Wrap Text
Changes to segment reporting
Sasol Limited
(Incorporated in the Republic of South Africa)
Company registration number: 1979/003231/06
JSE
Sasol Ordinary shares:
Share code: SOL
ISIN: ZAE000006896
NYSE
Sasol Ordinary shares:
Share code: SSL
ISIN: US8038663006
Sasol BEE Ordinary shares
Share code: SOLBE1
ISIN: ZAE000151817
("Sasol" or "the Company")
Changes to segment reporting
Dear stakeholder,
One of the cornerstones of Sasol's past successes stemmed from our diverse businesses and activities being organised along
an integrated value chain. While our value chain remains integrated, over the past decade we established and drove independent
businesses within Sasol founded on a product-based operating model. Over time, organising our businesses in this manner resulted
in increased complexity, leading to slower decision-making, higher costs and greater time required for internal alignment and co-
ordination. To bring greater focus and increased simplicity to how Sasol is structured and managed, we have streamlined our corporate
structures and reorganised our businesses from a product-based operating model to one based on our value chain.
Our new operating model, and a simplified and consolidated legal structure, came into effect on 1 July 2014. The new operating model
aligns the components of Sasol - operating business units, regional operating hubs, strategic business units, and group functions
- according to a single value chain, focused on the production of liquid fuels, high-value chemicals and low-carbon electricity, as
outlined below:
- The Operating Business Units comprise our mining and upstream oil and gas activities, focusing mainly on securing feedstock
supply;
- The Regional Operating Hubs include our operations in Southern Africa, United States and Eurasia, focusing on sustaining
asset management and performance while delivering to plan and optimising the total cost of production;
- The Strategic Business Units focus on our commercial and enhanced customer interfaces within the energy and chemicals
arenas, and on optimising business performance through marketing and sales excellence; and
- Our group functions deliver fit-for-purpose business support services and solutions.
To reflect our new operating model, our financial reporting has been updated and new reportable segments will accordingly be
restated and presented in the group financial statements for 2015. To keep our stakeholders informed, and to assist investors during
our transition, this document provides information on the restated segment disclosures for the financial years ended 30 June 2014
and 2013, and for the six months ended 31 December 2013. Additional supplementary information, which includes a segment
overview document, is available on our website at www.sasol.com. This information is preliminary and has not been audited or
reviewed by Sasol's auditors.
Paul Victor
Acting Chief Financial Officer
21 November 2014
Johannesburg
1. Overview of new operating model
Our previous operating model added both cost and complexity to the organisation. Complex structures, work processes,
policies and procedures resulted in slower decision-making and reduced organisational effectiveness.
Accordingly, we moved from our previous model that focused on product lines to a new integrated operating model which has
been structured along our value chain.
Our new group structure is presented below:
Operating Business Units Regional Operating Hubs Strategic Business Units
Southern Africa International Operations Energy Business Chemicals Business
Operations
Mining Secunda Synfuels United States Operations Southern Africa Energy Base Chemicals
Exploration and Production Secunda Chemicals Eurasian Operations International Energy Performance Chemicals
International Sasolburg
Natref
Satellite Operations
Group Functions
2. Overview of segmental reporting changes
In terms of International Financial Reporting Standard (IFRS) 8, Operating Segments, segmental reporting should reflect
how the business is managed and how the results are reported to the Chief Operating Decision Maker (CODM). The CODM
for Sasol is the President and Chief Executive Officer. The seven reportable segments have been defined as follows:
Operating Business Units (OBUs)
1. Mining - comprises our mining activities in South Africa. We mine approximately 40 million tons (Mt) of saleable coal per
year, mostly for gasification feedstock and utility consumption at our complexes in Secunda and Sasolburg, in South
Africa. We also export approximately 2,9 Mt of coal annually.
2. Exploration and Production International - manages our oil and natural gas exploration and production interests in West
and Southern Africa, Canada and Australia. We pursue opportunities for the exploration, appraisal, development and
production of hydrocarbon resources to supply feedstock to existing or potential future Sasol downstream plants and
external customers.
Strategic Business Units (SBUs)
3. Southern Africa Energy - comprises the sales and marketing of liquid fuels, natural gas and electricity. We market
approximately 9 billion litres of liquid fuels annually, blended from fuel components produced by the Secunda Synfuels
operations, crude oil refined at Natref, and external product purchases. We procure crude oil, refined through Sasol's
interest in the Natref refinery and market more than 450 million standard cubic feet per day (mmscf/d) of natural and
methane-rich gas. We also generate electricity which is then sold into the grid or consumed by our operations.
