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Impairment/reversal of impairments

The Group’s non-financial assets, other than inventories and deferred tax assets, are assessed for impairment indicators, as well as reversal of impairment indicators at each reporting date or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or a previous impairment should be reversed. Recoverable amounts are estimated for individual assets or, where an individual asset cannot generate cash inflows independently, the recoverable amount is determined for the larger cash generating unit to which it belongs. At 30 June 2026, the Group’s net asset value exceeding its market capitalisation was identified as an impairment indicator and consequently all of the Group’s CGUs and equity-accounted investments were tested for impairment. Other than the CGUs specifically mentioned, all of the Group’s remaining CGUs have adequate headroom and reasonable changes in assumptions applied would not result in any impairment.

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Impairment calculations

The recoverable amount of the assets reviewed for impairment is determined based on the higher of the fair value less costs to sell or value-in-use (VIU) calculations. The impairments disclosed below were all based on VIU calculations, except where indicated otherwise. Key assumptions relating to this valuation include the discount rate and cash flows used to determine the recoverable amount. Future cash flows are estimated based on approved financial budgets covering a five year period and extrapolated over the useful life of the assets to reflect the long term plans for the Group using the estimated growth rate for the specific business or project. Where reliable cash flow projections are available for a period longer than five years, those budgeted cash flows are used in the impairment calculation. The estimated future cash flows and discount rate are post-tax, based on the assessment of current risks applicable to the specific entity and country in which it operates. Discounting post-tax cash flows at a post-tax discount rate yields the same results as discounting pre-tax cash flows at a pre-tax discount rate, assuming there are no significant temporary tax differences.

Main long-term average macroeconomic assumptions used for impairment calculations

Sasol’s long-term price outlook is based on a set of, as far as possible, internally consistent assumptions and data which is validated against external benchmarks. Over the long-term, we assume that the average Rand/US$ will depreciate in line with the South African and US inflation differential, and inflation outcomes will be broadly in line with key central bank targets. For additional information purposes, our latest assumptions indicate an average exchange rate of R19,77 over the ten year period following the initial five year forecast horizon, 17% stronger than the 2025 assumptions. This reflects a stronger exchange rate starting point, driven by recent exchange rate outcomes and updated market and economic developments, as well as a lower assumed South African versus US inflation differential of 2,0%, down from 3,5%.

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Oil price assumptions take account of global supply and demand factors, which include production costs, inventories, and the evolution of structural factors in the underlying product demand categories that are derived from crude oil. The underlying assumptions on refined products demand, are informed by independent research and assumptions on, for example, the evolution of the vehicle parc, engine efficiency, refinery economics, aviation trends and the feedstock needs within the petrochemicals sector. Following the completion of price sets, these are benchmarked against the views of reputable global consulting firms, organisations, and local and domestic investment and commercial banks. For additional information purposes, our latest assumptions indicate an average Brent crude oil price of US$92,01/bbl over the ten year period following the initial five year forecast horizon, which is 3% lower than the 2025 assumptions.

For chemicals, our projections are developed using a combination of fundamental market analysis and long-term value chain economics. Assumptions incorporate expected changes in global supply and demand balances, feedstock costs while also considering trends in industrial output, regulatory developments, and shifts in end-user markets. The approach ensures that both cyclical market dynamics and longer-term structural changes are reflected in the projections. Following the completion of price sets, these are benchmarked against the views of reputable global consulting firms and organisations. For additional information purposes, our latest assumptions indicate an average North East Asia LLDPE price of US$1 724/ton over the ten year period following the initial five year forecast horizon, which is 8,1% lower than the 2025 assumptions.

During the 2026 financial year, the conflict involving the United States, Israel and Iran increased volatility in global energy markets and introduced additional uncertainty regarding future commodity price outcomes. In developing its long-term assumptions, Sasol considered the potential impact of disruptions to Middle East oil and product supply chains, including risks associated with regional production, export infrastructure, and shipping routes. The approved price outlook incorporates management's assessment of these risks through scenario analysis and probabilities, while continuing to be grounded in long-term supply and demand fundamentals and benchmarked against external market views. Although the conflict contributed to higher near-term uncertainty and risk premiums in energy and chemicals markets, management's long-term assumptions reflect its view of the most likely market outcomes over the forecast horizon and the expected normalisation of market conditions over time.

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Impairment/(reversal of impairment) of assets

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Description of impairment and sensitivity to changes in assumptions:

Key sources of estimation uncertainty include discount rates and cash flow forecasts which are impacted by commodity prices, exchange rates and carbon tax (and related allowances). Management has considered the sensitivity of the recoverable amount calculations to these key assumptions and these sensitivities have been taken into consideration in determining the required impairments and reversals of impairments in the current period.

