**As filed with the Securities and Exchange Commission on 26 October 2005**

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**FORM 20-F**

**o**                                 REGISTRATIONSTATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIESEXCHANGE ACT OF 1934

**OR**

**x**                              ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934—for the year ended 30 June 2005

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 

**Commissionfile number: 001-31615**

**Sasol Limited**

(Exact name of registrantas Specified in its Charter)

**Republic of South Africa**

(Jurisdiction ofIncorporation or Organization)

**1 Sturdee Avenue, Rosebank2196South Africa**

(Address of PrincipalExecutive Offices)

Securities registered orto be registered pursuant to Section 12(b) of the Act:

| Title of Each Class               | ** ** | **Name of Each Exchange on Which Registered** |
|-----------------------------------|------------|-----------------------------------------------|
| American  Depositary Shares       |       | New York Stock  Exchange                      |
| Ordinary Shares  of no par value* |       | New York Stock  Exchange                      |

 

*       Listed on the New York Stock Exchange not for tradingor quotation purposes, but only in connection with the registration of AmericanDepositary Shares pursuant to the requirements of the Securities and ExchangeCommission.

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Securities registeredpursuant to Section 12(g) of the Act: **None**

Securities for which thereis a reporting obligation pursuant to Section 15(d) of the Act: **None**

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Indicate the number ofoutstanding shares of each of the issuer’s classes of capital or common stockas of the close of the period covered by the annual report:

**616,765,648** ordinary shares of nopar value

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Indicate by check markwhether the registrant: (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports) and (2) has been subject to such filing requirementsfor the past 90 days:

**Yes** x   No o

Indicate by check markwhich financial statement item the registrant has elected to follow:

**Item17 **o   Item 18 x

 

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**TABLE OF CONTENTS**

|                 | ** ** | **Page**                                               | ** **                                               |
|-----------------|------------|--------------------------------------------------------|----------------------------------------------------------|
| **PART I** |       | 9                                                      |                                                     |
|            | ITEM 1.    | IDENTITY OF DIRECTORS, SENIOR  MANAGEMENT AND ADVISERS |                                                     | 9 |   |
|            | ITEM 2.    | OFFER STATISTICS AND  EXPECTED TIMETABLE               |                                                     | 10 |   |
|            | ITEM 3.    | KEY INFORMATION                                        |                                                     | 11 |   |
|            |       | 3.A                                                    | Selected Financial Data                                  |   | 11 |   |
|            |       | 3.B                                                    | Capitalization and  Indebtedness                         |   | 12 |   |
|            |       | 3.C                                                    | Reasons for the Offer and  Use of Proceeds               |   | 12 |   |
|            |       | 3.D                                                    | Risk Factors                                             |   | 12 |   |
|            | ITEM 4.    | INFORMATION ON THE COMPANY                             |                                                     | 28 |   |
|            |       | 4.A                                                    | History and Development of  the Company                  |   | 28 |   |
|            |       | 4.B                                                    | Business Overview                                        |   | 33 |   |
|            |       | 4.C                                                    | Organizational Structure                                 |   | 93 |   |
|            |       | 4.D                                                    | Property, Plants and Equipment                           |   | 94 |   |
|            | ITEM 5.    | OPERATING AND FINANCIAL  REVIEW AND PROSPECTS          |                                                     | 106 |   |
|            |       | 5.A                                                    | Operating Results                                        |   | 106 |   |
|            |       | 5.B                                                    | Liquidity and Capital  Resources                         |   | 158 |   |
|            |       | 5.C                                                    | Research and Development,  Patents and Licenses, etc.    |   | 161 |   |
|            |       | 5.D                                                    | Trend Information                                        |   | 162 |   |
|            |       | 5.E                                                    | Off-Balance Sheet Arrangements                           |   | 162 |   |
|            |       | 5.F                                                    | Tabular disclosure of  contractual obligations           |   | 164 |   |
|            | ITEM 6.    | DIRECTORS, SENIOR MANAGEMENT  AND EMPLOYEES            |                                                     | 166 |   |
|            |       | 6.A                                                    | Directors and Senior  Management                         |   | 166 |   |
|            |       | 6.B                                                    | Compensation                                             |   | 172 |   |
|            |       | 6.C                                                    | Board Practices                                          |   | 173 |   |
|            |       | 6.D                                                    | Employees                                                |   | 180 |   |
|            |       | 6.E                                                    | Share Ownership                                          |   | 182 |   |
|            | ITEM 7.    | MAJOR SHAREHOLDERS AND  RELATED PARTY TRANSACTIONS     |                                                     | 186 |   |
|            |       | 7.A                                                    | Major Shareholders                                       |   | 186 |   |
|            |       | 7.B                                                    | Related Party Transactions                               |   | 186 |   |
|            |       | 7.C                                                    | Interests of Experts and  Counsel                        |   | 187 |   |
|            | ITEM 8.    | FINANCIAL INFORMATION                                  |                                                     | 188 |   |
|            |       | 8.A                                                    | Consolidated Statements and  Other Financial Information |   | 188 |   |
|            |       | 8.B                                                    | Significant Changes                                      |   | 188 |   |
|            | ITEM 9.    | THE OFFER AND LISTING                                  |                                                     | 190 |   |
|            |       | 9.A                                                    | Offer and Listing Details                                |   | 190 |   |
|            |       | 9.B                                                    | Plan of Distribution                                     |   | 190 |   |
|            |       | 9.C                                                    | Markets                                                  |   | 190 |   |
|            |       | 9.D                                                    | Selling Shareholders                                     |   | 190 |   |
|            |       | 9.E                                                    | Dilution                                                 |   | 190 |   |
|            |       | 9.F                                                    | Expenses of the Issue                                    |   | 190 |   |
|            | ITEM 10.   | ADDITIONAL INFORMATION                                 |                                                     | 191 |   |
|            |       | 10.A                                                   | Share Capital                                            |   | 191 |   |
|            |       | 10.B                                                   | Memorandum and Articles of  Association                  |   | 191 |   |
|            |       | 10.C                                                   | Material Contracts                                       |   | 196 |   |
|            |       | 10.D                                                   | Exchange Controls                                        |   | 196 |   |
|            |       | 10.E                                                   | Taxation                                                 |   | 198 |   |
|            |       | 10.F                                                   | Dividends and Paying Agents                              |   | 203 |   |

2

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|                       |     | 10.G                                                                                                 | Statement by Experts                                                    |   | 203    |   |
|-----------------------|----------|------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------|--------|--------|--------|
|                  |     | 10.H                                                                                                 | Documents on Display                                                    |   | 203    |   |
|                  |     | 10.I                                                                                                 | Subsidiary Information                                                  |   | 203    |   |
|                  | ITEM 11. | QUANTITATIVE AND QUALITATIVE  DISCLOSURES ABOUT MARKET RISK       |                                                                    | 204    |   |
|                  | ITEM 12. | DESCRIPTION OF SECURITIES  OTHER THAN EQUITY SECURITIES                                              |                                                                    | 207    |   |
| **PART II**      |     | 208                                                                                                  |                                                                    |
|                  | ITEM 13. | DEFAULTS, DIVIDEND  ARREARAGES AND DELINQUENCIES                                                     |                                                                    | 208    |   |
|                  | ITEM 14. | MATERIAL MODIFICATIONS TO  THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS                        |                                                                    | 209    |   |
|                  | ITEM 15. | CONTROLS AND PROCEDURES                                                                              |                                                                    | 210    |   |
|                  | ITEM 16. |                                                                                                 | 211                                                                     |   |
|                  |     | 16.A                                                                                                 | Audit Committee Financial  Expert                                       |   | 211    |   |
|                  |     | 16.B                                                                                                 | Code of Ethics                                                          |   | 211    |   |
|                  |     | 16.C                                                                                                 | Principal Accountant Fees  and Services                                 |   | 211    |   |
|                  |     | 16.D                                                                                                 | Exemptions from the Listing  Standards for Audit Committees             |   | 213    |   |
|                  |     | 16.E                                                                                                 | Purchases of Equity  Securities by the Issuer and Affiliated Purchasers |   | 213    |   |
| **PART III**     |     | 214                                                                                                  |                                                                    |
|                  | ITEM 17. | FINANCIAL STATEMENTS                                                                                 |                                                                    | 214    |   |
|                  | ITEM 18. | FINANCIAL STATEMENTS                                                                                 |                                                                    | 215    |   |
|                  | ITEM 19. | EXHIBITS                                                                                             |                                                                    | H-1    |   |
| **GLOSSARY OF TERMS** |     | H-3                                                                                                  |                                                                    |
| **LOCATION MAPS**     |     | M-1                                                                                                  |                                                                    |

 

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**PRESENTATION OF INFORMATION**

We are incorporated in the Republic of South Africa asa public company under South African Company law. Our consolidated financialstatements included in our corporate filings in South Africa were prepared inaccordance with International Financial Reporting Standards (“IFRS”), for thefinancial years ended 25 June 2001, 30 June 2002, 30 June 2003,30 June 2004 and 30 June 2005.

For purposes of this annual report on Form 20-F,we have prepared our consolidated financial statements in accordance withUnited States Generally Accepted Accounting Principles, or US GAAP. Ourconsolidated financial statements for each of the financial years ended25 June 2001, 30 June 2002, 30 June 2003,30 June 2004 and 30 June 2005 have been audited byKPMG Inc., independent accountants.

As used in this Form 20-F:

·       “rand”or “R” means the currency of the Republic of South Africa;

·       “US dollars”,“dollars”, “US$” or “$” means the currency of the United States;

·       “euro”means the common currency of the member states of the European Monetary Union;

·       “GBP”means Great Britain Pound, the currency of the United Kingdom;

·       “JPY”means Japanese Yen, the currency of Japan;

·       “AUD”means Australian dollar, the currency of Australia.

We present our financial information in rand, which isour reporting currency. Solely for your convenience, this Form 20-Fcontains translations of certain rand amounts into US dollars at specifiedrates. These rand amounts do not actually represent such US dollaramounts, nor could they necessarily have been converted into US dollars atthe rates indicated. Unless otherwise indicated, rand amounts have beentranslated into US dollars at the rate of R6.35 per US dollar, which wasthe noon buying rate for customs purposes of the rand, as reported by theFederal Reserve Bank of New York on 30 September 2005.

**All references inthis Form 20-F to “years” refer to the financial years ended on30 June with respect to the financial year 2002 and to subsequentfinancial years and on 25 June with respect to the financial year2001 and to previous financial years, unless otherwise stated.**

Besides applying barrels (“b”) and cubic feet (“cf”)for reporting oil and gas reserves and production, Sasol applies the SystèmeInternational (“SI”) metric measures for all global operations. A ton or tonnedenotes one metric ton equivalent to 1,000 kilograms (“kg”). Sasol’s referenceto metric tons should not be confused with an imperial ton equivalent to 2,240pounds (or about 1,016 kg). Barrels per day or bpd is used to refer to our oiland gas production.

All references to billions in this Form 20-Fare to thousands of millions.

All references to the “group”, “us”, “we”, “thecompany”, or “Sasol” in this Form 20-F are to Sasol Limited, itsgroup of subsidiaries and its interests in associates and joint ventures. Allreferences in this Form 20-F are to Sasol Limited or the companiescomprising the group, as the context may require. All references to “(Pty)Limited” refers to (Proprietary) Limited, a form of corporation in South Africawhich restricts the right of transfer of its shares, limits the number ofmembers and prohibits the public offering of its shares.

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All references in this Form 20-F to “SouthAfrica” and “the government” are to the Republic of South Africa and itsgovernment. All references to the “JSE” are to the JSE Limited (formerly knownas the JSE Securities Exchange, South Africa). All references to “SARB” referto the South African Reserve Bank and all references to “PPI” refer to theProducer Price Index, which is a measure of inflation in South Africa. Allreferences to “GTL” and “CTL” refer to our gas-to-liquids and coal-to-liquidsprocesses respectively.

Certain industryterms used in this Form 20-F are defined in the Glossary of Terms.

Unless otherwise stated, presentation of financialinformation in this annual report on Form 20-F will be underUS GAAP. Our discussion of business segment results follows the basis onwhich management measures business segment performance. Presentation ofbusiness segment results on a management basis differs from results on aUS GAAP basis in certain respects. For more information on thereconciliation of segmental turnover and operating profit see Note 3 toour consolidated financial statements.

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**FORWARD-LOOKING STATEMENTS**

We may from time totime make written or oral forward-looking statements, including in this Form 20-F,in other filings with the United States Securities and Exchange Commission, inreports to shareholders and in other communications. These statements mayrelate to analyses and other information which are based on forecasts of futureresults and estimates of amounts not yet determinable. These statements mayalso relate to our future prospects, developments and business strategies.Examples of such forward-looking statements include, but are not limitedto:

·       statementsregarding our future results of operations and financial condition andregarding future economic performance;

·       statementsregarding recent and proposed accounting pronouncements and their impact on ourfuture results of operations and financial condition;

·       statementsof our business strategy, plans, objectives or goals, including those relatedto products or services;

·       statementsregarding future competition and changes in market share in the South Africanand international industries and markets for our products;

·       statementsregarding our existing or anticipated investments (including the GTL projectsin Qatar and Nigeria, the Arya Sasol Polymer Project and other investments),acquisitions of new businesses or the disposition of existing businesses;

·       statementsregarding our estimated oil, gas and coal reserves;

·       statementsregarding future development in legal and regulatory matters, includinginitiatives for the economic empowerment of historically disadvantaged SouthAfricans;

·       statementsregarding future fluctuations in product and oil prices or fluctuations inexchange and interest rates;

·       statementsregarding our plans to enter the South African retail and commercial marketsfor liquid fuels;

·       statementsregarding changes in the manufacturers’ fuel pricing mechanism in South Africaand their effects on fuel prices and our operating results and profitability;

·       statementsregarding our current or future products and anticipated customer demand forthese products;

·       statementsregarding acts of war, terrorism or other events that may adversely affect thegroup’s operations or that of key stakeholders to the group; and

·       statementsof assumptions underlying such statements.

Words such as “believe”, “anticipate”, “expect”, “intend”,“seek”, “will”, “plan”, “could”, “may”, “endeavor” and “project” and similarexpressions are intended to identify forward-looking statements, but arenot the exclusive means of identifying such statements.

By their verynature, forward-looking statements involve inherent risks anduncertainties, both general and specific, and there are risks that thepredictions, forecasts, projections and other forward-looking statementswill not be achieved. If one or more of these risks materialize, or shouldunderlying assumptions prove incorrect, our actual results may differmaterially from those anticipated in this Form 20-F. You should understandthat a number of important factors could cause actual results to differ 

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materiallyfrom the plans, objectives, expectations, estimates and intentions expressed insuch forward-looking statements. These factors include among others, andwithout limitation:

·       theoutcomes in developing regulatory matters and the effect of changes inregulation and government policy;

·       thepolitical, social and economic conditions and developments in the world,especially those countries in which we operate;

·       ourability to maintain key customer relations in important markets;

·       ourability to improve results despite unusual levels of competitiveness;

·       thecontinuation of substantial growth in significant developing markets, such asChina;

·       theability to benefit from our capital spending policies;

·       growthin significant developing areas of our business;

·       changesin the demand for and international prices of crude oil, petroleum and chemicalproducts and changes in currency rates;

·       oursuccess in continuing technological innovation;

·       ourability to maintain sustainable earnings despite fluctuations in foreignexchange rates and interest rates;

·       ourability to attract and retain sufficient skilled employees; and

·       oursuccess at managing the risks of the foregoing.

The foregoing list of important factors is not exhaustive;when relying on forward-looking statements to make investment decisions,you should carefully consider the foregoing factors and other uncertainties andevents. Such forward-looking statements apply only as of the date onwhich they are made, and we do not undertake any obligation to update or reviseany of them, whether as a result of new information, future events orotherwise.

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**ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES**

We are a public company incorporated under the Companylaw of South Africa. All of our directors and officers, reside outside theUnited States, principally in South Africa. You may not be able, therefore, toeffect service of process within the United States upon those directors andofficers with respect to matters arising under the federal securities laws ofthe United States.

In addition, substantially all of our assets and theassets of our directors and officers are located outside the United States. Asa result, you may not be able to enforce against us or our directors andofficers judgments obtained in United States courts predicated on the civilliability provisions of the federal securities laws of the United States.

A foreign judgmentis not directly enforceable in South Africa, but constitutes a cause of actionwhich will be enforced by South African courts provided that:

·       thecourt which pronounced the judgment has jurisdiction to entertain the case accordingto the principles recognized by South African law with reference to thejurisdiction of foreign courts;

·       thejudgment is final and conclusive, that is, it cannot be altered by the courtwhich pronounced it;

·       thejudgment has not been prescribed;

·       therecognition and enforcement of the judgment by South African courts would notbe contrary to public policy, including observance of the rules of naturaljustice which require that the documents initiating the proceeding wereproperly served on the defendant and that the defendant was given the right tobe heard and represented by counsel in a free and fair trial before animpartial tribunal;

·       thejudgment was not obtained by fraudulent means;

·       thejudgment does not involve the enforcement of a penal or revenue law; and

·       theenforcement of the judgment is not otherwise precluded by the provisions of theProtection of Businesses Act 99 of 1978, as amended, of the Republic of SouthAfrica.

It is the policy of South African courts to awardcompensation for the loss or damage actually sustained by the person to whomthe compensation is awarded. Although the award of punitive damages isgenerally unknown to the South African legal system that does not mean thatsuch awards are necessarily contrary to public policy. Whether a judgment wascontrary to public policy depends on the facts of each case. Exorbitant,unconscionable, or excessive awards will generally be contrary to publicpolicy. South African courts cannot enter into the merits of a foreign judgmentand cannot act as a court of appeal or review over the foreign court. SouthAfrican courts will usually implement their own procedural laws and, where anaction based on an international contract is brought before a South Africancourt, the capacity of the parties to the contract will usually be determinedin accordance with South African law. It is doubtful whether an original actionbased on United States federal securities law can be brought before SouthAfrican courts. A plaintiff who is not resident in South Africa may be requiredto provide security for costs in the event of proceedings being initiated inSouth Africa. Furthermore the Rules of the High Court of South Africarequire that documents executed outside South Africa must be authenticated forthe purpose of use in South Africa.

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**PART I**

**ITEM 1.**                IDENTITYOF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable

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**ITEM 2.**                OFFERSTATISTICS AND EXPECTED TIMETABLE

Not applicable

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**ITEM 3.**                KEYINFORMATION

**3.A   SelectedFinancial Data**

The following informationshould be read in conjunction with “Item 5.—Operating and Financial Reviewand Prospects” and the consolidated financial statements, the accompanyingnotes and other financial information included elsewhere in this annual reporton Form 20-F.

The USGAAP financial data set forth below has been extracted from the auditedconsolidated financial statements for the years ended and as at 30 June 2005,30 June 2004 and 30 June 2003 which are included in this Form 20-Fand which have been prepared in accordance with US GAAP. The US GAAPfinancial information for the two years ended and as at 30 June 2002 and25 June 2001 has been extracted from audited financial statements notincluded in this annual report on Form 20-F. The IFRS financial data setforth below for the years ended as at 30 June 2005, 30 June 2004,30 June 2003, 30 June 2002 and 25 June 2001 hasbeen derived from audited consolidated financial statements prepared inaccordance with IFRS.

| ** **                                                | ** ** | ** 25 June**                                                                                               | ** ** | ** 30 June**      | ** ** | ** 30 June** | ** ** | ** 30 June** | ** ** | ** 30 June** | ** ** | ** 30 June**(1) | ** ** |   |
|-----------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|------------------------|------------|------------------------|------------|------------------------|------------|---------------------------|------------|--------|
| ** **                                                | ** ** | **2001**                                                                                                             | ** ** | **2002**                    | ** ** | **2003**               | ** ** | **2004**               | ** ** | **2005**               | ** ** | **2005**                  | ** ** |   |
| ** **                                                | ** ** | **(Rand in millions)**                                                                                               | ** ** | **(US$ in  millions)** | ** ** |                   |
| ** **                                                | ** ** | **(except per share information and weighted average shares in issue)** | ** ** |                        |
| **Income Statement Data:**                                |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| **IFRS**                                                  |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| Turnover                                                  |       |                                                                                                                 | 40,768     |                        |       | 59,590                 |       |                   | 64,555     |                   |       | 60,151                    |       |   | 69,239 |   |   | 10,904 |   |
| Operating profit                                          |       |                                                                                                                 | 10,619     |                        |       | 14,783                 |       |                   | 11,911     |                   |       | 9,314                     |       |   | 14,506 |   |   | 2,284 |   |
| Income before tax                                         |       |                                                                                                                 | 10,664     |                        |       | 14,760                 |       |                   | 11,913     |                   |       | 9,182                     |       |   | 14,252 |   |   | 2,244 |   |
| Earnings  attributable to shareholders                    |       |                                                                                                                 | 7,125      |                        |       | 9,817                  |       |                   | 7,817      |                   |       | 5,940                     |       |   | 9,573 |   |   | 1,508 |   |
| **US GAAP**                                               |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| Turnover                                                  |       |                                                                                                                 | 37,636     |                        |       | 55,667                 |       |                   | 63,769     |                   |       | 58,808                    |       |   | 67,427 |   |   | 10,618 |   |
| Operating profit                                          |       |                                                                                                                 | 10,230     |                        |       | 14,224                 |       |                   | 11,011     |                   |       | 8,739                     |       |   | 14,933 |   |   | 2,351 |   |
| Income before tax                                         |       |                                                                                                                 | 10,274     |                        |       | 14,178                 |       |                   | 10,947     |                   |       | 8,676                     |       |   | 14,740 |   |   | 2,321 |   |
| Earnings  attributable to shareholders                    |       |                                                                                                                 | 6,952      |                        |       | 9,434                  |       |                   | 7,344      |                   |       | 5,358                     |       |   | 9,787 |   |   | 1,541 |   |
| **Per share information (South African and US  cents):**  |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| **IFRS**                                                  |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| Basic earnings per  share                                 |       |                                                                                                                 | 1,136      |                        |       | 1,603                  |       |                   | 1,283      |                   |       | 974                       |       |   | 1,560 |   |   | 246 |   |
| Diluted earnings  per share                               |       |                                                                                                                 | 1,123      |                        |       | 1,571                  |       |                   | 1,262      |                   |       | 964                       |       |   | 1,533 |   |   | 241 |   |
| Dividends per  share(2)                                   |       |                                                                                                                 | 320        |                        |       | 450                    |       |                   | 450        |                   |       | 450                       |       |   | 540 |   |   | 85 |   |
| **US GAAP**                                               |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| Basic earnings per  share                                 |       |                                                                                                                 | 1,108      |                        |       | 1,540                  |       |                   | 1,206      |                   |       | 878                       |       |   | 1,594 |   |   | 251 |   |
| Diluted earnings  per share                               |       |                                                                                                                 | 1,095      |                        |       | 1,509                  |       |                   | 1,185      |                   |       | 870                       |       |   | 1,567 |   |   | 247 |   |
| **Weighted average shares in issue  (in millions):** |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| Average shares  outstanding—basic                    |       |                                                                                                                 | 627.3      |                        |       | 612.5                  |       |                   | 609.3      |                   |       | 610.0                     |       |   | 613.8 |   |   | 613.8 |   |
| Average shares  outstanding—diluted                  |       |                                                                                                                 | 634.7      |                        |       | 625.0                  |       |                   | 619.6      |                   |       | 616.2                     |       |   | 624.4 |   |   | 624.4 |   |
| **Balance Sheet data:**                                   |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| **IFRS**                                                  |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| Total assets                                              |       |                                                                                                                 | 51,443     |                        |       | 65,730                 |       |                   | 69,619     |                   |       | 73,486                    |       |   | 87,989 |   |   | 13,857 |   |
| Total shareholders’  equity                          |       |                                                                                                                 | 23,137     |                        |       | 31,315                 |       |                   | 33,518     |                   |       | 35,027                    |       |   | 43,530 |   |   | 6,855 |   |
| Share capital                                             |       |                                                                                                                 | 2,630      |                        |       | 2,706                  |       |                   | 2,783      |                   |       | 2,892                     |       |   | 3,203 |   |   | 504 |   |
| **US GAAP**                                               |       |                                                                                                                 |       |                        |       |                   |       |                   |       |                   |       |                      |       |   |   |   |   |   |   |
| Total assets                                              |       |                                                                                                                 | 51,158     |                        |       | 62,493                 |       |                   | 67,905     |                   |       | 68,765                    |       |   | 80,428 |   |   | 12,665 |   |
| Total  shareholders’ equity                          |       |                                                                                                                 | 23,658     |                        |       | 30,944                 |       |                   | 32,793     |                   |       | 33,669                    |       |   | 40,945 |   |   | 6,449 |   |
| Share capital                                             |       |                                                                                                                 | 2,648      |                        |       | 2,772                  |       |                   | 2,842      |                   |       | 2,976                     |       |   | 3,356 |   |   | 529 |   |

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(1)     Translations into US dollars in this table are forconvenience only and are computed at the noon buying rate of the Federal ReserveBank of New York on 30 September 2005 of R6.35 per US dollar. Youshould not view such translations as a representation that such amountsrepresent actual US dollar amounts.

(2)     Includes the final dividend which was declaredsubsequent to the balance sheet date and is presented for information purposesonly. No provision for this final dividend has been recognized.

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***Exchange rate information***

Thefollowing table sets forth certain information as published by the FederalReserve Bank of New York with respect to the noon buying rate ofUS dollars in terms of rand for the years shown:

| **Rand per US dollar for the year ended 30 June or the respective month** | ** ** | ** ** | ** ** | **Average**(1) | ** ** | **High** | ** ** | **Low** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|----------------|------------|----------|------------|---------|------------|
| 2001(2)                                                                                                                                    |       |       | 7.64       |           | 8.16       |     | 6.79       |    |
| 2002                                                                                                                                       |       |       | 10.20      |           | 13.60      |     | 8.23       |    |
| 2003                                                                                                                                       |       |       | 9.04       |           | 10.90      |     | 7.18       |    |
| 2004                                                                                                                                       |       |       | 6.88       |           | 7.80       |     | 6.17       |    |
| 2005                                                                                                                                       |       |       | 6.21       |           | 6.92       |     | 5.62       |    |
| 2006(3)                                                                                                                                    |       |       | 6.50       |           | 6.90       |     | 6.26       |    |
| April 2005                                                                                                                            |       |       | 6.15       |           | 6.28       |     | 6.03       |    |
| May 2005                                                                                                                              |       |       | 6.33       |           | 6.75       |     | 5.96       |    |
| June 2005                                                                                                                             |       |       | 6.74       |           | 6.92       |     | 6.63       |    |
| July 2005                                                                                                                             |       |       | 6.70       |           | 6.90       |     | 6.53       |    |
| August 2005                                                                                                                           |       |       | 6.46       |           | 6.55       |     | 6.34       |    |
| September 2005                                                                                                                        |       |       | 6.36       |           | 6.45       |     | 6.26       |    |

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(1)           The averageexchange rates for each full year are calculated using the average exchangerate on the last day of each month during the period. The average exchange ratefor each month is calculated using the average of the daily exchange ratesduring the period.

(2)           Year ended 25 June 2001.

(3)           Through 30 September 2005.

The rate on 30 September 2005was R6.35 per US dollar.

**3.B   Capitalizationand Indebtedness**

Not applicable.

**3.C   Reasonsfor the Offer and Use of Proceeds**

Not applicable.

**3.D   RiskFactors**

**Fluctuationsin exchange rates may adversely affect our business, operating results, cashflows and financial condition.**

The rand is our principaloperating currency. However, a large part of our group’s turnover isdenominated in US dollars and some part in euro, derived either fromexports from South Africa or from our manufacturing and distribution operationsoutside South Africa. Also, a significant part of our turnover is determined bythe US dollar, as petroleum prices in general and the price of mostpetroleum and chemical products in South Africa are based on global commodityand benchmark prices which are quoted in US dollars. Hence, a large partof our group turnover (approximately 90%) is denominated in US dollars orinfluenced by the underlying global commodity and benchmark prices which arequoted in US dollars, while about one third of our costs are rand denominated.Furthermore, a significant part of our capital expenditure is alsoUS dollar-denominated, as it is directed to investments outsideSouth Africa. In our European operations a large part of our costs are eurobased and a significant part of our turnover is US dollar based.Accordingly, fluctuations in the exchange rates between the rand and US dollar,the rand and the euro and the euro and the US dollar may have a material effecton our business, operating results, cash flows and financial condition.

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The PPI has for manyyears been above the rate of inflation in the United States. This, among otherfactors, resulted in a concomitant decline in the value of the rand against theUS dollar up until 2002, during which year the average exchange rate wasR10.20 against the US dollar. However, since early 2002, due to a varietyof reasons, the rand has strengthened against the US dollar, reachingR6.35 at 30 September 2005, which has had a negative impact on ourresults. Whilst the exchange rate during the current year has been relativelyless volatile than in certain previous years we are unable to forecast whetherthis will continue in the foreseeable future.

In addition, although theexchange rate of the rand is primarily market-determined, its value atany time may not be an accurate reflection of the underlying value of the rand,due to the potential effect of, among other factors, exchange controls. Formore information regarding exchange controls in South Africa see “Item 10.D—ExchangeControls”.

**Fluctuationsin refining margins and crude oil, natural gas and petroleum products pricesmay adversely affect our business, operating results, cash flows and financialcondition.**

Market prices for crudeoil, natural gas and petroleum products may fluctuate as they are subject tolocal and international supply and demand fundamentals and factors over whichwe have no control. Worldwide supply conditions and the price levels of crudeoil may be significantly influenced by international cartels, which control theproduction of a significant proportion of the worldwide supply of crude oil,and by political developments, especially in the Middle East. Other factorswhich may influence the aggregate demand and hence affect the markets andprices for petroleum products in regions which influence South African fuelprices through the Basic Fuel Price (“BFP”) price formula (used for thecalculation of the refinery gate price in South Africa) and/or where we marketthese products, may include changes in economic conditions, the price andavailability of substitute fuels, changes in product inventory, productspecifications and other factors. In recent years, prices for petroleumproducts have fluctuated widely. In recent months the price of crude oil hasbeen at very high levels. See “Item 5.—Operating and Financial Review andProspects”.

A substantial proportionof our turnover is derived from sales of petroleum and petrochemical products.Through our equity participation in the National Petroleum Refiners of SouthAfrica (Pty) Limited (“Natref”) crude oil refinery, we are exposed tofluctuations in refinery margins resulting from differing fluctuations ininternational crude oil and petroleum product prices. We are also exposed tochanges in absolute levels of international petroleum product prices throughour synfuels operations. Fluctuations in international crude oil prices affectour results mainly through their indirect effect on the BFP price formula. See “Item 4.B—BusinessOverview—Sasol Synfuels” and “Sasol Liquid Fuels Business” as well as theimpact on oil derived feedstock. Furthermore, prices of petrochemical productsand natural gas are also affected by fluctuation in crude oil prices.Fluctuations and, in particular, decreases in the price of crude oil andpetroleum products can have a material adverse effect on our business,operating results, cash flows and financial condition.

We use hedging instrumentsto protect us against day to day US dollar price fluctuations affectingthe acquisition cost of our crude oil needs, including rand to US dollarexchange rate fluctuations. During the course of the 2005 year, we haveagain hedged a portion of our synthetic fuel production in respect of the 2006year. See “Item 8.B—Significant Changes” and “Item 11.—Quantitative andQualitative Disclosures about Market Risk”. While the use of these instrumentsmay provide some protection against short-term fluctuation in crude oil pricesit does not protect us against longer term fluctuations in crude oil prices ordiffering trends between crude oil and petroleum product prices.

We are unable toaccurately forecast fluctuations in refining margins and crude oil, natural gasand petroleum products prices. Fluctuations in any of these may have a materialadverse effect on our business, operating results, cash flows and financialcondition.

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**Cyclicalityin petrochemical product prices may adversely affect our business, operatingresults, cash flows and financial condition.**

The demand for chemicalsand especially products such as solvents, alkylates and polymers are cyclical.Typically, higher demand during peaks in the industry business cycles leadsproducers to increase their production capacity. Although peaks in the businesscycle have been characterized by increased selling prices and higher operatingmargins, in the past such peaks have led to overcapacity and supply exceedingdemand growth. Low periods in the business cycle are then characterized bydecreasing prices and excess capacity, which can depress operating margins andmay result in operating losses. We believe that some areas within the chemicalsindustry currently show overcapacity with the possibility of further capacityadditions in the next few years. We cannot assure you that future growth indemand will be sufficient to absorb current overcapacity or future capacityadditions without downward pressure on prices of chemical products. Suchpressure may have a material adverse effect on our business, operating results,cash flows and financial condition.

**Wemay not be able to exploit technological advances quickly and successfully.**

Most of our operations, including the gasification ofcoal and the manufacture of synthetic fuels (“synfuels”) and petrochemicalproducts, are highly dependent on the use of advanced technologies. The commercializationand use of the appropriate advanced technologies can affect, among otherthings, the competitiveness of our products, the continuity of our operations,our feedstock requirements and the capacity and efficiency of our production.

We believe that newtechnologies or novel processes may emerge and that existing technologies maybe further developed in the fields in which we operate. Unexpected rapidadvances in employed technologies or the development of novel processes canaffect our operations and product ranges in that it could render thetechnologies we utilize or the products we produce obsolete or less competitivein the future. Difficulties in accessing new technologies may impede us fromimplementing them and competitive pressures may force us to implement these newtechnologies at a substantial cost. Examples of new technologies which may inthe future affect our business include the following:

·  The development and commercialization ofnon-hydrocarbon-dependent energy carrier technologies, including thefurther development of fuel cells or the large scale broadening of theapplication of electricity to drive motor vehicles. These may be disruptive tothe use of hydrocarbon and refined crude oil-derived fuels.

·  The development of improved fuels (andassociated automotive technologies) from a crude oil base with equivalentproperties to that of Fischer-Tropsch derived fuels, which may erode thecompetitive advantage of Fischer-Tropsch fuels.

·  The development by competitors of nextgeneration catalysts in which catalyst performance is manipulated resulting inhighly selective and high purity chemical products, which may render the use ofour mixed feed stream catalytic-based production processes uncompetitive.

We cannot predict theeffect of these or other technological changes or the development of novelprocesses on our business or on our ability to provide competitive products.Our ability to meet the competition will depend on our timely andcost-effective implementation of new technological advances. It will alsodepend on our success in commercializing these advances in spite of competitionwe face by patents registered by our competitors. If we are unable to implementnew technologies in a timely or cost-efficient basis, or penetrate new marketsin a timely manner in response to changing market conditions or customerrequirements, we could experience a material adverse effect on our business,operating results, cash flows and financial condition.

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**OurGTL projects may not prove sufficiently viable or as profitable as planned.**

We are currently developing GTL projects in Qatar andNigeria. In addition we are considering opportunities for further GTLinvestments in other areas of the world. The development of these projects,either solely or through our joint venture with Chevron Corporation (“Chevron”),is a capital-intensive process and requires us to commit significantcapital expenditure and devote considerable management resources in utilizingour existing experience and know-how, especially in connection with Fischer-Tropschsynthesis technologies. See “Item 4.B—Business Overview—Sasol SynfuelsInternational”. This process and its products may also give rise to patentrisks in connection with the use of our GTL technology. See below, “Intellectualproperty risks may adversely affect our products or processes and ourcompetitive advantage”.

We consider thedevelopment of our GTL projects a major part of our strategy for future growthand believe that GTL fuels will in time develop to become an efficient andwidely used alternative and/or supplement to conventional diesel fuel. Inassessing the viability of our GTL projects, we make a number of assumptionsrelating to specific variables, mainly including:

·  prices of crude oil, petroleum products andgas;

·  fluctuations in the exchange rate of theUS dollar against the rand;

·  fluctuations in interest rates;

·  fiscal dispensation in the countries in whichwe invest;

·  capital cost of the facilities;

·  various operating costs;

·  technology and catalyst performance;

·  conditions in the countries in which weinvest, including factors relating to political, social and economicconditions;

·  availability of skills to construct andoperate the plants;

·  the extent of available gas reserves; and

·  timely completion of projects.

Significant variations inany one or more of the above factors beyond our control, or any other relevantfactor, may adversely affect the profitability or even the viability of our GTLinvestments. Should we not be successful in the implementation of our GTLprojects, we may be required to write off significant amounts devoted to them,while we may need to redirect our strategy for future growth. In view of theresources invested in these projects and their importance to our growth strategy,problems we may experience as a result of these factors may have a materialadverse effect on our business, operating results, cash flows and financialcondition and opportunities for future growth.

**Thereare risks relating to the sustainability of wholesale petroleum products supplyagreements and to the establishment of our retail service station network.**

Following the termination of the Main Supply and BluePump agreements in December 2003, [See “Item 4.B—Business Overview—SasolLiquid Fuels Business] we have sold or removed the Blue Pumps and associatedinfrastructure from service stations owned by other oil companies, and haveconcluded new short-term arrangements with the oil companies to supply theirpetroleum products requirements in certain geographic areas. We have sold asubstantial portion of our aggregate petroleum production to the oil companiesunder these arrangements. These agreements tend to be short term of between oneand two 

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years in duration. Furthernegotiations with these oil companies are ongoing. Furthermore, as a result ofthe termination of the agreements, the restrictions on our ability to marketour petroleum products directly to the South African retail and commercialmarkets expired. During 2003 we commenced with the development of a servicestation network with a view to accessing the retail market in South Africa withour own Sasol and Exel brands, and, in order to enhance the profitability ofthis network, we are concentrating on developing high volume stations in growthareas. See “Item 4.B—Business Overview—Sasol Liquid Fuel Business”. Theguidelines developed by the Gauteng Department of Agriculture Conservation andEnvironment relating to the development and upgrading of service stationswithin the Gauteng region in South Africa may place constraints on our plans togrow our retail service station network especially if the proposed jointventure with Petroliam Nasional Berhad (“Petronas”) referred to below does notmaterialise. See “Item 4.B—Business Overview—Legal Proceedings”. We areawaiting a decision by the South African competition authorities to combine ourliquid fuels business with that of Engen Limited (“Engen”), a South Africansubsidiary of Petronas, in a joint venture which will provide us with further accessto the South African retail market. See “Item 8.B—Significant Changes”.

Nonetheless, we cannotassure you that our ongoing negotiations with other oil companies will resultin beneficial arrangements on a sustainable basis. We cannot assure you that wewill be successful in competing with the oil companies’ established servicestation networks, or in optimizing the configuration of our network, or thatthe South African competition authorities will approve the proposed jointventure with Petronas, or that we will be successful in selling the balance ofour non-committed petroleum product directly to the commercial or retailmarkets. Failure to meet any of these objectives may have a material adverseeffect on our business, operating results, cash flows and financial condition.

**Thereare risks relating to countries in which we operate that could adversely affectour business, operating results, cash flows and financial condition.**

Several of our subsidiaries, joint ventures andassociates operate in countries and regions that are subject to significantlydiffering political, social, economic and market conditions. See “Item 18.—FinancialStatements—Note 3—Segmental Analysis” for a description of the extent ofour operations in the main countries and regions in which we operate. We are aSouth African domiciled company. The majority of our operations are located and51% of our turnover is generated in South Africa.

Specificaspects of country risks that may have a material impact on our business,operating results, cash flows and financial condition include:

(a)           Political, social andeconomic issues

Sasol has or is in theprocess of investing in significant operations in African, South-east Asian andMiddle Eastern regions that have in the past to a greater or lesser extentexperienced social, economic and political uncertainty. More recently certaincountries in which Sasol operates have achieved greater social, political andeconomic stability. Since 1994 South Africa, in particular, has experiencedsignificantly improved social, economic and political conditions.

(b)          Fluctuations ininflation and interest rates

Over recent years, theSouth African economy has had relatively low and stable levels of inflation andinterest rates. Should increases in these rates occur, our costs could increaseand our operating margins could be affected. High interest rates could alsoadversely impact on our ability to ensure cost-effective debt financing inSouth Africa.

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(c)           Transportation,water and electricity and other infrastructure

The infrastructure in somecountries in which we operate, such as rail infrastructure and electricity andwater supply in South Africa, may need to be further upgraded and expanded andin certain instances possibly at our own cost.

(d)          Unionized Labor

Themajority of our employees worldwide belong to trade unions. These employeescomprise mainly general workers, artisans and technical operators. Although inrecent years we have not experienced significant labor disruptions and have hadconstructive relations with our employees and their unions, we cannot assureyou that such labor disruptions will not occur in the future.

(e)           Southern Africanregional issues

Therehave been some instances of social, political, and economic instability in someof the countries in the Southern African region. Although we believe SouthAfrica’s growing stature has increasingly separated it from the effects ofregional issues, such political or economic instability in neighboringcountries could negatively affect conditions in South Africa.

(f)             Exchange controlregulations

SouthAfrican law provides for exchange control regulations which restrict the exportof capital from the Common Monetary Area, which includes South Africa, subjectto SARB dispensation. These regulations apply to transactions involving SouthAfrican residents, including both natural persons and legal entities. Theseregulations also affect our ability to borrow funds from non-South Africansources for use in South Africa or to repay these funds from South Africa and,in some cases, our ability to guarantee the obligations of our subsidiarieswith regard to these funds. These restrictions have affected the manner inwhich we have financed our acquisitions outside South Africa and the geographicdistribution of our debt. See “Item 10.D—Exchange Controls” and “Item 5.B—Liquidityand Capital Resources”.

(g)           HIV/AIDS in sub-SaharanAfrica

HIV/AIDS and tuberculosis, which is exacerbated in thepresence of HIV/AIDS, are the major healthcare challenges faced by our SouthAfrican and other sub-Saharan operations. HIV infection among women inantenatal clinics around South Africa rose from 1% in 1990 tonearly 25% in 2000. Under South African law, we may not run tests toaccurately establish the number of our employees who are infected with, or diefrom, AIDS related illnesses without the express consent of the people to betested. However, based on the final results of our voluntary counseling andtesting program which had an 82% uptake amongst all levels of the organization,we estimate that 7% of our South African workforce may be currently infected,with the highest concentration of infections in our mining operations. This isless than the 10% to 15% initially estimated during the 2004 year. Based on anactuarial study, which excludes the positive impact of any prevention andmanagement intervention program, we estimate that, while the percentage ofinfected employees may not rise significantly in the forthcoming years, therewill be a significant increase in the number of AIDS-related fatalities. See “Item 6.D—Employees”.

We incur costs relating to the medical treatment andloss of infected personnel, as well as the related loss of productivity. Wealso incur costs relating to the recruitment and training of new personnel. Weare not in a position to accurately quantify these costs. Based on ouractuarial models, we estimate that the impact of HIV/AIDS on our payrollexpenses should be less than 1% of our current payroll for our South Africanemployees by the year 2007. This calculation is based on the estimatedfinancial impact on production resulting from the projected prevalence ofHIV/AIDS among our workforce, but does not take into account indirect costs ofproductivity losses. We are investing human and financial resources to 

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establish and maintainprograms to address the HIV/AIDS pandemic. In September 2002, we launchedthe Sasol HIV/AIDS Response Programme (“SHARP”), which is our initiative torespond to the HIV/AIDS pandemic, on which we have spent a total sum ofapproximately R20 million to June 2005. We are committed to theon-going funding of SHARP.

Wecannot assure you that the costs we are currently incurring and will incur inthe future in connection with the HIV/AIDS pandemic, will not have a materialadverse effect on our business, operating results, cash flows and financialcondition.

(h)   Transformationissues

In some countries our operations are required tocomply with local procurement, employment equity, ownership and otherregulations which are designed to address country specific social and economictransformation issues. In this regard, the following South African-specificinitiatives apply which are intended to redress historical social and economicinequalities and ensure long-term socio-economic stability.

As a leading and patriotic South African-basedcompany, we embrace and will engender or participate in initiatives to bringabout meaningful transformation to assist in correcting the imbalances andinjustices of the apartheid era. We consider these initiatives to be astrategic imperative and we acknowledge the risk of not vigorously pursuingthem or of them not succeeding and adversely impacting on the long-termsustainable performance and reputation of our company.

As part of aninitiative of the government of South Africa to advance the participation ofhistorically disadvantaged South Africans in the country’s economy, inNovember 2000, we became party to an agreement with the government and theliquid fuels industry, the Charter for the South African Petroleum and LiquidFuels Industry on Empowering Historically Disadvantaged South Africans in thePetroleum and Liquid Fuels Industry (the Liquid Fuels Charter). The Charterdeals with the following key matters:

·  participation in ownership and control in allfacets of the industry by historically disadvantaged South Africans;

·  addressing the skills gap in the industry;

·  employment equity; and

·  procurement from historically disadvantagedSouth Africans.

See “Item 4.B—Business Overview—Sasol Liquid FuelBusiness” and “—Empowerment of Historically Disadvantaged South Africans”.

The Liquid Fuels Charter requires us, amongst otherthings, to ensure that historically disadvantaged South Africans hold atleast 25% equity ownership of our liquid fuels business by the year 2010.If the proposed joint venture with Engen is approved by the South Africancompetition authorities then we will comply with the 25% equity ownershiprequirement of the Liquid Fuels Charter through the shareholdings ofTshwarisano LFB Investment (Pty) Limited (“Tshwarisano”), Sasol’s Broad-basedBlack Economic Empowerment partner, and Afric Energy Resources, Engen’s Broad-basedBlack Economic Empowerment partner, in the joint venture company. If the jointventure is not approved then Tshwarisano will become a 25% equity owner in ourliquid fuels business, which will comply with the Liquid Fuels Charter. See“Item 8.B—Significant Changes”.

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In October 2002,the government and representatives of South African mining companies andmineworkers’ unions reached broad agreement on a charter (the Mining Charter),designed to facilitate the participation of historically disadvantaged SouthAfricans in the country’s mining industry. The Charter’s stated objectivesinclude the:

·       expansionof opportunities for persons disadvantaged by unfair discrimination under theprevious political dispensation;

·       expansionof the skills base of such persons;

·       promotionof employment and advancement of the social and economic welfare of miningcommunities; and

·       promotionof beneficiation, or the crushing and separation of ore into valuablesubstances or waste within South Africa.

The Charter, together withthe scorecard to facilitate the interpretation of and compliance with theMining Charter, requires mining companies to ensure that historicallydisadvantaged South Africans hold at least 15% ownership of mining assetsor equity in South Africa within 5 calendar years and 26% ownershipwithin 10 calendar years from the effective date of the new Mineral andPetroleum Resources Development Act which was on 1 May 2004. The Charterfurther specifies that the mining industry is required to assist historicallydisadvantaged South Africans in securing finance to fund their equityparticipation up to an amount of R100 billion within the first 5 calendaryears after the implementation of the aforementioned Act. Beyond thisR100 billion commitment, the Mining Charter requires that participation ofhistorically disadvantaged South Africans should be increased towardsthe 26% target on a willing buyer-willing seller basis. See “Item 4.B—BusinessOverview—Sasol Mining” and“—Empowerment of Historically Disadvantaged South Africans”.

Various principles of theMining Charter have been incorporated in regulations promulgated by theMinister of Minerals and Energy under the new Mineral and Petroleum ResourcesDevelopment Act with respect to the South African mining industry. These regulationscame into effect on 1 May 2004. We have commenced a process to applyfor the conversion of our existing mining licenses under the new Mineral andPetroleum Resources Development Act. See below “New mining legislation may havean adverse effect on our mineral rights”. When considering applications for theconversion of existing mining licenses under the Mineral and PetroleumResources Development Act, the Minister of Minerals and Energy must take intoaccount, among other factors, the applicant company’s compliance with theMining Charter. We intend to undertake appropriate action required to ensureconversion of our existing mining rights under the Mineral and PetroleumResources Development Act.

The financing arrangementsfor the Tshwarisano transaction are set out in “Item 8.B—Significant Changes”.It is not currently known what financing arrangements may ultimately be put inplace to support any further transactions required in order to comply with theabove-mentioned Charters and we cannot assure you that we will notparticipate in these arrangements.

In December 2004 theMinister of Trade and Industry issued certain draft Codes of Good Practice forBroad-based Black Economic Empowerment for public comment pursuant to theBroad-based Black Economic Empowerment Act of 2003.These codes are intended toprovide business with guidance on implementing the requirements of the Act. Itis uncertain when these Codes will be published in the South African GovernmentGazette.

It is not currently knownwhat additional costs or implications will arise for us to comply with the saidAct and other requirements of both the Liquid Fuels and Mining Charters or theCodes of Good Practice for Broad-based Black Economic Empowerment and we cannotassure you that these costs or implications will not have a material adverseeffect on our shareholders or business operating results, cash flows andfinancial condition.

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(i)    Other specific country risks that are applicable to countries inwhich we operate and which may have a material impact on our business include:

·       externalacts of warfare and civil clashes;

·       governmentinterventions, including protectionism and subsidies;

·       regulatory,taxation and legal structure changes;

·       thecontrol of field developments and transportation infrastructure;

·       failureto receive new permits and consents;

·       cancellationof contractual rights;

·       expropriationof assets;

·       lackof capacity to deal with emergency response situations; and

·       theintroduction of selective environmental and carbon taxes.

Some of the countries where we have already made, orother countries where we may consider making, investments are in various stagesof developing institutions and legal and regulatory systems that arecharacteristic of parliamentary democracies. However, institutions in thesecountries may not yet be as firmly established as they are in parliamentarydemocracies in South Africa, the United States and some European countries.Some of these countries are also transitioning to a market economy and, as a result,experience changes in their economies and their government policies that couldaffect our investments in these countries. Moreover, the procedural safeguardsof the new legal and regulatory regimes in these countries are still beingdeveloped and, therefore, existing laws and regulations may be appliedinconsistently. In some circumstances, it may not be possible to obtain thelegal remedies provided under those laws and regulations in a timely manner.

As the political, economicand legal environments remain subject to continuous development, investors inthese countries face uncertainty as to the security of their investments. Anyunexpected changes in the political or economic conditions in the countries inwhich we operate (including neighboring countries) may have a material adverseeffect on the investments that we have made or may make in the future, whichmay in turn have a material adverse effect on our business, operating results,cash flows and financial condition.

**Newmining legislation may have an adverse effect on our mineral rights.**

The Mineral and Petroleum Resources Development Actcame into effect on 1 May 2004. The fundamental principle of the Actis that mineral resources are the common heritage of all South Africans andcollectively belong to all the people of South Africa. The Act provides thatthe right to prospect and mine, including the right to grant prospecting andmining rights on behalf of the nation, be administered by the government ofSouth Africa which will have the right to exercise full and permanentcustodianship over mineral resources.

The Act requires mining companies, including ourcompany, to apply for conversion of their existing prospecting and miningpermits. A wide range of factors and principles must be taken into account bythe Minister of Minerals and Energy when considering these applications. Thesefactors include the applicant’s access to financial resources and appropriatetechnical ability to conduct the proposed prospecting or mining operation, theenvironmental impact of the operation and, in the case of prospecting rights,considerations relating to fair competition. Other factors includeconsiderations relevant to promoting employment and the social and economicwelfare of all South Africans and showing compliance with the provisions of theMining Charter for the empowerment of historically disadvantaged persons in themining 

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industry.See “Item 4.B—Business Overview—Regulation of Mining Activities in SouthAfrica” and“—Empowerment ofHistorically Disadvantaged South Africans”.

The Act also provides thata mining right granted under the Act may be cancelled if the mineral to whichsuch mining right relates is not mined at an optimal rate. Furthermore,royalties from mining activities may become payable to the state underprovisions contained in the “Mineral and Petroleum Royalty Bill”. This bill waspublished in March 2003. The bill provides for a royalty rate of 2% onanthracite and bituminous coal (low ash and steam) and 1% on bituminouscoal for South African energy consumption. The royalty is payable quarterly inarrears to the state. The Minister of Finance in his budget speech toParliament in February 2004 confirmed that these royalties will be revenuebased and will take effect in 2009. There is uncertainty as to whether ornot further amendments will be made to the bill and when the bill will becomelaw. Due to this uncertainty we are unable to assess the potential impact onour future business, operating results, cash flows and financial condition.

It is the declared intentof the South African government not to disrupt operations as a result of theintroduction of the new legislation and we intend to undertake the appropriateactions in order to ensure conversion of our existing prospecting and miningrights. However, we cannot assure you that we will be successful in all ourapplications for conversion and that our rights on existing coal mine reserveswill not be affected, which could have a material adverse effect on ourbusiness, operating results, cash flows and financial condition.

**Newlegislation on petroleum and energy activities may have an adverse impact onour business, operating results, cash flows and financial condition.**

The Petroleum ProductsAmendment Act was assented to by the President of South Africa on 26 April 2004.We are uncertain when the Act will take effect. The Act, and the subsequentAmendment Bill, will amend the existing Petroleum Products Act, enactingprovisions regulating a range of matters including the licensing of personsinvolved in the manufacturing, wholesale and retail sale of petroleum products.As the Act and regulations to be promulgated there under will regulate matterspertaining to wholesale and retail sales of petroleum products, including theirretail prices, its provisions may impact the conditions and cost of our entryinto the retail fuel market in South Africa. See “Item 4.B—BusinessOverview—Sasol Liquid Fuels Business” and “—Regulation of Petroleum-RelatedActivities in South Africa”.

The Petroleum PipelinesAct was signed by the President of South Africa on 31 May 2004. Weare uncertain when the Act will take effect. The Act will regulate petroleumpipelines and storage facility activities, including the construction andoperation of petroleum pipelines and the delivery of certain commercialservices in connection with these pipelines and storage facilities. The Actgrants broad discretion to the Minister of Minerals and Energy to adoptdifferent pricing methodologies in connection with the setting of tariffs,which may prove advantageous for some competitors, because of different marketand geographic positions. Regulations that may be promulgated under the Act mayaffect our advantage due to the location in the economic heartland of thecountry of our Natref refinery and our synfuels facilities at Secunda. See “Item 4.B—BusinessOverview—Sasol Liquid Fuels Business” and“—Regulationof Petroleum-Related Activities in South Africa”. We cannot assure youthat the enactment of new legislation or the amendment of existing laws andregulations will not have a material adverse effect on our business, operatingresults, cash flows and financial condition.

The Gas Act, which is expected to take effect on adate to be determined by the President, will regulate matters relating to gastransmission, storage, distribution, liquefaction and re-gasificationactivities. Although Sasol has negotiated a ten calendar year regulatorydispensation with the South African government covering the supply ofMozambican natural gas to the South African market, we cannot assure you thatthe enactment of the new Gas Act and the appointment of a new National EnergyRegulator (appointed in terms of the National Energy Regulator Act which wassigned by the 

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presidentin March, 2005) will not have a material adverse impact on our business,operating results, cash flows and financial condition. See “Item 4.B—BusinessOverview—Sasol Gas” and “—Regulation of Gas-Related Activities in South Africa”.

The South Africangovernment issued guidelines relating to new fuel specifications, portions ofwhich are intended to come into effect in January 2006 and other times inthe calendar years up to 2010. These specifications relate to the phasing outof lead from the petroleum products we manufacture, a reduction in the sulfurcontent in certain of these products and a new national octane structure. Thereis uncertainty as to what additives we will be allowed to use in themanufacture of these petroleum products. To meet these new specifications we aremaking significant capital investments at our manufacturing sites to modify ourcurrent petroleum production processes. It is as yet uncertain what the marketdemand will be for the various new products. Should the demand for particularproducts outstrip our ability to manufacture them as a result of a delay incompleting modifications to our plants and/or anticipated demand projectionsbeing exceeded this could have a material adverse effect on our business,operating results, cash flows and financial condition.

**Wemay not be successful in attracting and retaining sufficient skilled employees.**

We are highly dependent onthe continuous development and successful application of new technologies. Inorder to achieve this, we need to maintain a focus on recruiting and retainingqualified scientists and engineers. In the past, we have been successful inrecruiting such personnel. We have also established certain research anddevelopment facilities overseas. However, demand for personnel with the rangeof capabilities and experience required in our industry is high and success inattracting and retaining such employees is not guaranteed. The risk exists thatour scientific and engineering skills base may be depleted over time becauseof, for example, natural attrition and a shortage of people being available inthese disciplines. Failure to attract and retain people with the rightcapabilities and experience could negatively affect our ability to introduceand maintain the appropriate technological improvements to our business and ourability to successfully construct and commission new plants. This may have amaterial adverse effect on our business, operating results, cash flows andfinancial condition.

**Intellectualproperty risks may adversely affect our products or processes and ourcompetitive advantage.**

Our various products and processes, including mostnotably, our chemical, CTL and GTL products and processes have uniquecharacteristics and structures and, as a result, are subject to patentprotection, the extent of which varies from country to country. The expiry of apatent results in increased competition in the market for the previouslypatented products and processes. In addition, aggressive patenting by ourcompetition may result in an increased patent infringement risk.

A high percentage of our products can be regarded ascommodity chemicals, some of which have unique characteristics and structure.These products are normally utilized by our clients as feedstock to manufacturespecialty chemicals or application-type products. We have noticed a worldwidetrend of increased filing of patents relating to the composition ofapplication-type products. These patents may create pressure on our clients whomarket these application-type products which may adversely affect our sales tothese clients. Patent-related pressures may adversely affect ourbusiness, operating results, cash flows and financial condition.

We believe that ourproprietary technology, know-how and trade secrets, especially in the Fischer-Tropscharea, provide us with a competitive advantage. A possible loss of experiencedpersonnel to competitors, and a possible transfer of know-how and trade secretsassociated therewith, may negatively impact this advantage. Similarly,operating and licensing technology in countries in which intellectual propertylaws are not well established and enforced may result in some transfer of ourknow-how and trade secrets to our competitors. This may adversely affect ourbusiness, operating results, cash flows and financial condition.

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**Increasingcompetition from products originating from countries with low production costsmay adversely affect our business, operating results, cash flows and financialcondition.**

A significant part of ourchemical production facilities is located in developed countries, including theUnited States and Europe. Economic and political conditions in these countriesresult in relatively high labor costs and, in some regions, inflexible labormarkets, compared to others. Increasing competition from regions with lowerproduction costs, for example the Middle East and China, exercises pressure onthe competitiveness of our chemical products and, therefore, on our profitmargins and may result in withdrawal of particular products or closure of facilities.We cannot assure you that increasing competition by products originating fromcountries with low production costs will not result in withdrawal of ourproducts or closure of our facilities, which may have a material adverse effecton our business, operating results, cash flows and financial condition.

**Changesin consumer and safety, health and environmental regulations and legislationand public opinion may adversely affect our business, operating results, cashflows and financial condition.**

Our products are required to comply with legislationrelating to the protection of the environment, health and safety and/or the endconsumer, as well as customer needs. As these regulations may grow stricter, wemay be required in some cases to incur additional expenditure in providingadditional test data in order to register our products or to adjust themanufacturing processes for certain of our products, including liquid fuels andchemicals, or even withdraw some of them, in order to be in a position to complywith market needs or more stringent regulatory requirements. For example,compliance with the registration, evaluation and authorization of chemicals (“REACH”)procedure proposed by the European Commission (“EC”) may have significant costimplications as we may be required, among other things, to provide riskassessments and apply for registration of our products. Similarly, publicopinion is growing more sensitive to consumer health and safety andenvironmental protection matters, and, as a result, markets may apply pressureon us concerning certain of our products. Should we be required to comply withREACH requirements we may incur significant additional costs. We may berequired to withdraw from the market certain products which we consideruneconomical given these additional costs of compliance or otherwise due topublic opinion considerations. These factors may have a material adverse effecton our business, operating results, cash flows and financial condition.

Our exploration,mining and production operations are required to conform with legislationrelating to the protection of the environment, health and safety of theworkforce and/or neighboring communities. As these regulations may growstricter, we may be required in some cases to incur additional expenditure inorder to provide additional protection or to adjust specifications ormanufacturing processes or transport and distribution arrangements for certainof our operations or products. Should we make changes or incur such costs thismay have a material adverse effect on our business, operating results, cashflows and financial condition. More specifically:

·       TheNational Environmental Management: Air Quality Act was published on 24 February 2005and certain portions of it came into effect on 9 September 2005. This willenable the Department of Environmental Affairs and Tourism to set ambient airquality and emission standards, declare Priority Areas for the purpose ofimplementation of Air Quality Management Plans, and prepare for the review of atmosphericemission licenses. More stringent air quality standards may have significantcost implications for us; and

·       The nature of some of ourprocesses, like the gasification of coal to produce synthetic fuels andpetrochemicals, result in relatively high emission of carbon dioxide, agreenhouse gas. Although certain countries in which we operate are exemptfrom greenhouse gas reduction targets set in terms of the KyotoProtocol, it is uncertain how any future developments in carbon dioxiderestrictions will affect our group.

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**Wemay face potential costs in connection with industry-related accidents ordeliberate acts of terror causing property damages, personal injuries orenvironmental contamination.**

We operate coal mines, explore for and produce oil andgas and operate a number of plants and facilities for the storage, processingand transportation of oil, chemicals and gas related raw materials, productsand wastes. These facilities and their respective operations are subject tovarious risks, including, but not limited to, fire, explosion, leaks, ruptures,discharges of toxic hazardous substances, soil and water contamination,flooding and land subsidence, among others. As a result, we are subject to therisk of experiencing, and have in the past experienced, industry-relatedaccidents.

The terrorist attacks in the United States on 11 September 2001and subsequent attacks in various parts of the world demonstrated the increasedrisk posed by the threat of terrorism. Our facilities, located mainly in SouthAfrica, the United States and various European countries, as well as in variousAfrican countries, the Middle East and South-east Asia, are subject to the riskof experiencing deliberate acts of terror.

Industry-related accidents and acts of terrormay result in damages to our facilities and may require shutdown of theaffected facilities, thereby disrupting production and increasing productioncosts. Furthermore, acts of terror, accidents or our historical operations maycause, or may have caused, environmental contamination, personal injuries,health impairment or fatalities and may result in exposure to extensiveenvironmental remediation costs, civil litigation, the imposition of fines andpenalties and the need to obtain costly pollution control technology.

We obtain insurance cover over our assets and againstbusiness interruption. We also obtain insurance to limit certain of ourexposures. In some cases we also have indemnity agreements with the previousowners of acquired businesses which limit certain of our exposures toenvironmental contamination. As a result of the terrorist attacks on 11 September 2001and more recently hurricanes Katrina and Rita, our insurance costs haveincreased significantly. We are implementing a number of programs, includingon-the-job safety training, in order to increase safety, and we closely monitorour safety, health and environmental procedures. However, there can be noassurance that accidents or acts of terror will not occur in the future, thatinsurance will adequately cover the entire scope or extent of our losses orthat we may not be found directly liable in connection with claims arising fromthese events.

In general, we cannotassure you that costs incurred as a result of the above or related factors willnot have a material adverse effect on our business, operating results, cashflows and financial condition.

**Failureto comply timely with safety, health and environmental and other laws mayadversely affect our market position and our business, operating results, cashflows and financial condition.**

We are subject to a wide range of general and industry-specificenvironmental, health and safety and other legislation in jurisdictions inwhich we operate. Environmental requirements govern, among other things, landuse, air emissions, use of water, wastewater discharge, waste management andsite remediation. These regulations often require us to obtain and operate incompliance with the conditions of permits and authorizations from theappropriate regulatory authorities. Compliance with these laws, regulations,permits and authorizations is a significant factor in our business, and weincur, and expect to continue to incur, significant capital and operatingexpenditures in order to continue to comply, in all material respects, withapplicable laws, regulations, permits and authorizations.

Failure to comply timely with applicable safety,health and environmental laws, regulations or permit requirements may result infines or penalties or enforcement actions, including regulatory or judicialorders enjoining or curtailing operations or requiring corrective measures,installation of pollution control equipment or other remedial actions, any ofwhich could entail significant expenditures.

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We are also continuing to take remedial actions at anumber of sites due to soil and groundwater contamination. The process ofinvestigation and remediation can be lengthy and is subject to theuncertainties of site specific factors, changing legal requirements, developingtechnologies, the allocation of liability among multiple parties and thediscretion of regulators. Accordingly, we cannot estimate with certainty theactual amount and timing of costs associated with site remediation.

In order to comply with these safety, health and environmentallaws and regulations we may have to incur costs which we could finance from ouravailable cash flows or from alternative sources of financing. No assurance canbe given that changes in safety, health and environmental laws and regulationsor their application or the discovery of previously unknown contamination orother liabilities will not have a material adverse effect on our business,operating results, cash flows and financial condition.

Whilst it is our policy that asbestos-containingmaterials will be phased out as part of our routine maintenance program thereare currently certain asbestos-containing materials at our facilities. Inaddition, we produce carcinogenic materials at some of our facilities. Wecannot assure you that no liabilities may arise as a result of the use orexposure to these materials.

In addition to undertakinginternal investigations we are also subject to review from time to time byGovernment authorities on our compliance with, inter alia, tax and customs andexcise duty and anti-trust laws and regulations impacting our operations. Ourproduct pricing structures are also reviewed from time to time by regulatoryauthorities. Whilst it is our policy to conduct our operations in accordancewith applicable laws and regulations and we have established control systems tomonitor such compliance, no assurance can be given that these control systemswill not fail or that some of our product pricing structures will not change inthe future. Failure to interpret correctly and comply with such laws andregulations and/or changes to our product pricing and cost structures may havea material adverse impact on our business, operating results, cash flows andfinancial condition.

**Ourcoal, crude oil and natural gas reserve estimates may be materially differentfrom reserves that we may actually recover.**

Our reported coal reserves are estimated quantitiesthat under present and anticipated conditions have the potential to beeconomically mined and processed. Our proved developed and undeveloped crudeoil and natural gas reserves are estimates based on applicable reportingregulations. There are numerous uncertainties inherent in estimating quantitiesof reserves and in projecting potential future rates of coal, oil and naturalgas production, including many factors beyond our control. In addition,reserve/reservoir engineering is a subjective process of estimating undergrounddeposits of reserves that cannot be measured in an exact manner and theaccuracy of any reserve estimate is a function of the quality of available dataand engineering and geological interpretation and judgment. Estimates ofdifferent engineers may vary and results of our mining/drilling and productionsubsequent to the date of an estimate may justify revision of estimates.Reserve estimates may require revision based on actual production experienceand other factors. In addition, several factors including the market price ofcoal, oil and natural gas, reduced recovery rates or increased production costsdue to inflation or other factors may render certain of our estimated provenand probable coal reserves and proved developed and undeveloped oil and naturalgas reserves uneconomical to exploit and may ultimately result in a restatementof reserves. This may have a material adverse effect on our business, operatingresults, cash flows and financial condition. See “Item 4.D—Property,Plants and Equipment”.

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**Thereis a possible risk that sanctions may be imposed by the US Government as aresult of our Iran-related activities.**

There are possible risks posed by the potentialimposition of US economic sanctions in connection with activities we areundertaking in the polymers field and considering in respect of a GTLopportunity in Iran. For a description of our activities in Iran see “Item 4.B—BusinessOverview—Sasol Polymers” and “—Sasol Synfuels International”. The risks relateto two sanctions programs administered by the US Government that we haveconsidered: the Iranian Transactions Regulations (“ITR”) administered by the USTreasury Department Office of Foreign Assets Control (“OFAC”) and the Iran andLibya Sanctions Act (“ILSA”) administered by the US Department of State.

The ITR, administered by OFAC, do not apply directlyto either Sasol or the group entities involved in activities in Iran, becausenone of them would be considered a US person under these regulations.Nonetheless, because the group is a multinational enterprise, we are aware thatthe ITR may apply to certain entities associated with the group, including USemployees, investors and certain subsidiaries.

We are takingmeasures to ensure that US employees, investors and certain subsidiaries of thegroup to which the ITR applies will not violate the ITR as a result of theirrespective affiliation with the group. For instance, to that end, we are takingmeasures to:

·       ensurethat no US persons are involved in our Iranian activities, either as directorsand officers, or in other positions, including engineering, financial,administrative and legal;

·       ensurethat funds dedicated to projects in Iran will be kept segregated from generalgroup funds;

·       ensurethat no funds of US investors will be utilized in the projects by usingseparate bank accounts for any funds directed to, or to be received from, theseprojects and monitoring the flow of funds to and from these projects; and

·       separatethe results of these businesses into separate legal entities.

By undertaking the aforementioned steps, we believethat any risks posed by the ITR to US persons and entities affiliated with thegroup will be mitigated. Nevertheless, we cannot predict OFAC’s enforcementpolicy in this regard and it is possible that OFAC may take a different view ofthe measures described above. In such event, US persons or affiliatesassociated with the group may be subject to a range of civil and criminalpenalties.

ILSA grants the President of the United Statesdiscretion in imposing sanctions on companies found to be in violation of itsprovisions involving investment in the petroleum industry in Iran. Should theUS government determine that some or all of our activities in Iran areinvestments in the petroleum industry, as statutorily defined by ILSA, thePresident of the United States may in his discretion impose, among othersanctions, restrictions on our ability to obtain credit from US financialinstitutions, restrictions on our ability to procure goods, services andtechnology from the United States or restrictions on our ability to make salesinto the United States.

We cannot predict futureinterpretations of ILSA or the implementation policy of the US Governmentwith respect to ILSA. Although we believe that our polymers project is not inthe petroleum industry and we are only involved in a feasibility study inconnection with other activities in Iran, we cannot assure you that ouractivities in Iran would not be considered investments as statutorily definedby ILSA or that the imposition of sanctions on the company or other entities ofthe group would not have a material adverse impact on our business, operatingresults, cash flows and financial condition**.**

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**Theexercise of voting rights by holders of American Depositary Receipts is limitedin some circumstances.**

Holders of American Depositary Receipts (“ADRs”) mayexercise voting rights with respect to the ordinary shares underlying theirAmerican Depositary Shares (“ADSs”) only in accordance with the provisions ofour deposit agreement with The Bank of New York, as the depositary. Forexample, ADR holders will not receive notice of a meeting directly from us.Rather, we will provide notice of a shareholders meeting to The Bank of NewYork in accordance with the deposit agreement. The Bank of New York hasundertaken in turn, as soon as practicable after receipt of our notice, to mailto holders of ADRs voting materials. These voting materials include theinformation on the matters to be voted on contained in our notice of theshareholders meeting and a statement that the holders of ADRs on a specifieddate will be entitled, subject to any applicable provision of the laws of SouthAfrica and our Articles of Association, to instruct The Bank of New York as tothe exercise of the voting rights, pertaining to the shares underlying theirrespective ADSs on a specified date. In addition, holders of our ADRs will berequired to instruct The Bank of New York how to exercise these voting rights.

Upon the writteninstruction of an ADR holder, The Bank of New York will endeavor, in so far aspracticable, to vote or cause to be voted the shares underlying the ADSs inaccordance with the instructions received. If instructions from an ADR holderare not received by The Bank of New York by the date specified in the votingmaterials, The Bank of New York will not request a proxy on behalf of suchholder. The Bank of New York will not vote or attempt to exercise the right tovote other than in accordance with the instructions received from ADR holders.We cannot assure you that you will receive the voting materials in time toensure that you can instruct The Bank of New York to vote the shares underlyingyour ADSs. In addition, The Bank of New York and its agents are not responsiblefor failing to carry out voting instructions or for the manner of carrying outvoting instructions. This means that you may not be able to exercise your rightto vote and there may be nothing you can do if your voting rights are notexercised as you directed.

**Salesof a large amount of  Sasol’s ordinaryshares and ADSs could adversely affect the prevailing market price of thesecurities.**

Historically, tradingvolumes and liquidity of shares listed on the JSE have been low in comparisonwith other major markets. The ability of a holder to sell a substantial numberof Sasol’s ordinary shares on the JSE in a timely manner, especially in a largeblock trade, may be restricted by this limited liquidity. Sales of ordinaryshares or ADSs, if substantial, or the perception that these sales may occurand be substantial, could exert downward pressure on the prevailing marketprices for the Sasol ordinary shares or ADSs, causing their market prices todecline.

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**ITEM4.**                INFORMATION ON THECOMPANY

**4.A   Historyand Development of the Company**

Sasol Limited, the ultimate holding company of ourgroup, is a public company. It was incorporated under the laws of the Republicof South Africa in 1979 and has been listed on the JSE since October 1979.Our registered office and corporate headquarters are at 1 Sturdee Avenue,Rosebank, 2196, South Africa, and our telephone number is+27 11 441 3111. Our agent for service of process in the UnitedStates is Puglisi and Associates, 850 Library Avenue, Suite 204, P.O. Box 885,Newark, Delaware 19715.

In 1947, the South African Parliament enactedlegislation detailing the establishment of an oil-from-coalindustry in South Africa. This followed 20 years after the publication ofa White Paper by Parliament, aiming to protect the country’s balance ofpayments against increasing crude oil imports in view of the lack of domesticcrude oil reserves. As a result of this initiative, the South Africangovernment in 1950, through the Industrial Development Corporation of SouthAfrica Limited, a state-owned entity, formed our predecessor companyknown as the South African Coal, Oil and Gas Corporation Limited to manufacturefuels and chemicals from indigenous raw materials.

Construction work on our synthetic fuels plant atSasolburg, in the Free State province, about 80 kilometers (“km”)south of Johannesburg, commenced in 1952, and in 1955, the original Sasol Oneproduction units were commissioned. We supplied our first gasoline and dieselto motorists at Sasolburg in November 1955. The operation of this plantwas based on a combination of the German fixed-bed and the US fluidized-bedFischer-Tropsch technologies, together with German Lurgi coalgasification technologies for the synthetic production of gasoline, diesel,other liquid fuels and chemical feedstock from coal.

During the 1960s, we became a major supplier of rawmaterials for the chemical industry. This included products such as solventsfor paints, butadiene and styrene for synthetic rubber and ammonia fornitrogenous fertilizer. When our first naphtha cracker became operational inthe mid-1960s, we added ethylene and propylene for the plastics industry to ourproduct portfolio.

In 1966, we completed construction of our first gaspipeline, which connected 250 industrial companies in the greater Johannesburgarea to pipeline gas.

In December 1967, Natref was incorporated as ajoint venture company and, at the same time, construction of the oil refinerycommenced at Sasolburg. The refinery was commissioned in February 1971.Currently, we, as the major shareholder, and Total South Africa (Pty) Limited (“Total”),a subsidiary of Total S.A. of France hold 63.64% and 36.36%, respectively, inNatref.

The increased oil prices of the early seventiespresented us with an opportunity to increase our synfuels production capacityand assist in reducing South Africa’s dependence on imported crude oil. Wecommenced the construction of Sasol Two in Secunda, 145 km southeast ofJohannesburg in the Mpumalanga province, in 1976, and in March 1980, thisplant produced its first synthetic fuel. During the final construction phasesof Sasol Two in 1979, work commenced on the construction of our third synfuelsand chemicals plant, Sasol Three, which was completed in 1982. The virtuallyidentical operations of Sasol Two and Sasol Three were merged in 1993 to formSasol Synthetic Fuels, now Sasol Synfuels.

Towards the time of the completion of the Sasol Threeproject, all our technical and research and development services wereconsolidated into a new company, Sasol Technology. Since then, Sasol Technologyhas been an important area of our activities, responsible for research anddevelopment, technology development and commercialization, project managementand specialist engineering skills.

In October 1979, Sasol Limited was listed on theJSE, and 70% of its share capital was privatized. Subsequently, the interest inour share capital held by the South African government through the IndustrialDevelopment Corporation of South Africa Limited was further reduced to itscurrent 7.9%. In 1982, our ADRs were quoted on the NASDAQ National Marketthrough an unsponsored ADR program, 

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which was later convertedto a sponsored ADR program in 1994. With effect from 9 April 2003 wetransferred our listing to the New York Stock Exchange from NASDAQ.

Our technology enabled us to enter the downstreamproduction of higher-value chemicals, including nitrogenous fertilizersand commercial explosives in 1983 and 1984, respectively, and also of solvents,phenolics, waxes and alpha olefins.

In the years 1988 and 1989, we undertook theconstruction of a large polypropylene plant that incorporated BASF gas-phasetechnology. Between 1990 and 1993, Sasol One underwent an R820 millionrenovation, during which we discontinued the production of synfuels andincreased the production of higher-value chemicals, including ammonia,solvents, phenolics, paraffins and waxes.

Polifin was established in Johannesburg in January 1994,as a joint venture with AECI Limited (“AECI”), a South African listed chemicalsand explosives company. The joint venture manufactured and marketed monomersand polymers. In 1996, Polifin was listed on the JSE. In 1999, pursuant to atakeover offer, we acquired Polifin’s remaining share capital from AECI and thepublic, and delisted Polifin. Following this, Polifin became part of ourchemicals portfolio and was renamed Sasol Polymers.

In mid 1994 Sasol Fibres, our 50:50 partnership withthe Industrial Development Corporation of South Africa Limited commissioned anacrylic fibers manufacturing plant at Durban in the KwaZulu-Natalprovince. A strategic decision was taken to wind down and close the SasolFibres partnership in year 2002 because it was underperforming and unlikely tomeet our targeted rates of return in the long-term.

In June 1994, the first alpha olefins plant atSecunda was commissioned to produce 1-hexene and 1-pentene for theinternational copolymers market. This was followed in November 1994 by theopening of the African Amines alkylamines plant at Newcastle in KwaZulu-Natalprovince in a 50:50 joint venture with Sentrachem Limited (“Sentrachem”). DowChemical Company became our joint venture partner in African Amines in 1997following its acquisition of Sentrachem. Air Products became our joint venturepartner in 2002 following Dow Chemical Company’s disposal of its interest inAfrican Amines.

In 1995, we founded Sasol Petroleum International (“SPI”)to undertake oil and gas exploration and production in selected high potentialareas in West and Southern Africa. SPI is active in South Africa, Gabon, EquatorialGuinea, Nigeria and, most notably, in Mozambique.

The Schümann Sasol International wax manufacturing andmarketing venture was established in 1995 after a merger of Sasol Waxes and theHamburg-based Schümann wax operations. It produces paraffin and Fischer-Tropschwaxes with operations in various countries. Effective 1 July 2002, weacquired from Vara Holdings GmbH and Co KG the outstanding one-third of theshare capital of Schümann Sasol, for approximately 51.1 million euro(approximately R521 million at actual rates), and this subsidiary, now 100%owned, has been renamed Sasol Wax.

Merisol, formerly known as Merichem-Sasol, wasformed in October 1997 as a 50:50 joint venture with Merichem Company ofHouston. Merisol produces and supplies natural phenolics and cresylics.

By early 1999, Sasol Synfuels, our synfuels segment,had commissioned the last of its eight new-generation Sasol Advanced Synthol (“SAS”)reactors at Secunda, and a ninth reactor was commissioned in 2001. The 1-octeneplant, also at Secunda, was commissioned in April 1999 by Sasol AlphaOlefins and commenced supply to the Dow Chemical Company polyethylene plants inMay 1999.

In recent years, we have been exploring opportunitiesthrough Sasol Synfuels International (“SSI”) to exploit the Sasol Slurry Phase Distillate (“Sasol SPDTM”) process technology for theproduction of high-quality, environment-friendly diesel and otherhigher-value hydrocarbons from natural gas. In October 2000, wesigned agreements with Chevron for the creation of Sasol Chevron, a 50:50global joint venture founded on GTL technology.

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Sasol and Chevron are currently involved in thedevelopment of a GTL project in collaboration with the Nigerian NationalPetroleum Corporation (“NNPC”) at existing oil and gas facilities at Escravosin Nigeria. In April 2005, the engineering, procurement and constructioncontract for this project was awarded to Team JKS, a consortium of the JapanGasoline Corporation, Kellogg, Brown and Root (“KBR”), a subsidiary ofHalliburton and Italy’s Snamprogetti. We are currently evaluating other GTL ventures in Australia,Latin America, North America, the Middle East, South-east Asia and Africa.

Since May 2000 the group has undertaken sharerepurchases, which may be made at times and at prices deemed appropriate bymanagement and consistent with the authorization of the shareholders. Norepurchases were made during the year ended 30 June 2005. At 30 June 2005,a total of  60,111,447 shares (2004 :60,111,447), representing 8.9% of the issued share capital of the company, hadbeen repurchased since 9 May 2000 at an average price of R60.67 per share.

In July 2001, we signed a joint venture agreementwith Qatar Petroleum (Qatar Petroleum 51% and Sasol 49%) to establish Oryx GTL.The joint venture is constructing, on behalf of both venture partners, aUS$952 million, excluding finance charges, (R7.8 billion, convertedat forward covered rates) GTL plant based at Ras Laffan Industrial City toproduce high quality synfuels from Qatar’s natural gas resources. The plant isscheduled to commence operations during the first half of 2006 calendar year.

In 2000 and 2001, we signed agreements with thegovernment of Mozambique for the development of natural gas fields and theconstruction of a gas pipeline transporting gas to the South African market.The construction of this pipeline was completed in 2004. We introduced naturalgas to the South African pipeline gas market as of 2004 and use natural gas aspart of our feedstock for our chemicals and synfuels operations in both Secundaand Sasolburg.

Effective 1 March 2001, we acquired Condea, thewhole of RWE-DEA’s chemical business which we renamed Sasol Chemie, forapproximately 1.3 billion euro (approximately R8.3 billion at actualrates). This was our largest and most significant acquisition to date, in linewith our strategy of achieving international growth in the alpha olefins,surfactants and solvents businesses. Sasol announced in August 2005 thatit is considering the disposal of its Olefins and Surfactants businessexcluding its co-monomers activities in South Africa. In 2003, Sasol determinedthat it would continue to grow its chemical businesses conditional uponprojects leveraging its technology or securing integrated and highlycost-competitive feedstock positions. Sasol announced in August 2005 thatit is considering the divestment from its Olefins and Surfactants businessincluding its Safol plant but excluding its comonomers activities in SouthAfrica. The Olefins and Surfactants business is only partially integratedupstream into feedstock and has not adequately provided the integrationbenefits which Sasol requires. Deutsche Bank has been appointed to assist Sasolin procuring offers, assessing the feasibility and attractiveness thereof andexecuting any potential transaction.

In 2004 we commenced with Project Turbo our fuelenhancement investment, which will liberate further chemical feedstock andenable concomitant investments by Sasol Polymers to expand its South Africanpolymer production capacity by more than 80%.

Effective 1 January 2004, Sasol Oil, nowcomprising all of Sasol Liquid Fuels Business (“Sasol LFB”), entered the SouthAfrican retail fuel market with the establishment of its first Sasol-brandedretail convenience center (service station). Sasol Oil also completed theacquisition and integration of Exel Petroleum in a major step towards formingSasol LFB. We now have 345 Sasol- and Exel- branded retail convenience centers.

On November 2004, Sasol and Petronas finalized anagreement to combine their respective interests in Sasol LFB and Engen to forma joint venture to be called Uhambo Oil Limited (“Uhambo Oil”). The SouthAfrican Competition Commission granted conditional approval to the proposedjoint venture in May 2005, with hearings by the Competition Tribunalcommenced in October 2005. Sasol announced on 

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22 September 2005that Tshwarisano, its Broad-based Black Economic Empowerment partner, wouldacquire a 12.5% interest in Uhambo Oil for an amount of R1.45 billion. As notedabove the Uhambo Oil transaction is subject to Competition Tribunal approval.

As of 30 September 2005,we were the largest listed domiciled South African company by marketcapitalization (R166.7 billion), with total consolidated turnover in terms ofIFRS of approximately R69.2 billion in 2005. We employ approximately30,000 people.

**Capital Expenditure**

In2005 we invested approximately R12 billion (2004 : R11 billion and 2003 :R10 billion) in capital expenditure (on a cash flow basis excluding capitalizedinterest and including projects and investments incurred by our equityaccounted investees) to enhance our existing facilities and to expandoperations. Key capital expenditure incurred on projects to expand ouroperations includes:

| **Projects and Investments** | ** ** | ** **                                  | ** ** | **Business Categories** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|----------------------------------------|------------|---------------------------------------------|------------|------------------------------|------------|------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                             | ** ** | ** **                                  | ** ** | **(Rand in millions)**       | ** ** |
| Project Turbo(1)                       |       | Sasol Polymers                              |       |                         | 3,321      |                   |       | 936                    |       |                   | 185        |   |
| Oryx GTL (Nigeria)                     |       | Sasol Synfuels International                |       |                         | 847        |                   |       | 1,113                  |       |                   | 559        |   |
| Escravos GTL (Qatar)                   |       | Sasol Synfuels International                |       |                         | 868        |                   |       | 122                    |       |                   | 59         |   |
| Arya Sasol Polymer  (Iran)             |       | Sasol Polymers                              |       |                         | 823        |                   |       | 295                    |       |                   | 206        |   |
| Sasol LFB distribution  network   |       | Sasol LFB                                   |       |                         | 294        |                   |       | 114                    |       |                   | —     |   |
| 2nd and 3rd  Octene trains             |       | Sasol Olefins and Surfactants               |       |                         | 288        |                   |       | 519                    |       |                   | —     |   |
| Mozambique Natural Gas                 |       | Sasol Gas and Sasol Petroleum International |       |                         | 239        |                   |       | 1,811                  |       |                   | 3,164      |   |
| Clean Fuels Project                    |       | Sasol LFB                                   |       |                         | 215        |                   |       | —                 |       |                   | —     |   |
| Tar Naphta Phenolic  Extraction        |       | Other                                       |       |                         | 105        |                   |       | —                 |       |                   | —     |   |
| Acrylic acid and  acrylates            |       | Sasol Solvents                              |       |                         | —     |                   |       | 740                    |       |                   | 892        |   |
| 15th Oxygen  train                     |       | Sasol Synfuels                              |       |                         | —     |                   |       | 104                    |       |                   | 319        |   |
| n-Butanol                              |       | Sasol Solvents                              |       |                         | —     |                   |       | —                 |       |                   | 349        |   |
| Other smaller projects                 |       | Various                                     |       |                         | 350        |                   |       | 1,771                  |       |                   | 1,603      |   |

----

The amounts include business development costs and ourgroup’s share of capital expenditure of equity accounted investees. The amountsexclude borrowing costs capitalized. These amounts were approved by our Boardand are stated on a management reporting basis. We hedge all our major capitalexpenditure in foreign currency immediately upon commitment of expenditure orupon approval of the project.

(1)    During the current year, increases in the capitalcosts as well as an overrun on the project schedule have resulted in theestimated costs of completion of Project Turbo (Synfuels and Polymers)increasing from R12 billion to R13 billion and a resultant decrease in theexpected return on this project.

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Key projects to addressenvironmental matters and enhance existing assets during the 2005 year include:

| **Projects and Investments**                                              | ** ** | ** ** | ** **     | **Business Categories**     | ** ** | **30 June 2005** | ** ** |
|-------------------------------------------------------------------------------------|------------|------------|----------------|----------------------------------|------------|----------------------------|------------|
| ** **                                                                          | ** ** | ** ** | ** **     | **(Rand in millions)** | ** ** |
| Mining renewal                                                                      |       |       | Sasol Mining   |                             |       | 466                        |       |
| Project Turbo(1)                                                                    |       |       | Sasol Synfuels |                             |       | 2,520                      |       |
| Waste recycling facility                                                            |       |       | Sasol Synfuels |                             |       | 263                        |       |
| Reconstruction of the  ethylene plant (Unit 24) and the revamp of the furnaces |       |       | Sasol Polymers |                             |       | 185                        |       |
| Other (individually less  than R100 million)                                        |       |       | Various        |                             |       | 1,728                      |       |

----

The amounts include business development costs and ourgroup’s share of capital expenditure of equity accounted investees. The amountsexclude borrowing costs capitalized. These amounts were approved by our Boardand are stated on a management reporting basis. We hedge all our major capitalexpenditure in foreign currency immediately upon commitment of expenditure orupon approval of the project.

(1)    During the current year, increases in the capitalcosts as well as an overrun on the project schedule have resulted in theestimated costs of completion of Project Turbo (Synfuels and Polymers)increasing from R12 billion to R13 billion and a resultant decrease in theexpected return on this project.

In addition, we investedapproximately R112 million in intangible assets (including investments made byequity accounted investees), mainly in respect of exploration expenditure,software and patents and trademarks during the year. For a discussion of themethod of financing for our capital expenditures, see “Item 5.B—Liquidityand Capital Resources—Liquidity”.

**Capital Commitments**

As at 30 June 2005, we had authorizedapproximately R34 billion of group capital expenditure, of which we had spentR15 billion at 30 June 2005. Of the unspent capital commitments ofR19 billion, R11 billion has been contracted for. Of the unspent capitalcommitments of R19 billion, we expect to spend R15 billionin 2006, R3 billion in 2007 and the remainder in 2008 and thereafter.For more information regarding our capital commitments see “Item 5.B—Liquidityand Capital Resources” and “Item 5.F—Capital and Contractual Commitments”.

We expect to spend approximately R9 billion of ourR19 billion unspent capital commitments in projects in South Africa,R6 billion in other African countries and the R4 billion in theMiddle East and the remainder on projects in other regions.

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Thefollowing table reflects key projects approved and contracted which were notcompleted at 30 June 2005:

| **Project**                                                                                 | ** ** | ** **                     | ** ** | **Business Categories** | ** ** | **Total Project  Cost** | ** ** | **Scheduled Operation Date** | ** **                            |
|---------------------------------------------------------------------------------------------|------------|--------------------------------|------------|------------------------------|------------|------------------------------|------------|----------------------------------------|---------------------------------------|
| ** **                                                                                  | ** ** | ** **                     | ** ** | **(rand in millions)**  | ** ** | ** **                   | ** ** |
| Syferfontein  Kriel South Phase(2)                                                          |       | Sasol  Mining                  |       |                         | R299       |                         |       |                                   | October 2005                     |   |   |
| Mooikraal  underground coal mine                                                            |       | Sasol  Mining                  |       |                         | R229       |                         |       |                                   | November 2005                    |   |   |
| Project  Turbo—unleaded fuel                                                           |       | Sasol  Synfuels                |       |                         | R5,722     |                         |       |                                   | March 2006                       |   |   |
| Waste recycling  facility                                                                   |       | Sasol  Synfuels                |       |                         | R520       |                         |       |                                   | October 2005                     |   |   |
| Project Landlord                                                                            |       | Sasol  Synfuels                |       |                         | R429       |                         |       |                                   | December 2005                    |   |   |
| Black product  site remediation                                                             |       | Sasol  Synfuels                |       |                         | R150       |                         |       |                                   | February 2015                    |   |   |
| Natref clean  fuels project                                                                 |       | Sasol  LFB                     |       |                         | R520       |                         |       |                                   | October 2005                     |   |   |
| Escravos GTL  (Nigeria)                                                                     |       | Sasol  Synfuels International  |       |                         | R6,000     | (1)                          |       |                                   | March 2009                       |   |   |
| Oryx GTL (Qatar)                                                                            |       | Sasol  Synfuels International  |       |                         | R2,959     | (2)                          |       |                                   | May 2006                         |   |   |
| 3rd  Octene train                                                                           |       | Sasol  Olefins and Surfactants |       |                         | R2,055     | (3)                          |       |                                   | June 2007                        |   |   |
| Project  Turbo—polymers  projects—low-density polyethylene and polypropylene |       | Sasol  Polymers                |       |                         | R7,618     |                         |       |                                   | March 2006 and  August 2006 |   |   |
| Arya Sasol Polymer  (Iran)                                                                  |       | Sasol Polymers                 |       |                         | R3,277     | (4)                          |       |                                   | May 2006                         |   |   |

----

The amounts include businessdevelopment costs and our group’s share of capital expenditure of equityaccounted investees.

(1)    Thecontract has been concluded in US dollars for a total of US$945 million and hasbeen translated at rate of R6.35 per US$1.00 solely for the reader’sconvenience.

(2)    Thecontract has been concluded in US dollars for a total of US$466 million and hasbeen translated at rate of R6.35 per US$1.00 solely for the reader’sconvenience.

(3)    At themeeting held on 9 September 2005 the Board approved the revised projectcost of R2,055 million, increased from R1,265 million, subject to therenegotiations for the selling price of the product which were successful.

(4)    Sasol Polymers’ share of the estimated cost toestablish the Arya Sasol Polymer production facilities in US dollars is US$516million and has been translated at rate of R6.35 per US$1.00 solely for thereader’s convenience.

**4.B   Business Overview**

Sasol is an integrated oil and gas company withsubstantial chemical interests. In South Africa, we support these operations bymining coal and converting it into synthetic fuels and chemicals throughproprietary Fischer-Tropsch technology. We also have chemical manufacturing andmarketing operations in Europe, Asia and the Americas. Our larger chemical portfoliosinclude polymers, solvents, surfactants and their intermediates, waxes,phenolics and nitrogenous products.

The group explores for, and produces, crude oiloffshore of Gabon, refines crude oil into liquid fuels in South Africa andretails liquid fuels and lubricants through a growing network of retail servicecenters. During the first quarter of 2004, we started extracting Mozambicannatural gas, some of which we have been using as feedstock for fuel andchemical production in South Africa since mid 2004.

We are also developing in Qatar and Nigeria twojoint-venture GTL plants based on our proprietary Sasol SPDTM process.

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The financial information presented to our GroupExecutive Committee (“GEC”), including the financial information in thereportable segments, is presented based on IFRS. Since the IFRS financialinformation is the basis for segmental financial decisions, resource allocationand performance assessment, it forms the accounting basis for segmentalreporting that is disclosed to the investing public. The IFRS segmentalreporting information is reconciled to the amounts reported in our groupconsolidated financial statements, prepared in accordance with US GAAP, for allyears presented.

We divide ouroperations into the following segments (turnover percentages and amounts interms of IFRS):

·       *Sasol Mining.  *Our mining operationsin South Africa, which accounted for 2% of our total external segmentalturnover in 2005, supply coal mainly to our synfuels and chemicals plants. Wealso export coal to international customers.

·       *Sasol Synfuels.  *We operate theworld’s only large commercial-scale coal-based synfuels manufacturingoperation, which accounted for 1% of our total external segmental turnover in2005. We manufacture syngas from natural gas, low-grade coal and use ourtechnology to convert syngas into a range of products, including synfuels,chemical feedstock and industrial pipeline gas.

·       *Sasol Liquid Fuels Business*.   Weoperate South Africa’s only inland crude oil refinery. We market liquid andgaseous fuels and lubricants. Liquid fuels include gasoline, diesel, jet fuel,fuel alcohol, illuminating paraffin and fuel oils. Gaseous fuels includeliquefied petroleum gas. This segment accounted for 34% of our total externalsegmental turnover in 2005.

·       *Sasol Gas*.   We source natural gasobtained from fields operated by fellow subsidiaries in Mozambique and methanerich gas from our operations at Secunda. We supply these to Synfuels in Secundaand Infrachem in Sasolburg as well as pipeline gas to the South African market.For the next few years we will also continue to supply synthetic pipeline gasto customers in the South African market. We completed the construction of a pipelineto transport and supply natural gas from Mozambique to the South African marketduring 2004. This segment accounted for 2% of our total external segmentalturnover in 2005.

·       *Sasol Synfuels International*.   We areinvolved in the development of GTL fuels and production of other chemicalproducts from GTL derived feedstock. We are currently involved in theestablishment of two GTL production facilities in Qatar and Nigeria and areconducting feasibility studies at various other locations around the world.Potential CTL opportunities in China, United States and other coal-richcountries are being considered. These activities did not contribute to ourtotal external segmental turnover in 2005.

·       *Sasol Olefins and Surfactants.  *Wemanufacture a wide range of surfactants, surfactant intermediates (includingalcohols and alkylates), monomers and inorganic specialty chemicals derivedmostly from petrochemical feedstock (crude oil, natural gas and coal). Wemarket these products in the global chemical markets. This segment accountedfor 26% of our total external segmental turnover in 2005.

·       *Sasol Polymers.  *We focus on theproduction and marketing of ethylene and propylene monomers, polypropylene,polyethylene and polyvinyl chloride polymers and other chemical productsthrough our respective businesses with operations located in South Africa,Malaysia and China. This segment accounted for 10% of our total externalsegmental turnover in 2005.

·       *Sasol Solvents.  *We manufacture andmarket a range of oxygenated solvents derived mostly from coal and chemicalfeedstock, in the global chemicals markets. This segment accounted for 12% ofour total external segmental turnover in 2005.

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·       *Other*.   We are involved in a numberof other activities in the energy and chemicals industries, both in SouthAfrica and abroad, which, among others, include international petroleum and gasexploration and production, production of other chemical products, productionof wax and explosive products as well as technology research and development,and our financing activities. These activities accounted for 13% of our totalexternal segmental turnover in 2005.

Thefollowing tables present our total external turnover after the elimination ofinter-segment turnover by business operation and geographic market (under IFRS,except where otherwise indicated):

| **2005**                                                                  | ** ** | ** **                       | ** ** | **Sasol  Mining** | ** ** | **Sasol  Synfuels** | ** ** | **Sasol  LFB** | ** ** | **Sasol  Gas** | ** ** | **Sasol  Synfuels  International** | ** ** | **Sasol  Olefins and  Surfactants** | ** ** | **Sasol  Polymers** | ** ** | **Sasol  Solvents** | ** ** | **Other** | ** ** | **Total**  | ** ** |
|---------------------------------------------------------------------------|------------|----------------------------------|------------|-------------------|------------|---------------------|------------|----------------|------------|----------------|------------|------------------------------------|------------|------------------------------------------|------------|---------------------|------------|---------------------|------------|-----------|------------|------------|------------|
| ** **                                                                | ** ** | **(Rand in millions)** | ** ** |
| South Africa                                                              |       |                             | 42         |              |       | 642                 |       | 22,902         |       | 1,408          |       |                               | —     |                                     |       | 180                 |       |                | 5,651      |      |       | 1,206      |       |   | 3,364 |   | 35,395 |   |
| Rest of Africa                                                            |       |                             | —     |              |       | 6                   |       | 620            |       | —         |       |                               | —     |                                     |       | 115                 |       |                | 752        |      |       | 151        |       |   | 909 |   | 2,553 |   |
| Europe                                                                    |       |                             | 1,429      |              |       | 107                 |       | 3              |       | —         |       |                               | —     |                                     |       | 9,152               |       |                | 86         |      |       | 3,528      |       |   | 2,840 |   | 17,145 |   |
| Middle East and India                                                     |       |                             | —     |              |       | 16                  |       | —         |       | —         |       |                               | —     |                                     |       | 313                 |       |                | 28         |      |       | 803        |       |   | 173 |   | 1,333 |   |
| Far East                                                                  |       |                             | —     |              |       | —              |       | —         |       | —         |       |                               | —     |                                     |       | 1,027               |       |                | 358        |      |       | 1,006      |       |   | 116 |   | 2,507 |   |
| North America                                                             |       |                             | —     |              |       | 20                  |       | —         |       | —         |       |                               | —     |                                     |       | 6,647               |       |                | —     |      |       | 639        |       |   | 843 |   | 8,149 |   |
| South America                                                             |       |                             | —     |              |       | 11                  |       | —         |       | —         |       |                               | —     |                                     |       | 462                 |       |                | 7          |      |       | 144        |       |   | 136 |   | 760 |   |
| South East Asia and Australasia                                           |       |                             | —     |              |       | 18                  |       | —         |       | —         |       |                               | —     |                                     |       | 144                 |       |                | 317        |      |       | 586        |       |   | 332 |   | 1,397 |   |
| **Total segment**                                                         | ** ** | ** **                       | **1,471**  |              | ** ** | **820**             |       | **23,525**     | ** ** | **1,408**      | ** ** | ** **                         | —     |                                     | ** ** | **18,040**          |       | ** **          | **7,199**  |      | ** ** | **8,063**  |       | ** ** | **8,713** |   | **69,239** | ** ** |
| ***Adjustments  to US GAAP***                                             |       |                             |       |              |       |                |       |           |       |           |       |                               |       |                                     |       |                |       |                |       |      |       |       |       |   |   |   |   |   |
| Equity accounting and reversal of proportionate  consolidation(2)    |       |                             |       |              |       |                |       |           |       |           |       |                               |       |                                     |       |                |       |                |       |      |       |       |       |   |   |   | (1,812 | ) |
| **Turnover  per consolidated income statement under US GAAP****(1)** | ** ** | ** **                       | ** ** |              | ** ** | ** **          |       | ** **     | ** ** | ** **     | ** ** | ** **                         | ** ** |                                     | ** ** | ** **          |       | ** **          | ** ** |      | ** ** | ** ** |       | ** ** | ** ** |   | **67,427** | ** ** |

 

| **2004**                                                             | ** ** | ** **                       | ** ** | **Sasol  Mining** | ** ** | **Sasol  Synfuels** | ** ** | **Sasol  LFB** | ** ** | **Sasol  Gas** | ** ** | **Sasol  Synfuls  International** | ** ** | **Sasol  Olefins and  Surfactants** | ** ** | **Sasol  Polymers** | ** ** | **Sasol  Solvents** | ** ** | **Other** | ** ** | **Total**  | ** ** |
|----------------------------------------------------------------------|------------|----------------------------------|------------|-------------------|------------|---------------------|------------|----------------|------------|----------------|------------|-----------------------------------|------------|------------------------------------------|------------|---------------------|------------|---------------------|------------|-----------|------------|------------|------------|
| ** **                                                           | ** ** | **(Rand in millions)** | ** ** |
| South Africa                                                         |       |                             | 45         |              |       | 1,077               |       | 17,237         |       | 1,389          |       |                              | —     |                                     |       | 142                 |       |                | 5,063      |      |       | 799        |       |   | 3,202 |   | 28,954 |   |
| Rest of Africa                                                       |       |                             | 6          |              |       | 26                  |       | 1,305          |       | —         |       |                              | 7          |                                     |       | 133                 |       |                | 815        |      |       | 95         |       |   | 675 |   | 3,062 |   |
| Europe                                                               |       |                             | 1,032      |              |       | 153                 |       | —         |       | —         |       |                              | —     |                                     |       | 9,304               |       |                | 26         |      |       | 2,543      |       |   | 2,574 |   | 15,632 |   |
| Middle East and India                                                |       |                             | —     |              |       | 21                  |       | —         |       | —         |       |                              | —     |                                     |       | 431                 |       |                | 48         |      |       | 731        |       |   | 216 |   | 1,447 |   |
| Far East                                                             |       |                             | —     |              |       | 6                   |       | —         |       | —         |       |                              | —     |                                     |       | 911                 |       |                | 178        |      |       | 843        |       |   | 124 |   | 2,062 |   |
| North America                                                        |       |                             | —     |              |       | 21                  |       | —         |       | —         |       |                              | —     |                                     |       | 5,618               |       |                | —     |      |       | 518        |       |   | 903 |   | 7,060 |   |
| South America                                                        |       |                             | —     |              |       | 7                   |       | —         |       | —         |       |                              | —     |                                     |       | 457                 |       |                | 14         |      |       | 113        |       |   | 132 |   | 723 |   |
| South East Asia and Australasia                                 |       |                             | —     |              |       | 18                  |       | 12             |       | —         |       |                              | —     |                                     |       | 137                 |       |                | 432        |      |       | 314        |       |   | 298 |   | 1,211 |   |
| **Total segment**                                                    | ** ** | ** **                       | **1,083**  |              | ** ** | **1,329**           |       | **18,554**     | ** ** | **1,389**      | ** ** | ** **                        | **7**      |                                     | ** ** | **17,133**          |       | ** **          | **6,576**  |      | ** ** | **5,956**  |       | ** ** | **8,124** |   | **60,151** | ** ** |
| ***Adjustments  to US GAAP***                                        |       |                             |       |              |       |                |       |           |       |           |       |                              |       |                                     |       |                |       |                |       |      |       |       |       |   |   |   |   |   |
| Equity accounting and reversal of proportionate  consolidation(2)    |       |                             |       |              |       |                |       |           |       |           |       |                              |       |                                     |       |                |       |                |       |      |       |       |       |   |   |   | (1,609 | ) |
| Entities previously not consolidated(3)                              |       |                             |       |              |       |                |       |           |       |           |       |                              |       |                                     |       |                |       |                |       |      |       |       |       |   |   |   | 266 |   |
| **Turnover  per consolidated income statement under US GAAP****(1)** | ** ** | ** **                       | ** ** |              | ** ** | ** **          |       | ** **     | ** ** | ** **     | ** ** | ** **                        | ** ** |                                     | ** ** | ** **          |       | ** **          | ** ** |      | ** ** | ** ** |       | ** ** | ** ** |   | **58,808** | ** ** |

 

35

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| **2003**                                                             | ** ** | ** **                       | ** ** | **Sasol  Mining** | ** ** | **Sasol  Synfuels** | ** ** | **Sasol  LFB** | ** ** | **Sasol  Gas** | ** ** | **Sasol  Synfuels  International** | ** ** | **Sasol  Olefins and  Surfactants** | ** ** | **Sasol  Polymers** | ** ** | **Sasol  Solvents** | ** ** | **Other**  | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------|------------|----------------------------------|------------|-------------------|------------|---------------------|------------|----------------|------------|----------------|------------|------------------------------------|------------|------------------------------------------|------------|---------------------|------------|---------------------|------------|------------|------------|-----------|------------|
| ** **                                                           | ** ** | **(Rand in millions)** | ** ** |
| South Africa                                                         |       |                             | 3          |              |       |                | 1,122      |           |       | 18,857         |       |                               | 1,480      |                                     |       |                | —     |                |       |       | 161        |      |       |   | 5,162 |   |   |   | 881 |   |   |   | 3,470 |   |   | 31,136 |   |   |
| Rest of Africa                                                       |       |                             | —     |              |       |                | 43         |           |       | 409            |       |                               | —     |                                     |       |                | 7          |                |       |       | 37         |      |       |   | 694 |   |   |   | 106 |   |   |   | 663 |   |   | 1,959 |   |   |
| Europe                                                               |       |                             | 998        |              |       |                | 45         |           |       | 117            |       |                               | —     |                                     |       |                | —     |                |       |       | 10,534     |      |       |   | 6 |   |   |   | 2,614 |   |   |   | 2,835 |   |   | 17,149 |   |   |
| Middle East and India                                                |       |                             | —     |              |       |                | —     |           |       | 14             |       |                               | —     |                                     |       |                | —     |                |       |       | 1,005      |      |       |   | 1 |   |   |   | 692 |   |   |   | 364 |   |   | 2,076 |   |   |
| Far East                                                             |       |                             | —     |              |       |                | —     |           |       | 18             |       |                               | —     |                                     |       |                | —     |                |       |       | 573        |      |       |   | 176 |   |   |   | 721 |   |   |   | 146 |   |   | 1,634 |   |   |
| North America                                                        |       |                             | 12         |              |       |                | —     |           |       | 18             |       |                               | —     |                                     |       |                | —     |                |       |       | 6,688      |      |       |   | — |   |   |   | 515 |   |   |   | 1,576 |   |   | 8,809 |   |   |
| South America                                                        |       |                             | —     |              |       |                | —     |           |       | 4              |       |                               | —     |                                     |       |                | —     |                |       |       | 373        |      |       |   | 3 |   |   |   | 87 |   |   |   | 230 |   |   | 697 |   |   |
| South East Asia and Australasia                                      |       |                             | —     |              |       |                | —     |           |       | 23             |       |                               | —     |                                     |       |                | —     |                |       |       | 172        |      |       |   | 203 |   |   |   | 334 |   |   |   | 363 |   |   | 1,095 |   |   |
| **Total segment**                                                    | ** ** | ** **                       | **1,013**  |              | ** ** | ** **          | **1,210**  |           | ** ** | **19,460**     | ** ** | ** **                         | **1,480**  |                                     | ** ** | ** **          | **7**      |                | ** ** | ** ** | **19,543** |      | ** ** | ** ** | **6,245** |   | ** ** | ** ** | **5,950** |   | ** ** | ** ** | **9,647** |   | ** ** | **64,555** | ** ** |   |
| ***Adjustments  to US GAAP***                                        |       |                             |       |              |       |                |       |           |       |           |       |                               |       |                                     |       |                |       |                |       |       |       |      |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity accounting and reversal of proportionate  consolidation(2)    |       |                             |       |              |       |                |       |           |       |           |       |                               |       |                                     |       |                |       |                |       |       |       |      |       |   |   |   |   |   |   |   |   |   |   |   |   | (1,539 | ) |   |
| Entities previously not consolidated(3)                              |       |                             |       |              |       |                |       |           |       |           |       |                               |       |                                     |       |                |       |                |       |       |       |      |       |   |   |   |   |   |   |   |   |   |   |   |   | 650 |   |   |
| Other                                                                |       |                             |       |              |       |                |       |           |       |           |       |                               |       |                                     |       |                |       |                |       |       |       |      |       |   |   |   |   |   |   |   |   |   |   |   |   | 103 |   |   |
| **Turnover  per consolidated income statement under US GAAP****(1)** | ** ** | ** **                       | ** ** |              | ** ** | ** **          | ** ** |           | ** ** | ** **     | ** ** | ** **                         | ** ** |                                     | ** ** | ** **          | ** ** |                | ** ** | ** ** | ** ** |      | ** ** | ** ** | ** ** |   | ** ** | ** ** | ** ** |   | ** ** | ** ** | ** ** |   | ** ** | **63,769** | ** ** |   |
|                                                                      |            |                                  |            |                   |            |                     |            |                |            |                |            |                                    |            |                                          |            |                     |            |                     |            |            |            |           |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)     Formore information on the reconciliation of segmental turnover to thecorresponding amounts prepared under US GAAP, see “Item 5.A—OperatingResults—Reconciliation of segmental results to US GAAP” and Note 3 of“Item 18—Financial Statements”.

(2)     For theyears ended 30 June 2005, 30 June 2004 and 30 June 2003,proportionate consolidation is applied with respect to incorporated jointventures for management reporting purposes. Under US GAAP, the equity method ofaccounting is applied.

(3)     Relates to Naledi Petroleum Holdings (Pty)Limited (included in the Sasol LFB segment) which is equity accounted formanagement reporting purposes until 31 December 2003 and consolidated as asubsidiary with effect from 1 January 2004. However, it is consolidated asa subsidiary, for all reporting years, under US GAAP.

**Our Strategy**

Sasol is active in the oil, gas and chemical sectors,primarily in integrated petroleum and chemical centres of activity in SouthernAfrica and other countries where it can obtain competitive feedstockadvantages. Our core business is adding value to low-cost coal, oil and gasfeedstock through our unique Fischer-Tropsch synthesis and other proprietytechnologies for the production of fuel, fuel components and chemicalfeedstock.

We are committed togrow our shareholders’ value through the following primary growth drivers:

·       growa global GTL and CTL business;

·       growan integrated chemicals portfolio; and

·       exploitintegrated upstream hydrocarbon opportunities.

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*Grow a global GTL and CTLbusiness*—Sasol has made further progress towards thedrive to commercialize its GTL technology based on the Sasol SPDTM process innatural gas-rich regions. The Sasol SPDTM process would allow us to monetizeunderutilized gas resources by converting them into ultra-low sulfur,high-performing diesel in line with global trends towards cleaner fuel andreduced emissions to the environment.

·       SSIand Qatar Petroleum are advancing their 49:51 joint venture in respect of theOryx GTL plant in Ras Laffan, Qatar. Construction largely remains on scheduleand the plant with its capacity of 34,000 barrels per day (“bpd”) is expected tobe operational by the first of the 2006 calendar year.

·       Workon the Escravos GTL plant in Nigeria, a joint venture (called Escravos GTL)between NNPC and Chevron Nigeria Limited (“CNL”)is also progressing according to plan. After intensive evaluation, NNPC and CNLdecided to award the engineering,procurement and construction contract of the Escravos GTL plant to Team JKS. Itis envisaged that the plant will be operational in 2009. With its capacity of34,000 bpd, Escravos GTL will produce GTL diesel, GTL naphtha and liquefiedpetroleum gas.

Following our progress in Qatar and Nigeria, otherpotential GTL options are also under review. These options include a second GTLplant in Qatar and possible GTL investments in Algeria, Australia and Iran. Insupport of this, our team of Sasol researchers continue to advance oursecond-generation GTL technology, including our proprietary low-temperatureFischer-Tropsch Slurry Phase reactor and cobalt-based catalysts.

SSI is conducting a pre-feasibility study with a consortiumof Chinese companies for the potential development of two CTL plants in thePeople’s Republic of China. China has been able to sustain high levels ofeconomic growth for more than a decade, coupled with a growing demand forenergy which outstrips the world average. With its vast coal reserves, Chinaoffers a potential opportunity for Sasol to commercialise our CTL technology.Potential CTL opportunities in the United States and other coal-rich regionsmay be considered.

Sasol researchers will continue to explore newopportunities to commercialize our competitive Fischer-Tropsch synthesistechnology for the beneficiation of coal and other hydrocarbon resources,including environmental friendly biomass.

*Grow an integrated chemicals portfolio—*Sasolwill focus on organically growing its chemicals portfolio either by:

·       leveragingnew chemical growth opportunities from our Fischer-Tropsch processes; or

·       securingintegrated positions with highly cost-competitive feedstock.

Sasol Polymers remains an outstanding performer in ourchemicals portfolio by focussing on continued business optimisation andbenefiting from a buoyant demand for polyethylene, polypropylene and polyvinylchloride. As part of Project Turbo, this division is advancing the constructionof two new polymer plants in South Africa to increase our polymer capacity byabout 80%. We intend to bring the two plants into operation during 2006.Outside South Africa, our polymer business continues to gain momentum. In Iran,Sasol is investing US$462 million (our 50% share of the total capital project)in a new polymer plant which is designed to produce one million tons ofethylene to be converted into polyethylene, or exported as ethylene. Thisproject is a 50:50 joint venture (called Arya Sasol Polymer Company) betweenSasol and the National Petrochemical Company of Iran, and would comprise of oneethane cracker for producing polymer-grade ethylene and two polyethyleneplants. The cracker start-up is currently targeted for May 2006, followedby the two polyethylene plants soon thereafter.

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Sasol Solvents continues to benefit from its status asa diversified producer and marketer of industrial solvents. The Dia Acrylatesjoint venture with Mitsubishi ChemicalCorporation of Japan at Sasolburg, continues to perform well, and isbenefiting from a strong demand for acrylic acid and acrylates.

Sasol Olefins and Surfactants completed a R870 millionproject to develop and construct its second train for the recovery andproduction of additional volumes of 1-octene comonomer at Secunda. The majorityof the additional 1-octene volume is being sold under a long-term salesagreement to one of the major polyethylene producers. Beneficial operation wasachieved on schedule in November 2004. The second 1-octene train hasenabled the monomers business unit to double its octene production to 96 kilotons per annum. As for our operations outside South Africa, Sasol Olefins andSurfactants has managed to maintain high production levels, despite highfeedstock prices and tight margins. Strong demand and good customerrelationships have necessitated the restarting of our Porto Torres LAB plant inItaly. In addition, more than 50 million euro will be spent on an ethylenepipeline and related projects to increase the alcohol and alumina capacity ofunits in Brunsbüttel, Germany. Sasol announced in August 2005 that it isconsidering the disposal of its Olefins and Surfactants business excluding itsco-monomers activities in South Africa subject to an acceptable price beingobtained. In 2003, Sasol determined that it would continue to grow its chemicalbusinesses conditional upon projects leveraging its technology or securingintegrated and highly cost-competitive feedstock positions. The Olefins andSurfactants business is only partially integrated upstream into feedstock andhas not adequately provided the integration benefits which Sasol requires.

Sasol Nitro remains on course for improved performanceon previous years following an operational restructuring, streamlining andconsolidation program which started in 2003. Our ammonia plant in Sasolburgachieved record production following the introduction of natural gas as afeedstock.

*Exploit integrated upstream hydrocarbon opportunities—*SPIhas become a steady producer of natural gas in the Temane and Pande fields inMozambique. Sasol will continue to explore for additional gas fields in andaround these onshore fields as well as two offshore fields. Moreover, SPIremains a 27.75% partner in Gabon’s offshore Etame oilfield, where crude oilproduction is being sustained at about 19,000 bpd.

Sasol Gas continues to focus on growing the SouthAfrican gas market following the successful introduction of natural gas fromMozambique in the first quarter of 2004. At 30 June 2005 Sasol held a 100%interest in Republic of Mozambique Pipeline Investments Company (Pty) Limited (“Rompco”),a company which operates and maintains the cross-border pipeline that conveysnatural gas from the Temane central processing facility to the gas network atSecunda. On 1 July 2005, a 25% interest in Rompco was sold to iGas (Pty)Limited (owned by the South African Government) for R609 million realizing aprofit of R189 million.

Sasol Synfuels remainsvery important in respect of our South African synthetic fuel and chemicaloperations, since the strength of our business in South Africa is our abilityto efficiently back-integrate into cost-competitive hydrocarbon feedstock. Thecombination of factors such as rising oil prices, ongoing human development andproductivity improvement will continue to strengthen our group results. Ourmulti billion rand Project Turbo is advancing, and although the entire projectwill only be ready for operation in March 2006, it will enable our liquidfuel business to comply with South Africa’s new fuel specifications set for January 2006.

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**Our Activities**

***Sasol Mining***

Sasol Mining extracts and supplies coal mainly to oursynfuels and chemical plants under terms and conditions which are determined onan arm’s length basis, while about 28% of its output is sold to externalcustomers, primarily international. In 2005 its external turnover amounted toR1.5 billion, while its aggregate inter-segment and externalturnover was R5.2 billion.

Sasol Mining hasthree South African operations:

·       SecundaMining Complex, consisting of four underground mines (Bosjesspruit,Brandspruit, Middelbult and Syferfontein) at Secunda supplying coal to SasolSynfuels, its primary customer. As mentioned later in this section, supply ofcoal has commenced in May 2005 to Eskom Holdings Limited (“Eskom”), SouthAfrica’s state-owned power company.

·       ExportComplex (situated in the Secunda Mining Complex), supplied by Twistdraai mineat Secunda, producing coal for the international market as well as a secondaryproduct, supplied to Sasol Synfuels.

·       SigmaMining Complex. In recent years, Sasol Mining has been supplying approximately6 million tons (“Mt”) of coal a year to the Sasolburg petrochemicalcomplex. From February 2005, following the introduction of natural gas asa feed stream to the Sasolburg operations, this complex’s annual coal demandhas dropped to about 2 Mt. This coal is only needed to operate the steamand electricity plants. The development of the R229 million Sigma-Mooikraalmine near Sasolburg will supply coal to the utility plants in Sasolburg when itis brought into operation in November 2005.

During 2005 total production was 47.7 Mt of coal,compared to 52.4 Mt in the previous year. Saleable production volumes varyeach year according to inter-segment demand and export capacity. For moreinformation regarding our mining properties and operations and our miningreserves see “Item 4.D—Property, Plant and Equipment—Mining Properties andOperations”.

In 2005, total turnover to Sasol Synfuels, SasolInfrachem and external customers in the international market was 46.5 Mtof coal, compared to 51.1 Mt in 2004. In particular, in 2005, Sasol Miningsupplied 39.4 Mt to Sasol Synfuels at Secunda and 3.0 Mt to SasolInfrachem at Sasolburg. In 2004, it supplied 40.2 Mt to Sasol Synfuels and6.8 Mt to Sasol Infrachem.

Sasol Mining exports approximately 8% of the SecundaMining Complex’s production. In 2005 external turnover, primarily exports,amounted to 4.1 Mt, compared to 4.1 Mt in 2004. While a buoyantmarket allowed US dollar export prices to increase by 62%, continued randstrength limited the increase in the rand export coal price to 47%. Marketingopportunities for coal in both the international and domestic utility marketare being explored. It is the intention to increase our presence in theinternational market over the ensuing decade. This is currently constrained byour throughput entitlement at the Richards Bay Coal Terminal, South Africa’spredominant coal export outlet. The planned expansion of this terminal has beendelayed and its timing is uncertain. However, once completed, this may providethe company with a further 0.5 Mtpa of export capacity.

The previously reportednew methodology towards optimizing the layout and planning of the present andfuture mines is being used extensively and will result in more optimized minelayouts and planning.

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**SasolMiningCoal Production and Sales Data**

| ** **                                                                        | ** ** | **2005**                                         | ** ** | **2004** | ** ** | **2003** | ** ** |
|-----------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|----------|------------|----------|------------|
| ** **                                                                        | ** ** | **(Mt, unless otherwise stated)** | ** ** |
| Sigma Mine,  including Wonderwater                                                |       | 2.6                                              |       | 6.2      |       | 5.9      |       |
| Secunda Mines                                                                     |       | 45.1                                             |       | 46.2     |       | 45.4     |       |
| **Total  production**                                                             | ** ** | **47.7**                                         | ** ** | **52.4** | ** ** | **51.3** | ** ** |
| Saleable production from all mines(1)                                             |       | 45.5                                             |       | 50.4     |       | 49.6     |       |
| External coal  purchases from other mines                                         |       | —                                           |       | —   |       | 0.4      |       |
| Sales to Sasol Infrachem, Sasolburg                                               |       | 3.0                                              |       | 6.8      |       | 6.4      |       |
| Sales to Sasol  Synfuels, Secunda                                                 |       | 39.4                                             |       | 40.2     |       | 39.4     |       |
| Additional  domestic markets sales                                                |       | 0.5                                              |       | 0.5      |       | —   |       |
| International  sales                                                              |       | 3.6                                              |       | 3.6      |       | 3.6      |       |
| **Total  sales including exports**                                                | ** ** | **46.5**                                         | ** ** | **51.1** | ** ** | **49.4** | ** ** |
| Production per  shift of continuous miner (mining production machine) (tons) |       | 1,606                                            |       | 1,707    |       | 1,644    |       |

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(1)    Saleableproduction equals our total production minus discard and includes both productsold and movements in stockpiles.

*Project 2010.**  *An analysis of the futurechallenges facing Sasol Mining and a review of our strategy culminated in the definitionof Project 2010. This project commenced over a year ago and its objective is toensure that Sasol Mining meets the challenges going forward. These challengesare encapsulated in six main strategic themes, namely:

·       MiningCharter compliance;

·       Safety,health and environmental (“SH&E”);

·       Continuousimprovement;

·       Businessand reserve optimization;

·       Productand market optimization and logistics; and

·       Winning with people.

**Mining Charter compliance**

*Miningrights ownership.**  *Interms of the transitional arrangements of the Mineral and Petroleum ResourcesDevelopment Act (Act No. 28 of 2002), the mining authorizations interms of Section 9 of the repealed Minerals Act, remains in force for 5calendar years from date of implementation of the Act. During this 5 calendaryear period, applications will have to be submitted to the State for theconversion of the present mining authorizations to mining rights. These newrights are granted for a maximum period of 30 calendar years. All applicationsdue to date have been submitted to the Department of Minerals &Energy, and we are awaiting approval in this regard. For a further discussionof the Mineral and Petroleum Resources Development Act see “3.D RiskFactors—New mining legislation may have an adverse effect on our mineral rights”and below “—Regulation of Mining Activities in South Africa—The Mineral andPetroleum Resources Development Act”.

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*Economicempowerment of historically disadvantaged South Africans.**  *The Mineral and Petroleum ResourcesDevelopment Act, (with its adjuncts to the Mining Charter and scorecard) cameinto effect on 1 May 2004. The Act is aimed at fostering andencouraging black economic empowerment (“BEE”) and transformation within themining industry at the tiers of ownership, management, skills development,employment equity, procurement and rural development. The Mining Charterprovides for 15% of equity in South Africa’s mining assets to be owned byhistorically disadvantaged South Africans (“HDSA”) within 5 calendar yearsof the Act coming into effect, and 26% within 10 calendar years. Forfurther discussion on the Mining Charter see “3.D—Risk Factors—There are risksrelating to the countries in which we operate that could adversely affect ourbusiness, operating results, cash flows and financial condition”. The MiningCharter scorecard will be used as a measuring tool by the government(Department of Mineral and Energy Affairs) to measure conformance to the MiningCharter in forming its decisions of the conversion of mining rights.

Compliance with the Mining Charter is a prerequisitefor the conversion of prospecting and mining rights. Prospecting and miningrights, under the new legislation, must be converted from “old order” rights to“new order’ rights. Failure to comply will result in a company losing its rightto mine. To date we have submitted 33 applications to convert our mining rightsto the Department of Minerals and Energy. These applications cover all theprospecting rights in the Free State and Waterberg as well as some prospectingand mining rights in Secunda.

In order to make thesechanges in ownership as seamless as possible, Sasol Mining has pursued a rigorousblack economic empowerment strategy formulation process, followed by a partnerselection process, the result of which has been the selection of Eyesizwe Coal(Pty) Limited (“Eyesizwe”) as the preferred lead strategic black economicempowerment partner. Sasol Mining engaged in negotiations with Eyesizwe whichresulted in a Memorandum of Understanding (“MOU”) being signed. Potentialopportunities will be considered in the areas of coal export, Eskom market(power generation) and the Sasolburg mining operations. The Export business(Twistdraai mine and plant) is the first focus area for inclusion in a futuredeal with Eyesizwe. We believe Sasol Mining will comply with the 15% ownershiprequirement of the Act and Mining Charter within the prescribed 5 calendar yearperiod. Negotiations in this regard have progressed and it is envisaged thatfinalization with regards to the export business, will be achieved by 2006.

**Safety, health and environmental**

The recordable injuries case rate for 2005 was1.51 compared to 1.11 for 2004, and the lost work day case rate for 2005 was0.24 compared to 0.23 for 2004. Safety is of critical importance to SasolMining. To address this negative trend in accidents, interventions have beenimplemented to improve our safety performance. One of these interventions was acomprehensive review of Sasol Mining’s safety strategy and current approachtowards safety management by the global chemical company DuPont SafetyResources (“DuPont”) that is well known for its excellent safety record. Severalrecommendations were made by DuPont each of which is currently being addressed.Safety training and contractor management are the main themes of the DuPontrecommendations. A program to assist all employees in hazard identification andrisk assessment has been implemented at all our operations, and themajority of our employees have been trained in this regard. A process toimprove safety-related behavior has also started with the pilot phase almostcomplete. The roll-out to other operations will take place over the next 36months.

Underground dust levels onmechanical miners have increased to 3.63mg/m3 (3.05mg/m3 in 2004). This valueis still well below the legal limit of 5mg/m3.

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**Continuous improvement**

We continue toimprove the design, operability and performance of the continuous miner fleetat our Secunda underground mining operations. Through significant improvementsin productivity since 1998, we have managed to reduce the number of productionsections from 74 to 52. However, due to the underground development from thehighwall at Syferfontein colliery and adverse geological conditions atMiddelbult colliery, the following results were achieved during the 2005 year:

·       Section productivitydecreased from 1,707 tons per shift per continuous miner to 1,606 tons pershift per continuous miner;

·       Thepercentage of coal fines (less than 6.35 mm) has increased from 31.20% to31.68%.

·       Thenon-coal contaminants such as stone were reduced from 2.16% to 2.14%.

As a result of thisdecrease in productivity during the 2005 year, a consultant was appointed to doa diagnostic evaluation of our total productivity improvement initiative. Therecommendations of this diagnostic evaluation will be implemented during the2006 year. During the past year a process was also implemented to reduceoverhead costs (outside production sections). Specific opportunities have beenidentified through a rigorous process. The majority of the identifiedopportunities will be implemented in the 2006 year. The objective is to reduceoperating cost by some R125 million per annum. This is specifically implementedto address the reduction in coal production.

**Business and reserve optimization**

Attention is given toensure that the planning of our mines (short and long-term) is performed in themost cost effective manner utilizing our reserves as best as possible. Thisprocess will continue in the 2006 year. On 1 April 2005 upon the sale ofour Syferfontein opencast mine (excluding certain plant and equipment), theremaining equipment as well as employees were transferred to Anglo Coal. Thisresulted in the closure of all strip mine operations in Secunda.

**Productand market optimization and logistics**

The supply of coal toInfrachem has decreased due to the conversion to natural gas. In future coalwill only be supplied to Infrachem for steam generation. A decision was takento delay investment in a new mine and therefore a strategic deal was negotiatedwith Anglo Coal (a division of AngloAmerican plc) from which Sasol Mining acquired 100 Mt of coalreserves from Anglo Coal at the Isibonelo mine (in Kriel), by committing topurchase 5 Mt per annum (“Mtpa”) from Anglo Coal for a period of 20 years. The first coal from the Isibonelo mine wasdelivered on 1 July 2005 after an extensive construction program by bothSasol and Anglo Coal during 2004 and the first half of 2005. Anglo Coal willsupply 3.7 Mt for the first year where after the supply will be at 5.0 Mtpa.This will further reduce the Secunda production rates.

**Winning with people**

We are implementingprocesses to ensure that we further enhance our relationships with the LaborUnions. This includes training our Union Representatives in business skills. Atalent management process was implemented to ensure that we develop our employeesto their full potential as this forms a critical part of the Social and LaborPlan. Talent management includes ensuring that succession planning takes place.A mentorship program was introduced. Sasol Mining recruited 37 female employeeswho are now employed in traditional male positions (machine operators as wellas maintenance operators).

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***Sasol Synfuels***

Sasol Synfuels operates a coal and gas-based synfuelsmanufacturing facility which, on the basis of our knowledge of the industry andpublicly available information, we believe to be the world’s only largecommercial-scale facility of this type. Based at Secunda, Sasol Synfuelsproduces syngas primarily from low-grade coal with a smaller portion offeedstock being natural gas. The process uses our advanced high-temperatureFischer-Tropsch technology to convert syngas into a range of syntheticfuel components, as well as industrial pipeline gas and chemical feedstock.Sasol Synfuels also produces most of South Africa’s chemical and polymerbuilding blocks, including ethylene, propylene, ammonia, phenols, alcohols andketones. It operates the world’s largest oxygen production facilities(according to Air Liquide, the French industrial gas company), currentlyconsisting of 15 units. As a result, it also has the capacity to recoverhigh volumes of two noble gases, krypton and xenon.

Sasol Synfuels obtains its coal feedstock requirementsfrom Sasol Mining and purchases natural gas feedstock from Sasol Gas. Thecompany sells fuel components to Sasol LFB, and the methane-rich gas is sold toSasol Gas. Chemical feedstock are processed and marketed by Sasol and its jointventures, including Merisol. Unrefined ethylene and propylene are purified bySasol Polymers’ Monomers division at Secunda for the downstream production ofpolymers. Ammonia is sold to the fertilizer and explosives industries,including Sasol Nitro, our nitrogenous products division.

In 2005, Sasol Synfuels’ turnover amounted toR18.7 billion, of which R0.8 billion (4.4%) was sold to externalcustomers and R17.9 billion (95.6%) to other Sasol group companies.

Sasol Synfuels’ totalproduction decreased by 3% to 7.5 Mt in 2005 from 7.7 Mt in 2004,resulting mainly from three unplanned shutdowns during the year, mostsignificantly the flooding of the ash dam. Average per capita productionincreased slightly despite lower production volumes by 0.5% to 1,364 tons peremployee as a result of the labor optimization program completed in 2005. Theproduction of liquid and gaseous fuels decreased to 64% of total productionvolumes compared to 2004 which amounted to 66%.

**Sasol SynfuelsProduction Volumes**

| ** **                           | ** ** | **2005** | ** ** | **2004** | ** ** |
|--------------------------------------|------------|----------|------------|----------|------------|
| Total production  (Mt)               |       | 7.5      |       | 7.7      |       |
| Average production per  employee (t) |       | 1,364    |       | 1,357    |       |

 

**Specific ProductVolumes**

| ** **                                                            | ** ** | ** 2005 ** | ** ** | ** 2004 ** | ** ** |
|-----------------------------------------------------------------------|------------|----------------------|------------|----------------------|------------|
| Liquid and gaseous  fuels (%)                                         |       |                 | 64         |                 |       | 66 |   |
| Petrochemical  feedstock (%)                                          |       |                 | 25         |                 |       | 20 |   |
| Carbon plus  nitrogenous feedstock for fertilizers and explosives (%) |       |                 | 8          |                 |       | 11 |   |
| Specialized cokes,  creosote and related carbon and tar products (%)  |       |                 | 3          |                 |       | 3 |   |

 

Overall production integrity and reliability remainedat high levels throughout the year despite three unplanned shutdowns. Ongoingprograms are followed to improve plant reliability, availability and efficiencyof operations. Specific initiatives are being rolled out to improve productivity,starting with maintenance and production work processes. Behavior based safetyis also currently rolled out to improve the risk and safety profile of theorganization with simultaneous managerial safety improvement intervention inaccordance with DuPont’s safety management process.

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Natural gas is now fully integrated as a supplementaryfeedstock to coal derived gas and represented 2% of product volumes for the2005 year. It is expected that natural gas’ contribution to product volumes for2006 will be 3%. It is envisaged that the future production growth will bemainly based on natural gas as a feedstock. Sasol Synfuels does not excludefurther production growth via coal but this will be dependant on futuretechnology improvements.

Further refinement during the 2005 year was made tothe configuration of the Sasol Advanced Synthol (“SAS”) reactors yielded anincrease in production throughput and product yields. Further work on thisprocess is still in progress which will yield further volume and efficiencybenefits.

Continuous focus is being placed on the improvement ofthe business impact on the environment. The sulfur recovery improvement projectwas successfully completed during the 2005 year and the waste recyclingfacility plant will be fully operational in October 2005 (the totalcapital investment of this project amounts to R520 million).

