SASOL INZALO PUBLIC (RF) LIMITED GROUP

Transcription

1 SASOL INZALO PUBLIC (RF) LIMITED GROUP Annual Financial Statements 30 June 2017

2 1 FINANCIAL 2 4 Sasol Inzalo Public (RF) Limited Group Contents OVERVIEW CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 4 Report of the Audit Committee 6 Directors' report 8 Approval of the financial statements 8 Certificate of the Company Secretary 9 Independent auditor s report 13 Shareholder information 13 Share ownership 14 Accounting policies and financial reporting terms 17 Statements of financial position 17 Income statements 18 Statements of comprehensive income 18 Statements of changes in equity 19 Statements of cash flows 20 Notes to the financial statements 30 Interest in subsidiary 30 Investment in security 31 Long-term debt AFS IR Our Annual Financial Statements accompanies our Integrated Report (including Notice of Annual General Meeting). Integrated Report (including Notice of Annual General meeting) Our primary annual report to shareholders. It contains sufficient material information and confirms to local statutory reporting frameworks. CONTACT INFORMATION The Annual Financial Statements of Sasol Inzalo Public (RF) Limited have been audited in compliance with section 30 of the South African Companies Act. Sharika Balram CA(SA), Senior Manager Finance: Reporting at Sasol South Africa (Pty) Ltd, is responsible for this set of Annual Financial Statements and has supervised the preparation thereof in conjunction with Loyd Matsilele CA(SA), Senior Accountant: Reporting at Sasol South Africa (Pty) Ltd.

3 Consolidated financial statements for the year ended 30 June 2017 Sasol Inzalo Public (RF) Limited and Sasol Inzalo Public Funding (RF) (Pty) Ltd (the group) forms part of Sasol Limited s 2008 broad-based BEE ownership transaction equal to approximately 10% of its issued share capital. The group owns 2,37% of Sasol Limited s issued share capital. The main business of the group is to acquire and hold shares in Sasol Limited on behalf of the members of the black public. Financial overview The Sasol Inzalo share transaction will unwind in Sufficient cash is expected to be generated out of 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. 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 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. Based on the closing Sasol ordinary share price of R389 on 4 September 2017 and preference share funding balances at 31 August 2017, there is a shortfall and a funding commitment for the Sasol Group of approximately R1,2 billion. As a result, assuming the Sasol share price remains at current levels, there will be no distribution of Sasol ordinary share to Sasol Inzalo Public shareholders when the Sasol Inzalo Transaction ends in 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. Key financial highlights 0 (1) (2) (3) (4) (5) (6) (7) (8) Loss per share (Rand per share) (5,91) (6,59) June 16 June Cash generated from operating activities (R million) June 16 June 17 0 Net asset value (R million) Investment in security (R million) (300) (600) (900) (955) (1 200) (1 500) (1 444) June 16 June June 16 June 17 Sasol Inzalo Public Annual Financial Statements

4 Sasol Inzalo Public (RF) Group Limited Financial Overview (continued) How we use our cash Dividend received Operating activities 2 17 Repayment of capital and finance costs Utilised from cash (2) (21) Sasol Limited loan funding (9) Taxation paid Listing of Sasol Inzalo ordinary shares On 1 December 2015 Sasol Inzalo Public (RF) Limited was listed on the JSE Limited s Empowerment Segment. The listing provides existing and prospective shareholders with access to a licensed trading platform and the flexibility of transacting on a world-class stock exchange. This listing continues to ensure that Sasol Inzalo Public ordinary shares are traded exclusively amongst BEE compliant persons, as defined in the JSE Listings Requirements. Refer to Table 1 for historical listed prices per share of Sasol Inzalo Public (RF) Limited ordinary shares at 30 June: Table 1: Sasol Inzalo Public (RF) Limited ordinary shares Listed price per share 2009* 2010* 2011* 2012** 2013** 2014** 2015** 2016*** 2017*** year end n/a n/a n/a 40,00 51,06 138,00 70,11 39,70 42,10 year high 50,00 100,00 160,00 153,00 51,90 42,10 year low 25,00 30,02 45,10 60,00 21,60 42,10 Table 2: Sasol Limited ordinary shares Listed price per share year end 269,98 274,6 355,98 342,4 431,54 632, ,17 366,5 year high ,55 409,99 452,96 645,1 642,72 492,5 430,98 year low ,56 270,03 303, ,1 358, * Not applicable as prior to 8 September 2011, the shares had not yet started trading. ** Sasol Inzalo Public (RF) Limited's shares started trading over-the-counter through Computershare on 8 September *** Sasol Inzalo Public (RF) Limited's shares were listed on the JSE Limited's Empowerment Segment on 1 December Sasol Inzalo Public Annual Financial Statements 2017

