Sasol Limited – Annual report – 30 June 2026
Industry: oil & gas
Accounting standards, amendments and interpretations issued which are relevant to the Group, but not yet effective (extract)
IFRS 18 ‘Presentation and Disclosure in Financial Statements’
This standard will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods beginning on or after 1 January 2027. The standard will be effective for the Group’s annual reporting period beginning on 1 July 2027. The Group has not early adopted the new accounting standard in preparing these financial statements; however earlier application is permitted.
IFRS 18 requires a more structured statement of profit or loss and greater disaggregation of information. The Group is in the process of assessing the estimated impact that the initial application of IFRS 18 will have on its consolidated financial statements.
The expected impacts in the period of initial application are described below. The actual impacts of adopting the accounting standard on 1 July 2027 may change because:
- the Group has not finalised the assessment and implementation of changes to processes and controls; and
- the new accounting policies are subject to change until the Group presents its first consolidated financial statements that include the date of initial application.
Structure of the income statement
IFRS 18 requires entities to classify all income and expenses into five categories in the income statement, namely operating, investing, financing, income tax and discontinued operations. Classification of income and expenses depends on the main business activities of an entity. The Group has determined that it does not have a specified main business activity of investing in assets and/or providing financing to customers.
Neither net profit nor net assets will change as a result of the Group’s adoption of IFRS 18. However, the Group will be required to present two newly defined subtotals, which are ‘operating profit’ and ‘profit or loss before financing and income taxes’. The ‘operating profit’ subtotal differs from the current ‘operating profit before remeasurement items’ subtotal presented by the Group. Based on the information currently available, the Group expects significant changes to the current structure of the income statement to result from the following:
- share of profit (loss) of equity-accounted investees is currently presented above operating profit before remeasurement items subtotal. Income and expenses from equity-accounted investments are always classified in the investing category under IFRS 18, including any remeasurement items. Accordingly, the Group’s share of profit of equity-accounted investees and any remeasurement items on equity-accounted investees will be classified and presented in the investing category.
- interest income and expenses are generally included in finance income and finance costs under the Group’s current accounting policy and are presented as separate line items above the (loss)/earnings before tax subtotal. IFRS 18 provides specific guidance on the interest income and expenses that will be classified in the investing and financing categories.
– interest income on certain financial assets held by the Group (e.g., interest income on cash and cash equivalents) will be classified and presented in the investing category
– interest expense on ‘financing’ and ‘other’ liabilities as defined in IFRS 18 will continue to be classified and presented in the financing category (e.g., interest expense on financial liabilities not measured at FVTPL and unwind of discount on environmental provisions)
- Net foreign exchange differences are currently included in the other expenses and income line item presented above the operating profit before remeasurement items subtotal. Under IFRS 18, foreign exchange differences are required to be presented in the same category as the income and expenses from the items that gave rise to the differences unless such classification will result in undue cost and effort in which case it will all be classified in the operating category. The Group is in the process of determining in which categories its foreign exchange differences will be classified and whether such determination can be made without undue cost and effort. For example, foreign exchange differences on trade payables will be classified in the operating category.
Under IFRS 18, operating expenses are classified and presented by nature, function or using a mixed presentation. The Group has determined that continued classification and presentation on a by nature basis will provide the most useful structured summary of operating expenses.
Management-defined performance measures
Management-defined performance measures (MPMs) are subtotals of income and expenses used in public communications outside of the financial statements that communicate to users management’s view of an aspect of the financial performance of the entity as a whole. The Group will be required to disclose specific information about MPMs in a single note in the financial statements.
The Group has developed a process to determine public communications relevant when identifying MPMs. MPMs relate to the same reporting period as the financial statements. Therefore, MPMs disclosed by the Group following adoption of IFRS 18 will be determined based on public communications issued by the Group relating to the 2028 reporting period.
Principles of aggregation and disaggregation
IFRS 18 provides enhanced principles on how to group information in the financial statements. It also introduces guidance on labelling and describing items presented in the primary financial statements or disclosed in the notes.
The Group is assessing the grouping of items on the basis of similar and dissimilar characteristics. Based on this assessment, it will present line items in the primary financial statements that provide useful structured summaries and disclose additional material information in the notes.
The Group is also assessing line items currently labelled as ‘other’ and will use more informative labels.
Consequential amendments
IFRS 18 introduces consequential amendments to IAS 7 Statement of Cash Flows, which require entities to use the newly defined operating profit subtotal as a starting point for the statement of cash flows when presenting operating cash flows under the indirect method. The Group currently used earnings/(loss) before interest and tax as the starting point of the reconciliation to cash flows from operating activities. Certain adjusting items included in the reconciliation will change as a result of the new starting point. For example, the Group’s share of profit(loss) of equity-accounted investees will no longer be an adjusting item, as this amount will not be included in the operating profit starting point. Cash distributions from these investees will be included in cash flows from investing activities.
The consequential amendments also provide specific guidance on the classification of interest and dividend cash flows. The Group will classify cash flows from interest paid as financing activities rather than operating activities under this guidance. Cash flows from interest and dividends received and from dividends paid will be classified as investing activities and financing activities, respectively.
Accounts examples 