4. International Energy - develops, implements, and manages our international business ventures based on Sasol's
proprietary gas-to-liquids (GTL) technology. Our focus is on securing opportunities to advance Sasol's GTL strategy.
Sasol's investments in existing and future GTL ventures, including ORYX GTL in Qatar and Escravos GTL (EGTL) in
Nigeria are components of this reportable segment.
5. Base Chemicals - comprises the sales and marketing of ethylene, propylene, polyethylene, polypropylene, polyvinyl
chloride, chlor alkali chemicals, mining reagents, solvents (ketones and alcohols) and acrylates to domestic and
international customers. Our chemical products are produced in various regional operating hubs depending on the
geographical location. We also have joint venture monomer and polymer interests in Malaysia and marketing facilities in
China. We also market other products such as fertilisers and mining explosive products.
6. Performance Chemicals - comprises the sales and marketing of surfactants, linear alkylbenzene, surfactant intermediates,
n-paraffins, n-olefins, C6-C22 alcohols, co-monomers, ethylene and other organic intermediates to customers worldwide
as well as specialty aluminas, silica aluminas and hydrotalcites. We also market other products such as waxes and
phenolics. Our chemical products are produced in various regional operating hubs depending on the geographical location.
Group Functions
7. Comprises our technology research and development activities, as well as our central treasury and financing activities.
Segmental reporting of the new operating model
The key changes from the previous reportable segments to the new reportable segments are depicted below:
PREVIOUS SEGMENTAL REPORTING NEW SEGMENTAL REPORTING
Previous reporting clusters Previous reporting segments New reporting segments
SA Energy Mining Operating BUs Mining
Gas Exploration and Production
Synfuels International
Oil
Other
International Energy Synfuels International Strategic BUs Southern Africa Energy
Petroleum International International Energy
Base Chemicals
Chemicals Polymers Performance Chemicals
Solvents
O&S
Other Chemical
Businesses
Other Other Other Group Functions
Going forward, we will no longer apply the clustering approach. Accordingly, we will report on reportable segments only.
Regional Operating Hubs (ROHs)
The ROHs, which include our operations in Southern Africa, North America and Eurasia, houses our current and future
operating capacity, and enable the functioning of these operations as integrated manufacturing sites with consolidated
functional support. They operate assets on behalf of the SBUs and are accountable for delivering against agreed safety, cost,
volume and specifications targets set by the SBUs, within the context of a group-wide plan. They are responsible for ensuring
plant efficiency and optimising the total cost of production.
In terms of IFRS 8, the ROHs do not meet the quantitative criteria for disclosure as separate reportable segments, since the
profit and loss accountability resides in the SBUs. The ROHs, where the responsibility for optimally operating the Sasol plants
resides, will be measured by key performance indicators only.
The costs in the ROHs are passed through the value chain to the SBUs. Fixed assets, including assets under construction and
liabilities (including rehabilitation provisions) which are separately identifiable, and directly linked to a SBU, are allocated to
specific SBUs. Other common assets and liabilities (which cannot be directly linked to a SBU) are split across the SBUs based
on product costing principles.
3. Accounting policies
The accounting policies of the group are not impacted by the change to the new operating model or the change in reportable
segments. The group's latest accounting policies can be found in the Consolidated Annual Financial Statements for the year
ended 30 June 2014 on www.sasol.com.
4. Geographical segments
The group operates predominantly in the following geographic areas and in evaluating our reportable segments, we have
redefined our geographic segments as follows:
- South Africa
- Rest of Africa
- Mozambique
- Other areas in Africa
- Europe
- Germany
- Rest of Europe
- Americas
- United States
- Canada
- Rest of Americas
- Asia, Australasia and Middle East
In future, our geographical segments will be based on the categories presented above.
5. Simplified and consolidated legal structure
To realise greater efficiencies along our integrated value chain, we have simplified and consolidated our legal structures to
reduce statutory compliance for the separate financial statements, work processes and related costs. The new legal structure
also enables us to operate the company as one integrated business, by producing and selling what maximises value for the
whole Sasol group.
The information presented in the Sasol Limited group's primary financial statements are based on the legal structure which
complies with IFRS, JSE and SEC regulations as well as the Companies Act of South Africa. Our segmental reporting
however reflects how the business is managed and may therefore not correlate directly to our legal structure.