5 Subsequent events The Sasol Inzalo share transaction will come to an end in 2018 and separately the proposed new B-BBEE ownership structure, Sasol Khanyisa, will be implemented. Refer to the announcement released by Sasol on 20 September 2017 for details of the new transaction. Directors The composition of the Board of Directors is set out in the section Our Board of Directors of the Integrated Report (including Notice of Annual General Meeting). Ms CK Mokoena resigned as chairman of the Board and Independent Non-executive Director with effect from 31 January The Board appointed Ms Z Monnakgotla as interim chairman with effect from 1 February 2017 and chairman with effect from 16 March Declaration of cash dividend Taking into account the continued decline in the value of the investment in Sasol Limited due to the low oil price and the volatile macro-economic environment, the Board of Directors has seen it prudent to conserve cash and have concluded that no cash dividend should be declared for the year ended 30 June 2017 (2016: Rnil). Sasol Inzalo Public Annual Financial Statements

6 Sasol Inzalo Public (RF) Limited Group Report of the Audit Committee Zola Malinga, Chairman of the Audit Committee Introduction The Audit Committee (the Committee) presents this report in respect of the 2017 financial year. This report has been prepared based on the requirements of the Companies Act, 71 of 2008 as amended (the Companies Act), the King Code of Governance Principles for South Africa 2009 (King III), the Johannesburg Stock Exchange (JSE) Listings Requirements and other applicable regulatory requirements. Composition and meetings In compliance with the JSE Listings Requirements and South African legislation, all the members of the Audit Committee are independent Non-executive Directors. Members are elected by shareholders at the annual general meeting. The Committee is required to meet at least twice per year. The Committee met twice during the financial year. Attendance was as follows: Member 16 Sep Mar 2017 Z Malinga (Chairman) P P S Koyana P P N Manyika P P Z Monnakgotla 1 P n/a P n/a Indicates attendance. Indicates not a member at the time. 1 Resigned as member on 1 February 2017 Statutory duties and functions The Committee is constituted as a statutory committee of Sasol Inzalo Public (RF) Limited in line with the Companies Act and accountable in this regard to both the Board and Sasol Inzalo Public (RF) Limited s shareholders. It is a committee of the Board in respect of all other duties assigned to it by the Board and the Governing Agreement entered into between Sasol Limited, Sasol Inzalo Public (RF) Limited, Sasol Inzalo Public Funding (RF) (Pty) Ltd and The Sasol Inzalo Public Facilitation Trust on 15 May In terms of the Governing Agreement Sasol South Africa (Pty) Ltd (the administrative agent) provides Sasol Inzalo Public (RF) Limited and Sasol Inzalo Public Funding (RF) (Pty) Ltd with all necessary services, such as financial, information and risk management, company secretarial, legal compliance and internal audit services. 4 Sasol Inzalo Public Annual Financial Statements 2017

