Sasol Integrated Report 2018

What happened The global economy grew by about 3,8% in calendar 2017, a marked improvement on the 3,2% in 2016. US economic growth accelerated to 2,2% from 1,6%. In the Eurozone, growth was 2,5% from 1,8% previously. Among emerging markets, China and India expanded by 6,9% and 6,3% respectively. South Africa’s economic growth recovered to 1,3% from 0,6% in 2016 as agricultural conditions improved . During 2018, the rand/US dollar exchange rate averaged R12,85/US$ compared to R13,61/US$ in 2017. The rand/US dollar was volatile, impacted mainly by domestic political developments. Markets reacted positively to a South African leadership change, contributing to a significant strengthening of the rand from December 2017. Improved economic growth and volatile currencies How we responded Despite the improvement in demand conditions, operating challenges and rand/US dollar exchange rate strength, there were limited gains in our revenue, margins and earnings. Sasol remains focused on delivering on our Continuous Improvement objectives, and prudently managed our balance sheet and cash flows and increased our hedging activities to create headroom on the balance sheet. The outlook The global outlook remains favourable, with strong growth expected in calendar 2018 and into 2019 , but a number of uncertainties remain. These include an escalation in trade tensions and the return of financial market turbulence, the extent, timing and pace of US interest rate normalisation, the durability of US tax and expenditure measures, the sustainability of the global commodity cycle upturn and challenged bank balance sheets in some countries. Real GDP growth change - - USA Eurozone China RSA OUR EXTERNAL OPERATING CONTEXT The external market environment continues to have an impact on our ability to create stakeholder value. Sasol’s challenging operating environment persisted in 2018, with financial market volatility, geopolitical tensions and operational challenges all influencing activity. Geopolitical tensions, which included escalating trade tensions between the US and its trading partners – particularly China, as well as Middle East conflicts, contributed to uncertainties in the oil and financial markets. Emerging market sentiment, domestic political developments and weak business and consumer confidence continued to weigh on South Africa’s economic performance in 2018. EXTERNAL OPERATING CONTEXT UNDERSTAND THE RISKS ASSESS RELEVANCE TO MATERIAL MATTERS REVIEW STRATEGIC PRIORITIES ADJUST BUDGETS, EARNINGS TARGETS, CAPITAL ALLOCATION GROW SHAREHOLDER VALUE SUSTAINABLY The global operating context informed Sasol’s thinking on our material matters. It helped us identify those issues that could substantially affect our ability to create value in the short, medium or long term. Sasol Integrated Report 2018 22