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Sasol Limited - Impact Of Adopting New Accounting Standards Restatement Of Previously Reported Financial Results

Release Date: 03/03/2014 07:32:00      Code(s): SOLBE1 SOL     
Sasol Limited
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
Sasol Ordinary Share codes:    JSE : SOL      NYSE : SSL
Sasol Ordinary ISIN codes:     ZAE000006896   US8038663006
Sasol BEE Ordinary Share code:      JSE : SOLBE1
Sasol BEE Ordinary ISIN code:       ZAE000151817
("Sasol" or "the Company")

Dear stakeholder,

Impact of adopting new consolidation suite of accounting standards ? restatement of
previously reported financial results

On 1 July 2013, Sasol adopted a number of new International Financial Reporting Standards
(IFRS), which impacted the previously reported financial results of the group. These new
accounting standards include IFRS 10, Consolidated Financial Statements, IFRS 11, Joint
Arrangements and IFRS 12, Disclosure of Interests in Other Entities.

In accordance with the transition provisions, these standards have been applied with
retrospective effect resulting in a restatement of the previously reported financial
results. As part of our commitment to keep our stakeholders informed, this document provides
information on the restated comparative reporting periods that will be disclosed alongside
the group's results for the six months ended 31 December 2013.

This information is preliminary and has not been audited or reviewed by the Company's
auditors.

Yours sincerely,

Paul Victor
Acting Chief Financial Officer
03 March 2014
Johannesburg

1.Overview of reporting changes
  The consolidation suite of standards, namely IFRS 10, Consolidated Financial Statements
  (IFRS 10), IFRS 11, Joint Arrangements (IFRS 11) and IFRS 12, Disclosure of Interests in
  Other Entities (IFRS 12) became effective for annual periods beginning on or after 1
  January 2013. Accordingly, Sasol adopted these new accounting standards on 1 July 2013
  which resulted in a restatement of the group's previously reported results for the years
  ended 30 June 2013 and 2012 and the six months ended 31 December 2012.
  IFRS 10, Consolidated Financial Statements

  IFRS 10 replaces IAS 27, Consolidated and Separate Financial Statements, that addresses
  the accounting for consolidated financial statements and SIC-12, Consolidation ? Special
  Purpose Entities.

  This standard provides a single basis for consolidation with new criteria to determine
  whether entities, in which the group has an interest should be consolidated.
  The adoption of IFRS 10 has resulted in an existing subsidiary, National Petroleum
  Refiners of South Africa (Pty) Ltd (Natref), in which the group has a 64% interest, being
  accounted for as a joint operation using the line-by-line consolidation method.
  No other material subsidiaries within the group were affected.

  The group has applied IFRS 10 retrospectively in accordance with the transition provisions
  and the results for the years ended 30 June 2013 and 2012 and the six months ended 31
  December 2012 has been restated accordingly.

  IFRS 11, Joint Arrangements
  IFRS 11 replaces IAS 31, Interests in Joint Ventures, and SIC-13, Jointly-controlled
  Entities ? Non-monetary Contributions by Venturers and changes the classification for
  joint arrangements.
  Under IFRS 11, a joint arrangement is classified as either a joint operation or a joint
  venture based on the rights and obligations of the parties to the arrangement, the legal
  form of the joint arrangement and when relevant, other facts and circumstances.
  IFRS 11 removes the option to proportionately consolidate joint ventures and instead, all
  interests in joint arrangements that meet the definition of a joint venture under IFRS 11
  must be accounted for using the equity method.
  The adoption of IFRS 11 has resulted in the following changes:

                      Sasol's      Previous              Revised
                     interest   classification    classification
ORYX GTL Limited           49  Proportionately            Equity
                                  consolidated         accounted
Sasol-Huntsman             50  Proportionately            Equity
GmbH & co KG                      consolidated         accounted
Petlin                     40  Proportionately            Equity
(Malaysia)    Sdn.                consolidated         accounted
Bhd
Uzbekistan     GTL         44,5  Proportionately          Equity
LLC                               consolidated         accounted
Arya         Sasol         50  Proportionately            Equity
Polymer    Company                consolidated         accounted
(ASPC)(1)

Merisol LP(2)              50  Proportionately            Equity
                               consolidated            accounted

(1)The group disposed of its investment in Arya Sasol Polymer Company in August 2013. The
   comparative periods for the years ended 30 June 2013 and 2012 and the six months ended 31
   December 2012 have been restated in accordance with IFRS 11 to include this investment as
   an equity accounted joint venture.