7 The Committee obtains assurance from the administrative agent in respect of the functions specifically performed by the Committee in terms of section 94(7) of the Companies Act. The Committee also acts as the Audit Committee for Sasol Inzalo Public Funding (RF) (Pty) Ltd. The Board annually reviews and approves the Committee s terms of reference in terms of which responsibilities of the Committee include assisting the Board in overseeing the: quality and integrity of Sasol Inzalo Public (RF) Limited s financial statements including the consolidated group financial statements; the qualification and independence of the external auditors for Sasol Inzalo Public (RF) Limited and its subsidiary, Sasol Inzalo Public Funding (RF) (Pty) Ltd; the scope and effectiveness of the external audit function for Sasol Inzalo Public (RF) Limited and its subsidiary, Sasol Inzalo Public Funding (RF) (Pty) Ltd; the effectiveness of the group s internal controls and internal audit function; and compliance with legal and regulatory requirements to the extent that they might have an impact on financial statements. A copy of the Committee s terms of reference is available on the Sasol Inzalo website ( Executing on our statutory duties and other areas of responsibilities In satisfying our duties, the Committee in particular: considered compliance (legal and regulatory) requirements and reviewed the internal control environment; nominated for appointment PricewaterhouseCoopers Inc. (PwC) as auditor of the company for the financial year ended 30 June 2017; reviewed and assessed the independence of the auditor in accordance with the provisions of the Companies Act and is satisfied that PwC and the designated auditor is independent of the company and the Sasol group; determined the fees to be paid to PwC as well as PwC s terms of engagement; ensured that the appointment of the auditor complies with the provisions of the Companies Act and any other legislation relating to the appointment of auditors; determined, subject to the provisions of the Companies Act, the nature and extent of any non-audit services which PwC may provide to the group. There were no non-audit services performed by PwC for the period under review; reviewed the company s risk management plan and processes; and reviewed the internal audit plan and considered internal audit reports. Reviewed the key audit matters as identified by the auditors and reported on in their audit opinion. Conclusion The Committee is satisfied that it has complied with all its terms of reference determined by the Board and statutory and other responsibilities. Having had regard to all material risks and factors that may impact on the integrity of the Integrated Report (including Notice of Annual General Meeting) and the Annual Financial Statements and following appropriate review, the Committee recommended the Annual Financial Statements of Sasol Inzalo Public (RF) Limited and its subsidiary and the Integrated Report (including Notice of Annual General Meeting) for the year ended 30 June 2017 for approval to the Board. On behalf of the Audit Committee Zola Malinga Chairman of the Audit Committee 21 September 2017 Sasol Inzalo Public Annual Financial Statements

8 Sasol Inzalo Public (RF) Limited Group Directors report Dear shareholder, The directors have pleasure in presenting their report for the year ended 30 June Nature of business During May 2008, the shareholders of Sasol Limited approved the Sasol Inzalo share transaction, a broad-based black economic empowerment (BEE) transaction, which resulted in the transfer of beneficial ownership of 10% of Sasol Limited's issued share capital, before the implementation of this transaction, to its employees and a wide spread of BEE participants. Sasol Inzalo Public (RF) Limited and Sasol Inzalo Public Funding (RF) (Pty) Ltd own approximately 2,37% of Sasol Limited s issued share capital. The main business of the group (Sasol Inzalo Public (RF) Limited and its subsidiary, Sasol Inzalo Public Funding (RF) (Pty) Ltd is to acquire and hold shares in Sasol Limited on behalf of the members of the black public. The principal activities of the company remained unchanged during the year. Share capital The authorised and issued share capital of the group remained unchanged during the year. This is consistent with the previous year. Going concern The group incurred a net loss of R106 million for the year ended 30 June The Sasol Inzalo share transaction will unwind in September Sufficient cash is expected to be generated out of 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. 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 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. Based on the closing Sasol ordinary share price of R389 on 4 September 2017 and preference share funding balances at 31 August 2017, there is a shortfall and a funding commitment for the Sasol Group of approximately R1,2 billion. As a result, assuming the Sasol share price remains at current levels, there will be no distribution of Sasol ordinary share to Sasol Inzalo Public shareholders when the Sasol Inzalo Transaction ends in 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. Declaration of cash dividend Taking into account the continued decline in the value of the investment in Sasol Limited due to the low oil price and the volatile macro-economic environment, the Board of Directors has seen it prudent to conserve cash and have concluded that no cash dividend should be declared for the year ended 30 June 2017 (2016: Rnil). Directors The composition of the Board of Directors is set out in the section Our Board of Directors of the Integrated Report (including Notice of Annual General Meeting). Ms CK Mokoena resigned as chairman of the Board and Independent Non-executive Director with effect from 31 January The Board appointed Ms Z Monnakgotla as interim chairman with effect from 1 February 2017 and chairman with effect from 16 March Auditors PricewaterhouseCoopers Inc. was the external auditor of Sasol Inzalo Public (RF) Limited and its subsidiary, Sasol Inzalo Public Funding (RF) (Pty) Ltd for the financial year ended 30 June At the Annual General Meeting of 4 November 2017, shareholders will be requested to reappoint PricewaterhouseCoopers Inc. as auditor of Sasol Inzalo Public (RF) Limited and to note that Mr M Naidoo will be the individual responsible for performing the functions of the auditor, following the Audit Committee's decision to nominate the firm PricewaterhouseCoopers Inc. as its independent auditor for the financial year commencing 1 July Subsequent events The Sasol Inzalo share transaction will come to an end in 2018 and separately the proposed new B-BBEE ownership structure, Sasol Khanyisa, will be implemented. Refer to the announcement released by Sasol on 20 September 2017 for details of the new transaction. 6 Sasol Inzalo Public Annual Financial Statements 2017

