sasol ar 2005 fin download even

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visionTo be a respected global enterprise, harnessing our talents in applying unique, innovative and competitive

technologies to excel in selected markets in the energy and chemicals sectors in Southern Africa and worldwide.

valuesSasol's global business principles and conduct are founded on, and inspired by, six shared values: customer focus,

winning with people, safety, excellence in all we do, continuous improvement and integrity.

Through the collective skills of our people around

the globe we are working hard to improve safety,

customer service, productivity and technology, while

also containing costs, reducing our environmental

footprint and seeking to be a better corporate citizen

because the pursuit of continuous improvement is

integral to our values.

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the year in review

Turnover

01 02 03 04 05

70

60

50

40

30

20

10

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Export

Foreign

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Operating profit and turnover

01

70

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30

20

10

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Operating profit

Turnover

(R b

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n)

02 03 04 05

Dividends and attributableearnings per share

01 02 03 04 05

Dividends per share

Attributable earnings per share

(cen

ts)

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2004

July

Completion of project to convert Sasol Gas customers

to natural gas supply.

August

Sasol wins the overall award for best reporting and

communications in the 2004 IASSA awards sponsored

by the Investment Analysts' Society of Southern Africa.

A further development oil well, Etame 5H in the

Etame oilfield, offshore southern Gabon, was brought

on stream with Sasol Petroleum International (SPI) as a

27,75% partner.

September

Sasol and a Chinese consortium sign a memorandum of

understanding (MOU) to undertake a pre-feasibility study

for the development of two coal-to-liquids plants in China.

Tragic explosion at Secunda ethylene plant claims 10 lives.

Sasol Polymers' Poly 2 plant at Sasolburg successfully

uprated to produce 150 000 tons per annum (tpa) of

linear low-density polyethylene.

October

SPI announces discovery of Ebouri and Avouma oilfields in

Gabon's offshore Etame block.

Sasol and its consulting partner, Acer Africa, receive the

2004 premier award from the International Association

of Impact Assessment South Africa for their human

resettlement planning and implementation project as part

of Sasol’s Mozambique Natural Gas Project.

November

Start-up of second 48 000 tpa 1-octene plant at Secunda.

Sasol North America wins four energy awards from the

American Chemistry Council for energy-efficient projects

that help to reduce carbon dioxide emissions.

DuPont Safety Resources appointed to review Sasol's

safety systems and practices in South Africa.

2004 2005 2005 2004

US$ US$ Rand Rand

8 747 11 150 Turnover million 69 239 60 151

1 354 2 336 Operating profit million 14 506 9 314

864 1 541 Earnings attributable to shareholders million 9 573 5 940

142 251 Attributable earnings per share cents 1 560 974

71 84 Dividends per share cents 540 450

923 1 058 Net asset value per share cents 70,58 57,31

11 833 13 191 Total assets million 87 989 73 486

2 203 3 029 Cash generated by operating activities million 18 812 15 151

3 399 4 427 Wealth created million 27 493 23 373

10 559 18 262 Market capitalisation at 30 June million 122 379 64 509

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Sasol Mining pg 24

Sasol Mining currently mines around 43 million tons (Mt) a year of saleablecoal in the Sasolburg and Secunda regionsfor our South African petrochemical plantsand exports about 3,6 Mt of coalannually. As from the 2006 financial year,it will increase its annual supply of coal toEskom to 1,8 Mt for the next three years.Its main operations at Secunda comprisefive underground operations: Bosjesspruit,Brandspruit, Middelbult, Syferfontein andTwistdraai. An export coal beneficiationplant supports the Twistdraai operations.

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Total turnover 5 215Operating profit 1 247

Sasol Synfuels pg 26

Sasol Synfuels operates the world's onlycoal-based synfuels manufacturing facility at Secunda. It produces synthesis gas(syngas) through both coal gasification and natural gas reforming, and usesSasol’s high-temperature Fischer-Tropschtechnology to convert this syngas intocomponents for making synfuels, as well as chemical feedstock and pipeline gas.Sasol Synfuels produces most of SouthAfrica’s chemical building blocks,including ethylene, propylene, ammonia,solvents and phenolics.

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Sasol Liquid Fuels Business pg 28

The Sasol Liquid Fuels Business (LFB)manufactures and markets fuels andlubricants from its facilities at Secundaand through its 63,6% share in the Natrefcrude oil refinery at Sasolburg. Productsinclude petrol, diesel, jet fuel, illuminatingparaffin, fuel oils, bitumen andautomotive and industrial lubricants. Itmanages Sasol's interests in Natref andthe Tosas bituminous products business.Since launching a fuel retail network inJanuary 2004, the Sasol LFB hasestablished 345 Sasol and Exel servicestations around South Africa.

Sasol Olefins & Surfactants pg 38

Sasol Olefins & Surfactants manufactures and markets a diverse range of surfactants and surfactant intermediates such as linearalkylbenzene (LAB) and alcohols, as well as monomers and inorganic speciality chemicals, mainly at plants in Germany, Italy, the USA andSouth Africa, for customers across the globe. The division has four global business units: monomers (ethylene and comonomers), alcohols& surfactants (alcohols in the C6-C22 range, other surfactant intermediates and their derived surfactants), alkylates & surfactants (n-paraffins, n-olefins and LAB, as well as their derived surfactants) and inorganic specialties (mostly alumina and related products).

Oil and gas businesses

Main chemical businesses

Other chemical businesses

Specialist services

Sasol Nitro pg 44

Sasol Nitro manufactures and markets ammonia, nitric acid andammonium nitrate-based products, including commercialexplosives and fertilisers, as well as specialised blastingaccessories. It also manufactures phosphoric acid and aphosphate detergent, and markets ammonia, sulphur andspeciality gases produced by other Sasol businesses.

Sasol Wax pg 45

Sasol Wax operates wax manufacturing, blending and marketing operations in South Africa, Germany, the Netherlands,Belgium, Austria, the United Kingdom and the USA. The division also has marketing and sales operations in Switzerland,France, Denmark, Malaysia, Australia, New Zealand and Venezuela.

Sasol Technology pg 48

Sasol Technology is our specialist in the fields of research and development, technology and innovation, engineering and project-managing the design, construction and commissioning of new plants. The company fulfils a strategic role by helping Sasol businessesworldwide to pursue growth and continuous improvement, and to promote competitive advantage through appropriate technologysolutions and services.

our group of companies

Rm

Total turnover 18 394Operating loss (221)

5

Rm

Total turnover 2 404Operating profit 932

Rm

Total turnover 841Operating profit 281

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Sasol Gas pg 32

Sasol Gas distributes and marketsnatural gas from Mozambique's Temanefield and methane-rich gas produced atSecunda. The company delivers pipelinegas through a 2 265 km pipelinenetwork to more than 530 industrial and commercial customers in Gauteng,Mpumalanga, Free State and KwaZulu-Natal.

Sasol Synfuels International pg 36

Sasol Synfuels International (SSI),together with the joint venture withChevron of the USA, Sasol Chevron,develops and implements internationalventures based on the integrated, three-step Sasol Slurry Phase Distillate™ (SasolSPD™) process for gas-to-liquids (GTL)fuel conversion. SSI also exploresopportunities based on coal and otherhydrocarbon sources that could entail theuse of Sasol Fischer-Tropsch technology.SSI, in partnership with Qatar Petroleum,will bring its first GTL plant intoproduction in our 2006 financial year

Sasol Petroleum International pg 34

Sasol Petroleum International (SPI)develops and manages our internationalupstream interests in oil and gasexploration and production from officesin London and Johannesburg. Theseinterests are concentrated inMozambique, South Africa, Gabon,Equatorial Guinea and Nigeria. SPI hasbeen producing gas from Mozambique'sonshore Temane field since February2004, with production being 77,1 milliongigajoules for the 2005 financial year. It isalso producing oil in Gabon through its27,75% share in the offshore Etame field.

Sasol Polymers pg 40

Sasol Polymers operates plants at Sasolburg and Secunda andproduces ethylene, propylene, low-density polyethylene(LDPE), linear low-density polyethylene, polypropylene, vinylchloride monomer, polyvinyl chloride, chlor-alkali chemicalsand mining reagents. It has shareholdings in two Malaysiancompanies: Optimal Olefins for producing ethylene andpropylene; and Petlin (Malaysia) for producing LDPE.

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Sasol Solvents pg 42

Sasol Solvents is a supplier of a diverse range of solvents andassociated products with manufacturing plants in South Africa andGermany. It has 11 business units: blends and hydrocarbons; C3/C4

alcohols; esters and acids; ethanol; fine chemicals; glycol ethers;ketones; methanol; mining chemicals; acrylic acid and acrylates (a joint venture with Mitsubishi Chemical Corporation); andmaleic anhydride (a joint venture with Huntsman Corporation).

Sasol Infrachem pg 46

Sasol Infrachem has been producing syngas derived from naturalgas as feedstock for Sasol's Sasolburg chemical businesses since July 2004. The company produces and distributes reformednatural gas on behalf of Sasol Gas. Sasol Infrachem provides on-site utilities, infrastructure support and support services toother businesses.

Merisol pg 47

Merisol is a joint venture with Merichem Company of the USA.It is a leading global manufacturer of cresols, xylenols,alkylphenols and other phenolics. It has manufacturing facilities in South Africa and the USA and maintains two joint ventures:one at Sasolburg; and the other at Oita, Japan.

Sasol Financing pg 50

Sasol Financing is responsible for centrally managing group cash and liquidity, credit rating processes, in-house banking, domestic andinternational financing arrangements, and foreign exchange, interest rate and treasury risk management, as well as general financing andtreasury matters. Sasol Financing also acts as a business partner to Sasol subsidiaries and joint ventures for project- and company-specificspecialised financing and financial risk mitigation strategies and arrangements. Assistance is provided in developing and implementinghedging strategies for risks associated with commodity prices, foreign exchange and interest rates.

Note: Please refer to pages 129 and 131 of the annual financial statements for a list of the significant subsidiaries and incorporated joint ventures of Sasol Limited.

Sasol Limited

The Sasol head office at Johannesburg, South Africa, coordinates group activities and provides certain specialisedservices to group companies. The names and principal activities of the main businesses and divisions of the Sasol groupof companies are featured here.

6

chairman’s statement

It is a pleasure to report that Sasol achieved record headline

earnings in the financial year ended 30 June 2005. Headline

earnings per share of R17,49 represent an 87% increase on the

previous financial year. Earnings per share of R15,60 represent

a 60% improvement on the previous financial year.

Most of our businesses achieved commendable improvements in

operating profits. In our energy portfolio, for example, the

operating profit of Sasol Synfuels increased by 37%, mainly

because of higher oil prices, and that of Sasol Gas increased by

141% primarily because of higher volumes. The chemicals

businesses achieved a 130% increase in operating profit despite

substantial asset impairments. (These impairments have arisen as

a consequence of investments made in previous years, when the

weaker rand negatively impacted capital costs, and which are

now earning income streams based on a much stronger rand.)

The excellent improvement in the performance of our chemical

businesses resulted from substantially improved margins and the

benefits of closing down or disposing of non-core or poor-

performing businesses.

The adverse impact of impairments was more or less offset by the

beneficial group-wide reduction in depreciation charges,

following the revision of the estimated remaining useful lives of

our assets, which we did in accordance with the revised

International Financial Reporting Standard.

In the closing decade of the previous century, international oil

prices averaged about US$20,00/b (dated Brent). In 2000 these

prices changed structurally and for the first five years of the new

millennium were about 35% higher, averaging about

US$27,00/b. These higher prices placed pressure on chemical

margins because of their impact on oil-derivative feedstock

costs. It was only (four years later) in 2004 that chemical prices

responded to these higher feedstock costs, seemingly as a

consequence of the further upward movement in oil prices

triggered by the Iraq War, surging demand for oil from China

and the weakening of the US dollar. Chemical margins improved

and the resulting benefits to chemical businesses worldwide

were self-evident.

International oil prices have further increased to levels above

US$60,00/b over the last year. These prices may not be

sustainable and some industry pundits are forecasting long-term

oil prices in the range US$30,00 to US$35,00/b. This represents a

further structural change which will enhance the anticipated

returns from our planned gas-to-liquids (GTL) projects, but may

again place pressure on chemical margins until market forces

take effect and cause them to adjust accordingly. Of course, for

Sasol the higher oil prices have been beneficial, although this

benefit has been more or less offset by the negative effects of a

stronger rand.

Paul du P Kruger, chairman.

Record-breaking financial performance

7

Gearing (net debt to shareholders' equity) was reduced from

41% to 38% despite the year's significant capital expenditure of

R13,2 billion and remains within our targeted range of 30% to

50%. Major capital projects advanced included the Oryx GTL

venture in Qatar, the Ayra Sasol Polymers venture in Iran and the

fuel-enhancement project in South Africa (Project Turbo), which

also enables polymer expansions.

A final dividend of R3,10 has been declared, which brings the

total dividend for the year to R5,40 which is 20% higher than

the previous year. The resulting dividend cover of 2,9 is suitably

within our preferred range of 2,5 to 3,5 times cover.

The leadership changeAfter a highly successful 34-year career at Sasol, Pieter Cox

retired as chief executive on 30 June 2005. During his eight-year

tenure at the helm, Sasol became a truly globalised group. He led

many exciting and beneficial initiatives, including: a substantial

expansion of our chemical operations; the commencement of

our GTL projects in Qatar and Nigeria, which will spearhead

the growth of Sasol in future years; the Mozambique Natural

Gas Project, which brought gas into the industrial heartland of

South Africa; and the listing of Sasol on the New York Stock

Exchange (NYSE).

Pieter's contributions were recognised in many ways, including

being elected the Sunday Times Businessman of the Year in 2002 and

receiving an honorary doctorate from the University of St Andrews in

Scotland. Pieter will succeed me as chairman of Sasol Limited on

1 January 2006. I thank him for his immense contribution to the

group and wish him much success in his new role.

On 1 July 2005, Pat Davies succeeded Pieter as chief executive.

Pat has been with Sasol for 30 years and has held various

positions in engineering design, project management,

operations management and corporate affairs. He has been

responsible for the group's oil and gas businesses and Sasol

Technology, and has served on the boards of most major

companies in the group. He is well equipped to lead the

group as it embarks on a further growth path that will be

dominated by the global deployment of our GTL technology,

a responsibility which has also fallen to Pat.

With effect from the same date, Trevor Munday was appointed

deputy chief executive. Trevor joined Sasol when Polifin Limited,

which he led successfully for five years, was acquired in 1999.

In 2001, he was appointed chief financial officer with

responsibility also for corporate affairs and, in 2003, he

assumed responsibility for our global chemical businesses.

In my view, Pat and Trevor have complementary skills

and experience and will form a highly effective team.

I am confident they will successfully lead Sasol in “reaching

new frontiers” in the years ahead.

“A final dividend of R3,10 has been declared, which brings the total dividend

for the year to R5,40 which is 20% higher than the previous year”

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The transformation imperativeSasol has been criticised for its apparent tardiness in responding

to the transformation imperative and, more recently, particularly

with respect to the appointment of Pieter Cox to succeed me as

chairman, and those of Pat Davies and Trevor Munday. These

appointments were made by the Sasol Limited board following

a comprehensive selection process. The South African non-

executive members of the board at end June were 50%

represented by people from the so-called designated groups and

75% of these directors were black people. We intend to increase

this representation further in due course.

We are on public record acknowledging that we aspire to have more

black leaders in the senior executive positions of the group. Already,

we are pleased to have appointed Ms Nolitha Fakude, president of

the Black Management Forum (BMF), as an executive director

responsible for our worldwide human resources and strategy

functions. We welcome Nolitha to Sasol and are actively seeking

suitable black candidates for other key positions.

Sasol is a large, complex and growing global business with

governance and other obligations resulting from its listings on the

JSE Limited (JSE) and the NYSE. Recruiting senior financial

people, for example, in these circumstances is challenging when

only a fraction of the estimated 540 black (African) chartered

accountants in South Africa have more than three years of post-

qualifying experience, and when many of the remaining potential

candidates have moved on to other careers outside the finance

and accounting disciplines.

Nevertheless, we are persisting in our endeavours to recruit and

develop suitable black leaders and are confident that within the

foreseeable future the demographic profile of our senior

leadership structures will have become more representative of

South Africa. We understand our obligations in this regard – to us

they are morally, socially and business-driven and not just

prompted by statutes.

In the middle management ranks of Sasol, we are fortunate that

the substantial investment we have made over many years in our

bursary scheme is providing us with a steady source of high-

calibre candidates. In the past five years, 170 Sasol bursary-

holding black engineers have graduated from South African

universities and joined the group. Presently, we have nearly

500 bursary-holders of whom about 400 are undergraduate

students and, of these, some 60% are black students. Several

other initiatives, including our in-house advanced leadership

development programme (ALDP), which has been running for

several years and at any time has 20 to 25 black candidates

participating, will position us to meet the transformation

imperative from an employment equity perspective.

We are keenly awaiting the decision of the Competition Tribunal on

the proposed Uhambo Oil joint venture between our liquid fuels

business and Engen. The merged business is expected to be a

national champion in the South African fuel industry. It will provide

an exciting equity empowerment opportunity, across an entire

value-chain in this industry, ie from refinery to the fuel pump. We

expect it to be sustainable and credible. The model developed by

Sasol, together with our empowerment partners, will achieve

broad-based ownership from gender and geographic perspectives.

It is also financially facilitated by Sasol in an imaginative manner,

to the benefit of our prospective new partners, without prejudicing

the rights of our existing shareholders.

chairman’s statement

9

The competition law adjudication process will have taken a year if

the deliberations of our competition authorities are completed by

end-November 2005. They are working diligently within the

requirements of set statutes and we appreciate the importance of

them properly reviewing this proposed transaction and of giving

third-parties the opportunity to scrutinise and challenge it. This

length of time is, however, both frustrating for the potential

partners and demotivating for those people employed in the

entities planned for merger.

In turn, the resulting uncertainty adversely affects the efficiency

and focus of those involved, causing a potentially anti-

competitive situation in itself, especially if it is exploited by

competitors in the marketplace, or if their legal counsels are

allowed to frustrate and further protract the process. We

earnestly hope that the joint venture is cleared soon by the

Competition Tribunal.

We have also initiated equity empowerment transactions in Sasol

Mining and certain other parts of Sasol. We are, however, carefully

considering how we can advance the equity empowerment

imperative across our various other businesses. Of course, the

regulatory requirements in this respect are only now in the process

of being clarified through the progressive development and

gazetting of the South African Government's black economic

empowerment (BEE)-related codes of good practice. We look

forward to responding constructively to these codes.

From a competitive South Africa Incorporated position, this process

will have to be carefully managed by all businesses throughout the

country. The transformation imperative is clear and we must

progress within an overriding commitment to protecting or

enhancing the competitiveness of our businesses in South Africa,

in the interest of our economy and all our people.

It is an exciting, albeit a daunting task and encouragement

by the Government of businesses' endeavours through closer

engagement will be welcome. I am concerned about the divisive

tone of communiqués that are usually accorded much media

prominence. I would encourage a far more collaborative

association and dialogue being fostered between the Government

and the business community. Certainly, we at Sasol are aware of

our obligations in this regard and desire a constructive and

mutually beneficial relationship with the Government. After all,

we are important key joint-stakeholders in the success and

development of our country.

Our governance obligationsIt is a compliment to the governance standards set by the JSE

that at Sasol the step up to the stringent governance

requirements of the Securities and Exchanges Commission (SEC),

as a consequence of our listing on the NYSE, was not onerous.

During the year, we were privileged to have received governance

and disclosure awards, including the prestigious Ernst & Young

Award for excellence in corporate reporting and the JSE Award

for sustainability reporting.

As a major corporation, we continue to place prime emphasis on

sound governance throughout our worldwide operations and

have increased our disclosure to levels that have been

applauded by the investment, banking and other communities.

We shall continue to place priority on this critical aspect of

running our businesses.

“The transformation imperative is clear and we must progress within an

overall commitment to protecting or enhancing the competitiveness of our

businesses … in the interest of our economy and all our people”

10

In addition, I am pleased to report the extent to which we have

now embedded risk management practices throughout our

operations, and that risk assessments for all our businesses, major

functions and projects are regularly undertaken and presented to

the responsible governance committees for review.

The safety issueAfter several years of continuous improvement in safety

performance across all our businesses, we were shocked in 2004

by the spate of serious accidents we had at our plants and mines

that tragically resulted in fatalities and serious injuries to some of

our employees and contractors. It is conventional wisdom in the

petrochemical industry worldwide that a deteriorating safety

performance, measured according to internationally accepted

metrics, is a pointer to management problems and the likelihood

of a pending serious incident.

Our experiences in 2004 confounded this paradigm and showed us

that vigilance and management focus on safety matters must also

be increased, even in an environment of improvement. For example,

the tragic explosion at our Secunda ethylene plant on

1 September 2004 happened in an area which had for years been

successfully achieving improvements in safety performance,

confirming that complacency must be guarded against.

On behalf of the board and all the people of Sasol, I again

express my deep regret about these incidents. It is our dearest

wish that all people working at Sasol sites should be safe. The

intervention that took place following these incidents was

profound and I am confident that a stronger safety culture will

develop quickly as a result.

We have benefited from much intra-company introspection and

learning as a consequence of these safety incidents and the

interventions that followed to put our situation right. We accept

that every incident can be avoided and have committed ourselves

unreservedly to world-class safety performance. We appreciate

the collaborative spirit of our leading trade unions and have

welcomed the contribution they also are making to strengthen

Sasol's safety culture. The signing of our safety charter bears

testimony to the growing cooperation with our trade unions in

this key aspect of our operations.

Profit outlookDuring the year ahead, we shall be commissioning various large

projects and notably Project Turbo, our polymers project in Iran

and our first international GTL project in Qatar. The incremental

earnings benefits of these projects will start to flow in the

financial year beginning 1 July 2006.

For the year ahead, we are anticipating satisfactory headline

earnings growth, although uncertainty in oil and exchange rates

again makes forecasting difficult. Furthermore, this forward view

is dependent upon no major disruptions occuring in currency or

energy markets.

From a rand currency perspective, we are fortunate that the

South African fiscal environment and economy are stable

and we again express our admiration and appreciation to the

South African Government in this regard. The recent upgrading of

South Africa's international credit rating reflects the strength of

our economy and is testimony to its sound management.

11

The integrity of our balance sheet is high and our cash flow

planning is efficient and so we again expect to operate during the

year comfortably within our targeted gearing range of 30% to 50%.

The end of my tenure as chairman –acknowledgementsThis is my final statement as chairman of Sasol before stepping

down on 31 December 2005, after which I shall assume

responsibility as a non-executive director and hand over the

chairman's role to Pieter Cox. It has been a privilege to serve

Sasol as chairman for the past nine years. I have been fortunate

to have had sound counsel and support from my non-executive

directors whom I thank most sincerely. They have made my task

both manageable and gratifying. During my tenure, Pieter Cox

was chief executive until end-June 2005 and I also thank him for

the constructive relationship we had and the significant

contribution he made to Sasol.

During the year, one of our international non-executive directors,

Steven Pfeiffer, and a previous executive director, Jan Fourie,

retired. I thank them for their valuable contributions. I also

welcome Ms Imogen Mkhize, who joined the board as an

independent non-executive director on 1 January.

I thank the members of the group executive committee and all

the people of Sasol for the ongoing success of the group. It is

their individual and collective efforts that create our success and

I compliment them.

During the past year, we have again benefited from the support

of our various business partners, including our customers,

suppliers, contractors and bankers. I thank them all. I also thank

the South African and other governments and regulatory bodies

for the valuable engagements we have had with them.

In closing, I express my appreciation also to the public of South

Africa for their support of Sasol. Over the last year the group has

been under intense and often critical scrutiny.

The organisation is undergoing significant change and its

transformation will accelerate under the new executive

leadership. It is a successful and patriotic corporation that is

rapidly expanding globally and which proudly has its primary

domicile in South Africa. I look forward to it prospering under the

guidance of its new leadership.

Paul du P Kruger

Chairman

12

turning natural gas into low-emissions diesel

Why are GTL plants being developed?

Sasol is developing GTL plants because they:

• produce high-quality, high-performance, premium-grade, low-emissions energy

products in line with consumer demands and the requirements of future markets

and market regulators;

• enable gas-rich countries to monetise remote or underutilised gas reserves;

• are coinciding with a fast-emerging trend of dieselisation in many markets; and

• can help gas-rich countries to diversify their energy base.

Where might GTL plants be developed?

GTL plants can be developed in or near any gas-rich country, especially where the reserves are remote or underutilised – or in countries

where large amounts of associated gas are flared during oil production. Sasol and its GTL partners are developing GTL plants in Qatar

and Nigeria, and are exploring opportunities in Australia, Iran and other regions.

The world's energy paradigm will change in

2006 with the emergence of the international

era of commercial GTL production, which

enables gas-rich countries to convert remote or

underutilised natural gas into GTL diesel, GTL

naphtha and other higher-value products.

Australia Iran Nigeria Qatar

What is GTL technology?

GTL technology is the combination of three chemical

processing technologies to convert natural gas or a

similar gaseous hydrocarbon into liquid fuels and related

petrochemicals. The heart of GTL technology is the

conversion of synthesis gas into a waxy syncrude (a form

of synthetic crude oil) through Fischer-Tropsch synthesis.

In the case of the Sasol Slurry Phase Distillate™ (Sasol

SPD™) process, Sasol uses its proprietary Slurry Phase

Fischer-Tropsch technology to convert natural gas into

GTL diesel, GTL naphtha and some liquefied petroleum gas.

13

What have SSI and Sasol Chevronachieved to date?

The 34 000 barrels-per-day (b/d) Oryx

GTL joint venture at Ras Laffan in Qatar

between SSI and Qatar Petroleum (QP) will

be starting up in 2006. SSI is also working

with the National Petrochemical Company

of Iran for the possible development of a

GTL plant at Bandar Assaluyeh.

Sasol Chevron and QP plan to increase the

Oryx GTL plant capacity to 100 000 b/d,

and are at an early stage of discussion

regarding an integrated GTL plant at Ras

Laffan, with further capacity of about

130 000 b/d. Sasol Chevron is discussing

the potential development of a GTL plant

in Australia and is providing technical and

managerial support to the 34 000 b/d EGTL

plant at Escravos, Nigeria. This plant is

owned by the National Nigerian Petroleum

Corporation and Chevron Nigeria Limited

and is planned to start full commercial

production in 2009.

What is the potential for GTLtechnology?

Sasol Chevron and other GTL players have

the potential to produce 10% of the

world’s diesel requirements through GTL

plants by 2020. Sasol Chevron wants to

develop at least three foundation GTL

plants, through joint ventures, over the

next decade.

How does Sasol convert gas into GTL diesel in three steps?• by reforming natural gas in an autothermal reformer with oxygen and steam over a

catalyst to produce synthesis gas (syngas), a mixture comprising mostly carbon

monoxide and hydrogen;

• by converting syngas through Fischer-Tropsch synthesis into long-chain waxy

hydrocarbons in the low-temperature Sasol Slurry Phase reactor; and

• by selectively cracking the waxy hydrocarbons through Chevron Isocracking™

technology to produce the mildly isomerised middle-distillate products of GTL diesel,

kerosene and GTL naphtha.

What are the advantages of GTL products?

GTL diesel

GTL diesel is of a significantly higher quality than diesel derived from crude oil.It can be used in all modern diesel engine applications and is characterised by ahigh cetane number (>70), low sulphur (<5ppm), low aromatics (<1%), andgood cold flow characteristics (CFPP<-10C). The benefits of GTL diesel shouldposition it as a clean, premium product or blend-stock.

GTL diesel is compatible with existing fuel distribution infrastructures and withboth current and envisaged future exhaust gas after-treatment technologies.

GTL naphtha

The naphtha produced in the Fischer-Tropsch process is highly paraffinic with a very low sulphur, naphthenic and aromatics content. It is ideal as a feedstock for steam cracking to produce ethylene. Ethylene is one of the basic building blocks of the petrochemical industry and the precursor of widely used plasticpolyethylene and other derivatives.

What is Sasol's role in developing GTL plants?

To spearhead its international Fischer-Tropsch synfuel production ambitions, Sasol formed Sasol

Synfuels International (SSI) in 1997 and then a joint venture with Chevron of the USA, Sasol

Chevron, in 2000. SSI aims to be the company of choice in developing partnerships to enable the

successful commercial application of proven Sasol Fischer-Tropsch technology globally. The

primary expression of this vision is Sasol Chevron, which is dedicated to commercialising GTL

technology in projects that offer the highest rate of return for the investors.

14

chief executive’s report

Results and market trends

Returning to solid growth

In the wake of two tough financial years, in which the

appreciation of the rand led to reduced earnings, Sasol lifted its

overall performance on the strength of higher prices and margins

for oil, gas and chemicals. Ongoing efforts to reduce costs and

improve productivity, quality and customer service also

contributed to better performance.

On the downside, the continuing strength of the rand against the

US dollar impacted performance. The adverse impact of

impairments was more-or-less offset by reduced depreciation

charges following a review of the remaining useful lives of our

assets as required by accounting standards. Unscheduled

shutdowns at Sasolburg and Secunda lowered fuel and chemical

production and, in some cases, adversely impacted on supplies to

our customers. These incidents are regretted and the affected

Sasol businesses have since done everything possible to restore

required service levels.

Looking back at Sasol's performance of the last three years,

several factors have enabled the group to withstand dramatic

changes in prices, exchange rates and demand:

• our continuing focus on unlocking further value from our

integrated value chain;

• a commitment to develop our natural gas business;

• our investments to expand and improve our chemicals

portfolio; and

Robust strategy and improved conditions fuel growth

• our drive to reduce costs, improve productivity, develop new

markets and strengthen customer relations.

Achieving record earnings

Turnover increased by 15% from R60 151 million to R69 239 million,

and operating profit rose by 56% from R9 314 million to

R14 506 million. Earnings attributable to shareholders increased

by 61% from R5 940 million to R9 573 million. Wealth creation

rose by 18% from R23 373 million to R27 493 million.

Having increased by 12% in the previous year, the average price of

dated Brent crude oil rose by 48% from US$31,30 a barrel (b) to

US$46,17/b. Besides the strength of the world economy during the

year, the main geopolitical factors influencing the oil price were a

combination of a weaker US dollar, lower petroleum inventories,

strong Asian demand, uncertainty over Iraqi supplies, robust US

gasoline demand and concerns about political conflict in the

Middle East. International refining margins were notably higher.

Business optimisation

Reaffirming our safety commitment

During the year, we reported 17 work-related fatalities, 10 of

which resulted from an explosion at our Secunda ethylene plant

in September 2004. Once again, we extend our sincere

condolences to the families, friends and colleagues of those who

died as a result of these tragic workplace accidents. These

statistics are unacceptable and we have intensified our efforts to

achieve our goal of zero fatalities.

Pieter Cox, deputy chairman and chief executive (until 30 June 2005).

15

To bolster our safety culture and performance, we appointed

DuPont Safety Resources in November 2004 to independently

review our South African safety systems and practices. DuPont

was asked to recommend opportunities for improving our safety

programmes, including process safety, as well as employee and

contractor training and management. DuPont conducted its

safety review in the first quarter of 2005. In the interests of

transparency, DuPont's findings and recommendations have been

posted on our website.

Committing to a renewed safety drive

We are acting on the DuPont recommendations. This

commitment has been integrated into the Sasol safety

improvement plan, a change-management programme covering

safe behaviour, contractor safety, process safety and other key

safety matters. Through such sustained efforts, we aim to achieve

world-class safety standards throughout our South African

operations.

Sasol and three trade unions representing a high percentage of

our South African workforce – the Chemical, Energy, Paper,

Printing, Wood and Allied Workers' Union, the South African

Chemical Workers' Union and Solidarity – also signed the Sasol

safety charter in May 2005. This charter demonstrates our

common goal of making safety the first priority of everyone at

Sasol. In addition, we revised our values to better emphasise

safety as one of Sasol's six shared values.

As a result of these initiatives, Sasol's leaders and employees have

been demonstrating a stronger commitment to good safety

performance. We are optimistic, therefore, that we shall achieve

the results we all wish for Sasol.

Promoting black economic empowerment

Besides investing in social upliftment and development

programmes in communities around our operations, Sasol's

transformation initiatives centre on our growing black economic

empowerment (BEE) programme.

The intention is to introduce the required BEE ownership to our

liquid fuels business (LFB) and coal-mining business within the

next year. The final structure and timing of the Sasol LFB

transaction – which should result in the formation of Uhambo

Oil, a joint venture with Petronas – depends on final approval

from South Africa's Competition Tribunal.

Engen is a major South African oil company controlled by

Petroliam Nasional Berhad (Petronas) of Malaysia. The BEE

partners in the planned Uhambo joint venture are Worldwide

African Investment Holdings and Tshwarisano LFB Investment.

Their investment in Uhambo will be the single largest BEE

investment across the fuel industry value chain and will be broad-

based with significant gender and geographic representation. The

Competition Tribunal is scheduled to review the Uhambo

transaction in October 2005.

Sasol Mining is advancing plans with Eyesizwe Coal, which was

selected in May 2004 as our lead BEE partner for our South

African coal-mining activities. Sasol Mining and Eyesizwe plan to

announce details of their BEE deal in the year ahead.

Other BEE deals are being explored and it is likely that smaller

ones will be pursued through our renewed ChemCity initiative,

which focuses on creating new downstream businesses. This

initiative is at the forefront of our drive to develop small, medium

and micro enterprises in the South African chemical industry.

“The Sasol safety charter, signed in May 2005, demonstrates our common

goal of making safety the first priority of everyone at Sasol”

16

races and people with disabilities. We intend to increase this to

50% over the next few years.

Sustaining continuous improvement

The pursuit of continuous improvement remains a cornerstone ofSasol's culture. All businesses are retaining a disciplined approachtowards cost containment. Last year, we reported a largelysustainable reduction of almost R900 million in our annual costbase. This was maintained during the year under review.

Outside unscheduled shutdowns, several fuel and chemicalbusinesses increased their plant throughputs and per-capitaproductivity. Continuous improvement also covers ongoingprogrammes to:

• reduce our environmental footprint;• expand our knowledge base and promote the sharing of

best practices;• pioneer better technologies; and• increase our production and sale of higher-margin products.

Safeguarding a successful strategy

The group's strategic framework dating back to the late 1990sremains resilient and appropriate. Sasol's ability to withstandchanging currency and market cycles against the backdrop of globalmarkets that have become more competitive is further testimonythat we have the required vision, values, leadership and investmentsto stay focused on achieving growth and improvement.

Our growth drivers remain unchanged:

• commercialising and expanding our Fischer-Tropsch gas-to-liquids (GTL) and coal-to-liquids (CTL) technology;

• growing our chemical portfolio in selected areas; and• exploiting upstream hydrocarbon opportunities.


We are, however, also reconsidering our entire empowerment

strategy. Once the BEE Codes of Good Practice have been

classified and gazetted, businesses in South Africa will have a

clearer understanding of the South African Government's

empowerment expectations.

Through specific empowerment programmes under way in our

South African businesses, Sasol is well set to meet its

transformation challenges over the next decade. Notably, we

approach the broader issue of socioeconomic transformation

prudently, based on two prerequisites:

• we create partnerships with BEE players with whom we can

establish synergy based on shared values and commitments; and

• we seek sustainable BEE equity deals with the potential to

economically benefit a broad base of historically

disadvantaged South Africans.

Furthermore, our annual procurement spend with BEE suppliers in

South Africa rose by 65% from R1 495 million to R2 473 million.

We intend to increase this amount in the year ahead.

Seeking top-level black executives

We continue to advance employment equity in our South African

operations in line with the Employment Equity Act of 1998.

A major initiative is under way to develop black South Africans at

senior executive positions, an area in which we have been lacking.

Shortly after year end, we announced the appointment of Nolitha

Fakude as an executive director responsible for our global human

resource and strategy functions.

At year end, 39% of our South African managerial, professional

and supervisory posts were held by people from designated

groups: blacks (Africans, Coloureds and Indians), women of all

17

Business highlights

Mining, oil and gas

Adapting to a new paradigm

Sasol Mining has entered a new era following the conversion of

our Sasolburg chemical plant to natural gas feedstock, as well as

the introduction of natural gas to our Secunda plant as a

supplementary feedstock. As a result of these strategic

developments and a new coal supply agreement with Anglo Coal,

group coal production is being downscaled by more than 10%,

using 2004 as the baseline. For the foreseeable future, our

Secunda operations most likely will use natural gas, rather than

coal, to increase production.

Consequently, Sasol Mining faces new pressures in containing cost

per ton, having improved productivity, quality and financial

performance in the previous six financial years. This well-

performing business, however, is adapting to its new paradigm

having launched its Project 2010 initiative in 2003. Among other

objectives, Project 2010 is aimed at sustaining Sasol Mining's drive

to remain stable, innovative and profitable. We are confident this

business will remain an important contributor to earnings.

Retaining status despite lower production

Despite unscheduled shutdowns and the associated loss of

production, Sasol Synfuels remains a solid performer. Besides

contributing substantially to profit on the strength of higher

crude oil prices and greater efficiency, this business has been

working to increase operational stability and flexibility and

reduce costs.

In partnership with the Sasol Liquid Fuels Business (LFB) and Sasol

Technology, Sasol Synfuels is advancing Project Turbo to ensure

Sasol's compliance with South Africa's new liquid fuel

specifications after December 2005. Project Turbo will also

provide additional monomer feedstock to support Sasol

Polymers' growth plans.

Expanding our fuel retail network

The Sasol LFB posted a pleasing contribution to earnings. This

business maintained its retail service station rollout launched in

January 2004. By financial year end, it had established

345 Sasol- and Exel-branded service stations, 73 of which were

opened during the year. The business had another 25 retail sites

under development.

Whatever the outcome of the Competition Tribunal decision on

the planned Uhambo joint venture, we are confident Sasol LFB

has the foundations to build a successful liquid fuels business in

South Africa and sub-Saharan Africa.

Harnessing gas for new growth

Natural gas promises to play an important role in driving future

growth. We have completed our first full financial year as a

natural gas producer in Mozambique. Sasol Petroleum

International (SPI) maintained steady gas production in

Mozambique's Temane field and is set to become a reliable

and profitable gas producer.

While Sasol's proven gas reserves, according to the definitions

of the US Securities and Exchange Commission, have

remained unchanged, we can report significant increases in

our access to combined proven and probable reserves in

Mozambique. SPI entered into a new agreement with the

Government of Mozambique to commence exploration

of a large offshore block east of the Temane and Pande

fields in the year ahead.

The introduction of natural gas to customers in South Africa's

industrial heartland has benefited Sasol Gas. This business

increased its sales volumes by 71% largely on the strength of

introducing natural gas to established and new external

customers, as well as our Sasolburg and Secunda plants.

Compared with developed countries, South Africa is a small

consumer of natural gas as a percentage of its total energy

requirements. This presents Sasol Gas with opportunities to increase

sales of environmentally preferred natural gas.

This potential could be boosted if South African power producers

and consumers exploit the benefits of using gas for cost-competitive

and environmentally preferred co-generation, a technology for the

concurrent generation of steam and electricity in industry.

“Through specific empowerment programmes under way in our South African

businesses, Sasol is well set to meet its transformation challenges …”

18

Chemicals

Growing our polymers portfolio

Besides our world-scale South African and Asian polymer expansion

projects, we have eased the pace of our large-capacity chemical

expansion programme. While we shall continue to evaluate

chemical opportunities that meet our investment criteria, the group

is moving into an exciting era of expansion in GTL ventures, which

should also provide chemical expansion opportunities.

Sasol Polymers remains a strong performer and posted a record

earnings contribution on the strength of higher international

polymer prices, as well as cost reduction and improved

efficiencies. Once the two new Project Turbo-related polymer

plants are completed in the year ahead, this capacity – along

with the new capacity following two other plant expansions – will

increase our global polymer capacity by about 80% to about

1,5 million tons. This augurs well for Sasol Polymers' plans to

significantly increase future profit streams.

Through Sasol Polymers Germany, we are developing the Arya

Sasol joint-venture polymer facilities at Bandar Assaluyeh, Iran, in

partnership with that country's National Petrochemical

Company. As a 50% partner in Arya Sasol, these new investments

will provide us with an additional 500 000 tons per annum (tpa)

of ethylene and 300 000 tpa of polyethylene. Most of this

polyethylene will be targeted for sales to customers in China,

South-East Asia and Africa.

Planning to sell surfactants operations

On 1 August 2005, we announced our intention to dispose of much

of the assets we acquired in 2001 from RWE-DEA, subject to fair

value being secured. While we shall retain the German-based assets

of Sasol Solvents, as well as our South African comonomer

activities, we plan to sell the international surfactants and inorganic

speciality businesses of Sasol Olefins & Surfactants.

It has been a pleasure and a privilege for us to develop

relationships with the excellent people in these businesses over

the last four years. We are grateful for the contributions they have

made to strengthening this business and to ensuring that it is

poised for success and growth.


Gearing for the GTL era

An exciting development in our oil and gas portfolio is our

ambition to be a key player in the world's emerging GTL industry.

Through Sasol Synfuels International (SSI) and our joint venture

with Chevron, Sasol Chevron, we are pioneering the international

GTL industry at Ras Laffan, Qatar, with the construction of the

first-phase (34 000 b/d) Oryx GTL plant in partnership with

Qatar Petroleum (QP).

SSI and QP expect the Oryx GTL plant to start producing

GTL diesel and GTL naphtha for the international market

during 2006. Sasol Chevron and QP plan to increase the installed

GTL capacity at Ras Laffan in the future by about 195 000 b/d

by expanding the Oryx GTL plant and building an integrated

GTL plant.

In April 2005, Chevron Nigeria Limited (CNL) and the National

Nigerian Petroleum Corporation (NNPC) awarded the

US$1,7 billion engineering, procurement and construction

contract to the multinational Team JKS consortium for a GTL

plant at Escravos, Nigeria. While this plant will be owned and

operated by NNPC and CNL, Sasol will provide technology and

operating expertise, as well as 50% of the risk-based project

finance required by CNL for this venture. Plant start-up currently

is targeted for 2009. This GTL plant will use the Sasol Slurry Phase

Distillate™ (Sasol SPD™) process to produce GTL diesel, GTL

naphtha and some liquefied petroleum gas.

Based on the Sasol SPD™ process, there is potential for Sasol and

its partners to install a global GTL capacity of about 450 000 b/d

by 2014. To this end, we are holding discussions with Australia,

Iran and other gas-rich countries.

Pursuing CTL studies for China

The growth of emerging economies, along with continuing

concerns about high crude oil prices and security of energy

supplies, has revived interest in CTL conversion technology,

particularly Sasol's coal-based Fischer-Tropsch technology.

Sasol and a Chinese consortium are undertaking a pre-feasibility

study for the potential development of two CTL plants in China

early in the next decade.

19

The surfactants business, however, is not integrated to the extent

Sasol requires and, from a portfolio management perspective,

the proceeds arising from their sale will be better utilised to

reduce our gearing, or to advance our GTL ambitions, which

leverage Sasol's proprietary technology and are core to our

future growth objectives.

Sasol Solvents released sparkling results for the year, while both

Sasol Nitro and Sasol Wax have posted solid results.

Technology

Maintaining focused innovation

We continue to invest substantially in programmes to advance those

core petrochemical processes that form the bastion of our

competitive advantage. We are advancing the next generation of our

GTL technology and are seeking opportunities to leverage chemicals

expansion in the process. Our project management resources are

being bolstered in anticipation of future projects, particularly those

related to offshore GTL and potential CTL ventures.

Sustainable development

Sustainability framework

Building our commitment

Sasol remains in the top quartile of the international Dow-Jones

Sustainability Index for our industrial category. It also is pleasing

that our efforts to improve our sustainability reporting and

increase transparency on our economic, social and environmental

challenges were again acknowledged when, in June 2005, we

jointly won the best sustainability report award of the Association

of Chartered Certified Accountants.

In 2004, we were one of the first companies to be listed on the

socially responsible investment index (JSE SRI) of the JSE Limited

(JSE). This year, we were ranked in the five top performers of the

22 high-impact companies listed on the JSE. In addition, we

continue to advance a worldwide Responsible Care programme

for our fuel and chemical interests, and uphold our commitment

to the tenets of the Global Compact as a signatory to this United

Nations initiative.

Economic development

Unlocking wealth in Africa and the Middle East

Sasol is a major contributor to economic development in

South Africa and, increasingly, also in other African countries

and the Middle East.

In South Africa, our operations sustain about 170 000 jobs,

directly and indirectly, which accounts for about 2% of the formal

employment sector. We contribute about R40 billion (4%) to

national gross domestic product (GDP) and save the country

more than R30 billion in foreign exchange. Sasol also remains the

country's single largest industrial investor, with our R24 billion

invested over the last four years equating to almost 90% of South

Africa's total foreign direct investment over the same period.

Economists estimate that our US$1,2 billion investment to

develop the Temane and Pande gas fields and to pipe natural gas

to South Africa has enabled Mozambique to increase its GDP by

about 20%.

This contribution to Mozambique's economic development is

vital at a time when African leaders are engaged in new initiatives

to reduce poverty and promote further socioeconomic

development. During the year, in addition to providing a portion

of the royalty obligation by way of gas in kind, Sasol also paid

R19 million (US$3 million) to the Government of Mozambique in

the form of taxes and royalties. Our operations in Mozambique,

directly, have created about 280 permanent jobs.

Elsewhere in Africa, the licensing of our proprietary Sasol SPD™

process to CNL and NNPC for the Escravos GTL plant will begin to

contribute to the Nigerian economy after the plant's start-up in

2009. Our joint-venture investments in the Oryx GTL and Arya

Sasol Polymer projects will contribute to economic development

in the Middle East Gulf region.

Human capital

Nurturing talent for growth

Our substantial investment in employee training and development

entails striving to be an employer of choice that offers safe,

stimulating and rewarding workplaces and career opportunities.

“An exciting development in our oil and gas

portfolio is our ambition to be a key player

in the world’s emerging GTL industry”

20

We invested R172 million in employee training and development,

most of which was spent in South Africa, Germany, Italy and

the USA. We also are transferring and developing skills in

neighbouring Mozambique. We intend to replicate this

commitment whenever we invest in other economies, such

as Qatar and Nigeria. Our successful bursary programme

continues to gain momentum and, in line with South Africa's

social transformation, we are allocating more than 62% of

our undergraduate bursaries to students from historically

disadvantaged groups.

Waging war on Aids

The Sasol HIV/Aids Response Programme (SHARP) has been

introduced to all our businesses in South Africa, as well

as neighbouring Mozambique. SHARP is an integrated

approach focused on sustaining positive measures to reduce

the rate of HIV/Aids infection throughout our company, and

on extending the quality of life of infected employees by

providing managed healthcare solutions. In addition, SHARP is

benefiting communities surrounding our Southern African

operations, particularly in the Sasolburg, Secunda and

central Mozambique regions.

Social investment

Furthering social upliftment

Sasol is one of South Africa's largest corporate investors

in social upliftment and development. Most of this investment

is channelled into education and training, capacity building

and job creation, health and welfare, environmental education

and conservation, and arts and culture.

In South Africa, alone, we invested almost R47 million during

the year in social investment, which was complemented

by a further investment of R2,5 million in Mozambique.

We also contribute to community programmes in Europe,

the USA and Asia through our international operations.

In addition, Sasol contributed funds to the relief programmes

that followed the South-East Asian tsunami disaster of

December 2004.


21

Foreign shareholdingAttracting new foreign investors

Foreign investors continue to invest in Sasol. By year end,

foreign shareholding had risen to 33% of total ordinary

shares issued.

Since listing on the New York Stock Exchange (NYSE) in

April 2003, the price of a Sasol American depositary receipt

(ADR) continues to appreciate. On the day of our NYSE listing,

a Sasol ADR closed at US$10,73. In July and August 2005, a Sasol

ADR was trading in the region of US$34,00, a threefold increase.

ProspectsSustaining growth through new capacity

Forecasting exchange rates, oil and petrochemical prices

and energy costs remains difficult. We are, however,

expecting satisfactory growth in headline earnings in the

year ahead.

Our plans to increase production capacity in the year ahead as

the Oryx GTL, Arya Sasol Polymer and Project Turbo plants begin

to build up production and sales are well known. The income

streams from these investments will benefit the financial year

beginning on 1 July 2006.

AcknowledgementsLooking back with appreciation

This is my final chief executive's report and I wish to express

a special appreciation this year. Not only do I thank our

employees worldwide for their continued hard work and

contribution to Sasol's good results, but I also thank them for

contributing to many group successes during my stimulating

and enjoyable tenure as chief executive.

I also thank our many valued customers, suppliers and

business associates worldwide for their continuing goodwill

and support. We look forward to working with you in the

year ahead.

Welcoming Sasol’s new leaders

On 1 July 2005, I handed the reins to the group's new chief

executive, Pat Davies, to lead Sasol in an exciting new phase of

growth and innovation. To strengthen our leadership, the board

of directors also appointed Trevor Munday to the newly created

post of deputy chief executive. Both Pat and Trevor bring much

experience and insight to our executive team. I thank them for

their significant contributions, support and the constructive

relationship we enjoyed over many years.

Sasol is in capable hands. I believe our talented leaders and

employees around the world will continue to safeguard our

values, work for growth and improvement, and uphold the

principles of good corporate citizenship.

Acknowledgements

I thank Paul Kruger for his support as chairman over the past nine

years. I have appreciated the guidance and sound advice from

him and our non-executive board members during my tenure as

chief executive. I thank them all.

Pieter CoxChief executive (until 30 June 2005)

“Sasol’s contribution to Mozambique’s economic development is vital at a

time when African leaders are engaged in new initiatives to reduce poverty …”

Fischer-Tropsch process

Natural gas

Syngas

Coal, crude oil and natural gas sold to open market

Coal

Syngas productionExploration and production

Fisc

her-Tropsch process

Coal, crude oil and natural gas

Explorationand production

Natural gas Gas reforming

Coal Gasification

Syngas production

22

Exploiting the benefits of Fischer-Tropsch technology

Exploration and production

Sasol obtains its raw materials (coal, gas and crude oil) through its

coal-mining activities and oil and gas exploration and production

activities, which are supplemented by purchases from the open

market. Some raw materials are sold directly to external markets.

Syngas production

Using steam and oxygen at high temperatures, coal is gasified and

natural gas reformed to produce synthesis gas (syngas, a mixture

of carbon monoxide and hydrogen).

Fischer-Tropsch conversion

Using a catalyst, the Fischer-

Tropsch (FT) reaction converts

syngas into a range of

hydrocarbons – co-products, fuel

and chemical components.

Low- and high-temperature

operating modes provide different

product splits.

sasol’s integrated business model

Crude oil

Feedstock

Co-products

Chemical components

Refine and blend

Chemical products

Fuel productsFuel components

Chemical processes

Consumer

Wholesale

Commercial

Open market

3rd party producer

Markets

Market

Chemical components

Refine and blend

Chemical products

Fuel productsFuel components

Co-products

Chemical processes

23

Fuel products

In the liquid fuels business, synthetic fuel

components are upgraded and marketed

together with conventional fuels

produced in a refinery from crude oil.

Co-products

Coal gasification and the FT processes also

produce co-products for recovery and

beneficiation. These include ammonia,

crude tar acids and sulphur.

Chemical products

Chemical intermediates from the FT process are

separated, purified and, together with conventional

chemical raw materials, converted into a range of final

products – polymers, solvents, olefins and surfactants,

waxes and other products.

Sasol markets products directly to

the consumer, as well as to

commercial and industrial

customers, thereby integrating its

upstream and downstream activities.

24

operational review oil and gas businesses

• Healthy profit contribution of R1 247 million despite lower sales.

• Mining has entered a new paradigm following the introduction of natural gas and reduced group coal demand.

• Exports continue to perform well and benefited from higher global prices.

• Work is progressing towards our empowerment deal with Eyesizwe Coal.

• New Sasolburg mine is set to go into production in November 2005.

Sasol Mining continues to harness technology to improve safety and productivity.

Sasol Mining

Rising to meet new challengesIn the wake of Sasol's introduction of Mozambican natural gas to

inland gas customers and the Sasolburg and Secunda plants

during the previous year, Sasol Mining is building a new business

model based on reduced volumes of coal production. This

transformation has impacted on results, particularly sales

volumes, productivity and cost containment.

In the previous six years, Sasol Mining was a star performer as a

result of successful business renewal initiatives launched in the 1999

financial year. These initiatives were aimed at improving employee

morale and safety, productivity, product quality and technology

utilisation, while also reducing workplace injuries, cost per ton and

underground dust levels. The benefits of renewal led to an overall

sustained growth in profit contribution, as well as productivity (an

average of 14% a year for machine productivity).

With internal annual coal demand decreasing within a changing

mining environment, Sasol Mining launched an initiative in 2003,

called Project 2010, to guide it into the future. The division has

set its 2005 financial, production and related business metrics as

a baseline for future comparative reporting.

Delivering profit growth despite lower sales

Further increases in international coal prices helped Sasol Mining to

soften some of the impact of selling less coal to the Sasolburg and

Secunda plants. Turnover dropped marginally to R5 215 million,

but operating profit increased by 4% to R1 247 million, mainly on

the strength of disciplined production and cost management, as

well as higher margins achieved in the stable-volume export

business. Total production for the year dropped by 9% from

52,4 million tons (Mt) to 47,7 Mt.

Improving without volume benefits

We have a distinctive challenge as one of the main Sasol

businesses: to achieve continuous improvement and a

sustained contribution to group profit without the advantage

of shorter-term growth opportunities.

25

Following the introduction of natural gas during 2004, coal-

mining at Sasolburg has been downscaled from an annual rate

of about 6 Mt to around 2 Mt. In addition, with Sasol Synfuels

using natural gas as a supplementary feedstock, the Secunda

operations can be expected to use natural gas, rather than coal,

to expand future production.

We produced 52,4 Mt of coal at Sasolburg and Secunda in the

previous year and, by the end of the 2006 financial year, annual

production will have dropped to around 45 Mt. Our shorter-term

financial growth, therefore, will stem mainly from productivity

improvements and cost reductions.

Moving Project 2010 forward

For these and related optimisation reasons, we implemented

our Project 2010 business enhancement strategy and

revised operating framework two years ago. This initiative is

founded on:

• improving safety, health and environmental performance;

• supporting South Africa's socioeconomic transformation to

ensure Mining Charter compliance;

• winning with people;

• pursuing continuous improvement;

• strengthening product and market optimisation and logistics;

and

• optimising reserve utilisation.

Consolidating our Secunda operations

To support Project 2010, we have been consolidating our

Secunda operations. The lower Secunda production volumes have

presented an additional challenge at a time when we have been

working successfully to reduce unit cost. Since commencing

business renewal and optimisation in the 1999 financial year, unit

cost has reduced by 7% in real terms.

Sasol Mining operational highlights

2005 2004 % change

Total sales Mt 46,5 51,1 (9)

Total production Mt 47,7 52,4 (9)

Sales per employee t 6 535 6 687 (2)

Sasol Mining financial highlights

2005 2004 % change

Turnover Rm 5 215 5 244 (1)

Operating profit Rm 1 247 1 194 4

Capital items Rm 23 17

Operating margin % 24 23

Contribution to:

group operating profit % 9 13

attributable earnings Rm 801 837 (4)

Cash flow from operations Rm 1 689 1 714 (1)

Our Syferfontein strip-mining operations reached the end

of their economic life, and our underground complex adjacent

to the Secunda factories was consolidated further. In addition,

the Kriel South Project – aimed at optimising effectiveness at

Secunda – remains on schedule and budget, and the first coal

from Anglo Coal was delivered on 1 July 2005. As a result of

this project, entailing a swap of reserves for supplies between

the two mining companies, Anglo Coal will supply Sasol Mining

with 3,7 Mt of coal during the 2006 financial year and thereafter

at a rate of 5 Mt a year, and we shall further reduce our Secunda

production volumes.

We have defined our customer profiles and markets

more clearly. At Secunda, we are focused on three main

customers: Sasol Synfuels; exports through Richards Bay

Coal Terminal to power generators and Eskom, South Africa’s

state-owned power company. The established underground

operations of Bosjesspruit, Brandspruit, Middelbult and

Syferfontein serve Sasol Synfuels. The Twistdraai operations

have been consolidated to serve the export business, while

also producing middlings for Sasol Synfuels. The plan is to

ensure that Twistdraai no longer supplies run-of-mine coal

to Sasol Synfuels.

The Sigma-Wonderwater strip-mining operation near

Sasolburg is being closed and rehabilitated. In its place,

we are developing the Sigma-Mooikraal mine to supply the

2 Mt of utility coal required for the Sasolburg power and

steam plants. Situated near Sasolburg, Sigma-Mooikraal is

scheduled to commence supply in November 2005.

In the year ahead, we shall continue to work with Eyesizwe Coal,

our lead empowerment partner, towards introducing BEE

ownership to our mining operations. We intend to conclude the

terms of an empowerment deal in the year ahead.

26


Sasol Synfuels• Renewed commitment to improve safety performance.

• Strong contribution of R5 310 million to earnings despite lower production.

• Cost-optimisation drive unleashes new benefits.

• Complex Project Turbo enters final construction phase.

• Ongoing investments to reduce environmental footprint.

Pleasing results despite lower production

Prevailing high oil prices and other macroeconomic influences

were favourable for Sasol Synfuels, along with our focus on

safety, optimising cost and improving production planning.

These benefits, however, were offset partially by lower

production following a few non-scheduled shutdowns, the most

severe of which occurred in January 2005 after unusually high

rainfall, the highest recorded in Sasol Synfuels' history. Flooding

on the eastern site kept plants offline for up to 14 days because

several electrical motors were damaged.

Despite the 2,7% drop in production from a record 7,67 Mt to

7,46 Mt, Sasol Synfuels remained the leading contributor to

group earnings.

Sustaining our growth



R7 560 million.

Our rand/ton cost, however, increased by 9,4% mainly because

unscheduled shutdowns reduced volumes. We continue to work

hard to reduce unit cost through our five-year operational

excellence strategy.

Our continuing focus on reducing our staff complement

through natural attrition enabled us to increase productivity by

almost 0,5% from 1 357 t to 1 364 t per capita despite lower

total production.

Further improvements to Fischer-Tropsch technology

We continue to exploit new opportunities to streamline

production and enhance economy of scale. In the previous

financial year, we identified an opportunity with Sasol Technology

to operate some of the Sasol Advanced Synthol™ (SAS™)

reactors in a more efficient configuration, and this yielded higherSasol Synfuels is close to completing Project Turbo at Secunda in South Africa.

27

outputs and greater operational flexibility. We exploited further

opportunities to enhance the operations of all nine SAS™

reactors and achieved improved efficiencies.

We completed our first full year of using Mozambican natural gas

as a supplementary feedstock to Secunda coal. Year-on-year,

natural gas consumption increased by 320%, from a low base,

and we have proven that this supplementary feedstock enables us

to achieve greater production flexibility and higher gas loads.

These benefits offset the disadvantage of natural gas being more

expensive than coal-derived gas.

Preparing for cleaner fuels

The R13,5 billion Project Turbo clean-fuels and polymer-

expansion project in partnership with Sasol Polymers is advancing

well towards completion. This is the largest and most complex

project undertaken at Secunda since building the original Sasol

Two and Sasol Three plants. Our final Turbo-related production

units, including the new selective catalytic cracker, are expected

to start up in March 2006.

In partnership with the Sasol Liquid Fuels Business, we shall

be compliant with South Africa's new fuel specifications in

January 2006. This means all petrol produced from natural gas

and coal will be unleaded as from 1 January. Our low-sulphur

Secunda diesel already meets the new South African

specifications for substantially reduced sulphur in diesel.

Supporting renewed safety drive

We are implementing Sasol's groundbreaking safety charter and

safety improvement plan with the aim of eliminating work-

related accidents and injuries. We are confident that our

employees and their representative trade unions will work closely

with management in the year ahead to strengthen our safety

culture and lower our recordable case rate.

The spirit of renewed safety commitment extends to our

environmental programmes and, in particular, our sustained drive

to reduce emissions to air for each ton of product. This drive is

underscored by our commitment of more than R4 billion to

Sasol Synfuels operational highlights

2005 2004 % change

Total sales Mt 7,45 7,92 (5,9)

Total production Mt 7,46 7,67 (2,7)

Production per employee t 1 364 1 357 0,5

Sasol Synfuels financial highlights

2005 2004 % change

Turnover Rm 18 684 15 993 17


Capital items Rm (110) (3)


Contribution to:


attributable earnings Rm 5 310 3 696 44

Cash flow from operations Rm 8 504 6 743 26

various environmental enhancement programmes over the next

10 years. We shall execute these programmes in parallel with our

business growth programme.

Targeting further emissions reduction

South Africa's Air Quality Act of 2005 sets stringent standards

for ambient concentrations of the priority air pollutants.

Sasol began work several years ago to measure and reduce

emissions of these priority pollutants. Despite the high costs

of these projects, we are well prepared to address the

air-quality issues, which will take several years to implement

due to the scale and complexity of the projects.

Hydrogen sulphide emissions at Secunda have been

reduced significantly in recent years following an investment

of more than R400 million to increase the recovery and

processing of sulphur. We have committed to make further

improvements by 2008. We are focusing on opportunities to

lower emissions of low-level non-methane hydrocarbons

(volatile organic compounds) and are advancing a series of

investments to this end.

In addition, we are committed to improving waste management

and are executing capital projects with a combined value of

almost R800 million. In one major initiative, we are developing a

R520 million waste recycling facility for completion before the

end of 2005. In another initiative, we are spending R150 million

to rehabilitate a waste site for storing black products. This project

will take several years to complete.

Improving our sound fundamentals

Our strategic fundamentals are sound, and augur well for the

year ahead as we continue to focus on opportunities to improve

volumes, good safety practices, competitive skills and both

human and plant productivity.

Specific programmes are being implemented to improve

operational excellence over the next five years. This will be the

foundation for both growth and environmental programmes that

are planned for the next decade.

28


Maintaining growth and innovation

The Sasol Liquid Fuels Business (LFB) performed well and posted

a strong profit on the strength of higher refining margins. The

financial impact of lower-than-planned production was offset by

the sustained efforts to contain costs, improve efficiency and

build brand awareness.

Other operational highlights include:

• the establishment of mutually beneficial individual supply

agreements with each of the other major oil companies

operating in South Africa; and

• our drive to expand market share in the South African liquid

fuel wholesale and retail markets through marketing and

promotional initiatives, including Sasol's expanded corporate

sport sponsorship programme.

The combination of higher prices and sales enabled Sasol

LFB to increase turnover by 26% from R18 851 million to

R23 712 million, while operating profit rose 33% from

R1 429 million to R1 900 million largely on the strength of

better refining margins. The South African liquid fuels market

grew by about 3% during the year.

We also are marketing and selling on behalf of Sasol Petroleum

International the condensate recovered by the Temane natural

gas central processing facility in Mozambique.

Expanding retail network and market share

Consumers have been responding favourably to our retail

network expansion programme. During the year, 73 new

Sasol- and Exel-branded retail service stations were opened

and another 25 were under development at year end. To date,

Sasol LFB has established 345 Sasol- and Exel-branded retail

service stations around South Africa. These facilities contributed

appreciably to our increased market share, which rose to 7%

for the combined South African petrol and diesel market.

• Operating profit up 33% on strength of higher refining margins, cost discipline and retail expansion, with 146 Sasol convenience centres and 199 Exel service stations operating at year end.

• R600 million Natref clean-fuels project is nearing completion.

• Planned Uhambo Oil joint venture with Engen awaits Competition Tribunal approval.

• Improved range of turbo™ fuels launched.

• Supply agreements signed with other oil companies operating in South Africa.

Sasol Liquid Fuels Business

Sasol’s convenience centre rollout established critical mass during the year.

29

Significantly, 35% of the Sasol- and Exel-branded service stations

are operated by historically disadvantaged South Africans. It is

our intention to franchise at least 50% of all future service

stations to historically disadvantaged people in line with a wider

national programme to economically empower a far greater

percentage of South Africans.

Creating a world-class retail experience

The distinctive Sasol delight!™ convenience stores with bakeries

at our Sasol convenience centres (SCCs) have been exceptionally

well received by consumers around South Africa. Based on market

research findings, our Sasol delight!™ facilities are meeting and

exceeding their retail performance criteria.

We commenced our SCC rollout programme in January 2004

determined to create a new retail service station experience in

South Africa and to emulate world-best practices. We believe we

have met our initial SCC design and performance targets.