New fuel specifications will come into effect in January 2006,which will allow consumption of only unleaded fuel in South Africa. SasolSynfuels is advancing an initiative in partnership with Sasol Technology andSasol LFB to ensure our compliance with these fuel specification requirementsby January 2006. We are investing approximately R5.7 billion tomodify our liquid fuel refining and blending operations and to establishadditional new plant aimed at increasing the octane rating of our syntheticgasoline. The majority of this expenditure (approximately R4 billion),relating to the installation of a selective catalytic cracker, will be expendedduring the 2005 and 2006 years. Approximately R3.4 billion has already beencapitalized on the project to 30 June 2005. Unlike our other major capitalinvestment projects undertaken in recent years, this project is not expected togenerate additional returns for the group, but is required to meet therequirement for changed fuel specifications. The project requires multiplerefinery unit changes, and the construction of new refinery units, as well asthe installation of a catalytic cracker which will produce additional volumesof ethylene, propylene and high-octane fuel components. We expect that inaddition to delivering the new fuels solution for 2006, this project will alsoaddress most of the envisaged future more stringent fuel specifications whichare expected to be mandated in future years.

Due to the way our process plants are configured atSasol Synfuels, its ultra-low-sulfur synthetic diesel already meets the morestringent 2006 specifications for the sulfur content of diesel (to be loweredin South Africa from 3,000 parts per million (“ppm”) to 500 ppm.

*Strategic objectives.**  *Sasol Synfuels’primary strategic objectives are:

·       tomaintain all-round operational excellence (including safety performance);

·       tomaintain a motivated and skilled human resources base;

·       toposition itself strategically for long-term growth in a complex and evolvingenvironment; and

·       tocontinuously reduce the environmental footprint of our operations in Secunda.

In 2004 Sasol Synfuels commenced with a furtherinitiative to ensure organic growth via the improvement of maintenance andproduction business and works processes. The focus is on eliminating the impactof unplanned shutdowns, ensuring business continuity and increasing laborproductivity over the long-term.

*Sasol CarboTar.**  *Sasol’s CarboTar business was fullyintegrated as part of Sasol Synfuels with effect 1 July 2004 and willno longer operate as Sasol CarboTar. The Synfuels business has therefore beenextended to incorporate a marketing outlet for all of Synfuels and Carbo Tar’schemical and fuel component feed streams. The Tar plant in Sasolburg will befully depreciated in the 2006 year and will cease its operations, given theconversion of the Sasolburg facility from coal to natural gas as a feedstock.

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***Sasol Liquid Fuels Business***

In line with the requirements of South Africa’s LiquidFuels Charter of 2000 and our commitment to advancing BEE, we created a newliquid fuels business (“LFB”). The LFB encompasses the established liquid fuelsand lubricants marketing, distribution, commercial and retailing interests,including the Exel business, our shareholding in the Natref refinery, and theacquisition of fuel components and the fuel blending and storage facilities atSasol Synfuels in Secunda. Products include gasoline, diesel, jet fuel, fuelalcohol, illuminating paraffin, liquefied petroleum gas, fuel oils, motor andindustrial lubricants. The Sasol LFB also encompasses crude oil procurement,shipping and refining, as well as final product supply to, and trading with, otheroil companies operating in Southern Africa.

On 6 February 2004, Sasol announced that SasolLimited and Petronas were in discussions concerning the combination of SasolLFB and Petronas’ South African LFB, Engen, in a joint venture to create aleading South African liquid fuels business. The new LFB will be effected byway of a joint venture, called Uhambo Oil, in which Sasol and Petronas willeach have an equal 37.5% interest and BEE partners (both existing and new) willhold a combined 25% interest. The definitive agreements were signed on 1 November 2004.The transaction is subject to the approval of the competition authorities. The South African Competition Commission grantedconditional approval to the proposed joint venture in May 2005, TheCompetition Tribunal hearings are scheduled to commence in October 2005with the decision expected by the end of 2005 calendar year. Approval of thetransaction by the European Commission was granted in February 2005. In September 2005it was announced by Sasol that Tshwarisano, its Broad-based BEE partner, wouldacquire a 12.5% interest in Uhambo Oil, subject to the approval of theCompetition Tribunal. See “Item 6.B—Significant Changes”.

*Natref.**  *While weoperate the refinery, Total participates in its management with veto rights inrespect to a number of corporate actions, including, among others, increasingor reducing Natref’s share capital, amending Natref’s Memorandum and Articlesof Association and the rights attaching to its shares, appointing directors toserve as executive officers and determining directors’ remuneration.

Under the terms of an agreement concluded betweenTotal and Sasol, Total has the option to purchase up to 13.64% of the ordinaryshares in Natref from Sasol at fair market value upon the occurrence of certainevents. Termination of the Main Supply Agreements in December 2003 allowedTotal to exercise its option which would increase its interest in Natref to50%, although Total decided not to exercise its option and increase itsinterest to 50%, at that stage. The envisaged transaction to combine the liquidfuels businesses of Sasol and Petronas, in a joint venture, again providedTotal with the option to increase its shareholding in Natref by 13.64%. Totaldecided not to exercise its option to increase its shareholding in Natref.

*Refineryproduction and capacity.**  *Natref obtains approximately 50% of its crude oilrequirements from the Middle East through crude oil term contracts and thebalance at spot prices from West Africa and other sources. Durban landed crudeoil is transferred to the refinery through a 670 kilometer pipeline ownedby Petronet, a subsidiary of Transnet, a state-owned pipeline company.

Natref is a technologically advanced refinery, highlyefficient in refining heavy crude oil into gasoline, diesel and other whiteproducts. It is South Africa’s only inland crude oil refinery, as the otherthree crude oil refineries are located along the country’s shores. Its inlandposition does not allow the refinery easy access to the bunkers fuel market,which is the case for coastal refineries. Therefore, Natref focuses on theproduction of white petroleum products. It is designed to upgrade relativelyheavy crude oil with a high sulfur content (sour) to yield about 90% whitepetroleum products. Crude oil selection and degree of upgrade are ultimatelydictated by refinery configuration and overall economics. Other products of therefinery include commercial propane, jet fuel, different grades of bitumen andfuel oils.

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We are investing in the Natref refinery to meet newfuel specifications. This project is aimed at meeting the more stringentlegislation for the introduction of low-sulfur diesel and unleaded fuelproduction in January 2006. The project will allow Natref to produce tothe 2006 specifications, but at a reduced capacity to 89% of previouscapacity. The project should be fully operational by the end of October 2005with the new fuel qualities being available before the end of the 2005 calendaryear. Our share (63.64%) of the capital expenditure for the Natref project isexpected to be about R331 million. New processing units will have to bebuilt to meet the South African required fuel specifications (required for thecontrol of exhaust emissions from road-going vehicles in South Africa) in 2010and will require a substantial investment.

With regard to refinery efficiency during the year2005, plant availability was 89%. White product yield was 90% in 2005, comparedto 91% in 2004. The total product yield decreased from 99% in 2004, to 98% in2005.

Unintended downtimeincreased from 0.5% to 3.4%. The increase in the unintended downtime was as aresult of three unplanned interruptions. One of these interruptions resultedfrom a major fire that occurred at the product loading facilities.

**NatrefRefinery Production(1)**

| **Product**                              | ** ** | ** ** | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|------------------------------------------|------------|------------|------------|----------|------------|----------|------------|----------|------------|
| Crude oil  processed (million m3)        |       | 3.2        |       | 3.1      |       | 2.8      |       |
| White product  yield (% of raw material) |       | 89.5       |       | 90.7     |       | 91.6     |       |
| Total product yield (%)                  |       | 97.9       |       | 99.4     |       | 98.4     |       |

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(1)           Data based onour 63.64% share in Natref.

**LiquidFuels Marketedby Sasol LFB**

| **Product**                            | ** ** | ** ** | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|----------------------------------------|------------|------------|------------|----------|------------|----------|------------|----------|------------|
| Total liquid fuel  sales (million m3)  |       |       | 9.6        |     |       | 9.3      |       |     | 8.9        |   |
| Fuel and bitumen exports  (million m3) |       |       | 0.8        |     |       | 0.7      |       |     | 0.2        |   |

 

*TheSouth African liquid fuels market.**  *Our 63.64% share of Natref’sproduction represents about 12% of South Africa’s total liquid fuels demand. Inaddition, 27% of South Africa’s fuel demand is met from components produced atSasol Synfuels in Secunda. Our main wholesale customers in the South Africanliquid fuels market include Engen, BP, Caltex, Shell and Total. Thesecompanies, among others, currently purchase a part of their liquid fuelsrequirements for the South African market from us.

The Natref refinery at Sasolburg and our facilities atSecunda are located in the economic heartland of the country, where anestimated 55% of the country’s liquid fuels are consumed. We currently supplyapproximately 6.6 Mt of white products per year to the South Africanmarket. Gasoline and diesel export volumes to African countries, excludingSouth Africa decreased during 2005 from 756,961m3 to 636,033 m3.

After termination of the Main Supply and Blue Pumpagreements, we concluded new supply agreements with the main oil companiesoperating in South Africa. These agreements cover the supply of liquid fuels,including gasoline, diesel, liquefied petroleum gas, jet fuel and illuminatingparaffin. The transition to the new agreements was reasonably smooth and we metall supply commitments.

Slightly higher sales to the oil companies contributedto an increase in profits. This increase in oil company volumes was achievedagainst signed supply agreements with all the major oil companies. Supply 

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agreements were alsonegotiated for the first time for Sasol LFB with some emerging wholesale companies(companies registered with the CEF (Pty) Limited. For a company to be sodesignated it must sell a minimum of 15,000m3 of petroleum products per annum.The Minister of Minerals and Energy may, under the Central Energy Fund Act,impose a levy on fuel manufactured, sold, or otherwise dealt with for thebenefit of the Equalisation Fund or Central Energy Fund or both.).

We formed an empowerment joint venture with a Namibiancompany, Philco Twenty (Pty) Ltd, called Namibia Liquid Fuels, to supply 50% ofNamibia’s white product requirements (about 500,000m3 a year) for atleast three years. In addition, we entered into a major new supply agreementwith the Government of Lesotho.

In the commercial sector, we are targeting fourprimary business sectors for marketing and supplying Sasol liquid fuels andlubricants: the mining industry, the transport industry, reseller/distributorsand government organizations. Our successful marketing of products, for exampleour low-sulfur Sasol turbodieselTM, has assisted in promoting our successes inboth the commercial and retail markets.

In the retail sector we have successfully developednew, or converted existing service stations, growing to 146 Sasol ConvenienceCenters (“SCC”) and 199 Exel-branded service stations as at 30 June 2005,in line with the dual-branding approach, supporting two distinctive butcomplementary marketing strategies. In addition to the new sites developed, 88Exel sites were revamped and converted to Sasol SCCs included in the 146 sitesnoted above. We have been successful in achieving our interim objectives interms of market share for both retail gasoline and diesel.

When the Main Supply Agreement expired, we increaseddirect sales marketing on a commercial basis of the group’s low-sulfur,low-benzene illuminating paraffin. We expect to build up a market share for ourilluminating paraffin over the next 5 years. We retain competitive advantage inthis sector of the industrial and related energy markets because of a notablylow sulfur content of our fuel oils and special distillate fuels.

The Petroleum Products Amendment Act and subsequentfurther Amendment Bill, are expected, when enacted, to allow the Minister ofMinerals and Energy, if required, to regulate the conditions and requirementsfor licensing of the sale of petroleum products to the retail markets in SouthAfrica, including liquid fuel retail prices. Its provisions can affect theconditions and cost of our entry into the South African retail market forliquid fuels. See “Item 4.B—Business Overview—Regulation—Regulation ofPetroleum—Related Activities in South Africa”.

The Petroleum Pipelines Act was assented to and signedinto law by the President on 31 May 2004. This Act proposes, among otherthings, to establish a petroleum pipelines authority responsible for thesupervision of the national regulatory framework of petroleum pipelines andprovisions for the issuance of licenses relating to the construction andoperation of petroleum pipelines and the delivery of certain commercialservices in connection with these pipelines, provision for the registration ofmarine offloading and storage facilities and certain commercially relatedservices and setting and approving of tariffs for the use of pipelines andrelated storage facilities.

Among the matters governed by the Act, of particularsignificance to our business, are issues relating to the issuance of licensesand the discretion granted to the Minister of Minerals and Energy with respectto the exercise of executive powers, the determination of tariffs and the issueof open access to pipelines.

With regard to the setting of tariffs, variousmethodologies can be adopted, which may impact differently on some competitorsbecause of their different market position and geographic location. Regulationsthat may be promulgated under the Act, could affect our logistic position dueto the location in the economic heartland of the country of our Natref refineryand our Synfuels facilities at Secunda. The Act provides that sufficient pipelinecapacity will be made available in the crude oil pipeline to enable Natref tooperate at its capacity at the commencement of the Act.

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We believe that securing direct independent access tothe retail markets will yield strategic advantages to further improve ourposition in the South African fuels market. Since the restrictions on ourdirect sales to the South African market have been removed, we have theopportunity to increase our fuel production and sales by accessing the retailand commercial markets.

Petronet transfers synthetic fractions from Secunda toNatref on behalf of Sasol. Petronet purported to terminate the agreement totransfer these fractions with effect from 1 January 2005. Afterevaluating various technical options, agreement was reached with Petronet tocontinue with the transfers of synthetic fractions to Natref. Modifications tothe pipeline will be completed by the end of October 2005 allowingPetronet to also use the line for other products.

We supported and participated—with the South Africanliquid fuels industry and the national departments of Minerals and Energy andof Environmental Affairs and Tourism—in a comprehensive technical programtowards finalizing South Africa’s new clean fuels specifications and vehicleemission standards for implementation on 1 January 2006. In addition weactively participate, together with Government and other stakeholders, in thevarious task teams to facilitate smooth clean fuels implementation in January 2006.

*Economic empowerment ofhistorically disadvantaged South Africans.**  *As part of a general initiative ofthe government of South Africa to ensure the participation of historicallydisadvantaged South Africans in the country’s economy, in November 2000,we became party to an agreement with the government and the liquid fuelsindustry which requires us, as well as other oil companies in this sector, toallow and facilitate BEE participation. For a further discussion of the LiquidFuels Charter see “Item 4.B—Business Overview—Regulation—Empowerment ofHistorically Disadvantaged South Africans”. The Liquid Fuels Charter inter aliarequires, us to allow historically disadvantaged South Africans to acquire anequity participation of at least 25% in the company holding our Sasol’s LiquidFuels Business by 2010. We presented our charter-specific plan to adedicated parliamentary portfolio committee of the South African Parliamentduring 2003.

***Sasol Gas***

Through Sasol Gas, we market methane-rich gas,produced by Sasol Synfuels and natural gas as a result of the inception ofnatural gas production from the Mozambican gas fields. Since 1964, we havedeveloped gas markets and a gas distribution pipeline network of 2,200 kmthrough which we currently supply 86.9 million gigajoules per annum (“mGJ/a”).We supply 47 mGJ/a to over 500 industrial and commercial customers in theprovinces of Mpumalanga, Gauteng, KwaZulu-Natal and the Free State. Wealso supply additional volumes of 39.9 mGJ to other Sasol companies such asSasol Chemical Industries in Sasolburg and Sasol Synfuels in Secunda. We use aPetronet pipeline to transport gas to our markets in KwaZulu-Natal.

Our gas products consist of methane-rich gas producedat our Synfuels plant in Secunda and natural gas piped from the Mozambican gasfields. Our gas competes mainly with crude oil-derived products in variousindustries, including ceramics, glass, metal, manufacturing, chemical, food,paper and pulp and a number of other sectors.

*TheSouth African gas market.**  *The market for pipeline gas in South Africa is stillin its infancy. We expect the market to grow substantially as a result of theintroduction of natural gas from Mozambique. Our current supply of 86.9 mGJ/aof pipeline gas increased from 52.9 mGJ/a in 2004. Compared to developedcountries, South Africa is a small consumer of natural gas as a percentage ofits total energy requirements. This presents Sasol Gas with opportunities toincrease sales of environmentally preferred natural gas. Environmental andtechnological trends together with new environmental legislations are expectedto entice customers to convert to gas as a substitute for electricity, crudeoil derivatives and coal.

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*Thenatural gas project.**  *ThroughSasol Petroleum International, we agreed with the government of Mozambique todevelop its natural gas fields in the region of Temane. To this end, weconcluded a petroleum production agreement under which, in partnership withCompanhia Moçambicana de Hidrocarbonetos, a subsidiary of Mozambique’s nationaloil company, we are developing the reservoirs in Temane and Pande and haveconstructed a natural gas central processing facility. We have also concluded aproduction sharing agreement which grants us exploration rights to definedareas surrounding the Temane and Pande reservoirs.

Furthermore, the government of Mozambique granted usthe right to construct and operate a gas transmission pipeline for thetransportation of gas from Mozambique to South Africa. The governments of SouthAfrica and Mozambique have the option collectively to acquire 50% of the sharesin the pipeline company which is currently a wholly owned Sasol subsidiary, ata price to be determined by means of a formula at the date they exercise theoption. On 1 July 2005, a 25% interest in Rompco was sold to iGas (Pty)Limited (owned by the South African Government) for R609 million realizing aprofit of R189 million.

The project hasbeen completed on schedule and within budget and comprised eight mainobjectives:

·       explorationin and around the Temane and Pande fields and the development of the gasextraction infrastructure;

·       thecommissioning of the central processing facilities at Temane to clean and drygas;

·       thecommissioning of the cross-border transmission pipeline between Temaneand Secunda;

·       theconnection of the pipeline into the Sasol Gas network at Secunda;

·       theconversion of the Sasol Infrachem coal-based process at Sasolburg to usenatural gas as its hydrocarbon feedstock. Initial operating problems with thenew technology autothermal reformers used in the process have largely beenresolved;

·       theconversion of the Gauteng gas network and customers to natural gas to replacethe hydrogen rich gas derived from coal;

·       theexpansion of Secunda using natural gas as a supplementary feedstock to enablean initial 3% increase in Sasol Synfuels’ gas throughput; and

·       thefurther development of third-party gas markets in South Africa.

Construction of the central processing facility nearVilanculos in Mozambique, was completed in March 2004 and can currently befed with gas from nine of its twelve production wells. During June 2002,we commenced construction of the transmission pipeline from Mozambique, whichwas completed in March 2004. We have successfully converted all our inlandcustomers to natural gas.

Based on our estimates, we expect the delivery ofnatural gas to South Africa to increase from the current rate of 70mGJ/a to120mGJ/a by 2008.

The introduction of natural gas from Mozambiquecoincided with the exhaustion of the coal reserves and the shutdown of themajority of our mining operations at the Sigma Mine at Sasolburg. Wetransformed our coal gasification facilities at Sasolburg to natural gas refiningas part of the Mozambique natural gas project. In addition, Sasol Synfuels andSasol Technology installed additional facilities at our Secunda plant tocommence using natural gas as supplementary hydrocarbon feedstock.

The natural gas project was conducted with due regardfor social and environmental obligations and our requirement to completeconstruction according to the principles of sustainable development. Weutilized prevailing international development guidelines and principles issuedby various organizations, including the World Bank and the World HealthOrganization.

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*ThePetronet gas pipeline.**  *Petronetis the owner and operator of a network of 3,000 km of high-pressurepetroleum and gas pipelines. Following negotiations between Petronet and SasolGas, we recently entered into an operating lease agreement to continue to usethe Petronet Lily pipeline for the supply of pipeline gas to the Kwazulu Natalmarket. The agreement, which came into effect on 1 April 2005, will runfor the next 17 years until 2022 with an option of a further 3 years.

*Co-generation.**  *We are currently negotiating withpotential customers for the supply of gas to cogeneration facilities. Thesenegotiations are well advanced and should be concluded early in the 2006 year.

As part of our commitment to Black EconomicEmpowerment, Sasol Gas formed a joint venture company and contributed itsbusiness rights to market pipeline gas in the Durban South area to SpringLights Gas which is now entering its third year of commercial operations withincreased operating profit on the previous year. A Black Economic Empowermentcompany, Coal Energy and Power Resources, holds 51% of the shares and Sasol Gasthe balance.

Sasol Gas signed amemorandum of understanding in 2002 with another black empowerment company,Umkhumbi Gas for the potential distribution and marketing of natural gas in theNelspruit-Ngodwana region of Mpumalanga. Umkhumbi Gas and Sasol Gas embarked ona gas supply feasibility study which was completed in the beginning of 2005.The results of the study showed that the option to extend the gas pipeline tothe Ngodwana area was more viable than the Nelspruit pipeline extension.Commercial negotiations with potential customers in the Ngodwana area have beencompleted and the results indicate that it is currently not economicallyfeasible to supply this area with natural gas and work on this project has beenterminated.

***Sasol Synfuels International***

Based in Johannesburg and formed in 1997, SSI ourtechnology marketing and support subsidiary, is responsible for developing andimplementing international business ventures based on our Fischer-Tropschsynthesis technology. SSI initiates and develops new ventures from projectconception through to venture implementation. We expect that, in time, it willparticipate fully in supporting those ventures and the marketing of theirproducts after commercial start-up.

*The Sasol SPDTM process.**  *Exploiting our long and extensiveexperience in the commercial application of Fischer-Tropsch technology,we have successfully developed a Fischer-Tropsch-based SPDTM processfor converting natural gas into high-quality, environment-friendly dieseland other liquid hydrocarbons. The GTL process consists of three main steps,each one of which is commercially proven. These include:

·       theHaldor Tops&qout;e reforming technology, which converts natural gas and oxygen intosyngas;

·       ourSlurry Phase Fischer-Tropsch reactor, which converts syngas intohydrocarbons; and

·       wherepossible, the Chevron IsocrackingTM technology, which converts hydrocarbons intoparticular products, mainly diesel, naphtha and liquefied petroleum gas (“LPG”).

Currently, we believe, based on our knowledge of theindustry and publicly available information, that on a worldwide basis we havethe most extensive experience in the application of Fischer-Tropschtechnology on a commercial scale, with Shell being the only other company withsignificant experience in this field. Given the increasing discovery ofextensive natural gas resources, especially in remote regions, our Sasol SPDTMprocess can be applied with significant commercial and efficiency advantages invarious parts of the world. Proven global natural gas resources are currentlyestimated to be an oil equivalent of more than 900 billion barrels. Inaddition, transportation of fuels in liquid form is easier and cheaper thantransportation of gas. As a consequence, our technology has evoked interestfrom countries and companies with extensive natural gas reserves, as anappealing alternative for exploiting these reserves. In recent 

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years, we have beenactively promoting our Sasol SPDTM technology and are examining severalprojects, with a view to commencing its commercial application at the core ofnew GTL plants.

The Sasol SPDTM process converts natural gas intodiesel and other liquid hydrocarbons which are generally more environment-friendlyand of higher quality and performance, compared to the equivalent crudeoil-derived products. In view of product specifications gradually becoming morestringent, especially with respect to emissions, we believe that the option ofenvironment-friendly GTL fuels will become more appealing in time.However, the construction of GTL facilities and the production of GTL fuelsrequire significant capital investments, at least during their initial stages,as is usually the case with the application of new technologies. GTL fuels canbe used with optimized engines for best performance, although they can also beutilized with current compression ignition engines. We also expect that GTLdiesel may be suitable as a cost-competitive blend stock for conventionaldiesels, thereby enabling diesel producers to improve the quality of theirexisting diesel formulations without investing substantially in sophisticatednew plants and infrastructure. We anticipate the combined factors of GTL diesel’ssuperior characteristics and the prevailing market conditions in developedeconomies will enable GTL products to initially command premium prices foreither niche applications or as a blend stock for upgrading off-specificationproducts.

*TheSasol Chevron joint venture (“SC”).**  *In June 1999, SSI and Chevron,agreed to create a global alliance SC in order to identify and implementventures based on the Sasol SPDTM process as part of our strategy to exploit ourFischer-Tropsch technology and to develop and commercialize the GTL process.We believe that there are considerable synergies between the two companies,which will enable the alliance to accelerate both the implementation of GTLventures and the development of markets for the new products, to be producedfrom the ventures that will be established. We finalized and implemented ourglobal joint venture in October 2000. SC and SSI continue to be involvedin exploratory discussions and feasibility studies with some of the world’sgas-rich countries, including Qatar, Nigeria, Algeria and Australia, with theview to develop GTL plants over the next decade.

In addition, working closely with Sasol Technology’sFischer-Tropsch process innovation teams at Sasolburg and Johannesburg,SSI and SC are involved in an ongoing program aimed at further improvingcompetitiveness by lowering the capital and operating costs of future GTLplants.

*Sasolexploring new opportunities.**  *Working in partnership with Sasol Technology, SSIalso continues to explore for new opportunities to commercialize Sasol’scompetitive Fischer-Tropsch synthesis technology for the beneficiation ofcoal and other hydrocarbon resources, including biomass.

*TheQatari GTL project.**  *Wehave formed a joint venture with Qatar Petroleum (“QP”), Qatar’s state-ownedenergy company, the Oryx GTL venture, in respect of the joint development of aGTL plant at Ras Laffan Industrial City in Qatar. We hold 49% in this venture,with QP holding 51%, in the US$952 million project (excluding financialcharges)**,** including site,pre-production and contingency costs. Construction of the GTL plant hascommenced and a dedicated Sasol management team has been established in Qatar.

In November 2002 we jointly appointed 15 banks aslead arrangers to provide the US$700 million non-recourse debt financingfor the venture. QP and SSI awarded the US$675 million lump-sum, turnkeyengineering, procurement and construction (“EPC”) contract to themultinational, French-based engineering company, Technip, in December 2002.The EPC contract became effective in March 2003 after finalizing thefinancial agreements. The EPC contract is being executed from Technip’s Italianoperations in Rome. Sasol Technology design engineers and project managers aremanaging the technology, engineering and project management portfolios for SSIand QP.

Site work for the construction of the Oryx GTL plantbegan in September 2003. Civil engineering work, including pipe laying,was completed by mid-2005. Most major pieces of long-lead-order equipment,including the two low-temperature Fischer-Tropsch Slurry Phase reactorsbeing fabricated in Japan, 

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Haldor Tops&qout;e autothermalreformers, a Chevron IsocrackingTM unit and the compressors have arrived at RasLaffan in phases during our 2005 year. Plant start-up is scheduled for thefirst half of the 2006 calendar year. Most of the Oryx GTL diesel (about 8million bpa) will be marketed to customers in Western Europe, where much ofthis ultra-low-sulfur diesel will most likely be used as blend stock for higher-sulfurdiesel derived from conventional oil refining.

*Expansionof Qatari GTL capacity.**  *In March 2004, SC and QP announced plans toexpand the Oryx GTL plant in order to increase its capacity to about100,000 bpd. In support of these plans, SC and QP signed a memorandumof understanding for the expansion project that would add a further capacity ofabout 66,000 bpd.

In addition, QP and SC have agreed to evaluatethe opportunity of developing an upstream-downstream integrated GTL project,also at Ras Laffan, with a capacity of about 130,000 bpd.

*EscravosGTL (“EGTL”).**  *SCis also participating in the development of a second GTL plant, EGTL atEscravos in the Niger Delta region of southern Nigeria. EGTL is a joint venturebetween the Nigerian National Petroleum Corporation and CNL, two companies withestablished petroleum production interests at Escravos. In April 2005 theUS$1,700 million lump-sum EPC contract for this project was awarded to TeamJKS. Start-up of the EGTL facility is expected in the 2009 calendar year.

We believe that the operation of the GTL plants inNigeria and Qatar will effectively demonstrate the successful commercialapplication of the Sasol SPDTM process outside South Africa.

*TheGulf GTL study planned.**  *A potential GTL project opportunity exists ingas-rich Iran, for which SSI completed a pre-feasibility study in 2003. SSI andIran’s state-owned National Petrochemical Company (NPC) have beeninvolved in discussions with a view to exploring the merits of constructing onthe Gulf a GTL plant based on the Sasol SPDTM process. Discussions betweenSSI and the various parties in Iran to clarify project interfaces inpreparation for the feasibility study has taken longer than originallyanticipated but are nearing completion. SSI and NPC plan to commence afeasibility study for this potential project in the year ahead. An investment decisionwill only be made after the results of a feasibility study have been evaluated.

*Coalbeneficiation study for China.**  *SSI has commenced pre-feasibilitystudies with a consortium of Chinese companies for the potential development oftwo 60,000 bpd to 80,000 bpd CTL facilities in the People’s Republic ofChina. These studies are expected to be completed by October 2005. A decisionon how to proceed with these opportunities, subject to successful outcome ofthe current studies, is expected towards end of the 2005 calendar year.

*Early-stageinvestigation of potential GTL and CTL projects**—*Sasol Chevron is evaluating the opportunityparticipate in a 34,000 bpd GTL project in Algeria. No decision on whether ornot to submit a commercial bid has been taken. The decision of the US to becomeless dependent on imported crude oil and subsequent changes to the US EnergyPolicy Act has resulted in renewed interest in CTL projects in the US. Sasol iscurrently reviewing CTL opportunities in this context. These studies are inpre-feasibility stage and Sasol has taken no decision whether or not to pursuethis opportunity.

*Catalyst facility.**  *To support our plans to globallydevelop and exploit GTL technology, Sasol Technology entered a co-investmentagreement with Engelhard Corporation during 2002 to manufacture our proprietaryadvanced cobalt catalyst. Sasol Technology developed this cobalt catalyst forapplication in the Sasol SPDTM reactor to be featured in future GTL plants. In January 2002,we commissioned a 500 tons per annum cobalt catalyst production facility at DeMeern in the Netherlands. It has since been producing and stockpiling high-qualitycatalyst for our Nigerian and Qatari GTL plants. First shipment of catalyst toOryx took place in June 2005.

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***Sasol Olefins and Surfactants***

In 2003, Sasol determined that it would continue togrow its chemical businesses, conditional upon projects leveraging itstechnology or securing integrated and highly cost-competitive feedstockpositions. The Olefins and Surfactants business is only partially integratedupstream into feedstock and has not adequately provided the integrationbenefits which Sasol requires. Sasol announced in August 2005 that it isconsidering the disposal of its Olefins and Surfactants business excluding itsco-monomers activities in South Africa subject to an acceptable price beingobtained.

The main products of the Olefins and Surfactantsbusiness unit are paraffins, olefins (including poly-internal olefins), linearalkylbenzene (“LAB”) and their surfactant derivatives, such as paraffinsulfonate and linear alkylbenzene sulfonate (“LAS”).

LAB is the feedstock for the manufacture of LAS, anessential surfactant ingredient for the detergents industry. Paraffins(n-paraffins) and n-olefins are produced mainly as feedstock for the productionof LAB, oxo-alcohols and paraffin sulfonates. A portion of this business unit’sproducts are used internally for the production of downstream surfactants andalcohols.

Based on industry and publicly available information,Sasol’s Alkylates and Surfactants business unit is one of the leading globalproducers of paraffins and LAB, as well as a leading supplier of LAS in Europe.The main competitors include: ExxonMobil, Shell and Petresa in the n-paraffinsmarket; Huntsman, Petresa and ISU in the LAB market; and Stepan, Huntsman andCognis in LAS.

***Alcohols and Surfactants:***   TheAlcohols and Surfactants business unit produces a diversified portfolio oflinear and semi-linear alcohols of carbon range between C6 and C22+.The diversity of this product portfolio is supported by the wide range of rawmaterials (petrochemical, oleochemical and coal-based) and manufacturingfacilities used, and technologies applied. Nonionic and anionic surfactantsenhance the product portfolio, as well as some surfactant intermediates such asethylene oxide, alkyl phenols and alkanolamines.

Alcohols and Surfactants products are used in a widerange of applications, including metalworking, flavors and fragrances, personalcare, cosmetics, plastic additives, textiles, agriculture, detergents andcleaners. A portion of the alcohols production is consumed internally inOlefins and Surfactants’ value chain to produce surfactants and specialtyplasticizers.

Based on industry and publicly available information,Sasol’s Alcohols and Surfactants business unit is one of the leading globalsuppliers of carbon range C6+ linear and semi-linear alcohols, aswell as a leading producer of surfactants in Europe. The main competitorsinclude Cognis and Shell.

***Inorganic Specialties:***   Thisbusiness unit produces mainly alumina products. Alumina is used in a broadrange of applications, including catalyst supports, raw materials for ceramics,coatings and polymer additives. This business unit also produces zeolites,which are used as softening components in detergents. Competitors include AkzoFiltrol and Engelhard in aluminas. There are numerous competitors in zeolites.

***Monomers:***   TheMonomers business unit has two main activities: producing alpha-olefin co-monomersin South Africa and ethylene in the United States.

The alpha olefin co-monomers, 1-pentene, 1-hexene and1-octene are manufactured at facilities in Secunda as an integral part of Sasol’ssynfuels process. Most of these co-monomers are sold to third parties for usein the manufacture of polyethylene plastics, which end up in applications suchas shrink-wrap film, woven plastic bags and refuse bags. The main competitorsinclude BP, Shell and Chevron.

Ethylene is produced at our ethane-basedethylene cracker in Lake Charles in the United States and is sold to plasticsmanufacturers in the US Gulf Coast region. Some of the ethylene production isused internally to manufacture alcohols. There are numerous competitors in theUS ethylene market.

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The following tablesummarizes the production capacity of Sasol Olefins and Surfactants for each ofits main product areas.

**SasolOlefins and SurfactantsProduction Capacity**

| **Product**            | ** ** | ** **                                    | ** ** | **Facilities Location** | ** ** | **Total** | ** ** |
|------------------------|------------|-----------------------------------------------|------------|------------------------------|------------|-----------|------------|
| ** **             | ** ** | ** **                                    | ** ** | **(Ktpa)**                   | ** ** |
| C5-C8  alpha olefins   |       | South  Africa                                 |       |                         | 275        |      |       |
| Ethylene               |       | United  States                                |       |                         | 455        |      |       |
| C6+  alcohol           |       | United  States, Europe, South Africa          |       |                         | 600        |      |       |
| Inorganics             |       | United  States, Europe                        |       |                         | 170        |      |       |
| Paraffins and  olefins |       | United  States, Europe                        |       |                         | 800        |      |       |
| LAB                    |       | United  States, Europe                        |       |                         | 550        |      |       |
| Surfactants            |       | United States, Europe,  Far East, Middle East |       |                         | 1,000      |      |       |

 

These productionfacilities are located in Secunda in South Africa; Lake Charles, Tucson andBaltimore in the United States; Brunsbüttel, Marl and Witten in Germany;Augusta, Terranova, Sarroch, Crotone and Porte Torres in Italy; Dubai in theUAE; Novaky in Slovakia and Nanjing in China.

***Sasol Polymers***

The Sasol group’s polymer related activities aremanaged in two separate companies namely Sasol Polymers, a division of SasolChemicals Industries, and Sasol Polymers International Investments. SasolPolymers is responsible for the local operations and Sasol PolymersInternational Investments for the offshore operations.

Sasol Polymers focuses on the production of ethyleneand propylene monomers, polypropylene, polyethylene and polyvinyl chloridepolymers and other chemical products through its respective businesses with itsmajor manufacturing plants located at Sasolburg and Secunda.

During 2005, Sasol group’s polymer activities achievedexternal turnover of R7.2 billion, representing 10% of our total externalsegmental turnover.

They have also retained a sharp focus on continuousimprovement. Since 1995 per-capita productivity (tons of total production peremployee) has risen by a total of 300% in 11 years. Fixed costs per ton in realterms have dropped by 42% over the same period.

*Monomers.**  *The Monomers business unit of thePolymers division supplies feedstock to its polypropylene, polythene and vinylbusiness units and to Dow Plastics South Africa. Sasol Polymers extracts theethylene and propylene feedstock from feed streams produced in our Fischer-Tropschprocess at Secunda, while a small portion of ethylene is produced from propanecracking. The ethylene production capacity is 480 Kilo tons per annum (“Ktpa”)and includes facilities for ethane cracking in both Secunda and Sasolburg.

Ethylene production fell below target during the yearbecause of a tragic incident on 1 September 2004 when the Secunda Westethylene production facilities sustained severe damage as a result of anexplosion during maintenance activities. The plant was unavailable forproduction up to the last week in December 2004. During this three and ahalf month period, losses were reduced via increased production on theremaining two ethylene plants in the Monomers business. A portion of this lossin production was matched by a reduction in demand when project work wasexecuted on downstream polymer units. The supply to some downstream units hadto be restricted notwithstanding this reduction in demand. These losses weremostly covered by our insurance.

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The propylene extraction facilities comprise threesplitter columns at Secunda with a total capacity of 475 Ktpa(350 Ktpa polymer and 125 Ktpa chemical grade), as well as onesplitter column at Natref with a capacity of 45 Ktpa chemical grade. TheSecunda propylene plants had a stable period in 2005 with production maintainedat target levels. During an extended shutdown, a modification was performed onthe Natref splitter column to improve final product quality. We supplyapproximately 160 Ktpa of ethylene and 100 Ktpa of propylene to DowPlastics South Africa for its high-density polyethylene (“HDPE”) andpolypropylene plants at Sasolburg.

*Polypropylene.**  *The Polypropylene business unitmanufactures and markets homopolymers as well as random and impact copolymers.The polypropylene plant technology is licensed from Novolen Technology Holdingsand has a production capacity of 220 Ktpa. About 49% of the production issupplied to customers in South Africa. The remainder is sold in more than30 countries in the Far East, Africa, North West Europe and South America.

*Polyethylene.**  *The Polyethylene business unit is along-established producer and marketer of low-density polyethylene (“LDPE”) andlinear low-density polyethylene (“LLDPE”) for a broad spectrum of customers inthe South African plastics conversion industry. It is the country’s soleproducer of these products and has a market share of more than 70%. Thepolyethylene business achieved 194 Kt of total production due to ethylenesupply constraints.

The 100 Ktpa LDPE plant at Sasolburg useshigh-pressure autoclave technology licensed originally from ICI of the UnitedKingdom. The LLDPE plant, recently upgraded from 110 Ktpa to 150 Ktpa, usesgas-phase technology licensed from Univation.

*Vinyls.**  *The Vinyls business unit producessuspension polyvinyl chloride (“PVC”) resins. Its fully integrated vinylchloride monomer (“VCM”) and PVC production chain is situated at Sasolburg.Ethylene and chlorine are sourced from within Sasol Polymers. It uses technologylicensed from European-based VinTec and Ineos Vinyls (previously EuropeanVinyls Corporation) for VCM and PVC respectively. The current PVC nameplatecapacity is 200 Ktpa. This business unit supplies more than 95% of theSouth African resin market as well as exports to markets in Africa and theFar East.

Although the South African PVC market grewapproximately 2.3%, local PVC sales were in line with that in the previousyear. This was due to lost market share as a result of the market importing resinafter raw material supply constraints disrupted PVC production.

The Vinyls business shut down its PVC compoundingoperation at the end of April 2005.

*Chemicals.**  *The Chemicals business unitoperates plants at Sasolburg producing chlor-alkali chemicals, cyanideand organic peroxides. The latter is produced in a joint venture with Degussa.

The Chemicals business unit operates a 145 Ktpachlorine plant and supplies some 78% of its chlorine production to the Vinylsbusiness unit. The balance is beneficiated into hydrochloric acid, sodiumhypochlorite and calcium chloride. We sell 148 Ktpa of diaphram- andmembrane-grade caustic soda to South African customers in the pulp andpaper, minerals beneficiation and soap and detergent industries.

The Chemicals business isSouth Africa’s sole manufacturer of sodium and calcium cyanide solution with aproduction capacity of 40 Ktpa, which is sold to local gold producers.Local demand for cyanide is declining in line with South Africa’s reducedextraction and refining of gold ore.

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**Sasol Polymers**

**Production Capacity**

| **Product**       | ** ** | ** ** | ** ** | **Total**  | ** ** | **Africa**   | ** ** | **Asia** | ** ** |
|-------------------|------------|------------|------------|------------|------------|--------------|------------|----------|------------|
| ** **        | ** ** | **(Ktpa)** | ** ** | ** ** | ** ** | ** **   | ** ** |
| **South  Africa** |       |       |       |       |       |    |       |     |       |   |
| Ethylene          |       |       | 480        |       |       | ·       |       |     |       |   |
| Propylene         |       |       | 520        |       |       | ·       |       |     |       |   |
| Polypropylene     |       |       | 220        |       |       | ·       |       |     |       |   |
| LDPE              |       |       | 100        |       |       | ·       |       |     |       |   |
| LLPDE             |       |       | 150        |       |       | ·       |       |     |       |   |
| PVC               |       |       | 200        |       |       | ·       |       |     |       |   |
| Chlorine          |       |       | 145        |       |       | ·       |       |     |       |   |
| Caustic soda      |       |       | 165        |       |       | ·       |       |     |       |   |
| Cyanide           |       |       | 40         |       |       | ·       |       |     |       |   |
| **Offshore**      |       |       |       |       |       |         |       |     |       |   |
| Ethylene          |       |       | 72         |       |       |         |       |     | ·     |   |
| Propylene         |       |       | 11         |       |       |         |       |     | ·     |   |
| LDPE              |       |       | 102        |       |       |         |       |     | ·     |   |

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·       Indication of the geographical location of theproduction capacity.

*Investments.**  *As additional ethylene andpropylene feedstock is expected to become available during the 2006 year,resulting from our unleaded fuel and polymers project, Sasol Polymers will beincreasing its South African capacity of both polyethylene and polypropylene bya total of up to 510 Ktpa at its Sasolburg and Secunda operations. For moreinformation on our Synfuels unleaded fuel and polymers project see above “Item4.B—Business Overview—Sasol Synfuels”.

At the Sasolburg Midland site, we are constructing anew 220 Ktpa LDPE plant incorporating high pressure tubular reactortechnology licensed from ExxonMobil and plan to downscale or discontinueproduction at the Poly 1 LDPE plant in order to optimize the availableethylene. We are also increasing LLDPE capacity from 110 Ktpa to150 Ktpa. At the Secunda site, we are developing a new 300 Ktpapolypropylene plant based on licensed process technology from Innovene.

*Marketsand competition.**  *SasolPolymers’ major focus is on the Southern African polymers market, from which itderives more than 75% of its turnover. As the sole producer of LDPE, LLDPE andPVC in South Africa, it holds the leading share in the local market. The maincompetitors in this market are Asian and Middle Eastern producers.

Dow Plastics South Africa is the main competitor forour polypropylene business, producing 110 Ktpa. Sasol Polymers exports toneighboring countries in Southern, East and West Africa, the Far East, NorthWest Europe and South America. Sales to these markets depend on the extent towhich production capacity exceeds domestic market sales.

In 2005, Sasol Polymers exported 110 Ktpa ofpolypropylene, 23 Ktpa of PVC, 2 Ktpa of polyethylene and 6 Ktof chemicals. Polypropylene accounts for by far the largest portion andgeographical spread of Sasol Polymers’ exports.

***Sasol Polymers InternationalInvestments.***   Sasol Polymers InternationalInvestments’ growth strategy focuses on Africa and the Indian Ocean rim. Tosupport its objectives in this latter region, it participates in four ventures,Optimal Olefins and Petlin in Malaysia, Wesco China Limited (“Wesco China”) inChina and Arya Sasol Polymer Company in Iran.

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Optimal Olefins operates a 600 Ktpaethane/propane cracker at Kertih, on the east coast of Malaysia. The company isa venture between Petronas (64%), Dow Chemical Company (24%) and Sasol PolymersInternational Investments (12%). The cracker principally produces 600 Ktpaof ethylene and 90 Ktpa of propylene. The monomers are sold to captivedownstream customers, including Petlin, in the same petrochemical productioncomplex at Kertih.

Petlin operates a LDPE production plant on the eastcoast of Malaysia. The company is a joint venture between Sasol Polymers (40%),and Petronas (60%). This plant has a capacity of 255 Ktpa and, on thebasis of our knowledge of the industry and publicly available information, webelieve that it is one of the world’s largest of its type. It commencedproduction in September 2002 and its production is primarily for theSouth-east Asian and Chinese markets. Both these plants are in steady stateproduction and contribute to group profits.

Sasol Polymers International Investments holds a 40%stake in Wesco China, a distributor of polymer products mainly to customers inSouthern China and Taiwan. Wesco operates a polymer warehouse and baggingplant, a compounding plant and a recycling plant in the Guangdong province inChina. The company handles more than 150 Ktpa of polymers and has distributedSasol Polymers’ polypropylene in China since 1990.

Sasol Polymers Germany, asubsidiary of Sasol Polymers International Investments, has entered into a50:50 joint venture with the National Petrochemical Company of Iran toconstruct and operate an integrated ethylene and polyethylene productionfacility in Iran. The joint venture, Arya Sasol Polymer Company, comprises a1,000 Ktpa ethylene cracker based on ethane and two 300 Ktpapolyethylene plants (one for producing LDPE and one for HDPE). Construction ofthe production facility is progressing. The cracker construction schedule hasbeen revised and plant start-up is currently targeted for May 2006. Thetwo polyethylene plants will be started in the following months..

***Sasol Solvents***

Sasol Solvents manufactures and globally markets arange of primarily oxygenated solvents to various industries.

*Products and activities.**  *A significant part of SasolSolvents’ portfolio of products can be classified as oxygenates. These are usedas solvents in the manufacture of paints, inks, coatings, adhesives,pharmaceuticals, cosmetics, fragrances and other applications. In addition to theirsolvent applications, a number of these products serve as intermediates for theproduction of downstream chemicals. We believe that the breadth of our productportfolio is a competitive advantage, compared to more limited portfolios ofsome of our competitors in the global solvents market.

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**Sasol Solvents**

**Production Capacity**

| **Product**                   | ** ** | ** ** | ** ** | **Total**  | ** ** | **Africa** | ** ** | **Europe** | ** ** |
|-------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                    | ** ** | **(Ktpa)** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Ketones                       |       |       | 333        |       |       |       |       |       |       |   |
| — *Acetone*              | * *   | * *   | *175*      |       |       | ·     |       |       |       |   |
| — *MEK*                  | * *   | * *   | *130*      |       |       | ·     |       |       | ·     |   |
| — *MiBK*                 | * *   | * *   | *28*       |       |       | ·     |       |       |       |   |
| Glycol ethers                 |       |       | 70         |       |       |       |       |       |       |   |
| — *Butyl glycol ether*   | * *   | * *   | *70*       |       |       |       |       |       | ·     |   |
| Acetates                      |       |       | 59         |       |       |       |       |       |       |   |
| — *n-Propyl acetate*     | * *   | * *   | *9*        |       |       | ·     |       |       |       |   |
| — *Ethyl acetate*        | * *   | * *   | *50*       |       |       | ·     |       |       |       |   |
| Solvent blends                |       |       | 50         |       |       | ·     |       |       |       |   |
| Mixed alcohols                |       |       | 378        |       |       | ·     |       |       |       |   |
| Pure alcohols                 |       |       | 860        |       |       |       |       |       |       |   |
| — *Methanol (C1)*        | * *   | * *   | *140*      |       |       | ·     |       |       |       |   |
| — *Ethanol (C2)*         | * *   | * *   | *285*      |       |       | ·     |       |       | ·     |   |
| — *n-Propanol (C3)*      | * *   | * *   | *45*       |       |       | ·     |       |       |       |   |
| — *Isopropanol (C3)*     | * *   | * *   | *225*      |       |       |       |       |       | ·     |   |
| — *n-Butanol (C3)*       | * *   | * *   | *150*      |       |       | ·     |       |       |       |   |
| — *iso-Butanol*          | * *   | * *   | *15*       |       |       | ·     |       |       |       |   |
| Acrylates                     |       |       | 125        |       |       | ·     |       |       |       |   |
| — *Ethyl acrylate*       | * *   | * *   | *35*       |       |       | ·     |       |       |       |   |
| — *Butyl acrylate*       | * *   | * *   | *80*       |       |       | ·     |       |       |       |   |
| — *Glacial acrylic acid* | * *   | * *   | *10*       |       |       | ·     |       |       |       |   |
| Other                         |       |       | 70         |       |       | ·     |       |       | ·     |   |

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·       Indication of the geographical location of theproduction capacity.

Sasol Solvents has a total production capacity of1,945Ktpa, at four sites in South Africa (approximately 72%of our production capacity) and three in Germany (approximately 28% of ourproduction capacity). The South African production facilities are located atSecunda, Germiston and at two separate locations in Sasolburg. Our Germanproduction facilities are located at Herne, Marl and Moers in the Ruhr area.

The main portion of the division’s South Africanproduct is derived as a co-product of the synfuels process at Secunda.Significant parts of the products are nevertheless synthesized from chemicalfeedstock. Ethanol, isopropanol and methyl ethyl ketone (“MEK”) are synthesizedfrom ethylene, propylene and butenes respectively at the German plants. InSouth Africa, butanol is synthesized from propylene and acrylic acid issynthesized from propylene.

Some of theproducts also result from the downstream conversion of the primary chemicals tohigher value-added derivatives. Examples of these products include theproduction of:

·       methylisobutyl ketone (“MiBK”) from acetone;

·       ethylacetate from ethanol;

·       propylacetate from propanol and acetic acid;

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·       ethyl and butyl acrylatesfrom acrylic acid and the corresponding alcohols; and

·       ethyleneglycol butyl ethers from butanol and ethylene oxide.

Sasol Dia Acrylates is our marketing and productionjoint venture with Mitsubishi Chemical Corporation of Japan. The integrated,four-plant facility produces acrylic acid used captively for the production ofglacial acrylic acid, butyl acrylate and ethyl acrylate from Sasol feedstock.This chemical complex has enabled Sasol to become the world’s only knownacrylic acid and acrylates producer that is fully back-integrated into therequired feedstock of propylene, butanol and ethanol. The complex alsounderscores our commitment to expand our chemical portfolio by adding value toour chemical feedstock.

*Marketsand competition.**  *In2005, Sasol Solvents sold approximately 1.5 Mt of products worldwide. SasolSolvents manages its global business from its central offices in Johannesburgand Hamburg. It also operates thirteen regional sales offices and seven storagehubs in South Africa, Asia-Pacific, the Middle East, the United States andEurope.

Sasol Solvents holds significant market shares in theglobal markets for some products, amongst which n-propanol, propyl acetate andiso-propanol are the most prominent.

Sasol Solvents’competitors vary depending on the products and include a number of majorinternational oil and chemical companies. In the market for ketones, its maincompetitors are ExxonMobil, Shell Chemicals and Ineos. In the alcohols market,its main competitors are BP Chemicals, Shell Chemicals, Dow Chemicals Company,Celanese and Equistar. In the market for acetates and acids, its maincompetitors include Celanese, Eastman and BP Chemicals.

***Other Activities***

***Sasol Wax International AG (“Sasol Wax”)***

Sasol Wax, our wholly owned wax operation, producesand markets wax and wax-related products to commodity and specialty wax marketsglobally. It manufactures crude oil-derived paraffin waxes, as well assynthetic waxes produced on the basis of our Fischer-Tropsch technology.Sasol Wax has its head office in Hamburg and employs 990 people globally. In2005, it had a global external turnover of R3.9 billion.

*Productsand activities.**  *Theoverall volume of products marketed amounts to 822 Ktpa of which 27% are productsderived from the Fischer-Tropsch process. The main product portfolioincludes paraffin waxes, both fully refined and semi-refined, produced andmarketed in various grades, as well as Fischer-Tropsch-basedsynthetic waxes which include the Fischer-Tropsch-derived hard wax(melting point range 80°C and higher), theFischer-Tropsch-derived medium wax (melting point range 30-80°C)and liquid paraffins in the carbon range C5 through C20.Various specialty blends of waxes are also produced and marketed. Sasol Waxcontinues to develop niche markets for higher-value specialty waxes, suchas those used by the food, cosmetics, pharmaceutical, construction-boardand adhesive industries. Demand for our liquid paraffins for environmentallypreferred drilling fluids has been growing in the Gulf of Mexico following theintroduction of more stringent US Environmental Protection Agencyspecifications for drilling fluids and other oilfield chemicals. The Europeanwax emulsion business has annual sales of about 37.5 million euro. Weproduce, as a result, about 106 Ktpa of wax emulsion at facilities inthe UK, Austria, and Germany.

The main production assets of this division arelocated in Hamburg, Germany; Sasolburg and Durban, South Africa; PassChristian, Mississippi; and Oakland, California, in the United States.

Our plant in Hamburg has a production and blendingcapacity for paraffin wax of 300 Ktpa. It purchases slack wax feedstockfrom numerous lube-oil-producing refineries predominantly in Western Europe andfrom Eastern Europe and Africa. We initially de-oil slack waxes to fully orsemi-refined quality 

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and fully hydrogenate allfinal products. Subsequently, various product blends are produced. Products aresold either in liquid bulk or in solidified form. This operation has a tradingactivity of about 100 Ktpa.

Our plant in Sasolburg operates Fischer-Tropsch-basedtechnology for the production of synthetic waxes. It used coal-derived syngasas feedstock, which was changed to Mozambican natural gas as from July 2004.We own and operate a wax plant integrated in the Engen refinery in Durban,South Africa. This plant produces wax blends predominantly for the SouthAfrican and other African candle industries. The production capacity of theSouth African based wax plants amounts to 240 Ktpa of Fischer-Tropsch-derivedproducts, of which 70 Ktpa are hard waxes, 80 Ktpa medium waxes,30 Ktpa waxy oils and 60 Ktpa liquid paraffins.

We also operate a major candle factory located inJohannesburg with a capacity of up to 30 Ktpa, which representsapproximately 40% of the South African candle industry market.

In the United States, ourwholly owned subsidiary Sasol Wax Americas, Inc. (formerly Moore andMunger Inc.), based in Shelton, Connecticut, is engaged predominantly intrading activities, both in Fischer-Tropsch-derived and paraffinwaxes. Sasol Wax Americas, Inc. holds a 50% share in the Luxco Waxbusiness based in Oakland, California, which operates a wax blending facilityin Pass Christian, Mississippi with a capacity of up to 20 Ktpa. The totalproduct manufactured and traded by Sasol Wax Americas, Inc. in the UnitedStates amounts to approximately 100 Ktpa.

**Sasol Wax**

**Production Capacity**

| **Product**                | ** ** | ** **                                      | ** ** | **Facilities location** | ** ** | **Total** | ** ** |
|----------------------------|------------|-------------------------------------------------|------------|------------------------------|------------|-----------|------------|
| ** **                 | ** ** | ** **                                      | ** ** | **(Ktpa)**                   | ** ** |
| Paraffin wax               |       | Germany                                         |       |                         | 300        |      |
| FT Hard wax                |       | South  Africa                                   |       |                         | 70         |      |
| FT Medium wax              |       | South  Africa                                   |       |                         | 80         |      |
| Waxy oils                  |       | South  Africa                                   |       |                         | 30         |      |
| Liquid Paraffins           |       | South  Africa                                   |       |                         | 60         |      |
| Semi-refined  paraffin wax |       | South  Africa                                   |       |                         | 30         |      |
| Specialty wax  blends      |       | Germany,  the United States and The Netherlands |       |                         | 80         |      |
| Wax emulsion               |       | Europe                                          |       |                         | 100        |      |

 

*Marketsand competition.**  *Thedivision markets its products globally, but its main markets are in Europe andthe United States. In both Europe and the United States, approximately 50% ofparaffin waxes are sold to candle manufacturing companies and the balance issold to numerous industries, including rubber and tire, cosmetics, adhesivesand surface coatings industries. Fischer-Tropsch-derived hard waxproduction is sold predominantly in the United States and Europe, and also inAsia. Fischer-Tropsch-derived medium waxes and paraffin waxesproduced in South Africa are predominantly sold to the candle industry in SouthAfrica.

The overall world market for waxes is estimated atabout 3,300 Ktpa and our main competitors in the market are the Chineseproducers China Oil and Sinopec. In specialty wax market our competitors areHoneywell’s specialty products and Witco BP Special Products (Owned by H and RWax Company).

Sasol Wax is currentlysubject to certain legal proceedings regarding alleged anticompetitivebehavior. See “Item 4B.—Business Overview”.

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***Sasol Nitro***

Sasol Nitro, our nitrogenous products division,manufactures and markets ammonia, fertilizers, commercial explosives andrelated products. The division also markets ammonia, sulfur and specialty gasesproduced by other Sasol divisions. All production activities are located inSouth Africa. The division focuses on supplying the Southern African market,with selective exports of fertilizers, ammonium nitrate-based explosivesand explosives accessories.

*Main products.**  *The division’s product portfolioincludes:

·       ammonia;

·       nitric acid;

·       ammonium nitrate solution;

·       sulfuric acid;

·       high purity hydrogen;

·       phosphoric acid andphosphate derivatives;

·       various grades offertilizer;

·       explosives-gradeammonium nitrate;

·       various packagedexplosives; and

·       explosive accessories,including non electric initiation systems with joint venture Sasol Dyno Nobeland electronic initiations systems. The electronic initiation systems aremanufactured exclusively for Australian based Orica Explosives.

*Productionfacilities.**  *Allproduction facilities of Sasol Nitro are located in South Africa.

Our 330 Ktpa ammonia plant in Sasolburg usesnatural gas as feed stock. This plant also produces high purity hydrogen thatis sold to the oil and metal refining industries in South Africa. We alsoderive 330 Ktpa of ammonia as a by-product from coal gasification inSecunda.

Sasol Nitro operates two nitric acid plants. Thesmaller 315 Ktpa unit in Sasolburg is linked to a downstream ammoniumnitrate plant. The ammonium nitrate produced in Sasolburg is used mainly forthe production of explosive grade low-density ammonium nitrate. The470 Ktpa nitric acid plant in Secunda supplies a downstream ammoniumnitrate plant linked to a 500 Ktpa granulation facility that produceslimestone ammonium nitrate and various other grades containing nitrogen,phosphorus and potassium. Ammonium nitrate for industrial use is sourced fromboth sites.

In Phalaborwa adjacent to the phosphate rock mine ofFoskor Limited (“Foskor”), Sasol Nitro operates a 325 Ktpa phosphoric acidplant, of which 100 Ktpa capacity has been mothballed since 2004 due toadverse market conditions. The rock is of igneous origin and therefore low incadmium and organic material, which makes it highly suitable for industrial andfood-grade applications. Phosphoric acid is used within our group for theproduction of fertilizers and sodium tri-polyphosphate, sold to other localmanufacturers of fertilizers and animal feeds and limited volumes are exportedto Japan and the United Arab Emirates.

An increase in the phosphate rockprice, coupled with the strong rand and adverse market conditions, led to adecision to exit the under performing phosphoric acid business. An in principleagreement was reached with Foskor whereby Foskor will purchase Sasol Nitro’sphosphoric acid manufacturing assets at Phalaborwa. The transaction iscurrently awaiting approval from the Competition Authorities.

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Sasol Nitro alsomanufactures bulk explosives at various mining sites and cartridged explosivesin Secunda and Ekandustria. Non-electric initiation systems are manufactured ina joint venture with Dyno Nobel and electronic initiation systems aremanufactured for exclusive supply to Orica Explosives.

**Sasol Nitro**

**ProductionCapacities**

| **Product**                      | ** ** | ** ** | ** ** | **Total**  | ** ** | **South Africa** | ** ** |
|----------------------------------|------------|------------|------------|------------|------------|-----------------------|------------|
| ** **                       | ** ** | **(Ktpa)** | ** ** | ** ** | ** ** |
| Ammonia(1)                       |       |       | 660        |       |       | ·                |       |
| Sulfur                           |       |       | 205        |       |       | ·                |       |
| Granular and  liquid fertilizers |       |       | 700        |       |       | ·                |       |
| Fertilizers bulk  blending       |       |       | 905        |       |       | ·                |       |
| Phosphates(2)                    |       |       | 325        |       |       | ·                |       |
| Explosives                       |       |       | 300        |       |       | ·                |       |

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(1)           Includes volumesproduced by Sasol Synfuels.

(2)           Includes100 Ktpa mothballed capacity at Phalaborwa.

·                      Indication ofthe geographical location of the production capacity.

*Marketsand competition.**  *SasolNitro focuses primarily on the Southern African market, with exports ofexplosives grade ammonium nitrate, phosphoric acid and fertilizers. About halfof the 660 Ktpa total ammonia product is used within the group to produceammonium nitrate-based fertilizers and explosives. The balance is soldmainly to other South African explosives manufacturers with small quantitiesmade available for industrial usage in chemical manufacture and mineralbeneficiation.

Sasol Nitro is the only ammonia producer in SouthAfrica. About 15% of South Africa’s ammonia requirement in 2005 was imported.Omnia and AECI are our two major customers for ammonia and compete in thedownstream and explosives markets. We have entered into market-relatedcontractual arrangements with these customers.

Products are supplied mainly to the Southern Africanmarket, with limited deep sea exports of phosphoric acid. Urea, an alternativeto ammonium nitrate based fertilizers, is not manufactured in South Africa butis imported in large quantities. During 2005 local manufactures of ammoniumnitrate based fertilizers benefited from firm international Urea prices andstrong demand from the Southern African market. The expected softening ininternational Urea prices is likely to put pressure on the margins of localmanufacturers during 2006. In addition, thecombined impacts of a drastic increase in the South African maizesurplus and sustained low export prices formaize is likely to have a significant negative impact on maize plantingsfor the 2005/2006 season and thereby also the demand for fertilizers inSouthern Africa.

Explosive products are supplied mainly to the SouthernAfrican market, with exports of explosives grade ammonium nitrate mainly toAustralia. Some quantities of cartridged explosives are also exported to otherAfrican countries. Due to a global shortage of explosives grade ammoniumnitrate, exports increased significantly during 2005 and are expected to remainat these higher levels during 2006. The market for explosives accessories inSouth Africa is significant with large quantities of detonators required forextensive mining activities. Turnover and profits of the Sasol Dyno Nobel jointventure reached record levels, mainly as a result of growth into niche markets.Following the sale of the UNI TronicTM technology and marketing rights to OricaExplosives along with an associated supply agreement, our electronic detonatorbusiness posted a profit for the first time in its history.

The South African explosives market remains very competitiveand prices are amongst the lowest worldwide.

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The disposal of Sasol’s 51% shareholding in SasolSouthwest Energy during October 2004 represented the culmination of SasolNitro’s strategy to exit non-core offshore investments in order to focus on thelocal market.

Sasol Nitro is currentlysubject to certain legal proceedings. See “Item 4B.—Business Overview”.

***Sasol Infrachem***

The changeover from coal gasification to natural gasreforming at Sasolburg towards the end of the previous year went smoothly forSasol Infrachem with both autothermal reformers being fully operational fromJuly 2005 onwards. Production during the year, however, alternated betweenprolonged periods of stable operations and shorter downtimes to resolvetechnical shortcomings that limited the full use of the reformers.

In July 2004, the coal gasification facilitieswere temporarily recommissioned to support gas supply to the customers whilethe complex control systems were refined and the flanged-gas feed lines on bothreformers changed to welded lines to eliminate any possibility of gas leakages.The coal gasification facilities were finally decommissioned inFebruary 2005.

In May 2005, cracks were detected in the pipingof the heaters on the natural gas pre-heaters. Safety considerations led to thesimultaneous decommissioning of the reformers and the resultant cessation ofreforming for about four weeks. With the support of the coal gasificationfacilities, gas production, in spite of the interruptions, was 103% of thetarget for the year. In June 2005, the reformers were again operating atnormal design parameters. The reformers are owned by Sasol Gas, but operatedunder contract on its behalf by Sasol Infrachem.

As a result of these unforeseen interruptions,turnover dropped by 11.8% from R2,329 million to R2,055 million. Year-on-year,gas production declined from 53.2 million coal-based gigajoules (“GJ”) to 25.9million natural gas-based GJ and 12.5 million coal-based GJ, a total of 38.4million GJ. Sasol Infrachem is planning to increase the natural gas-based gasproduction in the year ahead to about 35.4 million GJ in line with projecteddownstream demand from the other Sasol chemical businesses that depend onsyngas.

The envisaged environmental benefits of convertingfrom coal to natural gas are being realised, and audited results of theSasolburg plant’s substantial reduction in emissions to air (including hydrogensulphide, carbon dioxide, nitrous oxides and volatile organic compounds) willbe reported in Sasol’s separate sustainable development report, which isavailable on Sasol’s website “*www.sasol.com*”.Sasol Infrachem also has commenced a large project to rehabilitate the legacysites associated with coal gasification, including the ash dump and tar residuepits.

The utilities and servicesdivision of Sasol Infrachem had a profitable year. Sasol Infrachem has expandedits utility infrastructure to accommodate the water, steam and electricityrequirements of the new Poly 3 polyethylene plant (part of Project Turbo) underconstruction at Sasolburg. The business also completed a major project toenhance the reliability of electricity supply to the Sasol One and SasolMidland sites at Sasolburg

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***Merisol***

Merisol is a joint venturecompany formed in 1997 by the merger of Sasol Phenolics with the phenolicsactivities of Merichem Company, based in Houston, Texas. We and Merichem eachown 50% of Merisol. Merisol has a strong presence in the global market fornatural phenolics and cresylics with manufacturing facilities in Houston,Sasolburg and Oil City, Pennsylvania. Merisol has an interest in the productionof synthetic, meta,para-cresol through a 50:50 manufacturing joint venture withSumitomo Chemicals. Merisol also has a 20:80 venture (Merisol holding 20%) withChang Chun of Taiwan for the production in Sasolburg of ortho-cresolnovolac, a precursor to high-performance epoxy resins used for encapsulatingmemory and processor chips. Merisol is the supplier of ortho-cresolfeedstock to this plant.

*Productsand activities.  *Natural phenolics are products relatedto phenol, which are derived as by-products of coal gasification, coalcarbonization and certain petroleum refining processes and are recovered forpurification and separation. Merisol manufactures the pure products, phenol,ortho-cresol, meta-cresol and para-cresol, and a diverse range of blendedproducts, consisting of mixtures of phenol, cresols, xylenols and other phenolderivatives. These blends are known collectively as cresylic acids. Both theSasolburg and Houston plants produce phenol and ortho-cresol and cresylicacids. The Houston plant uses proprietary separation technologies to producehigh-purity meta, para-cresol and pure meta-cresol and para-cresol, makingMerisol one of the few producers of all of these products in the world.

Merisol’s Sasolburg plantuses feedstock from our coal gasification activities at Secunda. At Houston,Merisol uses a more diverse feedstock mix from coal gasification and coalcarbonization. Petroleum refining sources are declining in significance asrefining practices in the United States change due to environmentalregulations. Merisol also transfers semi-refined feedstock from Sasolburg toHouston.

Merisol owns a butylationplant at Oil City, Pennsylvania, producing di-butyl para-cresol and meta-cresolfrom meta,para-cresol and pure para-cresol feedstock made by Merisol at itsHouston plant.

**MerisolProduction Capacity**

| **Products**                 | ** ** | ** **                   | ** ** | **Facilities location** | ** ** | **Total** | ** ** |
|------------------------------|------------|------------------------------|------------|------------------------------|------------|-----------|------------|
| ** **                   | ** ** | ** **                   | ** ** | **(Ktpa)**                   | ** ** |
| Phenol                       |       | South  Africa, United States |       |                         | 45         |      |       |
| Ortho-cresol                 |       | South  Africa, United States |       |                         | 15         |      |       |
| Meta-cresol  and para-cresol |       | United  States               |       |                         | 16         |      |       |
| Pure meta,para-cresol        |       | United  States               |       |                         | 30         |      |       |
| Cresylic acids  and xylenols |       | South  Africa, United States |       |                         | 28         |      |       |
| High-boiling  tar acids      |       | United  States               |       |                         | 4          |      |       |
| Butylated products           |       | United States                |       |                         | 13         |      |       |

 

Merisol completed thefirst and major part of its R400 million project to expand and improvefeedstock recovery and processing operations. This part of the investmentincludes a new Sasolburg plant to extract and refine additional volumes ofSecunda depitched tar acids to enable Merisol to grow with future market demandand compensate for the decrease of other feedstock globally. Following thesuccessful completion of the new Sasolburg plant, the Houston operations will bestreamlined in the 2006 year to enable Merisol to rationalize production at itsHouston site.

*Marketsand competition.  *Merisol markets its products worldwidethrough sales offices in the United Kingdom, Hong Kong, the United States ofAmerica and in South Africa. Markets are served from product inventories heldin Rotterdam, for the European market, in Houston, for the US market andin Taiwan and Sasolburg for most other markets.

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The pure products, phenol,ortho-cresol, meta-cresol and para-cresol are sold in competition withsynthetically produced equivalents. In the phenol market, Merisol is relativelysmall in the global market, but strong in the South African market and inselected niche markets elsewhere.

Incresols and cresylic acids, Merisol supplies major shares of the global marketsfor:

·       ortho-cresol,where the main competitors include General Electric, Lanxess, Nippon SteelChemicals, Rütgers-Chemicals and Deza;

·       meta-cresol,where the main competitors include Lanxess, Honshu Chemical and SumitomoChemicals;

·       para-cresol,where the main competitors include Degussa, Konan Chemical, Atul Chemicals  and various Chinese producers;

·       high-puritymeta,para-cresol, where the main competitors include Mitsui Chemicals, Lanxessand Sumitomo Chemicals; and

·       wireenamel solvents where the main competitors are Rütgers-Chemicals,Deza,  C-chem and Mitsui Chemicals.

Merisol derives about 76%of its turnover from the United States, European and the Far East markets andthe balance from other regions

***Sasol Petroleum International—Petroleum Explorationand Production***

Based in Johannesburg andfounded in 1995, SPI is responsible for our expanding internationalupstream interests in oil and gas exploration and production activities. SPIalso concentrates on high-potential areas in West and Southern Africa andinvests in partnerships with international oil and gas companies. SPI has itsinternational office in London, where it is co-located with the offices ofSasol Chevron, and has responsibility for the West African and Middle Eastexploration and production activities. For full financial detail refer tosupplemental oil and gas information to “Item 18—Financial Statements” forfurther disclosures of oil and gas operations.

***Mozambique****.  *During 2000 and 2001 landmark agreements weresigned with the government of Mozambique for the development of natural gasfields, including the construction of a pipeline for the South African gasmarket. Our 70:30 partnership of Sasol Petroleum Temane Limitada with CompanhiaMoçambicana de Hidrocarbonetos was granted rights by the government ofMozambique for the development, production and disposition of the reserves ofpetroleum located in the Temane and Pande field reservoirs in Mozambique. It iscurrently estimated that Sasol has, as at 30 June 2005, provedMozambican net gas reserves of about 1,368 billion cubic feet (“bcf”) and7.3 million barrels of condensate. These reserves are estimated to provide asteady stream of gas over 25 years on the basis of projected productionand consumption rates.

Sasol’s Temane and Pandeproduction and exploration rights cover an area of 16,540 km2.The program to develop 11 interlinked production wells in the Temane field wascompleted in January 2004. The program to develop additional productionwells in the neighboring Pande field is likely to start during 2007. By thistime it is expected that the gas pressure in the Temane wells will be similarto that of the Pande wells.

In an effort to extend theprojected lifespan of the current Temane and Pande gas reserves and to providegas for higher production rates, SPI continues to explore for additionalreserves in the Temane and Pande region.

The second explorationperiod was entered on 26 October 2004 and will run for 3 years to 25 October 2007.This entails having to acquire, process and evaluate 900 kilometers of 2Dseismic data.

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In addition SPI hassuccessfully negotiated and signed up an Exploration and Production concessionContract on Blocks 16/19 offshore Mozambique with effective date 1 July 2005.During the initial exploration period of 2 years it will be committed toacquire, process and evaluate 2,600 kilometers of new 2D seismic.

***South Africa****.  *SPI, has a prospecting sub-lease agreement with theSouth African Petroleum Agency and the Ministry of Minerals and Energy overBlock 3A/4A off South Africa’s west coast. The agreement covers an area of28,395 km2 in shallow Atlantic waters up to a depth of about300 meters. During the year it concluded a farm-out agreement which grantsBHP Billiton Limited (“BHP Billiton”) a 90% interest in the block with SPIretaining the remaining 10% and operatorship. Reprocessing of 3D seismic are inprogress with BHP Billiton.

***Gabon.  ***In Gabon, SPI holds a27.75% interest in a partnership with Vaalco Gabon (28.07%), Pan African Energy(31.36%), PetroEnergy Resources (2.34%), Energy Resources Japan (Etame) (2.98%)and Tullow Oil (7.5%) for the exploration, development, production and dispositionof hydrocarbons in the Etame block. The partnership has been awarded aproduction license by the Gabonese government and the Etame oilfield iscurrently in production. Oil commenced flowing in September 2002 at agross production rate of approximately 15,000 bpd and has ramped up toapproximately 18,500 bpd at year end. Subsequent to 30 June 2005 anadditional production well ( ET-6H ) was drilled and was brought intoproduction during July 2005. Exploration and appraisal drilling during theprevious year resulted in the discovery of two additional oil accumulations,Ebouri and Avouma, in the Etame license. During the year a development plan forthe Avouma field was approved by partners and the government. Currently no firmplan exists for the development of the Ebouri field although appraisal studiescontinue. No costs have been capitalized to date.

Immediately south of theEtame oil field, SPI holds a 50% interest together with Premier Oil (25%) andPerenco (25%) in the Dussafu block (formerly Phenix). SPI is the operator forthe Dussafu venture and oversaw the drilling of the exploration well in thefirst half of the reported year. With the failure of the well to identify anyhydrocarbons, and the expiry of the first exploration period, SPI negotiated aone year extension on the license. Current effort revolves around a thoroughevaluation of the 3 existing discoveries that were abandoned by previouslicensees.

***Equatorial Guinea****.  *In Equatorial Guinea, SPI holds a10% interest in Block L with Chevron (45%) Amerada Hess (25%) and  Tullow Oil(20%) . This block carries no outstanding obligations on the currentexploration phase. Partners have secured a farm-out agreement of 50% whichwould ensure entry into the next phase of exploration. During the year SPI tooka strategic decision not to exercise the option held over Block I for a 40%interest, resulting in our exit from the block. SPI decided to withdraw fromits 20% interest in Block H after the drilling of a dry well (Bravo H-1)in the previous year.

***Nigeria.  ***Through ourrelationship with Chevron we have gained entry into some highly prospectiveexploration acreage in Nigeria. In OML 214 Sasol Petroleum has been offered a5% interest in the permit. The farm-in has received all of the necessaryapprovals but still awaits Nigerian governmental ratification. An explorationwell was spudded during July 2005 and the results are in the process ofbeing evaluated. In OML 249 SPI holds a 3.75% interest after all approvals werereceived in June 2005. The Aparo-3 well has proved an extension ofthe adjacent SW Bonga field into our block. A combined development is underconsideration. Appraisal drilling was conducted on the N’siko discovery anddevelopment options are under consideration. In OML 247 SPI has been offered a 6%interest in the permit. The farm-in has received all of the necessary approvalsbut still awaits Nigerian governmental ratification. A further opportunity totake up a 5.1% interest in Block 1 of the Nigeria/Sao Tome Principe JDZ iscurrently receiving consideration.

***Middle East.  ***SPI is also workingto help capture upstream positions for Sasol’s GTL projects and in this regardare looking at opportunities in the Middle East. Upstream involvement supportsthe goal to be 

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activein the entire value chain of the projects and helps to secure the delivery ofthe upstream resource for the GTL plant in the downstream through an integratedproject approach.

We have commenced with aproject to ensure compliance with the requirements of Section 404 of theSarbanes-Oxley Act. Whilst this project is, with the exception of SPI, in theprocess of being finalised, there were no material weaknesses or significant deficienciesreported to the board for the year ended 30 June 2005. SPI has gone throughsubstantial growth over the past few years with the result that systems,procedures and infrastructure did not keep pace with the growth in the businessand its associated demands. SPI has embarked on a Business Process and Controls(“BPC”) Project through which processes are re-engineered, formalized andthe necessary controls implemented in conjunction with a SAP implementation. Asa result an assessment has not yet been performed and material weaknesses andsignificant deficiencies have not been formally listed due to it beingconsidered inappropriate at this stage in view of the project SPI has embarkedon. The requirements of Section 404 of the Sarbanes-Oxley Act are however beingtaken into account as part of the project. This project, as well as a finalassessment, will be completed during the first half of calendar year 2006,after completion of the BPC project.

***Sasol Technology—Researchand Development***

Our subsidiary, SasolTechnology, acts as our technology partner to all our business units throughlaunching and helping to sustain our growth initiatives. Sasol Technology aimsto provide functionally driven support across geographic boundaries through itsresearch and development, new business development, engineering and projectmanagement and information and logistics divisions within the Sasol Technologybusiness unit.

*Our research and development functions.  *Ourcentral research and development division employs over 500 people in SouthAfrica who focus on fundamental research, while our decentralized divisionconsists of various areas focusing on applications. The phased expansion andmodernization of the Sasolburg research and development facilities isprogressing with the first two of three phases completed. We are undertaking aresearch and development expansion and modernization program which aims to:

·       achieveinfrastructure enhancement through enabling the future installation of newpilot-plants in order to expand operational efficiency and flexibility;

·       allowthe relocation, upgrading and full integration of existing pilot plants;

·       installmodern process control systems; and

·       improvethe information generated.

We initiated this programafter the completion of a comprehensive exercise to benchmark the structure,equipment and performance of our research and development facilities againstthose of other international organizations. The enhanced facilities will createthe opportunity to commercialize new and improved petrochemical processes moreeffectively. The third phase has commenced and is expected to be completed bythe end of 2006.

The central researchfunction has a full suite of state-of-the-art pilot plants to support bothcurrent and future technology being developed. The central research team hashighly skilled employees, of whom approximately 70% have a universityqualification and over 110 employees hold a doctorate in chemistry or engineering.

We also conduct ourresearch activities through external alliances and research collaborations withover 100 research institutions, consortia and universities worldwide. Inaddition, strong emphasis is placed on training; as a result of this at least20 of our employees from South Africa are at any given time studying abroad ina continuing effort to ensure top level in-house research competency.

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*Fundamentalresearch activities.  *Among our noteworthy research anddevelopment successes over the past decade is the development of the SlurryPhase and Advanced Synthol reactors, the development of the proprietary cobaltcatalyst, the low temperature Fischer-Tropsch process, recarburizedcarbon, and ethylene trimerization.

A significant part of ourresearch focuses on supporting our CTL and GTL technologies and associatedproducts. This includes research on coal gasification and gasificationproducts, syngas conversion through the application of Fischer-Tropschand research relating to adding value to Fischer-Tropsch-derivedproducts. Catalysis research includes the development of both iron- and cobalt-basedproprietary Fischer-Tropsch catalysts and we have already commencedmanufacture of our cobalt catalyst through a joint venture with Engelhard Corp.Through Sasol Technology, we have progressed in developing the secondgeneration of our integrated Sasol SPDTM process to convert natural gas into aclean-burning synthetic fraction of diesel and other premium- gradeproducts. In time, we plan to integrate some of the experience gained fromoperating the Nigerian and Qatari GTL plants which are under development intothe new-generation Sasol SPDTM process. Sasol Technology is alsoinvestigating chemical expansion opportunities based on GTL plants. Inparticular, the fuel products of our GTL plants, including the Oryx plant, canbe diverted towards the production of chemicals. As was the case with chemicalproduction at Secunda, unique beneficiation technologies are being developed.

A wax hydroprocessor wascommissioned in 2003 and has been linked to our established 100 bpdFischer-Tropsch demonstration unit. It is being used to demonstratecatalyst performance and to produce, from mixed wax and light-hydrocarbons,a GTL diesel for testing.

Our wide range of productsrequires extensive research on product work-up and beneficiation, includingseparation and purification processes and new product development. Carbon-basedproducts and cresylic acids are among the cases in which we have adaptedexisting technology to meet our needs. The development of carbon-basedproducts (recarburized carbon) from medium temperature gasification pitch, aproduct of CarboTar, has already been successfully implemented on a commercialscale. Similarly, we have carried out work on cresylic acids, anothergasification by-product, on behalf of our joint venture with Merisol, relatingto purification of various associated products and also derivatizing and addingvalue to certain feedstreams.

Over the years, we havedeveloped a strong competency in purification in order to extract high valuealpha olefins from Fischer-Tropsch products. This has helped ussuccessfully develop purification processes for 1-pentene, 1-hexene,1-heptene and 1-octene products, which allow us to apply them asco-monomers in polymers. Ongoing studies include those dedicated to thecommercial viability of exploiting metathesis and other processes to convertodd-number alpha olefins (such as 1-pentene and 1-heptene) intoeven-numbered counterparts (such as 1-hexene and 1-octene), whichare in far greater demand. Sasol Technology is also focused on improvinghydroformylation as an alternative process for producing specialty alcoholsfrom olefins. Sasol Technology has also been successful in further increasingthe purities of hexene and octene co-monomers to enable their optimalapplication with new-generation polyolefin catalyst systems. In order tobenefit from the projected demand growth in global markets for 1-hexeneand 1-octene, we are investigating various potential production routes,including ethylene trimerization and ethylene tetramerisation.

The derivation of Fischer-Tropschfeedstreams is also a high priority. To support this focus, we have developedour competency in homogenous catalysis. Our in-house skills were leveragedthrough a laboratory that we established at St. Andrews University in Scotland,which, when fully operational, will comprise 25 highly qualified scientists.The focus is currently on hydroformylation of olefins to produce a range ofalcohols. We recently applied hydroformylation at a commercial scale to producedetergent range alcohols. Carbonylation of alpha olefins is another area wherewe are investigating homogenous catalysis. Other derivatization technologiesinclude the use of oxidation of olefins and paraffins.

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Research focused on thereduction of our operations’ environmental footprint includes water treatmentand purification. In this regard, special attention is given to waterutilization, given the location of some of our current and future plants insemi-arid areas. We follow an integrated approach toward optimization ofcurrent processes focusing, among others, on energy efficiency, emissions andwater utilization. End of pipe solutions include technology such as microbialtreatment processes and desalination technology, which has already been testedand implemented.

We continue to focus onidentifying and implementing new technologies, which can help reduce productioncost. This includes research focusing on the application of catalyticdistillation in various new and existing processes.

Renewable and alternativefuels are fast becoming important for future competitive strategies. SasolTechnology is investigating biodiesel and fuel cells. We are also experimentingwith the formulation and performance of biodiesels derived from soya beans aswell as from Fischer-Tropsch applied on biomass derived syngas. We expect thatSasol will be able to produce high-quality biodiesels based on renewableresources for potential use as a future fuel blend stock.

We have implementedtechniques such as computational chemistry and will embark on using combinatorialchemistry during 2006, on a smaller scale, in order to improve productivity andspeed up our technology development efforts.

*Applications research and development.  *Ourapplications research and development activities are focused around four areas:

·       technicalservice;

·       analyticalservice;

·       plantsupport; and

·       newapplications, products and processes.

In addition to SasolTechnology research, over 200 employees are involved in applications research,of which approximately 25% concentrate their efforts on developing new productsand applications and 25% on customer support. The majority are involved inresearch and development on a part time basis. About 120 of these researchpersonnel are located in Germany, over 50 in Italy and the United States andthe remainder in the Netherlands.

Thekey applications research and development product areas are:

·       alcoholsand derivatives, based in Brunsbüttel, Germany and Lake Charles, United States;

·       surfactantsand detergents, based in Italy, United States and Germany;

·       inorganicspecialties, based in United States, Germany and Italy;

·       LABs,paraffins and olefins, based in United States and Italy;

·       Solvents,based in South Africa and Germany;

·       SasolLFB research and development, based in Sasolburg;

·       SasolPolymers Technical Support Group, based in Modderfontein, South Africa.

Approximately 70% of ourapplications research division relates to specific customer-requestedresearch, which illustrates our commitment to meeting our customers’ changingrequirements. We acquired this customer-driven research and developmentcapability, especially in the areas of surfactants, inorganic specialties andLABs, through the Sasol Chemie acquisition. This complemented our existingapplications research and development capabilities in South Africa, whichprimarily related to fuel applications and wax research, conducted inconjunction with Sasol Wax in Germany. Following the integration of SasolChemie into our group there is strong interaction between our South Africanresearch operations and those of Sasol Chemie

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***African Amines***

AfricanAmines is a 50:50 joint venture of Sasol and Air Products. It manufactures,purchases and sells alkylamines, principally for use in explosives, water-treatmentchemicals and agricultural chemicals. Its products range includes:

·       mono-methylamine;

·       di-methylamine;

·       mono-ethylamine;and

·       iso-propylamine.

African Amines hasproduction facilities in Newcastle, Kwa-Zulu Natal, in South Africa. Thislocation makes African Amines an efficient and cost-effective supplier tomarkets in Australasia, South America, Asia-Pacific regions and the Indiansubcontinent. African Amines tends to be less competitive in the main ports ofEurope and the United States due to the density of local producers servingthose markets.

**Legal Proceedings**

*TheEDC pipeline litigation.*Sasol North America Inc. (“Sasol NA”)had numerous separate pending cases which originated as a result of a 1994rupture of the Conoco ethylene dichloride (“EDC”) pipeline connecting Conoco’sdock the Sasol NA’s vinyl chloride monomer plant in the United States ofAmerica. Plaintiffs sought compensatory and punitive damages as a result ofalleged exposure to EDC while employed as contractors, hired by Conoco, toclean up the EDC. As of 30 June 2005 there is a class action and 13lawsuits brought by approximately 500 plaintiffs pending. Sasol NA hassuccessfully obtained a substantial amount of insurance cover from the costsincurred in connection with this litigation but is not seeking additionalcoverage.

Under the Asset and SharePurchase agreement with RWE-DEA for the acquisition of Condea, the costs inrespect of the EDC pipeline cases are reimbursable by RWE-DEA less insuranceand tax benefits.

*Sulfurdioxide litigation.*   During January 2003 Sasol NAand ConocoPhillips refinery released a quantity of sulfur dioxide to theenvironment as a result of a power outage in the ConocoPhillips Lake Charlesrefinery. Lawsuits were filed against ConocoPhillips and Sasol NA hassince been added as a defendant. At 30 June 2005 more than600 lawsuits had been filed on behalf of more than 20,000 plaintiffs.ConocoPhillips and Sasol NA are jointly defending the lawsuits andSasol NA’s liability for defense and settlement costs has been limited, byagreement, to an amount not material for group purposes.

*Almatislitigation.  *Almatis Inc. filed a suit against SasolOlefins and Surfactants, Germany , and Sasol NA in March 2005 allegingbreach of a 2001 alumina supply contract as well as monopolization and pricediscrimination in the high purity alumina market resulting in damages totalingUS$60 million. In September 2005 Almatis Inc. dismissed its suit withoutprejudice to refiling in the future.

*YellowRock litigation.  *In July 2005 Sasol NA receivednotice of suit by Yellow Rock LLC alleging over US$1 million in damages and seekingan injunction that would require Sasol NA to remove its ethylene from SaltStorage Dome 1-A in Sulfur, Louisiana near the Lake Charles ChemicalComplex. The suit alleges that in winter 2004 the Dome 1-A was leakingethylene and caused the “blow out” of an oil and gas exploration well beingdrilled by Yellow Rock. A well integrity assessment performed by an independentconsultant in early 2005 had concluded that the Dome 1-A  was not leaking. These results were conveyedto Yellow Rock and were signed off on by the Louisiana Department of NaturalResources, but did not deter the filing of suit.

*FlyAsh Plant.  *Sasol Synfuels (Pty) Limited is in legalproceedings with regard to the operation of a plant in Secunda. Ashcor hasclaimed damages of R313 million relating to their inability to develop their 

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businessand a projected loss of future cash flows. The trial was postponed part-heardafter a three week trial period. The trial is in progress.

*Retailfilling station guidelines.  *The Gauteng Department ofAgriculture Conservation and Environment (“DACE”) has developed guidelinesrelating to the development and upgrading of filling stations within theGauteng region in South Africa which constrain the development of fillingstations. A number of applications for authorization for filling stations inwhich Sasol LFB has an interest have been rejected. A number of appeals werelodged, one of which was taken on review to the High Court. Sasol wassuccessful insofar as the court found that DACE had relied on inappropriate andirrelevant considerations in coming to its decision. The State took the matteron appeal to the Supreme Court of Appeal and the appeal was successful.

*JoelNagashigo and others.*   A class action was filed beforethe Supreme Court of the State of New York, County of New York, by anundisclosed number of plaintiffs (represented by attorney Edward Fagan)who each claimed US$1 million plus punitive damages of US$5 millionin respect of claims based on negligence, product liability, failure to warn ofdangers and emotional distress together with actual damages for past and futuremedical expenses. Sasol Limited and Natref and other non Sasol companies werecited as defendants. It was not clear from the summons what the factualfoundations of the claim were.  During December 2004the court dismissed the complaint against Sasol Limited and Natref for lack ofpersonal jurisdiction and on the basis of inconvenient forum.

*DorothyMolefi and others.  *Certain plaintiffs sued SasolLimited and Natref and various other defendants in two claims in the UnitedStates District Court. The plaintiffs are represented by attorney Edward Fagan.These claims are similar to many served against a large number of multi-nationalcorporations worldwide. The claims against Sasol Limited were consolidated withother related claims against many other multi-national corporationsbefore the Federal Court of New York. In November 2004 the plaintiffs’claims in the related cases were dismissed.

*NationwidePoles.  *The Competition Commission received a complaintagainst Sasol Oil (Pty) Limited (Carbo-Tar division) in April 2003. Thecomplaint was referred by the plaintiff to the Competition Tribunal. TheCompetition Tribunal found against Sasol that during the period of thecomplaint Sasol was a dominant firm whose conduct met the test required inestablishing prohibited price discrimination. The company filed a notice ofappeal and the appeal was heard by the Competition Appeal Court during September 2005.We are currently awaiting the outcome of the appeal.

*Nutri-Flo.  *TheCompetition Commission alleges that Sasol, Omnia and Kynoch have engaged inprice fixing or market sharing agreements and has decided to refer its findingsto the Competition Tribunal. The Commission has recommended the imposition ofan administrative penalty of 10% on turnover. Should the maximum fine beimposed on the basis of the fertilizer and ammonia turnover of Sasol Nitro, thefine would be in the order of R320 million. Sasol has applied to theCompetition Appeal Court to have the referral set aside on the basis that asubstantially similar complaint was previously rejected by the Commission andSasol believes the Commission did not comply with certain requirements of theCompetition Act in carrying out its investigation. The application was heard inSeptember 2005, we are currently awaiting the outcome of the appeal.

*Sasol Wax*.   On28 and 29 April 2005 the European Commission conducted an investigation atthe offices of Sasol Wax International AG and its subsidiary Sasol Wax GmbH,both located in Hamburg, Germany. A parallel investigation is being conductedby the US Department of Justice in the United States. On 28 April 2005Sasol Wax Americas Inc. received a subpoena for information from the UnitedStates District Court regarding its wax sales activities. The investigations inthe US and the European Union arise from alleged anticompetitive behaviouramong industry members in the paraffin wax industry. Sasol Wax is co-operatingwith the competition authorities in the US and in the European Union in orderto clarify this issue.

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*Profert.  *A plaintiff fileda complaint against Sasol Nitro alleging that Sasol was engaged in anexclusionary act by refusing to supply goods to the plaintiff. Submissions weremade to the Competition Commission to the effect that during 2002, Sasol was unableto supply the product to the plaintiff due to product shortages, that it is notdominant in the supply of that product and that it has not engaged in pricediscrimination.

*Uhambo Oil.  *On 6 February 2004,Sasol announced that it and Petronas were in discussions concerning thecombination of Sasol LFB and Petronas’ South African liquid fuels business,Engen, in a joint venture to create a leading South African liquid fuelsbusiness. The new liquid fuels business will be effected by way of a jointventure, Uhambo Oil, in which Sasol and Petronas will each have an equal 37.5%interest and in which Black Economic Empowerment partners (both existing andnew) will hold a combined 25% interest. The Definitive Agreements were signedon 1 November 2004. The transaction is subject to approval by the SouthAfrican Competition Authorities. The Competition Commission has made aconditional positive recommendation to the Competition Tribunal. TheCompetition Tribunal hearing of this matter is scheduled to take place in October 2005.A decision by the Competition Tribunal is expected by the end of 2005. Approvalof the transaction by the European Commission was granted in mid-February 2005.

*Sale of Phosphoric Acid production assets*.   SasolChemical Industries Limited has agreed to sell its phosphoric acid productionplant in Phalaborwa as well as storage assets located in Richards Bay to FoskorLimited, failing which it intends to shut the plant for financial reasons. Interms of competition laws, the sale is considered a large merger that isnotifiable to the competition authorities. The merger has been filed with suchauthorities for assessment and is currently being investigated by theauthorities.

*Other.  *Fromtime to time Sasol companies are involved in other litigation andadministrative proceedings in the normal course of business. Although theoutcome of these proceedings and claims cannot be predicted with certainty, thecompany does not believe that the outcome of any of these cases would have amaterial effect on the group’s financial results.

*EnvironmentalOrders.  *The group is subject to numerous national andlocal laws and regulations that regulate the discharge of materials into theenvironment or that otherwise relate to the protection of human health and theenvironment in all locations in which it operates. As with the oil and gas andchemical industries, generally, compliance with existing and anticipatedenvironmental health, safety and process safety laws and regulations increasesthe overall cost of business, including capital costs to construct, maintain, andupgrade equipment and facilities. These laws and regulations have required, andare expected to continue to require, the group to make significant expendituresof both a capital and expense nature. Under the agreement for the acquisitionof Sasol Chemie, we received an indemnification from RWE-DEA for most of thecosts of operational compliance with respect to conditions existing at CondeaVista Company located in the United States on or before 1 March 2001that we expect will survive until at least 1 March 2006.

**Regulation**

The majority of ouroperations are based in South Africa, but we also operate in numerous othercountries throughout the world. In South Africa, we operate coal mines and anumber of plants and facilities for the storage, processing and transportationof raw materials, products and wastes related to coal, oil, chemicals and gas.These facilities and the respective operations are subject to various laws andregulations that may become more stringent and may, in some cases, affect our business,operating results, cash flows and financial condition.

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**Regulationof Mining Activities in South Africa**

*TheMinerals Act.  *For the period up to 30 April 2004,all mineral rights, encompassing the right to prospect and mine, were held,either privately or by the government of South Africa. Ownership of privatemineral rights were held through title deeds and constitutes real rights inland, which are enforceable against any third party. Prospecting and miningwere regulated by the Minerals Act and South African common law. The MineralsAct regulated the prospecting for and the optimal exploitation, processing andutilization of minerals, in addition to imposing reclamation requirements onprospecting and mining operations. The Act required that anyone undertakingprospecting or mining operations had to compile an environmental managementprogram and to provide for the environmental impact of the proposed prospectingor mining activities. This program had to be approved by the relevant Directorof Mineral Development. The Minerals Act has subsequently been repealed by theimplementation of the Mineral and Petroleum Resources Development Act(Act 28 of 2002), which came into effect on 1 May 2004.

Under the Minerals Act, weowned all the coal rights for the properties over which we have miningauthorizations, except for small tracts of land at Secunda, which were owned bythe government of South Africa and for which we have obtained the government’sconsent to mine in consideration for the payment of a royalty per ton of coalmined from those properties.

*TheMineral and Petroleum Resources Development Act.  *Thefundamental principle of the Act is the recognition that the mineral resourcesof the country are the common heritage of all South Africans and thereforebelong to all the people of South Africa. The Act vests the right to prospectand mine, including the right to grant prospecting and mining rights on behalfof the nation, in the state, to be administered by the government of SouthAfrica. Thus, the state is the guardian of all mineral rights and has the rightto exercise full and permanent custodianship over mineral resources.

The Act imposessignificantly more stringent environmental obligations on mining activitiesthan the repealed Minerals Act. However, it contains transitional arrangementsfor existing operations. Under these transitional provisions, the environmentalmanagement programs will continue in force, as the Department of Minerals andEnergy introduces the more stringent requirements of the Mineral and PetroleumResources Development Act.

The Mineral and PetroleumResources Development Act adopts the environmental management principles andenvironmental impact assessment provisions of the National EnvironmentalManagement Act. The Mineral and Petroleum Resources Development Act addressesthe allocation of responsibilities for environmental damage, pollution and degradationand imposes rehabilitation obligations. It significantly extends the scope ofliability of directors who may be jointly and severally liable for anyunacceptable negative impact on the environment, advertently or inadvertentlycaused by the company. It also allows the state to take remedial action andclaim costs. It maintains the requirement for an environmental managementprogram for all mining operations, but with more detailed specifications thanunder the Minerals Act, and prohibits the carrying out of mining activitiesbefore the approval of the program. When rehabilitation is required, it is notlimited to land surface. We were in material compliance with the repealedMinerals Act, and we expect to continue to be in compliance with the new legislation.The Act also deals with matters relating to petroleum exploration anddevelopment, which may impact our current or future petroleum and gasexploration and development activities in South Africa.

*Mining rights.  *Transitionalprovisions are included in the Mineral and Petroleum Resources Development Act,which phases out privately held mineral rights held under the repealedlegislation. The transitional provisions contemplate three types of rights:

(a)   mineral rights in respect of which no prospecting permit or miningauthorization has been issued and/or no prospecting or mining activities aretaking place;

(b)   mineralrights in respect of which prospecting permits have been issued and prospectingis taking place; and

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(c)   mineral rights in respect of which mining authorizations have beenissued and mining is taking place.

The rights described inthese three categories are defined as Old Order rights. Undercategory (a), the holders of privately-held mineral rights had to applyfor a prospecting or mining right in their own names to replace their existingmineral rights by 30 April 2005. Under categories (b) and (c),any prospecting permit or mining authorization granted under the previouslegislation would continue to be valid for a maximum period of 2 or 5 calendaryears from enactment, respectively. After the lapse of the one-year periodreferred to in category (a) and the respective periods incategories (b) and (c), respectively, the mineral rights willcease to exist. Within these periods, the holders of mineral rights andprospecting permits or mining authorizations, in order to continue with theirmining or prospecting operations, must apply for a new prospecting right ormining right in respect of category (a) and for conversion to newprospecting or mining rights in respect of categories (b) and (c).

Under the Act, prospectingrights will be granted for an initial maximum period of 5 calendar years, andcould be renewed once, upon application, for a period not exceeding 3 calendaryears. Mining rights will be valid for a maximum period of 30 calendaryears, and could be renewed, upon application, for further periods, each notexceeding 30 calendar years. Provision is made for the grant of retentionpermits, which would have a maximum term of 3 calendar years and could berenewed once upon application for a further 2 calendar years.

A wide range of factorsand principles will be taken into account by the Minister of Minerals andEnergy when considering these applications. These factors include the applicant’saccess to financial resources and appropriate technical ability to conduct theproposed prospecting or mining operation, the environmental impact of theoperation and, in the case of prospecting rights, considerations relating tofair competition. Other factors include considerations relevant to promotingemployment and the social and economic welfare of all South Africans andshowing compliance with the provisions of the Mining Charter for theempowerment of historically disadvantaged persons in the mining industry. See “Item4.B—Business Overview—Empowerment of Historically Disadvantaged South Africans—TheMining Charter”.

Part II of the Regulations promulgated under theMineral and Petroleum Resources Development Act, relate to the Social and LaborPlan that must accompany any application for a mining right. The Mining TitlesRegistration Amendment Act (Act 24 of 2003) and Regulations have beenimplemented simultaneously with the implementation of the Mineral and PetroleumResources Development Act. It provides the mechanism to give effect to theprovisions of the Mineral and Petroleum Resources Development Act, inparticular with regard to the registration of rights under that Act. DraftRegulations under this Bill have also been published for comment.

We held various prospecting permits or miningauthorizations with respect to our existing mining operations, which are nowbeing classified as old order rights. We have commenced with the process toapply for conversion of our existing mining and prospecting rights into newrights and for any new licenses we may require under the Mineral and PetroleumResources Development Act. It is the declared intent of the South Africangovernment not to disrupt operations as a result of the introduction of the newlegislation and we intend to undertake any appropriate action required toensure conversion of our existing prospecting and mining rights under the Act.

The Act provides that a mining right granted under theAct may be cancelled if the mineral to which such mining right relates is notmined at an optimal rate. Furthermore, royalties from mining activities willbecome payable to the state under provisions contained in separate legislation,in 2009.

The Mineral and PetroleumRoyalty Bill was published for comment in March 2003. After the Departmentof Finance considered representations from interested parties, the bill waswithdrawn and is currently being redrafted. The Minister of Finance indicatedin his budget speech in parliament during February 2004 that the Mineraland Petroleum Royalty Bill will not be implemented before 2009.

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**Empowermentof Historically Disadvantaged South Africans**

*The Liquid Fuels Charter.  *InNovember 2000, following a process of consultation, the Minister ofMinerals and Energy and representatives of the companies in the liquid fuelsindustry, including our company, signed the Liquid Fuels Charter setting outthe principles for the empowerment of historically disadvantaged South Africansin the South African petroleum and liquid fuels industry. Uhambo Oil willcomply with the 25% equity ownership requirement of the Liquid Fuels Charterthrough the shareholdings of Tshwarisano and Afric Energy Resources, Engen’sBroad-based Black Economic Empowerment partner, in the joint venture company.If the joint venture is not approved then Tshwarisano would become a 25% equityowner in our liquid fuels business, which will also comply with the Liquid FuelsCharter. See “Item 8.B—Significant Changes”.

The Liquid Fuels Charter requires liquid fuelscompanies, including Sasol LFB, to ensure that historically disadvantaged SouthAfricans hold at least 25% equity ownership in the South African company of theirliquid fuels assets by the year 2010. It also envisages methods of measuringprogress on meeting targets set in connection with transformation of ownership.

In addition, the Liquid Fuels Charter requires thathistorically disadvantaged persons be given preferred supplier status, wherepossible, in the procurement of supplies, products, goods and services, as wellas access to use and ownership of facilities.

*TheMining Charter.  *In October 2002, the governmentand representatives of South African mining companies and mineworkers’ unionsreached broad agreement on a charter (the Mining Charter), designed tofacilitate the participation of historically disadvantaged South Africans inthe country’s mining industry. The Charter’s stated objectives include the:

·       expansionof opportunities for persons disadvantaged by unfair discrimination under theprevious political dispensation;

·       expansionof the skills base of such persons;

·       promotionof employment and advancement of the social and economic welfare of miningcommunities; and

·       promotionof beneficiation, or the crushing and separation of ore into valuablesubstances or waste within South Africa.

The Charter, together with the published scorecard tofacilitate the interpretation of and compliance with the Mining Charter,requires mining companies to ensure that historically disadvantaged SouthAfricans hold at least 15% ownership of mining assets or equity in South Africawithin 5 calendar years and 26% ownership within 10 calendar years fromthe enactment of the new Mineral and Petroleum Resources Development Act whichwas on 1 May 2004. The Charter further specifies that the miningindustry is required to assist historically disadvantaged South Africans insecuring finance to fund their equity participation up to an amount ofR100 billion within the first 5 calendar years after theimplementation of the aforementioned Act. Beyond this R100 billioncommitment, the Mining Charter requires that participation of historicallydisadvantaged South Africans should be increased towards the 26% target on awilling-buyer-willing seller basis. See “Item 4.B—Business Overview—SasolMining” and “—Economic Empowerment of Historically Disadvantaged South Africans”.

Various principles of the Mining Charter have beenincorporated in regulations promulgated by the Minister of Minerals and Energyunder the new Mineral and Petroleum Resources Development Act with respect tothe South African mining industry. These regulations came into effect on1 May 2004. We have commenced a process to apply for the conversionof our existing mining licenses under the new Mineral and Petroleum ResourcesDevelopment Act. See above “New mining legislation may have an adverse effecton our mineral rights”. When considering applications for the conversion ofexisting mining licenses 

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under the Mineral andPetroleum Resources Development Act, the Minister of Minerals and Energy musttake into account, among other factors, the applicant company’s compliance withthe Mining Charter. We intend to undertake any appropriate action required toensure conversion of our existing mining rights under the Mineral and PetroleumResources Development Act. See above “ Item 4.B—Business Overview—Regulationof Mining Activities in South Africa—The Mineral and Petroleum ResourcesDevelopment Act”.

A scorecard intended to give effect to and facilitatethe interpretation of the provisions of the Mining Charter was made public on18 February 2003. The scorecard provides a method of indicating theextent to which applicants for the conversion of their rights under the Mineraland Petroleum Resources Development Act have complied with the provisions ofthe Mining Charter. It is intended that the entire scorecard would be takeninto account in decision making. Notes attached to the scorecard provideguidance in interpreting the objectives of the Mining Charter.

We are currently indiscussions with prospective Black Economic Empowerment mining parties and webelieve that we should be able to meet the requirements of the Mining Charter.In any case, we intend to undertake any appropriate action required to obtainconversion of our existing mining rights under the Mineral and PetroleumResources Development Act.

*The Restitution ofLand Rights Act*

Our privately heldland and mineral rights could be subject to land restitution claims under theRestitution of Land Rights Act 1994. Under this Act, any person who wasdispossessed of rights in land in South Africa as a result of past raciallydiscriminatory laws or practices is granted certain remedies, including, butnot limited to:

·       restorationof the land claimed with or without compensation to the holder;

·       grantingof an appropriate right in alternative State-owned land to the claimant;or

·       paymentof compensation by the State or the holder of the land to the claimant.

If land is restored without fair compensation, it ispossible that a constitutional challenge to the restoration could besuccessful. Once a land claim has been lodged with the Commission onRestitution of Land Rights, the rights of any person in respect of such landare restricted in that he may not perform certain actions relating to the land,including, but not limited to, selling, leasing or developing such land,without the consent of the Commission. The Commission is obligated to notifythe land owner of such a claim lodged or any other party which might have aninterest in a claim. All claims had to have been lodged with the Commission by31 December 1998. Although this was the final date for filing claims,many claims lodged before the deadline are still being reviewed and not allparties who are subject to claims have yet been notified. We have not beennotified of any land claim that could have a material adverse effect on ourrights to any of our significant properties.

The Restitution of Land Rights Amendment Act becamelaw on February 2004. Under the original Act, in the absence of a courtorder, the power of the Minister to acquire or expropriate land for restitutionpurposes is limited to circumstances where an agreement has been reachedbetween the interested parties. The Act would entitle the Minister toexpropriate land in the absence of agreement. Such an expropriation could befor restitution or another land reform purposes. Compensation payable to the ownerof the land would be subject to the provisions of the Expropriation Act 63of 1975 and section 25(3) of the Constitution which provides, ingeneral, that compensation must be just and equitable.

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*Broad-based Black Economic Empowerment Act.  *TheSouth African Department of Trade and Industry introduced the Broad-based BlackEconomic Empowerment Act (“the Act”). The Act’s stated objectives are to:

·       promoteeconomic transformation in order to facilitate meaningful participation ofblack people in the economy;

·       achievea substantial change in the racial composition of ownership and managementstructures in new and existing enterprises;

·       increasethe instance of ownership and management of communities, workers and collectiveenterprise cooperatives in new and existing enterprises;

·       promoteinvestment programs that lead to broad-based and meaningful participationby black people in the economy in order to achieve sustainable development andgeneral prosperity; and

·       developrural communities and empower local communities by enabling access to economicactivities, land, infrastructure, ownership and skills.

TheAct establishes a Black Economic Empowerment Advisory Council (“the Council”)to advise the President on Black Economic Empowerment. In terms of the Act, theMinister of Trade and Industry may issue codes of practice on Black EconomicEmpowerment, which may include:

·       theinterpretation and definition of black economic empowerment;

·       qualificationcriteria for preferential purposes for procurement and other economicactivities;

·       indicatorsand weighting to measure black economic empowerment;

·       guidelinesfor stakeholders in the relevant sectors of the economy to draw uptransformation charters for their sectors;

·       thedevelopment of a system of reporting on the implementation of black economicempowerment; and

·       anyother matter necessary to achieve the objectives of this Act.

The Act provides thatevery organ of the State must take into account any relevant code of practiceissued in terms of this Act in determining qualification criteria for theissuing of licenses and other authorizations in terms of any law and indeveloping and implementing a preferential procurement policy. The Minister ofTrade and Industry may propose regulations under this Act.

*Codes of Good Practice for Broad-based BlackEconomic Empowerment.*

Draft codes of goodpractice were issued for comment by the Minister of Trade and Industry in December 2004in terms of the Act mentioned above. These draft codes are in the process ofbeing amended so as to provide further clarity as to the organization of thecodes of good practice.

Progressto date includes the issuing of the following draft codes:

·       Code000: Framework for the Measurement of Broad-based Black Economic Empowerment

·       Code100: Measurement of the Ownership Element of Broad-based Black EconomicEmpowerment

·       Code200: Measurement of the Management and Control Element of Broad-based BlackEconomic Empowerment

No draft codes have beenissued for Codes 300 to 800 outlining measurement of employment equity, skillsdevelopment, preferential procurement, enterprise development, the residualelement or any sector codes.

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In terms of the draftcodes, private sector enterprises are urged to apply the principles containedin the codes when implementing broad-based black economic empowermentinitiatives. In interactions with public entities and organs of state, it isconsidered essential that the private sector applies these principles to ensurefull recognition for their efforts. Furthermore, it is considered desirablethat the private sector also apply these principles in their interactions withone another.

Stakeholders areencouraged to align any legislation properly enacted prior to the Act, whichimposes broad-based empowerment objectives, with the Act and the codes. Thiswill apply specifically to the Liquid Fuels Charter and the Mining Charter ascontained in the Mineral and Petroleum Resources Development Act which shallremain in force unless amended, substituted or repealed. Alignment of all suchlegislation, over time, will reduce any residual uncertainty.

**Regulationof Petroleum-Related Activities in South Africa**

***The PetroleumProducts Act and the Petroleum Products Amendment Act***

*ThePetroleum Products Act.  *The Petroleum Products Act waspromulgated to provide measures relating to, among others, the maintenance andcontrol of petroleum products prices and the cost of distribution and thestandards of particular services rendered in connection with motor vehicles.The Act empowers the Minister of Minerals and Energy, at her discretion, topromulgate regulations relating to the sale and distribution of petroleumproducts, including the price at which petroleum products may be sold. Currentlythe retail price of gasoline and illuminating kerosene are regulated under theAct.

Two recent amendments tothe Act , which have been signed by the President but which will only come intooperation at a future date, include provisions for the licensing of personsinvolved in the manufacturing and sale of petroleum products and envisage theestablishment of a controller with authority to issue manufacturing, wholesale,retail and site licenses. The Minister of Minerals and Energy must prescribe asystem for the allocation of site and retail licenses to which the controllerwill be bound.

Among the matters governedby this legislation and of particular significance to our business, is theMinister’s discretion in the exercise of executive powers and the issuance oflicenses.

Although the Main Supplyand Blue Pump Agreements largely excluded us from selling fuels directly to theretail market in South Africa, the expiration of the agreements on 31 December 2003enabled us to commence the process of establishing a network of servicestations. As future legislation is expected to regulate matters pertaining tothe conditions and requirements for licensing the sale of petroleum products tothe retail market, the provisions of the Act could impact the conditions andcost of our entry into the retail fuel market in South Africa.

***The PetroleumPipelines Act***

ThePetroleum Pipelines Act will come into operation at a date to be determined bythe President. The Act, among other things, establishes a petroleum pipelinesauthority, responsible for the supervision of activities, including thefollowing:

·       supervisionof the national regulatory framework of petroleum pipelines;

·       provisionsfor the issuance of licenses relating to the construction and operation ofpetroleum pipelines and the delivery of certain commercial services inconnection with these pipelines;

·       provisionsfor the registration of marine offloading and storage facilities and certaincommercially related services; and

·       settingand approving of tariffs for the use of pipelines and related storagefacilities.

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Amongthe stated objectives of the Petroleum Pipelines Act are:

·       topromote competition and limit anticompetitive practices within the scope of theregulated activities;

·       topromote the efficient, sustainable and orderly development, operation and useof pipelines, marine offloading facilities and storage facilities from anational and industry-specific perspective;

·       toensure the safe, efficient, economic and environmentally responsible transportand storage of crude oil and petroleum products;

·       topromote fair and equitable access to pipelines, offloading and storagefacilities and related commercial services; and

·       underthe National Energy Regulator Act, the pipelines regulatory authority will vestin the National Energy Regulator

Among the matters governedby the Act of particular significance to our business, are issues relating tothe issuance of licenses and setting of tariffs by the National EnergyRegulator, and the discretion granted to the Minister of Minerals and Energy withrespect to the exercise of executive powers.

**Regulationof Gas-Related Activities in South Africa**

*The Gas Act*.   TheAct is expected to come into effect on a date to be determined by thePresident, will regulate matters relating to gas transmission, storage,distribution, liquefaction, and re-gasification activities. Among its statedobjectives are:

·       topromote the efficient development and operation of the respective facilitiesand with the provision of respective services in a safe, efficient, economicallyand environmentally responsible way;

·       topromote companies in the gas industry that are owned or controlled byhistorically disadvantaged South Africans;

·       topromote competition and investment in the gas markets; and

·       tosecure affordable and safe access to gas services.

TheGas Act provides for the powers of the National Energy Regulator regardingpipeline gas, whose powers would include the issuance of licenses for a rangeof activities including:

·       theconstruction, conversion or operation of gas transmission, storage,distribution, liquefaction and re-gasification facilities; and

·       tradingin gas.

The National EnergyRegulator determines maximum prices for distributors, reticulators and allclasses of consumers where there is inadequate competition as contemplated inthe South African Competition Act. The National Energy Regulator may imposefines not exceeding R2 million a day, if a licensee fails to comply withany provisions of the Gas Act.

*TheNational Energy Regulator Act.  *This act was assented toand signed into law by the President on 30 March 2005 and comes intooperation on a date to be determined by the President. The Act provides for theestablishment of a single regulator to regulate the piped gas, petroleumpipeline and electricity industries and for the functions and composition ofthe energy regulator.

In accordance with the GasAct, licensees may not discriminate between customers or classes of customersregarding access, tariffs, prices, conditions or service, except forobjectively justifiable and identifiable differences.

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*The Mozambique Gas Pipeline Agreement.  *TheGas Act deals with the Mozambique Gas Pipeline Agreement entered into betweenthe Minister of Minerals and Energy, the Minister of Trade and Industry and ourcompany in connection with the introduction of natural gas by pipeline fromMozambique into South Africa. See above “ Item 4.B—Business Overview—SasolGas—The natural gas project”. The Gas Act recognizes that the terms of theagreement bind the Gas Regulator for a period until 10 years after naturalgas is first received from Mozambique. From the date of the conclusion of theagreement, the terms of the agreement relating to the following mattersconstitute conditions of the licenses to be issued under the Gas Act:

·       ourrights and periods granted in respect of transmission and distribution of gas;

·       thirdparty access to the transmission pipeline from Mozambique and to certain of ourpipelines;

·       tariffswe charge for gas;

·       ourobligation to supply customers, distributors and reticulators with gas; and

·       theadministration of the agreement.

No assurances can be giventhat the government may not amend the current legislative position to altervarious terms and conditions of the Mozambique Gas Pipeline Agreement.

The Gas Regulator LeviesAct was signed into law on 15 January 2003, but as yet has not come intooperation, nor has the Regulator been appointed to assess the levies payable.It provides for the imposition of levies by the Gas Regulator on the amount ofgas delivered by importers and producers to inlet flanges of transmission or distributionpipelines. These levies would be used to meet the general administrative andother costs of the Gas Regulator and the functions performed by the GasRegulator. According to the Department of Minerals and Energy, this Act willcome into effect at the same time as the Gas Act mentioned above.

**Safety,Health and Environment**

Our combined mining, fuelsand chemical operations are subject to numerous local, national and regionalsafety, health and environmental laws and regulations in Southern Africa,Europe, the United States and Asia-Pacific. Our global operations, includingmarketing and logistics, are also affected by international environmentalconventions.

We focus on our safety,health and environmental responsibilities and try to ensure that we operateunder safe working practices, and safeguard against accidents and avoid harm topeople or the environment in all our businesses.

Safety, health andenvironmental laws and regulations affect a wide spectrum of our groupactivities. They often require permits to be obtained for the use of naturalresources such as water, for instance, and for the operation of our facilitiesand the disposal of our waste products. They prescribe minimum standards forthe safety and health of our employees. They impose restrictions on the typesand quantities of emissions that can be released into the environment, and alsoregulate issues of product safety, waste generation, management and ultimatedisposal. It is our expectation that these laws and regulations will becomemore stringent in the future.

*Oursafety, health and environment policy and management systems.  *Wehave developed a systems-oriented approach towards the management ofthese issues. We have moved from a division-based safety, health andenvironment management policy to a structure directed on a group basis. We arecommitted to sustainable development and legal compliance being the minimumrequirement for all our operations. Matters of safety, health and environmentare treated as critical business issues. Planning of safety, health andenvironmental issues includes the setting of targets, performance measurement,reporting and review.

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In order to ensure that our safety, health andenvironmental performance is aligned with our group targets and objectives,corporate governance and other audits are carried out regularly. All of ourbusinesses are required to track their performance and furnish quarterlyreports to their respective operating boards and to the group Safety, Healthand Environment and Sustainable Development Forum via the group Risk andSafety, Health and Environment Committee. At the highest level, the Risk andSafety, Health and Environment Committee.of the Sasol Limited Board, itconsiders the major risks and liabilities, progress on our internal indicatorsof performance and any major incidents and non-compliances. For informationregarding our group Safety, Health and Environment and Sustainable DevelopmentForum and the Risk and Safety, Health and Environment Committee of the SasolLimited Board, see also “Item 6.C—Board Practices”. Similar reports are alsorequired to address significant division-specific issues. We use thefindings emanating from corporate governance and other audits to implementimprovement measures.

Our businesses are required to manage their safety,health and environmental risks in line with internationally accreditedmanagement systems. On environmental management systems, we are well on the waytowards our group target of achieving ISO 14001 certification for all ourbusinesses. The ISO (“International Standards Organization”) 14001 standard isan internationally accepted standard for the development and implementation ofenvironmental management systems. Certification to the standard entails regularaudits by an independent, accredited third party auditor. We have started toobtain certification for OHSAS 18001 at some of our South African, the UnitedStates and European sites.

We have approved environmental management programs andISO 14001 certification for each of our coal mining operational areas andtheir future extensions. Our Wonderwater strip-mining operation was thefirst South African surface coal mining operation to obtain ISO 14001certification for its environmental management system.

*Health and Safety.  *Inthe 2005 year we regrettably lost seventeen workers, including contractors. Tenpeople died in an explosion at the Sasol Polymers ethylene plant at Secunda on1 September 2004. This very serious incident has led (amongst many otheractions) to a thorough review of safety management in our South Africanoperations. Sasol appointed DuPont, an internationally reputable safetyconsultancy, in November 2004 to undertake a comparative review of itsselected South African operations against international best practices in theareas of leadership, organization, and operational and process safety. We havestarted to implement a far reaching and comprehensive safety improvement planto improve our safety performance. The safety improvement plan addresses themain issues and key findings highlighted by DuPont, as well as concernscommunicated internally and by other stakeholders, including the major unions.The safety performance at our US and European operations has been good,resulting in significant reductions in greenhouse gas emission. We areinvestigating opportunities for carbon dioxide capture and storage and toimprove process efficiencies at both existing facilities and for our newprojects.

*Emissions.  *Becauseof the nature of some of our processes, including coal gasification for theproduction of petrochemical products, our operations generate relatively highcarbon dioxide emissions. Our coal gasification operations are situated inSouth Africa, which is classified as a developing country in terms of the KyotoProtocol and though we are largely exempt from the emissions reduction targetsrequired under the Protocol we have implemented a successful project to replacecoal as a feedstock with natural gas at our Sasolburg chemical operations.

We monitor and measure ambient air quality around ourSA plants. In Lake Charles in the United States, we also are part of anauthority-led initiative to monitor ambient air concentrations, in order toidentify and address proactively major risks for community health in a timelymanner. In addition, our operations in the United States have reduced reportedemissions under the Toxic Release Inventory by over 80% since reporting beganin 1987.

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As expected, our hydrogen sulfide odors from coalgasification, which were within statutory limits, were eliminated when naturalgas replaced coal as a feedstock at our Sasolburg operations. Significantefforts are also being made to reduce hydrogen sulfide emissions emanating fromthe Secunda operation. The sulfur recovery plants are being upgraded to reducelevels of hydrogen sulfide emissions and improved monitoring and controlequipment will also be addressed as part of this long-term project.

*Water.  *Wateris increasingly becoming a source of concern, not only in mining, but in allour operations, in particular in South Africa, which is an arid country. Aseries of water treatment and saving programs and projects are currently underway to address relevant challenges in all of our operations.

We have progressedsignificantly in the research and development of managing the water-relatedimpacts of our mining activities. The company has committed resources to thefollowing:

·       In1997, we built an electrodialysis reverse-osmosis desalination plant atSecunda at a cost of R82 million to treat 9,000 cubic meters of brinewater a day, for re-use in industrial processes.

·       Anevaporator crystallizer was commissioned at a cost of R250 million in June 2003in order to treat a concentrated brine stream (wastewater) from ourdesalination plant. The evaporator crystallizer is a chemical plant that willrecover water and salt from the waste stream for sale to specific markets inthe steel manufacturing and agricultural industries.

Our project team of internal and external experts inmining, geohydrology, geochemistry, water and waste treatment is currentlycommitted to researching innovative and cost-effective solutions to furtherreduce our impact on the environment.

The long-term supply of water to the Secunda complex(up to 2030) has been assured by the Vaal River Eastern Sub-System AugmentationProject (“Vresap”). The Trans-Caledon Tunnel Authority was mandated by theMinister of Water Affairs and Forestry of South Africa to fund and implementthe Vresap project to meet the growing demands of Eskom and Sasol in theMpumalanga Highveld region.

*Fires, explosions and releases.  *Themanufacture of petrochemicals involves using high volumes of flammablesubstances, often under high pressure and at high temperatures. Hence, managingthe risk of fires, explosions and releases of hazardous substances is essentialfor us. In the course of our operations, we experienced a number of fires,explosions and releases of hazardous chemical substances, the most significantbeing an explosion that occurred at Sasol Polymers on 1 September 2004. Weare taking steps to reduce the frequency and severity of these events, and donot expect any other past fires, explosions or releases to have a materialeffect on our results or operations.

Our operations in the United States are conducted inaccordance with the requirements of the Occupational Safety and HealthAdministration Process Safety Management regulations. Through the applicationof these regulations, we implement a thorough safety management processdesigned to minimize the risks of accidents and releases of hazardoussubstances.

In addition, since 11 September 2001,assessing and improving the security of chemical operations in the UnitedStates has become an important focus. Our Baltimore and Lake Charles plantshave since evaluated plant security programs and made changes in procedures andphysical security measures. As a member of the American Chemistry Council,Sasol NA has also adopted a Security Code of Management Practice, whichrequires that we conduct a security vulnerability analysis to identify areas inwhich additional security measures are necessary, and have a management systemin place for other aspects of plant, distribution and cyber security.

We maintain a comprehensive insurance program becauseof the nature of our processes, to address attendant risks.

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*Land remediation and rehabilitation.  *Becauseof our chemicals and fuels processes, we have particular legacy and currentrisks that we are addressing. We are consolidating our regional strategies toform a group-wide strategy to address potential liabilities associated withland remediation and rehabilitation.

At 30 June 2005, we had a provision ofR303.9 million of which R240.5 million was invested in a trust fund for mineclosure and rehabilitation. This figure is reviewed on an annual basis toensure that adequate provision is made at all times, taking into account allrelevant circumstances.

Our gas pipelines are buried underground in order toreduce long-term impacts. We implemented this approach for the Mozambiquenatural gas project, for which we used World Bank guidelines for environmentalimpact assessment studies.

*Waste.  *Potentialrisks associated with waste are a priority for us. Historical legacies areaddressed in accordance with relevant legal requirements, and cleanerproduction techniques are implemented to address future risks. Where we acquirenew plants, the attendant risks are identified and the necessary indemnitiessought from the sellers. Where we have not secured such indemnities, we areconfident that such risks and attendant liabilities will not have a materialeffect.

The Natural Gas Conversion Project: Sasolburg has hadsignificant impact on the reduction of waste produced, specifically withregards to tar and oil waste, and ash. The ash dump currently has a negativegrowth rate due to ash sales for brick making and in future will disappearcompletely.

The decommissioned Klipspruit cyanide factory has beensatisfactory rehabilitated and the Johannesburg Metro Council may take over theland for future development as a golf course.

The Waste Discharge Charge System will be implementedby the Department of Water Affairs and Forestry over the next 2-3 years.The financial impact to Sasol has yet to be quantified, but could besubstantial. Waste and waste water effluent minimization projects are receivingspecific attention.

*Asbestos.  *Wehave a strategy for the phase-out of asbestos, which is being implemented byour operations. We have implemented a policy to ensure that new sources ofasbestos are not procured in the construction of new facilities worldwide. Asbestosis removed and disposed of under strict regulatory requirements as plantmodifications are made or as necessary for maintenance.

***Environmental regulation in South Africa***

The Constitution of the Republic of South Africa formsthe framework for the environmental legislation in South Africa. Section 24of the Constitution enshrines the right of all citizens to an environment thatis not harmful to their health and well-being and provides individuals with aright for the protection of the environment. It further provides that theserights can be enforced through reasonable legislative and other measures toprevent pollution and degradation, to promote conservation and to secure anecologically sustainable development. Further constitutional provisions providerelevant rights of enforcement, including class actions. A number of laws andregulations address specific issues relating to the protection of theenvironment. The following includes an analysis of some of these laws, whichmay be relevant to our operations.

*National Environmental ManagementAct.  *The National Environmental Management Act providesfor cooperative environmental governance and coordination of the environmentalfunctions of the government. The Act regulates environmental compliance and providesfor enforcement measures. The Act principally imposes a duty of care on personswho have or may pollute or degrade the environment and other responsibleparties to take reasonable measures to prevent and remediate environmentaldamage, protects workers refusing to undertake environmentally hazardous workand provides for control over emergency incidents. It promotes access toenvironmental information, protects whistleblowers and 

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allows for privateprosecution and class actions. The Act also provides for integratedenvironmental management and, in time, it is intended to replace theEnvironment Conservation Act. Recent amendments have been promulgated relatingto improved enforcement of environmental compliance and improved regulation ofenvironmental impact assessments.

*Environment Conservation Act.  *TheEnvironment Conservation Act provides for the protection and controlledutilization of the environment. The Act and the environmental impact assessmentregulations promulgated under the Act require approval by the Department ofEnvironmental Affairs and Tourism in advance of the initiation of activitiesthat may have a detrimental impact on the environment. The Act also providesfor the designation and protection of nature reserves, imposes licensingrequirements for the operation of waste disposal sites and addresses noisecontrol and waste disposal.

*National Environmental Management:Biodiversity Act.  *This Act, deals with various issuesrelating to biological diversity including its management and conservation.

*National Environmental Management:Protected Areas Act.  *This Act provides for thedeclaration of conservation areas. Of particular significance is that itprovides for the expropriation of private land, including servitudes, in theinterests of conservation. We have not been notified of any action that couldhave a material adverse effect on our rights to any of our significantproperties.

*NationalMineral & Petroleum Resources Development Act.  *ThisAct makes provision for the effective management of impacts associated withmining activities. An environmental management program (“EMP”) must becompiled, approved by the Department of Minerals and Energy, and regularlyreviewed. The EMP is required to cover potential environmental as well associo-economic impacts. The Act further requires the making of financialprovision for the rehabilitation or management of negative environmentalimpacts.

***Water protection***

The National Water Act provides for the equitableallocation of water for beneficial use, sustainable water resource managementand the protection of the quality of water resources. The Act establishes watermanagement procedures and protects water resources through the licensing ofvarious uses of water. It also includes provisions for pollution prevention,remediation requirements and emergency incidents. The Department of WaterAffairs and Forestry is currently attending to the drafting of legislationregarding a waste discharge charge system and a natural water resourcestrategy.

A significant part of ouroperations, including mining, chemical processing and others, require use oflarge volumes of water. South Africa is generally an arid country and prolongedperiods of drought or significant changes to current water laws could increasethe cost of our water supplies or otherwise impact our operations. In thisregard, the Department of Water Affairs and Forestry has published a pricingstrategy for the use of water, which may have a significant impact onoperational costs.

***Air protection***

The Atmospheric Pollution Prevention Act regulates airemissions, including emission of smoke, and allows for promulgation of smoke-controlregulations. The Act provides for steps to be taken for preventing atmosphericpollution by dust and restricts the disposal of assets by mines beforeremediation of dust impacts. Regulations promulgated under this Act requirethat we maintain air pollution permits for certain scheduled activities, smoke-controlregulations, vehicle emissions, and guidelines for sulfur dioxide emissions.The National Environmental Management: Air Quality Act has recently beenpromulgated and will eventually replace the Atmospheric Pollution PreventionAct. Certain portions of the Act came into effect on 9 September 2005,which will enable the Department of Environmental Affairs and Tourism to setambient air quality and emission standards, declare Priority Areas for thepurposes of implementation 

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of Air Quality ManagementPlans, and prepare for the review of atmospheric emission licenses. It isexpected that this Act will impose stricter standards on air quality managementin South Africa, through the adoption of internationally accepted ambient andemission standards and that this will result in significant capital andoperational costs.

The National Ambient Air Quality Standard for sulfurdioxide published in December 2001 is the first in an intended series ofguidelines with respect to priority pollutants, which are intended to curbexcessive pollution by industry. Guidelines are based on World HealthOrganization standards and provide maximum allowable concentration of ambientsulfur dioxide over certain time periods.

Some of our processes inSouth Africa, especially coal gasification, result in relatively high carbondioxide emissions. South Africa is considered a developing country in terms ofthe Kyoto Protocol and, accordingly, it is largely exempt from the emissionsreductions required under the Protocol. We are taking measures to reduce ouremissions, amongst which has been the use of natural gas from Mozambique as of2004 in lieu of coal, which is reducing sulfur dioxide emissions and hydrogensulfide odors from gasification operations in the Sasolburg  region. We also monitor air emissions at ourplants to measure ambient air quality.

***Waste and hazardous substances***

*Environment Conservation Act.  *TheEnvironment Conservation Act establishes a licensing framework for theestablishment, operation and closure of any waste disposal site. The Departmentof Environmental Affairs and Tourism is currently drafting a Waste ManagementBill, which is expected to cover solid waste management and incorporate theprinciples of the Basel Convention on the trans-boundary movement ofwaste, and published it for public comment.

*Hazardous Substances Act.  *The Hazardous Substances Act provides for thecontrol of substances that may cause injury, ill-health or death to humanbeings by reason of their toxic, corrosive, irritant, strongly sensitizing orflammable nature. This Act also controls the use and handling of certainelectronic and radioactive products. The Act includes licensing provisions forvarious activities relating to designated substances. Regulations promulgatedunder this Act cover the identification of hazardous substances and theirtransportation by road.

***Other environmental legislation***

The National Road Traffic Act and its regulationscontrol road traffic matters, including provisions relating to thetransportation of dangerous goods and substances. The Act providesspecifications for road tankers, labeling, duties of responsible persons,compatibility of multi-loads, driver training and hazardous substancedocumentation.

The Explosives Act consolidates the laws relating tothe manufacture, storage, sale, transport, importation, exportation and the useof the explosives. The Act imposes an authorization requirement for themanufacture and storage, as well as for the import, export and sale ofexplosives. This Act is currently under revision. The Explosives Billof 2002 aims to ensure more comprehensive control over explosives.

The Fertilizers, FarmFeeds, Agricultural Remedies and Stock Remedies Act regulates the registration,importation, sale, acquisition, disposal or use of fertilizers, among otherproducts. Regulations promulgated under this Act relate to the registration andsale of fertilizers.

***Health and safety regulation in South Africa***

*Occupational Health and Safety Act.  *TheOccupational Health and Safety Act covers a number of areas of employmentactivity and use of machinery in South Africa, excluding mining activities. Theprincipal objectives of the Act are to protect and provide for the health andsafety of persons at work and 

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the protection of personsagainst hazards arising out of or in connection with the activities of personsat work. The Act imposes various obligations on employers and others tomaintain a safe workplace and minimize the exposure of employees and the publicto workplace hazards and establish penalties and a system of administrativefines for non-compliance.

The Act requires employers to ensure the health andsafety of their employees and all persons who may be directly affected by theiractivities. To promote the safe use of articles, products and substances in theworkplace, a duty is placed on manufacturers, importers, sellers and suppliersto take necessary steps to ensure that appropriate information is available tothe users of these articles, products and substances.

*Mine Health and Safety Act.  *Theprincipal objective of the Mine Health and Safety Act is to protect the healthand safety of persons at mines. The Act requires that employers and othersensure that their operating and non-operating mines provide a safe and healthyworking environment, determines penalties and a system of administrative finesfor non-compliance and gives the Minister of Minerals and Energy the right torestrict or stop work at any mine and to require an employer to take steps tominimize health and safety risks at any mine.

*Compensation for OccupationalInjuries and Diseases Act.  *The purpose of this Act isto provide for compensation for disablement caused by occupational injuries ordiseases sustained or contracted by employees in the course of theiremployment, or for death resulting from such injuries or diseases. The Act is administeredby the Minister of Labor, through a Director-General who manages acompensation fund to which employers contribute, directly or indirectly. Whereindirect contributions are made, these contributions are made to a mutualassociation, which acts as the insurer in respect of claims against theemployers. All employers, with the exception of those in national, provincialand local government, are required either to register under the Act or to befully insured against related liabilities.

