SIPBEE: SASOL INZALO PUBLIC LIMITED (RF) - Reviewed interim financial results for the six months ended 31 December 2015

SIPBEE: SASOL INZALO PUBLIC LIMITED (RF) - Reviewed interim financial results for the six months ended 31 December 2015
Reviewed interim financial results for the six months ended 31 December 2015

Sasol Inzalo Public Limited (RF)
(Incorporated in the Republic of South Africa)
(Registration number 2007/030646/06)
Sasol Inzalo Public Ordinary Share code: JSE: SIPBEE
Sasol Inzalo Public Ordinary ISIN: ZAE000210050
("Sasol Inzalo Public" or "Company")

Reviewed interim financial results
for the six months ended 31 December 2015

Overview
Performance for the six months ended 31 December 2015
Salient features
- 2,7% decrease in the investment in security
- 100% increase (R8 million) in other expenses due to JSE listing costs
- 4,4% decrease in finance costs mainly due to refinancing transaction
- 9,6% increase in cash flow generated by operating activities

- Reinvested in the group R9 million
- Repayment of capital and interest
(A preference) R109 million
- Repayment of interest
(B preference) R50 million
- Repayment of interest
(C preference) R80 million

How we used our cash 31 Dec 14 31 Dec 15
Dividend received 248 248
Wealth created 248 248
Operating costs 4 -
Repayment of debt 164 239
Security tax paid 3 *
Reinvested in the group 77 9
248 248
* Nominal amount

Commentary
The group recorded a net loss for the period ended
31 December 2015 of R50 million (2015: R58 million for the
period ended 31 December 2014 and R84 million for the year
ended 30 June 2015), showing an improvement of 14% from
the previous period. This was mainly driven by the 4,4%
decrease in finance costs and a decrease in taxation charge.
This was partially offset by an increase in other expenses of
R8 million, due to costs incurred in respect of the listing on
the JSE.

Due to the nature of the business, the company recorded
a loss per share of R3,13 for the period ended 31 December
2015 (R3,62 for the period ended 31 December 2014 and
R5,25 for the year ended 30 June 2015).

Our investment in Sasol Limited was revalued at the
closing market price of R419,40 per Sasol Limited ordinary
share as at 31 December 2015, to a value of R6 746 million
(R6 933 million at 31 December 2014 at a closing market
price of R431,01 per share and R7 238 million at 30 June
2015 at a closing market price of R450 per share) in line
with the group's accounting policy on investment in Sasol
Limited.

The group generated sufficient cash from dividends
received on the investment in Sasol Limited to fund
operating activities, finance costs and to repay long-term
debt during the period. Cash retained from operating
activities for the period ended 31 December 2015 amounted
to R137 million (2015: R125 million for the period ended
31 December 2014 and R256 million for the year ended
30 June 2015). The increase is mainly due to lower security
transfer tax paid and lower finance costs paid on the
A preference shares.

Listing of Sasol Inzalo ordinary shares
Sasol Inzalo Public Limited (RF) ("Sasol Inzalo") was listed on
1 December 2015 on the BEE Segment of the Main Board of
the Johannesburg Stock Exchange ("JSE").

The listing provides existing and prospective shareholders
with access to a licensed trading platform and the flexibility
of transacting on a world-class stock exchange. This listing
continues to ensure that Sasol Inzalo Public ordinary shares
are traded exclusively amongst BEE compliant persons, as
defined in the JSE Listings Requirements.

Subsequent events
There were no events subsequent to 31 December 2015
requiring disclosure.

Change in directors
Ms Z Ntwasa was appointed as a non-executive director
with effect from 1 December 2015. Mss L Mogudi and
T Zondi resigned as non-executive directors with effect
from 21 November 2015. Ms V Doo resigned as non-
executive director with effect from 15 March 2016.

Declaration of cash dividend
Taking into account the continued decline in the value of
the underlying investment (Sasol Limited) due to the low oil
price and difficult macroeconomic environment, the board
of directors has seen it prudent to conserve cash and have
concluded that no cash dividend be declared for the period
ended 31 December 2015.