The SCC franchisees, in general, have been performing well and

their combined turnover has been higher than expected. Our

retail rollout strategy is not driven by growth purely for growth's

sake, which can be disruptive to our industry. Since launching our

SCC rollout programme, we have focused successfully on areas

where there is a real market need for these facilities within the

ambit of responsible development and competition.

In April 2005, we held the ceremonial opening at Sasolburg of our

first integrated truck service centre, which we regard as a first of

its kind in South Africa. This centre offers refuelling, internal and

external tanker washing and ablution facilities, along with a

restaurant, convenience store and secure parking to benefit

transport companies operating in the region.

Besides our well-established programme of sponsoring motor

sport in South Africa, including the annual Sasol Rally in the

province of Mpumalanga, Sasol is sponsoring national rugby

Sasol Liquid Fuels Business financial highlights

2005 2004 % change

Turnover Rm 23 712 18 851 26


Capital items Rm (63) –


Contribution to:


attributable earnings Rm 1 201 943 27


(including the Springboks), the national under-23 soccer team,

Amaglug-glug™, and the South African Olympics team. The 2005

Sasol Rally had 71 participating teams and drew more than

30 000 live spectators.

We also sponsor the Exel cycling team, which has a strong focus

on developing top-class cyclists from historically disadvantaged

groups. The motor sport sponsorship specifically focuses on

developing people from disadvantaged groups as well.

Sustaining product innovation

The launch of improved formulations of Sasol turbodiesel™

and Sasol turbo™ unleaded petrol contributed to our pleasing

growth in the retail market. Consumers have responded

enthusiastically to these new products, particularly Sasol

turbodiesel™, which is considered to be the cleanest diesel

currently being sold at South African forecourts. This diesel

already exceeds the new South African fuel specifications to be

introduced in January 2006.

For several years, we have been supplying a semi-synthetic jet

fuel to international airlines operating to and from Johannesburg

International Airport. We are working with international airlines

and aviation officials, as well as jet-engine manufacturers, to

obtain approval to supply a fully synthetic jet fuel, which would

be manufactured at Secunda from a combination of coal and

natural gas feedstock.

Waiting for approval of joint venture

The planned Uhambo Oil Limited (Uhambo) joint venture

between the liquid fuel interests of Sasol and Engen,

predominantly owned by Petroliam Nasional Berhad (Petronas)

of Malaysia, was recommended for conditional approval in May

2005 by South Africa's Competition Commission. It has been

referred to the Competition Tribunal for final review and

approval. The tribunal hearing is set for October 2005.

Sasol Liquid Fuels Business operational highlights

2005 2004 % change

Crude oil processed * M m3 3,18 3,1 2

White product yield

(% of raw material) 89,5 90,7 (1)

Total liquid fuel sales M m3 9,60 9,32 3

Fuel and bitumen exports M m3 0,9 0,7 29

* Based on the 63,6% share held by Sasol in the Natref crude oil refinery.

30

Should the Uhambo deal proceed, Sasol and Petronas will

partner with two black economic empowerment (BEE) groups,

Worldwide African Investment Holdings (Worldwide) and

Tshwarisano LFB Investment (Tshwarisano), to create the largest

liquid fuel business in South Africa. The business will have the

annual capacity to produce about 13 million cubic metres (m3)

of white petroleum products, mostly comprising petrol, diesel

and kerosene.

Sasol and Petronas – Malaysia's national oil company – will each

own a 37,5% share in Uhambo. The empowerment partners,

Worldwide and Tshwarisano, will each hold a 12,5% share.

Subject to final approval, Uhambo will comprise the following

key operations:

• Engen's Enref oil refinery at Durban;

• Sasol's share in the Natref oil refinery at Sasolburg;

• a network of about 1 600 service stations currently operating

under the Engen, Sasol, Exel and Zenex brands;

• Engen and Sasol's liquid fuel operations in sub-Saharan Africa,

including Botswana, Burundi, Democratic Republic of the

Congo, Ghana, Kenya, Lesotho, Malawi, Mozambique,

Namibia, Swaziland, Tanzania, Uganda, Zambia and

Zimbabwe; and

• the purchase and blending of liquid fuel components produced

by Sasol Synfuels at Secunda.

The planned Uhambo company will be looking to sell its output

to its own marketing network and to the other oil companies

operating in South Africa. Some volumes will be exported,

mostly into Africa.

Engen currently operates more than 1 250 Engen- and

Zenex-branded service stations in South Africa. These will be

complemented by a further 350 Sasol- and Exel-branded

service stations. The planned joint venture's head office

will be in Cape Town.

Preparing our refinery for cleaner fuels

The Natref oil refinery at Sasolburg, owned by Sasol and Total

South Africa, continues to perform well and throughput increased

to 3,2 million m3. Total liquid fuels production, however, was

negatively impacted by several unscheduled shutdowns at our

Sasolburg and Secunda production facilities. Fortunately, lower

production did not impact on domestic supply agreements, but

compelled us to limit our targeted export volumes.

Natref's excellent safety record was marred by a tragic incident

that killed two people in a fire at the dispatch area.

The R520 million Natref clean-fuels project is progressing

according to schedule and on budget. In partnership with Total

and Sasol Technology, we are expanding the Natref diesel

hydrotreater to enable the production of a low-sulphur diesel.

The Natref gasoline processing units are being modified to enable

the termination of leaded-petrol production.

Once completed in October 2005, this investment will ensure

Natref's compliance with South Africa's new fuel specifications

that become mandatory in January 2006. As a result of the new

fuel specifications, the production and marketing of leaded petrol

will be discontinued and the maximum sulphur content of diesel

will be reduced from 3 000 parts per million (ppm) to 500 ppm.

Building a new supply dispensation

As reported last year, the long-serving Main Supply and Blue

Pump agreements between Sasol and the other oil companies

sasol liquid fuels business

31

operating in South Africa expired at the end of 2003. The

expiry of these agreements paved the way for a more liberalised

dispensation in the South African oil industry and brought

new manufacturing and supply challenges to Sasol's LFB.

During the year, we successfully negotiated and signed

individual supply agreements with each of the major oil

companies operating in South Africa. In our view, these

arm's-length agreements with member companies of

The South African Petroleum Industry Association augur

well for the development of the country's liquid

fuels industry.

We formed an empowerment joint venture, Namibia Liquid

Fuel, with a Namibian company to supply 50% of Namibia's

white product requirements (about 500 000 m3 a year) for

at least three years. In addition, we entered into a major

new supply agreement with the Government of Lesotho.

We met all term supply requirements throughout the year,

and are committed to remaining a reliable supplier in the

year ahead as we continue to focus on building strong

relations with our industry peers. We also signed a new

agreement with South Africa's state-owned gas-to-liquids

fuel producer, PetroSA, in May 2005 to increase our

purchases of liquid fuels from this company.

Our overland and marine exports of fuel were sustained

throughout the year and volumes grew by 20% despite

production interruptions at Sasolburg and Secunda. Most of

our fuel exports were supplied to customers in Southern African

Development Community countries.

Up until 31 March 2005, we sold all our base bitumen exclusively

through Tosas. The black-product value chain, however, was

redesigned and we started to market base bitumen directly with

effect from 1 April 2005.

Rising to environmental opportunities

In keeping with Sasol's wider commitment to sustainable

development and the international Responsible Care

programme, we remained focused on opportunities to reduce

environmental impacts and maintain our ISO 14001

management system. The rapid rollout of our new retail service

stations has been founded on a comprehensive environmental

programme, which includes a mandatory environmental impact

assessment for each new retail site.

A disciplined approach is maintained when designing,

installing and maintaining underground fuel tanks at retail

forecourts to prevent fuel from leaking into soil and aquifers.

In addition, we are working to ensure our road tankers'

emissions are restricted and that our vehicles are used in a

more eco-efficient manner.

Natref received a renewed environmental permit from the South

African Government, which will be valid until the end of 2007. In

addition, the refinery is installing a sour-water stripper as part of

a wider commitment to reduce future levels of sulphur dioxide

emissions to air.

Sasol's South African bio-diesel study is advancing and has

been formally approved by the group executive committee to

proceed to a full-scale feasibility study. This study is aimed at

establishing a technically and economically feasible process for

producing a high-performance diesel from a renewable source

such as soybeans.

32


Natural gas sparks new growth momentum

Sasol Gas performed well, having successfully introduced natural

gas to all inland customers who were targeted for conversion

from coal-based hydrogen-rich pipeline gas to the supply of

natural gas produced in the Temane field of Mozambique.

Natural gas supply from Sasol Petroleum Temane (SPT), a

Mozambican subsidiary of Sasol Petroleum International (SPI), was

sustained at volumes required by the market. Most customers who

were converted to natural gas have expressed satisfaction with the

performance of the natural gas product and service received.

Sasol Gas achieved a substantial 71% increase in sales volumes

from 50,7 million gigajoules (GJ) to 86,9 million GJ, mostly on

the strength of selling a combined 38,5 million GJ to the Sasol

plants at Sasolburg and Secunda. Gas sales to external customers

increased by 2,8% from 42,9 million GJ to 44,1 million GJ.

Gas optimisation initiatives at larger customers were offset by

new sales to new customers.

Sasol Gas benefited from higher selling prices, which are based

on indices linked to domestic inflation and alternative energy

prices. Accordingly, turnover increased by 58% from

R1 522 million to R2 404 million. Operating profit rose by 141%

from R387 million to R932 million, because of the higher sales

volumes and prices.

Targeting growth for gas

Now that the Sasolburg plant has converted to natural gas and

the Secunda plant most likely will increase gas volumes gradually,

most of Sasol Gas' shorter-term growth will be determined by its

ability to attract new external gas customers, along with its

success in working with other energy stakeholders to develop

a gas-based co-generation market in South Africa.

Pipeline gas, including the 16,8 million GJ of methane-rich gas

produced at Secunda, accounts for less than 4% of South Africa's

total energy requirements. This is substantially lower than the

percentage achieved in more developed economies.

Sasol Gas • First full year of natural gas supply enables significant growth.

• Operating profit up by 141%.

• Sales volumes increase by 71%.

• Opportunities are being pursued to advance black economic empowerment.

• Co-generation and other growth opportunities are being explored.

Natural gas is providing Sasol Gas with a range of exciting growth opportunities.

33

Maintaining sound supply record

Reliability of supply to our customers was sound but deteriorated

relative to the previous year. In one case, unauthorised third-

party excavation work led to a severe pipeline gas leak and fire

at an industrial site in Centurion in August 2004. Fortunately,

no one was injured, and the damaged pipeline section and some

associated equipment were repaired and supplies to affected

customers restored within 38 hours.

We launched a comprehensive pipeline integrity management

initiative to ensure that regional and local authorities, including

emergency services, local communities and other stakeholders

along our pipeline routes, are better informed on the location of

underground gas pipelines and the importance of maintaining

pipeline integrity for safety, environmental and supply reasons.

Post-commissioning problems were experienced with the two

newly installed autothermal reformers at Sasolburg. These

problems caused syngas supply interruptions to Sasol Nitro, Sasol

Solvents and Sasol Wax. Innovative cooperation and gas mixture

configuration by Sasol Infrachem, which operates and maintains

the reformers on behalf of Sasol Gas, enabled Egoli Gas in

Johannesburg to continue without interruption.

On the safety front, our recordable case rate (RCR)* of two is a

major disappointment, despite most of the cases being relatively

minor injuries. In support of a wider Sasol initiative in South

Africa, we are implementing a comprehensive safety

improvement plan.

Seeking empowerment opportunities

Our drive to promote BEE in the South African gas sector is

gaining momentum. The 49:51 Sasol Gas joint venture with the

Durban-based BEE company of Coal Energy & Power Resources,

Spring Lights Gas, continues to perform well. This company

increased its sales volumes from 2,7 million GJ to 3 million GJ.

Another BEE potential opportunity exists for the cross-border

transmission pipeline linking the Temane central processing

facility to the Sasol Gas network at Secunda. This 865-km

pipeline is owned and operated by Republic of Mozambique

Pipeline Investments Company (Rompco), formerly a wholly

owned Sasol subsidiary company. The South African Government

– through iGas, a member of the state-owned Central Energy

Fund group of companies – acquired a 25% stake in Rompco in

July 2005.

iGas intends to use its 25% share to enable BEE participation in

the pipeline at a later date. The Mozambican Government has

expressed its intent to take up its option for a share of up to 25%

in Rompco, but no final commitment has yet been made.

The feasibility study with another BEE company, Umkhumbi We

Afrika of Mpumalanga, for the installation of a gas supply

network in the Nelspruit region, has been completed. The

findings indicate that the project, as originally envisaged, is not

feasible and a smaller-scale project is being considered.

Gaining recognition for gas project

The group's natural gas project and its project teams received

four awards during the year:

• the 2005 project management excellence award from Project

Management South Africa;

• the 2004 Project Finance deal of the year in the African oil and

gas category;

• the 2004 premium award from the International Association

for Impact Assessment; and

• a 2004 South Africa Technology Top 100 award.

Sasol Gas financial highlights

2005 2004 % change

Turnover Rm 2 404 1 522 58

Operating profit Rm 932 387 141

Capital items Rm – –


Contribution to:


attributable earnings Rm 517 487 6

Cash flow from operations Rm 1 197 476 151

Sasol Gas operational highlights

2005 2004 % change

Total gas sales M GJ 86,9 50,7 71

Sales per employee GJ 499 494 331 176 51

Cash fixed cost per GJ R 2,33 3,62 (36)

Number of unscheduled

supply interruptions 15 9 67

Number of reported gas leaks 4 2 100

* An RCR is the number of fatalities, lost workdays and medical treatments beyond first-aid cases for every 200 000 employee hours worked.

Note: A gigajoule (GJ) is a standard measure used for the heating value of any fuel gas supplied to customers. A joule is an international unit of energy defined as the energy produced from onewatt flowing for one second. Giga – denotes a measure of a billion (109). For gas, one gigajoule is equal to 0,96 thousand cubic feet under standard temperature and pressure conditions.

34


Upstream producer establishescritical mass

Sasol Petroleum International (SPI) has established critical mass

having enjoyed its first full financial year as a reliable producer of

natural gas in Mozambique. Having produced and sold – jointly

with its 30% partner, Empresa Nacional de Hidrocarbonetos de

Moçambique (ENH) – 77,1 million gigajoules (GJ) of natural gas

to Sasol Gas and a further 1,8 million barrels (b) of crude oil for

its own account through its 27,75% stake in Gabon's offshore

Etame field, SPI has become a positive contributor to group

profit. SPI's share of the gas production was 54 million GJ.

SPI increased turnover from R312 million to R841 million,

maintained a strong cash flow and recorded an operating profit

of R281 million. The group's investments since 1995 to fund SPI's

fledgling oil and gas exploration and production (E&P) interests

are starting to yield desired returns. SPI is set to be a sustainable

contributor to group profits as a result of its expected

continuation as a reliable and consistent supplier of natural gas

from Mozambique's onshore Temane and Pande fields. The Pande

field will not be used for production until the high pressure in the

Temane field drops and is comparable with the lower pressure of

the Pande field.

Maintaining stable Mozambican production

SPI – through its Mozambican subsidiary company of Sasol Petroleum

Temane (SPT) – maintained steady operations of the Temane central

processing facility (CPF), where we collect, clean and compress

natural gas before feeding it into the main transmission line linking

the gas fields to the Sasol Gas network at Secunda.

We also continue to explore for additional gas reserves in and

around the Temane and Pande gas fields as part of an exploration

licence that enables exploration across an onshore area of almost

17 000 km2. While gas proven reserves, according to the

definitions of the US Securities and Exchange Commission, have

remained unchanged, we can report significant increases in our

access to combined proven and probable reserves.

Sasol Petroleum International • Stable gas production sustained in Mozambique's Temane field.

• New gas exploration programme to commence off the coast of Mozambique.

• Sales volumes from Gabon’s offshore Etame oilfield increased by more than 20%.

• South African seismic data is being reappraised with BHP Billiton.

• Upstream integration opportunities being sought with Sasol Chevron and Sasol Synfuels International.

Sasol Petroleum International completed its first full financial year as acommercial gas producer in Mozambique’s Temane field.

35

Compared with international norms, SPI has established a good

success rate in Mozambique, with 60% of its promising seismic

prospects leading to commercially viable quantities of natural gas

after completing exploration wells.

Pursuing offshore gas exploration

Besides Temane and Pande, we have the right to explore otherMozambican gas fields and commenced a new cycle of seismicsurveys outside the Temane and Pande areas shortly before yearend. We intend to widen our exploration programme over thenext two years.

Following the signing of an exploration, production andconcession agreement with the Mozambican Ministry of MineralResources shortly before year end (which became effective on 1 July 2005), we plan to explore two offshore blocks east of thePande and Temane fields, Block 16 and Block 19. SPI is the 85%operating partner. Mozambique's national oil company, ENH,holds the remaining 15% share.

Reappraising South African seismic data

The seismic data gathered from block 3A/4A off South Africa'swest coast under a prospecting sublease agreement withPetroleum Agency South Africa and the Ministry of Minerals andEnergy has been processed and appraised. We have since decidedto partner with BHPBilliton to re-evaluate this data.

Sasol Petroleum International operational highlights

2005

Total gas sales (Mozambique) M GJ 54

Total condensate sales b-thousand 225

Total oil sales (Gabon) b-million 1,8

No comparisons are provided due to 2005 being SPI's first yearof profit contribution.

Oil and gas reserves (according to the definitions of the US Securities and Exchange Commission)

Crude oil and condensate Natural gas

(Millions of barrels) (Billions of cubic feet)

Consolidated operations Consolidated operations

Mozambique Other areas Total Mozambique Other areas Total

Proved developed and undeveloped reserves

Balance at 30 June 2004 – 7,7 7,7 1,438 – 1,438

Revisions 7,5 2,7 10,2 (25) – (25)

Extensions and discoveries (Avouma) – 1,0 1,0 – – –

Production (0,2) (1,6) (1,8) (45) – (45)

Balance at 30 June 2005 7,3 9,8 17,1 1 368 – 1 368

Proved developed reserves

At 30 June 2004 – 4,3 4,3 375 – 375

At 30 June 2005 3,1 4,7 7,8 386 – 386

Expanding Gabonese oil production

Further north in the Atlantic Ocean, we continue to focus

on our West African portfolio, which currently is concentrated in

the Gulf of Guinea. In the Etame oilfield off the coast of southern

Gabon oil is being produced at a rate of about 18 500 barrels

a day (b/d) at year end. The Etame 6H well was being drilled

at year end and was subsequently brought into production

during July 2005.

Elsewhere in the Etame licence area, we are involved in

developing the Avouma oilfield, discovered in June 2004.

It currently is scheduled to be brought into production

during the 2007 financial year. Two other exploration wells

were drilled and abandoned in southern Gabon. We are further

evaluating discoveries abandoned by previous operators in

the Dussafu block where we have a 50%-operated interest

following the failure of an exploration well in the first half

of the year.

Outside Africa, we continue to work closely with Sasol

Synfuels International and Sasol Chevron in their pursuit of

back-integrated gas-to-liquids (GTL) opportunities. SPI is

seeking opportunities to become an upstream partner in

supplying gas to plants based on Sasol’s integrated, three-step

GTL process.

Sasol Petroleum International financial highlights

2005*

Turnover Rm 841

Exploration cost expensed Rm 121

Operating profit Rm 281

Operating margin % 33

Contribution to group operating profit % 2

Cash flow from operations Rm 557

36


Preparing for start of GTL production

Sasol Synfuels International (SSI) is well on track towards

becoming a key player in the world's emerging GTL industry and

will be the first to enter the market with commercial-scale GTL

products. The US$950 million Oryx plant – the first GTL plant

outside South Africa to feature Sasol's unique Fischer-Tropsch

(FT) synthesis gas (syngas) conversion technology – has entered

its final construction phase at Ras Laffan, Qatar. Systems

commissioning is well advanced and the plant is on schedule to

begin full commercial production in 2006.

SSI continues to work closely with Sasol Chevron, Sasol's joint

venture with Chevron of the USA, in seeking additional GTL

investment opportunities, one of which is under way at Escravos

in Nigeria. The Escravos facility is scheduled to begin full

commercial production in 2009. It will be the next GTL venture to

come on stream after Oryx.

In another significant development, SSI is working with a Chinese

consortium to advance pre-feasibility studies for the potential

development of two CTL plants in inland China.

Approaching Oryx GTL start-up

The Oryx GTL plant will be owned and operated by Oryx GTL

(QSC), a 49:51 joint venture between SSI and Qatar Petroleum

(QP), the Qatari state-owned petroleum company. The 34 000

b/d plant will incorporate the integrated, three-step Sasol Slurry

Phase Distillate™ (Sasol SPD™) process. It will convert lean

natural gas from Qatar's extensive North Field reserves into

syngas for the downstream conversion and upgrading to GTL

diesel, GTL naphtha and some liquefied petroleum gas (LPG).

The Sasol SPD™ process uses Sasol's unique low-temperature FT

(LTFT) Slurry Phase reactor technology. Two of these LTFT

reactors were fabricated in Japan and arrived at Ras Laffan from

Yokohama in April 2005. Technip is executing the US$675 million

lump-sum, turnkey engineering, procurement and construction

(EPC) contract for the GTL plant.

Sasol Synfuels International • Oryx gas-to-liquids (GTL) plant in Qatar is nearing completion.

• Construction of Nigerian GTL plant will commence in the year ahead.

• Pre-feasibility study under way for two potential coal-to-liquids (CTL) plants in China.

• Sasol Chevron and Qatar Petroleum continue to develop GTL expansion opportunities in Qatar.

• GTL opportunities in other gas-rich regions are under consideration.

• CTL opportunities in other coal-rich regions are being explored.

The Oryx GTL plant in Qatar will be brought into production in the year ahead.

37

Launching new-generation GTL diesel

The GTL diesel from the Oryx plant will be among the cleanest in

the world with a sulphur content of less than five parts per million

(ppm). Typical low-sulphur diesels in Europe and North America

have a sulphur content of between 50 ppm and 300 ppm. GTL

diesel has a low aromatic content, and a cetane number higher

than 70, whereas most conventional diesels derived from crude

oil have a cetane number of between 45 and 55.

These properties will enable significant reductions in tailpipe

emissions generated by compression-ignition vehicle engines.

The benefits include substantially reduced emissions of nitrous

oxides, sulphur oxides, carbon monoxide, aromatics, unburnt

hydrocarbons and particulates. The higher cetane number also

enables easier engine starting in cold weather. In addition,

GTL diesel is significantly more efficient when comparing its use in

a compression-ignition car with that of petrol in a spark-ignition

counterpart.

The commercial launch of GTL diesel in the current decade is

significant given the rapid growth in the diesel engine's market

share recently, especially in Europe. While diesel engines,

traditionally, have been confined mostly to the commercial-

vehicle market, recent and projected technical improvements to

compression-ignition engine and diesel technology are helping

to promote diesel as a fuel of choice, including the passenger-

vehicle market.

Advancing expansion plans for Qatar

Sasol Chevron and QP continue to develop the expansion of the

Oryx GTL plant to about 100 000 b/d. Additional studies for an

integrated GTL plant at Ras Laffan, which is planned to have a

capacity of 130 000 b/d, are at an early stage of development.

In another value-adding drive, Sasol Chevron and QP signed a

memorandum of understanding in March 2005 to develop an

8 000 b/d lubricating base-oils production facility. This facility

would use proprietary Chevron Isodewaxing™ technology and

would be built at Ras Laffan.

Proceeding with EGTL plant in Nigeria

Our global GTL strategy gained momentum in April 2005

when Chevron Nigeria Limited (CNL) and the National

Nigerian Petroleum Corporation (NNPC) announced their

award of the EPC contract to Team JKS, an international

consortium, for the construction of the Escravos GTL plant

(EGTL) in Nigeria. Team JKS comprises Japan Gas Corporation

of Japan, KBR of the USA and Snamprogetti of Italy. Sasol is

providing 50% of the risk-based project finance required

by CNL for this venture.

The EGTL plant will be owned and operated by the NNPC and

CNL, with Sasol, through Sasol Chevron, providing technology,

operating expertise and product marketing support. The plant

is being developed on the established CNL production site at

Escravos in the Niger Delta region.

Site work for the lump-sum, turnkey EGTL EPC contract is

likely to commence towards the end of 2005. The targeted

plant start-up date, based on current planning, will be 2009.

Like Oryx GTL, EGTL will have a 34 000 b/d capacity and will

use the Sasol SPD™ process to produce GTL diesel, GTL naphtha

and some LPG.

Sasol Chevron continues to seek other GTL opportunities in

select gas-rich regions around the world, including Australia.

Considering other Asian projects

SSI continues to review the potential of developing a GTL plant

in association with the National Petrochemical Company of

Iran. Discussions between SSI and Iranian counterparts, on

entering a full feasibility study, are progressing. A decision on

their GTL plans could still be reached before the end of 2006.

SSI is advancing a pre-feasibility study with a Chinese

consortium for the potential development of two CTL plants

in China: one with Shenhua Corporation, which is focusing on

a site in Shaanxi Province about 650 kilometres west of Beijing;

and the other with Ningxia Coal Company, which is owned by

the semi-autonomous Ningxia Province, and is developing a

site about 1 000 kilometres west of Beijing.

In January 2004, the Chinese Government and Sasol agreed

the two potential CTL projects would be studied under the

leadership of the National Development Reform Commission,

a major Chinese government agency. SSI and the consortium

are exploring the potential of developing CTL plants each

with an 80 000 b/d capacity. Combined, these capacities are

roughly equivalent to that of our existing Secunda operations.

Should these CTL projects advance, they are likely to go into

production by 2012.

Potential CTL opportunities in the USA and other coal-rich

regions are being considered.

38

operational review main chemical businesses

Sasol Olefins & Surfactants • Margins stabilised in spite of substantially higher feedstock costs.

• Surfactant and surfactant intermediate markets remain strong.

• Problems hamper supply of product from Secunda Safol plant.

• Further substantial reduction in fixed costs achieved.

• World-class performance in lowering injuries.

Margin stabilisation key to improved performance

Sasol Olefins & Surfactants (O&S) achieved turnover of R18 394 million (€2 331 million; US$2 962 million), which was6% higher in rand terms and 10% higher in euro terms than theprevious year (R17 382 million;€2 122 million; US$2 528 million).Increased turnover was due to higher sales prices, but this benefitwas fully absorbed in the higher feedstock and energy costs.

Profit was constrained to lower levels because of further increases in feedstock prices and higher energy costs.Product prices increased strongly during the year and furtherprogress was made in reducing costs and improving efficiency.EBITDA* (before capital items) amounted to R1 500 million (€190 million; US$242 million) and operating loss to R221 million (€28 million; US$36 million) including capital itemsamounting to R783 million ( €99 million; US$126 million).

Stronger international oil and energy prices increased feedstockcosts. When compared with the previous year, this resulted inincreased ethylene costs in Germany, significantly higher naturalgas and ethane costs in the USA, substantially higher keroseneand benzene costs in the USA and Italy, and slightly higher rand-based feedstock costs in South Africa.

Countering higher feedstock costs

Contrary to the previous year, we were able to significantlyincrease product pricing to counter the impact of increasedfeedstock costs. Furthermore, we sustained our drive to counterthe impacts of difficult trading conditions through efforts such asrestructuring, to reduce costs and improve operational efficiency.

Towards year end, strategic and growth projects again receivedattention in addition to our ongoing rationalisation efforts.Announcements were made on:

• an ethylene pipeline and related expansion projects atBrunsbüttel, Germany;

• the intention to build, pending final board approval, anoleochemical-based alcohol plant in China together with apotential joint-venture partner, Wilmar; and

Sasol Olefins & Surfactants continues to focus on new opportunities to reducecosts and streamline operations.

* earnings before interest, taxation, depreciation and amortisation.

39

• an investigation into business opportunities in Russia togetherwith a Russian company, Nizhnekamskneftekhim.

Easing ongoing pressures with cost reduction

Although the variable costs of the alkylates and surfactantsbusiness unit were substantially higher than the previous year,it was possible to increase product prices to keep margins fairly constant. Apart from kerosene feedstock costs thatincreased by about 50%, benzene feedstock costs almost doubled year-on-year. The benzene prices were not only drivenby higher oil prices and refinery margins, as were the keroseneprices, but also by a shortage of benzene in the market.

Apart from the increases in product prices, especially linearalkylbenzene (LAB) prices, the business unit performancebenefited from reduced fixed cost, improved efficiency andlonger-term customer relationships. Towards year end, the LABplant at Porto Torres, Italy, was restarted to meet customerdemand and replace volumes lost during maintenanceturnarounds on other LAB plants. In the year ahead, oil prices will continue to be the main driver, but, under constant feedstock conditions, the expectation is that this business unitwill perform appreciably better.

Delivering another strong performance

The supply/demand equation in the international alcoholsindustry remained well balanced, which enabled the alcoholsand surfactants business unit to increase product pricing formany of its products. These strong market conditions alsoattracted some new competitors and announcements have beenmade on several new oleochemical-based alcohol plants inSouth-East Asia. This will lead to a substantial increase in alcoholcapacity from 2006 onwards with the accompanying expectedpressure on alcohol margins.

Supply problems, of which the biggest was the cloudburst atSecunda in January 2005, severely restricted our ability to meetcustomer demand. Following the cloudburst we were forced todeclare force majeure on supplies of Safol. This situation impactedsignificantly on this business unit, but is not expected to persist inthe year ahead and should enable us to better our performance ofthe 2004 financial year.

Sasol Olefins & Surfactants operational highlights

2005 2004 % change

Total sales Mt 2,29 2,31 (1,0)

Total production Mt 2,26 2,29 (1,2)

Production per employee t 619 563 9,9

Sasol Olefins & Surfactants financial highlights

2005 2004 % change

Turnover Rm 18 394 17 382 6

Operating loss Rm (221) (67) (230)


Contribution to:

group operating profit % (2) (1)

attributable earnings Rm (317) (102)


Achieving strong monomers performance

Contrary to expectations, the ethylene part of the monomers

business unit had another good year when ethylene margins in

the USA were much stronger than forecast. These strong margins

compensated for the replacement of expiring contract volumes

with lower-margin business and increased energy cost.

The comonomer part of the monomers business, with plants

at Secunda, had a better financial performance. This was due

primarily to the rand's stabilisation later in the year and

much-improved supply/demand conditions in the 1-hexene

market. The successful commissioning of the second

1-octene train at the end of November also contributed

to this improvement.

Improvement at inorganic specialities

The inorganic specialities business unit maintained its upward

trend in performance by continuing to develop and introduce

new products. The business benefits from the continuing move

towards higher-value-added products. The performance further

gained from the successful introduction of precipitated aluminas

to the market from the new facility at Crotone, Italy.

Working to lower costs and lift efficiency

Our plants outside South Africa ran well and at high utilisation

rates. Initiatives to improve operational performance, such

as the restructuring project in Sasol Italy, the shared services

project in Sasol Germany and the profit improvement drive in

Sasol North America delivered further value. Coupled with the

ongoing efforts and projects to improve feedstock and energy

efficiency, reduce the overall cost of ownership and align

employees with business objectives through performance

management, this improved the competitiveness of our

production and delivery of products.

Following the nominal fixed cost reduction of 3% in the

previous year, Sasol O & S’ fixed cost was reduced by a further

nominal 2%. This fixed-cost-saving programme will be concluded

in the year ahead. The result of this programme will be a real

reduction in fixed costs, greater than 20%.

40


Sterling performance in aftermath of a tragedy

The explosion at the Secunda ethylene plant on 1 September

2004 and the tragic loss of life was a major upset during the year.

Sasol Polymers recovered from the tragedy to achieve a record

trading profit on the strength of good sales prices and margins,

and continuing efforts to enhance efficiency and control costs.

Monomers, polymers and chemicals, in general, enjoyed strong

international and domestic prices and higher margins, which

eased much of the impact of a stronger rand and higher feedstock

costs. A basket made up of the average of these prices was about

18% higher in rand terms than the previous year.

Production volumes dropped by 11% mostly because of the

90-day loss of ethylene production and the subsequent impact

on polyethylene and polyvinyl chloride (PVC) production at

Sasolburg. A flood at Secunda in January 2005 also temporarily

restrained production. Combined annual sales volumes declined

by 9% from a record 1,27 million tons (Mt) to 1,15 Mt.



R1 484 million. Because of the unscheduled shutdowns,

per-capita productivity dropped by 3% from 721 t to 701 t.

Sasol Polymers achieved a 99% success rate in delivering orders

on time and in full. We attained 96% quality compliance for all

products combined. Our fixed cash cost per ton has dropped by

42% in real terms over the last 11 years.

Restoring monomer production

The ethylene plant was restored to normal production levels by

December 2004. The monomers business sold 682 000 t of

ethylene and propylene, which was 8% lower than the previous

year. The financial impact of the plant explosion was mitigated

by an insurance claim.

Sasol Polymers• Excellent overall performance achieved despite tragic explosion at Secunda.

• Operating profit up 44% on the strength of higher prices and efficiencies, as well as cost containment.

• Two new world-scale South African polymer plants under construction.

• Asian interests continue to generate good earnings.

• Total installed polymer production capacity set to almost double.

Bold investments will enable Sasol Polymers to increase its South African polymercapacity in the year ahead.

41

As part of Sasol's Project Turbo work scope, the monomers

business will substantially increase its production of ethylene and

propylene in the year ahead. Our Sasolburg and Secunda

ethylene crackers are being debottlenecked to increase ethylene

production. Once brought into beneficial operation in 2006, our

new and debottlenecked plants will increase our installed South

African polymer production capacity by about 80%.

Achieving satisfactory polymer sales

The polypropylene business, in general, performed well, but

reported a 7% reduction in sales volumes. Of its sales volumes of

226 200 t, 49% (110 000 t) was sold to customers in export

markets, mostly in Asia-Pacific and Africa.

The polythene business recorded lower sales because of the

Secunda incident. Combined sales of low-density polyethylene

(LDPE) and linear low-density polyethylene (LLDPE) fell by

15% to 195 500 t.

The vinyls business performed well considering the reduced

availability of ethylene, which is used to make vinyl chloride

monomer (VCM). The VCM and PVC plants were successfully

uprated to 205 000 tpa and 200 000 tpa, respectively. This

business had to limit VCM production because of the prolonged

interruption of ethylene supply. As a result, PVC sales were 13%

lower at 169 600 t.

Harnessing desired returns in Asia

The two ventures with Petronas at Kertih, on the east coast of

mainland Malaysia, continue to perform satisfactorily and

contribute to profit. These interests are a 12% share in the Optimal

Olefins ethane cracker, which produces ethylene and some

propylene, and a 40% share in the 250 000 tpa Petlin LDPE plant.

Through a 40% interest in Hong Kong-based Wesco China,

Sasol Polymers remains a significant distributor of polymers in

the emerging Chinese market. Wesco China distributed almost

142 000 t of polymers, of which 30 000 t was produced by

Sasol Polymers.

Sasol Polymers operational highlights

2005 2004 % change

Total sales Mt 1,15 1,27 (9)

Total production Mt 1,73 1,93 (10)

Production per employee t 701 721 (3)

Sasol Polymers financial highlights

2005 2004 % change

Turnover Rm 7 282 6 662 9


Capital items Rm (12) 59


Contribution to:




Advancing South African expansion

As part of Project Turbo, we are constructing a 300 000 tpa

polypropylene plant (PP 2) to complement the 225 000 tpa

polypropylene plant at Secunda. PP 2 will produce

homopolymers, random copolymers and impact

copolymers for customers in Southern African and

offshore export markets.

At the Sasolburg Midland site, a 220 000 tpa LDPE plant

(Poly 3) is under construction. Once this plant is brought into

operation, we plan to downscale the Sasolburg Poly 1 LDPE plant

from 100 000 tpa to 20 000 tpa. The Sasolburg Poly 2 plant

was uprated to increase LLDPE production from 105 000 tpa

to 150 000 tpa.

SPG moves ahead in Iran

Sasol Polymers Germany GmbH, a subsidiary of Sasol Polymers

International Investments, is investing US$516 million in

new monomer and polymer production facilities at Bandar

Assaluyeh, Iran. These world-scale facilities are being

developed through Arya Sasol Polymer Company, a

50:50 joint venture with the National Petrochemical

Company of Iran.

The Arya Sasol facilities will comprise an ethane cracker for

producing 1 Mt of ethylene annually. Some ethylene will be

exported, but most of it will be converted in two 300 000 tpa

polyethylene plants: one for producing LDPE and one for

high-density polyethylene. The cracker construction schedule

has been revised and mechanical completion is targeted for

the first quarter of 2006. The polyethylene plants will be

completed soon afterwards.

Once the Arya Sasol facilities are operational – and

combined with the two Project Turbo plants under

development and the share in the Petlin plant in Malaysia –

Sasol will have an installed annual global polymer production

capacity of about 1,5 Mt.

42


Robust performance despite high feedstock prices

Sasol Solvents had a good year as a result of buoyant global

demand for most of the products in its diverse portfolio of

solvents and related chemicals. The second and third quarters, in

particular, were an exceptional period of robust sales and strong

prices, with some prices reaching record, but unsustainable highs.

Performance cooled in the fourth quarter, mainly because of

price reductions as a result of dampened demand in most

regional economies.

Towards year end, most global solvents prices were approaching

average historical levels, particularly in the European market.

Much of the benefit of higher selling prices, however, was

countered by the impact of higher feedstock prices, most of

which are linked to global petrochemical price indices.

Benefiting from strong global demand

Global sales were largely unchanged at 1,6 Mt. Turnover in rand

terms increased by 30% from R6 455 million to R8 404 million.

In US dollar terms, turnover rose by 44% from US$939 million to

US$1 354 million. Operating profit, before currency effects,

increased by 194% from R392 million to R1 151 million. The

rand's depreciation against the US dollar and euro benefited

operating profit by R92 million.

All our key geographic markets remained strong for most of the

year, with Asian-Pacific and North American markets being

particularly robust. China has developed into the main market of

our Asian-Pacific sales and is set to remain an important growth

market for the foreseeable future.

The Middle East and, in particular, Europe had a strong

performance in the second and third quarters before returning to

more historical performance in the last few months. The South

African and wider African markets showed a continued robust

performance without the peaks seen in some of the other

geographic regions.

Sasol Solvents • Record turnover with healthy profit contribution.

• Main businesses and joint ventures performed above expectation and made solid profit contributions.

• Temporary production difficulties due to plant failures and interrupted feedstock supply.

• Strong focus on cost management and qualitative growth maintained.

• Injury rate lowered to a targeted world-class benchmark.

The new Sasol Dia Acrylates plant at Sasolburg in South Africa contributed to SasolSolvents’ record profits.

43

Increasing volumes almost threefold in five years

The combination of increased production, new products and

focused marketing worldwide has enabled us in recent years to

increase sales and geographic spread. Five years ago, we sold

close to 510 000 t of products to customers in almost

90 countries. Today, we are selling a broader portfolio of

solvents, more than 1,5 Mt a year, to customers in more than

110 countries across all continents.

During the first half, our South African-based sales potential was

constrained by a few production problems in our own plants, as

well as other Sasol plants providing feedstock to Sasol Solvents.

This temporarily limited sales of certain products in most overseas

regions. All South African assets have since been restored to full

capacity and are operating smoothly. In some instances, we have

achieved new South African production records.

Our German operations at Herne, Marl and Moers performed well

without major interruptions and met expected production output.

Approved low-capital debottlenecking projects are under way to

increase the capacity of our methyl ethyl ketone (MEK) plant at

Moers and our iso-propanol plants at Herne and Moers. In South

Africa, two projects are being developed:

• the construction of a second methyl iso-butyl ketone (MIBK)

train; and

• an incremental debottlenecking of our n-propanol production.

Exceeding group safety targets

We are pleased with the achieved year-end recordable case rate

of 0,3 for our operations. In both Germany and South Africa,

we are significantly below the group’s set target of 0,5 for

June 2006. Our continuing safety efforts, especially in South

Africa, have led to a significant reduction of recordable-case injuries.

Rising above expectation in most cases

The C3/C4 alcohols business performed well due to the higher-

than-anticipated product prices achieved during the middle of

Sasol Solvents operational highlights

2005 2004 % change

Total sales Mt 1,58 1,48 7,0

Total production Mt 1,59 1,42 12,5

Production per employee t 1 177 1 062 10,8

Sasol Solvents financial highlights

2005 2004 increase

Turnover Rm 8 404 6 455 1 949




Contribution to:




the year. In particular, iso-propanol performed well in Europe and

contributed significantly to the business unit's results. The glycol

ethers business also had a strong performance for similar reasons.

The ketones business unit also performed well and enjoyed good

market conditions and excellent demand for its major products of

acetone, MEK and MIBK. The ethanol business globally did not

perform as planned, mainly because of the disappointing

performance of the German operation due to exceptionally high

feedstock costs. The esters and acids business reported better

results with improved production and sales volumes and higher

selling prices.

Enjoying robust demand for acrylates

The Sasol Dia Acrylates joint venture with Mitsubishi Chemical

Corporation of Japan at Sasolburg also performed well, and is

benefiting from strong global demand for acrylic acid and

acrylates. The new Sasolburg complex enjoyed its first full

financial year of operation. This joint venture posted a healthy

contribution to profit.

Although new capacities went on stream in China in the second

quarter of 2005, global acrylates demand seems to remain robust.

Sasol Solvents and Mitsubishi Chemical Corporation are exploring

the merits of expanding the Sasol Dia Acrylates plant. The first step

will be an incremental debottlenecking of the existing facilities, and

the next step will entail the construction of a second train to

produce additional volumes of acrylic acid and its derivatives.

Exceeding targets for maleic anhydride

The Sasol-Huntsman joint venture with Huntsman Corporation at

Moers experienced a strong year for the production and sale of

maleic anhydride. Demand for unsaturated polyester resins, the

largest market for maleic anhydride, remained healthy.

The recent approvals of low capital expenditure for a

pastillisation unit and debottlenecking of the existing

facilities in Europe will enable this business to increase its

focus on European markets.

44

operational review other chemical businesses

Continuing drive to streamline and unlock new value

Sasol Nitro

After amalgamating Sasol's disparate ammonia, fertiliser and

explosives interests into an integrated nitrogen value-chain

business, Sasol Nitro has been successful in exploiting its

renewed focus on continuous improvement. The division's

consolidated turnover increased by 8% from R3 226 million to

R3 485 million, mainly because of stronger selling prices, as well

as higher explosives and accessories volumes, partially offset

by a further strengthening of the rand, lower phosphoric acid

sales and the disposal of the Sasol Southwest Energy joint

venture in the USA.

Operating profit before capital items and provision for exit costs

in 2004 more than doubled from R187 million to R426 million

primarily due to higher selling prices, cost reduction and greater

efficiency, as well as the benefits arising from the repositioning of

the electronic detonator business and the increased sales

volumes from the Sasol Dyno Nobel joint venture.

Cost containment in all business activities enabled us to decrease

cash fixed cost for our South African operations by 8,5% in

addition to the previous year’s 4,1% reduction. The successful

rehosting of our three SAP accounting systems into a single

SAP system on a hub shared with other Sasol divisions

contributed significantly towards cost reduction and

enhanced accounting efficiency and governance.

Following a decision to exit the underperforming phosphoric

acid business, an in-principle agreement was reached with

Foskor whereby this company will purchase our phosphoric

acid manufacturing assets at Phalaborwa in Limpopo. The

transaction is awaiting approval from the South African

competition authorities.

Other chemical businesses • All Sasol Nitro business activities profitable.

• Sasol Wax sustains drive to increase higher-value niche applications for waxes.

• Sasol Infrachem's conversion to natural gas reforming augurs well for the future of our Sasolburg operations.

• Merisol maintains profit despite the impact of higher feedstock costs.

Sasol Nitro continues to improve its performance and all three businessescontributed to profit.

45

Rebounding from ammonia setbacks

Sales of ammonia, along with sulphur and speciality gases

produced by Sasol Synfuels, increased by 8,2% from

R1 545 million to R1 671 million. Our ammonia business

benefited from higher global ammonia prices, but its

contribution to operating profit was lower than expected

due to the stronger rand and teething problems that limited

Sasolburg production following the conversion to natural gas.

Our ammonia business is poised to improve performance on

the strength of greater plant efficiency and increased production

capacity derived from the conversion to natural gas.

Returning fertilisers to profitability

Turnover from our fertiliser business, including the phosphates

value chain, decreased marginally from R1 782 million to

R1 780 million. Our fertiliser business, however, returned to

profitability and contributed satisfactorily to operating profit.

Our fertiliser business benefited from favourable weather for

most of the Southern African summer rainfall area, as well as

increased demand from the Southern African export market.

Benefits were reaped from greater operational efficiency and

strategies to improve our overall value proposition, with renewed

focus on product quality, logistical efficiency and training of our

sales teams to improve customer service.

The 2004/2005 South African maize crop is likely to reach

12 Mt, thereby exceeding local consumption by more than 50%.

The combined impact of a drastic increase in the maize surplus

and sustained low export prices for maize is likely to constrain

planting for the 2005/2006 season. Consequently, the envisaged

lower demand for fertilisers in Southern Africa is expected to

reduce profit in the year ahead.

Maintaining momentum for explosives

Our explosives business increased turnover by 1,8% from

R1 003 to R1 021 million. Following a return to profitability

in 2004, this business posted a significant further increase in

contribution to operating profit.

Benefits were reaped from a renewed focus on the domestic

South African market and by capitalising on a global shortage of

ammonium nitrate, which saw a significant increase in export

sales of Expan™ ammonium nitrate in spite of the stronger rand.

Profitable exports of Expan™ ammonium nitrate are expected to

continue in 2006.

Sales and profits of the Sasol Dyno Nobel joint venture reached

record levels, mainly as a result of growth into niche markets.

Following the sale of the UNI Tronic™ technology and marketing

rights to Orica Explosives, along with an associated supply

agreement, our electronic detonator business posted a profit for

the first time.

Sasol Wax

Value-addition remains focus of wax portfolio

Sasol Wax's business was challenging as a result of strong

competition and higher feedstock prices in South Africa and

Europe, as well as feedstock-related production interruptions at

Sasolburg. These factors severely impacted operating profit, but

were countered by maintaining programmes to improve efficiency

and the cost base, and to increase the percentage of wax

production dedicated to higher-value niche applications.

The global wax market remains keenly contested, with supply of

many commodity paraffin-wax grades exceeding demand. In

addition, higher oil-based feedstock prices kept margins under

pressure. Sales volumes of wax and associated paraffinic products

increased by 5% from 779 900 t to 821 600 t primarily as a result

of securing new business.

Turnover increased by 5% in euros. The rand-equivalent increase

was 1%, up from R4 042 million (€493 million; US$587 million)

to R4 075 million (€516 million; US$656 million). Our

contribution to group operating profit in rand terms decreased by

22% from R270 million to R211 million.

Operational highlights for other chemical businesses

2005 2004 % change

Sasol Nitro total sales Mt 1,56 1,57 (0,4)

Sasol Wax total sales t 821 600 779 900 5

Sasol Infrachem syngas production M GJ 38,4 53,4 (28)

Merisol total sales t 103 330 108 200 (4,5)

46

Increasing demand for FT waxes

Global demand for Fischer-Tropsch (FT) waxes produced at

Sasolburg has been increasing and favourable margins are being

realised. The targeted sales volume of these speciality products

was not achieved due to the production setbacks after the

Sasolburg chemical plant converted to natural gas. We lost about

8% of our scheduled annual Sasolburg FT wax production. We

have since been restoring customer confidence, having placed

South African and international customers on limited supply.

Our German wax operations at Hamburg operated at full

capacity throughout the year and enjoyed excellent stability. The

toll-production of wax emulsions at Oslo, Norway, was ceased

and integrated with the Hamburg operations to streamline

production and reduce cost. Paramelt in the Netherlands

acquired Honeywell's wax-blending business at Eupen, Belgium,

and at Suzhou, China.

Continuing drive to increase value

Increasingly, successes are being achieved by developing new wax

applications, which are resulting in greater sales of higher-margin

speciality products. These value-adding opportunities apply to

waxes made from both oil-based feedstock outside South Africa

and gas-based feedstock in South Africa. One such opportunity is

the use of the proprietary Sasobit™ wax additive for bitumens,

which brings major advantages for road builders and related

bitumen coating applications.

New opportunities are emerging in China, through Sasol

Polymers and its Chinese joint-venture distributor, Wesco, to sell

speciality grades of polyethylene and polypropylene with FT-wax

additives. These modified grades help polymer converters to

improve both extruder energy-efficiency and the quality of their

final extruded plastic goods.

The planned wax joint venture with Total SA (France) was

abandoned for competitive reasons. In addition, the European

Union Competition Commission recently initiated an investigation

into the European paraffin wax industry, as did the competition

authorities in the USA. Sasol Wax declared at the outset that it

would cooperate with the competition authorities.

Sasol Infrachem

Rebounding from conversion setbacks

The conversion from coal gasification to natural gas reforming

at Sasolburg towards the end of the previous financial year was

completed by Sasol Infrachem when the two new autothermal

reformers were brought into commercial production. Reformer

production during the year, however, alternated between

prolonged periods of stable operations in line with

planned production and intermittent downtime to resolve

post-commissioning technical shortcomings that limited

full reformer capability.

As a result of these interruptions, turnover dropped by almost

14% from R2 329 million to R2 013 million. Gas production fell

by 28% from 53,4 million coal-based gigajoules (GJ) to

25,9 million natural gas-based GJ and 12,5 million coal-based

GJ, a total of 38,4 million GJ.

In July 2004, the coal gasification facilities were temporarily

recommissioned to support gas supply to our customers while

the complex reformer control systems were refined and feed lines

were upgraded. The coal gasification facilities were finally

decommissioned in February 2005.

In May 2005, cracks were detected in the heater piping on the

gas pre-heaters. As a safety precaution, we decommissioned

the reformers, which led to a four-week cessation of synthesis

gas (syngas) production. The reformers were recommissioned in

June 2005 and have since been operating at planned

design parameters.

We intend to increase natural gas-based gas production in the

year ahead to about 35,4 million GJ in line with projected

demand from the other Sasol businesses that require syngas.

Reducing emissions to air

The envisaged environmental benefits of converting from coal to

natural gas are being realised and audited results of the Sasolburg

plant's substantial reduction in emissions to air (including

hydrogen sulphide, carbon dioxide, nitrous oxides and volatile

other chemical businesses

The Sasol Wax plant at Hamburg in northern Germany. Sasol Infrachem employees working on a Sasolburg autothermal reformer.

47

organic compounds) will be reported in Sasol's 2005 sustainable

development report. We have commenced a project to

rehabilitate the waste-management sites associated with coal

gasification, including the ash dump and tar residue pits.

In the utilities and services area, Sasol Infrachem had an excellent

year. We have been expanding our utility infrastructure to

accommodate the water, steam and electricity requirements of

the new polyethylene plant under construction at Sasolburg as

part of Project Turbo. We also completed a project to enhance the

reliability of electricity supply to the Sasol One and Sasol Midland

sites at Sasolburg.

Merisol

Maintaining profit despite higher feedstock costs

Merisol, our 50:50 cresylic acids joint venture with Merichem

Company, performed well and increased total turnover by 6,4%

in rand terms from R993 million to R1 057 million. In US dollar

terms, turnover rose by 18% from US$144 million to

US$170 million, largely on the strength of higher prices and

sustained good sales across the portfolio.

Higher oil prices drove up the costs for Merisol products

manufactured in South Africa, Japan and the USA. Merisol was

able to absorb cost increases through price increases. Feedstock

constraints, however, reduced sales volumes to 103 330 t.

At the beginning of the previous year, Merisol announced the

start of its R400 million investment to ensure the availability of

raw material and to optimise its established cresylic acid

operations in South Africa and the USA. The first and major part

of this investment, a new raw-material recovery plant at

Sasolburg, to extract and purify crude tar acids from Sasol's coal-

based petroleum and chemical operations in South Africa, was

completed on schedule and below budget.

The 33 000 tpa plant uses novel technology developed

by Merisol and Sasol Technology and went into operation

shortly before year end. It enables Merisol to purify existing

South African raw material previously treated at its Houston

operations. The new raw-material recovery plant at Sasolburg

not only compensates for the loss of certain historic sources of

feedstock, but also gives Merisol the flexibility to expand its

production of high-purity feed material for the downstream

production of phenol, cresols and xylenols in line with growth in

the global market. In the year ahead, the operations at Houston,

Texas, will be modified and old sections shut down to reduce

costs and streamline operations.

Planning meta-cresol production increase

Shortly before year end, the Merisol board approved funding to

proceed with engineering for the planned expansion of the meta-

cresol capacity at Oil City, Pennsylvania, in the USA. We intend to

increase in-house meta-cresol production by about 20% by early

2007. Meta-cresol is an important chemical precursor, and its

growth in recent years has been driven largely by increased

demand for vitamin E, for which it is an important intermediate.

The vitamin E market currently accounts for about 40% of global

meta-cresol consumption.

Sumitomo Chemical Company's share in the ortho-cresol

novolac manufacturing joint venture at Sasolburg was sold to

Chang Chun of Taiwan. The synthetic cresols manufacturing and

marketing joint venture with Sumitomo Chemical at Oita, Japan,

continues to contribute positively to Merisol, despite significantly

higher feedstock costs due to high oil prices.

African Amines

Withstanding tough market conditions

Despite sustaining good production, safety and cost management,

our alkylamines joint venture with Air Products, African Amines,

continued to endure tough trading conditions.

This business recorded a further 6% decline in turnover, but a

slightly improved operating profit.

Alkylamine exports were still well below target because of the

rand's continuing strength. Efforts to reduce operating cost are

ongoing. The business achieved ISO 14001 certification for its

environmental management system.

Two autothermal reformers at Sasolburg reform natural gas into synthesis gas. Merisol cresylics plant at Greens Bayou in Houston, USA.

48

operational review specialist services

Building technological advantage

During the year Sasol Technology built on its well-establishedresearch and development, process design, engineering, projectmanagement and associated portfolios. These important functionssupport Sasol's ongoing growth and optimisation in the fields of fueland chemical manufacturing and marketing.

Exploiting new pilot-plant investments

Our research and development (R&D) group retained its corefocus on applied R&D. The recent investment of about R500 million in new pilot-plant facilities will play an importantrole in refining existing Sasol process technologies, as well as newones under development. A further R250 million has beenearmarked for additional new piloting facilities over the next twoyears. Most of the new piloting facilities are dedicated toadvancing both Sasol's low-temperature (LT) and high-temperature (HT) Fischer-Tropsch (FT) technology.

To support the group's growing gas-to-liquids (GTL) ambitions,Sasol Technology continues to advance Sasol's new-generationcobalt catalyst for use in future GTL plants incorporating theSasol Slurry Phase Distillate™ process, which uses the LT SlurryPhase reactor at the heart of its integrated, three-step process.

Our second-generation cobalt catalyst for use in this reactor hasmet all bench-scale test criteria and will be piloted in a 100 b/dSasolburg demonstration unit in the year ahead. The new catalysthas been designed to enhance catalyst activity and therefore topromote the efficiency of converting syngas into syncrude for thedownstream production of GTL diesel and GTL naphtha.

Supporting Chinese CTL study

The start of a pre-feasibility study for the potential developmentof two coal-to-liquids (CTL) plants in China has renewed ourinterest in further optimising our iron-based catalyst used in LTFT conversion. Based on recent R&D, we are confident we have a competitive CTL process. Ongoing CTL R&D is focused on developing a catalyst with greater longevity that will be easier to reuse or recycle.

The focus on optimising the iron-based catalyst used in Sasol'sSecunda HTFT process remains keen. We are developing a catalyst

Sasol Technology • Strong commitment to enhancing Sasol's Fischer-Tropsch technology for converting coal and natural gas

into higher-value products.

• Massive scale of new Sasol capital projects brings new challenges to engineering and project management teams.

• Further expansion of new research and development piloting facilities under way.

• Focused chemical process innovation drive retains vigorous pace.

• Special award received for excellent project management of the natural gas project.

Project Turbo work in progress under the vigilant eyes of Sasol Technologyengineers and project managers.

49

that will enable greater operational flexibility and better process

selectivity, which would make the Secunda synfuel component

and chemical feedstock operations more adaptable and versatile.

Increasing environmental efforts

In coal gasification, we aim to reduce future volumes of dumped

ash by finding alternative uses for ash. One option under

investigation is to use ash as aggregate for building roads and

making bricks and other building material. Opportunities to reduce

the percentage of hydrogen sulphide and other environmentally

undesirable co-products from gasification are being studied.

We continue to advance a range of other environmental

initiatives, including opportunities to sequester carbon dioxide

(CO2) and thereby contribute to the global effort to reduce future

emissions of CO2 and other greenhouse gases. We are researching

other opportunities with the aim of reducing Sasol's future

environmental footprint. This work includes a focus on treating

and recycling water streams to improve utilisation of this

precious resource.

Innovating and improving processes

In the process development field, we are advancing our

demonstration of ethylene tetramerisation on a larger

experimental scale. Tetramerisation enables us to convert

ethylene into 1-octene, a speciality chemical used for making

certain polyethylene grades.

A third Sasol 1-octene plant at Secunda, based on

hydroformylating a C7 olefin, is under engineering development.

With Sasol's international GTL era commencing in the year

ahead, we continue to advance our second-generation GTL

technology, which is focused on achieving lower capital and

operating costs, and greater process flexibility. In addition,

we are investigating various hub concepts using both GTL

and CTL technology to increase the future production of

higher-value chemicals.

Supporting cleaner-fuel initiatives

The Sasolburg fuel R&D operations, including the developmentand formulation of petrol, diesel and other liquid fuels, have beenintegrated into Sasol Technology to promote synergy. As a resultof continuing R&D advances, the Sasol Liquid Fuels Businesslaunched improved formulations of Sasol's turbodiesel™ andturbo™ unleaded petrol.

The fuel R&D group continues to work closely with Sasol Chevronand SSI to develop a GTL fuel marketing and support strategy.Key to this, we have been working with original equipmentmanufacturers, including Caterpillar, Citroën, DaimlerChryslerand Peugeot. This group is collaborating with Engelhard, JohnsonMatthey and other catalyst producers to evaluate the effects ofnew-generation Sasol diesel and petrol on automotive catalysts.

Retaining large-portfolio support

Sasol Technology continues to provide significant projectmanagement support for a series of large capital projects inprogress, particularly the Turbo and the Natref clean fuelsprojects in South Africa, and the Oryx GTL project in Qatar. Wealso are involved in supporting the Arya Sasol Polymer project inIran and the Escravos GTL project in Nigeria. The engineering andproject management group managed 200 projects in variousphases of development during the year. The value of all capitalprojects supported by Sasol Technology totalled R118,5 billion,including the amounts being sponsored by joint-venture partners.

The substantial increase in the size, complexity and geographicspread of Sasol capital projects has required exceptional effortsand challenges to optimally deploy specialist employees andstrengthen the technical training needed to sustain and support alarge, international capital programme. Our intention is tobalance the growth rate of our specialist employees so we can, intandem with the optimum leveraging of contractor resources,continue to support the targets set for Sasol's growth.

We are striving to increase our efficiency and to eradicateduplicated work efforts, while maintaining high standards ofsafety, morale, engineering quality and governance.

A view of the third 1-octene plant at Secunda, South Africa. The Oryx GTL plant under construction at Ras Laffan, Qatar.

50

operational review specialist services

Structuring complex deals andcreating value

Sasol Financing – comprising Sasol Financing (Pty) Limited at

Johannesburg and Sasol Financing International plc on the Isle

of Man – continues to fulfil an important strategic role in

optimising the group's treasury, hedging and specialised

financing requirements to support our strategic growth

drivers, particularly our major new investments to expand

our gas-to-liquids (GTL) and international chemical ventures.

Saving costs through centralisation

The in-house bank continues to achieve significant savings on cash

pooling, cost-effective financing, foreign-exchange management

and other treasury-related activities. Sasol Financing proactively

manages Sasol's liquidity risk by establishing appropriate

financing structures and credit lines, both committed and

uncommitted, and ensures a sound mix of funding, both

offshore and domestic, as well as long- and short-term.

Central financing sources include offshore and domestic

corporate bond issues, offshore revolving credit facilities,

long- and short-term bank loans and issuing commercial

paper. We also ensure, at a group level, that a sound balance is

maintained between floating and fixed interest rates. This is done

by evaluating different funding requirements (treasury funding,

subsidiary debt and project debt) in terms of risk tolerance and

repayment profiles and entering into appropriate fixed-interest-

rate funding (such as corporate bond issues) and/or derivative

instruments (interest rate swaps or options).

In one of the major activities undertaken in this respect,

we helped Oryx GTL (QSC) to conclude a three-year

interest-rate swap for US$200 million (about 50% of

outstanding debt) at a fixed rate of 3,78%.

Sasol Financing • Revolving credit facility of €400 million refinanced at substantially improved terms and conditions.

• Debut €300 million Eurobond successfully issued in European capital markets.

• First South African credit ratings awarded to Sasol by Moody's Investors' Services at Aa3.za long-term andPrime-1.za short term.

• Early repayment of Sasol Chemie external financing facilities, resulting in release of assets held as security and saving on interest expense.

• Assisted in implementing a fixed interest rate hedge of US$200 million for three years for Oryx GTL.

The Oryx GTL plant is one of the group's major new investments beingexecuted with expert support from Sasol Financing.

51

In addition, in our role as the custodian of group financial-

market risk management, we ensure appropriate governing

policies are in place for managing and hedging commodity price

and currency risk, and we also supply risk management advice

and hedging implementation support to Sasol subsidiaries and

joint ventures.

Sasol Financing also advised on the updating of Sasol's hedging

policies for commodity-price risk and currency risk, and assisted

Sasol Synfuels in executing a strategic hedge on about 30% of its

2005/06 synthetic fuel revenues. The hedging was executed by

utilising zero cost collars, in terms of which Sasol will obtain a

minimum of US$45,00/barrel (b) of oil, and a maximum of

US$82,61/b, for 45 000 b/day of oil for the 2006 financial year.

In March 2005, Sasol received the 2004 African oil and gas deal

of the year from Project Finance magazine for financing the

Mozambique-to-South Africa natural gas pipeline project.

Achieving higher credit rating and standing

Working with Standard & Poor's and Moody's Investors' Services

(Moody's), we are responsible for overseeing Sasol's corporate

credit rating. In May 2005, the international rating agency,

Moody's, awarded Sasol the highest possible short-term South

African rating of Prime-1.za, and a long-term South African credit

rating of Aa3.za. These ratings confirm Sasol's long-standing

position of strength in the South African debt and capital markets

and benefited the group's cost of funding.

In June 2005, in anticipation of our debut Eurobond issue,

Moody's assigned global long-term Baa1 and short-term Prime-2

ratings to Sasol. The outlook for Sasol was put at “stable”. The

Baa1 rating is commensurate with Standard & Poor's long-term

foreign-currency rating, which was upgraded to BBB+ in August

2005. These ratings underscore the group's commitment to

maintaining a prudent financial strategy, conservative gearing

and a strong balance sheet.

The Moody's and Standard & Poor's ratings are comprehensive

and continue to provide investors and lenders globally with a

relevant and improving benchmark of Sasol's credit quality.

Mandating a new revolving credit facility

In May 2005, we announced that the group had concluded a

€400 million syndicated multicurrency revolving credit facility.

Calyon and Dresdner Kleinwort Wasserstein acted as mandated

lead arrangers and bookrunners, and the latter bank also acts

as documentation agent. Dresdner Bank Luxembourg is the

facility agent.

This facility has a tenor of three years, as well as two one-year

extensions, and carries a margin of 0,325% a year. This facility –

established at much better terms, conditions and margins than

the existing Sasol US$375 million syndicated revolving credit

facility concluded in October 2003 – is being used to refinance

the existing facility and for general corporate financing needs.

Issuing of successful debut Eurobond

In June 2005, Sasol raised €300 million from its debut Eurobond

issue at a fixed-interest coupon of 3,375%. The bond was well

received by a geographically diverse investor base and will mature

in June 2010.

The bond assists greatly in diversifying and extending the average

tenor of Sasol's debt portfolio and lowers our exposure to

floating-interest-rate risk. ABN Amro and Dresdner Kleinwort

Wasserstein were the joint lead managers in the transaction,

which was oversubscribed sixfold.

Innovating financing solutions

We also add financing value to Sasol's businesses and joint

ventures. We continued to assist the Arya Sasol Polymer Company

joint venture in Iran with its financing in a complex environment.