*Occupational Diseases in Mines andWorks Act.  *This Act relates to the payment ofcompensation in respect of certain diseases contracted by persons employed inmines or at locations where activities ancillary to mining are conducted. Anymine (including the Sasol Mining operations) at which risk work takes place isdeemed to be a controlled mine in respect of the employees for whom theemployer is required to make payments to the fund for occupational diseases, inorder to meet relevant claims. Persons who are employed in controlled mines arerequired to have a certificate of fitness, which must be renewed from time totime.

An amendment to the Occupational Diseases in Mines andWorks Act came into effect on 22 January 2003. Under this amendment,the owner of a controlled mine is obliged to pay for an undetermined period forthe costs incurred by a person in his service, or who was in his service at thecommencement of the compensatable disease, in respect of medical costs requiredby such disease. Prior to the amendment, the owner was only liable forreasonable medical costs for a period of not more than 2 calendar years fromthe date of the commencement of a compensatable disease and only in respect ofa person in his service.

For further information,see “Item 6.C—Board Practices—The Risk and Safety, Health and EnvironmentCommittee”.

**Germany**

In Germany, we operate anumber of plants and facilities for the storage, processing and transportationof chemical feedstock, products and wastes. These operations are subject to numerouslaws and ordinances relating to safety, health and the protection of theenvironment.

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***General environmental care***

The lack of a general Environmental Code in Germanymeans that no guideline legislation is available for general environmentalcare. In terms of the Act on the Assessment of Environmental Impacts, theenvironment impact assessment (“EIA”) is an instrument of preventativeenvironmental care that is legally binding. This has been introduced inexisting public procedures for the licensing of, or considerable amendment to,certain projects of relevance to the environment, including chemicalfacilities. The EIA is based on the cooperation between the environmentalauthorities and the parties intending to carry out the project.

The Environmental Information Act guarantees everyone’saccess to official environmental information.

Issues relating to general environmental care areaddressed by the environmental provisions of the Regional Planning Act andother specific and planning law designed to ensure environmental soundness, aswell as by the Environmental Liability Act, which provides for liability in thecase of environmental risks. Where human life or health is disturbed and whereemissions have entered the soil, water or the air, the owner of a facility isliable, even if he or she is not at fault and irrespective of whether thedamage was caused as a result of a hazardous incident or during normaloperations. Damage resulting from force majeure is excluded from liability. Theright to the restoration of the previous state also extends to nature and thelandscape. Installations that pose a particular risk to the environment musthave provisions for sufficient cover, an obligation which may be met byarranging liability insurance.

Criminal law provisionsare included in the Act to Combat Environmental Crime, which targets a range ofpolluting activities, including water, soil and air pollution, environmentallydamaging waste disposal and noise. It also addresses licensing of the operationof installations and the handling of hazardous substances and goods andparticularly serious environmental offences.

***Specific environmental protection legislation***

*Emission control.  *Theguideline legislation to protect man and the environment from air pollution andnoise pollution is the Federal Emission Control Act. This Act and theordinances promulgated under it, provide the framework for environmentalprotection and the technical safety of installations. It provides for licensingfor installations that are particularly susceptible to causing harmfulenvironmental impacts, including chemical facilities or mineral oil refineries.

*Regulation of hazardous substances.  *Provisionsfor the protection of man and the environment against the harmful effects ofhazardous substances and preparations are provided in the Chemicals Act, therelated Ordinances on the Prohibition of Certain Chemicals and the HazardousIncidents Ordinance. New substances are subject, as laid down in European law,to a registration and notification obligation before they can be brought ontothe market. Old substances that have been on the market since 1981 areassessed on the basis of a relevant European regulation. Hazardous substancesand preparations must be classified, labeled and packed in line with theirhazardous properties, their manufacture, marketing and use may be prohibited orlimited.

The Chemicals Act is complemented by the PlantProtection Act in the version of 14 May 1998 and the Fertilizers Act,as well as by legislation on animal feedstuffs and human foodstuffs and bysubstance-related provisions in other areas of care of the environment.This also includes the provisions concerning the environmental impacts ofgenetic technology under the terms of the Genetic Technology Act.

*Avoidance, recovery and disposal ofwaste.  *The Closed Substance Cycle and Waste ManagementAct regulates the avoidance, recovery and disposal of waste. The aim of the Actis to promote an economy based on closed substance cycles, thus conservingresources, and to guarantee the environmentally sound 

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disposal of waste.Wherever waste cannot be avoided, recovered or used to produce energy, it mustbe removed from the cycle and, as a matter of principle, be disposed of withinGermany in a way that is not detrimental to the common good. Under law, wasteis defined as a tangible item, which falls under one of the legally determinedcategories of waste, and which the owner is getting rid of, desires to get ridof or must get rid of.

The Waste Transportation Act regulates the transportof waste into, out of or through the area of application of the Act and createsthe basis for the establishment of a solidarity fund to finance the return ofwaste exported illegally.

*Waterprotection.**  *Theguideline legislation in the field of water protection is the Federal WaterAct. This requires everyone to exercise adequate care when carrying outmeasures which may have an impact on a water body so that water pollution orany other negative effect on the water is prevented. Surface waters andgroundwater are, as public utilities, subject to a public management andutilization code, which leaves the allocation of users’ rights at officialdiscretion.

The Waste Water Charges Act complements the WaterManagement Act. The Act authorizes an annually rising waste water charge linkedto the toxicity of the discharged waste water. Water legislation promulgated bythe Federal States goes beyond merely the enforcement of the framework offederal law to determine administrative procedures and regulate issues ofprivate water law.

Water protection is also addressed directly orindirectly by substance-related provisions in other laws, including theChemicals Act, the Fertilizers Act and the Waste Avoidance and Waste ManagementAct. They also comprise provisions through which water is indirectly protectedvia the soil and the air.

*Soil protection.**  *The protection and care of soil asan environmental medium and part of the ecosystem is promoted by a range ofenvironmental provisions, primarily the Federal Soil Protection Act. Soilprotection measures, preventative or remedial, aim at avoiding or reducingsubstance inputs into the soil, or removing already existing soil damage, andat addressing the extensive land consumption caused by soil sealing.

***Health and safety***

The Health and Safety atWork Act provides for protection of the health and safety of employees. Itplaces the employer under a duty to assess the hazards at the workplace, totake appropriate preventive measures, and to instruct the employees about themeasures used. The employer must take precautions for especially hazardousareas and situations and provide preventive occupational healthcare. This Actis complemented by the Safety at Work Act, which places employers under a dutyto appoint appropriately qualified officers to support them in occupationalhealth and safety matters, including ergonomic workplace design. Also, theMining Act contains stipulations regarding the health protection of mineworkers and is complemented by a special ordinance treating this topic.

**Italy**

In Italy, we operate anumber of plants and facilities for the storage and processing of chemicalfeedstock, products and wastes. These operations are subject to numerous lawsand ordinances relating to safety, health and the protection of theenvironment.

***General environmental care***

There is no consolidated environmental statute inItaly. Nonetheless, the company is liable for damages caused to the environmentunder general and special rules. When EU Directive 2004/35/CE is implemented inItaly, it will provide for strict liability for damage caused to theenvironment.

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European Directive96/61/CE (Integrated Pollution Prevention and Control) provides that theindustries must obtain an integrated authorization for all the environmentalimpacts. This directive has already been implemented in Italy but has not takeneffect, yet. Sasol Italy is preparing all the documentation required to becompliant with the directive. 

***Specific environmental protection legislation***

*Emissioncontrol.**  *PresidentialDecree 203/1988 and Law 447/1995 provides the framework for environmentalprotection and the technical requirements licensing of all installations fromwhich emissions emanate. 

*Regulationof hazardous substances.**  *Legislative Decree 52/1997 implemented in Italy theEU Directive relevant to classification, packaging and labelling of dangeroussubstances. Legislative Decree 65/2003 implemented the EU Directives relevantto classification, packaging and labelling or dangerous preparations. New substancesare subject, as laid down in European law, to a registration and notificationprocess before they can be brought onto the market. Old substances that havebeen on the market since 1981 are assessed on the basis of relevantEuropean regulation. Hazardous substances and preparations must be classified,labeled and packed in line with their hazardous properties; their manufacture,marketing and use may be prohibited or limited.

*Avoidance,recovery and disposal of waste.**  *Legislative decree 22/1997 (Implementation ofEU Directives about wastes, dangerous wastes and packing wastes) incorporatesthe principle of ‘polluters pay’ and further provides for cradle to the graveliability for wastes.

*Waterprotection.**  *Legislativedecree 152/1999 defines the authorisation procedure and discharge limits, inorder to protect surface and underground water. Surface water and groundwaterare, as public utilities, subject to a public management and utilizationregulation which leaves the allocation of users’ rights at official discretion.

*Soil protection.**  *The protection and care of soil asan environmental medium and part of the ecosystem is promoted by a range ofenvironmental provisions, primarily the Ministerial decree 471/1999. Soilprotection measures, preventative or remedial, aim at avoiding or reducingsubstance inputs into the soil, or removing already existing soil damage. TheMinisterial decree sets forth both the acceptable limits and the rules formonitoring communication and reclamation. 

***Health and safety***

The Health and Safety atWork Legislative decree 626/1994 provides for protection of the health andsafety of employees. It places the employer under a duty to assess the hazardsat the workplace, to take appropriate preventive and protective measures, andto instruct the employees about the risks and relevant measures. The employermust take precautions for especially hazardous areas and situations and providepreventive occupational healthcare. 

**United States**

***Environmental compliance***

Sasol NA and Merisol are subject to numerousfederal, state, and local laws and regulations that regulate the discharge ofmaterials into the environment or that otherwise relate to the protection ofhuman health and the environment. As with the chemical industry, generally,compliance with existing and anticipated environmental, health, safety, andprocess safety laws and regulations increases the overall cost of business,including capital costs to construct, maintain, and upgrade equipment andfacilities. These laws and regulations have required, and are expected tocontinue to require, Sasol NA and Merisol to make significant expendituresof both a capital and expense nature. Environmental compliance expenditures for

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Sasol’s share of Merisoland Sasol NA’s manufacturing sites for the next 5 years are estimated torange from US$9 million to US$13 million per year.

Under the agreement for the acquisition of SasolChemie, we received an indemnification from the seller, RWE-DEA for most of thecosts of operational compliance with respect to conditions existing on orbefore 1 March 2001 that we expect will survive until at least1 March 2006.

The Louisiana Departmentof Environmental Quality (“LDEQ”) in 2000 issued to Sasol NA fourviolations of state and federal air emission laws and regulations. Theseallegations assert violations of air-based reporting and record-keepingrequirements, as well as minor exceedances of permitted air emissions.Sasol NA expects that the cost of settling these and all other outstandingair-related violations which will include fines or penalties, will not bematerial.

***Remedial action***

*Activeand former manufacturing sites.**  *Sasol NA has beeninvestigating and remediating soil and groundwater contamination at the LCCCand Baltimore Plant sites resulting from historical operations under ordersissued by LDEQ and the Maryland Department of the Environment (“MDE”). TheVinyl Chloride Monomer (“VCM”) Plant which was sold to Georgia Gulfin 1999, is also subject to US Resource Conservation and Recovery Act (“RCRA”)corrective action requirements, and is expected to complete a CorrectiveMeasures Study in 2004-2005. The Baltimore Plant is monitoring the naturalattenuation of hydrocarbon contaminants in the groundwater and regularlyreporting to MDE and is not being actively remediated. The current costsof monitoring the Baltimore Plant site and the VCM Plant site and anyforeseeable remediation costs are not expected to be material.

In addition to Sasol NA’s operating sites,Sasol NA also has retained liability to Georgia Gulf Corporation for theremediation of four manufacturing operations sold in November 1999 andlocated in Mansfield, Massachusetts, Aberdeen, Mississippi, Jeffersontown,Kentucky, and Oklahoma City, Oklahoma. The Mansfield site, which is still ownedby Sasol NA, has been extensively investigated since 1991 and theremediation of groundwater is ongoing. The Aberdeen plant site has also beeninvestigated under several orders issued by state authorities. Property to thewest of the Aberdeen plant was purchased in 2002 and part of the plumemigrating off-site was delineated and contained on-site during 2003. The need forfurther remediation is currently being investigated.

Under the agreement for the acquisition of SasolChemie, most of Sasol NA’s costs of remediating contamination fromhistorical operations at its active and sold sites are being indemnified byRWE-DEA, and will continue to be indemnified until at least 1 March 2023in respect of Lake Charles and Baltimore, and in perpetuity in respect of theMansfield, Aberdeen, Jeffersontown and Oklahoma City sites. In addition toindemnities from RWE-DEA, Sasol NA also has indemnities from some of itspredecessors—British Petroleum for Mansfield and Reichhold Chemical forJeffersontown—for contamination resulting from those companies’ operations atthe sites. Sasol NA does not expect costs to address contamination at thesesites to have a material effect on operations or results.

*CalcasieuEstuary CERCLA Site.**  *InJune 1999, Sasol NA and other Calcasieu Parish industry membersreceived letters from USEPA making demand under Section 107 of theComprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”)for past costs and future remedial investigation, remediation, and restorationcosts associated with the Calcasieu Estuary. The Calcasieu Estuary, whichincludes the Calcasieu River and several major tributaries (bayous) in thevicinity of Lake Charles, Louisiana, has received releases and discharges fromParish industry since the 1930s. Bayou Verdine has historically receivedreleases and discharges from the Conoco Lake Charles Refinery beginning in the1940s and from the LCCC beginning in the 1960s. The “Bayou Verdine Area ofConcern” is one of the areas of concern of the Calcasieu Estuary CERCLA Site.

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In 1999 and 2000, Conoco and Sasol NA completed avoluntary joint remedial investigation of Bayou Verdine under the oversight ofstate and federal authorities. In 2001, Conoco and Sasol NA completedecological and human health risk assessments of Bayou Verdine and in 2002performed an Engineering Evaluation and Cost Analysis (“EE/CA”) of removalactions for Bayou Verdine under an Administrative Order on Consent (“AOC”) withUSEPA. Sasol NA does not expect its share of costs associated withcontamination at Bayou Verdine to be material.

In October 2002, Conoco, Sasol NA, and USEPAentered into a second AOC to perform a sediment removal action for a relativelysmall area of elevated EDC concentrations located near the confluence ofSasol NA’s West Ditch and Bayou Verdine. The West Ditch Project wascompleted in July 2003 at a cost to Sasol NA of about US$2 million.To date, no third party claims have been filed in connection with the WestDitch Project.

The EE/CA also recommends removal actions for the “MainChannel Area” of Bayou Verdine. Conoco and Sasol NA intend to perform theMain Channel Removal Action under a Consent Decree which will be negotiated in2005 and 2006. We expect that Conoco and Sasol will have to agree to paysome part of the agencies’ past response costs, as well as the costs of naturalresource restoration. Under a Consent Decree, Conoco and Sasol hope to resolveall of the government’s CERCLA claims against the companies in connection withthe Calcasieu Estuary and will receive protection against CERCLA contributionclaims by other “Potentially Responsible Parties” against the companies. SasolNA will pay 10% of the costs to remediate the Main Channel, any associatedthird-party claims, past agency response costs, and natural resourcerestoration costs.

Sasol NA’s totalestimated liability for its share of Bayou Verdine and the Calcasieu EstuaryCERCLA Site is about US$4 million. Under the agreement for the acquisitionof the Condea group (now renamed Sasol Chemie), 80% of Sasol NA’s Estuary-relatedremediation costs are expected to be indemnified by RWE-DEA, and will continueto be indemnified until 1 March 2023.

**Mozambique**

In Mozambique, Sasol operates a processing plant andassociated facilities for the extraction, processing, storage andtransportation of natural gas. The Central Processing Facility has been inoperation since 18 February 2004. These operations are subject to numerousMozambican laws and regulations as well as World Bank requirements and bestpractice standards.

*Environmental,health and safety regulations.**  *The Ministry for the Coordinationof Environmental Affairs (“MICOA”) was created in 1994 to coordinateenvironmental affairs in Mozambique. In 1995, the Ministry drew up a NationalEnvironmental Management Program, which is a policy document outlining thepriorities for environmental management and sustainable development inMozambique. This program contains a National Environmental Policy, a proposalfor Framework Environmental Legislation and Environmental Legislation and anEnvironmental Strategy.

The Framework Environmental Law was enacted in July 1997.The aims of the Environmental Law are to provide a legal framework for the useand correct management of the environment and its components and to assuresustainable development in Mozambique. The Law is applicable to all public orprivate activities that may directly or indirectly influence the environment.It requires licensing of activities that are liable to cause significantenvironmental impacts. The granting of an environmental license is subject tothe preparation and approval of an appropriate level of environmental impactstudy and management plan. Over the last year, new environmental legislationhas been enacted, namely the Regulation on Environmental Quality and EffluentEmissions Standards (June 2004) and the Regulation on Environmental ImpactAssessment Process (December 2004), the latter revoking the 1998regulation. 

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In terms of environmental protection and safety, thePetroleum Act No. 3/2001 requires that holders of exploration andproduction rights conduct petroleum operations in compliance with environmentaland other applicable legislation.

In 2004 the Mozambican operations were certified interms of ISO14001 and ISO9001. Sasol is currently also implementing anintegrated management system, the last component of which is certification interms of the OHSAS18001. 

Sasol is currently involved in de-mining and seismicactivities inside the exploration area. These activities are governed by bestpractice environmental management approaches and periodic reports onenvironmental performance are submitted to MICOA. The seismic lines are alignedso that they avoid dwellings and no resettlement, temporary or permanent, isforeseen. Compensation due to affected community members as a result of theseactivities is being undertaken under the Resettlement and CompensationProcedures for the Natural Gas Project, approved by the Mozambican MinisterialProject Liaison Committee in early 2003. 

During the year, Sasol signed agreements with theMozambican government for two off-shore blocks in the Indian Ocean. Seismicactivities are due to start on these blocks following a detailed EnvironmentalImpact Assessment (“EIA”) process. To ensure an open and transparent process,Sasol will promote wide and active publicconsultation and engagement with all identified stakeholders. This willbe governed by the new EIA Regulations, as will the planned expansion aimed atthe de-bottle necking of the gas processing and transporting facilities of theNatural Gas Project.

*MineralRights.**  *Petroleumactivities are regulated by the provisions of the Law Regulating PetroleumActivities. The National Directorate of Coal and Hydrocarbons administers andregulates petroleum operations on behalf of the government. The Mozambiquegovernment encourages the exploration and development of the country’shydrocarbon potential within a certain defined project framework.

In accordance with the constitution of Mozambique, theland and the natural resources of the soil and the subsoil of the territorialwaters and continental shelf are the property of the state, which determinesthe conditions for their development and use.

The Petroleum Law createsa state enterprise, Empresa Nacional de Hidrocarbonetos de Mozambique, which isappointed as the custodian of rights for the use, benefit, administration anddisposal of hydrocarbons and may grant licenses to international investors toconduct exploration and production.

**Other Countries**

In a number of othercountries, we are engaged in various activities that are regulated by local andinternational laws, regulations and treaties. In Malaysia, China and othercountries, we operate plants and facilities for the storage, processing andtransportation of chemical substances, including feedstock, products andwastes. In Qatar, Nigeria, Gabon, Equatorial Guinea and other countries, we areinvolved, or are in the process of being involved, in exploration, extraction,processing and transportation activities in connection with feedstock, productsand waste relating to natural gas, petroleum and chemical substances. Ouroperations in the respective jurisdictions are subject to numerous laws andregulations relating to exploration and mining rights and the protection ofsafety, health and the environment.

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**4.C   Organizational Structure**

Sasol Limited is theultimate parent of the Sasol group of companies. Our wholly owned subsidiary,Sasol Investment Company (Pty) Limited, a company incorporated in the Republicof South Africa, holds our interests in companies incorporated outside SouthAfrica. The following table presents each of Sasol’s significant subsidiaries(including direct and indirect holdings), the nature of business, percentage ofshares of each subsidiary owned and the country of incorporation at 30 June 2005.

| **Name**                                                           | ** ** | ** **                                                                                                                                                                                                                    | ** ** | **Nature of   business** | ** ** | **Percentage    ownership** | ** ** | **Country of    incorporation** |
|--------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|---------------------------------|
| Sasol Mining (Pty) Limited                                         |       | Coal mining activities                                                                                                                                                                                                        |       | 100                      |       | South Africa                |
| Sasol Synfuels (Pty) Limited                                       |       | Production of liquid  fuels, gases and chemical products                                                                                                                                                                      |       | 100                      |       | South Africa                |
| Sasol Technology (Pty) Limited                                     |       | Engineering services,  research and development and technology transfer                                                                                                                                                       |       | 100                      |       | South Africa                |
| Sasol Financing (Pty) Limited                                      |       | Management of cash  resources, investment and procurement of loans                                                                                                                                                            |       | 100                      |       | South Africa                |
| Sasol Investment Company (Pty) Limited                             |       | Holding company of the  group’s foreign investments and investment in moveable and immoveable  property                                                                                                                  |       | 100                      |       | South Africa                |
| Sasol Chemical Industries Limited                                  |       | Production and marketing  of mining explosives, gases, petrochemicals, fertilizers and refining of tar  acids                                                                                                                 |       | 100                      |       | South Africa                |
| Sasol Gas Holdings (Pty) Limited                                   |       | Holding company for the  group’s gas interests                                                                                                                                                                           |       | 100                      |       | South Africa                |
| Sasol Oil (Pty) Limited                                            |       | Marketing of fuels and  lubricants                                                                                                                                                                                            |       | 98                       |       | South Africa                |
| Republic of Mozambique Pipeline Investments Company  (Pty) Limited |       | Owning and operating the  natural gas transmission pipeline between Temane in Mozambique and Secunda in  South Africa for the transportation of natural gas produced in Mozambique to  markets in Mozambique and South Africa |       | 100                      |       | South Africa                |
| Sasol Chemical Holdings International (Pty) Limited                |       | Investment in the Sasol  Chemie group                                                                                                                                                                                         |       | 100                      |       | South Africa                |
| Sasol Chemicals Europe Limited                                     |       | Marketing and  distribution of chemical products                                                                                                                                                                              |       | 100                      |       | United Kingdom              |
| Sasol Chemicals Pacific Limited                                    |       | Marketing and  distribution of chemical products                                                                                                                                                                              |       | 100                      |       | Hong Kong                   |
| Sasol-Chem Inc.                                                    |       | Marketing and  distribution of chemical products                                                                                                                                                                              |       | 100                      |       | United States of America    |
| Sasol Financing International plc                             |       | Management of cash  resources, investment and procurement of loans                                                                                                                                                            |       | 100                      |       | Isle of Man                 |
| Sasol Gas Limited                                                  |       | Marketing, distribution  and transportation of pipeline gas and the maintenance of pipelines used to  transport gas                                                                                                           |       | 100                      |       | South Africa                |
| Sasol Germany GmbH                                                 |       | Production, marketing  and distribution of waxes and wax related products                                                                                                                                                     |       | 100                      |       | Germany                     |
| Sasol Italy SpA                                                    |       | Trading and  transportation of oil products, petrochemicals and chemical products and  derivatives                                                                                                                            |       | 100                      |       | Italy                       |

 

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| **Name**                                                   | ** ** | ** **                                                                          | ** ** | **Nature of   business** | ** ** | **Percentage    ownership** | ** ** | **Country of    incorporation** |
|------------------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|---------------------------------|
| Sasol North America Inc.                                   |       | Manufacturing of  commodity and special chemicals                                   |       | 100                      |       | United States               |
| Sasol Oil International Limited                            |       | Buying and selling of  crude oil                                                    |       | 100                      |       | Isle of Man                 |
| Sasol Petroleum International (Pty) Limited                |       | Exploration, production,  marketing and distribution of petroleum and natural gases |       | 100                      |       | South Africa                |
| Sasol Polymers International Investments (Pty)  Limited    |       | Holding company for  Sasol Polymers’ foreign investments                       |       | 100                      |       | South Africa                |
| Sasol Synfuels International (Pty) Limited                 |       | Conversion and marketing  of liquid fuels and chemical products                     |       | 100                      |       | South Africa                |
| Sasol Wax International Aktiengesellschaft                 |       | Holding company for  Sasol Wax operations                                           |       | 100                      |       | Germany                     |
| Sasol Wax (SA) (Pty) Limited                               |       | Production, marketing of  the Sasol Wax operations                                  |       | 100                      |       | South Africa                |
| Tosas Beherend (Pty) Limited                               |       | Investment                                                                          |       | 100                      |       | South Africa                |
| National  Petroleum Refiners of South Africa (Pty) Limited |       | Refining crude oil                                                                  |       | 63.64                    |       | South Africa                |

 

**4.D   Property, Plants and Equipment**

We operate coal mines and a number of plants andfacilities for the storage, processing and transportation of oil, chemicals andgas related raw materials, products and wastes.

*Coalmining facilities.**  *Ourmain coal mining facilities are located at the Secunda Mining Complex,consisting of underground mines (Bosjesspruit, Brandspruit, Middelbult,Syferfontein and Twistdraai export mine) near Secunda and the Sigma MiningComplex, consisting of underground mines (Mohlolo and Mooikraal) nearSasolburg.

For a detailed discussion regarding the use, capacityand products of these facilities see “Item 4.B—Business Overview—SasolMining”. Pages M-1 to M-3 include maps showing the location of ourcoal properties and major manufacturing plants in South Africa.

*OurSecunda facilities.**  *Ourmain manufacturing facilities are located at Secunda and they are the base fornumerous of our Synfuels operations and a range of our chemical industriesoperations, including explosives, fertilizers, monomers and polymers, solvents,alpha olefins and tar. The approximate size of this property is82.5 million square meters (“m2”). See “Item 4.B—Business Overview—SasolSynfuels”.

*OurSasolburg facilities.**  *Ourfacilities at Sasolburg are the base for numerous of our chemical industriesoperations, including ammonia, explosives, mining chemicals, phenols, solvents,polymers, fertilizers, tars and waxes operations. The approximate total size ofthese properties is 51.4 million m2.

The size of the Natref refinery, also based inSasolburg, is approximately 1.1 million m2. See “Item 4.B—BusinessOverview—Sasol LFB”.

*OurMozambican facilities.**  *Ournatural gas processing operations in Mozambique are operated by Sasol PetroleumTemane (a subsidiary of Sasol Petroleum International). These facilities,located some 700 km north of the Mozambican capital, Maputo, on a site ofapproximately 400,000 m2, extract and process gas from the Temane gas field.The processed gas is supplied to the South African gas market, utilizing anewly installed high pressure pipeline, some 865 km in length.

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*Ourfacilities in Germany.**  *Variousoperations of Sasol Olefins and Surfactants and Sasol Solvents are based at anumber of locations in Germany. The most significant of these facilities are atBrunsbüttel (site size approximately 1.5 million m2; plant size500,000 m2), Marl (site size approximately 160,000 m2; plant size 75,000 m2)and Moers site (site size approximately 808,000 m2; plant size 400,000 m2).Sasol Wax facilities are also based in Hamburg.

*Otherfacilities in the rest of Europe.*   Variousoperations of Sasol Olefins and Surfactants are based at a number of locationsin Italy. The main of these facilities are at Augusta (site size approximately1.35 million m2; plant size 220,000 m2) and Terranova (site size approximately185,000 m2; plant size 75,000 m2).

*Ourfacilities in the United States of America.**  *Operations of Sasol Chemie arebased at a number of locations in the United States. The most significant ofthese facilities are located at Lake Charles, Louisiana (site sizeapproximately 3 million m2; plant size 540,000 m2) and in Baltimore,Maryland (site size approximately 293,000 m2; plant size 255,000 m2).Merisol also has operations based at Oil City, Pennsylvania, Houston and WinnieTexas. The Lake Charles ChemicalComplex suffered some damage due to Hurricane Rita which made landfall on 24 September 2005.The extent of the damages to our facilities is currently being assessed. It isexpected that normal production at the entire complex will have commenced bythe end of October 2005 and at which time it is expected that electrical powerwill also be restored to the homes of our employees in the affected areas. See“Item8.B—Significant Changes”.

With limited, immaterialexceptions, we own, or hold similar property rights on the properties describedin this section. For more information regarding capital expenditure in respectof these properties and the related facilities and operations, see“Item 4.A—History and Development of the Company—Capital Expenditure” fora description of our material plans to construct, expand and enhance ourfacilities.

**MINING PROPERTIES AND OPERATIONS**

**MineSystems and their Production Capacity**

Sasol Mining operatesseven mines, from which production is sold to Sasol Synfuels and Infrachem andthe international market. The production units, their annual nominated capacitiesand actual production values are indicated in the following table:

**Nominatedcapacity and production**

| **Mine**                                        | ** ** | ** **       | ** ** | **Nominated  capacity  per year**(1) | ** ** | **2005  Actual  production** | ** ** |
|-------------------------------------------------|------------|------------------|------------|-------------------------------------------|------------|------------------------------|------------|
| ** **                                      | ** ** | **(in Mt)** | ** ** |
| Middelbult Mine  (Secunda)                      |       |             | 8.5        |                                      |       | 8.0                          |       |
| Brandspruit Mine  (Secunda)                     |       |             | 8.5        |                                      |       | 8.3                          |       |
| Bosjesspruit Mine  (Secunda)                    |       |             | 8.0        |                                      |       | 7.7                          |       |
| Twistdraai Export  Mine (Secunda)               |       |             | 14.2       |                                      |       | 14.0                         |       |
| Syferfontein Mine  (Secunda)                    |       |             | 8.2        |                                      |       | 7.1                          |       |
| Sigma Mine (Mohlolo and  Mooikraal) (Sasolburg) |       |             | 1.7        |                                      |       | 2.6                          |       |

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(1)    The 2005nominated capacity of a mine is the expected maximum production of that mineduring normal operational hours.

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All mines employ theunderground room and pillar mining method using continuous miners and at Sigmaand Syferfontein this method was supplemented by opencast/strip mining (howeverboth opencast operations terminated during the year). The Sigma Mine was firstestablished in 1950. Production at the first two Secunda mines,Brandspruit and Bosjesspruit commenced in 1977. Twistdraai and Middelbultfollowed during the early 1980s, while Syferfontein started productionin 1992. In 1996, the Export Mine at Twistdraai was commissioned. Theoriginal mine boundaries have been extended into new reserve areas withbrownfield extensions facilitated by satellite shaft systems. All theproduction equipment is either replaced or overhauled on a regular basisaccording to a managed maintenance system that contributes significantly tolower production costs.

**Processingoperations**

*ExportBusiness—Secunda operations.**  *The export business was initiated in August 1996as part of a growth strategy. To date a total of 27.88 Mt of coal has beenexported, beneficiated from 76.05 Mt at the Twistdraai Export Plant from1996 through 2005. Coal is fed to the beneficiation plant from the existingTwistdraai Export Mine. The beneficiation plant produces primary export productwith an ash content of approximately 10%, as well as secondary product for theSynfuels market.

The export beneficiation plant has a design throughputcapacity of 8.5 Mt per year, but due to productivity improvements andminor alterations in the plant this figure is regularly exceeded. In 20059.96 Mt was fed through the plant. The plant consists of a primary andsecondary stage. The primary stage comprises three modules with two feedstreams each. The coal is fed at a rate of 550 tons per hour into two800 millimeter (“mm”) diameter dense medium cyclones per feed stream.There are a total of 18 cyclones in the primary stage. The secondary stageconsists of two modules with two 1,000 mm diameter dense medium cyclones.

The Run of Mine (“ROM”) coal is transported viaoverland conveyor belts to the export beneficiation plant from the Twistdraaiexport mine. The export product is loaded onto trains by means of a rapidload-out system, and then transported to the Richards Bay Coal Terminal inKwaZulu-Natal.

The existing capacity at the Richards Bay CoalTerminal is 72 Mt per year. Sasol Mining has a 5% share in this terminal,which relates to an existing entitlement of 3.6 Mt per year. The plannedRichards Bay Coal Terminal Phase 5 expansion project will increase the totalthroughput capacity to 82 Mt. Sasol Mining’s participation in thisproject, should result in a gross entitlement of 4.1 Mt per year. Theincrease in export product will be achieved, by increasing throughput and bythe production of a second grade product containing 14% ash.

*Sasol Coal Supply—Secundaoperations.**  *SasolCoal Supply operates the coal handling facility between Sasol Mines and SasolSynfuels by stacking and blending coal on six stockpiles of 110 Kt each. TheSasol Coal Supply operation has a live stockpile capacity of 660 Kt thatis turned over approximately 1.5 times per week. In addition there is areserve stockpile capacity of 2.14 Mt. The objectives are:

·       homogenizethe coal quality supplied to Sasol Synfuels;

·       keepthe Sasol Synfuels bunkers full with a product that conforms to customerrequirements; and

·       preventfine coal generation.

The daily coal supply toSasol Synfuels is approximately 110 Kt. The total coal handled by SasolCoal Supply, since production began in 1977 through 2005, amounts to831 Mt.

***Source of electrical power***

Electricity is supplied byEskom, the state-owned power producer. The approximate monthly peakdemand is 125MVA to the Secunda Mining Complex.

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**Location of Coal Deposits**

Pages M-1 to M-3include maps showing the location of coal properties and major manufacturingplants in South Africa.

***Secunda Mining Complex***

Secunda Mines aresituated 145 km southeast of Johannesburg, adjacent to the town of Secunda inthe Mpumalanga province. The mines are connected to the Gauteng province, theeconomic heartland of the country, by well-maintained roads, railways and anairport.

Secunda Mining Complex ispart of the Highveld coal field in the western Mpumalanga province.

***Sigma operations (Sasolburg)***

The Sigma operations aresituated close to the town of Sasolburg on the northern boundary of the FreeState province, located about 100 km south of Johannesburg, and connected by well-maintainedroads, railways and an airport. This northern portion of the mine has depletedits reserves and has also terminated production. A new underground access tothe remaining reserves in the southern highwall of the pit has been establishedand has been in operation for the past 2 years. In addition, the establishmentof the Mooikraal Mine some 22 km to the west of Sasolburg is on schedule.

**Planned Capital Spending**

Sasol Mining is pursuing a growth strategy, which willrequire capital expenditure in the long-term. Some mines will be reaching theend of their economic life and will have to be replaced within the next 5 to 10years.

The 5 year capitalspending plan for Sasol Mining can be divided into four broad categories:

·       Minereplacement and infrastructure capital spending: Major projects include thebrownfields development into the Irenedale Reserves for the Bosjesspruit Mineand the brownfields expansion into the Block 8 west Reserves for Middelbult. Greenfieldsdevelopment of the Rooipoort Reserves for replacement of Twistdraai Colliery,and Block 8 north Reserves for the replacement of Brandspruit Colliery willalso take off in the next 5 years. The recent implementation of the AngloCoal/Kriel South project (Isibonelo Colliery) has been successful, and furtherdevelopment is expected in the 2006 year. Capital expenditure on the newMooikraal project is expected in the 2006 year as a major item.

·       Operationscapital spending to ensure efficient operations.

·       EnvironmentalCapital Spending: As compartments fill with water and mines are closed, surfacewater management infrastructure will need to be established to transfer waterbetween compartments and mines, furthermore this water contains heavy metalswhich needs to be treated before sending the water into the EDR or Synfuels AshSystem or Cooling Towers and to enable this, pre-treatment water infrastructureis required to be established.

·       New Technology/NewBusiness: Testing of “Low Seam” equipment in order to better utilize the edgesof the coal reserves and a pelletising project to turn discard slimes intocoarse gasifiable pellets. A project on new generation roofbolters both fornormal production and stonework has been initiated and is expected to supportsafety and production targets. In addition in the new business category theexpected onset of the phase 5 expansion of the Richards Bay Coal Terminalwill require capital expenditure. Additional exploration will also take placeto bring specific resource areas to feasibility levels.

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**Coal Exploration Techniques**

Sasol Mining’s geologydepartment employs several exploration techniques in assessing the geologicalrisks associated with the coal deposits. These techniques are applied in amutually supportive way to achieve an optimal geological model of the relevantcoal seams targeted for production purposes. The Highveld Basin is consideredto be structurally complex when compared to the active coal fields in SouthAfrica. As a result, Sasol Mining has been basing its geological modeling onhaving sufficient and varied geological information, in order to achieve a highlevel of support to the production environment; an approach utilized for thelast 25 years.

***Present exploration techniques***

*Verticaldiamond drilling.**  *Thisis the primary exploration technique that is applied in all exploration areas,especially during reconnaissance phases. In and around operational mines, theaverage vertical borehole density varies from 1:10 to 1:15 (boreholes perhectare), while in medium-term mining areas, the average borehole density is inthe order of 1:25. The average drilling depth ranges from 200 to250 meters. The major application of this technique is to locate the coalhorizons, to identify coal quality and to gather structural information ondolerite dykes and sills, and associated de-volatilization. This information isthen modeled and forms the basis of further geological interpretation.

*Directionaldrilling (surface to in-seam).**  *Directional drilling from surfaceto in-seam has been successfully applied for several years, especially, formedium and long-term exploration areas. A circular area with a radius ofapproximately two kilometers (1,256 hectares) of coal deposits is coveredby this method. The main objective of this approach is to locate dolerite dykesand steep dipping dolerite sills, as well as faults with displacements largerthan the coal seam thickness.

*Horizontaldrilling.**  *Thistechnique is applied to all operational underground mines and suppliesshort-term (minimum three months) exploration coverage per mining section. Nocore is usually recovered, although core recovery is possible, if required. Themain objective is to locate dolerite dykes and steep dipping sills. A drillingreach of up to one kilometer is possible, although the average length isusually 800 meters.

*Aeromagneticsurveys.**  *Allexploration areas are usually aero-magnetically surveyed before the focused explorationis initiated. The main objective is to locate dolerite sills and dykes, as wellas large-scale fault zones.

*Airborneelectro-magnetic surveys.**  *Due to the occurrences ofnon-magnetic dolerite dykes and sills, it has been necessary to survey certainexploration areas electro-magnetically to pinpoint these structures foroptimal mine layout plans.

*Geophysical surveys ofdirectional boreholes.**  *Thepresent research has been highly successful. This technique is now beingroutinely applied with excellent information leading to increased confidence ofthe surface directional drilling results. This technique has also been appliedin underground directional drilling with excellent results.

**Secunda Operations Information**

The coal supplied to Sasol Synfuels is the raw coalmined on the tied mines, and the secondary product from the export mines’beneficiation plant.

The analytical work done on the sampling wasinitially, between 1965 and 1972 calendar years, conducted at the FuelsResearch Institute, and subsequently at the laboratories of the South AfricanBureau of Standards in Pretoria, South Africa, now called Coal and MineralTechnologies.

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Extensive geologicalexploration has been done in the coal resource areas. Every year additionalexploration is undertaken to update and refine the geological models, whichallows accurate forecasting of geological conditions, for the effectiveplanning and utilization of coal resources.

***Computation and storage of geological information***

Geological information isstored in a Sequel Server database. Data validation and quality checkingthrough several in-house methods is conducted regularly. Data modeling isconducted by manual interpretation and computer-derived geologicalmodels, using the Horizon module of the Surpac Minex Group’s MINEX software.Reserves and composite qualities are computed using established and recognizedgeo-statistical techniques.

***General stratigraphy***

The principal coal horizon, the Number 4 LowerCoal Seam, provides some 90.8% of the total proven and probable reserve. TheNumber 4 Lower Coal Seam is one of six developed coal horizons in theVryheid Formation of the Karoo Supergroup, a permo-carboniferous aged,primarily sedimentary sequence. The coal seams are numbered from the oldest tothe youngest.

*Characteristics of theNumber 4 Lower Coal Seam.**  *The Number 4 Lower Coal Seamis a bituminous hard coal characterized by the following borehole statistics:

·       Thedepth to the base of the seam ranges from 40m to 241m with an average depth of135m below the surface topography. The majority of the workings areunderground.

·       Thefloor of the seam dips gently from north to south at approximately0.5 degrees.

·       Thethickness of the seam varies in a range up to 10.0m with a weighted averagethickness of 3.30m. In general, thinner coal is found to the south and thickercoal to the west adjacent to the Pre-Karoo basement highs.

·       Theinherent ash content (air dried basis) is an average 24.5%, which is in-linewith the coal qualities supplied during the past 25 years to SasolSynfuels.

·       Thevolatile matter content is tightly clustered around a mean of 22.8% (airdried).

·       Thetotal sulfur content (air dried), which primarily consists of mineral sulfur inthe form of pyrite and minor amounts of organic sulfur, averages 1.08% of thetotal mass of the coal.

The other potentialcoal seam is:

·       The Number 2 CoalSeam, which provides additional tonnage to the reserve in one area and is beingevaluated in a number of other areas to provide supplemental tonnage.

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***Mineable parameters***

Theunderground mining parameters used to determine the extent of the reserves areindicated below:

| **Parameter**                                     | ** ** | ** **                                      | ** ** | **Value** | ** ** |
|---------------------------------------------------|------------|-------------------------------------------------|------------|-----------|------------|
| Minimum mining height  (meters)                   |       | 2.1                                             |       |
| Maximum mining height  (meters) (indication only) |       | 5.5                                             |       |
| Minimum mining depth  (meters)                    |       | 40                                              |       |
| Primary safety factor(1)                          |       | 2.2                                             |       |
| Secondary safety factor(1)                        |       | 2.0                                             |       |
| Tertiary safety factor(1)                         |       | 1.8                                             |       |
| Minimum dry ash-free  volatile content            |       | 28                                              | %          |
| Maximum air-dried  ash content                    |       | 34                                              | %          |
| Surface structure allowances                      |       | Depth/2.7 from  the  perimeter of the structure |       |

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(1)    A ratio of the stress placed on a pillar to thestrength of that pillar.

*Production History.**  *Since June 1977, when thefirst coal was produced, the build-up of production reached a plateau in 1984of 29 Mt. Subsequently, the growth of the synfuels demand and the creationof the export business have resulted in saleable production reaching45.5 Mt (total production 47.7 Mt) in 2005.

***Reserve Estimation(Remaining Reserves at 31 March 2005)***

We have approximately4.0 billion tons (“Bt”) of in situ proven and probable coal reservesin the Secunda Deposit and approximately 1.4 Bt of Recoverable reserves.The coal reserve estimations are set out in the table below:

*Table 1.*

**CoalResource/Reserve Estimations****(1) in areas where Sasol Mining has miningauthorization, in the Secunda mining complex, to be converted to mining rightsin terms of the Mineral and Petroleum Resources Development Act, Act 28 of 2002**

| **Reserve Block**                           | ** ** | ** **    | ** ** | **Gross in  situ Coal  Resource  (Mt)**(4) | ** **  | **Geological  discount  (Mt)** | ** **  | **Mine  layout  losses  (Mt)** | ** ** | **Extraction  rate  (%)** | ** ** | **Recoverable  Coal  Reserve**(2)  (Mt) | ** **    | **Beneficiated  Yield** | ** ** | **Proven/  Probable** | ** ** |
|--------------------------------------------------|------------|---------------|------------|------------------------------------------------------|-------------|--------------------------------|-------------|--------------------------------|------------|---------------------------|------------|-----------------------------------------|---------------|-------------------------|------------|-----------------------|------------|
| Block 2, Number 4 seam                           |       | 809.741       |       |                                                 | 218.630     |                           | 148.183     |                           |       | 58.6                      |       |                                    | 273.277       |                    | 100%       |                  | Probable   |   |
| Block 2, Number 2 seam                           |       | 369.819       |       |                                                 | 99.851      |                           | 67.677      |                           |       | 58.6                      |       |                                    | 124.809       |                    | 100%       |                  | Probable   |   |
| Bosjesspruit Extension (Block 3  South)     |       | 124.681       |       |                                                 | 33.664      |                           | 22.817      |                           |       | 58.6                      |       |                                    | 42.078        |                    | 100%       |                  | Probable   |   |
| B5C                                              |       | 219.782       |       |                                                 | 39.561      |                           | 40.220      |                           |       | 63.9                      |       |                                    | 94.192        |                    | 100%       |                  | Proven     |   |
| B5E                                              |       | 249.071       |       |                                                 | 87.175      |                           | 45.580      |                           |       | 51.5                      |       |                                    | 63.076        |                    | 100%       |                  | Probable   |   |
| B5S                                              |       | 152.954       |       |                                                 | 36.709      |                           | 27.991      |                           |       | 60.8                      |       |                                    | 56.452        |                    | P40%, S35% | (3)                   | Probable   |   |
| Brandspruit Extension  (Block 8 North + Evander) |       | 508.531       |       |                                                 | 101.611     |                           | 92.090      |                           |       | 63.2                      |       |                                    | 209.483       |                    | 100%       |                  | Probable   |   |
| Bosjesspruit                                     |       | 342.460       |       |                                                 | 26.746      |                           | 99.964      |                           |       | 61.5                      |       |                                    | 141.558       |                    | 100%       |                  | Proven     |   |
| Brandspruit                                      |       | 174.335       |       |                                                 | 30.857      |                           | 48.644      |                           |       | 53.3                      |       |                                    | 54.402        |                    | 100%       |                  | Proven     |   |
| Twistdraai                                       |       | 163.492       |       |                                                 | 12.278      |                           | 27.987      |                           |       | 63.8                      |       |                                    | 82.207        |                    | P46%, S30% | (3)                   | Proven     |   |
| Syferfontein                                     |       | 398.405       |       |                                                 | 71.713      |                           | 93.101      |                           |       | 53.9                      |       |                                    | 131.263       |                    | 100%       |                  | Proven     |   |
| Middelbult                                       |       | 409.199       |       |                                                 | 76.152      |                           | 89.635      |                           |       | 47.2                      |       |                                    | 121.266       |                    | 100%       |                  | Proven     |   |
| Secunda                                          |       | 88.160        |       |                                                 | 17.641      |                           | 17.632      |                           |       | 54.0                      |       |                                    | 30.096        |                    | 100%       |                  | Probable   |   |
| **Total Secunda Area**                           | ** ** | **4,010.630** | ** ** | ** **                                           | **852.588** |                           | **821.521** | ** **                     | ** ** | **58.3**                  |       | ** **                              | **1,424.159** |                    | ** ** | ** **            | ** ** | ** ** |

 

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*Table 2*

**CoalResource/Reserve Estimations****(1) in State owned areas, in terms of previouslegislation, for which Sasol has mining authorisation****(5) in the Secunda Mining Complex, as well coalResource/Reserve Estimations in State owned areas over which applications forprospecting and mining rights have been submitted(6) or are in theprocess of being submitted to the Department of Minerals and Energy, in theSecunda Mining Complex.**

| **Reserve Block**     | ** ** | ** ** | ** ** | **Gross in  situ Coal  Resource  (Mt)**(4) | ** ** | **Geological  discount  (Mt)** | ** ** | **Mine  layout  losses  (Mt)** | ** ** | **Extraction  rate  (%)** | ** ** | **Recoverable  Coal  Reserve**(2)  (Mt) | ** ** | **Beneficiated  Yield** | ** ** | **Proven/  Probable** | ** ** |
|----------------------------|------------|------------|------------|------------------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|---------------------------|------------|-----------------------------------------|------------|-------------------------|------------|-----------------------|------------|
| Block 2, Number 4  seam(6) |       |       | 10.297     |                                                 |       | 2.780                          |       | 1.884                          |       |                      | 58.6       |                                    |       | 3.475                   |       | 100%                  |       | Probable |   |
| B5C(6)                     |       |       | 2.881      |                                                 |       | 0.519                          |       | 0.527                          |       |                      | 63.9       |                                    |       | 1.235                   |       | 100%                  |       | Proven |   |
| B5S(6)                     |       |       | 49.732     |                                                 |       | 11.936                         |       | 9.101                          |       |                      | 60.8       |                                    |       | 18.355                  |       | P40%, S35%            | (3)        | Probable |   |
| Bosjesspruit(5)            |       |       | 6.089      |                                                 |       | 0.476                          |       | 1.777                          |       |                      | 61.5       |                                    |       | 2.517                   |       | 100%                  |       | Proven |   |
| Syferfontein(6)            |       |       | 4.774      |                                                 |       | 0.476                          |       | 1.116                          |       |                      | 53.9       |                                    |       | 1.573                   |       | 100%                  |       | Proven |   |
| Secunda(6)                 |       |       | 16.499     |                                                 |       | 3.301                          |       | 3.300                          |       |                      | 54.0       |                                    |       | 5.632                   |       | 100%                  |       | Probable |   |
| **Total Secunda Area**     | ** ** | ** ** | **90.272** |                                                 | ** ** | **19.488**                     |       | **17.705**                     | ** ** | ** **                | **59.2**   |                                    | ** ** | **32.787**              |       | ** **            | ** ** | ** ** | ** ** |

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**Notes:**Notes areapplicable to both tables 1 and 2

(1)    The coal reserve estimations in this table werecompiled under supervision of Mr. Phill Grobler Pr.Nat.Sci (ProfessionalNatural Scientist). According to the “South African Code for Reporting ofMinerals Resources and Mineral Reserves, (The SAMREC code)” dealing withcompetence and responsibility, paragraph 4.1 states: Documentationdetailing exploration results, mineral resources and mineral reserves estimatesfrom which a public report on exploration results, mineral resources andmineral reserves is prepared, must be prepared by or under the direction of,and signed by, a competent person. Paragraph 4.3 states: A competentperson is a person who is a member of the South African Council for NaturalScientific Professions (“SACNASP”). Mr J D Conradie on behalf of Gemecs (Pty)Limited reviewed the correctness of the methodology and the assumptions used toobtain coal resource/reserve estimations in tables 1 and 2.

(2)    The Recoverable Coal Reserve is an estimate of theexpected recovery of the mines in these areas and is determined by thesubtraction of losses due to geological and mining factors, and the addition ofdilutants such as moisture and contamination.

(3)    The P % refers to the % yield export product from theRecoverable Coal Reserve and the S % refers to the secondary product yield,which will be supplied to the Synfuels factory.

(4)    Mt refers to 1 million tonnes.

(5)    The area in which the Recoverable Coal Reserve isestimated is State-owned, but under previous legislation, Sasol Mining hadmining authorisation to exploit the reserve. Applications for prospecting andmining rights have been submitted, or are in the process of being submitted tothe Department of Minerals and Energy.

(6)    The area in which the Recoverable Coal Reserve isestimated is State-owned. Sasol Mining had no mining authorisation over theseareas, but applications for prospecting and mining rights have been submittedor are in the process of being submitted to the Department of Minerals andEnergy.

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***Criteria for Proven and Probable:***

Over and above the definitions for coal reserves,probable coal reserves, and proven coal reserves set forth in IndustryGuide 7 under the Securities Act, which are included in our Glossary, weconsider the following criteria to be pertinent to the classification of thereserves.

Probable reserves are those reserve areas where thedrill hole spacing is sufficiently close in the context of the deposit underconsideration where conceptual mine design can be applied, and for which allthe legal and environmental aspects have been considered. Currently thisclassification results in variable drill spacing depending on the complexity ofthe area being considered and is generally less than 500 meters, althoughin some areas may extend to 880 meters. The influence of increased drilling inthese areas should not materially change the underlying geostatistics of thearea on the critical parameters such as seam floor, seam thickness, ash, andvolatile content.

Proven reserves are thosereserves for which the drill hole spacing is generally less than350 meters, for which a complete mine design has been applied whichincludes layouts and schedules resulting in a full financial estimation of thereserve. This classification has been applied to areas in the production stageor for which a detailed feasibility study has been completed.

***Legal rights on coalfields***

Mineral rights weresubstituted with statutory rights in accordance with the transitionalprovisions of the Mineral and Petroleum Resources Development Act, 2002(Act 28 of 2002), which came into effect on 1 May 2004. Wetherefore hold these statutory rights, to mine more than 98% of the mineralrights previously owned in the Secunda area. We hold four old order miningrights (previously Section 9 mining authorizations under the repealedMinerals Act), consisting of 157,000 hectares of coal rights. See “Item 4.B—BusinessOverview—Regulation of Mining Activities in South Africa”.

**Sasolburg Operations**

***Exploration history***

The Northern Free State area was first explored in thelate 1930s. The exploration was conducted by drilling cored diamond boreholesover the current Sasolburg area. Some 600 boreholes were initially drilledby the South African government. The Sigma mine was established in 1950.Subsequent drilling by the General Mining and Finance Corporation in the 1960sidentified more coal reserves in the southwest of the existing Sigma Mine andalso extensions to the south and east. Pages M-1 and M-2 include mapsshowing the location of our Sasolburg coal operations.

Drilling conducted bySasol Mining has continued to the present with some 2,813 boreholes havingbeen drilled in total over the whole of the Northern Free State coal reserves.All analytical work was initially done by the state laboratory, the FuelsResearch Institute. More recently, it was conducted by the laboratories of theSouth African Bureau of Standards in Pretoria (now Coal and MineralTechnology).

***Coal seam geology***

There are two primary coal seams of importance, theNumber 2 Coal Seam and the Number 3 Coal Seam. These coal seams areseparated by a carbonaceous mudstone to siltstone parting and consist of anumber of coal piles and carbonaceous mudstone interburdens. The combined coalseams can attain a total thickness of over 30 meters. The individual coalpiles are numbered from the base upwards and selected mining horizons areidentified on the basis of the coal quality required. The major controllingfactor on the coal development is the pre-Karoo basement.

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Selective mining withincoal seams implies that strict horizon control is exercised to maintain miningon the selected horizon. This has been done very successfully at the old Sigmaunderground operations, as well as, at the present Sigma underground operation (Mohlolo).In the visible coal seam geology, a well-defined marker within the seamassists in the identification and verification of the pre-determined horizonunderground, even in areas where the coal seam is displaced because offaulting.

In general, the quality ofthe coal (the ash yield or the fixed carbon content) deteriorates from the baseof the coal seam to the top of the coal seam.

In-seam occurrence ofinorganic material is rare in the selected mineable area and may consist ofcarbonaceous mudstone lenses locally. Inorganic material occurs mainly towardsthe top of the coal seam, but has been excluded from the selected mineablehorizon.

Sigma Mine has been activesince 1950 and has completed total extraction of room and pillar and longwallmining on both the major coal seams.

The operations are theMohlolo underground mine, which was developed out of the northern highwall ofthe Wonderwater strip mine, the Mohlolo South underground mine developing outof the southern highwall and the Mooikraal block project on which constructionhas started. The current expected production (2005) is 1.7 Mt per year forthe Mohlolo/Mooikraal sites.

***Selected mininghorizon***

The determination of theselected mining horizon is driven primarily by the required coal quality forthe steam process at Sasol Infrachem. In order to define the mining horizon,detailed sampling and descriptions of the coal seams are conducted. From this,both a visual and chemical correlation of the piles are made.

***Reserve estimation***

Sasol Mining has30.4 Mt recoverable coal reserves for supply to Sasol Infrachem for steamgeneration.

**CoalReserve Estimations**(1)—Supply toSasol Infrachem Sasolburg (31 March 2005)

*Table 3*

**CoalResource/Reserve Estimations****(1) in areas where Sasol Mining has mining authorization,in the Free State mining complex to be converted to mining rights, in terms ofthe Mineral and Petroleum Resources Development Act, Act 28 of 2002**

| **Reserve area**  | ** ** | ** ** | ** ** | **Coal seam** | ** ** | **Gross in  situ Coal  Resource  (Mt)**(3) | ** ** | **Geological  discount  (Mt)** | ** ** | **Mine  layout  losses  (Mt)** | ** ** | **Extraction  rate  (%)** | ** ** | **Recoverable  Coal  Reserves**(2)  (Mt) | ** ** | **Proven/  Probable** | ** ** |
|------------------------|------------|------------|------------|--------------------|------------|------------------------------------------------------|------------|--------------------------------|------------|--------------------------------|------------|---------------------------|------------|------------------------------------------|------------|-----------------------|------------|
| Mohlolo North          |       |       | 3B/2B      |               |       |                                                 | 0.556      |                           |       |                           | 0.034      |                      |       | 0.028                                    |       |                  | 17         |   |   |   | 0.084 |   |   | Proven |   |
| Mohlolo South          |       |       | 2B/2A      |               |       |                                                 | 5.450      |                           |       |                           | 0.315      |                      |       | 0.273                                    |       |                  | 41         |   |   |   | 1.985 |   |   | Proven |   |
| **Total**              |       |       |       |               | ** ** | ** **                                           | **6.006**  |                           |       |                           |       |                      | ** ** | ** **                               | ** ** |                  |       |   | ** ** | ** ** | **2.069** |   | ** ** | **Proven** | ** ** |
| Mooikraal              |       |       | 3B         |               |       |                                                 | 81.039     |                           |       |                           | 11.751     |                      |       | 6.236                                    |       |                  | 45         |   |   |   | 28.374 |   |   | Proven |   |
| **Total**              | ** ** |       |       |               | ** ** | ** **                                           | **81.039** |                           |       |                           |       |                      | ** ** | ** **                               | ** ** |                  |       |   | ** ** | ** ** | **28.374** |   | ** ** | **Proven** | ** ** |
| **Probable reserves.** |       |       |       |               | ** ** | ** **                                           | ** ** |                           |       |                           |       |                      | ** ** | ** **                               | ** ** |                  |       |   | ** ** | ** ** | ** ** |   |   |   |   |
| Remainder Mooikraal    |       |       | 3B         |               |       |                                                 | 18.906     |                           |       |                           |       |                      |       |                                     |       |                  |       |   |   |   |   |   |   | Probable |   |
| Block 13 South         |       |       | 3B         |               |       |                                                 | 109.900    |                           |       |                           |       |                      |       |                                     |       |                  |       |   |   |   |   |   |   | Probable |   |
| North West             |       |       | 3B/2B      |               |       |                                                 | 103.610    |                           |       |                           |       |                      |       |                                     |       |                  |       |   |   |   |   |   |   | Probable |   |

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(1)    Mr. BFourie compiled the coal reserve estimations in this table, under thesupervision of Mr Phill GroblerPr.Nat.Sci., Divisional Manager, Strategic Capacity Management, SasolMining. According to the “South AfricanCode for 

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Reportingof Minerals Resources and Mineral Reserves, (The SAMREC code)” dealing withcompetence and responsibility, paragraph 4.1 states: Documentation detailingexploration results, mineral resources and mineral reserves estimates fromwhich a public report on exploration results, mineral resources and mineralreserves is prepared, must be prepared by or under the direction of, and signedby, a competent person. Paragraph 4.3 states: A competent person is aperson who is a member of the South African Council for Natural ScientificProfessions (“SACNASP”).

(2)    100% ofthe recoverable coal is supplied to the client, with no beneficiationundertaken.

(3)    Mt refers to 1 million tonnes

**Oiland Gas Production and Exploration Operations**

SPI, our dedicated oil and gas exploration andproduction company, commenced full scale commercial production and supply ofnatural gas from the 70% owned Temane gas field in Mozambique during the firstquarter in 2004 and made new discoveries in offshore Gabon and onshoreMozambique.

The Etame oil field inoffshore Gabon came into production in September 2002. SPI retains a27.75% shareholding in this field

***Reserve and Production Disclosure***

Seesupplemental oil and gas information to “Item 18—Financial Statements” forfurther disclosures of oil and gas operations.

| ** **                                                   | ** ** | **Crude oil and condensate  (millions of barrels  consolidated operations)** | ** ** | **Natural gas  (billions of cubic feet  consolidated operations)** | ** ** |
|--------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------|------------|
| ** **                                                   | ** ** | **Mozambique**                                                                                             | ** ** | **Other  areas**                                                                            | ** ** | **Total** | ** ** | **Mozambique** | ** ** | **Other  areas** | ** ** | **Total** | ** ** |
| **Proved developed and  undeveloped reserves**               |       |                                                                                                       |       |                                                                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Opening  volume derived from 30 June 2004 estimates** | ** ** | ** **                                                                                                 | **—** |                                                                                        | ** ** | ** ** | **9.2** |   | ** ** | ** ** | **9.2** |   | ** ** | ** ** | **1,438** |   | ** ** | ** ** | **—** |   | ** ** | **1,438** | ** ** |
| Production                                                   |       |                                                                                                       | —     |                                                                                        |       |   | (1.5 | ) |   |   | (1.5 | ) |   |   | — |   |   |   | — |   |   | — |   |
| **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                                  |       |                                                                                                       | —     |                                                                                        |       |   | 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** | ** ** |

 

The oil and gasreserve estimations in this table were compiled by:

·       Mozambique:Mr L Williams, Asset Manager (SPI), Bachelor of Science Petroleum and NaturalGas Engineering;

·       Other:Mr N Dighe, Senior Petroleum Engineer (SPI), Master of Science PetroleumEngineering.

The table above records estimates of the reservequantities held by Sasol, through its various operating entities under SPI.

*The companycurrently has reserves in the following areas:*

In Gabon (included under Other), the company holds a 27.75%non-operated interest in the offshore Etame oil field. An internally determinedassessment of oil reserves was conducted during 25-26 April 2005and updated for production through to 30 June 2005. As the licenseheld over this 

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property is a ProductionSharing Agreement, reserves reported represent the net economic interestvolumes attributable to the company, after deduction for royalties grossed upfor income taxes. Upward revisions in reserve estimates for the year have beenenabled by more performance history resulting in increased confidence inreserve levels and the effect of higher crude prices in the extension of theproduction plateau. Since the last assessment, a new production well (ET-6H)has been drilled and was brought into production during July 2005.

During 2004 exploration drilling of the Ebouri-1and the Avouma-1 wells resulted in the discovery of additional reserves.During 2005 our partner and the Government of Gabon approval of a plan for the development of the Avouma fieldenabled the booking of reserves.

In Mozambique, we hold a 70% operational interest inthe Pande and Temane gas fields. An internally determined assessment of gasreserves was conducted during 25-26 April 2005 and updated forproduction through to 30 June 2005. As the license held over this propertyis a Petroleum Production Agreement, reserves reported represent the neteconomic interest volumes attributable to the company, after deduction ofroyalties. Additionally, the volumes booked are restricted to take-or-pay quantitiesdefined in the gas sales contract agreement for the 25 year term. Condensatevolumes which were excluded from previous bookings are now included based uponthe recognition of a spot market and a history of sales over the past year. Thedownward revision in natural gas volume was as a result of production historyindicating a higher energy content in the reserves resulting in a reduction inthe gas volume to meet the requirements under the gas sales agreement.

A phased approach to field development has beenfollowed and only the Temane field has been developed and brought intoproduction. Gross gas production (jointly with our 30% partner) for the yearwas 68 bcf. The Pande field is scheduled to commence development during 2007.

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**ITEM5.**                OPERATING ANDFINANCIAL REVIEW AND PROSPECTS

You should read thissection along with our consolidated financial statements for the years endedand as at 30 June 2005, 30 June 2004 and 30 June 2003,including the accompanying notes, that are included in this annual report on Form 20-F.The following discussion of operating results and the financial review andprospects as well as our consolidated financial statements have been presentedand prepared in accordance with US GAAP. The Segment Review included below isbased on our segment results which have been prepared and presented inaccordance with IFRS and reconciled to US GAAP, as IFRS information is what thecompany’s chief operating decision maker reviews in allocating resources andmaking investment decisions.**Certain information contained in thediscussion and analysis set forth below and elsewhere in this annual reportincludes forward-looking statements that involve risks and uncertainties. See “Item 3.D—KeyInformation—Risk Factors” for a discussion of important factors that couldcause actual results to differ materially from the results described in orimplied by the forward-looking statements contained in this annual report.

**5.A   OperatingResults**

***Company andBusiness Overview.***

Sasol is an integrated oiland gas group with substantial chemical interests. In South Africa, we supportthese operations by mining coal and converting coal and natural gas intosynthetic fuels and chemicals through proprietary Fischer-Tropsch technology.During the first quarter of 2004, we started extracting Mozambican natural gas,some of which we having been using as feedstock for fuel and chemicalproduction in South Africa since mid 2004.

We also have chemicalmanufacturing and marketing operations in Europe, Asia and the Americas. Ourlarger chemical portfolios include polymers, solvents, olefins and surfactantsand their intermediates, waxes, phenolics and nitrogenous products.

The group also exploresfor, and produces, crude oil in offshore Gabon, refines crude oil (acquired andproduced) into liquid fuels in South Africa and retails liquid fuels andlubricants through a growing network of retail service centers.

We are also developing inQatar and Nigeria two joint-venture GTL plants based on our proprietary SasolSPDTM process.

We divide our operationsinto the following segments (turnover amounts in terms of IFRS):

·       *Sasol Mining.  *Sasol Mining sold 42.4Mt of coal to our Sasolburg and Secunda regions petrochemical plants andexported 3.6 Mt of coal (mainly to Europe). As from the 2006 year, it willincrease its annual supply of coal to Eskom to 1.8 Mt for the next three years.Sasol Mining accounted for 5% of our total segmental turnover in 2005.

·       *Sasol Synfuels.  *We operate the world’slargest commercial-scale coal-based synfuels manufacturing operation. Itproduces syngas through both coal and natural gas reforming, and uses Sasol’shigh temperature Fischer-Tropsch technology to convert syngas into componentsfor making synfuels, as well as chemical feedstock and pipeline gas. SasolSynfuels produces most of South Africa’s chemical building blocks, includingethylene, propylene, ammonia, solvents and phenolics. Sasol Synfuels accountedfor 19% of our total segmental turnover in 2005.

·       *Sasol Liquid Fuels Business.  *SasolLFB manufactures and markets fuel and lubricants from its facilities at Secundaand through its 63.64% share in the Natref crude oil refinery (South Africa’sonly inland crude oil refinery) at Sasolburg. Liquid fuels include gasoline,diesel, jet fuel, illuminating paraffin, fuel oils bitumen and automotive andindustrial lubricants. Gaseous fuels include liquefied petroleum gas. Thissegment accounted for 25% of our total segmental turnover in 2005.

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·       *Sasol Gas.  *Sasol Gas distributes andmarkets natural gas from Mozambique’s Temane field and methane-rich gasproduced at Secunda. We deliver pipeline gas through 2,265km pipeline networkto more than 530 industrial and commercial customers in Gauteng, Mpumulanga,Free State and Kwazulu-Natal in South Africa. This segment accounted for 2% ofour total segmental turnover in 2005.

·       *Sasol Synfuels International.  *SSItogether with the joint venture with Chevron, Sasol Chevron, develops andimplements international ventures based on the integrated, Sasol SPDTM process for GTL fuel conversion.SSI also explores opportunities based on coal and other hydrocarbon sourcesthat could entail the use of Fischer-Tropsch technology. SSI, in partnershipwith Qatar Petroleum, will bring its first GTL plant into production in the2006 year. This segment did not contribute to our total externalsegmental turnover in 2005.

·       *Sasol Olefins and Surfactants.  *SasolOlefins and Surfactants manufactures and markets a diverse range of surfactantsand surfactant intermediates such as linear alkylbenzene and alcohols, as wellas monomers and inorganic specialty chemicals, mainly in plants in Germany,Italy, the USA and South Africa, for customers across the globe. This segmentaccounted for 19% of our total segmental turnover in 2005.

·       *Sasol Polymers.  *Sasol Polymersoperates plants at Sasolburg and Secunda and produces ethylene, propylene,low-density polyethylene, linear low-density polyethylene, polypropylene, vinylchloride monomer, polyvinyl chloride, chlor-alkali chemicals and miningreagents. We have business operations located in South Africa, Malaysia andChina. This segment accounted for 8% of our total segmental turnover recognizedin 2005

·       *Sasol Solvents.  *Sasol Solvents isthe supplier of diverse range of solvents and associated products withmanufacturing plants in South Africa and Germany. This segment accounted for 9%of our total segmental turnover recognized in 2005.

·       *Other.  *We are also involved in anumber of other activities in the energy, petroleum and chemicals industries,both in South Africa and abroad, which, among others, include internationalpetroleum and gas exploration and production, production of other chemicalproducts (including wax, fertilizer and explosive products), as well astechnology research and development, and our financing activities. Theseactivities accounted for 13% of our total segmental turnover recognized in2005.

Our business, operatingresults, cash flow and financial condition are subject to the influence of anumber of external factors and conditions. These include conditions in themarkets in which we sell our products, including the effect of fluctuations inthe currency markets, most notably in the exchange rate between the rand andthe US dollar, fluctuation in the international price of crude oil andcyclicality in the prices of chemical products. Other factors which mayinfluence our business and operating results include economic, social,political and regulatory conditions and developments in the countries in whichwe operate our facilities or market our products. See “Item 3.D—Risk Factors”.

***Exchange rate fluctuations***

The rand is our principal operating currency. However,a large part of our group’s turnover is denominated in US dollars and some partin euro, derived either from exports from South Africa or from ourmanufacturing and distribution operations outside South Africa. A significantpart of our turnover is also determined by the US dollar, as petroleum pricesin general and the price of most petroleum and chemical products in SouthAfrica are based on global commodity and benchmark prices which are quoted inUS dollars. Hence, a large part of our group turnover (approximately 90%) isdenominated in US dollars or influenced by the underlying global commodityand benchmark prices which are quoted in US dollars, while about one third ofour costs are rand denominated. A significant part of our capital 

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expenditure is also USdollar-denominated, as it is directed to investments outside SouthAfrica. For more information regarding fluctuations in the value of the randagainst the U.S. dollar, see “Item 3A.—Selected Financial Data”.

Since 2003, the rand has appreciated against the USdollar. This has had a negative impact on our operating results. Similarly, thestrengthening of the euro against the US dollar over the last two years hasimpacted the profitability of our European operations where a large part of ourcosts are euro based and a significant portion of our turnover is US dollarbased. These negative effects of the exchange rate were outweighed in the 2005year by increases in chemical prices and the crude oil price.

In addition, although the exchange rate of the rand isprimarily market-determined, its value at any time may not be an accuratereflection of the underlying value of the rand, due to the potential effect of,among other factors, exchange controls. These regulations also affect ourability to borrow funds from non-South African sources for use in SouthAfrica or to repay these funds from South Africa and, in some cases, ourability to guarantee the obligations of our subsidiaries with regard to thesefunds. These restrictions have affected the manner in which we have financedour acquisitions outside South Africa and the geographic distribution of ourdebt. See “Item 10—Additional Information”.

Any change in the annual average rand/US dollarexchange rate has a significant effect on our results. For the 2006 year, weanticipate that for every R0.10 weakening or strengthening of the rand againstthe US dollar for the year, our operating profit will increase or decrease byapproximately R500 million as applicable. This sensitivity is utilizedprimarily for purposes of financial forecasting and budgeting, and reflects theeffect of possible changes in the average annual exchange rate and excludes theeffect of any changes to the closing rand/US dollar exchange rate.

Sasol manages its foreign exchange risks through theselective use of forward exchange contracts, cross currency swaps and crosscurrency options. We use forward exchange contracts to reduce foreign currencyexposures arising from imports into South Africa. We apply the followingprincipal policies in order to protect ourselves against the effects (on ourSouth African operations) of a volatile rand against other major currencies aswell as an anticipated long-term trend of a devaluing rand:

·       Allmajor capital expenditure in foreign currency is hedged on commitment ofexpenditure or on approval of the project (also with SARB approval), by way offorward exchange contracts; and

·       Allimports in foreign currency in excess of an equivalent of US$50,000 pertransaction are hedged on commitment by way of forward exchange contracts.

See “Item 11—Quantitativeand Qualitative Disclosure About Market Risk”.

***Fluctuations in refining margins and crude oil,natural gas and petroleum products prices***

Through our equity participation in the Natrefrefinery, we are exposed to fluctuations in refinery margins resulting fromfluctuations in international crude oil and petroleum product prices. We arealso exposed to changes in absolute levels of international petroleum productprices through our synfuels operations. Fluctuations in international crude oilprices affect our results mainly through their indirect effect on the BFPformula. A key factor in the BFP is the Mediterranean and Singapore (gasoline)or the Arab Gulf (diesel) spot price. See “Item 4.B—Business Overview—SasolSynfuels”, “Sasol Liquid Fuels Business” and “Sasol Petroleum International”.Furthermore, prices of petrochemical products and natural gas are also affectedby fluctuations in crude oil prices.

Market prices for crude oil, natural gas and petroleumproducts fluctuate as they are subject to local and international supply anddemand fundamentals and factors over which we have no control. Worldwide supplyconditions and the price levels of crude oil may be significantly influenced byinternational cartels, 

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which control theproduction of a significant proportion of the worldwide supply of crude oil,and by political developments, especially in the Middle East.

The volatility of thecrude oil price is illustrated in the following table, which shows the annualhigh, low and average of the European Brent Crude Spot Price (Free On Board) inUS dollars for the past 10 calendar years and to date in calendar year2005:

| ** **                  | ** ** | **US dollars per Barrel (US$/b)** | ** ** |
|-----------------------------|------------|-------------------------------------------------------|------------|
| **Calendar Year**      | ** ** | ** **                                            | ** ** | **Average**(1) | ** ** | **High** | ** ** | **Low** | ** ** |
| 1995                        |       | 17.02                                                 |       | 19.38 |   | 15.35 |   |
| 1996                        |       | 20.64                                                 |       | 25.40 |   | 16.23 |   |
| 1997                        |       | 19.11                                                 |       | 24.83 |   | 15.86 |   |
| 1998                        |       | 12.76                                                 |       | 16.28 |   | 9.10 |   |
| 1999                        |       | 17.90                                                 |       | 26.46 |   | 9.77 |   |
| 2000                        |       | 28.66                                                 |       | 37.43 |   | 21.05 |   |
| 2001                        |       | 24.46                                                 |       | 30.68 |   | 16.51 |   |
| 2002                        |       | 24.99                                                 |       | 32.02 |   | 18.17 |   |
| 2003                        |       | 28.85                                                 |       | 34.94 |   | 23.23 |   |
| 2004                        |       | 38.26                                                 |       | 52.28 |   | 29.02 |   |
| 2005 (through 30 September) |       | 53.82                                                 |       | 67.26 |   | 40.75 |   |
|                             |            |                                                       |            |  |  |  |  |  |  |

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*Source:Energy Information Administration (US Department of Energy)*

(1)           The average price was calculated as an arithmeticaverage of the quoted daily spot price.

On 30 September 2005, the Spot Price of EuropeanBrent Crude Oil was US$61.70/b.

Significant changes in the price of crude oil, natural gas and petroleum productsover a sustained period of time may lead Sasol to increase or decrease itsproduction, which could have a material impact on Sasol’s turnover. Decreases in the price of crude oil and petroleumproducts can have a material adverse effect on our business, operating results,cash flows and financial condition.

Other factors which may influence the aggregate demandand hence affect the markets and prices for products we sell, may includechanges in economic conditions, the price and availability of substitute fuels,changes in product inventory, product specifications and other factors. Inrecent years, prices for petroleum products have fluctuated widely.

As a general rule, Sasol makes limited use ofderivative instruments, including commodity swaps, options and futurescontracts of short duration as a means of mitigating price and timing risks oncrude oil and other energy-related product purchases and sales. See “Item11.—Quantitative and Qualitative Disclosure About Market Risk”. While the useof these hedging instruments provides some protection against short-termvolatility in crude oil prices, it does not protect against longer-term trendsin crude oil prices.

During 2005 a portion (approximately 30% of Synfuels’production) of our exposure to crude oil price volatility was hedged byentering into a derivative financial instrument in terms of which 45,000 bpd ofcrude oil were sold forward at a weighted average price of US$33.12/b. Whilstthe hedge achieved our objective of achieving a minimum level of cash flows inorder to fund our capital expenditure program, the group realized anopportunity loss for the year on this hedge of R1,147 million before tax (Referto the Segment Overview—Sasol Synfuels below).

Sasol has reviewed the group’s oil price exposure forthe 2006 year. Due to continuing volatility in oil markets and considering thecapital expenditure plans for the year, we have decided to continue with modesthedging to protect cash flows, but following a different approach.

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We have, therefore, for the 2006 year, entered intohedging transactions (zero cost collars) for 45,000 bpd (equivalent toapproximately 30% of Sasol Synfuels’ production). In terms of this hedge thegroup will be protected, should monthly average oil prices decrease belowUS$45.00/b on the hedged portion of production, and conversely, will incuropportunity losses on the hedged portion of production should monthly averageoil prices exceed US$82.61/b. Although this approach protects Sasol shouldcrude oil prices drop below US$45.00/b, thereby ensuring that sufficient cashflow is generated to fund the capital expenditure program, it allows Sasol totake advantage of any upside on the crude oil price up to US$82.61/b thuslimiting the potential opportunity loss which could arise.

For the 2006 year, weanticipate that a US$1/b increase in the average annual crude oil price willresult in an approximately R255 million (US$39 million) increase in operatingprofit with a similar negative consequence if the average annual crude oilprice decreases by US$1/b. This sensitivity is utilized primarily for purposesof financial forecasting and budgeting. Should the average crude oil price moveoutside the range of our zero cost collar hedging instrument described above,the effect on operating profit will increase or decrease to approximately R105million (US$16,5 million) for each US$1 change in the crude oil price.

***Cyclicality in petrochemical products prices***

The demand for our chemical and especially polymerproducts is normally cyclical. Typically, higher demand during peaks inindustry cycles leads producers to increase production capacity. Although peaksin these cycles have in the past been characterized by increased market pricesand higher operating margins, such peaks have prompted further capitalinvestment which has led to supply exceeding demand and a resultant reductionin selling prices and operating margins.

Even though there is currently a surplus capacity ofsome products in the chemicals market, with the possibility of further capacityadditions in the next few years, it is not currently group policy to hedgeagainst petrochemical product price movements.

The group’s strategicpolicy is to invest in downstream chemical activities which are backwardintegrated into the primary feed streams of those commodities. Our decision,subsequent to year end, of the potential divestment of our Olefins andSurfactants business (as disclosed below), as a result of it not having therequired degree of backward integration into its feed streams evidences thisstrategy.

***Divestment from our Olefins and Surfactants Business***

Sasol announced in August 2005 that it isconsidering the disposal of its Olefins and Surfactants business excluding itsco-monomers activities in South Africa subject to an acceptable price beingobtained. In 2003, Sasol announced that it would continue to grow its chemicalbusinesses conditional upon projects leveraging its technology or securingintegrated and highly cost-competitive feedstock positions. The Olefins andSurfactants business is only partially integrated upstream into feedstock andhas not adequately provided the integration benefits which we require.

The intended divestmentfrom the Olefins and Surfactants business will provide a number of challengesfor the relevant teams to ensure that all aspects are taken into account inthis transaction. Should the business be sold it will have a material effect on our business, operating results, cash flowsand financial condition.

***Termination of long-term product supply agreements andthe establishment of our retail service station network***

Up until December 2003 we were party to the MainSupply and Blue Pump Agreements, which formed a series of long-term supplyagreements with the major oil companies operating in South Africa, under whichoil companies purchased certain of our petroleum products. Moreover, we werenot allowed 

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to market liquid fuelsdirectly to the retail and commercial markets in South Africa, with the mainexception of the so-called “Blue Pumps”, which were Sasol-branded fuelpumps supplying our own fuels, located at service stations of other oilcompanies in designated regions.

Following termination ofthe agreements, the restrictions on our ability to market our petroleumproducts directly to the South African retail and commercial markets expired.As a result we have sold or removed all the Blue Pumps and associatedinfrastructure from service stations owned by other oil companies, and haveconcluded new short-term arrangements with the oil companies to supply theirpetroleum product requirements in certain geographic areas. Furthernegotiations with these oil companies are ongoing. During 2003 we commencedwith the development of a service station network with a view to accessing theretail market in South Africa with our own Sasol brand, and, in order toenhance the profitability of this network, we are concentrating on developinghigh volume stations in growth areas (We acquired Exel Petroleum and integratedthis into Sasol LFB during the second half of 2004). Since launching the retailnetwork in 2003, we have established 345 Sasol and Exel service stations aroundSouth Africa. See “Item 4.B Business Overview—Sasol’s Liquid Fuel Business”.

***Inflation***

Whilst over recent years, rates of inflation andinterest have been at relatively low levels, the economy of South Africa,though currently well managed, at various times in the past has had high ratesof inflation and high interest rates compared to the United States of Americaand Europe. Should these conditions recur, this would increase our SouthAfrican-based costs. High interest rates could adversely affect ourability to ensure cost-effective debt financing in South Africa. Sasol expectsthe impact of changes in the rates of inflation on our international operationsto be less significant.

Thehistory of the South African producer price index is illustrated in thefollowing table, which shows the average increase in the index for the past 10calendar years and to date in calendar year 2005:

| **Calendar Year**   | ** ** | ** ** | ** ** | **Average** | ** ** |
|--------------------------|------------|------------|------------|-------------|------------|
| 1995                     |       |       | 9.4        | %           |       |
| 1996                     |       |       | 7.0        | %           |       |
| 1997                     |       |       | 7.0        | %           |       |
| 1998                     |       |       | 3.6        | %           |       |
| 1999                     |       |       | 5.8        | %           |       |
| 2000                     |       |       | 9.2        | %           |       |
| 2001                     |       |       | 8.4        | %           |       |
| 2002                     |       |       | 14.2       | %           |       |
| 2003                     |       |       | 1.7        | %           |       |
| 2004                     |       |       | 0.6        | %           |       |
| 2005 (through 30 August) |       |       | 4.2        | %           |       |

 

*Source: Statistics South Africa*

***Our operations are subject to various laws andregulations in the countries in which we operate.***

The group operates in numerous countries throughoutthe world and is subject to various laws and regulations which may become morestringent. Our mining, gas and petroleum-related activities in South Africa aresubject to, amongst others, the following laws or regulations:

·       TheMinerals Act;

·       TheMineral and Petroleum Resources Development Act;

·       TheMineral and Petroleum Royalty Bill

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·       ThePetroleum Products Act and the Petroleum Related Products Amendment Act;

·       ThePetroleum Pipelines Act;

·       TheGas Act; and

·       TheGas Regulator Levies Act.

We are also subject to the various local, national andregional safety, health and environmental laws and regulations. Our globaloperations are also impacted by international environmental conventions. See “Item4.B—Business Overview” and “Item 3.D—Risk Factors” for the details of thevarious laws and regulations which may impact on operating results, cash flowsand financial condition of Sasol.

In South Africa ouroperations are required to comply with certain procurement, employment equity,ownership and other regulations which have been designed to address the country’sspecific transformation issues. These include the Mining Charter, the LiquidFuels Charter, the Board-based Black Economic Empowerment Act along with thevarious Codes of Good Corporate Practice for Board-based Black EconomicEmpowerment, and The Restitution of Land Rights Act. See “Item 4.B—BusinessOverview”.

***Competition by products originating from countrieswith low production costs***

A significant part of ourchemical production facilities is located in developed countries, including theUnited States of America and Europe. Economic and political conditions in thesecountries result in relatively high labor costs and, in some regions,inflexible labor markets, compared to others. Increasing competition fromregions with lower labor costs and feedstock prices, for example the MiddleEast and China, exercises pressure on the competitiveness of our chemicalproducts and, therefore, on our profit margins and may result in the withdrawalof particular products or closure of facilities.

***HIV/AIDS in sub-Saharan Africa***

HIV/AIDS is a healthcare challenge faced by our SouthAfrican and other sub-Saharan operations. Based on an actuarial study, whichexcludes the positive impact of any prevention and management interventionprograms, we estimate that, while the percentage of infected employees may notrise significantly in the forthcoming years, there will be a significantincrease in the number of AIDS-related fatalities. See “Item 6—Directors,Senior Management and Employees”.

We incur costs relating tothe medical treatment and loss of infected personnel, as well as the relatedloss of productivity. We also incur costs relating to the recruitment andtraining of new personnel. We are not in a position to accurately quantifythese costs. Based on our actuarial models, we estimate that the impact ofHIV/AIDS on our payroll expenses should be less than 1% of our current payrollfor our South African employees by the 2007 calendar year, when we expectprevalence rates to peak. This calculation is based on the estimated financialimpact on production resulting from the projected prevalence of HIV/AIDS amongour workforce, but does not take into account indirect costs of productivitylosses. We are investing human and financial resources in connection withestablishing and maintaining programs to address the HIV/AIDS problem. See “Item6—Directors, Senior Management and Employees”.

***The liquid fuels joint venture.***

On 6 February 2004, Sasol announced that SasolLimited and Petronas were in discussions concerning the combination of SasolLFB and Petronas’ South African LFB, Engen Limited (“Engen”) in a joint ventureto create a leading South African liquid fuels business. The new LFB will beeffected by way of a joint venture, Uhambo Oil, in which Sasol and Petronaswill each have an equal 37.5% interest and BEE partners (both existing and new)will hold a combined 25% interest. The definitive agreements were signed on 1 November 2004.The transaction is subject to the approval by the competition authorities. TheSouth 

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African CompetitionCommission granted conditional approval to the proposed joint venture in May 2005,The Competition Tribunal hearings commenced in October 2005 with thedecision expected by the end of 2005. In September 2005, Sasol announcedthat Tshwarisano, its Broad-based BEE partner, would acquire a 12.5% interestin Uhambo Oil for R1.45 billion, subject to the approval of the CompetitionTribunal. If, for any reason, the Competition Tribunal does not rule infavor of the merger, Tshwarisano will become a 25% shareholder in Sasol LFBrather than a 12.5% shareholder in Uhambo Oil. Through Sasol Financing (Pty)Limited and jointly with JP Morgan and Nedbank, Sasol will arrange andstructure the senior-debt financing required by Tshwarisano amounting toapproximately R1.1 billion. We will provide guarantees for this debt to theparticipating banks. See “Item 8.B—Significant Changes”.

The potential formation ofthe liquid fuels joint venture is expected to offer significant challenges forour business and financial teams. Should the joint venture be approved by theCompetition Tribunal, a significant proportion of our resources will berequired to successfully integrate this business into our reporting structure. Ouraccounting policy under US GAAP requires us to account for our investments injoint ventures using the equity method. We currently consolidate our interestin our LFB business under US GAAP. Should the proposed Uhambo Oil joint venturebe approved, this will have a material effect on the way in which we report ouroperating results, cash flows andfinancial condition under US GAAP.

**Significant Accounting Policies**

The preparation of Sasol’s consolidated financialstatements requires management to make estimates and assumptions that affectthe reported results of its operations. Some of Sasol’s accounting policiesrequire the application of significant judgments and estimates by management inselecting the appropriate assumptions for calculating financial estimates. Bytheir nature, these judgments are subject to an inherent degree of uncertaintyand are based on Sasol’s historical experience, terms of existing contracts,management’s view on trends in the industries in which we operate andinformation from outside sources and experts. Actual results may differ fromthose estimates. 

Sasol’s significant accounting policies are describedin more detail in note 2 to the consolidated financial statements. See “Item 18—FinancialStatements”. This discussion and analysis should be read in conjunction withthe consolidated financial statements and related notes included elsewhere inthis annual report.

Management believes thefollowing significant accounting policies, among others, affect its moresignificant judgments and estimates used in the preparation of Sasol’sconsolidated financial statements and could potentially impact Sasol’sfinancial results and future financial performance. 

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***General***

We evaluate our estimates,including those relating to trade receivables, inventories, investments,intangible assets, income taxes, pension and other post-retirement benefits andcontingencies and litigation on an ongoing basis. We base our estimates onhistorical experience and on various other assumptions that we believe to bereasonable under the circumstances, the results of which form the basis formaking our judgments about carrying values of assets and liabilities that arenot readily available from other sources.

***Business combinations***

Management accounts forits business acquisitions under the purchase method of accounting. The totalvalue of consideration paid for acquisitions is allocated to the underlying netassets acquired, based on their respective estimated fair values determined byusing internal or external valuations. Management uses a number of valuationmethods to determine the fair value of assets and liabilities acquired which itbelieves is the most appropriate measure to value each asset or liability. Thepolicy for valuation of business acquisitions is considered critical becausejudgments made in determining the estimated fair value and expected usefullives assigned to each class of assets and liabilities acquired can significantlyimpact the value of the asset or liability, including the impact on deferredtaxes, the respective amortization periods and ultimately earnings attributableto shareholders. Therefore the use of other valuation methods, as well as otherassumptions underlying these valuation methods, could significantly impact thedetermination of the financial position and the results of operations. Therehave been no significant acquisitions or disposals during the current year.

***Estimation of oil and gas reserves***

The estimation of oil and gas reserves under SEC rules requires“1⁄4geological and engineering data (that)demonstrate with reasonable certainty (reserves) to be recoverable in futureyears from known reservoirs under existing economic and operating conditions,i.e., prices and costs as of the date the estimate is made.” Refer toTable 4, “Proved Reserve Quantity Information,” on page G-4 for theestimates for the year ending 30 June 2005 and to Table 5, “StandardizedMeasure of Discounted Future Net Cash Flows”, on page G-5 for ourstandardized discounted future net cash flow information in respect provedreserves for year-end 30 June 2005, which were based on year-endprices at the time.

Estimates of oil and gas reserves are inherentlyimprecise, require the application of judgment and are subject to futurerevision. Accordingly, financial and accounting measures (such as thestandardized measure of discounted cash flows, depreciation and amortizationcharges and asset retirement obligations), that are based on proved reservesare also subject to change. 

Proved reserves are estimated by reference toavailable reservoir and well information, including production and pressuretrends for producing reservoirs and, in some cases, subject to definitionallimits, to similar data in respect of other producing reservoirs. Provedreserves estimates are attributed to future development projects only wherethere is significant commitment to project funding and execution and for whichapplicable governmental and regulatory approvals have been secured or arereasonably certain to be secured. Furthermore, estimates of proved reservesonly include volumes for which access to markets is assured with reasonablecertainty. All proved reserves estimates are subject to revision, either upwardor downward, based on new information, such as from development drilling andproduction activities or from changes in economic factors, including productprices, contract terms or development plans. See “Item 4.D—Information onthe Company—Property, Plants and Equipment”.

Upward revisions in oilreserve estimates for the year have been enabled by more performance historyresulting in increased confidence in reserve levels and the effect of highercrude prices in the extension of the production plateau. Additionallycondensate volumes which were excluded from previous estimates have beenincluded based upon the recognition of a spot market and a history of salesover the 2005 year. 

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Thedownward revision in natural gas volume was as a result of production historyindicating a higher energy content in the reserves resulting in a reduction inthe gas volume to meet the requirements under the gas sales agreement. Theserevisions to our oil and gas reserves during the current year did not have amaterial impact on our financial position and results from operations. 

***Amortization of coal mining assets***

We calculate amortizationcharges on coal mining assets using the units-of-production method, which isbased on our proven and probable reserves, not exceeding the estimated usefullives of the mines. The lives of the mines are estimated by our geologydepartment using interpretations of mineral reserves, as determined inaccordance with Industry Guide 7 under the US Securities Act of 1933, asamended. The estimate of the total reserves of our mines could be materiallydifferent from the actual coal mined. The actual usage by the mines may beimpacted by changes in the factors used in determining the economic value ofour mineral reserves, such as the coal price and foreign currency exchangerates. Any change in management’s estimate of the total expected future livesof the mines would impact the amortization charge recorded in our consolidatedfinancial statements, as well as our estimated asset retirement obligations.See “Item 4.D—Information on the Company—Property, Plants and Equipment”.

***Fair value and useful life of intangible assets***

In assessing therecoverability of goodwill (which requires the assessment of fair value of thereporting unit) and other intangible assets, we must make assumptions(including inflation, exchange rates and oil and chemical product pricesamongst others) regarding estimated future cash flows and other factors todetermine the fair value of the respective assets. If these estimates or theirfair value assessments change in the future, we may need to record impairmentcharges for these assets. Identifiable intangible assets with definite usefullives, such as patents, trademarks and licenses, are currently amortized on astraight-line basis, over their estimated useful lives.

***Fair value and useful life of long-lived assets***

In assessing the useful life of long-lived assets, weuse estimates of future cash flows and expectations regarding the futureutilization pattern of the assets to determine the depreciation to be chargedon a straight-line basis over the estimated useful lives of the assets.Annually, we review the useful lives and economic capacity of the long-livedassets with reference to any events or circumstances that may indicate that anadjustment to the depreciation period is necessary.

Given the significance oflong-lived assets to our financial statements, any change in the depreciationperiod could have a material impact on our results of operations and financialcondition. An assessment was performed during the current year of the usefullives of certain items of property, plant and equipment resulting in areduction in our depreciation charge of approximately R1.5 billion. Refer tothe discussions included below under the Segment Review for the impact for eachbusiness operation. The assessment was undertaken due to the recent significantcapital expenditure incurred, for example Project Turbo, primarily designed toenable our facilities to produce fuel which meets the new South African fuelspecifications with effect from 1 January 2006 and to expand our polymersportfolio. As Sasol Synfuels is the primary downstream feedstock provider to anumber of the chemical plants in the Secunda complex, the useful lives of theseassets were also assessed. This resulted in a substantial increase in theexpected remaining useful life of our assets in Secunda to a maximum remaininglife of 25 years. In Sasolburg, the introduction of natural gas as the primaryfeedstock towards the end of 2004 and the replacement of coal resulted in asimilar assessment of the useful lives of the assets in the Sasolburg region aswell as the group’s gas

 

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pipelineinfrastructure. As part of this process the useful lives of the assets in ouroverseas facilities were also evaluated. This assessment of the useful liveswas performed taking into account the following factors:

·       Theexpected usage of the asset by the business. Usage is assessed with referenceto the asset’s expected capacity or physical output;

·       Theexpected physical wear and tear, which depends on operational factors such asthe number of shifts for which the asset is to be used, the repair andmaintenance programme of the business and the care and maintenance of the assetwhile idle;

·       Technologicalobsolescence arising from changes or improvements in production or from achange in the market demand for the output of the asset; 

·       Legal or similar limits onthe use of the asset, such as expiry dates and related leases; and

·       Dependency or co-dependencyon supply of raw materials.

The group reviews theuseful life of its property, plant and equipment on an annual basis.

***Impairment of long-lived assets***

Long-lived assets arereviewed using economic valuations to calculate impairment losses wheneverevents or a change in circumstance indicate that the carrying amount may not berecoverable. In carrying out the economic valuations, an assessment is made ofthe future cash flows expected to be generated by the assets, taking intoaccount current market conditions, the expected lives of the assets and ourbudgeting process. The actual outcome can vary significantly from ourforecasts, thereby affecting our assessment of future cash flows. Assets whosecarrying values exceed their estimated recoverable amount, determined on anundiscounted basis, are written down to an amount determined using discountednet future cash flows expected to be generated by the asset. The expectedfuture cash flows are discounted based on Sasol’s Weighted Average Cost of Capital(“WACC”) which, at 30 June 2005, was 12.75% for our South Africanoperations and 7.25% for our operations in Europe and the United States. Referto the discussions included below under the Segment Review for the financialimpact of the impairment assessments performed during the current year.

***Asset retirement and rehabilitation obligations***

We have significantobligations to remove plant and equipment and rehabilitate land in areas inwhich we conduct operations upon termination of such operations. Removal andrestoration obligations are primarily associated with our mining andpetrochemical operations around the world. The estimated fair value ofdismantling and removing these facilities is accrued for as the obligationarises, if estimable, concurrent with the recognition of an increase in therelated asset’s carrying value. Estimating the future asset removal costs iscomplex and requires management to make estimates and judgments because most ofthe removal obligations will be fulfilled in the future and contracts andregulations often have vague descriptions of what constitutes removal. Further,management is required to determine the discount rate to be used in calculatingthe obligation based on the amount of the credit risk of the group which variesdepending on the underlying interest rate environment. Future asset removalcosts are also influenced by changing removal technologies, political,environmental, safety, business relations and statutory considerations. Theactual liability for rehabilitation costs can vary significantly from ourestimate and, as a result, the liabilities that we report can varysignificantly if our assessment of these costs changes. As at 30 June 2005the undiscounted value of our asset retirement and rehabilitation obligationswas R13.9 billion. The total discounted cash flow as at 30 June 2005amounted to R2.2 billion, of which R261 million will be incurred in the 2006year. These obligations are discounted using a credit adjusted rate dependingon the expected timing of the obligation and the currency in which theobligation will be settled, and the discount rates fall within a range ofbetween 3.2% to 9.2%. 

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***Employee benefits***

We provide for our obligations and expenses forpension and provident funds as they apply to both defined contribution anddefined benefit schemes, as well as post-retirement healthcare liabilities. Theamount provided is determined based on a number of assumptions and inconsultation with an independent actuary. These assumptions are described inNote 22 to “Item 18—Financial Statements” and include, among others, thediscount rate, the expected long-term rate of return on pension plan assets,healthcare inflation costs and rates of increase in compensation costs. Thenature of the assumptions is inherently long-term, and future experience maydiffer from these estimates. For example, a one percentage point increase inassumed healthcare cost trend rates would increase the accumulated post-retirementbenefit obligation by R451 million in South Africa and by R41 millionoutside of South Africa as at 30 June 2005.

The group includes the amortization of unrecognizedgains and losses on the pension fund valuation as a component of net pensioncost for the year if the net cumulative unrecognized actuarial gains and lossesat the end of the previous reporting period exceed the greater of:

·       10%of the present value of the defined benefit obligation at that date; or

·       10% of the fair value ofany plan assets at that date

(the 10% corridor rule) whereas in respect of thepost-retirement healthcare valuation the group accounting policy requires theimmediate recognition of net actuarial gains and losses.

While management believesthat the assumptions used are appropriate, significant changes in theassumptions may materially affect our pension and other post-retirementobligations and future expense.

***Fair value estimations of financial instruments***

We base fair values offinancial instruments on listed market prices, where available. If listedmarket prices are not available, fair value is determined based on otherrelevant factors, including dealers’ price quotations and price quotations forsimilar instruments traded in different markets. Fair value for certainderivatives are based on pricing models that consider current market andcontractual prices for the underlying financial instruments or commodities, aswell as the time value and yield curve or fluctuation factors underlying thepositions. Pricing models and their underlying assumptions impact the amountand timing of unrealized gains and losses recognized, and the use of differentpricing models or assumptions could produce different financial results. See “Item11—Quantitative and Qualitative Disclosures about Market Risk”.

***Deferred tax***

We apply significant judgment in determining ourprovision for income taxes and our deferred tax assets and liabilities.

Temporary differencesarise between the carrying values of assets and liabilities for accountingpurposes and the amounts used for tax purposes. These temporary differencesresult in tax liabilities being recognized and deferred tax assets beingconsidered based on the probability of our deferred tax assets beingrecoverable from future taxable income. We provide deferred tax at the tax rateapplicable to undistributed earnings on all temporary differences arisingbetween the carrying values of assets and liabilities for accounting purposesand the amounts used for tax purposes unless there is a temporary differencethat is specifically excluded in accordance with generally accepted accountingprinciples. To the extent that we believe that recovery is not likely, weestablish a valuation allowance. A valuation allowance of R671 million (2004 :R414 million) has been established for certain deferred tax assets which webelieve is not more likely than not be recovered. The carrying value of our netdeferred tax assets assumes that we 

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will beable to generate sufficient future taxable income in applicable taxjurisdictions, based on estimates and assumptions. While we have consideredfuture taxable income and ongoing prudent and feasible tax planning strategiesin assessing the need for the valuation allowance, in the event that we were todetermine that we would not be able to realize our deferred tax assets in thefuture, a valuation allowance may be required which would reduce income in theperiod that such determination was made.

***Secondary Taxation on Companies***

In South Africa, we pay both income tax and SecondaryTaxation on Companies (“STC”). STC is levied on companies at a rate of 12.5% ofdividends distributed. In the case of companies liquidated after 1 April 1993,STC is only payable on undistributed earnings earned after 1 April 1993.The tax becomes due and payable on declaration of a dividend. When dividendsare received in the current year that can be offset against future dividendpayments to reduce the STC liability, a deferred tax asset is recognized to theextent of the future reduction in STC.

Sasol does not providedeferred taxes at the tax rate applicable to distributed earnings. We believethat this is consistent with the accounting principle that allows the accrualof dividend payments after dividend declaration. If we were to provide fordeferred taxes on the potential STC arising on our undistributed earnings,should these be declared as dividends, there would be an increase in deferredtax liabilities of R5,029 million at 30 June 2005 (2004—R4,240 million;2003—R3,762 million) resulting in a net deferred tax liability of R10,570million at 30 June 2005 (2004—R8,910 million; 2003—R8,755 million).The STC charge included in our Income tax expense would increase byR789 million resulting in earnings attributable to shareholders ofR8,998 million for the year ended 30 June 2005 (2004—R478 millionand R4,880 million; 2003—R465 million and R6,879 million,respectively). The additional deferred tax liability would result in totalshareholders’ equity of R35,916 million at 30 June 2005 (2004—R29,429 million;2003—R29,031 million). We expect that R1,877 million of undistributedearnings earned before 1 April 1993 of two dormant companies will bedistributed without attracting STC of R209 million.

***Commitments and contingencies***

Management’s currentestimated range of liabilities relating to certain pending litigation andarbitration proceedings is based on claims for which management can reasonablyestimate the amount of loss. We have recorded the estimated liability wheresuch amount can be determined and the minimum liability related to those claimswhere there is a range of loss, and no amount within the range is more probablethan the others. As additional information becomes available, we will assessthe potential liability related to our pending litigation and arbitrationproceedings and revise our estimates. Such revisions in our estimates of thepotential liability could materially impact our results of operation andfinancial position. See “Item 5.E—Off-balance Sheet Arrangements”.

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**OURRESULTS OF OPERATIONS FOR 2005 AND 2004**

The financial results beloware stated under US GAAP.

**Results ofOperations**

| ** **                                                                                                      | ** ** | **2005**                         | ** ** | **2004**  | ** ** | **Change** | ** ** | **Change** | ** ** |
|-----------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|-----------|------------|------------|------------|------------|------------|
| ** **                                                                                                      | ** ** | **(Rand in millions)** | ** ** | **%**     | ** ** |
| Turnover                                                                                                        |       | 67,427                           |       | 58,808    |       | 8,619      |       |       | 15         |   |   |
| Other operating income                                                                                          |       | 408                              |       | 332       |       | 76         |       |       | 23         |   |   |
| Net foreign exchange gains / (losses)                                                                           |       | 146                              |       | (1,266    | )          | 1,412      |       |       | 112        |   |   |
| Operating costs and expenses                                                                                    |       | (53,048                          | )          | (49,135   | )          | (3,913     | )          |       | (8         | ) |   |
| **Operating profit**                                                                                            | ** ** | **14,933**                       |       | **8,739** | ** ** | **6,194**  |       |       | 71         |   |   |
| Net other expenses                                                                                              |       | (193                             | )          | (63       | )          | (130       | )          |       | (206       | ) |   |
| **Income  before tax, earnings / (losses) of equity accounted investees and minority  interest**                | ** ** | **14,740**                       |       | **8,676** | ** ** | **6,064**  |       |       | 70         |   |   |
| Income tax                                                                                                      |       | (5,157                           | )          | (3,177    | )          | (1,980     | )          |       | (62        | ) |   |
| **Income  after tax, but before earnings / (losses) of equity accounted investees  and minority interest** | ** ** | **9,583**                        |       | **5,499** | ** ** | **4,084**  |       |       | 74         |   |   |
| Earnings / (losses) of equity accounted investees                                                               |       | 307                              |       | (49       | )          | 356        |       |       | 727        |   |   |
| Minority interest                                                                                               |       | (103                             | )          | (92       | )          | (11        | )          |       | (12        | ) |   |
| **Earnings  attributable to shareholders**                                                                      | ** ** | **9,787**                        |       | **5,358** | ** ** | **4,429**  |       |       | 83         |   |   |

 

**Overview**

Higher average annualinternational oil prices (dated Brent US$46.17/b for 2005 versus US$31.30/b in2004) boosted operating profit. This benefit was partly offset by the adverseimpact of the stronger rand during the year (average rate R6.21per US dollarfor the 2005 year compared to R6.88 per US dollar in the 2004 year). The netadverse impact of currency effects manifested themselves across all of Sasol’sbusinesses. The benefit of higher oil prices were, however, only realized inthe energy and fuel-related businesses with adverse effects being experiencedin the chemical businesses because of higher oil-derivative feedstock costs.However, our chemical businesses returned positive results due to significantincreases in chemical prices. It is believed that the chemical prices realizedduring the 2005 year by Sasol Solvents reached unsustainable highs.

**Turnover**

Turnoverconsists of the following categories:

| **Category**                     | ** ** | ** **                       | ** ** | **2005**   | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Sale of products                 |       | 66,507                           |       | 57,973     |       |       | 8,534      |       |       |       | 15         |   |   |
| Services rendered                |       | 543                              |       | 517        |       |       | 26         |       |       |       | 5          |   |   |
| Commission and  marketing income |       | 377                              |       | 318        |       |       | 59         |       |       |       | 19         |   |   |
| **Total turnover**               | ** ** | **67,427**                       | ** ** | **58,808** | ** ** | ** ** | **8,619**  |       |       |       | 15         |   |   |

 

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Turnover in the 2005 year,increased by R8,619 million (15%) from R58,808 toR67,427 million when compared to the previous year. The primary factorscontributing to this increase were:

| ** **                                    | ** ** | **2005**                     | ** ** |       |
|-----------------------------------------------|------------|------------------------------|------------|------------|
| ** **                                    | ** ** | **(Rand in  millions)** | ** ** | **%**      | ** ** |   |
| Turnover as reported in  2004                 |       | 58,808                       |       |       |   |
| Exchange rates effects  (negative)            |       | (4,745                       | )          | (8         | ) |
| Product prices increases                      |       | 14,155                       |       | 24         |   |
| *—crude oil*                             | * *   | 6,349                        |       | *11*       | * * |
| *—other products (including  chemicals)* | * *   | 7,806                        |       | *13*       | * * |
| Volumes decreases                             |       | (791                         | )          | (1         | ) |
| **Turnover as reported in 2005**              | ** ** | **67,427**                   |       | ** ** | ** ** |
|                                               |            |                              |            |            |  |  |  |  |  |

 

**Other operating income**

Other operating income in2005 amounted to R408 million, which represents an increase ofR76 million or 23%, compared to R332 million in 2004. Included in otheroperating income for the current year is the profit recognized of R33 millionon the sale of part of our participation rights in the 2nd phase ofthe Qatar GTL project and insurance claims totaling R210 million.

**Net foreign exchange gains / (losses)**

Net foreign exchange gainsfor 2005 arising primarily on the translation of monetary assets andliabilities amounted to R146 million which resulted in an increase inoperating profit of R1,412 million compared to the loss ofR1,266 million in 2004. The profit recognized is due to the weakening ofthe rand / US dollar exchange rate towards the end of the year closing at R6.67per US dollar at 30 June 2005compared to the spot exchange rate at30 June 2004 of R6.21 per US dollar and as at 30 June 2003 of R7.50 perUS dollar. Additionally the average exchange rate for the 2005 financial yearwas R6.21 per US dollar compared to R6.88 per US dollar for 2004 and R9.03per US dollar for 2003. The closing rate is used to translate all ourmonetary assets and liabilities denominated in a currency other than the randat balance sheet date as a result a net profit was recognized on thesetranslations. 

**Operating costs and expenses**

Operatingcosts and expenses consists of the following categories:

| **Category**                            | ** ** | ** **                       | ** ** | **2005**   | ** ** | **2004**  | ** ** | **Change** | ** ** | **Change** | ** ** |
|-----------------------------------------|------------|----------------------------------|------------|------------|------------|-----------|------------|------------|------------|------------|------------|
| ** **                              | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Cost of products  sold                  |       | 40,129                           |       | 37,288     |       | 2,841     |       | 8          |       |
| Cost of services  rendered              |       | 530                              |       | 502        |       | 28        |       | 6          |       |
| Selling and  distribution costs         |       | 4,913                            |       | 4,837      |       | 76        |       | 2          |       |
| Administrative  expenses                |       | 3,868                            |       | 3,605      |       | 263       |       | 7          |       |
| Other operating  expenses               |       | 3,608                            |       | 2,903      |       | 705       |       | 24         |       |
| **Total operating costs and  expenses** | ** ** | **53,048**                       | ** ** | **49,135** | ** ** | **3,913** |       | 8          |       |

 

Total operatingcosts and expenses in 2005 amounted to R53,048 million, an increase ofR3,913 million or 8%, compared to R49,135 million in 2004. The variancesin the operating costs are described in detail in each of the various reportingsegments, included in the Segment Review below.

*Cost of products sold.**  *The cost of products sold in 2005amounted to R40,129 million, an increase of R2,841 million or 8%,compared to R37,288 million in 2004. The increase is due to the increasein the crude oil price and other feedstock prices. Compared to sale ofproducts, the cost of products sold was 

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60% in 2005 and 64% in2004, this is mainly due to the effects of appreciation of the rand against theUS dollar as well as the increase in crude oil and chemical prices.

*Costof services rendered.**  *Costof services rendered in 2005 amounted to R530 million, an increase ofR28 million or 6%, compared to the R502 million in 2004. The increaseis in line with the increase in the turnover for services rendered.

*Sellingand distribution costs.**  *These costs comprise marketing and distribution ofproducts as well as advertising, salaries and expenses of marketing personnel,freight, railage and customs and excise duty. Selling and distribution costs in2005 amounted to R4,913 million, an increase of R76 million or 2%,compared to R4,837 million in 2004. Compared to sales of products, sellingand distribution costs represented 7% in 2005 compared to 8% 2004. Costsincreased due to inflation, this increase was partially negated by lowervolumes sold during the current year.

*Administrativeexpenses.**  *Thesecosts comprise expenditure of personnel and administrative functions, includingaccounting, information technology, human resources, legal and administration,as well as pension, post-retirement healthcare and Sasol Share Incentive Schemecosts. Administrative expenses in 2005 amounted to R3,868 million, anincrease of R263 million or 7%, compared to R3,605 million in 2004.The increase in our administrative expenses during the current year is due tocertain costs incurred to date on our transaction to form the liquid fuelsjoint venture Uhambo Oil, and our readiness project to ensure compliance withthe Sarbanes-Oxley Act, Section 404. In addition increased activity at SSIand SPI resulted in significant increases in their administrative expenses.

*Otheroperating expenses.**  *Otheroperating expenses (including impairments) in 2005 amounted toR3,608 million, an increase of R705 million or 24%, compared toR2,903 million in 2004. This includes impairments of R262 million (2004 :R284 million), scrapping of assets of R290 million (2004 : Rnil) and theeffects of the crude oil hedge of Sasol Synfuels amounting to R1.1 billion(2004 : R54 million). Details of the impairments, scrapping of assets andprofit / (loss) on disposals are detailed in the Segment Review.

Includedbelow are the impairments and scrapping of assets recognized:

| ** **                                     | ** ** | **  2005  ** | ** ** | **  2004  ** | ** ** |
|------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                                     | ** ** | **(Rand in millions)** | ** ** |
| Sasol Synfuels                                 |       |                             | (139       | )                                |       |   | — |   |   |
| *—impairments*                            | * *   | * *                         | *(16*      | *)*                              | * *   | * * | *—* | * * |   |
| *—scrapping  of assets*                   | * *   | * *                         | *(123*     | *)*                              | * *   | * * | *—* | * * |   |
| Sasol LFB                                      |       |                             | (46        | )                                |       |   | — | * * |   |
| *—impairments*                            | * *   | * *                         | *(46*      | *)*                              | * *   | * * | *—* | * * |   |
| Sasol Olefins and  Surfactants                 |       |                             | 190        | * *                         |       |   | (52 | ) |   |
| *—impairments*                            | * *   | * *                         | *(103*     | *)*                              | * *   | * * | *(52* | *)* |   |
| *—scrapping  of assets*                   | * *   | * *                         | *(87*      | *)*                              | * *   | * * | *—* | * * |   |
| Sasol Solvents                                 |       |                             | (164       | )                                |       |   | (42 | ) |   |
| *—impairments*                            | * *   | * *                         | *(84*      | *)*                              | * *   | * * | *(42* | *)* |   |
| *—scrapping  of assets*                   | * *   | * *                         | *(80*      | *)*                              | * *   | * * | *—* | * * |   |
| Other Businesses                               |       |                             | (13        | )                                |       |   | (190 | ) |   |
| *—impairments*                            | * *   | * *                         | *(13*      | *)*                              | * *   | * * | *(190* | *)* |   |
| **Total  impairments and scrapping of assets** | ** ** | ** **                       | **552**    |                             | ** ** | ** ** | **284** |   |   |

 

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**Operating profit**

When compared to 2004 our turnover under US GAAP for2005 increased by R8,619 million or 15%, and other operating incomeincreased by R76 million or 23%. These increases were partly offset by anincrease in operating costs and expenses of R3,913 million which reducedthe net effect on operating profit. Additionally the group recognized a netforeign exchange profit of R146 million compared to the net foreignexchange losses of R1,266 incurred in 2004. This resulted in an increase inoperating profit of R6,194 million or 71% from R8,739 million in 2004to R14,933 million in 2005.

Themain factors contributing to the increase in operating profit were:

| ** **                                    | ** ** | **2005**                     | ** ** |
|-----------------------------------------------|------------|------------------------------|------------|
| ** **                                    | ** ** | **(Rand in  millions)** | ** ** | **%** | ** ** |
| Operating profit  as reported in 2004         |       |                         | 8,739      |   | ** ** | ** ** |
| Exchange rates effects (negative)(1)          |       |                         | (1,386     | ) | (16 | ) |
| Product prices  increases                     |       |                         | 8,274      |   | 95 |   |
| *—crude  oil*                            | * *   | * *                     | *3,466*    |   | *40* | * * |
| *—effect  of the crude oil hedge*        | * *   | * *                     | *(1,147*   | *)* | *(13* | *)* |
| *—other  products (including chemicals)* | * *   | * *                     | *5,955*    |   | *68* | * * |
| Inflation on  fixed costs                     |       |                         | (529       | ) | (6 | ) |
| Net volume and  productivity effects          |       |                         | (1,503     | ) | (17 | ) |
| Reassessment of  useful lives(2)              |       |                         | 1,547      |   | 18 |   |
| Capital items(2)                              |       |                         | (209       | ) | (3 | ) |
| **Operating profit as reported in  2005**     |       |                         | **14,933** |   |   |   |

----

(1)    Thisarises primarily from the effects of the average US dollar exchange rate duringthe year on both turnover and operating expenses.

(2)    During2005 a reassessment of the useful lives of various items of property, plant andequipment was performed the effect on each business is discussed in detail inthe Segment Review.

(3)    Included in capital items is the impairment oflong-lived assets and other capital items.

**Net other expenses**

| **Category**                                            | ** ** | ** **                       | ** ** | **2005** | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|---------------------------------------------------------|------------|----------------------------------|------------|----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                                              | ** ** | **(Rand in millions)** | ** ** | **%**    | ** ** |
| Dividends  received                                     |       | 23                               |       | 14       |       |       | 9          |       |       | 64         |       |
| Interest received                                       |       | 116                              |       | 183      |       |       | (67        | )          |       | (37        | )          |
| Finance costs                                           |       | (332                             | )          | (368     | )          |       | 36         |       |       | 10         |       |
| *—interest  incurred*                              | * *   | *(1,370*                         | *)*        | *(1,450* | *)*        | * *   | *80*       | * *   |       | 6          |       |
| *—interest  capitalized*                           | * *   | *1,038*                          | * *   | *1,082*  | * *   | * *   | *(44*      | *)*        |       | (4         | )          |
| Gain arising from  issuance of subsidiary’s shares |       | —                           |       | 108      |       |       | (108       | )          |       | (100       | )          |
| **Net other expenses**                                  | ** ** | **(193**                         | **)**      | **(63**  | **)**      | ** ** | **(130**   | **)**      |       | (206       | )          |

 

Interest income amounted to R116 million in 2005,a decrease of R67 million or 37%, compared to R183 million in 2004.This decrease is mainly attributable to translation differences on interestincome from investments in foreign countries due to the appreciation of therand against the US dollar, as well as lower average cash balances anddeclining interest rates.

Interest incurred in 2005 amounted toR1,370 million, a decrease of 6%, of which R1,038 million was capitalized,compared to interest incurred of R1,450 million in 2004, of whichR1,082 million was capitalized. The decrease in interest incurred was mainlydue to declining interest rates which was partially 

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offset as a result ofincreased net borrowings due to capital project requirements. However, theEurobond raised during the current year in the European capital markets is at afavorable interest rate compared to our other external borrowings. Capitalizedinterest decreased due the lower interest incurred, offset by increased capitalexpenditure on property, plant and equipment in 2005.

In 2004 our shareholdingin Naledi Petroleum (Pty) Limited was diluted through the issuing of shares tominority shareholders which resulted in a gain of R108 million being realized.

**Taxation**

Income tax expense in 2005 amounted toR5,157 million, an increase of R1,980 million or 62%, compared toR3,177 million in 2004. These amounts include a deferred tax expense ofR833 million in 2005 compared to a deferred tax benefit ofR299 million in 2004. The increase in taxation is broadly in line with theincrease in net income before taxation. The effective tax rate was 35.1% in2005 and 36.6% in 2004. The difference between the statutory tax rate of 30%and the effective tax rate results mainly from STC which is levied at a rate of12.5%, differences in foreign tax rates, disallowed expenditure and the effectof changes in tax rates for 2005. The decrease in average effective tax rate isdue to the increase in the average rate of earnings to dividend distributionsratio from 2.2 times to 2.9 times which reduces the effect of STC on theeffective tax rate.

On 8 July 2005, the President of South Africasigned the Taxation Laws Amendment Act of 2005 with the effect that all of ourSouth African registered companies will be assessed at a tax rate of 29% forthe financial year ended 30 June 2005.

Hadthe income tax expense and deferred tax liability and asset been calculated at29% for the 2005 year, the impact on our results would have been as follows:

| ** **                                        | ** ** | **As reported**                                                        | ** ** | **Pro-forma** | ** ** | **Change** | ** ** |
|---------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|---------------|------------|------------|------------|
| ** **                                        | ** ** | **30 June 2005**                                                  | ** ** |
| ** **                                        | ** ** | **(Rand in millions,  except earnings per share)** | ** ** |
| **Balance  sheet**                                |       |                                                                        |       |          |       |       |       |   |   |   |   |   |   |
| Income tax  payable                               |       |                                                                        | (686       | )             |       |       | (574       | ) |   |   | (112 | ) |   |
| Net deferred tax  liability                       |       |                                                                        | (5,541     | )             |       |       | (5,380     | ) |   |   | (161 | ) |   |
| **Income statement**                              |       |                                                                        |       |          |       |       |       |   |   |   |   |   |   |
| Income tax                                        |       |                                                                        | (5,157     | )             |       |       | (4,886     | ) |   |   | (271 | ) |   |
| Earnings of  equity account investees             |       |                                                                        | 307        |          |       |       | 312        |   |   |   | (5 | ) |   |
| Minority interest                                 |       |                                                                        | (103       | )             |       |       | (107       | ) |   |   | 4 |   |   |
| Earnings  attributable to shareholders            |       |                                                                        | 9,787      |          |       |       | 10,059     |   |   |   | (272 | ) |   |
| **Earnings per share**                            |       |                                                                        |       |          |       |       |       |   |   |   |   |   |   |
| Basic earnings  per share (South African cents)   |       |                                                                        | 1,594      |          |       |       | 1,638      |   |   |   | (44 | ) |   |
| Diluted earnings per  share (South African cents) |       |                                                                        | 1,567      |          |       |       | 1,610      |   |   |   | (43 | ) |   |

 

**Earnings/ (losses) of equity accounted investees**

Earnings of equityaccounted investees amounted to R307 million in 2005 compared to loss ofequity accounted investees of R49 million in 2004. This profit comprisesprofits principally in our Sasol Polymers and Sasol Solvents businesses, offsetby losses mainly from in our SSI business in 2005. The profits made are due tosignificant increases in chemical prices. The loss incurred by SSI, is due toincreases in costs as a result of the increased activity at our GTL projects.

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**Minority interest**

Minority interest in 2005amounted to R103 million, compared to R92 million in 2004. Theincrease is mainly attributable to the increase in the profits earned from ourSasol LFB operations. This is due to the increase in the crude oil price whichwas partially off-set by the appreciation of the rand.

**Earningsattributable to shareholders**

As a result of the factorsdiscussed above, earnings attributable to shareholders in 2005 was R9,787 million,an increase of R4,429 million or 83%, compared to R5,358 million in2004.

**OURRESULTS OF OPERATIONS FOR 2004 AND 2003**

The financial resultsbelow are stated under US GAAP.

**Results ofOperations**

| ** **                                                                                                       | ** ** | **2004**                         | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                                                                                                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Turnover                                                                                                         |       | 58,808                           |       | 63,769     |       | (4,961     | )          |       | (8         | ) |
| Other operating  income                                                                                          |       | 332                              |       | 603        |       | (271       | )          |       | (45        | ) |
| Net foreign  exchange losses                                                                                     |       | (1,266                           | )          | (2,437     | )          | 1,171      |       |       | 48         |   |
| Operating costs  and expenses                                                                                    |       | (49,135                          | )          | (50,924    | )          | 1,789      |       |       | 4          |   |
| **Operating  profit**                                                                                            | ** ** | **8,739**                        | ** ** | **11,011** | ** ** | **(2,272** | **)**      |       | (21        | ) |
| Net other expenses                                                                                               |       | (63                              | )          | (64        | )          | 1          |       |       | 2          |   |
| **Income  before tax, losses of equity accounted investees and minority interest**                               | ** ** | **8,676**                        | ** ** | **10,947** | ** ** | **(2,271** | **)**      |       | (21        | ) |
| Income tax                                                                                                       |       | (3,177                           | )          | (3,915     | )          | 738        |       |       | 19         |   |
| **Income  after tax, but before losses of equity accounted investees and minority  interest**                    | ** ** | **5,499**                        | ** ** | **7,032**  | ** ** | **(1,533** | **)**      |       | (22        | ) |
| Losses of equity  accounted investees                                                                            |       | (49                              | )          | (47        | )          | (2         | )          |       | (4         | ) |
| Minority interest                                                                                                |       | (92                              | )          | (170       | )          | 78         |       |       | 46         |   |
| **Earnings  attributable to shareholders before cumulative effect of change in  method of accounting** | ** ** | **5,358**                        | ** ** | **6,815**  | ** ** | **(1,457** | **)**      |       | (21        | ) |
| Change in method  of accounting for asset retirement obligations, net of tax of R227  million               |       | —                           |       | 529        |       | (529       | )          |       | (100       | ) |
| **Earnings attributable to  shareholders**                                                                       | ** ** | **5,358**                        | ** ** | **7,344**  | ** ** | **(1,986** | **)**      |       | (27        | ) |

 

**Turnover**

Turnoverconsists of the following categories:

| **Category**                     | ** ** | ** **                       | ** ** | **2004**   | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Sale of products                 |       | 57,973                           |       | 62,509     |       | (4,536     | )          |       | (7         | )          |
| Services rendered                |       | 517                              |       | 502        |       | 15         |       |       | 3          | ** ** |
| Commission and  marketing income |       | 318                              |       | 758        |       | (440       | )          |       | (58        | )          |
| **Total turnover**               | ** ** | **58,808**                       | ** ** | **63,769** | ** ** | **(4,961** | **)**      | ** ** | **(8**     | **)**      |

 

Turnover for 2004 amounted to R58,808 million, adecrease of R4,961 million or 8%, compared to R63,769 million for2003.

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The net decrease of R4,961 million in turnover ismainly attributable to decreases in the sale of products ofR4,536 million. Increases in product prices of R433 million,increases in crude oil prices of R2,330 million and volumes ofR3,864 million, were more than offset by the negative currency effect ofR11,113 million arising due to the appreciation of the rand. Additionally,services rendered increased by R15 million and commissions and marketingincome decreased by R440 million.

The average rand to USdollar exchange rate of R6.88 in 2004, was 24% stronger than the average ofR9.03 in 2003. The average crude oil price, of US$31.36/b in 2004 was 13%higher than the average of US$27.83/b in 2003. Our average US dollar refiningmargins in 2004 remained constant at the levels of 2003.

***Other operating income***

Other operating income in2004 amounted to R332 million, which represents a decrease of R271 millionor 45%, compared to R603 million in 2003. Included in the 2003 otheroperating income was insurance claims of R541 million.

***Net foreign exchange losses***

Net foreign exchangelosses for 2004 amounted to R1,266 million which represents a decrease ofR1,171 million compared to a losses of R2,437 million in 2003. Thelosses are mainly attributable to the appreciation of the rand against the USdollar. However due to the fact that the rate of appreciation of the randagainst the US dollar decreased significantly in the 2004 year the foreignexchange losses incurred decreased.

**Operating costs and expenses**

Operatingcosts and expenses consists of the following categories:

| **Category**                            | ** ** | ** **                       | ** ** | **2004**   | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|-----------------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                              | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Cost of products  sold                  |       | 37,288                           |       | 38,415     |       | (1,127     | )          |       | (3         | )          |       |
| Cost of services  rendered              |       | 502                              |       | 475        |       | 27         |       |       | 6          |       |       |
| Selling and  distribution costs         |       | 4,837                            |       | 4,976      |       | (139       | )          |       | (3         | )          |       |
| Administrative  expenses                |       | 3,605                            |       | 4,402      |       | (797       | )          |       | (18        | )          |       |
| Other operating  expenses               |       | 2,903                            |       | 2,656      |       | 247        |       |       | 9          |       |       |
| **Total operating costs and  expenses** | ** ** | **49,135**                       | ** ** | **50,924** | ** ** | **(1,789** | **)**      |       | (4         | )          |       |

 

Operating costs and expenses in 2004 amounted toR49,135 million, a decrease of R1,789 million or 4%, compared to R50,924 millionin 2003.

*Costof products sold.**  *Thecost of products sold in 2004 amounted to R37,288 million, a decrease ofR1,127 million or 3%, compared to R38,415 million in 2003. Compared tosales of products, the cost of products sold was 64% in 2004 and 61% in 2003,the increase is mainly due to the effects of the appreciation of the randagainst the US dollar.

*Costof services rendered.**  *Costof services rendered in 2004 amounted to R502 million, an increase ofR27 million or 6%, compared to the R475 million in 2003.

*Sellingand distribution costs.**  *These costs comprise marketing and distribution ofproducts as well as advertising, salaries and expenses of marketing personnel,freight, railage and customs and excise duty. Selling and distribution costs in2004 amounted to R4,837 million, a decrease of R139 million or 3%,compared to R4,976 million in 2003. Compared to sales of products, sellingand distribution costs represented 8% in both 2004 and 2003.

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*Administrativeexpenses.**  *Thesecosts comprise expenditure of personnel and administrative functions, includingaccounting, information technology, human resources, legal and administration,as well as pension, post-retirement healthcare and Sasol Share Incentive Schemecosts. Administrative expenses in 2004 amounted to R3,605 million, adecrease of R797 million or 18%, compared to R4,402 million in 2003.

*Other operating expenses.**  *Other operating expenses (includingimpairments) in 2004 amounted to R2,903 million, an increase ofR247 million or 9%, compared to R2,656 million in 2003. Otheroperating expenses excluding impairments amounted to R2,619 million in 2004,a decrease of R21 million, compared to R2,598 million in 2003. Thisdecrease generally arose from cost savings initiated and implemented inprevious years. Impairment of property, plant and equipment, intangible assetsand investments for 2004 amounted to R284 million, compared toR58 million in 2003. Details are as follows:

**Impairments**

| **Item**                                             | ** ** | ** **               | ** ** | **Segment**                      | ** ** | **   2004   ** | ** ** | **  2003  ** | ** ** |
|------------------------------------------------------|------------|--------------------------|------------|----------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|
| ** **                                           | ** ** | ** **               | ** ** | **(Rand in millions)** | ** ** |
| Glycol Ethers  Plant                                 |       | Solvents                 |       |                             | 13         |                                         |       |                             | —     |   |   |
| Crotonaldehyde  and Ethanol Plant                    |       | Solvents                 |       |                             | 23         |                                         |       |                             | —     |   |   |
| Sodium Hydrogen  Sulfide and Ammonium Sulfide Plants |       | Solvents                 |       |                             | 6          |                                         |       |                             | —     |   |   |
| Sulfonation Plant                                    |       | Olefins  and Surfactants |       |                             | 26         |                                         |       |                             | —     |   |   |
| Poly Internal  Olefins Plant                         |       | Olefins  and Surfactants |       |                             | 26         |                                         |       |                             | —     |   |   |
| Fedmis Business                                      |       | Other  businesses        |       |                             | 108        |                                         |       |                             | —     |   |   |
| Mining Initiators  Business                          |       | Other  businesses        |       |                             | 21         |                                         |       |                             | —     |   |   |
| Other smaller  assets                                |       | Other  businesses        |       |                             | 30         |                                         |       |                             | 5          |   |   |
| **Total  property, plant and equipment**             | ** ** | ** **               | ** ** | ** **                       | **253**    |                                         | ** ** | ** **                       | **5**      |   |   |
| Goodwill                                             |       | Other  businesses        |       |                             | 21         |                                         |       |                             | 48         |   |   |
| Other intangible  assets                             |       | Other  businesses        |       |                             | 5          |                                         |       |                             | 5          |   |   |
| **Total  intangible assets**                         | ** ** | ** **               | ** ** | ** **                       | **26**     |                                         | ** ** | ** **                       | **53**     |   |   |
| Held for sale  investment                            |       | Other  businesses        |       |                             | 5          |                                         |       |                             | —     |   |   |
| **Total  investment**                                | ** ** | ** **               | ** ** | ** **                       | **5**      |                                         | ** ** | ** **                       | **—** |   |   |
| **Total**                                            | ** ** | ** **               | ** ** | ** **                       | **284**    |                                         | ** ** | ** **                       | **58**     |   |   |

 

Some of the significantimpairments to property, plant and equipment included in the impairment chargeof R253 million, above, for the year ended 30 June 2004 are in thefollowing business segments:

***Sasol Solvents—R42 million***

*Glycol ethers plant—Germany—*Animpairment review performed on the assets of Sasol Germany, identified that theglycol ethers plant is not expected to generate future positive cash flows.Accordingly a net impairment charge of R13 million was recognized in theincome statement.

*Crotonaldehyde and Ethanol plant—SouthAfrica*—The crotonaldehyde plant produced feedstock untilOctober 2004 to meet its contractual commitments. Thereafter, the plantwill be shutdown and parts of the plant used in a new process to convertacetaldehyde into crude ethanol. The crotonaldehyde plant has thus beenimpaired to a carrying value approximating the value of the assets that will beused in the crude ethanol plant.

The ethanol plant has been mothballed sinceDecember 2003. Enhancements to the Secunda plant have resulted in thisplant no longer producing any product and not being required for backuppurposes. As there are no future cash flows expected to be generated from thisplant, the plant was impaired to a zero book value. A total impairment chargein respect of these two plants of R23 million has been recognized in theincome statement.

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*SodiumHydrogen Sulfide and Ammonium Sulfide plants—South Africa*—Thepoor economic performance of the NaHS and ASD plants resulted in an impairmenttest being performed. The value in use for this asset was determined which isless than the carrying value and accordingly an impairment of R6 millionwas recognized in the income statement.

***Sasol Olefins and Surfactants—R52 million***

*Sulfonation plant—Germany*—TheMarl sulfonation (LAS) units are running well below capacity. The lower salesvolumes and resulting gross margins were not enough to support the associatedfixed costs and result in a net negative cash flow. Furthermore, the main MarlLAS unit is based on old batch technology and the resulting product quality hasbeen acceptable in the past but is coming under scrutiny now from some majorcustomers. The impairment test performed resulted in an impairment ofR26 million.

*PolyInternal Olefins (“PIO”) Plant—Italy*—PIO is an olefins derivative used in the automotive lubricantsmarket and the plant is situated on the Sarroch site of Sasol Italy. During thepast two years, the PIO based lubricants, experienced severe competition fromPoly Alpa Olefins lubricants (quality leader) and a newcomer HydrocrackedBasestock (cost and price leader). As a consequence the PIO plant is operatingbelow 50% of capacity which results in a net negative cash flow. An impairmenttest was carried out and an impairment of R26 million was recognized.

***Nitro businesses (included in “Other businesses”)—R129 million***

The assets of Fedmis have been written down to apotential scrap value resulting in a total impairment of R108 million dueto a proposed disposal of Fedmis.

The change of operationsto toll manufacturing results in certain assets in the remaining Sasol MiningInitiators (Pty) Limited (Sasol Mining Initiators Africa (Pty) Limited inparticular) being impaired by R21 million.

**Operating profit**

Turnover for 2004decreased by R4,961 million or 8%, and other operating income byR271 million. These decreases were partly offset by decreases in netforeign exchange losses of R1,171 million and in operating costs and expensesof R1,789 million, which reduced the net effect on operating profit. Thisresulted in a decrease in operating profit of R2,272 million or 21% fromR11,011 million in 2003 to R8,739 million in 2004.

**Net other expenses**

| **Category**                                           | ** ** | ** **                       | ** ** | **2004** | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|--------------------------------------------------------|------------|----------------------------------|------------|----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                                             | ** ** | **(Rand in millions)** | ** ** | **%**    | ** ** |
| Dividends  received                                    |       | 14                               |       | 14       |       |       | —     |       |       | —     |       |
| Interest received                                      |       | 183                              |       | 193      |       |       | (10        | )          |       | (5         | )          |
| Finance costs                                          |       | (368                             | )          | (271     | )          |       | (97        | )          |       | (36        | )          |
| *Interest  incurred*                                   | * *   | *(1,450*                         | *)*        | *(1,279* | *)*        | * *   | *(171*     | *)*        | * *   | *(13*      | *)*        |
| *Interest  capitalized*                                | * *   | *1,082*                          | * *   | *1,008*  | * *   | * *   | *74*       |       | * *   | *7*        |       |
| Gain arising from issuance of subsidiary’s shares |       | 108                              |       | —   |       |       | 108        |       |       | 100        |       |
| **Net other expenses**                                 | ** ** | **(63**                          | **)**      | **(64**  | **)**      | ** ** | **1**      |       |       | 2          |       |

 

Net other expenses in 2004 amounted toR63 million, compared to R64 million in 2003, a decrease ofR1 million.