On behalf of the board

K Njobe T Maake
Chairman Director

Sasol Inzalo Public Limited (RF)
17 March 2016

Basis of preparation and accounting policies

The condensed consolidated interim financial statements
for the six months ended 31 December 2015 have been
prepared in accordance with International Financial
Reporting Standard, IAS 34, Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting
Standards Council and the requirements of the Companies
Act of South Africa and the Johannesburg Stock Exchange
Listings Requirements. The condensed consolidated interim
financial results were approved for issue by the Sasol Inzalo
Public Limited (RF) board of directors on 17 March 2016.

The condensed consolidated interim financial statements
do not include all the disclosure required for complete
annual financial statements prepared in accordance with
International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board.

These condensed consolidated interim financial statements
have been prepared in accordance with the historic cost
convention except that certain items, including available-
for-sale financial assets, are stated at fair value.

The condensed consolidated interim financial statements
are presented in South African rand, which is Sasol Inzalo
Public Limited (RF)'s functional and presentation currency.

The condensed consolidated interim financial statements
appearing in this announcement are the responsibility of
the directors. The directors take full responsibility for the
preparation of the condensed consolidated interim financial
statements.

Dashni Sinivasan, CA(SA), Senior Manager Finance at Sasol
South Africa Proprietary Limited, is responsible for this set
of condensed consolidated interim financial statements
and has supervised the preparation thereof in conjunction
with Loyd Matsilele, Manager Finance at Sasol South Africa
Proprietary Limited.

Accounting policies
The accounting policies applied in the preparation of these
condensed consolidated interim financial statements are
in terms of IFRS and are consistent with those applied in
the consolidated annual financial statements for the year
ended 30 June 2015.

Going concern
The group incurred a net loss of R50 million for the period
ended 31 December 2015 and, as of that date, the group's
total liabilities exceed its total assets by R600 million.
Due to the structure of the BEE transaction, the group is
regarded as a going concern despite the negative equity
position. Any shortfall between the value of the investment
in Sasol Limited and the outstanding C preference share
debt value at the end of the transaction will be settled
directly by Sasol Limited in terms of the guarantee issued
to the lenders. We expect that sufficient cash will be
generated out of dividends received from Sasol Limited to
pay for the operating expenses as well as dividends. The
directors have made an assessment of the group's ability
to continue as a going concern and there is no reason to
believe the business will not be a going concern in the year
ahead.

Related party transactions
The group, in the ordinary course of business, entered into
various transactions on an arm's length basis at market
rates with its related party.

Significant financial instruments
Fair value
Valuation techniques and assumptions utilised for the
purpose of calculating fair value

Fair value is determined using valuation techniques as
outlined below. Where possible, inputs are based on quoted
prices and other market determined variables.

Fair value hierarchy
The following table is provided representing the significant
financial instruments measured at fair value at reporting
date, or for which fair value is disclosed at 31 December
2015. The calculation of fair value requires various inputs
into the valuation methodologies used. The source of
the inputs used affects the reliability and accuracy of the
valuations. Significant inputs have been classified into the
hierarchical levels in line with IFRS 13, as shown below:

Level 1 Quoted prices in active markets for identical
assets or liabilities.
Level 2 Inputs other than quoted prices that are
observable for the asset or liability (directly or
indirectly).

IFRS 13
fair value Fair value
Instrument hierarchy Rm Valuation method Significant inputs
Investment in security - Level 1 6 746 Fair value Quoted market price for the same or similar
measured at fair value instruments
Long-term debt Level 2 7 144 Discounted cash flow Quoted market price for the same or similar
instruments or on the current rates available
for debt with the same maturity profile and
with similar cash flows

Independent auditor's report on the condensed
consolidate interim financial statements

To the Shareholders of Sasol Inzalo Public Limited (RF)
We have reviewed the condensed consolidated interim
financial statements of Sasol Inzalo Public Limited (RF)
in the accompanying interim financial results, which
comprise the condensed consolidated statement
of financial position as at 31 December 2015 and the
related condensed consolidated income statement and
statements of comprehensive income, changes in equity
and cash flows for the six months then ended, and selected
explanatory notes.

Directors' responsibility for the interim
financial statements
The directors are responsible for the preparation and
presentation of these interim financial statements in
accordance with the International Financial Reporting
Standard, IAS 34, Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as
issued by the Financial Reporting Standards Council and
the requirements of the Companies Act of South Africa,
and for such internal control as the directors determine
is necessary to enable the preparation of interim financial
statements that are free from material misstatement,
whether due to fraud or error.