We assisted the process to early repay Sasol Chemie's external

asset-based financing facilities of about US$650 million, which

was incurred at the time of acquiring Condea from RWE-DEA in

2001. This resulted in the release of more than €1,4 billion assets

held as security and has saved on interest expense.

In addition, we are assisting the financing arrangements for Sasol's

black economic empowerment partners set to acquire a 12,5%

interest in the planned Uhambo Oil joint venture with Petronas.

Major Sasol capital projects under way in South Africa, the Middle East and Europe are being financed optimally with the help of Sasol Financing.

52

global activities

Baltimore

Pass Christian

Lake CharlesHouston

Richmond

Tucson

Canada

USA

South America

Shelton

Oil City

facility

Manufacturing/production

Main office

Exploration

Project

Research

USA

Our joint-venture cresylics business, Merisol, is set

to expand meta-cresol capacity at Oil City, while

Sasol Wax continues to pursue further new higher-

value niche applications. We intend to dispose of

our surfactants and related interests at Baltimore

and Lake Charles.

Europe

We are planning to sell our surfactants, inorganic

speciality and related chemical interests in

Germany, Italy and Slovakia, purchased from

RWE-DEA in 2001. Sasol Solvents in Germany

plans to undertake several low-capital expansion

projects in the year ahead.

Middle East

We have invested almost US$1 billion in The Gulf

region in new production capacity that will come

on stream in the year ahead: the Oryx GTL plant at

Ras Laffan and the integrated Arya Sasol ethylene

and polyethylene facilities at Bandar Assaluyeh.

Africa

The commercialisation of Mozambican natural

gas fields in the previous financial year is

contributing to group earnings and benefiting

the Mozambican economy. We are also

participating in the development of a new

GTL plant at Escravos, Nigeria.

Far East

Our joint-venture ethylene and polyethylene

plants at Kertih, Malaysia, continue to contribute

to earnings, as do our growing polymer distribution

interests in China. We have initiated a study for

the potential development of two coal-to-liquids

plants in China.

53

Nigeria

Egypt

SouthAfrica

Namibia

Escravos

Equatorial Guinea

Gabon

Africa

Europe

Iran

Asia

Bandar Assaluyeh

Dubai

Ras Laffan

Alexandria

Windhoek

Hangzhou

Beijing

NanjingOita

Tokyo

Hong Kong

KertihKuala Lumpur

Singapore

Sydney Auckland

Australia

New Zealand

Southern Africa

Lusaka

Beira

Cape Town

DurbanNewcastle

Secunda

Phalaborwa

Johannesburg HQ

Gaborone

SasolburgMaputo

Harare

Europe

Douglas

St Andrews

Birkenhead HamburgMarl

HeerhugowaardBrunsbüttel

de Meern

Terranova dei Passerini

Lintz Bratislava

Nováky

Crotone

MilanoPaderno Dugnano

Appenzell

Bad Homburg

HerneWitten

Porto TorresSarroch

London

Paris

FarnhamMoers

Birmingham

Augusta

54

sustainable development review

Principal achievements

• New group-wide targets set to improve sustainability performance.

• Signing of safety charter with South African trade unions.

• New investments bring economic benefits to Africa and the Middle East.

• Successful rollout in South Africa of the Sasol HIV/Aids Response Programme.

• Continuing reductions in reported emissions of atmospheric pollutants.

• Strong social investment programme maintained.

Principal disappointments

• Seventeen work-related fatalities.

• Unacceptable number of safety incidents in South Africa.

• Slow progress in achieving employment equity objectives at the most senior

management levels of our South African activities.

Creating critical mass for better corporate citizenship

Our sustainable development commitment includes building open and constructive relations with different communities and other stakeholder groups.

55

Sustainable development commitment

Introduction

Evolving towards international best practice

Since publicly committing to sustainable development in 2000,

Sasol has been evolving the management framework needed to

provide our businesses with the policies, governance structures,

targets and reporting systems to manage the risks and

opportunities associated with improving our economic, social

and environmental performance.

Our commitment to sustainable development is intrinsic to our

vision and values, and is integral to our status as a public

company listed on the JSE Limited (JSE) in Johannesburg and the

New York Stock Exchange (NYSE). We believe effective

sustainability practices yield a valuable competitive advantage.

They enhance the reputation of our business; contribute to our

goal of being a company of choice; and result in improved

longer-term business performance.

Acting on our commitment

Our sustainable development commitment is expressed through

international programmes aimed at:

• maintaining sound governance and risk management practices;

• complying with the laws of the countries in which we operate;

• building open and constructive stakeholder relations;

• improving employee skills through training and development;

• promoting sound occupational health and safety practices and

minimising workplace accidents;

• recruiting and rewarding employees on merit with regard for

human rights and fair labour practices;

• improving process safety and reducing risks associated with

operating mining machinery and petrochemical plants;

• educating employees on the risks of contracting Aids and life-

threatening diseases, and, where necessary, providing them

with managed healthcare, including free antiretroviral

treatment in the case of HIV-positive employees;

• promoting black economic empowerment (BEE) in South

Africa to benefit people from historically disadvantaged

groups;

• adding economic value to the coal, crude oil, natural gas and

chemical feedstocks we beneficiate;

• decreasing our environmental footprint by striving to reduce

emissions, waste and the consumption of water and energy per

unit of production;

• developing and manufacturing products with regard for the

needs of customers, consumers and the environment; and

• sustaining social investments, particularly in under-resourced

South African and Mozambican communities.

We have evolved a corporate sustainable development management

framework to manage these programmes and ensure we pursue

continuous improvement in line with global best practice.

Management framework

Managing a global structure

Sasol's sustainable development management framework covers

our international construction, exploration, production and

marketing operations throughout the 30 countries in which we

operate in Africa, Asia, Europe, the Americas and Australasia (see

map on page 52).

Our global group commitment to corporate citizenship or

sustainable development is managed at corporate level and

implemented at business level, with ultimate responsibility

residing with the board of directors. The board has specialised

committees to help it to fulfil its fiduciary duties. One of these is

the risk, safety, health and environment committee (see

corporate governance overview on page 74).

The group executive committee (GEC), chaired by our chief

executive, maintains primary responsibility for the effective daily

management of group-wide sustainability. The GEC receives

valuable strategic and operational-specific inputs from all

businesses, as well as from specialised committees and two group

forums that meet quarterly. These are the:

• group risk management forum, which oversees the risk profile

of our global operations; and

• group safety, health and environment (SH&E) and sustainable

development (SD) forum, which reviews performance, and

considers and approves recommendations on sustainable

development and SH&E guidelines and policy.

The Sasol safety, health and environmental centre (SH&E

centre), based at our Johannesburg head office, oversees group-

wide sustainability and SH&E management. The centre is

responsible for global SH&E and sustainable development

direction, policy, review and governance. It also provides

specialist advice and support services to our businesses.

In a new development, our new chief executive, Pat Davies,

became the group's first chief SH&E officer on 1 July 2005.

He intends to play a significant leadership role in promoting

our safety charter and safety improvement plan, among other

sustainability challenges.

Refining risk management

We have developed a systemic approach towards managing

sustainability risks throughout Sasol. During the year, we further

56

enhanced our group SH&E strategy by identifying six priority focus

areas, each supported by short- and longer-term action plans:

• safety and health;

• SH&E performance and standards;

• climate change and greenhouse gases;

• proactive compliance;

• governance and assurance; and

• stakeholder relations.

A particular priority for the year ahead is to ensure effective

implementation of the safety improvement plan throughout our

South African operations, with specific programmes being

implemented to improve:

• safe behaviour;

• hazard identification;

• contractor safety;

• process safety;

• site-specific safety systems; and

• safety governance.

Introducing additional targets

During the year, the GEC approved three new group-wide

SH&E targets:

• to achieve at least a 50% reduction in the emission of volatile

organic compounds (VOCs), on the 2005 baseline, by July 2015;

• to achieve at least a 10% reduction in greenhouse gas emissions

per ton of product, on the 2005 baseline, by July 2015; and

• to achieve at least a 50% reduction in significant logistics

incidents per ton of product transported, on the 2004 baseline,

by July 2009.

These targets supplement commitments of individual companies

and/or plants, as well as these three long-standing group targets

set for achievement by all businesses by July 2006:

• to achieve an annual average recordable case rate (RCR)

of not more than 0,5 – or at least a 50% reduction on the

2001 baseline;

• to reduce significant process safety incidents (fires, explosions

and releases) by at least 50% on the 2001 baseline; and

• to achieve at least a 90% overall practice in place of the six

Responsible Care management codes of practice.

Undertaking SH&E corporate governance audits

We undertake regular SH&E corporate governance audits

throughout our global operations to ensure our performance is

aligned with group policies and objectives, and that critical risks

and liabilities are identified and communicated at a senior level.

Our internal audits are supplemented by annual external

verification audits associated with our independent sustainable

development report, as well as external audits undertaken as part

of ISO 14001 and OHSAS 18001 (or equivalent) certification, or

in fulfilment of regulatory requirements.

In late 2004, we commissioned an external review of our

corporate governance programme. We upgraded our governance

audit protocol and programme to reflect changing requirements

and to provide for the recommendations of the independent

external review.

All our businesses are required to track their performance and

submit quarterly reports to their boards, as well as to the group

SH&E and sustainable development forum and the risk and SH&E

committee of the main Sasol board. These quarterly reports

outline each business' major risks and liabilities, identify progress

against the group's sustainability targets and report on any major

incidents and non-compliances.

Upholding strict code of ethics

The Sasol code of ethics comprises four fundamental ethical

principles – responsibility, honesty, fairness and respect – and

15 ethical standards. These standards cover such issues as bribery


A particular priority for the year ahead is to ensure effective implementation of the safety improvement plan throughout our South African operations.

57

and corruption, fraud, insider trading, human rights and

discrimination. They include a commitment to conducting our

business with due regard to the interests of stakeholders and

the environment.

We have an ethics forum to monitor and report on ethics best

practice and compliance requirements, and to recommend

amendments to the code and guide. Employee performance

against Sasol's values, incorporating the code of ethics, is

assessed as part of our mandatory employee performance

management system.

We have been operating an independent and well-supported

South African-based ethics reporting telephone line since 2001

to provide stakeholders with an impartial facility to anonymously

report deviations from ethical behaviour.

Participating in sustainability indices

Sasol’s overall score on the Dow-Jones Sustainability Index (DJSI)

this year was 73%. This reflects an improvement on our rating of

70% in 2003 when we were last assessed as part of the oil and

gas producing sector. In 2004 we were assessed within the

chemicals sector. Despite our improved rating, which contrasts

favourably with the decline in both the average and best scores of

the other companies in this sector (see graph), our overall score

nevertheless remained below the top decile level required for

inclusion in the 2005 DJSI.

Sasol’s DJSI ranking – International benchmarking of

sustainability performance

The JSE recently established its socially responsible investment

index (JSE SRI) to track and publicise the sustainability

performance of public companies listed on the Johannesburg

bourse. Sasol was included in the top five of the 22 high-impact

listed companies that qualified for the 2005 JSE SRI ratings. This is

the first year that the JSE has publicised these ratings.

Supporting global initiatives

Sasol is a member of several international, national and regional

chemical and industrial organisations, most of which are involved

in initiatives aimed at improving the SH&E and sustainability

performance of their members. Sasol has been a Responsible

Care signatory since 1994, and continues to uphold the

guidelines and management practices of this programme for its

fuel and chemical operations.

Sasol is a signatory of the United Nations (UN) Global Compact,

an international initiative that addresses human rights, labour,

environmental and corruption issues through a commitment to

10 principles. A communication on our progress in implementing

the 10 Global Compact principles is included in our separate

sustainable development report.

Economic contribution

• Value of wealth created increases by almost 18%.

• Sasol's operations maintain an estimated 170 000 jobs in South Africa.

• Commercialisation of natural gas benefits theMozambican economy.

• New BEE deals are progressing in South Africa.

• New Gulf-region investments should stimulate theQatari and Iranian economies.


Expanding international role

We are determined to retain our status as an important

contributor to economic development in South Africa and,

increasingly, elsewhere in Africa, with our investments in

Mozambique, Nigeria and Gabon and our emerging petroleum

interests in Equatorial Guinea and Namibia. Our growing African

investments support the tenets of the New African Partnership for

Development and complement the broader agenda of the African

Union to stimulate pan-African socioeconomic development,

attract foreign direct investment and reduce poverty.

Through investments started in 1990, we are increasing our

activities in other regions, particularly in the USA, Germany,

China, Malaysia, Qatar and Iran, where we have completed new

investments, or are developing new and extended operations.

Building wealth in South Africa

On the basis of a recent independent economic review, it has

been estimated that our South African operations provide direct

and indirect employment for about 170 000 people. In recent

years, we have produced about 20% of South Africa's saleable

coal and met, on average, between 35% and 40% of the

country's liquid fuel requirements. We also remain the country's

largest producer of chemical feedstock.

01 02 03 04 05

90

80

70

60

50

40

30

20

10

0

(per

cent

age

scor

e)

Average for industry sector

Sasol

Best for industry sector

58

We contribute about R40 billion (4%) to national gross domestic

product (GDP) and save the country more than R30 billion in foreign

exchange. Sasol remains the country's single largest industrial

investor, with R24 billion invested over the last four years.

On the basis of our market capitalisation (R122 billion at year

end), we remain one of the top five companies listed on the JSE.

During the year, we increased group wealth creation by 18%

from R23,4 billion to R27,5 billion. Of this amount, R8,6 billion

(31%) was distributed to employees and R4,3 billion (16%) to

governments in the form of taxes and related revenue. All

regional operations contribute to wealth creation by adding

value to coal, natural gas, crude oil and chemical feedstocks.

Stimulating growth outside South Africa

In Mozambique, we have become an important economic

contributor since bringing natural gas on stream in the Temane

field in 2004. Through our natural gas operations, we paid

the Government of Mozambique US$3 million (about

R19 million) in taxes, royalties and dividends. Economists

estimate that our US$1,2 billion investment to develop these gas

fields and bring gas to South Africa has increased Mozambique's

GDP by about 20%.

We have also increased our economic contribution outside

Southern Africa, where we employ about 5 600 people, mostly in

the USA, Germany and Italy. While our economic contributions

are more modest in these national economies, they are

significant. A large percentage of our current capital investment is

concentrated in The Gulf region of the Middle East where we are

investing close to US$1 billion in two projects.

Sasol Polymers remains a significant partner in the Optimal

Olefins and Petlin plants at Kertih, Malaysia. Through other joint-

venture interests, Sasol Polymers is expanding its polymer

distribution interests in China.

Black economic empowerment

Supporting empowerment in South Africa

A big challenge in South Africa is to play a positive role in

stimulating the successful advance of the broad-based economic

empowerment of historically disadvantaged South Africans,

particularly black people (Africans, Coloureds and Indians).

To promote our BEE commitment, we operate a BEE coordination

office in Johannesburg. This office reports to a member of our

GEC, and oversees all corporate BEE activities, which have six

main components in our South African businesses:

• introducing equity ownership by historically disadvantaged

people;

• procuring goods and services, preferentially, from historically

disadvantaged people;

• progressing employment equity;

• building human capacity and talent in industry;

• facilitating the development of smaller BEE enterprises; and

• implementing social upliftment initiatives.

Preparing empowerment deals

We have advanced discussions with BEE partners in our South African

liquid fuels and mining businesses. In the previous year, Sasol Mining

selected Eyesizwe Coal as its lead empowerment partner, thereby

paving the way towards introducing BEE ownership to our mining

operations. Sasol Mining and Eyesizwe intend to conclude the terms

of their empowerment deal in the year ahead.

The planned Uhambo Oil joint venture between the liquid fuel

interests of Sasol and Engen, predominantly owned by Petroliam

Nasional Berhad (Petronas) of Malaysia, was recommended for

conditional approval in May 2005 by South Africa's Competition

Commission and referred to the Competition Tribunal for final

review. Our BEE plans for our liquid fuels business are progressing

well and the incorporation into Uhambo is subject to the outcome

of this review.


Sasol is an important economic contributor to Mozambique since bringing naturalgas on stream in 2004.

Sasol continues to develop black economic empowerment initiatives tosupport socioeconomic transformation in South Africa.

59

Should the Uhambo deal proceed, Petronas and Sasol will partner

with their two BEE groups, Worldwide African Investment Holdings

and Tshwarisano LFB Investment, respectively, to create South

Africa's largest liquid fuel business. BEE partners would own 25% of

Uhambo. If the Uhambo deal does not proceed, then Tshwarisano

will take a 25% equity position in Sasol’s Liquid Fuels Business.

Sasol Gas and its empowerment partner, Coal Energy & Power

Resources, continue to operate their successful 49:51 joint venture

at Durban, Spring Lights Gas. Sasol Gas is seeking other

empowerment joint ventures, subject to opportunities to create

new regional gas markets and find BEE partners. In addition, DPI

Plastics, a joint venture between Sasol Polymers and Group Five,

maintains seven BEE joint ventures to market and sell plastic piping.

Promoting employee diversity

We continue to increase the percentage of employees drawn from

historically disadvantaged groups in line with South Africa's

Employment Equity Act. People from designated groups – Africans,

Coloureds and Indians, women and people with disabilities –

comprise almost 65% of our South African workforce.

At year end, people from designated groups held 39,2% of our

South African managerial, professional and supervisory posts. This

compares with a target of 40% that we set for ourselves some years

ago. We intend to increase this figure to 50% in the medium term.

We award more than 62% of our undergraduate bursaries to

students from historically disadvantaged groups. More than 50% of

future appointments of trainee artisans will be allocated to people

from designated groups.

Shortly after year end, we announced the appointment of

Ms Nolitha Fakude as an executive director as part of a drive to

appoint more black people to the higher levels of group

management, including the GEC. We intend to make additional

senior black appointments in the year ahead.

Expanding BEE procurement

Our independently reviewed procurement spend with BEE

suppliers increased by 65% to R2 473 million. We intend to

increase this amount in the year ahead.

Social performance

• Safety charter and improvement plan launched in

response to an unacceptable increase in safety

incidents and 17 work-related fatalities.

• Sasol North America and Sasol Germany attained

world-class safety performances.

• More than R170 million invested in developing

employee skills.

• More than 80% of South African employees have

undergone voluntary HIV testing.

• Social investment continues to emphasise the need

for advancing socioeconomic development in

Southern Africa by building human capacity.

Occupational health and safety

Targeting zero fatalities

It is with deep regret that seven employees and 10 contractors

were fatally injured in workplace incidents. This includes the

10 people who died in an explosion at our Secunda ethylene

plant in September 2004. Any work-related fatality in the group

is unacceptable, and this figure is of particular concern. This

compares with five workplace fatalities in the previous year and

10 in our 2003 financial year. Our goal remains zero fatalities.

We have since intensified our safety management programmes to

attain our goal of zero fatalities. In November 2004, Sasol appointed

DuPont Safety Resources to perform a comprehensive safety review

of our South African operations. In the interests of transparency, the

findings of this review have been posted on our website.

Ongoing employee skills and safety training and personal development are integral to Sasol's pursuit of good corporate citizenship.

60

We are acting on the DuPont Safety Resources recommendations,

which are based on improving the safety culture of our South African

operations. This commitment is encapsulated in the Sasol safety

improvement plan, which covers key elements of safe behaviour,

contractor safety, process safety and many other specific issues. In

addition, all businesses have implemented their own site-specific

safety plans, the progress of which is monitored by their boards.

We have embarked on a comprehensive change-management

programme to ensure the sustainability of these efforts

throughout our South African operations. Key to this

commitment, Sasol and three trade unions recently unveiled a

safety charter, details of which are available on our website. This

charter – believed to be a world first – was developed in close

consultation with these unions and demonstrates our common

goal of making safety the first priority of everyone at Sasol.

As a focal point for these efforts, Sasol has revised its shared

values to emphasise safety as one of the group's six core values.

Improving our recordable case rate

We have significantly refocused our efforts to drive down the

group injury rate, which we track as the RCR. An RCR is the

number of fatalities, lost workdays and medical treatments

beyond first-aid cases for every 200 000 employee hours worked.

We have set an interim target of halving our worldwide RCR to

0,5 by June 2006 (a maximum of one case for every 400 000

employee hours). An RCR of 0,5 is considered to be in line with

global best practice.

An unacceptable increase in injuries was experienced in the first

half of the year, particularly at Sasol Mining and Sasol Polymers.

The group RCR increased to 1,17 compared with 1,03 and 1,34 in

financial 2004 and 2003, respectively. We have taken significant

steps to address this poor safety performance.

There have been some early encouraging signs of improved

performance. Sasol Mining, for the first time, achieved five

million employee hours without a lost workday case and, by mid-

2005, had reported working eight million employee hours

without a lost workday case. In April 2004, the Sasol North

America operations at Lake Charles, Louisiana, achieved one

continuous year of operations without a recordable injury.

Progressing process safety management

Ensuring the effective management of the risk of fires, explosions

and releases of hazardous substances is critical to our business.

We achieved further progress in implementing the recently

approved process safety management system throughout our

operations, with the aim of minimising the risks of accidents and

releases of hazardous substances.

Despite these efforts, there were 25 significant fires, explosions

and releases throughout the group. We register an incident as

“significant” when it meets one of three criteria: it involves a

fatality or lost workday case; it results in damage of more than

US$25 000; or it causes a release of the relevant substance’s

US OSHA threshold quantity. It is nevertheless pleasing that this

represents a 37,5% reduction on the level of our 2001 financial

year, and constitutes significant progress towards the SH&E

target of a 50% improvement on 2001 levels by July 2006.

Human resource management

Maintaining a skilled and stable workforce

At year end, Sasol had about 30 000 employees. Employee

turnover was within normal ranges of between 4% and 6%.

Since our inception, we have focused on developing, maintaining

and optimising our skills base that is necessary to ensure the

ongoing productivity, safety and reliability of our global

operations. Our commitment to creating a culture of continuous

learning is evident in the structured, group-wide approach to

people development, including our 5 600 employees outside

South Africa.


More than 80% of our South African employees volunteered to undergo confidentialHIV testing as part of the successful Sasol HIV/Aids Response Programme.

The implementation of a process safety management system was further advanced.

Employment equity statistics as at 30 June 2005

Executives 12% Senior management 18% Management 43% Skilled and semi-skilled 76%

People in designated groups – 39,2%

People in designated groups – 64%

White male

White female

Black male

Black female

31

1 3

3 725

1 049 1 411 347 3 610 1 204

9 555

654

927

72 127 11

61

Sasol sponsors at least 462 undergraduate bursaries in South

Africa annually, with emphasis on developing scientific,

engineering and technological skills. We committed R24 million

for 462 undergraduate and 80 postgraduate bursaries in 2005 and

have budgeted a similar amount for the 2006 academic year.

We invested a further R172 million in employee training and

development throughout the group. This investment includes

in-house technical training, self-learning centres and

undergraduate bursaries.

We are at the third intake of employees participating in our

accelerated leadership development programme in South Africa.

We are currently developing high-potential, historically

disadvantaged South Africans from different disciplines through

this programme.

Encouraging participation and good relations

We enjoy constructive relationships with representative trade

unions throughout the company. More than 50% of our

employees in South Africa belong to unions. As a result of

ongoing good relations, Sasol lost no employee days through

industrial action.

Joint forums have been established between trade unions and

management to discuss wages, conditions of employment, health

and safety, training and development, community care and

HIV/Aids, among other important issues. All representative unions

and pensioners are represented on our medical scheme board and

senior employees serve on the boards of union retirement funds.

Upholding human rights

We are committed to complying with all statutes in the countries

in which we operate. This is complemented by our commitment

to the human rights principles of the UN Global Compact. As we

extend our operations into countries that are considered to have

human rights concerns, we recognise the importance of

exercising extra care to ensure our activities comply with

internationally accepted standards of behaviour.

Meeting the Aids challenge

Recognising the challenge of managing South Africa's HIV/Aids

pandemic, we launched the Sasol HIV/Aids Response Programme

(SHARP) in September 2002. This initiative – which involved input

from business, trade union, community representatives and

independent experts – is an integrated approach focused on

reducing the rate of infection throughout the group, and

extending the quality of life of infected employees by providing

managed healthcare.

As a result of our collaborative approach, we have had one of the

highest uptakes for voluntary counselling and testing (VCT) in

South Africa: 82% by year end for our South African operations.

This compares with a rate of between 50% and 60% that is typical

among most corporate programmes. To date, 7% of our tested

South African employees have tested positive for HIV, which is

well below our estimated actuarial prevalence rate of 19%.

Having taken all of the South African operations through VCT,

our focus has shifted to providing comprehensive workplace

education and training programmes in our South African

businesses. Our goal is to train 800 managers and 1 000

educators. To date, 250 managers have been trained. SHARP is

being extended to surrounding communities through partnerships

with community stakeholders, government bodies and other

companies in South Africa and Mozambique.

Community involvement

Promoting engagement and outreach

Besides the public participation initiatives implemented as part of

new projects, we continued to undertake community outreach

62

initiatives at most of our existing operations. These initiatives

included holding public meetings, hosting explanatory tours

of our operations and implementing structured systems for

responding effectively to community complaints. This

constructive approach towards community outreach has

provided our management teams with a deeper understanding

of community concerns and interests.

In developing our 2005 sustainable development report,

we commissioned independent consultants to engage a sample

of Sasol's stakeholders by e-mail, telephone, interviews and

focus groups. A summary and analysis of the outcomes of this

engagement process are included in our sustainable

development report.

Sustaining strong social investments

Sasol has committed more than R600 million to social upliftment

and human development over the last decade. We continue to

support the communities in which we operate, especially in

South Africa, our corporate home, and in Mozambique, where

we recently completed construction of our US$1,2 billion

Mozambique Natural Gas Project (MNGP).

We channel our social investments into five main areas:

• education;

• job creation and capacity building;

• health and welfare;

• arts, culture and sport development; and

• the natural environment.

During the year, we committed almost R47 million to

socioeconomic development projects, mostly in the Sasolburg and

Secunda communities and along the Mozambique-to-Secunda

pipeline route. This investment excludes the R24 million committed

to bursaries and the funds dedicated to sport sponsorship.

As part of the MNGP, Sasol is maintaining a social development

plan in Mozambique. To date, we have invested more than

US$7 million in community development projects in

Mozambique, with US$0,86 million invested during the year.

We also have committed an additional US$1 million for social

upliftment projects to benefit communities alongside the gas

transmission pipeline in South Africa.

While most of our social investments are undertaken in Southern

Africa, important community-based initiatives are undertaken by

our US and European operations. During the year, these

operations and their employees contributed almost R6 million to

community projects. Employees in the USA donated thousands of

volunteer hours to help with community projects. A more detailed

review of our social investment activities is available from our

corporate social investment department.

Environmental performance

• Group targets agreed for reducing emissions of

greenhouse gases and volatile organic compounds.

• Visible progress in reducing atmospheric emissions.

• Significant new capital investments approved for

further emission reductions.

• Many businesses are reducing energy and water

consumption per ton of production.

• Progress in implementing product stewardship

throughout global operations.

Reducing impacts

Due to the nature of Sasol's activities as a global petrochemical

company, we recognise we have the potential to impact the

natural environment. The group is therefore committed to


Sasol is undertaking several major investments to improve its waste-management facilitiesand environmental performance.

Sasol continues to support socioeconomic development through anextensive corporate social investment programme.

63

minimising its environmental footprint by implementing measures

aimed at:

• reducing waste, atmospheric emissions, and water and energy

consumption;

• minimising the negative impacts of products through their life

cycles; and

• managing impacts on land and biodiversity.

Reducing greenhouse gas emissions

Following an extensive internal review and external

benchmarking process, we finalised a group target of achieving at

least a 10% reduction in greenhouse gas emissions per ton of

product, on the 2005 baseline, by July 2015. We intend to achieve

this reduction mostly by switching to a feedstock with a better

carbon-efficiency at existing facilities, using a less carbon-

intensive feedstock at new production facilities, reducing

emissions at our nitric acid facilities and implementing an

enhanced energy-efficiency drive at all facilities.

Our inventory of greenhouse gas emissions has been developed

using the reporting protocol of the World Business Council for

Sustainable Development and the World Resources Institute.

Certain projects have been verified by independent consultants.

The overall emission of carbon dioxide and methane, measured in

terms of carbon dioxide equivalent per ton of production, was

2,88 compared with 2,64 in the previous year.

Sasol has made valuable progress towards registering several

Clean Development Mechanism projects. We also continue to

contribute to the activities of a working group of the

Intergovernmental Panel on Climate Change that is examining

opportunities to capture and store carbon dioxide.

Targeting other pollutants

Some notable milestones were achieved in reducing atmospheric

emissions throughout the group, primarily in South Africa where

projects are being implemented against the backdrop of the new

National Environment Management: Air Quality Act, which

stipulates new ambient air quality standards.

At our Secunda operations, more than R500 million has been

committed over the next three years to projects aimed at

improving air quality, while, in Sasolburg, more than R2 billion is

to be invested in similar projects over the same period. Following

the conversion from coal to natural gas feedstock at our

Sasolburg operations, significant reductions have already been

achieved in the emission of hydrogen sulphide, historically a

cause for complaints about odour.

The GEC approved a group target of achieving at least a 50%

reduction in the emission of VOCs on the 2005 baseline by July

2015. Several projects have been implemented at the Natref

refinery at Sasolburg, which have since resulted in reduced

emissions of low-level VOCs. Capital expenditure has been

approved to achieve similar VOC reductions at our Secunda plant.

More detailed data on our atmospheric emissions at a group level

is provided in our separate sustainable development report.

Supporting clean-fuels drive

Sasol is investing more than R6 billion at Sasolburg and Secunda

to modify its fuel production facilities to ensure compliance with

South Africa's stricter diesel and petrol specifications that

become mandatory in January 2006. These specifications will

bring South Africa closer to global standards and are expected to

contribute to reduced vehicular emissions of harmful substances.

In another significant development, the imminent start-up of the

Oryx GTL plant in Qatar will enable Sasol and Qatar Petroleum to

supply an environmentally preferred form of synthetic diesel

(GTL diesel) produced from the Sasol Slurry Phase Distillate™

process. GTL diesel has virtually no sulphur (less than five parts

per million), a low aromatic content (less than 1%) and a high

Air-quality monitoring stations at and around Sasol plants worldwide areintegral to our efforts to reduce emissions to air.

Ongoing land rehabilitation is core to Sasol's worldwide environmentalmanagement efforts.

64

cetane number (70 versus the 45-55 of conventional diesels).

These properties enable greatly reduced tailpipe emissions of

nitrous oxides, sulphur oxides, carbon monoxide, aromatics,

unburnt hydrocarbons and particulates from compression-

ignition engines.

Working to minimise waste

Potential risks associated with waste remain a priority. Historical

legacies are addressed in accordance with relevant legal

requirements. Cleaner production principles are being

implemented to minimise future risks.

An important initiative has been the commissioning of a waste-

recycling facility at Secunda, which will have significant

implications for on- and off-site waste treatment and disposal

activities. We are working on developing group targets for waste

reduction and global guidelines are being developed for

minimum waste-management requirements.

Partnering for better energy efficiency

In South Africa, we signed the Energy Efficiency Accord with

other companies and the Department of Minerals and Energy.

Though this accord, we are committed to taking actions to

reduce energy consumption per unit produced by 15% by 2015.

The base year is 2000.

Remediating and rehabilitating land

As a result of our historical chemicals and fuels processes, we

have several areas where soil or groundwater may have been

polluted in the past. Good progress has been made in

remediating contaminated land throughout the group.

In some areas, remediation projects were successfully completed.

In other areas, detailed surface and groundwater characterisation

projects have been implemented.

Managing impacts in global activities

Sasol is undertaking new investments in countries such as

Mozambique, Nigeria, Gabon, Equatorial Guinea and Qatar,

where we are involved – or are about to become involved – in

exploration, extraction, processing and transportation activities

relating to natural gas, petroleum and chemicals.

Our operations in these jurisdictions are subject to regulations for

exploration and mining rights and the protection of safety, health

and the environment. In addition, securing external funding for

projects of this nature generally requires that we meet World

Bank social and environmental requirements following the

adoption by many banks of the Equator Principles. With this in

mind, we typically require that such activities comply, as a

minimum, with World Bank environmental and social standards.

Product stewardship

Furthering product stewardship

Recognising the risk management and marketing benefits

associated with environmentally preferred products, particularly


Members of the emergency response team at the Lake Charles ChemicalComplex in Louisiana conduct regular equipment inspections.

The Oryx GTL plant in Qatar will supply environmentally preferred synthetic diesel.

65

in the context of the global policy shift towards addressing the

risks and impacts of products rather than processes alone, Sasol is

committed to adopting a life-cycle approach to all the products

we develop, manufacture, use, distribute and sell.

Since 2003, a formalised global support structure – with assigned

responsibilities in each of the key companies – has been in place

with the goal of ensuring a structured, group-wide response to

product stewardship. Sasol has continued to play a leading role

on product stewardship issues in relevant working groups of the

European Chemical Industries' Council and the American

Chemistry Council.

We support the development of the Globally Harmonised System

of Classification and Labelling of Chemicals and will be adopting

this. Every Sasol chemical business is required to implement the

Responsible Care product stewardship code.

Sustainability reportingChanging to annual reporting

With effect from the year under review, we have agreed to publish

our group sustainable development report annually, and no

longer biennially. Our sixth external report on our sustainability

performance will be available from the Sasol head office and

website from November 2005.

Sasol reports on sustainable development in accordance with the

Sustainability Reporting Guidelines of the Global Reporting

Initiative (GRI). Our 2005 sustainable development report – for

A new Sasol waste-recycling facility under development at Secunda in South Africa.

the period 1 July 2004 to 30 June 2005 – has been produced in

accordance with GRI guidelines and has drawn on the findings of

an independently conducted process of stakeholder engagement

Looking ahead

Targeting improvements

We have many challenges ahead. Our safety record has been

unacceptable. We shall be working to improve this in the year ahead

as a priority. We shall be further transforming Sasol to provide new

opportunities to historically disadvantaged South Africans. As a

result of our current growth trajectory, we are fortunate that we can

offer opportunities to all our employees to grow and excel.

We shall proceed with established and new initiatives to empower

black people and ensure their broader participation in South

Africa's mainstream economy. We also are forging closer ties with

the South African Government to ensure we are more closely

aligned to national socioeconomic objectives, while also ensuring

the Government is informed of our activities and plans in this field.

Sasol's leaders have again committed themselves to living the

group's values, which continue to provide a solid foundation for

building our future sustainability policies and programmes. While

Sasol has achieved encouraging progress in many areas of

sustainable development, we have considerable work still to do.

This includes an ongoing change in our leadership style

throughout Sasol and, in particular, in the way we interact with

each other and our stakeholders.

66

the world of sasol

From the visual arts to nature conservation, and from community development tosports sponsorships, Sasol seeks to be a better corporate citizen by respondingwith concern to the needs of host communities and the natural environment.

Spare a thought for truck drivers. They oil our modern economy,

transporting goods and fuel countrywide with speed. But they

spend long hours on the road away from family and home

comforts. And when they need a break, there is often not much

choice other than the side of the road. So it's not surprising

that the one-stop truck centre in Sasolburg has become a

truckers' haven.

The Sasolburg Truck Service Centre was developed in response

to problems identified by the Sasolburg Town Council. The

town was taking strain because 400 to 500 heavy-duty

vehicles were passing through the central business area each

day on their way to collect fuel at Natref, the National

Petroleum Refineries of South Africa. The town council asked

Sasol to help with the damage to the roads.

Problems upsetting residents included dumping, an

environmental hazard, and prostitution. Trucks need to be

cleaned before reloading and in the past some tanker drivers

would empty the remainder of their loads on the roadside.

Truckers were also at risk from crime and hijacking.

The new centre, with parking for 80 trucks, eased the town's

traffic problems immediately. It was officially opened in

April 2005, although it had been open for trade since

November 2004. Managed by Sasol LFB fuels marketing,

60 new jobs have been created at the centre.

Another way life has been made more efficient for the

truckers is that they don't have to queue any more.

Previously, the vehicles had to wait up to three hours at

Natref before loading. The service centre is now the

official waiting point. Drivers park there and through

computer communication with Natref can find out when

it is time to go through to the factory. This means that

instead of sitting in their trucks on the side of the road,

they can have a shower, relax or enjoy a meal while they

wait – and they can have their vehicles washed, serviced or

refuelled as well.

The 24/7 stop has four wash bays. Truckers can have

their vehicles cleaned inside and out while they are waiting.

Even hazardous chemicals will be disposed of safely. The new

centre also has a minor repair workshop, a tyre service and

facilities for refuelling.

The centre is an example of Sasol's code of ethics working

in practice: the code includes respect for the environment

and regard for social responsibility. And the facility is not

only for Sasol transporters – other trucks passing through

the area can also use it.

in for thelong haul

67

contemporary artists. The collecting policy focuses on works

by young South African artists, both those emerging and

those more established. The annual Sasol New Signatures

competition exposes budding artists.

We have produced three volumes of art publications. The

first coincided with an exhibition of the collection at the

Johannesburg Art Gallery. The second marked the opening

of the Sasol Art Museum at the University of Stellenbosch.

The third was produced in honour of the late Joe Stegmann.

The Sasol Art Museum opened in October 1991 and its

outreach programmes include regular workshops for

learners from schools on the Cape Flats, Cape Town.

Once a year, in November, we open the doors of our

Rosebank, Johannesburg offices to the public to view new

acquisitions or take a guided tour.

When the staff at Petlin, the largest low-density polyethylene

plant in Asia, asked if they could alter their lunar landscape of

metal and concrete and develop a park within the plant, the

management gave them a green thumbs-up.

The staff then set out to create not one, but three gardens,

each representing one of the national identities of Petlin's

shareholders, Petronas, Malaysia's national petroleum

corporation (40%), Sasol Polymers of South Africa (40%) and

SABIC Polyethylenes, which holds the 20% share previously

held by DSM of the Netherlands.

The Malaysian garden has gazebos and bunga raya shrub, the

national flower, lining its perimeter. The South African garden

has a miniature replica of an African elephant and a lion

next to a water fountain. The Dutch garden has a windmill

and pine trees. The gardens are a talking point for visitors to the

plant. This employee-made oasis is used by the staff during

their tea breaks.

plants in a plant

This year’s publication of art @ work celebrates Sasol's support

for the visual arts in South Africa over the past 21 years. The

book features some of the almost 120 artists whose works

make up our collection.

Sasol may be an oil, gas and chemical company, but the Sasol staff

work in an artistic environment. The works are on display in

corridors, conference rooms and reception areas around the world,

a living testament to South Africa's wealth of creative visual talent.

More than that, staff are invited to participate through monthly in-

house More About Art sessions. One month a year is also dedicated

to arts and culture when employees, friends and family are included

in lunchtime activities such as videos and pottery workshops.

The collection was started in 1982 by a former chief executive,

Joe Stegmann, whose passion for the arts has evolved into an

impressive corporate collection of 2 000 pieces, mainly by

fuelling south africa’s creative juices

68

the world of sasol

If it’s Wednesday morning in Brunsbüttel in northern Germany,

it’s Children’s Lab time. Elementary school children gather to

do fun things like identifying plant fragrances and purifying

waste water – simple experiments that bring the world of

science alive for young, enquiring minds.

The lab is operated jointly by Sasol’s Brunsbüttel plant

and chemical companies Bayer, Dystar, RütgersElbchemie,

SAVA and Yara. It was opened in November 2004. Facilities

were provided by the city at Brunsbüttel’s Elementary

School Süd.

a chemical solution

“Natural sciences rank low on the priority list of German

schools. Therefore many applicants for apprentice positions

have only a limited knowledge of chemistry. With the lab

project we want to stimulate interest in chemistry and train

young talent and make it clear that chemistry is part of our

daily lives,” says Wolfgang Pfeffer, head of human resources

at the Brunsbüttel plant.

And the children of Brunsbüttel have grabbed the chance

to learn. The lab has been so popular that the sessions are

now booked out quickly.

The scorching sun of the Kgalagadi Transfrontier Park pushes temperatures as high as 42 degrees

Celsius in summer. Animals ranging this semi-desert terrain include lion, wildebeest and

cheetah, but drinking water is scarce. So Sasol is giving nature a nudge and harnessing the heat

of the sun for a solution. It is sponsoring a solar-powered waterhole for the wild animals.

This reserve is in the area where the borders of South Africa, Namibia and Botswana meet, and the

solar-powered waterhole at Polentswa has become a resting place for wild animals and birds.

Borehole water was previously provided through windmills with dams and concrete drinking

troughs. Solar-powered borehole pumps and natural-looking sunken troughs have replaced

these. The solar panel converts sun energy to electrical energy to drive the borehole pump.

It's just another way in which Sasol is reaching new frontiers.

giving nature a nudge

69

these unusual birds are left. Land lost to farming,

poisoning, trapping, the felling of large trees used for

nesting, the exotic bird trade and traditional medicinal

uses have almost depleted the species. Hand-rearing

chicks and reintroducing them into the wild is one of the

contributions the trust is making.

Sasol also sponsored the Sasol Birds and Birding Fair

with BirdLife South Africa, Africa Birds & Birding magazine

and the Johannesburg Zoo. We continued to support

the Vaal Dam big bird count, run by the Vaal Dam branch

of BirdLife South Africa. This monitors the water-bird

population and the conditions of the wetlands needed by

these birds. Twenty-eight boats, from dinghies to yachts

and powerboats, took the birders out to do the count.

You can imagine the human twittering and clucking when

they spotted yellow-billed storks, white-breasted

cormorants, blacksmith plovers and even Caspian terns.

Sometimes solutions are simple – like finding 3,5 kilometres of

plastic piping to carry water from a reservoir to a waterhole.

Sasol's environmental consciousness finds its most visible

expression in its support for bird life. So when supplying piping

could save the lives of Cape Griffon vultures in the

mountainous Blouberg Nature Reserve in the Western Cape,

Sasol Polymers naturally said yes.

This colony of vultures has been monitored by the Blouberg

Vulture Project for 10 years. As it is a stable breeding colony,

its well-being is vital. A few years ago the waterhole the

vultures used started drying up and they moved on to a large

storage dam 3,5 kilometres away. The problem was, once they

climbed inside the dam, these giant birds often couldn't get

out, and some of them drowned. Now water is running into

the waterhole and the vultures have their old spot back to

bathe and drink.

Other birding projects include sponsorship of the popular

Sasol Birds of Southern Africa, birdcall recordings, bird

hides and birding weekends in the Kruger National Park and at

the Marakele National Park. More than 400 birders and a

large contingent of SANParks honorary rangers participated in

this year's Kruger Park weekend.

The company has supported the Endangered Wildlife

Trust's Vulture Study Group and the Ground Hornbill Project

based at Mabula Lodge. The latter conducts research and

does the field work necessary to tackle the threats facing

this species and its habitat. The ground hornbill is classified

as vulnerable in South Africa because less than 2 000 of

flying high

70

the world of sasol

Energy changes lives. So Sasol was pleased to partner the

Department of Minerals and Energy in South Africa to

develop Integrated Energy Centres (IeCs). These centres will

make energy products more accessible and affordable to

poor people in rural areas of South Africa.

Take the people living in Maluti, a remote rural area near

Matatiele on the border of KwaZulu-Natal and Eastern Cape.

In the past they had to make an 80 kilometre taxi journey to

Kokstad to buy paraffin and candles. Now they can shop at the

Caba-Mdeni IeC, an information hub and energy shop selling

paraffin, liquid petroleum gas, candles, petrol and diesel. Sasol

delivers directly to the centre, excluding the middleman, which

makes the products more affordable.

The IeC idea was introduced in 2001 after President Thabo

Mbeki's plea to business to assist in the delivery of services

free state learners get wired

and resources to rural people. Industry players like Sasol

were asked to help with community-based energy projects

as part of the South African Government's Integrated

Sustainable Rural Development Plan.

Caba-Mdeni, which opened in December 2004, is the first

of 10 IeCs around the country. It is a cooperative owned by

59 members of the sprawling community. Thirty-five of the

registered members are women. It has also created 10 jobs

in a community where formal employment is scarce.

Sasol will eventually move on from being directly involved

in running the IeC. “We shall be involved with an IeC for a

maximum of 18 months, after which it will function like a

proper, independent business with us as the supplier,” says

Johan Thyse, manager: new energy solutions at Sasol's

manufacturing and supply group.

powerto thepeople

Teachers and learners in the northern Free State are joining

the information highway at the Boitjhorisong Resource Centre,

which has more than 100 computers and connections to the

Internet. This Sasol-sponsored community education project is

contributing to turning the northern Free State area into a

centre of excellence. The district achieved the best matric pass

rate for 2002, 2003 and 2004.

The centre embraces a philosophy of life-long learning. It

reaches 74 schools, 158 farm schools, 63 500 learners and 2 000

teachers with literacy, numeracy and computer courses,

workshops on different subjects and support services for schools.

Improving the standard of maths and science is crucial to

provide the skills the country needs. So Boitjhorisong is helping

to bridge the digital divide. It uses computers for training and

also gives learners the chance to pass computer science as a

seventh subject. Teachers can use the science and mathematics

lending library and learners are allowed Internet access at

the centre.

71

Wonke Wonke is being run across Safa's 25 regions. It

started at a district level. Then came regional participation

and a series of provincial trials. The provincial teams

participated at an inter-provincial tournament in July 2005

in Soweto. A team of selectors, including national coaches

and former soccer stars watched over the proceedings.

It was tough going. Sixty players were selected at the

end of the tournament – but there was still another round.

These 60 players stayed for a football camp lasting a week

until 22 of the country's finest were finally selected.

Parallel to Wonke Wonke is a programme focusing

on under-23 professional players in the Premier Soccer

League, the Mvela League, and those who are

playing abroad.

As this development programme unfolds, the 22 players

chosen at the inter-provincial tournament and the pool

of professional players will slowly merge into what will be

known as the Sasol-sponsored Amaglug-glug™. Laduma!

searching for soccer’s whizz-kids

Sasol's financing of the South African Under-23 soccer team

is an investment in building a world-class national team.

The Amaglug-glug™ team that will represent South Africa

in Beijing in 2008 will form the foundation of the Bafana

Bafana team we shall be fielding for the World Cup

in 2010.

We are committed to developing soccer through our

sponsorship of the Under-23 team, and have cemented our

partnership with the South African Football Association

(Safa) with a R40 million sponsorship for the Amaglug-glug™

team over the four years leading up to Beijing.

Now the search for talent is on. Wonke Wonke, which

means “everyone”, is Sasol and Safa's programme to find

the best players to fill our national team's boots. Since

Wonke Wonke was launched in February 2005, Sasol and

Safa staffers have been travelling around the country,

visiting remote areas, to unearth hidden potential.

72

1. 2. 3.

board of directors

1. Paul Kruger (68) BSc Eng (Mining), MBLIndependent non-executive chairman. Chairman of the nomination and

governance committee and the compensation committee and member of

the risk and safety, health and environment committee.

Past chancellor of the Rand Afrikaans University (now the University of

Johannesburg), and past chairman of Business South Africa (BSA). He is a

director of most major Sasol companies and several other companies,

including ABSA Bank Limited, ABSA Group Limited and Abagold (Pty) Limited.

He served on the King Committee on Corporate Governance and is a trustee

of the State President's International Marketing Council.

He joined the group in 1964, was appointed to the board in 1986 and

appointed as non-executive chairman in 1997.

2. Pieter Cox (62) BSc Eng (Mining), BSc (Metal) Chief executive until 30 June 2005. Non-executive director from

1 October 2005 and chairman from 1 January 2006. Member of the risk

and safety, health and environment committee.

Director of all major companies in the Sasol group. Joined the group in 1971.

In 1985 he was appointed a group general manager. He was appointed chief

executive officer of Polifin Limited in 1993, chief operating officer of Sasol

Limited in May 1996, chief executive of Sasol Limited in January 1997 and

deputy chairman and chief executive in March 2001.

Appointed to the board in 1996.

3. Pat Davies (54) BSc Eng (Mech.) Chief executive from 1 July 2005. Member of the risk and safety, health

and environment committee.

Director of most major companies in the Sasol group. Responsible for the

group's oil and gas business, including Sasol Synfuels, Sasol Petroleum

International, Sasol Synfuels International, Sasol Oil, Sasol Gas and

Sasol Technology.

Also responsible for the globalisation of Sasol's GTL technology. He joined the

group in 1975 and has held various positions in engineering design, project

management, operations management and corporate affairs.


4. Trevor Munday (56) BCom Deputy chief executive from 1 July 2005. Member of the risk and safety,

health and environment committee.

Director of all major companies in the Sasol group and chief financial officer.Responsible also for Sasol's chemical businesses, planning, investor relations,corporate affairs and brand management.

He has held several key senior commercial and financial managementpositions in Southern Africa and Europe and was managing director of PolifinLimited prior to its acquisition by Sasol.


5. Warren Clewlow (69) OMSG, CA(SA), DEcon (hc) Independent non-executive director. Member of the audit committee, thenomination and governance committee and the compensation committee.

Chairman of Barloworld Limited, Nedcor Limited and Nedbank Limited.Director of Old Mutual plc, Pretoria Portland Cement Limited and deputychairman of Old Mutual Life Assurance Company (South Africa) Limited.Past chairman of the State President's Advisory Council and recipient of theOrder of Meritorious Service, Gold Class for service to South Africa.


6. Brian Connellan (65) CA(SA)Independent non-executive director. Chairman of the audit committeeand member of the risk and safety, health and environment committee andcompensation committee.

Director of Nampak Limited, Tiger Brands Limited, Absa Group Limited,Reunert Limited, Illovo Sugar Limited and Oceana Group Limited.


7. Jürgen Schrempp (61) BSc Eng Independent non-executive director.

Chairman of the board of management of DaimlerChrysler AG, director ofVodafone Group plc and Compagnie Financière Richemont SA. He is foundingchairman of the Southern Africa Initiative of German Business (SAFRI), and amember of the advisory council of Deutsche Bank AG, the European advisory

7. 8. 9. 10.

73

4. 5. 6.

board of Harvard Business School, the German Council of INSEAD and theSouth African President's International Investment Council. He is HonoraryConsul-General in Germany of the Republic of South Africa and he holds aprofessorship of the federal state of Baden-Württemberg, Germany, andhonorary doctorates of the University of Graz, Austria and the University ofStellenbosch, South Africa.


8. Sam Montsi (60) BA Econ, MA Dev EconIndependent non-executive director. Chairman of the risk and safety,

health and environment committee and member of the nomination and

governance committee and compensation committee.

Chairman of Montsi Investments (Pty) Limited and director of Independent

News & Media SA (Pty) Limited and Business Arts South Africa and all

companies in which Montsi Investments has invested.


9. Elisabeth Bradley (66) BSc, MScIndependent non-executive director. Member of the nomination and

governance committee and the compensation committee.

Chairman of Toyota South Africa (Pty) Limited, Wesco Investments Limited,

Metair Investments Limited, Rosebank Hotel and the Winkler Hotel. Director

of the Standard Bank Group Limited, the Tongaat-Hulett Group Limited and

Anglogold Ashanti Limited. She is deputy chairman of the SA Institute of

International Affairs and chairman of the Centre for Development

and Enterprise.


10. Mandla Gantsho (43) CA(SA), MScNon-executive director.

Chief executive officer and managing director of the Development Bank of

Southern Africa (DBSA). Previously chief financial officer of the DBSA.

Between 1999 and 2000 was seconded as advisor to a vice-president of the

International Finance Corporation in Washington, DC.


11. Conrad Strauss (69) BA, MSc, PhDIndependent non-executive director. Member of the audit committee and

nomination and governance committee.

Former chairman of Standard Bank Investment Corporation Limited. He still

serves as a director of the Standard Bank of South Africa Limited, Afrox

Limited and Hans Merensky Holdings (Pty) Limited. He was chairman of the

Presidential Commission of Enquiry into Rural Finance, the South Africa

Foundation and the South African Institute of International Affairs.


12. Anshu Jain (42) BA (Hons), MBAIndependent non-executive director.

Managing director and head of global markets at Deutsche Bank AG and

member of the group executive committee. Previously a managing director

with Merrill Lynch in New York.


13. Imogen Mkhize (42) BSc, MBAIndependent non-executive director. Member of the risk and safety, health

and environment committee.

Chief executive officer of the 18th World Petroleum Congress. Previously,

executive chairman of the Zitek Group and managing director of Lucent

Technologies South Africa. She is a director of Murray & Roberts Holdings,

Datacentrix, the CSIR, the Financial Markets Advisory Board and

Rhodes University.

Appointed to the board on 1 January 2005.

11. 12. 13.

74

corporate governance

Upholding international best practice

Introduction

Sound corporate governance structures and processes have been in

operation at Sasol since its inception. They are constantly reviewed

and adapted to accommodate internal corporate developments

and to reflect national and international best practice.

The company maintains a primary listing of its ordinary shares on

the JSE Limited (JSE) and a listing of American Depositary Shares

on the New York Stock Exchange (NYSE). The company is

accordingly subject to the ongoing disclosure, corporate

governance and other requirements imposed by the JSE,

US Securities and Exchange Commission (SEC) and the NYSE.

The company complies with the JSE listing requirements and

US governance requirements of the SEC, the NYSE and legislation

such as the Sarbanes-Oxley Act of 2002 (SOX) applicable to

foreign companies listed on the NYSE. In addition, Sasol has

compared its corporate governance practices to those required to

be applied by domestic US companies listed on the NYSE and has

confirmed to the NYSE that it complies in all significant respects

with such NYSE corporate governance standards.

Sasol endorses the principles of the South African Code of

Corporate Practices and Conduct as recommended in the second

King Report (King II).

The nomination and governance committee and the board of

directors (board) continue to review and benchmark the group’s

governance structures and processes. The board considers

corporate governance as a priority that requires more attention

than merely establishing the steps to be taken to demonstrate

compliance with legal, regulatory or listing requirements.

Issues of governance will continue to receive the board and

its committees' consideration and attention during the year

ahead. Sound governance remains one of the top priorities of

executive management.

The board of directors and non-executivedirectors

The company's articles of association provide that the company’s

board consists of a maximum of 15 directors of whom a maximum

of five may be executive directors. During the year, three directors

were executive directors (Messrs PV Cox, LPA Davies and

TS Munday) and 11 of the directors were non-executive directors.

Mr JH Fourie retired as a non-executive director with effect from

1 January 2005 and Mr SB Pfeiffer resigned as a non-executive

director with effect from 31 October 2004. Ms IN Mkhize was

appointed as a non-executive director with effect from

1 January 2005.

All the non-executive directors, except Messrs MSV Gantsho,

JH Fourie and SB Pfeiffer, were considered by the board to be

independent directors in accordance with King II and the rules of

the NYSE. The board was precluded from categorising Steven

Pfeiffer as an independent director in view of the occasional

US legal services provided by him and his firm. These services

constituted less than 1% of the firm’s turnover. The board is

of the view that all non-executive directors bring independent

judgement to bear on material decisions of the company.

During the year, the offices of chairman and deputy

chairman/chief executive were separate and filled by a non-

executive independent director (Mr P du P Kruger) and an

executive director (Mr PV Cox), respectively. On 4 March 2005,

the company announced the appointment of Mr LPA Davies as

chief executive and Mr TS Munday as deputy chief executive with

effect from 1 July 2005. It was also announced that Mr PV Cox

would succeed Mr P du P Kruger as chairman of the board on

1 January 2006.

In terms of the company's articles of association, the directors

appoint the chief executive. Such an appointment may not exceed

five years at a time.

Details of directors of the board appear on pages 72 and 73 of the

annual review.

Board powers and procedures

The board has adopted a board charter. It provides a concise

overview of:

• the demarcation of the roles, functions, responsibilities and

powers of the board, the shareholders, individual directors,

officers and executives of the company;

• the terms of reference of the board committees;

• matters reserved for final decision-making or pre-approval by

the board; and

• the policies and practices of the board for such matters as

corporate governance, trading by directors in the securities of

the company, declarations of conflicts of interest, board

meeting documentation and procedures and the nomination,

appointment, induction, training and evaluation of directors

and members of board committees.

Within the powers conferred upon the board by the articles, the

board has determined its main function and responsibility as

adding significant value to the company by:

a) retaining full and effective control over the company;

b) determining the strategies and strategic objectives of the

company and group companies;

c) determining and setting the tone of the company's values,

including principles of ethical business practice;

75

d) bringing independent, informed and effective judgement to

bear on material decisions of the company and group

companies, including material company and group policies,

appointment and removal of the chief executive, approval

of the appointment or removal of group management

members, capital expenditure transactions and consolidated

group budgets and company budgets;

e) satisfying itself that the company and group companies are

governed effectively in accordance with corporate governance

best practice, including risk management and internal control

systems to:

• maximise sustainable returns;

• safeguard the people, assets and reputation of the group;

• ensure compliance with applicable laws and regulations; and

f) monitoring implementation by group companies, board

committees and executive management of the board's

strategies, decisions, values and policies by a structured

approach to reporting, risk management and auditing.

The board met six times during the year. The attendance by each

director is set out in the table at the bottom of this page.

Non-executive directors are chosen for their business skills and

acumen. Considerations of gender and racial diversity, as well as

diversity in business, geographic and academic backgrounds, are

taken into account by the nomination and governance committee

and the board when appointments to the board are considered.

In line with Sasol's commitment to transformation, two black

women were appointed to the Sasol board during 2005.

Ms IN Mkhize joined the board on 1 January 2005 and on

26 July 2005 Sasol announced that Ms VN Fakude will join the

board with effect from 1 October 2005. As from 1 October 2005,

the board will comprise 33% historically disadvantaged South

Africans, including women, and 20% women.

Newly appointed directors are inducted in the company’s

business, board matters and their duties as directors in accordance

with their specific needs.

The nomination and governance committee annually reviews the

effectiveness and performance of the board, its committees and

the individual directors.

All directors have access to the advice and services of the

company secretary, whose appointment is in accordance with the

South African Companies Act, and who is responsible to the board

for ensuring the proper administration of board proceedings.

The company secretary also provides guidance to the directors

on their responsibilities within the prevailing regulatory and

statutory environment and the manner in which such

responsibilities (including not dealing in the company's shares

during restricted periods) should be discharged. A report on

directors' dealings in the company's shares is tabled at each

board meeting and is disclosed in terms of the applicable JSE

and NYSE listings requirements.

The directors are entitled to seek independent professional advice

at Sasol's expense concerning the company’s affairs and have

access to any information they may require in discharging their

duties as directors.

In terms of the company's articles of association, one-third of

directors must retire at every annual general meeting and are

eligible for re-election.

Board meeting attendance

Director 6 Sept ‘04 12 Oct ‘041 23 Nov ‘041 30 Nov ‘04 4 March ‘05 3 June ‘05

P du P Kruger P P P P P PPV Cox P P P P P PLPA Davies P P P P P PJH Fourie2 P P † PTS Munday P P P P P PE le R Bradley P P P P P PWAM Clewlow P P † P P PBP Connellan P P † P P PMSV Gantsho P P P P P †

A Jain † P † P † PIN Mkhize3 P PS Montsi P P P P P †

SB Pfeiffer4 P PJE Schrempp P P †5 † † PCB Strauss P † † P P P

P Indicates attendance † Indicates absence with apology

1. Unscheduled, special meetings. 2. Resigned with effect from 1 January 2005. 3 . Appointed with effect from 1 January 2005. 4. Resigned with effect from 31 October 2004.

5. Pre-meeting inputs on executive appointments were provided by Prof. Schrempp.

76

Corporate governance

Board committees

Several committees have been established to assist the board in

discharging its responsibilities. The committees have an important

role in enhancing high standards of governance and achieving

increased effectiveness within the group.

During the year, the terms of reference of the audit committee,

the compensation committee, the nomination and governance

committee and the risk and safety, health and environment

committee were reviewed and updated to conform to the NYSE

corporate governance rules. The terms of reference of the board

committees form part of the board charter and can be viewed on

the company’s website (www.sasol.com).

The company's subsidiaries, as well as their operating divisions,

have established board and committee structures to ensure the

maintenance of high standards and best practice for corporate

governance and internal control throughout. The business of

group subsidiaries and divisions is decentralised.

The company requires decision-making involvement for a defined

list of material matters of the businesses of its subsidiaries. This list

includes matters such as the appointment of directors, strategy

charters, large capital expenditures and mergers, acquisitions and

disposals. The boards of the main subsidiaries and divisions of the

company are constituted so that a majority of directors of each

main subsidiary or divisional board are non-executive directors of

the subsidiary or division.

The chairman of Sasol Limited and members of the group

executive committee serve on boards of all the main Sasol

businesses. The attendance of the chairman at main subsidiary

board meetings provides an essential link between the Sasol

businesses and the non-executive directors of Sasol Limited.

The compensation committee

Members: Messrs P du P Kruger (chairman), WAM Clewlow,

BP Connellan, S Montsi and Ms E le R Bradley.

All the members of the committee are independent non-executive

directors. The functions of the compensation committee are to:

• assist the board in exercising its function of ensuring that

affordable, fair and effective compensation practices are

implemented in the Sasol group;

• determine the compensation of group management members;

• make recommendations to the board on directors' fees and the

compensation and service conditions of executive directors,

including the chief executive; and

• provide a channel of communication between the board and

management on compensation matters.

The compensation committee is mandated to:

• review and approve general proposals for salary and

wage adjustments;

• review and approve proposals for the general adjustment

of standard conditions of service, including matters relating

to leave, housing, motor vehicles, bonuses, incentives,

pension funds, provident funds, medical aid, deferred

compensation and share schemes;

• review the group’s compensation policies and practices and

proposals to change these and to make recommendations in

this regard to the board;

• determine and approve any criteria for measuring the

performance of executive directors in discharging their

functions and responsibilities;

• review (at least annually) and approve the terms and

conditions of executive directors' employment contracts,

taking into account information from comparable companies;

• determine and approve any grants to executive directors and

other senior employees made pursuant to the company's

executive share scheme;

• review and approve any disclosures in the annual report or

elsewhere on compensation policies or directors'

compensation; and

• at least annually assess the performance of the committee

and committee members.

The compensation committee has determined the remuneration

philosophy of the company, which is to offer remuneration that

will attract, retain, motivate and reward employees with the skills

required for the company to achieve its business goals and to base

remuneration on personal and company performance in

accordance with competitive market practices.

Directors' emoluments and other relevant remuneration

information are disclosed in the directors' remuneration section

from page 28 to 33 of the annual financial statements.

The committee meets at least twice a year and is empowered to

obtain such external or other independent professional advice as it

considers necessary to carry out its duties.

The attendance at meetings was as follows:

Member 3 Sept ‘04 4 March ‘05 3 June ‘05

WAM Clewlow P P PE le R Bradley P P PP du P Kruger P P PBP Connellan* † † PS Montsi* † † †

* Appointed with effect from 4 March 2005.

The audit committee

Members: Messrs BP Connellan (chairman), WAM Clewlow and

Dr CB Strauss.

The audit committee is an important element of the board's

system of monitoring and control. All members are independent

non-executive directors and Mr WAM Clewlow has been

77

designated as the audit committee financial expert for purposes

of compliance with SEC rules.

All audit committee members have extensive audit committee

experience and are financially literate. The chairman of the board

and the chief executive attend audit committee meetings on

invitation. The board has also requested Mr Gantsho to attend all

audit committee meetings.

The audit committee has been established primarily to assist the

board in overseeing:

• the quality and integrity of the company's financial statements

and public disclosures thereof;

• the scope and effectiveness of the external audit function; and

• the effectiveness of the company's internal controls and

internal audit function.

The board has delegated extensive powers in accordance with

King II and US corporate governance requirements to the audit

committee to perform these functions. In line with these

requirements the audit committee has, among other things,

determined which categories of non-audit services provided by

the external auditor should be pre-approved by the audit

committee and which could be approved by a designated member

of the audit committee.

The audit committee meets the group's external and internal

auditors and executive management regularly to consider risk

assessment and management, review the audit plans of the

external and internal auditors and to review accounting,

auditing, financial reporting, corporate governance and

compliance matters.

The audit committee approves the external auditors' engagement

letter and the terms, nature and scope of the audit function and

the audit fee. The internal audit charter, internal audit plan and

internal audit conclusions are similarly reviewed and approved by

the audit committee.

Interim and annual results of the group and trading statements

of the company are reviewed by the audit committee before

publication.

Both the audit committee and the board are satisfied there is

adequate segregation between the external and internal audit

functions and that the independence of the internal and external

auditors is not in any way impaired or compromised.