127

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Interest income amounted to R183 million in 2004,a decrease of R10 million or 5%, compared to R193 million in 2003.This decrease is mainly attributable to translation differences on interestincome from investments in foreign countries due to the appreciation of therand against the US dollar, as well as lower average cash balances anddeclining interest rates.

Interest incurred in 2004 amounted toR1,450 million, of which R1,082 million was capitalized, compared tointerest incurred of R1,279 million in 2003, of which R1,008 millionwas capitalized. The increase in interest incurred was mainly a result ofincreased net borrowings. Capitalized interest increased due to increasedinvestment in property, plant and equipment in 2004. Accordingly, finance costsexpensed amounted to R368 million in 2004, an increase of R97 millionor 36%, compared to finance costs expensed of R271 million in 2003.

In terms of thetransaction to acquire the remaining interest in Naledi Petroleum Holdings (Pty)Limited (“NPH”), 22 shares were issued to some of the previous NPH shareholderswhich diluted our interest in Sasol Oil (Pty) Limited by approximately 2% andresulted in a gain of R108 million being realized.

**Taxation**

Income tax expense in 2004amounted to R3,177 million, a decrease of R738 million or 19%,compared to R3,915 million in 2003. These amounts include a deferred taxbenefit of R299 million in 2004 compared to a deferred tax expense ofR114 million in 2003. The decrease in taxation is broadly in line with thedecrease in net income before taxation. The effective tax rate was 36.6% in2004 and 35.8% in 2003. The difference between the statutory tax rate of 30%and the effective tax rate results mainly from STC which is levied at a rate of12.5%, differences in foreign tax rates, disallowed expenditure and exemptincome for 2004.

**Lossesof equity accounted investees**

Losses of equity accountedinvestees amounted to R49 million in 2004, an increase of R2 million or4%, compared to a loss of R47 million in 2003. The loss ofR49 million comprises mainly losses of R151 million incurred by some ofour equity accounted investees, principally Sasol Chevron and Sasol SouthwestEnergy, offset by profits of approximately R102 million, mainly from Petlin,Merisol, and FFS Refiners in 2004.

**Minority interest**

Minority interest in 2004amounted to R92 million, compared to R170 million in 2003. This ismainly attributable to of the acquisition of the minority interest of NalediPetroleum Holdings with effect from 1 January 2004.

**Earningsattributable to shareholders**

As a result of the factorsdiscussed above, earnings attributable to shareholders in 2004 wasR5,358 million, a decrease of R1,986 million or 27%, compared toR7,344 million in 2003.

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**Segment Overview**

The following is a discussion of our segment results.Segmental financial performance is measured on a management basis which isprepared in accordance with IFRS. This approach is based on the way managementorganizes segments within our group for making operating decisions andassessing performance. For more information on the reconciliation of segmentalturnover and operating profit under IFRS to the corresponding amounts preparedunder US GAAP, see below “Reconciliation of segmental results to US GAAP” andNote 3 to our consolidated financial statements. See “Item 18 FinancialStatements”

Intersegment sales andtransfers were entered into under terms and conditions substantially similar toterms and conditions which would have been negotiated with an independent thirdparty.

**Turnover persegment**

|                                         | ** ** | **Sasol**                                                              | ** ** | **Sasol**  | ** ** | **Sasol**    | ** ** | **Sasol**  | ** ** | **Sasol  Synfuels** | ** ** | **Sasol  Olefins  and** | ** ** | **Sasol**       | ** ** | **Sasol**    | ** ** | ** **   | ** ** | **Total**  | ** ** |
|-----------------------------------------|------------|------------------------------------------------------------------------|------------|------------|------------|--------------|------------|------------|------------|---------------------|------------|-------------------------|------------|-----------------|------------|--------------|------------|--------------|------------|------------|------------|
| **2005**                                | ** ** | ** **                                                             | ** ** | **Mining** | ** ** | **Synfuels** | ** ** | **LFB**    | ** ** | **Gas**             | ** ** | **International**       | ** ** | **Surfactants** | ** ** | **Polymers** | ** ** | **Solvents** | ** ** | **Other**  | ** ** | **segments** | ** ** |
| ** **                              | ** ** | **(Rand in millions except for percentages)** | ** ** |
| External turnover                       |       |                                                                   | 1,471      |       |       | 820          |       | 23,525     |       | 1,408               |       |                    | —     |            |       | 18,040       |       |         | 7,199      |       |       | 8,063 |   | 8,713 |   |   | 69,239 |   |
| % of external turnover                  |       |                                                                   | 2          | %          |       | 1            | %          | 34         | %          | 2                   | %          |                    | —     |            |       | 26           | %          |         | 10         | %          |       | 12 | % | 13 | % |   | 100 | % |
| Inter-segment turnover                  |       |                                                                   | 3,744      |       |       | 17,864       |       | 187        |       | 996                 |       |                    | —     |            |       | 354          |       |         | 83         |       |       | 341 |   | 3,534 |   |   | 27,103 |   |
| % of inter-segment turnover             |       |                                                                   | 14         | %          |       | 66           | %          | 1          | %          | 4                   | %          |                    | —     |            |       | 1            | %          |         | —     |       |       | 1 | % | 13 | % |   | 100 | % |
| **Aggregated  turnover**                | ** ** | ** **                                                             | **5,215**  | ** ** | ** ** | **18,684**   | ** ** | **23,712** | ** ** | **2,404**           | ** ** | ** **              | **—** | ** **      | ** ** | **18,394**   | ** ** | ** **   | **7,282**  | ** ** | ** ** | **8,404** | ** ** | **12,247** | ** ** | ** ** | **96,342** | ** ** |
| Elimination—inter-segment turnover |       |                                                                   |       |       |       |         |       |       |       |                |       |                    |       |            |       |         |       |         |       |       |       |   |   |   |   |   | (27,103 | ) |
| **Total  segment turnover**             | ** ** | ** **                                                             | ** ** |       |       |         |       |       |       |                |       |                    |       |            |       |         |       |         |       |       |       |   |   |   |   | ** ** | **69,239** |   |
|                                         |            |                                                                        |            |            |            |              |            |            |            |                     |            |                         |            |                 |            |              |            |              |            |            |            |  |  |  |  |  |  |  |  |  |

 

|                                         | ** ** | **Sasol**                                                              | ** ** | **Sasol**  | ** ** | **Sasol**    | ** ** | **Sasol**  | ** ** | **Sasol  Synfuels** | ** ** | **Sasol  Olefins  and** | ** ** | **Sasol**       | ** ** | **Sasol**    | ** ** | ** **   | ** ** | **Total**  | ** ** |
|-----------------------------------------|------------|------------------------------------------------------------------------|------------|------------|------------|--------------|------------|------------|------------|---------------------|------------|-------------------------|------------|-----------------|------------|--------------|------------|--------------|------------|------------|------------|
| **2004**                                | ** ** | ** **                                                             | ** ** | **Mining** | ** ** | **Synfuels** | ** ** | **LFB**    | ** ** | **Gas**             | ** ** | **International**       | ** ** | **Surfactants** | ** ** | **Polymers** | ** ** | **Solvents** | ** ** | **Other**  | ** ** | **segments** | ** ** |
| ** **                              | ** ** | **(Rand in millions except for percentages)** | ** ** |
| External turnover                       |       |                                                                   | 1,083      |       |       | 1,329        |       | 18,554     |       | 1,389               |       |                    | 7          |            |       | 17,133       |       |         | 6,576      |       |       | 5,956 |   | 8,124 |   |   | 60,151 |   |
| % of external turnover                  |       |                                                                   | 2          | %          |       | 2            | %          | 31         | %          | 2                   | %          |                    | —     |            |       | 28           | %          |         | 11         | %          |       | 10 | % | 14 | % |   | 100 | % |
| Inter-segment turnover                  |       |                                                                   | 4,161      |       |       | 14,664       |       | 297        |       | 133                 |       |                    | —     |            |       | 249          |       |         | 86         |       |       | 499 |   | 3,609 |   |   | 23,698 |   |
| % of inter-segment turnover             |       |                                                                   | 18         | %          |       | 62           | %          | 1          | %          | —              |       |                    | —     |            |       | 1            | %          |         | —     |       |       | 2 | % | 16 | % |   | 100 | % |
| **Aggregated  turnover**                | ** ** | ** **                                                             | **5,244**  | ** ** | ** ** | **15,993**   | ** ** | **18,851** | ** ** | **1,522**           | ** ** | ** **              | **7**      | ** **      | ** ** | **17,382**   | ** ** | ** **   | **6,662**  | ** ** | ** ** | **6,455** | ** ** | **11,733** | ** ** | ** ** | **83,849** | ** ** |
| Elimination—inter-segment turnover |       |                                                                   |       |       |       |         |       |       |       |                |       |                    |       |            |       |         |       |         |       |       |       |   |   |   |   |   | (23,698 | ) |
| **Total  segment turnover**             | ** ** | ** **                                                             | ** ** |       |       |         |       |       |       |                |       |                    |       |            |       |         |       |         |       |       |       |   |   |   |   | ** ** | **60,151** |   |
|                                         |            |                                                                        |            |            |            |              |            |            |            |                     |            |                         |            |                 |            |              |            |              |            |            |            |  |  |  |  |  |  |  |  |  |

 

129

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|                                         | ** ** | **Sasol**                                                              | ** ** | **Sasol**  | ** ** | **Sasol**    | ** ** | **Sasol**  | ** ** | **Sasol  Synfuels** | ** ** | **Sasol  Olefins  and** | ** ** | **Sasol**       | ** ** | **Sasol**    | ** ** | ** **   | ** ** | **Total**  | ** ** |
|-----------------------------------------|------------|------------------------------------------------------------------------|------------|------------|------------|--------------|------------|------------|------------|---------------------|------------|-------------------------|------------|-----------------|------------|--------------|------------|--------------|------------|------------|------------|
| **2003**                                | ** ** | ** **                                                             | ** ** | **Mining** | ** ** | **Synfuels** | ** ** | **LFB**    | ** ** | **Gas**             | ** ** | **International**       | ** ** | **Surfactants** | ** ** | **Polymers** | ** ** | **Solvents** | ** ** | **Other**  | ** ** | **Segments** | ** ** |
| ** **                              | ** ** | **(Rand in millions except for percentages)** | ** ** |
| External turnover                       |       |                                                                   | 1,013      |       |       | 1,210        |       | 19,460     |       | 1,480               |       |                    | 7          |            |       | 19,543       |       |         | 6,245      |       |       | 5,950 |   | 9,647 |   |   | 64,555 |   |
| % of external turnover                  |       |                                                                   | 2          | %          |       | 2            | %          | 30         | %          | 2                   | %          |                    | —     |            |       | 30           | %          |         | 10         | %          |       | 9 | % | 15 | % |   | 100 | % |
| Inter-segment turnover                  |       |                                                                   | 4,003      |       |       | 15,766       |       | 191        |       | 24                  |       |                    | —     |            |       | 290          |       |         | 116        |       |       | 622 |   | 2,906 |   |   | 23,918 |   |
| % of inter-segment turnover             |       |                                                                   | 17         | %          |       | 66           | %          | 1          | %          | —              |       |                    | —     |            |       | 1            | %          |         | —     |       |       | 3 | % | 12 | % |   | 100 | % |
| **Aggregated  turnover**                | ** ** | ** **                                                             | **5,016**  | ** ** | ** ** | **16,976**   | ** ** | **19,651** | ** ** | **1,504**           | ** ** | ** **              | **7**      | ** **      | ** ** | **19,833**   | ** ** | ** **   | **6,361**  | ** ** | ** ** | **6,572** | ** ** | **12,553** | ** ** | ** ** | **88,473** | ** ** |
| Elimination—inter-segment turnover |       |                                                                   |       |       |       |         |       |       |       |                |       |                    |       |            |       |         |       |         |       |       |       |   |   |   |   |   | (23,918 | ) |
| **Total  segment turnover**             | ** ** | ** **                                                             | ** ** |       |       |         |       |       |       |                |       |                    |       |            |       |         |       |         |       |       |       |   |   |   |   | ** ** | **64,555** |   |
|                                         |            |                                                                        |            |            |            |              |            |            |            |                     |            |                         |            |                 |            |              |            |              |            |            |            |  |  |  |  |  |  |  |  |  |

 

**Operatingprofit/(loss) per segment**

| ** **                      | ** ** | **Sasol**                                                              | ** ** | **Sasol**    | ** ** | **Sasol’s** | ** ** | **Sasol** | ** ** | **Sasol  Synfuels** | ** ** | **Sasol  Olefins  and** | ** ** | **Sasol**    | ** ** | **Sasol**    | ** ** | ** ** | ** ** | **Total**    | ** ** |
|---------------------------------|------------|------------------------------------------------------------------------|------------|--------------|------------|------------------|------------|-----------|------------|---------------------|------------|-------------------------|------------|--------------|------------|--------------|------------|------------|------------|--------------|------------|
| ** **                      | ** ** | **Mining**                                                             | ** ** | **Synfuels** | ** ** | **LFB**          | ** ** | **Gas**   | ** ** | **International**   | ** ** | **Surfactants**         | ** ** | **Polymers** | ** ** | **Solvents** | ** ** | **Other**  | ** ** | **segments** | ** ** |
| ** **                      | ** ** | **(Rand in millions except for percentages)** | ** ** |
| Operating  profit / (loss) 2005 |       |                                                                   | 1,247      |         |       | 7,560            |       |      | 1,900      |                |       | 932                     |       |         | (199       | )            |       | (221       | )          |         | 1,484      |   |   | 1,243 |   |   | 560 |   |   | 14,506 |   |
| % of segment                    |       |                                                                   | 9          | %            |       | 52               | %          |      | 13         | %                   |       | 6                       | %          |         | (1         | )%           |       | (2         | )%         |         | 10         | % |   | 9 | % |   | 4 | % |   | 100 | % |
| Operating  profit / (loss) 2004 |       |                                                                   | 1,194      |         |       | 5,512            |       |      | 1,429      |                |       | 387                     |       |         | (138       | )            |       | (67        | )          |         | 1,030      |   |   | 117 |   |   | (150 | ) |   | 9,314 |   |
| % of segment                    |       |                                                                   | 13         | %            |       | 59               | %          |      | 15         | %                   |       | 4                       | %          |         | (1         | )%           |       | (1         | )%         |         | 11         | % |   | 1 | % |   | (1 | )% |   | 100 | % |
| Operating  profit / (loss) 2003 |       |                                                                   | 1,273      |         |       | 7,423            |       |      | 1,403      |                |       | 535                     |       |         | (180       | )            |       | (5         | )          |         | 884        |   |   | 436 |   |   | 142 |   |   | 11,911 |   |
| % of segment                    |       |                                                                   | 11         | %            |       | 62               | %          |      | 12         | %                   |       | 4                       | %          |         | (2         | )%           |       | —     |       |         | 7          | % |   | 4 | % |   | 2 | % |   | 100 | % |

 

130

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***Reconciliation of Segment Results to US GAAP***

Oursegments’ financial performance is prepared, measured and presented inaccordance with IFRS which is consistent with the basis that is used by the GECto measure and manage the segments of our business. This basis differs from thepresentation of our consolidated financial statements which are prepared underUS GAAP. The differences between US GAAP and IFRS as they affect externalturnover and operating profit are discussed below:

| ** **                                                                                     | ** ** | **30 June 2005**       | ** ** | **30 June 2004** | ** ** | **30 June 2003** | ** ** |
|------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------|------------|----------------------------|------------|
| ** **                                                                                     | ** ** | **Turnover  (external)**         | ** ** | **Operating  profit**      | ** ** | **Turnover  (external)**   | ** ** | **Operating  profit** | ** ** | **Turnover  (external)** | ** ** | **Operating  profit** | ** ** |
| ** **                                                                                     | ** ** | **(Rand in millions)** | ** ** |
| Operating results per  IFRS consolidated income statements                                |       |                             | 69,239     |                       |       | 14,506                     |       |   | 60,151 |   |   | 9,314 |   |   | 64,555 |   |   | 11,911 |   |
| ***Reconciliation of IFRS to US  GAAP:***                                                      |       |                             |       |                       |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustments:                                                                                   |       |                             |       |                       |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Post-retirement  healthcare                                                                    |       |                             | —     |                       |       | (186                       | )          |   | — |   |   | (126 | ) |   | — |   |   | (280 | ) |
| Research and development  expensed                                                             |       |                             | —     |                       |       | —                     |       |   | — |   |   | — |   |   | — |   |   | (74 | ) |
| Derivative instruments                                                                         |       |                             | —     |                       |       | (1                         | )          |   | — |   |   | (12 | ) |   | — |   |   | (251 | ) |
| Foreign currency  translation losses                                                           |       |                             | —     |                       |       | (3                         | )          |   | — |   |   | (253 | ) |   | — |   |   | (473 | ) |
| Impairments of assets                                                                          |       |                             | —     |                       |       | 811                        |       |   | — |   |   | (34 | ) |   | — |   |   | — |   |
| Provision for guarantee  payable                                                               |       |                             | —     |                       |       | —                     |       |   | — |   |   | — |   |   | — |   |   | 205 |   |
| Asset retirement  obligations                                                                  |       |                             | —     |                       |       | (94                        | )          |   | — |   |   | (23 | ) |   | — |   |   | (149 | ) |
| Equity accounting of  incorporated  joint ventures and reversal of proportionate consolidation |       |                             | (1,812     | )                          |       | (180                       | )          |   | (1,609 | ) |   | 56 |   |   | (1,539 | ) |   | 58 |   |
| Entities previously not  consolidated                                                          |       |                             | —     |                       |       | —                     |       |   | 266 |   |   | 106 |   |   | 650 |   |   | 146 |   |
| Business combinations                                                                          |       |                             | —     |                       |       | 99                         |       |   | — |   |   | (34 | ) |   | — |   |   | (20 | ) |
| Pension asset                                                                                  |       |                             | —     |                       |       | (61                        | )          |   | — |   |   | (67 | ) |   | — |   |   | (6 | ) |
| Gain arising from  issuance of subsidiary’s shares                                        |       |                             | —     |                       |       | —                     |       |   | — |   |   | (108 | ) |   | — |   |   | — |   |
| Other(1)                                                                                       |       |                             | —     |                       |       | 42                         |       |   | — |   |   | (80 | ) |   | 103 |   |   | (56 | ) |
| **Results per US GAAP consolidated income  statements**                                   | ** ** | ** **                       | **67,427** | ** **                 | ** ** | **14,933**                 | ** ** | ** ** | **58,808** | ** ** | ** ** | **8,739** | ** ** | ** ** | **63,769** | ** ** | ** ** | **11,011** | ** ** |

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(1)    Othercontains non-significant adjustments related to capitalization of financeleases, depreciation methods and pensions.

*Turnover.**  *Total segment turnover (external)in 2005 was R69,239 million (2004—R60,151 million; 2003—R64,555 million),compared to US GAAP turnover of R67,427 (2004—R58,808 million ; 2003—R63,769million), a difference of R1,812 million (2004—R1,343 million; 2007—R3,786 million).These differences comprise the following:

·       Decreaseof R1,812 million (2004—R1,609 million; 2003—R1,539 million) dueto the reversal of the proportionate consolidation method used for managementreporting purposes. Under US GAAP, the equity method of accounting isapplied.

·       Increaseof Rnil (2004—R266 million; 2003—R650 million) relating toNaledi Petroleum Holdings (Pty) Limited (included in the Sasol LFB segment)which is equity accounted for management reporting purposes until 31 December 2003;consolidated as a subsidiary with effect from 1 January 2004 andconsolidated as a subsidiary, for all reporting periods, under US GAAP.

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*Operatingprofit.**  *Totalsegment operating profit in 2005 was R14,506 million (2004—R9,314 million;2003—R11,911 million), compared to US GAAP operating profit of R14,933 million(2004—R8,739 million; 2003—R11,011 million), a difference ofR427 million (2004—R575 million; 2003—R900 million). Thisdifference is comprised of the following:

·       Decreaseof R186 million (2004—R126 million; 2003—R280 million) due tothe measurement of post-retirement healthcare obligations under US GAAP.

·       Decreaseof Rnil (2004—Rnil; 2003—R74 million) due to the expensing of research anddevelopment costs under US GAAP. US GAAP requires that research anddevelopment costs be expensed as incurred. Certain development costs arecapitalized for management reporting purposes.

·       Decreaseof R1 million (2004—R12 million; 2003—R251 million) due to thereversal of hedge accounting as some of our derivative contracts in each of ourbusiness segments did not meet the strict criteria set for achieving hedgeaccounting under US GAAP. All new derivative contacts entered into subsequentto 30 June 2002 met the criteria for hedge accounting under bothUS GAAP and for management reporting purposes.

·       Decreaseof R3 million (2004—R253 million; 2003—of R473 million) as aresult of foreign currency translation losses on a foreign operation, treatedas a foreign entity for management reporting purposes.

·       Increaseof R811 million (2004—decrease of R34 million; 2003—Rnil) because thecumulative effect of impairment recognized for management reporting purposes isreversed under US GAAP. For management reporting purposes property, plant andequipment was considered to be impaired as its carrying value exceeded thediscounted estimated future cash flows, whereas under US GAAP animpairment review is required to be performed on an undiscounted basis.

·       Decreaseof R94 million (2004—R23 million; 2003—R149 million) arising on theadoption of SFAS 143 for the recording of asset retirement obligationsfrom 1 July 2002. For management reporting purposes, asset retirementobligations are discounted at a risk free discount rate, which is reassessedannually, whereas under US GAAP, a consistent credit adjusted rate isused. This adjustment primarily affects the Sasol Synfuels, Sasol Mining andSasol Nitro segments.

·       Decreaseof R180 million (2004—increase of R56 million; 2003—increase ofR58 million) due to the reversal of the proportionate consolidation methodused for management reporting purposes. This primarily affects our SasolPolymers, Sasol Nitro and Other Business segments. We apply equity accountingfor US GAAP purposes.

·       Increaseof Rnil (2004—R106 million; 2003—R146 million) due to theconsolidation of Naledi Petroleum Holdings (Pty) Limited under US GAAP,which is reported in our Sasol LFB segment.

·       Increaseof R99 million (2004—decrease of R34 million; 2003—decrease ofR20 million) arising from differences in the application of businesscombinations.

·       Decreaseof R61 million (2004—R67 million; 2003—R6 million) in ourpension asset.

·       Decreaseof R108 million in the 2004 year due to the profit on sale of 2.04% sharesin Sasol Oil shown as non-operating profit for US GAAP and operatingprofit for management reporting purposes.

·       Other increase ofR42 million (2004—decrease of R80 million; 2003—decrease ofR56 million) relating to various non-significant adjustments that affectsome of our segments.

132

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**Segment Review**

***Sasol Mining—*resultsof operations for 2005 compared to 2004**

| **Category**                     | ** ** | ** **                       | ** ** | **2005**  | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **(%)**   | ** ** |
| Turnover                         |       |                             |       |      |       |       |       | ** ** |       |       | ** ** | ** ** |   |
| External                         |       | 1,471                            |       | 1,083     |       |       | 388        | ** ** |       |       | 36         | ** ** |   |
| Inter-segment                    |       | 3,744                            |       | 4,161     |       |       | (417       | )          |       |       | (10        | ) |   |
| **Aggregated  turnover**         | ** ** | **5,215**                        | ** ** | **5,244** | ** ** | ** ** | **(29**    | **)**      |       |       | (1         | ) |   |
| Operating costs  and expenses(1) |       | (3,968                           | )          | (4,050    | )          |       | 82         | ** ** |       |       | 2          |   |   |
| **Operating profit**             | ** ** | **1,247**                        | ** ** | **1,194** | ** ** | ** ** | **53**     | ** ** |       |       | 4          |   |   |

----

(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *External turnover amounted toR1,471 million in 2005 (28% of the aggregated Sasol Mining’s turnover),compared to R1,083 million in 2004 (21% of the aggregated Sasol Mining’sturnover), an increase of R388 million or 36%. Inter-segmentturnover amounted to R3,744 million in 2005 (72% of the aggregated Sasol Miningturnover), compared to R4,161 million in 2004 (79% of the aggregated SasolMining’s turnover), a decrease of R417 million or 10%. On an aggregatedbasis, Sasol Mining’s turnover amounted to R5,215 million in 2005,compared to R5,244 million in 2004, a decrease of R29 million or 1%.

The increase in Sasol Mining’s external turnover in2005 of R388 million or 36% was mainly attributable to the increase in theUS dollar price of coal which increased turnover by R470 million. This waspartially negated by the effect of the appreciation of the rand against the USdollar.

The decrease in inter-segment turnover in 2005of R417 million or 10%, is due to inter-segment sales volumes toInfrachem and Sasol Synfuels decreasing by 4.6 Mt or 10% to 42.4 Mt in 2005,due to the introduction of natural gas at Infrachem and Sasol Synfuels.

Sasol Mining’s aggregated turnover ofR5,215 million in 2005 represents 5% (2004—6%) of our total aggregatedsegmental turnover of R96,342 million (2004—R83,849 million).

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Mining amounted to R3,968 million in 2005,compared to R4,050 million in 2004, a decrease of R82 million or 2%. Thedecrease was mainly attributable to lower sales volumes and cost savinginitiatives.

Sasol Mining’s property, plant and equipment isdepreciated over their estimated remaining useful life. These useful lives wereassessed during the 2005 year. Due to the extension of the useful lives ofcertain items of property, plant and equipment, the depreciation charge wasreduced by R29 million for the current year. These changes in estimate areaccounted for prospectively with no adjustment made to prior years.

The Syferfontein opencast mine was sold on 1 April 2005to Anglo Coal. Whilst a profit of R36 million was realized on the sale ofmining assets, certain assets excluded from the disposal were impaired. Animpairment of R16 million was recognized.

*Operatingprofit.**  *Operatingprofit of Sasol Mining amounted to R1,247 million in 2005, compared toR1,194 million in 2004, an increase of R53 million or 4%. Profit as apercentage of turnover has increased from 23% in 2004, to 24% in 2005.

Sasol Mining’s operatingprofit represents 9% of our total segmental operating profit in 2005, comparedto 13% in 2004.

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***Sasol Mining—*resultsof operations for 2004 compared to 2003**

| **Category**                     | ** ** | ** **                       | ** ** | **2004**  | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **(%)**   | ** ** |
| Turnover                         |       |                             |       |      |       |       |       | ** ** |       |       |       |   |   |
| External                         |       | 1,083                            |       | 1,013     |       |       | 70         | ** ** |       |       | 7          |   |   |
| Inter-segment                    |       | 4,161                            |       | 4,003     |       |       | 158        | ** ** |       |       | 4          |   |   |
| **Aggregated  turnover**         | ** ** | **5,244**                        | ** ** | **5,016** | ** ** | ** ** | **228**    | ** ** |       |       | 5          |   |   |
| Operating costs  and expenses(1) |       | (4,050                           | )          | (3,743    | )          |       | (307       | )          |       |       | (8         | ) |   |
| **Operating profit**             | ** ** | **1,194**                        | ** ** | **1,273** | ** ** | ** ** | **(79**    | **)**      |       |       | (6         | ) |   |

----

(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *External turnover amounted toR1,083 million in 2004 (21% of aggregated Sasol Mining’s turnover),compared to R1,013 million in 2003 (20% of the aggregated Sasol Mining’sturnover), an increase of R70 million or 7%. Inter-segment turnoveramounted to R4,161 million in 2004 (79% of the aggregated Sasol Mining’sturnover), compared to R4,003 million in 2003 (80% of the aggregated SasolMining’s turnover), an increase of R158 million or 4%. On an aggregatedbasis, Sasol Mining’s turnover amounted to R5,244 million in 2004,compared to R5,016 million in 2003, an increase of R228 million or 5%.

The increase in Sasol Mining’s external turnover in2004 of R70 million or 7% was mainly attributable to higher coal salesvolumes of R65 million. The average increase in the US dollar coal pricein turn increased turnover by R200 million, which was negated by the effectof the appreciation of the rand of R237 million; greater sales volumesincreased turnover of R42 million and resulted in a reduction in finishedproduct inventory.

The increase in inter-segment turnover in 2004of R158 million or 4%, was mainly attributable to higher sales volumes ofR93 million. An effort to improve the quality of coal sold resulted in anincrease in turnover of R47 million. The price of coal sold also increasedturnover by R18 million. Inter-segment sales volumes of 47.0 Mt in2004, were 1.2 Mt or 3% higher than in 2003.

Sasol Mining aggregated turnover ofR5,244 million in 2004 represents 6% (2003—6%) of our total segmentalaggregated turnover of R83,849 million (2003—R88,473 million).

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Mining amounted to R4,050 million in 2004,compared to R3,743 million in 2003, an increase of R307 million or8%. The increase was mainly attributable to higher sales volumes and costinflation, although our mining costs per ton mined have decreased over the lastfew years.

The renewal project which was initiated in 1998 hascontinued to contain operating costs. Since the initiation of the renewalproject, per capita productivity has increased by a cumulative 41% (including a6% year-to-year increase in 2004).

*Operatingprofit.**  *Operatingprofit of Sasol Mining amounted to R1,194 million in 2004, compared toR1,273 million in 2003, a decrease of R79 million or 6%. Theoperating margin decreased from 25% in 2003, to 23% in 2004.

Sasol Mining operating profit represents 13% of our totalsegmental operating profit in 2004, compared to 11% in 2003.

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***Sasol Synfuels—*resultsof operations for 2005 compared to 2004**

| **Category**                     | ** ** | ** **                       | ** ** | **2005**   | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Turnover                         |       |                             |       |       |       |       |       |       |       |       |       |
| External                         |       | 820                              |       | 1,329      |       |       | (509       | )          |       | (38        | )          |
| Inter-segment                    |       | 17,864                           |       | 14,664     |       |       | 3,200      |       |       | 22         |       |
| **Aggregated  turnover**         | ** ** | **18,684**                       | ** ** | **15,993** | ** ** | ** ** | **2,691**  |       |       | 17         |       |
| Operating costs  and expenses(1) |       | (11,124                          | )          | (10,481    | )          |       | (643       | )          |       | (6         | )          |
| **Operating profit**             | ** ** | **7,560**                        | ** ** | **5,512**  | ** ** | ** ** | **2,048**  |       |       | 37         |       |

----

(1)    Operatingcosts and expenses net of other income

*Turnover.**  *External turnover amounted toR820 million in 2005 (4% of the aggregated Sasol Synfuels’ turnover),compared to R1,329 million in 2004 (8% of the aggregated Sasol Synfuels’turnover), a decrease of R509 million or 38%, mainly resulting from thesuspension of the sale of certain products (e.g. metcoke). This decision was asa result of low profit margins earned on these products as well as lower salesvolumes of ammonia, sulfur , krypton xenon and wood preservative product sales.Inter-segment turnover amounted to R17,864 million in 2005 (96% ofthe aggregated Sasol Synfuels turnover), compared to R14,664 million in2004 (92% of the aggregated Sasol Synfuels’ turnover), an increase of R3,200 millionor 22% most of which is sold to Sasol LFB.

The increase in Sasol Synfuels’ aggregated turnover ofR2,691million was mainly due to higher crude oil prices of R5,614 million aswell as higher other product prices of R201 million partly reduced by thenegative effect of a strengthening of the rand against the U S dollar of R2,278million as well as lower production volumes of R846 million.

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Synfuels amounted to R11,124 million in 2005,compared to R10,481 million in 2004, an increase of R643 million or 6%. The increase includes a realized opportunity loss on our commodityderivative financial instruments of R1,147 million, set off by a small profitrealized on other derivative instruments of R11 million, compared to the lossof R54 million in 2004. The other main reasons for the increase in our costs isdue to production price increases of R79 million and higher overhead costs of R337million. This was partly reduced by the decrease in costs due to lower volumesproduced of R 309 million, due to three unplanned shut downs mentioned below.

Production volumes for 2005 decreased to 7.5 Mt, adecrease of 3% over 2004 production of 7.7 Mt, mainly due to three unplannedshutdowns, most significantly the flooding of the ash dams due to a rainstorm.Sales volumes for 2005 decreased to 7.4 Mt, a decrease of 6% over 2004 sales of7.9 Mt resulting in a stock build up of intermediate products at year end. Theaverage per capita production rose by 0.5% to 1,364 tons per employee for 2005compared to 1,357 tons for 2004.

Duringthe current year Sasol Synfuels recorded the following net loss due to theimpairments, profit on disposal and scrapping of certain items of property,plant and equipment:

| ** **                                          | ** ** | **  2005  ** | ** ** | **  2004  ** | ** ** |
|-----------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                                          | ** ** | **(Rand in millions)** | ** ** |
| Impairment of  property, plant and equipment        |       |                             | (16        | )                                |       |   | — |   |   |
| Scrapping of property, plant and equipment          |       |                             | (111       | )                                |       |   | — |   |   |
| Profit on disposal of property, plant and equipment |       |                             | 17         |                             |       |   | — |   |   |
| **Total**                                           | ** ** | ** **                       | **(110**   | **)**                            | ** ** | ** ** | **—** | ** ** | ** ** |

 

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These losses weredue to the following factors:

·       Impairment of property,plant and equipment—following a business decision to utilize an alternativekiln for processing low sulfur coke, the electrical kiln was idle for a periodof eight months. Although potential uses for this asset are being investigated,there are presently no expected future cash flows to be derived from this assetand as a result an impairment of the carrying value of the asset wasrecognized;

·       Scrappingof property, plant & equipment—various items of property, plant andequipment were scrapped during the year. These consist mainly of developmentcosts for projects identified by Sasol Technology as well as certain smallerassets which are no longer being used by Synfuels;

·       Aprofit on sale of property, plant and equipment of R17 million was realizedduring the year.

Additionally Sasol Synfuels reassessed the usefullives of certain items of property, plant and equipment during the 2005 year.The estimated useful life of certain assets was extended due to technologicalinnovations, product life cycles and maintenance programs. Due to theseextensions of the useful lives of certain items of property plant and equipmentthe depreciation charge was reduced by R656 million for the current year. Thesechanges in estimate are accounted for prospectively with no adjustment made toprior years.

*Operatingprofit.**  *Operatingprofit of Sasol Synfuels amounted to R7,560 million in 2005, compared toR5,512 million in 2004, an increase of R 2,048 million or 37%. Themain reason for this increase was the higher crude oil prices during 2005partly reduced by a stronger rand as well as lower sales volumes. The operatingprofit margin also increased from 34% in 2004 to 40% in 2005.

Sasol Synfuels operatingprofit represents 52% of our total segmental operating profit for 2005,compared to 59% in 2004.

***Sasol Synfuels—*resultsof operations for 2004 compared to 2003**

| **Category**                     | ** ** | ** **                       | ** ** | **2004**   | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Turnover                         |       |                             |       |       |       |       |       |       |       |       |
| External                         |       | 1,329                            |       | 1,210      |       | 119        |       |       | 10         |       |
| Inter-segment                    |       | 14,664                           |       | 15,766     |       | (1,102     | )          |       | (7         | )          |
| **Aggregated  turnover**         | ** ** | **15,993**                       | ** ** | **16,976** | ** ** | **(983**   | **)**      |       | (6         | )          |
| Operating costs  and expenses(1) |       | (10,481                          | )          | (9,553     | )          | (928       | )          |       | (10        | )          |
| **Operating profit**             | ** ** | **5,512**                        | ** ** | **7,423**  | ** ** | **(1,911** | **)**      |       | (26        | )          |

----

(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *External turnover amounted toR1,329 million in 2004 (8% of the aggregated Sasol Synfuels’ turnover),compared to R1,210 million in 2003 (7% of the aggregated Sasol Synfuels’turnover), an increase of R119 million or 10%, mainly due to highervolumes of ammonia, sulfur and krypton xenon sales. Inter- segmentturnover amounted to R14,664 million in 2004 (92% of aggregated SasolSynfuels turnover), compared to R15,766 million in 2003 (93% of theaggregated Sasol Synfuels’ turnover), a decrease of R1,102 million or 7%.

The decrease in Sasol Synfuels’ aggregated turnover ofR983 million was mainly due to the appreciation of the rand against the USdollar resulting in a negative effect of R4,692 million and other pricevariances of R88 million. This decrease was partially offset by a highercrude oil price of R2,913 million as well as higher sales volumes ofR884 million. During 2004 the rand per US dollar exchange rate averagedR6.88 per US dollar representing a strengthening of 24% against the average of 

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R9.03 per US dollar during2003. The dated Brent crude oil price averaged US$28.85/b, representing a 22%increase from an average US$23.67/b in 2003.

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Synfuels amounted to R10,481 million in 2004,compared to R9,553 million in 2003, an increase of R928 million or10%. The increase is attributable to both higher production volumes, as well assales volumes and a loss on a hedging instrument of R54 million.Production volumes for 2004 increased to 7.7 Mt, an increase of 4% over 2003production of 7.4 Mt. Sales volumes for 2004 increased to 7.9 Mt, an increaseof 4% over 2003 sales of 7.6 Mt. Cash cost, defined as total productioncosts less non-cash costs, mainly depreciation and movements in assetretirement provisions, per ton produced decreased in 2004 with 2.4% compared to2003. The average per capita production rose by 9.1% to 1,357 tons per employeefor 2004 compared to 1,244 tons for 2003.

*Operatingprofit.**  *Operatingprofit of Sasol Synfuels amounted to R5,512 million in 2004, compared toR7,423 million in 2003, a decrease of R1,911 million or 26%. The mainreason for this decrease was a much stronger rand/US dollar exchange rateduring 2004 partly reduced by higher crude oil prices as well as higher salesvolumes. The operating profit margin also decreased from 44% in 2003 to 34% in2004 as a result of the above reasons.

Sasol Synfuels operatingprofit represents 59% of our total segmental operating profit for 2004,compared to 62% in 2003

***Sasol Liquid Fuels Business—*resultsof operations for 2005 compared to 2004**

| **Category**                     | ** ** | ** **                       | ** ** | **2005**   | ** ** | **2004**  | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|-----------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Turnover                         |       |                             |       |       |       |      |       |       |       |       |
| External                         |       | 23,525                           |       | 18,554     |       | 4,971     |       |       | 27         |       |
| Inter-segment                    |       | 187                              |       | 297        |       | (110      | )          |       | (37        | )          |
| **Aggregated  turnover**         | ** ** | **23,712**                       | ** ** | **18,851** | ** ** | **4,861** |       |       | 26         |       |
| Operating costs  and expenses(1) |       | (21,812                          | )          | (17,422    | )          | (4,390    | )          |       | (25        | )          |
| **Operating profit**             | ** ** | **1,900**                        | ** ** | **1,429**  | ** ** | **471**   |       |       | 33         |       |

----

(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *External turnover amounted toR23,525 million in 2005 (99% of the aggregated Sasol LFB’s turnover), comparedto R18,554 million in 2004 (98% of the aggregated Sasol LFB’s turnover),an increase of R4,971million or 27%. Inter-segment turnover amounted to R187 millionin 2005 (1% of the aggregated Sasol LFB’s turnover), compared toR297 million in 2004 (2% of the aggregated Sasol LFB turnover), a decreaseof R110 million or 37%. On an aggregated basis, Sasol LFB’s turnoveramounted to R23,712 million in 2005, compared to R18,851 million in2004, a net increase of R4,861 million or 26%.

The net increase in Sasol LFB’s aggregated turnover ofR4,861 million was mainly due to higher product prices of R6,970 million(primarily as a result of the higher crude oil price) and higher sales volumesof R294 million, which was partially offset by the strengthening of the randagainst the US dollar of R2,403 million.

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol LFB amounted to R21,812 million in 2005,compared to R17,422 million in 2004, an increase of R4,390 million or 25%.The increase of 25% is mainly due to increases in direct productions costs as aresult of higher prices of feedstock, such as crude oil prices, ofR6,108 million and increased costs as a result of higher production ofR248 million reduced by the strengthening of the rand against the USdollar resulting in reduction in feedstock cost of R2,024 million. Otheroperating costs increased as a result of annual fixed cost 

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escalations of R84 million,increased depreciation cost of R76 million due to commencement of thedepreciation of additional items of property, plant and equipment capitalized,an increase in the provision for doubtful debts of R16 million and othersmaller increases of R12 million, offset by lower foreign exchange translationlosses of R154 million.

The useful lives of our property, plant and equipmentwere assessed during the 2005 year. Due to the extension of the useful lives ofcertain items of property plant and equipment the depreciation charge wasreduced by R39 million for the current year. These changes in estimate areaccounted for prospectively with no adjustment made to prior years.

Duringthe current year Sasol LFB recorded the following net loss due to the impairmentsand loss on disposal of certain items of property, plant and equipment:

| ** **                                        | ** ** | **   2005   ** | ** ** | **  2004  ** | ** ** |
|---------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|
| ** **                                        | ** ** | **(Rand in millions)**             | ** ** |
| Impairment of  property, plant and equipment      |       |                                         | (3         | )                                |       |   | — |   |   |
| Impairment of intangible assets                   |       |                                         | (8         | )                                |       |   | — |   |   |
| Impairment of equity investment                   |       |                                         | (42        | )                                |       |   | — |   |   |
| Loss on disposal of property, plant and equipment |       |                                         | (10        | )                                |       |   | — |   |   |
| **Total**                                         | ** ** | ** **                                   | **(63**    | **)**                            | ** ** | ** ** | **—** | ** ** | ** ** |

 

These significantlosses included above were due to the following factors:

·       Impairmentof intangible assets—During the 2004 year Sasol acquired Exel Petroleum. Aspart of the purchase accounting, the retail and commercial contracts werevalued by means of determining the net present value of the future expectedcash flows from these contracts and this value recognized as intangible assetupon acquisition. Of these commercial contracts 14 were terminated during thecurrent year. The carrying value of these contracts amounting to R8 millionwere impaired;

·       Impairmentof equity investment—As part of the acquisition of Exel Petroleum we acquiredan investment in Black Top Holdings (Pty) Limited (“BTH”). It was anticipatedthat this investment would be sold in the near future and it was thereforevalued at fair value. During the current year, serious business problems havesurfaced at BTH with the result that the company is in a dire cash flowposition and is unable to meet its obligations. Accordingly, the investment inBTH has been impaired by R42 million to zero carrying value;

·       Animpairment charge of R3 million and R10 million loss on disposal of property,plant and equipment was also recognized during the year.

*Operatingprofit.**  *Theoperating profit of Sasol LFB amounted to R1,900 million in 2005, comparedto a profit of R1,429 million in 2004, an increase of R471 million or33%.

Sasol LFB operating profitrepresents 13% of our total segmental operating profit in 2005 and 15% in 2004.

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***Sasol Liquid Fuels Business—*resultsof operations for 2004 compared to 2003**

| **Category**                     | ** ** | ** **                       | ** ** | **2004**   | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Turnover                         |       |                             |       |       |       |       |       |       |       |       |       |
| External                         |       | 18,554                           |       | 19,460     |       |       | (906       | )          |       | (5         | )          |
| Inter-segment                    |       | 297                              |       | 191        |       |       | 106        |       |       | 55         |       |
| **Aggregated  turnover**         | ** ** | **18,851**                       | ** ** | **19,651** | ** ** | ** ** | **(800**   | **)**      |       | (4         | )          |
| Operating costs  and expenses(1) |       | (17,422                          | )          | (18,248    | )          |       | 826        |       |       | 5          |       |
| **Operating profit**             | ** ** | **1,429**                        | ** ** | **1,403**  | ** ** | ** ** | **26**     |       |       | 2          |       |

----

(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *External turnover amounted toR18,554 million in 2004 (98% of the aggregated Sasol LFB’s turnover),compared to R19,460 million in 2003 (99% of the aggregated Sasol LFB’sturnover), a decrease of R906 million or 5%. Inter-segment turnoveramounted to R297 million in 2004 (2% of the aggregated Sasol LFB’sturnover), compared to R191 million in 2003 (1% of the aggregated SasolLFB turnover), an increase of R106 million or 55%. On an aggregated basis,Sasol LFB’s turnover amounted to R18,851 million in 2004, compared toR19,651 million in 2003, a net decrease of R800 million or 4%.

The net decrease in Sasol LFB’s aggregated turnover ofR800 million was mainly due to the appreciation of the rand against the USdollar of R4,344 million, offset by higher sales volumes ofR1,747 million and higher product prices of R1,754 million.

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol LFB amounted to R17,422 million in 2004,compared to R18,248 million in 2003, a decrease of R826 million or5%. The decrease of 5% is mainly due to the strengthening of the rand againstthe US dollar resulting in a reduction in feed stock cost ofR3,980 million reduced by increased costs as a result of higher productionof R1,325 million and higher prices of feed stock, such as crude oilprices, of R1,498 million. Operating cost also increased as a result ofthe roll out of the Sasol Retail Convenience Centers and the Exel Petroleumacquisition of R108 million, the amortization of the long-term customercontracts recognized as part of the acquisition of R55 million,depreciation of capitalized finance leases of R46 million, annual fixedcost escalations of R43 million and an increase in the provision forrehabilitation cost of R30 million.

*Operatingprofit.**  *Theoperating profit of Sasol LFB amounted to R1,429 million in 2004, comparedto a profit of R1,403 million in 2003, an increase of R26 million or2%.

Sasol LFB operating profitrepresents 15% of our total segmental operating profit in 2004 and 12% in 2003.

***Sasol Gas—*resultsof operations for 2005 compared to 2004**

| **Category**                     | ** ** | ** **                       | ** ** | **2005**  | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**     | ** ** |
| Turnover                         |       |                             |       |      |       |       |       |       |       |       |       |
| External                         |       | 1,408                            |       | 1,389     |       |       | 19         |       |       | 1          |       |
| Inter-segment                    |       | 996                              |       | 133       |       |       | 863        |       |       | 649        |       |
| **Aggregated  turnover**         | ** ** | **2,404**                        | ** ** | **1,522** | ** ** | ** ** | **882**    |       |       | 58         |       |
| Operating costs  and expenses(1) |       | (1,472                           | )          | (1,135    | )          |       | (337       | )          |       | (30        | )          |
| **Operating profit**             | ** ** | **932**                          | ** ** | **387**   | ** ** | ** ** | **545**    |       |       | 141        |       |

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(1)    Operatingcosts and expenses net of other income.

139

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*Turnover.**  *External turnover amounted toR1,408 million in 2005 (59% of the aggregated Sasol Gas’ turnover),compared to R1,389 million in 2004 (91% of the aggregated Sasol Gas’turnover), an increase of R19 million or 1%. Inter-segment turnoveramounted to R996 million in 2005 (41% of the aggregated Sasol Gasturnover), compared to R133 million in 2004 (9% of the aggregated SasolGas’ turnover), an increase of R863 million or 649%. On an aggregatedbasis, Sasol Gas’ turnover amounted to R2,404 million in 2005, compared toR1,522 million in 2004, a net increase of R882 million or 58%.

The net increase in Sasol Gas’ aggregated turnover ofR882 million was mainly due to increased sales volumes as a result of theintroduction of natural gas from Mozambique to inter-segment operations. Thenatural gas was introduced in March 2004, therefore the 2005 year reflectsa full-years production compared to four months in the 2004 year.

The increase in external turnover in 2005 ofR19 million or 1% is attributable to higher sales prices being achieved asa result of higher inflation and alternate energy price variations and highervolumes to new customers partly offset by energy optimization strategiesfollowed by some of our major existing customers.

The increase in inter-segment turnover for 2005of R863 million or 649% is mainly attributable to the sale of natural gasto the Sasol plants at Infrachem (Sasolburg) and Sasol Synfuels (Secunda) forthe full year as compared to a four month period (March 2004 toJune 2004) in the 2004 year.

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Gas amounted to R1,472 million in 2005,compared to R1,135 million in 2004, an increase of R337 million or30%. This increase of 30% is mainly attributable to higher cost of gas ofR141 million and increased fixed costs of R69 million as a result ofincreased activity, additional depreciation of R222 million due fact thatcertain items of property, plant and equipment relating to the natural gasproject were depreciated for a full year in 2005 compared to four months in the2004 year, less other income of R5 million earned and customer plantconversion costs incurred by ourselves of R50 million, all associated withthe introduction of natural gas.

Additionally Sasol Gas reassessed the useful lives ofcertain items of property, plant and equipment during the 2005 year. The usefullifes of certain assets was extended due to technological innovations, productlife cycles and maintenance programs. Due to these extensions of the usefullives of certain items of property, plant and equipment the depreciation chargewas reduced by R50 million for the current year. These changes in estimate areaccounted for prospectively with no adjustment made to prior years.

*Operatingprofit.**  *Operatingprofit of Sasol Gas amounted to R932 million in 2005, compared toR387 million in 2004, an increase of R545 million or 141%. Theincrease of R545 million is mainly a result of the higher sales prices andvolumes offset by increased costs due to the increased sales activities.

Sasol Gas operating profitrepresents 6% of our total segmental operating profits for 2005, compared to 4%in 2004.

***Sasol Gas—*resultsof operations for 2004 compared to 2003**

| **Category**                     | ** ** | ** **                       | ** ** | **2004**  | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**     | ** ** |
| Turnover                         |       |                             |       |      |       |       |       |       |       |       |       |
| External                         |       | 1,389                            |       | 1,480     |       |       | (91        | )          |       | (6         | )          |
| Inter-segment                    |       | 133                              |       | 24        |       |       | 109        |       |       | 454        |       |
| **Aggregated  turnover**         | ** ** | **1,522**                        | ** ** | **1,504** | ** ** | ** ** | **18**     |       |       | 1          |       |
| Operating costs  and expenses(1) |       | (1,135                           | )          | (969      | )          |       | (166       | )          |       | (17        | )          |
| **Operating profit**             | ** ** | **387**                          | ** ** | **535**   | ** ** | ** ** | **(148**   | )          |       | (28        | )          |

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(1)    Operatingcosts and expenses net of other income.

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*Turnover.**  *External turnover amounted toR1,389 million in 2004 (91% of the aggregated Sasol Gas’ turnover),compared to R1,480 million in 2003 (98% of the aggregated Sasol Gas’turnover), a decrease of R91 million or 6%. Inter-segment turnoveramounted to R133 million in 2004 (9% of the aggregated Sasol Gasturnover), compared to R24 million in 2003 (2% of the aggregated Sasol Gas’turnover), an increase of R109 million or 454%. On an aggregated basis,Sasol Gas’ turnover amounted to R1,522 million in 2004, compared toR1,504 million in 2003, a net increase of R18 million or 1%.

The net increase in Sasol Gas aggregated turnover ofR18 million was mainly due to increased sales volumes as a result of theintroduction of natural gas from Mozambique for the period March 2004 to June 2004.

The decrease in external turnover in 2004 ofR91 million or 6% is mainly attributable to lower sales prices beingachieved as result of the low inflation and strong rand / US dollar exchangerate, which was exacerbated by energy optimization strategies followed by someof our major customers resulting in decreased volumes.

The increase in inter-segment turnover for 2004of R109 million or 454% is mainly attributable to the sale of natural gasfor the period March 2004 to June 2004.

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Gas amounted to R1,135 million in 2004,compared to R969 million in 2003, an increase of R166 million or 17%.This increase of 17% is mainly attributable to savings on the cost of gas ofR76 million offset by increases in fixed costs of R23 million as aresult of increased activity, reduced other income of R84 million as aresult of the once off profit of R84 million in the prior year andincreases in sundry other costs of R8 million, higher depreciation ofR47 million and the customer plant conversion costs incurred by ourselvesof R80 million, all associated with the introduction of natural gas.

*Operatingprofit.**  *Operatingprofit of Sasol Gas amounted to R387 million in 2004, compared toR535 million in 2003, a decrease of R148 million or 28%. The decreaseof R148 million is mainly a result of once off transactions of a profit onsale of business rights in 2003 of R84 million and the costs of convertingcustomers to use natural gas absorbed by Sasol Gas of R80 million in 2004offset by other small amounts attributable to increased sales volumes.

Sasol Gas operating profitrepresents 4% of our total segmental operating profits for 2004 and 2003.

***Sasol SynfuelsInternational—*results of operations for 2005 compared to 2004**

| **Category**                     | ** ** | ** **                       | ** ** | **2005** | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**    | ** ** |
| Turnover                         |       |                             |       |     |       |       |       |       |       |       |       |
| External                         |       | —                           |       | 7        |       |       | (7         | )          |       | (100       | )          |
| Inter-segment                    |       | —                           |       | —   |       |       | —     |       |       | —     |       |
| **Aggregated  turnover**         | ** ** | **—**                       | ** ** | **7**    | ** ** | ** ** | **(7**     | )          |       | (100       | )          |
| Operating costs  and expenses(1) |       | (199                             | )          | (145     | )          |       | (54        | )          |       | (37        | )          |
| **Operating loss**               | ** ** | **(199**                         | **)**      | **(138** | **)**      | ** ** | **(61**    | )          |       | (44        | )          |

----

(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *External turnover amounted toRnil million in 2005 compared to R7 million in 2004 (100% ofaggregated Sasol Synfuels International’s turnover). Turnover in 2004 wasderived from external portion of recoveries from joint ventures.

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Synfuels International amounted toR199 million in 2005, compared to R145 million in 2004, an increaseof R54 million or 37%. This 

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businesshosts the growth projects of the group relating to GTL and CTL ventures. Itscosts are associated with advancing the Qatar and Nigeria GTL projects andevaluating others in accordance with our strategic objective to build theseglobal businesses. This increase of 37% is a direct consequence of these increased activities.

Sasol Synfuels International sold business rights toChevron Synfuels Limited, a subsidiary of Chevron to enable the joint ventureto participate in the 2nd phase of the Qatar GTL project. A profitof R33 million was realized on this sale.

*Operating loss.**  *Operating loss of Sasol SynfuelsInternational amounted to R199 million in 2005, compared to a loss ofR138 million in 2004, an increase of R61 million or 44%. The increasein loss is attributable to the higher operating cost and expenses as discussedabove.

***Sasol SynfuelsInternational—*results of operations for 2004 compared to 2003**

| **Category**                     | ** ** | ** **                       | ** ** | **2004** | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**    | ** ** |
| Turnover                         |       |                             |       |     |       |       |       |       |       |       |       |
| External                         |       | 7                                |       | 7        |       |       | —     |       |       | —     |       |
| Inter-segment                    |       | —                           |       | —   |       |       | —     |       |       | —     |       |
| **Aggregated  turnover**         | ** ** | **7**                            | ** ** | **7**    | ** ** | ** ** | **—** |       |       | —     |       |
| Operating costs  and expenses(1) |       | (145                             | )          | (187     | )          |       | 42         |       |       | (22        | )          |
| **Operating loss**               | ** ** | **(138**                         | **)**      | **(180** | **)**      | ** ** | **42**     |       |       | (23        | )          |

----

(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *External turnover amounted toR7 million in 2004 (100% of the aggregated Sasol Synfuels International’sturnover), compared to R7 million in 2003 (100% of the aggregated SasolSynfuels International turnover). Turnover is derived from the external portionof recoveries from joint ventures.

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Synfuels International amounted toR145 million in 2004, compared to R187 million in 2003, a decrease ofR42 million or 22%. This decrease of 22% is mainly attributable to gainsfrom the effect of the strengthening of the rand against the US dollar of R34 million,saving on once off legal cost in 2003 of R20 million, offset by highercost on feasibility studies of R12 million.

*Operating loss.**  *Operating loss of Sasol SynfuelsInternational amounted to R138 million in 2004, compared to a loss ofR180 million in 2003, a decrease of R42 million or 23%. The decreasein loss is attributable to the decrease in operating cost and expenses asdiscussed above.

***Sasol Olefins andSurfactants—*results of operations for 2005 compared to 2004**

| **Category**                     | ** ** | ** **                       | ** ** | **2005**   | ** ** | **2004**  | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|-----------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Turnover                         |       |                             |       |       |       |      |       |       |       |       |
| External                         |       | 18,040                           |       | 17,133     |       | 907       |       |       | 5          |       |
| Inter-segment                    |       | 354                              |       | 249        |       | 105       |       |       | 42         |       |
| **Aggregated  turnover**         | ** ** | **18,394**                       | ** ** | **17,382** | ** ** | **1,012** |       |       | 6          |       |
| Operating costs  and expenses(1) |       | (18,615                          | )          | (17,449    | )          | (1,166    | )          |       | (7         | )          |
| **Operating profit/(loss)**      | ** ** | **(221**                         | **)**      | **(67**    | **)**      | **(154**  | **)**      |       | (230       | )          |

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(1)    Operatingcosts and expenses net of other income.

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*Turnover.**  *External turnover amounted toR18,040 million in 2005 (98% of the aggregated Sasol Olefins and Surfactants’turnover), compared to R17,133 million in 2004 (99% of the aggregated Sasol Olefins andSurfactants’ turnover), a net increase of R907 million or 5%. Inter-segmentturnover was R354 million in 2005 (2% of the aggregated Sasol Olefins andSurfactants’ turnover) compared to R249 million in 2004 (1% of theaggregated SasolOlefins and Surfactants’ turnover), an increase of R105 million or42%. On an aggregated basis, Sasol Olefins and Surfactants’ turnover amountedto R18,394 million in 2005 compared to R17,382 million in 2004, a netincrease of R1,012 million or 6%.

The net increase in Sasol Olefins and Surfactants’aggregated turnover of R1,012 million was mainly due to higher productprices of R3,028 million. This increase was partially offset by sales volumedecrease of R794 million and the appreciation of the rand against the euro andthe US dollar of R1,222 million.

Sasol Olefins and Surfactants aggregated turnover ofR18,394 million in 2005 (2004—R17,382) represents 19% (2004—21%) of ourtotal segmental aggregated turnover of R96,342 million (2004—R83,849 million).

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Olefins and Surfactants amounted to R18,615 millionin 2005, compared to R17,449 million in 2004, an increase ofR1,166 million or 7%. This increase is mainly due to higher chemicalfeedstock and crude oil related costs of R2,134 million, offset by theappreciation of the rand against the euro and the US dollar which resulted in apositive effect of R1,229 million. The useful lives of certain items ofproperty, plant and equipment were assessed during the 2005 year. Due to theextension of the useful lives of certain items of property plant and equipmentthe depreciation charge was reduced by R517 million for the current year. Thesechanges in estimate are accounted for prospectively with no adjustment made toprior years. Additionally the costs were reduced through our restructuringinitiatives in North America and Italy and a reduction of certain of ourenvironmental obligations of approximately R127 million.

Duringthe current year Sasol Olefins and Surfactants recorded the following net lossdue impairments, scrapping and capital loss on disposal of certain items ofproperty, plant and equipment, as well as the loss on disposal of business:

| ** **                                        | ** ** | **  2005  ** | ** ** | **  2004  ** | ** ** |
|---------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                                        | ** ** | **(Rand in millions)** | ** ** |
| Impairment of  property, plant and equipment      |       |                             | (453       | )                                |       |   | (52 | ) |   |
| Impairment of goodwill                            |       |                             | (209       | )                                |       |   | — |   |   |
| Scrapping of property, plant and equipment        |       |                             | (87        | )                                |       |   | — |   |   |
| Loss on disposal of property, plant and equipment |       |                             | (23        | )                                |       |   | — |   |   |
| (Loss) / profit on disposal of business           |       |                             | (11        | )                                |       |   | 52 |   |   |
| **Total**                                         | ** ** | ** **                       | **(783**   | **)**                            | ** ** | ** ** | **—** | ** ** | ** ** |

 

The significantlosses in 2005 included above were due to the following factors:

·                    Impairmentof property, plant and equipment and goodwill—includes:

1.                 Impairment of theAlkylates plant (North America)—The Alkylates cash generating unit comprisesthe assets of the Baltimore and Lake Charles alkylate plants and the LakeCharles paraffin and solvents plants. An impairment was recognized of R288million which is allocated first to goodwill (R79 million) and then to theunderlying property, plant and equipment (R209 million). This cash generatingunit has not been impaired under US GAAP as carrying value did not exceed theundiscounted future cash flows;

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2.                 Impairment ofOctene train 3 (South Africa)—The current economic evaluation of the projectindicates that it will be substantially more expensive than the originalapproved amount. As a result the entire amount of capital expenditure to date(including interest capitalized of R8 million) of R141 million was impaired.The Octene train 3 has not been impaired under US GAAP as carrying value didnot exceed the undiscounted future cash flows. On 9 September 2005 theSasol Limited board of directors approved the continuation of the project at asubstantially higher capital cost subject to successful renegotiations of theproduct selling price to recover the cost of the capital to be invested;

3.                 Impairment ofInorganic Specialties plant (Crotone, Italy)—Due to prolonged losses beingincurred by the inorganic business unit in Sasol Italy the long-lived assetswere assessed for impairment. Whilst the business managers are confident of aturnaround in this business over the longer term, the net present value ofestimated future cash flows is less than the carrying value of the asset andaccordingly an impairment of R103 million was recognized under IFRS and US GAAP;

4.                 Goodwill of R130million in Sasol Italy was impaired as a result of the losses incurred in thisbusiness.

·                    Scrappingof property, plant and equipment—During the year, various projects recognizedas capital work in progress were evaluated and identified by Sasol Technologyto be scrapped. The project costs at Sasol Olefins and Surfactants, SouthAfrican operations, amounted to R71 million in the current year. In Sasol NorthAmerica certain assets were disposed of at a profit of R23 million and othermiscellaneous assets with a carrying value of R16 million were scrapped.

·                    Losson disposal of assets—A loss on disposal of various items of property, plantand equipment of R23 million was incurred.

·                    Losson disposal of business—The final purchase price for the disposal of SasolServo to Elementis in the previous year was finalized. A reduction in thesettlement proceeds and the profit on disposal realized in the previous year ofR11million was recognized during the current year.

On the adoption IFRS 3—Business Combinations we havederecognized the carrying value of the negative goodwill of R610 million at thebeginning of the 2005 financial year, with a corresponding adjustment to ouropening retained earnings. As a result our net operating costs as internallyreported in 2005 are higher due to the fact that we have not amortized thegoodwill during the current year and therefore excluded the amortization ofR162 million, which was included in the 2004 year. 

*Operating loss.**  *Operating loss of Sasol Olefins andSurfactants amounted to R221 million in 2005, compared to a loss ofR67 million in 2004, a increase of R154 million.

***Sasol Olefins andSurfactants—*results of operations for 2004 compared to2003**

| **Category**                     | ** ** | ** **                       | ** ** | **2004**   | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Turnover                         |       |                             |       |       |       |       |       |       |       |
| External                         |       | 17,133                           |       | 19,543     |       | (2,410     | )          | (12        | )          |
| Inter-segment                    |       | 249                              |       | 290        |       | (41        | )          | (14        | )          |
| **Aggregated  turnover**         | ** ** | **17,382**                       | ** ** | **19,833** | ** ** | **(2,451** | **)**      | (12        | )          |
| Operating costs  and expenses(1) |       | (17,449                          | )          | (19,838    | )          | 2,389      |       | 12         |       |
| **Operating (loss)/profit**      | ** ** | **(67**                          | **)**      | **(5**     | **)**      | **(62**    | **)**      | (1,240     | )          |

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(1)    Operatingcosts and expenses net of other income.

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*Turnover.**  *External turnover amounted toR17,133 million in 2004 (99% of the aggregated Sasol Olefins and Surfactants’turnover), compared to R19,543 million in 2003 (99% of the aggregated Sasol Olefins andSurfactants’ turnover), a decrease of R2,410 million or 12%. Inter-segmentturnover was R249 million in 2004 (1% of the aggregated Sasol Olefins andSurfactants’ turnover) compared to R290 million in 2003 (1% of theaggregated SasolOlefins and Surfactants’ turnover), a decrease of R41 million or14%. On an aggregated basis, Sasol Olefins and Surfactants’ turnover amountedto R17,382 million in 2004 compared to R19,833 million in 2003, a netdecrease of R2,451 or 12%.

The decrease in Sasol Olefins and Surfactantsaggregated turnover of R2,451 million was mainly due to the appreciationof the rand against the euro and the US dollar, resulting in a negative effectof R3,663 million. This decrease was partially offset by sales volumeincreases of R1,424 million, which was partially offset by R212 milliondue to slightly lower product prices.

Sasol Olefins and Surfactants aggregated turnover ofR17,382 million in 2004 (2003—R19,833) represents 21% (2003—22%) of ourtotal segmental aggregated turnover of R83,849 million (2003—R88,473 million).

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Olefins and Surfactants amounted toR17,449 million in 2004, compared to R19,838 million in 2003, adecrease of R2,389 million or 12%. This decrease is mainly attributable tothe appreciation of the rand against the euro and the US dollar resulting in apositive effect of R3,524 million. Our net operating cost position wasfurther improved by the profit on sale of Sasol Servo. Negative cost variancestotaled R1,141 million and were due to the effect of increased costs dueto higher sales volumes of R752 million, higher chemical feedstock andcrude oil related costs of R291 million, impairment of assets ofR52 million, business restructuring cost of R46 million, andincreased employee benefit costs.

*Operating loss.**  *Operating loss of Sasol Olefins andSurfactants amounted to R67 million in 2004, compared to a loss ofR5 million in 2003, an increase of R62 million.

***Sasol Polymers—*resultsof operations for 2005 compared to 2004**

| **Category**                     | ** ** | ** **                       | ** ** | **2005**  | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**     | ** ** |
| Turnover                         |       |                             |       |      |       |       |       |       |       |       |       |
| External                         |       | 7,199                            |       | 6,576     |       |       | 623        |       |       | 9          |       |
| Inter-segment                    |       | 83                               |       | 86        |       |       | (3         | )          |       | (3         | )          |
| **Aggregated  turnover**         | ** ** | **7,282**                        | ** ** | **6,662** | ** ** | ** ** | **620**    |       |       | 9          |       |
| Operating costs  and expenses(1) |       | (5,798                           | )          | (5,632    | )          |       | (166       | )          |       | (3         | )          |
| **Operating profit**             | ** ** | **1,484**                        | ** ** | **1,030** | ** ** | ** ** | **454**    |       |       | 44         |       |

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(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *External turnover amounted toR7,199 million in 2005 (99% of the aggregated Sasol Polymers’ turnover),compared to R6,576 million in 2004 (99% of the aggregated Sasol Polymers’turnover), an increase of R623 million or 9%. Inter-segment turnoveramounted to R83 million in 2005 (1% of the aggregated Sasol Polymers’turnover), compared to R86 million in 2004 (1% of the aggregated SasolPolymers turnover), a decrease of R3 million or 4%. On an aggregatedbasis, Sasol Polymers’ turnover amounted to R7,282 million in 2005,compared to R6,662 million in 2004, an increase of R620 million or9%.

The increase in Sasol Polymers’ aggregated turnover ofR620 million, was mainly due to US dollar product price increases ofR1,764 million  partially offset bythe appreciation of the rand against the US dollar resulting in a negativefinancial impact of R567 and decreased sales volumes of R577 million. Our 

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sales volumes decreased by9% as production was interrupted for a 90 day period due to explosion at theethylene plant at the Secunda site in September 2004.

Sasol Polymers aggregated turnover ofR7,282 million in 2005 (2004-R6,662 million) represents 8% (2004—8%) ofour total segmental aggregated turnover of R96,342 million (2004—R83,849 million).

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Polymers amounted to R5,798 million in 2005,compared to R5,632 million in 2004, an increase of R166 million or 3%.This increase is due to higher input cost as a result of higher oil prices ofR995 million and higher cost due to inflation of R38 million. Thisincrease was partially offset by the appreciation of the rand against the USDollar resulting in a positive effect of R257 million and lower inputcosts of R207 million resulting from the decreased volumes. R236 million,net of excess payments, was received as insurance payments to cover thecontribution losses sustained in an explosion. An increase of R3 million due tovarious other differences was offset by management initiated cost reductionexercises of R42 million compared to the previous year. 

Additionally Sasol Polymers reassessed the usefullives of certain items of property, plant and equipment during the 2005 year.The useful life of certain assets was extended due to technological innovations,product life cycles and maintenance programs. Due to these extensions of theuseful lives of certain items of property plant and equipment the depreciationcharge was reduced by R170 million for the current year. These changes inestimate are accounted for prospectively with no adjustment made to prioryears.

*Operatingprofit.**  *SasolPolymers  operating profit  amounted to R1,484 million in 2005,compared to R1,030 million in 2004, an increase of R454 million or 44%.The operating margin for 2005 was 20% compared to 15% for 2004.

Sasol Polymers’ operatingprofit represents 10% of our total segmental operating profit for 2005,compared to 11% in 2004.

***Sasol Polymers—*resultsof operations for 2004 compared to 2003**

| **Category**                     | ** ** | ** **                       | ** ** | **2004**  | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**     | ** ** |
| Turnover                         |       |                             |       |      |       |       |       |       |       |       |       |
| External                         |       | 6,576                            |       | 6,245     |       |       | 331        |       | * *   | 5          |       |
| Inter-segment                    |       | 86                               |       | 116       |       |       | (30        | )          |       | (26        | )          |
| **Aggregated  turnover**         | ** ** | **6,662**                        | ** ** | **6,361** | ** ** | ** ** | **301**    |       |       | 5          |       |
| Operating costs  and expenses(1) |       | (5,632                           | )          | (5,477    | )          |       | (155       | )          |       | (3         | )          |
| **Operating profit**             | ** ** | **1,030**                        | ** ** | **884**   | ** ** | ** ** | **146**    |       |       | 17         |       |

----

(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *External turnover amounted toR6,576 million in 2004 (99% of the aggregated Sasol Polymers’ turnover),compared to R6,245 million in 2003 (98% of the aggregated Sasol Polymers’turnover), an increase of R331 million or 5%. Inter-segment turnoveramounted to R86 million in 2004 (1% of aggregated Sasol Polymersturnover), compared to R116 million in 2003 (2% of the aggregated SasolPolymers’ turnover), a decrease of R30 million or 26%, attributable todecreased propylene sales volumes. On an aggregated basis, Sasol Polymers’turnover amounted to R6,662 million in 2004, compared toR6,361 million in 2003, an increase of R301 million or 5%.

The increase in Sasol Polymers’ aggregated turnover ofR301 million, was mainly due to product US dollar price increases ofR1,126 million and increased sales volumes of R878 million partiallyoffset by the appreciation of the rand against the US dollar resulting in anegative effect of R1,703 million. Sales 

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volumes from localoperations increased by 10% and in addition the polyethylene plant in Malaysiawhich operated for a full twelve month period increased sales volumes by 141%compared to 2003.

Sasol Polymers aggregated turnover of R6,662 millionin 2004 (2003-R6,361) represents 8% (2003—7%) of our total segmental aggregatedturnover of R83,849 million (2003—R88,473 million).

*Operatingcosts and expenses.**  *Operatingcosts and expenses of Sasol Polymers amounted to R5,632 million in 2004, comparedto R5,477 million in 2003, an increase of R155 million or 3%. Thisincrease is due to higher costs associated with the polyethylene plant inMalaysia of R254 million which has been operating for a full twelve monthperiod in 2004, higher input cost as a result of higher oil prices ofR300 million, higher cost due to inflation of R75 million and higherinput cost of R155 million resulting from increased volumes. Theappreciation of the rand against the US dollar resulted in a positive effect ofR537 million to partially offset these increases. In addition managementinitiated a cost reduction exercise which reduced cost by R92 millioncompared to the previous year.

*Operatingprofit.**  *Operatingprofit of Sasol Polymers amounted to R1,030 million in 2004, compared toR884 million in 2003, an increase of R146 million or 17%. Theoperating margin for 2004 is 15% compared to 14% for 2003.

Sasol Polymers’ operatingprofit represents 11% of our total segmental operating profit for 2004,compared to 7% in 2003

***Sasol Solvents—*resultsof operations for 2005 compared to 2004**

| **Category**                     | ** ** | ** **                       | ** ** | **2005**  | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**     | ** ** |
| Turnover                         |       |                             |       |      |       |       |       |       |       |       |       |
| External                         |       | 8,063                            |       | 5,956     |       |       | 2,107      |       |       | 35         |       |
| Inter-segment                    |       | 341                              |       | 499       |       |       | (158       | )          |       | (32        | )          |
| **Aggregated  turnover**         | ** ** | **8,404**                        | ** ** | **6,455** | ** ** | ** ** | **1,949**  |       |       | 30         |       |
| Operating costs  and expenses(1) |       | (7,161                           | )          | (6,338    | )          |       | (823       | )          |       | (13        | )          |
| **Operating profit**             | ** ** | **1,243**                        | ** ** | **117**   | ** ** | ** ** | **1,126**  |       |       | 962        |       |

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(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *Sasol Solvents external turnoveramounted to R8,063 million in 2005 (96% of the aggregated Sasol Solvents’turnover), compared to R5,956 million in 2004 (92% of the aggregated SasolSolvents’ turnover), an increase of R2,107 million. Inter-segmentturnover amounted to R341 million in 2005 (4% of the aggregated SasolSolvents’ turnover), compared to R499 million in 2004 (8% of theaggregated Sasol Solvents’ turnover), a decrease of R158 million or 32%.On an aggregated basis, Sasol Solvents’ turnover amounted toR8,404 million in 2005, compared to R6,455 million in 2004, anincrease of R1,949 million or 30%.

The increase in external turnover in 2005 ofR2,107 million was mainly attributable to an increase in prices ofR2,026 million which was offset by the appreciation of the rand againstthe US dollar resulting in a negative effect of R538 million and by anincrease in sales volumes of R619 million. The increased prices andvolumes are due to customer demand currently outstripping supply, and it isbelieved that these price levels have reached unsustainable levels.

The decrease in inter-segment turnover for 2005of R158 million or 32% was mainly attributable to a decrease in salesvolumes of R187 million and the appreciation of the rand against the USdollar resulting in a negative effect of R18 million, partly offset byprice increases of R11 million.

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Sasol Solvents aggregated turnover ofR8,404 million in 2005 (2004—R6,455 million) represents 9% (2004—8%) ofour total segmental aggregated turnover of R96,342 million (2004—R83,849 million).

*Operating costs andexpenses.**  *Operatingcosts and expenses of Sasol Solvents amounted to R7,161 million in 2005,compared to R6,338 million in 2004, an increase of R823 million or13%. This net increase is mainly attributable to variable costs increases ofR771 million as a result the following:

·       higherprices of R734 million;

·       increasein the cost of feedstock due to higher crude oil prices of R565 million;

·       partlyreduced through the appreciation of the rand against the US dollar ofR492 million; and

·       lowerproduction volumes of R36 million. 

In addition fixed costs increased by R7 million,due to the inflationary increases of R19 million as well as various otherincreases amounting to R18 million, which were offset by the appreciationof the rand against the US dollar of R30 million. Additionally profits incurredon translation of foreign exchange transactions was R367 million higherthan the previous year.

Other income amounted to R38 million compared to R49million in 2004, a reduction of R11 million or 22%. Other income consistsmainly of rebates and management fees received.

Depreciation on the Acrylates plant for a full yearafter commissioning was higher by R90 million while depreciation on otherproperty, plant & equipment was lower by R61 million due to theextension of the useful life of certain items. The useful life of certainassets was extended due to technological innovations, product life cycles andmaintenance programs. These changes in estimate are accounted for prospectivelywith no adjustment made to prior years. Included in net operating costs andexpenses in 2004 was the profits realized on the disposal of the Acrylatesplant of R50 million and various other items of property, plant and equipmentof R2 million. 

Duringthe current year Sasol Solvents recorded the following net loss due to the impairmentsand scrapping of certain items of property, plant and equipment:

| ** **                                   | ** ** | **  2005  ** | ** ** | **  2004  ** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                                   | ** ** | **(Rand in millions)** | ** ** |
| Impairment of  property, plant and equipment |       |                             | (297       | )                                |       |   | (42 | ) |   |
| Impairment of intangible assets              |       |                             | (5         | )                                |       |   | — |   |   |
| Scrapping of property, plant and equipment   |       |                             | (80        | )                                |       |   | — |   |   |
| **Total**                                    | ** ** | ** **                       | **(382**   | **)**                            | ** ** | ** ** | **(42** | **)** | ** ** |

 

These losses in2005 were due to the following factors:

·       Impairmentof property, plant and equipment and intangible assets—includes:

1.                 Impairment ofketones and alcohols plants (Germany)—Both the ketones and ethanol plants wereevaluated for impairment during the year. The impairment assessment resulted inan impairment on the ketones plant of R13 million and on the ethanol plantof R71 million including an impairment of R5 million of intangible assets;

2.                 Impairmentof n-butanol plant (South Africa)—The lower than budgeted economic performanceand final cost of the n-butanol plant both lead Solvents to perform anassessment of impairment on the n-butanol plant. The results of the impairmentassessment yielded an impairment of R218 million which is primarily attributedto the interest capitalized on the construction of the n-butanol plant. As thisplant is included in an equity 

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accounted investee,the impairment charge is included in the earnings of equity accounted investeesunder US GAAP.

·       Scrappingof property, plant and equipment (South Africa)—During the current year, as aresult of decisions taken by the Solvents board, the following items ofproperty, plant and equipment assets were scrapped:

| 1. | Croton aldehyde plant                     | - | R16 million;      |
|----|-------------------------------------------|---|-------------------|
| 2. | Propylene oxide  and glycol ethers plants | - | R47 million; and  |
| 3. | Acetic acid plant                         | - | R  2 million |

 

Furthermore, certain studycosts were evaluated by Sasol Technology during the course of the year andthese costs (R12 million) written off. Other smaller items scrapped amounted toR3 million.

*Operatingprofit*   Operating profit of Sasol Solventsamounted to R1,243 million in 2005, compared to R117 million in 2004,an increase of R1,126 million. The operating margin for 2005 was 15%compared to 2% for 2004. The increase was primarily as a result of the higherturnover, the effect of the appreciation of the rand and movements in fixed andvariable cost partly offset by higher depreciation (Acrylates plant) andfeedstock cost.

Sasol Solvents’ operatingprofit represents 9% of our group operating profit for 2005, compared to 1% in2004.

***Sasol Solvents—*resultsof operations for 2004 compared to 2003**

| **Category**                     | ** ** | ** **                       | ** ** | **2004**  | ** ** | **2003**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**     | ** ** |
| Turnover                         |       |                             |       |      |       |       |       | ** ** |       |       |       |   |   |
| External                         |       | 5,956                            |       | 5,950     |       |       | 6          | ** ** |       |       | —     |   |   |
| Inter-segment                    |       | 499                              |       | 622       |       |       | (123       | **)**      |       |       | (20        | ) |   |
| **Aggregated  turnover**         | ** ** | **6,455**                        | ** ** | **6,572** | ** ** | ** ** | **(117**   | **)**      |       |       | (2         | ) |   |
| Operating costs  and expenses(1) |       | (6,338                           | )          | (6,136    | )          |       | (202       | **)**      |       |       | (3         | ) |   |
| **Operating profit**             | ** ** | **117**                          | ** ** | **436**   | ** ** | ** ** | **(319**   | **)**      |       |       | (73        | ) |   |

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(1)    Operatingcosts and expenses net of other income.

*Turnover.**  *Sasol Solvents external turnoveramounted to R5,956 million in 2004 (92% of the aggregated Sasol Solvents’turnover), compared to R5,950 million in 2003 (91% of the aggregated SasolSolvents’ turnover), an increase of R6 million. Inter-segmentturnover amounted to R499 million in 2004 (8% of aggregated Sasol Solvents’turnover), compared to R622 million in 2003 (9% of the aggregated SasolSolvents turnover), a decrease of R123 million or 20%. On an aggregatedbasis, Sasol Solvents’ turnover amounted to R6,455 million in 2004,compared to R6,572 million in 2003, a decrease of R117 million or 2%.

The slight increase in external turnover in 2004 ofR6 million was mainly attributable to increases in sales volumes ofR1,598 million, partly offset by a decrease in prices of R363 millionand the appreciation of the rand against the US dollar resulting in a negativeeffect of R1,229 million.

The decrease in inter-segment turnover for 2004of R123 million or 20% was mainly attributable to a decrease in salesvolumes of R119 million and the appreciation of the rand against the USdollar resulting in a negative effect of R86 million, partly offset byprice increases of R90 million.

Sasol Solvents aggregated turnover ofR6,455 million in 2004 (2003 : R6,572 million) represents 8% (2003—7%) ofour total segmental aggregated turnover of R83,849 million (2003—R88,473 million).

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*Operating costs andexpenses.**  *Operatingcosts and expenses of Sasol Solvents amounted to R6,338 million in 2004,compared to R6,136 million in 2003, an increase of R202 million or3%. This net increase is mainly attributable to an increase in variable costsof R367 million due to:

·       higherprices of R137 million;

·       highervolumes of R777 million; 

·       increasesin the cost of feedstock due to higher crude oil prices of R212 million;and

·       offsetby the appreciation of the rand against the US dollar of R741 million.

The increased variable costs were offset by savings infixed costs of R147 million due to the appreciation of the rand againstthe US dollar resulting in a positive financial effect of R121 million, aswell as various other savings amounting to R26 million. 

Depreciation on the n-Butanol plant for a full yearafter commissioning was higher by R55 million while losses incurred ontranslation of foreign exchange transactions was R49 million lower thanthe previous year. Other income was R24 million higher.

*Operatingprofit*   Operating profit of Sasol Solventsamounted to R117 million in 2004, compared to R436 million in 2003, adecrease of R319 million or 73%. The operating margin for 2004 was 2%compared to 7% for 2003. The reduction was primarily as a result of the lowerturnover, higher depreciation (n-Butanol plant) and feedstock cost, partlynegated by movements in fixed and variable cost.

Sasol Solvents’ operatingprofit represents 1% of our group operating profit for 2004, compared to 4% in2003.

***Other Businesses—*resultsof operations for2005 compared to 2004**

| **Category**                     | ** ** | ** **                       | ** ** | **2005**   | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Turnover                         |       |                             |       |       |       |       |       |       |       |       |       |   |   |
| External                         |       | 8,713                            |       | 8,124      |       |       | 589        |       |       |       | 7          |   |   |
| Inter-segment                    |       | 3,534                            |       | 3,609      |       |       | (75        | )          |       |       | (2         | ) |   |
| **Aggregated  turnover**         | ** ** | **12,247**                       | ** ** | **11,733** | ** ** | ** ** | **514**    |       |       |       | 4          |   |   |
| Operating costs  and expenses(1) |       | (11,687                          | )          | (11,883    | )          |       | 196        |       |       |       | 2          |   |   |
| **Operating profit/(loss)**      | ** ** | **560**                          | ** ** | **(150**   | **)**      | ** ** | **710**    |       |       |       |       |   |   |

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(1)    Operatingcosts and expenses net of other income.

Other businesses consist of Sasol Financing, SasolTechnology, Sasol Petroleum International, Sasol Wax, Sasol Nitro and variousother businesses including Merisol, Sasol Infrachem and other smaller chemicalbusinesses. In 2005 the operating profit for these businesses amounted toR560 million, compared to an operating loss of R150 million in 2004. 

Sasol Financing provides financing and treasuryservices to our group and also acts as our in-house bank. Its operating profitamounted to R 85 million in 2005, compared to operating losses of R153 million in 2004. Changes in Sasol Financing’s operating profit aremainly attributable to movements in the rand against the US dollar.

Sasol Petroleum International develops and manages ourgroup’s international interests in oil and gas exploration and production. Aggregatedturnover of SPI increased to R841 million in 2005 from R312 million in 2004,mainly as a result of increased oil production and higher oil prices from theEtame oil field in Gabon, and a full year of production from the Temane gasfield in Mozambique. Operating profit amounted to R281 million in 2005 comparedto an operating loss of R118 million in 2004 largely as a result 

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of increase in turnover. Totalexploration costs expensed against operating profit amounted to R120 millionfor 2005 compared to R223 million for 2004 mainly as a result of a temporarydecline in exploration activity in Mozambique.

Sasol Wax produces and markets wax and wax relatedproducts to commodity and specialty wax markets globally. It manufactures crudeoil derived paraffin waxes as well as synthetic waxes produced on the basis ofour Fischer-Tropsch technology. The Global wax market remains keenlycontested, with supply of many commodity paraffin-wax grades exceeding demand.Turnover increased 5% in euro. The rand equivalent increase was 1% up fromR4,042 million to R4,075 million. Higher oil-based feedstock prices keptoperating margins under pressure. Sales volumes of wax and associatedparaffinic products increased by 5% from 779.9Kt to 821.6Kt primarily as aresult of securing new business. Sasol Wax’s contribution to group profitdecreased by 17% from R254 million to R211 million. 

Sasol Nitro manufactures and markets ammonia and itsderivatives for use in the fertilizer and explosives markets. Aggregatedturnover of Sasol Nitro increased to R3,485 million in 2005 fromR3,226 million in 2004, a increase of R259 million or 8%. Thisincrease is mainly because of stronger selling prices, as well as higherexplosives and accessories volumes, which was partially offset by the strongerrand, lower phosphoric acid sales and the disposal of our investment in SasolSouthwest Energy joint venture in the United States. Following an impairmentcharge recognized in the previous year, the final disposal of the investmentrealized a profit for the group of R28 million. Operating costs were containedthrough cost savings initiatives and greater efficiency, as well as benefitsarising from the repositioning of the electronic detonator business and theincreased sales volumes from the Sasol Dyno Nobel joint venture. Sasol Nitro’scontribution to group profit was R454 million compared to the loss of R152million in 2004.

The conversion of Sasol Infrachem from coalgasification to natural gas reforming at Sasolburg towards the end of the 2004year went smoothly when the two new autothermal reformers were brought intocommercial production. The reformers production during the 2005 year alternatedbetween prolonged periods of stable operations in line with planned productionand intermittent downtime to resolve post-commissioning technical shortcomingsthat limited full reformer capability. As a result of these interruptions,turnover dropped by almost 12% from R2,329 million to R2,055 million. Gasproduction fell from 53.4 million coal-based gigajoules (“Gj”) to 25.9 millionnatural gas-based Gj and 12.5 million coal-based Gj, a total of 38.4 millionGj. Sasol Infrachem incurred a loss R361million, this loss was primarily due tothe consequence of the once-off costs incurred during the commissioning of thenatural gas-fed autothermal reformers that have replaced the coal-firedgasifiers in Sasolburg which could not be passed on to customers.

Merisol,our cresylic acid joint venture with Merichem, performed well and increasedturnover by 6.5% from R993 million to R1,057 million. The increase is largelydue to the strength of higher prices and sustained good sales across theproduct portfolio. Higher oil prices drove up costs for Merisol productsmanufactured in South Africa, Japan and the USA. Merisol was able to absorb costincreases through price increases. Feedstock constraints, however, reducedsales volumes to 103.3Kt.

During the year Sasolundertook a reassessment of the useful lives of certain items of property,plant and equipment. The useful life of certain assets was extended due totechnological innovations, product life cycles and maintenance programs. Due tothese extensions of the useful lives of certain items of property, plant andequipment owned by Sasol Nitro, Sasol Wax, Sasol Technology and Sasol Financing,the depreciation charge was reduced by R25 million. These changes in estimateare accounted for prospectively with no adjustment made to prior years.

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***Other Businesses—*resultsof operations for 2004 compared to 2003**

| **Category**                     | ** ** | ** **                       | ** ** | **2004**   | ** ** | **2003** | ** ** | **Change** | ** ** | **Change** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------|------------|----------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** | **%**      | ** ** |
| Turnover                         |       |                             |       |       |       |     |       |       |       |       |       |
| External                         |       | 8,124                            |       | 9,647      |       | (1,523   | )          |       | (16        | )          |       |
| Inter-segment                    |       | 3,609                            |       | 2,906      |       | 703      |       |       | 24         |       |       |
| **Aggregated  turnover**         | ** ** | **11,733**                       | ** ** | **12,553** | ** ** | **(820** | **)**      |       | (7         | )          |       |
| Operating costs  and expenses(1) |       | (11,883                          | )          | (12,411    | )          | 528      |       |       | 4          |       |       |
| **Operating (loss)/profit**      | ** ** | **(150**                         | **)**      | **142**    | ** ** | **(292** | **)**      |       |       |       |       |

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(1)    Operatingcosts and expenses net of other income.

Other businesses consist of Sasol Financing, SasolTechnology, Sasol Petroleum International, Sasol Wax, Sasol Nitro and variousother businesses including Merisol, Sasol Infrachem and other smaller chemicalbusinesses. In 2004 the operating loss for these businesses amounted toR150 million, compared to and operating profit R142 million in 2003.

Sasol Financing provides financing and treasuryservices to our group and also acts as our in-house bank. Its operating lossamounted to R153 million in 2004, compared to a loss of R286 millionin 2003, a decrease of R133 million. This decrease is mainly attributableto effects resulting from the appreciation of the rand against the US dollar ata lower rate than in 2003.

Sasol Petroleum International develops and manages ourgroup’s international interests in oil and gas exploration and production.Aggregated turnover of SPI increased to R312 million in 2004 from R201 millionin 2003. Operating loss amounted to R118 million in 2004, compared toR181 million in 2003, a decrease of R63 million or 35%. The netdecrease in the operating loss is due to increased oil income generated fromthe Etame field of R50 million, reduced translation losses ofR141 million offset by increased exploration cost in Mozambique ofR151 million and sundry other amounts of R23 million.

Sasol Wax produces and markets wax and wax relatedproducts to commodity and specialty wax markets globally. It manufactures crudeoil derived paraffin waxes as well as synthetic waxes produced on the basis ofour Fischer-Tropsch technology. Aggregated turnover of Sasol Waxdecreased to R4,042 million in 2004 from R4,773 million in 2003, adecrease of R731 million or 15%. Operating profit increased toR254 million in 2004 from R149 million in 2003, an increase ofR105 million or 70%. The net increase in operating profit is mainly due tohigher sales volumes of R681 million, reduced input prices ofR235 million and foreign exchange rate gains of R23 million offset byproduct price decreases of R811 million and other cost increases ofR23 million.

Sasol Nitro manufactures and markets ammonia and itsderivatives for use in the fertilizer and explosives markets. Aggregatedturnover of Sasol Nitro decreased to R3,226 million in 2004 fromR3,927 million in 2003, a decrease of R701 million or 18%. Anoperating loss of R152 million was incurred in 2004 compared to anoperating profit of R253 million in 2003, a decrease of R405 million.This net decrease is mainly due to the effect of the appreciation of the randagainst the US dollar on turnover offset by savings on cost as well as lowersales volumes. Operating expenses this year includes R339 million inrespect of impairment of assets and exit costs attributed to the phosphoricasset business and the under performing non-South African operations.

Aggregated turnover forthe various other businesses including Sasol Technology, Merisol, Infrachem andcertain smaller chemical businesses amounted to R4,150 million in 2004,compared to R3,657 million in 2003. Operating profit amounted toR19 million in 2004, compared to a profit of R207 million in 2003, adecrease of R188 million.

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**RECENT ACCOUNTING PRONOUNCEMENTS**

The following recentaccounting pronouncements applicable to the group have been issued by theFinancial Accounting Standards Board (“FASB”)

**SFAS 123R—Share-basedpayment**

In December 2004, the FASB issued FAS No. 123R,Share-Based Payment, to focusprimarily on accounting for transactions in which an entity obtains employeeservices in share-based payment transactions and to eliminate the alternativeof applying the intrinsic value measurement provisions of APB Opinion 25 tostock compensation awards issued to employees.

The new standard requires that an entity measure thecost of equity based service awards based on the grant-date fair value of theaward. That cost will be recognized over the period during which an employee isrequired to provide service in exchange for the award.

The group has continued toapply the Intrinsic Value Method of Accounting and will adopt the provisions ofFAS 123R effective 1 July 2005. The pro forma effects on net income andearnings per share if the group had applied the fair value recognitionprovisions of original FAS 123 on stock compensation awards (rather thanapplying the intrinsic value measurement provisions of Opinion 25) aredisclosed in Note 20 to the group’s consolidated financial statements.

**SFAS 151,Inventory costs—an amendment of ARB No. 43, Chapter 4**

In November 2004, the FASB issued Statement No. 151,Inventory Costs, an amendment of Accounting Research Bulletin No. 43,Chapter 4 (“FAS 151”). The standard adopts the IASB view related to inventoriesthat abnormal amounts of idle capacity and spoilage costs should be excludedfrom the cost of inventory and expensed when incurred.

The amendments made by clarify that abnormal amountsof idle facility expense, freight, handling costs, and wasted materials(spoilage) should be recognized as current period charges and require theallocation of fixed production overheads to inventory based on the normalcapacity of the production facilities. Additionally, the Board made thedecision to clarify the meaning of the term ‘normal capacity’.

The provisions of thisstandard are effective for inventory costs incurred during years beginningafter 15 June 2005. The group does not expect the adoption of thisstandard to have a material impact on its consolidated financial statements.

**SFAS 153,Exchanges of nonmonetary assets—an amendment of APB Opinion No. 29**

In December 2004, the FASB issued Statement No. 153(“FAS 153”), Exchanges of Nonmonetary Assets—an amendment to AccountingPrinciples Board Opinion No. 29, Accounting for Nonmonetary Transactions (“APB29”).

The statement eliminates the exception from the fairvalue measurement for non-monetary exchanges of similar productive assets inparagraph 21(b) of APB 29 and replaces it with an exception for exchangesthat do not have commercial substance.

FAS 153 specifies that a non-monetary exchange hascommercial substance if the future cash flows if the entity are expected tochange significantly as a result of the exchange.

The statement is effective for all fiscal periodsbeginning after 15 June 2005 and is required to be adopted by the groupeffective 1 July 2005.

The group does not expect the adoption of thisstandard to have a material impact on its consolidated financial statements.

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**SFAS 154—Accounting changes and error corrections—areplacement of APB Opinion No. 20 and FASB Statement No. 3**

In May 2005, the FASB issued FAS 154, AccountingChanges and Error Corrections to replace APB Opinion 20 (“APB 20”) by revisingthe accounting treatment and reporting requirements for all voluntary changesin accounting principles. 

APB 20 required that the cumulative effect of thechange in accounting principle be included in net income. Under the newstatement, the change in accounting principle is applied retrospectively (as ifthe principle had always been used) to prior period’s financial statements,hence revising previously issued financial statements to reflect the correctionof an error. The statement also specifically requires that changes indepreciation, amortization and depletion methods for long-lived, non- financialassets be accounted for as a change in estimate effected by a change inaccounting principle.

The group adopted FAS 154for the year ended 30 June 2005. The adoption of the statement did nothave a material effect on the consolidated financial position and the resultsof the operations of the group.

**EITFIssue 04-1, Accounting for pre-existing relationships between the parties to abusiness combination.**

In September 2004, the EITF of the FASB reached aconsensus on Issue 04-1 that consummation of a business combination betweenparties with a preexisting relationship should be evaluated to determine if asettlement of a preexisting relationship exists. 

The followingissues were also addressed by the Task Force and ratified by the FASB:

·       *Executory Contracts—*The effective settlement of an executorycontract in a business combination should be measured at the lesser of (a) theamount by which the contract is favorable or unfavorable from the perspectiveof the acquirer when compared to pricing for current market transactions forthe same or similar items or (b) any stated settlement provisions in thecontract available to the counterparty to which the contract is unfavorable. Tothe extent that a stated settlement amount is less than the off-marketcomponent of the contract, the difference should be included as part of thebusiness combination.

·       *Acquisition of a right—*The Task Force reached a consensusthat the acquisition of a right that the acquirer had previously granted to theacquired entity to use the acquirer’s existing recognized or unrecognizedintangible assets should also be included as part of the business combination.

·       *Intangible Assets—*The acquirer should recognize, apart fromgoodwill, an acquired entity’s intangible asset that, before the businesscombination, arose solely from the acquired entity’s contractual right to usethe acquirer’s existing recognized or unrecognized intangible assets

The Task Force alsoreached a consensus that the following disclosures should be required forbusiness combinations between parties with a preexisting relationship:

a)               The nature of thepreexisting relationship;

b)              The measurement ofthe settlement amount of the preexisting relationship, if any, and thevaluation method used to determine the settlement amount;

c)               The amount of anysettlement gain or loss recognized and its classification in the statement ofoperations.

The group adopted EITFIssue 04-1 for the year ended 30 June 2005. The adoption of this statementdid not have a material effect on the consolidated financial position andresults of operations of the group.

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**EITFIssue 03-16, Accounting for investments in limited liability companies (“LLC”)**

In March 2004, theEITF of the FASB reached a consensus on Issue 03-16, *AccountingFor Investments in Limited Liability Companies (“LLC”)* and notedthat an investment in an LLC that maintains a “specific ownership account” foreach investor—similar to a partnership capital account structure—should beviewed as similar to an investment in a limited partnership for purposes ofdetermining whether a non-controlling investment in an LLC should be accountedfor using the cost method or the equity method. Therefore, the provisions ofSOP 78-9 and related guidance, including Topic D-46, also apply to such LLCs. 

The group adopted EITFIssue 03-16 for the year ended 30 June 2005. The adoption of thisstatement did not have a material effect on the consolidated financial positionand results of operations of the group. 

**EITFIssue 05-6, Determining the amortization period for leasehold improvements**

In June 2005, theEITF of the FASB reached a consensus on Issue 05-6, on how an enterprise shouldaccount for existing lease agreements and related leasehold improvementsacquired as part of a business combination. The issues are whether the leaseterm for operating leases should be re-evaluated at consummation of a purchasebusiness combination and if the amortization period for leasehold improvementsshould be re-assessed by the acquiring entity in a business combination.

The consensus stated thatleasehold improvements acquired in a business combination and those acquiredafter the inception of the lease should be amortized over the shorter of theuseful life of the assets or a term that includes renewals that are reasonablyassured at the date of acquisition of leasehold improvements.

The group has not adoptedEITF Issue 05-6 for the year ended 30 June 2005. The effect of this statementis being assessed, but it is not expected that it will have a material effecton the consolidated financial position and results of operations of the group.

**EITFIssue 03-13, Applying the conditions in Paragraph 42 of FASB Statement No. 144,Accounting for the impairment or disposal of long-lived assets, in determiningwhether to report discontinued operations**

In November 2004, the EITF of the FASB reached aconsensus on Issue 03-13 on evaluating whether the criteria in paragraph 42 ofStatement 144, Accounting for the Impairment or Disposal of Long-Lived Assets,have been met for the purposes of classifying the results of operations of anentity that either has been disposed or classified as held for sale asdiscontinued operations.

The consensus stated that the criteria in paragraph 42should only be applied to a component of the enterprise that is either disposedof or classified as held for sale in fiscal periods beginning after 15 December 2005.

The adoption of thisstatement did not have a material effect on the consolidated financial positionand results of operations of the group.

**EITFIssue 04-6, Accounting for stripping costs incurred during production in themining industry**

During 2004, a committee of the EITF began discussingthe accounting treatment for stripping costs incurred during the productionphase of a mine. In March 2005, the EITF reached a consensus (ratified bythe FASB) that stripping costs incurred during the production phase of a mineare variable production costs that should be included in the costs of inventoryproduced during the period that the stripping costs are incurred. The EITFconsensus is effective for the first reporting period in years beginning after15 December 2005, with early adoption permitted. 

We have evaluated theimpact of this EITF and it is believed that it will not have a material affecton our financial position and results of operations under U.S. GAAP.

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**EITFIssue 04-10, Determining whether to aggregate operating segments that do notmeet the quantitative thresholds**

In September 2004, the EITF of the FASB reached aconsensus on Issue 04-10, on how an enterprise should evaluate the aggregationcriteria in paragraph 17 of SFAS 131 when determining whether operatingsegments that do not meet the quantitative thresholds may be aggregated inaccordance with paragraph 19 of SFAS 131. The consensus stated that OperatingSegments can only be aggregated if the segments have similar economiccharacteristics and share a majority of the aggregation criteria listed in SFAS131.

The group adopted EITFIssue 04-10 for the year ended 30 June 2005. The adoption of thisstatement did not have a material effect on the consolidated financial positionand results of operations of the group or on the group’s segmental report.

**FSP No. FAS19-1, Accounting for suspended well costs.**

In April 2005, the FASB directed the FASB staffto provide guidance on the accounting for exploratory well costs, whether it ispermissible to continue capitalizing well exploration costs beyond one year andto then propose an amendment to FASB Statement No. 19, *Financial Accounting and Reporting by Oil and GasProducing Companies*, accordingly. 

The FASB staff believes that exploratory well costsshould continue to be capitalized when the well has found a sufficient quantityof reserves to justify its completion as a producing well and the enterprise ismaking sufficient progress assessing the reserves and the economic andoperating viability of the project. 

The FASB Statement 19 has been amended accordingly toinclude that the costs of drilling an exploratory well or an exploratory-typestratigraphic well are capitalized as part of the enterprise’s uncompletedwells, equipment, and facilities pending the determination of whether the wellhas found proved reserves. 

The group adopted FSP No. FAS19-1 for the year ended 30 June 2005.The adoption of this statement didnot have a material effect on the consolidated financial position and resultsof operations of the group.

**FSP No. FAS97-1, Situations in which Paragraphs 17(b) and 20 of FASB Statement No. 97,*“Accounting and reporting by insurance enterprisesfor certain long-duration contracts and for realized gains and losses from thesale of investments”,* permit or require accrual of an unearnedrevenue liability**

In June 2004, the FASB issued FASB Staff Position97-1, to clarify whether it is appropriate to recognize an unearned revenueliability to compensate the insurer for services to be performed over futureperiods when future profits are expected to decline from the current level ORonly when current profits are expected to be followed by future losses. 

The FASB Staff reached a consensus that an unearnedrevenue liability should be recognized for all amounts that have been assessedas to compensate insurers for services to be performed over future periods. 

The FASB staff believes that paragraph 26 of SOP 03-1is based on principles consistent with Statement 97; however, it does not limitthe accrual of unearned income for insurance benefit features of universallife-type contracts to situations where profits are expected to be followed bylosses; that is, the facts and circumstances of each situation must beconsidered in determining the need for accruing unearned revenue. Paragraph 26of SOP 03-1 specifies how to determine the amount of the accrual for theinsurance benefit feature when profits are expected to be followed by losses. 

The group adopted FSP No. FAS97-1 for the year ended 30 June 2005.The adoption of this statement didnot have a material effect on the consolidated financial position and resultsof operations of the group.

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**FSPFAS 109-1—Application of FASB Statement No. 109, Accounting for incometaxes, to the tax deduction on qualified production activities provided by theAmerican Jobs Creation Act of 2004**

In December 2004, the FASB issued FASB StaffPosition 109-1to provide guidance on the application of FASB Statement No. 109,*Accounting for Income Taxes,*tothe provision within the American Jobs Creation Act of 2004 (“the Act”) that providesa tax deduction of up to 9% on qualified production activities. FSP 109-1clarifies that the tax deduction should be accounted for as a special deductionin accordance with Statement 109. 

The group has adopted theprovisions of this statement and is applicable to the Sasol North AmericanOperations only. The adoption of the statement did not have a material effecton the consolidated financial position and results of operations of the group.

**FAS141-1 and FAS 142-1, Interaction of FASB Statements No. 141, *Business combinations,* and No. 142, *Goodwill andother intangible assets,* and EITF Issue No. 04-2, “Whether mineralrights are tangible or intangible assets”**

In April 2004, the FASB issued a FASB StaffPosition 141-1 and 142-1, Interaction of SFAS 141, *BusinessCombinations* and SFAS 142, *Goodwill and OtherIntangible Assets*, and EITF Issue 04-2,*WhetherMineral Rights are Tangible or Intangible Assets* (“FSP 141-1 and142-2”). FSP 141-1 and 142-1 define mineral rights as tangible assets. If theguidance in this FSP results in the reclassification of an asset, prior-periodamounts on the statements of financial position shall be reclassified and anyeffects on amortization or depreciation of the asset shall be accounted forprospectively.

The group records miningmineral rights as tangible assets in accordance with its existing accountingpolicy, hence the adoption of this statement did not have any material effectson the consolidated financial position and results of operations.

**FSP No. FAS142-2, Application of FASB Statement No. 142, *Goodwill and other intangible assets,*to oil- andgas-producing entities**

On 2 September 2004, the FASB issued FSP 142-2,Application of FASB Statement No. 142, *Goodwilland Other Intangible Assets,*to Oil- and Gas-Producing Entities.Paragraph 8(b) of FAS 142 states that it does not change the accountingprescribed in SFAS 19, Financial Accounting and Reporting by Oil and GasProducing Entities. 

Questions have arisen as to whether the scopeexception in paragraph 8(b) of Statement 142 includes the balance sheetclassification and disclosures for drilling and mineral rights of oil- andgas-producing entities. 

In FSP 142-2, the FASB staff acknowledged that theaccounting framework in FAS 19 for oil and gas producing entities is based onthe level of established reserves and not whether an asset is tangible or not.Accordingly, the FASB staff concluded that FAS 142’s balance sheetclassification and disclosure provisions do not apply to drilling and mineralrights of oil and gas producing entities. However an entity is not precludedfrom providing information about its drilling and mineral rights in addition tothe information required by FAS 69, Disclosures about Oil and Gas ProducingActivities.

The group adopted FSP 142-2for the year ended 30 June 2005. The adoption of this statement did nothave a material effect on the consolidated financial position and results ofoperations of the group.

**FSP No. EITF03-1-1, Effective date of Paragraphs 10-20 of EITF Issue No. 03-1, “Themeaning of other-than-temporary impairment and it’s application to certaininvestments”**

In September 2004, the FASB issued a proposedFASB Staff Position No. EITF 03-1-1 to provide implementation guidancewith respect to debt securities that are impaired solely due to interest rates 

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and/or sector spreads andanalyzed for other-than-temporary impairment under paragraph 16 of Issue 03-1.

The FASB has directed theFASB staff to delay the effective date for the measurement and recognitionguidance contained in paragraphs 10–20 of Issue 03-1. The delay does notsuspend the existing accounting requirements for assessing whether impairmentsof “held-to-maturity” and “available-for-sale” securities areother-than-temporary, including current guidance for investments held at cost. TheFSP has expanded the scope of the deferral to include all securities covered byEITF 03-1 rather than limiting the deferral to only certain debt securitiesthat are impaired solely to interest rate and or sector spread increases. 

**5.B   Liquidityand Capital Resources**

**Liquidity**

Management believes that, with respect to our currentoperations, cash on hand and funds from operations, together with our existingborrowing facilities, will be sufficient to cover our reasonably foreseeableworking capital and debt requirements. We finance our capital expenditure fromfunds generated out of our business operations, existing borrowing facilitiesand, in some cases, additional borrowing to fund specific projects.

The following tableprovides a summary of our cash flows for each of the three years ended 30 June 2005,30 June 2004 and 30 June 2003:

**Summary of CashFlows**

| ** **                                                  | ** ** | **2005**                         | ** ** | **2004** | ** ** | **2003** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|----------|------------|----------|------------|
| ** **                                                  | ** ** | **(Rand in millions)** | ** ** |
| Net cash provided  by operating activities                  |       | 14,256                           |       | 9,686    |       | 11,393   |       |
| Net cash utilized  in investing activities                  |       | (11,891                          | )          | (9,677   | )          | (11,153  | )          |
| Net cash (utilized  by)/generated from financing activities |       | (1,465                           | )          | (1,729   | )          | 1,901    |       |

 

***Operating activities***

Net cash provided by operating activities wasR14.3 billion in 2005 compared to R9.7 billion in 2004. In 2005, theaverage dated Brent crude oil price increased to an average of $46.17/bcompared to $31.30/b in fiscal 2004. Although our sales volumes decreased ourtotal turnover increased by R8.6 billion on the back of increased oil andchemical prices, slightly offset by the strength of the rand. The net effectwas an increase in cash flow provided by operations before taxation and workingcapital changes. The increase in cash provided by operating activities waspartly offset by an increase in working capital of R2 billion, mainly dueto the increase cost of our feedstock as a result of the increased crude oilprice. 

Net cash provided byoperating activities in 2004 was R9.7 billion compared toR11.4 billion in 2003. In 2004. The decrease was mainly due to theappreciation of the rand against the US dollar. The average exchange rate for2004 was R6.88 per US dollar compared to R9.03 per US dollar in 2003. 

***Investing activities***

Net cash utilized in investing activities wasR11.9 billion in 2005 compared to R9.7 billion in 2004. The increase innet cash utilized of R2.2 billion was primarily due to an increase in capitalexpenditure on projects to expand our operations. Most notable are the costsincurred on Project Turbo (Sasol Polymers) of R3.3 billion in 2005 compared toR1 billion in 2004, this was partially offset by the fact that the MozambiqueNatural Gas project was substantially completed in the 2004 year. 

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Investment in property,plant and equipment amounted to R8.4 billion in 2004, a decrease ofR456 million compared to R8.9 billion in 2003. This expenditure was mainlyattributable to the completion of the Mozambique Natural Gas pipeline project,the conversion of our plants to utilize natural gas, the completion of ourAcrylic Acid and Acetates Plant, the completion of our n-Butanol plant andenhancements to existing facilities. In addition, in 2004 we investedR0.5 billion in intangible assets and R0.4 billion in equity accountedinvestees (mainly GTL projects in Qatar and Nigeria).

***Financing activities***

The group’s operations are financed primarily by meansof its operating cash flows. Cash shortfalls are usually short-term in natureand are met primarily from short-term banking facilities and commercial paperprogram. Long-term capital expansion projects and acquisitions of businessesare financed by a combination of floating and fixed rate debt. This debt isusually in the measurement currency of the project or acquisition beingfinanced and repayment terms match the expected cash flow to be generated bythe asset or business acquired.

Net cash effect of financing activities was R1.5billion in 2005 as compared to net cash effects of financing activities ofR1.7 billion in 2004. Dividends paid amounted to R2.9 billion in 2005 ascompared to R2.7 billion in 2004. The amount of dividends paid was higher thanin 2004 principally due to an increase in the interim dividend declared in2004, which was paid in 2005. 

During the year a Eurobond of 300 million euro (R2.4billion) was raised. The proceeds of the Eurobond were used to reduce ourshort-term borrowings in South Africa and assist in diversifying and extendingthe average tenor of our portfolio. In addition we replaced specific assetbased financing used to acquire Sasol Chemie with group debt. This debt hasreduced the value of assets pledged as security, as well as the negotiation ofbetter interest rates and less onerous covenants.

The net cash utilized byfinancing activities in 2004 of R1.7 billion was mainly due to proceeds ofborrowings of R11.9 billion offset by repayment of debt ofR10.8 billion, dividend payments from operating cash flows of R2.7 billionand other smaller net cash outflows of R124 million.

**Capital Resources**

Sasol Financing and Sasol Financing International actas our group financing vehicles. All our group treasury, cash management andborrowing activities are conducted through Sasol Financing and Sasol FinancingInternational.

*Long-termdebt.**  *At30 June 2005 we had total long-term debt of R9,938 million (excludingR809 million of short-term portion of long-term debt), compared tolong-term debt of R7,153 million (excluding R400 million ofshort-term portion of long-term debt) at 30 June 2004. 

*Short-termdebt.**  *At30 June 2005 we had total short-term debt (including short-term portion oflong-term debt) of R5,355 million compared to total short-term debt(including short-term portion of long-term debt) of R7,139 million at 30 June 2004.For further information regarding our short-term debt refer to Note 17 in “Item18—Financial Statements”.

The group has borrowing facilities with majorfinancial institutions of approximately R39,297 million (2004—R23,234 million).Of these facilities R18,866 million (2004—R7,865 million) has beenutilized at year end.

There were no events of default for the years ended 30June 2005 and 30 June 2004.

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Ourmajor funding facilities at 30 June 2005 are set out below.

| ** **                                                           | ** ** | **Expiry Date**  | ** ** | **Currency**    | ** ** | **Facilities**                   | ** ** | **Utilization** | ** ** |
|----------------------------------------------------------------------|------------|-----------------------|------------|-----------------|------------|----------------------------------|------------|-----------------|------------|
| ** **                                                           | ** ** | ** **            | ** ** | ** **      | ** ** | **(Rand in millions)** | ** ** |
| **Uncommitted facilities**                                           |       |                  |       |            |       |                             |       |            |       |   |   |   |   |
| Commercial banking  facilities                                       |       | Various  (short-term) |       | rand            |       |                             | 11,880     |            |       |   | 2,328 |   |   |
| International  commercial banking facilities                         |       | Various  (short term) |       | euro            |       |                             | 473        |            |       |   | 2 |   |   |
| Commercial paper program                                             |       | None                  |       | rand            |       |                             | 6,000      |            |       |   | 1,521 |   |   |
| **Committed facilities**                                             |       |                  |       |            |       |                             |       |            |       |   |   |   |   |
| Revolving credit facility (syndicated)                               |       | May 2008         |       | euro            |       |                             | 3,226      |            |       |   | 663 |   |   |
| **Debt arrangements**                                                |       |                  |       |            |       |                             |       |            |       |   |   |   |   |
| RSA Bond                                                             |       | August 2007      |       | rand            |       |                             | 2,000      |            |       |   | 1,993 |   |   |
| Japan Bank for International Co-operation                            |       | June 2013        |       | US dollar       |       |                             | 390        |            |       |   | 390 |   |   |
| Eurobond                                                             |       | June 2010        |       | euro            |       |                             | 2,420      |            |       |   | 2,407 |   |   |
| Natref(1)                                                            |       | Various               |       | rand            |       |                             | 1,491      |            |       |   | 982 |   |   |
| **Asset based finance**                                              |       |                  |       |            |       |                             |       |            |       |   |   |   |   |
| The Republic of  Mozambique Pipeline Investment Company (Pty) Ltd(1) |       | December 2015    |       | rand            |       |                             | 2,362      |            |       |   | 2,362 |   |   |
| Sasol Petroleum  Temane(1)                                           |       | June 2015        |       | euro  and  rand |       |                             | 1,302      |            |       |   | 1,302 |   |   |
| **Property finance leases**                                          |       |                  |       |            |       |                             |       |            |       |   |   |   |   |
| Sasol LFB(1)                                                         |       | Various               |       | rand            |       |                             | 590        |            |       |   | 590 |   |   |
| **Other banking facilities and debt arrangements**                   |       | Various               |       | Various         |       |                             | 2,085      |            |       |   | 1,019 |   |   |
|                                                                 |       |                  |       |            | ** ** | ** **                       | **34,219** |            | ** ** | ** ** | **15,559** |   |   |
| ***Comprising***                                                     |       |                  |       |            |       |                             |       |            |       |   |   |   |   |
| Long-term debt                                                       |       |                  |       |            |       |                             |       |            |       |   | 9,938 |   |   |
| Short-term debt                                                      |       |                  |       |            |       |                             |       |            |       |   | 5,355 |   |   |
| Bank overdraft                                                       |       |                  |       |            |       |                             |       |            |       |   | 266 |   |   |
|                                                                 |       |                  |       |            |       |                             |       |            | ** ** | ** ** | **15,559** |   |   |

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(1)    Facilities held by these subsidiaries

Excludedfrom the above analysis are borrowing facilities held by the group’s jointventures.

| ** **                                        | ** ** | **Facilities**                   | ** ** | **Utilization** | ** ** |
|---------------------------------------------------|------------|----------------------------------|------------|-----------------|------------|
| ** **                                        | ** ** | **(Rand in millions)** | ** ** |
| Oryx GTL Limited  (Q.S.C)                         |       |                             | 2,286      |            |       |   | 1,613 |   |   |
| Arya Sasol  Polymer Company                       |       |                             | 1,564      |            |       |   | 728 |   |   |
| Sasol Dia  Acrylates (South Africa) (Pty) Limited |       |                             | 984        |            |       |   | 750 |   |   |
| Other                                             |       |                             | 244        |            |       |   | 216 |   |   |
|                                              | ** ** | ** **                       | **5,078**  |            | ** ** | ** ** | **3,307** |   |   |

 

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We generally generate strong cash flow in South Africaand any funding shortfall is usually short-term in nature. Besides our normalcommercial banking facilities, the majority of which is in South Africa,another facility to fund short-term funding requirements in South Africa is ourcommercial paper program of R6 billion, normally at fixed interest rates.

We manage our short-termdebt interest rate exposure by making use of a combination of commercialbanking facilities with variable interest rates and commercial paper issues atfixed interest rates.

***Debt profile***

We actively monitor andmanage our cash flow requirements and to the extent that core long-termfinancing requirements are identified, we will finance these with longer-termdebt issues. Such a long-term bond issue will typically have a fixed interestrate profile; however, the interest rate structure is actively managed ashighlighted above.

**Maturity Profile of Debt**

Weendeavor to match the tenure of our debt with the nature of the asset or projectbeing financed.

| ** **            | ** ** | **Less than  1 year**  | ** ** | **1 to 2 years** | ** ** | **2 to 5 years** | ** ** | **More than  5 years** | ** ** | **Total** | ** ** |
|-----------------------|------------|----------------------------------|------------|---------------------------------|------------|---------------------------------|------------|----------------------------------|------------|-----------|------------|
| ** **            | ** ** | **(Rand in millions)** | ** ** |
| **Maturity  profile** |       |                             | 5,621      |                            |       |                            | 639        |                             |       |      | 6,314      |   |   |   | 2,985 |   |   | 15,559 |   |
|                       |            |                                  |            |                                 |            |                                 |            |                                  |            |           |            |  |  |  |  |  |  |  |  |

 

***Covenants***

The group is subject to certain covenants on its debtfacilities relating to earnings, debt cover, net asset value, amongst other.There were no events of default in the year ended 30 June 2005.

The covenant terms above are defined contractually ineach of the agreements for the above facilities using definitions agreed tobetween the parties derived from amounts published in the financial statementsof Sasol prepared in terms of IFRS for any year and adjusted in terms of theagreed definitions.

Moodys assigned Sasol Aa3.za long-term and Prime-1.zashort-term South African national scale credit ratings and a global Baa1rating. Additionally Standard and Poor’s long-term foreign-currency rating wasupgraded to BBB+ equal to Moody’s global Baa1 rating.

For information regardingour material commitments for capital expenditure see “Item 4.D—Property, plantsand equipment”.

**5.C   Researchand Development, Patents and Licenses**

**Research and Development**

Our research and development function consists of acentral research and development division in South Africa, which focuses onfundamental research while our decentralized divisions focus on applications.The central research function has a full suite of state-of-the-art pilot plantsto support both current and future technology being developed.

Our applicationresearch and development capabilities, which are based in Germany, Italy,United States and South Africa are focused around four areas:

·       technicalservice;

·       analyticalservice;

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·       plant support; and

·       newapplications, products and processes.

The key products supported by our applicationsresearch and development are alcohols and derivatives, surfactants anddetergents, inorganic specialties, LABs, paraffins and olefins, solvents, fuelsand lubricants and polymers and fine chemicals.

Total expenditure on Research and Development in years2005, 2004 and 2003 was R331 million, R427 million and, R461 million,respectively.

For further informationregarding our research and development activities, see “Item 4.B—BusinessOverview—Research and Development—Sasol Technology”.

**5.D   TrendInformation**

Our financial results since the end of 2005 have beenprincipally affected by increased dated Brent crude oil prices and a furtherstrengthening in the rand to US dollar and the euro to US dollar exchange rate.

In recent months, the derived European Brent crude oilspot price has risen from the year-end level of US$55.36/b to US$61.70/b on 30September 2005. Given the current uncertain political environment and therecent damage caused in the Gulf of Mexico by hurricane Katrina, the oil pricehas been volatile and this volatility is expected to continue in theforeseeable future. As discussed above, a high oil price generally results inincreased profitability for our group.

The rand to US dollar exchange rate was R6.67 at 30June 2005. After trading in a range of between R6.34 and R6.90 to the USdollar during July and August 2005, the rand strengthened reachingR6.35 per US dollar at 30 September 2005. This rand strength hasresulted in negative effects on our profits. Whilst the exchange rate duringthe current year has been relatively less volatile than in previous years weare unable to forecast whether this will continue in the foreseeable future.

The euro to US dollarexchange rate was euro 1.21 at 30 June 2005 with trading during July andAugust 2005 being relatively stable with a low of 1.19 to a high of 1.25.The euro to the US dollar exchange rate was 1.21 at 30 September 2005.This euro strength has resulted in negative effects on our profits.

**5.E   Off-BalanceSheet Items**

We do not engage inoff-balance sheet financing activities and do not have any off-balance sheetdebt obligations, special purpose entities or unconsolidated affiliates.

***Guarantees:***

Thegroup has issued the following guarantees for which the liabilities have not beenincluded in the balance sheet.

| ** **                                        | ** ** | **30 June 2005  Guarantee** | ** ** | **30 June 2004  Guarantee** | ** ** |
|---------------------------------------------------|------------|---------------------------------------|------------|---------------------------------------|------------|
| ** **                                        | ** ** | **(Rand in millions)**      | ** ** |
| Guarantees in  respect of GTL Ventures            |       |                                  | 7,839      |                                  |       |   | 7,070 |   |   |
| Guarantees in  respect of letters of credit       |       |                                  | 698        |                                  |       |   | 63 |   |   |
| Miscellaneous  other guarantees                   |       |                                  | 640        |                                  |       |   | 311 |   |   |
| Guarantee to RWE-DEA                              |       |                                  | 242        |                                  |       |   | 227 |   |   |
| Customs and  Excise                               |       |                                  | 164        |                                  |       |   | 130 |   |   |
| Guarantee in  respect of the Natural gas pipeline |       |                                  | 14         |                                  |       |   | 62 |   |   |
|                                              | ** ** | ** **                            | **9,597**  |                                  | ** ** | ** ** | **7,863** |   |   |

 

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Sasol has issuedthe following significant guarantees for the obligations of various of itssubsidiaries in respect of the GTL Ventures. These guarantees relate to theconstruction and funding of Oryx GTL Limited in Qatar and Escravos GTL inNigeria, including inter alia (2005 US dollar amounts are translated at R6.67per US dollar the rate at 30 June 2005. (2004 at R6.21 per US dollar therate at 30 June 2004)).

·       SasolLimited issued a completion guarantee for its portion of the project debt ofOryx GTL Limited capped at US$343 million (R2,286 million) plusinterest and costs subject to the project demonstrating a minimum level ofsustained production over a continuous period of ninety days and catalystdeactivation within acceptable parameters for at least two hundred and seventydays, after commissioning. It is estimated that the project will becommissioned during May 2006.

·       SasolLimited issued a guarantee for the take-or-pay obligations of its wholly ownedsubsidiary under the gas sale and purchase agreement (“GSPA”) entered intobetween Oryx GTL Limited, Qatar Petroleum and ExxonMobil Middle East GasMarketing Limited, by virtue of this subsidiary’s 49% shareholding in Oryx GTLLimited. Sasol Limited’s exposure is limited to the amount ofUS$123 million approximately (R820 million) (2004—US$100 millionapproximately (R621 million)). In terms of the GSPA, Oryx GTL Limited iscontractually committed to purchase minimum volumes of gas from Qatar Petroleumand ExxonMobil Middle East Gas Marketing Limited on a take-or-pay basis. ShouldOryx GTL terminate the GSPA prematurely, Sasol Limited’s wholly ownedsubsidiary will be obliged to take-or pay its 49% share of gas offtakerequirements by way of damages for a maximum amount of US$123 million(R820 million). The term of the GSPA is 25 years from the date ofcommencement of operations. It is estimated that the project will becommissioned during May 2006.

·       SasolLimited issued a guarantee for the obligation of its wholly owned subsidiary tocontribute 49% of the required equity in respect of the investment in Oryx GTLLimited. Sasol’s equity contribution is estimated at US$160 million(R1,066 million) (2004—US$75 million (R466 million)). It is expected thatthe project will be commissioned during May 2006.

·       SasolLimited issued a performance guarantee for the obligations of its subsidiariesin respect of the construction of Escravos GTL in Nigeria for the duration ofthe investment in Escravos GTL limited to an amount of US$250 million(R1,666 million).

·       SasolLimited issued a performance guarantee for the obligations of its subsidiariesin respect of and for the duration of the investment in Sasol Chevron HoldingsLimited, limited to an amount of US$ 250 million (R1,666 million).Sasol Chevron Holdings Limited is a joint venture between a wholly ownedsubsidiary of Sasol Limited and Chevron Texaco Corporation.

All guarantees listed above are issued in the normalcourse of business.

The group has guaranteed the fulfillment of varioussubsidiaries’ and joint ventures’ obligations in terms of contractualagreements.

***Product warranties.******  ***The groupprovides product warranties with respect to certain products sold to customersin the ordinary course of business. These warranties typically provide thatproducts sold will conform to specifications. The group generally does notestablish a liability for product warranty based on a percentage of turnover orother formula. The group accrues a warranty liability on a transaction-specificbasis depending on the individual facts and circumstances related to each sale.Both the liability and the annual expense related to product warranties areimmaterial to the consolidated group financial statements.

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**5.F   Tabulardisclosure of contractual obligations**

*Contractual obligations /commitments.**  *Thefollowing significant contractual obligations existed at 30 June 2005:

**Amountof obligations/commitments expiration per period**

| **Contractual obligations  (excluding capital  expenditure)** | ** ** | ** **                       | ** ** | **Total amount** | ** ** | **Amount  representing  finance  charges** | ** ** | **Within  1 year** | ** ** | **1 to 2  years** | ** ** | **2 to 3  years** | ** ** | **3 to 4  years** | ** ** | **4 to 5  years** | ** ** | **More  than  5 years** | ** ** |
|-------------------------------------------------------------------------|------------|----------------------------------|------------|-----------------------|------------|--------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|------------------------------|------------|
| ** **                                                              | ** ** | **(Rand in millions)** | ** ** |
| Operating leases                                                        |       |                             | 1,216      |                  |       |                                       | —     | ** **              |       |                        | 285        |                        |       | 213                         |       | 177                         |       | 151                          |       | 124 |   |   | 266 |   |   |
| External  long-term debt                                                |       |                             | 10,747     |                  |       |                                       | (3,029     | )                       |       |                        | 1,630      |                        |       | 1,395                       |       | 3,293                       |       | 1,015                        |       | 3,335 |   |   | 3,114 |   |   |
| External  short-term debt                                               |       |                             | 4,546      |                  |       |                                       | (149       | )                       |       |                        | 4,695      |                        |       | —                      |       | —                      |       | —                       |       | — |   |   | — |   |   |
| Bank overdraft                                                          |       |                             | 266        |                  |       |                                       | —     | ** **              |       |                        | 266        |                        |       | —                      |       | —                      |       | —                       |       | — |   |   | — |   |   |
| Purchase  commitments                                                   |       |                             | 12,420     |                  |       |                                       | —     | ** **              |       |                        | 2,356      |                        |       | 2,226                       |       | 2,200                       |       | 1,577                        |       | 867 |   |   | 3,194 |   |   |
| Capital leases                                                          |       |                             | 940        |                  |       |                                       | (234       | )                       |       |                        | 146        |                        |       | 90                          |       | 81                          |       | 86                           |       | 78 |   |   | 693 |   |   |
| **Total**                                                               | ** ** | ** **                       | **30,135** |                  | ** ** | ** **                                 | **(3,412** | **)**                   | ** ** | ** **                  | **9,378**  |                        | ** ** | **3,924**                   |       | **5,751**                   |       | **2,829**                    |       | **4,404** |   | ** ** | **7,267** |   |   |

 

| **Contractual commitments** | ** ** | ** **                       | ** ** | **Total amount** | ** ** | **Within  1 year** | ** ** | **1 to 2  years** | ** ** | **2 to 3  years** | ** ** | **3 to 4  years** | ** ** | **4 to 5  years** | ** ** | **More  than  5 years** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------------------|------------|-------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|------------------------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** |
| Standby letters  of credit       |       |                             | 698        |                  |       |                    | 698        |                        |       |                        | —     |                        |       |                        | —     |                         |       |   | — |   |   |   | — |   |   |   | — |   |   |
| **Total**                        | ** ** | ** **                       | **698**    |                  | ** ** | ** **              | **698**    |                        | ** ** | ** **                  | **—** |                        | ** ** | ** **                  | **—** |                         | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   |

 

*Capitalcommitments.**  *Commitmentsare budgeted, approved and reported in accordance with our management policyfor segmental reporting.

Thefollowing table sets forth our authorized capital expenditure as of 30June 2005:

| **Capital expenditure**           | ** ** | ** **                       | ** ** | **30 June 2005** | ** ** |
|----------------------------------------|------------|----------------------------------|------------|----------------------------|------------|
| ** **                             | ** ** | **(Rand in millions)** | ** ** |
| Authorized and  contracted for         |       |                             | 11,429     |                       |       |
| Authorized but  not yet contracted for |       |                             | 7,740      |                       |       |
| **Total**                              | ** ** | ** **                       | **19,169** |                       |       |

 

For more information regarding our planned capitalexpenditure see “4.A History and Development of the Company—CapitalExpenditure”.

As at 30 June 2005, we had authorizedapproximately R34 billion of group capital expenditure, of which we had spentR15 billion at 30 June 2005. Of the unspent capital commitments ofR19 billion, R11 billion has been contracted for. Of the unspent capitalcommitments of R19 billion, we expect to spend R15 billionin 2006, R3 billion in 2007 and the remainder in 2008 and thereafter.

It isestimated that the expenditure will be incurred as follows:

| **Contractual commitments** | ** ** | ** **                       | ** ** | **Total amount** | ** ** | **Within  1 year** | ** ** | **1 to 2  years** | ** ** | **2 to 3  years** | ** ** | **3 to 4  years** | ** ** | **4 to 5  years** | ** ** | **Over  5 years** | ** ** |
|----------------------------------|------------|----------------------------------|------------|-----------------------|------------|-------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|------------------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** |
| Capital  commitments             |       |                             | 19,169     |                  |       | 14,511                  |       | 2,977                       |       | 1,420                       |       |                        | 225        |                        |       |                   | 2          |   |   |   | 34 |   |   |
|                                  |            |                                  |            |                       |            |                         |            |                             |            |                             |            |                             |            |                             |            |                        |            |  |  |  |  |  |  |  |  |  |  |  |

 

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The above amountsare as reported to our Board, stated on the basis of the management approachused for segmental reporting. They exclude capitalized interest but includebusiness development costs and our group’s share of capital expenditure ofequity accounted investees.

We make use of ForwardExchange Contracts and Cross Currency Swaps to hedge all our major capitalexpenditure in foreign currency (i.e. contracts contracted in a currency otherthan the rand) immediately upon commitment of expenditure or upon approval ofthe project. See “Item 11—Quantitative and Qualitative Disclosure About MarketRisk”.

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**ITEM6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**

**6.A   Directorsand Senior Management**

We are managed by our Board of Directors (“Board”),the Group Executive Committee (“GEC”) and the chief executive. Corporategovernance structures and processes are constantly reviewed to reflect nationaland international best practice.

We comply with the JSE Listings Requirements and theapplicable US corporate governance requirements of the SEC, the NYSE andlegislation such as the Sarbanes-Oxley Act. In addition we have comparedour corporate governance practices to those required to be applied by domesticUS companies listed on the NYSE and have confirmed to the NYSE that we complyin all significant respects with such NYSE corporate governance standards. Weendorse the principles of the South African Code of Corporate Practices andConduct (“SA Code”) as recommended in the King II report.

The Nomination and Governance Committee and the Board criticallyreview and benchmark the governance structures and processes of the group on anongoing basis. The Board considers the issue of corporate governance as apriority that requires more attention than merely establishing the steps to betaken to demonstrate compliance with new legislation, regulatory or listingrequirements.

Issues of governance willcontinue to receive the Board and its committees’ consideration and attentionduring the next year and thereafter. Sound governance is also one of the toppriorities of executive management.

**The Board of Directors**

Our Board of Directors comprised thirteen directors at30 June 2005, of which ten were non-executive and three were executivedirectors. During the reporting year all the non-executive directors, with theexception of Mr. Mandla Gantsho, Mr. Jan Fourie and Mr. StevePfeiffer were considered to be independent in accordance with the SA Code andthe rules of the NYSE. Mr. Fourie became a non-executive director onhis retirement from executive management on 28 February 2004 and resignedfrom our Board with effect from 1 January 2005. Mr. Pfeiffer, whoresigned with effect from 31 October 2004, could not be categorizedindependent by the Board in view of the occasional legal services provided byhis firm to the company. These services constituted less than 1% of theturnover of his firm. The Board is of the view that all our non-executivedirectors bring independent judgment to bear on material decisions of thecompany.

The positions of chairman and chief executive wereseparate during the reporting year and filled by an independent non-executivedirector, Paul du Plessis Kruger, and an executive director, Pieter Vogel Cox,respectively. On 4 March 2005, the company announced the appointment of LawrencePatrick Adrian Davies as chief executive and Trevor Stewart Munday as deputychief executive with effect from 1 July 2005. It was also announced thatMr. Cox would succeed Mr. Kruger as our Chairman on 1January 2006.