(2)In December 2012, Sasol acquired the remaining 50% shareholding in Merisol. Accordingly,
   this investment was accounted for as a 100% subsidiary from 31 December 2012.

All other joint arrangements (including Sasol Canada and Natref), will continue to be
accounted for using the line-by-line consolidation method.

IFRS 12, Disclosure of Interests in Other Entities

IFRS 12 sets out the requirements for disclosures relating to an entity's interest in
subsidiaries, joint arrangements, associates and structured entities. These disclosures
will be provided in the group's annual financial statements for the year ending 30 June
2014.

Impact of new accounting standards on the group results
The impact of adopting IFRS 10 and IFRS 11 on the group results for the comparative
periods is indicated in the tables to follow:
Restated comparatives - 31 December 2012
Condensed consolidated statement of financial position at 31 December 2012

                                            As   Effect of
                                    previously    adopting IFRS Restated
                                                        10
                                      reported and IFRS 11           R'm
 
                                           R'm         R'm
   ASSETS
   Property, plant and equipment        99 149     (8 637)        90 512
   Assets under construction            38 452       (761)        37 691
   Investments in equity accounted
joint ventures                               -       8 502         8 502
   Investments in associates             2 487          14         2 501
   Other long-term assets                6 306       (270)         6 036
   Non-current assets                  146 394     (1 152)       145 242
   Inventories                          24 069     (1 716)        22 353
   Trade and other receivables          26 128       (918)        25 210
   Cash                                 28 147     (2 238)        25 909
   Other current assets                    864          31           895
   Current assets                       79 208     (4 841)        74 367
   Total assets                        225 602     (5 993)       219 609
   EQUITY AND LIABILITIES
   Shareholders' equity                132 428        (38)       132 390
   Non-controlling interests             3 294       (338)         2 956
   Total equity                        135 722       (376)       135 346
   Long-term debt                       21 402     (1 626)        19 776
   Long-term provisions                 10 991       (235)        10 756
   Other non-current liabilities        23 135       (694)        22 441
   Non-current liabilities              55 528     (2 555)        52 973
   Trade payables and accrued
   expenses                             24 245     (1 707)        22 538
   Other current liabilities            10 107     (1 355)         8 752
   Current liabilities                  34 352     (3 062)        31 290

   Total equity and liabilities        225 602     (5 993)       219 609

        Consolidated income statement for the period ended 31 December 2012

                                                      Effect of
                                                       adopting
                                    As previously   IFRS 10 and
                                         reported       IFRS 11      Restated
                                              R'm           R'm           R'm
   Turnover                                85 440       (5 590)        79 850
   Materials, energy and
                                         (37 001)           468      (36 533)
consumables used
   Selling and distribution costs         (2 479)           131       (2 348)
   Maintenance expenditure                (4 427)           729       (3 698)
   Employee related expenditure           (9 915)           503       (9 412)
   Exploration expenditure and
                                            (777)           (4)         (781)
feasibility costs
   Depreciation and amortisation          (5 445)           431       (5 014)
   Other expenses, net                    (3 841)           715       (3 126)
     Translation gains / (losses)           (299)           982           683
     Other operating expenses             (4 151)         (128)       (4 279)
     Other operating income                   609         (139)           470

    Operating profit before
                                           21 555       (2 617)        18 938
remeasurement items
    Remeasurement items                   (2 621)         1 963         (658)
    Operating profit after
                                           18 934         (654)        18 280
remeasurement items
    Share of profits of equity
accounted joint ventures, net of                -           592           592
tax