Auditor's responsibility
Our responsibility is to express a conclusion on these
interim financial statements. We conducted our review
in accordance with International Standard on Review
Engagements 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity.
ISRE 2410 requires us to conclude whether anything has
come to our attention that causes us to believe that the
interim financial statements are not prepared in all material
respects in accordance with the applicable financial
reporting framework. This standard also requires us to
comply with relevant ethical requirements.

A review of interim financial statements in accordance with
ISRE 2410 is a limited assurance engagement. We perform
procedures, primarily consisting of making inquiries of
management and others within the entity, as appropriate,
and applying analytical procedures, and evaluate the
evidence obtained.

The procedures in a review are substantially less than
and differ in nature from those performed in an audit
conducted in accordance with International Standards on
Auditing. Accordingly, we do not express an audit opinion
on these interim financial statements.

Emphasis of matter
Without qualifying our opinion, we draw attention to
page 3 to the interim financial statements which indicates
that the group incurred a net loss of R50 million for the
six months ended 31 December 2015 and, as at that date,
the group's total liabilities exceeded its total assets by
R600 million, rendering the company technically insolvent.
Page 3 also details plans in place by management to ensure
that the company is able to continue as a going concern in
the foreseeable future.

Conclusion
Based on our review, nothing has come to our attention
that causes us to believe that the accompanying condensed
consolidated interim financial statements of Sasol Inzalo
Public Limited (RF) for the six months ended 31 December
2015 are not prepared, in all material respects, in accordance
with the International Financial Reporting Standard,
IAS 34, Interim Financial Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the
Financial Reporting Standards Council and the requirements
of the Companies Act of South Africa.

PricewaterhouseCoopers Inc.
Director: M Naidoo
Registered Auditor
Sunninghill
17 March 2016

The interim financial statements are presented on a condensed consolidated basis.

Statement of financial position
at
Half year Half year Full year
31 Dec 15 31 Dec 14 30 Jun 15
Rm Rm Rm
Assets
Non-current asset
Investment in security 6 746 6 933 7 238
Cash 48 138 39
Other receivable * 3 -
Current assets 48 141 39
Total assets 6 794 7 074 7 277
Equity and liabilities
Shareholders' deficit (600) (372) (150)
Long-term debt 7 065 7 089 7 022
Deferred tax liability 160 195 252
Non-current liabilities 7 225 7 284 7 274
Short-term debt 148 149 148
Tax payable * - -
Other payables 21 13 5
Current liabilities 169 162 153
Total equity and liabilities 6 794 7 074 7 277
* Nominal amount

Income statement
for the period ended
Half year Half year Full year
31 Dec 15 31 Dec 14 30 Jun 15
Rm Rm Rm
Other expenses (16) (8) (7)
Operating loss (16) (8) (7)
Net finance costs (34) (47) (73)
Finance income 248 248 497
Finance costs (282) (295) (570)
Loss before tax (50) (55) (80)
Taxation * (3) (4)
Loss for period (50) (58) (84)
* Nominal amount

Earnings per share Rand Rand Rand

Basic earnings per share (3,13) (3,62) (5,25)
Diluted earnings per share (3,13) (3,62) (5,25)

Statement of comprehensive income
for the period ended
Half year Half year Full year
31 Dec 15 31 Dec 14 30 Jun 15
Rm Rm Rm
Loss for period (50) (58) (84)
Other comprehensive loss, net of tax
Items that can be subsequently reclassified to the income statement (400) (2 635) (2 387)
Investments available for sale (492) (3 239) (2 934)
Tax on items that can be subsequently reclassified to the income statement 92 604 547
Total comprehensive loss for the period (450) (2 693) (2 471)

Statement of changes in equity
for the period ended
Half year Half year Full year
31 Dec 15 31 Dec 14 30 Jun 15
Rm Rm Rm
Opening balance (150) 2 321 2 321
Total comprehensive loss for the period (450) (2 693) (2 471)
Closing balance (600) (372) (150)
Comprising
Share capital and share premium 371 371 371
Investment fair value reserve 698 851 1 099
Accumulated loss (1 669) (1 594) (1 620)
Shareholders' deficit (600) (372) (150)