The audit committee meets at least three times a year. The

attendance at meetings was as follows:

Member 2 Sept ‘04 12 Oct ‘04 3 Mar ‘05 2 June ‘05

BP Connellan P P P PWAM Clewlow P P P PCB Strauss P † P P


The risk and safety, health and environmentcommittee (risk and SHE committee)

Members: Messrs S Montsi (chairman), BP Connellan,

PV Cox, LPA Davies, P du P Kruger, TS Munday, SB Pfeiffer

(until 31 October 2004) and Ms IN Mkhize (from 4 March 2005).

The committee comprises three executive and four non-executive

directors. The committee’s functions include reviewing and

assessing the integrity of the company's risk management

processes, including the effective management of those covering

safety, health and environmental matters.

The committee met four times during the year. The attendance at

meetings was as follows:

Member 2 Sept ‘04 25 Nov ‘04 2 Mar ‘05 1 June ‘05

S Montsi1 P P †

BP Connellan P P P P

PV Cox P P P P

LPA Davies P P P P

MSV Gantsho2 P

P du P Kruger P P P P

IN Mkhize3 †

TS Munday P † P P


1. Appointed chairman and member with effect from 6 September 2004.

2. Resigned with effect from 6 September 2004.

3. Appointed with effect from 4 March 2005.

The nomination and governance committee

Members: Mr P du P Kruger (chairman), Ms E le R Bradley,

Dr CB Strauss and Messrs WAM Clewlow and S Montsi.

The nomination and governance committee consists entirely of

independent non-executive directors.

The nomination and governance committee’s functions include

reviewing and making recommendations to the board on the

company’s general corporate governance framework, the

composition and performance of the board and its committees,

legal compliance and the company's ethics policy and

programmes.

The nomination and governance committee met six times during

the year. Attendance at the meeting is set out in the table at the

top of the following page.

Group executive committees

Group executive committee (GEC)

Members: Messrs PV Cox (chairman until 30 June 2005),

JA Botha, LPA Davies (chairman with effect from 1 July 2005),

A de Klerk, TS Munday, MV Sisulu, JA van der Westhuizen,

R van Rooyen and Dr NL Joubert. On 26 July 2005, Sasol

78

announced the appointment of Mr GJ Strauss and Ms VN Fakudeas members of the GEC with effect from 26 July 2005 and 1 October 2005, respectively.

The board has delegated a wide range of matters relating toSasol’s management to the GEC, including financial, strategic,operational, governance, risk and functional issues. The GEC’sfocus is on the formulation of the group strategy and policy andthe alignment of group initiatives and activities. The committeemeets weekly and reports directly to the Sasol Limited board.

During the year, the GEC's functioning was supported by two ofits subcommittees, the Southern African executive committee(SAEC) and the international executive committee (IEC), each of which focused on issues relating to the management of theSouthern African and international businesses, respectively.The meetings of the SAEC and the IEC were deemed meetings of the GEC with regard to the powers delegated to the GEC by the board.

The Southern African executive committee (SAEC)Members: Messrs T Bates, BE Klingenberg, CF Rademan,M Sieberhagen, GJ Strauss and members of the GEC.

The GEC met monthly with managing directors and seniorfunctional managers of Sasol's Southern African businesses, toaddress material issues pertaining to Sasol's Southern Africanbusinesses, as well as regional issues. Among the issues addressedwere material business matters, government relations, legal andregulatory issues, empowerment of historically disadvantagedSouth Africans, employment equity, HIV/Aids, socioeconomictrends and indicators, and social responsibility.

The SAEC consisted of the members of the GEC and the managingdirectors of Sasol's Southern African businesses, including SasolPolymers, Sasol Oil, Sasol Synfuels, Sasol Infrachem, SasolTechnology, Sasol Mining and Sasol Nitro, as well as seniorexecutives of group functions, including financial, corporateaffairs, government policy and planning, and such otherexecutives as the GEC may determine from time to time.

The international executive committee (IEC)Members: Drs R Groh, G Safran, CF Putnik, Messrs G Couvaras,TF O'Brien, O Pepler, AH Putter, D Schrenk and members of the GEC.

The GEC met monthly with managing directors and seniorfunctional managers of its businesses outside South Africa.

The IEC’s focus was on the general business and strategic issues ofinternational businesses and joint ventures and the performanceof its businesses. It also focused on regional issues such as thegeneral business climate, market trends and indicators, the legal and regulatory framework, human resources and social responsibility.

In addition to GEC members, the IEC comprised representatives ofSasol Chevron, Sasol Solvents, Sasol Olefins & Surfactants, SasolWax and other non-South African managers.

With effect from 17 August 2005 the IEC and SAEC have beenreplaced by a committee of managing directors of Sasol's most significant businesses. The members are: Messrs T Bates(chairman), G Couvaras, PR Heydenrich, BE Klingenberg,JC Naudé, E Oberholster, AH Putter, CF Rademan, D Schrenk,M Sieberhagen, A Zwiegelaar, Dr R Groh and Ms FS Cranmer.

Internal control and risk managementThe directors are ultimately responsible for the group's system ofinternal control, designed to provide reasonable assurance againstmaterial misstatement and loss. The group maintains a system ofinternal financial control that is designed to provide assurances onthe maintenance of proper accounting records and the reliabilityof financial information used within the business and forpublication. The system contains self-monitoring mechanisms,and actions are taken to correct deficiencies as they are identified.

The internal control system includes:

• a documented organisational structure and reasonable divisionof responsibility;

• established policies and procedures (including a code ofconduct to foster a strong ethical climate), which arecommunicated throughout the group; and

• established mechanisms to ensure compliance.

Internal auditThe group has an internal audit function covering its globaloperations. Internal audit is responsible for:

• assisting the board and management in monitoring theeffectiveness of the company’s risk management process; and

• assisting the board and management in maintaining effectivecontrols by evaluating those controls continuously to determinetheir efficiency and effectiveness and recommend improvements.


Nomination and governance committee attendance

Member 2 Sept ‘04 18 Nov ‘04 25 Nov ‘04 7 Feb ‘05 3 Mar ‘05 2 June ‘05

P du P Kruger P P P P P PE le Bradley P P P P P PWAM Clewlow P P † P P PS Montsi P P P P P †

CB Strauss P P P P P P


79

The controls subject to evaluation encompass:

• the information management environment;

• the reliability and integrity of financial and operating information;

• the safeguarding of assets; and

• the effective and efficient use of the company's resources.

Audit plans are based on an assessment of risk areas, as well as on

issues highlighted by the audit committee and management. Audit

plans are updated as appropriate to ensure they are responsive to

changes in the business. A comprehensive findings report is

presented to the risk and SHE committee and the audit committee

at each of their scheduled meetings.

Follow-up audits are conducted in areas where significant internal

control weaknesses are found.

Corporate governance best practice requires that the internal

audit function reports directly to the audit committee. Such direct

reporting is ensured by the audit committee's mandate to:

• evaluate the effectiveness of internal audit;

• review and approve the internal audit charter, internal audit

plans and internal audit conclusions about internal control;

• review significant internal audit findings and the adequacy of

corrective action taken;

• assess the performance of the internal audit function and the

adequacy of available internal audit resources;

• review significant differences of opinion between management

and the internal audit function; and

• consider the appointment, dismissal or reassignment of the

head of internal audit.

The charter of the internal audit department provides that the

head of internal audit has direct access to the chief executive and

the chairman of the audit committee.

The head of internal audit reports administratively to the group

general manager responsible for the company secretarial, legal,

risk management and insurance departments.

Risk management

The board is responsible for governing risk management

processes in the Sasol group in accordance with corporate

governance best practice.

The establishment of a more formalised enterprise-wide risk

management process was initiated during the 2002 financial year

with the following principal objectives:

• providing the board with assurance that significant business risks

are systematically identified, assessed and reduced to acceptable

levels in order to achieve an optimal risk-reward profile; and

• making risk identification and risk management an integral part

of the daily activities of everyone in the organisation.

Substantial progress has been made to date in achieving the

above objectives. There are still certain components of the

process which need to be further developed and embedded and

programmes are in place to address these.

Sasol’s enterprise-wide risk management process is guided by the

following key principles:

• a clear assignment of responsibilities and accountabilities;

• the use of a single enterprise-wide risk management framework

and process;

• independent review of the effectiveness of the process; and

• the context of risk management activities is the achievement of

business plans and strategic objectives.

The company's insurance services department, with the assistance

of external consultants, undertakes regular risk control audits

of all the company's plants and operations using recognised

international procedures and standards. The group participates in

an international insurance programme that provides, at competitive

cost, insurance cover for losses above acceptable deductibles.

Most significant risks

The most significant risks currently faced by the group are:

• volatility in currency exchange rates;

• volatility in crude oil, natural gas and petroleum product prices;

• cyclicality in petrochemical product prices;

• not succeeding with the expedient exploitation of

technological advances;

• our gas-to-liquids projects not proving sufficiently

viable as planned;

• the sustainability of beneficial supply agreements entered into

after termination on 1 January 2004 of the agreements in terms of

which petroleum products are sold to South African oil companies;

• sociopolitical and other risks relating to the countries in

which we operate;

• regulatory changes impacting on our mining and

petroleum businesses;

• an inability to attract and retain desired levels of sufficiently

skilled employees;

• patent and related intellectual property competition;

• changes in consumer and safety, health and environmental laws

and regulations;

• increasing competition by products originating from countries with

low production costs;

• industry-related accidents causing property damages, personal

injuries and/or environmental contamination;*

• an inability to interpret correctly and ensure ongoing compliance

with legal and regulatory requirements;

• not responding timeously to emerging regulations/requirements

relating to the empowerment of historically disadvantaged South

Africans; and

• risks associated with the simultaneous construction and

commissioning of new plants and businesses.

* See also page 59 and 60 for more information on operational initiatives to improve safety.

80


The responsibility for monitoring the management by line

management of each of these risks is assigned to a senior group

executive member.

Disaster recovery plans are continually reviewed for critical

information management systems that could have a material

impact on the group's continuing operations. Certain of these plans

are subject to regular testing and, in other cases, are subjected to

ongoing tests to ensure their robustness and reliability.

Sustainability reporting

The company reports on all aspects of its social, transformation,

ethical and safety, health and environmental policies and

practices to the board and to its stakeholders. A comprehensive

sustainability report dealing with these issues was published

by the company in November 2004 and is available on the

company's website.

See pages 54 to 65 for more information on Sasol’s

sustainability reporting.

Worker participation and employment equity

The group has established participative structures on issues that

affect employees directly and materially and is committed to

promoting equal opportunities and fair employment practices

regardless of employees’ ethnic origin or gender. Several

programmes have been implemented to ensure practical

application of the group's commitment to worker participation

and employment equity, while maintaining the company's high

standards and statutory compliance.

Code of ethics

The company’s code of ethics consists of four fundamental ethical


15 ethical standards. These cover such issues as bribery and

corruption, fraud, insider trading, human rights and discrimination

and include a commitment to conducting our business with due

regard to the interests of all our stakeholders and the environment.

The code embodies the highest standards of compliance with laws

and regulations. An ethics forum has been established to monitor

and report on ethics, best practice and compliance requirements, and

to recommend amendments to the code and the guide as required.

Employee performance against Sasol's values, which incorporates

the code of ethics, is assessed as part of Sasol's performance

appraisal system.

Any amendment or waiver of the code as it relates to the chief

executive or chief financial officer will be posted on the website

within five business days following such amendment or waiver.

No such amendments or waivers are anticipated.

The principles contained in the code have been communicated

throughout the group and are available on the company's website.

An ethics hotline, operated by an independent service provider,

has been operating since 2001. The hotline provides an

independent facility for stakeholders of the company to

anonymously report fraud and other crimes, safety malpractices,

deviations from the procurement policy, financial reporting

irregularities and other irregularities.

Insider trading

The company's directors, executives and senior employees are

prohibited from dealing in Sasol shares during certain prescribed

restricted periods. The company secretary regularly disseminates

written notices to inform them of the insider trading legislation

and advise them of closed periods.

Disclosure

Sasol has a disclosure committee which oversees compliance with

the disclosure requirements contained in the JSE, SEC and NYSE

rules. Disclosure controls and procedures have been implemented

to ensure that accurate and timely disclosure of information that

may have a material effect on the value of Sasol securities or

influence investment decisions is made to shareholders, the

financial community and the investing public.

During the year, a project to ensure compliance with the

requirements for controls over financial reporting of SOX 404

during the next financial year has been successfully completed.

See page 11 of the annual financial statements for more details.

Investor relations and shareholdercommunication

The company's chief executive, the chief financial officer and

investor relations management conduct regular presentations on

the group's performance and strategy to analysts, institutional

investors and the media in South Africa, North America and

Europe. The company's investor relations management maintains

regular contact with the investment community and analysts.

To ensure the company communicates with its smaller

shareholders and those stakeholders without access to the

electronic media, the company publishes and reports on details of

its corporate actions and performance (including its interim and

final results) in the main South African daily newspapers.

The company's communications department also maintains

regular contact with the media by disseminating relevant

information. The company maintains a website through which

access is available to the company's latest financial, operational

and historical information, including its annual report.

81

summarised financial information

82 Highlights

83 Balance sheet

84 Income statement

85 Changes in equity statement

85 Value added statement

86 Cash flow statement

88 Salient features

90 Business segment information

82

sasol limited group financial highlights

• Record headline earnings.

• Most businesses achieve commendable improvements.

• Total dividend increased by 20% to R5,40 per share.

• Gearing improves to 38%; capital expenditure of R13,2 billion, with nearly R10 billion (75%).invested in South Africa.

• Contribution to economic wealth of South Africa increases by 22% to R21,5 billion.

• Sasol’s international credit rating upgraded.

Turnover

01 02 03 04 05

80

70

60

50

40

30

20

10

0

(R b

illio

n)

Operating profit

01 02 03 04 05

16

14

12

10

8

6

4

2

0

(R b

illio

n)

Attributable earnings anddividend per share

01 02 03 04 05

1 600

1 400

1 200

1 000

800

600

400

200

0

(Cen

ts p

er s

hare

)

Attributable earnings per share

Dividend per share

Turnover Operating profit

2004 2005 2005 2004

Rm Rm Business unit (before capital items) Rm Rm

1 083 1 471 Mining 1 224 1 177

1 329 820 Synfuels 7 670 5 515

18 554 23 525 Liquid Fuels Business 1 963 1 429

1 389 1 408 Gas 932 387

7 – Synfuels International (232) (138)

17 133 18 040 Olefins & Surfactants 562 (46)

6 576 7 199 Polymers 1 496 971

5 956 8 063 Solvents 1 625 135

8 124 8 713 Other 541 (89)

60 151 69 239 15 781 9 341

Effects of capital items (1 275) (27)

14 506 9 314

Mining

Synfuels

Liquid Fuels Business

Gas

Synfuels International

Olefins & Surfactants

Polymers

Solvents

Other

2005 2004

Turnover

South Africa

Rest of Africa

Europe

Middle East, India and Far East

North America

South America

South-East Asia

2005 2004

Operating profit

83

Gearing

01 02 03 04 05

45

40

35

30

25

20

15

10

5

0

(%)

Turnover Operating profit

2004 2005 2005 2004

Rm Rm Geographic analysis Rm Rm

28 954 35 395 South Africa 12 236 8 505

3 062 2 553 Rest of Africa 536 204

15 632 17 145 Europe 1 486 591

3 509 3 840 Middle East, India and Far East 389 277

7 060 8 149 North America (221) (303)

723 760 South America (5) 4

1 211 1 397 South-East Asia 85 36

60 151 69 239 14 506 9 314

84

balance sheet

2005 2004

at 30 June Rm Rm

AssetsProperty, plant, equipment 56 550 46 858

Goodwill (net of negative goodwill in 2004) 509 92

Intangible assets 1 900 2 236

Post-retirement benefit assets 300 239

Deferred tax assets 409 306

Other long-term assets 2 212 1 877

Non-current assets 61 880 51 608

Investments held-for-sale 41 –

Inventories 9 995 8 292

Trade and other receivables 12 384 10 971

Short-term financial assets 178 25

Restricted cash 1 002 527

Cash 2 509 2 063

Current assets 26 109 21 878

Total assets 87 989 73 486

Equity and liabilitiesShareholders' equity 43 530 35 027

Minority interest 256 373

Long-term debt 12 951 9 110

Long-term provisions 2 954 2 362

Post-retirement benefit obligations 2 970 2 724

Long-term deferred income 763 237

Deferred tax liability 6 286 5 768

Non-current liabilities 25 924 20 201

Short-term debt 3 300 3 265

Short-term financial liabilities 792 1 205

Other current liabilities 11 572 9 302

Bank overdraft (including overnight borrowings) 2 615 4 113

Current liabilities 18 279 17 885

Total equity and liabilities 87 989 73 486

85

income statement

2005 2004

for the year ended 30 June Rm Rm

Turnover 69 239 60 151

Cost of sales and services rendered (42 267) (38 794)

Gross profit 26 972 21 357

Non-trading income 417 343

Marketing and distribution expenditure (5 097) (4 920)

Administrative expenditure (4 075) (3 744)

Other operating expenditure (3 802) (2 687)

Translation gains/(losses) 91 (1 035)

Operating profit 14 506 9 314

Dividends and interest received 149 190

Income from associates 184 117

Borrowing costs (net of amounts capitalised) ( 587) ( 439)

Net income before tax 14 252 9 182

Taxation (4 568) (3 175)

Earnings 9 684 6 007

Attributable toShareholders 9 573 5 940

Minority interests in subsidiaries 111 67

9 684 6 007

Basic earnings per share (cents)attributable earnings basis 1 560 974

headline earnings basis 1 749 934

Diluted earnings per share (cents)*

attributable earnings basis 1 533 964


Dividends per share (cents)interim 230 215

final 310† 235

540 450

* Taking the Sasol Share Incentive Scheme into account.

† Declared subsequent to 30 June 2005 and has been presented for information purposes only. No provision regarding this final dividend has been recognised.

86

changes in equity statement

2005 2004


Opening balance 35 027 33 518

Negative goodwill written off 610 –

Shares issued 311 109

Shares repurchased – ( 33)

Attributable earnings 9 573 5 940

Dividends paid (2 856) (2 745)

Increase/(decrease) in foreign currency translation reserve 313 (1 217)

Increase/(decrease) in cash flow hedge accounting reserve 552 ( 545)

Closing balance 43 530 35 027

ComprisingShare capital 3 203 2 892

Share repurchase programme (3 647) (3 647)

Accumulated earnings 45 643 38 236

Foreign currency translation reserve (1 336) (1 569)

Investment fair value reserve 2 2

Cash flow hedge accounting reserve ( 335) ( 887)

Shareholders' equity 43 530 35 027

value added statement

2005 2004


Turnover 69 239 60 151

Purchased materials and services (42 079) (37 085)

Value added 27 160 23 066

Investment income 333 307

Wealth created 27 493 23 37

South Africa 21 474 17 664

Rest of World 6 019 5 709

Wealth created 27 493 23 373

Employees 8 645 8 731

Providers of equity capital 2 967 2 812

Providers of loan capital 587 439

Government 4 326 3 421

Reinvested in the group 10 968 7 970

Wealth distribution 27 493 23 373

87

cash flow statement

2005 2004


Cash receipts from customers 68 263 59 952

Cash paid to suppliers and employees (49 451) (44 801)

Cash generated by operating activities 18 812 15 151

Investment income 169 230

Borrowing costs paid (1 523) (1 384)

Dividends paid (2 856) (2 745)

Tax paid (3 753) (3 963)

Cash available from operating activities 10 849 7 289

Additions to property, plant and equipment* (12 414) (10 888)

Acquisition of businesses – (555)

Cash acquired on acquisition of businesses – 163

Disposal of businesses 36 283

Cash disposed of on disposal of businesses (94) (2)

Other net cash flows from investing activities 245 (29)

Cash utilised in investing activities (12 227) (11 028)

Share capital issued 311 109

Share repurchase programme – (33)

Dividends paid to minority shareholders (64) (37)

Contributions from minority shareholders – 75

Increase in long-term debt 4 165 4 386

Decrease in short-term debt (440) (2 616)

Cash effect of financing activities 3 972 1 884

Effect of translation of cash of foreign entities (175) (251)

Increase / (decrease) in cash and cash equivalents 2 419 (2 106)

Cash and cash equivalents at beginning of year (1 523) 583

Cash and cash equivalents at end of year 896 (1 523)

Comprising

restricted cash 1 002 527

cash 2 509 2 063

bank overdraft (2 615) (4 113)

896 (1 523)

* After taking the effect of cash flow hedge accounting on foreign exchange contracts (R600 million) into account.

88

salient features

2005 2004


Selected ratiosReturn on equity % 24,4 17,3

Return on total assets % 18,4 13,4

Operating margin % 21,0 15,5

Borrowing cost cover times 9,7 7,0

Dividend cover times 2,9 2,2

Share statisticsTotal shares in issue million 676,9 671,3

Treasury shares (share repurchase programme) million 60,1 60,1

Weighted average number of shares million 613,8 610,0

Diluted weighted average number of shares million 624,4 616,2

Share price (closing) Rand 180,80 96,10

Market capitalisation Rm 122 379 64,509

Net asset value per share rand 70,58 57,31

Other financial informationTotal debt (including bank overdraft)

interest-bearing Rm 18 865 16,448

non-interest-bearing Rm 1 40

Borrowing costs capitalised Rm 1116 1105

Capital commitments 19 169 24,780

authorised and contracted Rm 26 679 18,216

authorised, not yet contracted Rm 7 740 14,397

less expenditure to date Rm (15 250) (7,833)

Guarantees and contingent liabilities

total amount Rm 33 122 25,835

liability included on balance sheet Rm 11 230 9,759

Significant items in operating profit

employee costs Rm 8 645 8,731

depreciation of property, plant and equipment Rm 3 591 4,723

operating lease charges Rm 462 350

Directors' remuneration Rm 26 22

Share options granted to directors – cumulative '000 1 205 1,451

Effective tax rate % 32,1 34,6

Employees number 30,004 30,910

Average crude oil price – dated Brent US$/barrel 46,17 31,30

Average rand/US$ exchange rate 1US$ = rand 6,21 6,88

89

2005 2004


Reconciliation of headline earnings

Attributable earnings 9 573 5 940

Effect of capital items 1 275 27

impairment of assets 1 078 342

profit on disposal of assets (60) (341)

scrapping of property, plant and equipment 290 26

profit on sale of participation rights in GTL project (33) –

Amortisation of goodwill – 21

Amortisation of negative goodwill – (225)

Tax effect on reconciling items (235) (65)

Deferred tax asset written off 122 –

Headline earnings 10 735 5 698

Capital items included in operating profit

Mining (23) (17)

Synfuels 110 3

Liquid Fuels Business 63 –

Synfuels International (33) –

Olefins & Surfactants 783 21

Polymers 12 (59)

Solvents 382 18

Other (19) 61

1 275 27

The reader is referred to the definitions contained in the annual financial statements.

The financial information presented on pages 82 to 89 is a summary of our annual financial statements as set out in a separate

publication entitled Annual Financial Statements 2005 which, together with this Annual Review, comprise our 2005 annual report.

This summarised financial information does not provide sufficient information to allow for a full understanding of the results or state

of affairs of the Sasol group.

A complete annual report may be obtained from the Sasol group corporate affairs department. Contact details are printed on page 92

of this report.

90

ammonium nitrate: A colourless, crystalline compound derivedfrom nitric acid and ammonia and used mostly for fertilisers andcommercial explosives.

autothermal reformer: A type of catalytic partial-oxidation reactorin which the endothermic heat needed for the reforming reactions isprovided by combustion reactions of oxygen in the feed.

barrel (b): A standard international petroleum industryvolumetric measure equal to 42 US gallons, 35 imperial (UK)gallons or 159,1 litres.

bio-diesel: A form of diesel derived in part from renewable bioticsources such as soybeans and rapeseeds.

black products: In the context of Sasol's South Africanoperations, those secondary products from coal gasification – tarsand pitches – that often contain coal. They are difficult andexpensive to process, have little commercial value and may needto be stored at production sites.

catalyst: Usually a metal or metal-containing material used toaccelerate a reaction between two or more chemical elements orcompounds. A catalyst is not generally changed in the process,although its efficacy may reduce with time.

central processing facility: A petrochemical processing plantwith support infrastructure used at or near natural gas fields toconduct several processing steps on natural gas from multiplewells before the gas is fed into a transmission pipeline.

cetane number: This refers to the results of a standardised testconducted to measure the combustion properties of a diesel fuel.This is the equivalent of the octane testing conducted for petrol.Cetane is a colourless, liquid, straight-chain paraffin.

comonomer: A chemical, such as 1-butene, 1-hexene or 1-octene, that is blended with a monomer such as ethylene toimprove or modify certain properties such as impact strength,flexibility or clarity of a polymer such as polyethylene.

compression-ignition: The form of ignition used in a diesel-fuelled version of an internal-combustion engine. The diesel isignited spontaneously as it is injected into the cylinder because ofthe heat emanating from the compression of the air charge. This isin contrast to spark ignition used in petrol engines.

continuous-miner: A large, remote-controlled vehicle used in anunderground colliery to cut and remove coal from a coalface withthe aid of a spiked, rotating cutting drum.

cracker: Petrochemical jargon referring to a chemical reactionvessel used for decomposing (cracking) petrochemicalcompounds such as naphtha, liquefied petroleum gas or waxes.

dieselisation: A description of the trend presently occurring inEurope (and elsewhere) where vehicles are increasingly beingfuelled by diesel, primarily due to high fuel efficiencies, taxincentives and modern, effective diesel engines.

ethylene: A colourless, flammable hydrocarbon gas of the alkeneseries derived through Sasol's process and used principally in SouthAfrica as feedstock for producing polyethylene and polyvinyl chloride.

Fischer-Tropsch process: A chemical process pioneered inGermany by Franz Fischer and Hans Tropsch in the 1920s andsubsequently evolved by Sasol. It is used to produce synthesis gas,which is reacted under temperature in the presence of a catalystto produce a diverse spectrum of hydrocarbons for downstreamprocessing into liquid transportation fuels and chemicals.

gas-to-liquids (GTL): A petrochemical term referring to a processtechnology, plant or venture that entails the conversion of ahydrocarbon feedstock gas (usually natural gas or methane) intoa liquid transportation fuel and related hydrocarbons such asdiesel, kerosene and naphtha.

gasification: The process of converting coal in a gasifier into gasesand co-products under high temperature and pressure in thepresence of steam and oxygen. The purified gases and co-products are then converted into desired products.

greenhouse gases: Gases – usually formed anthropogenically – that contribute to the Earth's intensified greenhouse effect orglobal warming. Greenhouse gases include carbon dioxide, nitrousoxides, ozone, methane and chlorofluorocarbons.

hexene (1-hexene): An alpha olefin emanating from the SasolSynthol process. An alpha olefin is a straight-chain hydrocarbonmolecule containing a single, terminal double-bond betweenatoms. Hexene is used mostly as a comonomer for producingcertain plastics.

hydroformylation: A type of carbonylation (ie, involving carbonmonoxide) reaction that uses carbon monoxide and hydrogen withthe aid of a catalyst to convert an olefin into an aldehyde orprimary alcohol, depending on the selected reaction conditionssuch as pressure, temperature and catalyst type.

ketones: Hydrocarbon compounds containing a carbonyl group (-CO-) in the molecule attached to two hydrocarbon radicals.Ketones include acetone, methyl ethyl ketone (MEK) and methylisobutyl ketone (MIBK). They are used mostly as solvents orchemical feedstock.

linear alkylbenzene (LAB): An organic compound with an alkylgroup bound to a benzene ring that is produced in a process involvingbenzene and long-chain paraffins. LAB is used as an intermediate forproducing surfactants used in the detergent industry.

liquefied petroleum gas (LPG): Gaseous hydrocarbons orpetroleum gases such as propane, butane and pentane pressurisedin liquefied form and used for heating applications such ascamping stoves and lighters.

methane: The simplest alkane, methane is a gas that occursnaturally in petroleum wells, natural gas fields and as marsh gas.Coal gas also contains a large proportion of methane.

methanol: A toxic, colourless alcohol produced from varioussources, including the destructive distillation of wood, the catalyticoxidisation of methane and the synthesis of carbon monoxide andhydrogen in the presence of a catalyst. In it is an importantintermediate chemical and is often used as a versatile solvent.

glossary of terms

91

monomer: A chemical such as ethylene or propylene capable ofbeing converted into a long-chain polymer or a synthetic resin bycombining with itself or other similar molecules or compounds.

naphtha: A generic term for a flammable, light distillate orhydrocarbon feedstock, or a mixture of light hydrocarbons, usedfor gas or petrochemical manufacture.

natural gas: A mixture of hydrocarbon gases in the Earth's crustcontaining methane, as well as ethane, propane, butane, nitrogen,carbon dioxide and sulphur compounds such as hydrogen sulphide.

nitric acid: A colourless, corrosive, fuming and unstable liquid,which Sasol derives by oxidising some of its ammonia production.It is important intermediate for producing ammonium nitrate andits derivatives.

octene (1-octene): An alpha olefin emanating from the Sasol Synthol process, 1-octene is a straight-chain C8

hydrocarbon molecule that contains a single, terminal double-bond between atoms. It is used mostly as a comonomer forproducing certain plastics.

pentene (1-pentene): An alpha olefin emanating from the SasolSynthol process, 1-pentene is a straight-chain C5 hydrocarbonmolecule that contains a single, terminal double-bond betweenatoms. It is used for producing certain plastics and agrochemicals.

polyethylene: A common plastic that has a macromoleculecomprising long-chain ethylene molecules. Polyethylene is mostlyused to produce packaging materials, pipe and moulded fittingsand to sheath wire and cable.

polymer: A compound whose molecule is formed from a largenumber of repeated units of one or more compounds of lowmolecular-weight (monomers). Synthetic polymers are usedextensively in plastics. Polymers do not have a definite formulabecause they consist of many chains of different lengths.

polypropylene: Another common plastic, this versatile material

with many end-applications is derived from the polymerisation of

propylene. It is used for automotive components, furniture, self-

hinged containers, medical equipment, carpet backings and

woven bags.

polyvinyl chloride (PVC): PVC is a tough, white, solid

thermoplastic than can be softened with plasticisers. Sasol

produces PVC by polymerising vinyl chloride monomer derived from

ethylene and chlorine. It is used for sheathing cables, moulding

footwear and for moulding bottles and other packaging forms.

propanol: A colourless and volatile alcohol existing in twoisomers (iso-propanol and normal-propanol) used mainly as asolvent and to prepare esters such as propyl acetate.

propylene: A colourless, gaseous hydrocarbon (olefin) obtainedfrom petroleum by cracking alkanes, among other petrochemicalprocesses. In the case of Sasol's operations, it is a co-product ofthe Synthol process that is refined before being converteddownstream into polypropylene and butanol.

reforming: A generic term referring to petrochemical processesthat radically change the feed molecules. For example, reformingof naphtha is used to created high-octane petrol componentsfrom the low-value naphtha. The term is also used to refer to theprocess of converting methane or natural gas into synthesis gas.

Responsible Care: An international chemical industry initiative tomaintain responsible and beneficial control of the impacts itimposes on human safety and health and both the social andbiophysical environments, thereby instilling and maintaininggreater confidence in the industry's stakeholders.

Sasol Advanced Synthol ™ (SAS™) reactor: The proprietarySasol reactor at the heart of the SAS™ process, the high-temperature version of Sasol's Fischer-Tropsch process used at Secunda to produce a synthetic form of crude oil and chemical feedstock.

Sasol Slurry Phase Distillate ™ (Sasol SPD™) process: Aproprietary version of Sasol's low-temperature Fischer-Tropschprocess used to convert synthesis gas into waxes and relatedpetrochemical streams for the end production and marketing ofwaxes and/or diesel.

solvent: A liquid that dissolves another substance or substances to form a solution.

spark-ignition engine: The petrol-fuelled version of an internal-combustion engine in which electrical sparks from spark plugs areused to ignite the fuel in the combustion chambers.

surfactant (surface active agent): A soluble chemical compoundsuch as a detergent or soap that is added to a liquid to increase itsspreading or wetting properties by reducing its surface tension.

synthesis: The formation of more complex chemical compoundsor molecules from simpler compounds or molecules, as in theFischer-Tropsch process.

synthesis gas (syngas): A mixture of carbon monoxide and hydrogen used to produce certain petrochemicals indownstream processes.

volatile organic compounds (VOCs): A generic term forhydrocarbon compounds, such as industrial alcohols, ketones and other solvents, that evaporate rapidly and easily at ambienttemperature when exposed to the air and which are, or can be,harmful to human health as a result of overexposure or misuse.

wax: A liquid or solid long-chain paraffinic compound used forhot-melt adhesives, mould-release agents, printing inks,cosmetics, food coating, board coatings, polishes and candles,among other applications.

92

Shareholder information helpline

We have reserved 0800 202 361 as the South African toll-free

number and +27 (0) 11 870 8222 for shareholders calling

from outside South Africa.

The toll-free inbound telephone helpline will enable

shareholders to obtain information regarding the resolutions

and to provide assistance for completing proxy forms.

Depositary Bank

The Bank of New York

Depositary Receipts Division

101 Barclay Street

New York 10286, New York

The Bank of New York maintains a sponsored dividend

reinvestment and direct purchase programme for Sasol’s

Depositary Receipts. As a participant in Global BuyDIRECTSM,

investors benefit from the direct ownership of their Depositary

Receipts, the efficiency of receiving corporate communications

directly from the Depositary Receipts issuer, and the savings

resulting from the reduced brokerage and transaction costs.

Additional information is available at www.globalbuydirect.com

Questions or correspondence about Global BuyDIRECT should

be addressed to:


Investor Relations

PO Box 11258

Church Street Station

New York, New York 10286-1258

Toll-free telephone for US Global BuyDIRECT participants:

1-888-BNY-ADRS

Telephone for international callers: 212-815-3700

E-mail: [email protected]

Company registration number

1979/003231/06

Addresses

Business address and registered office

1 Sturdee Avenue, Rosebank 2196

Republic of South Africa

Postal and electronic addresses andtelecommunication numbers

PO Box 5486, Johannesburg 2000


Telephone +27 (0) 11 441-3111

Telefax +27 (0) 11 788-5092

Website: http://www.sasol.com

Share registrars

Computershare Investor Services 2004 (Pty) Limited

70 Marshall Street, Johannesburg 2001


PO Box 61051, Marshalltown 2107


Telephone +27 (0) 11 370-7700

Investor relations

Telephone +27 (0) 11 441-3420

Telefax +27 (0) 11 441-3481

e-mail: [email protected]

Sasol group corporate affairs department

Telephone: +27 (0) 11 441-3249

Telefax: +27 (0) 11 441-3236

contact information

5554


Sustainable development commitment

Introduction

Evolving towards international best practice

Since publicly committing to sustainable development in 2000,

Sasol has been evolving the management framework needed to

provide our businesses with the policies, governance structures,

targets and reporting systems to manage the risks and

opportunities associated with improving our economic, social

and environmental performance.

Our commitment to sustainable development is intrinsic to our

vision and values, and is integral to our status as a public

company listed on the JSE Limited (JSE) in Johannesburg and the

New York Stock Exchange (NYSE). We believe effective

sustainability practices yield a valuable competitive advantage.

They enhance the reputation of our business; contribute to our

goal of being a company of choice; and result in improved

longer-term business performance.

Acting on our commitment

Our sustainable development commitment is expressed through

international programmes aimed at:

• maintaining sound governance and risk management practices;

• complying with the laws of the countries in which we operate;

• building open and constructive stakeholder relations;

• improving employee skills through training and development;

• promoting sound occupational health and safety practices and

minimising workplace accidents;

• recruiting and rewarding employees on merit with regard for

human rights and fair labour practices;

• improving process safety and reducing risks associated with

operating mining machinery and petrochemical plants;

• educating employees on the risks of contracting Aids and life-

threatening diseases, and, where necessary, providing them

with managed healthcare, including free antiretroviral

treatment in the case of HIV-positive employees;

• promoting black economic empowerment (BEE) in South

Africa to benefit people from historically disadvantaged

groups;

• adding economic value to the coal, crude oil, natural gas and

chemical feedstocks we beneficiate;

• decreasing our environmental footprint by striving to reduce

emissions, waste and the consumption of water and energy per

unit of production;

• developing and manufacturing products with regard for the

needs of customers, consumers and the environment; and

• sustaining social investments, particularly in under-resourced

South African and Mozambican communities.

We have evolved a corporate sustainable development management

framework to manage these programmes and ensure we pursue

continuous improvement in line with global best practice.

Management framework

Managing a global structure

Sasol's sustainable development management framework covers

our international construction, exploration, production and

marketing operations throughout the 30 countries in which we

operate in Africa, Asia, Europe, the Americas and Australasia (see

map on page 52).

Our global group commitment to corporate citizenship or

sustainable development is managed at corporate level and

implemented at business level, with ultimate responsibility

residing with the board of directors. The board has specialised

committees to help it to fulfil its fiduciary duties. One of these is

the risk, safety, health and environment committee (see

corporate governance overview on page 74).

The group executive committee (GEC), chaired by our chief

executive, maintains primary responsibility for the effective daily

management of group-wide sustainability. The GEC receives

valuable strategic and operational-specific inputs from all

businesses, as well as from specialised committees and two group

forums that meet quarterly. These are the:

• group risk management forum, which oversees the risk profile

of our global operations; and

• group safety, health and environment (SH&E) and sustainable

development (SD) forum, which reviews performance, and

considers and approves recommendations on sustainable

development and SH&E guidelines and policy.

The Sasol safety, health and environmental centre (SH&E

centre), based at our Johannesburg head office, oversees group-

wide sustainability and SH&E management. The centre is

responsible for global SH&E and sustainable development

direction, policy, review and governance. It also provides

specialist advice and support services to our businesses.

In a new development, our new chief executive, Pat Davies,

became the group's first chief SH&E officer on 1 July 2005.

He intends to play a significant leadership role in promoting

our safety charter and safety improvement plan, among other

sustainability challenges.

Refining risk management

We have developed a systemic approach towards managing

sustainability risks throughout Sasol. During the year, we further

Principal achievements

• New group-wide targets set to improve sustainability performance.

• Signing of safety charter with South African trade unions.

• New investments bring economic benefits to Africa and the Middle East.

• Successful rollout in South Africa of the Sasol HIV/Aids Response Programme.

• Continuing reductions in reported emissions of atmospheric pollutants.

• Strong social investment programme maintained.

Principal disappointments

• Seventeen work-related fatalities.

• Unacceptable number of safety incidents in South Africa.

• Slow progress in achieving employment equity objectives at the most senior

management levels of our South African activities.

Creating critical mass for better corporate citizenship

Our sustainable development commitment includes building open and constructive relations with different communities and other stakeholder groups.

5756

enhanced our group SH&E strategy by identifying six priority focus

areas, each supported by short- and longer-term action plans:

• safety and health;

• SH&E performance and standards;

• climate change and greenhouse gases;

• proactive compliance;

• governance and assurance; and

• stakeholder relations.

A particular priority for the year ahead is to ensure effective

implementation of the safety improvement plan throughout our

South African operations, with specific programmes being

implemented to improve:

• safe behaviour;

• hazard identification;

• contractor safety;

• process safety;

• site-specific safety systems; and

• safety governance.

Introducing additional targets

During the year, the GEC approved three new group-wide

SH&E targets:

• to achieve at least a 50% reduction in the emission of volatile

organic compounds (VOCs), on the 2005 baseline, by July 2015;

• to achieve at least a 10% reduction in greenhouse gas emissions

per ton of product, on the 2005 baseline, by July 2015; and

• to achieve at least a 50% reduction in significant logistics

incidents per ton of product transported, on the 2004 baseline,

by July 2009.

These targets supplement commitments of individual companies

and/or plants, as well as these three long-standing group targets

set for achievement by all businesses by July 2006:

• to achieve an annual average recordable case rate (RCR)

of not more than 0,5 – or at least a 50% reduction on the

2001 baseline;

• to reduce significant process safety incidents (fires, explosions

and releases) by at least 50% on the 2001 baseline; and

• to achieve at least a 90% overall practice in place of the six

Responsible Care management codes of practice.

Undertaking SH&E corporate governance audits

We undertake regular SH&E corporate governance audits

throughout our global operations to ensure our performance is

aligned with group policies and objectives, and that critical risks

and liabilities are identified and communicated at a senior level.

Our internal audits are supplemented by annual external

verification audits associated with our independent sustainable

development report, as well as external audits undertaken as part

of ISO 14001 and OHSAS 18001 (or equivalent) certification, or

in fulfilment of regulatory requirements.

In late 2004, we commissioned an external review of our

corporate governance programme. We upgraded our governance

audit protocol and programme to reflect changing requirements

and to provide for the recommendations of the independent

external review.

All our businesses are required to track their performance and

submit quarterly reports to their boards, as well as to the group

SH&E and sustainable development forum and the risk and SH&E

committee of the main Sasol board. These quarterly reports

outline each business' major risks and liabilities, identify progress

against the group's sustainability targets and report on any major

incidents and non-compliances.

Upholding strict code of ethics

The Sasol code of ethics comprises four fundamental ethical


15 ethical standards. These standards cover such issues as bribery

and corruption, fraud, insider trading, human rights and

discrimination. They include a commitment to conducting our

business with due regard to the interests of stakeholders and

the environment.

We have an ethics forum to monitor and report on ethics best

practice and compliance requirements, and to recommend

amendments to the code and guide. Employee performance

against Sasol's values, incorporating the code of ethics, is

assessed as part of our mandatory employee performance

management system.

We have been operating an independent and well-supported

South African-based ethics reporting telephone line since 2001

to provide stakeholders with an impartial facility to anonymously

report deviations from ethical behaviour.

Participating in sustainability indices

Sasol’s overall score on the Dow-Jones Sustainability Index (DJSI)

this year was 73%. This reflects an improvement on our rating of

70% in 2003 when we were last assessed as part of the oil and

gas producing sector. In 2004 we were assessed within the

chemicals sector. Despite our improved rating, which contrasts

favourably with the decline in both the average and best scores of

the other companies in this sector (see graph), our overall score

nevertheless remained below the top decile level required for

inclusion in the 2005 DJSI.

Sasol’s DJSI ranking – International benchmarking of

sustainability performance

The JSE recently established its socially responsible investment

index (JSE SRI) to track and publicise the sustainability

performance of public companies listed on the Johannesburg

bourse. Sasol was included in the top five of the 22 high-impact

listed companies that qualified for the 2005 JSE SRI ratings. This is

the first year that the JSE has publicised these ratings.

Supporting global initiatives

Sasol is a member of several international, national and regional

chemical and industrial organisations, most of which are involved

in initiatives aimed at improving the SH&E and sustainability

performance of their members. Sasol has been a Responsible

Care signatory since 1994, and continues to uphold the

guidelines and management practices of this programme for its

fuel and chemical operations.

Sasol is a signatory of the United Nations (UN) Global Compact,

an international initiative that addresses human rights, labour,

environmental and corruption issues through a commitment to

10 principles. A communication on our progress in implementing

the 10 Global Compact principles is included in our separate

sustainable development report.

Economic contribution

• Value of wealth created increases by almost 18%.

• Sasol's operations maintain an estimated 170 000 jobs in South Africa.

• Commercialisation of natural gas benefits theMozambican economy.

• New BEE deals are progressing in South Africa.

• New Gulf-region investments should stimulate theQatari and Iranian economies.


Expanding international role

We are determined to retain our status as an important

contributor to economic development in South Africa and,

increasingly, elsewhere in Africa, with our investments in

Mozambique, Nigeria and Gabon and our emerging petroleum

interests in Equatorial Guinea and Namibia. Our growing African

investments support the tenets of the New African Partnership for

Development and complement the broader agenda of the African

Union to stimulate pan-African socioeconomic development,

attract foreign direct investment and reduce poverty.

Through investments started in 1990, we are increasing our

activities in other regions, particularly in the USA, Germany,

China, Malaysia, Qatar and Iran, where we have completed new

investments, or are developing new and extended operations.

Building wealth in South Africa

On the basis of a recent independent economic review, it has

been estimated that our South African operations provide direct

and indirect employment for about 170 000 people. In recent

years, we have produced about 20% of South Africa's saleable

coal and met, on average, between 35% and 40% of the

country's liquid fuel requirements. We also remain the country's

largest producer of chemical feedstock.


01 02 03 04 05

90

80

70

60

50

40

30

20

10

0

(per

cent

age

scor

e)

Average for industry sector

Sasol

Best for industry sector

A particular priority for the year ahead is to ensure effective implementation of the safety improvement plan throughout our South African operations.

5958

We contribute about R40 billion (4%) to national gross domestic

product (GDP) and save the country more than R30 billion in foreign

exchange. Sasol remains the country's single largest industrial

investor, with R24 billion invested over the last four years.

On the basis of our market capitalisation (R122 billion at year

end), we remain one of the top five companies listed on the JSE.

During the year, we increased group wealth creation by 18%

from R23,4 billion to R27,5 billion. Of this amount, R8,6 billion

(31%) was distributed to employees and R4,3 billion (16%) to

governments in the form of taxes and related revenue. All

regional operations contribute to wealth creation by adding

value to coal, natural gas, crude oil and chemical feedstocks.

Stimulating growth outside South Africa

In Mozambique, we have become an important economic

contributor since bringing natural gas on stream in the Temane

field in 2004. Through our natural gas operations, we paid

the Government of Mozambique US$3 million (about

R19 million) in taxes, royalties and dividends. Economists

estimate that our US$1,2 billion investment to develop these gas

fields and bring gas to South Africa has increased Mozambique's

GDP by about 20%.

We have also increased our economic contribution outside

Southern Africa, where we employ about 5 600 people, mostly in

the USA, Germany and Italy. While our economic contributions

are more modest in these national economies, they are

significant. A large percentage of our current capital investment is

concentrated in The Gulf region of the Middle East where we are

investing close to US$1 billion in two projects.

Sasol Polymers remains a significant partner in the Optimal

Olefins and Petlin plants at Kertih, Malaysia. Through other joint-

venture interests, Sasol Polymers is expanding its polymer

distribution interests in China.

Black economic empowerment

Supporting empowerment in South Africa

A big challenge in South Africa is to play a positive role in

stimulating the successful advance of the broad-based economic

empowerment of historically disadvantaged South Africans,

particularly black people (Africans, Coloureds and Indians).

To promote our BEE commitment, we operate a BEE coordination

office in Johannesburg. This office reports to a member of our

GEC, and oversees all corporate BEE activities, which have six

main components in our South African businesses:

• introducing equity ownership by historically disadvantaged

people;

• procuring goods and services, preferentially, from historically

disadvantaged people;

• progressing employment equity;

• building human capacity and talent in industry;

• facilitating the development of smaller BEE enterprises; and

• implementing social upliftment initiatives.

Preparing empowerment deals

We have advanced discussions with BEE partners in our South African

liquid fuels and mining businesses. In the previous year, Sasol Mining

selected Eyesizwe Coal as its lead empowerment partner, thereby

paving the way towards introducing BEE ownership to our mining

operations. Sasol Mining and Eyesizwe intend to conclude the terms

of their empowerment deal in the year ahead.

The planned Uhambo Oil joint venture between the liquid fuel

interests of Sasol and Engen, predominantly owned by Petroliam

Nasional Berhad (Petronas) of Malaysia, was recommended for

conditional approval in May 2005 by South Africa's Competition

Commission and referred to the Competition Tribunal for final

review. Our BEE plans for our liquid fuels business are progressing

well and the incorporation into Uhambo is subject to the outcome

of this review.

Should the Uhambo deal proceed, Petronas and Sasol will partner

with their two BEE groups, Worldwide African Investment Holdings

and Tshwarisano LFB Investment, respectively, to create South

Africa's largest liquid fuel business. BEE partners would own 25% of

Uhambo. If the Uhambo deal does not proceed, then Tshwarisano

will take a 25% equity position in Sasol’s Liquid Fuels Business.

Sasol Gas and its empowerment partner, Coal Energy & Power

Resources, continue to operate their successful 49:51 joint venture

at Durban, Spring Lights Gas. Sasol Gas is seeking other

empowerment joint ventures, subject to opportunities to create

new regional gas markets and find BEE partners. In addition, DPI

Plastics, a joint venture between Sasol Polymers and Group Five,

maintains seven BEE joint ventures to market and sell plastic piping.

Promoting employee diversity

We continue to increase the percentage of employees drawn from

historically disadvantaged groups in line with South Africa's

Employment Equity Act. People from designated groups – Africans,

Coloureds and Indians, women and people with disabilities –

comprise almost 65% of our South African workforce.

At year end, people from designated groups held 39,2% of our

South African managerial, professional and supervisory posts. This

compares with a target of 40% that we set for ourselves some years

ago. We intend to increase this figure to 50% in the medium term.

We award more than 62% of our undergraduate bursaries to

students from historically disadvantaged groups. More than 50% of

future appointments of trainee artisans will be allocated to people

from designated groups.

Shortly after year end, we announced the appointment of

Ms Nolitha Fakude as an executive director as part of a drive to

appoint more black people to the higher levels of group

management, including the GEC. We intend to make additional

senior black appointments in the year ahead.

Expanding BEE procurement

Our independently reviewed procurement spend with BEE

suppliers increased by 65% to R2 473 million. We intend to

increase this amount in the year ahead.

Social performance

• Safety charter and improvement plan launched in

response to an unacceptable increase in safety

incidents and 17 work-related fatalities.

• Sasol North America and Sasol Germany attained

world-class safety performances.

• More than R170 million invested in developing

employee skills.

• More than 80% of South African employees have

undergone voluntary HIV testing.

• Social investment continues to emphasise the need

for advancing socioeconomic development in

Southern Africa by building human capacity.

Occupational health and safety

Targeting zero fatalities

It is with deep regret that seven employees and 10 contractors

were fatally injured in workplace incidents. This includes the

10 people who died in an explosion at our Secunda ethylene

plant in September 2004. Any work-related fatality in the group

is unacceptable, and this figure is of particular concern. This

compares with five workplace fatalities in the previous year and

10 in our 2003 financial year. Our goal remains zero fatalities.

We have since intensified our safety management programmes to

attain our goal of zero fatalities. In November 2004, Sasol appointed

DuPont Safety Resources to perform a comprehensive safety review

of our South African operations. In the interests of transparency, the

findings of this review have been posted on our website.


Sasol is an important economic contributor to Mozambique since bringing naturalgas on stream in 2004.

Sasol continues to develop black economic empowerment initiatives tosupport socioeconomic transformation in South Africa.

Ongoing employee skills and safety training and personal development are integral to Sasol's pursuit of good corporate citizenship.

Employment equity statistics as at 30 June 2005

Executives 12% Senior management 18% Management 43% Skilled and semi-skilled 76%

People in designated groups – 39,2%

People in designated groups – 64%

White male

White female

Black male

Black female

31

1 3

3 725

1 049 1 411 347 3 610 1 204

9 555

654

927

72 127 11

6160

We are acting on the DuPont Safety Resources recommendations,

which are based on improving the safety culture of our South African

operations. This commitment is encapsulated in the Sasol safety

improvement plan, which covers key elements of safe behaviour,

contractor safety, process safety and many other specific issues. In

addition, all businesses have implemented their own site-specific

safety plans, the progress of which is monitored by their boards.

We have embarked on a comprehensive change-management

programme to ensure the sustainability of these efforts

throughout our South African operations. Key to this

commitment, Sasol and three trade unions recently unveiled a

safety charter, details of which are available on our website. This

charter – believed to be a world first – was developed in close

consultation with these unions and demonstrates our common

goal of making safety the first priority of everyone at Sasol.

As a focal point for these efforts, Sasol has revised its shared

values to emphasise safety as one of the group's six core values.

Improving our recordable case rate

We have significantly refocused our efforts to drive down the

group injury rate, which we track as the RCR. An RCR is the

number of fatalities, lost workdays and medical treatments

beyond first-aid cases for every 200 000 employee hours worked.

We have set an interim target of halving our worldwide RCR to

0,5 by June 2006 (a maximum of one case for every 400 000

employee hours). An RCR of 0,5 is considered to be in line with

global best practice.

An unacceptable increase in injuries was experienced in the first

half of the year, particularly at Sasol Mining and Sasol Polymers.

The group RCR increased to 1,17 compared with 1,03 and 1,34 in

financial 2004 and 2003, respectively. We have taken significant

steps to address this poor safety performance.

There have been some early encouraging signs of improved

performance. Sasol Mining, for the first time, achieved five

million employee hours without a lost workday case and, by mid-

2005, had reported working eight million employee hours

without a lost workday case. In April 2004, the Sasol North

America operations at Lake Charles, Louisiana, achieved one

continuous year of operations without a recordable injury.

Progressing process safety management

Ensuring the effective management of the risk of fires, explosions

and releases of hazardous substances is critical to our business.

We achieved further progress in implementing the recently

approved process safety management system throughout our

operations, with the aim of minimising the risks of accidents and

releases of hazardous substances.

Despite these efforts, there were 25 significant fires, explosions

and releases throughout the group. We register an incident as

“significant” when it meets one of three criteria: it involves a

fatality or lost workday case; it results in damage of more than

US$25 000; or it causes a release of the relevant substance’s

US OSHA threshold quantity. It is nevertheless pleasing that this

represents a 37,5% reduction on the level of our 2001 financial

year, and constitutes significant progress towards the SH&E

target of a 50% improvement on 2001 levels by July 2006.

Human resource management

Maintaining a skilled and stable workforce

At year end, Sasol had about 30 000 employees. Employee

turnover was within normal ranges of between 4% and 6%.

Since our inception, we have focused on developing, maintaining

and optimising our skills base that is necessary to ensure the

ongoing productivity, safety and reliability of our global

operations. Our commitment to creating a culture of continuous

learning is evident in the structured, group-wide approach to

people development, including our 5 600 employees outside

South Africa.

Sasol sponsors at least 462 undergraduate bursaries in South

Africa annually, with emphasis on developing scientific,

engineering and technological skills. We committed R24 million

for 462 undergraduate and 80 postgraduate bursaries in 2005 and

have budgeted a similar amount for the 2006 academic year.

We invested a further R172 million in employee training and

development throughout the group. This investment includes

in-house technical training, self-learning centres and

undergraduate bursaries.

We are at the third intake of employees participating in our

accelerated leadership development programme in South Africa.

We are currently developing high-potential, historically

disadvantaged South Africans from different disciplines through

this programme.

Encouraging participation and good relations

We enjoy constructive relationships with representative trade

unions throughout the company. More than 50% of our

employees in South Africa belong to unions. As a result of

ongoing good relations, Sasol lost no employee days through

industrial action.

Joint forums have been established between trade unions and

management to discuss wages, conditions of employment, health

and safety, training and development, community care and

HIV/Aids, among other important issues. All representative unions

and pensioners are represented on our medical scheme board and

senior employees serve on the boards of union retirement funds.

Upholding human rights

We are committed to complying with all statutes in the countries

in which we operate. This is complemented by our commitment

to the human rights principles of the UN Global Compact. As we

extend our operations into countries that are considered to have

human rights concerns, we recognise the importance of

exercising extra care to ensure our activities comply with

internationally accepted standards of behaviour.

Meeting the Aids challenge

Recognising the challenge of managing South Africa's HIV/Aids

pandemic, we launched the Sasol HIV/Aids Response Programme

(SHARP) in September 2002. This initiative – which involved input

from business, trade union, community representatives and

independent experts – is an integrated approach focused on

reducing the rate of infection throughout the group, and

extending the quality of life of infected employees by providing

managed healthcare.

As a result of our collaborative approach, we have had one of the

highest uptakes for voluntary counselling and testing (VCT) in

South Africa: 82% by year end for our South African operations.

This compares with a rate of between 50% and 60% that is typical

among most corporate programmes. To date, 7% of our tested

South African employees have tested positive for HIV, which is

well below our estimated actuarial prevalence rate of 19%.

Having taken all of the South African operations through VCT,

our focus has shifted to providing comprehensive workplace

education and training programmes in our South African

businesses. Our goal is to train 800 managers and 1 000

educators. To date, 250 managers have been trained. SHARP is

being extended to surrounding communities through partnerships

with community stakeholders, government bodies and other

companies in South Africa and Mozambique.

Community involvement

Promoting engagement and outreach

Besides the public participation initiatives implemented as part of

new projects, we continued to undertake community outreach


More than 80% of our South African employees volunteered to undergo confidentialHIV testing as part of the successful Sasol HIV/Aids Response Programme.

The implementation of a process safety management system was further advanced.

6362

initiatives at most of our existing operations. These initiatives

included holding public meetings, hosting explanatory tours

of our operations and implementing structured systems for

responding effectively to community complaints. This

constructive approach towards community outreach has

provided our management teams with a deeper understanding

of community concerns and interests.

In developing our 2005 sustainable development report,

we commissioned independent consultants to engage a sample

of Sasol's stakeholders by e-mail, telephone, interviews and

focus groups. A summary and analysis of the outcomes of this

engagement process are included in our sustainable

development report.

Sustaining strong social investments

Sasol has committed more than R600 million to social upliftment

and human development over the last decade. We continue to

support the communities in which we operate, especially in

South Africa, our corporate home, and in Mozambique, where

we recently completed construction of our US$1,2 billion

Mozambique Natural Gas Project (MNGP).

We channel our social investments into five main areas:

• education;

• job creation and capacity building;

• health and welfare;

• arts, culture and sport development; and

• the natural environment.

During the year, we committed almost R47 million to

socioeconomic development projects, mostly in the Sasolburg and

Secunda communities and along the Mozambique-to-Secunda

pipeline route. This investment excludes the R24 million committed

to bursaries and the funds dedicated to sport sponsorship.

As part of the MNGP, Sasol is maintaining a social development

plan in Mozambique. To date, we have invested more than

US$7 million in community development projects in

Mozambique, with US$0,86 million invested during the year.

We also have committed an additional US$1 million for social

upliftment projects to benefit communities alongside the gas

transmission pipeline in South Africa.

While most of our social investments are undertaken in Southern

Africa, important community-based initiatives are undertaken by

our US and European operations. During the year, these

operations and their employees contributed almost R6 million to

community projects. Employees in the USA donated thousands of

volunteer hours to help with community projects. A more detailed

review of our social investment activities is available from our

corporate social investment department.

Environmental performance

• Group targets agreed for reducing emissions of

greenhouse gases and volatile organic compounds.

• Visible progress in reducing atmospheric emissions.

• Significant new capital investments approved for

further emission reductions.

• Many businesses are reducing energy and water

consumption per ton of production.

• Progress in implementing product stewardship

throughout global operations.

Reducing impacts

Due to the nature of Sasol's activities as a global petrochemical

company, we recognise we have the potential to impact the

natural environment. The group is therefore committed to

minimising its environmental footprint by implementing measures

aimed at:

• reducing waste, atmospheric emissions, and water and energy

consumption;

• minimising the negative impacts of products through their life

cycles; and

• managing impacts on land and biodiversity.

Reducing greenhouse gas emissions

Following an extensive internal review and external

benchmarking process, we finalised a group target of achieving at

least a 10% reduction in greenhouse gas emissions per ton of

product, on the 2005 baseline, by July 2015. We intend to achieve

this reduction mostly by switching to a feedstock with a better

carbon-efficiency at existing facilities, using a less carbon-

intensive feedstock at new production facilities, reducing

emissions at our nitric acid facilities and implementing an

enhanced energy-efficiency drive at all facilities.

Our inventory of greenhouse gas emissions has been developed

using the reporting protocol of the World Business Council for

Sustainable Development and the World Resources Institute.

Certain projects have been verified by independent consultants.

The overall emission of carbon dioxide and methane, measured in

terms of carbon dioxide equivalent per ton of production, was

2,88 compared with 2,64 in the previous year.

Sasol has made valuable progress towards registering several

Clean Development Mechanism projects. We also continue to

contribute to the activities of a working group of the

Intergovernmental Panel on Climate Change that is examining

opportunities to capture and store carbon dioxide.

Targeting other pollutants

Some notable milestones were achieved in reducing atmospheric

emissions throughout the group, primarily in South Africa where

projects are being implemented against the backdrop of the new

National Environment Management: Air Quality Act, which

stipulates new ambient air quality standards.

At our Secunda operations, more than R500 million has been

committed over the next three years to projects aimed at

improving air quality, while, in Sasolburg, more than R2 billion is

to be invested in similar projects over the same period. Following

the conversion from coal to natural gas feedstock at our

Sasolburg operations, significant reductions have already been

achieved in the emission of hydrogen sulphide, historically a

cause for complaints about odour.

The GEC approved a group target of achieving at least a 50%

reduction in the emission of VOCs on the 2005 baseline by July

2015. Several projects have been implemented at the Natref

refinery at Sasolburg, which have since resulted in reduced

emissions of low-level VOCs. Capital expenditure has been

approved to achieve similar VOC reductions at our Secunda plant.

More detailed data on our atmospheric emissions at a group level

is provided in our separate sustainable development report.

Supporting clean-fuels drive

Sasol is investing more than R6 billion at Sasolburg and Secunda

to modify its fuel production facilities to ensure compliance with

South Africa's stricter diesel and petrol specifications that

become mandatory in January 2006. These specifications will

bring South Africa closer to global standards and are expected to

contribute to reduced vehicular emissions of harmful substances.

In another significant development, the imminent start-up of the

Oryx GTL plant in Qatar will enable Sasol and Qatar Petroleum to

supply an environmentally preferred form of synthetic diesel

(GTL diesel) produced from the Sasol Slurry Phase Distillate™

process. GTL diesel has virtually no sulphur (less than five parts

per million), a low aromatic content (less than 1%) and a high


Sasol is undertaking several major investments to improve its waste-management facilitiesand environmental performance.

Sasol continues to support socioeconomic development through anextensive corporate social investment programme.

Air-quality monitoring stations at and around Sasol plants worldwide areintegral to our efforts to reduce emissions to air.

Ongoing land rehabilitation is core to Sasol's worldwide environmentalmanagement efforts.

6564

cetane number (70 versus the 45-55 of conventional diesels).

These properties enable greatly reduced tailpipe emissions of

nitrous oxides, sulphur oxides, carbon monoxide, aromatics,

unburnt hydrocarbons and particulates from compression-

ignition engines.

Working to minimise waste

Potential risks associated with waste remain a priority. Historical

legacies are addressed in accordance with relevant legal

requirements. Cleaner production principles are being

implemented to minimise future risks.

An important initiative has been the commissioning of a waste-

recycling facility at Secunda, which will have significant

implications for on- and off-site waste treatment and disposal

activities. We are working on developing group targets for waste

reduction and global guidelines are being developed for

minimum waste-management requirements.

Partnering for better energy efficiency

In South Africa, we signed the Energy Efficiency Accord with

other companies and the Department of Minerals and Energy.

Though this accord, we are committed to taking actions to

reduce energy consumption per unit produced by 15% by 2015.

The base year is 2000.

Remediating and rehabilitating land

As a result of our historical chemicals and fuels processes, we

have several areas where soil or groundwater may have been

polluted in the past. Good progress has been made in

remediating contaminated land throughout the group.

In some areas, remediation projects were successfully completed.

In other areas, detailed surface and groundwater characterisation

projects have been implemented.

Managing impacts in global activities

Sasol is undertaking new investments in countries such as

Mozambique, Nigeria, Gabon, Equatorial Guinea and Qatar,

where we are involved – or are about to become involved – in

exploration, extraction, processing and transportation activities

relating to natural gas, petroleum and chemicals.

Our operations in these jurisdictions are subject to regulations for

exploration and mining rights and the protection of safety, health

and the environment. In addition, securing external funding for

projects of this nature generally requires that we meet World

Bank social and environmental requirements following the

adoption by many banks of the Equator Principles. With this in

mind, we typically require that such activities comply, as a

minimum, with World Bank environmental and social standards.

Product stewardship

Furthering product stewardship

Recognising the risk management and marketing benefits

associated with environmentally preferred products, particularly

in the context of the global policy shift towards addressing the

risks and impacts of products rather than processes alone, Sasol is

committed to adopting a life-cycle approach to all the products

we develop, manufacture, use, distribute and sell.

Since 2003, a formalised global support structure – with assigned

responsibilities in each of the key companies – has been in place

with the goal of ensuring a structured, group-wide response to

product stewardship. Sasol has continued to play a leading role

on product stewardship issues in relevant working groups of the

European Chemical Industries' Council and the American

Chemistry Council.