9 Company secretary Sasol South Africa (Pty) Ltd is the company secretary of Sasol Inzalo Public (RF) Limited and its subisidiary and its addresses are: Postal address Physical address PO Box Katherine Street Johannesburg Sandton Republic of South Africa Republic of South Africa Registered office The registered addresses of the company are: Postal address Physical address PO Box Katherine Street Johannesburg Sandton Republic of South Africa Republic of South Africa Sasol Inzalo Public Annual Financial Statements

10 Sasol Inzalo Public (RF) Limited Group Approval of the annual financial statements The Annual Financial Statements for the year ended 30 June 2017 set out on pages 14 to 31 were approved by the Board of Directors on 21 September 2017 and are signed on its behalf by: Zanele Monnakgotla Chairman of the Board Zola Malinga Chairman of the Audit Committee 21 September 2017 Certificate of the Company Secretary In my capacity as the Company Secretary, I hereby confirm, in terms of the Companies Act 71 of 2008 that for the year ended 30 June 2017, Sasol Inzalo Public (RF) Limited has lodged with the Companies and Intellectual Property Commission all such returns as are required of a public company in terms of the Companies Act 71 of 2008, and that all such returns are, to the best of my knowledge and belief, true, correct and up to date. Fay Hoosain for Sasol South Africa (Pty) Ltd 21 September Sasol Inzalo Public Annual Financial Statements 2017

11 Independent auditor s report To the Shareholders of Sasol Inzalo Public (RF) Limited Report on the audit of the consolidated and separate financial statements Our opinion In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Sasol Inzalo Public (RF) Limited (the Company) and its subsidiary (together the Group) as at 30 June 2017, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. What we have audited Sasol Inzalo Public (RF) Limited s consolidated and separate financial statements set out on pages 14 to 29 comprise: the consolidated and separate statements of financial position as at 30 June 2017; the consolidated and separate income statements for the year then ended; the consolidated and separate statements of comprehensive income for the year then ended; the consolidated and separate statements of changes in equity for the year then ended; the consolidated and separate statements of cash flows for the year then ended; and the notes to the financial statements, which include a summary of significant accounting policies. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor s responsibilities for the audit of the consolidated and separate financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). Our audit approach Overview Overall group materiality Overall Group materiality: R59 million, which represents 1% of total assets Group audit scope The Group consists of one subsidiary scoped in as a full scope audit Key audit matter Sasol Inzalo accounting considerations As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated and separate financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Sasol Inzalo Public Annual Financial Statements