   Share of profits of
                                             204             -            204
associates, net of tax
   Profit from operations,
                                          19 138          (62)         19 076
associates and joint ventures
   Net finance income                      (654)            93          (561)
   Profit before tax                      18 484            31         18 515
   Taxation                              (5 876)          (63)        (5 939)
   Profit for the period                  12 608          (32)         12 576

   Attributable to
   Owners of Sasol Limited                12 157             -         12 157
   Non-controlling interests in
                                             451          (32)            419
subsidiaries
                                          12 608          (32)         12 576

Salient features for the period ended 31 December 2012

                                                        Effect
                                                            of
                                                      adopting
                                              As       IFRS 10
                                      previously      and IFRS
                                        reported            11  Restated

   Operating profit margin          %       22,2           0,7      22,9
   Return on equity                 %       19,3         (0,1)      19,2
   Return on total assets           %       18,6           0,3      18,9
   Gearing                          %        6,6         (2,2)       4,4
   Capital commitments            R'm     64 299         (609)    63 690

Condensed consolidated statement of cash flow for the period ended 31 December 2012
                                                        Effect of
                                                  As     adopting
                                          previously  IFRS 10 and
                                            reported      IFRS 11    Restated
                                                 R'm          R'm         R'm
 Cash generated by operating activities       21 435      (2 716)      18 719
 Net finance income received / paid              154        1 910       2 064
 Tax paid                                    (4 745)           40     (4 705)
 Dividends paid                              (7 267)            -     (7 267)
 Cash retained from operating
                                               9 577        (766)
 activities                                                             8 811
 Additions to non-current assets            (14 350)          533    (13 817)
 Acquisition of new or additional
 interests in joint ventures                   (721)        (361)     (1 082)
 Acquisition of new or additional
 investments in associates                     (199)            -       (199)
 Other net cash flows from investing
 activities                                      906         (43)         863
 Cash utilised in investing activities      (14 364)          129    (14 235)
 Share capital issued on implementation
 of share options                                227            -         227
 Contributions from non-controlling 
 shareholders in subsidiaries                     27            -          27
 Dividends paid to non-controlling
 shareholders in subsidiaries                  (248)           28       (220)
 Net movement in long-term debt                7 522          269       7 791
 Net movement in short-term debt               6 513            -       6 513
 Cash effect of financing activities          14 041          297      14 338
 Translation effects on cash and cash            249         (57)         192
equivalents of foreign operations
Increase in cash and cash equivalents          9 503        (397)       9 106
Cash and cash equivalents at beginning
of the period                                 17 838      (1 841)      15 997
Net reclassification to held for sale           (29)            -        (29)
Cash and cash equivalents at end of
the period                                    27 312      (2 238)      25 074

Restated comparatives - 30 June 2013
Condensed consolidated statement of financial position at 30 June 2013

                                                    Effect of
                                             As      adopting
                                     previously   IFRS 10 and
                                       reported       IFRS 11  Restated
                                            R'm           R'm       R'm
   ASSETS
   Property, plant and equipment        108 070       (7 081)   100 989
   Assets under construction             41 244       (1 379)    39 865
   Investments in equity accounted
   joint ventures                             -         8 636     8 636
   Investments in associates              2 676            12     2 688
   Other long-term assets                 7 903            22     7 925
   Non-current assets                   159 893           210   160 103
   Inventories                           24 056       (1 437)    22 619
   Trade and other receivables           29 003         (663)    28 340
   Cash                                  32 713       (1 410)    31 303
   Other current assets                   3 830          (30)     3 800
   Current assets                        89 602       (3 540)    86 062
   Total assets                         249 495       (3 330)   246 165
   EQUITY AND LIABILITIES
   Shareholders' equity                 149 625          (42)   149 583
   Non-controlling interests              3 650         (340)     3 310
   Total equity                         153 275         (382)   152 893
   Long-term debt                        22 357       (1 017)    21 340
   Long-term provisions                  12 397         (169)    12 228
   Other non-current liabilities         25 341         (631)    24 710
   Non-current liabilities               60 095       (1 817)    58 278
   Trade payables and accrued
   expenses                              33 477         (985)    32 492
   Other current liabilities              2 648         (146)     2 502
   Current liabilities                   36 125       (1 131)    34 994