6. Supplementary information on the Sasol website
For a more detailed understanding of the new operating model, we refer you to our non-statutory submissions contained on
our website at www.sasol.com. These submissions include the following:
- Segment overview document - This document provides further context for the changes to the new operating model and a
summary of the integration and interface principles which we applied.
- Business performance metrics - This document contains key metrics, volumes and statistics for the OBUs, ROHs and SBUs.
This document replaces the business unit pages in the Analyst Book.
- Summarised earnings model - Simplified earnings and asset valuation model which will assist analysts and investors in
understanding the new operating model. This model is based on historical information only and contains no forward looking
references or information.
7. Investor Relations contacts
For assistance in understanding or questions related to our new operating model, please contact us as follows:
Web: investor.relations@sasol.com
Tel: +27 11 441 3113
Sponsor: Deutsche Securities (SA) Proprietary Limited
8. Restated financial reporting data under the new operating model
Our unaudited restated financial reporting segment data is presented below for the years ended 30 June 2014 and 30 June
2013, and the half year ended 31 December 2013.
The restatement of the financial reporting segment data did not have an impact on the primary financial statements of the
Sasol Limited group. The elements of the primary financial statements include the statement of financial position, income
statement, statement of changes in equity, statement of cash flows and statement of comprehensive income.
As we continue to implement our new operating model, there may be further refinement to the data presented, however, we
do not expect material changes to be made.
Group Segment Reporting
Segment analysis
for the year ended 30 June 2014
Operating Business Units Strategic Business Units Other
Exploration
and Southern
Production Africa International Base Performance Group Total
Mining International Energy Energy Chemicals Chemicals Functions Operations
Rm Rm Rm Rm Rm Rm Rm Rm
Turnover
external 2 154 2 990 84 611 21 42 262 70 592 53 202 683
intersegment 11 980 2 218 1 420 - 2 778 2 982 - 21 378
Total turnover 14 134 5 208 86 031 21 45 040 73 574 53 224 061
Operating profit/(loss) before remeasurement items and translation
gains/(losses) 2 463 (378) 28 692 (761) 7 802 12 074 (1 387) 48 505
Translation gains/(losses) (3) (130) (200) 21 255 27 828 798
Operating profit/(loss) before remeasurement items 2 460 (508) 28 492 (740) 8 057 12 101 (559) 49 303
Share of profits of equity accounted joint ventures, net of tax before
remeasurement items - - 14 3 709 100 - - 3 823
Share of profits/(losses) of associates, net of tax - - 8 - 350 1 (25) 334
Profit/(loss) from operations, joint ventures and associates before
remeasurement items 2 460 (508) 28 514 2 969 8 507 12 102 (584) 53 460
Remeasurement items (7) (5 472) 228 (288) (1 765) (254) (84) (7 642)
Profit/(loss) from operations, joint ventures and associates, after
remeasurement items 2 453 (5 980) 28 742 2 681 6 742 11 848 (668) 45 818
Depreciation of property, plant and equipment 1 211 2 654 3 153 21 3 281 2 497 382 13 199
Amortisation of intangibles - 23 26 1 26 91 150 317
EBITDA 3 664 (3 303) 31 921 2 703 10 049 14 436 (136) 59 334
Statement of financial position
Property, plant and equipment 10 578 10 496 28 492 886 33 466 25 124 2 407 111 449
Assets under construction 6 380 7 888 9 320 1 709 8 945 16 088 990 51 320
Other intangible assets 9 64 121 2 309 882 495 1 882
Other non-current assets* # 527 - 775 7 365 2 938 1 685 1 322 14 612
Current assets* 1 726 2 869 18 996 897 13 393 27 497 31 443 96 821
Total external assets 19 220 21 317 57 704 10 859 59 051 71 276 36 657 276 084
Non-current liabilities* 4 360 3 287 6 562 213 3 848 8 287 21 698 48 255
Current liabilities* 2 402 1 486 11 473 2 137 4 008 8 722 7 669 37 897
Total external liabilities 6 762 4 773 18 035 2 350 7 856 17 009 29 367 86 152
* Excludes tax and deferred tax.