We support the development of the Globally Harmonised System

of Classification and Labelling of Chemicals and will be adopting

this. Every Sasol chemical business is required to implement the

Responsible Care product stewardship code.

Sustainability reportingChanging to annual reporting

With effect from the year under review, we have agreed to publish

our group sustainable development report annually, and no

longer biennially. Our sixth external report on our sustainability

performance will be available from the Sasol head office and

website from November 2005.

Sasol reports on sustainable development in accordance with the

Sustainability Reporting Guidelines of the Global Reporting

Initiative (GRI). Our 2005 sustainable development report – for


Members of the emergency response team at the Lake Charles ChemicalComplex in Louisiana conduct regular equipment inspections.

A new Sasol waste-recycling facility under development at Secunda in South Africa.The Oryx GTL plant in Qatar will supply environmentally preferred synthetic diesel.

the period 1 July 2004 to 30 June 2005 – has been produced in

accordance with GRI guidelines and has drawn on the findings of

an independently conducted process of stakeholder engagement

Looking ahead

Targeting improvements

We have many challenges ahead. Our safety record has been

unacceptable. We shall be working to improve this in the year ahead

as a priority. We shall be further transforming Sasol to provide new

opportunities to historically disadvantaged South Africans. As a

result of our current growth trajectory, we are fortunate that we can

offer opportunities to all our employees to grow and excel.

We shall proceed with established and new initiatives to empower

black people and ensure their broader participation in South

Africa's mainstream economy. We also are forging closer ties with

the South African Government to ensure we are more closely

aligned to national socioeconomic objectives, while also ensuring

the Government is informed of our activities and plans in this field.

Sasol's leaders have again committed themselves to living the

group's values, which continue to provide a solid foundation for

building our future sustainability policies and programmes. While

Sasol has achieved encouraging progress in many areas of

sustainable development, we have considerable work still to do.

This includes an ongoing change in our leadership style

throughout Sasol and, in particular, in the way we interact with

each other and our stakeholders.

1

“Sasol’s financial targets are

• to maintain our gearing within a target range of 30% to 50%;

• to achieve 10% attributable earnings growth per annum

in US$ terms on a three-year moving average basis

(base years 1998 – 2000);

• to achieve an economic value added rating of 1,3 times

our weighted average cost of capital on all new major

investments; and

• to generate 50% of our cash from operations from our

non-South African operations by the 2010 financial year.”

Trevor Munday Deputy chief executive and chief financial officer

Key factors necessary to achieve Sasol’s goals include the:

Although Sasol believes it has strategies, product offerings and resources required to achieve its objectives, if Sasol’s expectations,assumptions and estimates are incorrect or if all key factors are not achieved, then actual performance could vary materially from theforward-looking statements made in this report.

Forward-looking statements can generally be identified as such because the context of the statement will include words such as the group ormanagement ‘believes’, ‘anticipates’, ‘expects’, ‘intends’, ‘seeks’, ‘will’, ‘plans’, ‘could’, ‘may’, ‘endeavours’, ‘projects’, ‘estimates’ or words ofsimilar import. Similarly, statements that describe the group’s future plans, objectives or goals are also forward-looking.

Forward-looking statements apply only as of the date on which they are made, and Sasol does not undertake any obligation to update orrevise any of them, whether as a result of new information, future events or otherwise.

ability to improve results despite unusual levels of

competitiveness;

ability to maintain key customer relations in important markets;

improvement in demand and pricing;

continuation of substantial growth in significant developing markets;

ability to benefit from capital spending policies;

ability to continue technological innovation;

ability to maintain sustainable earnings despite fluctuations

in foreign exchange rates and interest rates; and

successful outcomes in regulatory matters.

3

sasol limited group

chief financial officer’s review

2

Risk managementWe are exposed to a number of external risks, as described

below, which are not under our control, yet they can have a

significant impact on our results. These risks are monitored on an

ongoing basis and, where feasible and in line with our strategy,

derivative instruments are entered into in order to mitigate them.

No speculative trading in derivatives is permitted.*

ObjectiveOur hedging programme is based on risk management

rationale. The objective of our hedging programme is to achieve

greater certainty in cash flows, particularly considering our

capital expenditure programme, and not to boost profits

through speculative hedging approaches.

Exchange ratesThe majority of our turnover is denominated in US dollars or

significantly influenced by the rand/US dollar exchange rate.

This turnover is derived either from exports from South Africa,

businesses outside of South Africa or South African sales which

comprise mainly petroleum and chemical products that are

mostly based on global commodity and benchmark prices

quoted in US dollars. Furthermore, a significant proportion of

our capital expenditure is also US dollar-linked.

Any change in the annual average rand/US$ exchange rate has a

significant effect on our results. For the 2006 financial year, for

every 10c weakening or strengthening of the rand against the

US$ for the year, our operating profit increases or decreases by

approximately R500 million as applicable. This sensitivity is

utilised primarily for purposes of financial forecasting and

budgeting, reflects the effect of possible changes in the average

annual exchange rate and excludes the effect of any changes to

the closing rand/US dollar exchange rate.

We apply the following principal policies in order to protect

ourselves against the effects (on our South African operations)

of a volatile rand against other major currencies as well as an

anticipated long-term trend of a devaluing rand:

• all major capital expenditure in foreign currency is hedged

immediately on commitment of expenditure or on approval of

the project (also with South African Reserve Bank approval),

by way of forward exchange contracts; and

• all imports in foreign currency in excess of an equivalent of

US$50 000 per transaction are hedged immediately on

commitment by way of forward exchange contracts.

This is an established policy of our group based on anticipated

long-term trends and is designed to hedge our exposure in

South Africa to exchange rate-based volatility in cash flows on

both operating and capital expenditure. This policy enables us

to more accurately forecast our cash outflows for purchases of

both capital items and operating materials thereby improving

our management of both working capital and debt.

Crude oil pricesMarket prices for crude oil fluctuate because they are subject to

international supply, demand and political factors. Worldwide

supply and price levels of crude oil are also influenced by

international oil cartels. Our exposure to the crude oil price

centres primarily around crude oil related raw materials, as well

as on the selling price of the fuel marketed by our Sasol Liquid

Fuels Business which is governed by the basic fuel price (BFP)

formula. A key factor in the BFP is the Mediterranean and

Singapore (petrol) or The Gulf (diesel) spot price.

In order to protect the group against short-term US dollar oil

price volatility and rand to US dollar exchange rate fluctuations

adversely affecting the cost of crude oil purchases, a combination

of forward exchange contracts and crude oil futures are used.

While the use of these hedging instruments provides some

protection against short-term volatility in crude oil prices, it

does not protect against longer-term trends in crude oil prices.

In the financial year under review, we hedged a portion

(approximately 30% of Synfuels’ production) of our exposure to

crude oil price volatility by entering into a derivative instrument

in terms of which 45 000 b/d of crude oil were sold forward at a

weighted average price of US$33,12/b. Whilst the hedge

achieved our objective of achieving a minimum level of cash

flows in order to fund our capital expenditure programme, the

group realised a total opportunity loss for the year on this

hedge of R1 147 million before tax.

We have reviewed our oil price exposure for the 2006 financial

year. Due to continuing volatility in oil markets and considering

the capital expenditure plans for the year, we have decided to

continue with modest hedging to protect cash flows, but

following a different approach.

We have, therefore, for the 2006 financial year, entered into

hedging transactions (zero cost collars) for 45 000 barrels of oil

(dated Brent) per day (equivalent to approximately 30% of

Synfuels’ production). In terms of this hedge the group will be

protected, should monthly average oil prices decrease below

US$45,00/b on the hedged portion of production, and

conversely, will incur opportunity losses on the hedged portion

of production should monthly average oil prices exceed

US$82,61 per barrel.

We believe the revised approach to be more appropriate in the

context of the currently high and rising crude oil prices.

Although, on the hedged portion of production, the approach

protects Sasol should crude oil prices drop below US$45,00/b,

thereby ensuring that sufficient cash flow is generated to fund

the capital expenditure programme, it allows Sasol to take

advantage of any upside on the crude oil price up to

US$82,61/b thus limiting the potential opportunity loss

which could arise.

This review provides further insight into the financial position, performance and arrangements of our group and should be read inconjunction with the annual financial statements presented on pages 25 to 131.

Key performance indicatorsOur key financial performance indicators for the year ended 30 June 2005 were as follows

2005 2005 2004 % US$m1 Rm Rm increase

Turnover 11 150 69 239 60 151 15Operating profit 2 336 14 506 9 314 56Earnings attributable to shareholders 1 541 9 573 5 940 61Cash generated by operating activities 3 029 18 812 15 151 24Total assets 13 191 87 989 73 486 20Total debt 2 829 18 866 16 488 14

Earnings per share cents 251 1 560 974 60

Gearing % 37,6 41,2

Net asset value rand 70,58 57,31 23

1 The principal reporting currency of Sasol is the rand. Amounts expressed in US dollars represent a translation made in accordance with International Financial ReportingStandards (IFRS) as set out in note 28 of the accounting policies and glossary of financial reporting terms on page 43. These figures are presented for convenience purposes only.

Economic variables and financial indicatorsPrincipal economic indicatorsThe economic indicators and variables used in preparing the financial statements were

Income statement Balance sheetNote 2005 2004 2003 2005 2004 2003

Exchange rates 1rand/US$ 6,21 6,88 9,03 6,67 6,21 7,50rand/euro 7,89 8,19 9,41 8,07 7,57 8,63

Financial statementsNote 2005 2004 2003

Crude oil (US$/b)Dated Brent (annual average) 2 46,17 31,30 27,83

Notes:1. Exchange rates are determined as the mid-closing interbank rate of South African banks daily as published by Reuters. The average rate for the year, used for income

statement purposes, is determined as an arithmetic average of the mid-closing interbank rates for each of the South African business days for the financial year under review.2. Brent crude oil prices are determined from the quoted daily average market prices of Blend North Sea crude oil as published by Platts Global Alert. The average price for

the year is calculated as an arithmetic average of the daily published prices.

Monthly average commodity chemical prices are reflected in the following graph

* Further detail is provided in the Form 20-F filed with the Securities and Exchange Commission in the United States of America and available on our website.

Chemical prices

1997 1998 1999 2000 2001 2002 2003 2004 2005

260

240

220

200

180

160

140

120

100

80

60

40

Ammonia Polymers Phenols Solvents

pric

es –

exp

ress

ed a

s a

perc

enta

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f Jul

y 19

97

54

For the 2006 financial year, a US$1/b increase in the average

annual crude oil price results in an approximately R255 million

(US$39 million) increase in operating profit with a similar

negative consequence if the average annual crude oil price

decreases by US$1/b. This sensitivity is utilised primarily for

purposes of financial forecasting and budgeting. Should the

annual average crude oil price move outside the range of

our zero cost collar hedging instrument, the effect on

operating profit will reduce to approximately R105 million

(US$16,5 million) for each US$1 change in the crude oil price.

Full disclosure is provided in the financial instruments disclosure

on page 119.

Cyclicality in petrochemical product pricesThe demand for our chemical and especially polymer products

is normally cyclical. Typically, higher demand during peaks in

industry cycles leads producers to increase production capacity.

Although peaks in these cycles have in the past been

characterised by increased market prices and higher operating

margins, such peaks have prompted further capital investment

which has led to supply exceeding demand and a resultant

reduction in selling prices and operating margins.

Even though there is currently a surplus capacity of some

products in the chemicals market, with the possibility of further

capacity additions in the next few years, it is not currently group

The fixing or capping of interest rates to achieve improved

predictability of borrowing costs is considered and implemented

on a case-by-case and project-by-project basis, taking the

specific and overall risk profile and benefits into consideration.

In most cases, interest rates are fixed by entering into an interest

rate swap to exchange a portion of variable interest exposure

on the underlying debt for fixed interest rate exposure. Details

of these interest rate swaps are provided on page 118 in the

financial instruments notes.

Accounting policiesThe consolidated financial statements are prepared in

compliance with International Financial Reporting Standards

(IFRS) and applicable legislation.

As reflected in the accounting policies on page 37, the group

has adopted the majority of the revised standards issued by the

International Accounting Standards Board (IASB) before the

mandatory date of adoption. This approach has been followed

as these statements provide improvements to financial

reporting resulting in improved disclosure in the annual financial

statements and also has the effect of furthering our stated

intention of harmonising our accounting treatment under IFRS

and US GAAP. The following standards were not adopted during

the current year:

• IAS21 The effect of changes in foreign exchange rates – the

changes to this standard may result in material system and

accounting changes and is therefore being extensively

researched before it is adopted.

• IAS24 Related parties – the changes are primarily to company

(and not group) financial statements and are expected to

result in significant changes to underlying reporting systems

and the requirements are being extensively researched before

being implemented.

• IAS32 and 39 Financial instruments – the IASB recommended

that this statement not be adopted early.

• IFRS2 Share based payments – the equivalent revised

US GAAP standard will only be adopted from the 2006

financial year and therefore the adoption of this standard is

delayed to achieve harmonisation between IFRS and US GAAP.

• IFRS4 Insurance contracts – the standard has no material

impact on Sasol and will be implemented from the 2006

financial year.

• IFRS6 Exploration for and evaluation of mineral resources –

was issued during the current year, has a minimal effect on

Sasol and is only applicable from the 2007 financial year.

These standards will be adopted for the 2006 financial year

which commenced on 1 July 2005.

Progress in achieving harmonisation of IFRS with US GAAPThe adoption of the accounting standards as described in

the accounting policies on page 37 has resulted in further

harmonisation with US GAAP, notably in the areas of business

combinations and intangible assets. The adoption of IFRS2

Share based payments, concurrently with the revised

US GAAP standard, in the 2006 financial year will result in

further harmonisation.

The following remaining significant differences between IFRS

and US GAAP cannot, in terms of current accounting standards

and our policies, be harmonised because in terms of US GAAP:

• the provision for post-retirement benefit obligations is

determined as the expected future benefits payable while in

terms of IFRS it is determined as the expected future

contributions payable;

• all incorporated joint ventures are accounted for using the

equity method whilst under our selected policy for IFRS they

are proportionately consolidated;

• assets are considered to be impaired when the carrying value

is less than the undiscounted value of future cash flows, while

for IFRS the carrying value is compared to the discounted

value of future cash flows; and

• the discount rate of asset retirement obligations is not

reassessed annually whilst for IFRS the discount rate is

adjusted on an annual basis.

Key areas where management’s judgement has been applied

In preparing our financial statements in terms of IFRS,

applicable accounting policies are applied and estimates and

assumptions made that may affect reported financial results.

The nature of these assumptions is inherently long-term and

future experience may result in actual amounts differing from

these estimates.

The following accounting policies have been identified as involving

particularly complex or subjective decisions or assessments:

Depreciation rates

The group depreciates its assets over their estimated useful lives,

which, following the adoption of IAS16 Property, plant and

equipment (revised), are re-assessed on an annual basis. The actual

lives of these assets can vary depending on a variety of factors.

Assets related to oil-and-gas producing activities are

depreciated over the estimated proven reserves to which

those assets relate. Accordingly, changes in proven reserves may

result in a significant change to the depreciation rates applied

to these assets.

The group’s assets are depreciated over their estimated

remaining useful lives. These useful lives are periodically

reassessed to determine whether the original period continues

to be appropriate. Technological innovation, product life

cycles and maintenance programmes all impact the useful lives

of the assets.

During the current year, the effect of changing the remaining

estimated useful lives of our plant and equipment and therefore

the depreciation charge, was an increase in operating profit of

some R1,5 billion. This has significantly reduced the depreciation

to cost of property, plant and equipment ratio from 5,8% in 2004

to 3,8% in 2005. This reduction in depreciation is attributable to

the following businesses:

Reduction in

depreciation charge

Business unit Rm

Mining 29

Synfuels 656

Gas 50

Liquid Fuels Business 39

Polymers 170

Solvents 61

Olefins & Surfactants 517

Nitro 12

Wax 10

Technology 2

Financing 1

Total 1 547

The effect of the initial review of the estimated useful lives of

our assets was significant. It should be noted, however, that for

every subsequent financial year, each business unit is required

to perform a similar review of both the depreciation method

applied and the estimated remaining useful lives of its assets.

This future review is not expected to result in a significant

adjustment to future depreciation charges and therefore the

current year impact is not expected to recur.

Impairment of assets

An impairment assessment is performed on property, plant and

equipment, goodwill and intangible assets at least biannually.

The future cash flows expected to be generated by these assets

are assessed, taking into account forecast market conditions

and the expected remaining lives of these assets. The present

value of these cash flows is compared to the current net asset

value and, if lower, the assets are impaired to the present value.

A number of our chemical plants in South Africa wereconstructed during a period in which the relatively weak randincreased capital costs. These plants are now earning incomestreams based on a much stronger rand than originallyenvisaged at the time of construction. Furthermore, at the timethe investment decisions were made, an average long-termcrude oil price in the region of US$20/b was forecast whilst

sasol limited group

chief financial officer’s review continued

76

experience in the last two years has resulted in our long-termforecast increasing to between US$30/b and US$35/b. Thisincrease in crude oil prices has also had a negative impact onthe cost of feed streams in our chemical facilities.

As a result, a number of our chemical plants in South Africa,North America, Italy and Germany have been impaired duringthe current year. The impairment charge of R808 million onproperty, plant and equipment in the current year represents1,4% of the carrying value of property, plant and equipment andless than 0,4% of the replacement cost of the group’s property,plant and equipment.

Capital projects are evaluated against our weighted average costof capital (WACC). Therefore, when performing an impairmentreview, the same criterion is applied and expected future cash flows are discounted using WACC as the discount rate.At 30 June 2005, our WACC was 12,75% for South Africa and7,25% in Europe and the US.

Asset retirement and rehabilitation obligationsUpon turnaround or termination of a business operation, thegroup has obligations to remove the plant and equipment andrehabilitate the land in certain countries. Estimating the futurecosts of these obligations is complex and requires managementto make estimates and judgments because most of theobligations will only be fulfilled in the future and contracts andlaws are often not clear regarding what is required. The resultingprovisions could also be influenced by changing technologiesand political, environmental, safety, business and statutoryconsiderations.

Certain of our asset retirement obligations are coupled to theestimated remaining useful lives of the assets to which theyrelate. As a result of the extension of useful lives in the currentyear, the timing of certain provisions was also re-assessedresulting in a reduction of these provisions by approximatelyR0,6 billion. Further detail is provided in note 16 of the annualfinancial statements.

Employee benefitsThe group provides for obligations for pension and providentfunds as they apply to both defined contribution and definedbenefit schemes, as well as post-retirement healthcare. Theobligations are determined based on a number of assumptionsand in consultation with independent actuaries. These assumptions(set out in note 17 of the annual financial statements) include,amongst others, the discount rate, the expected long-term rateof return of retirement plan assets, healthcare inflation costsand rates of increase in compensation costs.

Valuation of financial instrumentsThe valuation of derivative financial instruments is based on themarket situation on balance sheet date. The value of thesederivative instruments fluctuates on a daily basis and the actualamounts realised may differ materially from the value at whichthey are reflected on balance sheet date.

Our financial performance in the 2005 financial year (income statement)

Turnover

Turnover, in the 2005 financial year, increased by R9 088 million

(15%) to R69 239 million when compared to the previous financial

year. The primary factors contributing to this increase were

2005 2004Rm % Rm %

Exchange rates (4 919) (8) (11 410) (18)Product prices 14 846 25 2 885 5

crude oil 6 502 11 2 330 4other products (including chemicals) 8 344 14 555 1

Volumes (839) (2) 4 421 7Exceptional items – – (300) (1)

Increase/(decrease) in turnover 9 088 15 (4 404) (7)

Turnover has increased at a compound average of 22% over the

last five years.

Operating profitOperating profit, in the 2005 financial year, increased by

R5 192 million (56%) to R14 506 million when compared to

the previous financial year.

The main factors contributing to the increase in operating

profit were

2005 2004Rm % Rm %

Exchange rates (1 621) (17) (5 975) (50)

closing rate 1 126 12 673 6average rate (2 747) (29) (6 648) (56)

Product prices 8 512 91 2 875 24

crude oil 3 619 38 2 245 19effect of the crude oil hedge (1 147) (12) – –other products (including chemicals) 6 040 65 630 5

Inflation on fixed cash costs (405) (4) (414) (4)Volume and productivity effects (1 395) (15) 1 163 10Change in accounting standards (property,plant and equipment and goodwill) 1 349 14 – –Exceptional items (1 248) (13) (246) (2)

Increase/(decrease) in operating profit 5 192 56 (2 597) (22)

Operating profit has increased at a compound annual average

rate of 18% over the last five years.

To date, the majority (84% in 2005) of our profits have been

derived from our South African operations. Our investments in

GTL in Qatar and Nigeria and Polymers in Iran are expected to

result in an increase in our operating profit generated outside

South Africa once they come on stream.

In the current year, our fuel and energy related business

contributed 79% of our operating profit and our chemical

businesses 21%.

sasol limited group


Effect of capital items on operating profitThe following non-recurring, exceptional transactions were included in operating profit

2005

Income/

(expenditure)

Business Rm

Impairments

Olefins & Surfactants Alkylates plant (North America); 3rd octene train (South Africa);

inorganic specialities plant (Italy) (453)

Olefins & Surfactants Goodwill in North America and Italy (209)

Solvents Ketones and alcohols plants (Germany) and n-Butanol (South Africa) (302)

Liquid Fuels Business Investment in Black Top Holdings (Pty) Limited (42)

Technology Research and development assets (18)

Synfuels (CarboTar) Electrical kiln (South Africa) (16)

Various (38)

(1 078)

Scrapping of assets

Synfuels Mainly capitalised development costs (111)

Olefins & Surfactants Mainly capitalised development costs (87)

Solvents Mainly closure of crotonaldehyde, propylene oxide and glycol ethers plants (80)

Various (12)

(290)

Other capital items

Synfuels International Profit on sale of participation rights in future GTL venture 33

Nitro Profit on disposal of Sasol Southwest Energy 28

Various Profit on disposal of businesses 12

Various Profit on disposal of property, plant and equipment 20

93

Capital items (per note 35 page 97) (1 275)

The most significant impairments in the current year were incurred in the Solvents and Olefins & Surfactants businesses. The primary

cause of these impairments is the significant increase in the price of raw materials as a result of the increase in crude oil prices which

cannot be passed on to customers and, for our South African assets, the effect of the weaker rand during the construction phase negatively

impacted capital costs and these assets are now earning income streams based on a much stronger rand than originally envisaged.

98

The current economic evaluation of the 3rd octene train indicatesthat the cost of completion will be substantially higher thanpreviously forecast with the result that the plant will not meet ourWACC. This has resulted in the total capital cost incurred to datebeing impaired. A higher price is being negotiated with ourcustomer in order to achieve our WACC and as a result, the projectwill be completed.

In the context of the current high crude oil prices and prices ofvarious other raw materials, the group has evaluated previouslycapitalised development costs. These projects are no longerconsidered economical and, as a result, these costs have beenwritten off. In addition, as a result of strategic decisions takenby the Solvents management board, certain areas of productionhave been discontinued and the related assets scrapped.

The group disposed of its investment in Sasol Southwest EnergyLLC. Following impairment charges recognised in the previousyear, the final disposal of the investment realised a profit for thegroup of R28 million. Furthermore, a number of smallersubsidiaries and investments were sold during the current yearrealising a profit of R12 million.

Our financial position (balance sheet)Capital resourcesThe group’s capital resources comprise

2005 2004 2003Rm Rm Rm

Total equity 43 786 35 400 33 818Total debt 18 866 16 488 14 330

62 652 51 888 48 148

Debt profileThe group’s operations are financed primarily by means of itsown cash flow. Cash shortfalls which are usually short-term innature are met primarily from short-term banking facilities andthe commercial paper programme.

Long-term capital expansion projects and acquisitions ofbusinesses are financed by a combination of floating and fixedrate long-term debt. This debt is normally in the measurementcurrency of the project or acquisition being financed and repaymentterms match the expected cash flow to be generated by theasset or business acquired.

Our debt comprises the following

2005 2004 2003Rm Rm Rm

Long-term debt 12 951 9 110 4 581Short-term debt 3 300 3 265 6 481Bank overdraft (includingovernight borrowings) 2 615 4 113 3 268

Total debt 18 866 16 488 14 330Less cash 2 509 2 063 3 186

Net debt 16 357 14 425 11 144

Utilisation of available cash

2005 2004Rm Rm

Net cash at beginning of year

(including restricted cash)* (1 523) 583

Cash generated by operating activities 18 812 15 151Investment income 169 230

Cash available for use by the group 17 458 15 964

Borrowing costs paid (1 523) (1 384)

Tax paid (3 753) (3 963)

Dividends paid to shareholders (2 856) (2 745)Dividends paid to minority shareholders (64) (37)

Cash available for investment 9 262 7 835

Capital expenditure (12 526) (11 418)

to enhance existing operations (5 235) (3 519)

to expand operations (7 291) (7 899)

Other net investing activities 299 390Share repurchase programme – (33)

Net cash shortfall (2 965) (3 226)

* The cash restricted for use is primarily cash held by joint ventures to whichthe group has restricted title as well as the cash in the group’s cell captiveinsurance companies.

The shortfall in the current year was financed primarily from an

increase in long-term borrowings including project finance for

certain of our capital projects.

Capital expenditureCapital commitmentsThere are currently close on 40 projects each in excess of

R150 million in various stages of development, representing

84% of a potential capital investment approximating

R39 billion. Numerous smaller projects are also under

consideration. Capital authorised at 30 June 2005 less

expenditure already incurred amounted to R19 billion of

which R8 billion has not yet been contracted. Approximately

R14 billion is expected to be invested in capital projects

during the next financial year.

Capital projects are evaluated against our weighted average

cost of capital (WACC) for the specific country in which the

project is being established. The country specific WACC is,

inter alia, based on long-term interest rates and market risks

attributable to that particular country. At 30 June 2005 our

WACC for South Africa was 12,75% and for Europe and the

US was 7,25%. Projects to expand operations are judged

against a hurdle rate of 1,3 times WACC.

sasol limited group


Although the group’s net borrowings have increased by R1 932 million to R16 357 million, the gearing ratio of 38%(2004 – 41%) at year end remains satisfactory and is wellwithin the target range of 30% to 50%. Our gearing changes byapproximately 2% points for every R1 billion change in debt.

During the year, the specific asset based financing in place forthe purchase of Sasol Chemie was replaced by newly raisedgroup debt. This has resulted in a substantial reduction in thevalue of assets pledged as security (from R16,4 billion to R8,4 billion) as well as the negotiation of better interest ratesand less onerous borrowing covenants. The increase in long-term debt is primarily attributable to the increasing capitalexpenditure on our Oryx GTL plant, the financing arrangementsin respect of the Mozambique Natural Gas Project as well as theraising of a Euro 300 million Eurobond. The proceeds of the fiveyear Eurobond were used to reduce Sasol’s short-termborrowings in South Africa and assist in diversifying andextending the average tenor of our debt portfolio. SasolFinancing now uses less uncommitted short-term bank creditfacilities which is positive from a credit rating perspective.

Accordingly, the ratio of long-term debt to short-term debt of2,2:1 in the current year has increased from 1,2:1 in 2004 whichmore accurately reflects the trend of future cash flows expectedto be generated by these projects as well as Project Turbo.

The anticipated sale of our investment in the Olefins &Surfactants business will also result in a substantial reduction indebt and enable the group to focus its resources (including itsdebt capacity) on its long-term strategy of developingintegrated fuel and chemicals facilities which are backwardintegrated into the raw material feedstreams.

Our debt coverage of 1,0 times (cash generated by operatingactivities to total debt) and borrowing cost cover of 9,7 times(net income before borrowing costs and taxation to borrowingcosts) remain satisfactory.

Our debt exposure at 30 June analysed by currency was

2005 2004Rm % Rm %

Euro 3 787 20 1 656 10US dollar 3 301 17 3 247 20Rand 11 471 61 11 569 70Other 307 2 16 –

18 866 100 16 488 100

This currency exposure is a reflection of the currency of thecapital expenditure of the group.

Cash flowThe group continues to generate strong operating cash flowswhich are used to service our working capital requirements,cover our debt, taxation and dividend obligations and financecapital investments.

Cash generated by operating activitiesThe compound annual rate of growth of cash generated byoperating activities over the last five years is 19%.

Significant projects, each in excess of R200 million, in progress with a total amount approved of approximately R30 billion, include

Capitalcommitment

at 30 June ExpectedAmount 2005 completion

Project Business Currency approved Rm date

GTL Escravos Synfuels International US$m 945 4 937 Mar 2009

Oryx GTL (Qatar) Synfuels International US$m 466 1 063 May 2006

Ethane cracker, HDPE

and LDPE plants in Iran Polymers US$m 516 2 457 May 2006

Project Turbo Polymers Rm 7 445 3 152 Aug 2006

Synfuels Rm 5 722 1 900 Mar 2006

3rd octene train Olefins & Surfactants Rm † 1 132 Nov 2006

Natref clean fuels project LFB Rm 520 288 Oct 2005

New waste recycling facility Synfuels Rm 520 151 Oct 2005

Project Landlord Synfuels Rm 429 199 Dec 2005

Syferfontein Kriel South phase 2 Mining Rm 299 157 Oct 2005

Mooikraal underground

coal mine Mining Rm 229 102 Nov 2005

The expected timing of the future cash flows related to these capital commitments is provided on page 63 of the annual financial statements.

† Final contract value still to be determined.

11

sasol limited group


10

Additions to non-current assets

Capital expenditure during the year, including the effects of

cash flow hedge accounting (R0,6 billion) amounted to

R13,2 billion of which R13,1 billion was incurred on property,

plant and equipment and R0,1 billion on intangible assets.

The cash effect of capital expenditure during the year

amounted to R12,4 billion on property, plant and equipment

and R0,1 billion on intangible assets.

Of the R12,4 billion capital expenditure (2004 – R10,9 billion),

R5,2 billion (42%) was utilised to address environmental

obligations and enhance existing assets and R7,2 billion (58%)

was spent to expand operations.

Shareholder informationShare repurchase programmeNo further shares were repurchased during the current year. The

group continues to hold 60 111 477 shares (8,9% of the total

shares in issue) in terms of its share repurchase programme.

Should opportunities arise where this capital can meaningfully

be utilised, the group may reissue these shares, although

presently there is no intention to trade with or reissue them.

In anticipation of our gearing easing, we will consider

reactivating our share repurchase programme and purchase

up to 10% of our own shares.

Share incentive schemeSasol operates a share incentive scheme which aims to retain and

reward certain senior employees. Allocations of options to these

employees are linked to both the company’s performance and that

of the individual. Further disclosure of the details of the scheme

are provided in note 38 of the annual financial statements.

In accordance with the group’s accounting policy, the cost of

share options granted to employees is not reflected in the

group’s financial statements. In terms of IFRS2 Share based

payments, Sasol will be required to recognise this expense in the

income statement from the 2006 financial year. Had this policy

been applied in the current year an expense of R137 million

(2004 – R146 million) would have been recognised in the

income statement.

This calculation is determined using the Black Scholes valuation

method taking into account the ruling price of the share on the

JSE Limited at 30 June 2005. Further detail is provided in note 38

of the annual financial statements.

DividendsIt is Sasol’s objective to distribute dividends on an annual basis

covered approximately three times by earnings. The group

aims to maintain a dividend cover of between 2,5 and 3,5 times.

In determining the dividend to be distributed, the group also

considers the potential re-investment opportunities within

the group. The dividend for the year has been increased to

R5,40 representing a dividend cover of 2,9 times which is

within the preferred dividend cover range.

Priorities for the year aheadOur key focus areas in the year ahead will be:

Sarbanes Oxley Act section 404 (SOX 404) implementation

The requirements of SOX 404 are to annually, for Sasol from the

2006 financial year and onwards, assess the adequacy of

internal controls in Sasol’s financial reporting process and to

report in Sasol’s annual (US GAAP) financial report (Form 20-F)

on the effectiveness thereof. The reporting environment and

review thereof by management is required to be evaluated by

our external auditors who will provide an audit opinion on our

assessment of internal control.

Key projects to address environmental matters and enhance existing assets during the year include

Project Business Rm

Project Turbo† Synfuels 2 520

Mining renewal Mining 466

Waste recycling facility Synfuels 263

Reconstruction of the ethylene plant (Unit 24) Polymers 185

Other (individually less than R100 million) Various 1 728

5 162

Key projects to expand operations during the year include

Project Business Rm

Project Turbo† Polymers 3 321

Oryx GTL* and Escravos GTL* Synfuels International (Sasol’s portion) 1 495

Ethane cracker, HDPE and LDPE plants in Iran* Polymers 945

Sasol LFB distribution network* LFB 294

2nd and 3rd octene trains Olefins & Surfactants 288

Mozambique Natural Gas Project* Gas and SPI 239

Clean fuels project* Natref 215

Tar naptha phenolic extraction Merisol (Sasol’s portion) 105

Other (individually less than R100 million) Various 350

7 252

† During the current year, increases in the capital costs as well as an overrun on the project schedule have resulted in the costs of completion of Project Turbo (Synfuels andPolymers) increasing from R12 billion to R13 billion and a resultant decrease in the expected return on this project.

* Financed using project specific finance. All other assets are financed out of available group funds.

Sasol has almost concluded its project to comprehensivelydocument the internal control environment to conform to theSOX 404 requirements. To this end, KPMG, as our external auditorshave been involved in the project as auditors and have evaluatedour process to achieve compliance with the requirements ofSOX 404 for the 2006 financial year. The SOX 404 processprovides benefits to the group in the form of an enhancedsensitivity to internal control as well as formalised, standardisedinternal and reporting control procedures throughout the group.

The focus in the 2006 financial year will be on embedding theseprocesses into our day to day activities and on achieving sign-offon the SOX 404 certification at the end of the 2006 financial year.

Implementation of new and revised accounting standardsThe accounting standards issued by the IASB which have not yetbeen adopted, as mentioned earlier in this report, will beimplemented during the 2006 financial year.

Formation of the liquid fuels business joint ventureThe potential formation of the liquid fuels joint venture,Uhambo Oil Limited, comprising the liquid fuels businesses ofSasol and Petronas, is expected to offer significant challengesfor our business and financial teams. Should the joint venture beapproved by the Competition Tribunal, a significant proportionof our resources will be required to successfully integrate thisbusiness into our reporting structures.

Divestment from Olefins & Surfactants businessThe intended divestment from the Olefins & Surfactants business will provide a number of challenges for the relevant teams to ensure that all aspects are taken into account in this transaction.

Financial targetsIn spite of these challenges we will continue to focus on our coreobjectives as they relate to financial performance. These targetsrepresent challenging but achievable milestones in our drive tocontinue to be a global business.

The current targets, which remain unchanged from the previous year, are:

• to maintain our gearing within a target range of 30% to 50%;

• to achieve 10% attributable earnings growth per annum inUS$ terms on a three year moving average basis (base years 1998 – 2000);

• to achieve an economic value added rating of 1,3 times ourweighted average cost of capital on all new majorinvestments; and

• to generate 50% of our cash from operations from our non-South African operations by the 2010 financial year.

Trevor Munday

Chief financial officer

13

sasol limited group

financial review†

Compound 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996

growth %* Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm

Balance sheet

Property, plant and equipment 24,6 56 550 46 858 42 363 38 453 29 346 18 798 16 048 14 981 13 163 11 547

Non-current assets 5 330 4 750 4 159 3 748 2 355 1 846 908 645 598 446

Current assets 26 109 21 878 23 097 23 529 19 742 9 021 7 300 7 893 7 231 6 631

Total assets 24,3 87 989 73 486 69 619 65 730 51 443 29 665 24 256 23 519 20 992 18 624

Total equity 19,8 43 786 35 400 33 818 31 587 23 244 17 715 15 131 13 025 11 778 10 077

Convertible debentures – – – – – – 1 028 1 028 1 028 1 028

Interest-bearing debt 18 865 16 448 14 277 10 579 8 429 777 1 123 2 145 1 146 1 317

Interest-free liabilities 25 338 21 638 21 524 23 564 19 770 11 173 6 974 7 321 7 040 6 202

Total equity and liabilities 24,3 87 989 73 486 69 619 65 730 51 443 29 665 24 256 23 519 20 992 18 624

Income statement

Turnover 21,9 69 239 60 151 64 555 59 590 40 768 25 762 19 180 16 666 15 810 13 545

Operating profit 18,2 14 506 9 314 11 911 14 783 10 619 6 292 3 701 3 121 3 900 3 213

Income from associates 184 117 60 31 11 6 – – – –

Borrowing (costs)/income (438) (249) (58) (54) 34 (189) 75 165 331 281

Net income before tax 18,5 14 252 9 182 11 913 14 760 10 664 6 109 3 776 3 286 4 231 3 494

Taxation (4 568) (3 175) (4 007) (4 905) (3 512) (1 994) (1 203) (1 225) (1 592) (1 226)

Earnings 18,7 9 684 6 007 7 906 9 855 7 152 4 115 2 573 2 061 2 639 2 268

Attributable to minority interests in subsidiaries (111) (67) (89) (38) (27) (19) (32) (28) (33) (34)

Equalisation reserve transfer – – – – – – – 100 – (100)

Earnings attributable to shareholders 18,5 9 573 5 940 7 817 9 817 7 125 4 096 2 541 2 133 2 606 2 134

Cash flow statement

Cash from operations 19,0 20 993 14 859 15 986 19 241 15 277 8 793 5 063 4 301 4 869 4 097

(Increase)/decrease in working capital (2 181) 292 11 216 (1 195) (1 010) (895) (318) (414) (25)

Cash generated by operating activities 19,3 18 812 15 151 15 997 19 457 14 082 7 783 4 168 3 983 4 455 4 072

Investment income 169 230 178 247 253 204 384 269 445 436

Borrowing costs paid (1 523) (1 384) (1 286) (863) (509) (387) (309) (104) (114) (155)

Tax paid (3 753) (3 963) (5 527) (4 749) (2 972) (1 267) (1 105) (1 211) (998) (1 241)

Cash available from operating activities 16,7 13 705 10 034 9 362 14 092 10 854 6 333 3 138 2 937 3 788 3 112

Dividends and debenture interest paid (2 856) (2 745) (2 835) (2 325) (1 655) (1 114) (980) (978) (901) (236)

Cash retained from operating activities 15,8 10 849 7 289 6 527 11 767 9 199 5 219 2 158 1 959 2 887 2 876

Additions to property, plant and equipment (12 414) (10 888) (10 272) (7 945) (3 657) (1 817) (2 348) (2 927) (2 617) (1 998)

Additions to intangible assets (112) (530) (696) (797) (438) (354) – – – –

Acquisition of businesses – (555) (155) (565) (8 350) (2 827) (346) (148) – –

Other movements 299 945 402 878 (291) 242 8 130 (101) 60

(Increase)/decrease in funding requirements (1 378) (3 739) (4 194) 3 338 (3 537) 463 (528) (986) 169 938

† The financial results of the group have, from the beginning of the 2000 financial year, been prepared in accordance with International Financial Reporting Standards.Figures prior to 2000 have not been restated to comply with International Financial Reporting Standards. During 2003 the group changed its accounting policy to capitalise borrowing costs on qualifying assets. Figures prior to 2001 have not been restated.

* Five year compound growth percentage per annum.

12

2005 2004 2003 2002 2001 2000 1999 1998 1997 1996

Liquidity Measures the group's ability to meet its maturing

obligations and short-term cash requirements

Current ratio Current assets :1 1,4 1,2 1,2 1,4 1,4 1,7 1,7 1,5 1,8 1,8

Current liabilities

Quick ratio Current assets – inventories :1 0,9 0,8 0,7 0,9 0,9 1,0 1,1 1,0 1,2 1,3

Current liabilities

Cash ratio Cash and cash equivalents :1 0,1 (0,1) – 0,1 0,2 0,1 0,2 0,4 0,6 0,7

Current liabilities – bank overdraft

Debt leverage Measures the group’s ability to meet capital and

interest payments over the long term

Total liabilities to shareholders’ equity Non-current liabilities + current liabilities % 101,5 108,7 106,8 109,0 121,9 66,9 49,5 66,7 63,3 66,9

Shareholders’ equity

Total borrowings to shareholders’ equity Long-term debt + short-term debt + bank overdraft (total borrowings) % 43,3 47,1 42,8 34,1 36,8 8,5 5,9 15,3 8,9 11,9


Net borrowings to shareholders’ equity (gearing) Total borrowings – cash % 37,6 41,2 33,2 25,1 28,1 5,6 0,9 * * *


Debt coverage Cash generated by operating activities times 1,0 0,9 1,1 1,8 1,7 5,2 4,4 1,9 3,9 3,1

Total borrowings

Borrowing cost cover Net income before borrowing costs and taxation times 9,7 7,0 9,4 17,4 21,4 16,8 13,2 32,6 38,1 23,5

Borrowing costs paid

Profitability Measures the financial performance of the group

Return on shareholders’ equity Earnings attributable to shareholders % 24,4 17,3 24,1 36,1 34,9 24,2 16,8 15,9 21,8 20,2

Average shareholders’ equity

Return on total assets Net income before borrowing costs and taxation % 18,4 13,4 17,9 25,7 26,8 24,1 17,1 15,2 21,9 20,5

Average non-current assets + average current assets

Return on net assets Net income before borrowing costs and taxation % 37,5 27,8 37,1 54,9 53,0 38,1 26,9 25,1 36,1 34,1

Average total assets – average total liabilities

Gross margin Gross profit % 39,0 35,5 39,0 41,6 37,8 31,9 29,0 23,2 31,1 °

Turnover

Operating margin Operating profit % 21,0 15,5 18,5 24,8 26,0 24,4 19,3 18,7 24,7 23,7

Turnover

Efficiency Measures the effectiveness and intensity of the group’s

management of its resources

Net asset turnover ratio Turnover times 1,7 1,7 2,0 2,2 2,0 1,5 1,3 1,2 1,3 1,3

Average total assets – average total liabilities

Depreciation to cost of property, Depreciation % 3,8 5,8 5,9 6,0 4,5 5,9 5,2 4,8 4,5 4,7

plant and equipment Cost of property, plant and equipment(Refer to the chief financial officer’s review)

Net working capital to turnover (Inventories + trade receivables + other receivables and

prepaid expenses) – (accounts payable + other

payables and accrued expenses) % 18,2 17,8 17,4 21,3 27,1 20,8 18,6 15,9 14,5 13,9

Turnover(Refer to the notes to the annual financial statements for additional working capital ratios)

* for 1998, 1997 and 1996 the result is a net cash surplus

° Not available

15

sasol limited group

summary of statistics

14

17

sasol limited group

summary of statistics continued

2005 2004 2003 2002 2001 2000 1999 1998 1997 1996

Shareholders’ returns Measures key financial variables on a per share basis

Attributable earnings per share Earnings attributable to shareholders SA cents 1 560 974 1 283 1 603 1 136 620 409 326 422 350

Weighted average number of shares in issue after the US cents 251 142 142 158 149 99 67 67 95 90

share repurchase programme

Headline earnings per share Headline earnings (refer note 36) SA cents 1 749 934 1 280 1 597 1 258 666 402 324 420 348

Weighted average number of shares in issue after US cents 282 136 142 158 164 106 66 66 95 89

the share repurchase programme

Dividend per share Interim dividend per share paid + final dividend per share declared SA cents 540 450 450 450 320 220 151 147 147 123

US cents 84 71 58 44 39 30 25 30 33 31

Dividend cover Attributable earnings per share + STC on prior year final dividend –

STC on current year final dividend times 2,9 2,2 2,9 3,5 3,5 3,2 2,7 2,2 2,9 2,8

Interim dividend paid per share + final dividend declared per share

Net asset value per share Shareholders’ equity rand 70,58 57,31 55,03 51,42 37,44 30,60 26,65 23,21 21,18 18,41

Total number of shares in issue after the share repurchase programme

Productivity

Annual increase/(decrease) in turnover Turnover – prior year turnover % 15,1 (6,8) 8,3 46,2 58,2 34,3 15,1 5,4 16,7 13,3

Prior year turnover

Employee cost to turnover Total employee costs % 12,5 14,5 14,0 13,3 12,2 15,3 17,0 17,7 16,9 17,2

Turnover

Depreciation and amortisation to turnover Total depreciation of property, plant and equipment + amortisation

of intangible assets, goodwill and negative goodwill % 5,8 8,3 7,0 6,8 6,0 7,6 7,3 7,2 6,2 6,6

Turnover

Effective tax rate Taxation % 32,1 34,6 33,6 33,2 32,9 32,7 31,9 37,3 37,6 35,1

Net income before tax

Employee statistics

Number of employees (at year end) 30 004 30 910 31 150 31 100 30 800 26 300 24 300 24 900 24 700 25 000

Paid to employees R million 8 645 8 731 9 055 7 921 4 957 3 943 3 265 2 948 2 668 2 326

Average paid to employees R thousand 288 282 291 255 161 150 134 118 108 93

Economic indicators

Average crude oil price (dated Brent) US$/b 46,17 31,30 27,83 23,24 28,38 24,03 12,60 16,15 20,92 17,78

Rand/US dollar exchange rate closing :1 6,67 6,21 7,50 10,27 8,02 6,93 6,06 5,46 4,35 4,33

average :1 6,21 6,88 9,03 10,13 7,65 6,28 6,06 4,88 4,43 3,91

Rand/euro exchange rate closing :1 8,07 7,57 8,63 10,19 6,89 6,54 6,34 ** ** **

average :1 7,89 8,19 9,41 9,08 6,79 6,35 6,77 ** ** **

** Euro brought into use on 1 January 1999

16

Number of % of Number % of

at 30 June 2005 shareholders shareholders of shares shares

Public and non-public shareholdingPublic 35 290 99,9 613 127 480 90,6Non-public 26 0,1 63 749 645 9,4

Directors and their associates 6 648 825Directors of subsidiary companies 17 164 122Sasol Investment Company (Pty) Limited 1 60 111 477 Sasol Employee Share Savings Trust 1 455 513Sasol Pension Fund 1 2 369 708

35 316 100,0 676 877 125 100,0

Major categories of shareholdersPension and provident funds 236 349 592 34,9 Growth funds and unit trusts 121 103 268 17,9 Treasury shares 60 111 477 8,9 Insurance companies 53 082 894 7,8 Managed and investment funds 43 699 498 6,5 Private investors 42 296 932 6,2 American depositary shares* 35 855 101 5,3

* Held by the Bank of New York as Depositary and listed on the New York Stock Exchange.

Major shareholdersPursuant to Section 140A of the South African Companies Act, the following beneficial shareholdings exceeding 5% in aggregate,as at 30 June 2005, were disclosed or established from enquiries

Number of shares % of (millions) shares

Public Investment Corporation Limited 94,0 13,9 Sasol Investment Company (Pty) Limited** 60,1 8,9 Industrial Development Corporation of South Africa Limited 53,3 7,9

** A wholly owned subsidiary of Sasol Limited.

19

sasol limited

shareholders’ informationsasol limited

share ownership

Shareholders’ diary

Financial year end 30 June 2005

Annual general meeting 29 November 2005

DividendsInterim dividend

SA cents per share 230

last date to trade cum dividend 1 April 2005

paid 11 April 2005

Final dividend

SA cents per share 310

date declared 12 September 2005

last date to trade cum dividend 7 October 2005

payable 17 October 2005

Statistics2005 2004 2003 2002 2001

Number of shareholders – beneficial 35 316 36 496 41 165

Number of shareholders – registered 7 944 11 273

The increase in the number of shareholders, when compared to the 2002 and prior year’s disclosure, is due to disclosing the beneficial

ownership since 2003 compared to the registered ownership in previous years.

Shares in issue* million 676,9 671,3 668,8 666,9 665,0

Shares repurchased million 60,1 60,1 59,7 57,9 47,1

Net shares in issue** million 616,8 611,2 609,1 609,0 617,9

Weighted average shares in issue** million 613,8 610,0 609,3 612,5 627,3

JSE Limited statisticsShares traded† million 515,5 395,5 396,2 377,5 317,7

Traded to issued % 76,2 58,9 59,2 56,6 47,8

Value of share transactions R million 67 930 36 941 38 111 35 997 19 073

Market price per share

year end rand 180,80 96,10 83,55 110,00 76,00

high rand 181,50 111,50 121,50 135,20 81,00

low rand 103,40 75,10 75,50 62,50 43,20

Key ratiosEarnings yield % 8,63 10,14 15,36 14,57 14,95

Dividend yield % 2,99 4,68 5,39 4,09 4,21

Price to net asset value :1 2,56 1,68 1,52 2,14 2,03

NYSE statisticsº

Shares traded thousand 65 911 16 673 2 397

Value of share transactions US$ million 1 467 239

Market price per share

year end US$ 26,98 15,73 11,28

high US$ 28,77 16,50 12,30

low US$ 15,75 10,35 10,30

* Before share repurchase programme

** After share repurchase programme

† Includes share repurchase programme

º As quoted on NYSE (American Depositary Shares) since 9 April 2003

18

Average share price

Jul04

190

180

170

160

150

140

130

120

110

100

JSE high

JSE

(ran

d)

JSE low JSE closing

NYSE high NYSE low NYSE closing

30

25

20

15

10

NYS

E (U

S$)

Aug04

Sep04

Oct04

Nov04

Dec04

Jan05

Feb05

Mar05

Apr05

May05

Jun05

Performance against JSE all share indices

99 00 01 02 03 04 05

350

300

250

200

150

100

50

JSE all share index JSE ALSI40

Sasol share price index

(1997 = 100)

sasol limited group

value added statement

21

sasol limited

share ownership continued

Furthermore the directors have ascertained that some of the shares registered in the names of nominee holders are managed by

various fund managers and that, at 30 June 2005, the following fund managers were responsible for managing investments of 2%

or more of the share capital of Sasol Limited

Number

of shares % of

Fund manager (millions) shares

PIC Equities† 66,2 9,8

Old Mutual Asset Managers 59,6 8,8

Allan Gray Investment Council 57,0 8,4

Capital International Inc. (USA) 30,3 4,5

Stanlib Limited 21,9 3,2

Investec Asset Management 16,7 2,5

Sanlam Investment Managers 13,8 2,0

† The Public Investment Corporation Limited is the beneficial owner of the shares held by PIC Equities and this nominee shareholding is included in the 94,0 million sharesheld by the Public Investment Corporation Limited as mentioned under major shareholders.

20

American depositary shares

Corporate holding

Insurance companies

Investment funds

Pension funds

Private investors

Foreign banks

Other

Beneficial holding disclosures

Beneficial ownership by fund type

South Africa

Europe

North America

Other

Beneficial ownership by geographic region

20053,6%

24,3%

1,0%

6,3%5,3%

16,8%

34,9% 7,8%

20044,3%0,9%

7,1%5,2%

16,9%

24,0%33,9% 7,7%

20050,7%20,9%9,8%

68,6%

20044,7%19,5%7,0%

68,8%

Wealth distribution for 2005

Employees(including employees’ tax)

Providers of equity capital

Providers of debt

Governments – direct taxes

15,7%

39,9%

10,8%

Wealth created per share

01 02 03 04 05

50

40

30

20

10

0

(Ran

d)

31,5%

2,1%

Reinvested in the group

(Year)

Value added is defined as the value created by the activities of a business and its employees and in the case of Sasol is determined as

turnover less the cost of purchased materials and services. The value added statement reports on the calculation of value added and its

application among the stakeholders in the group. This statement shows the total wealth created and how it was distributed, taking into

account the amounts retained and reinvested in the group for the replacement of assets and development of operations.

2005 2004 2003 2002 2001

for the year ended 30 June Rm Rm Rm Rm Rm

Turnover 69 239 60 151 64 555 59 590 40 768

Less purchased materials and services (42 079) (37 085) (39 066) (32 820) (22 844)

Value added 27 160 23 066 25 489 26 770 17 924

Investment income 333 307 227 261 255

Wealth created 27 493 23 373 25 716 27 031 18 179

% % % % %

Employees (including employees’ tax) 31,5 8 645 37,4 8 731 35,2 9 055 29,3 7 921 27,3 4 957

Providers of equity capital 10,8 2 967 12,0 2 812 11,4 2 924 8,7 2 363 9,3 1 682

Providers of debt 2,1 587 1,9 439 0,9 225 1,1 284 1,2 210

Governments – direct taxes 15,7 4 326 14,6 3 421 14,2 3 651 17,3 4 669 21,9 3 988

Reinvested in the group 39,9 10 968 34,1 7 970 38,3 9 861 43,6 11 794 40,4 7 342

Wealth distribution 100,0 27 493 100,0 23 373 100,0 25 716 100,0 27 031 100,0 18 179

Employee statistics

Number of employees at year end 30 004 30 910 31 150 31 100 30 800

Rand Rand Rand Rand Rand

Turnover per employee 2 307 659 1 946 005 2 072 392 1 916 077 1 323 636

Value added per employee 905 213 746 231 818 266 860 772 581 948

Wealth created per employee 916 311 756 163 825 554 869 164 590 227

sasol limited group

monetary exchanges with governments

22 23

sasol limited

approval of the financial statements

The directors are required by the South African Companies Act

1973, to maintain adequate accounting records and are

responsible for the content and integrity of the consolidated

annual financial statements and related financial information

included in this report. It is their responsibility to ensure that the

annual financial statements fairly present the state of affairs of

the group and Sasol Limited (company) as at the end of the

financial year and the results of their operations and cash flows

for the financial year, in conformity with International Financial

Reporting Standards. The group’s external auditors are engaged

to express an independent opinion on the consolidated annual

financial statements.

The consolidated annual financial statements are prepared in

accordance with International Financial Reporting Standards

and incorporate disclosure in line with the accounting policies

of the group. The consolidated annual financial statements are

based upon appropriate accounting policies consistently

applied and supported by reasonable and prudent judgements

and estimates.

The directors acknowledge that they are ultimately responsible

for the system of internal financial control established by the

group and place considerable importance on maintaining a

strong control environment. To enable the directors to meet

these responsibilities, the board sets standards for internal

control aimed at reducing the risk of error or loss in a cost-

effective manner. The standards include the proper delegation

of responsibilities within a clearly defined framework, effective

accounting procedures and adequate segregation of duties to

ensure an acceptable level of risk. These controls are monitored

throughout the group and all employees are required to

maintain the highest ethical standards in ensuring the group’s

business is conducted in a manner that in all reasonable

circumstances is above reproach. The focus of risk management

in the group is on identifying, assessing, managing and

monitoring all known forms of risk across the group. While

operating risk cannot be fully eliminated, the group endeavours

to minimise it by ensuring that appropriate infrastructure,

controls, systems and ethical behaviour are applied and

managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and

explanations given by management, the internal auditors and

the external auditors, that the system of internal control

provides reasonable assurance that the financial records may be

relied on for the preparation of the consolidated annual

financial statements. However, any system of internal financial

control can provide only reasonable, and not absolute,

assurance against material misstatement or loss.

The directors have reviewed the group’s cash flow forecast for

the year to 30 June 2006 and, in light of this review and the

current financial position, they are satisfied that the group has

or has access to adequate resources to continue in operational

existence for the foreseeable future.

The consolidated annual financial statements, set out on pages

25 to 123, and Sasol Limited’s (company) annual financial

statements, set out on pages 124 to 131, which have been

prepared on the going concern basis, were approved by the

board of directors on 9 September 2005 and were signed on its

behalf by:

Paul Kruger Pieter Cox

9 September 2005

certificate of the company secretary

In my capacity as the company secretary, I hereby confirm, in terms of the South African Companies Act, 1973, that for the year ended

30 June 2005, Sasol Limited has lodged with the Registrar of Companies all such returns as are required of a public company in terms

of this Act, and that all such returns are, to the best of my knowledge and belief, true, correct and up to date.

Nereus Joubert

9 September 2005

2005 2004 2003 2002 2001

for the year ended 30 June Rm Rm Rm Rm Rm

Direct taxes 4 326 3 421 3 651 4 669 3 988

South African normal tax 3 211 2 834 3 080 4 262 3 599

foreign tax 736 257 198 87 178

Secondary Taxation on Companies 379 330 373 320 211

Employees’ tax 1 769 1 643 1 641 1 538 995

Indirect taxes 6 595 4 653 1 254 636 651

customs, excise and fuel duty* 7 424 4 866 1 450 733 786

property tax 65 66 62 64 15

RSC levies 110 97 89 70 66

net VAT received (1 153) (600) (392) (267) (247)

other 149 224 45 36 31

Net monetary exchanges

with governments 12 690 9 717 6 546 6 843 5 634

* During April 2003 fuel duty became payable by the supplier rather than the customer. This amount is recovered from customers.

sasol limited

report of the independent auditors

24 25

sasol limited

directors’ report (Company registration number 1979/003231/06)

The directors have pleasure in presenting their report for the

year ended 30 June 2005.

Nature of business Sasol Limited, the holding company of the group, is incorporated

and domiciled in the Republic of South Africa and was listed on

the JSE Limited on 31 October 1979 and on the New York Stock

Exchange on 9 April 2003.

Sasol is an integrated oil and gas company with substantial

chemical interests. In South Africa, we support these

operations by mining coal and converting it into synthetic

fuels and chemicals through proprietary

Fischer-Tropsch technology.

We also have chemical manufacturing and marketing

operations in Europe, Asia and the Americas. Our larger

chemical portfolios include polymers, solvents, surfactants

and their intermediates, waxes, phenolics and

nitrogenous products.

The group explores for, and produces, crude oil offshore

Gabon, refines crude oil into liquid fuels in South Africa and

retails liquid fuels and lubricants through a growing network of

retail service centres. During the first quarter of 2004, we

started extracting Mozambican natural gas, some of which we

having been using as feedstock for fuel and chemical

production in South Africa since mid 2004.

We are also developing in Qatar and Nigeria two joint-venture

gas-to-liquids plants based on our proprietary Sasol Slurry

Phase Distillate™ process.

The nature of the businesses of the significant operating

subsidiaries and incorporated joint ventures is set out on

pages 129 to 131.

Financial results Earnings attributable to shareholders of R9 573 million for

the year was 61% higher (2004 – 24% lower) than the

R5 940 million of the previous year. Basic attributable earnings

per share, after taking into account the share repurchase

programme, increased by 60% (2004 – decreased by 24%)

from 974 cents to 1 560 cents.

As described in the accounting policies, the group adopted a

number of new accounting standards. Certain of these standards

were adopted before they became mandatory for Sasol.

Sasol Italy SpA has a year end of 31 May and has been included

in the consolidated financial statements up to that date.

The different year end had no material effect on Sasol’s

consolidated financial statements.

Subsidiaries, joint ventures and associates

SubsidiariesOn 9 November 2004, Sasol Oil (Pty) Limited invested in

Namibian Liquid Fuel (Pty) Limited (NLF). The main purpose of

NLF is to supply various petroleum products into the Namibian

market. In terms of the agreement entered into between the

shareholders of NLF, for the 2005 financial year, Sasol

effectively controlled this entity and was entitled to 90% of

the income from this business. NLF has accordingly been

consolidated as a subsidiary for the 2005 financial year.

On 24 December 2004, the group sold its investments in two

South African captive insurance companies for R17 million,

which was equal to their carrying value.

On 1 March 2005, Sasol Wax International AG underwent a

restructuring. The result of the restructuring was the disposal

of its investment in Euro Schumann Sasol Wax GmbH, the

acquisition of 100% of the investment in Sasol Wax Danmark

APS and an acquisition of a direct 31,25% interest in Paramelt

RMC BV. Significant influence in this entity has been retained.

This was a non-cash, share-for-share exchange transaction.

Paramelt is reflected in the 2005 results as an equity accounted

associate and Sasol Wax Danmark is consolidated as a

subsidiary.

Joint ventureOn 24 September 2004, the group disposed of its investment in

Sasol Southwest Energy LLC for R20 million. Following

impairments recognised in the previous year, the final disposal

realised a profit of R28 million.

AssociateDuring the year, the group reclassified its investment in

FFS Refiners (Pty) Limited from an investment in associate to

an investment held-for-sale as it is anticipated that the disposal

of this entity will be completed within the next year.

Share capital

New shares issuedThe company’s authorised share capital remained unchanged

during the year. A further 5 605 700 shares were issued during

the year in terms of the Sasol Share Incentive Scheme.

Share repurchase programmeNo shares were repurchased during the year. The total

shareholding of Sasol Investment Company (Pty) Limited in

Sasol Limited remains 60 111 477 shares representing 8,9% of

Sasol Limited’s issued share capital. Shareholders’ equity has

been reduced by the cost of these shares. No dividends are paid

in respect of these shares outside the group. These shares are

classified as treasury shares.

To the members of Sasol LimitedWe have audited the group annual financial statements and

annual financial statements of Sasol Limited set out on pages

25 to 131 for the year ended 30 June 2005. These financial

statements are the responsibility of the directors. Our

responsibility is to express an opinion on these financial

statements based on our audit.

ScopeWe conducted our audit in accordance with International

Standards on Auditing. Those standards require that we plan and

perform the audit to obtain reasonable assurance that the

financial statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit

also includes assessing the accounting principles used and

significant estimates made by management as well as evaluating

the overall financial statement presentation. We believe that our

audit provides a reasonable basis for our opinion.

Audit opinionIn our opinion, the financial statements fairly present, in all

material respects, the financial position of the group and of the

company at 30 June 2005, and the results of their operations

and cash flows for the year then ended in accordance with

International Financial Reporting Standards and in the manner

required by the Companies Act in South Africa.

KPMG Inc.

Registered accountants and auditors

Chartered Accountants (SA)

Johannesburg

9 September 2005

sasol limited

directors’ report continued

26 27

Shares held in reserveThe 464 327 175 authorised but unissued ordinary shares of the

company continue to be held in reserve.

Note 37 provides further details regarding the share capital of

Sasol Limited.

American depositary shares At 30 June 2005, the company had in issue through The Bank of

New York as Depositary, and listed on the New York Stock

Exchange 35 855 101 (2004 – 34 942 945) American Depositary

Shares (ADS). Each ADS represents one ordinary share.

Sasol Share Incentive Scheme In terms of the Sasol Share Incentive Scheme 33 795 700 shares

(2004 – 39 401 400 shares) are under the control of the

directors for purposes of enabling Sasol Limited to allot shares

and to grant options in respect of shares to present and future

employees, including executive directors of Sasol Limited, its

subsidiaries and joint ventures. Note 38 provides further details

regarding the Sasol Share Incentive Scheme.

Dividends An interim dividend of 230 cents per share (2004 – 215 cents

per share) was paid on 11 April 2005. A final dividend in

respect of the year ended 30 June 2005 of 310 cents per share

(2004 – 235 cents per share) was declared on 12 September

2005. As the final dividend was declared subsequent to the

financial year end, in terms of IFRS, no provision has been

recognised in the consolidated annual financial statements in

respect of this final dividend.

The total dividend for the year amounted to 540 cents per share

(2004 – 450 cents per share).

The estimated total cash flow of the final dividend of 310 cents

per share, payable on 17 October 2005, is R1 912 million

(2004 – 235 cents per share – R1 440 million).

The board of directors is satisfied that the capital remaining after

payment of the final dividend is sufficient to support the current

operations and to facilitate future development of the business.

Property, plant and equipment Capital expenditure incurred during the year amounted to

R12 414 million (2004 – R10 888 million).

Capital expenditure authorised less expenditure incurred to

30 June 2005 amounted to R18 889 million (2004 – R24 691 million).

Further details of capital acquisitions and future projects are

provided in the chief financial officer’s review on pages 9 and 10

in the notes to the consolidated annual financial statements.

Directors Mr SB Pfeiffer resigned with effect from 31 October 2004.

Mr JH Fourie resigned with effect from 1 January 2005.

Mr PV Cox resigned as chief executive with effect from

30 June 2005.

Ms IN Mkhize was appointed to the board as a non-executive

director, with effect from 1 January 2005.

Messrs LPA Davies and TS Munday were appointed chief

executive and deputy chief executive respectively with effect

from 1 July 2005.

Ms VN Fakude was appointed to the board as an executive

director with effect from 1 October 2005.

The composition of the board of directors is given on

pages 72 and 73 of the annual review. The remuneration of

Sasol Limited’s directors is set out on pages 28 to 33.

AuditorsKPMG Inc. continued in office as auditors of Sasol Limited and

its subsidiaries. At the annual general meeting of 29 November

2005, shareholders will be requested to appoint KPMG Inc.

auditors of Sasol Limited for the 2006 financial year.