Total equity and liabilities            249 495       (3 330)   246 165

Consolidated income statement for the year ended 30 June 2013

                                               As         Effect of
                                       previously  adopting IFRS 10
                                         reported       and IFRS 11     Restated
                                              R'm               R'm          R'm
   Turnover                               181 269          (11 378)      169 891
   Materials, energy and
consumables used                         (77 538)               921     (76 617)
   Selling and distribution costs         (5 371)               269      (5 102)
   Maintenance expenditure                (7 544)               301      (7 243)
   Employee related expenditure          (23 476)               999     (22 477)
   Exploration expenditure and
feasibility costs                         (1 354)              (15)      (1 369)
   Depreciation and amortisation         (12 030)               909     (11 121)
   Other expenses, net                    (6 841)             2 607      (4 234)
     Translation gains                        899             1 993        2 892
     Other operating expenses             (9 692)               803      (8 889)
     Other operating income                 1 952             (189)        1 763

    Operating profit before
remeasurement items                        47 115           (5 387)       41 728
    Remeasurement items                   (6 487)             3 538      (2 949)
    Operating profit after
remeasurement items                        40 628           (1 849)       38 779
    Share of profits of equity
accounted joint ventures, net of
tax                                             -             1 562        1 562
    Share of profits of associates, 
net of tax                                    445                59          504
    Profit from operations,
associates and joint ventures              41 073             (228)       40 845
    Net finance costs                     (1 294)               155      (1 139)
 
   Profit before tax                       39 779            (73)         39 706
   Taxation                              (12 597)               2       (12 595)

   Profit for year                         27 182            (71)         27 111

   Attributable to
   Owners of Sasol Limited                 26 278             (4)         26 274
   Non-controlling interests in
subsidiaries                                  904            (67)            837
                                           27 182            (71)         27 111


Salient features for the year ended 30 June 2013
                                                            
                                                    As          Effect of
                                            previously   adopting IFRS 10
                                              reported        and IFRS 11      Restated

   Operating profit margin               %        22,4                0,4          22,8
   Return on equity                      %        19,1                  -          19,1
   Return on total assets                %        18,4                0,3          18,7
   Gearing                               %       (0,3)              (0,8)         (1,1)
   Capital commitments                 R'm      67 752              (405)        67 347

Restated comparatives - 30 June 2012
Condensed consolidated statement of financial position at 30 June 2012
                                                    Effect of
                                             As      adopting
                                     previously   IFRS 10 and
                                       reported       IFRS 11  Restated
                                            R'm           R'm       R'm
   ASSETS
   Property, plant and equipment         95 872      (10 658)    85 214
   Assets under construction             33 585         (473)    33 112
   Investments in equity accounted
    joint ventures                            -         9 588     9 588
   Investments in associates              2 560            11     2 571
   Other long-term assets                 6 265         (337)     5 928
   Non-current assets                   138 282       (1 869)   136 413
   Inventories                           20 668       (1 748)    18 920
   Trade and other receivables           26 299         (656)    25 643
   Cash                                  18 060       (1 897)    16 163
   Other current assets                     444             -       444
   Current assets                        65 471       (4 301)    61 170
   Total assets                         203 753       (6 170)   197 583
   EQUITY AND LIABILITIES
   Shareholders' equity                 125 234          (38)   125 196
   Non-controlling interests              3 080         (334)     2 746
   Total equity                         128 314         (372)   127 942
   Long-term debt                        12 828       (1 239)    11 589
   Long-term provisions                  10 518         (234)    10 284
   Other non-current liabilities         21 204         (859)    20 345
   Non-current liabilities               44 550       (2 332)    42 218
   Trade payables and accrued
   expenses                              27 460       (1 548)    25 912

Other current liabilities                 3 429       (1 918)     1 511
Current liabilities                      30 889       (3 466)    27 423