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OurBoard currently comprises the following:

| **Name**                                                | ** ** | ** **                          | ** ** | **Position** | ** ** | **Age**            | ** ** | **Member Since** | ** ** | **Current Term  Expires**(1) |
|---------------------------------------------------------|------------|-------------------------------------|------------|--------------|------------|--------------------|------------|-----------------------|------------|-----------------------------------|
| Paul du Plessis (P du P)  Kruger                        |       | Independent Non-Executive  Chairman |       | 68           |       | January 1986  |       | November 2006    |
| Pieter Vogel (P V) Cox                                  |       | Non-executive Deputy  Chairman      |       | 61           |       | January 1996  |       | November 2005    |
| Lawrence Patrick Adrian  (L P A) Davies  |       | Chief Executive                     |       | 54           |       | August 1997   |       | November 2006    |
| Trevor Stewart (T S)  Munday                            |       | Deputy Chief Executive              |       | 56           |       | May 2001      |       | November 2005    |
| Elisabeth le Roux (E le  R) Bradley                |       | Independent Non-Executive  Director |       | 66           |       | February 1998 |       | November 2006    |
| Warren Alexander Morten  (W A M) Clewlow      |       | Independent Non-Executive  Director |       | 69           |       | July 1992     |       | November 2005    |
| Brian Patrick (B P)  Connellan                          |       | Independent Non-Executive  Director |       | 65           |       | November 1997 |       | November 2006    |
| Victoria Nolitha (VN)  Fakude                           |       | Executive Director                  |       | 40           |       | October 2005  |       | November 2005    |
| Mandla Sizwe Vulindlela  (M S V) Gantsho |       | Non-Executive  Director             |       | 43           |       | June 2003     |       | November 2005    |
| Anshuman (A) Jain                                  |       | Independent Non-Executive  Director |       | 42           |       | July 2003     |       | November 2005    |
| Imogen Nonhlanhla (I N)  Mkhize               |       | Independent Non-Executive  Director |       | 42           |       | January 2005  |       | November 2005    |
| Sam (S) Montsi                                     |       | Independent Non-Executive  Director |       | 60           |       | March 1997    |       | November 2005    |
| Jürgen E (J E) Schrempp                            |       | Independent Non-Executive  Director |       | 60           |       | November 1997 |       | November 2006    |
| Conrad Barend (C B) Strauss                             |       | Independent Non-Executive Director  |       | 69           |       | January 2000  |       | November 2005    |

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(1)           Under our Articles of Association, one-third ofthe serving directors shall retire at the annual general meeting of the companyor, if the total number of serving directors who shall retire does notconstitute a multiple of three, the number of directors who shall retire shallbe the number, adjusted upwards, that is the closest to one-third. Thenumber of directors that will retire at the annual general meeting in futureyears can therefore not be determined accurately in advance.

***Paul Kruger*********has been our non-executive chairman sinceJanuary 1997. He joined the group in 1964 and became a director in 1986.From 1987 to 1996, Mr. Kruger served as chief executive of our group. Heis also a director of several other companies in the group. Mr. Kruger ispast chancellor of the Rand Afrikaans University (now the University ofJohannesburg) and past chairman of Business South Africa. He is a director ofseveral companies, including ABSA Bank Limited, ABSA Group Limitedand Abagold (Pty) Limited. Mr. Kruger served on the King Committee onCorporate Governance and is a trustee of the State President’s InternationalMarketing Council. He received a Bachelor of Science Engineering (Mining) fromthe University of the Witwatersrand, South Africa in 1959 and a Master ofBusiness Leadership from the University of South Africa in 1973. He attendedthe Executive Program at Stanford Business School in the United States in 1986and holds an honorary doctorate from the University of Port Elizabeth.

***Pieter Cox*********has been our chief executive since 1997 and deputychairman since 2001. He was succeeded as chief executive by Pat Davies witheffect from 1 July 2005 and retired with effect 1 October 2005. Hejoined the group in 1971 and became a director in 1996. Mr. Cox is also adirector of all major companies in the group. In 1993, he was appointedmanaging director and chief executive of Polifin Limited. In May 1996,Mr. Cox became chief operating officer of Sasol Limited and served in thisrole prior to assuming the position of chief executive of Sasol. He received aBachelor of Science Engineering (Metallurgy) degree in 1966 and a Bachelor ofScience Engineering (Mining) degree in 1968 from the University of theWitwatersrand. He attended the Executive Program at Stanford Business School inthe United States in 1990.

***Pat Davies***hasbeen our director since 1997. He was appointed chief executive with effect from1 July 2005. He is also a director of several other companies in thegroup. Mr. Davies joined the group in 1975 

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and has held variouspositions in engineering design, project management, operations management andcorporate affairs. He is also a director of all major companies in the Sasolgroup and is responsible for the group oil, gas and liquid fuels businesses,including Sasol Synfuels, Sasol Petroleum International, Sasol SynfuelsInternational, Sasol Oil, Sasol Gas and Sasol Technology. He was also responsiblefor the globalization of Sasol’s GTL technology. He received a Bachelor ofScience Engineering (Mechanical) from the University of Natal, South Africa in1975 and attended the Management Program at Harvard Business School in theUnited States in 1986.

***Trevor Munday***hasbeen our director since 2001. He was appointed deputy chief executive witheffect from 1 July 2005. He is also a director of several other companiesin the group. Mr. Munday joined the group in 1996 and currently overseesfinance, investor relations, planning, corporate affairs, brand management andSasol’s chemical businesses. Mr. Munday served as the managing director ofPolifin Limited from 1996 to 2001 prior to its acquisition by us. He received aBachelor of Commerce from Natal University, South Africa in 1970.

***Elisabeth Bradley***hasbeen our director since 1998. She is currently chairman ofToyota SA (Pty) Limited, Wesco Investments Limited, MetairInvestments Limited, Rosebank Hotel and the Winkler Hotel. She is also adirector of several other companies, including Standard Bank Group Limited, theTongaat-Hulett Group Limited and Anglogold Ashanti Limited.Ms. Bradley is deputy chairman of the South African Institute ofInternational Affairs and chairman of the Centre for Development andEnterprise. She received her Bachelor of Science from the University of theFree State in 1961 and a Master of Science from the University of London in1964.

***Warren Clewlow***hasbeen our director since 1992. He is currently chairman of Barloworld Limited,Nedcor Limited and Nedbank Limited. He is deputy chairman of Old Mutual LifeAssurance Company (South Africa) Limited and a director ofOld Mutual plc and Pretoria Portland Cement Company Limited. He ispast chairman of the State President’s Advisory Council and was awarded theOrder of Meritorious Service, Gold Class, for service to South Africa.Mr. Clewlow received his Accountancy qualification from the University ofNatal in 1959 and was awarded an honorary doctorate by the University of Natal in1990.

***Brian Connellan***hasbeen our director since 1997. From 1990 to 2000, Mr. Connellan served asexecutive chairman of Nampak Limited and from 2000 to 2001 as non-executivechairman of Nampak. He was a director of Nampak until September 2005. Heis also a director of several other companies, including Tiger Brands Limited,ABSA Group Limited, Reunert Limited, Illovo Sugar Limited and Oceana GroupLimited. He is past councilor of the South African Foundation, The CorporateForum and The Institute of Directors and a contributor to both King Reports onCorporate Governance in South Africa. Mr. Connellan received hisCertificate in Theory of Accountancy from Witwatersrand University in 1961 andbecame a chartered accountant with the Public Accountants and Auditors Board in1963.

***Nolitha Fakude***becameour director on 1 October 2005. Ms Fakude is responsible for theworld-wide Human Resources and Strategy functions of the Group. She is also adirector of several other companies in the Group. Before joining Sasol, she wasa member of the Group Executive Committee at Nedbank Group Limited. She is alsoa director of Woolworths Holdings Limited, Harmony Gold Mining Company Limitedand the non-executive President of the Black Management Forum. She holdsBachelor of Arts and Honors degrees in Psychology from the University of FortHare and attended the Senior Executive Program at Harvard Business School inthe United States.

***Mandla Gantsho***hasbeen our director since 2003. He is the chief executive officer and managingdirector of the Development Bank of Southern Africa. Prior to this appointmentin 2001, he served as chief financial officer of DBSA. Between 1999 and 2000 hewas seconded as advisor to a vice-president of the International FinanceCorporation in Washington. He obtained a Bachelor of Commerce from theUniversity of Transkei in 1983 and a Certificate in Accountancy Theory and aBachelor of Commerce (with Honors) in Financial Management from the Universityof Cape Town in 1985 and 1986, respectively. 

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He became a charteredaccountant with the Public Accountants and Auditors Board in 1987. He alsoobtained a Masters in Science from The George Washington University in 2002.

***Anshu Jain***hasbeen our director since 2003. He has been a member of the General Executive Committeeof Deutsche Bank AG since 2002. He is currently the managing director and headof global markets at Deutsche Bank. Prior to this appointment he was a managingdirector of Merrill Lynch in New York. He obtained a Bachelor of Arts(with Honors) in economics from Delhi University in 1983 and a Master ofBusiness Administration in Finance from the University of Massachusetts in1985.

***Imogen Mkhize***hasbeen our director since 1 January 2005. Ms Mkhize is currently chiefexecutive officer of the 18th World Petroleum Congress. Previously, she was theexecutive chairman of the Zitek Group and the managing director of LucentTechnologies South Africa. In 2001, the World Economic Forum recognized her asa Global Leader for Tomorrow. Ms Mkhize is a director of Murray &Roberts Holdings Limited and Datacentrix Holdings Limited and serves on theboards of the CSIR, the Financial Markets Advisory Board and Rhodes University.

***Sam Montsi***has been our director since 1997. Mr. Montsi is chairman of MontsiInvestments (Pty) Limited. He is a director of Independent News andMedia (SA) (Pty) Limited, Business Arts South Africa and allcompanies in which Montsi Investments has invested. He received a Bachelor ofArts in Development Economics from the University of Botswana, Lesotho andSwaziland in 1970 and a Masters in Development Economics from Williams Collegein Massachusetts in the United States in 1973.

***Jürgen Schrempp***has been our director since 1997. He has been chairman of the board ofmanagement of DaimlerChrysler AG since 1998 and prior to that, chairman ofthe board of management of Daimler-Benz AG since 1995. He is also adirector of Vodafone Group plc (United Kingdom) and Compagnie FinancièreRichemont (SA) (Switzerland). Professor Schrempp is founding chairman ofthe Southern Africa Initiative of German Business (SAFRI), a member of theAdvisory Council of Deutsche Bank AG, the European Advisory Board ofHarvard Business School, the German Council of INSEAD and the South AfricanPresident’s International Investment Council. He holds a Professorship of theFederal State of Baden-Württemberg, Germany and Honorary Doctorates ofthe University of Graz, Austria and the University of Stellenbosch, SouthAfrica. He has received numerous national and international awards, amongstwhich the Order of Good Hope, South Africa’s highest civilian award.

***Conrad Strauss*** has been our directorsince 2000. From 1992 to 2000, he was the chairman of Standard Bank InvestmentCorporation Limited. He still serves as a director of the Standard Bank ofSouth Africa Limited as well as Afrox Limited and Hans MerenskyHoldings (Pty) Limited. Dr. Strauss previously served as the nationalchairman of the South African Institute of International Affairs, thePresidential Commission of Enquiry into Rural Finance and the South AfricaFoundation. Dr. Strauss received a Bachelor of Arts from RhodesUniversity, South Africa in 1956, a Master of Science from Cornell Universityin 1958, a Doctorate from Rhodes University in 1961 and holds honorarydoctorates from Rhodes University and from the University of Pretoria, SouthAfrica.

**Chief Executive**

Our chief executive, whois appointed by the Board, is responsible for the day-to-day management and thestrategic direction of the company. Our Board may from time to time confer uponour chief executive any of their powers as they deem fit, and may confer,recall, revoke, vary or alter these powers.

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**Senior Management**

Thefollowing is a list of our senior executive officers as of 1 October 2005,who are also members of our GEC, whose current areas of responsibility we setout below:

| **Name**                       | ** ** | ** **                                                                                                                                                                 | ** ** | **Position and areas of responsibility** |
|--------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------|
| Lawrence Patrick Adrian Davies |       | Chief Executive                                                                                                                                                            |
| Trevor Stewart Munday          |       | Deputy Chief Executive  and Chief Financial Officer, responsible for Sasol’s chemical businesses and  corporate affairs.                                              |
| Johannes Albertus Botha        |       | Group General Manager,  responsible for Sasol Synfuels, Sasol LFB and gas distribution and marketing.                                                                      |
| Abraham de Klerk               |       | Group General Manager,  responsible for Sasol Technology and safety, health and the environment.                                                                           |
| Nereus Louis Joubert           |       | Group General Manager  and Company Secretary, responsible for legal, procurement and supply,  insurance, risk management and internal audit functions.                     |
| Victoria Nolitha Fakude        |       | Executive Director  responsible for Group Human Resources and Strategy.                                                                                                    |
| Max Vuyisile Sisulu            |       | Group General Manager  responsible for key stakeholder relationships and Black Economic Empowerment  and Employment Equity.                                                |
| Giullean Johann Strauss        |       | Group General Manager  responsible for Sasol Petroleum International, Sasol Synfuels International  and Sasol Chevron.                                                     |
| Jan Adrian van der  Westhuizen |       | Group General Manager  responsible for the Sasol Mining, the establishment of a group services model,  Secunda shared and site services, and group information management. |
| Rynhardt van Rooyen            |       | Group General Manager, responsible for the group  financial function.                                                                                                      |

 

***Hannes Botha***has been our Group General Manager since 2003. He is responsible for Sasol’sliquid fuel business, gas business and Sasol Synfuels. He joined Sasol in 1981as a divisional manager and after acting as general manager responsible formanufacturing facilities and engineering activities of various plants, waspromoted to managing director of Sasol Synfuels in 1993 and the managingdirector of Sasol Oil in 1998. Mr. Botha is a director of severalcompanies in the group. He obtained his Bachelor of Science (ElectricalEngineering) in 1970 from the University of Pretoria, South Africa and in 1980his Master of Business Leadership from the University of South Africa.

***Bram de Klerk***became our Group General Manager in 2003. He is responsible for Sasol Technologyand safety, health and the environment. He was the managing director of SasolSynfuels from 1998 until 2003 and was appointed a Director of Sasol Technologyin September 2003. He joined Sasol in 1973 as an assistant design engineerand became the managing director of National Petroleum Refiners ofSA (Pty) Limited in 1993. Mr. De Klerk is a director of severalcompanies in the Sasol group. He received a Bachelor of Science (MechanicalEngineering) from the University of Pretoria, South Africa in 1973 and a Masterof Business Administration from the University of Potchefstroom, South Africain 1978.

***Nereus Joubert***has been our Company Secretary since joining Sasol in 1994 and a Group GeneralManager since 2003. Currently he is responsible for the group companysecretarial, legal, procurement and supply, insurance, risk management andinternal audit functions and serves on the boards of several of the companiesof the Sasol group. He obtained a Bachelor of Laws degree, a post-graduateBachelor of Law degree and a Doctor of Law degree from Rand AfrikaansUniversity, South Africa (now the University of Johannesburg) in 1978, 1980 and1985 respectively and attended the Advanced Management Program at 

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Harvard Business School inthe United States in 2000. He also conducted post doctoral research at theUniversity of Saarland, Germany as an Alexander Von Humboldt scholar during1989 and 1993. Prior to joining the company, Dr Joubert was a professor oflaw and vice dean of the faculty of law of the Rand Afrikaans University, SouthAfrica (now the University of Johanneburg).

***Max Sisulu***joined Sasol as our Group General Manager in 2003. He is responsible forgovernment and stakeholder relationships. He previously was deputy chiefexecutive of Denel (Pty) Limited, a post he held from November 1998.After his return from exile he became a Member of Parliament in 1995 and servedas chief whip of the African National Congress. He is a council member of theHuman Sciences Research Council and a member of the recently establishedNational Environment Advisory Forum of the Department of Environmental Affairsand Tourism. He is a non-executive director of African Rainbow Minerals,Imperial Holdings and the Resolve Group, non-executive chairman of UkhambaHoldings as well as director of several companies in the Sasol group. Mr. Sisuluobtained a Masters of Arts in Political Economy from the Plekhanov Institute inMoscow in 1969 and a Masters of Arts in Public Administration from the KennedySchool for Government at Harvard University in the United States in 1993. Hewas the recipient of the Govan Mbeki Fellowship at the University of Amsterdam,Netherlands, where he completed and published an extended research paper on themicro-electronics industry in South Africa from 1984 to 1985.

***Lean Strauss***became our Group General Manager in August 2005, responsible for SasolSynfuels International, Sasol Petroleum International and Sasol Chevron. Hejoined Sasol in 1982 as an investment officer of the Sasol Pension Fund. Hespent most of his career with Sasol Oil and held the positions of GeneralManager, Manufacturing and Supply as well as General Manager, Marketing. He wasappointed General Manager of Sasol Gas in 1997 and managing director of SasolNitro in 2002. He is also a director of several companies in the Sasol group. Heobtained Bachelor of Commerce and Bachelor of Commerce (with Honors) degreesfrom the University of Stellenbosch prior to joining Sasol and a Masters ofCommerce degree in Business Management from the Rand Afrikaans University (nowthe University of Johannesburg) in 1986.

***Jannie van derWesthuizen*** has been our Group General Manager since 2003,responsible for the mining division, the establishment of a group servicesmodel, Secunda shared and site services, and group information management,previous to which he was the General Manager responsible for group humanresources and mining. He joined Sasol Mining in 1986 and was the GeneralManager of Brandspruit Colliery, Sasol Mining when he left in 1993 to join Eskomas Fuel and Water Manager. In 1996, he joined Organization DevelopmentInternational as the Director and Head of Mining Practice and in April 1997rejoined Sasol as managing director, Sasol Mining . He is a director of severalcompanies in the group. He obtained his Bachelor of Science (IndustrialEngineering) in 1972, a Master of Business Administration in 1975 and in 1979 aPost Graduate Diploma in Mining (Cum Laude) from the University of Pretoria,South Africa. He attended the Executive Management Program in 1991 at thePennsylvania State University in the United States and in 2002, attended theStanford Executive Program at Stanford University, United States.

***Rynhardt van Rooyen***has been our Group General Manager responsible for the group financial functionsince June 2003, previous to which he was General Manager of Finance. Hejoined Sasol in 1977 as a senior accounting officer. He is a director ofseveral companies in the group. He obtained a Bachelor of Commerce from theUniversity of the Orange Free State, South Africa in 1971 and a Bachelor ofComputationis (with Honors) from the University of South Africa in 1975. Hebecame a chartered accountant in 1976 and is registered with the South AfricanInstitute of Chartered Accountants. In 1986, he attended the ExecutiveManagement Program and in 1994, the Strategic Purchasing Management Program atthe Pennsylvania State University in the United States.

See above for biographiesof our executive directors.

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**6.B**   Compensation

*Compensationof senior management under the JSE Listings Requirements.**  *We are not required to, and do nototherwise, disclose compensation paid to individual senior managers.

During the year ended 30 June 2005, the aggregatecompensation paid or payable to executive directors and the GEC of Sasol as agroup was approximately R34.6 million, including all salaries, fees, annualincentives, contributions during such period to provide pension, retirement orsimilar benefits and other benefits for directors and the GEC of Sasol, ofwhich R3.2 million was due to pension benefits for members, R7.3 millionwas due to annual incentives and R4.6 million to other benefits.

For details on the shares and shares options held byour Board of Directors named in Item 6.A see “Item 6.E—Share Ownership”.

The following tablessummarize the compensation received by our executive and non-executivedirectors in the year 2005.

**Directors’ Compensation**

| **Executive Directors** | ** ** | ** **                        | ** ** | **Salary** | ** ** | **Annual  incentive**(1) | ** ** | **Retirement  funding** | ** ** | **Other** | ** ** | **Total  2005** | ** ** | **Total  2004** | ** ** |
|------------------------------|------------|-----------------------------------|------------|------------|------------|--------------------------|------------|-------------------------|------------|-----------|------------|-----------------|------------|-----------------|------------|
| ** **                   | ** ** | **(Rand in thousands)** | ** ** |
| P V Cox                      |       | 4,411                             |       |       | 2,128      |                     |       | 157                     |       | 2,531     | (2)        | **9,227**       |       | 5,031           |       |
| L P A Davies                 |       | 2,975                             |       |       | 851        |                     |       | 536                     |       | 278       | (3)        | **4,640**       |       | 3,749           |       |
| J H Fourie(5)                |       | —                            |       |       | 743        |                     |       | —                  |       | —    | ** ** | **743**         |       | 3,045           |       |
| T S Munday                   |       | 2,714                             |       |       | 792        |                     |       | 538                     |       | 272       | (4)        | **4,316**       |       | 3,452           |       |
| Total                        |       | 10,100                            |       |       | 4,514      |                     |       | 1,231                   |       | 3,081     | ** ** | **18,926**      |       | 15,277          |       |

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(1)           Refers toincentives awarded, based on the company results for the 2004 year.

(2)           The amount for PV Cox includes travel benefits (R335,438), medical benefits (R19,300), leaveencashment on retirement (R1,407,654) and cash in lieu of retirement funding incompliance with retirement fund rules not allowing contributions after theage of 60 (R762,326). The amount also includes fringe benefits for vehicleinsurance (R2,620), a security benefit (R3,300) and a benefit in terms of thecompany’s employee share savings scheme (R672).

(3)           The amount for LP A Davies includes vehicle benefits (R248,783), medical benefits (R19,899),fringe benefits for vehicle insurance (R2,620), a security benefit (R3,300) anda benefit in terms of the company’s employee share savings scheme (R672).

(4)           The amount for TS Munday includes vehicle benefits (R248,783), medical benefits (R20,555) andfringe benefits for vehicle insurance (R2,620).

(5)           Retired as anexecutive director in February 2004.

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| **Non-executive directors** | ** ** | ** ** | ** ** | **Board  meeting fees** | ** ** | **Paid by  subsidiaries** | ** ** | **Committee  fees** | ** ** | **Total 2005** | ** ** | **Total 2004** | ** ** |
|----------------------------------|------------|------------|------------|------------------------------|------------|--------------------------------|------------|---------------------|------------|---------------------|------------|---------------------|------------|

| ** **       | ** ** | **(Rand in thousands)** | ** ** |
|------------------|------------|-----------------------------------|------------|
| P du P Kruger    |       |                              | 462        |   |   | 2,456 | (1) |   | 345 |   |   | **3,263** |   |   | 3,014 |   |
| E le R Bradley   |       |                              | 231        |   |   | — |   |   | 138 |   |   | **369** |   |   | 344 |   |
| W A M Clewlow(2) |       |                              | 231        |   |   | — |   |   | 282 |   |   | **513** |   |   | 559 |   |
| B P Connellan(3) |       |                              | 231        |   |   | — |   |   | 311 |   |   | **542** |   |   | 451 |   |
| M S V Gantsho(4) |       |                              | 231        |   |   | — |   |   | 69 |   |   | **300** |   |   | 279 |   |
| A Jain(5)        |       |                              | 495        |   |   | — |   |   | — |   |   | **495** |   |   | 487 |   |
| S Montsi(6)      |       |                              | 231        |   |   | — |   |   | 195 |   |   | **426** |   |   | 279 |   |
| S B Pfeiffer(7)  |       |                              | 170        |   |   | — |   |   | 12 |   |   | **182** |   |   | 487 |   |
| J E Schrempp(5)  |       |                              | 509        |   |   | — |   |   | — |   |   | **509** |   |   | 512 |   |
| I N Mkhize(8)    |       |                              | 116        |   |   | — |   |   | 23 |   |   | **139** |   |   | — |   |
| C B Strauss      |       |                              | 231        |   |   | — |   |   | 185 |   |   | **416** |   |   | 387 |   |
| J H Fourie(9)    |       |                              | 116        |   |   | 346 |   |   | — |   |   | **462** |   |   | 312 |   |
| Total            |       |                              | 3,254      |   |   | 2,802 |   |   | 1,560 |   |   | **7,616** |   |   | 7,111 |   |

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(1)           Inclusive offringe benefits amounting to R30,808 (travel, insurance and security).

(2)           Resigned aschairman from the Audit Committee with effect from 6 September 2004.

(3)           Resigned aschairman of the Risk & SHE Committee and appointed as chairman of theAudit Committee with effect from 6 September 2004. Appointed as member ofthe Compensation Committee with effect from 1 March 2005.

(4)           Resigned fromthe Risk & SHE Committee, and requested by the board to attend theAudit Committee meetings with effect from 6 September 2004.

(5)           Fees paid in USdollars, rand equivalent of $79,500 at actual exchange rates.

(6)           Appointed aschairman 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 USdollars amount to $26,500. Resigned with effect from 31 October 2004;appointed to the Risk & SHE Committee with effect from 6 September 2004and resigned at the end of October 2004.

(8)           Appointed asnon-executive director with effect from 1 January 2005. Appointed asmember of the Risk & SHE Committee with effect from 1 March 2005.

(9)           Resigned as anon-executive director of Sasol Limited with effect from 1 January 2005.

*Directors’service contracts.**  *Thereare no fixed-term service contracts for executive and non-executive directors.Executive directors have standard employee service agreements with noticeperiods ranging between 30 and 90 days.

An executive director isrequired to retire from the board at the age of 60, unless requested by theboard to extend his or her term. A non-executive director is required to retirefrom 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 ayear-to-year basis, extends the director’s term of office until the year inwhich he or she turns 73.

**6.C**   Board Practices

***Appointment, retirement and re-election of directors***

Our directors are elected by our shareholders at theannual general meeting. The Board of Directors may appoint any person as adirector, either to fill a vacancy or as an addition to the Board, providedthat the total number of directors does not at any time exceed the maximum of15 directors of which a 

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maximum of five may beexecutive directors. Directors appointed by the Board in this manner arerequired to retire at the next annual general meeting following theirappointment, but are eligible for re-election. There is no requirement in theArticles of Association that directors must hold qualifying shares. If thenumber of persons nominated as directors does not exceed the number of vacanciesavailable, then the nominated directors are deemed to have been duly elected.

At the annual general meeting of the company,one-third of the serving directors shall retire or, if the total number ofserving directors who shall retire does not constitute a multiple of three, thenumber of directors who shall retire shall be the number, adjusted upwards,that is the closest to one-third.

A director who wasappointed for the first time at an annual general meeting or by the Board ofDirectors after 27 October 1997 shall retire five years after hisinitial appointment. Directors who have retired in this manner are eligible forautomatic re-election by the shareholders if they were re-appointed afterretirement by either the Board or the shareholders.

***Board procedures and matters***

The Board hasadopted a Board Charter of which a copy is available on our website (*www.sasol.com*). It provides a concise overview of:

·       the demarcation of theroles, functions, responsibilities and powers of the Board, the shareholders,individual directors, officers and executives of the company;

·       the terms of reference ofthe various board committees;

·       matters reserved for finaldecision-making or pre-approval by the Board; and

·       the policies and practicesof the Board in respect of matters such as corporate governance, trading bydirectors in the securities of the company, declarations of conflicts ofinterest, Board meeting documentation and procedures and the nomination,appointment, induction, training and performance evaluation of directors andmembers of Board committees.

A quorum for a Board resolution comprises fivedirectors, three of whom must be non-executive. The Board meets at least fourtimes a year. It approves the strategic direction of the company defined by thechief executive, maintains full and effective control over the company andmonitors the executive management through a structured approach to reportingand accountability. However, the company adopts a decentralized approach to theday-to-day running of the businesses of the group.

The independent non-executive directors are chosen fortheir experience, business skills and acumen and bring independent, experiencedjudgment to bear on issues of strategy, performance and resources, includingkey appointments, standards of conduct, protection of stakeholders’ interestsand the setting of company policy. Considerations of gender and racialdiversity, as well as diversity in respect of business, geographic and academicbackgrounds, are taken into account when appointments to the Board areconsidered.

Newly appointed directors are inducted in the company,board matters and their duties as directors in accordance with their specificneeds.

The effectiveness and performance of the Board, itscommittees and the individual directors and members of the Board and itscommittees are reviewed annually by the Nomination and Governance Committee.

Our Board is supported by the advice and services ofthe Company Secretary, who is appointed in accordance with the South African CompaniesAct, and who is responsible to the Board for ensuring the proper administrationof Board proceedings. The Company Secretary also provides guidance to thedirectors in connection with their legal duties and responsibilities and themanner in which such duties and 

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responsibilities,including not dealing in the company’s shares during restricted periods, shouldbe discharged. A report on directors’ dealings in the company’s shares istabled at each Board meeting and publicly disclosed in accordance with theapplicable JSE and NYSE listings requirements.

The directors are entitledto seek independent professional advice at the company’s expense about thecompany’s affairs and have access to any information they may require indischarging their duties as directors.

***Board committees***

To assist our Board in discharging itsresponsibilities, we have established several committees, which are accountableto the Board and operate on the basis of specific charters. During the year thecharters of the Audit Committee, the Compensation Committee, the Nomination andGovernance Committee and the Risk and Safety, Health and Environment Committee(“Risk and SHE Committee”) were reviewed and updated to conform to the NYSEcorporate governance rules. These charters form part of the Board Charter andare available on our website (*www.sasol.com*).

Our subsidiaries, as well as their operatingbusinesses, have also established board and committee structures to ensure themaintenance of high standards and best practice with respect to corporategovernance and internal control. We retain decision-making involvement inrespect of a defined list of material matters in respect of the businesses ofour subsidiaries. This list includes matters such as the appointment ofdirectors, strategy charters, large capital expenditure and mergers,acquisitions and disposals. The boards of our main subsidiaries and divisionsare constituted in such a way that a majority of directors of each mainsubsidiary or divisional board are non-executive directors of the subsidiary ordivision.

The Chairman of our Board and members of the GEC serveon the Boards of all the main Sasol businesses. The attendance of the Chairmanat our main subsidiary board meetings provides an essential link between ourbusinesses and the non-executive directors of our Board.

*TheCompensation Committee.**  *The Compensation Committee was established in 1989and as of March 2005 comprises five members, all of whom are independentnon-executive directors. As of 30 June 2005, its members were PaulKruger (chairman), Elisabeth Bradley, Warren Clewlow, Brian Connellan and SamMontsi. The Compensation Committee meets at least twice a year to discuss anddetermine the group’s remuneration policy and strategy.

The functions ofthe Compensation Committee are to:

·       assist the Board inexercising its function of ensuring that affordable, fair and effectivecompensation practices are implemented in our group;

·       determine the compensationof group management members;

·       make recommendations to theboard in respect of directors’ fees and the compensation and services conditionsof the executive directors, including the chief executive; and

·       provide a channel ofcommunication between the board of directors and management on compensationmatters.

The Compensation Committee has determined ourremuneration philosophy, which is to offer remuneration that will attract,retain, motivate and reward employees with the skills required for us toachieve our business goals and to base remuneration on personal and companyperformance in accordance with competitive market practices.

*TheNomination and Governance Committee.**  *The Nomination and GovernanceCommittee was formed during 2002 and is comprised entirely of independentnon-executive directors. The members of this 

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committee are Paul Kruger(chairman), Elisabeth Bradley, Warren Clewlow, Sam Montsi and Conrad Strauss.The Nomination and Governance Committee meets at least twice a year.

The functions of the Nomination and GovernanceCommittee include reviewing and making recommendations to the Board on thegeneral corporate governance framework of the group, the composition andperformance of the Board, its committees, individual directors and committeemembers, legal compliance and the company’s ethics policy and programs.

*TheAudit Committee.**  *TheAudit Committee was established in 1988 and is an important element of theBoard’s system of monitoring and control. The Audit Committee meets at leastthree times a year. All the members of the Audit Committee are independentnon-executive directors, financially literate and have extensive AuditCommittee experience. They are Brian Connellan (chairman), Warren Clewlow andConrad Strauss. Mr. Warren Clewlow has been determined by the Board as an AuditCommittee financial expert within the meaning of the Sarbanes-Oxley Act.

The Audit Committeehas been established primarily to assist the board in overseeing:

·       the quality and integrityof the company’s financial statements and public disclosures in respectthereof;

·       the scope and effectivenessof the external audit function;

·       the effectiveness of thecompany’s internal controls and internal audit function.

The board has delegated extensive powers in accordancewith King II and US corporate governance requirements to the Audit Committee toperform the above functions. In line with these requirements, the AuditCommittee has, among other things, determined which categories of non-auditservices provided by the external auditors should be pre-approved by the AuditCommittee and which may be approved by a designated member of the AuditCommittee.

The Audit Committee meets regularly with the group’sexternal and internal auditors and managers to consider risk assessment andmanagement, to review the audit plans of the external auditors, and to reviewaccounting, auditing, financial reporting, corporate governance and compliancematters. The Audit Committee approves the external auditors’ engagement letteron the terms, nature and scope of the audit function and the audit fee. Theinternal audit charter, internal audit plan and internal audit conclusions aresimilarly reviewed and approved by the Audit Committee. Interim and annualresults of the group and trading statements of the company are reviewed by theAudit Committee before publication. The Audit Committee usually makesrecommendations and refers matters for information or approval to the Board.

Both the Audit Committee and the board are satisfiedthat there is adequate segregation between the external and internal auditfunctions and that the independence of the internal and external auditors isnot in any way impaired or compromised.

*TheRisk and Safety, Health and Environment Committee.**  *The Risk and SHE Committee wasformed during 2002. It is comprised of two executive and five non-executivedirectors, Sam Montsi (chairman), Brian Connellan, Pieter Cox, Pat Davies, PaulKruger, Imogen Mkhize and Trevor Munday. The committee meets at least twice ayear. The functions of the committee include reviewing and assessing the integrityof our risk management process including effective management of risk policiesand strategies in respect of safety, health and environmental matters.

*TheGEC.**  *OurBoard has delegated a wide range of matters relating to the management of ourgroup to the GEC, including financial, strategic, operational, governance, riskand functional issues. Its focus is on the formulation of our group strategyand policy and the alignment of group initiatives and activities. The GEC meetsweekly and reports directly to our Board.

For the members of the GEC see “Item 6.A—Directorsand Senior Management”.

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During the year the GEC’s functioning was supported bytwo of its subcommittees, the Southern African Executive Committee and theInternational Executive Committee, each of which focused on issues relating tothe management of our Southern African and international businesses,respectively. The meetings of both the Southern African Executive Committee andthe International Executive Committee were deemed meetings of our GEC, withregard to the powers delegated to the GEC by our Board.

*TheSouthern African Executive Committee.**  *The GEC met monthly with managingdirectors and senior functional managers of our Southern African businesses todiscuss material issues pertaining to our businesses in Southern Africa as wellas regional issues. Among the issues addressed were material business matters,government relations, legal and regulatory issues, empowerment of historicallydisadvantaged South Africans, employment equity, HIV/AIDS, socio-economictrends and indicators, and social responsibility.

The Southern African Executive Committee consisted ofthe members of the GEC and managing directors of our Southern Africanbusinesses, including Sasol Polymers, Sasol LFB, Sasol Synfuels, SasolInfrachem, Sasol Technology, Sasol Mining and Sasol Nitro, as well as seniorexecutives of group functions.

*TheInternational Executive Committee.**  *The GEC also met monthly withmanaging directors and senior functional managers of our businesses outsideSouth Africa. The focus of the International Executive Committee was on thegeneral business and strategic issues of our international businesses and jointventures and the performance of those businesses. It also focused on regionalissues such as the general business climate, market trends and indicators,legal and regulatory matters, human resources and social responsibility.

In addition to GEC members, the InternationalExecutive Committee comprised representatives of Sasol Chevron, Sasol Solvents,Sasol Olefins and Surfactants, Sasol Wax and other non-South African managers.

As of 17 August 2005the Southern African Executive Committee and the International ExecutiveCommittee were replaced by a Committee of Managing directors of our mostsignificant businesses.

 

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***Internal control and risk management***

*Internal Controls.**  *Our directors are ultimatelyresponsible for our company’s system of internal control, which is designed toprovide reasonable assurance against material misstatement as a result offraud. The group maintains systems of internal financial controls that aredesigned to provide assurance regarding the maintenance of proper accountingrecords and the reliability of financial information used within the group andfor publication. These systems contain self-monitoring mechanisms and controls,and actions are taken to correct deficiencies as they are identified. Theinternal control systems include:

·       adocumented organizational structure and reasonable division of responsibility;

·       establishedpolicies and procedures which are communicated throughout the group, includinga code of conduct to foster a strong ethical climate; and

·       establishedmechanisms and systems to ensure compliance.

As required by the SEC rules, the general disclosurecontrols and procedures of our company have been formalized and are assessedperiodically by management and our Board for effectiveness. We are also faradvanced with a project to ensure compliance with the requirements of Section 404of the Sarbanes-Oxley Act. For more information on disclosure controls andinternal controls over financial reporting see “Item 15.—Controls andProcedures”.

*Internal Audit Function.**  *We have an internal audit functioncovering our global operations. Our internal audit function is responsible forthe following:

·       assistingthe board and management in monitoring the effectiveness of our risk managementprocess; and

·       assistingthe board and management in maintaining effective controls by evaluating thosecontrols on an ongoing basis to determine their efficiency and effectivenessand developing recommendations for improvement.

The controlssubject to evaluation encompass the following:

·       theinformation management environment;

·       thereliability and integrity of financial and operating information;

·       thesafeguarding of assets; and

·       theeffective 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. Auditplans are updated as appropriate to ensure that they are responsive to changesin the business. Comprehensive findings reports are presented to the Risk and SHECommittee and the Audit Committee at each of their scheduled meetings.

Follow-up audits are conducted in areas where internalcontrol weaknesses are found or previously experienced.

Corporategovernance best practice requires that the internal audit function reportdirectly to the Audit Committee. Such a direct reporting requirement is ensuredby the Audit Committee mandate and practice to:

·       evaluatethe effectiveness of internal audit;

·       reviewand approve the internal audit charter, internal audit plans and internal auditconclusions in respect to internal control;

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·       reviewsignificant internal audit findings and the adequacy of corrective action takenin response to significant internal audit findings;

·       assessthe performance of the internal audit function and the adequacy of availableinternal audit resources;

·       reviewsignificant differences of opinion between management and the internal auditfunction; and

·       considerthe appointment, dismissal or reassignment of the head of internal audit.

The Charter of theInternal Audit Department provides that the head of internal audit has directaccess to the chief executive and the chairman of the Audit Committee.

The head of internal auditreports administratively to the Group General Manager responsible for thecompany secretarial, legal, risk management and insurance departments.

*Risk Management.**  *The Board is responsible forgoverning risk management processes in the Sasol group in accordance withcorporate governance best practice.

Theestablishment of a more formalized enterprise-wide risk management process wasinitiated during the 2002 year with the following principal objectives:

·       providingthe Board with assurance that significant business risks are systematicallyidentified, assessed and reduced to acceptable levels in order to achieve anoptimal risk-reward profile;

·       makingrisk identification and risk management an integral part of the dailyactivities of everyone in the organization.

Substantial progress hasbeen made to date in achieving the above objectives. There are still certaincomponents of the process which need to be further developed and embedded andprograms are in place to address these.

Sasol’senterprise-wide risk management process is guided by the following keyprinciples:

·       aclear assignment of responsibilities and accountabilities;

·       theuse of a single enterprise-wide risk management framework and process;

·       independentreview of the effectiveness of the process; and

·       thecontext of risk management activities is the achievement of business plans andstrategic objectives.

Our insurance department,with the assistance of external insurance consultants, undertakes regular riskcontrol audits of all our plants and operations using recognized internationalprocedures and standards. We participate in an international insurance programthat provides, at competitive costs, insurance cover for losses above tolerablelevels.

Responsibility formonitoring management by line management of each of these risks is assigned toa GEC member.

Disaster recovery plansare continually reviewed for critical information management systems that couldhave a material impact on the group’s continuing operations. Certain of theseplans are subject to regular testing and, in other cases, are subjected toongoing tests to ensure their robustness and reliability.

For more information onthe main risks facing our group see “Item 3.D—Risk Factors”.

*Sustainability Reporting.**  *We currently report on all aspectsof the group’s social, transformational, ethical, safety, health andenvironmental policies and practices to the Board and, from time to time, tothe group’s stakeholders. A comprehensive sustainability report is publishedannually and is available on our website (*www.sasol.com*).

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**6.D**   Employees

We have developed and implemented five valuesgroup-wide in order to support our vision, culture and strategic goals. During2005 a sixth value, in support of our drive towards improved safety, was added.

The six Sasol values; *customer focus, winning with people, safety,excellence in all we do, continuous improvement and**integrity;* have been rolled out to all ofour employees. We will continue to focus to fully integrate behavior inaccordance with our values in our performance management system.

**WorkforceComposition(1)**

| **Region**    | ** ** | ** ** | ** ** | **2005**   | ** ** | **2004**   | ** ** | **2003** | ** ** |
|---------------|------------|------------|------------|------------|------------|------------|------------|----------|------------|
| South Africa  |       | 24,737     |       | 24,888     |       | 25,076     |       |
| Europe        |       | 3,753      |       | 4,438      |       | 4,448      |       |
| North America |       | 767        |       | 841        |       | 780        |       |
| Other         |       | 747        |       | 743        |       | 846        |       |
| **Total**     | ** ** | **30,004** | ** ** | **30,910** | ** ** | **31,150** | ** ** |

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(1)           Includes theworkforce of our incorporated joint ventures accounted for under the equitymethod for US GAAP.

*Developingour workforce*.   Our vision of being a respectedglobal enterprise and the rapid growth in many regions of the worldnecessitated the development of a comprehensive world-class talent managementsystem. This initiative comprises four focus areas, namely, performancemanagement, succession management, manpower planning and leadershipdevelopment. These actions significantly accelerated the development of keyrole players, planning of resources for new ventures and optimal staffing ofcurrent businesses.

A special project to attract and retain key talent forthe organization against the challenge of an ever increasing scarcity ofcertain jobs is starting to deliver positive results.

Using the work of Steven Drotter, Sasol also developeda leadership pipeline for the group to facilitate career planning, focuseddevelopment and clear performance objectives for each level of leadership. Allour current leadership programs at business schools are in the process of beingrevamped to reflect the redefined requirements for current and future leadersin order to meet the challenges of the future Sasol strategy.

All Sasol businesses have developed a ten year peopleplan reflecting needs, excesses and problem areas. This has been “rolled-up” toreflect a Sasol group picture. This enabled Sasol to have a better understandingof its risk areas and facilitated a more focused approach to action plans toremedy the challenge.

In South Africa, we sponsor a significant number ofbursaries for undergraduate and post graduate students. The majority ofstudents are studying engineering, with a smaller percentage in the sciencesand related technological disciplines at various universities around thecountry on a full-time basis.

Approximately 77% of our current bursaries have beenallocated, in keeping with our commitment to promoting workplace diversity andprogressing employment equity, to people from the designated groups. UnderSouth Africa’s Employment Equity Act No. 55 of 1998 (“Employment EquityAct”), designated groups include Black people (Africans, Coloreds and Indians),women and people with disabilities.

We recognize and believe that the young South Africandemocracy and a thriving corporate environment can only be sustained by agrowing economy underpinned by a vibrant and diverse business leadership. Inresponse to this challenge, we are now at the fourth intake of employeesparticipating in our Accelerated Leadership Development Program (“ALDP”). Theexperience gained from the launch of the program (in 2001-2002) has confirmedthe need for and our commitment to business leadership 

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development. Currentlytwenty two high potential, professionally qualified, and historicallydisadvantaged South Africans from different disciplines are being developedthrough the ALDP. This program is primarily designed to equip and expose theparticipants to our specific business expertise, and also focuses on theindustry and global business challenges faced by us.

The Employment Equity Act prescribes equity anddemocracy in the work place, facilitating the employment of previously disadvantagedpersons at all job levels and in all job categories. As at 30 June 2005we have 39.4% of group leadership and professional positions being held byhistorically disadvantaged persons which stands us in good stead of achievingour set target of 40% by the end of the 2005 calendar year.

*Workerparticipation and relations with unions.**  *Building onto the efforts tomaintain and enhance relationships with all representative unions in ourcompany, we have again achieved a strike-free settlement in this year’s annualnegotiations against a backdrop of wage strikes in almost all other major industriesin South Africa. Much of this can be attributed to the sound relationships andproblem solving atmosphere that exists between the parties. Regularcommunication and sharing of business results and challenges with unionscontributed towards an understanding of the various Sasol challenges.

Sasol remains a highly unionized environment in thetechnical, artisan and general workers categories. The use of union managementforums and regular break-away conferences by the leadership of both groupsfacilitate transparency and sound relations.

All representative unions are represented on ourMedical Scheme and Pension fund Boards. Many senior company employees alsoserve on the Boards of union funds. Sasol plays a leading role in theBargaining Council for the petrochemical industry in South Africa.

*The HIV/AIDS Challenge.*   Inrecognizing the HIV/AIDS pandemic in Sub-Saharan Africa, Sasol in September 2002,launched a major initiative to address the threat of this disease in the group.The initiative named SHARP was launched at an initial committed cost of R13million. The SHARP strategy focused on:

·       reducingthe rate of infection through education

·       extendingthe quality of life of infected employees through the provision of managedhealthcare and anti-retroviral treatment

·       assessingthe real impact of the epidemic and planning for the challenges within eachbusiness.

We launched an initiative of voluntary testing andcounseling amongst all levels of employees with the full support andparticipation of senior management and the union leadership overcoming someprevious reservations about testing for HIV/AIDS in South Africa. We are verypleased to report an 82% voluntary testing uptake amongst all levels of the organizationwhich presented only a 7% HIV positive result for Sasol. This is significantlylower than previous actuarial projections calculated without testing.

This initiative is nowlinked to a “wellness” drive in Sasol whereby testing for cholesterol,hypertension, blood glucose and body mass index is also made available toemployees at no cost. Healthy eating and stop smoking campaigns and stressmanagement are also presented at these wellness days. The participation andenthusiasm experienced at these days reflect an encouraging trend amongstemployees.

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**6.E**   Share Ownership

*Shareholdings of directorsand officers.**  *Thefollowing table presents the beneficial shareholdings of our directors as of 30September 2005:

| **Beneficial Shareholding**     | ** ** | ** ** | ** **  | **30 September  2005** | ** ** |
|--------------------------------------|------------|------------|-------------|-----------------------------|------------|
| **Executive directors**              |       |       |        |                        |
| P V Cox                              |       |       | 59,772      |                        |
| L P A Davies                         |       |       | 194         |                        |
| T S Munday                           |       |       | —      |                        |
| **Non-executive directors**          |       |       |        |                        |
| P du P Kruger                        |       |       | 231,700     |                        |
| E le R Bradley                       |       |       | 298,000     |                        |
| W A M Clewlow                        |       |       | 13,195      |                        |
| B P Connellan                        |       |       | 10,500      |                        |
| V N Fakude                           |       |       | —      |                        |
| M S V Gantsho                        |       |       | —      |                        |
| A Jain                               |       |       | —      |                        |
| I N Mkhize                           |       |       | —      |                        |
| S Montsi                             |       |       | 25,000      |                        |
| J E Schrempp                         |       |       | —      |                        |
| C B Strauss                          |       |       | 40,100      |                        |
| **Total**                            | ** ** | ** ** | **678,461** |                        |
| **Group Executive Committee****(1)** | ** ** | ** ** | **47,625**  |                        |

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(1)           Excluding theexecutive directors disclosed separately in the table.

*Shareownership of senior managers under the JSE Listings Requirements.**  *Each of our directors and seniormanagers named under Item 6.B—Compensation beneficially own less than 1% of theoutstanding share capital of the company. We are not required to disclose shareownership of individual senior managers in the share capital of the company.

*Our Share Incentive Scheme.**  *We have implemented our ShareIncentive Scheme, the objective of which is to retain and reward our keyemployees, including executive directors. Non-executive directors received aonce-off allocation of share options in 2000. The non-executive directors atthe time were granted 25,000 shares each, 12,500 vesting after two years and12,500 vesting after four years from the date of the grant. This scheme isoffered to approximately 1,200 of our most senior employees and includes anoption to buy our shares at a price equal to their closing price on the mostrecent trading day on the JSE prior to the grant date. The value of the sharesoffered to each employee is based on a multiple of the employee’s total cashremuneration and occupation level. Should an employee accept the offer, he willbe entitled to take up a maximum of one-third of the shares after two years,two-thirds of the shares after four years and the full allocation after sixyears from acceptance. A share option shall lapse, if, among other reasons:

·       the share option is notexercised by the ninth anniversary of the offer;

·       the participant ceases tobe an employee for reasons other than death, retirement, incapacity or illhealth; or

·       the participant may notexercise the option for other legal reasons.

The Sasol Share Trust allocates share options toemployees, annually, at the instruction of our Board and our CompensationCommittee.

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The following tableprovides the number of share options granted to our executive and non-executivedirectors, and GEC through our Share Incentive Scheme:

**Share OptionsGranted**

| ** **                           | ** ** | **Balance at  30 June  2004**      | ** ** | **On  9 September  2004** | ** **  | **On  8 July  2005**                    | ** **  | **Average  offer price  per share**(3) | ** ** | **Share  options  exercised**(1) | ** ** | ** **   | **Resignations** | ** ** | **Balance at  30 September  2005** | ** **  |
|--------------------------------------|------------|----------------------------------------------|------------|--------------------------------|-------------|----------------------------------------------|-------------|--------------------------------------------------|------------|----------------------------------|------------|--------------|------------------|------------|----------------------------------------------|-------------|
| ** **                           | ** ** | **(Number of share options)** | ** ** | **(Rand)**                     | ** **  | **(Number of share options)** | ** **  |
| **Executive  directors**             |       |                                         |       |                           |        |                                         |        |                                             |       |                             |       |         | ** **       |       |                                         |        |   |   |   |   |
| P V Cox                              |       | 561,400                                      |       |                           | 84,200      |                                         | —      |                                             |       | 111.20                           |       | (167,400     | **)**            |       |                                         | —      |   |   | 478,200 |   |
| L P A Davies                         |       | 295,400                                      |       |                           | 39,700      |                                         | 390,000     |                                             |       | 185.67                           |       | (48,500      | **)**            |       |                                         | —      |   |   | 676,600 |   |
| T S Munday                           |       | 266,100                                      |       |                           | 36,200      |                                         | 280,000     |                                             |       | 183.86                           |       | (54,400      | **)**            |       |                                         | —      |   |   | 527,900 |   |
| **Non-executive directors**          |       |                                         |       |                           |        |                                         |        |                                             |       |                             |       |         | ** **       |       |                                         |        |   |   |   |   |
| P du P Kruger                        |       | 12,500                                       |       |                           | —      |                                         | —      |                                             |       | —                           |       | (12,500      | **)**            |       |                                         | —      |   |   | — |   |
| E le R Bradley                       |       | 12,500                                       |       |                           | —      |                                         | —      |                                             |       | —                           |       | (12,500      | **)**            |       |                                         | —      |   |   | — |   |
| W A M Clewlow                        |       | 25,000                                       |       |                           | —      |                                         | —      |                                             |       | —                           |       | —       | ** **       |       |                                         | —      |   |   | 25,000 |   |
| B P Connellan                        |       | 25,000                                       |       |                           | —      |                                         | —      |                                             |       | —                           |       | (25,000      | **)**            |       |                                         | —      |   |   | — |   |
| J H Fourie(2)                        |       | 177,900                                      |       |                           | —      |                                         | —      |                                             |       | —                           |       | (139,200     | **)**            |       |                                         | (38,700     | ) |   | — |   |
| S Montsi                             |       | 25,000                                       |       |                           | —      |                                         | —      |                                             |       | —                           |       | (25,000      | **)**            |       |                                         | —      |   |   | — |   |
| J E Schrempp                         |       | 25,000                                       |       |                           | —      |                                         | —      |                                             |       | —                           |       | (25,000      | **)**            |       |                                         | —      |   |   | — |   |
| C B Strauss                          |       | 25,000                                       |       |                           | —      |                                         | —      |                                             |       | —                           |       | (25,000      | **)**            |       |                                         | —      |   |   | — |   |
| **Total**                            | ** ** | **1,450,800**                                | ** ** | ** **                     | **160,100** | ** **                                   | **670,000** | ** **                                       | ** ** | ** **                       | ** ** | **(509,500** | **)**            | ** ** | ** **                                   | **(38,700** | ) | ** ** | **1,732,700** | ** ** |
| **Group Executive Committee****(4)** | ** ** | **689,300**                                  | ** ** | ** **                     | **86,600**  | ** **                                   | **136,200** | **(5)**                                          | ** ** | **176.49**                       | ** ** | **(232,400** | **)**            | ** ** | ** **                                   | **—**  |   | ** ** | **679,700** | ** ** |

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(1)    Exercise in the context of this table means the implementation ofthe share option.

(2)           Resigned as adirector with effect from 1 January 2005. The options indicated weregranted to Mr J H Fourie when he was still an executive director.

(3)           The average offerprice per share relates to share options granted up to 15 September 2005.

(4)           Excluding theexecutive directors disclosed separately in the table.

(5)           Share optionswere granted to the GEC on 15 September 2005.

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Thistable presents information regarding share options exercised during the period1 July 2004 to 30 September 2005:

**Gainon Exercise(1) of Share Options**

| ** **                       | ** ** | **Exercise dates** | ** ** | **Share options  exercised**        | ** **  | **Average  option  price per  share** | ** ** | **Average  market  price**(2) | ** ** | **Total gain  2005**(3) | ** ** |
|----------------------------------|------------|-------------------------|------------|------------------------------------------|-------------|--------------------------------------------|------------|-------------------------------|------------|------------------------------|------------|
| ** **                       | ** ** | ** **              | ** ** | **(Number of  share options)** | ** **  | **(Rand)**                                 | ** ** | **(Rand in  thousands)** | ** ** |
| **Executive Directors**          |       |                    |       |                                     |        |                                       |       |                          |       |                         |       |   |   |   |   |   |   |
| P V Cox                          |       |                    |       |                                     | 71,400      |                                       |       |                          |       |                         |       |   | ** ** | ** ** | **6,430** |   |   |
|                             |       | 5  November 2004   |       |                                     | 40,400      |                                       |       |                          | 25.10      |                         |       | 122.65 | ** ** | ** ** | **3,941** |   |   |
|                             |       | 5  November 2004   |       |                                     | 31,000      |                                       |       |                          | 42.30      |                         |       | 122.60 | ** ** | ** ** | **2,489** |   |   |
| L P A Davies                     |       |                    |       |                                     | 30,800      |                                       |       |                          |       |                         |       |   | ** ** | ** ** | **2,717** |   |   |
|                             |       | 3  November 2004   |       |                                     | 17,200      |                                       |       |                          | 25.10      |                         |       | 121.17 | ** ** | ** ** | **1,652** |   |   |
|                             |       | 3  November 2004   |       |                                     | 13,600      |                                       |       |                          | 42.30      |                         |       | 120.58 | ** ** | ** ** | **1,065** |   |   |
| T S 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** |   |   |
| B P Connellan                    |       | 7 April 2005       |       |                                     | 25,000      |                                       |       |                          | 53.80      |                         |       | 159.38 | ** ** | ** ** | **2,640** |   |   |
| J H Fourie                       |       |                    |       |                                     | 139,200     |                                       |       |                          |       |                         |       |   | ** ** | ** ** | **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** |   |   |
| J E Schrempp                     |       | 29 November 2004   |       |                                     | 25,000      |                                       |       |                          | 53.80      |                         |       | 113.98 | ** ** | ** ** | **1,505** |   |   |
| C B Strauss                      |       | 10 March 2005      |       |                                     | 25,000      |                                       |       |                          | 53.80      |                         |       | 147.10 | ** ** | ** ** | **2,333** |   |   |
| **Total**                        |       |                    | ** ** | ** **                               | **367,600** |                                       |       |                          |       |                         |       |   | ** ** | ** ** | **32,588** |   |   |
| **Group Executive Committee(4)** |       |                    | ** ** | ** **                               | **158,100** |                                       |       |                          |       |                         |       |   | ** ** | ** ** | **14,120** |   |   |

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(1)           Exercise in thecontext of this table means the implementation of the share option.

(2)           Average marketprice per share on the date of the exercise of the option.

(3)           Subsequent to 30June 2005 141,900 share options were exercised by our executive directorsresulting in a gain of R20.9 million, 25,000 share options were exercised byour non-executive directors resulting in a gain of R4.4 million and 74,300share options were exercised by members of the GEC resulting in a gain of R11.3million.

(4)           Excluding theexecutive directors disclosed separately in the table.

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The optionsoutstanding as of 30 September 2005 vest during the followingperiods:

**Share OptionsOutstanding**

| **Vesting period**          | ** ** | ** ** | ** **  | **Vested as of  30 June  2005** | ** **  | **Within  1 year** | ** ** | **1 to 2 years** | ** ** | **2 to 5 years** | ** **  | **More than  5 years** | ** ** | **Total**   | ** ** |
|----------------------------------|------------|------------|-------------|------------------------------------------------|-------------|-------------------------|------------|---------------------------------|------------|---------------------------------|-------------|----------------------------------|------------|-------------|------------|
| **Executive  directors**         |       |       |        |                                           |        |                    |       |                            |       |                            |        |                             |       |        |       |   |   |
| P V Cox                          |       |       | 112,200     |                                           | 183,100     |                    |       | 70,000                          |       |                            | 112,900     |                             |       | —      |       | **478,200** | ** ** |
| L P A Davies                     |       |       | 112,000     |                                           | 92,600      |                    |       | 160,700                         |       |                            | 181,300     |                             |       | 130,000     |       | **676,600** | ** ** |
| T S Munday                       |       |       | 94,200      |                                           | 84,300      |                    |       | 117,300                         |       |                            | 138,700     |                             |       | 93,400      |       | **527,900** | ** ** |
| **Non-executive  directors**     |       |       |        |                                           |        |                    |       |                            |       |                            |        |                             |       |        |       | ** ** | ** ** |
| W A M Clewlow                    |       |       | 25,000      |                                           | —      |                    |       | —                          |       |                            | —      |                             |       | —      |       | **25,000** | ** ** |
| **Total**                        | ** ** | ** ** | **343,400** |                                           | **360,000** | ** **              | ** ** | **348,000**                     |       | ** **                      | **432,900** |                             | ** ** | **223,400** |       | **1,707,700** | ** ** |
| **Group Executive Committee(1)** | ** ** | ** ** | **142,200** |                                           | **217,800** | ** **              | ** ** | **113,800**                     |       | ** **                      | **160,700** |                             | ** ** | **45,200**  |       | **679,700** | ** ** |

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(1)**          **Excluding theexecutive directors disclosed separately in the table.

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**ITEM 7.**                MAJORSHAREHOLDERS AND RELATED PARTY TRANSACTIONS

**7.A   Major Shareholders**

As of 30 June 2005 the issued share capital ofSasol Limited consisted of 676,877,125 ordinary shares including treasuryshares of 60,111,477 with no par value. See “Item 10.A—Share Capital”. To thebest of our knowledge, Sasol Limited is not directly or indirectly owned orcontrolled by another corporation or the government of South Africa or anyother government. Our management believes that no single person or entity holdsa controlling interest in our share capital.

Inaccordance with the requirements of the Companies Act of South Africa, thefollowing beneficial shareholdings exceeding 5% in the aggregate were disclosedor established from inquiries as of 25 August 2005:

| ** **                                          | ** ** | **Number of shares** | ** ** | **% of shares** | ** ** |
|-----------------------------------------------------|------------|--------------------------------|------------|---------------------------|------------|
| Public Investment  Corporation Limited              |       |                           | 94,158,063 |                      |       | 13.9 |   |
| Sasol Investment  Company (Pty) Limited(1)          |       |                           | 60,111,477 |                      |       | 8.9 |   |
| Industrial Development  Corporation of South Africa |       |                           | 53,266,887 |                      |       | 7.9 |   |

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(1)    A whollyowned subsidiary of Sasol Limited. As a result of our share repurchase program,Sasol Investment Company (Pty) Limited holds the shares as treasury stock onwhich no dividends are paid outside the group and no voting rights areexercised.

Furthermorethe directors have ascertained that some of the shares registered in the namesof the nominee holders are managed by various fund managers and that, as at 30 June 2005,the following funds managers were responsible for managing 2% or more of theshare capital of Sasol Limited.

| ** **                     | ** ** | **Number of shares** | ** ** | **% of shares** | ** ** |
|--------------------------------|------------|--------------------------------|------------|---------------------------|------------|
| PIC Equities(1)                |       |                           | 68,309,052 |                      |       | 10.1 |   |
| Old Mutual Asset  Managers     |       |                           | 58,658,024 |                      |       | 8.7 |   |
| Allan Gray  Investment Council |       |                           | 55,362,899 |                      |       | 8.2 |   |
| Capital  International Inc     |       |                           | 34,043,457 |                      |       | 5.0 |   |
| Stanlib Asset  Management      |       |                           | 22,183,800 |                      |       | 3.3 |   |
| Investec Asset  Management     |       |                           | 18,228,870 |                      |       | 2.7 |   |
| Sanlam Investment  Management  |       |                           | 12,991,807 |                      |       | 2.0 |   |

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(1)    ThePublic Investment Corporation Limited is the beneficial owner of the sharesheld by PIC Equities and this nominee shareholding is included in the93,958,063 shares held by the Public Investment Corporation Limited as includedin the table of shareholders who have a beneficial shareholding in excess of5%.

The voting rights of major shareholders do not differfrom the voting rights of other shareholders.

As of 25 August 2005,37,451,991 shares, or approximately 5.5% of our share capital, were held in theform of ADRs. On the same date, 386 record holders in the United States heldapproximately 20% of our issued share capital in the form of either shares orADRs.

**7.B   Related Party Transactions**

There have been no material transactions during themost recent three years, other than as described below, nor are there proposedto be any material transactions at present to which we or any of oursubsidiaries are or were a party and in which any executive or independentdirector, or 10% shareholder, or any relative or spouse thereof or any relativeof such spouse, who shared a home with this person, or who is a director orexecutive officer of any parent or subsidiary of ours, had or is to have adirect or indirect material interest. Furthermore, during our three most recentyears, there has been no and at 

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30 June 2005,there was no outstanding indebtedness to us or any of our subsidiaries owed byany of our executive or independent directors or any associate thereof.

During the year group companies, in the ordinarycourse of business, entered into various purchases and sale transactions withassociates, joint ventures and certain other related parties. The effect ofthese transactions is included in the financial performance and results of thegroup. Terms and conditions are determined on an arm’s length basis.

Materialrelated party transactions were as follows:

| ** **                                      | ** ** | **30 June 2005**       | ** ** | **30 June 2004** | ** ** | **30 June 203** | ** ** |
|-------------------------------------------------|------------|----------------------------------|------------|----------------------------|------------|---------------------------|------------|
| ** **                                      | ** ** | **(Rand in millions)** | ** ** |
| Sales and services  rendered to related parties |       |                             |       |                       |       |                      |       |   |   |   |   |   |   |
| —Third parties                             |       |                             | 204        |                       |       |                      | 60         |   |   |   | — |   |   |
| —Joint Ventures                            |       |                             | 1,067      |                       |       |                      | 419        |   |   |   | 66 |   |   |
| —Associates                                |       |                             | 379        |                       |       |                      | 453        |   |   |   | 1,844 |   |   |
| **Total**                                       | ** ** | ** **                       | **1,650**  |                       | ** ** | ** **                | **932**    |   | ** ** | ** ** | **1,910** |   |   |
| Purchases from related  parties                 |       |                             |       |                       |       |                      |       |   |   |   |   |   |   |
| —Third parties                             |       |                             | 282        |                       |       |                      | 266        |   |   |   | 92 |   |   |
| —Joint Ventures                            |       |                             | 240        |                       |       |                      | 137        |   |   |   | 42 |   |   |
| —Associates                                |       |                             | 530        |                       |       |                      | 752        |   |   |   | 39 |   |   |
| **Total**                                       | ** ** | ** **                       | **1,052**  |                       | ** ** | ** **                | **1,155**  |   | ** ** | ** ** | **173** |   |   |

 

Amounts due to and fromrelated parties are disclosed in the respective notes to the financialstatements for the respective balance sheet line items. See “Item 18—FinancialStatements”.

**7.C   Interestsof Experts and Counsel**

Not applicable.

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**ITEM8.**                FINANCIALINFORMATION

**8.A   ConsolidatedStatements and Other Financial Information**

See “Item—18. FinancialStatements” for a list of our financial statements, related notes and otherfinancial information filed with this annual report on Form 20-F.

Our total export andforeign sales, being sales exported from South Africa or made outside SouthAfrica in 2005 amounted to R33.1 billion, representing 49% of our totalgroup turnover, compared to R30.1 billion or 51% and R32.4 billion or51% in 2004 and 2003 respectively.

Our dividend distributionpolicy is to distribute increased dividends on a regular basis, to the extent permittedby our earnings. In particular, we intend to distribute dividends, provided ourannual attributable earnings represent a range of 2.5 to 3.5 times the amountdistributed in the form of dividends. The average rate of earnings to dividenddistributions in the past five years was approximately 3 times. Wedistribute dividends twice a year. On the declaration of a dividend, thecompany includes the 12.5% secondary tax on companies on this dividend in itscomputation of the income tax expense for that period.

For information regarding our legal proceedings see “Item4.B—Business Overview—Legal Proceedings”.

**8.B   SignificantChanges**

The following developmentshave occurred subsequent to 30 June 2005:

In May 2005, theSouth African Competition Commission conditionally recommended the approval ofthe proposed joint venture between Sasol’s and Petronas’ liquid fuelsbusinesses, to be called Uhambo Oil, to the Competition Tribunal. Publichearings commenced in October 2005 where after the Competition Tribunal willgive its ruling. Approval of the transaction by the European Commission wasgranted in February 2005.

The governments of SouthAfrica and Mozambique have the option collectively to acquire 50% of the sharesin Rompco which was a wholly owned Sasol subsidiary at 30 June 2005, at aprice to be determined by means of a formula at the date they exercise theoption. On 1 July 2005, a 25% interest in Rompco was sold to iGas (Pty)Limited (owned by the South African Government) for R609 million realizing aprofit in terms of IFRS of R189 million.

Sasol announced in August 2005that it is considering the divestment from its Olefins and Surfactants businessincluding its Safol plant but excluding its comonomers activities in SouthAfrica. In 2003, Sasol determined that it would continue to grow its chemicalbusinesses conditional upon projects leveraging its technology or securingintegrated and highly cost-competitive feedstock positions. The Olefins andSurfactants business is only partially integrated upstream into feedstock andhas not adequately provided the integration benefits which Sasol requires. Thepotential divestment is subject to an acceptable price being obtained.

Sasol announced on 22 September 2005that Tshwarisano, its Broad-based BEE partner, would acquire a 12.5% interestin Uhambo Oil Limited for an amount of R1.45 billion. As noted above the UhamboOil transaction is subject to Competition Tribunal approval. Through SasolFinancing (Pty) Limited and jointly with JP Morgan and Nedbank, Sasol willarrange and structure the senior-debt financing required by Tshwarisanoamounting to approximately R1.1 billion. We will provide guarantees for thisdebt to the participating banks. Additionally we will bear the advising,arranging and structuring fees and waive the guarantee fees which wouldnormally be charged to the beneficiaries. In addition, Sasol is contributingR45 million to two trusts, aimed at empowering the severely underprivileged, aswell as Uhambo Oil staff and their families. Sasol has also not requestedTshwarisano to pay for its share of the synergies that are expected to arise inUhambo Oil, which constitutes a discount from full fair value amounting toabout R200 million. If, for any reason, the Competition Tribunal does not rule infavor of the merger, then Tshwarisano will become a 25% shareholder in SasolLFB rather than a 12.5% shareholder in Uhambo Oil.

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Sasol’s Lake CharlesChemical Complex located in the United States suffered some damage due toHurricane Rita which made landfall on 24 September 2005. The extent of thedamages to our facilities is currently being assessed. It is expected thatnormal production at the entire complex will commence before the end of October 2005and at which time it is expected that electrical power will also be restored tothe homes of our employees in the affected areas. Physical damage to ourfacilities will be claimed against our insurance (subject to a deductible ofUS$2 million) and it is anticipated that loss of profits will be claimed if theplant is out of production for a period exceeding 45 days.

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**ITEM 9.**                THEOFFER AND LISTING

**9.A   Offer and Listing Details**

Thefollowing table sets forth, for the years indicated, the reported high and lowquoted prices for the ordinary shares on the JSE and of our ADRs on the NYSEfrom 9 April 2003 and of the ADRs on the NASDAQ prior to the delisting ofour ADRs on 8 April 2003 from NASDAQ.

| ** **     | ** ** | **Shares  (Price per  share in rand)** | ** ** | **ADRs  (Price per  ADR in US$)** | ** ** |
|----------------|------------|-------------------------------------------------------|------------|--------------------------------------------------|------------|
| **Period**     | ** ** | ** **                                            | ** ** | **High**                                         | ** ** | **Low** | ** ** | **High** | ** ** | **Low** | ** ** |
| **2001**       | ** ** | 81.00                                                 |       | 43.20                                            |       | 9.99 |   | 5.97 | ** ** |
| **2002**       |       | 135.20                                                |       | 62.50                                            |       | 12.00 |   | 7.95 |   |
| **2003**       |       | 121.55                                                |       | 75.50                                            |       | 12.78 |   | 8.34 |   |
| **2004**       |       | 111.50                                                |       | 75.10                                            |       | 16.50 |   | 10.40 |   |
| First quarter  |       | 91.65                                                 |       | 75.10                                            |       | 12.43 |   | 10.40 |   |
| Second quarter |       | 97.20                                                 |       | 79.70                                            |       | 14.96 |   | 11.80 |   |
| Third quarter  |       | 111.50                                                |       | 94.10                                            |       | 15.94 |   | 14.31 |   |
| Fourth quarter |       | 108.39                                                |       | 90.50                                            |       | 16.50 |   | 13.64 |   |
| **2005**       |       | 192.12                                                |       | 66.23                                            |       | 28.96 |   | 15.61 |   |
| First quarter  |       | 125.90                                                |       | 66.23                                            |       | 19.40 |   | 15.61 |   |
| Second quarter |       | 131.50                                                |       | 107.40                                           |       | 22.00 |   | 18.70 |   |
| Third quarter  |       | 155.00                                                |       | 116.50                                           |       | 26.10 |   | 19.95 |   |
| Fourth quarter |       | 192.12                                                |       | 138.95                                           |       | 28.96 |   | 22.55 |   |
| April          |       | 163.40                                                |       | 138.95                                           |       | 26.55 |   | 22.55 |   |
| May            |       | 171.50                                                |       | 143.00                                           |       | 25.75 |   | 23.08 |   |
| June           |       | 192.12                                                |       | 167.00                                           |       | 28.96 |   | 24.42 |   |
| July           |       | 206.40                                                |       | 180.00                                           |       | 31.10 |   | 26.99 |   |
| August         |       | 220.50                                                |       | 196.30                                           |       | 34.43 |   | 30.54 |   |
| September      |       | 248.00                                                |       | 213.50                                           |       | 38.99 |   | 33.92 |   |
|                |            |                                                       |            |                                                  |            |  |  |  |  |  |  |

 

**9.B   Plan ofDistribution**

Not applicable.

**9.C   Markets**

The principal tradingmarket for our shares is currently the JSE. Our American Depositary Shares, orADSs, have been listed on the New York Stock Exchange since 9 April 2003,each representing one common ordinary share of no par value, under the symbol “SSL”.The Bank of New York is acting as the Depositary for our ADSs and issues ourADRs in respect of our ADSs.

**9.D   SellingShareholders**

Not applicable.

**9.E   Dilution**

Not applicable.

**9.F   Expensesof the Issue**

Not applicable.

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**ITEM10.**         ADDITIONAL INFORMATION

**10.A   ShareCapital**

Not applicable.

**10.B   Memorandumand Articles of Association**

SasolLimited is incorporated in South Africa as a public company under the SouthAfrican Companies Act of 1973 as amended and is registered with the SouthAfrican Registrar of Companies under registration number 1979/003231/06. Ourcorporate seat is in Johannesburg, South Africa. According to our Memorandum,our company’s main business includes, among other things, to act as an investmentholding company, an investment company and a management company and, whether onits own and/or in collaboration with other agencies:

·       toprospect for coal, oil, petroleum and related substances;

·       toacquire mineral and other rights;

·       toacquire, exploit and mine coal, oil, petroleum and related substances andbeneficiate and refine them into gaseous, liquid and solid fuels,petrochemicals and other products;

·       toconvert, process and beneficiate any product with or without the addition ofother products in any other way whatsoever; and

·       to market these products.

***Our Board ofDirectors***

*Appointment, retirementand re-election of directors.**  *Our directors are elected by ourshareholders at the annual general meeting. The Board of Directors may appointany person qualifying as a director in terms of the Companies Act, either tofill a vacancy or as an addition to the Board, provided that the total numberof directors does not at any time exceed the maximum of 15 directors.Directors appointed by the Board in this manner are required to retire at thenext annual general meeting following their appointment, but are eligible forre-election. There is no requirement in our Articles of Association thatdirectors must hold qualifying shares. If the number of persons nominated asdirectors does not exceed the number of vacancies available, then the nominateddirectors are deemed to have been duly elected.

At the annual generalmeeting of the company, one-third of the serving directors shall retire or ifthe total number of serving directors who shall retire does not constitute amultiple of three, the number of directors who shall retire shall be the number,adjusted upwards, that is the closest to one-third.

A director who has beenappointed for the first time at an annual general meeting or by the Board ofDirectors after 27 October 1997, shall retire 5 years after hisinitial appointment. Directors who have retired in this manner are eligible forautomatic re-election by the shareholders, if they have been nominated forre-appointment after retirement by either the Board or the shareholders.

Any director reaching70 years of age shall retire at the end of that year, provided that,subject to the Articles of Association, the Board may, by unanimous resolutionon a year-to-year basis, extend a director’s term of office until the end ofthe year in which the director turns 73.

*Remuneration.**  *In accordance with our Articles ofAssociation, the Board of Directors has the authority to determine directors’remuneration and have delegated this authority to the Compensation Committee.The South African Code furthermore requires that proposed fees as recommendedby the Board should be submitted to the shareholders in general meeting forapproval prior to implementation and payment. The Companies Act prohibits loansor any form of credit or guarantee to be provided by us to any member of ourBoard. Our Compensation Committee determines the Group’s human resources policyand the remuneration of directors and senior management. See “Item 6.C BoardPractices—Board committees—The Compensation Committee”.

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*Interestedtransactions.**  *Adirector in his capacity as a member of the Board or one of its committees canparticipate in and vote on all decisions put before a meeting of the Board orthe respective committee. Nothing contained in our Articles prohibits adirector from voting on any decisions put before a meeting of the Board or oneof its committees, whether or not a director has a personal interest or is inany manner involved in the matter. However, directors are required to declarein the manner prescribed by the Companies Act any interest, whether direct orindirect, material or otherwise, in any other company, partnership or corporatebody, of which a director of ours is a director or shareholder, or any contractor transaction in which they have an interest in any manner.

*Managing Director.**  *Under our Articles, the directorsmay appoint one or more of their number to the office of managing director ormanaging directors, or may appoint employees of the company in any othercapacity, and may remove or dismiss them from office and appoint others intheir place. Such an appointment is made by an independent quorum of directorsand for a period not exceeding 5 years per appointment.

***Disclosure of interests in shares***

The Companies Act requires disclosure of beneficialownership interests in a company’s securities. Pursuant to Section 140A ofthe Companies Act, where the securities of an issuer are registered in the nameof a person and that person is not the holder of the beneficial interest in allof the securities held by the registered shareholder, the registeredshareholder is obliged, at the end of every three-month period, todisclose to the issuer the identity of each person on whose behalf theregistered holder holds securities and the number and class of securitiesissued by that issuer held on behalf of each such person. Moreover, the issuerof securities may, by notice in writing, require a person who is a registeredshareholder and whom the issuer knows, or has reasonable cause to believe, tohave a beneficial interest in a security issued by the issuer, to confirm ordeny whether it holds that beneficial interest and, if the security is held foranother person, to disclose the identity of the person on whose behalf asecurity is held.

The addressee of thenotice will also be required to give particulars of the extent of thebeneficial interest held during the 3 years preceding the date of the notice.All issuers of securities are obliged to establish and maintain a register ofdisclosures of interests in their securities as described above and to publishin their IFRS annual financial statements a list of the persons who holdbeneficial interests equal to or in excess of 5% of the total number ofsecurities of that class issued by the issuer, together with the extent of thosebeneficial interests.

***Rights of holders of our securities***

*Dividendrights.**  *TheBoard may declare a dividend to be paid to the registered holders of shares.All shares have equal rights to dividends. The directors may also pay to theshareholders such interim dividend as they consider justified from the profitof the company. No dividends shall be paid except out of the profits oraccumulated distributable reserves of the company and no dividends bearinterest against our company.

Dividends may be declared, either free of, or subjectto, the deduction of any income tax and any other tax or duty which may bechargeable. Dividends are declared payable to shareholders registered at a datesubsequent to the date of the declaration of the dividend as determined by the rules ofthe JSE. The dates applicable to the dividend payment are determined inaccordance with the JSE listing requirements.

Dividends which remain unclaimed after a period of12 years may be declared forfeit by the Board and revert to our company.All unclaimed dividends may be invested or otherwise utilized by the directorsfor the benefit of the company until claimed.

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Any dividend may be paid and satisfied, either inwhole or in part, by the distribution of specific assets and in particular, ofshares or debentures of any other company, or in cash or in any one or more ofsuch ways as the directors may, at the time of the declaration of the dividend,determine and direct. Any dividend or other sum payable in cash to ashareholder may be paid by check, warrant, coupon or otherwise as the directorsmay decide.

It is our policy to declare dividends in rand and theBoard may at the time of declaring a dividend make such regulations, as theymay deem appropriate with regard to the payment in any currency and the rate ofexchange, subject to the approval of the SARB. For further information on ourdividend policy, see “Item 8.A Consolidated Statements and Other FinancialInformation”.

Holders of ADRs on the relevant record date will beentitled to receive any dividends payable in respect of the shares underlyingthe ADRs, subject to the terms of the Deposit Agreement. Cash dividends will bepaid by the Depositary to holders of ADRs in accordance with the DepositAgreement.

*Votingrights.**  *Everyshareholder, or representative of a shareholder, who is present at ashareholders’ meeting has one vote on a show of hands, regardless of the numberof shares he holds or represents, unless a poll is demanded. On a poll, ashareholder is entitled to one vote per ordinary share held.

Shareholders are entitled to appoint a proxy toattend, speak and vote on a poll at any meeting on their behalf. Proxies neednot be shareholders. Cumulative voting is not permitted.

*Rightsof non-South African shareholders.**  *There are no limitations imposed bySouth African law or our Articles on the rights of non-South Africanshareholders to hold or vote our shares. Acquisitions of shares in SouthAfrican companies are not generally subject to review by the SARB. However, itsapproval may be required in certain cases where share acquisition is financedby South African lenders.

*Rights of minorityshareholders.**  *Majorityshareholders of South African companies have no fiduciary duties under SouthAfrican common law to minority shareholders. However, shareholders may, underthe Companies Act, seek court relief upon establishing that they have beenunfairly prejudiced by the company.

***General meeting of shareholders***

In accordance with our Articles, our annual generalmeeting is required to be held each year within 6 months from the end of eachyear, and within 15 months after the date of our last preceding annualgeneral meeting.

*Notices.  *Weare required by law and our Articles to provide for at least 21 daysnotice for any annual general meeting and any meeting at which specialresolutions are proposed, and at least 14 days notice for all othermeetings. Meetings of shareholders may be attended by shareholders on record inour share register or by their proxies who need not be registered shareholders.Annual general meetings shall be described as such in the notice convening themeeting. All other meetings shall be called general meetings and shall also bedescribed as such in the respective notice.

Notice under our Articles of Association must be inwriting and must be given or served on any shareholder, either by delivery orby post, properly addressed, to a shareholder at his or her address shown inthe register of shareholders. Any notice to shareholders must simultaneously becommunicated to the JSE.

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We are required, upon request by at least 100shareholders or shareholders holding not less that 5% of our total sharecapital, to give notice to our shareholders of any resolution that may be dulyproposed and any resolution intended to be proposed at a general meeting orannual general meeting.

*Attendanceat meetings.**  *Beneficialshareholders whose shares are not registered in their own name, or beneficialowners who have dematerialized their shares, are required to contact theregistered shareholder or their Central Securities Depository Participant (“CSDP”)as the case may be, for assistance to attend and vote at meetings.

*Quorum.**  *No business may be transacted atany general meeting unless the requisite quorum is present at the commencementof proceedings. The quorum for the approval of special resolutions is shareholdersholding in the aggregate not less than one-fourth of the total votes of allshareholders entitled to vote at the meeting, present in person or by proxy. Inall other cases, the quorum is three shareholders present in person or by proxyand entitled to vote or, if a shareholder is a corporate body, represented by aproxy.

In case the required quorum of shareholders is notpresent within ten minutes from the time appointed for the meeting, the meetingwill stand adjourned to take place on a day determined by the shareholderspresent, which may be no earlier than seven days and no later than 21 daysafter the date of the meeting, at the same time and venue, or if such venue isnot available, another venue appointed by the directors present. If no shareholdersare present, the day and the venue of the adjourned meeting shall be determinedby the directors. If no quorum is present within ten minutes from the timeappointed for the adjourned meeting, those shareholders who are present inperson shall form a quorum. If the meeting at which a quorum is notpresent is convened upon the request of shareholders, this meeting will bedissolved.

There is no quorum requirement when an ordinarygeneral meeting is reconvened, but only those topics which were on the agendaof the adjourned general meeting may be discussed and voted upon.

*Manner of voting.**  *At a general meeting, a resolutionput to vote will be decided by a show of hands, unless a poll is demanded by:

·       thechairman;

·       notless than five shareholders having the right to vote at such meeting;

·       ashareholder or shareholders representing not less than one-tenth of the totalvoting rights of all shareholders having the right to vote at the meeting; or

·       shareholdersentitled to vote at the meeting and holding in total not less than one-tenth ofthe issued share capital of the company.

A special resolutionis required in connection with the following, amongst other matters:

·       liquidationor winding up of the company;

·       allincreases or decreases in our share capital and shares;

·       changeof company name, conversion from one company type into another;

·       amendmentsto our Memorandum and Articles of Association;

·       acquisitionsof our own shares; and

·       amendmentof any rights attached to our shares.

For the approval of special resolutions, three-quartersof shareholders present in person or by proxy must vote in favor of theresolution on a show of hands or on a poll.

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Unless otherwise specifiedby applicable law or in our Articles of Association, resolutions will beapproved by a majority of the votes recorded at the meeting either by show ofhands or by proxy. In the event of a tie, the chairman will have a castingvote.

***Changes in share capital and preemptive rights***

We may, by special resolution in general meeting,increase our share capital by a sum divided into shares of a number, orincrease our shares without par value to a number, as we may deem appropriate.We may also increase our share capital consisting of shares without par valueby transferring reserves or profits to our stated capital, with or without adistribution of shares. New shares are issued to persons, on terms andconditions and with the rights and privileges attached thereto, as may bedetermined in general meeting.

Subject to any authority given to our directors in ourArticles of Association, we may, prior to the issue of new shares, direct thatthey be offered in the first instance, either at par or at a premium or at astated value in the case of shares without par value, to all our shareholdersin proportion to the amount of capital held by them, or take any other measurewith regard to the issue and allotment of the new shares.

We may also, by special resolution, cancel, vary oramend shares or any rights attached to shares which, at the time of the passingof the relevant resolution, have not been taken up by any person or which noperson has agreed to take up, and we may reduce the amount of our share capitalby the amount of the shares so cancelled.

*Unissued shares placedunder the control of directors.**  *Subject to the provisions of theCompanies Act and the listing requirements of the JSE, we may, in a generalmeeting, place the balance of the ordinary shares not allotted under thecontrol of the directors with general authorization to allot, and issue suchshares at such prices and upon such terms and conditions as they deem fit,provided that no such issue of such shares will be made which could effectivelytransfer the control of the company without prior approval of the shareholdersin a general meeting.

***Trading in our own shares***

We may resolve by special resolution to repurchase anyof our issued shares in accordance with the provisions of the company laws ofSouth Africa and any other applicable rule of the law or regulation. Suchresolution may grant a general approval or a specific approval for a particularacquisition.

*Regulationof repurchases of own shares.**  *The South African Companies Actauthorizes a company to repurchase its own issued shares, provided its articlesof association permit doing so. The approval must be in the form of a specialresolution, either as a general or a specific approval for a specificrepurchase. If the approval is a general approval, it only remains valid untilthe next general meeting of the company following the grant of such generalapproval. A company may only repurchase its own shares, provided that certainsolvency and liquidity requirements are met immediately subsequent to therepurchase. A company may not repurchase its own shares, if this would resultin there being no shares left in issue other than convertible or redeemableshares. Any shares repurchased by the company will be cancelled as issuedshares and treated as authorized shares.

Subsidiary companies may, in accordance with theprinciples stated above, acquire shares in their holding company up to a totalmaximum of 10% of the issued shares of the holding company. A subsidiary maynot exercise voting rights in respect of its shares in its holding company,unless the subsidiary is acting in a representative capacity or as a trustee.

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The JSE ListingsRequirements provide that a company may only conduct a specific repurchasesubject to the following conditions, among others:

·       inthe case of an offer to all shareholders, that the offer be pro rata to their existingholdings, or from shareholders specifically named; and

·       thatauthorization be given in terms of a special resolution of the company byshareholders, excluding controlling shareholders, their associates, any partyacting in concert and any shareholder that is participating in the repurchaseand is not regarded as being public.

In accordance with the JSElisting requirements, the repurchase by a company of its own shares may notexceed 20% of the company’s issued share capital of that class in any one year.Companies may only conduct a general repurchase of their securities on the JSEand the repurchase price may not be greater than 10% above the weighted averageof the market value for the securities for the five business days immediatelypreceding the date on which the transaction was effected.

***Rights on liquidation***

Should the company be wound up, the assets remainingafter payment of the debts and liabilities of the company and the costs ofliquidation shall be distributed among the shareholders in proportion to thenumber of shares respectively held by each of them.

Upon winding up, any partof our assets, including any shares or securities of other companies, may, withthe sanction of a special resolution of our shareholders, be divided in specie amongour shareholders or may, with the same sanction, be vested in trustees for thebenefit of such shareholders, and the liquidation of the company may befinalized and the company dissolved.

***Form and transfer of shares***

In accordance with the Share Transactions TotallyElectronic (“STRATE”) settlement system of the JSE, Sasol ordinary shares weredematerialized as of 19 November 2001. STRATE introduced thedematerialization of share certificates in a central securities depository andcontractual rolling and electronic settlement. Shares traded electronically inthe STRATE are settled five days after trade.

The dematerialization ofshares has not been mandatory and, although the majority of our share capitalhas been dematerialized, shareholders who have elected to do so have stillretained their share certificates. Transfer of shares in certificated form is effectedby means of a deed.

**10.C   Material Contracts**

Not applicable.

**10.D   Exchange Controls**

The following is a general outline of South Africanexchange controls. This outline may not apply to former residents of SouthAfrica. Investors should consult a professional advisor as to the exchangecontrol implications of their particular investments.

South African law provides for exchange controlregulations, which restrict the export of capital from the Common MonetaryArea, which comprises South Africa, the Kingdoms of Lesotho, Swaziland and theRepublic of Namibia. The exchange control regulations, which are administeredby the Exchange Control Department of the SARB, are applied throughout theCommon Monetary Area and regulate transactions involving South Africanresidents, including natural persons and legal entities.

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The Government hasfrom time to time stated their intention to relax South Africa’s exchangecontrol regulations when economic conditions permit such action. In recentyears, the Government has incrementally relaxed aspects of exchange control forfinancial institutions and individuals. In October 2004 the SARB announcedfurther relaxation of the exchange control regulations, which include thefollowing:

·       exchangecontrol limits on new foreign investments by a South African corporate areabolished, although it is still required to submit an application to the SARBand comply with a number of SARB criteria; and

·       aSouth African corporate is allowed to retain foreign dividend income abroadwithout the permission of the SARB and profits earned abroad may be used abroadfor any lawful purpose abroad. Any foreign dividends repatriated to SouthAfrica after 26 October 2004 may be transferred abroad at any timefor any purpose without application to SARB.

It is, however, impossible to predict with anycertainty when the government will remove exchange controls in their entirety.

The comments below relateto exchange controls in force at the date of this annual report. These controlsare subject to change at any time without notice.

***Overseas financing and investments***

*Overseasdebt.**  *We,and our South African subsidiaries, need SARB approval to receive debt from andrepay debt to non-residents of the Common Monetary Area, mainly in respect ofthe interest rate and terms of repayment applicable to loans. Repayment ofprincipal and interest on these loans is usually approved and is limited to theamount borrowed and a market related rate of interest.

Funds raised outside the Common Monetary Area by ournon-South African subsidiaries are not restricted under South African exchangecontrol regulations and can be used for overseas investment, subject to anyconditions imposed by the SARB in connection with such overseas investment. We,and our South African subsidiaries, would, however, require SARB approval inorder to provide guarantees for the obligations of any of our subsidiaries withregard to funds obtained from non-residents of the Common Monetary Area.

Debt raised outside the Common Monetary Area by ournon-South African subsidiaries must be repaid or serviced by those foreignsubsidiaries. Without SARB approval, we cannot use cash we earn in South Africato repay or service such foreign debts. In terms of the recent amendments tothe exchange control regulations set out above, we are permitted to use foreigndividend income to finance the operations of another foreign subsidiary withoutspecific SARB approval.

*Raisingcapital overseas.**  *Alisting by a South African company on any stock exchange other than the JSE inconnection with raising capital requires permission from the SARB. If a foreignlisting were to result in a South African company being redomiciled, it wouldalso need the approval of the Minister of Finance.

Under South African exchange control regulations, wemust obtain approval from the SARB regarding any capital raising activityinvolving a currency other than the rand. In granting its approval, the SARBmay impose conditions on our use of the proceeds of the capital raisingactivity outside South Africa, including limits on our ability to retain theproceeds of this capital raising activity outside South Africa or a requirementthat we seek further SARB approval prior to applying any of these funds to anyspecific use. Any limitations imposed by the SARB on our use of the proceeds ofa capital raising activity could adversely affect our flexibility in financingour investments.

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*Overseasinvestments.**  *Undercurrent exchange control regulations, we, and our South African subsidiaries,can invest overseas only if the investment meets certain criteria including oneof national interest, as determined by the SARB. In accordance with the latestamendments to the South African exchange control regulations there is nolimitation placed on us with regard to the amount of funds that we can transferfrom South Africa for the purchase of shares in offshore entities or for thepurchase of foreign assets subject to meeting these criteria. The SARB may,however, request us to stagger the capital outflows relating to large foreigninvestments in order to limit the impact of such outflows on the foreignexchange market.

The SARB also requires usto provide annual financial statements of our foreign subsidiaries.

***Investment in South African companies***

*Inwardinvestment.**  *Aforeign investor may invest freely in shares in a South African company.Foreign investors may also sell shares in a South African company and transferthe proceeds out of South Africa without restriction. Acquisitions ofshares or assets of South African companies by non-South African purchasers arenot generally subject to review by the SARB when the consideration is in cash,but may require SARB review in certain circumstances, including when theconsideration is equity in a non-South African company or when the acquisitionis financed by a loan from a South African lender.

*Dividends.**  *There are no exchange controlrestrictions on the remittance in full of dividends declared out of tradingprofits to non-residents of the Common Monetary Area.

*Transfer of shares andADSs.**  *UnderSouth African exchange control regulations, our shares and ADSs are freelytransferable outside South Africa among persons who are not residents of theCommon Monetary Area. Additionally, where shares are sold on the JSE on behalfof our shareholders who are not residents of the Common Monetary Area, theproceeds of such sales will be freely exchangeable into foreign currency andremittable to them. Any share certificates held by non-resident shareholderswill be endorsed with the words “non-resident”. The same endorsement, however,will not be applicable to ADSs held by non-resident shareholders.

**10.E   Taxation**

**South African Taxation**

The following discussion summarizes South African taxconsequences of the ownership and disposition of shares or ADSs by a US holder(as defined below). This summary is based upon current South African tax lawand the convention between the government of the United States and the Republicof South Africa for the avoidance of double taxation and the prevention offiscal evasion with respect to taxes on income and capital gains, signed 17 February 1997(“the Treaty”). In addition, this summary is based in part upon representationsof the Depositary, and assumes that each obligation provided for in, orotherwise contemplated by the Deposit Agreement and any related agreement, willbe performed in accordance with its respective terms.

The following summary of South African taxconsiderations does not address the tax consequences to a US holder that isresident in South Africa for South African tax purposes or whose holding ofshares or ADSs is effectively connected with a permanent establishment in SouthAfrica through which such US holder carries on business activities or who isnot the beneficial recipient of the dividends or returns or, in the case of anindividual who performs independent personal services, with a fixed basesituated therein or the source of the transaction is deemed to be in SouthAfrica, or who is otherwise not entitled to full benefits under the Treaty.

The statements of law set forth below are subject toany changes (which may be applied retroactively) in South African law or in theinterpretation thereof by the South African tax authorities, or in the Treaty, 

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occurring after the datehereof. For the purposes of the Treaty and South African tax law, a UnitedStates resident that owns Sasol ADSs will be treated as the owner of Sasolshares represented by such ADSs.

Holders are strongly urgedto consult their own tax advisors as to the consequences under South African,US federal, state and local, and other applicable laws, of the ownership anddisposition of shares or ADSs.

***Taxation of dividends***

South Africa imposes a corporate tax known asSecondary Tax on Companies (“STC”) at the rate of 12.5% on the distribution ofearnings in the form of dividends on the company declaring the dividend. STC isa recognized form of tax in terms of the Treaty, but is not a withholding taxon dividends.

South Africa does not impose any withholding tax orany other form of tax on dividends paid to US holders with respect to shares orADSs.

Should South Africa decidein the future to impose a withholding tax on dividends paid to a US holder withrespect to shares or ADSs, the Treaty would limit the rate of this tax to 5% ofthe gross amount of the dividends, if a US corporate holder holds directly atleast 10% of the voting stock of Sasol and 15% of the gross amount of thedividends in all other cases.

***Taxation of gains on sale or other disposition***

Prior to 1 October 2001,in the absence of a capital gains tax, gains realized on the sale or other dispositionof shares held by a US holder as a capital asset were not subject to taxationin South Africa. From 1 October 2001, South Africa has introduced atax on capital gains, which only applies to South African residents and to non-residentsif the sale is linked to a permanent establishment of the non-resident.The meaning of the word “resident” is different for individuals andcorporations and is governed by the South African Income Tax Act of 1962 (“theAct”) and by the Treaty. In the event of conflict the Treaty would prevail. Interms of the Act and the Treaty, a US holder of shares or ADSs will not besubject to capital gains tax on the disposal of securities held as capitalassets unless such securities constitute the assets linked to a permanentestablishment in South Africa. In contrast, gains on the disposal of securitieswhich are not capital in nature are usually subject to income tax. However,even in the latter case, a US holder will not be subject to income tax unlessthe US holder carries on business in South Africa through a permanentestablishment situated therein. In such a case, this gain may be subject to taxin South Africa, but only so much as is attributable to that permanentestablishment for so long as it does not constitute a share buy back resultingin the purchase price being seen to be a dividend.

***Stamp duty and uncertified securities tax***

South African stamp duty is payable by the company onthe issue of certificated shares at the rate of 0.25% of the higher of theconsideration or the market value of the issue price. Uncertificated securitiestax is payable in South Africa by the company in respect of the issue ofdematerialized shares at the rate of 0.25% of the par value of such shares plusany premium payable. If the shares are of no par value, the payable rate is0.25% of the greater of the actual consideration paid for the shares or thenominal value of the interest that such shares represent in the share capitalof the company.

On a subsequent registration or transfer of shares,stamp duty is generally payable for shares not sold through the JSE, theexchange conducted by JSE and uncertificated securities tax, or UST, isgenerally payable for on-market transactions (shares sold through the JSE indematerialized form), each at 0.25% of the market value of the sharesconcerned. Stamp duty is payable in South Africa regardless of whether thetransfer is executed within or outside South Africa. A transfer of adematerialized share can only occur in South Africa.

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There are certainexceptions to the payment of stamp duty where, for example, the instrument oftransfer is executed outside of South Africa and registration of transfer is effectedin any branch register kept by the relevant company, subject to certainprovisions set forth in the South African Stamp Duties Act of 1968. Althoughtechnically under the terms of current legislation it could be interpreted thattransfers of ADSs between non-residents of South Africa could attract eitherstamp duty or UST, such transfers have not to date attracted either stamp dutyor UST. However, if securities are withdrawn from the deposit facility or therelevant deposit agreement is terminated, either stamp duty or UST will bepayable on the subsequent transfer of the shares. An acquisition of shares fromthe Depositary in exchange for ADSs representing the relevant underlyingsecurities will also render an investor liable to pay South African stamp dutyor UST in South Africa at the same rate as stamp duty or UST on a subsequenttransfer of shares, upon the registration of the investor as the holder of theapplicable shares on the company’s register.

**UnitedStates Federal Income Taxation**

The following is a general summary of certain materialUS federal income tax consequences of the ownership and disposition of sharesor ADSs to a US holder (as defined below) that holds its shares or ADSs ascapital assets. This summary is based on US tax laws, including the InternalRevenue Code of 1986, as amended (“the Code”), Treasury regulations, rulings,judicial decisions, administrative pronouncements, South African tax laws, andthe Treaty, all as currently in effect as of the date of this annual report,and all of which are subject to change or changes in interpretation, possiblywith retroactive effect. In addition, this summary is based in part upon therepresentations of the Depositary and the assumption that each obligation inthe Deposit Agreement relating to the ADSs and any related agreement will beperformed in accordance with its terms.

This summary does not address all aspects of USfederal income taxation that may apply to holders that are subject to specialtax rules, including US expatriates, insurance companies, tax-exemptorganizations, banks, financial institutions, regulated investment companies,persons subject to the alternative minimum tax, securities-brokerdealers, traders in securities who elect to apply a mark-to-market method ofaccounting, investors that actually or constructively own 10% or more of theshare capital or voting stock of Sasol, persons holding their shares or ADSs aspart of a straddle, hedging transaction or conversion transaction, persons whoacquired their shares or ADSs pursuant to the exercise of employee stockoptions or similar derivative securities or otherwise as compensation, orpersons whose functional currency is not the US dollar. Such holders may besubject to US federal income tax consequences different from those set forthbelow.

As used herein, theterm “US holder” means a beneficial owner of shares or ADSs that is

a)               a citizen orindividual resident of the United States for US federal income tax purposes;

b)              a corporation (orother entity taxable as a corporation for US federal income tax purposes)created or organized in or under the laws of the United States or any statethereof;

c)               an estate whoseincome is subject to US federal income taxation regardless of its source; or

d)              a trust if a courtwithin the United States can exercise primary supervision over theadministration of the trust and one or more US persons are authorized tocontrol all substantial decisions of the trust.

If a partnership (or other entity treated as apartnership for US federal income tax purposes) holds shares or ADSs, the taxtreatment of a partner generally will depend upon the status of the partner andthe activities of the partnership. A partner in a partnership that holds sharesor ADS is urged to consult its own tax advisor regarding the specific taxconsequences of the ownership and disposition of the shares or ADSs.

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US holders should consult their own tax advisorsregarding the specific South African and US federal, state and local taxconsequences of owning and disposing of shares or ADSs in light of theirparticular circumstances as well as any consequences arising under the laws ofany other taxing jurisdiction. In particular, US holders are urged to consulttheir own tax advisors regarding whether they are eligible for benefits underthe Treaty.

For US federal income taxpurposes, a US holder of ADSs should be treated as owning the underlying sharesrepresented by those ADSs. The following discussion (except where otherwiseexpressly noted) applies equally to US holders of shares and US holders ofADSs. Furthermore, deposits or withdrawals of shares by a US holder for ADSswill not be subject to US federal income tax.

***Taxation of dividends***

The gross amount of any distributions, including theamount of any withholding tax thereon, paid to a US holder by Sasol will betaxable as dividend income to the US holder for US federal income tax purposes,based on the US dollar value of the distribution calculated by reference to thespot rate in effect on the date the distribution is actually or constructivelyreceived by the US holder, in the case of shares, or by the Depositary, in thecase of ADSs. For foreign tax credit limitation purposes, dividends paid bySasol generally will constitute foreign source “passive income” or, for someholders, foreign source “financial services income”. Dividends paid by Sasolwill not be eligible for the dividends-received deduction generallyallowed to US corporations in respect of dividends received from other UScorporations. At present, South Africa does not impose a withholding tax ondividends.

The amount of any distribution paid in foreigncurrency will be includible in the gross income of a US holder of shares in anamount equal to the US dollar value of the foreign currency calculated byreference to the spot rate in effect on the date of receipt, regardless ofwhether the foreign currency is converted into US dollars. If the foreigncurrency is converted into US dollars on the date of receipt, a US holder ofshares generally should not be required to recognize foreign currency gain orloss in respect of the dividend. If the foreign currency received in thedistribution is not converted into US dollars on the date of receipt, a USholder of shares will have a basis in the foreign currency equal to its USdollar value on the date of receipt. Any gain or loss recognized upon a subsequentconversion or other disposition of the foreign currency will be treated as USsource ordinary income or loss. In the case of a US holder of ADSs, the amountof any distribution paid in a foreign currency ordinarily will be convertedinto US dollars by the Depositary upon its receipt. Accordingly, a US holder ofADSs generally will not be required to recognize foreign currency gain or lossin respect of the distribution.

Certain US holders(including individuals) are eligible for reduced rates of US federal income tax(at a maximum rate of 15%) in respect of “qualified dividend income” receivedin taxable years beginning before 1 January 2009. For this purpose,qualified dividend income generally includes dividends paid by a non-UScorporation if, among other things, the US holders meet certain minimum holdingperiods and the non-US corporation satisfies certain requirements, includingthat either

(i)            the shares or the ADSswith respect to which the dividend has been paid are readily tradable on anestablished securities market in the United States, or

(ii)        the non-US corporation iseligible for the benefits of a comprehensive US income tax treaty (such as theTreaty) which provides for the exchange of information.

Sasol currently believes that dividends paid withrespect to its shares and ADSs should constitute qualified dividend income forUS federal income tax purposes. The United States Treasury and Internal RevenueService (“the IRS”) have announced their intention to promulgate rules pursuantto which holders of shares and ADSs, among others, will be permitted to rely oncertifications from issuers to establish that dividends are treated asqualified dividend income. Each individual US holders of shares or ADSs isurged 

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to consult his own tax advisor regarding theavailability to him of the reduced dividend tax rate in light of his ownparticular situation and regarding the computations of his foreign tax creditlimitations with respect to any qualified dividend income paid by Sasol to him,as applicable.

The US Treasury hasexpressed concern that parties to whom ADSs are released may be taking actionsthat are inconsistent with the claiming of deductions in respect of qualifieddividends by US holders of ADSs. Accordingly, the analysis of the availabilityof qualified dividend treatment could be affected by future actions that may betaken by the US Treasury with respect to ADSs.

***Taxation of capital gains***

If a US holder is a resident of the United States forpurposes of the Treaty, such holder generally will not be subject to SouthAfrican tax on any capital gain if it sells or exchanges its shares or ADSs.Special rules apply to individuals who are potentially residents of morethan one country. Refer to “South African Taxation—Taxation of gains on sale orother disposition” above.

In general, upon a sale,exchange or other disposition of shares or ADSs, a US holder will generallyrecognize capital gain or loss for US federal income tax purposes in an amountequal to the difference between the US dollar value of the amount realized onthe disposition and the US holder’s adjusted tax basis, determined in USdollars, in the shares or ADSs. Such gain or loss generally will be US sourcegain or loss, and generally will be treated as a long-term capital gain or lossif the holder’s holding period in the shares or ADSs exceeds 1 year at the timeof disposition. The deductibility of capital losses is subject to significantlimitations. If the US holder is an individual, any capital gain generally willbe subject to US federal income tax at preferential rates if specified minimumholding periods are met.

***Passive foreign investment company considerations***

Sasol believes that itwill not be classified as a Passive Foreign Investment Company (“PFIC”) for USfederal income tax purposes for the taxable year ended 30 June 2005.US holders are advised, however, that this conclusion is a factualdetermination that must be made annually and thus may be subject to change. IfSasol were to be classified as a PFIC, the tax on distributions on its sharesor ADSs and on any gains realized upon the disposition of its shares or ADSsmay be less favourable than as described herein. Furthermore, dividends paid bya PFIC are not “qualified dividend income” and are not eligible for the reducedrates of taxation for certain dividends. US holders should consult their owntax advisors regarding the application of the PFIC rules to theirownership of the shares or ADSs.

***US information reporting and backup withholding***

Dividend payments made to a holder and proceeds paidfrom the sale, exchange, or other disposition of shares or ADSs may be subjectto information reporting to the IRS. US federal backup withholding generally isimposed at a current rate of 28% on specified payments to persons who fail tofurnish required information. Backup withholding will not apply to a holder whofurnishes a correct taxpayer identification number or certificate of foreignstatus and makes any other required certification, or who is otherwise exemptfrom backup withholding. US persons who are required to establish their exemptstatus generally must provide IRS Form W-9 (Request for TaxpayerIdentification Number and Certification). Non-US holders generally will not besubject to US information reporting or backup withholding. However, theseholders may be required to provide certification of non-US status (generally onIRS Form W-8BEN) in connection with payments received in the UnitedStates or through certain US-related financial intermediaries.

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Backup withholding is notan additional tax. Amounts withheld as backup withholding may be creditedagainst a holder’s US federal income tax liability. A holder may obtain arefund of any excess amounts withheld under the backup withholding rules byfiling the appropriate claim for refund with the IRS and furnishing anyrequired information.

**10.F   Dividends and Paying Agents**

Not applicable.

**10.G   Statement by Experts**

Not applicable.

**10.H   Documents on Display**

All reports and otherinformation that we file with the SEC may be obtained, upon written request,from the Bank of New York, as Depositary for our ADSs at its Corporate Trustoffice, located at 101 Barclay Street, New York, New York 10286.These reports and other information can also be inspected without charge andcopied at prescribed rates at the public reference facilities maintained by theSEC in Room 1024, 450 Fifth Street, N.W., Washington,D.C. 20549. These reports may also be accessed via the SEC’s website at *www.sec.gov.* Also, certain reports and other informationconcerning us will be available for inspection at the offices of the New YorkStock Exchange. In addition, all the statutory records of the company and itssubsidiaries may be viewed at the registered address of the company in SouthAfrica.

**10.I   Subsidiary Information**

Not applicable. For a listof our subsidiaries see Exhibit 8.1 to this annual report on Form 20-F.

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**ITEM 11.**         QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are aninternational integrated oil and gas group with substantial chemical intereststhat is exposed to various market risks associated with our underlying assets,liabilities and anticipated transactions. We continuously monitor theseexposures and enter into derivative financial instruments to reduce theserisks. We do not enter into derivative transactions on a speculative basis. Allfair values, with the exception of the sensitivity analysis, have beendetermined using current market pricing models.

The principalmarket risks (i.e. the risk of losses arising from adverse movements in marketrates and prices) to which we are exposed are:

·       foreign exchange ratesapplicable on conversion of foreign currency transactions as well as onconversion of assets and liabilities to rand;

·       commodity prices, mainlycrude oil prices; and

·       interest rates on debt andcash deposits.

**Foreign Exchange Risk**

Our operations aredenominated in various foreign currencies and consequently, we are exposed toexchange rate fluctuations that have an impact on our cash flows and financingactivities. We manage our foreign exchange risks through our group financingpolicies and the selective use of forward exchange contracts, cross currencyswaps and cross currency options. We use foreign exchange contracts to reduceforeign currency exposures arising from imports into South Africa. Hedging oflocal exports is evaluated on a case-by-case basis.

All forwardexchange contracts and cross currency swaps are supported by underlyingcommitments or receivables.

Thefollowing tables present maturity analysis of our forward exchange contracts,cross currency options and cross currency swaps at 30 June 2005:

**Forward ExchangeContracts**

| ** **                             | ** ** | ** **                                       | ** ** | **Fair value loss at** | ** ** |
|----------------------------------------|------------|--------------------------------------------------|------------|---------------------------------------|------------|
| ** **                             | ** ** | **Expected maturity date**             | ** ** | **30 June**                      | ** ** | **30 June** | ** ** |
| **Rand functional currency** | ** ** | ** **                                       | ** ** | **2006**                              | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                             | ** ** | **(Rand equivalent in millions)** | ** ** |
| US$—contract amount               |       | 4,355                                            |       |                                  | 9          |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   | 4,364 |   |   | (3 | ) |   |   | (271 | ) |   |
| Average  contractual exchange rate     |       | 6.47                                             |       |                                  | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   | — |   |   | — |   |   |   | — |   |   |
| Euro—contract  amount             |       | 496                                              |       |                                  | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   | 496 |   |   | (14 | ) |   |   | (154 | ) |   |
| Average  contractual exchange rate     |       | 8.33                                             |       |                                  | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   | — |   |   | — |   |   |   | — |   |   |
| GBP—contract  amount              |       | 107                                              |       |                                  | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   | 107 |   |   | (1 | ) |   |   | — |   |   |
| Average  contractual exchange rate     |       | 11.86                                            |       |                                  | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   | — |   |   | — |   |   |   | — |   |   |
| Other  currencies—contract amount |       | 84                                               |       |                                  | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   | 84 |   |   | (1 | ) |   |   | (11 | ) |   |
| **Total**                              | ** ** | **5,042**                                        | ** ** | ** **                            | **9**      |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | **5,051** | ** ** | ** ** | **(19** | **)** | ** ** | ** ** | **(436** | **)** |   |
|                                        |            |                                                  |            |                                       |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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**Cross CurrencySwaps**

| ** **                         | ** ** | ** **                                                                  | ** ** | **Fair value  gain/(loss) at** | ** ** |
|------------------------------------|------------|-----------------------------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                         | ** ** | **Expected maturity date**                                        | ** ** | **30 June**                         | ** ** | **30 June** | ** ** |
| **Cross currency swaps** | ** ** | ** **                                                                  | ** ** | **2006**                                 | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                         | ** ** | **(Rand equivalent in millions—notional amounts)** | ** ** |
| Euro to US$ swaps             |       | 5,219                                                                       | ** ** |                                     | **—** | ** ** |   |   | **—** | ** ** |   |   | **—** | ** ** |   |   | **—** | ** ** |   |   | **—** |   |   | 5,219 |   |   | (609 | ) |   |   | (663 | ) |   |
| Other                              |       | 1,201                                                                       | ** ** |                                     | **—** | ** ** |   |   | **—** | ** ** |   |   | 31 | ** ** |   |   | 62 | ** ** |   |   | 1,490 |   |   | 2,784 |   |   | 14 |   |   |   | (14 | ) |   |
| Average contractual  exchange rate |       | 7.32                                                                        | ** ** |                                     | **—** | ** ** |   |   | **—** | ** ** |   |   | **—** | ** ** |   |   | **—** | ** ** |   |   | **—** |   | ** ** | **—** | ** ** | ** ** | **—** |   |   |   | — |   |   |
|                                    |            |                                                                             |            |                                          |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**Commodity Price Risk**

We make use of derivative instruments, includingcommodity swaps, options and futures contracts of short duration as a means ofmitigating price and timing risks on crude oil and other energy-relatedproduct purchases and sales. In effecting these transactions, the groupentities concerned operate within procedures and policies designed to ensurethat risks including those relating to the default of counter parties areminimized.

The hedging transactions are linked to underlyingphysical deals and there are no significant losses or profits on thesetransactions.

Thefollowing hedging instruments were in place in respect of crude oil futures andother raw materials at 30 June 2005:

| ** **                | ** ** | ** **                                       | ** ** | **Fair value  gain/(loss) at** | ** ** |
|---------------------------|------------|--------------------------------------------------|------------|------------------------------------------|------------|
| ** **                | ** ** | **Expected maturity date**             | ** ** | **30 June**                         | ** ** | **30 June** | ** ** |
| ** **                | ** ** | **2006**                                         | ** ** | **2007**                                 | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                | ** ** | **(Rand equivalent in millions)** | ** ** |
| **Future contracts**      |       |                                             |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil futures (US$)         |       | 260                                              | ** ** | ** **                               | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   | 260 |   |   | (2 | ) |   |   | (9 | ) |   |
| **Swaps**                 |       |                                             |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Crude oil (US$)           | ** ** | **—**                                       | ** ** | ** **                               | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | **—** | ** ** | ** ** | **—** |   |   |   | (36 | ) |   |
| Fuel oil (US$)            |       | 70                                               | ** ** | ** **                               | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   | 70 |   |   | 22 |   |   |   | 6 |   |   |
| **Zero cost collar**      |       |                                             |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Call options sold  (US$)  |       | 2,622                                            | ** ** | ** **                               | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   | 2,622 | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   |
| Put options  bought (US$) |       | 1,440                                            | ** ** | ** **                               | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   | 1,440 |   |   | 11 |   | ** ** | ** ** | **—** |   |   |
| **Options sold**          |       |                                             |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Call options sold  (US$)  |       | 51                                               |       |                                     | 238        |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   | 289 |   |   | (2 | ) |   |   | — |   |   |
| Put options sold (US$)    |       | 1,380                                            |       |                                     | 213        |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   | 1,593 |   |   | 8 |   |   |   | 4 |   |   |
|                           |            |                                                  |            |                                          |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**Interest Rate Risk**

We monitor exposure to interest rate risk onborrowings and cash deposits on a continuous basis. At 30 June 2005, wehad approximately R15.6 billion of total debt arrangements outstanding.

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Thefollowing is a breakdown of our debt arrangements and a summary of fixed versusfloating interest rate exposures.

| **Liabilities—notional**     | ** ** | ** **                       | ** ** | **2006** | ** ** | **2007**  | ** ** | **2008** | ** ** | **2009**  | ** ** | **2010**   | ** ** | **Thereafter** | ** ** | **Total**  | ** ** |
|-----------------------------------|------------|----------------------------------|------------|----------|------------|-----------|------------|----------|------------|-----------|------------|------------|------------|----------------|------------|------------|------------|
| ** **                        | ** ** | **(Rand in millions)** | ** ** |
| Fixed rate (Rand)                 |       | 3,947                            |       | 67       |       | 2,064     |       | 70       |       | 61        |       |       | 277        |           | 6,486      |       |
| Average interest  rate            |       | 8.5                              | %          | 10.6     | %          | 10.6      | %          | 10.8     | %          | 10.6      | %          |       | 10.5       | %              |       |       |
| Variable rate  (Rand)             |       | 637                              |       | 503      |       | 454       |       | 501      |       | 505       |       |       | 2196       |           | 4,796      |       |
| Average interest  rate            |       | 9.4                              | %          | 9.4      | %          | 9.3       | %          | 9.3      | %          | 9.3       | %          |       | 9.2        | %              |       |       |
| Fixed rate (US$)                  |       | 7                                | ** ** | —   | ** ** | —    | ** ** | —   | ** ** | —    | ** ** | ** ** | —     |           | 7          |       |
| Average interest  rate            |       | 3.3                              | %          | —   | ** ** | —    | ** ** | —   | ** ** | —    | ** ** | ** ** | —     |           |       |       |
| Variable rate  (US$)              |       | 569                              | ** ** | —   | ** ** | —    | ** ** | —   | ** ** | —    |       |       | 390        |           | 959        |       |
| Average interest  rate            |       | 3.6                              | %          | —   | ** ** | —    | ** ** | —   | ** ** | —    |       |       | 3.5        | %              |       |       |
| Fixed rate (euro)                 |       | 65                               |       | 26       |       | 18        |       | 2        |       | 2,421     |       |       | 1          |           | 2,533      |       |
| Average interest  rate            |       | 3.4                              | %          | 3.4      | %          | 3.4       | %          | 3.4      | %          | 3.4       | %          |       | 3.5        | %              |       |       |
| Variable rate  (euro)             |       | 396                              |       | 43       |       | 24        |       | 24       |       | 24        |       |       | 121        |           | 632        |       |
| Average interest  rate            |       | 3.3                              | %          | 4.9      | %          | 5.1       | %          | 5.1      | %          | 5.1       | %          |       | 5.1        | %              |       |       |
| Variable rate  (other currencies) | ** ** | —                           | ** ** | —   |       | 146       | ** ** | —   | ** ** | —    | ** ** | ** ** | —     |           | 146        |       |
| Average interest  rate            | ** ** | —                           | ** ** | —   |       | 11.7      | %          | —   | ** ** | —    | ** ** | ** ** | —     |           |       |       |
| **Total**                         | ** ** | **5,621**                        | ** ** | **639**  | ** ** | **2,706** | ** ** | **597**  | ** ** | **3,011** | ** ** | ** ** | **2,985**  |           | **15,559** | ** ** |

 

We enter into interest rate derivatives, particularly“interest rate swaps” to mitigate interest rate exposures and to achieveimproved predictability of cash flows on a project-by-project basis.

Thefollowing interest rate derivative contracts were outstanding at 30June 2005:

| ** **                        | ** ** | **Expected maturity date**                                         | ** ** | **Fair value  gain/(loss) at** | ** ** |
|-----------------------------------|------------|------------------------------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                        | ** ** | **2006**                                                                     | ** ** | **2007**                                 | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **30 June 2005** | ** ** |
| ** **                        | ** ** | **(Rand equivalent, in millions—notional amounts)** | ** ** |
| Fixed to receive  floating (US$)  |       | 65                                                                           |       | 136                                      |       | 145 |   | 307 |   | — |   |   | — |   | 653 |   |   | 10 |   |
| Average pay rate                  |       | 3.80                                                                         | ** ** | —                                   | ** ** | — | ** ** | — |   | — |   |   | — |   | — | ** ** | ** ** | — |   |
| Fixed to receive  floating (Rand) | ** ** | —                                                                       | ** ** | —                                   |       | 500 | ** ** | — |   | — |   |   | — |   | 500 |   |   | (30 | ) |
| Cap                               | ** ** | —                                                                       |       | 500                                      | ** ** | — | ** ** | — |   | — |   |   | — |   | 500 |   |   | (9 | ) |
| Collar                            |       | 500                                                                          | ** ** | —                                   | ** ** | — | ** ** | — |   | — |   |   | — |   | 500 |   |   | (9 | ) |
| **Total**                         | ** ** | **565**                                                                      | ** ** | **636**                                  | ** ** | **645** | ** ** | **307** |   | — |   |   | — |   | **2,153** | ** ** | ** ** | **(38** | ) |

 

Our South African operations are vulnerable to adversechanges in short-term domestic interest rates, as a result of the emergingmarket status of the South African money markets.

At 30 June 2005, wewere exposed to changes in interest rates on R5,380 million. A change ininterest rates of 100 basis points per annum would therefore have an effect ofR53.8 million on our incurred interest expense.

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**ITEM 12.**         DESCRIPTIONOF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

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**PART II**

**ITEM 13.**         DEFAULTS,DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

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**ITEM 14.**         MATERIALMODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

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**ITEM 15.**         CONTROLSAND PROCEDURES

(a)   DisclosureControls and Procedures

The Company’s ChiefExecutive and Chief Financial Officer (the “Officers”), based on the evaluationof the effectiveness of the Group’s disclosure controls and procedures(required by paragraph (b) of 17 CFR 240.13a-15) as of the end of theperiod covered by this annual report on Form 20-F, have concluded that, asof such date, the Company’s disclosure controls and procedures were effective.

(b)   Notapplicable.

(c)   Notapplicable.

(d)   Changes ininternal control over financial reporting.

There were no significantchanges in the Group’s internal controls over financial reporting that occurredin the year ended 30 June 2005 that have materially affected, or arereasonably likely to affect, the Group’s internal control over financialreporting.

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**ITEM16.**

**Item 16A.**         AuditCommittee Financial Expert

Mr. Warren Clewlow,an independent member of the audit committee, has been determined by our boardto be an audit committee financial expert within the meaning of the Sarbanes-OxleyAct, in accordance with the Rules of the NYSE and the SEC.

**Item 16B.**        Codeof Ethics

Our code of ethics consists of four fundamentalethical principles—responsibility, honesty, fairness and respect—and 15 ethicalstandards. These cover such issues as bribery and corruption, fraud, insidertrading, human rights and discrimination and include a commitment to conductingour business with due regard to the interests of all our stakeholders and theenvironment. The code embodies the highest standards of compliance with allapplicable laws and regulations. An ethics forum has been established tomonitor and report on ethics, best practice and compliance requirements, and torecommend amendments to the code as required. Employee performance against ourvalues, which incorporate the code of ethics, is assessed as part of ourperformance appraisal system. Any amendment or waiver of the code as it relatesto our chief executive or chief financial officer will be posted on our websitewithin five business days following such amendment or waiver. No suchamendments or waivers are anticipated.

The principles contained in the code have beencommunicated throughout the group and are available on our internet website.Our website address is *www.sasol.com*and the code is located on the investor relations sub-directory.

An ethics hotline operatedby an independent service provider, has been in operation since 2002. Thehotline provides an independent facility for stakeholders of our company,including our employees, suppliers and customers, to anonymously report fraud,statutory malpractices and other crimes, deviations from the procurementpolicy, financial and accounting reporting irregularities and otherirregularities.

**Item 16C.**        PrincipalAccountant Fees and Services

Thefollowing table sets forth the aggregate audit and audit-related fees,tax fees and all other fees billed by our principal accountants (KPMG Inc.) foreach of the 2005 and 2004 years:

| ** ** | ** ** | **Audit fees**      | ** ** | **Audit-related  fees** | ** ** | **Tax fees** | ** ** | **All other fees** | ** ** | **Total**(1) | ** ** |
|------------|------------|--------------------------|------------|-------------------------|------------|-------------------|------------|------------------------------|------------|--------------|------------|
| ** ** | ** ** | **(rand millions)** | ** ** |
| 2004       |       |                     | 32         |                    |       |              | 3          |                         |       |         | 2          |   |   |   | — |   |   |   | 37 |   |   |
| 2005       |       |                     | 36         |                    |       |              | 26         |                         |       |         | 4          |   |   |   | 1 |   |   |   | 67 |   |   |

----

(1)    In termsof our audit committee approval process all of the non-audit and audit feespaid to KPMG Inc. have been approved by the audit committee.

Audit fees consist of fees billed for the annual auditof the company’s consolidated financial statements and the statutory financialstatements of the company’s subsidiaries, it includes fees billed for assuranceand related services that are reasonably related to the performance of theaudit or reviews of the company’s financial statements that are services thatonly an external auditor can reasonably provide.

Audit-related fees consist, inter alia,attestation services relating to internal controls, review of documents filedwith regulatory authorities, consultations concerning financial accounting andreporting standards, review of security controls and operational effectivenessof systems, due diligence related to acquisitions and employee benefit planaudits. Included in audit-related fees for the 2005 year includes fees billedby KPMG Inc. in respect of the assistance provided on our Sarbanes-Oxley Act, Section 404,

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readiness project ofapproximately R22 million. This project includes assistance relating to thedocumentation of internal control policies and procedures.

Tax fees include fees billed for tax complianceservices, including assistance in the preparation of original and amended taxreturns, tax consultations, such as assistance in connection with tax auditsand appeals, tax advice relating to acquisitions, transfer pricing, andrequests for rulings or technical advice from tax authorities; tax planningservices and expatriate tax compliance, consultation and planning services.

All other fees includesall fees billed which are not included under audit fees, audit related fees ortax fees.

**Audit Committee Approval Policy**

In accordance with our audit committee approvalpolicy, all audit and non-audit services performed for us by our independentaccountants were approved by the audit committee of our Board of directors,which concluded that the provision of such services by the independentaccountants was compatible with the maintenance of that firm’s independence inthe conduct of its auditing functions.

The approval policy provides for categorical approvalof permissible non-audit services and requires the specific pre-approval by theaudit committee, prior to engagement, of such services, other than auditservices covered by the annual audit engagement letter, provided that all suchfees must be less than 20% of the total audit fees for Sasol’s annual auditengagement, unless otherwise directed by the audit committee. During thecurrent year this 20% was exceeded due to the fees relating to theSarbanes-Oxley Act, Section 404 readiness project. In addition, servicesto be provided by the independent accountants that are not within the categoryof approved services must be approved by the audit committee prior toengagement, regardless of the service being requested and the amount, butsubject to the restriction above.

Requests or applications for services that requirespecific separate approval by the audit committee are required to be submittedto the audit committee by both management and the independent accountants, andmust include a detailed description of the services to be provided and a jointstatement confirming that the provision of the proposed services does notimpair the independence of the independent accountants.

The audit committee hasdelegated the approval authority to the chairman of the Audit Committee, Mr. BrianConnellan, (and if he is unavailable, any audit committee member), provided thefee so approved is less than R1 million per service and the cumulativeamount approved per annum does not exceed the guideline of 20% of the budgetedaudit fees for the year, without the approval of the audit committee. Mr. Connellanshall notify any approvals to the audit committee at its next scheduledmeeting. The audit committee does not delegate to management itsresponsibilities to approve services to be performed by the independentaccountants.

**Changes of principal accountants**

In prior years, a significant subsidiary, SasolChemical Holdings International (Pty) Ltd (“SCHI”), was audited byPricewaterhouseCoopers GmbH of Hamburg, Germany (“PwC”), whose unqualifiedreport was referred to by the principal accountant, KPMG, for purposes ofexpressing an opinion on the group.

With effect from 1 July 2003, managementrecommended to the Sasol audit committee that the principal accountants of SCHIbe changed to KPMG in order to rationalize the independent accountantsappointed to the group to one firm. On 20 November 2003, the board of SCHIformally ratified the change of independent accountants from PWC to KPMG.

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KPMG confirmed with the predecessor auditors, PWC,that in connection with its audits for the two most recent fiscal years anduntil November 20, 2003, there had been no disagreements with PWC on anymatter of accounting principles or practices, financial statement disclosure,or auditing scope or procedure, which disagreements if not resolved to thesatisfaction of PWC would have caused them to make reference thereto in theirreport on the financial statements for such years.

During the two most recentfiscal years and until November 20, 2003, there had been no reportableevents (as defined in Regulation S-K Item 304(a)(1)(v)).

**Item 16D.**       Exemptionsfrom the Listing Standard for Audit Committees

Not applicable.

**Item16E.**        Purchases of EquitySecurities by the Issuer and Affiliated Purchases

| **Period**                                | ** ** | ** ** | ** ** | **Total  number  of shares  purchased** | ** ** | **Average  price paid  per share** | ** ** | **Total number of  shares purchased as  part of publicly  announced programs** | ** ** | **Maximum number  of shares that may  yet be purchased  under the programs** | ** ** |
|-------------------------------------------|------------|------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------|------------|
| **For the  year ended 30 June 2005** |       |       |       |                                         |       |                                         |       |                                                                                                              |       |                                                                                                                 |       |   |   |   |   |   |   |
| 2004-07-01 to  2004-07-31                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 6,868,980 |   |   |
| 2004-08-01 to  2004-08-31                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 6,868,980 |   |   |
| 2004-09-01 to  2004-09-30                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 6,868,980 |   |   |
| 2004-10-01 to  2004-10-31                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 6,868,980 |   |   |
| 2004-11-01 to  2004-11-30                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 6,868,980 |   |   |
| 2004-12-01 to  2004-12-31                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 7,263,266 |   |   |
| 2005-01-01 to  2005-01-31                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 7,263,266 |   |   |
| 2005-02-01 to  2005-02-28                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 7,263,266 |   |   |
| 2005-03-01 to  2005-03-31                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 7,263,266 |   |   |
| 2005-04-01 to  2005-04-30                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 7,263,266 |   |   |
| 2005-05-01 to  2005-05-31                 |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 7,263,266 |   |   |
| 2005-06-01 to 2005-06-30                  |       |       | —     |                                         |       |                                         | —     |                                                                                                              |       |                                                                                                                 | 60,111,477 |   |   |   | 7,263,266 |   |   |

 

a.      At eachannual general meeting since October 1999 and on 24 November 2004 theshareholders have authorized the directors to undertake a repurchase of issuedsecurities limited to a maximum of 10% of the company’s issued securities atthe time that the authority was granted. For more information on the generalrequirements for trading in own shares refer to “Item 10.B Memorandum andArticles of Association”

b.     Anyacquisition must not be made at a price more than 10% above the weightedaverage of the market value of the securities for the 5 business daysimmediately preceding the date of such acquisition.

c.      Theauthority granted to the directors to acquire the company’s issued securitiesis valid only until the company’s next annual general meeting and shall notextend beyond 15 months from the date of the previous authorization.

d.     No plan orprogram has expired during the year.

e.      Noprogram is intended to terminate prior to the expiration date.

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**PART III**

**ITEM 17.**         FINANCIALSTATEMENTS

Sasol is furnishing financial statements pursuant tothe instructions of Item 18 of Form 20-F.

214

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**Item18:**             FINANCIAL STATEMENTS

The following consolidatedfinancial statements, together with the auditors’ reports of KPMG Inc and theother accountants are filed as part of this annual report on Form 20-F:

**INDEX TOCONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED 30 JUNE 2005, 30 JUNE2004 AND 30 JUNE 2003**
| Report of the Independent  Registered Public Accounting Firm | F-1    |
|--------------------------------------------------------------|--------|
| Report  of the Other Accountants                             | F-2    |
| **Consolidated  Financial Statements**                       |   |
| Income  Statements                                           | F-3    |
| Balance Sheets                                               | F-4    |
| Statement of Changes in  Shareholders’ Equity           | F-5    |
| Statements of Cash Flows                                     | F-6    |
| Statements of Comprehensive  Income                          | F-7    |
| Notes to the Consolidated Financial  Statements              | F-8    |
| **SUPPLEMENTARY OIL AND GAS  INFORMATION (UNAUDITED)**       | G-1    |

 

215

----

|        | ** ** | **KPMG Inc**                                 |   | Telephone | +27 (11) 647 7111        |
|--------|------------|----------------------------------------------|--------|-----------|--------------------------|
|   |       | KPMG  Crescent                               |   | Fax       | +27  (11) 647 8000       |
|   |       | 85  Empire Road, Parktown, 2193              |   | Docex     | 472  Johannesburg        |
|   |       | Private  Bag 9, Parkview, 2122, South Africa |   | Internet  | *http://www.kpmg.co.za/* |

 

**Report of IndependentRegistered Public Accounting Firm**

**TheBoard of Directors and Shareholders of Sasol Limited:**

We have audited theaccompanying consolidated balance sheets of Sasol Limited and its subsidiaries(Group) as of 30 June 2005 and 30 June 2004, and therelated consolidated income statements, statements of comprehensive income,changes in shareholders’ equity and cash flows for each of the years in thethree-year period ended 30 June 2005. These consolidated financialstatements are the responsibility of the Group’s management. Our responsibilityis to express an opinion on these consolidated financial statements based onour audits. We did not audit the financial statements of Sasol ChemicalHoldings International (Pty) Limited, a wholly-owned subsidiary for the yearended 30 June 2003, which statements reflect total turnoverconstituting 34 percent in the year ended 30 June 2003 of therelated consolidated total. The financial statements of Sasol Chemical HoldingsInternational (Pty) Limited for the year ended 30 June 2003 wereaudited by other auditors whose report has been furnished to us, and ouropinion, insofar as it relates to the amounts included for Sasol ChemicalHoldings International (Pty) Limited for year ended 30 June 2003, isbased solely on the report of the other auditors.

We conducted our audits inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basisfor our opinion.

In ouropinion, based on our audits and the report of the other auditors, theconsolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of Sasol Limited and its subsidiariesas of 30 June 2005 and 30 June 2004, and the results oftheir operations and their cash flows for each of the years in the three-yearperiod ended 30 June 2005, in conformity with accounting principlesgenerally accepted in the United States of America
| **KPMG Inc.**                        |       |
|--------------------------------------|------------|
| Registered  Accountants and Auditors |       |
| Johannesburg,  South Africa          |       |
| 26  October 2005                |       |
|                                      |            |
| A van der Lith                       | LP Fourie  |
| *Director*                           | *Director* |

 
|                                                                                                                                   |                               | Policy  Board: RM Kgosana (Chairman) TW Grieve (Chief Executive)  TH Bashall BG Bauer DC Duffield J Geel A Hari  TH Hoole D Jackson GI Maile AM Mokgabudi S Naidoo  CM Read YGH Suleman D van Heerden JM Vice |
|-----------------------------------------------------------------------------------------------------------------------------------|------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| KPMG Inc, a company incorporated under the South  African Companies Act, is a member of KPMG International, a Swiss  cooperative. |                               | The company’s principal place of business is at KPMG  Crescent, 85 Empire Road, Parktown, where a list of the directors’ names is  available for inspection.                                                                                                                             |
|                                                                                                                              | Registration number 1999/021543/21 |

 

The accompanying notes form an integral part of these consolidated financial statements.

F-1

----

**To the Board of****Directors and Shareholders ofSasol Chemical Holdings International(Pty) Limited**

**Report of IndependentAuditors**

In our opinion, theaccompanying consolidated balance sheets and the related consolidatedstatements of income and comprehensive income, of changes in shareholders’equity and of cash flows present fairly, in all material respects, thefinancial position of Sasol Chemical Holdings International (Pty) Limited andits subsidiaries (the “Company”) at June 30, 2003, 2002 2001 and theresults of their operations and their cash flows for the years ended June 30,2003 and 2002 and for the four month period ended June 30, 2001, inconformity with accounting principles generally accepted in the United Statesof America. These financial statements are the responsibility of the Company’smanagement; our responsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits of these statements inaccordance with auditing standards generally accepted in the United States ofAmerica, which require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made by management, andevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for our opinion.