12 Sasol Inzalo Public (RF) Limited Group Independent auditor s report (continued) Overall group materiality How we determined it R59 million 1% of total assets Rationale for the materiality benchmark applied We chose total assets as the benchmark because, in our view and consistent with the nature of the entity (non-profit oriented), it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark given the nature of the entity. How we tailored our group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. The group consists of one subsidiary, which in our view required a full scope audit due to the significance of this subsidiary. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The below key audit matter relates to the consolidated financial statements. We have determined that there are no key audit matters in respect of the separate financial statements to communicate in our report. Key audit matter Sasol Inzalo accounting considerations The group owns approximately 2.37% (16,085,199) of Sasol Limited issued shares, specifically held on behalf of the black public for purposes of the advancement of Sasol Limited s commitment to black economic empowerment ( BEE ). At 30 June 2017 the carrying value of the investment at R5.8 billion, was valued at the Sasol Limited quoted share price which closed at R per share. This investment is accounted for as available-for-sale held at fair value and unrealised gains and losses amounting to R435 million (before tax) arising from revaluation are recognised through other comprehensive income. The resultant deferred tax thereon was calculated in accordance with capital tax gains principles, which is reflective of the intended recovery of the carrying value of this investment. Funding of this transaction was sought from external financial institutions through the issue of preference shares with various rights attached to them. This is detailed in note 4 of the financial statements. Management accounted for the debt at amortised costs and in accordance with agreements governing the debt. How our audit addressed the key audit matter We obtained the Sasol Limited listed share price from the Sasol Limited s website and re-performed the revaluation of the investment as at 30 June The resultant revaluation loss of R435 million before tax, was calculated as the difference between the closing price at 30 June 2017 (R366.50) to that at 30 June 2016 (R397.17). In addition to this, we confirmed the value of the investment at 30 June 2017 directly with the management of Sasol Limited. We recalculated the taxation impact of the revaluation loss with reference to the requirements of IAS 12: Income Taxes and the current year deferred tax movement of R110 million was determined with reference to the prevailing capital gains tax rate. We read the preference shares agreements and based our re-performance procedures on the terms as stipulated in these agreements. We obtained management s amortisation schedules detailing the recalculated debt and related interest. 10 Sasol Inzalo Public Annual Financial Statements 2017

13 Key audit matter The investment in Sasol Limited and the preference share debt were considered a key audit matter due to the following reasons: The magnitude of both these balances, amounting to 99% of the Group s total consolidated assets and liabilities respectively; and This investment, together with the external debt, is of significant interest to the shareholders of Sasol Inzalo as the value of investment and the ability of this to cover the outstanding external debt at the end of the empowerment period, will determine the number of Sasol Limited shares awarded to the shareholders at the end of the scheme. How our audit addressed the key audit matter The following procedures were performed by the audit team: Using the amortised costs method as stipulated by IAS 39: Financial Instruments: Recognition and Measurement, we recalculated the interest accrued for the year and the outstanding balances at year end after taking into account repayments made on the A (capital and interest) and B preference shares (interest) in accordance with the preference share agreements; We requested the preference shareholders to provide us with written confirmation of the outstanding debt, repayments as well as interest accrued as at 30 June 2017; and We inspected the preference share agreements to confirm that all provisions have been met. Other information The directors are responsible for the other information. The other information comprises the Directors Report, the Report of the Audit Committee and the Certificate of the Company Secretary as required by the Companies Act of South Africa and the supplementary information included in the financial statements ( Interest in subsidiary, Investment in subsidiary and Long term debt ) as well as the Integrated Report (Including notice of the General Meeting). Other information does not include the consolidated and separate financial statements and our auditor s report thereon. Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the consolidated and separate financial statements The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards 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 consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group and the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and/or the Company or to cease operations, or have no realistic alternative but to do so. Auditor s responsibilities for the audit of the consolidated and separate financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements. Sasol Inzalo Public Annual Financial Statements

14 Sasol Inzalo Public (RF) Limited Group Independent auditor s report (continued) As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group s and the Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s and the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Group and/or Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other legal and regulatory requirements In terms of the IRBA Rule published in Government Gazette Number dated 4 December 2015, we report that PricewaterhouseCoopers Inc. has been the auditor of Sasol Inzalo Public (RF) Limited for four years. PricewaterhouseCoopers Inc. Director: M Naidoo Registered Auditor Sunninghill 21 September Sasol Inzalo Public Annual Financial Statements 2017