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1 Relates largely to upstream Gas assets.

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Significant impairment/(reversal of impairment) of assets in prior period

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1Relates largely to Chemicals America (Phenolics CGU) and Chemicals Eurasia.

Significant impairment/(reversal of impairment) of assets in prior period continued

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1Relates largely to the Chemicals America and Energy segments.

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Areas of judgement:

Determination as to whether, and by how much, an asset, CGU, or group of CGUs is impaired, or whether a previous impairment should be reversed, involves management estimates on highly uncertain matters such as the effects of inflation on operating expenses, discount rates, capital expenditure, carbon tax and related allowances, production profiles and future commodity prices, including the outlook for global or regional market supply-and-demand conditions for crude oil, natural gas and refined products. Judgement is also required when determining the appropriate grouping of assets into a CGU or the appropriate grouping of CGUs for impairment testing purposes.

The future cash flows were determined using the assumptions included in the latest budget as approved by the Board, which included forecast sales volumes and gross margins. If necessary, these cash flows were then adjusted to take into account any changes in assumptions or operating conditions that have been identified subsequent to the preparation of the budgets.

When determining VIU, management also applies judgement when assessing whether future capital projects to achieve sustainability and decarbonisation targets are deemed to maintain the same level of economic benefits or whether they enhance the asset’s performance. Generally, the costs incurred relating to the Group’s ERR are considered costs to maintain the current level of economic benefits. Costs incurred to enhance the asset’s performance are not considered in the VIU calculations.

The weighted average cost of capital rate (WACC) is derived from a pricing model. The variables used in the model are established on the basis of management judgement and current market conditions. Management judgement is also applied in estimating future cash flows and defining of CGUs. These values are sensitive to the cash flows projected for the periods for which detailed forecasts are not available and to the assumptions regarding the long-term sustainability of the cash flows thereafter.

In support of global efforts to address climate change, South Africa made commitments under the Paris Agreement to further reduce GHG emissions and to contribute to limiting global warming to well below 2°c above pre-industrial levels and to pursue efforts to achieve the 1,5°c temperature goal. The Group is targeting a 30% reduction in Scope 1 and 2 greenhouse gas (GHG) emissions by 2030 which will pave the way to a net zero ambition by 2050. In support, Sasol is progressing with the development and implementation of its ERR to 2030 with capital and resources allocated to achieve the significant reduction in emissions. Where reasonable, supportable and permissible under the applicable accounting standards, management has included the costs and capital from these initiatives in its cash flow forecasts.

In South Africa, the Carbon Tax Act, 2019 came into effect on 1 June 2019. Phase 1 of the carbon tax was extended to 31 December 2025, with Phase 2 applicable from 1 January 2026 to 31 December 2030. The South African government has published carbon tax rates up to 2030 for Scope 1 greenhouse gas emissions. Post 2030, management assumes escalation to US$55/tCO2e by 2050. Significant industry-specific tax-free emissions allowances, ranging from 60% to 95%, remain in place to provide current emitters time to transition their operations to cleaner technologies through investments in energy efficiency, renewable energy and other low-carbon measures. For modelling purposes, management has assumed that the current basic tax-free allowance is maintained until 31 December 2030, in line with Phase 2, with a 3 percentage point decrease assumed every five years thereafter. Details on the scope of Phase 3 of carbon tax have not yet been finalised post 2030. Phase 2 is expected to introduce closer alignment between carbon tax and mandatory carbon budgets, including financial consequences where emissions exceed an allocated carbon budget. Management has considered the potential impact of the carbon tax penalty regime, including exposure to higher tax rates or penalties for non-compliance or exceedance of applicable carbon budgets, in determining the Group’s expected carbon tax liability. The liability has also been reduced significantly by the renewable energy premium claim, where qualifying renewable energy purchases and related claims have been taken into account in the calculation of the carbon tax payable. Management has included its best estimate of any expected applicable carbon taxes payable by the Group.

