Good morning, and welcome to Sasol Limited's Financial Year 2024 Interim Results Presentation. Thank you for dialing in and listening to our announcement. My name is Tiffany Sydow from Investor Relations. With me is Fleetwood Grobler, President and CEO of Sasol; and Hanre Rossouw, Chief Financial Officer. Fleetwood will start today's presentation with an overview of the business performance in this period. The financials will be covered in more detail by Hanre. Fleetwood will then conclude with a brief update on our social commitment and sustainability and strategy. We will commence with a Q&A session immediately thereafter, where you will have an opportunity to engage with management and ask a few questions via our webcast or teleconference facility. I'd like you to note our forward-looking statement shown on the slide. Please peruse in your own time and note the important information regarding statements that are made in the presentation. Thank you. And now handing over to Fleetwood to commence his presentation today.

Good day, everyone, and welcome to our interim financial results update for the 2024 financial year. The last six months have again seen an incredibly challenging external environment for us to navigate, with a high level of macro uncertainty, inflationary pressure, weak economic growth and specific operating constraints in South Africa. These factors have had a material impact on our business, particularly with lower prices and demand across many of our chemical products. But they are not the sole determinants of our performance. As an organization, we have worked hard to mitigate the external pressures to the extent that we can through focus on the issues that we can control. As part of this, I'm pleased that we continue to deliver against our Sasol 2.0 improvement program targets, and we dealt with further operational improvement in South Africa. Unfortunately, though, our efforts were hampered by persistent underperformance of the state-owned enterprises involved in Sasol's value chain, and in some instances, and plant safety-related production stoppages. Moving forward, whilst we are well positioned to benefit from a turn in the chemical cycle at this stage, we need to keep absolutely focused on our priorities, to step up cash flow generation to make sure that we maintain the robust balance sheet needed to cope in these extremely uncertain times. As with previous results presentations, I will start by reviewing our half year performance across our people, planet and profit pillars. From a safety standpoint, the period has been marred by four tragic fatalities. Mr. [Zolani Dubey], Mr. [Dumisami Dumele], Mr. [Motsubishi Matlobo] and Mr. [Sefsu Madhuna] lost their lives in work-related incidents, and we again express our heartfelt condolences to their families, friends and colleagues. Safety is our priority, and we must continue our work towards zero harm. Our recordable case rate…

Thank you, Fleetwood, and good morning, ladies and gentlemen. As Fleetwood already mentioned, whilst we saw some operational improvements, this was not enough to mitigate the external challenges and resulted in a weaker financial performance in this half. I'm confident that enhanced by the initiatives we are already implementing now, our business will, however, be better placed for the second half. Let me start with some detail around the macro environment and some of the key metrics we track. Oil prices softened during the first half of the financial year, decreasing by 10% to an average of $85 per barrel. This was offset by the rand weakening 8% to an average of ZAR18.69 to the dollar. As such, a 3% decrease in the rand oil prices realized compared to the prior period. However, the weaker closing exchange rate negatively impacted the translation of our U.S. dollar-denominated debt. Although we have seen a significant decrease in ethane and energy input costs in the first half of the financial year, they remain elevated compared to historic levels. As such, Chemical margins remained under pressure due to weak market conditions. Polyethylene prices continued to decrease on the back of weaker demand as seen in the 19% decrease compared to the previous period. Looking ahead, we expect pricing and demand volatility to continue in the short term given the uncertain global market sentiment and ongoing geopolitical events. Locally, the South African economy continues to face multiple challenges relating to the underperformance of state-owned enterprises, which needs to be factored into our business planning. These headwinds require us to adapt quickly to the prevailing situation and optimize our integrated cash cost and margins across our portfolio. Turning then to the financial results. With operational improvements unable to mitigate external headwinds, we experienced a significant decrease…