Statement of cash flows
for the period ended
Half year Half year Full year
31 Dec 15 31 Dec 14 30 Jun 15
Rm Rm Rm
Cash utilised in operating activities - (4) (8)
Cash flow from operations (16) (8) (7)
Decrease/(increase) in net working capital 16 4 (1)
Finance income received 248 248 497
Finance costs paid (111) (116) (229)
Tax paid * (3) (4)
Cash generated by operating activities 137 125 256
Repayment of long-term debt (128) (2 225) (2 455)
Proceeds from long-term debt - 2 177 2 177
Cash utilised in financing activities (128) (48) (278)
Increase/(decrease) in cash 9 77 (22)
Cash at beginning of year 39 61 61
Cash at end of period 48 138 39
* Nominal amount

Long-term/Short-term debt
The group's borrowing powers is restricted by its memorandum of incorporation.

Interest
rate at Half year Half year Full year
31 Dec 15 31 Dec 15 31 Dec 14 30 Jun 15
Terms of repayment Security % Rm Rm Rm
Secured debt
A preference shares repayable in Secured by Sasol preferred Fixed 11,10 1 074 1 172 1 123
semi-annual instalments ending ordinary shares held by the group
September 2018
B preference shares repayable in Secured by Sasol preferred Fixed 13,30 792 792 792
September 2018 ordinary shares held by the group
C preference shares repayable in Secured by a guarantee from Variable 6,63 5 356 5 286 5 265
September 2018 Sasol Limited
Unsecured debt
Non-participating preference share(1) - * * *
Total secured and unsecured debt 7 222 7 250 7 180
Unamortised loan costs (amortised over period of debt using the (9) (12) (10)
effective interest rate method)
Total long-term debt (including short-term debt) 7 213 7 238 7 170
Repayable within one year included in short-term debt (148) (149) (148)
Total long-term debt (excluding short-term debt) 7 065 7 089 7 022

* Nominal amount
(1)One 'A' ordinary share of R0,01 was issued to Sasol Limited during the period ended 30 June 2008. The rights to this share provide that immediately
when any ordinary share is issued, it is converted to a preference share. As a result of the ordinary shares issued during the year ended 30 June 2009,
the share was converted to a preference share. The preference share will be entitled in the aggregate to a dividend of R1,00 immediately prior to
redemption, on 8 September 2018, and to redemption proceeds of R0,01.

Half year Half year Full year
Earnings per share 31 Dec 15 31 Dec 14 30 Jun 15
Loss per share
Loss per share is derived by dividing loss for the year
by the weighted average number of shares
Weighted average number of shares Number of shares 16 085 199 16 085 199 16 085 199
Loss for the year Rm (50) (58) (84)
Loss per share Rands per share (3.13) (3.62) (5.25)

Due to the nature of the business, no potential dilution
of shares exists and no headline earnings adjustments
have arisen over the last two years
Net asset value per share and net tangible
asset value per share
Net asset value Rm (600) (372) (150)
Net asset value per share Rands per share (37) (23) (9)
Tangible net asset value Rm 27 128 34
Tangible net asset value per share Rands per share 1.68 7.96 2.11

Corporate Information
Registered office: Sasol Inzalo Public Limited (RF)
1 Sturdee Avenue, Rosebank, Johannesburg 2196
PO Box 5486, Johannesburg 2000, South Africa

Share registrars: Computershare Investor Services
Proprietary Limited
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107, South Africa
Tel: +27 11 370 7700 Fax: +27 11 370 5271/2

Information helpline: 0800 000 222

Email: sasolinzalo@computershare.co.za

JSE sponsor: Deutsche Securities (SA) Proprietary Limited

Directors (Non-executive): Ms K Njobe (Chairman),
Ms T Boikhutso, Ms A Haroon, Dr S Koyana,
Ms T Maake, Ms N Manyika, Ms Z Monnakgotla,
Ms CK Mokoena, Ms Z Ntwasa

Company secretary: Sasol South Africa Proprietary Limited

Company registration number: 2007/030646/06,
incorporated in the Republic of South Africa

Income tax reference number: 9261678164

Sasol Inzalo ordinary shares
Share code: SIPBEE
ISIN: ZAE000210050

18 March 2016
Johannesburg
Sponsor: Deutsche Securities (SA) Proprietary Limited

www.sasolinzalo.com

Date: 18/03/2016 10:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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Date: 
Friday, March 18, 2016