Wrap Text
Reviewed interim financial results for the six months ended 31 December 2017
Sasol Inzalo Public (RF) Limited (Incorporated in the Republic of South Africa)
(Registration number 2007/030646/06)
Sasol Inzalo Public Ordinary Share code: JSE: SIPBEE
Sasol Inzalo Public Ordinary ISIN: ZAE000210050
("Sasol Inzalo Public" or "Company")
Reviewed interim financial results
for the six months ended 31 December 2017
Financial overview
The Sasol Inzalo share transaction will unwind in September 2018. Sasol Inzalo Public (RF) Limited
(the group) will be required to dispose of the preferred ordinary shares in order to be in a position to
redeem the preference share funding and cumulative dividends in 2018. Any shortfall in the value of
the preferred ordinary shares held by the group will be made good through a subscription of shares by
Sasol Limited in the group.
The investment in Sasol Limited was revalued at the closing market price of R428,18 per Sasol Limited
ordinary share as at 31 December 2017, to a value of R6 887 million (R6 417 million at 31 December
2016 at a closing market price of R398,90 per share) in line with the group's accounting policy for
investments classified as available-for-sale financial assets. At a Sasol Limited ordinary share price
of R425 and preference share funding balances at 31 December 2017 of R7 400 million, there is a shortfall
and a funding commitment for the Sasol Group of approximately R0,6 billion. As a result, assuming the
Sasol Limited share price remains at R425, there will be no distribution of Sasol Limited
ordinary shares to Sasol Inzalo Public funded participants when the transaction ends in September 2018.
The group recorded a net loss for the six months ended 31 December 2017 of R56 million (2016:
R58 million).
The directors have made an assessment of the group's ability to continue as a going concern until
termination date, and there is no reason to believe the business will not continue until the transaction
unwinds in September 2018.
Sufficient cash is expected to be generated from the dividends that will be received from
Sasol Limited in the period until termination of the scheme, to pay for the operating expenses as
well as preference dividends and a portion of the capital repayments on the preference shares which
are due.
Key financial highlights
Net asset value
(R million)
Dec 16 Dec 17
(990) (730)
Investment in security
(R million)
Dec 16 Dec 17
6 417 6 887
Basic loss per share
(Rand per share)
Dec 16 Dec 17
(3,61) (3,48)
How we used our cash
Dec 17 Dec 16
Rm Rm
Dividend received 248 248
Operating activities 7 1
Repayment of capital and finance costs 244 249
Utilised from cash (3) (2)
248 248
Subsequent events
There were no events subsequent to 31 December 2017 requiring disclosure.
Change in directors
There were no changes to the board of directors for the period ended 31 December 2017.
Declaration of cash dividend
Taking into account the value of the outstanding preference share debt balance, the Board of Directors
has seen it prudent to utilise cash for repayment of financing activities and have concluded that no
cash dividend be declared for the period ended 31 December 2017 (2016: Rnil).
On behalf of the board
Z Monnakgotla Z Malinga
Chairman Director
14 March 2018
Income statement
for the period ended
Half year Half year Full year
31 Dec 17 31 Dec 16 30 Jun 17
Reviewed Reviewed Audited
Rm Rm Rm
Other expenses (7) (7) (8)
Operating loss (7) (7) (8)
Net finance costs (49) (51) (97)
finance income 248 248 498
finance costs (297) (299) (595)
Loss before tax (56) (58) (105)
Taxation * * (1)
Loss for period (56) (58) (106)
(*) Nominal amount
Per share information Rand Rand Rand
Basic loss per share (3,48) (3,61) (6,59)
Diluted loss per share (3,48) (3,61) (6,59)
Statement of comprehensive income
for the period ended
Half year Half year Full year
31 Dec 17 31 Dec 16 30 Jun 17
Reviewed Reviewed Audited
Rm Rm Rm
Loss for period (56) (58) (106)
Other comprehensive income/(loss), net of tax
Items that can be subsequently reclassified to the income
statement 770 23 (383)
Fair value of investments available for sale 992 29 (493)
Tax on items that can be subsequently reclassified to the
income statement (222) (6) 110
Total comprehensive income/(loss) for the period 714 (35) (489)
The interim financial statements are presented on a condensed consolidated basis.
Statement of financial position
at
Half year Half year Full year
31 Dec 17 31 Dec 16 30 Jun 17
Reviewed Reviewed Audited
Rm Rm Rm
Assets
Investment in Sasol Limited shares - 6 417 5 895
Non-current asset - 6 417 5 895
Investment in Sasol Limited shares 6 887 - -
Cash 18 18 21
Current assets 6 905 18 21
Total assets 6 905 6 435 5 916
Equity and liabilities
Shareholders' deficit (730) (990) (1 444)
Long-term debt* - 7 152 7 205
Deferred tax liability - 118 2
Non-current liabilities - 7 270 7 207
Short-term debt* 7 400 144 142
Deferred tax liability 224 - -
Other payables 11 11 11
Current liabilities 7 635 155 153
Total equity and liabilities 6 905 6 435 5 916
* Reclassified to current liabilities as the transaction is coming to an end in September 2018.