Post-balance sheet events In May 2005, the South African Competition Commission

conditionally recommended the approval of the proposed

joint venture between Sasol Limited and Petroliam Nasional

Berhad of their respective liquid fuels businesses, Sasol Oil

(Pty) Limited and Engen Limited, to be called Uhambo Oil

Limited, to the Competition Tribunal. Public hearings are

scheduled for October 2005 whereafter the Competition

Tribunal will give its ruling.

On 1 July 2005, a 25% interest in Republic of Mozambique

Pipeline Investments Company (Pty) Limited was sold to

iGas (Pty) Limited (owned by the South African Government)

for R609 million realising a profit of R189 million.

On 1 August 2005, Sasol announced that it is considering

the divestment from its Olefins & Surfactants business

including its Safol plant but excluding its comonomers

activities in South Africa. The potential divestment is subject

to an acceptable selling price being attained.

Secretary The company secretary of Sasol Limited is Dr NL Joubert.

His business and postal addresses appear on page 132.

Special resolutionsThe following special resolutions were registered during the year

Resolution

Sasol Limited17 December 2004 Authorised the directors to approve the purchase of a maximum of 10% of Sasol Limited’s shares by the

company or any of its subsidiaries, subject to the provisions of the South African Companies Act and the rulesand requirements of the JSE Limited.

Subsidiaries In order to give effect to the funding structure of the Sasol group without possible infringement of theborrowing powers of the group’s subsidiaries, the Articles of Association of certain of the group’s subsidiarieswere amended by inclusion of the following paragraph

“For purposes of determining the borrowing powers, long-term interest free loans with no fixed repayment termsfrom the company’s holding company or any wholly owned subsidiary of Sasol Limited will not be deemed to formpart of debt but will be deemed to be equity.”

The subsidiaries whose articles were amended were

• Sasol Mining (Pty) Limited

• Sasol Chemical Industries Limited

• Sasol Oil (Pty) Limited

• Sasol Petroleum International (Pty) Limited

Republic of Mozambique Pipeline Investments Company (Pty) Limited10 January 2005 Amended the articles of association to reflect the main business and object of the company and to amend

the share structure to enable the implementation of the options held by the Mozambican and South Africangovernments to acquire an interest in the company.

The approved cash salary and the annual performance bonus of

the executive directors’ remuneration are determined and paid

on the assessment that up to 25% of their time is related to

services rendered offshore as defined in terms of a separate

employment agreement with Sasol Holdings (Netherlands) BV,

which is reviewed and approved annually.

Fixed remuneration

The executive directors’ fixed remuneration was reviewed by the

compensation committee at its meeting in September 2004.

Following its established practice, the salaries were compared

with the upper-quartile pay levels of South African companies

to ensure sustainable performance and market

competitiveness. Reference is also made to the scope and

nature of an individual’s role and his or her performance and

experience. The intended market position is upper-quartile

remuneration for superior performance.

In addition to a cash salary, executives receive benefits that

include membership of the group’s medical health care scheme

and a choice of a comprehensive vehicle allowance or a

company car benefit. Retirement and risk benefits, including life

cover and death in-service benefits, also apply, subject to the

rules of the Sasol pension fund.

During the year, contributions calculated as a percentage of the

basic cash salary were paid to contributory retirement schemes

established and/or approved by the group and subject to the

rules of the scheme. The rate of contribution for each executive

director is structured to enable the executive director to retire at

the age of 60 years.

At the compensation committee meeting held on 3 June 2005,

the remuneration of the newly appointed chief executive and

deputy chief executive was determined and it was approved to

adjust the cash component of their remuneration packages on

promotion, with effect from 1 July 2005, by 40% and 30%

respectively.

Annual performance bonus

In addition to salary and benefits, each executive director and

member of group management participates in an annual cash

bonus plan to reward the achievement of agreed group

financial, business unit financial (where applicable), business

unit strategic and personal performance objectives.

The approved principles for the executive performance bonus

scheme for the year 1 July 2004 to 30 June 2005 were based on

group, individual, business and personal criteria/metrics. The

group financial performance target relates to earnings-per-

sasol limited

directors’ remuneration report

28 29

The compensation committee During the financial year ended 30 June 2005, the

compensation committee had five members, all of whom are

independent non-executive directors: Messrs P du P Kruger

(chairman), WAM Clewlow, S Montsi, BP Connellan and

Ms E le R Bradley. The chief executive is invited to all

committee meetings, but excuses himself when his own

remuneration is discussed.

With effect from 1 January 2006, Mr P du P Kruger will

be standing down as chairman and Mr PV Cox will

become chairman.

This committee has operated since 1989 under the delegated

authority of the Sasol Limited board of directors (board) to

support and advise on the group’s remuneration philosophy and

policy. The committee sets the remuneration and incentive

plans, as well as all grants and awards under the company’s

share incentive plan, for executive directors, members of the

group executive committee and group management in

accordance with its terms of reference approved by the board.

The compensation committee’s other responsibilities include:

• reviewing and approving principles on which short-term

incentives for all staff are based;

• approving the granting of share incentives to staff; and

• approving the overall cost of remuneration increases awarded

to staff.

The committee considers the views of the chief executive on

the remuneration and the performance of his colleagues. The

company secretary, the human resources group manager and

the manager responsible for group rewards and benefits assist

the committee with analysis of market information and trends.

In applying agreed remuneration principles, the compensation

committee is committed to reward behaviour that supports the

business strategy.

Group remuneration philosophy Recognising that the Sasol group is operating in a global

environment, the Sasol remuneration philosophy is founded

on four main principles:

• playing an integral part in supporting the implementation of

global Sasol business strategies;

• motivating and reinforcing individual and team performance;

• integrating financial and non-financial rewards and benefits;

and

• being equitably, fairly and consistently applied in relation

to job responsibility, the employment market and

personal performance.

Sasol’s application of remuneration practices in all businesses

and functions in South Africa and internationally are aligned to

four main guiding principles:

• aiming to be market competitive in specific labour markets in

which people are employed;

• determining the value proposition of the various positions

within job families or functions;

• ensuring that performance management forms an integral

part of remuneration, thereby influencing the remuneration

components of base pay and incentives; and

• applying good governance to remuneration practices within

approved structures.

The alignment of these remuneration principles aims to meet

the strategic objectives of:

• attracting, retaining and motivating key and talented people;

• competing in the marketplace with the intention of being a

preferred employer;

• rewarding individual, team and business performance, and

encouraging superior performance; and

• supporting Sasol’s six core values.

Policy on directors’ fees and remunerationThe directors are appointed to the board to bring the

competencies and experience appropriate to achieving the

group’s objectives as a global business. The purpose of

remuneration is to ensure that executive directors and senior

managers receive remuneration that is appropriate to their

scope of responsibility and contribution to the group’s

operating and financial performance, taking into account

industry norms, and external market and country benchmarks.

In applying its remuneration principles, the compensation

committee aims to encourage long-term performance and, at

all times, to align such performance with the strategic direction

and specific value-drivers of the business.

Executive directors’ remunerationThe current employment agreements of executive directors

outline the components of their remuneration. At present,

remuneration is divided into two components: a fixed

component and an at-risk component comprising an annual

performance bonus and long-term incentives in the form of the

current Sasol group share incentive scheme, ensuring that a

substantial portion of their package is linked to the

achievement of improved group business performance.

share growth compared with inflation. The weighting dedicated

to improved group business results varies from 50% for group

executive members, 60% for executive directors and 70%

for the chief executive. The balance of weightings is aimed

at incentivising meeting group strategic business and

personal objectives.

Performance criteria (or metrics) in the group may vary depending

on business-specific strategic value drivers and personal objectives

as agreed by the boards. Divisional financial targets measure mainly

operating profit improvements and fixed cash cost savings, while

value drivers derived from group business objectives include targets

agreed for safety and employment equity (for businesses based in

South Africa).

At its meeting of 3 September 2004, the compensation

committee agreed that for the year under review, the chief

executive may earn a bonus up to 80% of his fixed

remuneration and the other executive directors may earn

bonuses of up to 60% of their fixed remuneration for the year.

At its meeting on 9 September 2005, the compensation

committee received an overall assessment of the performance

of the executives participating in the incentive plan against the

agreed targets.

Following its review of the newly appointed chief executive and

deputy chief executive’s remuneration packages at its meeting

on 3 June 2005, the compensation committee agreed that the

chief executive may, with effect from 1 July 2005, earn a bonus

of up to 100% of fixed remuneration (previously 80%) and the

deputy chief executive up to 80% in line with market indicators.

The remuneration packages of the executive directors with

effect from 1 October were approved by the board at its

meeting of 9 September 2005.

During the year, the group incentive schemes were reviewed to

ensure that focused group business drivers will be applied on a

common basis for the financial year commencing 1 July 2005.

At its meeting on 9 September 2005, the committee considered

and approved a matrix of performance factors for senior

management. Employment equity, for South African businesses

and safety were given a higher weighting factor to emphasise

the importance of these issues into the future.

Non-executive directors’ feesThe current fees of non-executive directors were approved by

the shareholders at the annual general meeting of members

(AGM) of 26 November 2004. Fees are approved for an annual

period commencing on 1 July each year. The revised fees of the

non-executive directors will be submitted to the shareholders for

approval at the next AGM on 29 November 2005.

Directors’ service contractsThere are no fixed-term service contracts for executive or

non-executive directors. Executive directors have standard

employee service agreements with notice periods ranging

between 30 days and 90 days.

An executive director is required to retire from the board at the

age of 60, unless requested by the board to extend his or her

term. A non-executive director is required to retire at the end of

the year in which the director turns 70, unless the board, subject

to the articles of association and by unanimous resolution on a

year-to-year basis, extends the director’s term of office until the

end of the year in which he or she turns 73.

Directors’ share optionsExecutive directors

Directors participate in the Sasol share incentive scheme, which

is designed to recognise the contributions of senior staff to the

growth in the value of the group’s financial position and

performance and to retain key employees. Within the limits

imposed by the company’s shareholders and the JSE Limited

(formerly the JSE Securities Exchange, South Africa) options are

allocated to the directors and senior staff in proportion to their

contribution to the business as reflected by their seniority and

the group’s performance.

The options, which are allocated at the closing market price

ruling on the trading day immediately preceding the granting of

the option, vest after stipulated periods and are exercisable up

to a maximum of nine years from the date of allocation.

Options are granted for a period of nine years and vest as follows:

• two years – first third

• four years – second third

• six years – final third

In terms of the Sasol share incentive scheme, 60 million

shares (2004: 60 million shares) are under the control of

the directors for purposes of enabling Sasol Limited to allot

shares and to grant options for shares to current and future

Sasol Limited employees.

sasol limited

directors’ remuneration report continued

30 31

Annual directors’ fees for the period July 2004 to June 2005 are as follows

EmolumentsDirector Chairman

Board/Committee meeting Rand Rand

Sasol Limited board South African director 231 000 462 000Non-resident director US$79 500

Audit committee 115 500 231 000Compensation committee 69 000 138 000Risk & safety, health and environment committee 69 000 138 000Nomination and governance committee 69 000 138 000Subsidiary or divisional boards 115 500 231 000

The chairman of a board or a board committee is paid double the rate of a member. The deputy chairman of a board is paid one-and-

a-half times the rate of a member. Executive directors do not receive directors’ fees.

Directors’ remuneration for the year, excluding benefits resulting from share options, are as follows

Annual Retirement Other Total TotalSalary incentive* funding benefits 2005 2004

Executive directors R’000 R’000 R’000 R’000 R’000 R’000

PV Cox (CE and deputy chairman) 4 411 2 128 157 2 5311 9 227 5 031LPA Davies 2 975 851 536 2782 4 640 3 749JH Fourie9 – 743 – –2 743 3 045TS Munday 2 714 792 538 2723 4 316 3 452

Total 10 100 4 514 1 231 3 081 18 926 15 277

* Refers to incentives awarded, based on the company results for the 2004 financial year.1 The amount for Mr Cox includes travel benefits (R335 438), medical benefits (R19 300), leave encashment on retirement (R1 407 654) and cash in lieu of retirement

funding in compliance to retirement fund rules not allowing contributions after age 60 (R762 326). The amount also includes fringe benefits for vehicle insurance (R2 620), a security benefit (R3 300) and a benefit in terms of the company’s employees share savings scheme (R672).

2 The amount for Mr Davies includes vehicle benefits (R248 783) and medical benefits (R19 899), fringe benefits for vehicle insurance (R2 620), a security benefit (R3 300), and a benefit in terms of the company’s employee share savings scheme (R672).

3 The amount for Mr Munday includes vehicle benefits (R248 783), medical benefits (R20 555) and fringe benefits for vehicle insurance (R2 620).

Board Paid by Committee Total Totalmeeting fees subsidiaries fees 2005 2004

Non-executive directors R’000 R’000 R’000 R’000 R’000

P du P Kruger (chairman) 462 2 4561 345 3 263 3 014E le R Bradley 231 – 138 369 344WAM Clewlow2 231 – 282 513 559BP Connellan3 231 – 311 542 451MSV Gantsho4 231 – 69 300 279A Jain5 495 – – 495 487S Montsi6 231 – 195 426 279SB Pfeiffer7 170 – 12 182 487JE Schrempp5 509 – – 509 512IN Mkhize8 116 – 23 139 –CB Strauss 231 – 185 416 387JH Fourie9 116 346 – 462 312

Total 3 254 2 802 1 560 7 616 7 111

1 Inclusive of fringe benefits amounting to R30 808 (travel, insurance and security).2 Resigned as chairman from the audit committee with effect from 6 September 2004.3 Resigned as chairman of the risk & SHE committee and appointed as chairman of the audit committee with effect from 6 September 2004; appointed as member of the

compensation committee with effect from 1 March 2005.4 Resigned from the risk & SHE committee, and requested by the board to attend the audit committee meetings with effect from 6 September 2004.5 Fees paid in US dollars. Rand equivalent of US$79 500 at actual exchange rates.6 Appointed as chairman of the risk & SHE committee with effect from 6 September 2004; appointed as member of the compensation committee with effect from 1 March 2005.7 Fees paid in US dollars amount to US$26 500; resigned with effect from 31 October 2004; appointed to the risk & SHE committee with effect from 6 September 2004

and resigned at the end of October 2004.8 Appointed as non-executive director with effect from 1 January 2005; appointed as member of the risk & SHE committee with effect from 1 March 2005.9 Resigned as a non-executive director of Sasol Limited with effect from 1 January 2005.

The trustees of the Sasol share trust grant share options

as follows:

• When an employee is promoted or appointed to the eligibility

level of share options. In the case of new appointments,

within this category and according to established practice,

options are granted six months after appointment and are

based on satisfactory performance.

• Supplementary share option grants are normally granted

annually, in terms of formulae as approved by the

compensation committee.

• The granting of supplementary share options is considered

annually by the committee and approved by the trustees of

the Sasol share trust.

• The number of shares offered in the form of share option

grants is determined in accordance with the following

formulae:

– the number of shares offered for promotions is based

on a multiple of total annual cash salary divided by the

moving average share price over 24 months, prior to the

grant; and

– the number of supplementary shares offered is based on

an individual rating factor and meeting the company’s

performance growth targets in attributable profit

compared with the South African consumer price index

(CPI). The individual’s performance is based on an

assessment of the participants’ annually agreed

performance targets aiming to reward performance

exceeding expectations, while not rewarding substandard

performance. The company performance factor is

determined when the company’s profit growth exceeds

the current inflation, thereby ensuring that executives are

rewarded for achieving real growth in earnings when

tested against SA inflation.

Non-executive directorsNon-executive directors received a once-off allocation of share

options in 2000. The non-executive directors at the time were

granted 25 000 shares each, 12 500 vesting after two years and

12 500 vesting after four years from the date of the grant.

sasol limited

directors’ remuneration report continued

Share options granted

Share options granted

Balance at On Average rand Share

beginning 9 September price per share options Balance at

(number) of year 2004 (Rand) implemented Resignations end of year

Executive directors

PV Cox 561 400 84 200 111,20 (71 400) – 574 200

LPA Davies 295 400 39 700 111,20 (30 800) – 304 300

TS Munday 266 100 36 200 111,20 (26 200) – 276 100

Non-executive directors

P du P Kruger 12 500 – (12 500) – –

E le R Bradley 12 500 – (12 500) – –

WAM Clewlow 25 000 – – – 25 000

BP Connellan 25 000 – (25 000) – –

JH Fourie1 177 900 – (139 200) (38 700) –

S Montsi 25 000 – – – 25 000

JE Schrempp 25 000 – (25 000) – –

CB Strauss 25 000 – (25 000) – –

Total 1 450 800 160 100 (367 600) (38 700) 1 204 600

1 Resigned as a director with effect from 1 January 2005. The options indicated were granted to Mr JH Fourie when he was still an executive director.

Share options implemented

Rand Market Gain on implementation

Number of price per price per of share options

Implementation share options share option share option 2005 2004

dates implemented (Rand) (Rand) R’000 R’000

Executive directors

PV Cox 6 430 5 081

5 November 2004 40 400 25,10 122,65 3 941

5 November 2004 31 000 42,30 122,60 2 489

LPA Davies 2 717 1 392

3 November 2004 17 200 25,10 121,17 1 652

3 November 2004 13 600 42,30 120,58 1 065

TS Munday 29 March 2005 26 200 50,90 143,00 2 413 –

Non-executive directors

P du P Kruger 10 March 2005 12 500 53,80 147,10 1 166 –

E le R Bradley 29 November 2004 12 500 53,80 115,10 766 –

BP Connellan 7 April 2005 25 000 53,80 159,38 2 640 –

JH Fourie 12 618 –

22 December 2004 29 300 25,10 118,50 2 737

17 March 2005 26 500 42,30 154,50 2 973

17 March 2005 31 500 54,00 154,50 3 166

13 April 2005 51 900 78,70 150,80 3 742

JE Schrempp 29 November 2004 25 000 53,80 113,98 1 505 –

CB Strauss 10 March 2005 25 000 53,80 147,10 2 333 –

Total 367 600 32 588 6 473

The options outstanding at the end of the year vest during the following periods

Already Within 1 to 2 2 to 5 More than(number) vested 1 year years years 5 years Total

Executive directorsPV Cox 138 300 107 600 145 400 154 900 28 000 574 200LPA Davies 98 900 62 100 61 300 68 700 13 300 304 300TS Munday 112 800 58 100 50 200 43 000 12 000 276 100

Non-executive directorsWAM Clewlow 25 000 – – – – 25 000S Montsi 25 000 – – – – 25 000

Total 400 000 227 800 256 900 266 600 53 300 1 204 600

Beneficial shareholdingThe aggregate beneficial shareholding at 30 June 2005 of the directors of the company and their immediate families (none of which

has a holding greater than 1%) in the issued shares of the company are detailed below. There have been no material changes in these

shareholdings since that date.

At 30 June 2005, Messrs Gantsho, Jain, Munday, Montsi, Ms Mkhize and Prof Schrempp and their immediate families held no

beneficial shares in Sasol Limited.

Beneficial shareholding 2005 2004Number of Number of

shares shares

Executive directorsPV Cox 59 772 47 649LPA Davies 194 165

Non-executive directorsP du P Kruger 231 700 219 200E le R Bradley 298 000 285 500WAM Clewlow 13 195 13 195BP Connellan 10 500 1 000JH Fourie – 57 740CB Strauss 45 250 20 100

Total 658 611 644 549

Interest of directors in contractsThe directors have certified that they did not have a material interest in any transaction of any significance with the company or any of

its subsidiaries or joint ventures. Accordingly, no conflict of interest with regard to directors’ interests in contracts exists. There have

been no material changes since 30 June 2005 up to the date of this report. In accordance with the requirements of the South African

Companies Act, Sasol Limited maintains a register of directors’ interests in contracts.

Succession planning and leadership developmentThe Sasol board places considerable emphasis on succession planning at the executive and senior management level. Detailed and intensive

planning is conducted through the chairman’s office in consultation with the nomination and governance committee. The chief executive is

required by law to regularly report to the board on the group’s management development and employment equity programmes.

During the year, the company embarked on a comprehensive and focused succession management and career development process

for Sasol’s senior leadership. A profile of each senior executive will be compiled, based on a combination of structured discussions

around past, current and future experience and exposure.

This focused succession management process forms part of the group’s larger talent management drive and supports the link

between the long-term company strategy, the 10-year capital plan and the 10-year people plan. Talent management is an integrated

process throughout the organisation. Further optimisation and design to enhance the efficiency will continue.

32 33

General accounting terms

Acquisition date The date on which control in respect of subsidiaries, joint control in respect of joint ventures and significant

of a business influence in respect of associates commences.

Commissioning date The date that an item of property, plant and equipment, whether acquired or constructed, is brought into use.

Consolidated The financial results of the group which comprise the financial results of Sasol Limited and its subsidiaries,

financial statements the group’s proportionate interest in the financial results of joint ventures and its interest in associates.

Construction A contract specifically negotiated with a third party for the construction of an asset or a combination of

contract assets that are closely interrelated or interdependent in terms of their design, technology and function or

their ultimate purpose or use.

Control The ability, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain

economic benefit from its activities. When assessing the ability to control an entity, the existence and effect

of potential voting rights that are presently exercisable or convertible are taken into account.

Discontinued An operation that, pursuant to a single plan, has been disposed of or abandoned or is classified as

operation held-for-sale.

Discount rate The rate used for purposes of determining discounted cash flows defined as the yield at balance sheet date on

AAA credit rated bonds (for entities outside South Africa) and relevant South African Government bonds

(for South African entities) that have maturity dates approximating the term of the related cash flows. This

pre-tax interest rate reflects the current market assessment of the time value of money. When determining

the cash flows, to the extent that the risks specific to the asset or liability are taken into account in

determining those cash flows, they are not included in determining the discount rate.

Disposal date The date on which control in respect of subsidiaries, joint control in respect of joint ventures and significant

of a business influence in respect of associates ceases.

Fair value The value for which an asset could be exchanged or a liability settled in a market related transaction.

Financial results Comprise the financial position (assets, liabilities and equity), results of operations (revenue and expenses)

and cash flows of the group or any entity within the group.

Held-for-sale item A non-current asset, group of assets or operation is designated as held-for-sale when its carrying amount will

be recovered principally through a sale transaction rather than through continuing use.

Long-term A period longer than twelve months from balance sheet date.

Measurement The currency that best reflects the economic substance of the underlying events and circumstances

currency relevant to an entity.

Qualifying asset An asset that necessarily takes a substantial period (normally in excess of twelve months) of time to get ready

for its intended use.

Recoverable amount The amount that reflects the greater of the net selling price and value in use that can be attributed to an asset

as a result of its ongoing use by the entity. In determining the value in use, expected pre-tax future cash flows

are discounted to their present values using the discount rate.

Related party Parties are considered to be related if one party has the ability to control the other party or exercise

significant influence over the other party in making financial and operating decisions.

Revenue Comprises turnover, dividends received and interest received.

Significant influence The ability, directly or indirectly, to participate in, but not exercise control over, the financial and operating

policy decisions of an entity so as to obtain economic benefit from its activities.

Turnover Comprises revenue generated by operating activities and includes sales of products, services rendered, licence

fees and royalties excluding value-added tax, fuel and excise duty and levies.

34 35

sasol limited group

accounting policies and glossary of financial reporting terms

Sasol Limited is the holding company of the Sasol 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 2005. Except as otherwise disclosed,

these policies are consistent in all material respects with those applied in previous years.

Glossary of financial reporting terms

This glossary of financial reporting terms is provided to ensure clarity of meaning as certain terms may not always have the same

meaning or interpretation in other countries.

Group structures

Associate An entity, other than a subsidiary or joint venture, in which the group has significant influence over financial

and operating policies.

Company A legal business entity registered in terms of the applicable legislation of that country.

Entity Sasol Limited, a subsidiary, joint venture or associate.

Foreign entity An entity domiciled outside the Republic of South Africa whose activities are not an integral part or extension

of the group’s main South African operations.

Group The group comprises Sasol Limited, its subsidiaries and its interest in joint ventures and associates.

Integrated foreign An entity domiciled outside the Republic of South Africa whose activities are an integral part or extension

operation of the group’s main South African operations.

Joint venture An entity over which the group exercises joint control established under a contractual arrangement.

Operation A component of the group:

• that represents a separate major line of business or geographical area of operation; and

• can be distinguished separately for financial and operating purposes.

Business unit A distinguishable component of the group engaged in providing similar goods or services that are different to

those provided by other business units. The primary strategic business units are:

• Sasol Mining; • Sasol Olefins & Surfactants;

• Sasol Synfuels; • Sasol Polymers;

• Sasol Liquid Fuels Business; • Sasol Solvents; and

• Sasol Gas; • Sasol Synfuels International.

Classified as ‘Other businesses’ in the segment report:

• Sasol Technology; • Sasol Nitro;

• Sasol Petroleum International; • Merisol;

• Sasol Infrachem; • Sasol Financing; and

• Sasol Wax; • Corporate head office functions.

Subsidiary Any entity over which the group has the power to exercise control.

Inter-company transactions, balances and unrealised gains andlosses between entities are eliminated on consolidation. To theextent that a loss on a transaction provides evidence of areduction in the net realisable value of current assets or animpairment loss of a non-current asset, that loss is recognised inthe income statement.

In respect of joint ventures and associates, unrealised gains andlosses are eliminated to the extent of the group’s interest inthese entities. Unrealised gains and losses arising fromtransactions with associates are eliminated against theinvestment in the associate.

Subsidiaries The financial results of subsidiaries areconsolidated into the group’s results from the acquisition dateuntil the disposal date. Minority interest at the acquisitiondate is determined as the minority shareholders’ proportionateshare of the fair value of the net assets of subsidiaries acquired.

Joint ventures The financial results of joint ventures areproportionately consolidated into the group’s results fromthe acquisition date until the disposal date.

Associates The financial results of associates are included inthe group’s results according to the equity method from theacquisition date until the disposal date.

Under this method, subsequent to the acquisition date, thegroup’s share of profits or losses of associates is recognised inthe income statement as equity accounted earnings and itsshare of movements in equity reserves is recognised in thechanges in equity statement. All cumulative post-acquisitionmovements in the equity of associates are adjusted against thecost of the investment.

Goodwill relating to associates is included in the carrying valueof those associates. Any impairment of goodwill relating toassociates is recognised in the income statement as part ofequity accounted earnings of those associates.

If impaired, the carrying value of the group’s share of theunderlying assets of associates is written down to its estimatedrecoverable amount in accordance with the accounting policyon impairment.

Associates whose financial year ends on a date other than30 June are included in the consolidated financial statementsusing their most recently audited financial results. Adjustmentsare made to the associates’ financial results for materialtransactions and events between the group and the associatesin the intervening period. When the group’s share of losses inassociates equals or exceeds its interest in those associates, thegroup does not recognise further losses, unless the group has acontractual obligation in respect of those associates.

3 Measurement currency and foreign currencytranslations

Measurement currency The financial results of an entity areaccounted for in its measurement currency. The consolidatedfinancial statements are presented in rand.

sasol limited group

accounting policies and glossary of financial reporting termscontinued

36 37

Statement of compliance The consolidated financial statements are prepared incompliance with International Financial Reporting Standards(IFRS) and Interpretations of those standards, as adopted by theInternational Accounting Standards Board and applicablelegislation. During the current financial year, the followingaccounting standards were adopted before the mandatory dateof adoption for Sasol:

IFRS5 Non-current assets held for sale and discontinuedoperations;

IAS1 Presentation of financial statements;

IAS2 Inventories;

IAS8 Accounting policies, changes in accounting estimatesand errors;

IAS10 Events after the balance sheet date;

IAS16 Property, plant and equipment;

IAS17 Leases;

IAS27 Consolidated and separate financial statements;

IAS28 Investments in associates;

IAS31 Interests in joint ventures; and

IAS33 Earnings per share.

The following accounting standards, which are not yetmandatory for Sasol, have not been adopted in the current year:

IFRS2 Share based payment;

IFRS4 Insurance contracts;

IFRS6 Exploration for and evaluation of mineral resources;

IAS21 The effects of changes in foreign exchange rates;

IAS24 Related party disclosures;

IAS32 Financial instruments: disclosure and presentation; and

IAS39 Financial instruments: recognition and measurement.

Principal accounting policies1 Basis of preparation of financial results The consolidated financial statements are prepared using thehistoric cost convention except for specific financial instrumentsas described on pages 115 to 123, which are stated at fair value.

The consolidated financial statements are prepared on thegoing concern basis.

Except as otherwise disclosed, these accounting policies areconsistent with those applied in previous years.

These accounting policies are consistently applied throughoutthe group.

2 Basis of consolidation of financial results The consolidated financial statements reflect the financialresults of the group. All financial results are consolidated withsimilar items on a line by line basis except for investments in associates, which are included in the group’s results as set out below.

Financial instrument terms

Available-for-sale A financial asset, excluding a loan or receivable issued by an originating entity, an investment acquired

financial asset for trading purposes, a held-to-maturity investment and a derivative instrument.

An investment intended to be held for an indefinite period of time, which may be sold in response to needs for

liquidity or changes in interest rates, is classified as a non-current available-for-sale financial asset.

Cash and cash Comprise cash on hand, demand deposits and other short-term highly liquid investments.

equivalents

Cash flow hedge A hedge of the exposure to variability in cash flows, that is attributable to a particular risk associated with a

recognised asset or liability or a forecasted transaction, and that will affect the income statement.

Derivative instrument A financial instrument

• whose value changes in response to movements in a specified interest rate, commodity price, foreign

exchange rate or similar variable;

• that requires minimal initial net investment; and

• whose terms require or permit net settlement at a future date.

Effective interest rate The rate that discounts the expected future cash flows to the current net carrying amount of the financial

asset or financial liability.

Equity instrument Any financial instrument (including investments) that evidences a residual interest in the assets of an

enterprise after deducting all of its liabilities.

Financial asset Cash or cash equivalents, a right to receive cash or cash equivalents, an equity instrument or a right to

exchange a financial instrument under favourable conditions.

Financial liability A contractual obligation to pay cash or transfer other benefits or an obligation to exchange a financial

instrument under unfavourable conditions.

Monetary asset An asset which will be settled in a fixed or easily determinable amount of money.

Monetary liability A liability which will be settled in a fixed or easily determinable amount of money.

Trading investment An investment acquired principally for the purpose of generating short-term economic benefits through

trading activities.

Held-to- An investment, with a fixed maturity and fixed or determinable future payments, that management has

maturity investment the positive intent and ability to hold to maturity. The investment is classified as a non-current asset, except

when it has a maturity within twelve months from the balance sheet date, in which case it is classified as a

current asset.

Transaction date The date an entity commits itself to purchase or sell a financial instrument.

sasol limited group


38 39

Oil and gas reserves are classified as proven when reasonablecertainty exists with regard to the economic recoverability thereofbased on marketing arrangements and the development thereofunder current economic and operating conditions.

Exploratory wells that discover potentially proven reserves remaincapitalised pending decisions on capital expenditure, or whenadditional exploratory drilling is under way or firmly planned inthe near future or when substantial progress towards obtainingregulatory approval for the development has been made.Progress in this regard is reassessed at least annually to ensureprogress is sufficient to justify carrying the cost as an asset. In allother cases, exploratory wells not meeting the criteria for provenreserves within one year of well completion are recognised in theincome statement.

Costs incurred to drill and equip development wells on provedproperties are capitalised.

Amortisation of capitalised exploration and development is basedon the units-of-production method, on a field-by-field basis,calculated using estimated proved developed oil and gas reserves.

Mining exploration

Mining exploration costs are recognised in the income statementuntil completion of a final feasibility study supporting proven andprobable reserves. Expenditure incurred subsequent to provenand probable reserves being identified is capitalised.

Expenditure on producing mines or development properties iscapitalised only when excavation or drilling is incurred to extendreserves or further delineate existing proven and probable reserves.

6 Business combinations (goodwill) The purchase method is used when an entity is acquired.On acquisition date, fair values are attributed to the identifiableassets and liabilities.

Fair values of the identifiable assets and liabilities aredetermined by reference to market values of those or similaritems, where available, or by discounting expected future cashflows using the discount rate to present values.

The cost of acquisition is the fair value of the group’scontribution in the form of assets transferred, shares issued orliabilities assumed at the acquisition date plus costs directlyattributable to the acquisition.

On acquisition date, goodwill is recognised when the cost of theacquisition exceeds the fair value of the group’s interest in the netidentifiable assets of the entity acquired. Up to 30 June 2004,goodwill is stated at cost less accumulated amortisation andimpairment. With effect from 1 July 2005, goodwill is not amortisedbut subjected to an annual impairment test. Accumulatedamortisation written off in previous years is not reversed.

The profit or loss realised on disposal or termination of an entityis calculated after taking into account the carrying value of anyrelated goodwill.

To the extent that the fair value of the net identifiable assets ofthe entity acquired exceeds the cost of acquisition, the excess isrecognised in the income statement on acquisition date.

Any pre-existing negative goodwill at 30 June 2004 waswritten off against opening accumulated profit in the changesin equity statement.

7 Long-term debt and equity investments The group classifies its investments in debt and equity securitiesinto the following categories:

• trading;

• held-to-maturity; and

• available-for-sale.

The classification is dependent on the purpose for which theinvestment is acquired. Management determines theclassification of its investments at the time of the purchase andre-evaluates such designation at least biannually.

Investments are stated initially on transaction date at costincluding transaction costs. Trading and available-for-saleinvestments are subsequently carried at fair value. Held-to-maturity investments are carried at amortised cost using theeffective interest rate method.

The fair values of investments are based on quoted bid prices oramounts derived using a discounted cash flow model. Fairvalues for unlisted equity securities are estimated usingmethods reflecting the specific economic circumstances of theinvestee. Equity securities for which fair values cannot bemeasured reliably are recognised at cost less impairment.

Gains and losses arising from revaluation of trading investmentsare recognised in the income statement. Unrealised gains andlosses arising from revaluation of available-for-sale investmentsare recognised in the changes in equity statement as aninvestment fair value reserve. On disposal or impairment of anavailable-for-sale investment, cumulative unrealised gains andlosses previously recognised in the changes in equity statementare included in determining the profit or loss on disposal of, orimpairment charge relating to, that investment, which isrecognised in the income statement.

8 Impairment of assets The group’s assets, other than inventories and deferred tax, arereviewed biannually or whenever events or changes incircumstances indicate that the carrying value may not berecoverable, to determine whether there is any indication ofimpairment. An annual impairment test is performed on allgoodwill, intangible assets not yet in use and intangible assetswith indefinite useful lives.

The impairment recognised in the income statement is theexcess of the carrying value over the recoverable amount.Recoverable amounts are estimated for individual assets or,where an individual asset cannot generate cash flowsindependently, the recoverable amount is determined for thelarger cash-generating unit to which the asset belongs.

With the exception of goodwill, a previously recognisedimpairment will be reversed insofar as estimates change as aresult of an event occurring after the impairment was

Foreign entities Income and expenditure transactions offoreign entities are translated at the average rate of exchangefor the year. All assets and liabilities, including fair valueadjustments arising on acquisition, are translated at the rate ofexchange ruling at the balance sheet date. Differences arisingon translation are recognised in the changes in equity statementas a foreign currency translation reserve.

On disposal of part or all of the investment, the proportionateshare of the related cumulative gains and losses previouslyrecognised in the foreign currency translation reserve in thechanges in equity statement are included in determining theprofit or loss on disposal of that investment recognised in theincome statement.

Integrated foreign operations Income and expendituretransactions of integrated foreign operations are treated as ifthey were transactions of the company holding the investment.These transactions are translated at the rate of exchange rulingat the transaction date or an average rate where there are anumber of similar transactions. Monetary assets and liabilitiesare translated at the rate of exchange ruling at the balancesheet date. Non-monetary assets and liabilities, stated athistorical cost, are translated at the rate of exchange ruling atthe transaction date. Non-monetary assets and liabilities,stated at fair value, are translated at the rate of exchange rulingat the date the fair values were determined. Differences arisingon conversion of monetary assets and liabilities are recognisedin the income statement.

Other foreign currency transactions Income and expendituretransactions are translated into the measurement currency ofthe entity at the rate of exchange ruling at the transaction date.

Monetary assets and liabilities are translated at the rate ofexchange ruling at the balance sheet date.

Differences arising on translation of monetary assets andliabilities are recognised in the income statement unless theyarise from cash flow hedges.

Differences arising on translation of available-for-sale financialassets are included in the changes in equity statement.

4 Property, plant and equipment Property, plant and equipment is stated at cost lessaccumulated depreciation and impairment. Land is notdepreciated.

The cost of self-constructed assets includes expenditure onmaterials, direct labour and an allocated proportion of projectoverheads. Cost also includes the estimated costs ofdismantling and removing the assets and site rehabilitationcosts to the extent that they relate to the construction of theasset as well as gains or losses on qualifying cash flow hedges.Borrowing costs are capitalised on qualifying assets.

When plant and equipment comprises major components withdifferent useful lives, these components are accounted for as

separate items. Expenditure incurred to replace or modify a

significant component of plant is capitalised and any remaining

book value of the component replaced is written off in the

income statement. All other expenditure is recognised in the

income statement.

Property, plant and equipment is depreciated to its estimatedresidual value on a straight-line basis over its expected usefullife. The depreciation methods, estimated remaining useful livesand residual values are reviewed at least annually. Thedepreciation rates applied are provided on page 62.

5 Intangible assets Intangible assets are stated at cost less accumulatedamortisation and impairment.

Intangible assets are recognised if it is probable that futureeconomic benefits will flow to the entity from the assets andthe costs of the assets can be reliably measured.

Intangible assets with finite useful lives are amortised on astraight-line basis over their estimated useful lives. Theamortisation methods and estimated remaining useful lives arereviewed at least annually. Amortisation rates applied areprovided on page 67. Intangible assets with an indefinite usefullife are not amortised but are tested at least annually forimpairment and the assessment of the estimated useful life ofthese assets reviewed at least annually.

Research and development Research expenditure is recognisedin the income statement.

Development expenditure relating to the production of new orsubstantially improved products or processes is capitalised if theproducts or processes are technically and commercially feasible.Cost includes expenditure on materials, direct labour and anallocated proportion of project overheads. All remainingdevelopment expenditure is recognised in the income statement.

Software Purchased software and the direct costs associatedwith the customisation and installation thereof are capitalised.Expenditure on internally-developed software is capitalised if itmeets the criteria for capitalising development expenditure.Expenditure incurred to restore or maintain the originallyassessed future economic benefits of existing software systemsis recognised in the income statement.

Patents and trademarks Expenditure on purchased patentsand trademarks is capitalised. Expenditure incurred to extendthe life of the patents or trademarks is capitalised. All otherexpenditure is recognised in the income statement.

Exploration and development – Oil and gas exploration

The successful efforts method is used to account for oil and gasexploration activities. Exploratory well and related drilling costsare capitalised pending further evaluation of reserves.

Geological and geophysical costs, dry exploratory wells and thecosts of carrying and retaining undeveloped properties arerecognised in the income statement.

sasol limited group


40 41

expected to apply when the asset is realised or liability settled.

A deferred tax asset is recognised to the extent that it is probable

that future taxable profits will be available against which the

deferred tax asset can be realised.

The provision for 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.

Deferred tax liabilities have not been provided on undistributed

earnings of foreign subsidiaries where those earnings are not

expected to be distributed.

Secondary Taxation on Companies (STC) STC is recognised

as part of the current tax charge in the income statement when

the related dividend is declared. When dividends received in the

current year can be offset against future dividend payments to

reduce the STC liability, a deferred tax asset is recognised to the

extent of the future reduction in STC.

19 Revenue Revenue is recognised net of indirect taxes, rebates and

trade discounts and consists primarily of the sale of products,

services rendered, licence fees, royalties, dividends received

and interest received.

Revenue is recognised when the following criteria are met:

• evidence of an arrangement exists;

• delivery has occurred or services have been rendered and the

significant risks and rewards of ownership have been

transferred to the purchaser;

• transaction costs can be reliably measured;

• the selling price is fixed or determinable; and

• collectability is reasonably assured.

The timing of revenue recognition is as follows. Revenue from:

• the sale of products is recognised when the group no longer

retains continuing managerial involvement associated with

ownership;

• services rendered is based on the stage of completion of the

transaction, based on the proportion that costs incurred to

date bear to the total cost of the project;

• licence fees and royalties is recognised on an accrual basis;

• 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 rate method.

20 Construction contracts When the outcome of a construction contract can be estimated

reliably, contract revenue and contract costs associated with

that construction contract are recognised as revenue and

expenses respectively by reference to the stage of completion

of the contract activity at the balance sheet date. The stage of

completion is generally based on physical progress, man-hours

or costs incurred, based on the appropriate method for the type

of contract.

To the extent that the outcome of a construction contract

cannot be reliably measured, revenue is recognised only to the

extent of contract costs incurred that it is likely will be

recoverable.

Any expected loss on a construction contract is recognised

immediately in the income statement.

Contract costs relating to future activity on a contract are

recognised as an asset provided it is likely that they will be

recovered.

21 Deferred income Incentives received are recognised on a systematic basis in the

income statement over the periods necessary to match them

with the related costs which they are intended to compensate.

Incentives related to non-current assets are stated on the

balance sheet as deferred income and are recognised in the

income statement on a basis representative of the pattern of

use of the asset to which the incentive relates.

22 Leases Finance leases Leases where the group assumes substantially

all the benefits and risks of ownership, are classified as finance

leases. Finance leases are capitalised as property, plant and

equipment at the lower of fair value or the present value of the

minimum lease payments at the inception of the lease with an

equivalent amount being stated as a finance lease liability.

The capitalised amount is depreciated over the asset’s useful

life. Lease payments are allocated between capital repayments

and borrowing costs using the effective interest rate method.

To the extent that land constitutes a significant proportion

(greater than 25%) of a lease, the proportion of the lease

payments attributable to the land are classified as an

operating lease.

Operating leases Leases of assets under which all the risks and

benefits of ownership are effectively retained by the lessor are

classified as operating leases. Lease payments under an

operating lease are recognised in the income statement over the

lease term on a basis representative of the pattern of use.

23 Borrowing costs Borrowing costs are capitalised against qualifying assets.

Such borrowing costs are capitalised over the period during

which the asset is being acquired or constructed and borrowings

recognised. An impairment is reversed only to the extent thatthe asset’s carrying amount does not exceed the carryingamount that would have been determined had no impairmentbeen recognised. A reversal of an impairment is recognised inthe income statement.

9 Inventories Inventories are valued at the lower of cost and net realisable value.Cost includes expenditure incurred in acquiring, manufacturingand transporting the inventory to its present location.

Cost is determined as follows

Crude oil and other First-in-first-out valuation method raw materials (FIFO)

Process, maintenance Weighted average purchase priceand other materials

Work-in-progress Allocation of direct labour, anallocated proportion of overheadsand material costs incurred

Manufactured products Production cost according to FIFO including consignment inventory

Net realisable value is the estimated selling price in the ordinarycourse of business, less the cost of completion and sellingexpenses.

10 Trade and other receivables Trade and other receivables are stated at invoiced value lessprovision for doubtful debts.

11 Cash and cash equivalents Cash and cash equivalents are stated at carrying value which isdeemed to be fair value. For cash flow statement purposes bankoverdrafts are offset against cash and cash equivalents.

12 Restricted cash Cash which is subject to restrictions on its use is statedseparately at carrying value in the balance sheet.

13 Provisions A provision is recognised when the group has a legal orconstructive obligation arising from a past event that will probablybe settled, and a reliable estimate of the amount can be made.

Long-term provisions are determined by discounting theexpected future cash flows to their present value using thediscount rate. The increase in discounted long-term provisionsas a result of the passage of time is recognised as a deemedborrowing cost in the income statement.

Environmental rehabilitation provisions Estimated long-termenvironmental provisions, comprising pollution control,rehabilitation and mine closure, are based on the group’senvironmental policy taking into account current technological,environmental and regulatory requirements. The provision forrehabilitation is recognised as and when the environmentalliability arises. To the extent that the obligations relate to the

construction of an asset, they are capitalised as part of the cost

of those assets. All subsequent changes to the provisions are

recognised in the income statement.

Decommissioning costs of plant and equipment The

estimated present value of future decommissioning costs,

taking into account current environmental and regulatory

requirements, is capitalised as part of property, plant and

equipment, to the extent that they relate to the construction of

the asset, and the related provisions are raised. These estimates

are reviewed at least annually. All subsequent changes to the

provisions are recognised in the income statement.

Ongoing rehabilitation expenditure Ongoing rehabilitation

expenditure is recognised in the income statement.

14 Trade and other payables Trade and other payables are stated at cost.

15 Dividends payable Dividends payable and the related taxation thereon are

recognised as a liability in the period in which they are declared.

16 Share capital Issued share capital is stated in the changes in equity statement

at the amount of the proceeds received less directly attributable

issue costs.

17 Share repurchase programme When Sasol Limited’s shares are repurchased by a subsidiary, the

amount paid, including directly attributable costs, is disclosed

as a deduction from shareholders’ equity. Where such shares are

subsequently reissued, any consideration received is included in

the changes in equity statement.

18 Taxation The income tax charge is determined based on net income

before tax for the year and includes deferred tax and Secondary

Taxation on Companies.

Current tax The current tax charge is the calculated tax payable

on the taxable income for the year using substantially enacted tax

rates and any adjustments to tax payable in respect of prior years.

Deferred tax Deferred tax is provided for using the liability

method, on all temporary differences between the carrying

values of assets and liabilities for accounting purposes and the

amounts used for tax purposes. No deferred tax is provided on

temporary differences relating to:

• non-tax deductible goodwill;

• the initial recognition (other than in a business combination)

of an asset or liability to the extent that neither accounting

nor taxable profit is affected on acquisition; and

• investments in subsidiaries to the extent they will probably

not reverse in the foreseeable future.

The provision for deferred tax is calculated using enacted or

substantially enacted tax rates at balance sheet date that are

sasol limited group


42 43

The fair value of financial instruments is determined as follows:

• short-term receivables (net of any provision for doubtful

debts) and payables, other than derivative instruments, at the

historic invoice amount;

• derivative instruments are marked to market at balance sheet

date; and

• long-term financial assets at the current market value if listed

or, if unlisted, the amount determined using appropriate

valuation methods.

Gains and losses arising on the revaluation at balance sheet

date of available-for-sale financial assets are recognised as an

investment fair value reserve in the changes in equity statement

until the asset is disposed of or impaired, at which time the

cumulative gain or loss is recognised in the income statement.

All derivative instruments are marked to market at balance

sheet date. Resulting gains or losses on derivative instruments,

excluding designated hedging instruments, are recognised in

the income statement.

All other gains and losses on revaluation to fair value of

financial instruments are recognised in the income statement on

valuation date.

Premiums or discounts arising from the difference between

the cost of financial instruments purchased or issued and the

amounts receivable or repayable at maturity are recognised as

borrowing costs using the effective interest rate method.

Hedge accounting The group is exposed to market risks from

changes in interest rates, foreign exchange rates and

commodity prices. The group uses derivative instruments to

hedge its exposure to fluctuations in interest rates, foreign

exchange rates and certain commodity prices.

The group’s criteria for a derivative instrument to be classified

as a hedge require that:

• the hedge transaction is expected to be highly effective in

achieving offsetting changes in fair value or cash flows

attributable to the hedged risk;

• the effectiveness of the hedge can be reliably measured

throughout the duration of the hedge;

• there is adequate documentation of the hedging relationship

at the inception of the hedge; and

• for cash flow hedges, the forecasted transaction that is the

subject of the hedge must be highly probable.

Where a derivative instrument is designated as a cash flow

hedge of an asset, liability or expected future transaction, the

effective part of any gain or loss arising on the derivative

instrument is classified as a cash flow hedge accounting reserve

in the changes in equity statement until the underlying

transaction occurs. The ineffective part of any gain or loss is

recognised in the income statement.

If the expected future transaction results in the recognition of

an asset or liability, the associated gain or loss is transferred

from the cash flow hedge accounting reserve in the changes in

equity statement to the underlying asset or liability on the

transaction date. Other cash flow hedge gains or losses are

recognised in the income statement at the same time as the

hedged transaction occurs.

When forward exchange contracts are entered into as fair value

hedges, no hedge accounting is applied. All gains and losses on

such contracts are recognised in the income statement.

26 Comparative figures Comparative figures are reclassified or restated where necessary

to afford a proper and more meaningful comparison of results

as set out in the affected notes to the financial statements.

27 Segment information Segment information is reported on both a business unit

(primary) and geographical (secondary) basis. This approach is

based on the manner in which segments are organised and

managed as well as management’s assessment that the risks

and rates of return are affected predominantly by differences in

the products produced and services rendered rather than the

geographical location of its activities. The basis of segmental

reporting is set out on pages 51 to 59.

28 Convenience conversion from rand to US dollars The principal reporting currency of the group is rand.

This currency reflects the economic substance of the

underlying events and circumstances of the group.

Supplementary US dollar information is provided for

convenience only.

The conversion to US dollars is performed as follows:

• assets and liabilities are translated at the closing rate of

exchange on balance sheet date;

• income and expenses are translated at average rates of

exchange for the years presented except for significant

transactions which are translated at rates of exchange ruling

on the transaction dates;

• shareholders’ equity, other than attributable earnings for the

year, is translated at the closing rate on each balance sheet

date; and

• the resulting translation differences are included in

shareholders’ equity.

have been incurred. Capitalisation ceases when construction is

interrupted for an extended period or when the asset is

substantially complete. Further borrowing costs are recognised

in the income statement.

Where funds are borrowed specifically for the purpose of acquiring

or constructing a qualifying asset, the amount of borrowing costs

eligible for capitalisation on that asset is the actual borrowing

costs incurred on the borrowing during the period.

Where funds are made available from general borrowings and

used for the purpose of acquiring or constructing qualifying

assets, the amount of borrowing costs eligible for capitalisation

is determined by applying a capitalisation rate to the

expenditures on these assets. The capitalisation rate is the

weighted average of the interest rates applicable to the

borrowings of the group that are outstanding during the period,

other than borrowings made specifically for the purpose of

obtaining qualifying assets.

The amount of borrowing costs capitalised will not exceed the

amount of borrowing costs incurred.

24 Employee benefits Short-term employee benefits Remuneration to employees is

recognised in the income statement. Provision is made for

accumulated leave and incentive bonuses.

Retirement benefits – pension The group operates or

contributes to defined benefit pension plans and defined

benefit plans for its employees in the countries in which it

operates. These plans are generally funded through payments

to trustee-administered funds as determined by annual

actuarial calculations.

Defined contribution pension plans Contributions to

defined contribution pension plans are recognised in the

income statement.

Post-retirement benefits – defined benefit pension plans

The group’s net obligation in respect of defined benefit pension

plans is actuarially calculated separately for each plan by

deducting the fair value of plan assets from the gross obligation

for post-retirement benefits. The gross obligation is determined

by estimating the future benefit attributable to employees in

return for services rendered to date.

This future benefit is discounted using the discount rate to

determine its present value. Independent actuaries perform this

calculation annually using the projected unit credit method.

Improvements to a defined benefit pension plan relating to past

service are recognised in the income statement as an expense

on a straight-line basis over the period during which the

benefits vest.

To the extent that, at the beginning of the financial year, any

cumulative unrecognised actuarial gain or loss exceeds ten

percent of the greater of the present value of the defined

benefit obligation and the fair value of the plan assets (the

corridor), that portion is recognised in the income statement

over the expected average remaining service lives of

participating employees. Actuarial gains or losses within the

corridor are not recognised.

Where the plan assets exceed the gross obligation, the asset

recognised is limited to the total of unrecognised net actuarial

losses, unrecognised past service costs related to improvements

to the defined benefit pension plan and the present value of any

future refunds from the plan or reductions in future

contributions to the plan.

Post-retirement benefits – healthcare The group provides post-

retirement healthcare benefits to certain of its retirees. The

entitlement of these benefits is usually based on the employee

remaining in service up to retirement age and the completion of a

minimum service period. The expected costs of these benefits are

accrued on a systematic basis over the expected remaining period

of employment, using the accounting methodology described in

respect of defined benefit pension plans above. Independent

actuaries perform the calculation of this obligation annually.

Equity and equity-related compensation benefits The Sasol

Share Incentive Scheme allows certain senior group employees

the option to acquire shares in Sasol Limited over a prescribed

period. The exercise price of these options equals the market

price of the underlying shares on the trading day immediately

preceding the granting of the option. Consequently no

compensation cost or obligation is recognised. When the

options are exercised, share capital is increased by the proceeds

received less directly attributable issue costs.

25 Financial instruments

Financial instruments are initially recognised on transaction date

at cost including transaction costs when the related contractual

rights or obligations exist. Certain financial instruments are

subsequently revalued.

Derivative instruments, financial instruments acquired for

trading purposes and available-for-sale financial assets are

stated at fair value. Held-to-maturity investments are stated

at cost taking into account any accumulated amortisation

and impairment.

Financial assets and liabilities are recognised when the group has

rights to receive or obligations to pay economic benefits and are

derecognised when these rights or obligations no longer exist.

sasol limited group

income statement

2005 2004 2003

for the year ended 30 June Note Rm Rm Rm

Turnover 26 69 239 60 151 64 555

Cost of sales and services rendered (42 267) (38 794) (39 347)

Gross profit 26 972 21 357 25 208

Non-trading income 27 417 343 604

Marketing and distribution expenditure (5 097) (4 920) (4 977)

Administrative expenditure (4 075) (3 744) (4 407)

Other operating expenditure (3 802) (2 687) (2 809)

Translation gains/(losses) 28 91 (1 035) (1 708)

Operating profit 29 14 506 9 314 11 911

Dividends and interest received 31 149 190 167

Income from associates 32 184 117 60

Borrowing costs 33 (587) (439) (225)

Net income before tax 14 252 9 182 11 913

Taxation 34 (4 568) (3 175) (4 007)

Earnings 9 684 6 007 7 906

Attributable toShareholders 9 573 5 940 7 817

Minority interests in subsidiaries 111 67 89

9 684 6 007 7 906

Basic earnings per share (cents) 36

attributable earnings basis 1 560 974 1 283

headline earnings basis 1 749 934 1 280

Diluted earnings per share (cents) 36

attributable earnings basis 1 533 964 1 262

headline earnings basis 1 719 925 1 259

Dividends per share (cents)

interim 230 215 215

final 310* 235 235

* Declared subsequent to 30 June 2005 and has been presented for information purposes only. No provision regarding this final dividend has been recognised.

45

sasol limited group

balance sheet

2005 2004 2003

at 30 June Note Rm Rm Rm

AssetsProperty, plant and equipment 1 56 550 46 858 42 363

Goodwill (and negative goodwill) 2 509 92 (314)

Intangible assets 3 1 900 2 236 2 051

Investments in securities 4 397 372 690

Investments in associates 5 608 471 270

Post-retirement benefit assets 6 300 239 451

Long-term receivables 7 1 091 899 778

Long-term prepaid expenses 8 106 128 30

Long-term financial assets 9 10 7 9

Deferred tax asset 19 409 306 194

Non-current assets 61 880 51 608 46 522

Investments held-for-sale 5 41 – –

Inventories 10 9 995 8 292 8 748

Trade receivables 11 8 668 7 551 7 713

Other receivables and prepaid expenses 12 3 716 3 420 2 773

Short-term financial assets 13 178 25 12

Cash restricted for use 14 1 002 527 665

Cash 14 2 509 2 063 3 186

Current assets 26 109 21 878 23 097

Total assets 87 989 73 486 69 619

Equity and liabilitiesShareholders’ equity 43 530 35 027 33 518

Minority interest 256 373 300

Total equity 43 786 35 400 33 818

Long-term debt 15 12 951 9 110 4 581

Long-term provisions 16 2 954 2 362 2 486

Post-retirement benefit obligations 17 2 970 2 724 2 589

Long-term deferred income 18 763 237 96

Deferred tax liability 19 6 286 5 768 6 113

Non-current liabilities 25 924 20 201 15 865

Short-term debt 20 3 300 3 265 6 481

Short-term financial liabilities 21 792 1 205 654

Short-term provisions 22 1 801 1 838 1 566

Short-term portion of deferred income 18 8 15 –

Tax payable 23 614 61 571

Trade payables 24 4 733 3 886 4 060

Other payables and accrued expenses 25 4 416 3 502 3 336

Bank overdraft 14 2 615 4 113 3 268

Current liabilities 18 279 17 885 19 936

Total equity and liabilities 87 989 73 486 69 619

44

sasol limited group

income statement (US dollar convenience translation)

2005 2004 2003

for the year ended 30 June US$m US$m US$m

47

sasol limited group

balance sheet (US dollar convenience translation)

2005 2004 2003

at 30 June US$m US$m US$m

46

AssetsProperty, plant and equipment 8 478 7 545 5 652

Goodwill (and negative goodwill) 76 15 (42)

Intangible assets 285 360 274

Investments in securities 60 60 92

Investments in associates 91 76 36

Post-retirement benefit assets 45 39 60

Long-term receivables 164 145 104

Long-term prepaid expenses 16 20 4

Long-term financial assets 1 1 1

Deferred tax asset 61 49 26


Investments held-for-sale 6 – –

Inventories 1 499 1 335 1 167

Trade receivables 1 299 1 216 1 029

Other receivables and prepaid expenses 557 551 370

Short-term financial assets 27 4 2

Cash restricted for use 150 85 89

Cash 376 332 425

Current assets 3 914 3 523 3 082

Total assets 13 191 11 833 9 289


Minority interest 38 60 40

Total equity 6 564 5 700 4 512

Long-term debt 1 942 1 467 611

Long-term provisions 443 380 332

Post-retirement benefit obligations 445 439 345

Long-term deferred income 114 38 13

Deferred tax liability 942 929 816

Non-current liabilities 3 886 3 253 2 117

Short-term debt 495 526 865


Short-term provisions 270 296 209

Short-term portion of deferred income 1 2 –

Tax payable 92 10 76

Trade payables 710 626 542

Other payables and accrued expenses 662 564 445

Bank overdraft 392 662 436

Current liabilities 2 741 2 880 2 660


Converted at closing rate of rand per 1US$ 6,67 6,21 7,50

Turnover 11 150 8 747 7 149

Cost of sales and services rendered (6 807) (5 641) (4 357)

Gross profit 4 343 3 106 2 792

Non-trading income 67 50 67

Marketing and distribution expenditure (821) (716) (551)

Administrative expenditure (656) (544) (488)

Other operating expenditure (612) (391) (312)

Translation gains/(losses) 15 (151) (189)

Operating profit 2 336 1 354 1 319

Dividends and interest received 24 28 18

Income from associates 30 17 7

Borrowing costs (95) (64) (25)


Taxation (736) (461) (444)

Earnings 1 559 874 875

Attributable toShareholders 1 541 864 865

Minority interests in subsidiaries 18 10 10

1 559 874 875

Basic earnings per share (cents)attributable earnings basis 251 142 142


Diluted earnings per share (cents)attributable earnings basis 247 140 140


Dividends per share (cents)interim 37 33 27

final 47* 38 31

Converted at average rate of rand per 1US$ 6,21 6,88 9,03

* Declared subsequent to 30 June 2005 and has been presented for information purposes only. No provision regarding this final dividend has been recognised.

49

sasol limited group


48

Foreigncurrency Cash flow

translation Investment hedge ShareShare reserve fair value accounting repurchase Accumulated Shareholders’ Minority Total

capital (Note 39) reserve reserve programme earnings equity interest equityfor the year ended 30 June Rm Rm Rm Rm Rm Rm Rm Rm Rm

Balance at 30 June 2002 2 706 2 218 2 (241) (3 429) 30 059 31 315 272 31 587

Shares issued 77 – – – – – 77 – 77

Decrease in foreign currency translation reserve for year – (2 487) – – – – (2 487) (16) (2 503)

Effect of cash flow hedge accounting – – – (128) – – (128) – (128)

Shares repurchased during year – – – – (185) – (185) – (185)

Attributable earnings for year – – – – – 7 817 7 817 89 7 906

Dividends paid – – – – – (2 835) (2 835) (65) (2 900)

Change in shareholding of subsidiaries – – – – – – – 20 20

Tax effects – (83) – 27 – – (56) – (56)

Balance at 30 June 2003 2 783 (352) 2 (342) (3 614) 35 041 33 518 300 33 818

Shares issued 109 – – – – – 109 – 109

Decrease in foreign currency translation reserve for year – (1 464) – – – – (1 464) (21) (1 485)

Transfer of reserves – 199 – (199) – – – – –

Disposal of businesses – 43 – (7) – – 36 – 36

Effect of cash flow hedge accounting – – – (462) – – (462) – (462)

Shares repurchased during year – – – – (33) – (33) – (33)


Dividends paid – – – – – (2 745) (2 745) (37) (2 782)

Change in shareholding of subsidiaries – – – – – – – 64 64

Tax effects – 5 – 123 – – 128 – 128

Balance at 30 June 2004 2 892 (1 569) 2 (887) (3 647) 38 236 35 027 373 35 400

Shares issued 311 – – – – – 311 – 311

Effect of translation of foreign entities – 338 – – – – 338 11 349

Negative goodwill written off – (80) – – – 690 610 – 610

Disposal of businesses – (25) – – – – (25) – (25)

Effect of cash flow hedge accounting – – – 646 – – 646 – 646


Dividends paid – – – – – (2 856) (2 856) (64) (2 920)

Change in shareholding of subsidiaries – – – – – – – (175) (175)

Tax effects – – – (94) – – (94) – (94)

Balance at 30 June 2005 3 203 (1 336) 2 (335) (3 647) 45 643 43 530 256 43 786

sasol limited group

segment information

51

sasol limited group

cash flow statement

2005 2004 2003


Cash receipts from customers 68 263 59 952 64 696

Cash paid to suppliers and employees (49 451) (44 801) (48 699)

Cash generated by operating activities 41 18 812 15 151 15 997

Investment income 44 169 230 178

Borrowing costs paid 33 (1 523) (1 384) (1 286)

Tax paid 23 (3 753) (3 963) (5 527)

Cash available from operating activities 13 705 10 034 9 362

Dividends paid 45 (2 856) (2 745) (2 835)

Cash retained from operating activities 10 849 7 289 6 527

Additions to property, plant and equipment 1 (12 414) (10 888) (10 272)

Additions to intangible assets 3 (112) (530) (696)

Non-current assets sold 46 478 746 504

Acquisition of businesses 47 – (555) (155)

Cash acquired on acquisition of businesses 47 – 163 119

Disposal of businesses 48 36 283 –

Cash disposed of on disposal of businesses 48 (94) (2) –

Decrease/(increase) in investments 35 49 (184)

Increase in long-term receivables (156) (294) (37)

Cash utilised in investing activities (12 227) (11 028) (10 721)

Share capital issued 311 109 77

Share repurchase programme – (33) (185)

Dividends paid to minority shareholders (64) (37) (65)

Contributions from minority shareholders – 75 –

Increase in long-term debt 4 165 4 386 122

(Decrease)/increase in short-term debt (440) (2 616) 3 088

Cash effect of financing activities 3 972 1 884 3 037

Translation effects on cash and cash equivalents of

foreign entities 39 (175) (251) (255)

Increase/(decrease) in cash and cash equivalents 2 419 (2 106) (1 412)

Cash and cash equivalents at beginning of year (1 523) 583 1 995

Cash and cash equivalents at end of year 14 896 (1 523) 583

50

Classification of primary reporting segmentsThe group has eight primary reporting segments that are used

by management to make key operating decisions and assess

performance. They are Sasol Mining, Sasol Synfuels, Sasol Liquid

Fuels Business, Sasol Gas, Sasol Synfuels International, Sasol

Olefins & Surfactants, Sasol Polymers and Sasol Solvents.

Included in other businesses are Sasol Wax, Sasol Nitro, Merisol

and Sasol Petroleum International as well as the group support

services such as Sasol Technology, Sasol Infrachem, Sasol

Financing and the corporate head office functions.

LiabilitiesSegment liabilities are those operating liabilities that result

from the operating activities of a segment and that are either

directly attributable to the segment or can be allocated on

a reasonable basis. Segment liabilities do not include

income tax liabilities.

Sasol Financing acts as the group treasury and thus

borrows funds from external parties on behalf of the group.

Inter-segment liabilities are not included in the segment

liabilities reported.

AssetsSegment assets are those operating assets that are employed

by the segment in its operating activities that are directly

attributable to the segment or can be allocated on a

reasonable basis. Segment assets exclude income tax assets.

The classification of the geographical analysis of assets is

based on the location of the underlying assets. In the case

of current assets, this is based on the location of the

related customer.

Revenue recognitionTurnover is recognised upon delivery of the product to

the customer which, in accordance with the related

contractual terms, is the point at which the risks and

rewards of ownership pass to the customer.