Thank you, Hanre. In the last few slides, I will cover the highlights of our societal contributions, progress made on our 2030 greenhouse gas reduction pathway and our key focus areas for the coming months. The value generated by our Secunda facility alongside our Sasolburg site contributes materially to South Africa's economy and society, from making everyday products to critical value chains, such as agriculture, chemicals and mining, while also delivering substantial socioeconomic contributions. A recent Sasol commission study confirmed that our direct, indirect and induced employment contribution is in the order of 500,000 people. We contribute around 5% to the country's gross domestic product, or GDP, and also remain one of the largest corporate taxpayers. During the half year, we invested over ZAR0.25 billion globally in our communities through social impact programs, spanning education, skills, employability, health and infrastructure, environment, sports development, local content and volunteerism. Our focused preferential procurement has grown 17%, achieving ZAR21.5 billion spend with black-owned businesses compared to ZAR18.4 billion the previous period, thereby allowing us to surpass the South African government's target by a good margin. At Sasol, we pride ourselves in being pathfinders continuously seeking out novel ways to realize sustainable socioeconomic benefits for our communities and broader society. Our diligent efforts ensure that the program we develop and execute continue to deliver meaningful outcomes to mitigate the scourge of youth unemployment, improve access to quality education and reduce poverty among other pressing societal needs. Some examples include bridge to work, a skills development and employability program, which will see over 110 beneficiaries graduating from various technical programs in the next six months. Through this program, we are partnering on projects that could potentially provide biomass feedstock required as part of the pilot to replace coal in the boilers in Sasolburg, aligned to…

Good morning, and welcome to this question-and-answer session for Sasol's 2024 Interim Results Announcement. With us today in the room are other members of Sasol's Group Executive Committee in addition to Fleetwood and Hanre, who presented earlier this morning. To my left, we have Simon Baloyi, who is the EVP of Energy Operations and Technology as well as the incoming CEO; Hermann Wenhold, EVP of Mining, SHE and Risk and Procurement. On my right, Vuyo Kahla, EVP of Strategy, Sustainability and Integrated Services. And to my far right, Brad Griffith, EVP of the Chemicals Business. Also participating online, we have Charlotte Mokoena, EVP of HR and Stakeholder Relations; as well as Priscillah Mabelane, EVP of the Energy Business. [Operator Instructions] I will be switching between the two platforms to give everyone a fair chance to ask their questions. Thank you. We'll now commence with a few of the online questions, which are coming through the platform. The first question or theming of questions relates to the dividend announcement. I'll start with those, Hanre, if that's okay. We have a question from [Adam Cambuli] from Allocated Capital. Can you take us through how you reached a dividend of ZAR2 per share that seems to be out of balance with the indicated dividend cover in the capital allocation strategy? Similarly, also from [Ezek Fenikha] from Mergence, why not link the dividend policy to free cash flow rather than earnings?

Thanks, Tiffany. So I think important to note that the current dividend policy, as rightly pointed out, links our dividend payment to dividend cover based on core headline earnings per share. And I think the feedback that we've seen and comments post by analysts is, of course, that there's a significant disparity between core headline earnings and the underlying cash flow generation of the business. And I think to that extent, which links to [Ezek's] question as well, why not link the dividend policy then to free cash flow? I think then in the -- kind of what we've noted is that we are currently reviewing the dividend policy. So we will announce an updated dividend policy at the full year. And I think that will then be very clear on a link and kind of, in most probability, to cash flow. And I think we've got to be very specific which element of cash flow. And I think to that extent, important that we link this clearly to our capital allocation framework as well, which looks at cash flow before growth and dividends, and then also the ultimate cash flow generation of the business. So the question then, how do we get to 2 million -- sorry, ZAR2 per share interim dividend given that we're currently reviewing our policy? To that extent, if one applies the old policy. And if we look at the policy, looking at a 2.5 to 2.8x cover for the full year, we, of course, don't do that in the interim. So historically, we've had a cover around 3.5x of core HEPS imply around a ZAR5 dividend. And I think to that extent then, the question is kind of why 2? On the other hand, if one says, "But it should be cash flow linked." Given that we didn't generate any cash, we had a negative free cash flow of ZAR6 billion, then we shouldn't pay a dividend. So in consideration then of what is a reasonable interim dividend, the Board looked at kind of these two as book ends. And I think effectively to give that signal of confidence in free cash flow generation for the full year, we deemed a ZAR2 per share interim dividend as a vote of confidence in the free cash flow generation then of the business for the full year with the promise then also of kind of paying out a full year dividend on the back of a revised policy. So the full detail of that will be shared in due course. But I think in the meantime we believe that ZAR2 per share interim dividend is the appropriate level to distribute cash in the interim.