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8Remeasurement items affecting operating profit continued

The implementation of the Climate Change Bill proposed a carbon tax penalty of R640 per ton of CO₂ payable for emissions exceeding carbon budgets. The Climate Change Bill was signed into law by President Cyril Ramaphosa on 18 July 2024 and published as the Climate Change Act, 2022 (Act) on 23 July 2024. However, in terms of section 35 of the Act, it will only come into operation on a date fixed by the President by proclamation in the Government Gazette. The Climate Change Act includes Nationally Determined Contributions (NDCs) – scope 1 CO2e emission reduction ranges for South African for 2025 and 2030. The Department of Fisheries, Forestry and Environment (DFFE) are in the process of rolling out these NDCs to Sectoral Emissions Targets (SETs), which will form the basis for company level carbon budgets. Sasol has participated in a voluntary carbon budget process with the DFFE for the periods 2016-2020 and 2021-2025. The period 2026-2030 will be the first mandatory period for carbon budget reporting. A penalty is included in the impairment assessment to the extent that the Group expects its scope 1 GHG emissions to exceed its estimated carbon budget from calendar year 2026, The expected carbon tax penalty rate was subsequently escalated by CPI from a pricing perspective. However, based on the assumed budget allowance and company scope 1 GHG emissions pathway, penalties are likely to start from financial year 2038. This assumption will be monitored and updated when the carbon budget process and relevant legislation are finalised and implemented.

Climate change and the transition to a lower carbon economy are also likely to impact the future prices of commodities such as oil and natural gas which in turn may affect the recoverable amount of the Group’s property, plant and equipment and other non-current assets. Management has updated its best estimate of oil price assumptions used in determining the recoverable amounts of its CGUs in June 2026. The revised estimates reflect lower real oil price in the longer term as demand is expected to decrease as the transition to a lower carbon economy progresses. The energy transition may impact demand for certain refined products in the future.

Management will continue to review price assumptions as the energy transition progresses and this may result in impairment charges or reversals in the future.

Accounting policies:

Remeasurement items are amounts recognised in profit or loss relating to any change (whether realised or unrealised) in the carrying amount of non-current assets or liabilities that are less closely aligned to the normal operating or trading activities of the Group such as the impairment of non-current assets, profit or loss on disposal of non-current assets including businesses and equity accounted investments, and scrapping of assets.

The Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, to determine whether there is any indication of impairment. An impairment test is performed on all goodwill, intangible assets not yet in use and intangible assets with indefinite useful lives at each reporting date.

The recoverable amount of an asset or CGU is defined as the amount that reflects the greater of the fair value less costs of disposal and VIU that can be attributed to an asset as a result of its ongoing use by the entity. VIU is estimated using a discounted cash flow model. The future cash flows are adjusted for risks specific to the asset and are adjusted where applicable to take into account any specific risks relating to the country where the asset or CGU is located. The rate applied in each country is reassessed each year. The recoverable amount may be adjusted to take into account recent market transactions for a similar asset.

Some assets are an integral part of the value chain but are not capable of generating independent cash flows because there is no active market for the product streams produced from these assets, or the market does not have the ability to absorb the product streams produced from these assets or it is not practically possible to access the market due to infrastructure constraints that would be costly to construct. Product streams produced by these assets form an input into another process and accordingly do not have an active market. These assets are classified as corporate assets in terms of IAS 36 when their output supports the production of multiple product streams that are ultimately sold into an active market.

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8Remeasurement items affecting operating profit continued

The Group’s corporate assets are allocated to the relevant CGU based on a cost or volume contribution metric. Costs incurred by the corporate asset are allocated to the appropriate CGU at cost. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

In Southern Africa, the coal value chain starts with feedstock mined in Secunda and Sasolburg and continues along the integrated processes of the operating business units, ultimately resulting in fuels and chemicals-based product lines. Similarly, the gas value chain starts with the feedstock obtained in Mozambique and continues along the conversion processes in Secunda and Sasolburg, ultimately resulting in fuels and chemicals-based product lines.

The groups of assets which support the different product lines, including corporate asset allocations, are considered to be separate CGUs.

In the US, the ethylene value chain results in various chemicals-based product lines, sold into active markets. The assets which support the different chemicals-based product lines, including corporate asset allocations, are considered to be separate CGUs.

In Europe, the identification of separate CGUs is based on the various product streams that have the ability to be sold into active markets by the European business units.

Certain products are sometimes produced incidentally from the main conversion processes and can be sold into active markets. When this is the case, the assets that are directly attributable to the production of these products, are classified as separate CGUs. The cost of conversion of these products is compared against the revenue when assessing the asset for impairment.

Exploration assets are tested for impairment when development of the property commences or whenever facts and circumstances indicate impairment. An impairment loss is recognised for the amount by which the exploration assets carrying amount exceeds their recoverable amount.

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interest and other components of equity. Any resulting gain or loss, including any FCTR reclassified, is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. Any gain or loss on disposal will comprise that attributed to the portion disposed of and the remeasurement of the portion retained.