Operating profitOperating profit is determined as the operating profit

of that business unit, after deducting unrealised profit

on transactions entered into with other business units.

Operating profit on a geographical basis is determined

based on the location of the underlying customers.

Number of employeesThe significant numbers of employees included in

other businesses comprise mainly those employees

providing support services to the group, specifically

those employed by Sasol Technology and Sasol Infrachem

as well as employees of Sasol Wax and Sasol Nitro.

53

sasol limited group

business segment information

52

Property, plant and equipment

Currentassets

Total consolidatedassets*

Other non-currentassets*Mining

Synfuels


Gas



Polymers

Solvents

Other businesses

2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm

Mining 543 500 490 612 1 033 1 112 3 062 3 112 272 247 528 470 3 862 3 829

Synfuels 1 970 1 277 1 093 1 043 3 063 2 320 11 138 8 230 263 333 939 751 12 340 9 314

Liquid Fuels Business 1 663 1 264 2 593 1 885 4 256 3 149 3 258 2 640 447 644 6 318 5 534 10 023 8 818

Gas 2 232 1 404 313 92 2 545 1 496 5 555 5 546 122 147 285 271 5 962 5 964

Synfuels International 2 337 1 189 828 210 3 165 1 399 4 858 2 696 249 114 969 145 6 076 2 955

Olefins & Surfactants 1 283 2 348 2 989 2 358 4 272 4 706 8 895 9 022 823 512 7 621 6 543 17 339 16 077

Polymers 932 295 847 626 1 779 921 10 385 5 665 779 555 2 219 1 884 13 383 8 104

Solvents 1 088 1 210 768 702 1 856 1 912 4 015 4 486 394 233 3 097 2 343 7 506 7 062

Other businesses 7 590 4 946 7 744 10 296 15 334 15 242 5 384 5 461 1 572 1 659 4 133 3 937 11 089 11 057

Total 19 638 14 433 17 665 17 824 37 303 32 257 56 550 46 858 4 921 4 444 26 109 21 878 87 580 73 180

US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m

Mining 82 81 74 99 156 180 459 501 41 40 79 76 579 617

Synfuels 295 205 164 167 459 372 1 670 1 326 40 54 141 121 1 851 1 501

Liquid Fuels Business 249 204 389 304 638 508 488 425 67 104 947 891 1 502 1 420

Gas 335 226 47 15 382 241 833 893 18 24 43 44 894 961

Synfuels International 350 191 124 34 474 225 728 434 37 18 145 23 910 475

Olefins & Surfactants 192 378 448 379 640 757 1 334 1 453 123 82 1 142 1 054 2 599 2 589

Polymers 140 48 127 101 267 149 1 557 912 117 89 333 303 2 007 1 304

Solvents 163 195 115 113 278 308 602 722 59 38 464 377 1 125 1 137

Other businesses 1 138 796 1 161 1 658 2 299 2 454 807 879 236 267 620 634 1 663 1 780

Total 2 944 2 324 2 649 2 870 5 593 5 194 8 478 7 545 738 716 3 914 3 523 13 130 11 784

* excludes tax and deferred tax

Non-currentliabilities*

Currentliabilities*

Total consolidatedliabilities*

2005 2005 2005 2005 2005 2005 2005

55

sasol limited group

business segment information continued

54

Translationgains/(losses)

Operatingprofit/(loss)

Contributionto attributableearnings

Intersegmentturnover

Totalturnover

Externalturnover

Effect of capitalitems (before tax)(refer note 35)

Mining

Synfuels


Gas



Polymers

Solvents

Other businesses

2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm

Mining 1 471 1 083 3 744 4 161 5 215 5 244 (2) (13) 23 17 1 247 1 194 801 837

Synfuels 820 1 329 17 864 14 664 18 684 15 993 (3) (27) (110) (3) 7 560 5 512 5 310 3 696

Liquid Fuels Business 23 525 18 554 187 297 23 712 18 851 (11) (165) (63) – 1 900 1 429 1 201 943

Gas 1 408 1 389 996 133 2 404 1 522 (6) (11) – – 932 387 517 487

Synfuels International – 7 – – – 7 (23) (21) 33 – (199) (138) 37 40

Olefins & Surfactants 18 040 17 133 354 249 18 394 17 382 6 (89) (783) (21) (221) (67) (317) (102)

Polymers 7 199 6 576 83 86 7 282 6 662 8 (70) (12) 59 1 484 1 030 1 548 881

Solvents 8 063 5 956 341 499 8 404 6 455 92 (275) (382) (18) 1 243 117 1 106 169

Other businesses 8 713 8 124 3 534 3 609 12 247 11 733 30 (364) 19 (61) 560 (150) (630) (1 011)

Total 69 239 60 151 27 103 23 698 96 342 83 849 91 (1 035) (1 275) (27) 14 506 9 314 9 573 5 940

US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m

Mining 237 157 603 605 840 762 – (2) 4 2 201 174 129 122

Synfuels 132 193 2 877 2 132 3 009 2 325 – (4) (18) – 1 218 802 855 537

Liquid Fuels Business 3 788 2 699 30 43 3 818 2 742 (2) (24) (10) – 306 208 193 137

Gas 227 202 160 19 387 221 (1) (2) – – 150 56 83 71

Synfuels International – 1 – – – 1 (4) (3) 5 – (32) (20) 6 6

Olefins & Surfactants 2 905 2 492 57 36 2 962 2 528 1 (13) (126) (3) (36) (10) (51) (15)

Polymers 1 159 956 13 13 1 172 969 1 (10) (2) 9 239 150 249 128

Solvents 1 299 866 55 73 1 354 939 15 (40) (61) (3) 200 17 178 25

Other businesses 1 403 1 181 569 525 1 972 1 706 5 (53) 3 (9) 90 (22) (101) (147)

Total 11 150 8 747 4 364 3 446 15 514 12 193 15 (151) (205) (4) 2 336 1 355 1 541 864

2005 2005 2005 2005 2005 2005

57

sasol limited group

business segment information continued

56

Cash flow fromoperations

Additions to property,plant and equipment

Additions to intangible assets

Intangible assets

Number of employees

Property, plant andequipment

Cash flow informationCapital commitments

Depreciation andamortisationMining

Synfuels


Gas



Polymers

Solvents

Other businesses

2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm

Mining 798 685 24 45 7 115 7 642 1 689 1 714 532 567 615 358 7 16

Synfuels 2 909 6 369 – 12 6 098 5 792 8 504 6 743 611 1 154 3 248 1 867 18 36

Liquid Fuels Business 661 961 1 1 1 779 1 778 2 405 1 932 406 369 1 011 588 36 13

Gas 209 424 3 1 174 153 1 197 476 250 78 204 1 544 – 18

Synfuels International 5 990 5 482 – – 162 71 291 (16) 1 1 1 246 1 690 – –

Olefins & Surfactants 1 746 1 760 5 12 3 656 4 086 1 520 1 465 953 1 375 907 1 201 11 35

Polymers 5 696 8 294 – 5 2 467 2 682 1 778 1 436 302 485 4 423 1 703 1 4

Solvents 86 215 – – 1 339 1 335 1 883 454 301 272 164 767 1 65

Other businesses 794 501 247 13 7 214 7 371 1 726 655 653 720 596 1 170 38 343

Total 18 889 24 691 280 89 30 004 30 910 20 993 14 859 4 009 5 021 12 414 10 888 112 530

US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m

Mining 120 110 4 7 272 249 86 82 99 52 1 2

Synfuels 436 1 026 – 2 1 369 981 98 168 523 271 3 5

Liquid Fuels Business 99 155 – – 387 281 65 54 163 85 6 2

Gas 31 68 – – 193 69 40 11 33 224 – 3

Synfuels International 898 883 – – 47 (2) – – 201 246 – –

Olefins & Surfactants 262 283 1 2 245 213 153 200 146 175 2 5

Polymers 854 1 336 – 1 286 209 49 71 712 248 – 1

Solvents 13 35 – – 303 66 48 40 26 112 – 9

Other businesses 119 80 37 2 278 95 105 105 96 170 6 50

Total 2 832 3 976 42 14 3 380 2 161 644 731 1 999 1 583 18 77

20052005 20052005200520052005

59

sasol limited group

geographic segment information

58

Additions to property,plant and equipment(by location of assets)

Capitalcommitments

External turnover Operatingprofit/(loss)

Total turnover Total consolidatedassets*South Africa

Rest of Africa

Europe

Middle East and India

Far East

North America

South America

South-East Asia and Australasia

2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm

South Africa 61 543 51 980 35 395 28 954 12 236 8 505 53 627 45 580 9 368 6 961 9 425 15 863

Rest of Africa 2 999 3 114 2 553 3 062 536 204 6 822 5 548 609 1 422 5 648 3 802

Mozambique 490 84 44 32 76 (207) 3 970 4 220 81 755 427 305

Nigeria 116 155 116 155 29 28 1 964 844 460 593 5 076 3 472

Rest of Africa 2 393 2 875 2 393 2 875 431 383 888 484 68 74 145 25

Europe 17 440 16 069 17 145 15 632 1 486 591 12 811 11 120 490 717 444 226

Germany 4 978 4 811 4 737 4 646 383 267 5 848 5 108 259 255 328 70

Italy 2 393 2 307 2 383 2 296 276 (40) 3 861 3 302 171 236 116 152

The Netherlands 1 730 1 584 1 729 1 566 202 114 440 634 48 220 – –

Rest of Europe 8 339 7 367 8 296 7 124 625 250 2 662 2 076 12 6 – 4

Middle East and India 1 373 1 489 1 333 1 447 236 82 4 938 2 579 1 696 1 560 3 480 4 829

Iran 71 93 71 93 (19) 2 1 823 711 823 474 2 427 2 819

Qatar 80 89 41 47 127 – 2 633 1 510 872 1 085 1 053 2 010

Rest of Middle East and India 1 222 1 307 1 221 1 307 128 80 482 358 1 1 – –

Far East 2 646 2 161 2 507 2 062 153 195 859 674 1 3 9 2

North America 8 184 7 091 8 149 7 060 (221) (303) 6 818 6 062 247 191 163 58

United States of America 7 631 6 649 7 596 6 618 (228) (294) 6 665 5 944 247 191 163 58

Rest of North America 553 442 553 442 7 (9) 153 118 – – – –

South America 759 723 760 723 (5) 4 249 161 – – – –

South-East Asia and Australasia 1 398 1 222 1 397 1 211 85 36 1 456 1 456 3 34 – –

Total 96 342 83 849 69 239 60 151 14 506 9 314 87 580 73 180 12 414 10 888 19 169 24 780

* excludes deferred tax

2005 2005 2005 2005 2005 2005

2005 2004 2003

for the year ended 30 June Rm Rm Rm

1 Property, plant and equipment (continued)

CostBalance at beginning of year 81 235 75 254 70 898 Acquisition of businesses (refer note 47) – 490 371 Additions

to enhance existing operations 5 237 3 423 3 204 to expand operations 7 817 7 055 7 167

Borrowing costs capitalised (refer note 33) 1 116 1 105 1 053 Net transfer (to)/from intangible assets (refer note 3) (20) 180 34 Translation of foreign entities (refer note 39) 1 678 (3 837) (5 993)Disposal of businesses (refer note 48) (334) (832) – Disposals and scrapping (2 391) (1 603) (1 480)

Balance at end of year 94 338 81 235 75 254

ComprisingLand 610 600 656 Buildings and improvements 3 492 3 166 3 599 Plant, equipment and vehicles 67 325 62 393 53 899 Coal mining assets 5 003 5 525 5 311 Capital work in progress 17 908 9 551 11 789

94 338 81 235 75 254

Accumulated depreciation and impairmentBalance at beginning of year 34 377 32 891 32 445 Acquisition of businesses (refer note 47) – – 197 Current year charge (refer note 29) 3 591 4 723 4 468 Impairment of assets (refer note 35) 808 310 5 Net transfer (to)/from intangible assets (refer note 3) (23) 27 (24)Translation of foreign entities (refer note 39) 882 (2 010) (3 203)Disposal of businesses (refer note 48) (196) (536) –Disposals and scrapping (1 651) (1 028) (997)


ComprisingLand 15 – –Buildings and improvements 1 973 1 672 1 741 Plant, equipment and vehicles 32 844 29 576 28 340Coal mining assets 2 808 3 129 2 810 Capital work in progress 148 – –

37 788 34 377 32 891

Carrying valueLand 595 600 656 Buildings and improvements 1 519 1 494 1 858 Plant, equipment and vehicles 34 481 32 817 25 559 Coal mining assets 2 195 2 396 2 501Capital work in progress 17 760 9 551 11 789


As the group has more than five items of land and buildings a register is maintained in terms of paragraph 22(3) of Schedule 4of the South African Companies Act. The register is available for inspection at the registered office of Sasol Limited.

61

sasol limited group

non-current assets

60

2005 2004 2003

Note Rm Rm Rm

Property, plant and equipment 1 56 550 46 858 42 363

Goodwill (and negative goodwill) 2 509 92 (314)

Intangible assets 3 1 900 2 236 2 051

Investments in securities 4 397 372 690

Investments in associates 5 608 471 270

Post-retirement benefit assets 6 300 239 451


Long-term prepaid expenses 8 106 128 30

Long-term financial assets 9 10 7 9

Deferred tax asset 19 409 306 194

61 880 51 608 46 522

1 Property, plant and equipment

Buildings Plant, Coal Capitaland equipment mining work in

Land improvements and vehicles assets progress Total2005 Rm Rm Rm Rm Rm Rm

CostBalance at 30 June 2004 600 3 166 62 393 5 525 9 551 81 235

Additions – 89 1 302 325 11 338 13 054

to enhance existing operations – 82 379 325 4 451 5 237

to expand operations – 7 923 – 6 887 7 817

Borrowing costs capitalised – – 6 – 1 110 1 116

Transfer to intangible assets – – – – (36) (36)

Transfer from intangible assets – – – – 16 16

Work in progress capitalised – 224 3 800 115 (4 139) –

Translation of foreign entities 28 165 1 187 – 298 1 678

Disposal of businesses (6) (95) (231) – (2) (334)

Disposals and scrapping (12) (57) (1 132) (962) (228) (2 391)

Balance at 30 June 2005 610 3 492 67 325 5 003 17 908 94 338

Accumulated depreciation and impairmentBalance at 30 June 2004 – 1 672 29 576 3 129 – 34 377

Current year charge – 185 2 947 459 – 3 591

Impairment of assets 14 79 551 16 148 808

Transfer to intangible assets – – (23) – – (23)

Translation of foreign entities 1 92 789 – – 882

Disposal of businesses – (19) (177) – – (196)

Disposals and scrapping – (36) (819) (796) – (1 651)

Balance at 30 June 2005 15 1 973 32 844 2 808 148 37 788

Carrying value at 30 June 2005 595 1 519 34 481 2 195 17 760 56 550

Carrying value at 30 June 2004 600 1 494 32 817 2 396 9 551 46 858

notes to the financial statements


Reassessment of useful lives of assetsWith effect from 1 July 2004, the group adopted IAS16 Property, plant and equipment (revised). One of the requirements of this

standard is to reassess the remaining useful lives of tangible assets at least at each financial year end. Any reassessment

performed is applied prospectively and requires the depreciation charge to be amended for current and future periods only. The

effect of the adoption of this standard has been a reduction in the depreciation charge, when compared to the group’s expected

charge had no reassessment been performed, of R1 547 million (before tax) as more fully described in the chief financial officer’s

review. The effect on earnings per share is an increase of 171 cents.

Capital commitmentsCapital commitments include all projects for which specific board approval has been obtained. Projects still under investigation

for which specific board approvals have not yet been obtained are excluded from the following

2005 2004 2003


Authorised and contracted for 26 479 18 071 22 854

Authorised but not yet contracted for 7 611 14 381 8 503

Less expenditure to the end of the year (15 201) (7 761) (13 504)

18 889 24 691 17 853

Comprising

Subsidiary companies 10 435 16 230 9 514

Proportionate share of joint ventures 8 454 8 461 8 339

18 889 24 691 17 853

Estimated expenditure

Within one year 14 249 14 826 9 017

One to two years 2 959 6 910 5 434

Two to three years 1 420 1 936 2 738

Three to four years 225 818 640

Four to five years 2 165 24

More than five years 34 36 –

18 889 24 691 17 853

Funding

Capital expenditure will be financed out of funds generated from normal business operations, existing borrowing facilities and

specifically arranged financing.

63

sasol limited group

non-current assets continued

2005 2004 2003



Additions to property, plant and equipment (cash flow)To enhance existing operations 5 162 3 363 3 121

current year additions 5 237 3 423 3 204

adjustments for non-cash items

rehabilitation and asset retirement costs capitalised – (60) (83)

cash flow hedge accounting* (75) – –

To expand operations 7 252 7 525 7 151

current year additions 7 817 7 055 7 167

adjustments for non-cash items

rehabilitation and asset retirement costs capitalised (42) (17) –

cash flow hedge accounting* (523) 487 (16)

Per the cash flow statement 12 414 10 888 10 272

* As described in the chief financial officer’s review, the group hedges its exposure to foreign currency risk in respect of its capital projects. This is

done primarily by means of forward exchange contracts. Cash flow hedge accounting is applied to these hedging transactions and accordingly,

any gain or loss realised on these contracts is adjusted against the underlying item of property, plant and equipment.

Further detail of additions is provided in the chief financial officer’s review on page 10.

2005 2004 2003


Additional disclosuresLeased assets

Carrying value of capitalised leased assets 661 704 397

Finance lease additions included in additions above 288 136 462

Replacement information

Estimated replacement cost of property, plant and equipment 224 289 221 670 213 749

Cost of assets not replaceable 2 127 2 285 1 759

Cost price of fully depreciated assets 8 183 7 981 7 367

Carrying value of assets held retired from active use 37 221 196

Carrying value of assets pledged as security for liabilities 8 445 13 561 8 676

Depreciation rates

Buildings and improvements 2 – 5%

Plant 4 – 25%

Equipment 10 – 33%

Vehicles 20 – 33%

Coal mining assets 7 %

62 notes to the financial statements

3 Intangible assets

Patents Capitalised Capital Otherand exploration work in intangible

Software trademarks costs progress assets* Total2005 Rm Rm Rm Rm Rm Rm

CostBalance at 30 June 2004 1 237 499 888 82 656 3 362

Additions 35 3 6 67 1 112

to enhance existing operations 23 3 1 45 1 73

to expand operations 12 – 5 22 – 39

Transfer of capital work in progress 33 2 15 (70) 20 –

Transfer to property, plant

and equipment – – (16) – – (16)

Transfer from property, plant

and equipment 20 – – – 16 36

Translation of foreign entities 7 31 – 1 9 48

Disposal of businesses (5) – – – – (5)

Disposals and scrapping (42) (2) (15) (17) (2) (78)

Balance at 30 June 2005 1 285 533 878 63 700 3 459

Accumulated amortisation and impairmentBalance at 30 June 2004 676 340 14 – 96 1 126

Current year charge 187 23 80 – 128 418

Impairment of assets 1 3 – – 9 13

Transfer from property,

plant and equipment 18 – – – 5 23

Translation of foreign entities 3 21 – – 1 25

Disposals and scrapping (42) (2) – – (2) (46)

Balance at 30 June 2005 843 385 94 – 237 1 559

Carrying value at 30 June 2005 442 148 784 63 463 1 900

Carrying value at 30 June 2004 561 159 874 82 560 2 236

* Other intangible assets include long-term customer contracts acquired as part of the acquisition in 2004 of Exel Petroleum to the value of R260 million (2004 – R360 million).

All intangible assets were acquired from third parties.

65

sasol limited group


2 Goodwill (and negative goodwill)With effect from 1 July 2004, the group adopted IFRS3 Business combinations. IFRS3, amongst other requirements, prohibits the

amortisation of goodwill and requires that goodwill on the balance sheet be assessed annually for impairment. The statement

further prohibits the recognition of negative goodwill on the balance sheet and requires that any pre-existing negative goodwill

be written off against accumulated earnings through the statement of changes in equity. The negative goodwill arising on the

original acquisition in 2001 of Sasol Chemie was presented on a net basis. The adoption of IFRS3 has necessitated that the total

negative goodwill be written off and the carrying value of the original goodwill arising on this acquisition be presented on the

balance sheet.

2005 2004 2003


GoodwillBalance at beginning of year 221 222 392

Acquisition of businesses (refer note 47) – 147 –

Fair value adjustments (refer note 47) (15) – 48

Reclassification of Sasol Chemie negative goodwill 481 – –

Current year charge – (21) (42)

Current year impairment (refer note 35) (213) (70) (73)

Disposal of businesses (refer note 48) 4 (20) –

Translation of foreign entities (refer note 39) 31 (37) (103)

Carrying value at end of year 509 221 222

Business segmentation

Olefins & Surfactants 270 – –

Solvents 149 131 20

Wax 72 68 102

Nitro – – 98

Other 18 22 2

509 221 222

Negative goodwillBalance at beginning of year (129) (536) (910)

Reclassification of Sasol Chemie negative goodwill (481) – –

Amount written off against accumulated earnings 610 – –

Acquisition of businesses (refer note 47) – – (49)

Current year charge – 225 301

Current year impairment (refer note 35) – 87 –

Disposal of businesses (refer note 48) – 42 –

Translation of foreign entities (refer note 39) – 53 122

Carrying value at end of year – (129) (536)


Olefins & Surfactants – – (256)

Solvents – (129) (242)

Nitro – – (38)

– (129) (536)

Goodwill and negative goodwill per the balance sheet 509 92 (314)


2005 2004 2003


3 Intangible assets (continued)

Additions to intangible assetsTo enhance existing operations 73 156 377

To expand operations 39 374 319

Per the cash flow statement 112 530 696

Cost price of fully amortised assets still in use 353 332 117

Amortisation ratesSoftware 33%

Patents and trademarks 20%

Capitalised exploration units-of-

production

Estimated future aggregate amortisation per annumWithin one year 400 599 436

One to two years 370 416 388

Two to three years 264 332 206



More than five years 427 597 871

1 900 2 236 2 051

Capital commitmentsCapital commitments include all projects for which specific board

approval has been obtained. Projects still under investigation for which

specific board approvals have not yet been obtained are excluded from

the following.

Authorised and contracted for 200 145 1 199

Authorised but not yet contracted for 129 16 7

Less expenditure (49) (72) (987)

280 89 219

These capital commitments are in respect of subsidiaries only.

Funding

Capital expenditure will be financed from funds generated out of normal business operations and existing borrowing facilities.

67

sasol limited group


2005 2004 2003


3 Intangible assets (continued)

CostBalance at beginning of year 3 362 2 820 2 587

Acquisition of businesses (refer note 47) – 566 2

Additions

to enhance existing operations 73 156 377

to expand operations 39 374 319

Borrowing costs capitalised – – 8

Net transfer from/(to) property, plant and equipment (refer note 1) 20 (180) (34)


Disposal of businesses (refer note 48) (5) (16) –

Disposals and scrapping (78) (259) (244)


Comprising

Software 1 285 1 237 1 083

Patents and trademarks 533 499 644

Capitalised exploration 878 888 653

Capital work in progress 63 82 424

Other intangible assets 700 656 16

3 459 3 362 2 820

Accumulated amortisation and impairmentBalance at beginning of year 1 126 769 733

Acquisition of businesses (refer note 47) – – 2

Current year charge (refer note 29) 418 502 314

Impairment of assets (refer note 35) 13 13 5

Net transfer from/(to) property, plant and equipment (refer note 1) 23 (27) 24


Disposal of businesses (refer note 48) – (10) –

Disposals and scrapping (46) (67) (222)

Balance at end of year 1 559 1 126 769

Comprising

Software 843 676 361




1 559 1 126 769

Carrying valueSoftware 442 561 722



Capital work in progress 63 82 424


1 900 2 236 2 051


2005 2004 2003


5 Investments in associatesInvestments at cost 323 248 211

Loans to associates 15 96 2

Share of post-acquisition reserves 270 127 57

608 471 270

Fair value of associates 1 008 475 289

Dividends received from associates (refer note 44) 20 41 17

Key financial information of associates

Total assets 5 654

Total liabilities 2 849

Total turnover 4 719

Total operating profit 1 782

Total attributable earnings 1 421

Investment held-for-saleAt carrying value 41

The investment in FFS Refiners (Pty) Limited has been classified as held-for-sale. This investment was previously recognised as an

investment in associate.

With effect from 1 March 2005, Sasol Wax restructured its operations resulting in a loss of control in Paramelt RMC BV whilst still

retaining significant influence. Paramelt RMC BV has therefore been reflected as an investment in associate with effect from

1 March 2005.

This has resulted in a significant increase in the carrying value of associates with the effect on earnings and dividends received

only expected to be observed from the 2006 financial year.

At 30 June 2005, the group’s associates and interest in those associates based on outstanding shares and the total carrying

value were

Carrying value Country of Nature of Interest 2005 2004

Name incorporation business % Rm Rm

Optimal Olefins Malaysia Malaysia Ethane and propane gas Sdn Bhd cracker 12 388 284 Wesco China Ltd Hong Kong Trading and distribution of

plastics raw materials 40 82 70Paramelt RMC BV The Netherlands Speciality wax blender 31 81 – FFS Refiners (Pty) Ltd South Africa Refining and blending of oil 49 – 47LUX International United StatesCorporation USA of America Production of waxes 50 31 16Merkur GmbH Germany Trading of waxes 50 19 30Other 7 24

608 471

None of the group’s investments in associates are publicly traded and therefore no quoted market prices are available.

69

sasol limited group


2005 2004 2003


4 Investments in securitiesInvestments available-for-sale 203 228 537

At fair value

Balance at beginning of year 228 537 368


Investments purchased/(disposed of) 7 (42) 161

Impairment of investments (refer note 35) (2) (5) –

Transfer to investments in associates (43) (284) (18)

Disposal of businesses (refer note 48) (1) – –


Balance at end of year 203 228 537

Investments held-to-maturity 194 144 153

At amortised cost


Investments purchased 96 13 41

Investments sold (46) (22) –


Investments in securities per balance sheet 397 372 690

As the group has more than five investments, a register is maintained in terms of paragraph 27 of Schedule 4 of the South African

Companies Act. The register is available for inspection at the registered office of Sasol Limited.

At 30 June 2005, the group’s investments and their carrying values were

Carried at Carried at

fair value cost

Country of Nature of Interest 2005 2005 2004

Name incorporation business % Rm Rm Rm

Long-term fixed deposits South Africa Investment for

rehabilitation

of Sasol Mining – – 194 144

Aetylen Rohrleitungs-

gesellschaft mbH & Co KG Germany Pipeline business 17 122 – 115

sEnergy Insurance Limited Bermuda Insurance 6 67 – 63

Euro Pipeline Development

Company BV The Netherlands Pipeline business 7 8 – –

Other 6 – 50

203 194 372

The unlisted investments represent strategic investments of the group and are long-term in nature.


2005 2004 2003

Note Rm Rm Rm

Investments held-for-sale 5 41 – –

Inventories 10 9 995 8 292 8 748

Trade receivables 11 8 668 7 551 7 713

Other receivables and prepaid expenses 12 3 716 3 420 2 773

Short-term financial assets 13 178 25 12


Cash 14 2 509 2 063 3 186

26 109 21 878 23 097

2005 2004 2003


10 InventoriesCrude oil and other raw materials 2 388 1 629 1 768

Process material 387 361 413

Maintenance and other materials 937 913 936

Work in process 186 130 154

Manufactured products 6 013 5 226 5 435

Consignment inventory 84 33 42

9 995 8 292 8 748

Inventories carried at net realisable valueCrude oil and other raw materials 32 94 75

Process material 1 – 5


Manufactured products 533 470 582

569 589 693

Write-down of inventories to net realisable valueCrude oil and other raw materials 2 1 10


Manufactured products 40 43 31

Income statement charge (refer note 29) 47 62 46

Analysis of inventory obsolescence(deducted from the carrying value of inventory above)


Provision raised during year 71 169 7

Provision utilised during year (6) (9) (3)

Provision released during year (42) (43) (8)

Translation of foreign entities 2 (6) (1)


Inventories pledged as security over long-term debt, refer note 15. – 2 807 2 819

Inventories to sale of products (refer note 26) 14,6% 14,0% 13,8%

Inventories to cost of sales and services rendered 23,6% 21,4% 22,2%

71

sasol limited group


2005 2004 2003


6 Post-retirement benefit assetsPost-retirement benefit assets 303 242 451

Short-term portion (refer note 12) (3) (3) –

300 239 451

For further details of post-retirement benefit assets, refer note 17.

7 Long-term receivablesTotal long-term receivables as previously stated 1 292 933

Reclassification of long-term prepaid expenses (refer note 8) (140) (30)

Total long-term receivables 1 168 1 152 903

Short-term portion (refer note 12) (77) (253) (125)

1 091 899 778

Comprising

Long-term joint venture receivables 105 112 103

Long-term interest-bearing loans 256 252 351

Long-term interest-free loans 730 535 324

1 091 899 778

Maturity profile

Within one year 77 253 125






1 168 1 152 903

8 Long-term prepaid expensesArising on long-term contracts 120 140 30

Short-term portion (refer note 12) (14) (12) –

106 128 30

9 Long-term financial assetsArising on long-term financial instruments 10 7 9

Long-term financial assets include the revaluation of in-the-money long-term derivative instruments, refer pages 115 to 123.

70

sasol limited group

current assets


2005 2004 2003


14 Cash and cash equivalents

Cash and cash equivalentsCash restricted for use 1 002 527 665Cash 2 509 2 063 3 186Bank overdraft (including overnight borrowings) (2 615) (4 113) (3 268)

Per the cash flow statement 896 (1 523) 583

Cash restricted for useCash held in trust 55 69 439Cash held as collateral 119 206 154Other cash restricted for use 828 252 72

1 002 527 665

Currency analysisEuro 9 94 593US dollar 767 220 –Rand 182 122 72Other currencies 44 91 –

1 002 527 665

CashCash on hand and in bank 2 127 1 567 2 439Foreign currency accounts 35 52 154Short-term deposits 347 444 593

2 509 2 063 3 186

Currency analysisEuro 171 486 548US dollar 1 225 781 948Pound Sterling 35 24 53Rand 793 676 1 549Other currencies 285 96 88

2 509 2 063 3 186

Bank overdraft (2 615) (4 113) (3 268)

Currency analysisEuro (256) (18) (52)US dollar (2) (38) (29)Rand (2 350) (4 050) (3 184)Other currencies (7) (7) (3)

(2 615) (4 113) (3 268)

The cash restricted for use consists primarily of cash held in joint ventures to which the group has restricted title, cash pledged ascollateral for obligations and cash in the group’s cell captive insurance companies.

73

sasol limited group

current assets continued

2005 2004 2003


11 Trade receivablesTrade receivables 8 891 7 765 7 869Provision for doubtful debts (223) (214) (156)

8 668 7 551 7 713

Provision for doubtful debtsBalance at beginning of year (214) (156) (303)Provision raised during year (107) (102) (16)Provision utilised during year 31 25 103Provision released during year 71 9 47Disposal of businesses – 1 –Translation of foreign entities (4) 9 13

Balance at end of year (223) (214) (156)

Trade receivables to turnover 12,5% 12,6% 11,9%

12 Other receivables and prepaid expensesEmployee related receivables 21 17 19Capital projects related receivables 224 119 156Insurance related receivables 282 177 –Duties receivable from customers 1 234 1 110 868Related party receivables 448 306 228

third parties 182 146 114joint ventures 266 160 114

Value added tax 681 657 518Other receivables 611 694 747

3 501 3 080 2 536Prepaid expenses 121 72 112

3 622 3 152 2 648Short-term portion of

post-retirement benefit assets (refer note 6) 3 3 –long-term receivables (refer note 7) 77 253 125long-term prepaid expenses (refer note 8) 14 12 –

3 716 3 420 2 773

13 Short-term financial assetsArising on short-term financial instruments 178 25 12

Short-term financial assets include the revaluation of in-the-money derivative instruments, refer pages 115 to 123.


2005 2004 2003

Note Rm Rm Rm

Long-term debt 15 12 951 9 110 4 581

Long-term provisions 16 2 954 2 362 2 486

Post-retirement benefit obligations 17 2 970 2 724 2 589

Long-term deferred income 18 763 237 96

Deferred tax liability 19 6 286 5 768 6 113

25 924 20 201 15 865

2005 2004 2003


15 Long-term debtTotal long-term debt 13 966 9 677 5 479

Short-term portion (refer note 20) (1 015) (567) (898)

12 951 9 110 4 581

ComprisingSecured loans 5 598 4 668 3 522

Variable rate redeemable cumulative preference shares of subsidiaries 117 618 887

Finance leases 686 589 339

Unsecured loans 7 565 3 802 731

13 966 9 677 5 479

ReconciliationBalance at beginning of year 9 677 5 479 6 264


Loans raised 6 586 7 379 1 406

Loans repaid (2 421) (2 993) (1 284)

Effect of cash flow hedge accounting (43) 5 –


Translation of foreign entities (refer note 39) 167 (518) (1 009)


Currency analysisEuro 3 415 1 189 2 222

US dollar 2 679 2 536 1 453

Rand 7 579 5 952 1 686

Other 293 – 118

13 966 9 677 5 479

Interest-bearing statusInterest-bearing debt 13 965 9 637 5 431

Non-interest bearing debt 1 40 48

13 966 9 677 5 479

75

sasol limited group

non-current liabilities

74

2005 2004 2003


15 Long-term debt (continued)

Maturity profile

Within one year 1 015 567 898

One to two years 842 696 1 024

Two to three years 2 930 1 159 899

Three to four years 983 3 310 988

Four to five years 3 355 703 819

More than five years 4 841 3 242 851

13 966 9 677 5 479

Related party long-term debtThird parties 109 130 84

Joint ventures 80 93 19

189 223 103

Business segmentationFinancing 4 790

Gas 2 178

Synfuels International 1 613

Liquid Fuels Business 1 506

Petroleum International 1 172

Polymers 791

Solvents 762

Other 139

12 951

In terms of Sasol Limited’s Articles of Association, the group’s borrowing powers are limited to twice the sum of its stated capital

and reserves (2005 – R87 billion and 2004 – R70 billion).


Interest rate 2005 2004 2003

Terms of repayment Security Business at 30 June 2005 Rm Rm Rm


Secured loansRepayable in semi-annual Secured by plant

instalments ending with a book value

June 2015 of R3 409 million Gas Jibar +

(2004 – R3 343 million) (ROMPCO) 0,4% – 3,0% 2 362 1 330 –

Repayable in semi-annual Secured by plant under

instalments commencing construction with a

June 2007 until book value of Synfuels Fixed 4,5%

December 2016 R2 592 million International and Libor

(2004 – R1 001 million) (Oryx GTL) + 0,75% 1 613 1 001 246

Repayable in monthly Secured by plant

instalments ending 2015 and equipment Jibar +

with a book value 1,6% – 3,0%

of R1 463 million Petroleum and Euribor

(2004 – R798 million) International + 3,0% 1 302 798 –

Repayable in equal Secured by a

semi-annual instalments guarantee from

over 6,5 years Sasol and its

until February 2010 joint venture

partners in Polymers

Malaysia (Petlin) 2,4% – 6,8% 128 151 220

Repayable in quarterly Secured by trade

instalments ending receivables with

June 2009 a book value Gas 9,9%

of R25 million (Spring Lights) variable 55 75 –

Repayable in equal Secured by a mortgage

semi-annual instalments over foreign plant with

ending 31 March 2008 a book value of

R106 million

(2004 – R84 million) Wax 4,25% – 5,0% 50 63 91

Repayable monthly Secured by plant SA prime

ending May 2010 with a book value lending rate

of R47 million Polymers less 1,0% – 2,0% 39 – –

Repayable Secured by

semi-annually property, plant

ending June 2006 and equipment Chemie

of R167 million (Italy) 6,0% fixed 18 28 –

Repayable over Secured by Liquid Fuels

13 years ending 2018 shares in Petromoc Business Libor +3,5% 13 – –

Other secured debt Various Various 18 – –

Settled during the year Chemie – 1 222 2 965

5 598 4 668 3 522

77

sasol limited group

non-current liabilities continued

76

Interest rate 2005 2004 2003

Terms of repayment Security Business at 30 June 2005 Rm Rm Rm


Variable rate redeemable cumulative preference shares of subsidiaries

Repayable in full Secured in

between terms of a put

January 2004 option against

and December 2005 the shareholders

of National

Petroleum

Refiners of Liquid Fuels

South Africa Business

(Pty) Limited (Natref) 6,8% – 8,8% 117 618 887

Finance leasesRepayable in equal Secured by

monthly instalments plant and

ending May 2009 equipment with

a book value

of R71 million

(2004 –

R217 million) Various 7,0% – 17,0% 85 217 289

Repayable in Secured by

monthly instalments plant and

over 20 to 30 years equipment

ending 2035 with a book

value of

R590 million

(2004 – Liquid Fuels 8,0% – 18,0%

R398 million) Business variable 590 366 42

Other smaller Underlying

finance leases assets Various Various 11 6 8

686 589 339

Total secured debt 6 401 5 875 4 748


Interest rate 2005 2004 2003Terms of repayment Business at 30 June 2005 Rm Rm Rm


Unsecured liabilities

Repayable on maturity in June 2010 Financing 3,375% fixed 2 407 – –

Repayable in August 2007 Financing 10,5% fixed 1 993 1 989 –

Repayable in semi-annual instalments Solvents Libor + 0,13%

ending December 2013 (Acrylates) & Jibar + 1,15% 758 792 –

Repayable in semi-annual Liquid Fuels

instalments ending Business 8,0% – 8,7%

December 2015 (Natref) variable 603 165 –

Repayable in May 2015 Polymers

(Arya) 2,6% 600 – –

Repayable in June 2013 Financing Libor +

0,13% 390 363 –

Repayable in semi-annual Liquid Fuels

instalments ending Business

January 2014 (Natref) 11,55% fixed 262 – –

Repayable quarterly ending May 2008 Liquid Fuels SA prime

Business lending rate 146 – –

Bankers acceptance with instalments Polymers

every 180 days (Petlin) 2,8% – 4,3% 133 124 –

Repayment terms not specified Liquid Fuels

Business (Natref) 8,0% fixed 63 63 48

Purchase consideration repayable in four

equal annual amounts until December 2006 Wax 2,2% variable 37 54 84

Repayable December 2011 Mining Variable 28 32 35Other Other Various 145 220 564

Total unsecured debt 7 565 3 802 731

Total long-term debt 13 966 9 677 5 479Repayable within one year included in short-term debt (1 015) (567) (898)

12 951 9 110 4 581

79notes to the financial statements

sasol limited group


78

Banking facilities and debt arrangements at 30 June 2005

Rand

equivalent Utilisation

Facility Expiry date Currency Rm Rm

Sasol Financing Uncommitted facilitiesCommercial banking facilities Various (short-term) Rand 11 880 2 328

Commercial paper programme None Rand 6 000 1 521

Committed facilityRevolving credit facility (syndicated) May 2008 Euro 3 226 663

Debt arrangementsRSA Bond August 2007 Rand 2 000 1 993

Japan Bank for International Cooperation June 2013 US dollar 390 390

Sasol Financing InternationalUncommitted facilitiesCommercial banking facilities Various (short-term) Euro 473 2

Debt arrangementEurobond June 2010 Euro 2 420 2 407

Other Sasol businessesAsset based financeRepublic of Mozambique Pipeline

Investments Company (Pty) Limited December 2015 Rand 2 362 2 362

Oryx GTL Limited (QSC) December 2015 US dollar 2 286 1 613

Sasol Petroleum Temane Limitada June 2015 Euro and rand 1 302 1 302

Debt arrangementsArya Sasol Polymer Company May 2015 Euro 1 564 728

National Petroleum Refiners of

South Africa (Pty) Limited Various Rand 1 491 982

Sasol Dia Acrylates (South Africa)

(Pty) Limited August 2006 US dollar and rand 984 750

Property finance leasesLiquid Fuels Business Various Rand 590 590

Other banking facilities and debt arrangements Various Various 2 329 1 235

39 297 18 866

ComprisingLong-term debt 12 951

Short-term debt 3 300

Bank overdraft (including overnight borrowings) 2 615

18 866

Financial covenantsCertain of the above facilities and debt arrangements are subject to financial covenants based on key financial ratios.

No events of default have occurred in the current financial year.

2005 2004 2003


16 Long-term provisionsBalance at beginning of year 3 017 2 954 3 510

Acquisition of businesses (refer note 47) – – 12

Capitalised in property, plant and equipment (refer note 1) 42 77 83

Net income statement charge 744 511 55

increase for year 1 127 631 443

reversal of unutilised amounts (652) (143) (212)

effect of change in discount rate 92 (137) (227)

notional interest 177 160 51

Utilised during year (cash flow) (461) (359) (430)




Less short-term portion (refer note 22) (460) (655) (468)

Long-term provisions 2 954 2 362 2 486

Comprising

Rehabilitation and asset retirement 2 634 2 401 2 317

Other 780 616 637

3 414 3 017 2 954

Estimated undiscounted obligation 14 735

Expected timing of utilisation of provision






More than five years 1 932 1 473 1 599

3 414 3 017 2 954

In accordance with the group’s published environmental policy and applicable legislation, a provision for rehabilitation is

recognised when the obligation arises.

The rehabilitation obligation includes estimated costs for the rehabilitation of coal mining and petrochemical sites. The amount

provided is calculated based on currently available facts and applicable legislation. It is envisaged that, based on the current

information available, any additional liability in excess of the amounts provided will not have a material adverse effect on its

financial condition, liquidity or cash flow.

The significant increase in the reversal of unutilised amounts is primarily attributable to the change in estimated useful lives of

property, plant and equipment as the rehabilitation provision is estimated based on the average remaining useful lives of the

related assets.

Other includes provisions in respect of personnel, rebates, discounts and bonuses.


sasol limited group


80

Rehabili-

tation Other Total

2005 2005 2005


16 Long-term provisions (continued)

Balance at beginning of year 2 401 616 3 017

Capitalised in property, plant and equipment (refer note 1) 41 1 42

Net income statement charge 350 394 744

increase for year 707 420 1 127

reversal of unutilised amounts (626) (26) (652)

effect of change in discount rate 92 – 92

notional interest 177 – 177

Utilised during year (cash flow) (181) (280) (461)

Translation of foreign entities (refer note 39) 23 49 72

Balance at end of year 2 634 780 3 414

2005 2004 2003


17 Post-retirement benefit obligationsPost-retirement healthcare benefits 1 772 1 613 1 365

Pension benefits (foreign) 1 239 1 148 1 252

Total post-retirement benefit obligations 3 011 2 761 2 617

Less short-term portion

post-retirement healthcare benefits (refer note 22) (31) (22) (26)

pension benefits (foreign) (refer note 22) (10) (15) (2)

2 970 2 724 2 589

Post-retirement healthcare benefitsThe group provides post-retirement healthcare benefits to certain of its retirees, principally in South Africa and the United States

of America. The method of accounting and the frequency of valuations for determining the liability are similar to those used for

defined benefit pension plans.

South AfricaThe post-retirement benefit plan provides certain healthcare and life assurance benefits to South African employees hired prior

to 1 January 1998, who retire and satisfy the necessary requirements of the medical fund. Generally, medical coverage provides

for a specified percentage of most medical expenses, subject to preset rules and maximum amounts. The cost of providing these

contributions is shared with the retirees. The plan is unfunded. The accumulated post-retirement benefit obligation is accrued

over the employee’s working life until full eligibility age.

United States of AmericaCertain other healthcare and life assurance benefits are provided for personnel employed in the United States of America.

Generally, medical coverage pays a specified percentage of most medical expenses, subject to preset maximum amounts and

reduced for payments made by Medicare. The cost of providing these benefits is shared with the retirees. The plan is also unfunded.

17 Post-retirement benefit obligations (continued)

South Africa Foreign

Last actuarial valuation 31 March 2005 30 June 2005

Full/interim valuation Full Full

Valuation method adopted Projected unit Projected unit

Principal actuarial assumptionsWeighted average assumptions used in performing actuarial valuation


2005 2004 2005 2004

% % % %

Healthcare cost inflation

initial 6,5 7,0 9,0 9,0

ultimate 6,5 7,0 5,5 5,5

Discount rate 8,5 9,0 5,3 6,6

Change in projected benefit obligations

South Africa Foreign Total

2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm

Projected benefit obligation

at beginning of year 1 443 1 047 349 422 1 792 1 469

Service cost 50 43 3 6 53 49

Interest cost 128 114 22 22 150 136

Remeasurement cost – 173 – (4) – 169

Actuarial (gains)/losses (199) 99 42 – (157) 99

Benefits paid (35) (33) (29) (25) (64) (58)

Foreign currency difference – – 28 (72) 28 (72)

Projected benefit obligation

at end of year 1 387 1 443 415 349 1 802 1 792

Reconciliation of the actuarial obligations to amounts recognised in the balance sheet


2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm

Unfunded obligation (1 387) (1 443) (415) (349) (1 802) (1 792)

Unrecognised prior service cost – – (17) (21) (17) (21)

Unrecognised actuarial

(gains)/losses (100) 99 147 101 47 200

Liability recognised (1 487) (1 344) (285) (269) (1 772) (1 613)

Short-term portion – – (31) (22) (31) (22)

Net liability recognised (1 487) (1 344) (254) (247) (1 741) (1 591)


sasol limited group


82


Reconciliation of net liability to amounts recognised in the balance sheet


2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm

Net liability at beginning of year 1 344 1 047 269 318 1 613 1 365

Service cost 50 43 3 6 53 49

Interest cost 128 114 22 22 150 136

Remeasurement cost – 173 – – – 173

Foreign currency difference – – 19 (54) 19 (54)

Recognised actuarial losses – – 6 8 6 8

Past service cost recognised – – (5) (6) (5) (6)

Benefits paid (35) (33) (29) (25) (64) (58)

Net liability at end of year 1 487 1 344 285 269 1 772 1 613

Net post-retirement healthcare costs recognised in the income statement


2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm

Service cost 50 43 3 6 53 49

Interest cost 128 114 22 22 150 136

Remeasurement cost – 173 – – – 173

Past service cost – – (5) (6) (5) (6)

Recognised net actuarial loss – – 6 8 6 8

Net periodic benefit cost 178 330 26 30 204 360

The post-retirement healthcare liability is calculated, using the projected unit credit method, as the present value of the

expected future contributions required to be made in respect of eligible employees once they have retired. Had this liability been

calculated on the basis of the expected future benefits to be provided to the eligible employees, the provision would have been

increased by R1 002 million (2004 – R681 million).

Post-retirement pension benefitsThe group operates or contributes to defined benefit pension plans and defined contribution plans in the countries in which

it operates.

Contributions by the group and in some cases the employees are made for funds set up in South Africa and the United States of

America whilst no contributions are made for plans established in other geographic areas.

Provisions for pension obligations are established for benefits payable in the form of retirement, disability and surviving

dependent pensions. The benefits offered vary according to the legal, fiscal and economic conditions of each country.

Details of the principal defined benefit funds are set out below.

The individual fund’s funding details based on the latest actuarial valuations were

United States

Pension fund South Africa of America

Last actuarial valuation 31 March 2005 30 June 2005

Full/interim valuation Full Full

Valuation method adopted Projected unit Projected unit


Principal actuarial assumptionsWeighted average assumptions used in performing actuarial valuation

South Africa United States of America

2005 2004 2005 2004

% % % %

Discount rate 8,5 9,0 5,3 6,3

Expected return on plan assets 8,5 9,0 8,0 8,5

Average salary increases 5,5 6,0 3,8 3,8

Average pension increases 1,9 2,5 – –

Each of the pension fund assets are invested in a diversified range of equities, bonds, property and cash.


2005 2004 2005 2004

% % % %

Equities

local 61 59 – –

foreign 7 9 70 70

Fixed interest 8 11 30 30

Property 16 18 – –

Other 8 3 – –

Total 100 100 100 100

The investment objectives of the group’s pension plans are designed to generate returns that will enable the plans to meet their

future obligations. The precise amount for which these obligations will be settled depends on future events, including the life

expectancy of the plan’s members and salary inflation. The obligations are estimated using actuarial assumptions, based on the

current economic environment.

The pension plans seek to achieve total returns both sufficient to meet expected future obligations as well as returns greater than

their policy benchmark reflecting the target weights of the asset classes used in their targeted strategic asset allocation.

In evaluating the strategic asset allocation choices, an emphasis is placed on the long-term characteristics of each individual

asset class, and the benefits of diversification among multiple asset classes. Consideration is also given to the proper long-term

level of risk for the plan, particularly with respect to the long-term nature of the plan’s liabilities, the impact of asset allocation

on investment results, and the corresponding impact on the volatility and magnitude of plan contributions and expense and the

impact certain actuarial techniques may have on the plan’s recognition of investment experience.

The group targets the plans’ asset allocation within the following ranges within each asset class


Asset classes Minimum Maximum Minimum Maximum

% % % %

Equities

local 50 60 – –

foreign – 15 50 75

Fixed interest 10 25 20 40

Property 10 25 – –

Other – 10 – –

The group monitors investment performance and portfolio characteristics on a regular basis to ensure that managers are meeting

expectations with respect to their investment approach. There are restrictions and controls placed on managers in this regard.


sasol limited group


84


South African operationsSasol contributes to a pension fund which provides defined post-retirement and death benefits based on final pensionable salary

at retirement. Prior to 1 April 1994 this pension fund was open to all employees of the group in South Africa. In 1994 all members

were given the choice to voluntarily transfer to a newly established defined contribution section of the pension fund and

approximately 99% of contributing members chose to transfer to the defined contribution section. At that date the calculated

actuarial surplus of approximately R1 250 million was apportioned to pensioners, members transferring to the defined

contribution section and a R200 million balance was allocated within the pension fund to an employer’s reserve.

The assets of the fund are held separately from those of the company in a trustee administered fund, registered in terms of the

South African Pension Funds Act, 1956. Included in the fund assets are 2 369 708 Sasol Limited shares valued at R428 million at

year end (2004 – 2 369 708 shares at R232 million) purchased in terms of an approved investment strategy.

The annual pension charge is determined in consultation with the pension fund’s independent actuary and is calculated using

assumptions consistent with those used at the last actuarial valuation of the pension fund. The pension fund assets have been

valued at fair value.

The prepayment of R78 million (2004 – R78 million) in the balance sheet represents the accumulated excess of the actual

contributions paid to the pension fund in excess of the accumulated pension liability.

In December 2001, the Pension Funds Second Amendment Act was promulgated. The Act generally provides for

• the payment of enhanced benefits to former members and minimum pension increases for pensioners; and

• the apportionment of any actuarial surplus existing in the fund, at the apportionment date, in an equitable manner between

existing members including pensioners, former members and the employer in such proportions as the trustees of the fund

shall determine.

The pension fund asset recognised is limited to the present value of any economic benefits available in the form of refunds from

the plan or reductions in future contributions to the plan. This limitation has been applied in the 2005 and 2004 financial years as

a result of the effect of the Pension Funds Second Amendment Act.

A significant number of employees are covered by union sponsored, collectively bargained, and in some cases, multi-employer

defined contribution pension plans. Information from the administrators of these plans offering defined benefits is not sufficient

to permit the company to determine its share, if any, of any unfunded vested benefits.

The group occupies certain properties owned by the Sasol Pension Fund.

Members of the defined benefit section are required to contribute to the pension fund at the rate of 7,5% of pensionable salary.

Sasol meets the balance of the cost of providing benefits. Company contributions are based on the results of the actuarial

valuation of the pension fund in terms of South African legislation and are agreed by Sasol Limited and the pension fund trustees.

Contributions, for the defined contributions section, are paid by the members and Sasol at fixed rates. Contributions to the

defined contribution fund for the year ended 30 June 2005 amounted to R460 million (2004 – R450 million).

Foreign operationsPension coverage for employees of the group’s international operations is provided through separate plans. The companysystematically provides for obligations under such plans by depositing funds with trustees for those plans operating in the UnitedStates of America or by creation of accounting obligations for other plans.


Change in projected benefit obligation (funded obligation)

South Africa Foreign Total2005 2005 2005

Rm Rm Rm

Projected benefit obligation at beginning of year 2 328 1 036 3 364Transfer from funded plan to unfunded plan1 – (494) (494)Service cost 5 23 28Interest cost 202 42 244Member contributions 2 – 2Actuarial losses 169 115 284Benefits paid (187) (51) (238)Disposal of subsidiary1 – (52) (52)Settlement gain – (15) (15)Foreign currency difference – 80 80

Projected benefit obligation at end of year 2 519 684 3 203

Change in plan assets

South Africa Foreign Total2005 2005 2005

Rm Rm Rm

Fair value of plan assets at beginning of year 2 279 528 2 807Foreign currency exchange rate changes – 42 42Plan participant contributions 2 – 2Employer contributions 4 96 100Disposal of subsidiary1 – (22) (22)Settlements – (15) (15)Benefit payments (187) (51) (238)Actual return on plan assets 702 31 733Transfer from defined contribution plan2 440 – 440

Fair value of plan assets at end of year 3 240 609 3 849

Change in projected benefit obligations (unfunded obligations)

Foreign2005

Rm

Projected benefit obligations at beginning of year 648Transfer from funded plan to unfunded plan1 494Service cost 39Interest cost 62Plan amendments (5)Actuarial loss 235Benefits paid (32)Foreign currency difference 48

Projected benefit obligations at end of year 1 489

1 With effect from 1 March 2005, Sasol Wax restructured its operations resulting in a loss of control in Paramelt RMC BV whilst still retaining significant influence.Paramelt RMC BV has therefore been reflected as an investment in associate with effect from 1 March 2005.

As a result, the funded plan has been accounted for on the disposal line.

2 Amount represents retired employees from the defined contribution section of the plan, who, on retirement, have elected to participate in the defined benefit planby purchasing a defined benefit pension from the fund. The related increase in the projected benefit obligation is included as part of the actuarial loss.


sasol limited group


86


Reconciliation of the funded status to amounts recognised in the balance sheet

South Africa Foreign Total2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm

Funded obligations (2 519) (2 328) (684) (1 036) (3 203) (3 364)Plan assets 3 240 2 279 609 528 3 849 2 807Unfunded obligations – – (1 489) (648) (1 489) (648)Unrecognised actuarial net (gains)/losses (622) 127 550 171 (72) 298Asset not recognised due tolegal limitation (21) – – – (21) –Unrecognised prior service cost – – – 1 – 1

Net asset/(liability) recognised 78 78 (1 014) (984) (936) (906)

ComprisingPrepaid pension asset 78 78 225 164 303 242Accrued pension liabilities

long-term portion – – (1 229) (1 133) (1 229) (1 133)short-term portion – – (10) (15) (10) (15)

Net asset/(liability) recognised 78 78 (1 014) (984) (936) (906)

Net periodic pension cost/(gain) recognised in the income statement

South Africa Foreign Total2005 2004 2005 2004 2005 2004

Rm Rm Rm Rm Rm Rm

Service cost 5 2 62 66 67 68Interest cost 202 231 104 86 306 317Expected return on plan assets (224) (193) (43) (49) (267) (242)Recognised actuarial losses – 16 11 19 11 35Plan amendments – – (5) – (5) –Settlement/curtailment cost – – – 37 – 37

Net pension costs (17) 56 129 159 112 215

Actual return on plan assets 703 588 32 57 735 645

The group expects the following benefit payments to be paid out of the plans for the years indicated. The expected benefits arebased on the same assumptions used to measure the group’s benefit obligation as at 30 June 2005 and include estimated futureemployee service.







More than five years 1 648 692 2 340

2 870 1 194 4 064

2005 2004 2003for the year ended 30 June Rm Rm Rm

18 Long-term deferred incomeTotal deferred income 771 252 96Short-term portion (8) (15) –

763 237 96

Amounts received in respect of capital investment, to be recognised in income over the useful lives of the underlying assets.

19 Deferred tax

ReconciliationBalance at beginning of year 5 462 5 919 5 977


Fair value adjustments (refer note 47) (15) – –

Current year charge 336 (374) 297

per the income statement (refer note 34) 242 (246) 356

per the changes in equity statement 94 (128) (59)

Disposal of businesses (refer note 48) 5 (14) –Translation of foreign entities (refer note 39) 89 (231) (377)


ComprisingDeferred tax asset (409) (306) (194)Deferred tax liability 6 286 5 768 6 113

5 877 5 462 5 919

Deferred tax assets and liabilities are determined

based on the tax paying entity.

Arising from the following temporary differencesAssets

Property, plant and equipment 419 443 51

Short- and long-term provisions (58) (71) (58)

Calculated tax losses (759) (696) (174)Other (11) 18 (13)

(409) (306) (194)

Liabilities

Property, plant and equipment 7 774 7 081 7 365


Current assets 95 (48) 74

Long-term debt (9) (14) (85)

Short- and long-term provisions (1 490) (1 294) (1 066)

Calculated tax losses (564) (228) (422)Other 284 5 (77)

6 286 5 768 6 113


sasol limited group


88


19 Deferred tax (continued)

Attributable to the following tax jurisdictionsSouth Africa 4 608 4 143 4 315

United States of America 642 747 989

Germany 451 390 474

Nigeria 194 271 281

Italy 28 (56) (145)

Mozambique (69) (99) –Other 23 66 5

5 877 5 462 5 919

Calculated tax lossesAvailable for offset against future taxable income 6 224 4 548 2 574Utilised to reduce the deferred tax balance (4 643) (3 414) (2 196)

Not recognised as a deferred tax asset 1 581 1 134 378

Deferred tax assets have been recognised to the extent that it is probable that the entities will generate future taxable income

against which these tax losses can be utilised.

A portion of the estimated tax losses available may be subject to various statutory limitations as to its usage in the event of

significant changes in that entity.

Unremitted earnings of foreign subsidiaries and foreign incorporated joint venturesNo provision is made for the income tax effect that may arise on the remittance of unremitted earnings by certain foreign

subsidiaries and foreign incorporated joint ventures. It is management’s intention that, where there is no double taxation relief,

these earnings will be permanently reinvested in these entities.


Unremitted earnings at end of year 1 826 1 521 1 401Tax effect if remitted 72 46 267

Secondary Taxation on Companies (STC)STC is a tax levied on South African companies at a rate of 12,5% on dividends distributed.

Current and deferred tax are measured at the tax rate applicable to undistributed income and therefore only take STC into

account to the extent that dividends have been received or paid.

On declaration of a dividend, the company includes the tax of 12,5% on this dividend in its computation of the income tax

expense in the period of such declaration.


Undistributed earnings subject to STC 44 949 38 239 34 138Tax effect if distributed 4 994 4 249 3 793

Available STC credits at end of year 67 76 –

Note 2005 2004 2003

Rm Rm Rm

Short-term debt 20 3 300 3 265 6 481

Short-term financial liabilities 21 792 1 205 654

Short-term provisions 22 1 801 1 838 1 566

Short-term portion of deferred income 18 8 15 –

Tax payable 23 614 61 571

Trade payables 24 4 733 3 886 4 060

Other payables and accrued expenses 25 4 416 3 502 3 336

Bank overdraft (including overnight borrowings) 14 2 615 4 113 3 268

18 279 17 885 19 936


20 Short-term debtComprisingCommercial paper in issue 1 522 1 521 3 288Revolving credit 663 1 023 1 184Bank loans 77 106 995Short-term joint venture debt 20 46 114Other 3 2 2

Short-term external loans 2 285 2 698 5 583Short-term portion of long-term debt (refer note 15) 1 015 567 898

3 300 3 265 6 481

ReconciliationBalance at beginning of year 2 698 5 583 2 637Acquisition of businesses (refer note 47) – – 16Loans raised 496 2 787 5 185Loans repaid (936) (5 403) (2 097)Effect of cash flow hedge accounting – (13) –Disposal of businesses (refer note 48) – (188) –Translation of foreign entities (refer note 39) 27 (68) (158)


Currency analysisEuro 116 449 335US dollar 620 673 1 286Rand 1 542 1 567 3 954Other currencies 7 9 8

2 285 2 698 5 583Interest bearing statusInterest bearing 2 285 2 698 5 578Non-interest bearing – – 5

2 285 2 698 5 583SecuritySecured – 37 915Unsecured 2 285 2 661 4 668

2 285 2 698 5 583


sasol limited group

current liabilities

90

2005 2004 2003


20 Short-term debt (continued)

Business segmentationFinancing 2 185

Liquid Fuels Business 294

Gas 242

Polymers 214

Petroleum International 131

Other 234

3 300

21 Short-term financial liabilitiesArising on short-term financial instruments 792 1 205 654

Short-term financial liabilities include the revaluation of

out-of-the-money derivative instruments, refer pages 115 to 123.

22 Short-term provisionsEmployee provisions 920 741 414

Other provisions 380 405 656

1 300 1 146 1 070

Short-term portion of

long-term provisions (refer note 16) 460 655 468

post-retirement benefit obligations (refer note 17) 41 37 28

1 801 1 838 1 566

Reconciliation

Balance at beginning of year 1 146 1 070 1 534


Net movement (refer note 42) 138 162 (322)

income statement charge 1 278 1 293

reversal of unutilised amounts (49) (43)

provisions utilised (1 091) (1 088)

Disposal of businesses (refer note 48) (15) (7) –



sasol limited group

results of operations

2005 2004 2003


23 Tax paidAmounts unpaid at beginning of year (61) (571) (2 398)

Acquisition of businesses (refer note 47) – (44) –

Interest (paid)/received on tax (3) 1 6

Income tax per income statement (refer note 34) (4 326) (3 421) (3 651)

Charged directly to equity (refer note 39) – – (115)

Disposal of businesses (refer note 48) 31 – –

Translation of foreign entities (refer note 39) (8) 11 60

(4 367) (4 024) (6 098)

Tax payable per balance sheet 614 61 571

Per the cash flow statement (3 753) (3 963) (5 527)

Comprising

Normal tax (3 374) (3 633) (5 154)

STC (379) (330) (373)

(3 753) (3 963) (5 527)

24 Trade payablesNet trade payables 4 733 3 886 4 060

Trade payables to cost of sales and services rendered (%) 11,2% 10,0% 10,3%

25 Other payables and accrued expensesAccrued expenses 1 247 473 345

Capital projects related payables 805 777 612

Duties payable to revenue services 787 786 971

Employee related payables 335 381 408

Insurance related payables 139 173 2

Related party payables 278 153 14

third parties 85 26 –

joint ventures 193 127 14

Value added tax 147 200 103

Other payables 678 559 881

4 416 3 502 3 336


sasol limited group

current liabilities continued

92

2005 2004 2003

Note Rm Rm Rm

Turnover 26 69 239 60 151 64 555

Non-trading income 27 417 343 604

Translation gains/(losses) 28 91 (1 035) (1 708)

Operating profit 29 14 506 9 314 11 911

Auditors’ remuneration 30 (80) (51) (58)

Dividends and interest received 31 149 190 167

Income from associates 32 184 117 60

Borrowing costs 33 (587) (439) (225)

Taxation 34 (4 568) (3 175) (4 007)

Capital items affecting earnings 35 (1 162) 38 (240)

Earnings per share (cents) 36 1 560 974 1 283

2005 2004 2003


26 TurnoverSale of products 68 432 59 380 63 353

Services rendered 448 454 479

Other trading income 359 317 723

69 239 60 151 64 555

Comprising

Within South Africa 34 448 28 764 31 101

Exported from South Africa 8 453 7 836 7 211

Outside South Africa 26 338 23 551 26 243

69 239 60 151 64 555

27 Non-trading incomeTotal non-trading income 417 343 604

Comprising

Insurance refund 210

Gain on hedging activities 82

Profit on sale of participation rights in future GTL venture 33

Other 92

417


28 Translation gains/(losses)Gains/(losses) on foreign exchange transactions 40 (878) (1 539)

realised (117) (607) (567)unrealised 157 (271) (972)

Gains/(losses) on translation of foreign operations 51 (157) (169)

91 (1 035) (1 708)

ComprisingForward exchange contracts (14) (436)Trade receivables 163 (358)Other (109) (84)

40 (878)Gains/(losses) on translation of foreign operations 51 (157)

91 (1 035)

29 Operating profitOperating profit includesAmortisation of

goodwill – (21) (42)negative goodwill – 225 301intangible assets (refer note 3) (418) (502) (314)

Depreciation of property, plant and equipment (refer note 1) (3 591) (4 723) (4 468)Effect of capital items (refer note 35) (1 275) (27) (242)Effect of crude oil swap (1 147) – –Employee costs (8 645) (8 731) (9 055)Exploration expenditure (121) (223) (120)Insurance refund (refer note 27) 210 – –Operating lease charges

buildings (193) (139) (115)plant and equipment (269) (211) (263)

Research and development expenditure (227) (395) (376)Restructuring costs (69) (112) (90)Technical and other fees (294) (264) (257)Write-down of inventories to net realisable value (refer note 10) (47) (62) (46)

30 Auditors’ remunerationAudit fees 38 39 44

KPMG 36 32 28other external auditors 2 7 16

Other fees paid to auditors of group companies 36 5 5

management advisory services 1 2 1Sarbanes-Oxley Act section 404 implementation* 22 – –other advisory services 13 3 4

Tax advisory fees 5 6 7Expenses 1 1 2

80 51 58

* KPMG’s involvement in the SOX 404 implementation is more fully described in the chief financial officer’s review.


sasol limited group

results of operations continued

94


31 Dividends and interest receivedDividends received 28 15 12

South Africa 5 – –

outside South Africa 23 15 12

Interest received 121 175 155

South Africa 62 127 99


149 190 167

32 Income from associatesNet income before tax 224 164 82

Taxation (40) (47) (22)

Income from associates 184 117 60

Dividends distributed to shareholders 20 41 17

33 Borrowing costsBank overdraft 151 174 8

Borrowings 1 108 966 920

Finance leases 55 20 20

Other 133 115 79

1 447 1 275 1 027

Finance charges 79 109 208

1 526 1 384 1 235

Notional interest (refer note 16) 177 160 51

Total borrowing costs 1 703 1 544 1 286

Amounts capitalised (refer note 1) (1 116) (1 105) (1 061)

Income statement charge 587 439 225

Per the cash flow statement 1 523 1 384 1 286

Comprising

South Africa 1 301 1 157 819


1 703 1 544 1 286

Average capitalisation rate applied 9,1% 9,9% 11,2%


34 TaxationSouth African normal tax 3 211 2 834 3 080

current year 3 193 2 881 3 307

prior years 18 (47) (227)

STC 379 330 373

Foreign tax 736 257 198

Income tax (refer note 23) 4 326 3 421 3 651

Deferred tax (refer note 19) 242 (246) 356

current year 251 (265) 335

prior years 11 (97) 8

tax losses written off (previously recognised as assets) 122 141 –

tax rate change (142) (25) 13

4 568 3 175 4 007

2005 2004 2003Reconciliation of effective tax rate % % %

Total income tax expense differs from the amount computed by

applying the South African normal tax rate to income before tax.

