivity analysis has been prepared on the basis that all other variables, in particular foreign currency rates, remain constant and has been performed on the same basis for 2023. Interest is recognised in the income statement using the effective interest rate method. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Income statement — 1% increase
​ |  | ​ |  | ​ |  | United States |  | ​
​ | ​ | South Africa | ​ | Europe | ​ | of America | ​ | Other
​ |  | Rm |  | Rm |  | Rm |  | Rm
30 June 2024 |  | 250 |  | 32 |  | (328) |  | 21
30 June 2023 |  | 300 |  | 28 |  | (63) |  | 26
​ A 1% decrease in interest rates would have an equal and opposite effect to the amounts disclosed above. ​
36. | Financial risk management and financial instruments continued
36.2 Financial risk management continued The Group’s remaining exposure to IBORs relate mainly to loans denominated in JIBAR. Refer to note 1. Commodity price risk Commodity price risk is the risk of fluctuations in our earnings as a result of fluctuation in the price of commodities. ​ How we manage the risk The Group makes use of derivative instruments, including options and commodity swaps as a means of mitigating price movements and timing risks on crude oil purchases and sales and ethane purchases and export coal sales. The Group entered into hedging contracts which provide downside protection against decreases in commodity prices. Refer to the summary of our derivatives below. Our exposure to and assessment of the risk A substantial proportion of our turnover is derived from sales of petroleum and petrochemical products. Market prices for crude oil fluctuate because they are subject to international supply and demand and political factors. Our exposure to the crude oil price centres primarily around the selling price of the fuel marketed by our Energy business which is governed by the Basic Fuel Price (BFP) formula, the crude oil related raw materials used in our Natref refinery and certain of our offshore operations including where chemical prices are linked to the crude oil price. Key factors in the BFP are the Mediterranean and Singapore or Mediterranean and Arab Gulf product prices for petrol and diesel, respectively. Dated Brent crude oil prices applied during the year: ​
​ | ​ | ​ | ​ | ​
​ |  | Dated Brent Crude
​ | ​ | 2024 | ​ | 2023
​ | ​ | US$ | ​ | US$
High | ​ | 97,92 | ​ | 124,79
Average |  | 84,74 |  | 87,34
Low |  | 73,56 |  | 71,70
​ ​
36 | Financial risk management and financial instruments continued
36.2 | Financial risk management continued
Summary of our derivatives In the normal course of business, the Group enters into various derivative transactions to mitigate our exposure to foreign exchange rates, interest rates and commodity prices. Derivative instruments used by the Group in hedging activities include swaps, options, forwards and other similar types of instruments.
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Financial | ​ | Financial | ​ | Financial | ​ | Financial | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | asset | ​ | liability | ​ | asset | ​ | liability | ​ | Income statement gain/(loss)
​ |  | 2024 |  | 2024 |  | 2023 |  | 2023 | ​ | 2024 | ​ | 2023 | ​ | 2022
​ |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm |  | Rm
Commodity and currency derivatives | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swap options |  | — |  | — |  | — |  | — | ​ | — | ​ | — | ​ | 1 029
Crude oil put options | ​ | 279 | ​ | — | ​ | 253 | ​ | — | ​ | (953) | ​ | (507) | ​ | —
Crude oil zero cost collars | ​ | — | ​ | — | ​ | — | ​ | — | ​ | — | ​ | 3 953 | ​ | (11 349)
Crude oil swap options | ​ | — | ​ | — | ​ | — | ​ | — | ​ | — | ​ | — | ​ | (5 140)
Crude oil futures | ​ | — | ​ | — | ​ | — | ​ | (12) | ​ | (180) | ​ | 401 | ​ | (1 049)
Ethane swap options | ​ | — | ​ | — | ​ | — | ​ | (158) | ​ | (17) | ​ | (272) | ​ | 279
Coal swap options | ​ | — | ​ | — | ​ | — | ​ | — | ​ | — | ​ | 1 099 | ​ | 691
Other commodity derivatives | ​ | 5 | ​ | (7) | ​ | 10 | ​ | — | ​ | (62) | ​ | 180 | ​ | (593)
Forward exchange contracts | ​ | 711 | ​ | (11) | ​ | 133 | ​ | (353) | ​ | 1 091 | ​ | (1 339) | ​ | (677)
Foreign exchange zero cost collars |  | 302 |  | — |  | 76 |  | (579) | ​ | 810 | ​ | (301) | ​ | (1 580)
Embedded derivatives | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Convertible bond embedded derivative | ​ | — | ​ | (59) | ​ | — | ​ | (1 302) | ​ | 1 233 | ​ | 867 | ​ | —
Oxygen supply contract embedded derivatives* | ​ | 508 | ​ | (542) | ​ | 516 | ​ | (993) | ​ | 442 | ​ | (794) | ​ | 64
Non-derivative financial instruments |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Investments at fair value through profit or loss** | ​ | 2 173 | ​ | — | ​ | 1 237 | ​ | — | ​ | — | ​ | — | ​ | —
​ | ​ | 3 978 | ​ | (619) | ​ | 2 225 | ​ | (3 397) | ​ | 2 364 | ​ | 3 287 | ​ | (18 325)
| * | Relates to a US dollar derivative that is embedded in long-term oxygen supply contracts to our SO.