15 Shareholders information Shareholders diary Financial year-end 30 June 2017 Annual general meeting 4 November 2017 Dividends No ordinary dividends were declared for the year ended 30 June 2017 Share ownership at 30 June 2017 Public and non-public shareholding of Sasol Inzalo ordinary shares Number of shareholders % of shareholders Number of shares % of ordinary shares Public , ,65 Non-public 2 0, ,35 Directors and their associates Sasol Inzalo Public Facilitation Trust Major shareholders No individual shareholder s beneficial shareholding in the Sasol Inzalo ordinary shares is equal to or exceeds 5%. Sasol Inzalo Public Annual Financial Statements

16 Sasol Inzalo Public (RF) Limited Group Accounting policies and financial reporting terms Sasol Inzalo Public (RF) Limited is the holding company of the Sasol Inzalo Public (RF) Limited group (the Group) and is domiciled in the Republic of South Africa. The following principal accounting policies were applied by the group for the financial year ended 30 June Except as otherwise disclosed, these policies are consistent in all material respects with those applied in previous years. Financial reporting terms These definitions of financial reporting terms are provided to ensure clarity of meaning as certain terms may not always have the same meaning or interpretation in all countries. Group structures Company Entity Group Subsidiary A legal business entity registered in terms of the applicable legislation of that country. Sasol Inzalo Public (RF) Limited or a subsidiary of Sasol Inzalo Public (RF) Limited. The group comprises Sasol Inzalo Public (RF) Limited and its subsidiary, Sasol Inzalo Public Funding (RF) (Pty) Ltd. Any entity over which one group exercises control. General accounting terms Consolidated group financial statements Functional currency Long-term Presentation currency Related party The financial results of the group which comprise the financial results of Sasol Inzalo Public (RF) Limited and its subsidiary. The currency of the primary economic environment in which the entity operates, which is the South African rand. A period longer than 12 months from the reporting date. The currency in which financial results of an entity is presented, which is the South African rand. Parties are considered to be related if one party directly or indirectly has the ability to control or jointly control the reporting entity (Sasol Inzalo Public (RF) Limited) or exercise significant influence over the reporting entity or is a member of the key management of the reporting entity. Statement of compliance The consolidated and separate financial statements are prepared in compliance with International Financial Reporting Standards (IFRS) and Interpretations of those standards, as issued by the International Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council and the South African Companies Act, The consolidated financial statements were approved for issue by the Board of Directors on 21 September 2017 and will be presented for approval at the annual general meeting of shareholders on 4 November Accounting standards, interpretations and amendments to published accounting standards During the current financial year, no new accounting standards, interpretations and amendments to published accounting standards were adopted by the group: Standard Date published Effective date * Anticipated impact on the group IFRS 9, Financial Instruments (Amended) IFRS 15, Revenue from contracts with customers 24 July January 2018 IFRS 9 introduced new requirements for classifying and measuring financial assets and liabilities. It also contains a new impairment model which will result in earlier recognition of losses and new hedging guidance which will require the implementation of new models, systems and processes. A detailed impact analysis is underway, however we do not expect the adoption of IFRS 9 to have a significant impact on total assets, total liabilities or earnings of the group. We do not expect a fundamental change in the recognition or measurement of impairments on financial assets. 28 May January 2018 IFRS 15 requires entities to recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is achieved through a five step methodology that is required to be applied to all contracts with customers. The group is currently investigating the impact of the new recognition requirements, however, it is not expected that any significant change will be seen in the amount of turnover recognised for the group. *The amendments apply for annual periods commencing on or after the date noted and early adoption is permitted, unless otherwise indicated. 14 Sasol Inzalo Public Annual Financial Statements 2017