Statement of changes in equity
for the period ended
Half year Half year Full year
31 Dec 17 31 Dec 16 30 Jun 17
Reviewed Reviewed Audited
Rm Rm Rm
Opening balance (1 444) (955) (955)
Total comprehensive income/(loss) for the period 714 (35) (489)
Closing balance (730) (990) (1 444)
Comprising
Share capital and share premium 371 371 371
Investment fair value reserve 776 412 6
Accumulated loss (1 877) (1 773) (1 821)
Shareholders' deficit (730) (990) (1 444)
Statement of cash flows
for the period ended
Half year Half year Full year
31 Dec 17 31 Dec 16 30 Jun 17
Reviewed Reviewed Audited
Rm Rm Rm
Cash utilised in operating activities (7) (1) (2)
Cash flow from operations (7) (7) (2)
Decrease in net working capital - 6 -
Finance income received 248 248 498
Finance costs paid (52) (54) (157)
Tax paid - - (1)
Cash generated by operating activities 189 193 338
Repayment of capital (47) (47) (95)
Repayment of capitalised finance costs (145) (148) (242)
Cash utilised in financing activities (192) (195) (337)
(Decrease)/increase in cash (3) (2) 1
Cash at beginning of year 21 20 20
Cash at end of period 18 18 21
Long-term/short-term debt
The group's borrowing powers are restricted by its memorandum of incorporation.
Interest Half year Half year Full year
rate at 31 Dec 17 31 Dec 16 30 Jun 17
Terms of repayment Security 31 Dec 17 Rm Rm Rm
Secured debt
A preference shares Secured by Sasol
repayable in semi-annual preferred ordinary
instalments by shares held by the
September 2018 group Fixed 11,10% 878 975 926
B preference shares Secured by Sasol
repayable in September preferred ordinary
2018 shares held by the Fixed
group 13,30% 790 791 790
C preference shares Guaranteed by Sasol Variable
repayable in September Limited 68% of
2018 prime 5 725 5 527 5 626
Unsecured debt
Sasol Limited interest-
free loan repayable in
September 2018(1) - 9 9 9
Non-participating
preference share(2) - * * *
7 402 7 302 7 351
Unamortised loan costs (amortised over period of
debt using the effective interest rate method) (2) (6) (4)
7 400 7 296 7 347
Repayable within one year
included in short-term
debt (7 400) (144) (142)
- 7 152 7 205
(*) Nominal amount
(1) An unsecured interest-free loan was obtained from Sasol Limited for the purpose of paying for costs associated with
the listing of the BEE shares of the company on the JSE Limited's Empowerment Segment on 1 December 2015.
(2) One 'A' ordinary share of R0,01 was issued to Sasol Limited during the period ended 30 June 2008. The rights to this
share provide that immediately when any ordinary share is issued, it is converted to a preference share. As a result
of the ordinary shares issued during the year ended 30 June 2009, the share was converted to a preference share.
The preference share will be entitled in the aggregate to a dividend of R1,00 immediately prior to redemption,
on 8 September 2018, and to redemption proceeds of R0,01.
Half year Half year Full year
31 Dec 17 31 Dec 16 30 Jun 17
Basic loss per share
Basic loss per share is derived by dividing loss for the period/year by the weighted average number of
shares.
Number of
shares
Weighted average number of shares 16 085 199 16 085 199 16 085 199
Rm
Basic loss for the period (56) (58) (106)
Rand per
share
Basic loss per share (3,48) (3,61) (6,59)
Due to the nature of the business, no potential dilution of shares exist and no headline earnings
adjustments have arisen over the last two years.
Basis of preparation
The condensed consolidated interim financial statements for the six months ended 31 December
2017 have been prepared in accordance with International Financial Reporting Standards, IAS 34,
Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and
the requirements of the Companies Act of South Africa, 2008, as amended, and the JSE Limited Listings
Requirements. The condensed consolidated interim financial results were approved for issue by the
Sasol Inzalo Public (RF) Limited board of directors on 14 March 2018.
The condensed consolidated interim financial statements do not include all the disclosures required for
complete annual financial statements prepared in accordance with IFRS as issued by the International
Accounting Standards Board. The condensed consolidated interim financial statements are prepared
on a going-concern basis. The Board is satisfied that the liquidity and solvency of the Company is
sufficient to support the current operations until the transaction unwinds.
These condensed consolidated interim financial statements have been prepared in accordance with
the historic cost convention except that certain items, including available-for-sale financial assets, are
stated at fair value.
The condensed consolidated interim financial statements are presented in South African Rand, which is
Sasol Inzalo Public (RF) Limited's functional and presentation currency.
The condensed consolidated interim financial statements appearing in this announcement are
the responsibility of the directors. The directors take full responsibility for the preparation of the
condensed consolidated interim financial statements. Sharika Balram CA(SA), Senior Manager: Financial
Control Services, is responsible for this set of condensed consolidated interim financial statements and
has supervised the preparation thereof in conjunction with the Senior Accountant: Financial Control
Services, Loyd Matsilele CA(SA).
Accounting policies
The accounting policies applied in the preparation of these condensed consolidated interim financial
statements are in terms of IFRS and are consistent with those applied in the consolidated annual
financial statements for the year ended 30 June 2017.
