sasol limited group  directors’ report
(Company registration number 1979/003231/06)

The directors have pleasure in presenting their report for the year ended 25 June 2001.

Nature of business  The main business of the Group is the production (from coal and crude oil) and marketing of liquid fuels, pipeline gas, waxes, detergent range alcohols, solvents, petrochemicals, plastics, fertilisers and mining explosives and the marketing and mining of coal. The nature of the businesses of the significant operating subsidiaries and incorporated jointly controlled entities is set out on pages 155 and 156.

Financial results  The consolidated earnings, attributable to the shareholders of Sasol Limited, amounted to R7 025 million for the year compared with R4 096 million for the previous year, an increase of 71,5%. Headline earnings per share, after the share buyback programme, increased by 85,6% from 666 cents to 1 236 cents.

During the year, the directors approved the implementation of the accounting standards issued by the International Accounting Standards Committee. The consolidated annual financial statements have been prepared as if they had always been prepared in accordance with these standards, effective for the period of first time application. Comparative figures have been restated where appropriate.

The directors approved the reclassification of the general and equalisation reserves to accumulated profit.

Full details of the financial results are disclosed in the financial statements.

Subsidiaries and incorporated jointly controlled entities  With effect from 26 June 2000, the remaining 50% of Fedmis Phalaborwa was acquired and with effect from 1 March 2001 the entire chemical business of RWE-DEA Aktiengesellschaft für Mineraloel und Chemie of Germany, now called Sasol Chemie. During the year, the minority interests in Sasol Mining Initiators (Pty) Limited, SMI Technology (Pty) Limited and Polyfos (Pty) Limited were acquired. During the year, a dormant subsidiary, Carl Bechem Africa (Pty) Limited was disposed of.

Share capital  During the year 19 275 300 shares of Sasol Limited were purchased by the wholly owned subsidiary, Sasol International Holdings (Pty) Limited, at a total cost of R1 119 million. This brings the total shareholding of Sasol International Holdings (Pty) Limited to 47 074 900 shares representing 7,1% of Sasol Limited’s issued share capital. Shareholders’ equity has been reduced by the cost of these shares. There is no intention to trade these shares and no dividends are paid in respect of these shares outside the Group. These shares are classified as treasury shares.

In terms of the Sasol Share Incentive Scheme 25 693 300 shares (2000 – 27 459 300 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 jointly controlled entities. Note 22 to the financial statements gives further details regarding the shares of Sasol Limited.

Convertible debentures  With effect from 26 June 2000, the 56 382 400 8,5% unsecured automatically convertible subordinated debentures were converted into ordinary shares on the basis of one ordinary share per debenture.

Domestic medium-term note programme  During the year, a wholly owned subsidiary, Sasol Financing (Pty) Limited, issued R900 million domestic medium-term notes. Sasol Limited has irrevocably bound itself to the domestic medium-term bond holders as surety for and co-principal debtor in solidum with Sasol Financing (Pty) Limited for the due and punctual fulfilment and performance of all the note obligations. Page 141 of the financial statements gives further details regarding the domestic medium-term note programme.

Commercial paper  Sasol Financing (Pty) Limited issued one-year non-listed commercial paper for R1 100 million on 19 March 2001.

Offshore revolving credit facility  A syndicated dual-tranche revolving credit facility of United States dollars 400 million was concluded on 9 November 2000 in the form of three-year and five-year tranches with an option to extend the three-year tranche to five years.

Dividends  An interim dividend of 140 cents per share (2000 – 83 cents per share) was paid on 26 April 2001. A final dividend in respect of the year ended 25 June 2001 of 180 cents per share (2000 – 137 cents per share) was declared on 3 September 2001. As the final dividend was declared subsequent to the financial year end, in terms of the provisions of International Accounting Standards, no provision has been recognised in the annual financial statements in respect of this final dividend. The total dividend for the year amounted to 320 cents per share (2000 – 220 cents per share). This total dividend is covered approximately three times by earnings.

Dividend policy  The dividend policy is to distribute increasing dividends, on a regular basis, covered approximately three times by earnings. Dividends for the year increased by 100 cents per share. The average dividend cover over the last five years is 2,9 times.

Property, plant and equipment  Capital expenditure authorised less expenditure incurred to 25 June 2001 amounted to R7 549 million (2000 – R6 682 million). The capital expenditure relates mainly to the Sasol Polymers Far East projects, a detergent-range alcohols plant at Sasol Alpha Olefins, an n-Butanol plant at Sasol Solvents, a skeletal isomerisation project at Sasol Synthetic Fuels, the Natref 2000 expansion project, the Global Joint Venture projects, exploration projects for the Sasol Petroleum International group as well as normal replacements, renewals and plant optimisation.

The Acrylo nitrile, acid recovery, and crotonaldehyde plants at Sasol Chemical Industries and mining activities in Sasolburg were impaired during the year.

Directors  With effect from 9 May 2001, TS Munday was appointed an executive director. The composition of the board of directors is given on pages 6 and 7. The directors’ emoluments of Sasol Limited are set out on pages 153 and 154.

Terms of contracts  There are no long-term service contracts with executive or non-executive directors.

Special resolutions  
Sasol Limited  Allow the company or any of its subsidiaries to repurchase its shares up to a maximum of 10% of the issued share capital.

Issue 175 000 share options to non-executive directors in terms of the Sasol Share Incentive Scheme.

Subsidiaries  National Petroleum Refiners of South Africa (Pty) Limited increased its issued share capital by registering 770 variable rate redeemable preference shares of R1 each at a premium of R999 999 each.

Merichem Sasol (RSA) (Pty) Limited changed its name to Merisol RSA (Pty) Limited.

The South African Gas Distribution Corporation changed its name to Sasol Gas Limited.

Post-balance sheet events  
Change of year end  As part of Sasol’s globalisation process, the board approved that the financial year end be changed from 25 June to 30 June with effect from the 2002 financial year.

Redeemable preference share issue  A subsidiary company, National Petroleum Refiners of South Africa (Pty) Limited, issued 455 variable rate redeemable preference shares of R1 each at a premium of R999 999 each.

Secretary  The Company Secretary of Sasol Limited is Dr N L Joubert. His business and postal addresses appear on page 162.