​
| ** | Fair value gains and losses are presented in other operating income and expenses, separately from derivative gains and losses.
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Contract/Notional amount* | ​ | ​ | ​ | Average price
​ | ​ | ​ | ​ | Open | ​ | Settled | ​ | Open | ​ | Settled | ​ | ​ | ​ | Open | ​ | Open
​ |  | ​ | ​ | 2024 | ​ | 2024 | ​ | 2023 | ​ | 2023 | ​ | ​ | ​ | 2024 | ​ | 2023
​ | ​ | ​ |  | Million |  | Million |  | Million |  | Million |  | ​ |  | ​ |  | ​
Fair value hedges | ​ | ​ | ​ |  | ​ |  |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Crude oil put options purchased** | ​ | barrels | ​ | 16,8 | ​ | 18,0 | ​ | 16,3 | ​ | — | ​ | US$/bbl | ​ | 58,7 | ​ | 49,4
Crude oil zero cost collars | ​ | barrels |  | — |  | — | ​ | — |  | 29,0 | ​ | US$/bbl | ​ | — | ​ | —
Crude oil futures | ​ | US$ |  | — |  | 2 | ​ | 2 |  | 21 | ​ | US$/bbl | ​ | — | ​ | 75,0
Ethane swap options | ​ | barrels |  | — |  | 3,6 | ​ | 3,6 |  | 1,3 | ​ | US$ c/gal | ​ | — | ​ | 30,1
Coal swaps | ​ | ton | ​ | — | ​ | — | ​ | — | ​ | 0,9 | ​ | US$/ton | ​ | — | ​ | —
Forward exchange contracts | ​ | US$ |  | 1 080 |  | — | ​ | 836 |  | — | ​ | R/US$ | ​ | 18,90 | ​ | 18,61
Forward exchange contracts | ​ | EUR | ​ | 43 | ​ | — | ​ | 30 | ​ | — | ​ | US$/EUR | ​ | 1,08 | ​ | 1,10
Foreign exchange zero cost collars | ​ | US$ |  | 1 530 |  | — | ​ | 2 760 |  | 4 400 | ​ | R/US$ Floor | ​ | 17,53 | ​ | 16,72
​ | ​ | ​ |  | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | R/US$ Cap | ​ | 22,65 | ​ | 20,70
| * | The notional amount is the sum of the absolute value of all contracts for both derivative assets and liabilities.
| ** | Total premium paid for contracts entered into in the year US$94,8 million (2023: US$42,0 million).
36 | Financial risk management and financial instruments continued
36.2 | Financial risk management continued
Accounting policies: Derivative financial instruments and hedging activities The Group is exposed to market risks from changes in interest rates, foreign exchange rates and commodity prices. The Group uses derivative instruments to hedge its exposure to these risks. Additionally, there are embedded derivatives that have been bifurcated in certain of the Group’s long-term supply agreements and borrowings. All derivative financial instruments are initially recognised at fair value and are subsequently stated at fair value at the reporting date. Attributable transaction costs are recognised in the income statement when incurred. Resulting gains or losses on derivative instruments, excluding designated and effective hedging instruments, are recognised in the income statement. To the extent that a derivative instrument has a maturity period of longer than one year, the fair value of these instruments will be reflected as a non-current asset or liability. Contracts to buy or sell non-financial items (e.g. gas or electricity) that were entered into and continue to be held for the purpose of the receipt of the non‑financial items in accordance with the Group’s expected purchase or usage requirements are not accounted for as derivative financial instruments. Purchase commitments relating to these contracts are disclosed in note 3. Hedge accounting The Group continues to apply the hedge accounting requirements of IAS 39 ‘Financial Instruments: Recognition and Measurement’. Where a derivative instrument is designated as a cash flow hedge of an asset, liability or highly probable forecast transaction that could affect the income statement, the effective part of any gain or loss arising on the derivative instrument is recognised as other comprehensive income and is classified as a cash flow hedge accounting reserve until the underlying transaction occurs. The ineffective part of any gain or loss is recognised in the income statement. If the hedging instrument no longer meets the criteria for cash flow hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction results in the recognition of a non-financial asset or non-financial liability, the associated gain or loss is transferred from the cash flow hedge accounting reserve, as other comprehensive income, to the underlying asset or liability on the transaction date. If the forecast transaction is no longer expected to occur, then the cumulative balance in other comprehensive income is recognised immediately in the income statement as reclassification adjustments. Other cash flow hedge gains or losses are recognised in the income statement at the same time as the hedged transaction occurs. Economic hedges When derivative instruments, including forward exchange contracts, are entered into as fair value hedges, no hedge accounting is applied. All gains and losses on fair value hedges are recognised in the income statement.

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