Total equity and liabilities            203 753       (6 170)   197 583

Consolidated income statement for the year ended 30 June 2012

                                              As       Effect of
                                      previously   adopting IFRS
                                        reported  10 and IFRS 11   Restated
                                             R'm             R'm        R'm
   Turnover                              169 446        (10 332)    159 114
   Materials, energy and
   consumables used                     (80 410)           1 699   (78 711)
   Selling and distribution costs        (4 621)             435    (4 186)
   Maintenance expenditure               (7 421)             274    (7 147)
   Employee related expenditure         (19 465)             857   (18 608)
   Exploration expenditure and
   feasibility costs                     (1 045)               2    (1 043)
   Depreciation and amortisation         (9 651)             809    (8 842)
   Other expenses, net                   (8 215)           1 164    (7 051)
     Translation gains                       243             496        739
     Other operating expenses            (9 874)             683    (9 191)
     Other operating income                1 416            (15)      1 401

Operating profit before
remeasurement items                       38 618         (5 092)     33 526
    Remeasurement items                  (1 860)              83    (1 777)
    Operating profit after
remeasurement items                       36 758         (5 009)     31 749
    Share of profits of equity
accounted joint ventures, net of
tax                                            -           4 545      4 545
    Share of profits of
associates, net of tax                       479            (63)        416
    Profit from operations,
associates and joint ventures             37 237           (527)     36 710
    Net finance costs                    (1 234)             227    (1 007)

     Profit before tax                    36 003           (300)     35 703
     Taxation                           (11 746)             245   (11 501)

      Profit for year                     24 257            (55)     24 202

     Attributable to
     Owners of Sasol Limited              23 583             (2)     23 581
     Non-controlling interests in
  subsidiaries                               674            (53)        621
                                          24 257            (55)     24 202



  Salient features for the year ended 30 June 2012
                                                                Effect of
                                                     As     adopting IFRS
                                             previously       10 and IFRS
                                               reported                11     Restated

     Operating profit margin              %        21,7             (1,7)         20,0
     Return on equity                     %        20,3                 -         20,3
     Return on total assets               %        20,0               0,2         20,2
     Gearing                              %         2,7             (2,4)          0,3
     Capital commitments                R'm      45 819             (299)       45 520


2. Other elements of the financial statements

  The adoption of IFRS 10 and IFRS 11 did not have a significant impact on the statement of
  changes in equity or the statement of comprehensive income for the years ended 30 June
  2013 and 2012 and the six months ended 31 December 2012.

3. Investor Relations contacts

  Please feel free to contact us as follows:
  - investor.relations@sasol.com
  - +27 11 441 3113

03 March 2014
Sponsor: Deutsche Securities (SA) Proprietary Limited

Forward-looking statements:

Sasol may, in this document, make certain statements that are not historical facts and
relate to analyses and other information which are based on forecasts of future results and
estimates of amounts not yet determinable. These statements may also relate to our future
prospects, developments and business strategies. Examples of such forward-looking statements
include, but are not limited to, statements regarding exchange rate fluctuations, volume
growth, increases in market share, total shareholder return and cost reductions. Words such
as "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may",
"endeavour" and "project" and similar expressions are intended to identify such forward-
looking statements, but are not the exclusive means of identifying such statements. By their
very nature, forward-looking statements involve inherent risks and uncertainties, both
general and specific, and there are risks that the predictions, forecasts, projections and
other forward-looking statements will not be achieved. If one or more of these risks
materialise, or should underlying assumptions prove incorrect, our actual results may differ
materially from those anticipated. You should understand that a number of important factors
could cause actual results to differ materially from the plans, objectives, expectations,
estimates and intentions expressed in such forward-looking statements. These factors are
discussed more fully in our most recent annual report under the Securities Exchange Act of
1934 on Form 20-F filed on 9 October 2013 and in other filings with the United States
Securities and Exchange Commission. The list of factors discussed therein is not exhaustive;
when relying on forward-looking statements to make investment decisions, you should
carefully consider both these factors and other uncertainties and events. Forward-looking
statements apply only as of the date on which they are made, and we do not undertake any
obligation to update or revise any of them, whether as a result of new information, future
events or otherwise.