The reasons for these differences are

South African normal tax rate 29,0 30,0 30,0

Increase in rate of tax due to

STC 2,7 3,6 3,1

disallowed expenditure 1,7 2,6 2,9

increase in calculated tax losses 0,8 0,7 1,2

non-taxable goodwill and negative goodwill 0,6 – –

prior year adjustments 0,2 – –

write-off of deferred tax assets – 1,5 –

different foreign tax rate – 0,3 0,2

35,0 38,7 37,4

Decrease in rate of tax due to

exempt income (1,5) (1,4) (2,0)

reduction in tax rate (1,0) – –

different foreign tax rate (0,3) – –

utilisation of tax losses (0,1) – –

prior year adjustments – (1,6) (1,8)

non-taxable goodwill and negative goodwill – (1,1) –

Effective tax rate 32,1 34,6 33,6

The difference in effective tax rate between 2005 and 2004 is mainly a result of the reduction in the South African normal tax rate

from 30% to 29%.


sasol limited group


96


35 Capital items affecting earningsImpairment of

property, plant and equipment (refer note 1) (808) (310) (5)

goodwill (refer note 2) (213) (70) (73)

negative goodwill (refer note 2) – 87 –

intangible assets (refer note 3) (13) (13) (5)

investments in securities (2) (5) –

investments in associates (42) (31) –

Profit/(loss) on disposal of

property, plant and equipment 20 106 (16)

intangible assets – 52 84

investments in businesses 31 75 (158)

investments in securities 9 – –

Profit on dilution of interest in Sasol Oil (Pty) Limited – 108 –

Profit on sale of participation rights in future GTL venture (refer note 27) 33 – –

Scrapping of property, plant and equipment (290) (26) (69)

Effect on operating profit (1 275) (27) (242)

Tax effect thereon 113 65 2

(1 162) 38 (240)

Gross Tax Net2005 2005 2005


Earnings effect of capital itemsImpairment of

property, plant and equipment (808) 221 (587)

goodwill (213) – (213)

intangible assets (13) – (13)

investments in securities (2) 1 (1)

investments in associates (42) – (42)

Profit on disposal of

property, plant and equipment 20 (17) 3

investments in businesses 31 – 31

investments in securities 9 – 9

Profit on sale of participation rights in future GTL venture 33 (4) 29

Scrapping of property, plant and equipment (290) 34 (256)

Sasol Italy deferred tax asset write-off – (122) (122)

(1 275) 113 (1 162)

Further details on capital items written off are provided in the chief financial officer’s review, refer pages 7 and 8.

sasol limited group

equity structure

36 Earnings per shareEarnings per share is derived by dividing attributable earnings by the weighted average number of shares after taking the share

repurchase programme into account. Appropriate adjustments are made in calculating diluted and headline earnings per share.

Diluted earnings per share reflect the potential dilution that could occur if all of the group’s outstanding share options were

exercised. The number of shares outstanding is adjusted to show the potential dilution if employee share options are converted

into ordinary shares.

No adjustments were made to reported earnings attributable to shareholders in the computation of diluted earnings per share.

2005 2004 2003

Number of Number of Number of

shares shares shares

for the year ended 30 June million million million

Weighted average number of shares 613,8 610,0 609,3

Potential dilutive effect of outstanding share options 10,6 6,2 10,3

Diluted weighted average number of shares 624,4 616,2 619,6

2005 2004 2003


Headline earnings is determined as follows

Earnings attributable to shareholders 9 573 5 940 7 817

Adjusted for

effect of capital items (refer note 35) 1 275 27 242

goodwill amortised – 21 42

negative goodwill amortised – (225) (301)

tax effect thereon (113) (65) (2)

Headline earnings 10 735 5 698 7 798

2005 2004 2003

for the year ended 30 June cents cents cents

Basic earnings per shareAttributable earnings basis 1 560 974 1 283

Diluted earnings basis 1 533 964 1 262

Effect of share repurchase programme 139 87 113

Headline earnings per shareAttributable earnings basis 1 749 934 1 280

Diluted earnings basis 1 719 925 1 259

Effect of share repurchase programme 156 84 112


sasol limited group


98

Note

Share capital 37

The Sasol Share Incentive Scheme 38

Foreign currency translation reserve 39

Share repurchase programme 40

2005 2004 2003


for the year ended 30 June shares shares shares

37 Share capitalAuthorised

Ordinary shares of no par value 1 175 000 000 1 175 000 000 1 175 000 000

Issued

Shares in issue at beginning of year 671 271 425 668 798 425 666 868 725

Issued in terms of the Sasol Share Incentive Scheme 5 605 700 2 473 000 1 929 700

Shares in issue at end of year 676 877 125 671 271 425 668 798 425

Held in reserve

Allocated to the Sasol Share Incentive Scheme. 33 795 700 39 401 400 41 874 400

Unissued shares 464 327 175 464 327 175 464 327 175

498 122 875 503 728 575 506 201 575

In terms of a shareholder resolution taken at the annual general meeting of 29 November 2004, the unissued ordinary sharesof the company were placed under the control of the directors until the next annual general meeting. The aggregate numberof shares to be allotted and issued in terms of this resolution is limited to 5% of the number of ordinary shares in issue at30 November 2004 (673 747 425 shares).

38 The Sasol Share Incentive SchemeIn 1988 the shareholders approved the adoption of the Sasol Share Incentive Scheme. The scheme was introduced to provide anincentive for senior employees (including executive directors) of the group who participate in management and also non-executive directors from time to time.

The objective of the Sasol Share Incentive Scheme is the retention of key employees. Allocations are linked to the performance ofboth the group and the individual. Options are granted for a period of nine years and vest as follows

2 years – 1st third4 years – 2nd third6 years – final third

The offer price of these options equals the closing market price of the underlying shares on the trading day immediatelypreceding the granting of the option.

In terms of the scheme, options to a maximum of 60 000 000 ordinary shares may be offered by the trustees to eligible groupemployees. Each employee is limited to holding a maximum of 1 000 000 options to acquire Sasol Limited shares.

Unless otherwise determined by the board, share options which have not yet vested will lapse on resignation, and share optionswhich have vested may be taken up at the employee’s election before their last day of service. Payment on shares forfeited willtherefore not be required. On death, all options vest immediately and the deceased estate has a period of twelve months toexercise these options. On retirement, at normal retirement age, the options vest immediately and the nine year expiry periodremains unchanged.

It is group policy that employees who have access to price sensitive information should not deal in Sasol Limited shares for theperiods from 1 January for half-year end and 1 June for year end until two days after publication of the results.

2005 2004 2003



38 The Sasol Share Incentive Scheme (continued)

Shares allotted 26 204 300 20 598 600 18 125 600

Share options granted 24 975 700 27 097 900 26 495 200

Available for allocation 8 820 000 12 303 500 15 379 200

60 000 000 60 000 000 60 000 000

Movements in the number of options granted

Balance at beginning of year 27 097 900 26 495 200 24 067 000

Options granted 4 208 800 3 950 700 4 942 300

Options converted to shares (5 605 700) (2 473 000) (1 929 700)

Options forfeited (43 700) (63 100) (44 000)

Options expired (681 600) (811 900) (540 400)

Balance at end of year 24 975 700 27 097 900 26 495 200

Vesting periods of options granted

Already vested 5 034 700 5 567 000 2 829 700

Within one year 5 826 000 5 165 200 5 518 400

One to two years 5 522 300 5 765 000 4 847 200

Two to three years 3 206 100 4 435 500 4 736 700

Three to four years 2 797 700 3 391 100 4 736 400

Four to five years 1 218 200 1 496 700 2 231 600

More than five years 1 370 700 1 277 400 1 595 200

24 975 700 27 097 900 26 495 200

2005 2004 2003

for the year ended 30 June Rand Rand Rand

Average price at which share options were granted during year 120,34 90,99 107,76

Average market price of options traded during year 138,73 94,78 107,87

2005 2004 2003


Compensation expense (not recognised) 137 146 144

Being the compensation expense that would have been recognised had

a fair value model been applied, calculated using the Black Scholes

model based on the following assumptions

risk free interest rate 9,25% 10,75% 11,75%

volatility 34% 37% 45%

dividend yield 4,3% 4,3% 4,0%

vesting period 2, 4, 6 years 2, 4, 6 years 2, 4, 6 years

Weighted average value of options issued during year (rand) 33,44 28,40 39,70


sasol limited group

equity structure continued

100

Weighted Weighted

average average

Number of option price remaining life

at 30 June 2005 shares Rand years

38 The Sasol Share Incentive Scheme (continued)

Range of exercise pricesDetails of unimplemented share options granted up to 30 June 2005

R20,01 – R30,00 1 431 100 24,94 1,95

R30,01 – R40,00 974 900 37,62 3,69

R40,01 – R50,00 2 267 700 42,49 3,37

R50,01 – R60,00 3 055 400 54,50 3,61

R60,01 – R70,00 555 400 69,02 4,91

R70,01 – R80,00 3 221 300 78,64 5,07

R80,01 – R90,00 3 866 100 88,11 6,92

R90,01 – R100,00 802 700 96,87 7,74

R100,01 – R110,00 1 046 500 105,02 7,08

R110,01 – R120,00 6 466 300 114,20 6,87

R120,01 – R130,00 384 600 125,73 8,31

R130,01 – R140,00 156 500 132,57 6,13

R140,01 – R150,00 266 400 144,21 9,00

R150,01 – R160,00 396 700 156,30 9,00

R160,01 – R170,00 – – –

R170,01 – R180,00 84 100 170,20 9,00

24 975 700 83,18

Details of unimplemented options vested at 30 June 2005

R20,01 – R30,00 387 400 24,95

R30,01 – R40,00 362 400 37,77

R40,01 – R50,00 637 600 42,07

R50,01 – R60,00 1 155 500 54,23

R60,01 – R70,00 139 900 69,30

R70,01 – R80,00 762 900 78,46

R80,01 – R90,00 324 800 89,23

R90,01 – R100,00 44 100 93,71

R100,01 – R110,00 113 800 106,81

R110,01 – R120,00 1 064 800 115,88

R120,01 – R130,00 – –

R130,01 – R140,00 41 500 132,40

5 034 700 70,82

2005 2004 2003


39 Foreign currency translation reserve

Translation of foreign entitiesProperty, plant and equipment (refer note 1)

cost 1 678 (3 837) (5 993)

accumulated depreciation (882) 2 010 3 203

Goodwill (refer note 2) 31 (37) (103)

Negative goodwill (refer note 2) – 53 122

Intangible assets (refer note 3)

cost 48 (99) (195)

accumulated amortisation (25) 54 87

Investments in securities 14 (21) (24)

Investments in associates 36 (82) (39)

Post-retirement benefit assets 22 (52) (83)

Long-term receivables 32 (107) (240)

Long-term financial assets 1 (2) (2)

Inventories 275 (549) (861)

Trade receivables 233 (471) (744)

Other receivables and prepaid expenses 53 (92) (100)

Short-term financial assets – (1) (1)

Cash and cash equivalents (175) (251) (255)

Minority interest (11) 21 16

Long-term debt (refer note 15) (167) 518 1 009

Long-term provisions (refer note 16) (72) 149 276

Post-retirement benefit obligations (96) 217 339

Long-term deferred income (53) 35 20

Deferred tax (refer note 19) (89) 231 377

Short-term debt (refer note 20) (27) 68 158

Short-term financial liabilities (1) – 1

Short-term provisions (refer note 22) (31) 81 143

Tax payable (refer note 23) (8) 11 60

Trade payables (154) 315 526

Other payables and accrued expenses (505) 915 (324)

127 (923) (2 627)

Arising from net investment in foreign entities 211 (541) 140

Less tax effect thereon

normal – – (115)

deferred – 5 32

Movement for year 338 (1 459) (2 570)

Transfer from cash flow hedge accounting reserve – 199 –

Effect of negative goodwill written off (80) – –

Disposal of businesses (25) 43 –

Balance at beginning of year (1 569) (352) 2 218

Balance at end of year (1 336) (1 569) (352)


sasol limited group

equity structure continued

102

2005 2004 2003


39 Foreign currency translation reserve (continued)


Synfuels International (856) (689) (462)

Polymers (196) (237) (169)

Olefins & Surfactants (164) (226) (16)

Petroleum International (97) (132) (148)

Financing (67) (278) 296

Wax (60) (62) (103)

Solvents 60 14 70

Merisol 23 19 39

Other 21 22 141

(1 336) (1 569) (352)

2005 2004 2003



40 Share repurchase programmeHeld by the wholly owned subsidiary,

Sasol Investment Company (Pty) Limited

Balance at beginning of year 60 111 477 59 741 477 57 857 149

Repurchased during year – 370 000 1 884 328

Balance at end of year 60 111 477 60 111 477 59 741 477

Percentage of issued share capital 8,88% 8,95% 8,93%

2005 2004 2003

for the year ended 30 June Rand Rand Rand

Average cumulative purchase price 60,67 60,67 60,49

Average purchase price during year – 88,85 97,84

At each annual general meeting since 25 October 1999 the shareholders have authorised the directors to approve the

repurchase, by Sasol Limited or any of its subsidiaries, of Sasol Limited shares, subject to the provisions of the South African

Companies Act and the requirements of the JSE Limited.

2005 2004 2003

Note Rm Rm Rm

Cash generated by operating activities 41 18 812 15 151 15 997Cash flow from operations 42 20 993 14 859 15 986Movement in working capital 43 (2 181) 292 11Investment income 44 169 230 178Dividends paid 45 (2 856) (2 745) (2 835)Non-current assets sold 46 478 746 504Acquisition of businesses 47 – (555) (155)Disposal of businesses 48 36 283 –

2005 2004 2003


41 Cash generated by operating activitiesCash flow from operations (refer note 42) 20 993 14 859 15 986Movement in working capital (refer note 43) (2 181) 292 11

18 812 15 151 15 997

42 Cash flow from operationsOperating profit 14 506 9 314 11 911Adjusted for

amortisation ofgoodwill – 21 42negative goodwill – (225) (301)intangible assets 418 502 314

capitalised exploration expenditure written off 33 153 –deferred income 466 191 51depreciation of property, plant and equipment 3 591 4 723 4 468effect of cash flow hedge accounting 23 33 (46)impairment of

property, plant and equipment 808 310 5goodwill 213 70 73negative goodwill – (87) –intangible assets 13 13 5investments in securities 2 5 –investments in associates 42 31 –

(profit)/loss on disposal ofproperty, plant and equipment (20) (106) 16intangible assets – (52) (84)investments in businesses (31) (75) 158investments in securities (9) – –

movement in provision for doubtful debts 9 58 (147)movement in long-term prepaid expenses 22 – –movement in long-term provisions

income statement charge 567 351 55utilisation (461) (359) (430)

movement in short-term provisions 138 162 (322)movement in post-retirement benefit

assets (39) – (37)obligations 154 387 140

profit on dilution of interest in Sasol Oil (Pty) Limited – (108) –scrapping of property, plant and equipment 290 26 69translation of net investment in foreign entities 211 (541) –write-down of inventories to net realisable value 47 62 46

20 993 14 859 15 986


sasol limited group

liquidity and capital resources

104


43 Movement in working capital

Movement in inventoriesPer the balance sheet (1 703) 456 265Acquisition of businesses (refer note 47) – 8 142Write-down of inventories to net realisable value (47) (62) (46)Disposal of businesses (refer note 48) (68) (122) –Translation of foreign entities (refer note 39) 275 (549) (861)

(1 543) (269) (500)

Movement in trade receivablesPer the balance sheet (1 117) 162 1 281Acquisition of businesses (refer note 47) – 333 325Movement in provision for doubtful debts (9) (58) 147Disposal of businesses (refer note 48) (83) (165) –Translation of foreign entities (refer note 39) 233 (471) (744)

(976) (199) 1 009

Movement in other receivables and prepaid expensesPer the balance sheet (296) (647) (1 252)Movement in short-term portion of long-term receivables (188) 143 –Acquisition of businesses (refer note 47) – 2 31Disposal of businesses (refer note 48) (13) (13) –Translation of foreign entities (refer note 39) 53 (92) (100)

(444) (607) (1 321)

Movement in trade payablesPer the balance sheet 847 (174) (166)Acquisition of businesses (refer note 47) – (514) (91)Disposal of businesses (refer note 48) 39 117 –Translation of foreign entities (refer note 39) (154) 315 526

732 (256) 269

Movement in other payables and accrued expensesPer the balance sheet 914 166 838Acquisition of businesses (refer note 47) – (3) (372)Effect of cash flow hedge accounting – (9) –Disposal of businesses (refer note 48) 45 24 –Translation of foreign entities (refer note 39) (505) 915 (324)

454 1 093 142

Movement in financial assets and liabilitiesLong-term financial assets (2) – (2)Short-term financial assets 15 (12) 219Short-term financial liabilities (417) 542 195

(404) 530 412

Movement in working capital (2 181) 292 11

2005 2004 2003


44 Investment incomeInterest received (refer note 31) 121 175 155

Interest received on tax (refer note 23) – (1) (6)

Dividends received

investments (refer note 31) 28 15 12

associates (refer note 32) 20 41 17

169 230 178

45 Dividends paidFinal dividend – prior year (1 440) (1 432) (1 524)

Interim dividend – current year (1 416) (1 313) (1 311)

(2 856) (2 745) (2 835)

Forecast cash flow on final dividend – current year (1 912)

Forecast STC charge on final dividend – current year (239)

The forecast cash flow on the final dividend is calculated based on the net number of shares in issue at 30 June 2005 of

616,8 million. The actual dividend payment will be determined on the last day to trade cum dividend of 7 October 2005.

2005 2004 2003


46 Non-current assets soldProperty, plant and equipment 438 655 398


Investments in securities 9 – –

478 746 504


sasol limited group

liquidity and capital resources continued

106

2005 2004 2003


47 Acquisition of businessesProperty, plant and equipment – (490) (174)

Intangible assets – (566) –

Investments in securities – (43) (50)

Long-term receivables – (15) –

Inventories – (8) (142)

Trade receivables – (333) (325)

Other receivables and prepaid expenses – (2) (31)

Cash – (163) (119)

Long-term debt – 358 102

Long-term provisions – – 12

Post-retirement benefit obligations – – 1

Deferred tax – 162 22

Short-term debt – – 16

Short-term provisions – 2 1

Tax payable – 44 –

Trade payables – 514 91

Other payables and accrued expenses – 3 372

– (537) (224)

Minority interest – (17) 20

– (554) (204)

Goodwill – (147) –

Negative goodwill – – 49

Total consideration – (701) (155)

Less amount settled by issue of shares – 146 –

Per the cash flow statement – (555) (155)

Comprising

Olefins & Surfactants and Solvents – (298) (155)

Liquid Fuels Business – (369) –

Other – (34) –

Total consideration – (701) (155)

Fair value adjustmentsRecognition in 2005 of previously unrecognised deferred tax asset

on acquisition of Sasol Nanjing.

Investments in associates – – 48

Deferred tax (15) – –

Goodwill 15 – (48)

Purchase price amendment – – –


sasol limited group

liquidity and capital resources continued

2005 2004


48 Disposal of businessesProperty, plant and equipment

cost 334 832

accumulated depreciation (196) (536)

Goodwill (4) 20

Negative goodwill – (42)

Intangible assets

cost 5 16

accumulated amortisation – (10)

Investments in securities 1 –

Investments in associates (69) 48

Long-term receivables 1 –

Inventories 68 122

Trade receivables 83 165

Other receivables and prepaid expenses 13 13

Cash 94 2

Long-term debt – (33)

Long-term provisions – (17)

Post-retirement benefit obligations – (26)

Deferred tax 5 (14)

Short-term debt – (188)

Short-term provisions (15) (7)

Tax payable (31) –

Trade payables (39) (117)

Other payables and accrued expenses (45) (24)

205 204

Minority interest (175) (32)

30 172

Realisation of accumulated translation effects (25) 43

Hedge accounting reserve – (7)

Profit on disposal of businesses 31 75

Total consideration 36 283

Comprising

Olefins & Surfactants (11) 242

Nitro 20 52

Wax – (11)

Other 27 –

Total consideration 36 283

With effect from 1 March 2005 Sasol Wax restructured its business which resulted in the company losing effective control over its

Paramelt operations but retaining significant influence. The effect is reflected as a disposal of business with a corresponding

amount of R72 million being included in investments in associates.

108

sasol limited group

other disclosures

109

Note

Guarantees and contingent liabilities 49

Commitments under leases 50

Related party transactions 51

Inflation reporting 52

Post balance sheet events 53

Liability

included on

Guarantee balance sheet

2005 2005

Rm Rm

49 Guarantees and contingent liabilities

GuaranteesIn respect of GTL ventures 7 839 –

Commercial paper holders 6 000 1 522

In respect of natural gas project 4 732 2 204

Subsidiaries’ financial obligations 3 365 663

SA Commercial Bond 2 000 1 993

Eurobond 2 420 2 407

In respect of joint venture commitments 2 131 1 331

In respect of development of filling stations 1 500 590

In respect of Natref debt 1 309 444

To RWE-DEA AG 241 –

Customs and excise 164 –

Performance guarantees 531 –

Guarantees issued in respect of letters of credit 698 –

Other guarantees and claims 192 76

33 122 11 230

SubsidiariesSasol Limited has guaranteed the fulfilment of various subsidiaries’ obligations in terms of contractual agreements.

Sasol Limited has guaranteed the borrowing facilities of certain of its subsidiaries. Further details of major banking facilities and

debt arrangements at 30 June 2005 are provided on page 79.

Pension fund assetThe Pension Funds Second Amendment Act (South Africa) requires that approval be obtained from the Financial Services Board

for a surplus to be allocated to an employer. A pension fund asset has been recognised on the basis that a portion of the surplus

will be allocated to Sasol. Further detail is provided in note 17.

Mineral rightsAs a result of the promulgation of recent legislation in South Africa, the common law rights (mineral rights) and associated

statutory competencies of Sasol Mining have been converted to interim statutory rights (Old Order Rights). Sasol Mining is

entitled to convert these Old Order Rights to permanent statutory mining and prospecting rights (New Order Rights) after

complying with certain statutory requirements. Certain of the Old Order Rights not currently being mined may not be renewed.

No value has been attributed to these rights in the financial statements.

49 Guarantees and contingent liabilities (continued)

Dorothy Molefi and others

Certain plaintiffs have sued Sasol Limited and National Petroleum Refiners of South Africa (Pty) Limited and various other

defendants in two claims in a United States District Court. The plaintiffs are represented by attorney Edward Fagan. These claims

are similar to many already served against a large number of multi-national corporations worldwide. The claims against Sasol

were consolidated with other related claims against many other multi-national corporations before the Federal Court of New

York. In November 2004 the plaintiffs’ claims in the related cases were dismissed.

Competition mattersNationwide Poles

The Competition Commission received a complaint against Sasol Oil (CarboTar division) in April 2003. The complaint was

referred by the plaintiff to the Competition Tribunal. The Competition Tribunal found against Sasol that during the period of the

complaint Sasol was a dominant firm whose conduct met the test required in establishing prohibited price discrimination. The

company filed a notice of appeal and the appeal was heard by the Competition Appeal Court during September 2005. We are

currently awaiting the outcome of the appeal.

Fertiliser competition matters

The Competition Commission alleges that Sasol, Omnia and Kynoch have engaged in price fixing or market sharing agreements

and has decided to refer its findings to the Competition Tribunal. The Commission has recommended the imposition of an

administrative penalty of 10% on turnover. Should a maximum fine be imposed on the basis of the fertiliser and ammonia

turnover of Sasol Nitro, the fine would be of the order of R320 million. Sasol has applied to the Competition Appeal Court to

have the referral set aside on the basis that a substantially similar complaint was previously rejected by the Commission and Sasol

believes the Commission did not comply with certain requirements of the Competition Act in carrying out its investigation. The

application was heard during September 2005. We are currently awaiting the outcome of the appeal.

Wax competition matters

During April 2005 the European Commission conducted an investigation at the offices of Sasol Wax International AG and its

subsidiary Sasol Wax GmbH, both located in Hamburg, Germany. A parallel investigation is being conducted by the US

Department of Justice in the USA. The investigations in the US and European Union arise from alleged anticompetitive behaviour

among industry members in the paraffin wax industry. Sasol is cooperating with the competition authorities in Europe and the

US in order to clarify this issue.

Nitro competition matters

A plaintiff filed a complaint against Sasol Nitro alleging that Sasol was engaged in an exclusionary act by refusing to supply

goods to the plaintiff. Submissions were made to the Competition Commission to the effect that during 2002, Sasol was unable

to supply the product to the plaintiff due to product shortages, that it is not dominant in the supply of that product and that it

had not engaged in price discrimination.

Other litigation

From time to time Sasol companies are involved in litigation in the normal course of business. Although the outcome of these

proceedings and claims cannot be predicted with certainty, the company does not believe that the outcome of any of these cases

would have a material effect on the company’s financial results.

Environmental orders

The group is subject to numerous national and local laws and regulations that regulate the discharge of materials into the

environment or that otherwise relate to the protection of human health and the environment in all locations in which it operates.

As with the oil and gas and chemical industries generally, compliance with existing and anticipated environmental, health, safety

and process safety laws and regulations increases the overall cost of business, including capital costs to construct, maintain, and

upgrade equipment and facilities. These laws and regulations have required, and are expected to continue to require, the group

to incur significant expenditures of both a capital and expense nature.

49 Guarantees and contingent liabilities (continued)

LitigationEDC pipeline litigation

Sasol North America Inc had numerous separate pending cases which originated as a result of a 1994 rupture of the Conoco

Ethylene Dichloride (EDC) pipeline connecting Conoco’s dock to Sasol North America’s vinyl chloride monomer plant in the

United States of America. Plaintiffs sought compensatory and punitive damages as a result of alleged exposure to EDC while

employed as contractors, hired by Conoco, to clean up the EDC. As of 30 June 2005 there is a class action and 13 lawsuits

brought by approximately 500 plaintiffs pending. Sasol North America has successfully obtained a substantial amount of

insurance coverage from costs incurred in connection with this litigation but is not seeking additional coverage.

Under the Asset and Share purchase agreement with RWE-DEA for the acquisition of Condea, the costs in respect of the

EDC pipeline cases are reimbursable by RWE-DEA less insurance and tax benefits.

Sulphur dioxide release

During January 2003 Sasol North America Inc and the ConocoPhillips refinery released a quantity of sulphur dioxide to the

environment as a result of a power outage in the ConocoPhillips Lake Charles refinery. Lawsuits were filed against ConocoPhillips

and Sasol North America has since been added as a defendant. At 30 June 2005 more than 600 lawsuits have been filed on behalf

of more than 20 000 plaintiffs. ConocoPhillips and Sasol North America are jointly defending the lawsuits and Sasol’s liability for

defence and settlement costs has been limited to an amount that is not material for group purposes.

Alumina supply contract

A plaintiff has filed a suit against Sasol Olefins & Surfactants Germany and Sasol North America in March 2005 alleging breach

of a 2001 alumina supply contract as well as monopolisation and price discrimination in the high purity alumina market resulting

in damages totalling US$60 million. On 8 September 2005, the plaintiff dismissed its suit without prejudice.

Yellow Rock litigation

In July 2005 Sasol North America received notice of suit by Yellow Rock LLC alleging over US$1 million in damages and seeking

an injunction that would require Sasol North America to remove its ethylene from Salt Storage Dome 1-A in Sulphur, Louisiana.

The suit alleges that in winter 2004 Dome 1-A was leaking ethylene and caused the ‘blow out’ of an oil and gas exploration well

being drilled by Yellow Rock. A well integrity assessment performed by an independent consultant in early 2005 had concluded

that the Dome 1-A was not leaking. These results were conveyed to Yellow Rock and were signed off by the Louisiana Department

of Natural Resources, but did not deter the filing of suit.

Fly ash plant

Sasol Synfuels (Pty) Limited is in legal proceedings with regard to its alleged obligations in respect of the operation of the fly ash

plant in Secunda. The plaintiff has claimed damages of R313 million relating to their inability to develop their fly ash business and

a projected loss of future cash flows. The trial is in progress.

Retail filling station guidelines

The Gauteng Department of Agriculture Conservation Environment and Land Affairs (DACE) has developed guidelines relating to

the development and upgrading of filling stations within the Gauteng region in South Africa which constrain the development of

service stations. A number of applications for authorisation of filling stations in which Sasol Oil (Pty) Limited has an interest have

been rejected. A number of appeals were lodged, one of which was taken on review to the High Court. Sasol was successful

insofar as the court found that DACE had relied on inappropriate and irrelevant considerations in coming to its decision. The State

took the matter on appeal to the Supreme Court of Appeal and the appeal was successful.

Joel Nagashigo and others

A class action in a New York District Court by an undisclosed number of plaintiffs (represented by attorney Edward Fagan) are

each claiming US$1 million plus punitive damages of US$5 million in respect of each claim based on negligence, product

liability, failure to warn of dangers and emotional distress together with actual damages for past and future medical expenses.

Sasol Limited and National Petroleum Refiners of South Africa (Pty) Limited and other non-Sasol companies are cited as

defendants. During December 2004, the court dismissed the complaint for lack of personal jurisdiction and on the basis of

inconvenient forum.


sasol limited group

other disclosures continued

110

2005 2004 2003

Rm Rm Rm

50 Commitments under leases

Operating leasesThe group rents buildings under long-term non-cancellable operating

leases and also rents offices and other equipment under operating

leases that are cancellable at various short-term notice periods by

either party.

Minimum future lease payments – operating leasesBuildings and offices







1 121 1 111 673

Equipment







738 491 502

Minimum future lease payments – finance leasesWithin one year 111 181 133






Less amounts representing finance charges (9) (26) (14)

686 586 432

Contingent rentalsThe group has no contingent rentals in respect of finance leases.

113

sasol limited group

other disclosures continued

112

51 Related party transactionsDuring the year, group companies, in the ordinary course of business, entered into various purchase and sale transactions withassociates and joint ventures. The effect of these transactions is included in the financial performance and results of the group.Terms and conditions are determined on an arm’s length basis.

Disclosure in respect of joint ventures is provided on page 114 and of associates in note 5.

Material related party transactions were as follows

2005 2004 2003

Rm Rm Rm

Sales and services rendered to related partiesthird parties 204 60 –joint ventures 1 067 419 66associates 379 453 1 844

1 650 932 1 910

Purchases from related partiesthird parties 282 266 92joint ventures 240 137 42associates 530 752 39

1 052 1 155 173

Amounts due to and from related parties are disclosed in the respective notes to the financial statements for those balance sheet items.

Included in the above amounts are a number of transactions with related parties which are individually insignificant.

Identity of related parties with whom material transactions have occurredExcept for the group’s interests in joint ventures and associates, there are no other related parties with whom material individualtransactions have taken place.

DirectorsDetails of directors’ remuneration and shareholding in Sasol Limited are disclosed in the directors’ remuneration report.

ShareholdersAn analysis of major shareholders is provided on pages 19 and 20.

2005 2004 2003

% % %

52 Inflation reportingThe financial statements have not been restated to a current cost basisas the group does not operate in a hyperinflationary economy.

Producer price index – South Africa 1,7 (0,6) 9,4

53 Post balance sheet eventsThe following events occurred subsequent to 30 June 2005. These are more fully described in the directors’ report, refer page 26.

• Potential formation of joint venture with Petronas;• Sale of 25% of shareholding in Mozambican pipeline; and• Announcement of intent to offer Olefins & Surfactants business for sale.


sasol limited group

financial risk management and financial instruments

Additional disclosure provided for information purposes. In accordance with the group’s accounting policy, the results of joint

ventures are proportionately consolidated on a line by line basis and include intercompany transactions and balances.

Spring PolymersSasol Lights joint Dia 2005 2004 2003

GTL Merisol Gas ventures* Acrylates Other** Total Total TotalRm Rm Rm Rm Rm Rm Rm Rm Rm

Balance sheet

Property, plant and equipment 3 954 298 – 1 716 1 449 143 7 560 4 878 1 379

Other non-current assets 8 7 61 269 130 21 496 (267) 168

Current assets 1 001 263 18 366 614 104 2 366 1 271 627

Total assets 4 963 568 79 2 351 2 193 268 10 422 5 882 2 174

Shareholders’ equity 1 600 327 10 869 1 029 125 3 960 2 061 963

Long-term debt (interest-bearing) 1 621 48 54 928 754 54 3 459 2 417 433

Long-term provisions – 29 – 74 – – 103 20 44

Other non-current liabilities 918 27 – – – 2 947 455 392

Interest-bearing current liabilities 5 47 6 242 4 28 332 242 –

Non-interest bearing current liabilities 819 90 9 238 406 59 1 621 687 342

Total equity and liabilities 4 963 568 79 2 351 2 193 268 10 422 5 882 2 174

Income statement

Turnover – 528 62 977 1 127 349 3 043 1 990 945

Operating profit/(loss) (64) 28 27 20 161 82 254 (83) (35)

Other charges (2) (3) (7) (19) (70) (3) (104) (60) (1)

Net income before tax (66) 25 20 1 91 79 150 (143) (36)

Taxation (2) (16) (7) (3) 111 (17) 66 (29) (37)

Attributable earnings/(loss) (68) 9 13 (2) 202 62 216 (172) (73)

Cash flow statement

Cash flow from operations 430 28 31 53 242 91 875 (253) 134

Movement in working capital 429 28 – (13) (88) 3 359 (370) 14

Taxation (paid)/received (93) (5) (2) (12) – – (112) (29) 289

Other charges (47) (5) (7) (37) (74) (3) (173) (82) (54)

Cash available from operations 719 46 22 (9) 80 91 949 (734) 383

Dividends paid – – – – – (2) (2) (3) (46)

Cash retained from operations 719 46 22 (9) 80 89 947 (737) 337

Cash flow from investing activities (1 475) (115) – (584) (33) (6) (2 213) (2 918) (1 335)

Cash flow from financing activities 1 270 16 (19) 577 (33) (78) 1 733 3 720 1 098

Decrease/(increase) in cash and

cash equivalents 514 (53) 3 (16) 14 5 467 65 100

* Comprising Arya Sasol Polymers, Petlin and DPI Plastics.

** Includes Sasol Huntsman, African Amines, Sasol Oil Petromoc, Sasol Lurgi, Macadam Franchise Company and Sasol Fibres.

At 30 June 2005, the group’s share of the total capital commitments of joint ventures amounted to R8 454 million

(2004 – R8 461 million; 2003 – R8 339 million).

The GTL businesses’ costs are associated with the advancing GTL projects in Qatar and Nigeria and evaluation of other projects in

accordance with the group’s strategy.

115

sasol limited group

interest in joint ventures

114

IntroductionThe Sasol group has a risk management and central treasury function that manages the financial risks relating to the group’s

operations. The group’s liquidity, credit, foreign currency, interest rate and commodity price risks are continuously monitored. The

group has developed a comprehensive risk management process to monitor and control these risks. The group risk management

committee and senior management meet regularly to review and, if appropriate, approve the implementation of optimal strategies

for the effective management of financial risk.

Risk profileIn the course of the group’s business operations it is exposed to financial risks relating to liquidity, credit, foreign currency, interest

rate and commodity price risk. Risk management relating to each of these risks is discussed under the headings below. The group’s

objective in using derivative instruments for hedging purposes is to reduce the uncertainty over future cash flows arising from foreign

currency, interest rate and commodity price risk exposures.

Liquidity riskThe group manages liquidity risk by effectively managing its working capital, capital expenditure and cash flows. The group finances

its operations through a mixture of retained earnings, short-and long-term bank funding, a commercial paper programme and

corporate bond issues. Adequate banking facilities and reserve borrowing capacities are maintained (refer page 79). The group has

sufficient undrawn call/demand borrowing facilities, which could be utilised to fund any potential shortfall in cash resources.

Credit riskCredit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits and monitoring

procedures. Where appropriate, the group obtains appropriate collateral to mitigate risk. Counterparty credit limits are in place and

are reviewed and approved by the respective subsidiary boards.

Trade receivables consist of a large number of customers spread across diverse industries and geographical areas. Adequate provision

is made for doubtful debts. No single customer represents more than 10% of the group’s total turnover or total trade receivables for

the years ended 30 June 2005 and 30 June 2004.

Treasury counterparties consist of a diversified group of prime financial institutions. The group does not expect any treasury

counterparties to fail to meet their obligations, given their high credit ratings.

Credit risk exposure in respect of trade receivables is analysed as follows

2005 2005 2004 2004

By business segment Rm % Rm %

Mining 139 2 66 1

Synfuels 112 1 120 2

Liquid Fuels Business 1 976 23 1 894 25

Gas 146 2 156 2

Olefins & Surfactants 2 955 34 2 487 33

Polymers 878 10 847 11

Solvents 1 302 15 1 041 14

Other businesses 1 160 13 940 12

8 668 100 7 551 100

2005 2005 2004 2004

By geographic location Rm % Rm %

South Africa 3 362 39 3 209 42

Rest of Africa 372 4 220 3

Europe 2 860 33 2 445 32

Germany 610 7 629 8

Italy 827 10 466 6

The Netherlands 142 2 188 2

Rest of Europe 1 281 14 1 162 16

Middle East and India 233 3 230 3

Far East 374 4 349 5

North America 973 11 790 11

South America 243 3 155 2

South-East Asia and Australasia 251 3 153 2

8 668 100 7 551 100

Foreign exchange riskThe group’s operations have various foreign currencies as their measurement currencies and, consequently, are exposed to exchange

rate fluctuations that have an impact on cash flows and financing activities. Foreign exchange risks are managed through the group’s

financing policies and the selective use of forward exchange contracts, cross currency swaps and cross currency options. Foreign

exchange contracts are utilised to reduce foreign currency exposures arising from imports into South Africa.

All foreign exchange derivative contracts are supported by underlying commitments or receivables.

The fair value gain/(loss) calculated below was determined by recalculating the daily forward rates for each currency using a forward

rate interpolator model. The net market value of all forward exchange contracts at year end was then calculated by comparing the

forward exchange contracted rates to the equivalent year end market foreign exchange rates. The present value of these net market

values were then calculated using the appropriate currency specific discount curve.

117

sasol limited group

financial risk management and financial instruments continued

116

The following forward exchange contracts and cross currency swaps were held at 30 June 2005

Contract Contract Averageforeign amount rate Estimated

currency – rand of fair valueamount equivalent exchange gain/(loss)million Rm (calculated) Rm

Forward exchange contractsRelated to transactions which have already occurredImports – capitalUS dollar 6 43 6,94 (2)Euro 5 41 8,75 (3)

84 (5)

Imports – goodsUS dollar 107 717 6,68 –Euro 1 10 8,23 –Other currencies – US$ equivalent 5 36 7,03 (2)

763 (2)

ExportsUS dollar 78 505 6,47 (40)Euro 4 30 8,04 –Pound Sterling 7 78 11,77 (1)Other currencies – US$ equivalent 11 75 6,63 (1)

688 (42)

Other payables (liabilities)US dollar 49 332 6,73 3Euro – 4 8,13 –Pound Sterling 2 24 12,03 –Other currencies – US$ equivalent 1 9 6,67 (1)

369 2

Other receivables (assets)US dollar 228 1 482 6,49 (24)Euro – – 2

1 482 (22)

Contract Contract Averageforeign amount rate Estimated

currency – rand of fair valueamount equivalent exchange gain/(loss)million Rm (calculated) Rm

Forward exchange contractsRelated to future commitmentsImportsUS dollar 61 422 6,86 (39)Euro 46 383 8,33 (13)Pound Sterling – 4 12,37 –Other currencies – US$ equivalent 1 9 6,68 –

818 (52)

Other payables (liabilities)US dollar 147 886 6,03 98Euro 4 30 8,25 –Pound Sterling – 1 12,52 –

917 98

Cross currency swapsEuro to US dollar 673 5 219 7,75 (609)Other 488 3 234 6,63 8

8 453 (601)

Interest rate riskExposure to interest rate risk on financial assets and liabilities is monitored on a continuous and proactive basis. The debt of the groupis structured on a combination of floating and fixed interest rates. The benefits of fixing or capping interest rates on the group’svarious financing activities are considered on a case-by-case and project-by-project basis, taking the specific and overall risk profileinto consideration. For further details on long-term debt refer note 15.

The following interest rate derivative contracts were in place at 30 June 2005

Contract Contractforeign amount Average Estimated

currency – rand fixed fair valueamount equivalent rate Expiry gain/(loss)million Rm % Rm

Interest rate derivativesPay fixed rate receive floating rate

US dollar 98 653 3,8 15 Jan 2008 10Rand 500 9,7 30 June 2008 (30)

1 153 (20)

Interest rate cap or collar(relating to long-term debt)Rand – cap 227 11,0 1 June 2009 1Rand – cap 500 9,4 29 June 2007 (9)Rand – collar 500 (9)

cap 11,0 30 June 2006floor 9,0 30 June 2006

1 227 (17)

119

sasol limited group


118

Commodity price riskThe group makes limited use of derivative instruments, including commodity swaps, options and futures contracts of short duration as

a means of mitigating price and timing risks on crude oil and other energy related product purchases and sales. In effecting these

transactions, the companies concerned operate within procedures and policies designed to ensure that risks, including those relating

to the default of counterparties, are minimised.

The following commodity derivative contracts were in place at 30 June 2005.

Contract Contractforeign amount Estimated

currency – rand Average fair valueamount equivalent price gain/(loss)million Rm US$ Rm

Commodity derivativesFutures

Crude oil (US$) 39 260 55,95 (2)

Gas (US$) – 1 3,45 1

Swaps

Fuel Oil (US$) 10 70 207,25 22

Zero cost collar

Call options sold (US$) 393 2 622 82,61 –

Put options bought (US$) 216 1 440 45,00 11

Options sold

Call options sold (US$) 43 289 93,62 (2)

Put options sold (US$) 239 1 593 32,66 8

Fair value of financial instrumentsThe group’s financial instruments consist mainly of cash and cash equivalents, trade accounts receivable, other receivables, certain

investments, other non-current assets, trade payables, other payables and accrued expenses, long and short-term debts and

derivative instruments.

Financial instruments held to maturity in the normal course of business are recorded at cost or redemption amount as appropriate.

The recorded amount is described below as the carrying amount, otherwise known as book value.

Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between knowledgeable

willing parties in an arm’s-length transaction, other than in a forced or liquidation sale. Fair values are obtained from quoted market

prices, discounted cash flow models and option pricing models as appropriate.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments

(i) Cash and cash equivalents, investments and other non-current assets

Cash and cash equivalentsThe carrying amount of cash and cash equivalents approximates fair value due to the relatively short-term maturity of these

financial assets.

InvestmentsThe fair value of debt securities is determined using a discounted cash flow method. It is not practical to determine the fair value

of unlisted equity investments. These investments are carried at their original cost in the balance sheet. The fair values of publicly

traded instruments are estimated based on quoted market prices for those or similar investments where there are no quoted

market prices available.

Long-term receivablesThe fair value of long-term receivables approximates the carrying value as market related rates of interest are charged on these

outstanding amounts.

Other

For all other instruments for which there are no quoted market prices, a reasonable estimate of fair value has been calculated

based on the expected cash flows or the underlying net asset base for each investment.

(ii) Short-term debtThe carrying amount approximates fair value because of the short period to maturity of those instruments.

(iii) Long-term debtThe fair value of long-term debt is based on the quoted market price for the same or similar issues or on the current rates

available for debt with the same maturity profile and effective interest rate with similar cash flows. The fair value of non-current

loans, borrowings and other payables with variable interest rates approximates their carrying amounts.

(iv) DerivativesThe fair value of derivatives is based upon marked to market valuations.

Forward exchange contracts and cross currency swaps and options

The fair value gains/(losses) calculated are determined by recalculating the daily forward rates for each currency using a forward

rate interpolator model. The net market value of all forward exchange contracts at year end was then calculated by comparing

the forward exchange contracted rates to the equivalent year end market foreign exchange rates. The present value of these net

market values were then determined using the appropriate currency specific discount curve.

Interest rate swaps and oil futuresThe fair value of interest rate swaps and oil futures is determined by reference to quoted market prices for similar instruments.

The fair value of financial instruments were as follows

2005 2005

carrying fair

value value

Note Rm Rm

Financial assetsInvestments in securities 4

practical to estimate fair value 203 203

impractical to estimate fair value 194

Investments held-for-sale 5 41


Long-term financial assets 9 10 10

Trade receivables 11 8 668 8 668

Other receivables 12 2 914 2 914

Short-term financial assets 13 178 178


Cash 14 2 509 2 509

Financial liabilitiesLong-term debt 15 12 951 12 951

Short-term debt 20 3 300 3 300


Trade payables 24 4 733 4 733

Other payables and accrued expenses 25 4 269 4 269

Bank overdraft 14 2 615 2 615

121

sasol limited group


120

Maturity profile of financial instrumentsThe maturity profile of financial assets and liabilities at 30 June 2005 were as follows

Carrying within one to two to three to four to more than

value one year two years three years four years five years five years

Note Rm Rm Rm Rm Rm Rm Rm

Financial assetsInvestments in securities 4 397 – – – – – 397

Investments held-for-sale 5 41 41 – – – – –

Long-term receivables 7 1 091 – 319 35 38 36 663

Long-term financial assets 9 10 – 10 – – – –

Trade receivables 11 8 668 8 668 – – – – –

Other receivables 12 2 914 2 914 – – – – –

Short-term financial assets 13 178 178 – – – – –

Cash restricted for use 14 1 002 1 002 – – – – –

Cash 14 2 509 2 509 – – – – –

16 810 15 312 329 35 38 36 1 060

Financial liabilitiesLong-term debt 15 12 951 – 842 2 930 983 3 355 4 841

Short-term debt 20 3 300 3 300 – – – – –

Short-term financial liabilities 21 792 792 – – – – –

Trade payables 24 4 733 4 733 – – – – –

Other payables and

accrued expenses 25 4 269 4 269 – – – – –

Bank overdraft 14 2 615 2 615 – – – – –

28 660 15 709 842 2 930 983 3 355 4 841

Contract within one to two to

amount one year two years three years

Rm Rm Rm Rm

Forward exchange contractsTransactions which have already occurredImports – capital

US dollar 43 43 – –

Euro 41 41 – –

84 84 – –

Imports – goods

US dollar 717 717 – –

Euro 10 10 – –

Other currencies 36 33 3 –

763 760 3 –

Exports

US dollar 505 505 – –

Euro 30 30 – –

Pound Sterling 78 78 – –

Other currencies 75 75 – –

688 688 – –

Other payables (liabilities)

US dollar 332 332 – –

Euro 4 4 – –

Pound Sterling 24 24 – –

Other currencies 9 4 4 1

369 364 4 1

Other receivables (assets)

US dollar 1 482 1 482 – –

123

sasol limited group


122

Contract within one one to two to more than

amount year two years four years four years

Rm Rm Rm Rm Rm

Related to future commitmentsImportsUS dollar 422 413 9 – –

Euro 383 383 – – –

Pound Sterling 4 4 – – –

Other currencies 9 9 – – –

818 809 9 – –

Other payables (liabilities)US dollar 886 886 – – –

Euro 1 1 – – –

Pound Sterling 30 30 – – –

917 917 – – –

Cross currency swaps

Euro to US dollar 5 219 5 219 – – –

Other 3 234 1 201 – 106 1 927

8 453 6 420 – 106 1 927

Interest rate derivativesPay fixed rate receive floating rate

US dollar 653 65 136 300 152

Rand 500 – – 500 –

1 153 65 136 800 152

Interest rate cap or collar

Rand 1 227 500 500 38 189

Commodity derivativesFutures

Crude oil 260 260 – – –

Gas 1 1 – – –

261 261 – – –

Swaps

Fuel oil 70 70 – – –

Zero cost collar

Call options sold (US$) 2 622 2 622 – – –

Put options bought (US$) 1 440 1 440 – – –

4 062 4 062 – – –

Options sold 1 882 1 431 451 – –

125124

sasol limited company

balance sheet

2005 2004 2003

at 30 June Note Rm Rm Rm

AssetsInvestment in securities 1 2 2 3

Investments in subsidiaries 2 28 629 25 598 23 858

Deferred tax asset 3 14 11 –


Tax receivable 5 – 2

Trade and other receivables 481 966 2 436

Cash 10 19 10 52

Current assets 505 976 2 490

Total assets 29 150 26 587 26 351


Long-term debt 4 1 057 1 119 1 119

Tax payable – 13 –

Trade and other payables 132 147 136

Current liabilities 132 160 136



income statement

2005 2004 2003


Operating (loss)/profit 5 (82) 5 (62)

Dividends and interest received 6 5 556 3 123 8 962


Taxation 7 2 (8) (11)

Attributable earnings 5 476 3 120 8 889



2005 2004 2003


Share capital 8


Issued during year 311 109 77


Accumulated profit


Attributable earnings 5 476 3 120 8 889

Dividends paid (3 135) (3 014) (3 107)


Foreign currency translation reserve


Movement during year 1 (2) (3)


Investment fair value reserve 1 1 2

Shareholders’ equity 27 961 25 308 25 096


cash flow statement

2005 2004 2003


Cash flow from operations (82) 5 (62)

Movement in working capital 470 1 481 (2 317)

Investment income 5 556 3 123 8 962

Cash generated by operations 5 944 4 609 6 583

Dividends paid 9 (3 135) (3 014) (3 107)

Tax paid (19) (4) (44)

Cash available from operating activities 2 790 1 591 3 432

Investment in subsidiaries (3 092) (1 742) (3 461)

Share capital issued 311 109 77

Increase/(decrease) in cash 9 (42) 48

Cash 10

at end of year 19 10 52

at beginning of year (10) (52) (4)

Increase/(decrease) in cash 9 (42) 48

127126



2005 2004 2003


1 Investment in securitiesUnlisted shares (available-for-sale)

Carried at fair value 2 2 3

2 Investments in subsidiariesReflected as non-current assets

Shares at cost 1 304 1 289 1 206

Long-term loans to subsidiaries 27 325 24 309 22 652

28 629 25 598 23 858

Reflected as current assets

Short-term loans to subsidiaries 465 944 574

Reflected as long-term debt

Long-term loans from subsidiaries (1 057) (1 119) (1 119)

Reflected as current liabilities

Short-term loans from subsidiaries (36) (57) (39)

Net investments in subsidiaries 28 001 25 366 23 274

Investments in subsidiaries are accounted for at cost.

For further details of interest in significant subsidiaries, refer page 129.

3 Deferred tax assetBalance at end of year 14 11 –

The deferred tax asset arising on temporary differences relating to

provisions has been recognised to the extent that the company will

generate future taxable income against which the deferred tax asset

can be utilised.

4 Long-term debtTotal long-term loans 1 057 1 119 1 119

The unsecured long-term debt comprises interest free loans from subsidiaries for which there are no fixed terms of repayment.

2005 2004 2003


5 Operating (loss)/profitOperating (loss)/profit includes

Auditors’ remuneration

audit fees (5) (6) (16)

other services (24) – –

Directors’ emoluments (8) (7) (11)

total remuneration (refer page 29) (26) (22) (29)

paid by subsidiaries 18 15 18

Donations and sponsorships (47) (42) (44)

Employee costs (209) (183) (172)

Income from subsidiaries 544 507 404

Loss on disposal of investment in subsidiary (6) – –

Operating lease charges

buildings (23) (19) (28)

6 Dividends and interest receivedDividends received

subsidiaries 5 553 3 119 8 959

Interest received 3 4 3

5 556 3 123 8 962

7 TaxationSouth African normal tax (1) (19) (11)

current year (4) (23) (11)

prior years 3 4 –

Deferred tax 3 11 –

current year 3 3 –

prior years – 8 –

2 (8) (11)

Reconciliation of tax rate % % %

South African normal tax rate 29,0 30,0 30,0

Increase in effective tax rate due to

disallowed expenditure 0,4 0,6 0,3

29,4 30,6 30,3

Decrease in effective tax rate due to

prior year adjustments – (0,4) –

exempt income (29,4) (29,9) (30,2)

Effective tax rate – 0,3 0,1

Available STC credits at year end (Rm) 1 74 –

129


notes to the financial statements continued


Interest in significant operating subsidiaries and incorporated joint ventures

128

2005 2004 2003

Number Number Number

for the year ended 30 June of shares of shares of shares

8 Share capitalAuthorised

Ordinary shares of no par value 1 175 000 000 1 175 000 000 1 175 000 000

Issued

Ordinary shares of no par value 676 877 125 671 271 425 668 798 425

For further details of share capital, refer note 37 in the group annual financial statements.

2005 2004 2003


9 Dividends paidFinal dividend – prior year

external shareholders (1 440) (1 432) (1 524)

subsidiary company (141) (140) (146)

Interim dividend – current year

external shareholders (1 416) (1 313) (1 311)

subsidiary company (138) (129) (126)

(3 135) (3 014) (3 107)

Expected cashflow on final dividend – current year

external shareholders (1 912)

subsidiary company (186)

10 CashCash and bank balance 19 10 52

11 Guarantees and contingent liabilitiesGuarantees and claims 29 808 22 693 10 054

Unutilised borrowing facilities guaranteed 12 450 15 721 14 774

The company has guaranteed the fulfilment of various subsidiaries’

obligations in terms of contractual agreements.

12 Commitments under operating leasesThe company rents buildings and equipment under

long-term non-cancellable operating leases.

Maturity profileWithin one year 32 18 21






489 396 453

Nominal Investment Loans to/(from)issued at cost subsidiaries

share Interest 2005 2004 2005 2004Name Nature of business capital % Rm Rm Rm Rm

Operating subsidiariesDirect

Sasol Mining (Pty) Limited Coal mining activities Rm 215 100 456 456 31 31

Sasol Synfuels (Pty) Limited Production of liquid fuels,gases and chemical products Rm 100 100 676 676 518 518

Sasol Technology Engineering services, research(Pty) Limited and development and

technology transfer Rm 1 100 1 1 176 (62)

Sasol Financing Management of cash (Pty) Limited resources, investment and

procurement of loans for South African operations R 200 100 – – 4 041 4 535

Sasol Investment Company Holding company of the (Pty) Limited group’s foreign investments

and investment in movable and immovable property R 200 100 – – 13 597 11 413

Sasol Chemical Industries Production and marketingLimited of mining explosives, gases,

petrochemicals, fertilisers and refining of tar acids R 152 100 – – 3 829 2 396

Sasol Gas Holdings Holding company of the (Pty) Limited group’s gas interests R 100 100 – – 1 209 1 957

Sasol Oil (Pty) Limited Marketing of fuels and lubricants R 1 077 98 83 83 275 374

Indirect

ChemCity (Pty) Limited Supporting empowered small, micro and medium enterprises’ requirements in order to enable them to thrive in the chemical industry R 477 100

Republic of Owning and operating of the Mozambique Pipeline natural gas transmission pipeline Investments Company between Temane in Mozambique (Pty) Limited and Secunda in South Africa for

the transportation of natural gas produced in Mozambique to markets in Mozambique and South Africa Rm 10 100

Sasol Chemical Holdings Investment in the Sasol International (Pty) Limited Chemie group R 370 100

Sasol Chemicals Marketing and distribution ofEurope Limited a chemical products GBP 20 000 100

Sasol Chemicals Marketing and distribution of Pacific Limited b chemical products HKD 10 000 100

Sasol-Chem Inc c Marketing and distribution of chemical products US$ 85 100


Interest in significant operating subsidiaries and incorporated joint ventures continued

131130

Nominalissued

share InterestName Nature of business capital %

Operating subsidiaries (continued)

Indirect

Sasol Financing Management of cash resources,International plc d investment and procurement of

loans for operations outside South Africa US$ 1 001 100

Sasol Gas Limited Marketing, distribution and transportation of pipeline gas and the maintenance and operation of pipelines used for the transportation of various types of gas R 1 000 100

Sasol Germany GmbH e Production, marketing and distribution of waxes and wax related products Euro m 70 100

Sasol Italy SpA f Trading and transportation of oil products, petrochemicals and chemical products and their derivatives Euro m 23 100

Sasol North America Inc c Manufacturing of commodity and special chemicals US$m 318 100

Sasol Oil International Limited d Buying and selling of crude oil US$ 1 100

Sasol Petroleum Exploration, production, marketing International (Pty) Limited and distribution of petroleum and

natural gas R 100 100

Sasol Polymers International Holding company of Sasol Investments (Pty) Limited Polymers foreign investments R 100 100

Sasol Synfuels International Conversion and marketing of (Pty) Limited liquid fuels and chemical

products R 100 100

Sasol Wax International Holding company of the Sasol Aktiengesellschaft e Wax operations Euro m 33 100

Sasol Wax (SA) Production, marketing and (Pty) Limited distribution of paraffin waxes R 100 000 100

Tosas Beherend (Pty) Limited Investment R 100 70

National Petroleum Refiners of South Africa (Pty) Limited Refining of crude oil Rm 128 64

Nominalissued

share InterestName Nature of business capital %

Incorporated joint venturesIndirect

Sasol Dia Acrylates Production of acrylic acid (South Africa) (Pty) Limited and acrylates R’000 1 002 75

Sasol Dia Acrylates Marketing of acrylic acid (Pty) Limited and acrylates R’000 1 002 50

Arya Sasol Polymer Company g Production of polyethylene Rial m 800 50

DPI Holdings (Pty) Limited Holding company of DPI group which manufactures and markets plastic piping systems R 2 000 50

Merisol LP c Production, marketing and distribution of phenolics US$m 71 50

Sasol Chevron Holdings Management of the group’sLimited h joint venture interests with

Chevron corporation US$ 12 000 50

Sasol-Huntsman Production and marketing of maleicGmbH & Co KG e anhydride Euro m 20 50

Namibia Liquid Fuel Marketing and distribution of(Pty) Limited i petroleum products N$ 100 49

Oryx GTL Limited Manufacturing and marketing (QSC) j of synthetic fuels from gas US$m 242 49

Spring Lights Gas Marketing of pipeline gas in the (Pty) Limited Durban South area R 1 000 49

Petlin (Malaysia) Sdn Bhd k Manufacturing and marketing of low-density polyethylene pellets RM m 52 40

Except as indicated below, all companies are registered in the Republic of South Africa.

Foreign registered companies

(a) Registered in the United Kingdom. Share capital stated in Pound Sterling.(b) Registered in Hong Kong. Share capital stated in Hong Kong dollars.(c) Registered in the United States of America. Share capital stated in United States dollars.(d) Registered in the Isle of Man. Share capital stated in United States dollars.(e) Registered in Germany. Share capital stated in Euro.(f) Registered in Italy. Share capital stated in Euro.(g) Registered in Iran. Share capital stated in Rials.(h) Registered in Bermuda. Share capital stated in United States dollars.(i) Registered in Namibia. Share capital stated in Namibian dollars.( j) Registered in Qatar. Share capital stated in United States dollars.(k) Registered in Malaysia. Share capital stated in Malaysian ringgets.

The company’s interest in the aggregate profits and losses of subsidiaries amounts to R10 847 million (2004 – R7 198 million) profits

and R1 197 million (2004 – R1 259 million) losses.

The group maintains a register of all subsidiaries and incorporated joint ventures, available for inspection at the registered office of

Sasol Limited.

132

Shareholder information helpline

We have reserved 0800 202 361 as the South African toll-free

number and +27 (0) 11 870 8222 for shareholders calling

from outside South Africa.

The toll-free inbound telephone helpline will enable

shareholders to obtain information regarding the resolutions

and to provide assistance for completing proxy forms.

Depositary Bank


Depositary Receipts Division

101 Barclay Street

New York 10286, New York

The Bank of New York maintains a sponsored dividend

reinvestment and direct purchase programme for Sasol’s

Depositary Receipts. As a participant in Global BuyDIRECTSM,

investors benefit from the direct ownership of their Depositary

Receipts, the efficiency of receiving corporate communications

directly from the Depositary Receipts issuer, and the savings

resulting from the reduced brokerage and transaction costs.

Additional information is available at www.globalbuydirect.com

Questions or correspondence about Global BuyDIRECT should

be addressed to:


Investor Relations

PO Box 11258

Church Street Station

New York, New York 10286-1258

Toll-free telephone for US Global BuyDIRECT participants:

1-888-BNY-ADRS

Telephone for international callers: 212-815-3700

E-mail: [email protected]

Company registration number

1979/003231/06

Addresses

Business address and registered office

1 Sturdee Avenue, Rosebank 2196


Postal and electronic addresses andtelecommunication numbers

PO Box 5486, Johannesburg 2000


Telephone +27 (0) 11 441-3111

Telefax +27 (0) 11 788-5092

Website: http://www.sasol.com

Share registrars

Computershare Investor Services 2004 (Pty) Limited

70 Marshall Street, Johannesburg 2001


PO Box 61051, Marshalltown 2107


Telephone +27 (0) 11 370-7700

Investor relations

Telephone +27 (0) 11 441-3420

Telefax +27 (0) 11 441-3481

e-mail: [email protected]

Sasol group corporate affairs department

Telephone: +27 (0) 11 441-3249

Telefax: +27 (0) 11 441-3236

contact information

This annual report must be read in conjunction with our annual report under the Securities Exchange Act of 1934 on Form 20-F to befiled with the United States Securities and Exchange Commission during October 2005. The Form 20-F is available on our website atwww.sasol.com.

Note on measurement: Besides applying barrels (b) and cubic feet (cf) for reporting on oil and gas reserves and production, Sasol applies SystèmeInternational (SI) metric measures for all global operations. A ton (also spelt as tonne) denotes one metric ton equivalent to 1 000 kilograms (kg) or about 2 200 imperial pounds. Sasol’s reference to a metric ton should not be confused with an imperial ton equivalent to 2 240 pounds (or about 1 016 kg). In addition, in line with a particular South African distinction under the auspices of the South African Bureau of Standards (SABS), all Sasolglobal reporting emanating from South Africa uses the decimal comma (eg 3,5) instead of the more familiar decimal point (eg 3.5) used in the UK,USA and elsewhere. Similarly, a hard space is used to distinguish thousands in numeric figures (eg 2 500) instead of a comma (eg 2,500).A billion is defined as 1 000 million.

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