Related party transactions
The group, in the ordinary course of business, entered into various transactions on an arm's length
basis at market rates with its related party.
Independent review by the auditors
These condensed consolidated interim financial statements, for the six months ended 31 December
2017 have been reviewed by PricewaterhouseCoopers Inc., who expressed an unmodified conclusion
thereon. The individual auditor assigned to perform the review is Mr M Naidoo. The auditor's report
does not necessarily report on all of the information contained in this announcement of interim
financial results.
Financial instruments
Fair value
Various valuation techniques and assumptions are utilised for the purpose of calculating fair value.
The group does not hold any financial instruments traded in an active market, except for the
investment in listed equity instruments. Fair value is determined using valuation techniques as outlined
below. Where possible, inputs are based on quoted prices and other market determined variables.
Fair value hierarchy
The following table is provided representing the assets and liabilities measured at fair value at
reporting date, or for which fair value is disclosed at reporting date.
The calculation of fair value requires various inputs into the valuation methodologies used.
The source of the inputs used affects the reliability and accuracy of the valuations. Significant inputs
have been classified into the hierarchical levels in line with IFRS 13, as shown below.
There have been no transfers between levels in the current period. Transfers between levels are
considered to have occurred at the date of the event or change in circumstances.
Level 1 Quoted prices in active markets for identical assets or liabilities.
Level 3 Inputs for the asset or liability that are unobservable.
31 December Fair value
2017 hierarchy of
Rm Valuation method Significant inputs inputs
Financial assets 6 887 Quoted market Quoted market Level 1
Investments in listed price for the same price for the same
securities instrument instrument
Financial liabilities 7 400 Discounted cash flow Market related Level 3
Unlisted short-term interest rates
debt
Independent auditor's review report on the
condensed consolidated interim financial
statements
To the Shareholders of Sasol Inzalo Public (RF) Limited
We have reviewed the condensed consolidated interim financial statements of Sasol Inzalo Public (RF)
Limited in the accompanying interim report, which comprise the condensed consolidated statement of
financial position as at 31 December 2017 and the related condensed consolidated income statement
and statement of comprehensive income, changes in equity and cash flows for the six-months then
ended, and selected explanatory notes.
Directors' responsibility for the interim financial statements
The directors are responsible for the preparation and presentation of these interim financial
statements in accordance with the International Financial Reporting Standard, (IAS) 34 Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Pronouncements as issued by the Financial Reporting Standards Council and the
requirements of the Companies Act of South Africa, and for such internal control as the directors
determine is necessary to enable the preparation of interim financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express a conclusion on these interim financial statements. We conducted our
review in accordance with International Standard on Review Engagements 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity. ISRE 2410 requires us to
conclude whether anything has come to our attention that causes us to believe that the interim
financial statements are not prepared in all material respects in accordance with the applicable financial
reporting framework. This standard also requires us to comply with relevant ethical requirements.
A review of interim financial statements in accordance with ISRE 2410 is a limited assurance
engagement. We perform procedures, primarily consisting of making inquiries of management and
others within the entity, as appropriate, and applying analytical procedures, and evaluate the evidence
obtained.
The procedures in a review are substantially less than and differ in nature from those performed in
an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not
express an audit opinion on these interim financial statements.
Emphasis of matter
Without qualifying our opinion, we draw attention to the interim financial statements which indicates
that the group incurred a net loss of R56 million for the six months ended 31 December 2017 and, as at
that date, the group’s total liabilities exceeded its total assets by R730 million, rendering the
company technically insolvent. The directors have made an assessment of the group's ability to continue
as a going concern and there is no reason to believe the business will not be a going concern until the
transaction unwinds in September 2018.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying condensed consolidated interim financial statements of Sasol Inzalo Public (RF)
Limited for the six months ended 31 December 2017 are not prepared, in all material respects, in
accordance with the International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the
Companies Act of South Africa.
PricewaterhouseCoopers Inc.
Director: M Naidoo
Registered Auditor
Waterfall
14 March 2018
Registered office: Sasol Place, 50 Katherine Street, Sandton, Johannesburg 2196
PO Box 5486, Johannesburg 2000, South Africa
Share registrars: Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank 2196, South Africa
PO Box 61051, Marshalltown 2107, South Africa
Tel: +27 11 370 5000 Fax: +27 11 370 5271/2
Information helpline: 0800 000 222
Email: sasolinzalo@computershare.co.za
JSE Sponsor: Deutsche Securities (SA) Proprietary Limited
Directors (Non-executive): Ms Z Monnakgotla (Chairman), Ms TB Boikhutso, Ms A Haroon,
Dr S Koyana, Ms N Manyika, Ms ZN Malinga, Ms K Njobe
Company secretary: Sasol South Africa Limited
Company registration number: 2007/030646/06, incorporated in the Republic of South Africa
Income tax reference number: 9261678164
Sasol Inzalo Ordinary shares
Share code: SIPBEE
ISIN: ZAE000210050
www.sasolinzalo.com
Date of publication: 15 March 2018
Date: 15/03/2018 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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