# Excludes post-retirement benefit assets.
Cash flow information
Cash flow from operations 3 921 2 659 31 839 (572) 13 021 14 933 1 791 67 592
Capital expenditure (additions to non-current assets) 5 837 4 564 7 189 1 757 7 940 10 358 1 134 38 779
Capital commitments
Property, plant and equipment (subsidiaries and joint operations) 7 532 6 639 10 607 8 234 10 271 15 272 503 59 058
Property, plant and equipment (equity accounted joint ventures) - - 14 733 17 - - 764
Number of employees^ 8 435 527 5 058 161 6 220 6 112 6 887 33 400
^ Includes permanent and non-permanent employees.
Group Segment Reporting
Segment analysis
for the year ended 30 June 2013
Operating Business Units Strategic Business Units Other
Exploration
and Southern
Production Africa International Base Performance Group Total
Mining International Energy Energy Chemicals Chemicals Functions Operations
Rm Rm Rm Rm Rm Rm Rm Rm
Turnover
external 1 833 2 177 71 266 76 41 174 53 352 13 169 891
intersegment 10 491 1 457 610 - 2 463 2 063 - 17 084
Total turnover 12 324 3 634 71 876 76 43 637 55 415 13 186 975
Operating profit/(loss) before remeasurement items and translation
gains/(losses) 2 216 (1 192) 25 805 (1 255) 4 284 8 589 389 38 836
Translation gains/(losses) 5 (266) (187) 35 964 159 2 182 2 892
Operating profit/(loss) before remeasurement items 2 221 (1 458) 25 618 (1 220) 5 248 8 748 2 571 41 728
Share of profits of equity accounted joint ventures, net of tax before
remeasurement items - - 117 2 577 2 285 42 - 5 021
Share of profits/(losses) of associates, net of tax - - 3 - 517 - (16) 504
Profit/(loss) from operations, joint ventures and associates before
remeasurement items 2 221 (1 458) 25 738 1 357 8 050 8 790 2 555 47 253
Remeasurement items (7) (428) (122) - (3 904) (1 835) (112) (6 408)
Profit/(loss) from operations, joint ventures and associates, after
remeasurement items 2 214 (1 886) 25 616 1 357 4 146 6 955 2 443 40 845
Depreciation of property, plant and equipment 999 2 511 2 584 18 2 776 1 689 335 10 912
Amortisation of intangibles - 12 26 - 26 41 104 209
EBITDA 3 213 637 28 226 1 375 6 948 8 685 2 882 51 966
Statement of financial position
Property, plant and equipment 8 816 11 642 26 692 405 33 786 17 443 2 205 100 989
Assets under construction 3 315 9 114 6 804 316 7 686 11 586 1 044 39 865
Other intangible assets 7 59 59 - 136 674 483 1 418
Other non-current assets* # 484 1 785 8 429 3 248 1 375 784 15 106
Current assets* 1 400 4 191 17 666 1 619 18 032 18 551 24 423 85 882
Total external assets 14 022 25 007 52 006 10 769 62 888 49 629 28 939 243 260
Non-current liabilities* 1 863 2 802 6 695 264 3 954 7 109 20 019 42 706
Current liabilities* 1 902 1 580 9 138 2 007 4 601 8 663 5 701 33 592
Total external liabilities 3 765 4 382 15 833 2 271 8 555 15 772 25 720 76 298
* Excludes tax and deferred tax.
# Excludes post-retirement benefit assets.
Cash flow information
Cash flow from operations 3 386 1 742 27 445 (700) 8 263 10 444 4 604 55 184
Capital expenditure (additions to non-current assets) 3 482 4 064 7 513 446 6 156 7 885 868 30 414
Capital commitments
Property, plant and equipment (subsidiaries and joint operations) 9 751 5 353 14 129 6 494 12 279 17 322 733 66 061
Property, plant and equipment (equity accounted joint ventures) - - 18 532 67 - - 617
Number of employees^ 8 140 487 5 075 179 6 727 5 918 7 220 33 746
^ Includes permanent and non-permanent employees.