Thank you, Hanre. A few more questions around dividend and perhaps some more color on the new dividend policy from Faisal Al Azmeh from Goldman Sachs as well as [Benny Shrader] from Momentum. Will you expand on the current dividend policy? Where are you going? And if you can please provide more details on the new dividend policy and how to think about the link to free cash flow generation?

So I think, Tiffany, that it really links back to the comment I made that we are looking to link this specifically then to free cash flow. I think the feedback we've gathered from shareholders, analysts, and we'll continue to do that on the roadshow, is to effectively get clarity on what level of free cash flow. I think what we've seen in other examples that we've looked at that sometimes it's not clearly communicated to shareholders. So the intention would be to clearly link it to a specific metric on the free cash flow statement that we can be tracked. To that extent, if I look at our current capital allocation framework, which I've outlined in the presentation, where we talk about first order capital allocation, we look then at free cash flow after sustaining and maintaining capital. That is a key aspect that includes, of course, tax payments and interest payments. So that would be in my mind an appropriate level to look at then to gain insight into what is the appropriate level of cash to allocate to debt reduction versus payment to dividends, but then also allowing sufficient capital to allocate to a second order capital allocation. And that is where we look at the growth of the business, the reinvention of the business, the Sasol of tomorrow. But also additional cash returns to shareholders, whether it's buybacks or special dividends, as well as organic -- other organic and inorganic growth. And I think the intention then is to link it clearly to the capital allocation framework. But as I've noted, we will share the full details at the full year.

Thank you, Hanre. I'm going to shift gear to the operational update. Fleetwood, two questions in this regard. Kindly elaborate on the expected impact of Oryx Trains 1 and 2 being offline for longer than planned? That comes from [Yamin Hussain] at [Laurium]. And then also around the theme of the underperforming SOEs. There are multiple challenges against the backdrop of it being 17 years since load shedding started. 2023 being the worst year ever. And other SOEs like Transnet performing abysmally. Can you please provide advice on how you factor this into the performance going forward? This was from Chris Logan from Opportune Investment.

Yes. Thank you, Tiffany, and thank you, [Yamin] and Chris. So the guidance we've given with respect to Oryx Train 1 and 2 was in the outlook that Hanre provided. And the operating rate that we guided is now between 55% and 65% for the year. We are currently looking at the full scope of the work. We have gone into the rector system. We started to repair coils. That is ongoing. We believe that we will fully scope that out in the next weeks. But we believe that the whole program can be concluded in the next months before this half year ahead of us. So the work is ongoing, but it is factored in the guidance that we've given. So when I look at the load shedding and how we factor that in our performance, we are continuously engaging with Transnet with respect to the rail trajectories between Secunda, Richards Bay, Sasolburg, Durban, and we have seen positive engagement there. Today -- later today, we will announce the first collaboration between Business and Transnet, where we would be supporting rolling stock maintenance in the ammonia value chain in the Sasolburg-Secunda trajectory. And I hope this is testimony of the collaboration that we do bring to the table so that we can really mitigate the impact of rail woes that we've been experiencing over the last year. So that is one data point. With respect to the load shedding, if you follow closely the Business for South Africa, we have been indicating clearly and over the weekend again it was indicated by Business for South Africa that we believe we see the turning point and that we hopefully will get to a Stage 1 or 2 by the end of this year, and in the calendar year of 2025, that we will put load shedding behind us. And the main driver is basically the energy availability factor of the Eskom fleet of power generation, which we see as stabilizing and the plans starting to tick up. But moreover, the most important impact is the new renewable energy that is now connected to the grid. And the impact of that will be really making us turn the corner as we also see further connections to the grid in this financial -- in this calendar year. And that's why that statement and outlook has been positioned as I've mentioned.

Thank you, Fleetwood. I'm going to switch to Corus Call to check if there are any callers online. Operator, do you have anybody queued?

There are a few questions, ma'am. The first question comes from Chris Nicholson of RMB Morgan Stanley.