17 Principal accounting policies Basis of preparation of financial results The consolidated and separate financial statements are prepared using the historic cost convention except that, as set out in the accounting policies below, certain items, including available-for-sale financial assets, are stated at fair value. The consolidated and separate financial statements are prepared on the going-concern basis. Except as otherwise disclosed, these accounting policies are consistent with those applied in previous years. Basis of consolidation of financial results The consolidated financial statements reflect the financial results of the group. All financial results are consolidated with similar items on a line by line basis except for the investment in subsidiary, which is included in the company s results as set out below. Investment in subsidiary Investment in subsidiary is stated at cost less impairment losses. Financial assets The group classifies its financial assets into the following categories: available-for-sale financial assets; and loans and receivables. The classification is dependent on the purpose for which the financial asset is acquired. Management determines the classification of its financial assets at the time of the initial recognition and re-evaluates such designation at least at each reporting date. Financial assets are recognised on transaction date when the group becomes a party to the contracts and thus obtains rights to receive economic benefits and are derecognised when these rights expire or are transferred. Financial assets are stated initially on transaction date at fair value including transaction costs. Available-for-sale financial assets are subsequently stated at fair value at the reporting date. Unrealised gains and losses arising from revaluation of available-for-sale financial assets are recognised as other comprehensive income and included in the investment fair value reserve. On disposal or impairment of available-for-sale financial assets, cumulative unrealised gains and losses previously recognised in other comprehensive income are included respectively in determining the profit or loss on disposal of, or impairment charge relating to, that financial asset, which is recognised in the income statement. The fair values of financial assets are based on quoted market prices. An assessment is performed at each reporting date to determine whether objective evidence exists that a financial asset is impaired. In the case of available-for-sale financial assets, a significant or prolonged decline in the fair value of the asset below its cost is considered an indicator of impairment. If any such evidence exists, the cumulative loss is removed as other comprehensive income from the investment fair value reserve and recognised in the income statement. Impairment losses charged to the income statement on available-for-sale financial assets are not reversed. Financial liabilities Financial liabilities are recognised on the transaction date when the group becomes a party to a contract and thus has a contractual obligation and are derecognised when these contractual obligations are discharged, cancelled or expired. Financial liabilities are stated initially on the transaction date at fair value including transaction costs. Subsequently, they are stated at amortised cost using the effective interest method. Cash and cash equivalents Cash and cash equivalents are stated at carrying value which is deemed to be fair value. Bank overdrafts are offset against cash and cash equivalents in the statement of cash flows. Share capital Issued share capital is stated in the statement of changes in equity at the amount of the proceeds received less directly attributable issue costs. Sasol Inzalo Public Annual Financial Statements

18 Sasol Inzalo Public (RF) Limited Group Accounting policies and financial reporting terms (continued) Preference shares Preference shares are classified as liabilities if they are redeemable on a specific date or at the option of the shareholders and, in the case of A and B preference shares dividend payments are not discretionary. Dividends thereon are charged to the income statement as a finance expense based on the effective interest method. Debt Debt, which constitutes a financial liability, includes short-term and long-term debt. Debt is initially recognised at fair value, net of transaction costs incurred and is subsequently stated at amortised cost. Debt is classified as short-term unless the borrowing entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Debt is derecognised when the obligation in the contract is discharged, cancelled or has expired. Premiums or discounts arising from the difference between the fair value of debt raised and the amount repayable at maturity date are charged to the income statement as finance expenses based on the effective interest method. Taxation The income tax charge is determined based on income before tax for the year and includes deferred tax. The current tax charge is the calculated tax payable on the taxable income for the year using enacted or substantively enacted tax rates and any adjustments to tax payable in respect of prior years. Deferred tax is provided for using the liability method, on all temporary differences between the carrying amount of assets and liabilities for accounting purposes and the amounts used for tax purposes and on any tax losses. The provision for deferred tax is calculated using enacted or substantively enacted tax rates at the reporting date that are expected to apply when the asset is realised or liability settled. The provision of deferred tax assets and liabilities reflects the tax consequences that would follow from the expected recovery or settlement of the carrying amount of its assets and liabilities. Other payables Other payables are initially recognised at fair value and subsequently stated at amortised cost. Finance income Finance income consists primarily of dividends received and interest received. The timing of finance income recognition is as follows: Dividends received is recognised when the right to receive payment is established; and Interest received is recognised on a time proportion basis using the effective interest method. Finance costs Finance costs, including dividends on preference shares classified as liabilities, are charged to the income statement using the effective interest method. 16 Sasol Inzalo Public Annual Financial Statements 2017