As described in Note 2, theCompany has restated its 2002 financial statements to eliminate the tax benefitof Rand 47.2 million attributable to the reversal of a deferred taxvaluation allowance related to a purchased entity and record it as a reductionof intangible assets.

Hamburg,September 30, 2003

| ****                                 | ** ** |
|--------------------------------------|------------|
| GmbH                                 | ** ** |
| Wirtschaftsprüfungsgesellschaft | ** ** |

 

|                            |                             |
|----------------------------|-----------------------------|
| M. McLean                  | R.  Schulz                  |
| Wirtschaftsprüfer     | Wirtschaftsprüfer      |
| (German Public Accountant) | (German  Public Accountant) |
| *Chartered Accountant*     |                        |

 

F-2

----

**Sasol Limited and its subsidiariesConsolidated Income Statementsfor the years ended**
|                                                                                                                     | ** ** | **Note**   | ** ** | **30 June  2005** | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|---------------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------------------|------------|----------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                                                                          | ** ** | ** ** | ** ** | **(US$in  millions)*** | ** ** | **(Rand in millions)** | ** ** |
| ** **                                                                                                          | ** ** | ** ** | ** ** | **(Unaudited)**        | ** ** | ** **                       | ** ** | ** **             | ** ** | ** **             | ** ** |
| Sale of products                                                                                                    | ** ** |       | ** ** |                   |       | **10,474**                       |       | **66,507**             |       | 57,973                 |       | 62,509 |   |
| Services rendered                                                                                                   | ** ** |       | ** ** |                   |       | **85**                           |       | **543**                |       | 517                    |       | 502 |   |
| Commission and  marketing income                                                                                    | ** ** |       | ** ** |                   |       | **59**                           |       | **377**                |       | 318                    |       | 758 |   |
| **Turnover**                                                                                                        |       |       | ** ** |                   |       | **10,618**                       |       | **67,427**             |       | 58,808                 |       | 63,769 |   |
| Other operating  income                                                                                             | ** ** |       | ** ** |                   |       | **64**                           |       | **408**                |       | 332                    |       | 603 |   |
| Net foreign exchange  gains / (losses)                                                                              | ** ** |       | ** ** |                   |       | **23**                           |       | **146**                |       | (1,266                 | )          | (2,437 | ) |
| Cost of sales                                                                                                       | ** ** |       | ** ** |                   |       | **(6,320**                       | )          | **(40,129**            | **)**      | (37,288                | )          | (38,415 | ) |
| Cost of services  rendered                                                                                          | ** ** |       | ** ** |                   |       | **(83**                          | )          | **(530**               | **)**      | (502                   | )          | (475 | ) |
| Selling and  distribution costs                                                                                     | ** ** |       | ** ** |                   |       | **(774**                         | )          | **(4,913**             | **)**      | (4,837                 | )          | (4,976 | ) |
| Administrative  expenses                                                                                            | ** ** |       | ** ** |                   |       | **(609**                         | )          | **(3,868**             | **)**      | (3,605                 | )          | (4,402 | ) |
| Other operating  expenses                                                                                           | ** ** |       | ** ** |                   |       | **(568**                         | )          | **(3,608**             | **)**      | (2,903                 | )          | (2,656 | ) |
| **Operating  costs and expenses**                                                                                   | ** ** |       | ** ** |                   |       | **(8,354**                       | )          | **(53,048**            | **)**      | (49,135                | )          | (50,924 | ) |
| **Operating  profit**                                                                                               | ** ** |       | **5**      |                   |       | **2,351**                        |       | **14,933**             | ** ** | 8,739                  | ** ** | 11,011 |   |
| **Other income / (expenses)**                                                                                       | ** ** |       | ** ** |                   |       | ** **                       |       | ** **             |       |                   |       |   |   |
| Dividends received                                                                                                  | ** ** |       | ** ** |                   |       | **4**                            |       | **23**                 |       | 14                     |       | 14 |   |
| Interest received                                                                                                   | ** ** |       | ** ** |                   |       | **18**                           |       | **116**                |       | 183                    |       | 193 |   |
| Finance costs                                                                                                       | ** ** |       | **6**      |                   |       | **(52**                          | )          | **(332**               | **)**      | (368                   | )          | (271 | ) |
| Gain arising from  issuance of subsidiary’s shares                                                             | ** ** |       | **4**      |                   |       | **—**                       |       | **—**             |       | 108                    |       | **—** |   |
| **Income  before tax**                                                                                              |       |       | ** ** |                   |       | **2,321**                        |       | **14,740**             |       | 8,676                  |       | 10,947 |   |
| Income tax                                                                                                          | ** ** |       | **7**      |                   |       | **(812**                         | )          | **(5,157**             | **)**      | (3,177                 | )          | (3,915 | ) |
| **Income  after tax**                                                                                               | ** ** |       | ** ** |                   |       | **1,509**                        |       | **9,583**              |       | 5,499                  |       | 7,032 |   |
| Earnings /  (losses) of equity accounted investees                                                                  | ** ** |       | ** ** |                   |       | **48**                           |       | **307**                |       | (49                    | )          | (47 | ) |
| Minority interest                                                                                                   | ** ** |       | ** ** |                   |       | **(16**                          | )          | **(103**               | **)**      | (92                    | )          | (170 | ) |
| **Earnings  attributable to shareholders before cumulative effect of change  in method of accounting**         | ** ** |       | ** ** |                   |       | **1,541**                        |       | **9,787**              | ** ** | 5,358                  | ** ** | 6,815 |   |
| Change in method  of accounting for asset retirement obligations, net of tax of R227  million             | ** ** |       | ** ** |                   |       | **—**                       |       | **—**             |       | **—**             |       | 529 |   |
| **Earnings  attributable to shareholders after cumulative effect of change in method of  accounting**               | ** ** |       | ** ** |                   |       | **1,541**                        |       | **9,787**              | ** ** | 5,358                  | ** ** | 7,344 |   |
| ***Basic earnings per share  (cents)***                                                                             | ** ** |       | ** ** |                   |       | ** **                       |       |                   |       |                   |       |   |   |
| Earnings per share  before cumulative effect of change in method of accounting                            | ** ** |       | **8**      |                   |       | **251**                          |       | **1,594**              |       | 878                    |       | 1,119 |   |
| Change in method  of accounting for asset retirement obligations                                                    | ** ** |       | ** ** |                   |       | **—**                       |       | **—**             |       | **—**             |       | 87 |   |
| Earnings per share  after cumulative effect of change in method of  accounting                                      | ** ** |       | ** ** |                   |       | **251**                          |       | **1,594**              |       | 878                    |       | 1,206 |   |
| ***Diluted earnings per share  (cents)***                                                                           |       |       | ** ** |                   |       | ** **                       |       |                   |       |                   |       |   |   |
| Diluted earnings  per share before cumulative effect of change in method of accounting          | ** ** |       | **8**      |                   |       | **247**                          |       | **1,567**              |       | 870                    |       | 1,100 |   |
| Change in method  of accounting for asset retirement obligations                                                    | ** ** |       | ** ** |                   |       | **—**                       |       | **—**             |       | **—**             |       | 85 |   |
| Diluted earnings  per share after cumulative effect of change in method of accounting      | ** ** |       | ** ** |                   |       | **247**                          |       | **1,567**              |       | 870                    |       | 1,185 |   |

----

*                      US dollar information has been presentedfor the year ended 30 June 2005  onan unaudited basis solely for the convenience of the reader and is computed atthe noon buying rate for customs purposes of R6.35 / US dollar , as reported by the Federal Reserve Bank of New Yorkon 30 September 2005.

The accompanying notes form an integral part of these consolidated financial statements.

F-3

----

**Sasol Limited and its subsidiariesConsolidated Balance Sheetsat**
|                                                                                                                                                                       | ** ** | **Note**   | ** ** | **30 June  2005**           | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|----------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                                                                                                                                                            | ** ** | ** ** | ** ** | **(US$ in millions)*** | ** ** | **(Rand in millions)** | ** ** |
| ** **                                                                                                                                                            | ** ** | ** ** | ** ** | **(Unaudited)**                  | ** ** | ** **                       | ** ** | ** **             | ** ** |
| **Assets**                                                                                                                                                            | ** ** |       | ** ** | ** **                       |       |                             | ** ** | ** **             |       |   |   | ** ** |   |   |   |   |   |
| ***Current assets***                                                                                                                                                  | ** ** |       | ** ** | ** **                       |       |                             | ** ** | ** **             |       |   |   | ** ** |   |   |   |   |   |
| Cash and cash  equivalents                                                                                                                                            | ** ** |       | **9**      | ** **                       |       |                             | **370**    | ** **             | ** ** | ** ** | **2,350** | ** ** |   |   | 1,410 |   |   |
| Cash restricted  for use                                                                                                                                              | ** ** |       | **9**      | ** **                       |       |                             | **52**     | ** **             | ** ** | ** ** | **331** | ** ** |   |   | 930 |   |   |
| Trade, other  receivables and prepaid expenses                                                                                                                        | ** ** |       | **10**     | ** **                       |       |                             | **1,852**  | ** **             | ** ** | ** ** | **11,763** | ** ** |   |   | 10,397 |   |   |
| Inventories                                                                                                                                                           | ** ** |       | **11**     | ** **                       |       |                             | **1,520**  | ** **             | ** ** | ** ** | **9,650** | ** ** |   |   | 7,959 |   |   |
| Deferred tax                                                                                                                                                          | ** ** |       | **7**      | ** **                       |       |                             | **24**     | ** **             | ** ** | ** ** | **154** | ** ** |   |   | 5 |   |   |
| ***Total  current assets***                                                                                                                                           | ** ** |       | ** ** | ** **                       |       |                             | **3,818**  | ** **             | ** ** | ** ** | **24,248** | ** ** |   |   | 20,701 |   |   |
| ***Non-current assets***                                                                                                                                              | ** ** |       | ** ** | ** **                       |       |                             | ** ** | ** **             |       |   |   | ** ** |   |   |   |   |   |
| Investments in  securities                                                                                                                                            | ** ** |       | **12**     | ** **                       |       |                             | **62**     | ** **             | ** ** | ** ** | **395** | ** ** |   |   | 369 |   |   |
| Investments in  equity accounted investees                                                                                                                            | ** ** |       | **13**     | ** **                       |       |                             | **855**    | ** **             | ** ** | ** ** | **5,431** | ** ** |   |   | 4,189 |   |   |
| Prepaid pension  asset                                                                                                                                                | ** ** |       | **22**     | ** **                       |       |                             | **97**     | ** **             | ** ** | ** ** | **618** | ** ** |   |   | 583 |   |   |
| Long-term  receivables                                                                                                                                                | ** ** |       | ** ** | ** **                       |       |                             | **97**     | ** **             | ** ** | ** ** | **616** | ** ** |   |   | 535 |   |   |
| Long-term prepaid  expenses                                                                                                                                           | ** ** |       | ** ** | ** **                       |       |                             | **17**     | ** **             | ** ** | ** ** | **107** | ** ** |   |   | 128 |   |   |
| Goodwill and  intangible assets                                                                                                                                       | ** ** |       | **14**     | ** **                       |       |                             | **315**    | ** **             | ** ** | ** ** | **1,998** | ** ** |   |   | 2,278 |   |   |
| Property, plant  and equipment                                                                                                                                        | ** ** |       | **15**     | ** **                       |       |                             | **7,337**  | ** **             | ** ** | ** ** | **46,591** | ** ** |   |   | 39,720 |   |   |
| Deferred tax                                                                                                                                                          | ** ** |       | **7**      | ** **                       |       |                             | **67**     | ** **             | ** ** | ** ** | **424** | ** ** |   |   | 262 |   |   |
| ***Total  non-current assets***                                                                                                                                       | ** ** |       | ** ** | ** **                       |       |                             | **8,847**  | ** **             | ** ** | ** ** | **56,180** | ** ** |   |   | 48,064 |   |   |
| **Total  assets**                                                                                                                                                     | ** ** |       | ** ** | ** **                       |       |                             | **12,665** | ** **             | ** ** | ** ** | **80,428** | ** ** |   |   | 68,765 |   |   |
| **Liabilities and shareholders’ equity**                                                                                                                         | ** ** |       | ** ** | ** **                       |       |                             | ** ** | ** **             |       |   |   | ** ** |   |   |   |   |   |
| ***Current liabilities***                                                                                                                                             | ** ** |       | ** ** | ** **                       |       |                             | ** ** | ** **             |       |   |   | ** ** |   |   |   |   |   |
| Bank overdraft                                                                                                                                                        | ** ** |       | ** ** | ** **                       |       |                             | **42**     | ** **             | ** ** | ** ** | **266** | ** ** |   |   | 74 |   |   |
| Trade payables                                                                                                                                                        | ** ** |       | ** ** | ** **                       |       |                             | **816**    | ** **             | ** ** | ** ** | **5,181** | ** ** |   |   | 4,148 |   |   |
| Accrued expenses  and other obligations                                                                                                                               | ** ** |       | **16**     | ** **                       |       |                             | **821**    | ** **             | ** ** | ** ** | **5,216** | ** ** |   |   | 5,840 |   |   |
| Short-term debt                                                                                                                                                       | ** ** |       | **17**     | ** **                       |       |                             | **843**    | ** **             | ** ** | ** ** | **5,355** | ** ** |   |   | 7,139 |   |   |
| Income tax payable                                                                                                                                                    | ** ** |       | ** ** | ** **                       |       |                             | **108**    | ** **             | ** ** | ** ** | **686** | ** ** |   |   | 2 |   |   |
| Deferred tax                                                                                                                                                          | ** ** |       | **7**      | ** **                       |       |                             | **30**     | ** **             | ** ** | ** ** | **196** | ** ** |   |   | 165 |   |   |
| ***Total  current liabilities***                                                                                                                                      | ** ** |       | ** ** | ** **                       |       |                             | **2,660**  | ** **             | ** ** | ** ** | **16,900** | ** ** |   |   | 17,368 |   |   |
| ***Non-current liabilities***                                                                                                                                         | ** ** |       | ** ** | ** **                       |       |                             | ** ** | ** **             | ** ** | ** ** | ** ** | ** ** |   |   |   |   |   |
| Long-term  obligations, net of current portion                                                                                                                        | ** ** |       | **18**     | ** **                       |       |                             | **386**    | ** **             | ** ** | ** ** | **2,452** | ** ** |   |   | 1,940 |   |   |
| Long-term debt,  net of current portion                                                                                                                               | ** ** |       | **19**     | ** **                       |       |                             | **1,565**  | ** **             | ** ** | ** ** | **9,938** | ** ** |   |   | 7,153 |   |   |
| Post-retirement  healthcare                                                                                                                                           | ** ** |       | **22**     | ** **                       |       |                             | **436**    | ** **             | ** ** | ** ** | **2,771** | ** ** |   |   | 2,449 |   |   |
| Pension liability                                                                                                                                                     | ** ** |       | **22**     | ** **                       |       |                             | **199**    | ** **             | ** ** | ** ** | **1,262** | ** ** |   |   | 1,054 |   |   |
| Deferred tax                                                                                                                                                          | ** ** |       | **7**      | ** **                       |       |                             | **933**    | ** **             | ** ** | ** ** | **5,923** | ** ** |   |   | 4,772 |   |   |
| ***Total  non-current liabilities***                                                                                                                                  | ** ** |       | ** ** | ** **                       |       |                             | **3,519**  | ** **             | ** ** | ** ** | **22,346** | ** ** |   |   | 17,368 |   |   |
| **Total  liabilities**                                                                                                                                                | ** ** |       | ** ** | ** **                       |       |                             | **6,179**  | ** **             | ** ** | ** ** | **39,246** | ** ** |   |   | 34,736 |   |   |
| ***Minority  interests in consolidated subsidiaries***                                                                                                                | ** ** |       | ** ** | ** **                       |       |                             | **37**     | ** **             | ** ** | ** ** | **237** | ** ** |   |   | 360 |   |   |
| **Shareholders’ equity**                                                                                                                                         | ** ** |       | ** ** | ** **                       |       |                             | ** ** | ** **             |       |   |   | ** ** |   |   |   |   |   |
| Stated share  capital—1,175,000,000 authorised ordinary shares of no par value. 676,877,125  shares (2004—671,271,425 shares) in issue and outstanding | ** ** |       | **20**     | ** **                       |       |                             | **529**    | ** **             | ** ** | ** ** | **3,356** | ** ** |   |   | 2,976 |   |   |
| Treasury  stock—60,111,477 shares (2004—60,111,477 shares)                                                                                                  | ** ** |       | **20**     | ** **                       |       |                             | **(574**   | **)**                  | ** ** | ** ** | **(3,647** | **)** |   |   | (3,647 | ) |   |
| Retained earnings                                                                                                                                                     |       |       | ** ** | ** **                       |       |                             | **6,931**  | ** **             | ** ** | ** ** | **44,011** | ** ** |   |   | 37,080 |   |   |
| Accumulated other  comprehensive loss                                                                                                                                 |       |       | ** ** | ** **                       |       |                             | **(437**   | **)**                  | ** ** | ** ** | **(2,775** | **)** |   |   | (2,740 | ) |   |
| ***Total  shareholders’ equity***                                                                                                                                |       |       | ** ** | ** **                       |       |                             | **6,449**  | ** **             | ** ** | ** ** | **40,945** | ** ** |   |   | 33,669 |   |   |
| **Total  liabilities and shareholders’ equity**                                                                                                                  | ** ** |       | ** ** | ** **                       |       |                             | **12,665** | ** **             | ** ** | ** ** | **80,428** | ** ** |   |   | 68,765 |   |   |

 

**Commitments and contingencies—see note 21**

----

*           USdollar information has been presented for the year ended 30 June 2005  on an unaudited basis solely for theconvenience of the reader and is computed at the noon buying rate for customspurposes of  R6.35 / US dollar , asreported by the Federal Reserve Bank of New York on 30 September 2005.

The accompanying notes form an integral part of these consolidated financial statements.

F-4

----

**Sasol Limited and its subsidiariesConsolidated Statementof Changes in Shareholders’ Equityfor the years ended 30 June 2005, 30 June 2004 and 30 June 2003**
|                                                                                         | ** ** | **Common Stock**                        | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** **             | ** ** | ** **                                                       | ** ** | ** **                            | ** ** |
|-----------------------------------------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|------------------------|------------|------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                              | ** ** | **Number of  ordinary  shares  issued** | ** ** | **Stated  share  capital**       | ** ** | **Treasury  stock**              | ** ** | **Retained  earnings** | ** ** | **Accumulated  other  comprehensive  (loss) / income** | ** ** | **Total  shareholders’  equity** | ** ** | **Total  shareholders’  equity** | ** ** |
| ** **                                                                              | ** ** | ** **                                   | ** ** | **(Rand in millions)** | ** ** | **(US$ in millions)*** | ** ** |
| ** **                                                                              | ** ** | ** **                                   | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** **             | ** ** | ** **                                                       | ** ** | ** **                            | ** ** | **(Unaudited)** | ** ** |
| **Balance  as of 30 June 2002**                                                    | ** ** | **666,868,725**                              | ** ** |                             | **2,772**  | ** **                       |       |                   | **(3,429** | **)**                                                            |       |                                  | **29,961** | ** ** |   |   | **1,640** | ** ** |   |   | **30,944** | ** ** |   |   |   | ** ** |   |
| Earnings  attributable to shareholders                                                  |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | 7,344      | ** ** |   |   | — | ** ** |   |   | 7,344 | ** ** |   |   |   | ** ** |   |
| Foreign currency  translation adjustments, net of tax                                   |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | —     |   |   |   | (1,902 | ) |   |   | (1,902 | ) |   |   |   | ** ** |   |
| Realized and  unrealized holding losses from cash flow hedging activity, net of tax     |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | —     |   |   |   | (308 | ) |   |   | (308 | ) |   |   |   | ** ** |   |
| Minimum pension  liability adjustment, net of tax                                       |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | —     |   |   |   | (335 | ) |   |   | (335 | ) |   |   |   | ** ** |   |
| Cash dividend  payments                                                                 |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | (2,835     | ) |   |   | — |   |   |   | (2,835 | ) |   |   |   | ** ** |   |
| Share options  exercised                                                                |       | 1,929,700                                    |       |                             | 77         | ** **                       |       |                   | —     | ** **                                                       |       |                                  | —     |   |   |   | — |   |   |   | 77 |   |   |   |   | ** ** |   |
| Acquisition of  treasury stock                                                          |       | —                                       |       |                             | —     | ** **                       |       |                   | (185       | )                                                                |       |                                  | —     |   |   |   | — |   |   |   | (185 | ) |   |   |   | ** ** |   |
| Share option  income                                                                    |       | —                                       |       |                             | (7         | )                                |       |                   | —     | ** **                                                       |       |                                  | —     |   |   |   | — |   |   |   | (7 | ) |   |   |   | ** ** |   |
| **Balance  as of 30 June 2003**                                                    | ** ** | **668,798,425**                              | ** ** |                             | **2,842**  | ** **                       |       |                   | **(3,614** | **)**                                                            |       |                                  | **34,470** |   |   |   | **(905** | **)** |   |   | **32,793** | ** ** |   |   |   | ** ** |   |
| Earnings  attributable to shareholders                                                  |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | 5,358      |   |   |   | — |   |   |   | 5,358 | ** ** |   |   |   | ** ** |   |
| Foreign currency  translation adjustments, net of tax                                   |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | —     |   |   |   | (1,084 | ) |   |   | (1,084 | ) |   |   |   | ** ** |   |
| Realised and  unrealised holding losses from cash flow hedging activity, net of tax     |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | —     |   |   |   | (1,086 | ) |   |   | (1,086 | ) |   |   |   | ** ** |   |
| Minimum pension  liability adjustment, net of tax                                       |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | —     |   |   |   | 335 |   |   |   | 335 |   |   |   |   | ** ** |   |
| Cash dividend  payments                                                                 |       | —                                       |       |                             | —     | ** **                       |       |                   | —     | ** **                                                       |       |                                  | (2,748     | ) |   |   | — |   |   |   | (2,748 | ) |   |   |   | ** ** |   |
| Share options  exercised                                                                |       | 2,473,000                                    |       |                             | 109        | ** **                       |       |                   | —     | ** **                                                       |       |                                  | —     |   |   |   | — |   |   |   | 109 |   |   |   |   | ** ** |   |
| Acquisition of  treasury stock                                                          |       | —                                       |       |                             | —     | ** **                       |       |                   | (33        | )                                                                |       |                                  | —     |   |   |   | — | ** ** |   |   | (33 | ) |   |   |   | ** ** |   |
| Stock based  compensation                                                               |       | —                                       |       |                             | 25         | ** **                       |       |                   | —     | ** **                                                       |       |                                  | —     | ** ** |   |   | — | ** ** |   |   | 25 | ** ** |   |   |   | ** ** |   |
| **Balance  as of 30 June 2004**                                                    | ** ** | **671,271,425**                              | ** ** |                             | **2,976**  | ** **                       |       |                   | **(3,647** | **)**                                                            |       |                                  | **37,080** | ** ** |   |   | **(2,740** | **)** |   |   | **33,669** | ** ** | ** ** | ** ** | **5,302** | ** ** |   |
| Earnings  attributable to shareholders                                                  | ** ** | **—**                                   | ** ** |                             | **—** | ** **                       |       |                   | **—** | ** **                                                       |       |                                  | **9,787**  | ** ** |   |   | **—** | ** ** |   |   | **9,787** | ** ** | ** ** | ** ** | **1,541** | ** ** |   |
| Foreign currency  translation adjustments, net of tax                                   | ** ** | **—**                                   | ** ** |                             | **—** | ** **                       |       |                   | **—** | ** **                                                       |       |                                  | **—** | ** ** |   |   | **28** | ** ** |   |   | **28** | ** ** | ** ** | ** ** | **5** | ** ** |   |
| Realised and  unrealised holding gains from cash flow hedging activity, net of tax | ** ** | **—**                                   | ** ** |                             | **—** | ** **                       |       |                   | **—** | ** **                                                       |       |                                  | **—** | ** ** |   |   | **1** | ** ** |   |   | **1** | ** ** | ** ** | ** ** | **1** | ** ** |   |
| Minimum pension  liability adjustment, net of tax                                       | ** ** | **—**                                   | ** ** |                             | **—** | ** **                       |       |                   | **—** | ** **                                                       |       |                                  | **—** | ** ** |   |   | **(64** | **)** |   |   | **(64** | **)** | ** ** | ** ** | **(10** | **)** |   |
| Cash dividend  payments                                                                 | ** ** | **—**                                   | ** ** |                             | **—** | ** **                       |       |                   | **—** | ** **                                                       |       |                                  | **(2,856** | **)** |   |   | **—** | ** ** |   |   | **(2,856** | **)** | ** ** | ** ** | **(450** | **)** |   |
| Share options  exercised                                                                | ** ** | **5,605,700**                                | ** ** |                             | **311**    | ** **                       |       |                   | **—** | ** **                                                       |       |                                  | **—** | ** ** |   |   | **—** | ** ** |   |   | **311** | ** ** | ** ** | ** ** | **49** | ** ** |   |
| Stock based  compensation                                                               | ** ** | **—**                                   | ** ** |                             | **69**     | ** **                       |       |                   | **—** | ** **                                                       |       |                                  | **—** | ** ** |   |   | **—** | ** ** |   |   | **69** | ** ** | ** ** | ** ** | **11** | ** ** |   |
| **Balance  as of 30 June 2005**                                                    | ** ** | **676,877,125**                              | ** ** |                             | **3,356**  | ** **                       |       |                   | **(3,647** | **)**                                                            |       |                                  | **44,011** | ** ** |   |   | **(2,775** | **)** |   |   | **40,945** | ** ** | ** ** | ** ** | **6,449** | ** ** |   |

----

*                     US dollar information has been presented for the yearended 30 June 2005 on an unaudited basis solely for the convenience of thereader and is computed at the noon buying rate for customs purposes of R6.35 /US dollar, as reported by the Federal Reserve Bank of New York on 30 September2005.

The accompanying notes form an integral part of these consolidatedfinancial statements.

F-5

 

----

**Sasol Limited and its subsidiariesConsolidated Statementsof Cash Flowsfor the years ended**
|                                                                                | ** ** | **30 June**       | ** ** | **30 June**                  | ** ** | **30 June** | ** ** | **30 June** | ** ** |
|--------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------------------|------------|------------------|------------|------------------|------------|
| ** **                                                                     | ** ** | **2005**               | ** ** | **2005**                          | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| ** **                                                                     | ** ** | **US$ millions*** | ** ** | **(Rand in milllions)** | ** ** |
| ** **                                                                     | ** ** | **(Unaudited)**        | ** ** | ** **                        | ** ** | **Restated**     | ** ** | **Restated**     | ** ** |
| Cash receipts  from customers                                                  | ** ** |                   | **10,488** | ** **                        |       | **66,597**       |       | 58,382           |       | 63,577 |   |
| Cash paid to  suppliers and employees                                          | ** ** |                   | **(7,649** | **)**                             |       | **(48,570**      | **)**      | (44,543          | )          | (46,857 | ) |
| Net cash flow  from operations                                                 | ** ** |                   | **2,839**  | ** **                        |       | **18,027**       |       | 13,839           |       | 16,720 |   |
| Interest received                                                              | ** ** |                   | **18**     | ** **                        |       | **116**          |       | 183              |       | 193 |   |
| Dividends  received                                                            | ** ** |                   | **10**     | ** **                        |       | **61**           |       | 37               |       | 14 |   |
| Finance costs  paid                                                            | ** ** |                   | **(52**    | **)**                             |       | **(332**         | **)**      | (368             | )          | (271 | ) |
| Income tax paid                                                                | ** ** |                   | **(569**   | **)**                             |       | **(3,616**       | **)**      | (4,005           | )          | (5,263 | ) |
| **Net  cash generated by operating activities**                                | ** ** |                   | **2,246**  | ** **                        |       | **14,256**       |       | 9,686            |       | 11,393 |   |
| Purchase of property, plant and equipment                                      | ** ** |                   | **(1,599** | **)**                             |       | **(10,151**      | **)**      | (8,405           | )          | (8,861 | ) |
| Purchase of  intangible assets                                                 | ** ** |                   | **(14**    | **)**                             |       | **(89**          | **)**      | (474             | )          | (921 | ) |
| Investments in  equity accounted investees                                     | ** ** |                   | **(121**   | **)**                             |       | **(768**         | **)**      | (376             | )          | (1,035 | ) |
| Interest  capitalized                                                          | ** ** |                   | **(164**   | **)**                             |       | **(1,038**       | **)**      | (1,082           | )          | (1,008 | ) |
| Non-current  assets sold                                                       | ** ** |                   | **66**     | ** **                        |       | **418**          |       | 747              |       | 360 |   |
| Acquisition of  businesses, net of cash acquired                               | ** ** |                   | **—** | ** **                        |       | **—**       |       | (247             | )          | (505 | ) |
| Disposal of  businesses, net of cash disposed                                  | ** ** |                   | **(7**     | **)**                             |       | **(46**          | **)**      | 254              |       | — |   |
| (Increase) /  decrease in investments                                          | ** ** |                   | **(3**     | **)**                             |       | **(19**          | **)**      | 7                |       | (34 | ) |
| (Increase) /  decrease in long-term receivables                                | ** ** |                   | **(31**    | **)**                             |       | **(198**         | **)**      | (101             | )          | 851 |   |
| **Net  cash utilized in investing activities**                                 | ** ** |                   | **(1,873** | **)**                             |       | **(11,891**      | **)**      | (9,677           | )          | (11,153 | ) |
| Share capital issued                                                           | ** ** |                   | **49**     | ** **                        |       | **311**          |       | 109              |       | 77 |   |
| Acquistion of  treasury stock                                                  | ** ** |                   | **—** | ** **                        |       | **—**       |       | (33              | )          | (185 | ) |
| Dividends paid to  minority shareholders                                       | ** ** |                   | **(9**     | **)**                             |       | **(60**          | **)**      | (200             | )          | (44 | ) |
| Dividends paid to  shareholders                                                | ** ** |                   | **(450**   | **)**                             |       | **(2,856**       | **)**      | (2,748           | )          | (2,835 | ) |
| Contributions  from minority shareholders                                      | ** ** |                   | **—** | ** **                        |       | **—**       |       | 75               |       | 10 |   |
| Proceeds from  borrowings                                                      | ** ** |                   | **931**    | ** **                        |       | **5,911**        |       | 11,932           |       | 8,105 |   |
| Repayment of debt                                                              | ** ** |                   | **(781**   | **)**                             |       | **(4,957**       | **)**      | (10,789          | )          | (3,339 | ) |
| Movement in bank  overdraft                                                    | ** ** |                   | **29**     | ** **                        |       | **186**          |       | (75              | )          | 112 |   |
| **Net  cash (utilized in) / provided by financing activities**                 | ** ** |                   | **(231**   | **)**                             |       | **(1,465**       | **)**      | (1,729           | )          | 1,901 |   |
| **Translation effects on cash and cash equivalents  of foreign entities** | ** ** |                   | **6**      | ** **                        |       | **40**           |       | (77              | )          | (225 | ) |
| **Net increase / (decrease) in cash and cash  equivalents**                    | ** ** |                   | **148**    | ** **                        |       | **940**          |       | (1,797           | )          | 1,916 |   |
| Cash and cash  equivalents at beginning of year                                | ** ** |                   | **222**    | ** **                        |       | **1,410**        |       | 3,207            |       | 1,291 |   |
| **Cash and cash equivalents at end of year**                                   | ** ** |                   | **370**    | ** **                        |       | **2,350**        |       | 1,410            |       | 3,207 |   |

----

*       USdollar information has been presented for the year ended 30 June 2005 onan unaudited basis solely for the convenience of the reader and is computed atthe noon buying rate for customs purposes of R6.35 / US dollar , as reported bythe Federal Reserve Bank of New York on 30 September 2005.

The accompanying notes form an integral part of these consolidated financial statements.

F-6

----

**Sasol Limited and its subsidiariesConsolidated Statementsof Comprehensive Incomefor the years ended**
|                                                                                                                                                                          | ** ** | **30 June**                 | ** ** | **30 June**                 | ** ** | **30 June** | ** ** | **30 June** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|------------------|------------|------------------|------------|
| ** **                                                                                                                                                               | ** ** | **2005**                         | ** ** | **2005**                         | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| ** **                                                                                                                                                               | ** ** | **(US$ in millions)*** | ** ** | **(Rand in millions)** | ** ** |
| ** **                                                                                                                                                               | ** ** | **(Unaudited)**                  | ** ** | ** **                       | ** ** | ** **       | ** ** | ** **       | ** ** |
| **Comprehensive  income**                                                                                                                                                | ** ** |                             | ** ** | ** **                       |       |             | ** ** | ** **       |       |   |   |   |   |   |   |   |   |
| **Earnings attributable to shareholders after  cumulative effect of change in method of  accounting**                                                                    | ** ** |                             | **1,541**  | ** **                       |       |             | **9,787**  | ** **       |       |   | 5,358 |   |   |   | 7,344 |   |   |
| ***Other comprehensive income /  (loss)***                                                                                                                               | ** ** |                             | ** ** | ** **                       |       |             | ** ** | ** **       |       |   |   |   |   |   |   |   |   |
| Translation of foreign operations with a functional  currency other than the rand, net of tax of negative R1 million (2004—R5  million, 2003—R39 million)      | ** ** |                             | **5**      | ** **                       |       |             | **28**     | ** **       |       |   | (1,084 | ) |   |   | (1,902 | ) |   |
| Realized and unrealized holding losses from cash  flow hedging activities, net of tax of negative R38 million (2004—R164  million, 2003—R25 million) | ** ** |                             | **1**      | ** **                       |       |             | **1**      | ** **       |       |   | (1,086 | ) |   |   | (308 | ) |   |
| Minimum pension liability adjustment, net of tax of R38  million (2004—negative R168 million, 2003—R168 million)                                          | ** ** |                             | **(10**    | **)**                            |       |             | **(64**    | **)**            |       |   | 335 |   |   |   | (335 | ) |   |
| ***Net  movement per statements of changes in shareholders’ equity***                                                                                          | ** ** |                             | **(4**     | **)**                            |       |             | **(35**    | **)**            |       |   | (1,835 | ) |   |   | (2,545 | ) |   |
| **Comprehensive  income**                                                                                                                                                | ** ** |                             | **1,537**  | ** **                       |       |             | **9,752**  | ** **       |       |   | 3,523 |   |   |   | 4,799 |   |   |

----

*       USDollar information has been presented for the year ended 30 June 2005 onan unaudited basis solely for the convenience of the reader and is computed atthe noon buying rate for customs purposes of R6.35 / US dollar, as reported bythe Federal Reserve Bank of New York on 30 September 2005.

The accompanying notes form an integral part of these consolidated financial statements.

F-7

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements**

**1.**   Natureof business and organisation

Sasol is an integrated oil and gas group, withsubstantial chemical interests. In South Africa, the group supports theseoperations by mining coal and converting it into synthetic fuels and chemicalsthrough our Fischer-Tropsch technology.

The group also has chemical manufacturing andmarketing operations in Europe, Asia and North America. Our larger chemicalportfolios include polymers, solvents, surfactants and their intermediates,waxes, phenolics and nitrogenous products.

The group explores for, and produces, crude oiloffshore Gabon, refines crude oil into liquid fuels in South Africa and retailsliquid fuels and lubricants through a network of retail service centres. Duringthe first quarter of 2004, the group started extracting Mozambican natural gas,some of which we have been using as feedstock for fuel and chemical productionin South Africa since mid 2004.

Sasol is also developingtwo gas-to-liquid fuel joint ventures in Qatar and Nigeria based on our SasolSlurry Phase Distillate process.

**2.**   Significantaccounting policies

Thefollowing accounting policies were applied by the group in the preparation ofits consolidated financial statements at and for the financial years ended 30 June 2005,30 June 2004 and 30 June 2003.

**Basis of preparation**

Theconsolidated financial statements have been prepared in accordance withaccounting principles generally accepted in the United States of America (USGAAP).

**Basis of consolidation**

Thegroup’s consolidated financial statements include the financial statements ofthe company, its subsidiaries and its investments in associates and jointventures.

***Subsidiaries***

Companies in which (i) the group is the primarybeneficiary of a variable interest entity or (ii) owns more than 50% ofthe voting rights in an entity that is not a variable interest entity, exceptwhere minority shareholders retain substantive participating rights, areclassified as subsidiaries. Entities, other than variable interest entities, inwhich the group owns more than 50% of the voting rights, but minorityshareholders retain substantive participating rights, are accounted foraccording to the equity method of accounting. The results of any subsidiaryacquired or disposed of during the year are consolidated from the acquisitiondate or up to the disposal date.

Inter-companytransactions and balances are eliminated on consolidation.

Sasol Italy SpA, a whollyowned and consolidated subsidiary, has a statutory year end of 31 May andis included in the consolidated accounts up to that date. An adjustment to theSasol Italy SpA financial statements to 30 June, the group’s year end, wouldnot result in a material effect on reported balance sheets and incomestatements.

F-8

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

***Investments in equity investees (associates andincorporated joint ventures)***

*Investments inassociates*

Anassociate is an entity other than a subsidiary in which the group has amaterial long-term interest and in respect of which the group has the abilityto exercise significant influence over operational and financial policies,normally owning between 20% and 50% of the voting equity.

*Investments inincorporated joint ventures*

A joint venture is an entity in which the group holdsa long-term interest and which is jointly controlled by the group and one ormore external joint venture partners under a contractual arrangement.

Investments in associates and joint ventures areaccounted for using the equity method. Subsequent to the acquisition date, thegroup’s share of profits or losses of associates and joint ventures isrecognized in the income statement as equity accounted earnings and its shareof movements in equity reserves is recognized directly in the statement ofchanges in shareholders’ equity. All cumulative post-acquisition movements inthe equity of associates and joint ventures are adjusted against the cost ofthe investment.

Goodwill relating toassociates and joint ventures is included in the carrying value of the group’sinvestment in those entities. The total carrying value of equity accountedinvestments in associates and joint ventures, including goodwill, is evaluatedfor impairment when conditions indicate that a decline in fair value below thecarrying amount is other than temporary or at least annually on 31 March. Whenimpaired, the carrying value of the group’s investment in those entities iswritten down to its fair value. The group’s share of results of equityaccounted investees, that have financial years within three months of thefiscal year-end of the group, is included in the consolidated financialstatements based on the results reported by those investees for their financialyears. There were no significant adjustments required to be made in respect ofequity accounted investees which have financial years that are different tothose of the group.

**Foreign currency**

The reporting currency of the group is rand.

Theexchange rates used in preparation of the consolidated financial statements wereas follows:
|                              | ** ** | **Rate** | ** ** | **30 June 2005** | ** ** | **30 June 2004** | ** ** | **30 June 2003** | ** ** |
|------------------------------|------------|----------|------------|----------------------------|------------|----------------------------|------------|----------------------------|------------|
| Rand/US dollar exchange rate |       | Closing  |       |                       | 6.67       |                       |       |                       | 6.21       |   |   |   | 7.50 |   |   |
|                              |       | Average  |       |                       | 6.21       |                       |       |                       | 6.88       |   |   |   | 9.03 |   |   |
| Rand/euro  exchange rate     |       | Closing  |       |                       | 8.06       |                       |       |                       | 7.57       |   |   |   | 8.63 |   |   |
|                         |       | Average  |       |                       | 7.89       |                       |       |                       | 8.19       |   |   |   | 9.41 |   |   |

 

***Foreign operations currency translation***

*Foreign operationswith a functional currency other than rand*

In respect of foreign operations with a functionalcurrency other than rand, assets and liabilities, which include fair valueadjustments arising on acquisition, are translated into rand at the closingrate of exchange ruling at the balance sheet date. Results of operations aretranslated at the average rate of 

F-9

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

exchange for the year. Exchangedifferences arising on translation are classified as foreign currencytranslation adjustments in shareholders’ equity and included in determiningother comprehensive income.

On sale or partialdisposal of an investment in a foreign entity, the related cumulative foreigncurrency translation included in shareholders’ equity is recognized in theincome statement.

*Foreign operationswith a functional currency of rand*

For foreign operationswhose accounts are kept in local currency of their operations but whosefunctional currency is rand, due to their activities being a direct andintegral part or extension of the group’s South African operations, monetaryassets and liabilities are translated into rand at the closing rate of exchangeruling at balance sheet date. Non-monetary assets and liabilities that arestated at historical cost, are translated at the rate of exchange ruling attransaction date. Exchange differences arising on translation of assets andliabilities are recognized in the income statement in the year in which theyarise.

***Translation of foreign currency transactions***

Transactions in foreign currencies are translated intothe functional currency of the entity at the rate of exchange ruling at thetransaction date.

Monetary assets and liabilities in foreign currenciesare translated into the functional currency of the entity at the closing rateof exchange ruling at the balance sheet date.

Foreign exchangedifferences arising from the translation of monetary assets and liabilities arerecognized in the income statement in the year in which they arise.

**Cash and cash equivalents**

Cash and cash equivalentscomprise cash on hand, demand deposits and short-term liquid investments with amaturity period of three months or less at the date of purchase. Cash and cashequivalents are stated at cost, which approximates fair value. Cash subject torestrictions has been classified separately on the face of the balance sheet.

**Property, plant and equipment**

Property, plant and equipment is stated at cost, lessaccumulated depreciation and impairment. Land is not depreciated.

Coal mining assets comprise assets utilized over thelife-of-mine and other coal mining assets utilized in mining operations.Life-of-mine assets are depreciated using the units-of-production method overproved and probable reserves, not exceeding the estimated useful life of themine. Other coal mining assets are depreciated on the straight-line method overtheir estimated useful lives.

Other categories of property, plant and equipment aredepreciated on the straight-line method over their estimated useful lives. Areview of the useful lives of property, plant and equipment is performed atleast annually. The depreciation rates applied are described in Note 15.

The cost of self-constructed assets includesexpenditure on materials, direct labor and an appropriate portion of projectoverheads. Expenditure incurred to replace or modify a significant component ofplant is 

F-10

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

capitalized and anyremaining book value of the component replaced is written off immediately. Allother expenditure on plant renewal is expensed as incurred.

Asset retirement costs are recognized as liabilitiesand a corresponding amount is added to the carrying value of the asset anddepreciated on a straight-line basis over the estimated useful lives of theassets. Where asset retirement costs relate to coal mining assets, the carryingamount is depreciated using the units-of-production method over proved andprobable reserves, not exceeding the estimated useful life of the mine.

Assets leased undercapital lease agreements are capitalized as property, plant and equipment withthe equivalent amount being shown as a capital lease liability. The amountcapitalized is the lower of the fair value of the leased asset and the presentvalue of the minimum lease payments at the inception of the lease. Leasepayments are allocated between capital repayments and interest payments.Interest is recognized in the income statement using the effective interestrate method. Capitalized leased assets are depreciated either over the leaseperiod or the estimated useful life of the leased asset based on the leaseterms.

**Exploration and development costs**

***Mining***

Mining exploration expenditure is expensed as incurreduntil completion of a final feasibility study supporting proved and probablereserves. Mining exploration costs incurred subsequent to proved and probablereserves being identified are capitalized.

Exploration and development expenditure in respect ofproducing mines or development properties is capitalized only when excavationor drilling has occurred to extend reserves or further delineate existingproved and probable reserves.

Amortization ofcapitalized exploration and development is based on the units-of-productionmethod on a field-by-field basis using estimated proved developed oil and gasreserves.

***Oil and gas***

The successful efforts method is used to account foroil and gas exploration activities.

Geological and geophysical costs, expenditure relatingto dry exploratory wells and the costs of carrying and retaining undevelopedproperties are recognized in the income statement as incurred*.*

On completion of drilling, an exploratory well may bedetermined to have found oil and gas reserves, but classification of thosereserves as proved depends on whether major capital expenditure can bejustified which, in turn, depends on whether additional exploratory wells findsufficient quantities of additional reserves.

Oil and gas reserves are classified as proved when,upon analysis of geologic and engineering data, it appears with reasonablecertainty to be recoverable in the future from known oil and gas reservoirsunder existing economic and operating conditions.

F-11

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

The cost of drilling exploratory wells is carried asan asset pending determination of whether proved reserves have been found onlyas long as the following conditions are met:

·       thewell has found a sufficient quantity of reserves to justify its completion as aproducing well if the required capital expenditure is made;

·       drillingof the additional exploratory wells is under way or firmly planned for the nearfuture; and

·       sufficientprogress is being made in assessing the reserves and the economic and operatingviability of the project.

If the above conditions are not met or if informationis obtained that raises substantial doubt about the economic or operatingviability of the project, the costs would be recognized in the incomestatement.

Expenditure incurred to drill and equip developmentwells on proved properties are capitalized.

Amortization ofcapitalized exploration and development is based on the units-of-productionmethod on a field-by-field basis using estimated proved developed oil and gasreserves.

**Capitalization of interest costs**

Interest costs arecapitalized during the construction period of qualifying assets (an asset thatnecessarily takes a substantial period of time to get ready for its intendeduse or sale) and on the group’s investments in equity accounted investees while the investee has activities inprogress necessary to commence its planned principal operations, provided thatthe equity accounted investee’s activities include the use of funds toconstruct qualifying assets for its operations. All other interest costsare expensed as incurred.

**Goodwill and intangible assets**

***Goodwill***

Goodwill is stated at costand is not subject to amortization. Goodwill is tested for impairment at thereporting unit level on an annual basis on 31 March, or more frequently if thegroup believes indicators of impairment exist. The performance of the testinvolves a two tier process. The first step of the impairment test involvescomparing the fair value of the reporting unit with the reporting unit’scarrying amount, including goodwill. The fair value of the reporting unit isdetermined based on estimated future discounted cash flows. If the carryingamount of the reporting unit exceeds the reporting unit’s fair value, weperform the second step of the goodwill impairment test to determine the amountof the impairment necessary. The second step of the goodwill impairment test involvescomparing the implied fair value of our reporting unit’s goodwill with thecarrying amount of that goodwill. If the carrying amount of the reporting unit’sgoodwill exceeds the implied fair value of that goodwill, an impairment loss isrecognized in the income statement.

***Intangible assets***

Amortizable intangible assets are stated at cost andare amortized over their respective estimated useful lives on a straight-linebasis. Amortization rates are described in Note 14.

F-12

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

Intangible assets with an indefinite life are reviewedfor impairment at least annually on 31 March or whenever events or changesin circumstances indicate that the carrying amount of an asset or group ofassets may not be recoverable. Recoverability of an asset or asset group isassessed by comparing the carrying amount of an asset or group of assets to theestimated future undiscounted net cash flows of the asset or group of assets.If an asset or asset group is considered to be impaired, the impairmentrecognized is measured as the amount by which the carrying amount of the assetor group of assets exceeds the discounted future cash flows expected to bederived from that asset or group of assets.

Further details relatingto the impairment assessment of intangible assets are provided in theaccounting policy on impairment of long-lived assets.

***Software***

Purchased software and the direct costs associatedwith the customization and installation thereof are capitalized and amortizedon a straight-line basis from the date of commissioning over its expecteduseful life of 3 years.

Software development costsnot qualifying for capitalization are recognized in the income statement asincurred.

***Patents and trademarks***

Purchased patents andtrademarks are capitalized and amortized on a straight-line basis over theirestimated useful lives. Expenditure incurred to extend the life of patents ortrademarks is capitalized and amortized over the remaining estimated usefullife of the assets. All other expenditure is recognized in the income statementas incurred.

**Asset retirement obligations**

The fair value ofobligations relating to dismantling and restoring production sites, inaccordance with the South African regulatory requirements, is accrued as theobligation arises, if estimable, concurrent with the recognition of an increasein the related asset’s carrying value. The increase in the related asset’scarrying value is depreciated over its estimated useful life. Fair value is determinedby discounting estimated future cash flows at a discount rate at the time ofinitial recognition, which reflects the terms of the obligation adjusted forthe entity’s credit risk. The discount associated with the liability isaccreted as a charge to income over the period leading up to the expectedtiming of the cash flow. The dismantling and restoration costs will berecognized in the income statement over the life of the related assets and willbe adjusted for changes resulting from the passage of time (accretion expense)and revisions to either the timing or amount of the original present valueestimate.

**Business combinations**

Acquisitions made by thegroup are accounted for using the purchase method, in terms of which assetsacquired and liabilities assumed are recorded at fair value, reflecting theircondition at the acquisition date. The excess of the cost of an acquisitionover the fair value of the group’s interest in the net identifiable tangibleand intangible assets of an entity acquired at the acquisition date isrecognized as goodwill.

F-13

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accountingpolicies (Continued)

**Sale of shares by asubsidiary**

When a subsidiary sellsadditional shares to external parties and the selling price per share is moreor less than the group’s average carrying amount per share, a gain or loss isrecognized in the income statement in the period that the change of interesttransaction occurs, as long as the transaction does not form part of a broadercorporate re-organisation of the group.

**Investments in securities**

Investments in marketable equity and debt securitiesare classified into one of three categories, namely held-to-maturity,available-for-sale, or trading securities.

Investments in debt securities that the group has thepositive intent and ability to hold to maturity are classified as held-to-maturitysecurities and stated at amortized cost in the balance sheet.

Marketable equity or debt securities not classified aseither held-to-maturity or trading securities are classified asavailable-for-sale securities and stated at fair value, with changes in fairvalue, net of related taxes included in other comprehensive income. If theinvestment is disposed of, the cumulative change in fair value in respect ofthat investment is recognized in the income statement. Unrealized losses, tothe extent they arise from a decline in fair value that is assessed to be otherthan temporary, are recognized in the income statement.

Marketable equity and debt securities that arepurchased and held principally for the purpose of selling them in the near termare classified as trading securities and reported at fair value, with changesin fair value recognized in the income statement. The group had no tradingsecurities at 30 June 2005 and 30 June 2004.

Unlisted investments that are classified asavailable-for-sale securities, other than those accounted for under the equitymethod, are carried at cost.

Purchases and sales ofinvestment in securities are recorded on a trade date basis. Realized gains andlosses on disposal of investment in securities, other than trading securitiesare recognized in the income statement as incurred.

**Impairment of long-lived assets**

Long-lived assets are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of anasset or group of assets may not be recoverable. Recoverability of an asset orasset group is assessed by comparing the carrying amount of the asset or groupof assets to the estimated future undiscounted net cash flows of the asset orgroup of assets. If an asset or asset group is considered to be impaired, theimpairment recognized is measured as the amount by which the carrying amount ofthe asset or group of assets exceeds the discounted future cash flows expectedto be derived from that asset or group of assets.

When the group decides toexit or sell a long-lived asset or group of assets and the asset or group ofassets meets the requirements to be classified as assets held-for-sale, thecarrying value of these assets is adjusted downward, if necessary, to theestimated sales price, less costs to sell and reclassify the long-lived assetor group of assets as held-for-sale.

F-14

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

**Inventories**

Inventoriesare valued at the lower of cost and market value. Cost includes expenditureincurred in acquiring, manufacturing and transporting the inventory to itspresent location. Cost is determined as follows:
| Crude oil and other raw  materials        |   | First-in-first-out  valuation method (FIFO)                                               |
|-------------------------------------------|--------|-------------------------------------------------------------------------------------------|
| Process, maintenance and  other materials |   | Weighted average  purchase price                                                          |
| Work-in-progress                          |   | Allocation of direct  labor, an allocated portion of overhead and material costs incurred |
| Manufactured products                     |   | Production cost using  FIFO                                                               |
| Consignment inventory                     |   | Production cost using FIFO                                                                |

 

**Trade and other receivables**

Trade and otherreceivables are stated at cost less provision for doubtful debts. Bad debts arerecognized in the income statement during the year in which they areidentified.

**Contingent obligations**

An estimated loss arisingfrom a contingent obligation is accrued as a liability when informationavailable prior to issuance of the financial statements indicates that it isprobable that an asset had been impaired or a liability had been incurred atthe date of the financial statements and the amount of the loss can bereasonably estimated.

**Trade and other payables**

Trade and other payablesare stated at cost.

**Comprehensive income**

Comprehensive incomerepresents changes in shareholders’ equity, excluding investments by anddistributions to shareholders. The group’s comprehensive income comprisesattributable earnings, foreign currency translation adjustments, changes in thefair value of derivative instruments designated as cash flow hedges and theminimum pension liability adjustments.

**Dividends payable**

Dividends payable arerecognized as a liability when declared.

**Income tax**

***Deferred income taxes***

Income taxes are determined by applying the asset andliability method. Deferred tax assets and liabilities are recognized for thefuture tax consequences attributable to differences between the financialstatement carrying amounts of assets and liabilities and their respective taxbases and operating loss and tax credit carry-forwards. Deferred tax assets andliabilities are measured using enacted tax rates expected 

F-15

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

to applyto taxable income in the years in which those temporary differences areexpected to be recovered or settled. The effect on deferred tax assets andliabilities of a change in tax rates is recognized in income in the period thatincludes the enactment date. Deferred tax assets are reduced by a valuationallowance to the amount that management believes is more likely than not to berealized.

***Secondary Taxation on Companies (STC)***

STC is a tax levied by the South African RevenueService on dividends declared and becomes payable on declaration of a dividendby a South African entity. STC is recognized in the income statement when therelated dividend is declared.

When dividends received inthe current year can be offset against future dividend payments to reduce theSTC liability, a deferred tax asset is recognized to the extent of the futurereduction in STC.

**Turnover**

Turnover isrealized and earned when title and the risks and rewards of ownership have beentransferred to the buyer and all of the following criteria have been met:

·       persuasiveevidence of an arrangement exists;

·       deliveryhas occurred or services have been rendered;

·       theseller’s price to the buyer is fixed or determinable; and

·       collectibilityis reasonably assured.

Further descriptions ofthe recognition of turnover for the various reporting segments are included inNote 3—Segmental analysis.

**Shipping and handling fees**

Shipping and handling feesare included in cost of sales and the related amounts charged to customers areincluded in turnover.

**Operating leases**

Lease payments under anoperating lease are expensed on a straight-line basis over the lease term.

**Researchand development expenditure**

Research and developmentexpenditure is expensed as incurred.

**Derivative instruments**

All derivative instruments are stated as assets orliabilities on the balance sheet at fair value, regardless of the purpose orintent for holding them.

F-16

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

Derivative instruments are financial instruments andother contracts:

·       whichhave one or more underlying variable (i.e. a specified interest rate, commodityprice, foreign exchange rate or similar variable) and either one or morenotional amounts (i.e. a number of currency units, shares or other units) orpayment provisions or both;

·       thatrequire little or no initial net investment; and

·       whosepayment terms require or permit net settlement.

The group uses derivative instruments to reduce itsexposure to fluctuations in foreign currencies, interest rates, and commodityprices. The group does not deal in speculative trading of derivativeinstruments. The group designates certain foreign currency related derivativefinancial instruments which hedge exposure to variability in cash flows that iseither attributable to a particular risk associated with a recognized asset orliability or a forecasted transaction, as cash flow hedges when such derivativeinstruments effectively meet pre-determined criteria. In instances where aderivative instrument is designated as a cash flow hedge, the effective part ofany change in fair value of the derivative instrument is recognized in othercomprehensive income in the statement of changes in shareholders’ equity. It issubsequently recognized in the income statement over the same period as thehedged item is recognized in the income statement. The ineffective part of anychange in fair value is immediately recognized in the income statement.

All other derivative instruments are measured at fairvalue at each reporting date with the resulting change in fair valueimmediately recognized in the income statement.

Further information on thegroup’s financial instruments is included in Note 24.

**Employee benefits**

***Pension plans***

The group operates defined benefit and definedcontribution pension plans for its employees.

Contributions to defined contribution pension plan andpension expenses are recognized in the income statement as incurred.

Defined benefit plan pension expenses are calculatedand recognized in the income statement in accordance with Statement ofFinancial Accounting Standards (SFAS) No. 87, Employers’ Accounting forPensions (SFAS 87).

The projected unit credit method is used to determinethe accrued benefit obligations based on completed service and to value theplans’ assets at fair value.

Independent actuarial valuations are prepared annuallyusing a market-related discount rate and an individual best-estimate approachfor the other assumptions that are pertinent to valuing the accrued obligations.The actuarial gains and losses, that emerge when individual plans’ performancediffers from the assumptions made, are accumulated and amortized if they exceed10% of the greater of the projected benefit obligation or the market-relatedvalue of plan assets of the associated plan at the beginning of the year. Priorservice costs or credits that arise from plan amendments are amortized byassigning an equal amount to each future period of service of each employeeactive at the date of the amendment whom is 

F-17

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies(Continued)

expected to receivebenefits under the plan. Where all or almost all of the plans’ participants areinactive, the costs of retroactive plan amendments are amortized based on theremaining life expectancy of those participants.

The amount recorded in the balance sheet is theaccumulated difference between the pension expense and the contributions paidin respect of that plan. The balance sheet provision or prepayment will differfrom the funded status of the plan to the extent that there are unamortizedactuarial gains or losses or unamortized prior service costs or credits.

The group records anon-cash charge to accumulated other comprehensive income to recognize anyadditional minimum pension liability in accordance with SFAS 87, which requiresthat a liability be recognized at year end in an amount equal to the amount bywhich the Accumulated Benefit Obligation (ABO) exceeds the fair value ofthe defined benefit pension plan assets. The additional minimum pensionliability is recorded by recognizing an intangible asset to the extent of anyunrecognized prior service cost and unrecognized transition obligation.

***Post-retirement healthcare***

Post-retirement healthcare expenses are calculated andrecognized in the income statement in accordance with SFAS No. 106—Employers’Accounting for Post-retirement Benefits Other Than Pensions (SFAS 106). Theprojected unit credit method is used to determine the accrued benefitobligations based on completed service. The post-retirement healthcare plansare unfunded.

Independent actuarial valuations are prepared annuallyusing a market-related discount rate and an individual best-estimate approachfor the other assumptions that are pertinent to valuing the accruedobligations. The actuarial gains and losses that emerge when the plans’experience differs from the assumptions made are recognized in the period inwhich they arise, as permitted by SFAS 106. Prior service costs or credits thatarise from plan amendments are amortized by assigning an equal amount to eachfuture period of service of each employee active at the date of the amendmentwho is expected to receive benefits under the plan.

The amount stated in thebalance sheet will differ from the Accumulated Projected Benefit Obligation(APBO) to the extent that there are unamortized prior service costs or credits.

***Equity and equity-related compensation benefits***

The Sasol Share Incentive Scheme allows certain seniorgroup employees the option to acquire shares in Sasol Limited over a prescribedperiod. The exercise price of these options equals the market price of theunderlying shares on the trading day immediately preceding the granting of theoption.

The group applies the intrinsic value-based method ofaccounting prescribed by APB Opinion 25—Accounting for Stock Issued toEmployees, and related interpretations including FASB Interpretation 44,Accounting for Certain Transactions involving Stock Compensation (FIN 44), aninterpretation of APB Opinion 25, to account for its share option plans. Underthis method, the compensation expense is calculated as the excess of the marketvalue of the share over the exercise price at the date on which are known both(a) the number of shares that an individual employee is entitled toreceive and (b) the exercise price, and the expense so determined isrecognized over the vesting period.

F-18

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significantaccounting policies (Continued)

As permitted under SFAS 148, Accounting forStock-Based Compensation—Transition and Disclosure (SFAS 148)—an amendment ofSFAS 123 (Revised 2004), Share—Based Payment (SFAS 123R) the group hascontinued to apply the intrinsic-value method of accounting described above andhas adopted the disclosure requirements of SFAS 148. SFAS 148 requiresdisclosure of the estimated fair value of employee stock options granted andpro forma financial information disclosure (Refer Note 20) assuming that thecompensation expense was recorded using these fair values.

Hadcompensation cost been based upon the fair value at the grant date for alloptions granted, the impact on net income and earnings per share for the yearsended 30 June 2005, 30 June 2004 and 30 June 2003, wouldhave been as follows on a pro forma basis:
|                                                                                   | ** ** | **Years ended:**            | ** ** |
|-----------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                        | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
| ** **                                                                        | ** ** | **(Rand in millions)** | ** ** |
| Net income:                                                                       | ** ** |                             | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| As reported                                                                       | ** ** |                             | **9,787**  | ** ** |   |   | 5,358 | ** ** |   |   | 7,344 | ** ** |   |
| Add: Stock based compensation/(income) included in  reported net income | ** ** |                             | **69**     | ** ** |   |   | 25 | ** ** |   |   | (7 | ) |   |
| Deduct: Stock based compensation under fair value method                     | ** ** |                             | **(137**   | **)** |   |   | (146 | ) |   |   | (144 | ) |   |
| Pro forma net income                                                              | ** ** |                             | **9,719**  | ** ** |   |   | 5,237 | ** ** |   |   | 7,193 | ** ** |   |
| Earnings per share (cents)                                                        | ** ** |                             | ** ** | ** ** |   |   |   | ** ** |   |   |   | ** ** |   |
| Basic—as reported                                                            | ** ** |                             | **1,594**  | ** ** |   |   | 878 | ** ** |   |   | 1,206 | ** ** |   |
| Basic—pro forma                                                              | ** ** |                             | **1,583**  | ** ** |   |   | 859 | ** ** |   |   | 1,181 | ** ** |   |
| Diluted—as reported                                                          | ** ** |                             | **1,567**  | ** ** |   |   | 870 | ** ** |   |   | 1,185 | ** ** |   |
| Diluted—pro forma                                                            | ** ** |                             | **1,557**  | ** ** |   |   | 850 | ** ** |   |   | 1,161 | ** ** |   |

 

These pro forma amounts may not be representative offuture results since the calculated fair value of stock options is amortized toexpense over the vesting period, and additional options may be granted infuture years, awards may be forfeited or cancelled and the fair value of futureawards may differ from the current fair values.

Thefair value of options was calculated at the date of grant using theBlack-Scholes model with the following weighted-average assumptions:
|                                                           | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|-----------------------------------------------------------|------------|------------------------|------------|------------------------|------------|------------------------|------------|
| Expected dividend  yield                                  | ** ** | **4.3**                | **%**      | 4.3                    | %          | 4.0                    | %          |
| Expected stock  price volatility                          | ** ** | **35**                 | **%**      | 37                     | %          | 45                     | %          |
| Risk-free  interest rate                                  | ** ** | **9.25**               | **%**      | 10.75                  | %          | 11.75                  | %          |
| Expected life of  options                                 | ** ** | **2-6 years**          |       | 2-6 years              |       | 2-6 years              |       |
| Weighted average fair  value of grants for the year ended | ** ** | **R33.40**             |       | R28.40                 |       | R39.70                 |       |

 

**Treasury shares**

When Sasol Limited’sshares are repurchased the amount paid is recorded as a deduction from totalshareholders’ equity in the statement of changes in shareholders’ equity.

F-19

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significantaccounting policies (Continued)

**Comparatives**

Comparative figures havebeen reclassified to conform to changes in presentation of the consolidatedcash flow statement in the current year.

**Use of estimates**

The group has prepared thefinancial statements in conformity with accounting principles generallyaccepted in the United States of America. Preparation of these financialstatements require group management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of turnover and expenses during the reporting period.Actual results could differ from those estimates.

**Segmental reporting**

The group’s primaryreporting segments are:

·       SasolMining 

·       SasolSynfuels

·       SasolLiquid Fuels Business

·       SasolGas

·       SasolSynfuels International

·       SasolPolymers

·       SasolSolvents

·       SasolOlefins and Surfactants

·       Classifiedas “Other Businesses” in the segment report:

·        SasolWax

·        SasolNitro

·        SasolTechnology

·        SasolPetroleum International

·        SasolFinancing

·        SasolInfrachem

·        Merisol

·        andthe group’s corporate head office

Segmental analysis isreported on a reporting segment basis using a management approach. Thisapproach is based on the way management organizes segments within the group formaking operating decisions and assessing performance. Additional geographicaldisclosure is provided. Segment results have been reported for the yearspresented and are described in Note 3.

F-20

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

**Conveniencetranslation to United States dollars**

The functional currency ofSasol Limited and reporting currency of the group is rand. This currencyreflects the economic substance of the underlying events and circumstances ofthe group. Solely for the convenience of the reader, US dollar information hasbeen presented on an unaudited basis for the 2005 Consolidated IncomeStatement, Consolidated Balance Sheet, Consolidated Statement of Changes inShareholders’ Equity, Consolidated Statement of Cash Flow, and ConsolidatedStatement of Comprehensive Income. The convenience translation should not beconstrued as a representation that the rand amounts have been, could have been,or could in the future be, converted into US dollars at the noon buying ratefor custom purposes as reported by the Federal Reserve Bank of New York.

**Recent accounting pronouncements**

The following recentaccounting pronouncements applicable to the group have been issued by theFinancial Accounting Standards Board (FASB):
| Pronouncement                 | ** ** | ** **                                                                                                                                                                                                                                                                                                       | ** ** | **Description**     | ** ** | **Date of issuance** |
|-------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|------------|----------------------|
| SFAS 123R                     |       | Share Based Payments (Revised 2004)                                                                                                                                                                                                                                                                              |       | December 2004  |
| SFAS 151                      |       | Inventory Costs—an  amendment of ARB No. 43, Chapter 4                                                                                                                                                                                                                                                 |       | November 2004  |
| SFAS 153                      |       | Exchanges of  Non-monetary Assets—an amendment of PB Opinion No. 29                                                                                                                                                                                                                                    |       | December 2004  |
| SFAS 154                      |       | Accounting Changes and  Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement  No. 3                                                                                                                                                                                           |       | May 2005       |
| EITF Issue 04-1               |       | Accounting for  Pre-Existing Relationships between the Parties to a Business Combination                                                                                                                                                                                                                         |       | September 2004 |
| EITF Issue 03-16              |       | Accounting For  Investments in Limited Liability Companies (LLC)                                                                                                                                                                                                                                                 |       | March 2004     |
| EITF Issue 05-6               |       | Determining the  Amortization Period for Leasehold Improvements                                                                                                                                                                                                                                                  |       | June 2005      |
| EITF Issue 03-13              |       | Applying the Conditions  in Paragraph 42 of FASB Statement No. 144, Accounting for the impairment  or Disposal of Long-Lived Assets, in Determining Whether to Report  Discontinued Operations                                                                                                              |       | November 2004  |
| EITF Issue 04-6               |       | Accounting For Stripping  Costs Incurred During Production in the Mining Industry                                                                                                                                                                                                                                |       | March 2005     |
| EITF Issue 04-10              |       | Determining Whether to  Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds                                                                                                                                                                                                                |       | September 2004 |
| FSP No. FAS 19-1         |       | Accounting for Suspended  Well Costs                                                                                                                                                                                                                                                                             |       | April 2005     |
|  

FSP No. FAS 97-1 |       | Situations in Which  Paragraphs 17(b) and 20 of FASB Statement No. 97, “Accounting and  Reporting by Insurance Enterprises for Certain Long-Duration Contracts and  for Realized Gains and Losses from the Sale of Investments”, Permit or  Require Accrual of an Unearned Revenue Liability |       | June 2004      |

** **

F-21

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significantaccounting policies (Continued)
| Pronouncement                | ** ** | ** **                                                                                                                                                                                                                        | ** ** | **Description**     | ** ** | **Date of issuance** |
|------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|------------|----------------------|
| FSP SFAS 109-1               |       | Application of FASB  Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on  Qualified Production Activities Provided by the American Jobs Creation Act of  2004                                            |       | December 2004  |
| FAS 141-1 and FAS 142-1 |       | Interaction of  FASB Statements No. 141, Business Combinations, and No. 142,  Goodwill and Other Intangible Assets, and EITF Issue No. 04-2, “Whether  Mineral Rights Are Tangible or Intangible Assets” |       | April 2004     |
| FSP No. FAS 142-2       |       | Application of FASB  Statement No. 142, Goodwill and Other Intangible Assets, to Oil- and  Gas-Producing Entities                                                                                                            |       | September 2004 |
| FSP No. EITF 03-1-1     |       | Effective Date of  Paragraphs 10-20 of EITF Issue No. 03-1, “The Meaning of  Other-Than-Temporary Impairment and It’s Application To Certain Investments”                                                     |       | September 2004 |

 

**SFAS123R—Share Based Payment (Revised 2004)**

In December 2004, the FASB issued SFAS No. 123(revised 2004), Share-Based Payment, to focus primarily on accounting fortransactions which an entity obtains employee services in share-based paymenttransactions and to eliminate the alternative of applying the intrinsic valuemeasurement provisions of APB Opinion 25 to stock compensation awards issued toemployees.

The new standard requires enterprises to measure thecost of employee services received in exchange for an award of equityinstruments based on the grant-date fair value of the award. That cost will berecognized over the period during which an employee is required to provideservice in exchange for the award.

The group has continued toapply the Intrinsic Value Method of Accounting and will adopt the provisions ofSFAS 123(R) effective 1 July 2005. The pro forma effects on netincome and earnings per share if the group had applied the fair valuerecognition provisions of the original SFAS 123 on stock compensation awards(rather than applying the intrinsic value measurement provisions of APB OpinionNo.25) are disclosed in Note 20 to the group’s consolidated financialstatements.

**SFAS151—Inventory Costs—an amendment to Accounting Research Bulletin No. 43,Inventory Pricing**

In November 2004, the FASB issued SFAS No. 151,Inventory Costs, an amendment to Accounting Research Bulletin No. 43,Inventory Pricing.

The amendments made by SFAS 151 clarify that abnormalamounts of idle facility expense, freight, handling costs, and wasted materials(spoilage) should be recognized as current period charges and require theallocation of fixed production overheads to inventory based on the normalcapacity of the production facilities. Additionally, the FASB made the decisionto clarify the meaning of the term ‘normal capacity’.

F-22

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

The provisions of thisstandard are effective for inventory costs incurred during fiscal yearsbeginning after 15 June 2005. The group does not expect the adoption ofthis standard to have a material impact on its consolidated financialstatements.SFAS 153—Exchanges of Non-monetary Assets—an amendment of APBOpinion No. 29

In December 2004, the FASB issued SFAS No. 153,“Exchanges of Non-monetary Assets—An Amendment of APB Opinion No. 29,Accounting for Non-monetary Transactions.

The statement eliminates the exception from fair valuemeasurement for non-monetary exchanges of similar productive assets inparagraph 21(b) of APB Opinion No. 29 and replaces it with anexception for exchanges that do not have commercial substance.

SFAS 153 specifies that a non-monetary exchange hascommercial substance if the future cash flows of the entity are expected tochange significantly as a result of the exchange.

The statement is effective for all fiscal periodsbeginning after 15 June 2005 and is required to be adopted by the groupeffective 1 July 2005.

The group does not expectthe adoption of this standard to have a material impact on its consolidatedfinancial statements.

**SFAS 154—AccountingChanges and Error Corrections—a replacement of APB Opinion No. 20 and FASBStatement No. 3**

In May 2005, the FASB issued SFAS 154, AccountingChanges and Error Corrections, to replace APB Opinion No. 20 by revisingthe accounting treatment and reporting requirements for all voluntary changesin accounting principles.

APB Opinion No. 20 required that the cumulativeeffect of the change in accounting principle be included in net income. Underthe new statement, the change in accounting principle is appliedretrospectively (as if the principle had always been used) to prior period’sfinancial statements, hence revising the comparative amounts.

The statement also specifically requires that changesin Depreciation, Amortization and Depletion Methods for long-lived,non-financial assets be accounted for as a change in estimate effected by achange in accounting principle. The group adopted SFAS 154 for the year ended30 June 2005.

The adoption of thestatement did not have an effect on the consolidated financial position and theresults of the operations of the group.

**EITF Issue 04-1,Accounting for Pre-Existing Relationships between the Parties to a BusinessCombination**

In September 2004, the EITF of the FASB reached aconsensus on Issue 04-1 that consummation of a business combination between partieswith a pre-existing relationship should be evaluated to determine if asettlement of a pre-existing relationship exists.

F-23

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

The following issues were also addressed by theEmerging Issues Task Force and ratified by the FASB:

·       ExecutoryContracts—The effective settlement of an executory contract in a businesscombination should be measured at the lesser of (a) the amount by whichthe contract is favorable or unfavorable from the perspective of the acquirerwhen compared to pricing for current market transactions for the same orsimilar items or (b) any stated settlement provisions in the contractavailable to the counterparty to which the contract is unfavorable. To theextent that a stated settlement amount is less than the off-market component ofthe contract, the difference should be included as part of the businesscombination.

·       Acquisitionof a right—The Task Force reached a consensus that the acquisition of a rightthat the acquirer had previously granted to the acquired entity to use theacquirer’s existing recognized or unrecognized intangible assets should also beincluded as part of the business combination.

·       IntangibleAssets—The acquirer should recognize, apart from goodwill, an acquired entity’sintangible asset that, before the business combination, arose solely from theacquired entity’s contractual right to use the acquirer’s existing recognizedor unrecognized intangible assets.

The Task Force alsoreached a consensus that the following disclosures should be required forbusiness combinations between parties with a pre-existing relationship:

a)               The nature of thepre-existing relationship.

b)              The measurement ofthe settlement amount of the pre-existing relationship, if any, and thevaluation method used to determine the settlement amount.

c)               The amount of anysettlement gain or loss recognized and its classification in the statement ofoperations.

The group adopted EITFIssue 04-1 for the year ended 30 June 2005. The adoption of this statementdid not have a material effect on the consolidated financial position andresults of operations of the group.

**EITF Issue 03-16,Accounting For Investments in Limited Liability Companies (LLC**)

In March 2004, the EITF of the FASB reached aconsensus on Issue 03-16, Accounting For Investments in Limited LiabilityCompanies (LLC), and noted that an investment in an LLC that maintains a “specificownership account” for each investor—similar to a partnership capital accountstructure—should be viewed as similar to an investment in a limited partnershipfor purposes of determining whether a non-controlling investment in an LLCshould be accounted for using the cost method or the equity method. Therefore,the provisions of AICPA Statements of Position (SOP) 78-9 and related guidance,including Topic D-46, also apply to such LLCs.

The group adopted EITFIssue 03-16 for the year ended 30 June 2005. The adoption of thisstatement did not have any effect on the consolidated financial position andresults of operations of the group.

F-24

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

**EITF Issue 05-6, Determiningthe Amortization Period for Leasehold Improvements**

In June 2005, the EITF of the FASB reached aconsensus on Issue 05-6, on how an enterprise should account for existing leaseagreements and related leasehold improvements acquired as part of a businesscombination. The issues are whether the lease term for operating leases shouldbe re-evaluated at consummation of a purchase business combination and if theamortization period for leasehold improvements should be re-assessed by theacquiring entity in a business combination.

The consensus stated that leasehold improvementsacquired in a business combination and those acquired after the inception ofthe lease should be amortized over the shorter of the useful life of the assetsor a term that includes renewals that are reasonably assured at the date ofacquisition of leasehold improvements.

The group adopted EITFIssue 05-6 for the year ended 30 June 2005. The adoption of this statementdid not have any effect on the consolidated financial position and results ofoperations of the group.

**EITF Issue 03-13,Applying the Conditions in Paragraph 42 of FASB Statement No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, in DeterminingWhether to Report Discontinued Operations**

In November 2004, the EITF of the FASB reached aconsensus on Issue 03-13 on evaluating whether the criteria in paragraph 42 ofSFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, havebeen met for the purposes of classifying the results of operations of an entitythat either has been disposed or classified as held for sale as discontinuedoperations.

The consensus stated thatthe criteria in paragraph 42 should only be applied to a component of theenterprise that is either disposed of or classified as held for sale in fiscalperiods beginning after 15 December 2005. The group does not expectthe adoption of this standard to have a material impact on its consolidatedfinancial statements.

**EITF Issue 04-6,Accounting For Stripping Costs Incurred During Production in the MiningIndustry**

During 2004, a committeeof the EITF began discussing the accounting treatment for stripping costsincurred during the production phase of a mine. In March 2005, the EITFreached a consensus (ratified by the FASB) that stripping costs incurred duringthe production phase of a mine are variable production costs that should beincluded in the costs of inventory produced during the period that thestripping costs are incurred. The EITF consensus is effective for the first reportingperiod in years beginning after 15 December 2005, with early adoptionpermitted. The group has evaluated the impact of this EITF and it is believedthat it will not have a material affect on our financial position and resultsof operations under US GAAP.

**EITF Issue 04-10,Determining Whether to Aggregate Operating Segments That Do Not Meet the QuantitativeThresholds**

In September 2004, the EITF of the FASB reached aconsensus on Issue 04-10, on how an enterprise should evaluate the aggregationcriteria in paragraph 17 of SFAS 131 when determining whether operatingsegments that do not meet the quantitative thresholds may be aggregated inaccordance with paragraph 19 of SFAS 131.

F-25

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

The consensus stated that operating segments can onlybe aggregated if the segments have similar economic characteristics and share amajority of the aggregation criteria listed in SFAS 131.

EITF Issue 04-10 iseffective for all financial periods beginning after 15 September 2005 andearly adoption is permitted. The group adopted EITF Issue 04-10 for the yearended 30 June 2005. The adoption of this statement did not have a materialeffect on the segment disclosure of the group.

**FSP No. FAS19-1, Accounting for Suspended Well Costs**

In April 2005, the FASB directed the FASB staffto provide guidance on the accounting for exploratory well costs, whether it ispermissible to continue capitalizing well exploration costs beyond one year andto then propose an amendment to SFAS 19, Financial Accounting and Reporting byOil and Gas Producing Companies, accordingly.

The FASB staff believes that exploratory well costsshould continue to be capitalized when the well has found a sufficient quantityof reserves to justify its completion as a producing well and the enterprise ismaking sufficient progress assessing the reserves and the economic andoperating viability of the project.

SFAS 19 has been amended accordingly to include thatthe costs of drilling an exploratory well or an exploratory-type stratigraphicwell are capitalized as part of the enterprise’s uncompleted wells, equipment,and facilities pending the determination of whether the well has found provedreserves.

The group adopted FSP No. FAS19-1 for the year ended 30 June 2005. The adoption of this statement didnot have a material effect on the consolidated financial position and resultsof operations of the group.

**FSP No. FAS97-1, Situations in Which Paragraphs 17(b) and 20 of FASB Statement No. 97,“Accounting and Reporting by Insurance Enterprises for Certain Long-DurationContracts and for Realized Gains and Losses from the Sale of Investments”,Permit or Require Accrual of an Unearned Revenue Liability**

In June 2004, the FASB issued FASB Staff Position97-1, to clarify whether it is appropriate to recognize an unearned revenueliability to compensate the insurer for services to be performed over futureperiods when future profits are expected to decline from the current level oronly when current profits are expected to be followed by future losses.

The FASB staff reached a consensus that an unearnedrevenue liability should be recognized for all amounts that have been assessedas to compensate insurers for services to be performed over future periods.

The FASB staff believes that paragraph 26 of SOP 03-1is based on principles consistent with SFAS 97; however, it does not limitthe accrual of unearned income for insurance benefit features of universallife-type contracts to situations where profits are expected to be followed bylosses; that is, the facts and circumstances of each situation must be consideredin determining the need for accruing unearned revenue. Paragraph 26 of SOP 03-1specifies how to determine the amount of the accrual for the insurance benefitfeature when profits are expected to be followed by losses. Thegroup adopted FSP No. FAS 97-1 for the year ended 30 June 2005. Theadoption of this statement did not have a material effect on the consolidatedfinancial position and results of operations of the group.

F-26

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significantaccounting policies (Continued)

**FSP SFAS 109-1—Application of FASB Statement No. 109,Accounting for Income Taxes, to the Tax Deduction on Qualified ProductionActivities Provided by the American Jobs Creation Act of 2004**

In December 2004, the FASB issued FASB StaffPosition 109-1 to provide guidance on the application of SFAS 109, Accountingfor Income Taxes, to the provision within the American Jobs Creation Act of2004 (the Act) that provides a tax deduction of up to 9% on qualified productionactivities.

FSP 109-1 clarifies thatthe tax deduction should be accounted for as a special deduction in accordancewith SFAS 109. The group has adopted the provisions of this statement and it isapplicable to the Sasol North American Operations only. The adoption of thestatement did not have a material effect on the consolidated financial positionand results of operations of the group.

**FSP FAS 141-1 and FSP FAS 142-1, Interaction ofFASB Statements No. 141, Business Combinations, and No. 142, Goodwilland Other Intangible Assets, and EITF Issue No. 04-2, “Whether MineralRights Are Tangible or Intangible Assets”**

In April 2004, the FASB issued a FASB StaffPosition 141-1 and 142-1, Interaction of SFAS 141, Business Combinations andSFAS 142, Goodwill and Other Intangible Assets, and EITF Issue 04-2, WhetherMineral Rights are Tangible or Intangible Assets (FSP 141-1 and 142-2).

FSP 141-1 and 142-1 define mineral rights as tangibleassets. If the guidance in this FSP results in the reclassification of anasset, prior-period amounts on the statements of financial position shall bereclassified and any effects on amortization or depreciation of the asset shallbe accounted for prospectively.

The group records miningmineral rights as tangible assets in accordance with its existing accountingpolicy, hence the adoption of this statement did not have any effect on thepresentation of the consolidated financial position of the group as at 30 June 2005.

**FSP No. FAS 142-2, Application of FASBStatement No. 142, Goodwill and Other Intangible Assets, to Oil-andGas-Producing Entities**

On 2 September 2004, the FASB issued FSP 142-2,Application of FASB Statement No. 142, Goodwill and Other IntangibleAssets, to Oil- and Gas-Producing Entities.

Paragraph 8(b) of SFAS 142 states that it doesnot change the accounting prescribed in SFAS 19, Financial Accounting andReporting by Oil and Gas Producing Entities

Questions have arisen as to whether the scopeexception in paragraph 8(b) of SFAS 142 includes the balance sheet classificationand disclosures for drilling and mineral rights of oil- and gas-producingentities.

In FSP 142-2, the FASB staff acknowledged that theaccounting framework in SFAS 19 for oil and gas producing entities is based onthe level of established reserves and not whether an asset is tangible or not.Accordingly, the FASB staff concluded that SFAS 142’s balance sheetclassification and disclosure provisions do not apply to drilling and mineralrights of oil and gas producing entities.

However, an entity is not precluded from providinginformation about its drilling and mineral rights in addition to theinformation required by SFAS 69, Disclosures about Oil and Gas ProducingActivities.

F-27

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**2.**   Significant accounting policies (Continued)

The group adopted FSP142-2 for the year ended 30 June 2005.The adoption of this statement didnot have a material effect on the presentation of the consolidated financialposition of the group.

**FSP No. EITF 03-1-1, Effective Date ofParagraphs 10-20 of EITF Issue No. 03-1, “The Meaning ofOther-Than-Temporary Impairment and It’s Application To Certain Investments”**

In September 2004, the FASB issued a proposedFASB Staff Position No. EITF 03-1-1 to provide implementation guidancewith respect to debt securities that are impaired solely due to interest ratesand/or sector spreads and analyzed for other-than-temporary impairment underparagraph 16 of Issue 03-1.

The FASB has directed the FASB staff to delay the effectivedate for the measurement and recognition guidance contained in paragraphs 10—20of Issue 03-1. The delay does not suspend the existing accounting requirementsfor assessing whether impairments of “held-to-maturity” and “available-for-sale”securities are other-than-temporary, including current guidance for investmentsheld at cost.

The FSP has expanded thescope of the deferral to include all securities covered by EITF 03-1 ratherthan limiting the deferral to only certain debt securities that are impairedsolely to interest rate and or sector spread increases.

**3.**   Segmental analysis

**Reporting segments**

The group has eightmain reportable segments that comprise the structure used by the GeneralExecutive Committee (GEC) to make key operating decisions and assessperformance. These are Sasol Mining, Sasol Synfuels, Sasol Liquid FuelsBusiness (LFB), Sasol Gas, Sasol Synfuels International (SSI), Sasol Polymers,Sasol Solvents and Sasol Olefins and Surfactants.

The group’sreportable segments are operating segments that are differentiated by theactivities that each undertakes and the products they manufacture and market. Theyare managed separately because each business utilises different technology,manufacturing and marketing strategies.

The group evaluatesthe performance of its reportable segments based on operating profit. The groupaccounts for inter-segment sales and transfers as if the sales and transferswere entered into under the same terms and conditions as would have beenentered into in a market related transaction.

The financialinformation of the group’s reportable segments is reported to the chiefoperating decision maker for purposes of making decisions about allocatingresources to the segment and assessing its performance. The measurements ofreportable segments’ profitability and assets are reconciled to the amountsreported in the group’s consolidated financial statements prepared inaccordance with accounting principles generally accepted in the United Statesof America.

The group has formed significant joint ventures topromote Sasol technology and products internationally. The group is promotingand marketing its gas-to-liquid (GTL) technology for converting remote orflared natural gas into new-generation, low-emission GTL diesel, GTL naphthaand other products. It is envisaged that Sasol Synfuels International (SSI)through the recent development of the GTL plants in Qatar and Nigeria wouldcontribute significantly to the group results and will contribute to thegrowing of a global gas to liquid business in the future. Consequently thechief operating decision 

F-28

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmental analysis (Continued)

maker has chosen toinclude SSI as a reportable operating segment. SSI did not meet any of thequantitative thresholds but has been considered reportable and has beenseparately disclosed in terms of SFAS 131, Disclosures About Segments of anEnterprise and Related Information, as the chief operating decision makerbelieves that the information about SSI would be useful to readers of thefinancial statements.

Thefinancial information presented to our chief operating decision maker,including the financial information of the group’s reportable segments, ispresented in accordance with International Financial Reporting Standards (IFRS).Since the IFRS financial information is the basis on which segmental financialdecisions are based, resources are allocated and performance is assessed, thisis the accounting basis for segment reporting that is required to be disclosed.The IFRS segment reporting information is reconciled to the amounts reported inthe group’s consolidated financial statements prepared in accordance withaccounting principles generally accepted in the United States of America forall years presented.

***Sasol Mining***

Sasol Mining’sactivities include the mining and supply of coal to other segments includingSasol Synfuels, other group companies and to third parties.

Turnoveris recognized upon delivery of the coal to the customer, which, in accordancewith the related contract terms is the point at which the title and risks andrewards of ownership passes to the customer. Shipping and handling costs areincluded in turnover when billed to customers in conjunction with the sale of aproduct. The related costs of sales are recognized in the same period as thesupply of the coal and include any shipping and handling costs incurred. Allinter-segment sales are conducted at market related prices.

***Sasol Synfuels***

Sasol Synfuels’activities include the production of synthesis gas from coal, supplied by SasolMining, using in-house technology to convert this into a wide range of liquidfuels intermediates and petrochemicals. Sasol Synfuels also provides chemicalfeedstock to, amongst others, Sasol Olefins and Surfactants, Sasol Polymers andSasol Solvents.

Turnover(including inter-segment turnover) is recognized when title and the risks andrewards of ownership pass to the customer which is when the goods have passedover the appropriate weigh bridge or flow meter.

***Sasol Liquid Fuels Business (LFB)***

Sasol LFB isresponsible for the group’s crude oil refining activities and for blending andmarketing of all liquid fuels and lubricants.

Turnover derivedfrom the supply of fuel oil is recognized upon delivery of the product to thecustomer, which in accordance with the related contract terms is when ownershippasses to the customer. Turnover from the supply of fuel oil is based onmeasurement through a flow-meter into the customers’ tanks.

F-29

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmental analysis (Continued)

Shipping and handlingcosts are included in turnover when billed to customers in conjunction with thesale of a product. The related costs of sales are recognized in the same periodas the turnover.

***Sasol Gas***

Sasol Gas’ activities include the marketing ofclean-burning pipeline gas sourced from Sasol Synfuels and natural gas from theMozambican gas fields.

Turnover derived from the supply of gas is recognizedupon delivery of the product to the customer, which in accordance with therelated contract terms is when ownership passes to the customer. Turnoverderived from the supply of gas is measured based on the reading of Sasol’soutlet flange on the customer’s premises.

Transportation andhandling costs are included in turnover when billed to customers in conjunctionwith the sale of a product. The related costs of sales are recognized in thesame period as the turnover.

***Sasol Synfuels International***

Sasol Synfuels International (SSI) is responsible fordeveloping, implementing and managing international business ventures based onSasol’s Fischer-Tropsch synthesis technology. SSI is also involved in thedevelopment of GTL fuels and production of other chemical products from GTLderived feedstocks. SSI is currently involved in the establishment of two GTLproduction facilities in Qatar and Nigeria and are conducting feasibilitystudies at various other locations around the world.

Turnover is derived fromthe rendering of engineering services to external partners in joint venturesupon the proof of completion of the service.

***Sasol Polymers***

Sasol Polymers focuses onthe production of monomers, polypropylene, polyethylene, vinyls and otherchemical products through its respective businesses.

***Sasol Solvents***

Sasol Solvents primarilymanufactures and markets globally a range of oxygenated solvents and chemicalintermediates to various industries.

***Sasol Olefins and Surfactants***

Sasol Olefins and Surfactants manufactures and marketsglobally a diverse range of surfactants, surfactant intermediates, alcohols,monomers and inorganic speciality chemicals.

F-30

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmental analysis (Continued)

In respect of the abovechemical industry segments (Sasol Polymers, Sasol Solvents and Sasol Olefinsand Surfactants), revenue recognition is determined in accordance with thecontractual agreements entered into with customers. A brief summary of theseterms is as follows:
| Delivery terms                                               | ** ** | ** **                                                                                                                                                | ** ** | **Title and risks and rewards of ownership  pass to the customer** |
|--------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------|
| Ex-Tank sales                                                |       | When products are loaded  into the customer’s vehicle or unloaded from the seller’s storage tanks.                                              |
| Carriage Paid To (CPT)                                       |       | On delivery of  products to a specified location (main carriage is paid for by the seller).                                                               |
| Free on Board (FOB)                                          |       | When products are  loaded into the transport vehicle—customer is responsible for shipping and  handling costs.                                       |
| Cost Insurance Freight  (CIF) and Cost Freight Railage (CFR) |       | When products are  loaded into the transport vehicle—seller is responsible for shipping and  handling costs which are included in the selling price. |
| Proof of Delivery (POD)                                      |       | When products are  delivered to and signed for by the customer.                                                                                           |
| Consignment Sales                                            |       | As and when products are  consumed by the customer.                                                                                                       |

 

Turnover derived from thesupply of chemical products is recognized at the point at which title and therisks and rewards of ownership pass to the customer as described above. Therelated cost of sales is recognized in the same period as turnover.

***Other Businesses***

Other businesses include the group’s treasury,upstream exploration and production activities, production and marketing of waxand wax related products, manufacturing of ammonia and its derivatives,research and development activities, synthesis gas, manufacturing of phenolicsand cresylics and central administration activities.

F-31

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmental analysis (Continued)

The results of thereporting segments were as follows:

|                                                                             | ** ** | ** ** | ** ** | **Year ended 30 June 2005** | ** ** | **Year ended 30 June 2004** | ** ** | **Year ended 30 June 2003** | ** ** |
|-----------------------------------------------------------------------------|------------|------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                                                  | ** ** | **Note**   | ** ** | **External  turnover**                          | ** ** | **Inter-  segment  turnover**                   | ** ** | **Total  turnover**                             | ** ** | **External  turnover** | ** ** | **Inter-  segment  turnover** | ** ** | **Total  turnover** | ** ** | **External  turnover** | ** ** | **Inter-  segment  turnover** | ** ** | **Total  turnover** | ** ** |
| ** **                                                                  | ** ** | ** ** | ** ** | **(Rand in millions)**                | ** ** |
| Sasol Mining                                                                |       |       | ** ** |                                            |       |                                            | **1,471**  | ** **                                      |       |   | **3,744** |   |   |   | **5,215** | ** ** |   |   | 1,083 |   |   |   | 4,161 |   |   |   | 5,244 |   |   |   | 1,013 |   |   |   | 4,003 |   |   |   | 5,016 |   |   |   |
| Sasol Synfuels                                                              |       |       | ** ** |                                            |       |                                            | **820**    | ** **                                      |       |   | **17,864** |   |   |   | **18,684** | ** ** |   |   | 1,329 |   |   |   | 14,664 |   |   |   | 15,993 |   |   |   | 1,210 |   |   |   | 15,766 |   |   |   | 16,976 |   |   |   |
| Sasol Liquid Fuels Business                                                 |       |       | ** ** |                                            |       |                                            | **23,525** | ** **                                      |       |   | **187** |   |   |   | **23,712** | ** ** |   |   | 18,554 |   |   |   | 297 |   |   |   | 18,851 |   |   |   | 19,460 |   |   |   | 191 |   |   |   | 19,651 |   |   |   |
| Sasol Gas                                                                   |       |       | ** ** |                                            |       |                                            | **1,408**  | ** **                                      |       |   | **996** |   |   |   | **2,404** | ** ** |   |   | 1,389 |   |   |   | 133 |   |   |   | 1,522 |   |   |   | 1,480 |   |   |   | 24 |   |   |   | 1,504 |   |   |   |
| Sasol Synfuels International                                                |       |       | ** ** |                                            |       |                                            | **—** | ** **                                      |       |   | **—** |   |   |   | **—** | ** ** |   |   | 7 |   |   |   | — |   |   |   | 7 |   |   |   | 7 |   |   |   | — |   |   |   | 7 |   |   |   |
| Sasol Polymers                                                              |       |       | ** ** |                                            |       |                                            | **7,199**  | ** **                                      |       |   | **83** |   |   |   | **7,282** | ** ** |   |   | 6,576 |   |   |   | 86 |   |   |   | 6,662 |   |   |   | 6,245 |   |   |   | 116 |   |   |   | 6,361 |   |   |   |
| Sasol Solvents                                                              |       |       | ** ** |                                            |       |                                            | **8,063**  | ** **                                      |       |   | **341** |   |   |   | **8,404** | ** ** |   |   | 5,956 |   |   |   | 499 |   |   |   | 6,455 |   |   |   | 5,950 |   |   |   | 622 |   |   |   | 6,572 |   |   |   |
| Sasol Olefins and Surfactants                                               |       |       | ** ** |                                            |       |                                            | **18,040** | ** **                                      |       |   | **354** |   |   |   | **18,394** | ** ** |   |   | 17,133 |   |   |   | 249 |   |   |   | 17,382 |   |   |   | 19,543 |   |   |   | 290 |   |   |   | 19,833 |   |   |   |
| Other Businesses                                                            |       |       | ** ** |                                            |       |                                            | **8,713**  | ** **                                      |       |   | **3,534** |   |   |   | **12,247** | ** ** |   |   | 8,124 |   |   |   | 3,609 |   |   |   | 11,733 |   |   |   | 9,647 |   |   |   | 2,906 |   |   |   | 12,553 |   |   |   |
| Total Segments                                                              |       |       | ** ** |                                            |       |                                            | **69,239** | ** **                                      |       |   | **27,103** |   |   |   | **96,342** | ** ** |   |   | 60,151 |   |   |   | 23,698 |   |   |   | 83,849 |   |   |   | 64,555 |   |   |   | 23,918 |   |   |   | 88,473 |   |   |   |
| Elimination of intersegment turnover                                        |       |       | ** ** |                                            |       |                                            | ** ** | ** **                                      |       |   | ** ** |   |   |   | **(27,103** | **)** |   |   |   |   |   |   |   |   |   |   | (23,698 | ) |   |   |   |   |   |   |   |   |   |   | (23,918 | ) |   |   |
| Total turnover                                                              |       |       | ** ** |                                            |       |                                            | ** ** | ** **                                      |       |   | ** ** |   |   |   | **69,239** | ** ** |   |   |   |   |   |   |   |   |   |   | 60,151 |   |   |   |   |   |   |   |   |   |   |   | 64,555 |   |   |   |
| Reconciliation of segment information to consolidated  financial statements |       |       | ** ** |                                            |       |                                            | ** ** | ** **                                      |       |   | ** ** |   |   |   | ** ** | ** ** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustments:                                                                |       |       | ** ** |                                            |       |                                            | ** ** | ** **                                      |       |   | ** ** |   |   |   | ** ** | ** ** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity accounting and reversal of proportionate  consolidation              |       |       | **1**      |                                            |       |                                            | **(1,812** | **)**                                           |       |   | ** ** |   |   |   | ** ** | ** ** |   |   | (1,609 | ) |   |   |   |   |   |   |   |   |   |   | (1,539 | ) |   |   |   |   |   |   |   |   |   |   |
| Entities previously not consolidated                                        |       |       | **2**      |                                            |       |                                            | **—** | ** **                                      |       |   | ** ** |   |   |   | ** ** | ** ** |   |   | 266 |   |   |   |   |   |   |   |   |   |   |   | 650 |   |   |   |   |   |   |   |   |   |   |   |
| Other                                                                       |       |       | ** ** |                                            |       |                                            | **—** | ** **                                      |       |   | ** ** |   |   |   | ** ** | ** ** |   |   | — |   |   |   |   |   |   |   |   |   |   |   | 103 |   |   |   |   |   |   |   |   |   |   |   |
| **As  reported in consolidated income statements**                          |       |       | ** ** |                                            |       |                                            | **67,427** | ** **                                      |       |   | ** ** |   |   |   | ** ** | ** ** |   |   | 58,808 |   |   |   |   |   |   |   |   |   |   |   | 63,769 |   |   |   |   |   |   |   |   |   |   |   |

 

F-32

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**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmental analysis (Continued)

The results of thereporting segments were as follows (continued):

|                                                                             | ** ** | ** ** | ** ** | **Year ended 30  June 2005**                           | ** ** | **Year ended 30  June 2004**                           | ** ** | **Year ended 30  June 2003** | ** ** |
|-----------------------------------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                  | ** ** | **Note**   | ** ** | **    Operating      profit** | ** ** | **    Operating      profit** | ** ** | **Operating  profit**                       | ** ** |
| ** **                                                                  | ** ** | ** ** | ** ** | **(Rand in millions)**                                      | ** ** |
| Sasol Mining                                                                | ** ** |       | ** ** |                                                                  |       |                                                                  | **1,247**  | ** **                                  |       |   | 1,194 |   |   |   | 1,273 |   |   |
| Sasol Synfuels                                                              | ** ** |       | ** ** |                                                                  |       |                                                                  | **7,560**  | ** **                                  |       |   | 5,512 |   |   |   | 7,423 |   |   |
| Sasol Liquid  Fuels Business                                                | ** ** |       | ** ** |                                                                  |       |                                                                  | **1,900**  | ** **                                  |       |   | 1,429 |   |   |   | 1,403 |   |   |
| Sasol Gas                                                                   | ** ** |       | ** ** |                                                                  |       |                                                                  | **932**    | ** **                                  |       |   | 387 |   |   |   | 535 |   |   |
| Sasol Synfuels  International                                               | ** ** |       | ** ** |                                                                  |       |                                                                  | **(199**   | **)**                                       |       |   | (138 | ) |   |   | (180 | ) |   |
| Sasol Polymers                                                              | ** ** |       | ** ** |                                                                  |       |                                                                  | **1,484**  | ** **                                  |       |   | 1,030 |   |   |   | 884 |   |   |
| Sasol Solvents                                                              | ** ** |       | ** ** |                                                                  |       |                                                                  | **1,243**  | ** **                                  |       |   | 117 |   |   |   | 436 |   |   |
| Sasol Olefins and  Surfactants                                              | ** ** |       | ** ** |                                                                  |       |                                                                  | **(221**   | **)**                                       |       |   | (67 | ) |   |   | (5 | ) |   |
| Other Businesses                                                            | ** ** |       | ** ** |                                                                  |       |                                                                  | **560**    | ** **                                  |       |   | (150 | ) |   |   | 142 |   |   |
| Total Segments                                                              | ** ** |       | ** ** |                                                                  |       |                                                                  | **14,506** | ** **                                  |       |   | 9,314 |   |   |   | 11,911 |   |   |
| Reconciliation of segment information to  consolidated financial statements |       |       | ** ** |                                                                  |       |                                                                  |       | ** **                                  |       |   |   |   |   |   |   |   |   |
| Adjustments:                                                                |       |       | ** ** |                                                                  |       |                                                                  |       | ** **                                  |       |   |   |   |   |   |   |   |   |
| Equity accounting and reversal of proportionate  consolidation              | ** ** |       | **1**      |                                                                  |       |                                                                  | **(180**   | **)**                                       |       |   | 56 |   |   |   | 58 |   |   |
| Entities previously not consolidated                                        | ** ** |       | **2**      |                                                                  |       |                                                                  | **—** | ** **                                  |       |   | 106 |   |   |   | 146 |   |   |
| Business combinations                                                       | ** ** |       | **3**      |                                                                  |       |                                                                  | **99**     | ** **                                  |       |   | (34 | ) |   |   | (20 | ) |   |
| Post-retirement healthcare                                                  | ** ** |       | **4**      |                                                                  |       |                                                                  | **(186**   | **)**                                       |       |   | (126 | ) |   |   | (280 | ) |   |
| Research and development expensed                                           | ** ** |       | **5**      |                                                                  |       |                                                                  | **—** | ** **                                  |       |   | — |   |   |   | (74 | ) |   |
| Derivative instruments                                                      | ** ** |       | **6**      |                                                                  |       |                                                                  | **(1**     | **)**                                       |       |   | (12 | ) |   |   | (251 | ) |   |
| Foreign currency translation                                                | ** ** |       | **7**      |                                                                  |       |                                                                  | **(3**     | **)**                                       |       |   | (253 | ) |   |   | (473 | ) |   |
| Impairment                                                                  | ** ** |       | **8**      |                                                                  |       |                                                                  | **811**    | ** **                                  |       |   | (34 | ) |   |   | — |   |   |
| Provision for guarantee payable                                             | ** ** |       | ** ** |                                                                  |       |                                                                  | **—** | ** **                                  |       |   | — | ** ** |   |   | 205 |   |   |
| Asset retirement obligations                                                | ** ** |       | **9**      |                                                                  |       |                                                                  | **(94**    | **)**                                       |       |   | (23 | ) |   |   | (149 | ) |   |
| Pension asset                                                               | ** ** |       | **10**     |                                                                  |       |                                                                  | **(62**    | **)**                                       |       |   | (67 | ) |   |   | (6 | ) |   |
| Gain arising from issuance of subsidiary’s  shares                     | ** ** |       | **11**     |                                                                  |       |                                                                  | **—** | ** **                                  |       |   | (108 | ) |   |   | — |   |   |
| Other                                                                       | ** ** |       | ** ** |                                                                  |       |                                                                  | **43**     |                                        |       |   | (80 | ) |   |   | (56 | ) |   |
| **As reported in consolidated income statements**                           | ** ** |       | ** ** |                                                                  |       |                                                                  | **14,933** | ** **                                  |       |   | 8,739 |   |   |   | 11,011 |   |   |

 

F-33

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmental analysis (Continued)

The results of thereporting segments were as follows (continued):

|                                                                             | ** ** | ** ** | ** ** | **Year ended 30 June 2005** | ** ** | **Year ended 30 June 2004** | ** ** | **Year ended 30 June 2003** | ** ** |
|-----------------------------------------------------------------------------|------------|------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                                                  | ** ** | ** ** | ** ** | **Cash flow information**             | ** ** | **Cash flow information**             | ** ** | **Cash flow information**             | ** ** |
| ** **                                                                  | ** ** | **Note**   | ** ** | **Additions   to PPE***               | ** ** | **Depreciation  and  amortisation**             | ** ** | **Additions  to PPE***                     | ** ** | **Depreciation  and  amortisation** | ** ** | **Additions  to PPE*** | ** ** | **Depreciation  and  amortisation** | ** ** |
| ** **                                                                  | ** ** | ** ** | ** ** | **(Rand in millions)**                | ** ** |
| Sasol Mining                                                                | ** ** |       | ** ** | ** **                                      |       |                                            | **615**    | ** **                                      |       |   | **(532** | **)** |   |   | 358 |   |   |   | (567 | ) |   |   | 523 |   |   |   | (473 | ) |   |
| Sasol Synfuels                                                              | ** ** |       | ** ** | ** **                                      |       |                                            | **3,248**  | ** **                                      |       |   | **(611** | **)** |   |   | 1,867 |   |   |   | (1,154 | ) |   |   | 1,719 |   |   |   | (992 | ) |   |
| Sasol Liquid  Fuels  Business                                               | ** ** |       | ** ** | ** **                                      |       |                                            | **1,011**  | ** **                                      |       |   | **(406** | **)** |   |   | 588 |   |   |   | (369 | ) |   |   | 681 |   |   |   | (255 | ) |   |
| Sasol Gas                                                                   | ** ** |       | ** ** | ** **                                      |       |                                            | **204**    | ** **                                      |       |   | **(250** | **)** |   |   | 1,544 |   |   |   | (78 | ) |   |   | 2,466 |   |   |   | (31 | ) |   |
| Sasol Synfuels  International                                               | ** ** |       | ** ** | ** **                                      |       |                                            | **1,246**  | ** **                                      |       |   | **(1** | **)** |   |   | 1,690 |   |   |   | (1 | ) |   |   | 825 |   |   |   | (1 | ) |   |
| Sasol Polymers                                                              | ** ** |       | ** ** | ** **                                      |       |                                            | **4,423**  | ** **                                      |       |   | **(302** | **)** |   |   | 1,703 |   |   |   | (485 | ) |   |   | 553 |   |   |   | (445 | ) |   |
| Sasol Solvents                                                              | ** ** |       | ** ** | ** **                                      |       |                                            | **164**    | ** **                                      |       |   | **(301** | **)** |   |   | 767 |   |   |   | (272 | ) |   |   | 1,376 |   |   |   | (157 | ) |   |
| Sasol Olefins and  Surfactants                                         | ** ** |       | ** ** | ** **                                      |       |                                            | **907**    | ** **                                      |       |   | **(953** | **)** |   |   | 1,201 |   |   |   | (1,375 | ) |   |   | 740 |   |   |   | (1,474 | ) |   |
| Other Businesses                                                            | ** ** |       | ** ** | ** **                                      |       |                                            | **596**    | ** **                                      |       |   | **(653** | **)** |   |   | 1,170 |   |   |   | (720 | ) |   |   | 1,389 |   |   |   | (695 | ) |   |
| Total Segments                                                              | ** ** |       | ** ** | ** **                                      |       |                                            | **12,414** | ** **                                      |       |   | **(4,009** | **)** |   |   | 10,888 |   |   |   | (5,021 | ) |   |   | 10,272 |   |   |   | (4,523 | ) |   |
| Reconciliation of  segment information to consolidated financial statements |       |       | ** ** | ** **                                      |       |                                            | ** ** | ** **                                      |       |   |   | ** ** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustments:                                                                |       |       | ** ** | ** **                                      |       |                                            | ** ** | ** **                                      |       |   |   | ** ** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity accounting and reversal of proportionate  consolidation              | ** ** |       | **1**      | ** **                                      |       |                                            | **(2,599** | **)**                                           |       |   | **174** | ** ** |   |   | (2,295 | ) |   |   | 141 |   |   |   | (1,021 | ) |   |   | 111 |   |   |
| Entities previously not consolidated                                        | ** ** |       | **2**      | ** **                                      |       |                                            | **—** | ** **                                      |       |   | **—** | ** ** |   |   | 179 |   |   |   | (5 | ) |   |   | 50 |   |   |   | (36 | ) |   |
| Business combinations                                                       | ** ** |       | **3**      | ** **                                      |       |                                            | **—** | ** **                                      |       |   | **102** | ** ** |   |   | — |   |   |   | 30 |   |   |   | — |   |   |   | (12 | ) |   |
| Research and development expensed                                           | ** ** |       | **5**      | ** **                                      |       |                                            | **(25**    | **)**                                           |       |   | **(38** | **)** |   |   | (42 | ) |   |   | (3 | ) |   |   | (99 | ) |   |   | 22 |   |   |
| Derivative instruments                                                      | ** ** |       | **6**      | ** **                                      |       |                                            | **(205**   | **)**                                           |       |   | **3** | ** ** |   |   | (66 | ) |   |   | 32 |   |   |   | (22 | ) |   |   | 1 |   |   |
| Impairment                                                                  | ** ** |       | **8**      | ** **                                      |       |                                            | **—** | ** **                                      |       |   | **—** | ** ** |   |   | — |   |   |   | (4 | ) |   |   | — |   |   |   | (6 | ) |   |
| Asset retirement obligations                                                | ** ** |       | **9**      | ** **                                      |       |                                            | **46**     | ** **                                      |       |   | **6** | ** ** |   |   | (11 | ) |   |   | 20 |   |   |   | 83 |   |   |   | — |   |   |
| Capital leases                                                              | ** ** |       | **12**     | ** **                                      |       |                                            | **—** | ** **                                      |       |   | **20** | ** ** |   |   | (8 | ) |   |   | (19 | ) |   |   | (187 | ) |   |   | (3 | ) |   |
| Other                                                                       | ** ** |       | ** ** | ** **                                      |       |                                            | **520**    | ** **                                      |       |   | **(6** | **)** |   |   | (240 | ) |   |   | (36 | ) |   |   | (215 | ) |   |   | (68 | ) |   |
| **As  reported in consolidated financial statements**                       | ** ** |       | ** ** | ** **                                      |       |                                            | **10,151** | ** **                                      |       |   | **(3,748** | **)** |   |   | 8,405 |   |   |   | (4,865 | ) |   |   | 8,861 |   |   |   | (4,514 | ) |   |

----

*       Property,plant and equipment

F-34

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmentalanalysis (Continued)

Theassets and capital commitments of the reporting segments were as follows:
|                                                                             | ** ** | ** ** | ** ** | **Year ended 30 June 2005** | ** ** | **Year ended 30 June 2004** | ** ** | **Year ended 30 June 2003** | ** ** |
|-----------------------------------------------------------------------------|------------|------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                                                  | ** ** | **Note**   | ** ** | **Total  assets**                               | ** ** | **Capital  commitments**                        | ** ** | **Total  assets**                               | ** ** | **Capital  commitments** | ** ** | **Total  assets** | ** ** | **Capital  commitments** | ** ** |
| ** **                                                                  | ** ** | ** ** | ** ** | **(Rand in millions)**                | ** ** |
| Sasol Mining                                                                | ** ** |       | ** ** | ** **                                      |       | **3,862**                                       | ** ** |                                            | **822**    |   |   | 3,829 |   |   | 730 |   |   | 3,945 |   |   | 512 |   |   |
| Sasol Synfuels                                                              | ** ** |       | ** ** | ** **                                      |       | **12,340**                                      | ** ** |                                            | **2,909**  |   |   | 9,314 |   |   | 6,381 |   |   | 9,087 |   |   | 1,495 |   |   |
| Sasol Liquid  Fuels Business                                                | ** ** |       | ** ** | ** **                                      |       | **10,023**                                      | ** ** |                                            | **662**    |   |   | 8,818 |   |   | 962 |   |   | 6,995 |   |   | 732 |   |   |
| Sasol Gas                                                                   | ** ** |       | ** ** | ** **                                      |       | **5,962**                                       | ** ** |                                            | **212**    |   |   | 5,964 |   |   | 425 |   |   | 3,884 |   |   | 3,249 |   |   |
| Sasol Synfuels  International                                               | ** ** |       | ** ** | ** **                                      |       | **6,076**                                       | ** ** |                                            | **5,990**  |   |   | 2,955 |   |   | 5,482 |   |   | 1,462 |   |   | 6,786 |   |   |
| Sasol Polymers                                                              | ** ** |       | ** ** | ** **                                      |       | **13,383**                                      | ** ** |                                            | **5,696**  |   |   | 8,104 |   |   | 8,299 |   |   | 6,537 |   |   | 1,969 |   |   |
| Sasol Solvents                                                              | ** ** |       | ** ** | ** **                                      |       | **7,506**                                       | ** ** |                                            | **86**     |   |   | 7,062 |   |   | 215 |   |   | 6,232 |   |   | 1,064 |   |   |
| Sasol Olefins and  Surfactants                                              | ** ** |       | ** ** | ** **                                      |       | **17,339**                                      | ** ** |                                            | **1,751**  |   |   | 16,077 |   |   | 1,772 |   |   | 18,630 |   |   | 1,409 |   |   |
| Other Businesses                                                            | ** ** |       | ** ** | ** **                                      |       | **11,089**                                      | ** ** |                                            | **1,041**  |   |   | 11,057 |   |   | 514 |   |   | 12,653 |   |   | 856 |   |   |
| Total Segments                                                              | ** ** |       | ** ** | ** **                                      |       | **87,580**                                      | ** ** |                                            | **19,169** |   |   | 73,180 |   |   | 24,780 |   |   | 69,425 |   |   | 18,072 |   |   |
| Reconciliation of  segment information to consolidated financial statements | ** ** |       | ** ** | ** **                                      |       | ** **                                      | ** ** |                                            | ** ** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustments:                                                                | ** ** |       | ** ** | ** **                                      |       | ** **                                      | ** ** |                                            | ** ** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity accounting and reversal of proportionate  consolidation              | ** ** |       | **1**      | ** **                                      |       | **(7,356**                                      | **)**      |                                            | **—** |   |   | (3,460 | ) | ** ** | **—** |   |   | (1,532 | ) |   | — |   |   |
| Entities previously not consolidated                                        | ** ** |       | **2**      | ** **                                      |       | **—**                                      | ** ** |                                            | **—** |   |   | — |   | ** ** | **—** |   |   | 436 |   |   | — |   |   |
| Business combinations                                                       | ** ** |       | **3**      | ** **                                      |       | **(1,263**                                      | **)**      |                                            | **—** |   |   | (633 | ) | ** ** | **—** |   |   | (490 | ) |   | — |   |   |
| Research and development expensed                                           | ** ** |       | **5**      | ** **                                      |       | **(311**                                        | **)**      |                                            | **—** |   |   | (341 | ) | ** ** | **—** |   |   | (114 | ) |   | — |   |   |
| Derivative instruments                                                      | ** ** |       | **6**      | ** **                                      |       | **(201**                                        | **)**      |                                            | **—** |   |   | (791 | ) | ** ** | **—** |   |   | (209 | ) |   | — |   |   |
| Impairment                                                                  | ** ** |       | **8**      | ** **                                      |       | **945**                                         | ** ** |                                            | **—** |   |   | 72 |   | ** ** | **—** |   |   | 106 |   |   | — |   |   |
| Pension asset                                                               | ** ** |       | **10**     | ** **                                      |       | **315**                                         | ** ** |                                            | **—** |   |   | 357 |   | ** ** | **—** |   |   | (451 | ) |   | — |   |   |
| Capital leases                                                              | ** ** |       | **12**     | ** **                                      |       | **254**                                         | ** ** |                                            | **—** |   |   | 218 |   | ** ** | **—** |   |   | 138 |   |   | — |   |   |
| Deferred tax asset classification                                           | ** ** |       | **13**     | ** **                                      |       | **578**                                         | ** ** |                                            | **—** |   |   | 267 |   | ** ** | **—** |   |   | 356 |   |   | — |   |   |
| Other                                                                       | ** ** |       | ** ** | ** **                                      |       | **(113**                                        | **)**      |                                            | **—** |   |   | (104 | ) | ** ** | **—** |   |   | 240 |   |   | — |   |   |
| **As reported in consolidated  financial statements**                       | ** ** |       | ** ** | ** **                                      |       | **80,428**                                      | ** ** |                                            | **19,169** |   |   | 68,765 |   |   | 24,780 |   |   | 67,905 |   |   | 18,072 |   |   |

 

***Notes on the reconciliation of segment information tothe consolidated financial statements***

1                    *Equity accounting and reversal of proportionate consolidation*

For the years ended 30 June 2005, 30June 2004 and 30 June 2003, proportionate consolidation is appliedwith respect to incorporated joint ventures for management reporting purposes.Under US GAAP, the equity method of accounting is applied.

F-35

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmental analysis (Continued)

2                    *Entities previously not consolidated*

From 1 January 2004, Naledi Petroleum Holdings(Pty) Limited (NPH) was consolidated for both management reporting purposes andfor US GAAP. (See Note 4 Acquisitions for details relating to the acquisitionof the remaining 75.63% of NPH).

For the year ended 30June 2003 and up to 31 December 2003, for management reportingpurposes, NPH is equity accounted whereas under US GAAP, it is consolidated asa subsidiary.

3                    *Business combinations*

For the years ended 30 June 2005, 30June 2004 and 30 June 2003, the timing of recording of certain fairvalue adjustments differs under US GAAP to those recorded for managementreporting purposes because transactions were not accounted for at the sameeffective date. This will have a continuing impact on depreciation of theseitems.

Also, for the years ended30 June 2004 and 30 June 2003, negative goodwill is recognized formanagement reporting purposes and amortized over the remaining useful life ofnon-financial assets acquired. With effect from 1 July 2004, negativegoodwill was written off against opening retained earnings and is no longeramortized. US GAAP requires that negative goodwill be allocated to reduce theamounts of any non-financial assets acquired and any excess amount remaining isrecognized as an extraordinary gain in the period that it arises.

4                    *Post-retirement healthcare*

For the years ended 30June 2005, 30 June 2004 and 30 June 2003, for managementreporting purposes the healthcare liability is calculated as the expectedfuture contributions required to be made in respect of eligible employees oncethey have retired. US GAAP requires that the liability be calculated on thebasis of expected future benefits to be provided to eligible employees and thatthe actuarial valuation includes both employer’s share of contributions and therequired cross-subsidy. For management reporting purposes the 10% corridorrule is applied to net actuarial gains/(losses), whereas the group’s USGAAP accounting policy requires the immediate recognition on net actuarialgains/(losses).

5                    *Research and development expensed*

For the year ended 30June 2003, for management reporting purposes, research costs arerecognized in the income statement while certain development costs on capitalprojects are capitalized. US GAAP requires that these development costs berecognized in the income statement as incurred.

6                    *Derivative instruments*

For the years ended 30June 2005, 30 June 2004, and 30 June 2003, all new derivativecontracts entered into subsequent to 30 June 2002 met the criteria forhedge accounting under both US GAAP and for management reporting purposes. Allcontracts entered into prior to 30 June 2002 (open forward exchangecontracts) which still existed at 30 June 2005, 30 June 2004 and 30June 2003 did not meet the hedge accounting criteria under US GAAP and assuch hedge accounting was not applied.

F-36

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmentalanalysis (Continued)

7                    *Foreign currency translation*

For the years ended 30June 2005, 30 June 2004, and 30 June 2003, only one entity wasaccounted for differently for management reporting purposes and under US GAAP.As a result the translation gains and losses arising on translation of monetaryassets and liabilities of this entity are recognized in the income statement.

8                    *Impairment*

For the years ended 30June 2005, 30 June 2004 and 30 June 2003, the cumulative effectof impairment recognized for management reporting purposes is reversed under USGAAP. For management reporting purposes, property, plant and equipment isconsidered to be impaired when its carrying value exceeds the discountedestimated future cash flows, whereas under US GAAP an initial impairment reviewis required to be performed on an undiscounted basis.

9                    *Asset retirement obligations*

For the years ended 30June 2005, 30 June 2004, and 30 June 2003, for managementreporting purposes asset retirement obligations are discounted at a risk freediscount rate which is reassessed annually, whereas under US GAAP, a creditadjusted rate is used for the entire period and not reassessed. Also, formanagement reporting purposes, notional interest is recognized as interestexpense in the income statement in the year that it was incurred. Under US GAAPthe accretion charge is recognized as an operating expense.

10             *Pension asset*

For the years ended 30June 2005, 30 June 2004, and 30 June 2003, for managementreporting purposes, any unamortized prior service cost is recognized in theincome statement in the year that the obligation arose. Under US GAAP, theunamortized prior service cost is recognized over the expected remainingworking life of participants, or where almost all of the plans’ participantsare inactive, the unamortized prior service cost is recognized over theremaining life expectancy of those participants.

11             *Gain arising from issuance of subsidiary’s shares*

For the year ended 30June 2004, for management reporting purposes, the gain arising fromissuance of subsidiary’s shares was reflected in operating income however underUS GAAP this gain has been reflected as non-operating income.

12             *Capital leases*

Certain leases classifiedas operating leases for management reporting purposes were classified ascapital leases under US GAAP as they met the requirements for capitalization.

13             *Deferred tax asset classification*

For the years ended 30 June 2005, 30June 2004, and 30 June 2003, for management reporting purposes, totalsegment assets exclude deferred tax assets.

In addition, otherreconciling differences arise as a result of the tax impact of certain otherdifferences between amounts reported for management reporting purposes andthose under US GAAP.

F-37

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmental analysis(Continued)

***Geographic information***

In terms of geographicanalysis, turnover, the related costs of inventory sold and trade receivablesare reported by location of customer and other assets and expenditure by thelocation of the operating activities. The principal geographic markets andoperating activities are in Europe, Asia, North America and South Africa.Within the principal geographic market of Europe, the majority of assets arelocated in and turnover and operating profit mainly derived from Germany andItaly. Within the principal geographic market of North America, the majority ofassets are located in and external turnover and operating profit are derivedfrom the United States of America.
| 2005                               | ** ** | ** **                       | ** ** | **Turnover  (external)** | ** ** | **Operating  profit/(loss)** | ** ** | **Total  assets** | ** ** | **Additions to  PPE*** | ** ** | **Capital  commitments** | ** ** |
|------------------------------------|------------|----------------------------------|------------|--------------------------|------------|------------------------------|------------|-------------------|------------|-----------------------------|------------|--------------------------|------------|
| ** **                         | ** ** | **(Rand in millions)** | ** ** |
| Germany                            | ** ** |                             | **4,737**  | ** **               |       |                         | **383**    | ** **        |       | **5,848**                   | ** ** |                     | **259**    | ** ** |   |   | **328** | ** ** |   |
| Italy                              | ** ** |                             | **2,383**  | ** **               |       |                         | **276**    | ** **        |       | **3,861**                   | ** ** |                     | **171**    | ** ** |   |   | **116** | ** ** |   |
| The Netherlands                    | ** ** |                             | **1,729**  | ** **               |       |                         | **202**    | ** **        |       | **440**                     | ** ** |                     | **48**     | ** ** |   |   | **—** | ** ** |   |
| Rest of Europe                     | ** ** |                             | **8,296**  | ** **               |       |                         | **625**    | ** **        |       | **2,662**                   | ** ** |                     | **12**     | ** ** |   |   | **—** | ** ** |   |
| **Europe**                         | ** ** |                             | **17,145** | ** **               |       |                         | **1,486**  | ** **        |       | **12,811**                  | ** ** |                     | **490**    | ** ** |   |   | **444** | ** ** |   |
| Iran                               | ** ** |                             | **71**     | ** **               |       |                         | **(19**    | **)**             |       | **1,823**                   | ** ** |                     | **823**    | ** ** |   |   | **2,427** | ** ** |   |
| Qatar                              | ** ** |                             | **41**     | ** **               |       |                         | **127**    | ** **        |       | **2,633**                   | ** ** |                     | **872**    | ** ** |   |   | **1,053** | ** ** |   |
| Rest of Middle  East and India     | ** ** |                             | **1,221**  | ** **               |       |                         | **128**    | ** **        |       | **482**                     | ** ** |                     | **1**      | ** ** |   |   | **—** | ** ** |   |
| **Middle  East and India**         | ** ** |                             | **1,333**  | ** **               |       |                         | **236**    | ** **        |       | **4,938**                   | ** ** |                     | **1,696**  | ** ** |   |   | **3,480** | ** ** |   |
| **Far East**                       | ** ** |                             | **2,507**  | ** **               |       |                         | **153**    | ** **        |       | **859**                     | ** ** |                     | **1**      | ** ** |   |   | **9** | ** ** |   |
| United States of America           | ** ** |                             | **7,596**  | ** **               |       |                         | **(228**   | **)**             |       | **6,665**                   | ** ** |                     | **247**    | ** ** |   |   | **163** | ** ** |   |
| Rest of North  America             | ** ** |                             | **553**    | ** **               |       |                         | **7**      | ** **        |       | **153**                     | ** ** |                     | **—** | ** ** |   |   | ** ** | ** ** |   |
| **North America**                  | ** ** |                             | **8,149**  | ** **               |       |                         | **(221**   | **)**             |       | **6,818**                   | ** ** |                     | **247**    | ** ** |   |   | **163** | ** ** |   |
| **South America**                  | ** ** |                             | **760**    | ** **               |       |                         | **(5**     | **)**             |       | **249**                     | ** ** |                     | **—** | ** ** |   |   | **—** | ** ** |   |
| **Southeast Asia and Australasia** | ** ** |                             | **1,397**  | ** **               |       |                         | **85**     | ** **        |       | **1,456**                   | ** ** |                     | **3**      | ** ** |   |   | **—** | ** ** |   |
| Mozambique                         | ** ** |                             | **44**     | ** **               |       |                         | **76**     | ** **        |       | **3,970**                   | ** ** |                     | **81**     | ** ** |   |   | **427** | ** ** |   |
| Nigeria                            | ** ** |                             | **116**    | ** **               |       |                         | **29**     | ** **        |       | **1,964**                   | ** ** |                     | **460**    | ** ** |   |   | **5,076** | ** ** |   |
| Other African  Countries           | ** ** |                             | **2,393**  | ** **               |       |                         | **431**    | ** **        |       | **888**                     | ** ** |                     | **68**     | ** ** |   |   | **145** | ** ** |   |
| **Rest of  Africa**                | ** ** |                             | **2,553**  | ** **               |       |                         | **536**    | ** **        |       | **6,822**                   | ** ** |                     | **609**    | ** ** |   |   | **5,648** | ** ** |   |
| **Republic of South Africa**       | ** ** |                             | **35,395** | ** **               |       |                         | **12,236** | ** **        |       | **53,627**                  | ** ** |                     | **9,368**  | ** ** |   |   | **9,425** | ** ** |   |
| **Total  segments**                | ** ** |                             | **69,239** | ** **               |       |                         | **14,506** | ** **        |       | **87,580**                  | ** ** |                     | **12,414** | ** ** |   |   | **19,169** | ** ** |   |

----

*       Property,plant and equipment

F-38

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmentalanalysis (Continued)
|                                | ** ** | **Turnover**                     | ** ** | **Operating**  | ** ** | **Total**         | ** ** | **Additions to** | ** ** | **Capital** | ** ** |
|--------------------------------|------------|----------------------------------|------------|----------------|------------|-------------------|------------|-----------------------|------------|-------------|------------|
| **2004**                       | ** ** | ** **                       | ** ** | **(external)** | ** ** | **profit/(loss)** | ** ** | **assets**            | ** ** | **PPE***    | ** ** | **commitments** | ** ** |
| ** **                     | ** ** | **(Rand in millions)** | ** ** |
| Germany                        |       |                             | 4,646      |           |       |              | 267        |                  |       | 5,108       |       |   | 255 |   |   |   | 70 |   |   |
| Italy                          |       |                             | 2,296      |           |       |              | (40        | )                     |       | 3,302       |       |   | 236 |   |   |   | 152 |   |   |
| The Netherlands                |       |                             | 1,566      |           |       |              | 114        |                  |       | 634         |       |   | 220 |   |   |   | — |   |   |
| Rest of Europe                 |       |                             | 7,124      |           |       |              | 250        |                  |       | 2,076       |       |   | 6 |   |   |   | 4 |   |   |
| Europe                         |       |                             | 15,632     |           |       |              | 591        |                  |       | 11,120      |       |   | 717 |   |   |   | 226 |   |   |
| Iran                           |       |                             | 93         |           |       |              | 2          |                  |       | 711         |       |   | 474 |   |   |   | 2,819 |   |   |
| Qatar                          |       |                             | 47         |           |       |              | —     |                  |       | 1,510       |       |   | 1,085 |   |   |   | 2,010 |   |   |
| Rest of Middle  East and India |       |                             | 1,307      |           |       |              | 80         |                  |       | 358         |       |   | 1 |   |   |   | — |   |   |
| Middle East and  India         |       |                             | 1,447      |           |       |              | 82         |                  |       | 2,579       |       |   | 1,560 |   |   |   | 4,829 |   |   |
| Far East                       |       |                             | 2,062      |           |       |              | 195        |                  |       | 674         |       |   | 3 |   |   |   | 2 |   |   |
| United States of America       |       |                             | 6,618      |           |       |              | (294       | )                     |       | 5,944       |       |   | 191 |   |   |   | 58 |   |   |
| Rest of North  America         |       |                             | 442        |           |       |              | (9         | )                     |       | 118         |       |   | — |   |   |   |   |   |   |
| North America                  |       |                             | 7,060      |           |       |              | (303       | )                     |       | 6,062       |       |   | 191 |   |   |   | 58 |   |   |
| South America                  |       |                             | 723        |           |       |              | 4          |                  |       | 161         |       |   | — |   |   |   | — |   |   |
| Southeast Asia and Australasia |       |                             | 1,211      |           |       |              | 36         |                  |       | 1,456       |       |   | 34 |   |   |   | — |   |   |
| Mozambique                     |       |                             | 32         |           |       |              | (207       | )                     |       | 4,220       |       |   | 755 |   |   |   | 305 |   |   |
| Nigeria                        |       |                             | 155        |           |       |              | 28         |                  |       | 844         |       |   | 593 |   |   |   | 3,472 |   |   |
| Other African  Countries       |       |                             | 2,875      |           |       |              | 383        |                  |       | 484         |       |   | 74 |   |   |   | 25 |   |   |
| Rest of Africa                 |       |                             | 3,062      |           |       |              | 204        |                  |       | 5,548       |       |   | 1,422 |   |   |   | 3,802 |   |   |
| Republic of South Africa       |       |                             | 28,954     |           |       |              | 8,505      |                  |       | 45,580      |       |   | 6,961 |   |   |   | 15,863 |   |   |
| Total segments                 |       |                             | 60,151     |           |       |              | 9,314      |                  |       | 73,180      |       |   | 10,888 |   |   |   | 24,780 |   |   |
|                                |            |                                  |            |                |            |                   |            |                       |            |             |            |  |  |  |  |  |  |  |  |  |  |

----

*       Property,plant and equipment

F-39

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**3.**   Segmentalanalysis (Continued)
| 2003                           | ** ** | ** **                       | ** ** | **Turnover  (external)** | ** ** | **Operating  profit/(loss)** | ** ** | **Total  assets** | ** ** | **Additions to  PPE*** | ** ** | **Capital  commitments** | ** ** |
|--------------------------------|------------|----------------------------------|------------|--------------------------|------------|------------------------------|------------|-------------------|------------|-----------------------------|------------|--------------------------|------------|
| ** **                     | ** ** | **(Rand in millions)** | ** ** |                     |
| Germany                        |       |                             | 5,078      |                     |       |                         | (404       | )                 |       | 5,717                       |       |                     | 319        |   |   |   | 221 |   |   |   |
| Italy                          |       |                             | 2,722      |                     |       |                         | (94        | )                 |       | 3,795                       |       |                     | 284        |   |   |   | 236 |   |   |   |
| The Netherlands                |       |                             | 1,615      |                     |       |                         | 222        |              |       | 959                         |       |                     | 61         |   |   |   | 60 |   |   |   |
| Rest of Europe                 |       |                             | 7,734      |                     |       |                         | 1,057      |              |       | 2,115                       |       |                     | 15         |   |   |   | 5 |   |   |   |
| Europe                         |       |                             | 17,149     |                     |       |                         | 781        |              |       | 12,586                      |       |                     | 679        |   |   |   | 522 |   |   |   |
| Iran                           |       |                             | 65         |                     |       |                         | 2          |              |       | 228                         |       |                     | 224        |   |   |   | 1,295 |   |   |   |
| Qatar                          |       |                             | 87         |                     |       |                         | 130        |              |       | 645                         |       |                     | 559        |   |   |   | 3,780 |   |   |   |
| Rest of Middle  East and India |       |                             | 1,924      |                     |       |                         | 92         |              |       | 489                         |       |                     | 3          |   |   |   | — |   |   |   |
| Middle East and  India         |       |                             | 2,076      |                     |       |                         | 224        |              |       | 1,362                       |       |                     | 786        |   |   |   | 5,075 |   |   |   |
| Far East                       |       |                             | 1,634      |                     |       |                         | 229        |              |       | 611                         |       |                     | 2          |   |   |   | — |   |   |   |
| United States of America       |       |                             | 8,186      |                     |       |                         | (221       | )                 |       | 7,064                       |       |                     | 204        |   |   |   | 192 |   |   |   |
| Rest of North  America         |       |                             | 623        |                     |       |                         | (8         | )                 |       | 128                         |       |                     | —     |   |   |   | — |   |   |   |
| North America                  |       |                             | 8,809      |                     |       |                         | (229       | )                 |       | 7,192                       |       |                     | 204        |   |   |   | 192 |   |   |   |
| South America                  |       |                             | 697        |                     |       |                         | 7          |              |       | 149                         |       |                     | —     |   |   |   | — |   |   |   |
| Southeast Asia and Australasia |       |                             | 1,095      |                     |       |                         | (12        | )                 |       | 1,769                       |       |                     | 27         |   |   |   | 36 |   |   |   |
| Mozambique                     |       |                             | 40         |                     |       |                         | (181       | )                 |       | 3,149                       |       |                     | 1,953      |   |   |   | 1,461 |   |   |   |
| Nigeria                        |       |                             | 131        |                     |       |                         | 23         |              |       | 753                         |       |                     | 59         |   |   |   | 3,654 |   |   |   |
| Other African  Countries       |       |                             | 1,788      |                     |       |                         | 173        |              |       | 487                         |       |                     | 3          |   |   |   | 20 |   |   |   |
| Rest of Africa                 |       |                             | 1,959      |                     |       |                         | 15         |              |       | 4,389                       |       |                     | 2,015      |   |   |   | 5,135 |   |   |   |
| Republic of South Africa       |       |                             | 31,136     |                     |       |                         | 10,896     |              |       | 41,367                      |       |                     | 6,559      |   |   |   | 7,112 |   |   |   |
| Total segments                 |       |                             | 64,555     |                     |       |                         | 11,911     |              |       | 69,425                      |       |                     | 10,272     |   |   |   | 18,072 |   |   |   |

----

*       Property,plant and equipment

F-40

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**4.**   Acquisitionsand disposals of businesses

**Acquisitions**

***2005 Acquisitions***

There were no significantacquisitions for the year ended 30 June 2005.