Group Segment Reporting
Segment analysis
for the six months ended 31 December 2013
Operating Business Units Strategic Business Units Other
Exploration
and Southern
Production Africa International Base Performance Group Total
Mining International Energy Energy Chemicals Chemicals Functions Operations
Rm Rm Rm Rm Rm Rm Rm Rm
Turnover
external 1 103 1 482 41 412 20 21 017 33 234 - 98 268
intersegment 5 875 926 724 - 1 337 1 497 - 10 359
Total turnover 6 978 2 408 42 136 20 22 354 34 731 - 108 627
Operating profit/(loss) before remeasurement items and translation
gains/(losses) 1 344 (551) 14 627 (499) 4 207 4 597 331 24 056
Translation gains/(losses) 2 (108) (119) 33 244 91 912 1 055
Operating profit/(loss) before remeasurement items 1 346 (659) 14 508 (466) 4 451 4 688 1 243 25 111
Share of profits of equity accounted joint ventures, net of tax before
remeasurement items - - 3 1 898 96 - - 1 997
Share of profits/(losses) of associates, net of tax - - 2 - 164 1 (11) 156
Profit/(loss) from operations, joint ventures and associates before
remeasurement items 1 346 (659) 14 513 1 432 4 711 4 689 1 232 27 264
Remeasurement items 5 (5 478) 429 - (604) (75) (7) (5 730)
Profit/(loss) from operations, joint ventures and associates, after
remeasurement items 1 351 (6 137) 14 942 1 432 4 107 4 614 1 225 21 534
Depreciation of property, plant and equipment 561 1 628 1 498 10 1 544 1 120 173 6 534
Amortisation of intangibles - 10 14 - 12 44 69 149
EBITDA 1 912 (4 499) 16 454 1 442 5 663 5 778 1 467 28 217
Statement of financial position
Property, plant and equipment 9 380 10 412 27 236 890 32 540 21 734 2 132 104 324
Assets under construction 4 831 6 826 8 816 1 103 8 268 15 949 944 46 737
Other intangible assets 7 66 95 3 83 816 481 1 551
Other non-current assets* # 495 - 794 8 240 2 802 1 489 1 115 14 935
Current assets* 1 306 2 843 19 509 1 908 15 240 21 780 23 408 85 994
Total external assets 16 019 20 147 56 450 12 144 58 933 61 768 28 080 253 541
Non-current liabilities* 2 121 2 825 6 703 133 3 446 7 647 20 736 43 611
Current liabilities* 1 685 1 564 10 602 2 351 4 617 7 725 4 135 32 679
Total external liabilities 3 806 4 389 17 305 2 484 8 063 15 372 24 871 76 290
* Excludes tax and deferred tax.
# Excludes post-retirement benefit assets.
Cash flow information
Capital expenditure (additions to non-current assets) 2 345 2 925 4 089 1 162 4 051 5 115 209 19 896
Capital commitments
Property, plant and equipment (subsidiaries and joint operations) 9 178 6 265 10 734 8 056 9 144 15 755 665 59 797
Property, plant and equipment (equity accounted joint ventures) - - 19 876 58 - - 953
Number of employees^ 8 279 483 5 008 160 6 478 6 157 7 196 33 761
^ Includes permanent and non-permanent employees.
Registered office: Sasol Limited, 1 Sturdee Avenue, Rosebank, Johannesburg 2196
PO Box 5486, Johannesburg 2000, South Africa
Share registrars: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107, South Africa, Tel: +27 11 370-7700 Fax: +27 11 370-5271/2
Directors (non-executive): Dr MSV Gantsho* (Chairman), Mr C Beggs*, Mr HG Dijkgraaf (Dutch)*, Ms IN Mkhize*, Mr ZM Mkhize*,
Mr MJN Njeke*, Mr B Nqwababa*, Mr PJ Robertson (British and American)*, Prof JE Schrempp (German)^, Mr S Westwell (British)*
(executive): Mr DE Constable (President and Chief Executive Officer) (Canadian), Mr P Victor (Acting Chief Financial Officer),
Ms VN Fakude
*Independent ^Lead independent director
Company secretary: Mr VD Kahla
Company registration number: 1979/003231/06, incorporated in the Republic of South Africa
Income tax reference number: 9520/018/60/8
JSE
Sasol Ordinary shares:
Share code: SOL
ISIN: ZAE000006896
NYSE
Sasol Ordinary shares:
Share code: SSL
ISIN: US8038663006
Sasol BEE Ordinary shares
Share code: SOLBE1
ISIN: ZAE000151817
American depositary receipts (ADR) program:
Cusip number 803866300
ADR to ordinary share 1:1
Depositary: The Bank of New York Mellon, 22nd floor, 101 Barclay Street, New York, NY 10286, USA
21 November 2014
Johannesburg
JSE sponsor: Deutsche Securities (SA) Proprietary Limited
Date: 21/11/2014 02:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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