19 Statements of financial position at 30 June Group Company Note Rm Rm Rm Rm ASSETS Investment in subsidiary Investment in security Non-current assets Current asset Cash Total assets EQUITY AND LIABILITIES Shareholders (deficit)/equity (1 444) (955) Long-term debt Deferred tax liability Non-current liabilities Short-term debt Other payables Current liabilities Total equity and liabilities Income statements for the year ended 30 June Group Company Note Rm Rm Rm Rm Other expenses 7 (8) (17) (7) (16) Operating loss (8) (17) (7) (16) Net finance (costs)/income (97) (77) 1 1 finance income finance costs 9 (595) (574) Loss before tax (105) (94) (6) (15) Taxation 10 (1) (1) Loss for year (106) (95) (6) (15) Per share information Rand Rand Basic loss per share 11 (6,59) (5,91) Diluted loss per share 11 (6,59) (5,91) Sasol Inzalo Public Annual Financial Statements

20 Sasol Inzalo Public (RF) Limited Group Statements of comprehensive income for the year ended 30 June Group Company Rm Rm Rm Rm Loss for year (106) (95) (6) (15) Other comprehensive loss, net of tax Items that can be subsequently reclassified to the income statement (383) (710) Fair value of investment available-for-sale (493) (850) Tax on items that can be subsequently reclassified to the income statement Total comprehensive loss for year (489) (805) (6) (15) Statements of changes in equity for the year ended 30 June Group Company Share capital and share premium Investment fair value reserve Total shareholders deficit Share capital and share premium Total shareholders' equity Accumulated loss Accumulated (loss)/profit (Note 12) (Note 12) Rm Rm Rm Rm Rm Rm Rm Balance at 30 June (1 620) (150) Total comprehensive loss for year (710) (95) (805) (15) (15) Balance at 30 June (1 715) (955) Total comprehensive loss for year (383) (106) (489) (6) (6) Balance at 30 June (1 821) (1 444) 371 (5) Sasol Inzalo Public Annual Financial Statements 2017

21 Statements of cash flows for the year ended 30 June Group Company Note Rm Rm Rm Rm Cash utilised in operating activities 13 (2) (17) (1) (16) Finance income received Finance costs paid 9 (157) (219) Tax paid 10 (1) (1) Cash generated by/(utilised in) operating activities (15) Repayment of capital 4 (95) (95) Repayment of capitalised finance costs 4 (242) (193) Loan raised Cash effect of financing activities (337) (279) 9 Increase/(decrease) in cash 1 (19) (6) Cash at beginning of year Cash at end of year Sasol Inzalo Public Annual Financial Statements

22 Sasol Inzalo Public (RF) Limited Group Notes to the financial statements Group Company for the year ended 30 June Rm Rm Rm Rm 1 Investment in subsidiary Reflected as non-current asset Shares at cost For further details of interest in subsidiary, refer to page Investment in security Long-term available-for-sale investment Reconciliation Balance at beginning of year Revaluation to fair value (493) (850) Balance at end of year Fair value of investment available-for-sale The fair value of the investment available-for-sale is based on a quoted market price of the Sasol ordinary share of R366,50 per share (2016: R397,17 per share) as listed on the Johannesburg Stock Exchange at 30 June. This is a level one fair value measurement. For futher details of the investment in security, refer to page Cash Cash per the statements of cash flows Fair value of cash The carrying value of cash approximates fair value due to the short-term maturity of these instruments. 4 Long-term debt Total long-term debt Short-term portion (142) (145) Analysis of long-term debt At amortised cost Secured debt Unsecured debt Unamortised loan costs (4) (7) Reconciliation Balance at beginning of year Interest accrued Loans repaid 1 (337) (288) Loans raised 9 9 Amortised loan costs 3 3 Balance at end of year Interest-bearing status Interest-bearing debt Non-interest-bearing debt Sasol Inzalo Public Annual Financial Statements 2017