***2004 Acquisitions***

*Naledi PetroleumHoldings (Pty) Limited*

Witheffect from 1 January 2004 the group acquired the remaining 75.63% ofNaledi Petroleum Holdings (Pty) Limited (NPH) for a total consideration of R369million of which R223 million was settled in cash and R146 million by the issueof Sasol Oil (Pty) Limited shares. In terms of the transaction, 22 shares inSasol Oil (Pty) Limited (representing 2% of the issued shares of the company)were issued to some of the previous shareholders of NPH. The issue of theseshares had the effect of diluting Sasol’s interest in Sasol Oil (Pty) Limitedby 2.04%. The effect of the dilution of the group’s interest in Sasol Oil (Pty)Limited resulted in a gain of R108 million being realized. NPH through itsExcel brand supplies fuel and lubricants to retail and commercial markets.
|                                                              | ** ** | **Book value  at acquisition** | ** ** | **Fair value  adjustments** | ** ** | **Total  fair value** | ** ** | **% acquired  75.63%** | ** ** |
|--------------------------------------------------------------|------------|------------------------------------------|------------|----------------------------------|------------|----------------------------|------------|-----------------------------|------------|
| ** **                                                   | ** ** | **(Rand in millions)**         | ** ** |
| Cash and cash  equivalents                                   |       |                                     | 142        |                             |       |                       | —     |                        |       |   | 142 |   |   |   | 107 |   |   |
| Accounts  receivable, net of allowance for doubtful accounts |       |                                     | 305        |                             |       |                       | —     |                        |       |   | 305 |   |   |   | 231 |   |   |
| Inventory                                                    |       |                                     | 1          |                             |       |                       | —     |                        |       |   | 1 |   |   |   | 1 |   |   |
| ***Current  assets***                                        |       |                                     | 448        |                             |       |                       | —     |                        |       |   | 448 |   |   |   | 339 |   |   |
| Property, plant and equipment less accumulated  depreciation |       |                                     | 91         |                             |       |                       | 162        |                        |       |   | 253 |   |   |   | 191 |   |   |
| Intangible assets  (Refer Note 14)                           |       |                                     | —     |                             |       |                       | 558        |                        |       |   | 558 |   |   |   | 422 |   |   |
| Investments                                                  |       |                                     | 40         |                             |       |                       | 9          |                        |       |   | 49 |   |   |   | 37 |   |   |
| Long-term  receivables                                       |       |                                     | 24         |                             |       |                       | —     |                        |       |   | 24 |   |   |   | 18 |   |   |
| Deferred tax                                                 |       |                                     | 7          |                             |       |                       | —     |                        |       |   | 7 |   |   |   | 5 |   |   |
| ***Non-current  assets***                                    |       |                                     | 162        |                             |       |                       | 729        |                        |       |   | 891 |   |   |   | 673 |   |   |
| **Total assets acquired**                                    |       |                                     | 610        |                             |       |                       | 729        |                        |       |   | 1,339 |   |   |   | 1,012 |   |   |
| Current liabilities                                          |       |                                     | (544       | )                                |       |                       | —     |                        |       |   | (544 | ) |   |   | (411 | ) |   |
| Deferred tax                                                 |       |                                     | —     |                             |       |                       | (167       | )                           |       |   | (167 | ) |   |   | (127 | ) |   |
| Long-term  obligations                                       |       |                                     | —     |                             |       |                       | (162       | )                           |       |   | (162 | ) |   |   | (123 | ) |   |
| **Total  liabilities assumed**                               |       |                                     | (544       | )                                |       |                       | (329       | )                           |       |   | (873 | ) |   |   | (661 | ) |   |
| **Net assets acquired**                                      |       |                                     | 66         |                             |       |                       | 400        |                        |       |   | 466 |   |   |   | 351 |   |   |
| **Goodwill**                                                 |       |                                     |       |                             |       |                       |       |                        |       |   |   |   |   |   | 18 |   |   |
| **Consideration paid**                                       |       |                                     |       |                             |       |                       |       |                        |       |   |   |   |   |   | 369 |   |   |

 

NPH was consolidated for the year ended 30 June 2003,with a minority interest of 75.63%. NPH was consolidated as it was consideredto be a special purpose entity. For the year ended 30 June 2003, NPH’s 

F-41

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**4.**   Acquisitions and disposals of businesses (Continued)

turnover would have beenincluded in the group turnover and as such no proforma effect has beenpresented. The group’s attributable earnings for the year ended 30 June 2003was however reduced by the minority interest of 75.63%.

Theunaudited condensed proforma effect for the acquisition of the remaining 75.63%of NPH, had the acquisition occurred at the beginning of the years ended 30 June 2004and 30 June 2003 are set out below:
|                                                | ** ** | **  2004  ** | ** ** | **  2003  ** | ** ** |
|------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                                     | ** ** | **(unaudited)**                  | ** ** |
| ** **                                     | ** ** | **(Rand in millions)** | ** ** |
| Attributable  earnings as reported             |       |                             | 5,358      |                             |       |   | 7,344 |   |   |
| NPH minority  interest                         |       |                             | 33         |                             |       |   | 88 |   |   |
| Pro forma  attributable earnings               |       |                             | 5,391      |                             |       |   | 7,432 |   |   |
| Earnings per share as reported (cents)         |       |                             | 878        |                             |       |   | 1,206 |   |   |
| Proforma earnings  per share (cents)           |       |                             | 884        |                             |       |   | 1,220 |   |   |
| Diluted earnings per share as reported (cents) |       |                             | 870        |                             |       |   | 1,185 |   |   |
| Pro forma diluted  earnings per share (cents)  |       |                             | 875        |                             |       |   | 1,199 |   |   |

 

Other smaller acquisitions which were accounted for inaccordance with the purchase method of accounting during the year ended 30 June 2004,were as follows:

With effect from 1 July 2003 Sasol Italy SpAacquired the remaining 48,05% shares in G.D. Portbury Limited (Dubai) tradingas Sasol Gulf for a cash consideration of US$ 2,7 million (R17 million).

In December 2003,Sasol Chemical Industries Limited acquired the remaining 58% shares in ChemCity(Pty) Limited for a consideration of R22 million, net of cash acquired of R16million.

F-42

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**4.**   Acquisitions and disposals of businesses (Continued)

***2003 Acquisitions***

*Schümann SasolInternational Aktiengesellschaft*

Witheffect from 1 July 2002, the group acquired the remaining 33.3% ofSchümann Sasol International, which was renamed Sasol Wax for R521 million. SasolWax operates wax manufacturing, blending and marketing operations in Germany,the Netherlands, the USA, South Africa and China.
|                                                              | ** ** | **Book value  at acquisition** | ** ** | **Fair value  adjustments** | ** ** | **Total  fair value** | ** ** | **% acquired  33.33%** | ** ** |
|--------------------------------------------------------------|------------|------------------------------------------|------------|----------------------------------|------------|----------------------------|------------|-----------------------------|------------|
| ** **                                                   | ** ** | **(Rand in millions)**         | ** ** |
| Cash and cash  equivalents                                   |       |                                     | 157        |                             |       |                       | —     |                        |       |   | 157 |   |   |   | 52 |   |   |
| Accounts  receivable, net of allowance for doubtful accounts |       |                                     | 5          |                             |       |                       | —     |                        |       |   | 5 |   |   |   | 2 |   |   |
| Inventories                                                  |       |                                     | 737        |                             |       |                       | 67         |                        |       |   | 804 |   |   |   | 268 |   |   |
| Other receivables                                            |       |                                     | 788        |                             |       |                       | (2         | )                           |       |   | 786 |   |   |   | 262 |   |   |
| ***Current  assets***                                        |       |                                     | 1,687      |                             |       |                       | 65         |                        |       |   | 1,752 |   |   |   | 584 |   |   |
| Property, plant and equipment less accumulated  depreciation |       |                                     | 1,303      |                             |       |                       | 558        |                        |       |   | 1,861 |   |   |   | 620 |   |   |
| Goodwill in  underlying subsidiaries                         |       |                                     | 177        |                             |       |                       | (177       | )                           |       |   | — |   |   |   | — |   |   |
| Investments                                                  |       |                                     | 98         |                             |       |                       | 120        |                        |       |   | 218 |   |   |   | 73 |   |   |
| Long-term  receivables                                       |       |                                     | 182        |                             |       |                       | —     |                        |       |   | 182 |   |   |   | 61 |   |   |
| Intangible assets                                            |       |                                     | 3          |                             |       |                       | —     |                        |       |   | 3 |   |   |   | 1 |   |   |
| ***Non-current  assets***                                    |       |                                     | 1,763      |                             |       |                       | 501        |                        |       |   | 2,264 |   |   |   | 755 |   |   |
| **Total assets acquired**                                    |       |                                     | 3,450      |                             |       |                       | 566        |                        |       |   | 4,016 |   |   |   | 1,339 |   |   |
| Current liabilities                                          |       |                                     | (1,195     | )                                |       |                       | (136       | )                           |       |   | (1,331 | ) |   |   | (443 | ) |   |
| Deferred tax                                                 |       |                                     | (57        | )                                |       |                       | (285       | )                           |       |   | (342 | ) |   |   | (114 | ) |   |
| Long-term debt                                               |       |                                     | (231       | )                                |       |                       | —     |                        |       |   | (231 | ) |   |   | (77 | ) |   |
| Long term  obligations                                       |       |                                     | (631       | )                                |       |                       | —     |                        |       |   | (631 | ) |   |   | (210 | ) |   |
| ***Total  liabilities assumed***                             |       |                                     | (2,114     | )                                |       |                       | (421       | )                           |       |   | (2,535 | ) |   |   | (844 | ) |   |
| ***Net assets acquired***                                    |       |                                     | 1,336      |                             |       |                       | 145        |                        |       |   | 1,481 |   |   |   | 495 |   |   |
| **Minority interest**                                        |       |                                     |       |                             |       |                       |       |                        |       |   |   |   |   |   | (33 | ) |   |
| **Goodwill**                                                 |       |                                     |       |                             |       |                       |       |                        |       |   |   |   |   |   | 59 |   |   |
| **Consideration paid**                                       |       |                                     |       |                             |       |                       |       |                        |       |   |   |   |   |   | 521 |   |   |

 

Other smaller acquisitionsamounting to R155 million, net of cash acquired of R119 million, were also madeand accounted for in accordance with the purchase method of accounting duringthe year ended 30 June 2003.

F-43

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**4.**   Acquisitions anddisposals of businesses (Continued)

**Disposals**

***2005 Disposals***

On 1 March 2005, Sasol Wax International AGunderwent a restructuring whereby the entity disposed of its investment in EuroSchumann Sasol Wax GmbH and simultaneously acquired a 100% investment in SasolWax Danmark APS and a 31.25% direct interest in Paramelt RMC BV.

Prior to the transaction Sasol Wax International AGheld an effective 31.88% interest in Paramelt, hence resulting in a 0.625%dilution of their shareholding in Paramelt and net cash disposed of R47 million.

The restructuring was a non-monetary fair valuetransaction and was accounted for as a share-for-share exchange, hence therewas no gain or loss recognized in the current year.

With effect from 1 March 2005, Paramelt RMC BVwas equity accounted and Sasol Wax Danmark was consolidated.

Other smaller disposalsamounting to R35 million less cash disposed of, of R34 million, were alsorecognized during the year ended 30 June 2005.

***2004 Disposals***

During the year ended 30 June 2004,the group made the following disposals:

*Sasol Servo BV(Sasol Servo)*

During 2004, Sasol Chemie GmbH sold its 100 %shareholder interest in Sasol Servo to UK-listed Elementis Plc for euro 27million (R204 million) in cash. The group recorded a profit on disposal of euro 3.7million (R28 million).

Sasol Servo is a speciality chemicals manufacturer basedin the Netherlands which was acquired by Sasol as part of the Condeaacquisition in 2001. Sasol Servo had an annual turnover of approximately euro 120million, and consists of four divisions: coating additives, oilfield chemicals,chemicals and speciality surfactants, and pulp and paper chemicals.

This transaction isconsistent with Sasol’s stated commitment to divest of any non-core chemicalassets at values that benefit the interests of its shareholders.

*Energy StorageTechnologies Inc. (EST)*

During 2004, Sasol Wax International AG disposed ofits 50% interest in EST for a nominal amount. The group recorded a profit ondisposal of approximately euro 5.9 million (R50 million).

EST’s activities included providing temperaturecontrol products and services based on the use of phase change materials andvacuum insulation.

This transaction isconsistent with Sasol’s stated commitment to divest of any non-core assets atvalues that benefit the interests of its shareholders.

F-44

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**4.**   Acquisitions and disposals of businesses (Continued)

***2003 Disposals***

There were no significantdisposals for the year ended 30 June 2003.

**5.**   Operating profit

Operatingprofit is stated after taking into account:
|                                                                                     | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|-------------------------------------------------------------------------------------|------------|----------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                                          | ** ** | **(Rand in millions)** | ** ** |
| Amortization of  intangible assets                                                  | ** ** |                             | **407**    | ** **             |       |                   | 493        |   |   |   | 349 |   |   |
| Depreciation of property, plant and equipment  (including capitalized leases)  | ** ** |                             | **3,341**  | ** **             |       |                   | 4,372      |   |   |   | 4,165 |   |   |
| —Coal mining assets                                                            | ** ** |                             | **482**    | ** **             |       |                   | 452        |   |   |   | 407 |   |   |
| —Buildings                                                                     | ** ** |                             | **181**    | ** **             |       |                   | 187        |   |   |   | 208 |   |   |
| —Plant, equipment and vehicles                                                 | ** ** |                             | **2,678**  | ** **             |       |                   | 3,733      |   |   |   | 3,550 |   |   |
| Exploration costs written off                                                       | ** ** |                             | **121**    | ** **             |       |                   | 223        |   |   |   | 120 |   |   |
| Effect of the crude oil hedge*                                                      | ** ** |                             | **1,147**  | ** **             |       |                   | —     |   |   |   | — |   |   |
| Loss/(gain) on disposal of non-current assets                                       | ** ** |                             | **267**    | ** **             |       |                   | (165       | ) |   |   | (9 | ) |   |
| Loss/(gain) on disposal of businesses                                               | ** ** |                             | **2**      | ** **             |       |                   | (78        | ) |   |   | — |   |   |
| (Gain)/loss on disposal of equity accounted  investees                              | ** ** |                             | **(31**    | **)**                  |       |                   | 27         |   |   |   | — |   |   |
| Impairment of                                                                       |       |                             | ** ** | ** **             |       |                   |       |   |   |   |   |   |   |
| —Investment in Black Top Holdings (Pty) Limited                                | ** ** |                             | **35**     | ** **             |       |                   | —     |   |   |   | — |   |   |
| —Property, plant and equipment                                                 | ** ** |                             | **218**    | ** **             |       |                   | 253        |   |   |   | 5 |   |   |
| —Goodwill and intangible assets                                                | ** ** |                             | **13**     | ** **             |       |                   | 26         |   |   |   | 53 |   |   |
| —Investment in securities                                                      | ** ** |                             | **2**      | ** **             |       |                   | 5          |   |   |   | — |   |   |
| Operating lease rentals                                                             |       |                             | ** ** | ** **             |       |                   |       |   |   |   |   |   |   |
| —Equipment                                                                     | ** ** |                             | **257**    | ** **             |       |                   | 205        |   |   |   | 250 |   |   |
| —Buildings                                                                     | ** ** |                             | **156**    | ** **             |       |                   | 99         |   |   |   | 90 |   |   |
| Research and development expenditure                                                | ** ** |                             | **241**    | ** **             |       |                   | 427        |   |   |   | 461 |   |   |
| Restructuring charges                                                               | ** ** |                             | **69**     | ** **             |       |                   | 110        |   |   |   | 90 |   |   |
| Technical fees                                                                      | ** ** |                             | **293**    | ** **             |       |                   | 259        |   |   |   | 247 |   |   |
| Write down of  inventory to market value                                            | ** ** |                             | **47**     | ** **             |       |                   | 62         |   |   |   | 44 |   |   |

----

*       During the year ended 30 June 2005, a portion of thegroup’s exposure to crude oil price volatility was hedged by entering into aderivative financial instrument resulting in a R1,147 million loss beingrecognized in the current year.

F-45

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**6.**   Financecosts
|                                | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|--------------------------------|------------|----------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                     | ** ** | **(Rand in millions)** | ** ** |
| Interest incurred              | ** ** | **1,370**                        | ** ** |                   | 1,450      |                   |       | 1,279 | ** ** |
| Less: amounts  capitalized     | ** ** | **(1,038**                       | **)**      |                   | (1,082     | )                      |       | (1,008 | ) |
|                           | ** ** | **332**                          | ** ** |                   | 368        |                   |       | 271 | ** ** |
| Amounts capitalized to:        |       | ** **                       | ** ** |                   |       |                   |       |   | ** ** |
| Property, plant  and equipment | ** ** | **(602**                         | **)**      |                   | (750       | )                      |       | (808 | ) |
| Intangible assets              |       | **—**                       | ** ** |                   | —     |                   |       | (13 | ) |
| Equity accounted  investees    | ** ** | **(436**                         | **)**      |                   | (332       | )                      |       | (187 | ) |
|                           | ** ** | **(1,038**                       | **)**      |                   | (1,082     | )                      |       | (1,008 | ) |

 

**7.**   Incometax
|                          | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|--------------------------|------------|----------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **               | ** ** | **(Rand in millions)** | ** ** |
| Income/(loss) before tax | ** ** | ** **                       | ** ** |                   |       |                   |       |   | ** ** |
| South Africa             | ** ** | **13,492**                       | ** ** |                   | 9,833      |                   |       | 11,390 | ** ** |
| Foreign                  | ** ** | **1,248**                        | ** ** |                   | (1,157     | )                      |       | (443 | ) |
|                     | ** ** | **14,740**                       | ** ** |                   | 8,676      |                   |       | 10,947 | ** ** |

 
|                                        | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|----------------------------------------|------------|----------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                             | ** ** | **(Rand in millions)** | ** ** |
| Current tax                            | ** ** | ** **                       | ** ** |                   |       | ** **             |       | ** ** | ** ** |
| —South African normal tax         | ** ** | **(3,325**                       | **)**      |                   | (2,844     | **)**                  |       | (3,109 | ) |
| —Secondary tax on companies (STC) | ** ** | **(375**                         | **)**      |                   | (343       | **)**                  |       | (370 | ) |
| —Foreign                          | ** ** | **(624**                         | **)**      |                   | (289       | **)**                  |       | (322 | ) |
| Total current tax                      | ** ** | **(4,324**                       | **)**      |                   | (3,476     | **)**                  |       | (3,801 | ) |
| Deferred Tax                           | ** ** | ** **                       | ** ** |                   |       | ** **             |       | ** ** | ** ** |
| —South African                    | ** ** | **(693**                         | **)**      |                   | 202        | ** **             |       | (166 | ) |
| —Foreign                          | ** ** | **(140**                         | **)**      |                   | 97         | ** **             |       | 52 |   |
| Total deferred  tax (expense)/income   | ** ** | **(833**                         | **)**      |                   | 299        | ** **             |       | (114 | ) |
| Income tax  expense for the year       | ** ** | **(5,157**                       | **)**      | ** **             | **(3,177** | **)**                  | ** ** | **(3,915** | **)** |

 

F-46

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**7.**   Income tax(Continued)

Total income tax expensediffers from the amount computed by applying the South African normal tax rateto income before tax. The reasons for these differences are as follows:
| Reconciliation of tax rate | ** ** | ** ** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|-------------------------------------------|------------|------------|------------|------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                | ** ** | **%**      | ** ** | **%**                  | ** ** | **%**                  | ** ** |
| South African normal tax  rate            | ** ** |       | **30.0**   | ** **             |       |                   | 30.0       |                   |       |   | 30.0 |   |   |
| Increase in rate of tax  due to:          | ** ** |       | ** ** | ** **             |       |                   |       |                   |       |   |   |   |   |
| —STC                                 | ** ** |       | **2.6**    | ** **             |       |                   | 4.0        |                   |       |   | 3.4 |   |   |
| —Change in tax rate                  | ** ** |       | **—** | ** **             |       |                   | —     |                   |       |   | 0.1 |   |   |
| —Different foreign tax  rates        | ** ** |       | **0.2**    | ** **             |       |                   | 0.1        |                   |       |   | 0.1 |   |   |
| —Prior year adjustments              | ** ** |       | **0.6**    | ** **             |       |                   | —     |                   |       |   | — |   |   |
| —Change in valuation  allowance      | ** ** |       | **0.9**    | ** **             |       |                   | 1.0        |                   |       |   | 1.3 |   |   |
| —Disallowed expenditure              | ** ** |       | **2.2**    | ** **             |       |                   | 3.8        |                   |       |   | 3.8 |   |   |
|                                      | ** ** |       | **36.5**   | ** **             |       |                   | 38.9       |                   |       |   | 38.7 |   |   |
| Decrease in rate of  taxation due to:     | ** ** |       | ** ** | ** **             |       |                   |       |                   |       |   |   |   |   |
| —Prior year adjustments              | ** ** |       | **—** | ** **             |       |                   | (1.0       | )                      |       |   | (0.8 | ) |   |
| —Exempt income                       | ** ** |       | **(0.8**   | **)**                  |       |                   | (0.8       | )                      |       |   | (2.1 | ) |   |
| —Investment incentive  allowance     | ** ** |       | **(0.7**   | **)**                  |       |                   | —     |                   |       |   | — |   |   |
| —Change in tax rate                  | ** ** |       | **—** | ** **             |       |                   | (0.5       | )                      |       |   | — |   |   |
| Effective tax rate                        | ** ** |       | **35.0**   | ** **             |       |                   | 36.6       |                   |       |   | 35.8 |   |   |

 

The tax effects oftemporary differences comprising the net deferred income tax liability are asfollows:
|                                       | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|---------------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                            | ** ** | **(Rand in millions)** | ** ** |
| Deferred tax assets                   | ** ** |                             | ** ** | ** **             |       |   |   |   |   |
| Property, plant and equipment         | ** ** |                             | **89**     | ** **             |       |   | 65 |   |   |
| Goodwill and intangible assets        | ** ** |                             | **142**    | ** **             |       |   | 159 |   |   |
| Current assets                        | ** ** |                             | **187**    | ** **             |       |   | 188 |   |   |
| Long-term debt                        | ** ** |                             | **104**    | ** **             |       |   | 58 |   |   |
| Long-term obligations                 | ** ** |                             | **1,730**  | ** **             |       |   | 1,431 |   |   |
| Calculated tax losses carried forward | ** ** |                             | **1,724**  | ** **             |       |   | 1,397 |   |   |
| Other                                 | ** ** |                             | **144**    | ** **             |       |   | 208 |   |   |
|                                  | ** ** |                             | **4,120**  | ** **             |       |   | 3,506 |   |   |
| Less valuation allowance              | ** ** |                             | **(671**   | **)**                  |       |   | (414 | ) |   |
| *Total deferred tax assets*           | ** ** |                             | **3,449**  | ** **             |       |   | 3,092 |   |   |
| Deferred tax liabilities              | ** ** |                             | ** ** | ** **             |       |   |   |   |   |
| Property, plant and equipment         | ** ** |                             | **(7,781** | **)**                  |       |   | (6,862 | ) |   |
| Intangible assets                     | ** ** |                             | **(157**   | **)**                  |       |   | (217 | ) |   |
| Current assets                        | ** ** |                             | **(755**   | **)**                  |       |   | (454 | ) |   |
| Other                                 | ** ** |                             | **(297**   | **)**                  |       |   | (229 | ) |   |
| *Total deferred tax liabilities*      | ** ** |                             | **(8,990** | **)**                  |       |   | (7,762 | ) |   |
| Net deferred tax liability            | ** ** |                             | **(5,541** | **)**                  |       |   | (4,670 | ) |   |

 

F-47

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**7.**   Income tax (Continued)

The net deferred taxliability has been classified in the consolidated balance sheet as follows:
|                                     | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|-------------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                          | ** ** | **(Rand in millions)** | ** ** |
| Current deferred  tax asset         | ** ** |                             | **154**    | ** **             |       |   | 5 |   |   |
| Non-current deferred  tax asset     | ** ** |                             | **424**    | ** **             |       |   | 262 |   |   |
| Current deferred  tax liability     | ** ** |                             | **(196**   | **)**                  |       |   | (165 | ) |   |
| Non-current  deferred tax liability | ** ** |                             | **(5,923** | **)**                  |       |   | (4,772 | ) |   |
|                                | ** ** |                             | **(5,541** | **)**                  |       |   | (4,670 | ) |   |
| South Africa                        | ** ** |                             | **(4,804** | **)**                  |       |   | (3,999 | ) |   |
| Germany                             | ** ** |                             | **(360**   | **)**                  |       |   | (324 | ) |   |
| Italy                               | ** ** |                             | **13**     | ** **             |       |   | 109 |   |   |
| United States of  America           | ** ** |                             | **(441**   | **)**                  |       |   | (462 | ) |   |
| Rest of the world                   | ** ** |                             | **51**     | ** **             |       |   | 6 |   |   |
|                                | ** ** |                             | **(5,541** | **)**                  |       |   | (4,670 | ) |   |

 

At 30 June 2005, the group had unutilizedcalculated tax losses carried forward of approximately R5,088 million, of whichR177 million will expire in 2006 and 2007, R485 million will expire in 2008 and2009, R202 million will expire in 2010, R29 million will expire in 2013, R884million in 2016, R68 million between 2019 and 2025, and R3,243 million can becarried forward indefinitely. A portion of the calculated tax losses carriedforward may be subject to various statutory limitations as to its usage in theevent of significant changes in ownership or change in main operating activityof the entity. 

Due to the uncertainty surrounding the realisation andtiming of realisation of the deferred tax assets per jurisdictional area, thegroup has recorded a valuation allowance of R671 million (2004—R414 million,2003—R349 million). 

The net change in the total valuation allowance was anincrease of R257 million (2004—R65 million, 2003—R102 million). 

At 30 June 2005, management believes it is morelikely than not that the deferred tax assets, net of existing valuationallowances will be realized.

If tax benefits arerecognized in the future through a reduction of the valuation allowance, R57 million(2004—R59 million, 2003—R68 million) of such benefits will reduce intangibleassets.

***Unremitted earnings of foreign subsidiaries andforeign corporate joint ventures***

No provision has been madefor South African income tax or foreign tax that may result from futureremittances of undistributed earnings of foreign subsidiaries or foreigncorporate joint ventures because it is expected that such earnings will bepermanently reinvested in these foreign entities. The distribution of theseundistributed earnings of R1,539 million (2004—R1,010 million, 2003—R1,669million) by these entities would result in income and foreign withholding taxesof approximately R80 million (2004—R55 million, 2003—R242 million).

F-48

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**7.**   Income tax (Continued)

***Secondary Taxation on Companies (STC)***

STC is a tax levied on South African companies at arate of 12.5% of dividends distributed. However, in the case of companiesliquidated after 1 April 1993, STC is only payable on undistributedearnings earned after 1 April 1993. 

STC is not included in the computation of deferred taxor the normal South African tax charge. These amounts are calculated at thestatutory company tax rate on undistributed earnings of 30%. 

On declaration of a dividend, the company includes thetax of 12.5% on this dividend in its computation of the income tax expense inthe period of such declaration.

If the group distributedall of its undistributed retained earnings, of which R45,240 million (2004—R38,163million), 2003—R 33,856 million) would be subject to STC, the group wouldhave to pay additional taxes of R5,027 million (2004—R4,240 million, 2003—R3,762million). If all the earnings attributable to shareholders for the year ended30 June 2005 were distributed, the additional estimated STC charge wouldbe R789 million (2004—R478 million, 2002—R465 million). The group expects thatR1,877 million undistributed earnings earned before 1 April 1993 of twodormant companies will be distributed without attracting STC of R209 million.

At 30 June 2005 thegroup had R67 million STC credits available for set-off against futuredividends declared (2004—R76 million, 2003—R nil). 

***Change in South African Tax Rate***

On 8 July 2005, the State President signed theTaxation Laws Amendment Act of 2005 with the effect that all of our SouthAfrican registered companies will be assessed at a tax rate of 29% for the yearended 30 June 2005 and all years thereafter.

Hadthe income tax expense been calculated at 29% for the 2005 financial year, theimpact on our reported results would have been as follows:
|                                         | ** ** | **Year ended 30 June 2005** | ** ** |
|-----------------------------------------|------------|-------------------------------------------------|------------|
| ** **                              | ** ** | **As reported**                            | ** ** | **Pro-forma** | ** ** | **Change** | ** ** |
| ** **                              | ** ** | **(Rand in millions)**                | ** ** |
| **Balance  sheet**                      |       |                                            |       |   |   |   |   |   |   |   |   |   |   |
| Income tax  payable                     |       |                                            | (686       | ) |   |   | (574 | ) |   |   | (112 | ) |   |
| Net deferred tax  liability             |       |                                            | (5,541     | ) |   |   | (5,380 | ) |   |   | (161 | ) |   |
| **Income statement**                    |       |                                            |       |   |   |   |   |   |   |   |   |   |   |
| Income tax                              |       |                                            | (5,157     | ) |   |   | (4,886 | ) |   |   | (271 | ) |   |
| Earnings of  equity accounted investees |       |                                            | 307        |   |   |   | 312 |   |   |   | (5 | ) |   |
| Minority interest                       |       |                                            | (103       | ) |   |   | (107 | ) |   |   | 4 |   |   |
| Earnings attributable  to shareholders  |       |                                            | 9,787      |   |   |   | 10,059 |   |   |   | (272 | ) |   |
| **Earnings per share (cents)**          |       |                                            |       |   |   |   |   |   |   |   |   |   |   |
| Basic                                   |       |                                            | 1,594      |   |   |   | 1,639 |   |   |   | (44 | ) |   |
| Diluted                                 |       |                                            | 1,567      |   |   |   | 1,611 |   |   |   | (43 | ) |   |

 

F-49

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**8.   Earnings per share**

Basic earnings per share is computed by dividingearnings attributable to shareholders by the weighted average number ofordinary shares outstanding for the period. Diluted earnings per share reflectthe potential dilution that could occur if all of the group’s outstanding stockoptions, to the extent that the effect would be dilutive, were exercised. 

No adjustments were made to reported earningsattributable to shareholders in the computation of earnings per share.

Thefollowing table reconciles the weighted average number of ordinary shares usedin calculating basic earnings per share to the diluted weighted average numberof shares used in the calculation of diluted earnings per share:
|                                        | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|----------------------------------------|------------|----------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                             | ** ** | **(Rand in millions)** | ** ** |
| Earnings  attributable to shareholders | ** ** |                             | **9,787**  |                   |       |                   | 5,358      |   |   |   | 7,344 |   |   |
|                                        |            |                                  |            |                        |            |                        |            |  |  |  |  |  |  |

 
|                                                               | ** ** | **(Number of shares)** | ** ** |
|---------------------------------------------------------------|------------|----------------------------------|------------|
| ***Weighted  average number of shares:***                     | ** ** |                             | ** ** |   |   |   |   |   |   |   |   |   |   |
| Average shares  outstanding—basic shares (in millions)   | ** ** |                             | **613.8**  |   |   |   | 610.0 |   |   |   | 609.3 |   |   |
| Potential  dilutive effect of stock options (in millions)     | ** ** |                             | **10.6**   |   |   |   | 6.2 |   |   |   | 10.3 |   |   |
| Average shares  outstanding—diluted shares (in millions) | ** ** |                             | **624.4**  |   |   |   | 616.2 |   |   |   | 619.6 |   |   |

 

**9.**   Cash and cashequivalents and cash restricted for use

**Cash and cash equivalents**
|                           | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|---------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                | ** ** | **(Rand in millions)** | ** ** |
| Cash on hand and  in bank | ** ** |                             | **1,978**  |                   |       |   | 1,267 |   |   |
| Short-term  deposits      | ** ** |                             | **347**    |                   |       |   | 100 |   |   |
| Other                     | ** ** |                             | **25**     |                   |       |   | 43 |   |   |
|                      | ** ** |                             | **2,350**  |                   |       |   | 1,410 |   |   |

 

**Cash restricted foruse**
|                                     | ** ** | **30 June  2005**      | ** ** | **30 June  2004** | ** ** |
|-------------------------------------|------------|------------------------|------------|-------------------|------------|
| ** **                          | ** ** | **(Rand in millions)** | ** ** |
| Cash held in  trust                 | ** ** | **51**                 |       | 66                |       |
| Collateral for  bank guarantees     | ** ** | **119**                |       | 206               |       |
| Other Sasol  Chemie restricted cash | ** ** | **—**             |       | 508               |       |
| Other                               | ** ** | **161**                |       | 150               |       |
|                                | ** ** | **331**                |       | 930               |       |

 

F-50

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**9.**   Cash and cash equivalents and cash restricted for use (Continued)

Included in cash restricted for use are:

·       Cashheld in trust of R51 million (2004—R66 million), which is restricted for useand is being held in escrow to fund statutory obligations for miningrehabilitation which is to take place during the year ending 30 June 2006;

·       Cashdeposits of R119 million (2004—R206 million) serving as collateral for bankguarantees; and

·       Othercash of R161 million to which the group has restricted title, mainly in itscell captive insurance companies where the funds are restricted solely to beutilized for insurance purposes.

During the year ended 30 June 2005,the secured loan relating to Sasol Chemie was settled in full, hence the cashrestricted for use in the prior year of R508 million has been moved to cash andcash equivalents.

**10.**   Trade,other receivables and prepaid expenses
|                                                                | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|----------------------------------------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                                                     | ** ** | **(Rand in millions)** | ** ** |
| Trade receivables                                              | ** ** | **8,285**                        |       | 7,316                  |       |
| Less: provision  for doubtful debts                            | ** ** | **(200**                         | **)**      | (210                   | )          |
| Net trade  receivables                                         | ** ** | **8,085**                        |       | 7,106                  |       |
| Duty at source  debtors*                                       | ** ** | **1,234**                        |       | 1,110                  |       |
| Value added tax                                                | ** ** | **638**                          |       | 630                    |       |
| Amounts due from  related parties                              | ** ** | **558**                          |       | 396                    |       |
| Insurance related  receivables                                 | ** ** | **282**                          |       | 177                    |       |
| Short-term  receivables under derivative financial instruments | ** ** | **174**                          |       | 17                     |       |
| Prepaid expenses                                               | ** ** | **126**                          |       | 66                     |       |
| Short-term  portion of long-term receivables                   | ** ** | **38**                           |       | 77                     |       |
| Capital project  related debtors                               | ** ** | **41**                           |       | 82                     |       |
| Other receivables                                              | ** ** | **587**                          |       | 736                    |       |
|                                                           | ** ** | **11,763**                       |       | 10,397                 |       |

 

***Roll forward ofprovision for doubtful debts:***
|                               | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|-------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                    | ** ** | **(Rand in millions)** | ** ** |
| Balance at  beginning of year | ** ** |                             | **210**    | ** **             |       |   | 166 |   |   |
| Charged to income  statement  | ** ** |                             | **88**     | ** **             |       |   | 99 |   |   |
| Bad debts written  off        | ** ** |                             | **(102**   | **)**                  |       |   | (46 | ) |   |
| Foreign currency  difference  | ** ** |                             | **4**      | ** **             |       |   | (9 | ) |   |
| Balance at end of year        | ** ** |                             | **200**    | ** **             |       |   | 210 |   |   |

----

*       Duty at source debtors represents the amountsrecoverable from customers as soon as the excise dutiable materials are movedfrom the refineries. The recoverable amounts are only recorded to the extentthat the risks and rewards of ownership have been transferred.

F-51

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**11.**   Inventories
|                                    | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|------------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                         | ** ** | **(Rand in millions)** | ** ** |
| Crude oil and  other raw materials | ** ** |                             | **2,356**  |                   |       |   | 1,601 |   |   |
| Process material                   | ** ** |                             | **358**    |                   |       |   | 340 |   |   |
| Maintenance and  other materials   | ** ** |                             | **878**    |                   |       |   | 864 |   |   |
| Work in process                    | ** ** |                             | **151**    |                   |       |   | 109 |   |   |
| Manufactured  products             | ** ** |                             | **5,823**  |                   |       |   | 5,013 |   |   |
| Consignment  inventory             | ** ** |                             | **84**     |                   |       |   | 32 |   |   |
|                               | ** ** |                             | **9,650**  |                   |       |   | 7,959 |   |   |

 

***Roll forward ofprovision for inventory obsolescence***
|                                  | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|----------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                       | ** ** | **(Rand in millions)** | ** ** |
| Balance at  beginning of year    | ** ** |                             | **170**    | ** **             |       |   | 59 |   |   |
| Provison raised  during the year | ** ** |                             | **71**     | ** **             |       |   | 169 |   |   |
| Utilized during  the year        | ** ** |                             | **(46**    | **)**                  |       |   | (58 | ) |   |
| Balance at end of  year          | ** ** |                             | **195**    | ** **             |       |   | 170 |   |   |

 

Inventories to the valueof approximately R nil (2004—R2,801 million) have been pledged as security forlong-term debt.

**12.**   Investmentsin securities

***Marketable equityand debt securities***

Held-to-maturityinvestments at 30 June 2005 and 30 June 2004 consist of debtsecurities. There were no available-for-sale or trading securities at 30June 2005 or 30 June 2004.

Held-to-maturityinvestments are held at amortized cost and all have maturity dates in excess offive years.

Therewere no changes in the classification of held to maturity investments from thetime of purchase to 30 June 2005.
|                               | ** ** | **30 June 2005**       | ** ** | **30 June 2004** | ** ** |
|-------------------------------|------------|----------------------------------|------------|----------------------------|------------|
| ** **                    | ** ** | **Amortised  cost**              | ** ** | **Fair value**        | ** ** | **Amortised  cost** | ** ** | **Fair value** | ** ** |
| ** **                    | ** ** | **(Rand in millions)** | ** ** |
| Held-to-maturity  investments | ** ** |                             | **194**    | ** **                 |       |   | **194** | ** ** |   |   | 144 |   |   |   | 144 |   |   |
|                               |            |                                  |            |                            |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

There were no unrealizedgains / (losses) recognized for the year ended 30 June 2005 and 30 June 2004.

These investments arelegally restricted for the purposes of the rehabilitation requirements incurredby Sasol Mining.

F-52

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**12.**   Investmentsin securities (Continued)

***Unlisted equity securities***

Theunlisted investments represent strategic investments of the group and arelong-term in nature.
|                                                                   | ** ** | **Holding** | ** ** | **30 June  2005**           | ** ** | **Holding** | ** ** | **30 June  2004**           | ** ** |
|-------------------------------------------------------------------|------------|-------------|------------|----------------------------------|------------|-------------|------------|----------------------------------|------------|
| ** **                                                        | ** ** | **%**       | ** ** | **(Rand in millions)** | ** ** | **%**       | ** ** | **(Rand in millions)** | ** ** |
| sEnergy Insurance  Limited                                        | ** ** |        | **6**      | **%**                            |       |        | **67**     |                             |       |   | 6 | % |   |   | 63 |   |   |
| Aethylen  Rohrleitungsgesellscharf. GmbH & CoKG pipeline | ** ** |        | **17**     | **%**                            |       |        | **122**    |                             |       |   | 17 | % |   |   | 115 |   |   |
| Other—not  considered significant in aggregate               | ** ** |        | ** ** | ** **                       |       |        | **12**     |                             |       |   |   |   |   |   | 47 |   |   |
| **Total  unlisted investments**                                   | ** ** |        | ** ** | ** **                       |       |        | **201**    |                             |       |   |   |   |   |   | 225 |   |   |
| **Investments held-to-maturity**                                  | ** ** |        | ** ** | ** **                       |       |        | **194**    |                             |       |   |   |   |   |   | 144 |   |   |
| **Total  investments**                                            | ** ** |        | ** ** | ** **                       |       |        | **395**    |                             |       |   |   |   |   |   | 369 |   |   |

 

**13.**   Investments inequity accounted investees

At 30 June 2005,the group’s significant equity accounted investees and the group’s ownershipinterest in those equity accounted investees based on outstanding shares andthe total carrying value were as follows:
|                                                                                                    | ** ** | ** ** | ** ** | **30 June 2005**       | ** ** | ** **              | ** ** | **30 June 2004**       | ** ** |
|----------------------------------------------------------------------------------------------------|------------|------------|------------|----------------------------------|------------|-------------------------|------------|----------------------------------|------------|
| **Joint ventures**                                                                            | ** ** | ** ** | ** ** | **Ownership**                    | ** ** | **Carrying Value** | ** ** | **Ownership**                    | ** ** | **Carrying Value** | ** ** |
| ** **                                                                                         | ** ** | **%**      | ** ** | **(Rand in millions)** | ** ** | **%**                   | ** ** | **(Rand in millions)** | ** ** |
| Tosas Holdings  (Pty) Limited                                                                      | ** ** |       | **70**     | **%**                            |       |                    | **52**     |                             |       |   | 70 | % |   |   | 47 |   |   |
| Merisol LP                                                                                         | ** ** |       | **50**     | **%**                            |       |                    | **341**    |                             |       |   | 50 | % |   |   | 361 |   |   |
| Sasol Southwest  Energy LLC                                                                        | ** ** |       | **—** | ** **                       |       |                    | **—** |                             |       |   | 50 | % |   |   | 7 |   |   |
| Escravos  Gas-to-Liquids joint venture (unincorporated)                                            | ** ** |       | **37.5**   | **%**                            |       |                    | **772**    |                             |       |   | 37.5 | % |   |   | 322 |   |   |
| Oryx  Gas-to-Liquids Limited                                                                       | ** ** |       | **49**     | **%**                            |       |                    | **849**    |                             |       |   | 49 | % |   |   | 499 |   |   |
| Sasol Chevron                                                                                      | ** ** |       | **50**     | **%**                            |       |                    | **122**    |                             |       |   | 50 | % |   |   | 67 |   |   |
| Optimal Olefins  Malaysia Sdn.Bhd                                                                  | ** ** |       | **12**     | **%**                            |       |                    | **388**    |                             |       |   | 12 | % |   |   | 478 |   |   |
| Petlin (Malaysia)  Sdn. Bhn                                                                        | ** ** |       | **40**     | **%**                            |       |                    | **271**    |                             |       |   | 40 | % |   |   | 292 |   |   |
| Ayra Sasol  Polymer Company                                                                        | ** ** |       | **50**     | **%**                            |       |                    | **1,005**  |                             |       |   | 50 | % |   |   | 465 |   |   |
| Sasol Petroleum  Mocambique Limitada (Petromoc)                                               | ** ** |       | **49**     | **%**                            |       |                    | **9**      |                             |       |   | 49 | % |   |   | 10 |   |   |
| FFS Refiners  (Pty) Limited                                                                        | ** ** |       | **49**     | **%**                            |       |                    | **41**     |                             |       |   | 49 | % |   |   | 47 |   |   |
| Wesco China  Limited                                                                               | ** ** |       | **40**     | **%**                            |       |                    | **82**     |                             |       |   | 40 | % |   |   | 70 |   |   |
| Sasol Dia  Acrylates (South Africa) (Pty) Limited and Sasol Dia Acrylates (Pty)  Limited | ** ** |       | **50%-75** | **%**                            |       |                    | **1,182**  |                             |       |   | 50%-75 | % |   |   | 997 |   |   |
| Sasol—Huntsman  GmbH and Co KG                                                                | ** ** |       | **50**     | **%**                            |       |                    | **107**    |                             |       |   | 50 | % |   |   | 284 |   |   |
| Other—not  considered signficant in aggregate                                                 | ** ** |       | ** ** | ** **                       |       |                    | **210**    |                             |       |   |   |   |   |   | 243 |   |   |
|                                                                                               | ** ** |       | ** ** | ** **                       |       |                    | **5,431**  |                             |       |   |   |   |   |   | 4,189 |   |   |
|                                                                                                    |            |            |            |                                  |            |                         |            |                                  |            |  |  |  |  |  |  |  |  |  |  |

 

F-53

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**13.**   Investments in equity accounted investees (Continued)

None of the group’s investments in equity accountedinvestees are publicly traded and therefore no quoted market prices areavailable to be disclosed.

During the year interest charges of R436 million (2004—R332million) were capitalized on the group’s investments in equity accountedinvestees while theinvestee had activities in progress necessary to commence its planned principaloperations provided that the equity accounted investees’ activities include theuse of funds to construct qualifying assets for operations. The investees’activities included the use of funds to construct qualifying assets for itsoperations.

The group’s share of undistributed gains of equityaccounted investees approximates R345 million (2004—loss of R20 million). Themovement was primarily attributable to the Acrylates and Sasol-Huntsman jointventures as well as the disposal of Sasol Southwest Energy LLC. Included in thecarrying value of equity accounted investees is goodwill of R196 million (2004—R189million).

Sasol entered into shareholder agreements with theminority shareholders in Tosas Holdings (Pty) Limited that restricts Sasol’sability to exercise control over the operations or assets due to certainapproval or veto rights granted to those minority shareholders. The shareholderagreements entered into by Sasol provide each of the minority shareholders withsubstantive participating interests in the operations of this investee suchthat Sasol is precluded from exercising control.

Having limited control over the above equity accountedinvestee results in Sasol only being able to realize its gains by selling theinvestments. Although unlikely and contrary to Sasol’s strategy, such disposalwould result in an insignificant amount of capital gains tax on recognizedgains.

Both Sasol Dia Acrylates (South Africa) (Pty) Limitedand Sasol Dia Acrylates (Pty) Limited are designed so that substantially noneof their activities either involve or are conducted on behalf of the reportingenterprise and its related parties as specified in FIN 46 (R)*.* Hence Sasol has noability to control these entities and does not substantially benefit from theshareholding, as both sales and purchases to Sasol are less than 30%. Theshareholder agreements entered into by Sasol provide the other shareholder withequal substantive participating interests in the operations of this investeesuch that Sasol is precluded from exercising control.

During the year ended 30 June 2005, SasolSouthwest Energy LLC was sold for R20 million and the group recorded a profiton sale of associate of approximately R25 million. Management decided todispose of its 50% investment in Sasol Southwest Energy LLC as a result ofrationalisation of the Sasol Nitro business.

The group is intending tosell its investment in FFS Refiners (Pty) Limited.

F-54

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**14.**   Goodwilland intangible assets
|                                                       | ** ** | **Goodwill**                     | ** ** | **Patents and  trademarks** | ** ** | **Capitalized  exploration  expenditure** | ** ** | **Capitalized  software** | ** ** | **Other  intangibles** | ** ** | **Total**  | ** ** |
|-------------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|-------------------------------------------|------------|---------------------------|------------|------------------------|------------|------------|------------|
| ** **                                            | ** ** | **(Rand in millions)** | ** ** |
| **Cost**                                              |       |                             |       | ** **                       |       |                                      |       | ** **                |       |                   |       | ** ** |       |   |   | ** ** |   |   |   | ** ** |   | ** ** | ** ** |
| Balance at 30 June 2003                               |       |                             | 405        | ** **                       |       |                                      | 514        | ** **                |       |                   | 1,071      | ** ** |       |   | 898 | ** ** |   |   | 408 | ** ** |   | 3,296 |   |
| Acquisition of  businesses                            |       |                             | 25         | ** **                       |       |                                      | —     | ** **                |       |                   | —     | ** ** |       |   | — | ** ** |   |   | 422 | ** ** |   | 447 |   |
| Additions                                             |       |                             | —     | ** **                       |       |                                      | 10         | ** **                |       |                   | 362        | ** ** |       |   | 102 | ** ** |   |   | — | ** ** |   | 474 |   |
| Transfer (to)/from  property, plant and equipment     |       |                             | —     | ** **                       |       |                                      | (3         | **)**                     |       |                   | (307       | )          |       |   | 140 | ** ** |   |   | — | ** ** |   | (170 | ) |
| Disposal of businesses                                |       |                             | —     | ** **                       |       |                                      | (7         | **)**                     |       |                   | —     | ** ** |       |   | — | ** ** |   |   | — | ** ** |   | (7 | ) |
| Reversal of minimum  pension liability                |       |                             | —     | ** **                       |       |                                      | —     | ** **                |       |                   | —     | ** ** |       |   | — | ** ** |   |   | (408 | ) |   | (408 | ) |
| Disposals                                             |       |                             | —     | ** **                       |       |                                      | (62        | )                         |       |                   | (154       | )          |       |   | (44 | ) |   |   | — | ** ** |   | (260 | ) |
| Impairment                                            |       |                             | (21        | )                                |       |                                      | —     | ** **                |       |                   | —     | ** ** |       |   | (5 | ) |   |   | — | ** ** |   | (26 | ) |
| Foreign currency translation                          |       |                             | (46        | )                                |       |                                      | (68        | )                         |       |                   | (8         | )          |       |   | (2 | ) |   |   | — | ** ** |   | (124 | ) |
| **Balance at 30 June 2004**                           | ** ** | ** **                       | **363**    | ** **                       | ** ** | ** **                                | **384**    | ** **                | ** ** | ** **             | **964**    | ** ** | ** ** | ** ** | **1,089** | ** ** | ** ** | ** ** | **422** | ** ** |   | **3,222** | ** ** |
| **Additions**                                         |       |                             | **—** | ** **                       | ** ** | ** **                                | **3**      | ** **                | ** ** | ** **             | **6**      | ** ** | ** ** | ** ** | **35** | ** ** | ** ** | ** ** | **45** | ** ** |   | **89** | ** ** |
| **Transfer  from/(to) property, plant and equipment** |       |                             | **—** | ** **                       | ** ** | ** **                                | **2**      | ** **                | ** ** | ** **             | **(1**     | **)**      | ** ** | ** ** | **53** | ** ** | ** ** | ** ** | **67** | ** ** |   | **121** | ** ** |
| **Disposal  of businesses**                           | ** ** | ** **                       | **(99**    | **)**                            | ** ** | ** **                                | **—** | ** **                |       |                   | **—** | ** ** | ** ** | ** ** | **(5** | **)** |   |   | **—** | ** ** |   | **(104** | **)** |
| **Disposals**                                         |       |                             | **—** | ** **                       | ** ** | ** **                                | **(2**     | **)**                     | ** ** | ** **             | **(15**    | **)**      | ** ** | ** ** | **(42** | **)** | ** ** | ** ** | **(20** | **)** |   | **(79** | **)** |
| **Impairment**                                        |       |                             | **—** | ** **                       | ** ** | ** **                                | **(3**     | **)**                     |       |                   | **—** | ** ** | ** ** | ** ** | **(1** | **)** | ** ** | ** ** | **(9** | **)** |   | **(13** | **)** |
| **Foreign  currency translation**                     | ** ** | ** **                       | **13**     | ** **                       | ** ** | ** **                                | **52**     | ** **                | ** ** | ** **             | **1**      | ** ** | ** ** | ** ** | **6** | ** ** | ** ** | ** ** | **—** | ** ** |   | **72** | ** ** |
| **Balance at 30 June 2005**                           | ** ** | ** **                       | **277**    | ** **                       | ** ** | ** **                                | **436**    | ** **                | ** ** | ** **             | **955**    | ** ** | ** ** | ** ** | **1,135** | ** ** | ** ** | ** ** | **505** | ** ** |   | **3,308** | ** ** |
| **Amortization**                                      |       |                             |       | ** **                       |       |                                      |       | ** **                |       |                   |       | ** ** |       |   |   | ** ** |   |   |   | ** ** |   | ** ** | ** ** |
| Balance at 30 June 2003                               |       |                             | 99         | ** **                       |       |                                      | 189        | ** **                |       |                   | 28         | ** ** |       |   | 290 | ** ** |   |   | — | ** ** |   | 606 |   |
| Current year charge                                   |       |                             | —     | ** **                       |       |                                      | 73         | ** **                |       |                   | 13         | ** ** |       |   | 352 | ** ** |   |   | 55 | ** ** |   | 493 |   |
| Transfer (to)/from  property, plant and equipment     |       |                             | —     | ** **                       |       |                                      | —     | ** **                |       |                   | (29        | )          |       |   | 1 | ** ** |   |   | — | ** ** |   | (28 | ) |
| Disposal of businesses                                |       |                             | —     | ** **                       |       |                                      | (7         | )                         |       |                   | —     | ** ** |       |   | — | ** ** |   |   | — | ** ** |   | (7 | ) |
| Disposals                                             |       |                             | —     | ** **                       |       |                                      | (31        | )                         |       |                   | —     | ** ** |       |   | (35 | ) |   |   | — | ** ** |   | (66 | ) |
| Foreign currency  translation                         |       |                             | (21        | )                                |       |                                      | (33        | )                         |       |                   | —     | ** ** |       |   | — | ** ** |   |   | — | ** ** |   | (54 | ) |
| **Balance at 30 June 2004**                           | ** ** | ** **                       | **78**     | ** **                       | ** ** | ** **                                | **191**    | ** **                | ** ** | ** **             | **12**     | ** ** | ** ** | ** ** | **608** | ** ** | ** ** | ** ** | **55** | ** ** |   | **944** | ** ** |
| **Current  year charge**                              |       |                             | **—** | ** **                       | ** ** | ** **                                | **38**     | ** **                | ** ** | ** **             | **80**     | ** ** | ** ** | ** ** | **185** | ** ** | ** ** | ** ** | **104** | ** ** |   | **407** | ** ** |
| **Transfer  from property, plant and equipment**      |       |                             | **—** | ** **                       |       |                                      | **—** | ** **                | ** ** | ** **             | **—** | ** ** | ** ** | ** ** | **18** | ** ** | ** ** | ** ** | **20** | ** ** |   | **38** | ** ** |
| **Disposal  of businesses**                           | ** ** | ** **                       | **(88**    | **)**                            |       |                                      | **—** | ** **                |       |                   | **—** | ** ** |       |   | **—** | ** ** |   |   | **—** | ** ** |   | **(88** | **)** |
| **Disposals**                                         |       |                             | **—** | ** **                       | ** ** | ** **                                | **(2**     | **)**                     |       |                   | **—** | ** ** | ** ** | ** ** | **(42** | **)** | ** ** | ** ** | **(2** | **)** |   | **(46** | **)** |
| **Foreign  currency translation**                     | ** ** | ** **                       | **10**     | ** **                       | ** ** | ** **                                | **41**     | ** **                | ** ** | ** **             | **—** | ** ** | ** ** | ** ** | **4** | ** ** | ** ** | ** ** | **—** | ** ** |   | **55** | ** ** |
| **Balance at 30 June 2005**                           | ** ** | ** **                       | **—** | ** **                       | ** ** | ** **                                | **268**    | ** **                | ** ** | ** **             | **92**     | ** ** | ** ** | ** ** | **773** | ** ** | ** ** | ** ** | **177** | ** ** |   | **1,310** | ** ** |
| **Net  book value 30 June 2005**                      | ** ** | ** **                       | **277**    | ** **                       | ** ** | ** **                                | **168**    | ** **                | ** ** | ** **             | **863**    | ** ** | ** ** | ** ** | **362** | ** ** | ** ** | ** ** | **328** | ** ** |   | **1,998** | ** ** |
| Net book value 30 June 2004                           |       |                             | 285        | ** **                       |       |                                      | 193        | ** **                |       |                   | 952        | ** ** |       |   | 481 | ** ** |   |   | 367 | ** ** |   | 2,278 |   |

 

F-55

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**14.**   Goodwill and intangible assets (Continued)

There were no significant additions to intangibleassets for the year ended 30 June 2005.

For the year ended30 June 2004, major expenditure on intangible assets comprised mainly ofthe implementation of a purchased enterprise resource planning system at anumber of sites in the group as well as the ongoing exploration and developmentactivities in the upstream oil and gas industry, mainly in Mozambique.

Theamortization rates of intangible assets, using the straight-line basis, are asfollows:
|                                            | ** ** | **Rates** | ** ** |
|--------------------------------------------|------------|-----------|------------|
| Goodwill—not  subject to amortization |       |      |       |
| Patents and  trademarks                    |       | 10-20     | %          |
| Capitalized  software                      |       | 33        | %          |
| Long-term customer  contracts              |       | 25        | %          |

 

Capitalized exploration costs are amortized using theunits-of-production method, over proven oil and gas reserves.

Forintangible assets subject to amortization, the estimated future aggregateamortization expense per annum is as follows:
|                             | ** ** | **  2005  ** | ** ** | **  2004  ** | ** ** |
|-----------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                  | ** ** | **(Rand in millions)** | ** ** |
| For the year  ended 30 June | ** ** |                             | ** ** |                             |       |   |   |   |   |
| Within 1 year               | ** ** |                             | **391**    |                             |       |   | 593 |   |   |
| 1-2 years                   | ** ** |                             | **360**    |                             |       |   | 403 |   |   |
| 2-3 years                   | ** ** |                             | **253**    |                             |       |   | 317 |   |   |
| 3-4 years                   | ** ** |                             | **218**    |                             |       |   | 135 |   |   |
| 4-5 years                   | ** ** |                             | **200**    |                             |       |   | 127 |   |   |
| over 5 years                | ** ** |                             | **299**    |                             |       |   | 418 |   |   |
|                        | ** ** |                             | **1,721**  |                             |       |   | 1,993 |   |   |

 

The realizability of intangible assets is evaluated atleast annually to assess the recoverability of carrying amounts. The valuationis based on various analyzes including cash flow and profitability projections.The valuation necessarily involves significant management judgment. As a resultof the group’s assessment of recoverability of its intangible assets at 30 June 2005,the group has determined that the net carrying value of its intangible assetsat 30 June 2005 has been impaired. The impairment of R13 million recordedin the current year relates to intangible assets of which approximately R8million can be directly attributed to the impairment of the Sasol Oil servicecontracts.

In June 2004, theimpairment recorded related to goodwill of R21 million and intangible assets ofR5 million. The impairment of goodwill of R21 million was an impairmentrelating to the Sasol Mining Initiator’s entities as a result of a change inoperations to toll manufacturing.

F-56

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**15.**   Property,plant and equipment
|                                   | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|-----------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                        | ** ** | **(Rand in millions)** | ** ** |
| Land, buildings  and improvements | ** ** | **3,143**                        |       | 2,880                  |       |
| Plant, equipment  and vehicles    | ** ** | **49,521**                       |       | 45,525                 |       |
| Capital work in  progress         | ** ** | **11,190**                       |       | 6,078                  |       |
| Coal mining  assets               | ** ** | **5,232**                        |       | 5,711                  |       |
|                              | ** ** | **69,086**                       |       | 60,194                 |       |
| Less: accumulated  depreciation   | ** ** | **22,495**                       |       | 20,474                 |       |
|                              | ** ** | **46,591**                       |       | 39,720                 |       |

 

Thedepreciation rates applied using the straight-line method are:
| Buildings and improvements     |   | 2-8  | % |
|--------------------------------|--------|------|---|
| Plant, equipment and  vehicles |   | 4-33 | % |

 

Coal mining assets are depreciated using theunits-of-production method over proved and probable reserves, not exceeding thelives of the mines.

Land and capital work in process are not depreciated.

Assets with a carrying value of R836 million (2004—R803million) were held under capital leases and were included in plant, equipmentand vehicles above.

Included in the cost of property, plant and equipmentare asset retirement costs capitalized of approximately R209 million (2004—R125million). These costs are capitalized to the cost of the asset and depreciatedover its estimated useful life. Prior to the adoption of SFAS 143 in June 2003,asset retirement costs were expensed in the period incurred.

During the year, interest of R602 million (2004—R750million) was capitalized to property, plant and equipment. Included in thedepreciation charge for the year is amortization relating to the capitalizedinterest of R190 million (2004—R163 million).

The carrying value of property, plant and equipmentpledged as security for liabilities amounted to R5,972 million (2004—R12,107million).

The cost of fully depreciated assets amounted toR7,724 million (2004—R7,652 million).

During the year ended 30 June 2005, the group reviewedthe useful lives of its assets. This resulted in a reduction in thedepreciation charge when compared to the expected charge had no review beenperformed, of R1,547 million before tax and a resulting increase in earningsper share of 169 cents.

The group assessed the recoverability of itslong-lived assets and determined that there was an impairment charge of R218million (2004—R253 million) required for the year ended 30 June 2005. Theprimary cause of these impairments is the significant increase in the price ofraw materials as a result of the increase in crude oil products which cannot bepassed on to customers.

F-57

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**15.**   Property, plant and equipment (Continued)

Some of the significantimpairments included in the impairment charge of R218 million for the yearended 30 June 2005 are impairments in the following business segments:

***Olefins and Surfactants—R103 million***

*Inorganic Specialitiesplant—(Crotone, Italy)*—In the context of highcrude oil prices and prices of various other raw materials, an impairmentreview was performed on the assets of Sasol Italy during the year ended 30 June 2005.As a result of the impairment test, it was identified that the net presentvalue of estimated future cash flows was less than the carrying value of theasset. Accordingly a net impairment charge of R103 million was recognized inthe income statement.

***Solvents—R79 million***

*Ketones and alcoholsplants—(Germany)**—*In the context of high crude oilprices and prices of various other raw materials, an impairment review wasperformed during the year ended 30 June 2005, on both the ketones andethanol plants in Germany to evaluate previously capitalized costs. Theimpairment test resulted in an impairment of approximately R79 million beingrecognized in the income statement .

***Synfuels—R16 million***

*Electricalkiln—(Secunda South Africa)**—*Based on a businessdecision to use an alternative kiln for processing low sulfur coke, theelectrical kiln was not in use for 8 months. Although potential uses of theasset are being investigated, it is not expected that any future cash flowswill be derived from this asset.

An impairment test wascarried out and an impairment of R16 million was recognized in the incomestatement.

***Sasol Technology—R11 million***

*ContinuousHydroformylation Plant—(Sasolburg, South Africa)**—*An impairment reviewperformed on the assets of Sasol Technology identified that the continuoushydroformylation plant is not expected to generate future positive cash flowsdue to the changing nature of Sasol Technology’s research program and theintroduction of natural gas in Sasolburg. Accordingly an impairment charge ofR11 million was recognized in the income statement.

F-58

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**16.**   Accruedexpenses and other obligations
|                                                                      | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|----------------------------------------------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                                                           | ** ** | **(Rand in millions)** | ** ** |
| Amounts due to  capital project related creditors                    | ** ** |                             | **571**    |                   |       |   | 564 |   |   |
| Employee related  liabilities                                        | ** ** |                             | **1,213**  |                   |       |   | 1,103 |   |   |
| Duty at source  creditors                                            | ** ** |                             | **787**    |                   |       |   | 786 |   |   |
| Short-term  payables under derivative financial instruments          | ** ** |                             | **784**    |                   |       |   | 1,184 |   |   |
| Short-term  portion of long-term obligations                         | ** ** |                             | **450**    |                   |       |   | 648 |   |   |
| Short-term  obligations                                              | ** ** |                             | **287**    |                   |       |   | 307 |   |   |
| Insurance loss  reserve                                              | ** ** |                             | **201**    |                   |       |   | 239 |   |   |
| Amounts due to related  parties                                      | ** ** |                             | **156**    |                   |       |   | 128 |   |   |
| Value added tax                                                      | ** ** |                             | **132**    |                   |       |   | 197 |   |   |
| Amount due to  RWE-DEA*                                              | ** ** |                             | **121**    |                   |       |   | — |   |   |
| Audit fees                                                           | ** ** |                             | **17**     |                   |       |   | 18 |   |   |
| Provision for  bond interest                                         | ** ** |                             | **69**     |                   |       |   | 69 |   |   |
| Short-term  portion of post-retirement healthcare                    | ** ** |                             | **31**     |                   |       |   | 22 |   |   |
| Short-term  portion of accrued pension liabilities                   | ** ** |                             | **16**     |                   |       |   | 15 |   |   |
| Legal obligation  in respect of ConocoPhillips sulfur dioxide claims | ** ** |                             | **—** |                   |       |   | 17 |   |   |
| Other payables                                                       | ** ** |                             | **381**    |                   |       |   | 543 |   |   |
|                                                                 | ** ** |                             | **5,216**  |                   |       |   | 5,840 |   |   |

----

*       Amount represents tax refund received by Sasol and dueto RWE-DEA under the Asset and Share purchase agreement with RWE-DEA for theacquistion in 2001 of Condea.

**17.**   Short-termdebt
|                                                | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
|------------------------------------------------|------------|----------------------------------|------------|------------------------|------------|
| ** **                                     | ** ** | **(Rand in millions)** | ** ** |
| Commercial  banking facilities (Refer Note 21) | ** ** |                             | **2,328**  | ** **             |       |   | 4,094 |   |   |
| Commercial paper  program (Refer Note 21)      | ** ** |                             | **1,521**  | ** **             |       |   | 1,521 |   |   |
| Short-term  portion of long-term debt          | ** ** |                             | **809**    | ** **             |       |   | 400 |   |   |
| Revolving credit  facility (Refer Note 21)     | ** ** |                             | **663**    | ** **             |       |   | 1,023 |   |   |
| Other                                          | ** ** |                             | **34**     | ** **             |       |   | 101 |   |   |
|                                           | ** ** |                             | **5,355**  | ** **             |       |   | 7,139 |   |   |

 

Theweighted average interest rate of short-term debt for the year wasapproximately 7.9%

(2004—8.6%).

F-59

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**18.**   Long-termobligations
| 2005                                                | ** ** | ** **                       | ** ** | **Asset  retirement  obligations** | ** ** | **Other** | ** ** | **Total**  | ** ** |
|-----------------------------------------------------|------------|----------------------------------|------------|------------------------------------|------------|-----------|------------|------------|------------|
| ** **                                          | ** ** | **(Rand in millions)** | ** ** |
| **Balance  at 1 July 2004**                    | ** ** |                             | **2,003**  | ** **                         |       |      | **585**    | ** ** |       | **2,588** |   |
| **Charge for year**                                 | ** ** |                             | **308**    | ** **                         |       |      | **410**    | ** ** |       | **718** |   |
| **Utilized during year**                            | ** ** |                             | **(182**   | **)**                              |       |      | **(280**   | **)**      |       | **(462** | **)** |
| **Capitalized to property, plant and equipment**    | ** ** |                             | **84**     | ** **                         |       |      | **—** | ** ** |       | **84** |   |
| **Reversal of unused amounts**                      | ** ** |                             | **(232**   | **)**                              |       |      | **(22**    | **)**      |       | **(254** | **)** |
| **Accretion**                                       | ** ** |                             | **184**    | ** **                         |       |      | **—** | ** ** |       | **184** |   |
| **Effect of change in estimated future cash flows** | ** ** |                             | **(26**    | **)**                              |       |      | **—** | ** ** |       | **(26** | **)** |
| **Foreign currency translation**                    | ** ** |                             | **22**     | ** **                         |       |      | **48**     | ** ** |       | **70** |   |
| **Balance  at 30 June 2005**                   | ** ** |                             | **2,161**  | ** **                         |       |      | **741**    | ** ** |       | **2,902** |   |
| **Less:  short-term portion**                       | ** ** |                             | **261**    | ** **                         |       |      | **189**    | ** ** |       | **450** |   |
| **Long-term portion**                               | ** ** |                             | **1,900**  | ** **                         |       |      | **552**    | ** ** |       | **2,452** |   |

 
| 2004                                            | ** ** | ** **                       | ** ** | **Asset  retirement  obligations** | ** ** | **Other** | ** ** | **Total** | ** ** |
|-------------------------------------------------|------------|----------------------------------|------------|------------------------------------|------------|-----------|------------|-----------|------------|
| ** **                                      | ** ** | **(Rand in millions)** | ** ** |
| Balance at 1  July 2003                    |       |                             | 1,856      |                               |       |      | 614        |      |       | 2,470 |   |
| Charge for year                                 |       |                             | 323        |                               |       |      | 255        |      |       | 578 |   |
| Utilized during year                            |       |                             | (154       | )                                  |       |      | (204       | )         |       | (358 | ) |
| Capitalized to property, plant and equipment    |       |                             | 92         |                               |       |      | 19         |      |       | 111 |   |
| Reversal of unused amounts                      |       |                             | (112       | )                                  |       |      | (11        | )         |       | (123 | ) |
| Accretion                                       |       |                             | 151        |                               |       |      | 2          |      |       | 153 |   |
| Disposal of businesses                          |       |                             | (7         | )                                  |       |      | (10        | )         |       | (17 | ) |
| Effect of change in estimated future cash flows |       |                             | (83        | )                                  |       |      | —     |      |       | (83 | ) |
| Foreign currency translation                    |       |                             | (63        | )                                  |       |      | (80        | )         |       | (143 | ) |
| Balance at 30  June 2004                   |       |                             | 2,003      |                               |       |      | 585        |      |       | 2,588 |   |
| Less: short-term  portion                       |       |                             | 426        |                               |       |      | 222        |      |       | 648 |   |
| Long-term portion                               |       |                             | 1,577      |                               |       |      | 363        |      |       | 1,940 |   |

 

In accordance with SFAS 143, an asset retirementobligation is recognized when the obligation arises. The asset retirementobligation includes estimated costs for the rehabilitation of coal mining andpetrochemical sites.

The estimated value of dismantling and future assetremoval costs is based on the remaining useful lives of the assets. During theyear ended 30 June 2005, the group reviewed the useful lives of itsassets. The effect of the increase in the useful lives has resulted in adecrease in the value of the obligation and has been accounted for as areversal of unused amounts in the current year of R628 million.

There is an ABSA Bank fixed deposit of R194 million(2004—R144 million) included in Investments in Securities (see Note 12) whichis legally restricted for the purposes of the rehabilitation requirementsincurred by Sasol Mining.

F-60

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**18.**   Long-termobligations (Continued)

The group believes that, based on the currentinformation available, any additional liability for the asset retirementobligation in excess of the amounts provided will not have a material adverseeffect on its financial condition, liquidity or cash flow.

Other long-termobligations includes, liabilities in respect of leave pay for personnel,deferred wages, severance indemnity and retirement program expenses as well aslong-term insurance related obligations.

**19.**   Long-termdebt
|                                                                   | ** ** | ** **                                                                                        | ** ** | ** **        | ** ** | **30 June**                 | ** ** | **30 June** | ** ** |
|-------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------|------------|-------------------|------------|----------------------------------|------------|------------------|------------|
| **Repayment terms**                                          | ** ** | ** **                                                                                        | ** ** | **Collateral**    | ** ** | **Interest rate**           | ** ** | **2005**         | ** ** | **2004** | ** ** |
| ** **                                                        | ** ** | ** **                                                                                        | ** ** | ** **        | ** ** | **(Rand in millions)** | ** ** |
| **Collateralised loans**                                          |       |                                                                                              |       |              |       |                             |       |             |       |
| Repaid in full  during the year ended 30 June 2005           |       | Plant, equipment and inventories with a book value  of R nil (2004—R9,880 million)      |       | 1%-7.8            | %          | **—**                       |       | 1,235            |       |
| Repayable semi-annually  ending June 2006                    |       | Plant and equipment with a book value of R167  million                                            |       | 6.0% Fixed        | ** ** | **18**                           |       | 28               |       |
| Repayable in  monthly instalments until June 2015            |       | Plant and equipment with a book value of R1,463  million (2004—R798 million)                 |       | Jibar +(1.6%-3    | %)         | **1,302**                        |       | 798              |       |
| Repayable in  semi-annual instalments until June 2015        |       | A pipeline asset with a carrying value of R3,409 milllion  (2004—R3,343 million)   |       | Jibar +(0.4%-3    | %)         | **2,362**                        |       | 1,330            |       |
| Repayable in  annual instalments until March 2008            |       | Plant and equipment with a book value of R106  million (2004—R84 million)                    |       | 4.3% - 5.0% Fixed | ** ** | **31**                           |       | 63               |       |
| **Capital lease liabilities**                                     |       |                                                                                              |       |              |       |                             |       |             |       |
| Repayable in  equal monthly instalments until June 2017      |       | Building with a book value of R144 million (2004—R156 million)                          |       | 10.6              | %          | **205**                          |       | 202              |       |
| Repayable in  equal monthly instalments until September 2019 |       | Building and equipment with a book value of R52  million (2004—R59 million)                  |       | 14.3%-20.8        | %          | **52**                           |       | 59               |       |
| Repayable in  equal monthly instalments until March 2034     |       | Secured over plant and equipment with a book value  of R590 million (2004—R398 million) |       | Variable          | ** ** | **590**                          |       | 350              |       |
| Repayable in  equal monthly instalments until January 2008   |       | Computer Equipment with a book value of R9 million (2004—R55  million)                       |       | 12.2%-14          | %          | **10**                           |       | 55               |       |
| Repayable in equal  monthly instalments until April 2007     |       | Computer  Equipment with a book value of R57 million (2004—R93 million)                      |       | 7%-14             | %          | **63**                           |       | 105              |       |
|                                                                   |            |                                                                                                   |            |                   |            |                                  |            |                  |            |  |  |

 

F-61

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**19.**   Long-term debt(Continued)
|                                                                                                                                                                                  | ** ** | ** **                                                                                                               | ** ** | ** **            | ** ** | **30 June**                 | ** ** | **30 June** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|----------------------------------|------------|------------------|------------|
| **Repayment terms**                                                                                                                                                         | ** ** | ** **                                                                                                               | ** ** | **Collateral**        | ** ** | **Interest rate**           | ** ** | **2005**         | ** ** | **2004** | ** ** |
| ** **                                                                                                                                                                       | ** ** | ** **                                                                                                               | ** ** | ** **            | ** ** | **(Rand in millions)** | ** ** |
| Repayable in equal monthly instalments until  December 2015                                                                                                                 |       | Various                                                                                                                  |       | Various               |       | **20**                           |       | 8                |       |
| **Redeemable  preference shares of subsidiaries**                                                                                                                                |       |                                                                                                                     |       |                  |       |                             |       |             |       |
| Repayable in full between January 2004 and  December 2005                                                                                                              |       | Secured in terms  of a put option against the shareholders of National Petroleum Refiners of  South Africa (Pty) Limited |       | 6.8%-8.8              | %          | **117**                          |       | 618              |       |
| **Unsecured guaranteed registered  notes**                                                                                                                                       |       |                                                                                                                     |       |                  |       |                             |       |             |       |
| Repayable on 1 September 2007.  Interest is paid semi-annually in arrears on 1 March and 1 September each  year, commencing 1 March 2004 |       | None                                                                                                                     |       | 10.5% Fixed           | ** ** | **1,993**                        |       | 2,000            |       |
| Repayable on  maturity in June 2010                                                                                                                                         |       | None                                                                                                                     |       | 3.4% Fixed            | ** ** | **2,419**                        |       | —           |       |
| **Loans**                                                                                                                                                                        |       |                                                                                                                     |       |                  |       |                             |       |             |       |
| Repayable in four  equal annual instalments until December 2006                                                                                                             |       | None                                                                                                                     |       | 2.2                   | %          | **57**                           |       | 54               |       |
| Repayable in  equal annual instalments until April 2005                                                                                                                     |       | None                                                                                                                     |       | —                | ** ** | **—**                       |       | 6                |       |
| Repayable in  semi-annual instalments ending January 2014                                                                                                                   |       | None                                                                                                                     |       | 11.6% Fixed           | ** ** | **262**                          |       | —           |       |
| Repayable  quarterly ending May 2008                                                                                                                                        |       | None                                                                                                                     |       | SA Prime Lending Rate | ** ** | **146**                          |       | —           |       |
| Repayable in  semi-annual instalments ending December 2015                                                                                                                  |       | None                                                                                                                     |       | 8%-8.7                | %          | **603**                          |       | 165              |       |
| Repayable in December 2011                                                                                                                                                  |       | None                                                                                                                     |       | 8.74                  | %          | **28**                           |       | 32               |       |
| No fixed terms of  repayment                                                                                                                                                     |       | None                                                                                                                     |       | Variable              | ** ** | **63**                           |       | 63               |       |
| Repayable in  June 2013                                                                                                                                                     |       | None                                                                                                                     |       | Libor +0.13           | %          | **390**                          |       | 363              |       |
| Other                                                                                                                                                                            |       | None                                                                                                                     |       | Various               | ** ** | **16**                           |       | 19               |       |
| **Total  debt**                                                                                                                                                                  | ** ** | ** **                                                                                                               |       |                  | ** ** | **10,747**                       |       | 7,553            |       |
| **Less:  short-term portion**                                                                                                                                                    | ** ** | ** **                                                                                                               |       |                  | ** ** | **809**                          |       | 400              |       |
| **Long-term debt**                                                                                                                                                               | ** ** | ** **                                                                                                               |       |                  | ** ** | **9,938**                        |       | 7,153            |       |
|                                                                                                                                                                                  |            |                                                                                                                          |            |                       |            |                                  |            |                  |            |  |  |

 

F-62

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**19.**   Long-term debt (Continued)

The redeemablepreference shares were issued by a subsidiary to finance specific projects. Theredemption of these preference shares cannot result in a change in control ofthe subsidiary and even if called upon the guarantees will be redeemed inproportion to the existing shareholding. These preference shares will notresult in the issue of shares of the holding company and as a result areclassified as long-term debt instruments and the preference dividends areincluded in finance costs in the income statement.

Theaggregate maturities of total long—term debt (including short-term portion)subsequent to 30 June 2005 and 30 June 2004, are as follows:
|              | ** ** | **30 June**                 | ** ** | **30 June** | ** ** |
|--------------|------------|----------------------------------|------------|------------------|------------|
| ** **   | ** ** | **2005**                         | ** ** | **2004**         | ** ** |
| ** **   | ** ** | **(Rand in millions)** | ** ** |
| Within 1year | ** ** | **809**                          |       |             | 400        |   |   |
| 1 - 2 years  | ** ** | **639**                          |       |             | 513        |   |   |
| 2 - 3 years  | ** ** | **2,706**                        |       |             | 934        |   |   |
| 3 - 4 years  | ** ** | **597**                          |       |             | 3,057      |   |   |
| 4 - 5 years  | ** ** | **3,011**                        |       |             | 393        |   |   |
| over 5 years | ** ** | **2,985**                        |       |             | 2,256      |   |   |
| Total debt   | ** ** | **10,747**                       |       |             | 7,553      |   |   |

 

**20.**   Shareholders’equity

***Numberof ordinary shares in issue***
|                               | ** ** | **30 June**                 | ** ** | **30 June** | ** ** | **30 June** | ** ** |
|-------------------------------|------------|----------------------------------|------------|------------------|------------|------------------|------------|
| ** **                    | ** ** | **2005**                         | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| ** **                    | ** ** | **(Number of shares)** | ** ** |
| Balance at beginning of  year | ** ** | **671,271,425**                  |       | 668,798,425      |       | 666,868,725      |       |
| Share options exercised       | ** ** | **5,605,700**                    |       | 2,473,000        |       | 1,929,700        |       |
| Balance at end of year        | ** ** | **676,877,125**                  |       | 671,271,425      |       | 668,798,425      |       |
| Less: Treasury shares         | ** ** | **(60,111,477**                  | **)**      | (60,111,477      | )          | (59,741,477      | )          |
|                          |       | **616,765,648**                  |       | 611,159,948      |       | 609,056,948      |       |

 

***Treasury shares***

At every annual general meeting since the annualgeneral meeting held on 25 October 1999 the shareholders have authorizedthe directors to approve the purchase, by Sasol Limited (the company) or any ofits subsidiaries, of the company’s shares subject to the provisions of theSouth African Companies Act and the requirements of the JSE Limited. Thecurrent restrictions imposed on the directors by the shareholders, the SouthAfrican Companies Act and the JSE Limited are:

·       thegeneral authority is valid from annual general meeting to annual generalmeeting and can be varied and revoked by special resolution prior to thecompany’s next annual general meeting;

·       thegeneral authority shall be valid until the company’s next annual generalmeeting, but shall not extend beyond fifteen months from the date of thespecial resolution;

F-63

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**20.**   Shareholders’equity (Continued)

·       therepurchase must be made through the order book of the JSE Limited tradingsystem and without any prior arrangement between the company and the counterparty;

·       onlyone agent may be appointed at any point in time to make repurchases on behalfof the company;

·       the general authority toacquire the company’s shares shall be limited to a maximum of 10% of the issuedshare capital of that class at the time the authority is granted;

·       any repurchase will not bemade at a price more than 10% above the weighted average of the market value ofthe share for the five business days immediately preceding the date ofpurchase;

·       repurchasesmay only be undertaken if, after such a purchase, the JSE Limited requirementsregarding shareholder spread are still complied with;

·       sharesmay not be repurchased during a prohibited period; and

·       shouldthe company, or any of its subsidiaries, cumulatively repurchase 3% of thecompany’s shares in terms of the general authority an announcement shall bemade in accordance with the requirements of the JSE Limited.

Repurchases may be made attimes and at prices deemed appropriate by management and consistent with theauthorization of the shareholders. During the year ended 30 June 2005, noshares (2004—370,000 shares at a total price of R33 million) of the companywere repurchased. At 30 June 2005, a total of 60,111,477 shares,representing 8.9% of the issued share capital of the company, had beenrepurchased since 9 May 2000 at an average price of R60.67 per share.

***Sasol ShareIncentive Scheme***

In 1988, the shareholdersapproved the adoption of the Sasol Share Incentive Scheme. The scheme wasintroduced to provide an incentive for senior employees (including executivedirectors) of the group who participate in management and also non-executivedirectors from time to time.

In terms of the scheme,options up to a maximum of 60,000,000 shares (2004—60,000,000 shares; 2003—60,000,000shares) of ordinary share capital may be offered by the directors to eligible groupemployees. Each employee is limited to holding a maximum of 1,000,000 (2004—1,000,000;2003—1,000,000) options to acquire Sasol Limited shares. The exercise price ofthese options equals the market price of the underlying shares on the tradingday immediately preceding the granting of the option.

Foroptions granted prior to 25 October 1999, vesting periods for theseoptions are as follows:

·       1¤3of the options vest on the fourth anniversary of the grant;

·       1¤3of the options vest on the sixth anniversary; and

·       1¤3of the options vest on the eighth anniversary.

Foroptions granted after 25 October 1999, vesting periods for these optionsare as follows:

·       1¤3of the options vest on the second anniversary of the grant;

·       1¤3of the options vest on the fourth anniversary; and

·       1¤3of the options vest on the sixth anniversary.

F-64

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**20.**   Shareholders’ equity (Continued)

Under both of these vesting periods, the options maybe exercised at any time after vesting until the ninth anniversary of the grantdate.

Unless otherwise determined by the Board, shareoptions 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 lastday of service. On death, all options vest immediately and the estate has aperiod of twelve months to exercise these options. On retirement, at normalretirement age, the options vest immediately and the nine year expiry remainsunchanged.

Options available forgrant under the scheme amount to 8,820,000 shares (2004—12,303,500 shares; 2003—15,379,200shares). Of the total shares available under the scheme, 26,204,300 options(2004—20,598,600 options; 2003—18,125,600 options) had been converted intoshares.

Details of share optionactivity is as follows:
|                                                         | ** ** | **Weighted average** | ** ** | **Number** | ** ** |
|---------------------------------------------------------|------------|---------------------------|------------|------------|------------|
| ** **                                              | ** ** | **option/exercise**       | ** ** | **of**     | ** ** |
| ** **                                              | ** ** | **prices (rands)**   | ** ** | **shares** | ** ** |
| Outstanding at 30 June 2002                        |       |                      | 55.98      |       |       | 24,067,000 |   |
| Granted                                                 |       |                      | 107.76     |       |       | 4,942,300 |   |
| Forfeited                                               |       |                      | 115.18     |       |       | (44,000 | ) |
| Expired                                                 |       |                      | 68.74      |       |       | (540,400 | ) |
| Exercised                                               |       |                      | 39.19      |       |       | (1,929,700 | ) |
| Outstanding at 30 June 2003                        |       |                      | 66.40      |       |       | 26,495,200 |   |
| Granted                                                 |       |                      | 90.99      |       |       | 3,950,700 |   |
| Forfeited                                               |       |                      | 92.14      |       |       | (63,100 | ) |
| Expired                                                 |       |                      | 74.14      |       |       | (811,900 | ) |
| Exercised                                               |       |                      | 45.26      |       |       | (2,473,000 | ) |
| **Outstanding at 30 June 2004**                    | ** ** | ** **                | **71.77**  |       |       | **27,097,900** |   |
| **Granted**                                             | ** ** | ** **                | **120.34** |       | ** ** | **4,208,800** | ** ** |
| **Forfeited**                                           | ** ** | ** **                | **128.70** |       | ** ** | **(43,700** | **)** |
| **Expired**                                             | ** ** | ** **                | **83.99**  |       | ** ** | **(681,600** | **)** |
| **Exercised**                                           | ** ** | ** **                | **55.33**  |       | ** ** | **(5,605,700** | **)** |
| **Outstanding at 30 June 2005**                    | ** ** | ** **                | **83.18**  |       | ** ** | **24,975,700** | ** ** |
| **Vested, but not yet exercised at 30  June 2005** | ** ** | ** **                | ** ** |       | ** ** | **5,034,700** | ** ** |
| Vested, but not yet exercised at 30 June 2004      |       |                      |       |       |       | 5,567,000 |   |
| Vested, but not yet exercised at 30 June 2003      |       |                      |       |       |       | 2,829,700 |   |

 

F-65

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**20.**   Shareholders’ equity (Continued)

The following tablesummarises weighted average option exercise price information:
|                                             | ** ** | **Options outstanding** | ** **     | **Options vested, but not yet excercised** | ** ** |
|---------------------------------------------|------------|------------------------------|----------------|---------------------------------------------------------------------|------------|
| ** **                                  | ** ** | **Number**                   | ** **     | **Weighted**                                                        | ** ** | **Weighted** | ** ** | **Number** | ** ** | **Weighted** | ** ** |
| ** **                                  | ** ** | **outstanding**              | ** **     | **average**                                                         | ** ** | **average** | ** ** | **vested** | ** ** | **average** | ** ** |
| **Range of exercise prices** | ** ** | ** **                   | ** **     | **at 30 June 2005**                                  | ** ** | **remaining life**(a) | ** ** | **exercise price** | ** ** | **  at 30 June 2005  ** | ** ** | **  exercise price  ** | ** ** |
| **R23.10-R30.00**                           | ** ** |                         | **1,431,100**  | ** **                                                          |       |   | **1.95** | ** ** |   |   | **24.94** | ** ** |   |   | **387,400** | ** ** |   |   | **24.95** | ** ** |   |
| **R30.01-R40.00**                           | ** ** |                         | **974,900**    | ** **                                                          |       |   | **3.69** | ** ** |   |   | **37.62** | ** ** |   |   | **362,400** | ** ** |   |   | **37.77** | ** ** |   |
| **R40.01-R50.00**                           | ** ** |                         | **2,267,700**  | ** **                                                          |       |   | **3.37** | ** ** |   |   | **42.49** | ** ** |   |   | **637,600** | ** ** |   |   | **42.07** | ** ** |   |
| **R50.01 -R60.00**                          | ** ** |                         | **3,055,400**  | ** **                                                          |       |   | **3.61** | ** ** |   |   | **54.50** | ** ** |   |   | **1,155,500** | ** ** |   |   | **54.23** | ** ** |   |
| **R60.01 -R70.00**                          | ** ** |                         | **555,400**    | ** **                                                          |       |   | **4.91** | ** ** |   |   | **69.02** | ** ** |   |   | **139,900** | ** ** |   |   | **69.30** | ** ** |   |
| **R70.01 -R80.00**                          | ** ** |                         | **3,221,300**  | ** **                                                          |       |   | **5.07** | ** ** |   |   | **78.64** | ** ** |   |   | **762,900** | ** ** |   |   | **78.46** | ** ** |   |
| **R80.01 -R90.00**                          | ** ** |                         | **3,866,100**  | ** **                                                          |       |   | **6.92** | ** ** |   |   | **88.11** | ** ** |   |   | **324,800** | ** ** |   |   | **89.23** | ** ** |   |
| **R90.01 -R100.00**                         | ** ** |                         | **802,700**    | ** **                                                          |       |   | **7.74** | ** ** |   |   | **96.87** | ** ** |   |   | **44,100** | ** ** |   |   | **93.71** | ** ** |   |
| **R100.01 -R110.00**                        | ** ** |                         | **1,046,500**  | ** **                                                          |       |   | **7.08** | ** ** |   |   | **105.02** | ** ** |   |   | **113,800** | ** ** |   |   | **106.81** | ** ** |   |
| **R110.01 -R120.00**                        | ** ** |                         | **6,466,300**  | ** **                                                          |       |   | **6.87** | ** ** |   |   | **114.20** | ** ** |   |   | **1,064,800** | ** ** |   |   | **115.88** | ** ** |   |
| **R120.01 -R130.00**                        | ** ** |                         | **384,600**    | ** **                                                          |       |   | **8.31** | ** ** |   |   | **125.73** | ** ** |   |   | **—** | ** ** |   |   | **—** | ** ** |   |
| **R130.01 -R132.40**                        | ** ** |                         | **156,500**    | ** **                                                          |       |   | **6.13** | ** ** |   |   | **132.57** | ** ** |   |   | **41,500** | ** ** |   |   | **132.40** | ** ** |   |
| **R140.01 -R150.00**                        | ** ** |                         | **266,400**    | ** **                                                          |       |   | **9.00** | ** ** |   |   | **144.21** | ** ** |   |   | **—** | ** ** |   |   | **—** | ** ** |   |
| **R150.01 -R160.00**                        | ** ** |                         | **396,700**    | ** **                                                          |       |   | **9.00** | ** ** |   |   | **156.30** | ** ** |   |   | **—** | ** ** |   |   | **—** | ** ** |   |
| **R170.01 -R170.20**                        | ** ** |                         | **84,100**     | ** **                                                          |       |   | **9.00** | ** ** |   |   | **170.20** | ** ** |   |   | **—** | ** ** |   |   | **—** | ** ** |   |
| ** **                                  | ** ** |                         | **24,975,700** | ** **                                                          |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | **5,034,700** | ** ** |   |   | ** ** | ** ** |   |
|                                             |            |                              |                |                                                                     |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

----

(a)    Weightedaverage remaining life (years) of options granted

In accordance with APBOpinion No. 25 and related interpretations, compensation cost recognizedfor the group’s share incentive plans amounted to R69 million(compensation cost in 2004—R25 million, compensation income in 2003—R7 million).

***Dividends***

An interim dividend of 230 cents per share (2004—215cents per share, 2003—215 cents per share) was paid on 11 April 2005. Afinal dividend in respect of the year ended 30 June 2005 of 310 cents pershare (2004—235 cents per share, 2003—235 cents per share) was declared on 9 September 2005.As the final dividend for 2005 was declared subsequent to the financial yearend, no liability was recognized in the annual financial statements in respectof this final dividend.

The cash flow of the finaldividend of 310 cents per share is expected to be approximatelyR1,912 million.

**21.**   Commitments andcontingencies

***Lease and purchase commitments***

The company and its subsidiaries occupy certainpremises under leases which are classified as capital leases which expire atvarious dates until 2034. Sasol Chemie had various outstanding purchasecommitments primarily for feedstock purchases. The commitments arise mainlyfrom take-or-pay agreements. In general such commitments are at prices not inexcess of current market prices.

F-66

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**21.**   Commitmentsand contingencies (Continued)

Thegroup’s future minimum capital and operating lease payments and purchasecommitments are as follows:
| 2005                                      | ** ** | ** **                       | ** ** | **Capital** | ** ** | **Operating** | ** ** | **Purchase  commitments** | ** ** |
|-------------------------------------------|------------|----------------------------------|------------|-------------|------------|---------------|------------|---------------------------|------------|
| ** **                                | ** ** | **(Rand in millions)** | ** ** |
| Within 1 year                             | ** ** |                             | **146**    | ** **  |       |          | **285**    | ** **                |       |   | **2,356** | ** ** |   |
| Within 1-2 years                          | ** ** |                             | **90**     | ** **  |       |          | **213**    | ** **                |       |   | **2,226** | ** ** |   |
| Within 2-3 years                          | ** ** |                             | **81**     | ** **  |       |          | **177**    | ** **                |       |   | **2,200** | ** ** |   |
| Within 3-4 years                          | ** ** |                             | **86**     | ** **  |       |          | **151**    | ** **                |       |   | **1,577** | ** ** |   |
| Within 4-5years                           | ** ** |                             | **78**     | ** **  |       |          | **124**    | ** **                |       |   | **867** | ** ** |   |
| More than 5 years                         | ** ** |                             | **693**    | ** **  |       |          | **266**    | ** **                |       |   | **3,194** | ** ** |   |
| Total minimum lease/purchase  commitments | ** ** |                             | **1,174**  | ** **  |       |          | **1,216**  | ** **                |       |   | **12,420** | ** ** |   |
| Less: amounts  representing interest      | ** ** |                             | **(234**   | **)**       |       |          | ** ** | ** **                |       |   | ** ** | ** ** |   |
| ** **                                | ** ** |                             | **940**    | ** **  |       |          | ** ** | ** **                |       |   | ** ** | ** ** |   |

 

Operating rent expenseincurred amounted to R413 million (2004—R304 million, 2003—R340 million).

***Capital commitments***

Commitments are budgeted, approved and reported interms of the management approach used for segmental reporting.

Contractedand authorized capital expenditure are summarised below:
|                                        | ** ** | **30 June**                 | ** ** | **30 June** | ** ** |
|----------------------------------------|------------|----------------------------------|------------|------------------|------------|
| ** **                             | ** ** | **2005**                         | ** ** | **2004**         | ** ** |
| ** **                             | ** ** | **(Rand in millions)** | ** ** |
| **Capital  expenditure**               |       | ** **                       | ** ** |             |       |
| Authorized and  contracted for         | ** ** | **26,679**                       | ** ** | 18,216           |       |
| Authorized but  not yet contracted for | ** ** | **7,740**                        | ** ** | 14,397           |       |
| **Authorized  capital expenditure**    | ** ** | **34,419**                       | ** ** | 32,613           |       |
| Less: expenditure  to date             | ** ** | **(15,250**                      | **)**      | (7,833           | )          |
| **Unspent  capital commitments**       | ** ** | **19,169**                       | ** ** | 24,780           |       |

 

As of 30 June 2005, the group had authorizedapproximately R34 billion of group capital expenditure of which we had spentR15 billion up to 30 June 2005. Of the unspent capital commitments of R19billion, we expect to spend R15 billion in 2006, R3 billion in 2007 and R1billion in 2008 and thereafter.

F-67

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**21.**   Commitments and contingencies (Continued)

Significant projects, eachin excess of R200 million, in progress with a total amount approved at 30 June 2005of approximately R34 billion include:
| Capital Project                                    | ** ** | ** **                     | ** ** | **Business** | ** ** | **  Currency  ** | ** ** | ** ** | ** ** | **Amount  approved**   | ** ** | **Capital commitment at  30 June 2005** | ** ** | **Expected  completion  date** | ** ** |
|----------------------------------------------------|------------|--------------------------------|------------|--------------|------------|--------------------------------------|------------|------------|------------|------------------------|------------|----------------------------------------------|------------|--------------------------------|------------|
| ** **                                         | ** ** | ** **                     | ** ** | ** **   | ** ** | ** **                           | ** ** | ** ** | ** ** | **(Rand in millions)** | ** ** | ** **                                   | ** ** |
| Escravos GTL                                       |       | Sasol Synfuels  International  |       |         | US$ m |                                 |       | *          |       |                   | 945        |                                         |       |                           | 4,937      |   |   |   | Mar-09 |   |   |
| Oryx GTL (Qatar)                                   |       | Sasol Synfuels  International  |       |         | US$ m |                                 |       | *          |       |                   | 466        |                                         |       |                           | 1,063      |   |   |   | May-06 |   |   |
| Ethane cracker, HDPE and  LDPE plants in Iran |       | Sasol Polymers                 |       |         | US$ m |                                 |       | *          |       |                   | 462        |                                         |       |                           | 2,457      |   |   |   | May-06 |   |   |
| Project Turbo                                      |       | Sasol Polymers                 |       |         | R m        |                                 |       |       |       |                   | 7,618      |                                         |       |                           | 3,152      |   |   |   | Aug-06 |   |   |
| Project Turbo                                      |       | Sasol Synfuels                 |       |         | R m        |                                 |       |       |       |                   | 5,722      |                                         |       |                           | 1,900      |   |   |   | Mar-06 |   |   |
| 3rd Octene train                                   |       | Sasol Olefins and  Surfactants |       |         | R m        |                                 |       | **         |       |                   | 1,265      |                                         |       |                           | 1,132      |   |   |   | June-07 |   |   |
| Natref clean fuels  project                   |       | Sasol Liquid fuels business    |       |         | R m        |                                 |       |       |       |                   | 520        |                                         |       |                           | 288        |   |   |   | Oct-05 |   |   |
| New waste recycling  facility                      |       | Sasol Synfuels                 |       |         | R m        |                                 |       |       |       |                   | 520        |                                         |       |                           | 151        |   |   |   | Oct-05 |   |   |
| Project Landlord                                   |       | Sasol Synfuels                 |       |         | R m        |                                 |       |       |       |                   | 429        |                                         |       |                           | 199        |   |   |   | Dec-05 |   |   |
| Syferfontein Kriel South  Phase 2                  |       | Sasol Mining                   |       |         | R m        |                                 |       |       |       |                   | 299        |                                         |       |                           | 157        |   |   |   | Oct-05 |   |   |
| Mooikraal Undergound  coal mine                    |       | Sasol Mining                   |       |         | R m        |                                 |       |       |       |                   | 229        |                                         |       |                           | 102        |   |   |   | Nov-05 |   |   |

----

*       RandEquivalent information below has been presented for the year ended 30June 2005 on an unaudited basis solely for the convenience of the readerand is computed at the noon buying rate for customs purposes of 1US$ /6.35Rand, as reported by the Federal Reserve Bank of New York on 30 September 2005.

**     Subsequent to 30 June 2005, at the meeting held on9 September 2005, the Board approved an increase in the project cost toR2,055 million, from R1,265 million, subject to the renegotiations of theselling price of the product which were successful.
| Capital Project                          | ** ** | ** **                    | ** ** | **Business** | ** ** | **Currency** | ** ** | **Amount  approved** | ** ** | **Capital commitment at  30 June 2005** | ** ** |
|-----------------------------------------------|------------|-------------------------------|------------|--------------|------------|--------------|------------|----------------------|------------|-------------------------------------------------------------|------------|
| Escravos GTL                                  |       | Sasol  Synfuels International |       |         | R m        |         |       |                 | 6,000      |                                                        |       |   | 4,937 |   |   |
| Oryx GTL (Qatar)                              |       | Sasol  Synfuels International |       |         | R m        |         |       |                 | 2,959      |                                                        |       |   | 1,063 |   |   |
| Ethane cracker, HDPE and  LDPE plants in Iran |       | Sasol Polymers                |       |         | R m        |         |       |                 | 2,934      |                                                        |       |   | 2,457 |   |   |

 

F-68

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**21.**   Commitments and contingencies (Continued)

***Guarantees:***

Thegroup has issued the following guarantees for which the liabilities have notbeen included in the balance sheet:
|                                                | ** ** | **30 June**                 | ** ** | **30 June** | ** ** |
|------------------------------------------------|------------|----------------------------------|------------|------------------|------------|
| ** **                                     | ** ** | **2005**                         | ** ** | **2004**         | ** ** |
| ** **                                     | ** ** | **Guarantee**                    | ** ** | **Guarantee**    | ** ** |
| ** **                                     | ** ** | **(Rand in millions)** | ** ** |
| Guarantees in  respect of GTL ventures         | ** ** |                             | **7,839**  |             |       |   | 7,070 |   |   |
| Guarantees in  respect of letters of credit    | ** ** |                             | **698**    |             |       |   | 63 |   |   |
| Guarantee to  RWE-DEA                          | ** ** |                             | **242**    |             |       |   | 227 |   |   |
| Customs and  excise                            | ** ** |                             | **164**    |             |       |   | 130 |   |   |
| Guarantees in  respect of natural gas pipeline | ** ** |                             | **14**     |             |       |   | 62 |   |   |
| Miscellaneous  other guarantees                | ** ** |                             | **640**    |             |       |   | 311 |   |   |
| ** **                                     |       |                             | **9,597**  |             |       |   | 7,863 |   |   |

 

***Guarantees in respect of GTLventures***

Sasolhas issued the following significant guarantees for the obligations of variousof its subsidiaries in respect of the GTL ventures. These guarantees relate tothe construction and funding of Oryx GTL in Qatar and Escravos GTL in Nigeria,including inter alia (2005 US dollar amounts translated at R6.67 per US dollarthe rate at 30 June 2005 (2004 amounts at R6.21 per US dollar the rate at 30June 2004)):

·       SasolLimited issued a completion guarantee for its portion of the project debt ofOryx GTL capped at US$ 343 million (R2,286 million) plus interest andcosts subject to the project demonstrating a minimum level of sustainedproduction over a continuous period of ninety days and catalyst deactivationwithin acceptable parameters for at least two hundred and seventy days, aftercommissioning. It is estimated that the project will be commissioned during May 2006.

·       SasolLimited issued a guarantee for the take-or-pay obligations of its wholly ownedsubsidiary under the gas sale and purchase agreement (GSPA) entered intobetween Oryx GTL Limited, Qatar Petroleum and ExxonMobil Middle East GasMarketing Limited, by virtue of this subsidiary’s 49% shareholding in Oryx GTLLimited. Sasol Limited’s exposure is limited to the amount of approximatelyUS$123 million (R820 million) (2004—US$100 million approximately(R621 million)). In terms of the GSPA, Oryx GTL Limited is contractuallycommitted to purchase minimum volumes of gas from Qatar Petroleum andExxonMobil Middle East Gas Marketing Limited on a take-or-pay basis. ShouldOryx GTL terminate the GSPA prematurely, Sasol Limited’s wholly ownedsubsidiary will be obliged to take-or pay its 49% share of gas offtakerequirements by way of damages for a maximum amount of US$ 123 million (R820 million). The term of the GSPA is 25 years from the date ofcommencement of operations. It is estimated that the project will be commissionedduring May 2006.

·       SasolLimited issued a guarantee for the obligation of its wholly owned subsidiary tocontribute 49% of the required equity in respect of the investment in Oryx GTLLimited. Sasol’s equity contribution is estimated at US$160 million(R1,066 million) (2004—US$ 75 million (R466 million)). It is expected thatthe project will be commissioned during May 2006.

F-69

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**21.**   Commitments and contingencies (Continued)

·       SasolLimited issued a performance guarantee for the obligations of its subsidiariesin respect of the construction of Escravos GTL in Nigeria for the duration ofthe investment in Escravos GTL limited to an amount of US$250 million(R1,666 million).

·       SasolLimited issued a performance guarantee for the obligations of its subsidiariesin respect of and for the duration of the investment in Sasol Chevron HoldingsLimited, limited to an amount of US$ 250 million (R1,666 million).Sasol Chevron Holdings Limited is a joint venture between a wholly ownedsubsidiary of Sasol Limited and Chevron Texaco Corporation.

All guarantees listedabove are issued in the normal course of business. The group has guaranteed thefulfilment of various subsidiaries’ and joint ventures’ obligations in terms ofcontractual agreements.

***Product warranties***

The group provides productwarranties with respect to certain products sold to customers in the ordinarycourse of business. These warranties typically provide that products sold willconform to specifications. The group generally does not establish a liabilityfor product warranty based on a percentage of turnover or other formula. Thegroup accrues a warranty liability on a transaction-specific basis depending onthe individual facts and circumstances related to each sale. Both the liabilityand the annual expense related to product warranties are insignificant to theconsolidated group financial statements.

***Contingencies—Litigationand competition matters***

The group is party tolegal proceedings in the ordinary course of business and the group does notbelieve that there are any pending legal proceedings which could have amaterial adverse effect on the group’s business, operating results or financialcondition.

*Litigation matters*

EDC pipeline litigation

Sasol North America Inc. (“SasolNA”) had numerous separate pending cases which originated as a result of a 1994rupture of the Conoco ethylene dichloride (“EDC”) pipeline connecting Conoco’sdock the Sasol NA’s vinyl chloride monomer plant in the United States ofAmerica. Plaintiffs sought compensatory and punitive damages as a result ofalleged exposure to EDC while employed as contractors, hired by Conoco, toclean up the EDC. As of 30 June 2005 there is a class action and 13lawsuits brought by approximately 500 plaintiffs pending. Sasol NA hassuccessfully obtained a substantial amount of insurance cover from the costsincurred in connection with this litigation but is not seeking additionalcoverage.

Under the Asset and SharePurchase agreement with RWE-DEA for the acquisition of Condea, the costs inrespect of the EDC pipeline cases are reimbursable by RWE-DEA less insuranceand tax benefits.

Sulfur dioxide litigation

During January 2003Sasol NA and ConocoPhillips refinery released a quantity of sulfur dioxide tothe environment as a result of a power outage in the ConocoPhillips LakeCharles refinery. Lawsuits were filed against ConocoPhillips and Sasol NAsince been added as a defendant. At 30 June 2005 more than 

F-70

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**21.**   Commitments and contingencies (Continued)

600 lawsuitshad been filed on behalf of more than 20,000 plaintiffs. ConocoPhillipsand Sasol NA are jointly defending the lawsuits and Sasol NA’sliability for defense and settlement costs has been limited by agreement, to anamount not material for group purposes.

Almatislitigation

AlmatisInc. filed a suit against Sasol Olefins and Surfactants, Germany , and Sasol NAin March 2005 alleging breach of a 2001 alumina supply contract as well asmonopolization and price discrimination in the high purity alumina marketresulting in damages totaling US$60 million. In September 2005 AlmatisInc. dismissed its suit without prejudice to refiling in the future.

Yellow Rock litigation

In July 2005 Sasol NAreceived notice of suit by Yellow Rock LLC alleging over US$1 million indamages and seeking an injunction that would require Sasol NA to remove itsethylene from Salt Storage Dome 1-A in Sulfur, Louisiana near the LakeCharles Chemical Complex. The suit alleges that in winter 2004 the Dome 1-Awas leaking ethylene and caused the “blow out” of an oil and gas explorationwell being drilled by Yellow Rock. A well integrity assessment performed by anindependent consultant in early 2005 had concluded that the Dome 1-A wasnot leaking. These results were conveyed to Yellow Rock and were signed off onby the Louisiana Department of Natural Resources, but did not deter the filingof suit.

Fly Ash Plant

Sasol Synfuels (Pty)Limited is in legal proceedings with regard to the operation of a plant inSecunda. Ashcor has claimed damages of R313 million relating to their inabilityto develop their business and a projected loss of future cash flows. The trialwas postponed part-heard after a three week trial period. The trial is in progress.

Retail Filling StationGuidelines

The Gauteng Department ofAgriculture Conservation and Environment (“DACE”) has developed guidelinesrelating to the development and upgrading of filling stations within theGauteng region in South Africa which constrain the development of fillingstations. A number of applications for authorization for filling stations inwhich Sasol LFB has an interest have been rejected. A number of appeals werelodged, one of which was taken on review to the High Court. Sasol wassuccessful insofar as the court found that DACE had relied on inappropriate andirrelevant considerations in coming to its decision. The State took the matteron appeal to the Supreme Court of Appeal and the appeal was successful.

Joel Nagashigo and others

A class action was filedbefore the Supreme Court of the State of New York, County of New York, by anundisclosed number of plaintiffs (represented by attorney Edward Fagan) whoeach claimed US$1 million plus punitive damages of US$5 million inrespect of claims based on negligence, product liability, failure to warn ofdangers and emotional distress together with actual damages for past and futuremedical expenses. Sasol Limited and Natref and other non Sasol companies werecited as defendants. It was not clear from the summons what the factualfoundations of the claim were. During December 2004 the court dismissedthe complaint against Sasol Limited and Natref for lack of personaljurisdiction and on the basis of inconvenient forum.

F-71

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**21.**   Commitments and contingencies (Continued)

Dorothy Molefi and others

Certain plaintiffs suedSasol Limited and Natref and various other defendants in two claims in theUnited States District Court. The plaintiffs are represented by attorney EdwardFagan. These claims are similar to many served against a large number of multi-nationalcorporations worldwide. The claims against Sasol Limited were consolidated withother related claims against many other multi-national corporationsbefore the Federal Court of New York. In November 2004 the plaintiffs’claims in the related cases were dismissed.

*Competition matters*

Nationwide Poles

The Competition Commissionreceived a complaint against Sasol Oil (Pty) Limited (Carbo-Tar division) in April 2003.The complaint was referred by the plaintiff to the Competition Tribunal. TheCompetition Tribunal found against Sasol that during the period of thecomplaint Sasol was a dominant firm whose conduct met the test required inestablishing prohibited price discrimination. The company filed a notice ofappeal and the appeal was heard by the Competition Appeal Court during September 2005.We are currently awaiting the outcome of the appeal.

Nutri-Flo

The Competition Commissionalleges that Sasol, Omnia and Kynoch have engaged in price fixing or marketsharing agreements and has decided to refer its findings to the CompetitionTribunal. The Commission has recommended the imposition of an administrativepenalty of 10% on turnover. Should the maximum fine be imposed on the basis ofthe fertilizer and ammonia turnover of Sasol Nitro, the fine would be in theorder of R320 million. Sasol has applied to the Competition Appeal Court tohave the referral set aside on the basis that a substantially similar complaintwas previously rejected by the Commission and Sasol believes the Commission didnot comply with certain requirements of the Competition Act in carrying out itsinvestigation. The application was heard in September 2005, we arecurrently awaiting the outcome of the appeal.

Sasol Wax competitionmatters

On 28 and 29 April 2005,the European Commission conducted an investigation at the offices of Sasol WaxInternational AG and its subsidiary Sasol Wax GmbH, both located in Hamburg,Germany. A parallel investigation is being conducted by the US Department ofJustice in the United States. On 28 April 2005 Sasol Wax Americas Inc.received a subpoena for information from the United States District Courtregarding its wax sales activities. The investigations in the US and theEuropean Union arise from alleged anticompetitive behaviour among industrymembers in the paraffin wax industry. Sasol Wax is co-operating with thecompetition authorities in the US and in the European Union in order to clarifythis issue.

Profert

A plaintiff filed acomplaint against Sasol Nitro alleging that Sasol was engaged in anexclusionary act by refusing to supply goods to the plaintiff. Submissions weremade to the Competition Commission to the effect that during 2002, Sasol wasunable to supply the product to the plaintiff due to product shortages, that itis not dominant in the supply of that product and that it has not engaged inprice discrimination.

F-72

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**21.**   Commitments and contingencies (Continued)

Uhambo Oil

On 6 February 2004,Sasol announced that it and Petronas were in discussions concerning thecombination of Sasol LFB and Petronas’ South African liquid fuels business,Engen, in a joint venture to create a leading South African liquid fuelsbusiness. The new liquid fuels business will be effected by way of a jointventure, Uhambo Oil, in which Sasol and Petronas will each have an equal 37.5%interest and in which Black Economic Empowerment partners (both existing andnew) will hold a combined 25% interest. The Definitive Agreements were signedon 1 November 2004. The transaction is subject to approval by the SouthAfrican Competition Authorities. The Competition Commission has made aconditional positive recommendation to the Competition Tribunal. TheCompetition Tribunal hearing of this matter is scheduled to take place in October 2005.A decision by the Competition Tribunal is expected by the end of 2005. Approvalof the transaction by the European Commission was granted in mid-February 2005.

Sale of Phosphoric Acidproduction assets

Sasol Chemical IndustriesLimited has agreed to sell its phosphoric acid production plant in Phalaborwaas well as storage assets located in Richards Bay to Foskor Limited, failingwhich it intends to shut the plant for financial reasons. In terms of competitionlaws, the sale is considered a large merger that is notifiable to thecompetition authorities. The merger has been filed with such authorities forassessment and is currently being investigated by the authorities.

*Other litigation matters*

From time to time Sasolcompanies are involved in litigation in the normal course of business. Althoughthe outcome of these proceedings and claims cannot be predicted with certainty,the group does not believe that the outcome of any of these cases would have amaterial effect on the group’s financial results.

***EnvironmentalOrders***

The group is subject tonumerous national and local laws and regulations that regulate the discharge ofmaterials into the environment or that otherwise relate to the protection ofhuman health and the environment in all locations in which it operates. As withthe oil and gas and chemical industries, generally, compliance with existingand anticipated environmental health, safety and process safety laws andregulations increases the overall cost of business, including capital costs toconstruct, maintain, and upgrade equipment and facilities. These laws andregulations have required, and are expected to continue to require, the groupto make significant expenditures of both a capital and expense nature. Underthe agreement for the acquisition of Sasol Chemie, we received anindemnification from RWE-DEA for most of the costs of operational compliancewith respect to conditions existing at Condea Vista Company located in theUnited States on or before 1 March 2001 that we expect will surviveuntil at least 1 March 2006.

F-73

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**21.**   Commitmentsand contingencies (Continued)

***Mineral andPetroleum Royalty Bill***

Royalties from the SouthAfrican mining activities may become payable to the state under provisionscontained in the Mineral and Petroleum Royalty Bill. This bill was published inMarch 2003. The Department of Finance is presently consideringrepresentations from interested parties. The bill provides for a royalty rateof 2% on anthracite and bituminous coal (low ash and steam) and 1% onbituminous coal 

fordomestic energy consumption. The royalty is payable quarterly to the state.There is uncertainty as to whether or not further amendments will be made tothe bill and when the bill will become law.

Sasol is of the opinionthat any royalty imposed could impact on the financial results and the cost ofmining in South Africa.

***Borrowing facilities***

The group has borrowing facilities with majorfinancial institutions of approximately R40,000 million (2004—R23,000 million).Of these facilities approximately R19,000 million (2004—R8,000 million) hadbeen utilized at year end.

There were no events ofdefault for the years ended 30 June 2005 and 30 June 2004.

F-74

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**21.**   Commitments and contingencies (Continued)

***List of majorbanking facilities and debt arrangements at 30 June 2005:***
|                                                                    | ** ** | **Expiry Date** | ** ** | **Currency**   | ** ** | **Facility**                     | ** ** | **Utilization** | ** ** |
|--------------------------------------------------------------------|------------|----------------------|------------|----------------|------------|----------------------------------|------------|-----------------|------------|
| ** **                                                         | ** ** | ** **           | ** ** | **(millions)** | ** ** | **(Rand in millions)** | ** ** |
| **Sasol Financing**                                                |       |                 |       |           |       |                             |       |            |       |   |   |
| ***Uncommitted facilities***                                       |       |                 |       |           |       |                             |       |            |       |   |   |
| Commercial banking  facilities                                     |       | Various (short-term) |       | Rand           |       | 11,880                           |       |            | 2,328      |   |   |
| Commercial paper program                                           |       | None                 |       | Rand           |       | 6,000                            |       |            | 1,521      |   |   |
| ***Committed facility***                                           |       |                 |       |           |       |                             |       |            |       |   |   |
| Revolving credit  facility (syndicated)                            |       | May 2008        |       | Euro           |       | 3,226                            |       |            | 663        |   |   |
| ***Debt Arrangements***                                            |       |                 |       |           |       |                             |       |            |       |   |   |
| RSA Bond                                                           |       | August 2007     |       | Rand           |       | 2,000                            |       |            | 1,993      |   |   |
| Japan Bank for  International Co-operation                    |       | June 2013       |       | US Dollar      |       | 390                              |       |            | 390        |   |   |
| **Sasol Financing International**                                  |       |                 |       |           |       |                             |       |            |       |   |   |
| ***Uncommitted facilities***                                       |       |                 |       |           |       |                             |       |            |       |   |   |
| Commercial banking  facilities                                     |       | Various (short-term) |       | Euro           |       | 473                              |       |            | 2          |   |   |
| ***Debt Arrangement***                                             |       |                 |       |           |       |                             |       |            |       |   |   |
| Eurobond                                                           |       | June 2010       |       | Euro           |       | 2,420                            |       |            | 2,407      |   |   |
| **Other Sasol businesses**                                         |       |                 |       |           |       |                             |       |            |       |   |   |
| ***Asset based finance***                                          |       |                 |       |           |       |                             |       |            |       |   |   |
| Republic of Mozambique  Pipeline Investment Company (Pty) Limited* |       | December 2015   |       | Rand           |       | 2,362                            |       |            | 2,362      |   |   |
| Sasol Petroleum Temane  Limited*                                   |       | June 2015       |       | Euro and Rand  |       | 1,302                            |       |            | 1,302      |   |   |
| ***Debt arrangements***                                            |       |                 |       |           |       |                             |       |            |       |   |   |
| National Petroleum  Refiners of South Africa (Pty) Limited*        |       | Various              |       | Rand           |       | 1,491                            |       |            | 982        |   |   |
| ***Property finance leases***                                      |       |                 |       |           |       |                             |       |            |       |   |   |
| Sasol Liquid Fuels  Business*                                      |       | Various              |       | Rand           |       | 590                              |       |            | 590        |   |   |
| **Other  banking facilities and debt arrangements**                |       | Various              |       | Various        |       | 2,085                            |       |            | 1,019      |   |   |
|                                                               |       |                 | ** ** | ** **     | ** ** | **34,219**                       | ** ** | ** **      | **15,559** |   |   |
| **Comprising:**                                                    |       |                 |       |           |       |                             |       |            |       |   |   |
| Long-term debt (see note  19)                                      |       |                 |       |           |       |                             |       |            | 9,938      |   |   |
| Short-term debt (see  note 17)                                     |       |                 |       |           |       |                             |       |            | 5,355      |   |   |
| Bank overdraft                                                     |       |                 |       |           |       |                             |       |            | 266        |   |   |
|                                                               |       |                 |       |           | ** ** | ** **                       | ** ** | ** **      | **15,559** |   |   |

----

*       Facilities held by these subsidiaries

**Excluded from the aboveanalysis are borrowing facilities held by the group’s joint ventures**
| Oryx GTL Limited (Q.S.C)                               |   |   |       |       |       | 2,286     |       |       | 1,613     |   |   |
|--------------------------------------------------------|--------|--------|------------|------------|------------|-----------|------------|------------|-----------|--------|--------|
| Arya Sasol Polymer  Company                            |   |   |       |       |       | 1,564     |       |       | 728       |   |   |
| Sasol Dia Acrylates  (South Africa) (Pty) Limited |   |   |       |       |       | 984       |       |       | 750       |   |   |
| Other                                                  |   |   |       |       |       | 244       |       |       | 216       |   |   |
|                                                   |   |   | ** ** | ** ** | ** ** | **5,078** | ** ** | ** ** | **3,307** |   |   |

 

F-75

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and otherpost-retirement benefits

Sasol Limited has defined benefit pension funds anddefined contribution funds.

Contributions by the group, and in some cases theemployees, are made for funds set up in South Africa, and the UnitedStates of America, whilst no contributions are made by employees for plansestablished in other geographic areas.

Details of the principaldefined benefit funds are set out below.

**Sasol (South African operations)**

Sasol contributes to a pension fund which providesdefined retirement and death benefits based on final pensionable salary. Priorto 1 April 1994 this fund was open to all employees of Sasol in SouthAfrica. In 1994, all members were given the choice to voluntarily move to thenewly established defined contribution section of the fund, and approximately99% of contributing members chose to do so. At that date, the calculatedactuarial surplus of approximately R1,250 million was apportioned topensioners and members transferring to the defined contribution section, and aR200 million balance was transferred to Sasol.

Members of the defined benefit section are required tocontribute to the fund at the rate of 7.5% of pensionable salary. Sasol (SouthAfrican operations) meets the balance of the cost of providing benefits.Company contributions are based on the results of the actuarial valuation ofthe fund in terms of South African legislation and are agreed to by SasolLimited and the fund trustees.

Contributions for the defined contributions section,are paid by the members and Sasol at fixed rates.

The assets of the fund are held separately from thoseof the company in a trustee administered fund, registered in terms of the SouthAfrican Pension Funds Act, 1956. Included in the fund assets are 2,369,708Sasol Limited shares valued at R428,4 million at year end (2004—2,369,708shares at R232.2 million) purchased in terms of an approved investmentstrategy. The fund received dividends on Sasol Limited shares ofR11.01 million (2004—R13.6 million) during the year.

The pension charge for the year is determined inconsultation with the fund’s independent actuary and is calculated using thesame assumptions as those used at the last actuarial valuation of the fund. Thefund assets have been valued at fair value.

In December 2001 the Pension Funds SecondAmendment Act was promulgated. The Act generally provides for:

(i)            the payment ofenhanced benefits to former members and minimum pension increases forpensioners, and

(ii)        the apportionment of anyactuarial surplus existing in the fund, at the apportionment date, in anequitable manner between existing members including pensioners, former membersand the employer in such proportions as the Trustees of the fund shalldetermine.

In determining the prepayment asset of the fund at 30 June 2002,management, in consultation with the fund’s independent actuary, calculated thepotential cost of the payment of enhanced benefits to former members andminimum pension increases for pensioners. This resulted in a R478 millionincrease in the projected benefit obligation, which was disclosed as a planamendment. The remaining unrecognized prior service cost related to the planamendment has been included in the prepayment asset of the fund at 

F-76

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and other post-retirement benefits(Continued)

30 June 2005. Nodetermination of the further potential apportionment has been made as it isunlikely to eventuate until 2006 and is dependent on the actuarially calculatedsurplus, if any, that will exist at the apportionment date and thedeterminations of the Trustees of the fund.

A significant number ofthe employees are covered by union sponsored, collectively bargained, and insome cases, multi-employer defined contribution pension plans. Information fromthe administrators of these plans offering defined benefits is not sufficientto permit the company to determine its share, if any, of any unfunded vestedbenefits.

**Sasol Foreign operations**

Pension coverage foremployees of Sasol’s international operations is provided through separateplans. The group systematically provides for obligations under such plans asservices are rendered by qualifying employees by depositing funds with Trusteesfor those plans operating in the United States of America, or by creation of accountingobligations for other plans.

**FUNDED PLANS**

Theindividual fund funding details based on the latest actuarial valuations were:
| Pension fund                          | ** ** | ** **             | ** ** | **2005  South Africa** | ** ** | **2005  United States of  America** | ** ** |
|--------------------------------------------|------------|------------------------|------------|-----------------------------|------------|-----------------------------------------------|------------|
| Last actuarial  valuation/measurement date | ** ** | **31 March 2005** | ** ** | **30 June 2005**       | ** ** |
| **Full/interim**                           | ** ** | **Full**               | ** ** | **Full**                    | ** ** |
| Market value of  assets                    | ** ** | **R3,240 million**     | ** ** | **R590 million**            | ** ** |
| Valuation method  adopted                  | ** ** | **Projected unit**     | ** ** | **Projected unit**          | ** ** |
| Value of fund  assets/accrued benefits     | ** ** | **128.5**              | **%**      | **94.1**                    | **%**      |

 

Each of the pension fundassets are invested in a diversified range of equities, bonds, property andcash. The broad proportions in each asset class at the measurement date was asfollows:
|                       | ** ** | **South  Africa** | ** ** | **Foreign** | ** ** | **South  Africa** | ** ** | **Foreign** | ** ** |
|-----------------------|------------|-------------------|------------|-------------|------------|-------------------|------------|-------------|------------|
| **Pension Fund** | ** ** | ** **        | ** ** | **2005**    | ** ** | **2004**          | ** ** |
| ** **            | ** ** | **%**             | ** ** | **%**       | ** ** | **%**             | ** ** | **%**       | ** ** |
| Equities              |       |              |       |        |       |              |       |        |       |   |   |   |   |   |   |   |   |
| —local           | ** ** | ** **        | **61**     |        |       |              | **—** |        |       |   | 59 |   |   |   | — |   |   |
| —foreign         | ** ** | ** **        | **7**      |        |       |              | **70**     |        |       |   | 9 |   |   |   | 70 |   |   |
| Fixed interest        | ** ** | ** **        | **8**      |        |       |              | **30**     |        |       |   | 11 |   |   |   | 30 |   |   |
| Property              | ** ** | ** **        | **16**     |        |       |              | **—** |        |       |   | 18 |   |   |   | — |   |   |
| Other                 | ** ** | ** **        | **8**      |        |       |              | **—** |        |       |   | 3 |   |   |   | — |   |   |
| **Total**             | ** ** | ** **        | **100**    |        | ** ** | ** **        | **100**    |        |       |   | 100 |   |   |   | 100 |   |   |
|                       |            |                   |            |             |            |                   |            |             |            |  |  |  |  |  |  |  |  |  |  |

 

The investment objectives of the group’s pension plansare designed to generate returns that will enable the plans to meet theirfuture obligations. The precise amount for which these obligations will besettled depends on future events, including the life expectancy of the plan’smembers and salary inflation. The obligations are estimated using actuarialassumptions, based on the current economic environment.

F-77

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and other post-retirement benefits (Continued)

The pension plans seek to achieve total returns bothsufficient to meet expected future obligations as well as returns greater thanits policy benchmark reflecting the target weights of the asset classes used inits targeted strategic asset allocation.

In evaluating the strategic asset allocation choices,an emphasis is placed on the long-term characteristics of each individual assetclass, 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 correspondingimpact on the volatility and magnitude of plan contributions and expense andthe impact certain actuarial techniques may have on the plan’s recognition ofinvestment experience.

Thegroup targets the plan’s asset allocation within the following ranges withineach asset class:
|                    | ** ** | **South Africa** | ** ** | **Foreign** | ** ** |
|--------------------|------------|-----------------------|------------|-------------|------------|
| ** **         | ** ** | **Ranges**            | ** ** | **Ranges**  | ** ** |
| ** **         | ** ** | **Minimum**           | ** ** | **Maximum** | ** ** | **Minimum** | ** ** | **Maximum** | ** ** |
| ** **         | ** ** | **%**                 | ** ** | **%**       | ** ** | **%** | ** ** | **%** | ** ** |
| **Asset  classes** | ** ** |                  | ** ** | ** **  |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Equities           |       |                  |       | ** **  |       |   |   | ** ** |   |   |   | ** ** |   |   |   | ** ** |   |
| —Local        |       |                  | 50         | ** **  |       |   | 60 | ** ** |   |   | — | ** ** |   |   | — | ** ** |   |
| —Foreign      |       |                  | —     | ** **  |       |   | 15 | ** ** |   |   | 50 | ** ** |   |   | 75 | ** ** |   |
| Fixed interest     |       |                  | 10         | ** **  |       |   | 25 | ** ** |   |   | 20 | ** ** |   |   | 40 | ** ** |   |
| Property           |       |                  | 10         | ** **  |       |   | 25 | ** ** |   |   | — | ** ** |   |   | — | ** ** |   |
| Other              |       |                  | —     | ** **  |       |   | 10 | ** ** |   |   | — | ** ** |   |   | — | ** ** |   |

 

The group monitors investment performance andportfolio characteristics on a regular basis to ensure that managers aremeeting expectations with respect to their investment approach. There arerestrictions and controls placed on managers in this regard.

Funding is based onactuarially determined contributions. The following table sets forth ourprojected voluntary pension contributions for fiscal year 2006.
|                       | ** ** | **2006**                         | ** ** |
|-----------------------|------------|----------------------------------|------------|
| ** **            | ** ** | **South Africa**            | ** ** | **Foreign** | ** ** |
| ** **            | ** ** | **Projected**                    | ** ** |
| ** **            | ** ** | **(Rand in millions)** | ** ** |
| Pension contributions |       |                             | 4          |   |   |   | 40 |   |   |
|                       |            |                                  |            |  |  |  |  |  |  |

 

Theaccumulated benefit obligations for the year ended 30 June 2005 are:
|                                 | ** ** | **South Africa**            | ** ** | **Foreign** | ** ** | **Total** | ** ** |
|---------------------------------|------------|----------------------------------|------------|-------------|------------|-----------|------------|
| ** **                      | ** ** | **(Rand in millions)** | ** ** |
| Accumulated benefit  obligation |       |                             | 2,453      |        |       |      | 570        |   |   | 3,023 |   |
|                                 |            |                                  |            |             |            |           |            |  |  |  |  |

 

F-78

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and other post-retirement benefits (Continued)

The group expects thefollowing benefit payments to be paid out of the plans for the years indicated.The expected benefits are based on the same assumptions used to measure thegroup’s benefit obligation as at 30 June 2005 and include estimated futureemployee service.
|            | ** ** | **South Africa**            | ** ** | **Foreign** | ** ** | **Total** | ** ** |
|------------|------------|----------------------------------|------------|-------------|------------|-----------|------------|
| ** ** | ** ** | **(Rand in millions)** | ** ** |
| 2006       |       |                             | 208        |        |       |      | 38         |   |   | 246 |   |
| 2007       |       |                             | 233        |        |       |      | 44         |   |   | 277 |   |
| 2008       |       |                             | 246        |        |       |      | 52         |   |   | 298 |   |
| 2009       |       |                             | 260        |        |       |      | 64         |   |   | 324 |   |
| 2010       |       |                             | 275        |        |       |      | 66         |   |   | 341 |   |
| 2011-2015  |       |                             | 1648       |        |       |      | 383        |   |   | 2,031 |   |
|       |       |                             | 2,870      |        |       |      | 647        |   |   | 3,517 |   |

 

Reconciliation of thefunded status to amounts recognized in the consolidated balance sheets:
|                                                   | ** ** | **Pension Benefits**        | ** ** |
|---------------------------------------------------|------------|----------------------------------|------------|
| ** **                                        | ** ** | **South Africa**            | ** ** | **Foreign** | ** ** | **Total** | ** ** |
| ** **                                        | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** |
| ** **                                        | ** ** | **(Rand in millions)** | ** ** |
| ***Change  in projected benefit obligation***     |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Projected benefit obligation at beginning of year |       |                             | **2,328**  | ** ** |   |   | 2,188 |   |   |   | **555** | ** ** |   |   | 954 |   |   |   | **2,883** | ** ** |   |   | 3,142 |   |   |
| Change due to remeasurement                       |       |                             | **—** | ** ** |   |   | — |   |   |   | **—** | ** ** |   |   | (44 | ) |   |   | **—** | ** ** |   |   | (44 | ) |   |
| Translation of foreign entities                   |       |                             | **—** | ** ** |   |   | — |   |   |   | **41** | ** ** |   |   | (117 | ) |   |   | **41** | ** ** |   |   | (117 | ) |   |
| Service cost                                      |       |                             | **5**      | ** ** |   |   | 3 |   |   |   | **21** | ** ** |   |   | 26 |   |   |   | **26** | ** ** |   |   | 29 |   |   |
| Interest cost                                     |       |                             | **202**    | ** ** |   |   | 231 |   |   |   | **40** | ** ** |   |   | 39 |   |   |   | **242** | ** ** |   |   | 270 |   |   |
| Member contributions                              |       |                             | **2**      | ** ** |   |   | 2 |   |   |   | **—** | ** ** |   |   | — |   |   |   | **2** | ** ** |   |   | 2 |   |   |
| Retiree contributions^                            |       |                             | **440**    | ** ** |   |   | — |   |   |   | **—** | ** ** |   |   | — |   |   |   | **440** | ** ** |   |   | — |   |   |
| **Plan amendments+**                              |       |                             | **—** | ** ** |   |   | — |   |   |   | **—** | ** ** |   |   | 59 |   |   |   | **—** | ** ** |   |   | 59 |   |   |
| Actuarial (gains) / losses                        |       |                             | **(271**   | **)** |   |   | 90 |   |   |   | **109** | ** ** |   |   | — |   |   |   | **(162** | **)** |   |   | 90 |   |   |
| Disposal*                                         |       |                             | **—** | ** ** |   |   | — |   |   |   | **(52** | **)** |   |   | (238 | ) |   |   | **(52** | **)** |   |   | (238 | ) |   |
| Settlements                                       |       |                             | **—** | ** ** |   |   | — |   |   |   | **(15** | **)** |   |   | (83 | ) |   |   | **(15** | **)** |   |   | (83 | ) |   |
| Benefits paid                                     |       |                             | **(187**   | **)** |   |   | (186 | ) |   |   | **(50** | **)** |   |   | (41 | ) |   |   | **(237** | **)** |   |   | (227 | ) |   |
| **Projected benefit obligation at end of year**   | ** ** | ** **                       | **2,519**  | ** ** | ** ** | ** ** | 2,328 |   | ** ** | ** ** | **649** | ** ** | ** ** | ** ** | 555 |   | ** ** | ** ** | **3,168** | ** ** | ** ** | ** ** | 2,883 |   |   |

 

F-79

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and other post-retirement benefits (Continued)
|                                                       | ** ** | **Pension Benefits**        | ** ** |
|-------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                            | ** ** | **South Africa**            | ** ** | **Foreign** | ** ** | **Total** | ** ** |
| ** **                                            | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** |
| ** **                                            | ** ** | **(Rand in millions)** | ** ** |
| ***Fair  value of plan assets at beginning of year*** |       |                             | **2,279**  | ** ** |   |   | 1,871 |   |   |   | **514** | ** ** |   |   | 738 |   |   |   | **2,793** | ** ** |   |   | 2,609 |   |   |
| Foreign currency  exchange rate changes               |       |                             | **—** | ** ** |   |   | — |   |   |   | **38** | ** ** |   |   | (99 | ) |   |   | **38** | ** ** |   |   | (99 | ) |   |
| Actual return on plan  assets                         |       |                             | **702**    | ** ** |   |   | 588 |   |   |   | **31** | ** ** |   |   | 57 |   |   |   | **733** | ** ** |   |   | 645 |   |   |
| Employer contributions                                |       |                             | **4**      | ** ** |   |   | 4 |   |   |   | **94** | ** ** |   |   | 147 |   |   |   | **98** | ** ** |   |   | 151 |   |   |
| Plan participant  contributions                       |       |                             | **2**      | ** ** |   |   | 2 |   |   |   | **—** | ** ** |   |   | — |   |   |   | **2** | ** ** |   |   | 2 |   |   |
| Retiree contributions^                                |       |                             | **440**    | ** ** |   |   | — |   |   |   | **—** | ** ** |   |   | — |   |   |   | **440** | ** ** |   |   | — |   |   |
| Disposal*                                             |       |                             | **—** | ** ** |   |   | — |   |   |   | **(22** | **)** |   |   | (205 | ) |   |   | **(22** | **)** |   |   | (205 | ) |   |
| Settlements                                           |       |                             | **—** | ** ** |   |   | — |   |   |   | **(15** | **)** |   |   | (83 | ) |   |   | **(15** | **)** |   |   | (83 | ) |   |
| Benefits paid                                         |       |                             | **(187**   | **)** |   |   | (186 | ) |   |   | **(50** | **)** |   |   | (41 | ) |   |   | **(237** | **)** |   |   | (227 | ) |   |
| **Fair value of plan assets at  end of year**         | ** ** | ** **                       | **3,240**  | ** ** | ** ** | ** ** | 2,279 |   | ** ** | ** ** | **590** | ** ** | ** ** | ** ** | 514 |   | ** ** | ** ** | **3,830** | ** ** | ** ** | ** ** | 2,793 |   |   |
|                                                       |            |                                  |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

----

+      Plan amendments are changes in a pension plan that will eitherincrease or decrease future retirement benefits for work performed in priorperiods. For the year ended 30 June 2004, a previous defined contributionplan was amended in one foreign operation into a defined benefit plan.