Supplementary A billion
Please note: information is defined as one thousand million. All references to years refer to
the financial year ended 30 June. Any reference to a calendar year is prefaced by the word
Summarised results of the group's joint arrangements - The following table contains a summary of the results of the group's share in joint arrangements at 30 June 2013, based on the new   IFRS 11
"calendar"
classifications

R' million                           ORYX         Sasol        Petlin      Uzbekistan         ASPC(1) Merisol(2)       Other            Total        Natref            Sasol         Other        Total joint
                                      GTL      Huntsman                                                                                equity                         Canada                      operations
                                                                                                                                    accounted
As at 30 June                                                                                                                           joint
2013                                                                                                                                 ventures


External non-current                5 095           945           550             344            -            -          198            7 132         2 095           13 899           980            16 974
assets

Property, plant and                 4 704           648           502               1            -            -           87            5 942         1 976            7 170           226             9 372
equipment

Assets under                          340             -            39             343            -            -            9              731           118            6 668           542             7 328
construction

Other non-current                      51           297             9               -            -            -          102              459             1               61           212               274
assets

External current assets             2 008           333           484             358            -            -          270            3 453           329            2 822         1 449             4 600

Intercompany current                    -             -             -               -            -            -            -                -            10                -            64                74
assets

Total assets                        7 103         1 278         1 034             702            -            -          468           10 585         2 434           16 721         2 493            21 648

Shareholders' equity                6 388           622           688             644            -            -          294            8 636           207           15 659         1 861            17 727

Long-term debt                         57           345             -               -            -            -            3              405         1 191                1           215             1 407

Intercompany long-term                  -             -             -               -            -            -            -                -             -                -            62                62
debt

Long-term provisions                   26            17             -               -            -            -           86              129            70              260             -               330

Other non-current                     194           145            32               -            -            -           11              382           441                -           (5)               436
liabilities
   
Current liabilities                   438           149           314              58            -            -           74            1 033           525              801           360             1 686

Total liabilities and               7 103         1 278         1 034             702            -            -          468           10 585         2 434           16 721         2 493            21 648
equity

Carrying value of                   6 388           622           688             644            -            -          294            8 636
investment

Income statement

External turnover                   4 790           705         1 213               -        4 134          401        (138)           11 105          479               600          401             1 480

Operating profit /                  2 670            91          (62)            (21)      (1 323)           46          195            1 597          327           (1 919)            3           (1 589)
(loss)

Attributable earnings /             2 656            49          (49)            (20)      (1 237)           41         (48)            1 392          113           (1 912)           44           (1 755)
(loss)

(1)The assets and liabilities of ASPC was classified as held for sale at 30 June 2013.

(2)In December 2012, Sasol acquired the remaining 50% shareholding in Merisol. Accordingly,
this investment was accounted for as a 100% subsidiary from 31 December 2012.

Effect of IFRS 10 and IFRS 11 on the group consolidated results for the year ended 30 June
2013

                              IFRS 11        IFRS 10  Consolidation     Total
R' million                adjustments    adjustments adjustments(1)

External non-current            7 132          1 610          (316)     8 426
assets

Property, plant and             5 942          1 139             -      7 081
equipment

Assets under construction         731            648             -     1 379

Other non-current assets          459          (177)         (316)      (34)

Investments in equity         (8 636)              -             -   (8 636)
accounted joint ventures

Current assets                  3 453            202         (115)     3 540

Total assets                    1 949          1 812         (431)     3 330

Shareholders' equity                -            362            20       382

Long-term debt                    405            612             -     1 017

Long-term provisions              129             40             -       169

Other non-current                 382            249             -       631
liabilities

Current liabilities             1 033            549         (451)     1 131

Total liabilities and           1 949          1 812         (431)     3 330
equity

Income statement

External turnover              11 105            273             -    11 378

Operating profit                1 597            191            61     1 849

(1)Consolidation adjustments are in respect of transactions between group companies and equity
accounted joint ventures that are accounted for as external transactions


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