*       During the year ended 30 June 2005, the grouprestructured certain of its shareholdings in Sasol Wax International’sunderlying subsidiaries, thereby resulting in a dilution of its interest inParamelt RMC BV.The entity is now equity accounted, hence the Funded Plan has been accountedfor on the disposal line. In 2004, the group sold its 100% shareholder interestin Sasol Servo to UK-listed Elementis.

^     Amount represents retired employees who on retirement haveelected to participate in the defined benefit plan by purchasing a definedbenefit pension.

Reconciliation of the funded status to amountsrecognized in the consolidated balance sheets:
|                                                        | ** ** | **Pension Benefits**        | ** ** |
|--------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                             | ** ** | **South Africa**            | ** ** | **Foreign** | ** ** | **Total** | ** ** |
| ** **                                             | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** |
| ** **                                             | ** ** | **(Rand in millions)** | ** ** |
| Funded status  liability                               |       |                             | **721**    | ** ** |   |   | (49 | ) |   |   | **(59** | **)** |   |   | (41 | ) |   |   | **662** | ** ** |   |   | (90 | ) |   |
| Unrecognized  actuarial (gains)/losses                 |       |                             | **(560**   | **)** |   |   | 188 |   |   |   | **227** | ** ** |   |   | 101 |   |   |   | **(333** | **)** |   |   | 289 |   |   |
| Unrecognized  prior service cost                       |       |                             | **282**    | ** ** |   |   | 343 |   |   |   | **—** | ** ** |   |   | — |   |   |   | **282** | ** ** |   |   | 343 |   |   |
| ***Net  asset recognized***                            | ** ** | ** **                       | **443**    | ** ** | ** ** | ** ** | 482 |   | ** ** | ** ** | **168** | ** ** | ** ** | ** ** | 60 |   | ** ** | ** ** | **611** | ** ** | ** ** | ** ** | 542 |   |   |
| ***Amounts  recognized in balance sheet consist of:*** |       |                             | ** ** | ** ** |   |   |   |   |   |   | ** ** | ** ** |   |   |   |   |   |   | ** ** | ** ** |   |   |   |   |   |
| Prepaid pension  asset                                 |       |                             | **443**    | ** ** |   |   | 482 |   |   |   | **175** | ** ** |   |   | 101 |   |   |   | **618** | ** ** |   |   | 583 |   |   |
| Accrued pension liability                              |       |                             | **—** | ** ** |   |   | — |   |   |   | **(7** | **)** |   |   | (41 | ) |   |   | **(7** | **)** |   |   | (41 | ) |   |
| ***Net  asset recognized***                            | ** ** | ** **                       | **443**    | ** ** | ** ** | ** ** | 482 |   | ** ** | ** ** | **168** | ** ** | ** ** | ** ** | 60 |   | ** ** | ** ** | **611** | ** ** | ** ** | ** ** | 542 |   |   |

 

F-80

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and other post-retirementbenefits (Continued)

Thenet periodic pension cost for the years ended 30 June 2005, 30 June 2004and 30 June 2003 was:
|                                        | ** ** | **Pension Benefits**        | ** ** |
|----------------------------------------|------------|----------------------------------|------------|
| ** **                             | ** ** | **South Africa**            | ** ** | **Foreign** | ** ** | **Total** | ** ** |
| ** **                             | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
| ** **                             | ** ** | **(Rand in millions)** | ** ** |
| ***Components  of net pension cost***  |       |                             | ** ** | ** ** |   |   |   |   |   |   |   |   |   |   | ** ** | ** ** |   |   |   |   |   |   |   |   |   |   | ** ** | ** ** |   |   |   |   |   |   |   |   |   |
| Service cost                           |       |                             | **5**      | ** ** |   |   | 3 |   |   |   | 3 |   |   |   | **21** | ** ** |   |   | 26 |   |   |   | 47 |   |   |   | **26** | ** ** |   |   | 29 |   |   |   | 50 |   |   |
| Interest cost                          |       |                             | **202**    | ** ** |   |   | 231 |   |   |   | 260 |   |   |   | **40** | ** ** |   |   | 39 |   |   |   | 68 |   |   |   | **242** | ** ** |   |   | 270 |   |   |   | 328 |   |   |
| Expected return  on plan assets        |       |                             | **(224**   | **)** |   |   | (193 | ) |   |   | (256 | ) |   |   | **(42** | **)** |   |   | (38 | ) |   |   | (65 | ) |   |   | **(266** | **)** |   |   | (231 | ) |   |   | (321 | ) |   |
| Settlement or  curtailment cost        |       |                             | **—** | ** ** |   |   | — |   |   |   | — |   |   |   | **5** | ** ** |   |   | 27 |   |   |   | — |   |   |   | **5** | ** ** |   |   | 27 |   |   |   | — |   |   |
| Amortization of:                       |       |                             | ** ** | ** ** |   |   |   |   |   |   |   |   |   |   | ** ** | ** ** |   |   |   |   |   |   |   |   |   |   | ** ** | ** ** |   |   |   |   |   |   |   |   |   |
| —Unrecognized  prior service cost |       |                             | **60**     | ** ** |   |   | 60 |   |   |   | 45 |   |   |   | **—** | ** ** |   |   | — |   |   |   | — |   |   |   | **60** | ** ** |   |   | 60 |   |   |   | 45 |   |   |
| —Unrecognized net  loss           |       |                             | **—** | ** ** |   |   | 39 |   |   |   | — |   |   |   | **5** | ** ** |   |   | 12 |   |   |   | 14 |   |   |   | **5** | ** ** |   |   | 51 |   |   |   | 14 |   |   |
| **Net pension cost**                   | ** ** | ** **                       | **43**     | ** ** | ** ** | ** ** | 140 |   | ** ** | ** ** | 52 |   | ** ** | ** ** | **29** | ** ** | ** ** | ** ** | 66 |   | ** ** | ** ** | 64 |   | ** ** | ** ** | **72** | ** ** | ** ** | ** ** | 206 |   | ** ** | ** ** | 116 |   |   |
|                                        |            |                                  |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Theweighted average assumptions used in calculating actuarial valuations of theprincipal pension plans were:
|                                   | ** ** | **Pension Benefits** | ** ** |
|-----------------------------------|------------|---------------------------|------------|
| ** **                        | ** ** | **South Africa**     | ** ** | **United States of  America** | ** ** |
| ** **                        | ** ** | **30 June  2005**    | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** |
| Discount rate                     |       |                      | **8.5**    | **%** |   |   | 9.0 | % |   |   | **5.3** | **%** |   |   | 6.3 | % |   |
| Expected return  on plan assets   |       |                      | **8.5**    | **%** |   |   | 9.0 | % |   |   | **8.0** | **%** |   |   | 8.5 | % |   |
| Expected future salary  increases |       |                      | **5.5**    | **%** |   |   | 6.0 | % |   |   | **3.8** | **%** |   |   | 3.8 | % |   |

 

***South Africa***

The assumed discount rate of 8.5% for the year ended30 June 2005 represents a 50 basis point decrease from the 9% for the yearended 30 June 2004. This discount rate assumption is based on the discountyield on government stock which had a 8.5% yield at short durations and 8%yield at longer durations at the measurement date.

The expected long-termrate of return on assets assumption declined to 8.5% for the year ended30 June 2005. This reduction was supported by an analysis performedof the weighted average yield expected to be achieved with the anticipatedmakeup of investments. Approximately 60% of the assets are invested in equitiesand the balance in lower yielding investments.

F-81

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and other post-retirement benefits (Continued)

***United States of America***

The assumed discount rate of 5.3% for the year ended30 June 2005, represents a 100 basis point decrease from the 6.3% for theyear ended 30 June 2004. This discount rate assumption was determined bymatching future pension benefit payments with expected future AA bond yieldsfor the same periods.

The expected long-termrate of return on assets declined by 50 basis points to 8% for the year ended30 June 2005. The assumption was supported by an analysis performedof the weighted average yield expected to be achieved with the anticipatedmakeup of investments. The investment makeup is heavily weighted towardsequities.

**UNFUNDED PLANS**
| **Pension fund**         |   |              |   |
|--------------------------|--------|-------------------|--------|
| Last actuarial valuation |   | 30 June 2005 |   |
| Full/interim             |   | Full              |   |

 
|                                                    | ** ** | **Foreign**                      | ** ** |
|----------------------------------------------------|------------|----------------------------------|------------|
| ** **                                         | ** ** | **30 June  2005**           | ** ** | **30 June  2004** | ** ** |
| ** **                                         | ** ** | **(Rand in millions)** | ** ** |
| **Change  in projected benefit obligation**        |       |                             | ** ** | ** ** |   |   |   |   |   |
| Projected benefit  obligation at beginning of year |       |                             | **1,103**  | ** ** |   |   | 1,216 |   |   |
| Change due to  remeasurement                       |       |                             | **—** | ** ** |   |   | (1 | ) |   |
| Translation of  foreign entities                   |       |                             | **86**     | ** ** |   |   | (153 | ) |   |
| Service cost                                       |       |                             | **39**     | ** ** |   |   | 41 |   |   |
| Interest cost                                      |       |                             | **62**     | ** ** |   |   | 59 |   |   |
| Plan amendment                                     |       |                             | **(5**     | **)** |   |   | — |   |   |
| Actuarial  losses/(gains)                          |       |                             | **236**    | ** ** |   |   | (26 | ) |   |
| Benefits paid                                      |       |                             | **(32**    | **)** |   |   | (33 | ) |   |
| **Projected benefit obligation at  end of year**   | ** ** | ** **                       | **1,489**  | ** ** | ** ** | ** ** | 1,103 |   |   |

 
|                                                        | ** ** | **Pension benefits  Foreign** | ** ** |
|--------------------------------------------------------|------------|------------------------------------|------------|
| ** **                                             | ** ** | **30 June  2005**             | ** ** | **30 June  2004** | ** ** |
| ** **                                             | ** ** | **(Rand in millions)**   | ** ** |
| Funded status  liability                               |       |                               | **(1,489** | **)** |   |   | (1,103 | ) |   |
| Unrecognized  actuarial net losses                     |       |                               | **320**    | ** ** |   |   | 75 | ** ** |   |
| Minimum pension  liability                             |       |                               | **(102**   | **)** |   |   | — | ** ** |   |
| ***Net  liability recognized***                        | ** ** | ** **                         | **(1,271** | **)** | ** ** | ** ** | (1,028 | ) |   |
| ***Amounts  recognized in balance sheet consist of:*** |       |                               | ** ** | ** ** |   |   |   | ** ** |   |
| Accrued pension  liabilities                           |       |                               | ** ** | ** ** |   |   |   | ** ** |   |
| Long-term  portion                                     |       |                               | **(1,255** | **)** |   |   | (1,013 | ) |   |
| Short-term  portion                                    |       |                               | **(16**    | **)** |   |   | (15 | ) |   |
| ***Net  liability recognized***                        | ** ** | ** **                         | **(1,271** | **)** | ** ** | ** ** | (1,028 | ) |   |

 

F-82

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and other post-retirementbenefits (Continued)
|                                       | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |
|---------------------------------------|------------|------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                            | ** ** | **(Rand in millions)** | ** ** |
| ***Components  of net pension cost*** |       |                   |       | ** **             |       |                   |       | ** ** |   |   |   | ** ** |   |
| Service cost                          |       |                   | **39**     | ** **             |       |                   | 41         | ** ** |   |   | 43 | ** ** |   |
| Interest cost                         |       |                   | **62**     | ** **             |       |                   | 59         | ** ** |   |   | 69 | ** ** |   |
| Amortization of:                      |       |                   | ** ** | ** **             |       |                   |       | ** ** |   |   |   | ** ** |   |
| —Unrecognized net  loss          |       |                   | **—** | ** **             |       |                   | —     | ** ** |   |   | 9 | ** ** |   |
| ***Net  pension cost***               | ** ** |                   | **101**    | ** **             |       |                   | 100        | ** ** |   |   | 121 | ** ** |   |

 

Theweighted average assumptions used in calculating actuarial valuations of theprincipal pension plans were:
|                                   | ** ** | **Pension Fund—Unfolded** | ** ** |
|-----------------------------------|------------|-------------------------------------|------------|
| ** **                        | ** ** | **Germany**                         | ** ** |
| ** **                        | ** ** | **30 June 2005**          | ** ** | **30 June 2004** | ** ** |
| Discount rate                     |       |                                | **4.2**    | **%** |   |   | 5.5 | % |   |
| Expected future salary  increases |       |                                | **2.0**    | **%** |   |   | 2.5 | % |   |

 

The assumed discount rate of 4.2% for the year ended30 June 2005 represents a 130 basis points decrease from 5.5% for the yearended 30 June 2004. This discount rate assumption is based on annuityinsurance tariffs from a group of leading German insurers.

Thegroup expects the following benefit payments to be paid out of the plans forthe years indicated. The expected benefits are based on the same assumptionsused to measure the group’s benefit obligation as at 30 June 2005 andinclude estimated future employee service.
|            | ** ** | **Foreign**                      | ** ** |
|------------|------------|----------------------------------|------------|
| ** ** | ** ** | **(Rand in millions)** | ** ** |
| 2006       |       |                             | 37         |   |   |
| 2007       |       |                             | 41         |   |   |
| 2008       |       |                             | 45         |   |   |
| 2009       |       |                             | 50         |   |   |
| 2010       |       |                             | 53         |   |   |
| 2011-2015  |       |                             | 292        |   |   |
|       | ** ** | ** **                       | **518**    |   |   |

 

**Post-retirement healthcare**

The post-retirement benefit plan provides certainhealthcare and life insurance benefits to South African employees hiredprior to 1 January 1998, who retire and satisfy the necessary requirementsof the medical fund. Generally, healthcare coverage provides for a specifiedpercentage of most healthcare expenses, subject to preset rules andmaximum amounts. The cost of providing these benefits is shared with theretirees. The plan is unfunded.

Certain other healthcareand life insurance benefits are provided for employees hired in the United Statesof America. Generally, healthcare coverage pays a specified percentage of mosthealthcare 

F-83

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and other post-retirement benefits (Continued)

expenses, subjectto preset maxima and reduced for payments made by Medicare. The cost ofproviding these benefits is shared with the retirees. The plan is alsounfunded.
|                                 | ** ** | **South Africa** | ** ** | **United States of  America** | ** ** |
|---------------------------------|------------|-----------------------|------------|-----------------------------------------|------------|
| ** **                      | ** ** | **2005**              | ** ** | **2005**                                | ** ** |
| **Post-retirement  healthcare** | ** ** | ** **            | ** ** | ** **                              | ** ** |
| Last actuarial  valuation       |       | 30 March 2005    |       | 30 June 2005                       |       |
| Full/interim                    |       | Full                  |       | Full                                    |       |
| Valuation method adopted        |       | Projected Unit        |       | Projected Unit                          |       |

 
|                                                        | ** ** | **Post-retirement healthcare** | ** ** |
|--------------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                             | ** ** | **South Africa**               | ** ** | **Foreign** | ** ** | **Total** | ** ** |
| ** **                                             | ** ** | **30 June  2005**              | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** |
| ** **                                             | ** ** | **(Rand in millions)**    | ** ** |
| ***Change  in projected benefit obligation***          |       |                                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Projected benefit  obligation at  beginning of year    |       |                                | **2,124**  | ** ** |   |   | 1,680 |   |   |   | **347** | ** ** |   |   | 421 |   |   |   | **2,471** | ** ** |   |   | 2,101 |   |   |
| Translation of  foreign entities                       |       |                                | **—** | ** ** |   |   | — |   |   |   | **28** | ** ** |   |   | (72 | ) |   |   | **28** | ** ** |   |   | (72 | ) |   |
| Remeasurement                                          |       |                                | **—** | ** ** |   |   | 216 |   |   |   | **42** | ** ** |   |   | (4 | ) |   |   | **42** | ** ** |   |   | 212 |   |   |
| Service cost                                           |       |                                | **62**     | ** ** |   |   | 58 |   |   |   | **3** | ** ** |   |   | 5 |   |   |   | **65** | ** ** |   |   | 63 |   |   |
| Interest cost                                          |       |                                | **188**    | ** ** |   |   | 182 |   |   |   | **22** | ** ** |   |   | 22 |   |   |   | **210** | ** ** |   |   | 204 |   |   |
| Actuarial losses                                       |       |                                | **75**     | ** ** |   |   | 38 |   |   |   | **—** | ** ** |   |   | — |   |   |   | **75** | ** ** |   |   | 38 |   |   |
| Benefits paid                                          |       |                                | **(60**    | **)** |   |   | (50 | ) |   |   | **(29** | **)** |   |   | (25 | ) |   |   | **(89** | **)** |   |   | (75 | ) |   |
| **Projected benefit obligation at  end of year**  | ** ** | ** **                          | **2,389**  | ** ** | ** ** | ** ** | 2,124 |   | ** ** | ** ** | **413** | ** ** | ** ** | ** ** | 347 |   | ** ** | ** ** | **2,802** | ** ** | ** ** | ** ** | 2,471 |   |   |

 

Reconciliationof the funded status to amounts recognized in the consolidated balance sheets:
|                                 | ** ** | **Post-retirement healthcare** | ** ** |
|---------------------------------|------------|-------------------------------------|------------|
| ** **                      | ** ** | **South Africa**               | ** ** | **Foreign** | ** ** | **Total** | ** ** |
| ** **                      | ** ** | **30 June  2005**              | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** |
| ** **                      | ** ** | **(Rand in millions)**    | ** ** |
| ***Net  liability recognized*** |       |                                | **(2,389** | **)** |   |   | (2,124 | ) |   |   | **(413** | **)** |   |   | (347 | ) |   |   | **(2,802** | **)** |   |   | (2,471 | ) |   |
|                                 |            |                                     |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
|                                                        | ** **   | **Post-retirement healthcare** | ** **   |
|--------------------------------------------------------|--------------|-------------------------------------|--------------|
| ** **                                             | ** **   | **South Africa**               | ** **   | **Foreign** | ** ** | **Total** | ** ** |
| ** **                                             | ** **   | **30 June  2005**              | ** **   | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** |
| ** **                                             | ** **   | **(Rand in millions)**    | ** **   |
| ***Amounts  recognized in balance sheet consist of:*** | *** *** |                                | *** *** | *** *** |   |   | *** *** | *** *** |   |   | *** *** | *** *** |   |   | *** *** | *** *** |   |   | *** *** | *** *** |   |   | *** *** | *** *** |   |
| Long-term  portion                                     |         |                                | **(2,389**   | **)** |   |   | (2,124 | ) |   |   | **(382** | **)** |   |   | (325 | ) |   |   | **(2,771** | **)** |   |   | (2,449 | ) |   |
| Short-term  portion                                    |         |                                | **—**   | ** ** |   |   | — |   |   |   | **(31** | **)** |   |   | (22 | ) |   |   | **(31** | **)** |   |   | (22 | ) |   |
| ***Net  liability recognized***                        | ** **   |                                | **(2,389**   | **)** | ** ** | ** ** | (2,124 | ) | ** ** | ** ** | **(413** | **)** | ** ** | ** ** | (347 | ) | ** ** | ** ** | **(2,802** | **)** | ** ** | ** ** | (2,471 | ) |   |

 

F-84

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pensionand other post-retirement benefits (Continued)

Thenet periodic post retirement healthcare cost for the years ended 30 June 2005,30 June 2004 and 30 June 2003 were as follows:
|                                                        | ** ** | **Post-retirement healthcare** | ** ** |                   |
|--------------------------------------------------------|------------|-------------------------------------|------------|------------------------|
| ** **                                             | ** ** | **South Africa**               | ** ** | **Foreign**            | ** ** | **Total** | ** ** |   |
| ** **                                             | ** ** | **30 June  2005**              | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2003** | ** ** |   |
| ** **                                             | ** ** | **(Rand in millions)**    | ** ** |                   |
| ***Components  of net post retirement benefits cost*** |       |                                |       |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                                           |       |                                | **62**     |                   |   |   | 58 |   |   |   | 88 |   |   |   | **3** |   |   |   | 5 |   |   |   | 6 |   |   |   | **65** |   |   |   | 63 |   |   |   | 94 |   |   |
| Interest cost                                          |       |                                | **188**    |                   |   |   | 182 |   |   |   | 155 |   |   |   | **22** |   |   |   | 22 |   |   |   | 28 |   |   |   | **210** |   |   |   | 204 |   |   |   | 183 |   |   |
| Recognized net  actuarial loss                         |       |                                | **75**     |                   |   |   | 38 |   |   |   | 15 |   |   |   | **—** |   |   |   | — |   |   |   | 127 |   |   |   | **75** |   |   |   | 38 |   |   |   | 142 |   |   |
| Net periodic  benefit cost                        |       |                                | **325**    |                   |   |   | 278 |   |   |   | 258 |   |   |   | **25** |   |   |   | 27 |   |   |   | 161 |   |   |   | **350** |   |   |   | 305 |   |   |   | 419 |   |   |
| Remeasurement                                          |       |                                | **—** |                   |   |   | 216 |   |   |   | — |   |   |   | **42** |   |   |   | (4 | ) |   |   | — |   |   |   | **42** |   |   |   | 212 |   |   |   | — |   |   |
| **Net periodic benefit cost**                     | ** ** | ** **                          | **325**    |                   | ** ** | ** ** | 494 |   | ** ** | ** ** | 258 |   | ** ** | ** ** | **67** |   | ** ** | ** ** | 23 |   | ** ** | ** ** | 161 |   | ** ** | ** ** | **392** |   | ** ** | ** ** | 517 |   | ** ** | ** ** | 419 |   |   |

 

Theweighted average assumptions used in calculating actuarial valuation topost-retirement benefits were:
|                                      | ** ** | **South Africa**  | ** ** | **Foreign**            | ** ** |
|--------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                           | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** | **30 June  2005** | ** ** | **30 June  2004** | ** ** |
| ***Weighted  average assumptions:*** |       |                   |       |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount rate                        |       |                   | **8.5**    | **%**                  |       |   | 9.0 | % |   |   | **5,3** | **%** |   |   | 6.3 | % |   |
| Expected future  salary increases    |       |                   | **5.5**    | **%**                  |       |   | 6.0 | % |   |   | **3.8** | **%** |   |   | 3.8 | % |   |
| Expected future medical  inflation   |       |                   | ** ** | ** **             |       |   |   |   |   |   | ** ** | ** ** |   |   |   |   |   |
| —Initial                        |       |                   | **6.5**    | **%**                  |       |   | 7.0 | % |   |   | **9.0** | **%** |   |   | 9.0 | % |   |
| —Ultimate                       |       |                   | **6.5**    | **%**                  |       |   | 7.0 | % |   |   | **5.5** | **%** |   |   | 5.5 | % |   |

 

***South Africa***

The assumed discount rateof 8.5% for the year ended 30 June 2005 represents a 50 basis pointdecrease from the 9% for the year ended 30 June 2004. This discount rateassumption is based on the discount yield on government stock which had a 8.5%yield for short duration and 8% yield at longer durations at the measurementdate.

***United States of America***

The assumed discount rate of 5.3% for the year ended30 June 2005, represents a 100 basis point decrease from the 6.3% for theyear ended 30 June 2004. This discount rate assumption was determined bymatching future pension benefit payments with expected future AA bond yieldsfor the same periods.

F-85

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**22.**   Pension and other post-retirement benefits (Continued)

The group expects thefollowing benefit payments to be paid out of the plans for the years indicated.The expected benefits are based on the same assumptions used to measure thegroup’s benefit obligation as at 30 June 2005 and include estimated futureemployee service.
|            | ** ** | **South Africa**            | ** ** | **Foreign** | ** ** | **Total**  | ** ** |
|------------|------------|----------------------------------|------------|-------------|------------|------------|------------|
| ** ** | ** ** | **(Rand in millions)** | ** ** |
| 2006       |       |                             | 63         |        |       |       | 31         |   |   | 94 |   |
| 2007       |       |                             | 70         |        |       |       | 30         |   |   | 100 |   |
| 2008       |       |                             | 77         |        |       |       | 29         |   |   | 106 |   |
| 2009       |       |                             | 86         |        |       |       | 29         |   |   | 115 |   |
| 2010       |       |                             | 96         |        |       |       | 28         |   |   | 124 |   |
| 2011-2015  |       |                             | 670        |        |       |       | 139        |   |   | 809 |   |
|       | ** ** | ** **                       | **1,062**  |        | ** ** | ** ** | **286**    |   | ** ** | **1,348** | ** ** |

 

***SensitivityAnalysis***

Assumedhealthcare cost trend rates have a significant effect on the amounts reportedfor the healthcare and life insurance plans. A one percentage-point changein assumed healthcare cost trend rates could have the following effect:
|                                                                 | ** ** | **Post retirement healthcare** | ** ** |
|-----------------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                                      | ** ** | **South Africa**                    | ** ** | **Foreign** | ** ** |
| ** **                                                      | ** ** | **Point increase**                  | ** ** | **Point decrease** | ** ** | **Point increase** | ** ** | **Point decrease** | ** ** |
| ** **                                                      | ** ** | **(Rand in millions)**         | ** ** |
| **2005**                                                        |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect on total service  and interest cost components           |       |                                     | 59         |   |   |   | (46 | ) |   |   | 4 |   |   |   | (3 | ) |   |
| Effect on accumulated  post-retirement benefit obligations |       |                                     | 451        |   |   |   | (357 | ) |   |   | 41 |   |   |   | (30 | ) |   |
| **2004**                                                        |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect on total service  and interest cost components           |       |                                     | 55         |   |   |   | (42 | ) |   |   | 4 |   |   |   | (3 | ) |   |
| Effect on accumulated  post-retirement benefit obligations |       |                                     | 403        |   |   |   | (319 | ) |   |   | 44 |   |   |   | (35 | ) |   |
| **2003**                                                        |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect on total service  and interest cost components           |       |                                     | 49         |   |   |   | (39 | ) |   |   | 4 |   |   |   | (3 | ) |   |
| Effect on accumulated post-retirement  benefit obligations |       |                                     | 321        |   |   |   | (255 | ) |   |   | 57 |   |   |   | (45 | ) |   |

 

F-86

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**23.**   Accumulated othercomprehensive income

Thecomponents of accumulated other comprehensive income are summarized as follows:
|                                                                                           | ** ** | **30 June**                 | ** ** | **30 June** | ** ** | **30 June** | ** ** |
|-------------------------------------------------------------------------------------------|------------|----------------------------------|------------|------------------|------------|------------------|------------|
| ** **                                                                                | ** ** | **2005**                         | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| ** **                                                                                | ** ** | **(Rand in millions)** | ** ** |
| Realised and unrealised  holding losses from cash flow hedging activity, net of tax       | ** ** |                             | **(1,436** | **)**            |       |             | (1,437     | ) |   |   | (351 | ) |   |
| Translation of foreign  operations with a functional currency other than rand, net of tax | ** ** |                             | **(1,275** | **)**            |       |             | (1,303     | ) |   |   | (219 | ) |   |
| Minimum pension  liability adjustment, net of tax                                         | ** ** |                             | **(64**    | **)**            |       |             | —     |   |   |   | (335 | ) |   |
|                                                                                      | ** ** |                             | **(2,775** | **)**            |       |             | (2,740     | ) |   |   | (905 | ) |   |

 

**24.**   Concentration ofrisk

**Financial and market risk**

In the normal course of business, the group is exposedto liquidity, credit, foreign exchange, interest rate and crude oil price risks.In order to manage these risks, the group has developed a comprehensive riskmanagement process to facilitate control and monitoring of these risks. Generalcorporate hedging unrelated to specific transactions or projects is notundertaken. Throughout the years ended 30 June 2005 and 30 June 2004it has been, and remains, our policy that no speculative trading in derivativeinstruments be undertaken.

Unless specifiedotherwise, derivative financial instruments did not qualify as designated cashflow hedges and thus fair value gains and losses are recognized in the incomestatement.

***Liquidity risk***

The group manage’s liquidityrisk by proper management of working capital, capital expenditure and cashflows. We finance our operations through a mixture of retained profits,short-term and long-term bank funding, a commercial paper programme andcorporate bond issues. Adequate banking facilities and reserve borrowingcapacities are maintained. We have sufficient undrawn call/demand borrowingfacilities, which could be utilized to fund any potential shortfall in cashresources.

F-87

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**24.**   Concentration of risk (Continued)

Maturity profile offinancial instruments held at 30 June 2005:
|                                              | ** ** | ** **                       | ** ** | **Maturity**          | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|-----------------------|------------|
| ** **                                   | ** ** | **Carrying  value**              | ** ** | **Within  one  year** | ** ** | **One to  two  years** | ** ** | **Two to  three  years** | ** ** | **Three to  Four  years** | ** ** | **Four to  five  years** | ** ** | **More than  five  years** | ** ** | **Total  Maturity** | ** ** |
| ** **                                   | ** ** | **(Rand in millions)** | ** ** |
| ***Financial  assets***                      |       |                             |       |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash  equivalents (note 9)          |       |                             | 2,350      |                  |       | 2,350 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2,350 |   |   |
| Cash restricted  for use (note 9)  |       |                             | 331        |                  |       | 331 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 331 |   |   |
| Trade and other  receivables                 |       |                             | 10,999     |                  |       | 10,999 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 10,999 |   |   |
| Investments in  securities (note 12)    |       |                             | 395        |                  |       | — |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 395 |   |   |   | 395 |   |   |
| Long-term  receivables                       |       |                             | 616        |                  |       | — |   |   | 36 |   |   |   | 26 |   |   |   | 24 |   |   |   | 35 |   |   |   | 495 |   |   |   | 616 |   |   |
| ***Financial  liabilities***                 |       |                             |       |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term and  short-term debt          |       |                             | 15,293     |                  |       | 5,355 |   |   | 639 |   |   |   | 2,706 |   |   |   | 597 |   |   |   | 3,011 |   |   |   | 2,985 |   |   |   | 15,293 |   |   |
| Trade payables                               |       |                             | 5,181      |                  |       | 5,181 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 5,181 |   |   |
| Accrued expenses  and other obligations      |       |                             | 4,300      |                  |       | 4,300 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 4,300 |   |   |
| Bank overdraft                               |       |                             | 266        |                  |       | 266 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 266 |   |   |

 

F-88

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**24.**   Concentration of risk (Continued)
|                                                 | ** ** | **Contract  Amount** | ** ** | **Within one  year** | ** ** | **One to two  years** | ** ** |
|-------------------------------------------------|------------|----------------------|------------|---------------------------|------------|---------------------------------|------------|
| **FORWARD EXCHANGE CONTRACTS**                  |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| ***Transactions which have already  occurred*** |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| ***Imports—Capital***                      |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| US dollar                                       |       |                 | 41         |                      |       |                            | 41         |   |   |   | — |   |   |
| Euro                                            |       |                 | 39         |                      |       |                            | 39         |   |   |   | — |   |   |
| **Total**                                       |       |                 | 80         |                      |       |                            | 80         |   |   |   | — |   |   |
| ***Imports—Goods***                        |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| US dollar                                       |       |                 | 717        |                      |       |                            | 717        |   |   |   | — |   |   |
| Euro                                            |       |                 | 10         |                      |       |                            | 10         |   |   |   | — |   |   |
| **Total**                                       |       |                 | 727        |                      |       |                            | 727        |   |   |   | — |   |   |
| ***Exports***                                   |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| US dollar                                       |       |                 | 485        |                      |       |                            | 485        |   |   |   | — |   |   |
| Euro                                            |       |                 | 30         |                      |       |                            | 30         |   |   |   | — |   |   |
| Pounds sterling                                 |       |                 | 78         |                      |       |                            | 78         |   |   |   | — |   |   |
| Other currency—US dollar  equivalent       |       |                 | 75         |                      |       |                            | 75         |   |   |   | — |   |   |
| **Total**                                       |       |                 | 668        |                      |       |                            | 668        |   |   |   | — |   |   |
| ***Other payables (liabilities)***              |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| US dollar                                       |       |                 | 331        |                      |       |                            | 331        |   |   |   | — |   |   |
| Euro                                            |       |                 | 4          |                      |       |                            | 4          |   |   |   | — |   |   |
| Pounds sterling                                 |       |                 | 24         |                      |       |                            | 24         |   |   |   | — |   |   |
| **Total**                                       |       |                 | 359        |                      |       |                            | 359        |   |   |   | — |   |   |
| ***Other receivables (assets)***                |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| US dollar                                       |       |                 | 1,482      |                      |       |                            | 1,482      |   |   |   | — |   |   |
| ***Related to future commitments***             |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| ***Imports***                                   |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| US dollar                                       |       |                 | 422        |                      |       |                            | 413        |   |   |   | 9 |   |   |
| Euro                                            |       |                 | 383        |                      |       |                            | 383        |   |   |   | — |   |   |
| Pounds sterling                                 |       |                 | 4          |                      |       |                            | 4          |   |   |   | — |   |   |
| Other Currency—US dollar  equivalent       |       |                 | 9          |                      |       |                            | 9          |   |   |   | — |   |   |
| **Total**                                       |       |                 | 818        |                      |       |                            | 809        |   |   |   | 9 |   |   |
| ***Other payables (liabilities)***              |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| US dollar                                       |       |                 | 886        |                      |       |                            | 886        |   |   |   | — |   |   |
| Euro                                            |       |                 | 30         |                      |       |                            | 30         |   |   |   | — |   |   |
| Pounds sterling                                 |       |                 | 1          |                      |       |                            | 1          |   |   |   | — |   |   |
| **Total**                                       |       |                 | 917        |                      |       |                            | 917        |   |   |   | — |   |   |
| **Commodity Derivatives**                       |       |                 |       |                      |       |                            |       |   |   |   |   |   |   |
| Futures—Crude Oil                          |       |                 | 260        |                      |       |                            | 260        |   |   |   | — |   |   |
| Swaps—Fuel Oil                             |       |                 | 70         |                      |       |                            | 70         |   |   |   | — |   |   |
| Zero cost collar—call  options sold        |       |                 | 2,622      |                      |       |                            | 2,622      |   |   |   | — |   |   |
| Zero cost collar—put  options bought       |       |                 | 1,440      |                      |       |                            | 1,440      |   |   |   | — |   |   |
| Options sold                                    |       |                 | 1,882      |                      |       |                            | 1,431      |   |   |   | 451 |   |   |

 

F-89

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**24.**   Concentration ofrisk (Continued)
|                                           | ** ** | ** **         | ** ** | **Maturity**          | ** ** |
|-------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                | ** ** | **Nominal  Value** | ** ** | **Within  one  year** | ** ** | **One to  two  years** | ** ** | **Two to  three  years** | ** ** | **Three to  Four  years** | ** ** | **Four to  Five  years** | ** ** | **More than  Five  Years** | ** ** |
| **Cross Currency Swaps**                  |       |               |       |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Euro to US dollar                         |       |               | 5,219      |                  |       |   | 5,219 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Other                                     |       |               | 2,784      |                  |       |   | 1,201 |   |   |   | — |   |   |   | — |   |   |   | 31 |   |   |   | 62 |   |   |   | 1,490 |   |   |
| **Total**                                 |       |               | 8,003      |                  |       |   | 6,420 |   |   |   | — |   |   |   | — |   |   |   | 31 |   |   |   | 62 |   |   |   | 1,490 |   |   |
| **Interest Rate Derivatives**             |       |               |       |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Pay fixed rate receive floating  rate** |       |               |       |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| US dollar                                 |       |               | 653        |                  |       |   | 65 |   |   |   | 136 |   |   |   | 145 |   |   |   | 307 |   |   |   | — |   |   |   | — |   |   |
| Rands                                     |       |               | 500        |                  |       |   | — |   |   |   | — |   |   |   | 500 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| **Total**                                 |       |               | 1,153      |                  |       |   | 65 |   |   |   | 136 |   |   |   | 645 |   |   |   | 307 |   |   |   | — |   |   |   | — |   |   |
| **Other**                                 |       |               |       |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rand                                      |       |               | 1,000      |                  |       |   | 500 |   |   |   | 500 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |

 

***Credit risk***

The group has credit risk with respect to long-termreceivables, trade receivables, cash and cash equivalents, held-to-maturityinvestments and derivative contracts. The exposure to credit risk with regardto trade receivables is not concentrated due to a large customer base. Adequateprovision is made for doubtful debts.

We minimize our creditrisk relating to financial instruments by only transacting with major financialinstitutions on listed exchanges. Counterparty credit limits are in place andreviewed and approved by the respective subsidiary boards.

F-90

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**24.**   Concentrationof risk (Continued)

Creditrisk exposure in respect of trade receivables is analyzed as follows:

|                                | ** ** | **2005** | ** ** | **2004** | ** ** |
|--------------------------------|------------|----------|------------|----------|------------|
| ** **                     | ** ** | **%**    | ** ** | **%**    | ** ** |
| ***By  business segment***     |       |     |       |     |       |   |   |   |   |
| Sasol Mining                   |       |     | **2**      |     |       |   | 1 |   |   |
| Sasol Synfuels                 |       |     | **1**      |     |       |   | 2 |   |   |
| Sasol Liquid Fuels Business    |       |     | **22**     |     |       |   | 25 |   |   |
| Sasol Gas                      |       |     | **2**      |     |       |   | 2 |   |   |
| Sasol Olefins and Surfactants  |       |     | **37**     |     |       |   | 35 |   |   |
| Sasol Polymers                 |       |     | **9**      |     |       |   | 10 |   |   |
| Sasol Solvents                 |       |     | **14**     |     |       |   | 13 |   |   |
| Sasol Synfuels International   |       |     | **—** |     |       |   | — |   |   |
| Other Businesses               |       |     | **13**     |     |       |   | 12 |   |   |
|                           |       |     | **100**    |     |       |   | 100 |   |   |
| ***By geographic location***   |       |     | ** ** |     |       |   |   |   |   |
| South Africa                   |       |     | **38**     |     |       |   | 43 |   |   |
| Rest of Africa                 |       |     | **4**      |     |       |   | 2 |   |   |
| Europe                         |       |     | **34**     |     |       |   | 33 |   |   |
| Middle East                    |       |     | **3**      |     |       |   | 3 |   |   |
| Far East                       |       |     | **4**      |     |       |   | 5 |   |   |
| North America                  |       |     | **12**     |     |       |   | 11 |   |   |
| South America                  |       |     | **3**      |     |       |   | 2 |   |   |
| Southeast Asia and Australasia |       |     | **2**      |     |       |   | 1 |   |   |
|                           |       |     | **100**    |     |       |   | 100 |   |   |

 

No single customerrepresents more than 10% of the group’s total turnover for the years ended, ortotal trade receivables at, 30 June 2005 and 30 June 2004.

***Foreign exchange risk***

Our operations are denominated in various foreigncurrencies and consequently, we are exposed to exchange rate fluctuations thathave an impact on our cash flows and financing activities. We manage ourforeign exchange risks through our group financing policies and the selectiveuse of forward exchange contracts, cross currency swaps and cross currencyoptions. We use foreign exchange contracts to reduce foreign currency exposuresarising from imports into South Africa. Hedging of exports from South Africa isevaluated regularly and on a case-by-case basis.

All foreign exchange derivative contracts aresupported by underlying commitments or receivables.

The fair value gains/(losses) calculated below are determined by recalculating the daily forwardrates for each currency using a forward rate interpolator model. The net marketvalue of all forward exchange contracts at year end was then calculated bycomparing the forward exchange contracted rates to the equivalent year endmarket foreign exchange rates. The present value of these net market values wasthen calculated using the appropriate currency specific discount curve.

F-91

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**24.**   Concentration of risk (Continued)

The following forwardexchange contracts were held at 30 June 2005:

| FORWARD EXCHANGE CONTRACTS         | ** ** | ** **     | ** ** | **Contract   foreign   currency   amount** | ** ** | **Contract   amount** | ** ** | **Estimated   fair value   gains / (losses)** | ** ** | **Calculated   average rate** | ** ** |
|----------------------------------------------|------------|----------------|------------|--------------------------------------------|------------|-----------------------|------------|--------------------------------------------------------------|------------|------------------------------------|------------|
| ** **                                   | ** ** | **(Millions)** | ** ** | **(Rand in millions)**           | ** ** | ** **            | ** ** |
| **Transactions which have already occurred** |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| ***Imports—Capital***                   |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| US dollar                                    |       |           | 6          |                                       |       |                  | 41         |                                                         |       |                               | (2         | ) |   |   | 7.01 |   |   |
| Euro                                         |       |           | 4          |                                       |       |                  | 39         |                                                         |       |                               | (3         | ) |   |   | 8.77 |   |   |
| **Total**                                    |       |           |       |                                       |       |                  | 80         |                                                         |       |                               | (5         | ) |   |   |   |   |   |
| ***Imports—Goods***                     |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| US dollar                                    |       |           | 107        |                                       |       |                  | 717        |                                                         |       |                               | —     |   |   |   | 6.68 |   |   |
| Euro                                         |       |           | 1          |                                       |       |                  | 10         |                                                         |       |                               | —     |   |   |   | 8.23 |   |   |
| **Total**                                    |       |           |       |                                       |       |                  | 727        |                                                         |       |                               | —     |   |   |   |   |   |   |
| ***Exports***                                |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| US dollar                                    |       |           | 75         |                                       |       |                  | 485        |                                                         |       |                               | (39        | ) |   |   | 6.46 |   |   |
| Euro                                         |       |           | 4          |                                       |       |                  | 30         |                                                         |       |                               | —     |   |   |   | 8.04 |   |   |
| Pounds sterling                              |       |           | 7          |                                       |       |                  | 78         |                                                         |       |                               | (1         | ) |   |   | 11.77 |   |   |
| Other currency—US dollar  equivalent    |       |           | 11         |                                       |       |                  | 75         |                                                         |       |                               | (1         | ) |   |   | 6.63 |   |   |
| **Total**                                    |       |           |       |                                       |       |                  | 668        |                                                         |       |                               | (41        | ) |   |   |   |   |   |
| ***Other payables (liabilities)***           |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| US dollar                                    |       |           | 49         |                                       |       |                  | 331        |                                                         |       |                               | 3          |   |   |   | 6.73 |   |   |
| Euro                                         |       |           | —     |                                       |       |                  | 4          |                                                         |       |                               | —     |   |   |   | 8.13 |   |   |
| Pounds sterling                              |       |           | 2          |                                       |       |                  | 24         |                                                         |       |                               | —     |   |   |   | 12.03 |   |   |
| **Total**                                    |       |           |       |                                       |       |                  | 359        |                                                         |       |                               | 3          |   |   |   |   |   |   |
| ***Other receivables (assets)***             |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| US dollar                                    |       |           | 228        |                                       |       |                  | 1,482      |                                                         |       |                               | (24        | ) |   |   | 6.49 |   |   |
| Euro                                         |       |           | —     |                                       |       |                  | —     |                                                         |       |                               | 2          |   |   |   | — |   |   |
| **Total**                                    |       |           |       |                                       |       |                  | 1,482      |                                                         |       |                               | (22        | ) |   |   |   |   |   |
| **Related to future commitments**            |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| ***Imports***                                |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| US dollar                                    |       |           | 61         |                                       |       |                  | 422        |                                                         |       |                               | (39        | ) |   |   | 6.86 |   |   |
| Euro                                         |       |           | 46         |                                       |       |                  | 383        |                                                         |       |                               | (13        | ) |   |   | 8.33 |   |   |
| Pounds sterling                              |       |           | —     |                                       |       |                  | 4          |                                                         |       |                               | —     |   |   |   | 12.34 |   |   |
| Other currency—US dollar  equivalent    |       |           | 1          |                                       |       |                  | 9          |                                                         |       |                               | —     |   |   |   | 6.68 |   |   |
| **Total**                                    |       |           |       |                                       |       |                  | 818        |                                                         |       |                               | (52        | ) |   |   |   |   |   |
| ***Other payables (liabilities)***           |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| US dollar                                    |       |           | 147        |                                       |       |                  | 886        |                                                         |       |                               | 98         |   |   |   | 6.03 |   |   |
| Euro                                         |       |           | 4          |                                       |       |                  | 30         |                                                         |       |                               | —     |   |   |   | 8.25 |   |   |
| Pounds sterling                              |       |           | —     |                                       |       |                  | 1          |                                                         |       |                               | —     |   |   |   | 12.52 |   |   |
| **Total**                                    |       |           |       |                                       |       |                  | 917        |                                                         |       |                               | 98         |   |   |   |   |   |   |
| **Cross Currency Swaps**                     |       |           |       |                                       |       |                  |       |                                                         |       |                               |       |   |   |   |   |   |   |
| Euro to US dollar                            |       |           | 673        |                                       |       |                  | 5,219      |                                                         |       |                               | (609       | ) |   |   | 7.75 |   |   |
| Other                                        |       |           | 420        |                                       |       |                  | 2,784      |                                                         |       |                               | 14         |   |   |   | 6.62 |   |   |
| **Total**                                    |       |           |       |                                       |       |                  | 8,003      |                                                         |       |                               | (595       | ) |   |   |   |   |   |

 

F-92

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**24.**   Concentration of risk (Continued)

***Interest rate risk***

The group monitor’s exposure to interest rate risk ondebt and investments on a continuous basis. The financing of the group isstructured on a combination of floating and fixed interest rates. The benefitsof fixing or capping interest rates on debt to achieve improved predictabilityof cash flows are considered and implemented on a case-by-case basis.

Thefollowing interest rate derivative contracts were in place at 30 June 2005:

|                                         | ** ** | **Notional contract amount** | ** ** | ** **            | ** ** | ** **           | ** ** | **Estimated**                | ** ** |
|-----------------------------------------|------------|----------------------------------------|------------|-----------------------|------------|----------------------|------------|------------------------------|------------|
| ** **                              | ** ** | **Foreign  currency**                  | ** ** | **Rand  equivalent**  | ** ** | **Expiry date** | ** ** | **Average  fixed rate** | ** ** | **fair value  gains / (losses)** | ** ** |
| ** **                              | ** ** | **(Millions)**                         | ** ** | **(Rand**             | ** ** | ** **           | ** ** | ** **                   | ** ** | **(Rand** | ** ** |
| ** **                              | ** ** | ** **                             | ** ** | **in millions)** | ** ** | ** **           | ** ** | ** **                   | ** ** | **in millions)** | ** ** |
| ***Interest  rate derivatives***        |       |                                   |       |                  |       |                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |
| *Pay  fixed rate receive floating rate* |       |                                   |       |                  |       |                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |
| US dollar                               |       |                                   | 98         |                  |       |                 | 653        |                         |       | 15 Jan 2008 |   |   | 3.8 | % |   |   | 10 |   |   |
| Rands                                   |       |                                   |       |                  |       |                 | 500        |                         |       | 30 Jun 2008 |   |   | 9.7 | % |   |   | (30 | ) |   |
| **Total**                               |       |                                   |       |                  |       |                 | 1,153      |                         |       |   |   |   |   |   |   |   | (20 | ) |   |
| ***Interest rate cap or collar***       |       |                                   |       |                  |       |                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |
| (relating to long-term  debt)           |       |                                   |       |                  |       |                 |       |                         |       |   |   |   |   |   |   |   |   |   |   |
| Rand—Cap                           |       |                                   |       |                  |       |                 | 500        |                         |       | 29 Jun 2007 |   |   | 9.4 | % |   |   | (9 | ) |   |
| Rand—Collar                        |       |                                   |       |                  |       |                 | 500        |                         |       |   |   |   |   |   |   |   | (9 | ) |   |
| Cap                                     |       |                                   |       |                  |       |                 |       |                         |       | 30 Jun 2006 |   |   | 11.0 | % |   |   |   |   |   |
| Floor                                   |       |                                   |       |                  |       |                 |       |                         |       | 30 Jun 2006 |   |   | 9.0 | % |   |   |   |   |   |
|                                    |       |                                   |       |                  |       |                 | 1,000      |                         |       |   |   |   |   |   |   |   | (17 | ) |   |

 

***Crude oil price risk***

The group make’s use of derivative instruments,including commodity swaps, zero cost collars, options and futures contracts ofshort duration as a means of mitigating price and timing risks on crude oil andother energy related product purchases and sales. In effecting thesetransactions, the companies concerned operate within procedures and policiesdesigned to ensure that risks, including those relating to the default ofcounterparties are minimized.

In the financial year under review, the group hedged aportion of our exposure to crude oil price volatility by entering into aderivative instrument in terms of which 45,000 barrels of crude oil per daywere sold forward at a weighted average price of US$33.12 per barrel. Whilstthe hedge achieved our objective of achieving a minimum level of cash flows inorder to fund our capital expenditure programme, the group realized a totalopportunity loss for the year on this hedge of R1,147 million before tax.

We have reviewed our crude oil price exposure for thefinancial year ahead. Due to continuing volatility in oil markets andconsidering the capital expenditure plans for the year, we have decided tocontinue with modest hedging to protect cash flows, but following a differentapproach.

We have, therefore, for the next financial year,entered into hedging transactions (zero cost collars) for 45 000 barrels ofcrude oil (dated Brent) per day. In terms of this hedge the group will beprotected, should monthly average oil prices decrease below US$45.00 per barrelon the hedged portion of 

F-93

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**24.**   Concentration of risk (Continued)

production, andconversely, will incur opportunity losses on the hedged portion of productionshould monthly average oil prices exceed US$82.61 per barrel.

We believe the revised approach to be more appropriatein the context of the currently high and rising crude oil prices.

Thefollowing hedging instruments were in place in respect of crude and fuel oilderivative instruments at 30 June 2005:

|                                | ** ** | **Contract  foreign  currency** | ** ** | **Contract amount**         | ** ** | **Estimated  fair value  gains / (losses)** | ** ** | **Average  price** | ** ** |
|--------------------------------|------------|---------------------------------|------------|----------------------------------|------------|------------------------------------------------------------|------------|--------------------|------------|
| ** **                     | ** ** | **(Millions)**                  | ** ** | **(Rand in millions)** | ** ** | ** **                                                 | ** ** |
| **Commodity derivatives**      |       |                            |       |                             |       |                                                       |       |               |       |   |   |   |   |   |   |
| **Futures**                    |       |                            |       |                             |       |                                                       |       |               |       |   |   |   |   |   |   |
| Crude oil futures  (US dollar) |       |                            | 39         |                             |       |                                                       | 260        |               |       |   | (2 | ) |   | 55.95 |   |
| **Swaps**                      |       |                            |       |                             |       |                                                       |       |               |       |   |   |   |   |   |   |
| Fuel oil (US  dollar)          |       |                            | 10         |                             |       |                                                       | 70         |               |       |   | 22 |   |   | 207.25 |   |
| **Zero cost collar**           |       |                            |       |                             |       |                                                       |       |               |       |   |   |   |   |   |   |
| Call options sold  (US dollar) |       |                            | 393        |                             |       |                                                       | 2,622      |               |       |   | — |   |   | 82.61 |   |
| Put options sold  (US dollar)  |       |                            | 216        |                             |       |                                                       | 1,440      |               |       |   | 11 |   |   | 45.00 |   |
| **Options sold**               |       |                            |       |                             |       |                                                       |       |               |       |   |   |   |   |   |   |
| Call options sold  (US dollar) |       |                            | 43         |                             |       |                                                       | 289        |               |       |   | (2 | ) |   | 93.62 |   |
| Put options sold (US  dollar)  |       |                            | 239        |                             |       |                                                       | 1,593      |               |       |   | 8 |   |   | 32.66 |   |

 

***Commodity chemical prices***

We are exposed to pricerisk in respect of certain of our chemical products. The prices of chemicalproducts are based on international chemical prices of those commodities, whichinclude ethylene, propylene, ammonia and certain solvents and polymer prices.No derivative instruments were entered into to hedge these risks.

***Disclosures regarding fair value of financialinstruments***

*Cash and cashequivalents and bank overdraft*

The carrying amount approximatesfair value as a result of the short-term maturity of these instruments.

*Investments*

The fair value of debtsecurities is determined using a discounted cash flow method. It is notpractical to determine the fair value of unlisted equity investments. Theseinvestments are carried at their original cost in the balance sheet.

*Long-termreceivables*

The fair value oflong-term receivables approximates the carrying value as market related ratesof interest are charged on these outstanding amounts.

F-94

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**24.**   Concentration of risk (Continued)

*Long-term andshort-term debt*

The fair value oflong-term debt is estimated based on the effective interest rate and expectedfuture cash flows. The fair value of short-term debt approximates the carryingvalue as a result of the short-term maturity periods.

*Foreign currencycontracts and cross-currency options*

The fair valuegains/(losses) are determined by recalculating the daily forward rates for eachcurrency using a forward rate interpolator model. The net market value of allforward exchange contracts at year end was then calculated by comparing theforward exchange contracted rates to the equivalent year end market foreignexchange rates. The present value of these net market values were thencalculated using the appropriate currency specific discount curve.

*Interest rate swapsand oil futures*

The fair value of interest rate swaps and oil futuresis determined by reference to quoted market prices for similar instruments.

The fairvalue of financial instruments was as follows:

|                                             | ** ** | **2005**                         | ** ** | **2004**        | ** ** |
|---------------------------------------------|------------|----------------------------------|------------|-----------------|------------|
| ** **                                  | ** ** | **Carrying  value**              | ** ** | **Fair  value** | ** ** | **Carrying  value** | ** ** | **Fair  value** | ** ** |
| ** **                                  | ** ** | **(Rand in millions)** | ** ** |
| Cash and cash  equivalents                  |       | **2,350**                        | ** ** | **2,350**       | ** ** | 1,410 |   | 1,410 |   |
| Cash restricted  for use                    |       | **331**                          | ** ** | **331**         | ** ** | 930 |   | 930 |   |
| Investments in  securities for which it is: |       | ** **                       | ** ** | ** **      | ** ** |   |   |   |   |
| —Practical to  estimate fair value     |       | **194**                          | ** ** | **194**         | ** ** | 144 |   | 144 |   |
| —Not practical to  estimate fair value |       | **201**                          | ** ** | **—**      | ** ** | 225 |   | — |   |
| Long-term  receivables                      |       | **616**                          | ** ** | **616**         | ** ** | 663 |   | 663 |   |
| Long-term and  short-term debt              |       | **(15,293**                      | **)**      | **(15,293**     | **)**      | (14,292 | ) | (14,297 | ) |
| Bank overdraft                              |       | **(266**                         | **)**      | **(266**        | **)**      | (74 | ) | (74 | ) |
| Foreign currency  options                   |       | **(19**                          | **)**      | **(19**         | **)**      | (436 | ) | (436 | ) |
| Cross-currency  options                     |       | **(595**                         | **)**      | **(595**        | **)**      | (677 | ) | (677 | ) |
| Interest rate swaps                         |       | **(38**                          | **)**      | **(38**         | **)**      | (35 | ) | (35 | ) |

 

**Labor risk**

Approximately 54% of the South African labor force inSouth Africa are members of labor unions. The majority of the union members areblue-collar employees. The unions negotiate an annual wage agreement which isbinding on employees in the bargaining unit which consists of occupationalgroupings of mainly blue collar workers in the organisation. These agreementsare valid from 1 July to 30 June of each year. There are no long-termwage agreements in place.

The levels of unionizationfor operations outside South Africa varies. It is mostly contained amongst bluecollar workers and membership ranges from 30-50%.

F-95

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**24.**   Concentration of risk (Continued)

**Mining Charter**

In October 2002, thegovernment and representatives of South African mining companies andmineworkers’ unions signed a charter (the Mining Charter), designed tofacilitate the participation of historically disadvantaged South Africans inthe country’s mining industry. The Mining Charter requires mining companies toensure that historically disadvantaged South Africans hold at least 15%ownership of mining assets in South Africa within five years from the effectivedate of the Mineral and Petroleum Resources Development Act, enacted on 1 May 2004,and reach ownership of at least 26% within 10 years. The Mining Charteralso requires that transactions must take place in a transparent manner, on awilling seller-buyer basis, at fair market value, where mining companiesare not at risk. It also requires that mining companies assist historicallydisadvantaged groups in securing finance to fund participation in an amount ofR100 billion over the next five years. We were not a signatory to theMining Charter. We are closely monitoring developments in connection with theMining Charter and its application. The group will consider to what extent theprinciples of the charter may apply to the group and the appropriate actionsthat may be required. It cannot be assured that the costs that may be incurredin any restructuring that may be undertaken as a result of the Mining Charterand relevant developments will not have a material effect on the group’soperating results, cash flows and financial position.

**Liquid Fuels Charter**

The Liquid Fuels Charter requires the group to ensurethat historically disadvantaged South Africans hold at least 25% ownership ofliquid fuels business by the year 2010. Whilst it is the group’s intention thatequity participation will take place through transactions at fair market value,the group may be required to facilitate these transactions.

F-96

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**25.**   Supplemental cashflow information

PerSFAS 95, Statement of Cash Flows, the preferred method of presentation of thecash flow statement is the direct method and therefore the presentation in thecurrent year has been amended and comparative periods restated. Details ofsupplemental disclosures of cash flow or non-cash investing and financinginformation was:
|                                                                  | ** ** | **Years ended:**            | ** ** |
|------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                       | ** ** | **30 June**                 | ** ** | **30 June** | ** ** | **30 June** | ** ** |
| ** **                                                       | ** ** | **2005**                         | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                                                       | ** ** | **(Rand in millions)** | ** ** |
| **Cash flow from operations**                                    | ** ** |                             | ** ** | ** ** |   |   |   |   |   |   |   |   |   |
| Earnings attributable to  shareholders                           | ** ** |                             | **9,787**  | ** ** |   |   | 5,358 |   |   |   | 7,344 |   |   |
| Change in method of  accounting for asset retirement obligations | ** ** |                             | **—** | ** ** |   |   | — |   |   |   | (529 | ) |   |
| Minority interest                                                | ** ** |                             | **103**    | ** ** |   |   | 92 |   |   |   | 170 |   |   |
| (Earnings)/losses of  equity accounted investees                 | ** ** |                             | **(307**   | **)** |   |   | 49 |   |   |   | 47 |   |   |
| Net profit after tax                                             | ** ** |                             | **9,583**  | ** ** |   |   | 5,499 |   |   |   | 7,032 |   |   |
| Dividends received                                               | ** ** |                             | **(23**    | **)** |   |   | (14 | ) |   |   | (14 | ) |   |
| Interest received                                                | ** ** |                             | **(116**   | **)** |   |   | (183 | ) |   |   | (193 | ) |   |
| Finance costs paid                                               | ** ** |                             | **332**    | ** ** |   |   | 368 |   |   |   | 271 |   |   |
| Gain arising from  issuance of subsidiary’s shares          | ** ** |                             | **—** | ** ** |   |   | (108 | ) |   |   | — |   |   |
| Income tax                                                       | ** ** |                             | **5,157**  | ** ** |   |   | 3,177 |   |   |   | 3,915 |   |   |
| Operating profit                                                 | ** ** |                             | **14,933** | ** ** |   |   | 8,739 |   |   |   | 11,011 |   |   |
| Adjusted for                                                     | ** ** |                             | ** ** | ** ** |   |   |   |   |   |   |   |   |   |
| amortization of  intangible assets                               | ** ** |                             | **407**    | ** ** |   |   | 493 |   |   |   | 349 |   |   |
| capitalised exploration  expenditure written off                 | ** ** |                             | **33**     | ** ** |   |   | 153 |   |   |   | — |   |   |
| depreciation of property,  plant and equipment                   | ** ** |                             | **3,341**  | ** ** |   |   | 4,372 |   |   |   | 4,165 |   |   |
| effect of cash flow hedge  accounting                            | ** ** |                             | **20**     | ** ** |   |   | — |   |   |   | — |   |   |
| impairment of                                                    | ** ** |                             | ** ** | ** ** |   |   |   |   |   |   |   |   |   |
| property, plant and  equipment                                   | ** ** |                             | **218**    | ** ** |   |   | 253 |   |   |   | 5 |   |   |
| goodwill                                                         | ** ** |                             | **—** | ** ** |   |   | 21 |   |   |   | 48 |   |   |
| intangible assets                                                | ** ** |                             | **13**     | ** ** |   |   | 5 |   |   |   | 5 |   |   |
| investments in securities                                        | ** ** |                             | **2**      | ** ** |   |   | 5 |   |   |   | — |   |   |
| investments in associates                                        | ** ** |                             | **35**     | ** ** |   |   | — |   |   |   | — |   |   |
| loss / (gain) on disposal of                                     | ** ** |                             | ** ** | ** ** |   |   |   |   |   |   |   |   |   |
| non-current assets                                               | ** ** |                             | **267**    | ** ** |   |   | (165 | ) |   |   | (9 | ) |   |
| investments in businesses                                        | ** ** |                             | **2**      | ** ** |   |   | (78 | ) |   |   | — |   |   |
| equity accounted  investees                                      | ** ** |                             | **(31**    | **)** |   |   | 27 |   |   |   | — |   |   |
| movement in provision for  doubtful debts                        | ** ** |                             | **(10**    | **)** |   |   | 44 |   |   |   | (90 | ) |   |
| movement in provision for  inventory obsolescence                | ** ** |                             | **25**     | ** ** |   |   | (111 | ) |   |   | 5 |   |   |
| movement in long-term  prepaid expenses                          | ** ** |                             | **21**     | ** ** |   |   | — |   |   |   | — |   |   |
| movement in long-term  obligations                               | ** ** |                             | **160**    | ** ** |   |   | (47 | ) |   |   | (1,394 | ) |   |
| movement in short-term  obligations                              | ** ** |                             | **113**    | ** ** |   |   | — |   |   |   | — |   |   |
| movement in pension and  other post-retirement benefits          | ** ** |                             | **311**    | ** ** |   |   | 551 |   |   |   | 1,850 |   |   |
| realisation of  translation effects                              | ** ** |                             | **(8**     | **)** |   |   | — |   |   |   | — |   |   |
| stock based compensation  / (income)                             | ** ** |                             | **69**     | ** ** |   |   | 25 |   |   |   | (7 | ) |   |
| translation of net  investment in foreign entities               | ** ** |                             | **210**    | ** ** |   |   | (570 | ) |   |   | (345 | ) |   |
| write-down of inventories  to net realizable value               | ** ** |                             | **47**     | ** ** |   |   | 62 |   |   |   | 44 |   |   |
| (increase) / decrease in working capital                         | ** ** |                             | ** ** | ** ** |   |   |   |   |   |   |   |   |   |
| movement in inventories                                          | ** ** |                             | **(1,567** | **)** |   |   | (108 | ) |   |   | 244 |   |   |
| movement in trade  receivables                                   | ** ** |                             | **(830**   | **)** |   |   | (426 | ) |   |   | (108 | ) |   |
| movement in other  receivables and prepaid expenses              | ** ** |                             | **(228**   | **)** |   |   | (1,172 | ) |   |   | (928 | ) |   |
| movement in trade  payables                                      | ** ** |                             | **930**    | ** ** |   |   | (42 | ) |   |   | (379 | ) |   |
| movement in other  payables and accrued expenses                 | ** ** |                             | **(1,067** | **)** |   |   | 1,939 |   |   |   | 867 |   |   |
| movement in cash  restricted for use                             | ** ** |                             | **611**    | ** ** |   |   | (131 | ) |   |   | 1,387 |   |   |
|                                                             | ** ** |                             | **18,027** | ** ** |   |   | 13,839 |   |   |   | 16,720 |   |   |

 

F-97

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**25.**   Supplemental cash flow information (Continued)
|                                                      | ** ** | **Years ended:**            | ** ** |
|------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                           | ** ** | **30 June**                 | ** ** | **30 June** | ** ** | **30 June** | ** ** |
| ** **                                           | ** ** | **2005**                         | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                                           | ** ** | **(Rand in millions)** | ** ** |
| **Dividends  received**                              | ** ** |                             | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** |   |   |
| investments                                          | ** ** |                             | **23**     | ** ** |   |   | 14 | ** ** |   |   | 14 |   |   |
| equity accounted  investees                          | ** ** |                             | **38**     | ** ** |   |   | 23 | ** ** |   |   | — |   |   |
|                                                 | ** ** |                             | **61**     | ** ** |   |   | 37 | ** ** |   |   | 14 |   |   |
| **Dividends paid**                                   | ** ** |                             | ** ** | ** ** |   |   |   | ** ** |   |   |   |   |   |
| Final dividend—prior  year                      | ** ** |                             | **(1,440** | **)** |   |   | (1,432 | ) |   |   | (1,524 | ) |   |
| Interim dividend—current  year                  | ** ** |                             | **(1,416** | **)** |   |   | (1,316 | ) |   |   | (1,311 | ) |   |
|                                                 | ** ** |                             | **(2,856** | **)** |   |   | (2,748 | ) |   |   | (2,835 | ) |   |
| **Detail of businesses acquired (see note 4):**      | ** ** |                             | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** |   |   |
| Current assets  acquired including cash              | ** ** |                             | **—** | ** ** |   |   | — | ** ** |   |   | (2,221 | ) |   |
| Fair value of  non-current assets acquired           | ** ** |                             | **—** | ** ** |   |   | (577 | ) |   |   | (1,230 | ) |   |
| Liabilities  assumed including deferred taxes        | ** ** |                             | **—** | ** ** |   |   | 330 | ** ** |   |   | 2,946 |   |   |
| Cash paid, net of  cash acquired                     | ** ** |                             | **—** | ** ** |   |   | (247 | ) |   |   | (505 | ) |   |
| **Detail of businesses disposed of (see note 4):**   | ** ** |                             | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** |   |   |
| Current assets  disposed of                          | ** ** |                             | **81**     | ** ** |   |   | 225 | ** ** |   |   | **—** |   |   |
| Non-current assets  disposed of                      | ** ** |                             | **78**     | ** ** |   |   | 265 | ** ** |   |   | **—** |   |   |
| Cash balance  disposed of                            | ** ** |                             | **82**     | ** ** |   |   | 3 | ** ** |   |   | **—** |   |   |
| Liabilities  disposed of including deferred taxes    | ** ** |                             | **(292**   | **)** |   |   | (360 | **)** |   |   | **—** |   |   |
| Net assets  disposed of                              | ** ** |                             | **(51**    | **)** |   |   | 133 | ** ** |   |   |   |   |   |
| Realisation of  accumulated translation effects      | ** ** |                             | **(24**    | **)** |   |   | 43 | ** ** |   |   | **—** |   |   |
| Profit on disposal  of businesses                    | ** ** |                             | **29**     | ** ** |   |   | 78 | ** ** |   |   | **—** |   |   |
| Total  consideration                                 | ** ** |                             | **(46**    | **)** |   |   | 254 | ** ** |   |   | **—** |   |   |
| **Assets  acquired under finance lease obligations** | ** ** |                             | **288**    | ** ** |   |   | 157 | ** ** |   |   | 323 |   |   |

 

**26.**   Related parties

The group entered into transactions with relatedparties, comprising mainly product sales and sales of raw materials. Thesesales are in the ordinary course of business and terms and conditions aredetermined on an arm’s length basis.

The transactionsand balances with related parties are summarised below:
|                                  | ** ** | **Years ended:**            | ** ** |
|----------------------------------|------------|----------------------------------|------------|
| ** **                       | ** ** | **30 June**                 | ** ** | **30 June** | ** ** | **25 June** | ** ** |
| ** **                       | ** ** | **2005**                         | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                       | ** ** | **(Rand in millions)** | ** ** |
| ***Income***                     | ** ** |                             | ** ** |   |   |   |   |   |   |   |   |   |   |
| Sales of goods  and services     | ** ** |                             | **1,770**  |   |   |   | 1,050 |   |   |   | 1,951 |   |   |
| ***Expenses***                   | ** ** |                             | ** ** |   |   |   |   |   |   |   |   |   |   |
| Purchases of goods and  services | ** ** |                             | **1,190**  |   |   |   | 1,048 |   |   |   | 132 |   |   |

 

Included in the above amounts are a number oftransactions with related parties which are individually insignificant.

F-98

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**26.**   Related parties (Continued)

The balances ofreceivables and payables between the group and its related parties are asfollows:
|                                              | ** ** | ** **                 | ** ** | **30 June**                 | ** ** | **30 June** | ** ** | **30 June** | ** ** |
|----------------------------------------------|------------|----------------------------|------------|----------------------------------|------------|------------------|------------|------------------|------------|
| ** **                                   | ** ** | **Relationship**           | ** ** | **2005**                         | ** ** | **2004**         | ** ** | **2003**         | ** ** |
| ** **                                   | ** ** | ** **                 | ** ** | **(Rand in millions)** | ** ** |
| ***Receivables***                            |       |                       |       |                             |       |             |       |             |       |   |   |   |   |   |   |
| Sasol Dia  Acrylates (Pty) Limited           |       | Equity  accounted investee | ** ** | ** **                       | **95**     |             |       |             | —     |   |   |   | — |   |   |
| Merisol LP                                   |       | Equity  accounted investee | ** ** | ** **                       | **88**     |             |       |             | 44         |   |   |   | 38 |   |   |
| Exelem Aviation  (Pty) Limited               |       | Equity  accounted investee | ** ** | ** **                       | **86**     |             |       |             | —     |   |   |   | — |   |   |
| Total South  Africa Limited                  |       | Joint  venture partner     | ** ** | ** **                       | **82**     |             |       |             | 111        |   |   |   | 75 |   |   |
| Wesco China  Limited                         |       | Equity  accounted investee | ** ** | ** **                       | **36**     |             |       |             | 29         |   |   |   | 15 |   |   |
| DPI Holdings  (Pty) Limited                  |       | Equity  accounted investee | ** ** | ** **                       | **32**     |             |       |             | 23         |   |   |   | 27 |   |   |
| Oryx GTL Limited                             |       | Equity  accounted investee | ** ** | ** **                       | **24**     |             |       |             | 8          |   |   |   | 14 |   |   |
| Tosas Holdings  (Pty) Limited                |       | Equity  accounted investee | ** ** | ** **                       | **21**     |             |       |             | 36         |   |   |   | — |   |   |
| Sasol Chevron  Holdings Limited              |       | Equity  accounted investee | ** ** | ** **                       | **24**     |             |       |             | 12         |   |   |   | — |   |   |
| Spring Lights Gas  (Pty)Limited              |       | Equity  accounted investee | ** ** | ** **                       | **4**      |             |       |             | 6          |   |   |   | 11 |   |   |
| Sasol Roche  Blasting Services (Pty) Limited |       | Equity  accounted investee |       |                             | **—** |             |       |             | —     |   |   |   | 14 |   |   |
| Petlin (Malaysia)  Sdn.Bhd                   |       | Equity  accounted investee |       |                             | **—** |             |       |             | —     |   |   |   | 2 |   |   |
| Oil Insurance  Limited                       |       | Unlisted  equity security  |       |                             | **—** |             |       |             | 14         |   |   |   | — |   |   |
| Other related  parties                       |       |                       | ** ** | ** **                       | **66**     |             |       |             | 113        |   |   |   | 114 |   |   |
|                                         |       |                       | ** ** | ** **                       | **558**    |             |       |             | 396        |   |   |   | 310 |   |   |
| *Long  term receivables*                     |       |                       |       |                             |       |             |       |             |       |   |   |   |   |   |   |
| Merisol LP                                   |       | Equity  accounted investee | ** ** | ** **                       | **42**     |             |       |             | 66         |   |   |   | 76 |   |   |
| Petlin (Malaysia)  Sdn.Bhd                   |       | Equity  accounted investee | ** ** | ** **                       | **25**     |             |       |             | —     |   |   |   | — |   |   |
| Spring Lights Gas  (Pty) Limited             |       | Equity  accounted investee | ** ** | ** **                       | **4**      |             |       |             | 5          |   |   |   | — |   |   |
| Sasol Roche  Blasting Services (Pty) Limited |       | Equity  accounted investee |       |                             | **—** |             |       |             | —     |   |   |   | 21 |   |   |
| Oryx GTL Limited                             |       | Equity  accounted investee |       |                             | **—** |             |       |             | 8          |   |   |   | — |   |   |
| Other                                        |       |                       | ** ** | ** **                       | **4**      |             |       |             | 8          |   |   |   | — |   |   |
|                                         |       |                       | ** ** | ** **                       | **75**     |             |       |             | 87         |   |   |   | 97 |   |   |
| ***Payables***                               |       |                       |       |                             |       |             |       |             |       |   |   |   |   |   |   |
| Sasol Dia Acrylates  (Pty) Limited           |       | Equity  accounted investee | ** ** | ** **                       | **72**     |             |       |             | 32         |   |   |   | — |   |   |
| Oryx GTL Limited                             |       | Equity  accounted investee | ** ** | ** **                       | **55**     |             |       |             | —     |   |   |   | — |   |   |
| Sasol Huntsman  GmbH and Co KG               |       | Equity  accounted investee | ** ** | ** **                       | **8**      |             |       |             | 8          |   |   |   | — |   |   |
| Merisol LP                                   |       | Equity  accounted investee | ** ** | ** **                       | **3**      |             |       |             | 12         |   |   |   | — |   |   |
| Oil Insurance  Limited                       |       | Unlisted  equity security  | ** ** | ** **                       | **—** |             |       |             | 14         |   |   |   | — |   |   |
| Spring Lights Gas  (Pty) Limited             |       | Equity  accounted investee | ** ** | ** **                       | **—** |             |       |             | 18         |   |   |   | — |   |   |
| Optimal Olefins  Malaysia Sdn.Bhd            |       | Equity  accounted investee | ** ** | ** **                       | **—** |             |       |             | 29         |   |   |   | — |   |   |
| Other related  parties                       |       |                       | ** ** | ** **                       | **18**     |             |       |             | 15         |   |   |   | 13 |   |   |
|                                         |       |                       | ** ** | ** **                       | **156**    |             |       |             | 128        |   |   |   | 13 |   |   |

 

F-99

----

**Sasol Limited and its subsidiaries Notes to the Consolidated Financial Statements (Continued)**

**27.**   Post balance sheetevents

In May 2005, the South African CompetitionCommission conditionally recommended the approval of the proposed joint venturebetween Sasol’s and Petronas’ liquid fuels businesses, to be called Uhambo Oil,to the Competition Tribunal. Public hearings are scheduled for October 2005where after the Competition Tribunal will give its ruling. Approval of thetransaction by the European Commission was granted in February 2005.

The governments of South Africa and Mozambique havethe option collectively to acquire 50% of the shares in Rompco which was awholly owned Sasol subsidiary at 30 June 2005, at a price to be determinedby means of a formula at the date they exercise the option. On 1 July 2005,a 25% interest in the Republic of Mozambique Pipeline Investment Company wassold to iGas Limited (owned by the South African Government) for R609 millionrealizing a profit of R189 million.

Sasol announced in August 2005 that it isconsidering the divestment from its Olefins and Surfactants business includingits Safol plant but excluding its comonomers activities in South Africa. In2003, Sasol determined that it would continue to grow its chemical businessesconditional upon projects leveraging its technology or securing integrated andhighly cost-competitive feedstock positions. The Olefins and Surfactantsbusiness is only partially integrated upstream into feedstock and has notadequately provided the integration benefits which Sasol requires. Thepotential divestment is subject to an acceptable price being obtained.

Sasol announced on 22 September 2005 thatTshwarisano, its Broad-Based BEE partner, would acquire a 12.5% interest inUhambo Oil Limited for an amount of R1.5 billion. As noted above the Uhambo Oiltransaction is subject to Competition Tribunal approval.

Through Sasol Financing (Pty) Limited and jointly withJP Morgan and Nedbank, Sasol will arrange and structure the senior-debtfinancing required by Tshwarisano amounting to approximately R1.1 billion. Thegroup will provide guarantees for this debt to the participating banks. Additionallywe will bear the advising, arranging and structuring fees and waive theguarantee fees which would normally be charged to the beneficiaries. Inaddition, Sasol is contributing R45 million to two trusts, aimed at empoweringthe severely underprivileged, as well as Uhambo Oil staff and their families.

If, for any reason, the Competition Tribunal does not rule infavor of the merger, then Tshwarisano will become a 25% shareholder in SasolLFB rather than a 12.5% shareholder in Uhambo Oil.

Sasol’s Lake Charles Chemical Complex located in theUnited States suffered some damage due to Hurricane Rita which made landfall on24 September 2005. The extent of the damages to our facilities iscurrently being assessed. It is expected that normal production at the entirecomplex will commence during mid October 2005 and at which time it isexpected that electrical power will also be restored to the homes of ouremployees in the affected areas. Physical damage to our facilities will beclaimed against our insurance (subject to a deductible of US$2 million) and itis anticipated that loss of profits will be claimed if the plant is out ofproduction for a period exceeding 45 days.

F-100

----

**Sasol Limited and its subsidiaries Supplemental Oil and Gas Information (unaudited)**

**SUPPLEMENTALOIL AND GAS INFORMATION (unaudited)**

In accordance with FAS 69,“Disclosures about Oil and Gas Producing Activities”, and regulations of the USSecurities and Exchange Commission, this section provides supplementalinformation about oil and gas exploration and production operations. Tables 1through to 3 provide historical information pertaining to costs incurred forproperty acquisitions, exploration and development; capitalized costs andresults of operations. Tables 4 through to 6 present information on theestimated net proved reserve quantities; standardized measure of estimateddiscounted future net cash flows related to proved reserves and changestherein.

**TABLE1—COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENTACTIVITIES**

| ** **                          | ** ** | **Mozambique**                   | ** ** | **Other  areas** | ** ** | **Total**  | ** ** |
|-------------------------------------|------------|----------------------------------|------------|------------------|------------|------------|------------|
| ** **                          | ** ** | **(Rand in millions)** | ** ** |
| **Year ended 30 June 2003**    | ** ** |                             | ** ** | ** **       |       | ** ** | ** ** | ** ** | ** ** |
| Exploration                         |       |                             | 11.6       | ** **       |       | 108.8      |       | 120.4 |   |
| Development                         |       |                             | 911.9      | ** **       |       | 78.0       |       | 989.9 |   |
| Total costs  incurred               |       |                             | 923.5      | ** **       |       | 186.8      |       | 1,110.3 |   |
| **Year  ended 30 June 2004**   | ** ** |                             | ** ** | ** **       |       | ** ** | ** ** | ** ** | ** ** |
| Acquisition of  unproved properties |       |                             | —     | ** **       |       | 1.6        |       | 1.6 |   |
| Exploration                         |       |                             | 159.0      | ** **       |       | 64.1       |       | 223.1 |   |
| Development                         |       |                             | 654.4      | ** **       |       | 104.4      |       | 758.8 |   |
| Total costs  incurred               |       |                             | 813.4      | ** **       |       | 170.1      |       | 983.5 |   |
| **Year  ended 30 June 2005**   | ** ** |                             | ** ** | ** **       |       | ** ** | ** ** | ** ** | ** ** |
| Acquisition of  unproved properties |       |                             | **—** | ** **       | ** ** | **86.8**   | ** ** | **86.8** |   |
| Exploration                         |       |                             | **19.2**   | ** **       | ** ** | **70.3**   | ** ** | **89.5** |   |
| Development                         |       |                             | **58.9**   | ** **       | ** ** | **57.0**   | ** ** | **115.9** |   |
| Total costs incurred                |       |                             | **78.1**   | ** **       | ** ** | **214.1**  | ** ** | **292.2** |   |

 

G-1

----

**Sasol Limited and its subsidiaries Supplemental Oil and Gas Information (unaudited) (Continued)**

**TABLE2—CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES**

| ** **                                         | ** ** | **Mozambique**                   | ** **  | **Other  areas** | ** ** | **Total**  | ** ** |
|----------------------------------------------------|------------|----------------------------------|-------------|------------------|------------|------------|------------|
| ** **                                         | ** ** | **(Rand in millions)** | ** **  |
| **Year ended 30 June 2003**                   |       |                             |        |             |       |       |       |   |   |
| ***Proved  properties***                           |       |                             | 1,791.4     |             |       | 191.6      |       | 1,983.0 |   |
| Producing wells  and equipment                     |       |                             | —      |             |       | 180.7      |       | 180.7 |   |
| Support  facilities and equipment                  |       |                             | 1.2         |             |       | —     |       | 1.2 |   |
| Non-producing  wells and equipment                 |       |                             | 1,790.2     |             |       | —     |       | 1,790.2 |   |
| Other                                              |       |                             | —      |             |       | 10.9       |       | 10.9 |   |
| ***Unproved  properties***                         |       |                             |        |             |       |       |       |   |   |
| Uncompleted and  non-producing wells and equipment |       |                             | 3.4         |             |       | —     |       | 3.4 |   |
| ***Capitalized  costs***                           |       |                             | 1,794.8     |             |       | 191.6      |       | 1,986.4 |   |
| Accumulated  depreciation                          |       |                             | (0.2        | )                |       | (34.7      | )          | (34.9 | ) |
| ***Net  book value***                              |       |                             | 1,794.6     |             |       | 156.9      |       | 1,951.5 |   |
| **Year  ended 30 June 2004**                  |       |                             |        |             |       |       |       |   |   |
| ***Proved  properties***                           |       |                             | 2,458.3     |             |       | 223.8      |       | 2,682.1 |   |
| Producing wells  and equipment                     |       |                             | 2,238.8     |             |       | 164.8      |       | 2,403.6 |   |
| Support  facilities and equipment                  |       |                             | 24.0        |             |       | —     |       | 24.0 |   |
| Non-producing  wells and equipment                 |       |                             | 195.5       |             |       | 48.0       |       | 243.5 |   |
| Other                                              |       |                             | —      |             |       | 11.0       |       | 11.0 |   |
| ***Unproved  properties***                         |       |                             |        |             |       |       |       |   |   |
| Uncompleted and  non-producing wells and equipment |       |                             | —      |             |       | 30.5       |       | 30.5 |   |
| ***Capitalized  costs***                           |       |                             | 2,458.3     |             |       | 254.3      |       | 2,712.6 |   |
| Accumulated  depreciation                          |       |                             | (28.6       | )                |       | (68.5      | )          | (97.1 | ) |
| ***Net  book value***                              |       |                             | 2,429.7     |             |       | 185.8      |       | 2,615.5 |   |
| **Year  ended 30 June 2005**                  |       |                             |        |             |       |       |       |   |   |
| ***Proved  properties***                           |       |                             | **2,508.2** | ** **       | ** ** | **311.8**  | ** ** | **2,820.0** | ** ** |
| Producing wells  and equipment                     |       |                             | **2,333.8** | ** **       | ** ** | **253.6**  | ** ** | **2,587.4** | ** ** |
| Non-producing  wells and equipment                 |       |                             | **174.4**   | ** **       | ** ** | **58.2**   | ** ** | **232.6** | ** ** |
| ***Unproved  properties***                         |       |                             | ** **  | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Uncompleted and  non-producing wells and equipment |       |                             | **—**  | ** **       | ** ** | **87.6**   | ** ** | **87.6** | ** ** |
| ***Capitalized  costs***                           |       |                             | **2,508.2** | ** **       | ** ** | **399.4**  | ** ** | **2,907.6** | ** ** |
| Accumulated  depreciation                          |       |                             | **(178.9**  | **)**            | ** ** | **(107.2** | **)**      | **(286.1** | **)** |
| ***Net  book value***                              |       |                             | **2,329.3** | ** **       | ** ** | **292.2**  | ** ** | **2,621.5** | ** ** |

 

G-2

----

**Sasol Limited and its subsidiaries Supplemental Oil and Gas Information (unaudited) (Continued)**

**TABLE3—RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES**

| ** **                           | ** ** | **Mozambique**                   | ** ** | **Other  areas** | ** ** | **Total**  | ** ** |
|--------------------------------------|------------|----------------------------------|------------|------------------|------------|------------|------------|
| ** **                           | ** ** | **(Rand in millions)** | ** ** |
| **Year ended 30 June 2003**     |       |                             |       |             |       |       |       |   |   |
| Sales to  unaffiliated parties       |       |                             | —     |             |       | 201.4      |       | 201.4 |   |
| Total revenue                        |       |                             | —     |             |       | 201.4      |       | 201.4 |   |
| Production costs                     |       |                             | —     |             |       | (58.8      | )          | (58.8 | ) |
| Foreign currency  translation losses |       |                             | (167.6     | )                |       | —     |       | (167.6 | ) |
| Exploration  expenses                |       |                             | (11.6      | )                |       | (108.8     | )          | (120.4 | ) |
| Depreciation                         |       |                             | —     |             |       | (35.6      | )          | (35.6 | ) |
| Operating loss                       |       |                             | (179.2     | )                |       | (1.8       | )          | (181.0 | ) |
| Future income  taxes                 |       |                             | —     |             |       | (31.4      | )          | (31.4 | ) |
| Results of  operations               |       |                             | (179.2     | )                |       | (33.2      | )          | (212.4 | ) |
| **Year  ended 30 June 2004**    |       |                             |       |             |       |       |       |   |   |
| Sales to  unaffiliated parties       |       |                             | —     |             |       | 261.6      |       | 261.6 |   |
| Transfers to  affiliated parties     |       |                             | 50.1       |             |       | —     |       | 50.1 |   |
| Total revenue                        |       |                             | 50.1       |             |       | 261.6      |       | 311.7 |   |
| Production costs                     |       |                             | (36.3      | )                |       | (70.6      | )          | (106.9 | ) |
| Foreign currency  translation losses |       |                             | (28.3      | )                |       | —     |       | (28.3 | ) |
| Exploration  expenses                |       |                             | (159.0     | )                |       | (64.1      | )          | (223.1 | ) |
| Depreciation                         |       |                             | (28.5      | )                |       | (42.5      | )          | (71.0 | ) |
| Other  income/expenses               |       |                             | (2.8       | )                |       | 6.8        |       | 4.0 |   |
| Operating (loss)  / profit           |       |                             | (204.8     | )                |       | 91.2       |       | (113.6 | ) |
| Future income  taxes                 |       |                             | 99.5       |             |       | (78.0      | )          | 21.5 |   |
| Results of  operations               |       |                             | (105.3     | )                |       | 13.2       |       | (92.1 | ) |
| **Year  ended 30 June 2005**    |       |                             |       |             |       |       |       |   |   |
| Sales to  unaffiliated parties       |       |                             | **3.1**    | ** **       | ** ** | **392.5**  | ** ** | **395.6** | ** ** |
| Transfers to  affiliated parties     |       |                             | **445.1**  | ** **       | ** ** | **—** | ** ** | **445.1** | ** ** |
| Total revenue                        |       |                             | **448.2**  | ** **       | ** ** | **392.5**  | ** ** | **840.7** | ** ** |
| Production costs                     |       |                             | **(126.3** | **)**            | ** ** | **(76.0**  | **)**      | **(202.3** | **)** |
| Exploration  expenses                |       |                             | **(42.4**  | **)**            | ** ** | **(78.1**  | **)**      | **(120.5** | **)** |
| Depreciation                         |       |                             | **(142.2** | **)**            | ** ** | **(48.3**  | **)**      | **(190.5** | **)** |
| Operating profit                     |       |                             | **137.3**  | ** **       | ** ** | **190.1**  | ** ** | **327.4** | ** ** |
| Future income  taxes                 |       |                             | **(48.2**  | **)**            | ** ** | **(108.6** | **)**      | **(156.8** | **)** |
| Results of operations                |       |                             | **89.1**   | ** **       | ** ** | **81.5**   | ** ** | **170.6** | ** ** |

 

G-3

----

**Sasol Limited and its subsidiaries Supplemental Oil and Gas Information (unaudited) (Continued)**

**TABLE4—PROVED RESERVE QUANTITY INFORMATION**

| ** **                                     | ** ** | **Crude Oil and Condensate** | ** ** | **Natural Gas**                      | ** ** |
|------------------------------------------------|------------|---------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                     | ** ** | **Mozambique**                              | ** ** | **Other  areas**                          | ** ** | **Total** | ** ** | **Mozambique** | ** ** | **Other  areas** | ** ** | **Total** | ** ** |
| ** **                                     | ** ** | **Millions of barrels**           | ** ** | **Billions of cubic feet** | ** ** |
| **Proved developed and  undeveloped reserves** | ** ** |                                        | ** ** | ** **                                |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** |   |   |   | ** ** | ** ** |   | ** ** | ** ** |
| First estimate                                 |       |                                        | —     | ** **                                |       |   | 9.2 | ** ** |   |   | 9.2 | ** ** |   |   | 1,445.0 |   |   |   | — | ** ** |   | 1,445.0 |   |
| Production                                     |       |                                        | —     |                                      |       |   | (1.5 | ) |   |   | (1.5 | ) |   |   | (7.0 | ) |   |   | — | ** ** |   | (7.0 | ) |
| Balance at 30  June 2004                  |       |                                        | —     |                                      |       |   | 7.7 | ** ** |   |   | 7.7 |   |   |   | 1,438.0 |   |   |   | — | ** ** |   | 1,438.0 |   |
| Revisions                                      |       |                                        | **7.5**    | ** **                                | ** ** | ** ** | **2.7** | ** ** | ** ** | ** ** | **10.2** | ** ** | ** ** | ** ** | **(24.9** | **)** | ** ** | ** ** | **—** | ** ** | ** ** | **(24.9** | **)** |
| Extensions and  discoveries                    |       |                                        | **—** | ** **                                | ** ** | ** ** | **1.0** | ** ** | ** ** | ** ** | **1.0** | ** ** | ** ** | ** ** | **—** | ** ** | ** ** | ** ** | **—** | ** ** | ** ** | **—** | ** ** |
| Production                                     |       |                                        | **(0.2**   | **)**                                     | ** ** | ** ** | **(1.6** | **)** | ** ** | ** ** | **(1.8** | **)** | ** ** | ** ** | **(45.2** | **)** | ** ** | ** ** | **—** | ** ** | ** ** | **(45.2** | **)** |
| Balance at 30  June 2005                  |       |                                        | **7.3**    | ** **                                | ** ** | ** ** | **9.8** | ** ** | ** ** | ** ** | **17.1** | ** ** | ** ** | ** ** | **1,367.9** | ** ** | ** ** | ** ** | **—** | ** ** | ** ** | **1,367.9** | ** ** |
| **Proved  developed reserves**                 |       |                                        |       |                                      |       |   |   | ** ** |   |   |   |   |   |   |   |   |   |   |   | ** ** |   |   |   |
| At 30  June 2004                          |       |                                        | —     |                                      |       |   | 4.3 | ** ** |   |   | 4.3 |   |   |   | 375.0 |   |   |   | — | ** ** |   | 375.0 |   |
| At 30  June 2005                          |       |                                        | **3.1**    | ** **                                | ** ** | ** ** | **4.7** | ** ** | ** ** | ** ** | **7.8** | ** ** | ** ** | ** ** | **385.7** | ** ** | ** ** | ** ** | **—** | ** ** | ** ** | **385.7** |   |

 

The table above records estimates of the reservequantities held by Sasol, through its various operating entities under SasolPetroleum International (Pty) Limited.

Comparative information for 30 June 2003 has notbeen disclosed due to the unavailability of the relevant information.

The company currently has reserves in two fields:

In Gabon, the company holds a 27.75% non-operatedinterest in the offshore Etame field. An internally determined assessment ofoil reserves was conducted during April 2005. As the license held overthis property is a Production Sharing Contract, reserves reported represent thenet economic interest volumes attributable to the company, after deduction forroyalties, grossed up for income taxes. Extensions and discoveries relate tothe Avouma discovery.

In Mozambique, the companyholds a 70% operated interest in the Pande and Temane gas fields. An internallydetermined assessment of gas reserves was conducted during April 2005.Reserves reported represent the net economic interest volumes attributable tothe company, after deduction of production tax. Additionally, the volumesbooked are restricted to the take-or-pay quantities defined in the gas salescontract agreement for the 25-year term. A phased approach to fielddevelopment has been followed and only the Temane field has currently beendeveloped. It is planned to develop the Pande field and bring it intoproduction during 2007. Due to a spot market in respect of condensate havingbeen proved over the past year the condensate volumes have now also beenbooked.

G-4

----

**Sasol Limited and its subsidiaries Supplemental Oil and Gas Information (unaudited) (Continued)**

**NOTES &DEFINITIONS**

The definitions of categories of reserves used in thisdisclosure are consistent with those set forth in the regulations of theSecurities and Exchange Commission:

**ProvedReserves—**Those quantities of crude oil, natural gas,and natural gas liquids which, upon analysis of geologic and engineering data,appear with reasonable certainty to be recoverable in the future from known oiland gas reservoirs under existing economic and operating conditions i.e. pricesand costs as of the date the estimate is made. Prices include consideration ofchanges in existing prices provided only by contractual arrangements, but noton escalations based upon future conditions. Proved reserves are limited tothose quantities of oil and gas which can be expected, with little doubt, to berecoverable commercially at current prices and costs, under existing regularitypractices and with existing conventional equipment and operating methods.Depending upon their status of development, such proved reserves are subdividedinto “proved developed reserves” and “proved undeveloped reserves”.

**ProvedDeveloped Reserves**—Reserves which can be expected tobe recovered through existing wells with existing equipment and operatingmethods.

**Proved UndevelopedReserves**—Reserves which are expected to be recoveredfrom new wells on undrilled acreage, or from existing wells where a relativelymajor expenditure is required for recompletion.

**TABLE5—STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS**

| ** **                                                | ** ** | **Mozambique**                   | ** **   | **Other  areas** | ** ** | **Total**   | ** ** |
|-----------------------------------------------------------|------------|----------------------------------|--------------|------------------|------------|-------------|------------|
| ** **                                                | ** ** | **(Rand in millions)** | ** **   |
| **Year ended 30 June 2004**                          |       |                             |         |             |       |        |       |   |   |
| Future cash  inflows                                      |       |                             | 10,820.4     |             |       | 1,668.8     |       | 12,489.2 |   |
| Future production  costs                                  |       |                             | (1,987.0     | )                |       | (570.3      | )          | (2,557.3 | ) |
| Future  development costs                                 |       |                             | (835.9       | )                |       | (73.6       | )          | (909.5 | ) |
| Future income  taxes                                      |       |                             | (1,427.2     | )                |       | (283.9      | )          | (1,711.1 | ) |
| Undiscounted  future net cash flows                       |       |                             | 6,570.3      |             |       | 741.0       |       | 7,311.3 |   |
| 10% annual  discount for timing of estimated cash flows   |       |                             | (4,026.3     | )                |       | (190.4      | )          | (4,216.7 | ) |
| Standardized  measure of discounted future net cash flows |       |                             | 2,544.0      |             |       | 550.6       |       | 3,094.6 |   |
| **Year  ended 30 June 2005**                         |       |                             |         |             |       |        |       |   |   |
| Future cash  inflows                                      |       |                             | **15,133.0** | ** **       | ** ** | **3,416.0** | ** ** | **18,549.0** | ** ** |
| Future production  costs                                  |       |                             | **(3,255.2** | **)**            | ** ** | **(955.5**  | **)**      | **(4,210.7** | **)** |
| Future  development costs                                 |       |                             | **(1,157.1** | **)**            | ** ** | **(107.0**  | **)**      | **(1,264.1** | **)** |
| Future income  taxes                                      |       |                             | **(2,878.8** | **)**            | ** ** | **(942.6**  | **)**      | **(3,821.4** | **)** |
| Undiscounted  future net cash flows                       |       |                             | **7,841.9**  | ** **       | ** ** | **1,410.9** | ** ** | **9,252.8** | ** ** |
| 10% annual  discount for timing of estimated cash flows   |       |                             | **(4,794.6** | **)**            | ** ** | **(448.9**  | **)**      | **(5,243.5** | **)** |
| Standardized measure of  discounted future net cash flows |       |                             | **3,047.3**  | ** **       | ** ** | **962.0**   | ** ** | **4,009.3** | ** ** |

 

Comparative information for 30 June 2003 has notbeen disclosed due to the unavailability of the relevant information.

The standardized measure of discounted future cashflows, related to preceding proved oil and gas reserves, is calculated inaccordance with the requirements of SFAS 69. Estimated future cash inflows from

G-5

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**Sasol Limited and its subsidiaries Supplemental Oil and Gas Information (unaudited) (Continued)**

production are computed byapplying year-end prices and year-end quantities of estimated net provedreserves. Future development and production costs are those estimated futureexpenditures necessary to develop and produce year-end estimated provedreserves based on year-end cost indices, assuming continuation of year-endeconomic conditions. Estimated future income taxes are calculated by applyingappropriate year-end statutory tax rates.

The information provideddoes not represent management’s estimate of the companies expected future cashflows or value of proved oil and gas reserves. Estimates of proved reservequantities shall change over time as new information becomes available.Moreover, probable and possible reserves, which may become proved in thefuture, are excluded from the calculations. The arbitrary valuation prescribedunder SFAS 69 requires assumptions as to the timing of future development andproduction costs. The calculations are made as of each fiscal year-end andshould not be relied upon as an indication of the companies’ future cash flowsor value of their oil and gas reserves

**TABLE6—CHANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS**

| ** **                                                           | ** ** | **Mozambique**                   | ** ** | **Other  Areas** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------|------------|----------------------------------|------------|------------------|------------|-----------|------------|
| ** **                                                           | ** ** | **(Rand in millions)** | ** ** |
| **Present  value at 1 July 2004**                               |       |                             | 2,544.0    |             |       | 550.6     |       | 3,094.6 |   |
| Net changes for  the year                                            |       |                             | 503.3      |             |       | 411.4     |       | 914.7 |   |
| Sales and transfers of oil and gas produced net of  production costs |       |                             | (321.7     | )                |       | (281.6    | )          | (603.3 | ) |
| Development costs incurred                                           |       |                             | 58.9       |             |       | 57.0      |       | 115.9 |   |
| Extensions, discoveries and improved recovery less  related costs    |       |                             | —     |             |       | 154.4     |       | 154.4 |   |
| Revisions of previous quantity estimates                             |       |                             | 773.6      |             |       | 277.9     |       | 1,051.5 |   |
| Net changes in prices, net of production costs                       |       |                             | 440.8      |             |       | 541.1     |       | 981.9 |   |
| Changes in estimated development costs                               |       |                             | (203.7     | )                |       | 8.6       |       | (195.1 | ) |
| Accretion of discount                                                |       |                             | 283.6      |             |       | 76.5      |       | 360.1 |   |
| Net change in income tax                                             |       |                             | (539.2     | )                |       | (420.2    | )          | (959.4 | ) |
| Others                                                               |       |                             | 11.0       |             |       | (2.3      | )          | 8.7 |   |
| **Present  value at 30 June 2005**                              |       |                             | 3,047.3    |             |       | 962.0     |       | 4,009.3 |   |

 

Comparative information has not been disclosed due tothe unavailability of the relevant information.

G-6

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**ITEM 19.   EXHIBITS**

| 1.1  |   | Memorandum of associations of Sasol Limited*                                                                                                                                                                                                                                                                 |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.2  |   | Articles of association  of Sasol Limited*                                                                                                                                                                                                                                                                   |
| 4.1  |   | Management Share  Incentive Scheme*                                                                                                                                                                                                                                                                          |
| 8.1  |   | List of subsidiaries                                                                                                                                                                                                                                                                                         |
| 12.1 |   | Certification of  Lawrence Patrick Adrian Davies, chief executive of Sasol Limited pursuant of  Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                           |
| 12.2 |   | Certification of Trevor  Stewart Munday, deputy chief executive and chief financial officer of Sasol  Limited pursuant of Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                 |
| 13.1 |   | Certification of  Lawrence Patrick Adrian Davies, chief executive of Sasol Limited and Trevor  Stewart Munday, deputy chief executive and chief financial officer of Sasol  Limited pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 |

----

*       Incorporatedby reference to our registration statement on Form 20-F filed on 6 March 2003.

H-1

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**SIGNATURES**

The registrant herebycertifies that it meets all of the requirements for filing on Form 20-Fand that it has duly caused and authorized the undersigned to sign this annualreport on its behalf.
|                             | SASOL LIMITED |
|-----------------------------|---------------|
|                        | By:           | /s/ TREVOR STEWART MUNDAY |
|                        |          |   | Trevor Stewart Munday |
|                        |          |   | *Deputy chief executive and chief financial  officer* |
| Date: 26  October 2005 |          |   |   |

 

H-2

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**GLOSSARY OFTERMS**

| Acetic acid          |   | The chemical compound acetic acid, systematically called ethanoic acid. Acetic acid is a carboxylic acid with chemical  formula C2H4O2, also written as H3C-COOH  to reflect its chemical structure. In pure form it has an ice crystal form,  which is called                                                                                                                                                           |
|----------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Acetone              |   | In chemistry, acetone is the simplest  representative of the ketones. It is a colorless mobile flammable liquid. The  most familiar household use of acetone is as the active ingredient in nail  polish remover. Acetone is also used to make plastic, fibers, drugs, and  other chemicals.                                                                                                                             |
| Acrylates            |   | Acrylates are a family  of polymers and are a type of vinyl  polymer. Acrylates are produced from acrylate monomers. Acrylate  monomers are esters which contain vinyl groups, that is, two carbon atoms  double-bonded to each other, directly attached to the carbonyl carbon.                                                                                                                                         |
| Acrylic acid         |   | An unsaturated acid  produced mainly by oxidation of propylene that polymerizes readily and is  used as a building block for acrylic polymers.                                                                                                                                                                                                                                                                           |
| Aeromagnetic surveys |   | The determinations of  the variability of the surface magnetism by trailing a detector behind an  aircraft at a certain altitude above surface. These surveys are used to  determine discrete magnetic bodies in the near surface strata such as dolerite  dykes and sills.                                                                                                                                              |
| Alcohol              |   | Besides the potable form  which is ethanol, the term refers to a broader class of chemicals. Alcohols  are produced either from natural feedstocks such as sugar and coconut oil or  synthetically from petroleum derivatives such as ethylene and propylene. Used  as solvents, fuels and beverages, or as intermediate in production of range  of products such as detergents, pharmaceuticals, plasticizers and fuels |
| Alkanolamines        |   | A chemical produced by  adding ethylene oxide to ammonia.                                                                                                                                                                                                                                                                                                                                                                |
| Alkylamines          |   | Derivative of ammonia in  which one or more of the hydrogen atoms is replaced by a hydrocarbon group  and not an alcohol group.                                                                                                                                                                                                                                                                                          |
| Alkylates            |   | Is a product formed by  reacting an olefin with an aromatic compound. In the case of linear  alkylbenzene (“LAB”) this is the reaction of a C11 to C14 linear olefin with  benzene. The LAB is then normally reacted with sulfonic acid to produce a  surfactant called Linear Alkylbenzene Sulfonate LAS.                                                                                                     |
| Alpha olefin         |   | An olefin with a double  bond between the 1st and 2nd carbon atoms. An Alpha Olefin can be linear or  branched. Sasol Olefins and Surfactants manufacture 1-Pentene, 1-Hexene, 1-Octene  in Secunda, which are all Alpha Olefins.                                                                                                                                                                                        |

H-3

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| Ammonia                    |   | A compound of nitrogen  and hydrogen and used amongst others for the production of fertilizers,  explosives and nitrogen-containing acids such as nitric acids.                                                                                                                                                                                              |
|----------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Ammonium nitrate solutions |   | A solution in water of  the ammonium nitrate salt used as a nitrogen source in fertilizers and as an  oxidising medium in commercial explosives.                                                                                                                                                                                                             |
| Baseload                   |   | The continuous, recurrent volume of pipeline gas  provided to a market through a gas pipeline network, which determines the  economic viability of the particular gas pipeline project, including the  ability to obtain and repay financing for the project.                                                                                                |
| Beneficiation              |   | Adding value to lower-value  raw materials by further processing.                                                                                                                                                                                                                                                                                            |
| Borehole density           |   | The ratio of the surface area divided by the number  of boreholes and is an indication of the level of information for a specific  property.                                                                                                                                                                                                                 |
| Brownfields                |   | The expansion of an  existing mine working into adjacent reserve areas that are situated next to  the existing mine boundaries. It is contrary to greenfields development,  where the development is not done via an existing working mine.                                                                                                                  |
| Butadiene                  |   | A chemical molecule  consisting of 4 carbon atoms and hydrogen, containing two double-bonds  in its structure. Used predominantly in the production of synthetic rubber.                                                                                                                                                                                |
| Butane                     |   | An organic chemical gas  used extensively as a propellant or carrier gas in spray aerosol cans (e.g.  deodorants and other cosmetic applications)                                                                                                                                                                                                            |
| Butene                     |   | One of the olefins.  Used: (1) as gasoline component, (2) comonomer for polyethylene,  (3) polymerized with itself or alkylated with aromatics to produce high-octane  gasoline components.                                                                                                                                                   |
| Butyl and ethyl acrylate   |   | Butyl acrylate and ethyl  acrylate are acrylic acid esters. Acrylic acid and its esters are perhaps  some of the most versatile monomers for improving performance characteristics  to thousands of polymer formulations. Major markets for esters include  coatings, textiles, adhesives, paper and plastics. Acrylic polymers are  considered as nontoxic. |
| Butyl glycol ethers        |   | Butyl glycol ether (“BGE”) is a high performing ethylene glycol ether  solvent used in a wide range of applications. BGE can be used in both solvent  and water based systems and is one of the best available coupling agents and  active solvents for water based coatings on the market today.                                                  |
| Calcium chloride           |   | An inorganic salt sold  as a colourless liquid solution, is widely used in dust control,  moisture-absorbing, as an accelerator for concretes.                                                                                                                                                                                                               |
| Calcium cyanide            |   | Is a mining reagent used  in the recovery of gold                                                                                                                                                                                                                                                                                                            |

H-4

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| Carbide                                     |   | A compound of carbon and a metallic or semi-metallic  element (e.g., calcium, silicon, aluminum, boron).                                                                                                                                                                               |
|---------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Carbonaceous mudstone interburden           |   | Clay sized sedimentary  material that is encountered between discrete correlateable coal seams.                                                                                                                                                                                        |
| Carbonaceous mudstone to siltstone  parting |   | Material that may be present within a coal seam which is composed of  sedimentary material, deposited in varying velocities of water, stagnant  conditions for carbonaceous mudstone to slowly moving for siltstone.                                                                   |
| Carbon dioxide                              |   | Gas produced by complete  combustion of carbon-containing compounds. Uses include dry ice (in solid  form) and for carbonation of beverages.                                                                                                                                           |
| Catalyst                                    |   | A material that accelerates or retards a chemical  reaction without being chemically affected itself (although it may be  physically changed or even destroyed).                                                                                                                       |
| Caustic soda                                |   | A strong industrial  alkali sold as a 50% m/m solution, is used in the manufacture of pulp and  paper, aluminium, base metals such as copper and nickel.                                                                                                                               |
| Ceramic                                     |   | A hard and durable  material with a crystalline structure and high resistance to chemical  corrosion and heat, with a broad range of applications.                                                                                                                                     |
| Chemical reaction                           |   | The formation of new  chemical substances from one or more reactants through the breakage of  existing bonds between atoms and the creation of new ones.                                                                                                                               |
| Chlorine                                    |   | Is an inorganic liquid  used as an intermediate in the production of inter alia polyvinyl chloride  (PVC polymer) and in water purification plants.                                                                                                                                    |
| Coal fine                                   |   | The size fraction of  coal, passing through a screen with an aperture of 6.3mm.                                                                                                                                                                                                        |
| Coal pile                                   |   | Individual bands or  laminations of different types of coal within an individual coal seam that  can be correlated horizontally for a finite distance.                                                                                                                                 |
| Coal reserves                               |   | That part of the coal  deposit which, after appropriate assessments, are considered to be  economically mineable, at the time of the reserve determination. It is  inclusive of diluting and contaminating materials and allows for losses that  can occur when the material is mined. |
| Cobalt                                      |   | A metal element often  found in the ores of other metals, soils, plants and animals. Component of  catalyst systems used in the petrochemical and oil refining industries.                                                                                                             |
| Coke                                        |   | A brittle, solid, black,  lightweight, hydrocarbon material, nearly pure carbon, left as a residual,  after the volatiles and most of the noncombustibles have been removed from  coal.                                                                                                |

H-5

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| Commission     |   | A critical period during  which a newly constructed or modified production facility is de-bugged,  tested and “switched-on”, following which the facility is formally  declared commercially production ready.                                                                                                                                                                      |
|----------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Co-monomer     |   | A component added in  smaller quantities to the base monomer in the production of polymers (see  Polymer) that by their presence in the polymer (e.g. automobile trim,  plastic bag, water pipes) convey enhanced performance (appearance,  flexibility, impact strength) attributes to the polymer. Examples of co-monomers  are: propylene, butene, hexene, octene and butyl acrylate. |
| Condensate     |   | A hydrocarbon liquid  that condenses from a gaseous state to a liquid state when produced.                                                                                                                                                                                                                                                                                                    |
| Copolymer      |   | A polymer produced from  two or more dissimilar monomers.                                                                                                                                                                                                                                                                                                                                     |
| Corrosion      |   | The slow destruction of  metal by chemical reaction; for example, iron or steel can rust away through  their reaction with oxygen contained in air or water.                                                                                                                                                                                                                                  |
| Cracker        |   | The technology that is  used to partially decompose high molecular weight compounds  to lighter  low boiling compounds by using elevated temperatures to induce carbon-carbon  bond cleavage.                                                                                                                                                                                            |
| Creosote       |   | A black liquid derived  from the gasification of coal and the subsequent distillation of the coal  tars. Commonly used as a timber preservative.                                                                                                                                                                                                                                              |
| Cresol         |   | A liquid obtained from  coal tar and containing not more than 5 per cent phenol, ranging from  colorless to yellow, brown, or pink. Its primary use is for sterilizing  instruments, dishes, utensils, and other inanimate objects. Called also cresylic  acid.                                                                                                                               |
| Cresylics      |   | A commercial blend of  phenolic (ring shaped) molecules with hydroxyl groups (consisting of an  oxygen and hydrogen atom) attached to it. Normally produced from coal tars  when coal is gasified. Used in a wide range of applications such as resins,  gasoline additive, coatings for magnet wire for small electric motors, and  disinfectants.                                           |
| Cyanide        |   | A generic term for a  mining reagent in the form of calcium or sodium cyanide solution.                                                                                                                                                                                                                                                                                                       |
| Cyclone        |   | A separation device  found on chemical facilities to separate material based on their densities  which also separates course and fine particles.                                                                                                                                                                                                                                              |
| Derivatization |   | This refers to the  changing of the nature of a chemical by reaction with a second chemical. For  example, when an alcohol such as ethanol is reacted with acetic acid, ethyl  acetate is produced. Ethyl acetate is then a derivative of ethanol.                                                                                                                                            |

H-6

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| Devolatilization             |   | The effect that heating  of the coal measures due to emplacement of dolerite dykes and sills,  resulting in the coal losing some of the volatile matter content contained  within the coal.                                                                                                                                                                    |
|------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Directional drilling         |   | The drilling of a  continually steered drill hole from the surface into the selected coal seam,  in a predetermined direction and at a predetermined elevation.                                                                                                                                                                                                |
| Distillation                 |   | A process whereby  mixtures of liquids are separated into their individual components under  conditions of controlled heating and pressure. Each component of the mixture  has a boiling-point unique to its chemical and physical properties  enabling separation.                                                                                            |
| Dolerite dykes and sills     |   | The igneous intrusions  (cross cutting the strata—dykes, and partially conformable to the  strata—sills) in the strata related to the emplacement of the basaltic lavas  of the Lesotho Basalt Formation during the break up of the Gondwanaland super  continent about 145 million years ago.                                                  |
| Ethanol                      |   | Produced chemically from  ethylene. Used as a gasoline octane enhancer and oxygenate. Ethanol also can  be used in higher concentration in alternative-fuel vehicles optimized for  its use.                                                                                                                                                                   |
| Ethoxylate                   |   | Surfactants that are  produced by reacting long-chain alcohol molecules with ethylene oxide  (ethylene molecules combined with an oxygen molecule). Commonly used in  detergent formulations.                                                                                                                                                                  |
| Ethyl acetate                |   | A colorless liquid at room temperature and atmospheric  pressure. Commonly known in the chemical industry as an “ester”. Normally  made from acetic acid and ethanol. Commonly used as a cleansing and  extraction agent, in the paper and perfume industry and as a solvent (in ink  and paint).                                                    |
| Ethylene                     |   | One of the fundamental  building blocks of the chemical industry. A colorless gas usually produced by  cracking crude oil derived fractions such as naphtha or natural gas fractions  such as ethane at high temperature. Used as a building block in the  production of polymers (polyethylene and polyvinyl chloride) and a whole  range of other chemicals. |
| Fraction                     |   | A term commonly used in  the petrochemical industry to describe a specific “range” (fraction) of  hydrocarbons in a mixture, in terms of their chemical and physical  properties.                                                                                                                                                                    |
| Front-end engineering design |   | Conceptualizing and  beginning the design of a plant.                                                                                                                                                                                                                                                                                                          |
| Gasification                 |   | The process where coal  is reacted with oxygen, steam or carbon dioxide at temperatures of above 850  degrees Celsius to produce carbon monoxide and hydrogen.                                                                                                                                                                                                 |

H-7

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| Glacial acrylic acid |   | Acrylic acid serves as  an industrial intermediate product. Furthermore, acrylic acid is used as an  ingredient and occurs as residual monomer in consumer products like  adhesives, paints, binding agents and printing inks. Crude acrylic acid is  processed to purified (glacial) acrylic acid.                                                                                                                  |
|----------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Hexene               |   | A co-monomer (see  Co-monomer). A straight chain hydrocarbon molecule containing  6 carbon atoms with one double bond between 2 carbon (usual  terminal) atoms.                                                                                                                                                                                                                                            |
| Homopolymer          |   | A polymer made from a  single monomer. The polymer does not contain any co-monomer, example:  polyethylene.                                                                                                                                                                                                                                                                                                          |
| Horizontal drilling  |   | The drilling of a  horizontally orientated drill hole into the coal horizon from the mine  workings. These drill holes are used to determine the presence of gas  accumulations and displacement of the coal seam horizon.                                                                                                                                                                                           |
| Hydrocarbon          |   | The broad classification  of compounds that are comprised of a carbon skeleton to which hydrogen is  bonded.                                                                                                                                                                                                                                                                                                         |
| Hydrochloric acid    |   | A strong industrial acid  sold as a 32% m/m solution.                                                                                                                                                                                                                                                                                                                                                                |
| Igneous              |   | Of fire, fiery. Rocks  produced by volcanic or magmatic action.                                                                                                                                                                                                                                                                                                                                                      |
| Impact copolymers    |   | A particular form of  polymer that by chemical and mechanical design is able to resist impact,  e.g. automotive components.                                                                                                                                                                                                                                                                                     |
| Isomerisation        |   | A process that changes  the chemical and physical properties of a molecule without changing the atoms  that make up that molecule. Typically used to upgrade marginal product  streams in a refinery, i.e. from a lower to a higher octene rating.                                                                                                                                                              |
| Ketones              |   | Ketones are a class of organic compound that contain  one or more carbonyl groups bound to two aliphatic, aromatic, or alicyclic  substituents, and are represented by the general formula. Ketones are an  important class of industrial chemicals that have found widespread use as  solvents and chemical intermediates. Acetone is the simplest and most  important ketone and finds ubiquitous use as a solvent |
| Krypton / xenon      |   | Rare noble gases found  in minute quantities in nature and used in the lighting and laser technologies  as well as flat panel TV and computer screens.                                                                                                                                                                                                                                                               |
| Limestone            |   | A sedimentary rock  composed mostly of calcium (the shell remains of marine animals), carbon and  oxygen. One of its industrial uses is as an agricultural fertilizer,  especially when mixed with ammonium nitrate, which is rich in nitrogen.                                                                                                                                                                      |
| Methane              |   | The dominant component  of natural gas, which is highly flammable. Used in the production of ammonia,  methanol, as a source of heat and a feedstock for our GTL process.                                                                                                                                                                                                                                            |
| Methylamine          |   | Colorless gas with a  strong ammonia smell derived from methanol and ammonia. It is used as an  intermediate for dyes, pharmaceuticals, fungicides, tanning and solvents.                                                                                                                                                                                                                                            |

 

H-8

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| Methyl Ethyl Ketone  (MEK)      |   | A colorless  liquid commonly used as a solvent (in adhesives, inks and paints) and a  selective extractant.                                                                                                                                                                                                                                                                                    |
|---------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Methyl Iso-butyl Ketone  (MiBK) |   | A flammable  colorless liquid. It is used largely as a solvent in surface coatings.                                                                                                                                                                                                                                                                                                            |
| Monomer                         |   | A chemical  capable of converting to long-chain polymers (plastics) or synthetic  resins by combination with itself or other similar molecules or compounds.                                                                                                                                                                                                                                   |
| Naphtha                         |   | A crude oil  fraction used in the fuel market as a primary component for gasoline production.  Also used as a feedstock for production of petrochemical products such as  olefins and aromatics, which are the basic building blocks of other  downstream chemical products.                                                                                                                   |
| n-Butanol                       |   | A straight chain  hydrocarbon molecule containing 4 carbon atoms and a hydroxyl group at the  end of the molecule. Also part of a family of molecules called “alcohols”  (see Alcohols) or “oxygenates”(see Oxygenates). Used as a solvent for resins  and coatings or as an intermediate for production of other chemicals.                                               |
| Nitric acid                     |   | A colorless  strong acidic, corrosive liquid produced by oxidizing ammonia. It is  primarily used for the production of fertilizers and some industrial  explosives and chemicals.                                                                                                                                                                                                             |
| Noble gas                       |   | Noble gas is the  family of gases that are chemically very stable and form the Group 0 elements  in the periodic table.                                                                                                                                                                                                                                                                   |
| Octene                          |   | A comonomer (see  Comonomer). A straight chain hydrocarbon molecule containing eight carbon  atoms and one double bond between carbon atoms. Used as a co-monomer in  the production of polymers.                                                                                                                                                                                              |
| Olefin                          |   | Hydrocarbon  molecules of varying carbon chain length characterized by a double bond  between atoms. They have a bonding propensity which allows formation of  larger molecules. They are used as chemical intermediates for production of a  variety of components such as plasticizer alcohols, polymers, polyethylene,  fatty acids, detergent alcohol, lube oil additives and surfactants. |
| Oligomerize                     |   | The process of joining double bond hydrocarbon  molecules (monomers) together to form short chained molecules consisting only  of a few monomers.                                                                                                                                                                                                                                              |
| Organic peroxides               |   | Organic peroxides  are a family of highly reactive agents used as catalysts.                                                                                                                                                                                                                                                                                                                   |
| Oxygenates                      |   | Organic compounds  containing one or two oxygen atoms in their structure. They include ketones,  alcohols, phenols, esters and aldehydes which are used as intermediates for  producing a number of chemical products used in industries such as paints,  adhesives, printing, coatings and pharmaceuticals.                                                                                   |

H-9

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| Paraffin          |   | Straight or  branched saturated hydrocarbons chain containing only carbon and hydrogen  atoms with its physical form varying from gases to waxy solids as the length  of the chain increases. They are derived from gas oil fractions. Their  primary usage is raw material for the production of olefins, Linear Alkylbenzenes  (“LAB”), solvents, detergent alcohol and lubricants.                                                                                 |
|-------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Paraffin waxes    |   | A white,  translucent solid, consisting of hydrocarbons of high molecular weight and  derived from crude wax. Different waxes exhibit different physical properties  such as structure of crystals, melting point and molecular weight. It can be  used neat or as blends with additives for specific applications, such as  candles, adhesives, polishes and cosmetics.                                                                                                        |
| Pentene           |   | A double bonded  hydrocarbon with five carbon atoms. 1-Pentene (the double bond between  atoms is at the start or the end of the chain) is used as a co-monomer  in polypropylene production.                                                                                                                                                                                                                                                                                   |
| Perchloroethylene |   | Colorless liquid,  used for applications like dry-cleaning solvent, vapor-  degreasing solvent, drying agent and heat-transfer medium.                                                                                                                                                                                                                                                                                                                                          |
| Phenol            |   | A ring shaped  molecule most commonly produced from cumene. It can also be recovered from  coal tar and petroleum streams. It is mainly used as a chemical intermediate  for downstream chemicals.                                                                                                                                                                                                                                                                              |
| Phosphoric acid   |   | The inorganic acid  of phosphorus used in large quantities in the production of fertilizers,  animal feeds, detergents and numerous other industrial applications.                                                                                                                                                                                                                                                                                                              |
| Petroleum/Petrol  |   | Gasoline.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Phosphate         |   | Phosphorous and  phosphoric acid derived chemical, with commercial markets in agricultural and  industrial sectors, e.g. fertilizers, livestock supplements, paper and water  treatment.                                                                                                                                                                                                                                                                                        |
| Plasticizers      |   | Chemical  additives used as processing aids to facilitate the production of PVC, resins  and polymers and influencing the physical properties of desired products.                                                                                                                                                                                                                                                                                                              |
| Ply               |   | The lateral  continuity of a similar type of coal within a coal seam, as opposed to the  vertical continuity of a particular type of coal.                                                                                                                                                                                                                                                                                                                                      |
| Polyethylene      |   | A macromolecule  consisting of a long chain of ethylene molecules. It can be composed of  straight-chain molecules (in a line formation), which provide a dense  material known as high-density polyethylene, or of branched chain  molecules (in a branch formation) that yield a product called low-density  polyethylene. Used in a broad range of applications e.g. wire and cable  coatings, pipe and molded fittings and packaging in especially the food  industry. |

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| Polymer                                      |   | A collective term typically used in reference to  polyethylene, polypropylene and other polymers.                                                                                                                                                                                                                                                                                                                           |
|----------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Polymerize                                   |   | To join molecules  (monomers) of the same structure together so as to form larger molecules  (polymers).                                                                                                                                                                                                                                                                                                                    |
| Polypropylene                                |   | A macromolecule  consisting of a long chain of repeating propylene molecules. Commonly used  for packaging film, molded parts for cars, appliances, housewares, fibers for  carpets and upholstery, crates for soft drink bottles, toys.                                                                                                                                                                                    |
| Polystyrene                                  |   | A polymer made  from styrene, commonly used in applications like packaging, disposables,  toys, construction and housewares.                                                                                                                                                                                                                                                                                                |
| Polythene                                    |   | Generic name for  polyethylene. See polyethylene.                                                                                                                                                                                                                                                                                                                                                                           |
| Polyvinyl chloride                           |   | The plastic known  as PVC commonly used for piping and other applications such as the production  of gutters, toys, and garden hoses. PVC is produced by first reacting  ethylene with chlorine and subsequently using a suitable catalyst to convert  the intermediate product to a long-chain molecule.                                                                                                                   |
| Potassium                                    |   | One of the  elemental metals that is essential in plant growth, animal and human  nutrition, occurring in all soils. Potassium is commonly used as a laboratory  reagent, and as a component of fertilizers.                                                                                                                                                                                                                |
| Prills                                       |   | A physical form  in which a chemical (e.g. urea, polyethylene) as solid is processed and  sold.                                                                                                                                                                                                                                                                                                                        |
| Proved developed oil and  gas reserves       |   | Reserves which  can be expected to be recovered through existing wells with existing  equipment and operating methods.                                                                                                                                                                                                                                                                                                      |
| Proved undeveloped oil  and gas reserve |   | Reserves which  are expected to be recovered from new wells on undrilled acreage, or from  existing wells where a relatively major expenditure is required for  recompletion.                                                                                                                                                                                                                                               |
| Probable Coal Reserves                       |   | Reserves for which quantity and grade and/or quality  are computed from information similar to that used for proven (measured)  reserves, but the sites for inspection, sampling, and measurement are farther  apart or are otherwise less adequately spaced. The degree of assurance,  although lower than that for proven (measured) reserves, is high enough to  assume continuity between points of observation.        |
| Propylene                                    |   | Is a hydrocarbon  used as an intermediate in the production of polypropylene (PP polymer) and  n-Butanol.                                                                                                                                                                                                                                                                                                                   |
| Proven Coal Reserves                         |   | Reserves for which:  (a) quantity is computed from dimensions revealed in outcrops, trenches,  workings or drill holes; grade and/or quality are computed from the results  of detailed sampling; and (b) the sites for inspections, sampling and  measurement are spaced so closely and the geologic character is so well  defined that size, shape, depth and mineral content of reserves are well-established. |

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| Reactor                      |   | Industrial unit to  provide the physical conditions required for specific chemical reactions to  take place.                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Recoverable coal reserve     |   | The tonnage of mineable, in situ coal reserves that  are expected to be recovered after all geological losses, dilution, mining  losses (mining layout loss, mining layout extraction loss, mining recovery  efficiency factor), contamination and moisture content correction factors  have been applied. The assessments demonstrate that at the time of reporting,  economic extraction is reasonably justified. The recoverable coal reserves  are subdivided in order of increasing confidence into probable and proven  recoverable reserves. |
| Reclaimers                   |   | Large automated  machines that consist of a rotating drum which picks up coal laid out on a  pad in an orderly fashion and places that coal on a conveyor belt. Normally  reclaimers will reclaim coal at a constant rate.                                                                                                                                                                                                                                                                                                                          |
| Reform                       |   | Rearrangement or  composition of hydrocarbon gases or low-octane petroleum fractions by  heat and pressure, often in the presence of a catalyst. Steam reforming of  natural gas is an important method of producing hydrogen.                                                                                                                                                                                                                                                                                                                      |
| Room and Pillar  mining |   | The mining method  used in flat-lying shallow mineral deposits, where a number of roads  are developed leaving pillars to hold up the roof.                                                                                                                                                                                                                                                                                                                                                                                                         |
| Slurry                       |   | Liquid substance  containing solid particles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Sodium cyanide solution      |   | Is a mining  reagent used in the recovery of gold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Solvent                      |   | A substance  capable of dissolving another substance to form a solution at the molecular  or ionic level. The main uses of organic solvents are in the coatings field  (paints, varnishes and lacquers), industrial cleaners, printing inks,  extractive processes and pharmaceuticals.                                                                                                                                                                                                                                                             |
| Stackers                     |   | Large automated machines that stack coal from a  conveyor belt on to a flat pad in an orderly fashion. They consist of an  inclined conveyor and swinging boom.                                                                                                                                                                                                                                                                                                                                                                                     |
| Styrene                      |   | A liquid  hydrocarbon partly composed of a ring-shaped molecule (benzene) with an  ethylene side chain which can be easily converted to polystyrene used in  packaging.                                                                                                                                                                                                                                                                                                                                                                             |
| Splitter column              |   | A splitter column  is used to separate a mixture of liquids into different  boiling fractions.                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Sulfur                       |   | A pale yellow non-metallic  element found as a component of crude oil, natural gas and coal. Sulfur is  commonly used in making gunpowder, matches, sulfuric acid, the vulcanizing of  rubber, and the treatment of skin diseases.                                                                                                                                                                                                                                                                                                                  |
| Sulfuric acid                |   | The inorganic acid of  Sulfur used as a leaching agent in mineral processing in the mining sector as  well as in the production of fertilizers and numerous other industrial  applications                                                                                                                                                                                                                                                                                                                                                     |

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| Surfactant                 |   | Any compound that  reduces surface tension when dissolved in water or water solutions, or which  reduces interfacial tension between two liquids, or between a liquid and a  solid. A surfactant facilitates the solution of otherwise immiscible  components e.g., oil and water. Also called surface-active agents. Used  as the active ingredient in detergents. |
|----------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Synfuels                   |   | The family of fuels that have comparable or better  properties than that of crude oil derived fuels but they  are derived via one of several potential synthesis routes using  alternative feedstock such as coal or petroleum coke. Two examples of synfuel  technologies are indirect and direct liquefaction of coal.                                  |
| Train                      |   | A sequence of  processing units, each of them performing a different function to arrive at  the final product.                                                                                                                                                                                                                                                      |
| Trimerization              |   | Trimerization is  the joining of three molecules into one molecule such as trimerization of  ethylene to form 1-hexene                                                                                                                                                                                                                                              |
| Urea                       |   | A soluble,  colorless, crystalline, nitrogen-containing compound derived from  ammonia primarily used as a fertilizer.                                                                                                                                                                                                                                              |
| Units of measures          |   | m                                                                                                                                                                                                                                                                                                                                                                   | meter |
|                       |   | km                                                                                                                                                                                                                                                                                                                                                                  | kilometer |
|                       |   | mm                                                                                                                                                                                                                                                                                                                                                                  | millimeter |
|                       |   | km2                                                                                                                                                                                                                                                                                                                                                            | square kilometer |
|                       |   | m2                                                                                                                                                                                                                                                                                                                                                             | square meter |
|                       |   | m3                                                                                                                                                                                                                                                                                                                                                             | cubic meter |
|                       |   | bcf                                                                                                                                                                                                                                                                                                                                                                 | billion cubic feet |
|                       |   | Kg                                                                                                                                                                                                                                                                                                                                                                  | kilogram |
|                       |   | t                                                                                                                                                                                                                                                                                                                                                                   | tons or tonnes |
|                       |   | Kt                                                                                                                                                                                                                                                                                                                                                                  | kilotons |
|                       |   | Mt                                                                                                                                                                                                                                                                                                                                                                  | million tons |
|                       |   | tpa                                                                                                                                                                                                                                                                                                                                                                 | tons per annum |
|                       |   | Ktpa                                                                                                                                                                                                                                                                                                                                                                | kilotons per annum |
|                       |   | Mtpa                                                                                                                                                                                                                                                                                                                                                                | million tons per annum |
|                       |   | b                                                                                                                                                                                                                                                                                                                                                                   | barrels |
|                       |   | bpd                                                                                                                                                                                                                                                                                                                                                                 | barrels per day |
|                       |   | cf                                                                                                                                                                                                                                                                                                                                                                  | cubic feet |
|                       |   | mg/m3                                                                                                                                                                                                                                                                                                                                                          | milligrams per meters  cubed |
|                       |   | ppm                                                                                                                                                                                                                                                                                                                                                                 | parts per million |
|                       |   | GJ                                                                                                                                                                                                                                                                                                                                                                  | gigajoules |
|                       |   | mGJ/a                                                                                                                                                                                                                                                                                                                                                               | million gigajoules per  annum |
| Vertical diamond  drilling |   | The drilling of a  drill hole using a diamond impregnated drill bit to acquire drill core for  the entire length of the drill hole. Therefore a continuous sample of the  rock mass is obtained over the mineral bearing strata.                                                                                                                                    |
| Zeolite                    |   | A chemical substance  consisting of silica and aluminum extensively used as a water-softener  and a detergent component.                                                                                                                                                                                                                                            |

 

H-13

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***Locality Plan of Sasol Mines and Plants in SouthernAfrica***

M-1

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**LocalityPlan of Sasol Mines in Sasolburg**

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M-2

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**LocalityPlan of Sasol Mines in Secunda**

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M-3

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**Sasol Petroleum International Areas of Focus in Africaand the Middle East**

M-4

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