Yes, I've got a couple of questions about the balance sheet. So I think you've explained the dividend now. But just -- the questions are as follows. So I think the first one is obviously the $1.5 billion bond maturity that you have said you would prefinance last year. Just looking at this increase in net debt and where the cash positions are at December, it looks unlikely you're going to be able to pay that out of cash. Could you confirm what you're actually physically going to be paying that bond maturity out of? Will you be drawing down on the revolver? That's the first question. And second question is around working capital. Clearly, obviously, the working capital has normalized to some degree over this half and it's obviously built and weighed on cash generation. What is the outlook from here over the next six months? It looks like it's a bit of a more normalized range, but is there anything specific to think about? And then the final one is this. I mean, if I look at Sasol's balance sheet, quite clearly, the international businesses are not making any money and the interest payments are all in dollars or predominantly in dollars. Are there any issues you're experiencing having to expatriate rands to pay down dollar debt, and also, I guess, to some extent maybe to subsidize or plug up some of the losses in the international chemicals business.

Thanks, Chris. I guess, Fleetwood, I'll grab that one. I think in terms of your first question around liquidity and managing the $1.5 billion bond maturity coming up in March. As I've noted in the presentation, we've got over -- or close to $5 billion of liquidity, kind of predominantly cash and in the RCF. So we've got about ZAR36 billion facility -- or cash on hand. So in terms of the ability then to redeem that bond, we can comfortably do that from the RCF. The RCF at the year-end was undrawn. So we've got comfort to effectively then extinguish that bond through a drawdown of the RCF. And cash -- and of course, further cash generation then as well as we expect this in the second half. I think you touch on an important point on your second question, kind of the working capital movement. If one looks at our free cash flow generation or certainly then lack of free cash flow generation in the second half -- in the first half, a big aspect of that has been a significant increase in the working capital that was built up from the low kind of that we saw at the year-end. And the question then rightly, kind of what's a reasonable level of working capital? So we guide to that 15.5% to 16.5% on an average basis throughout the year. But I've got to note that there is, of course, seasonality in the way that we can manage working capital. So not only do we look to manage that at a sustainable level throughout the year, but we do see the ability of the business to generate and release cash at the year-end as we're able to manage debtors, creditors, inventory. That is more comfortable at the June…

Can we move to the next caller?

The next question we have comes from Gerhard Engelbrecht of Absa CIB.

I've got three topics that I just maybe would like to ask you about. Firstly, on the gas reserves. You're talking about four new wells in the PPA operating. I guess my question is, I'm trying to reconcile this with your reported reserve numbers in your 20F. Are you going to increase those reserve numbers? Or is this a faster depletion of the PPA? I'm just trying to understand how four wells is going to affect the longer term in terms of the PPA reserves? Secondly, very quickly, you spoke in the BPM of difficult geological conditions in mining. I wonder if you can just maybe elaborate on that. Is this a long-term feature that we're talking about? Or it's just some difficult ground that you're mining through? And then maybe if you can talk a little bit about costs. You talk about a 15% increase in Synfuels' cash fixed cost -- not Synfuels, the fuels business' cash fixed costs. And I presume that it would be not too different on the chemical side of Synfuels as well then. Maintenance and electricity you mentioned. I'm trying to reconcile that with your Sasol 2.0 milestones that you say you've achieved. So maybe if you can talk around the cost increases in Synfuels. And then also you talk about mining, talking about increased security costs. So maybe if you can just elaborate on that. I'm just trying to figure out if this is a fleeting thing or is this also going to be an issue in the future.

Thank you, Tiffany. I will -- Gerhard, thank you for those questions. I will start off with the wells that you mentioned, and I'm going to ask Priscila to weigh in also on that. Then the question on mining, we'll give a high-level overview. Hermann will help us to provide that. And then the cost question, I will ask Hanre to elaborate on. Now Gerhard, as you know, we have announced the decline of our gas reserve on the PPA field. And part of the -- if you wish, the flow or the improved flow out of that reservoir, we had to do the infill well drilling campaign and remediation. So that means to get the flow again to the potential of the existing PPA reserve, we had to do infill well drilling. Now this is a result of three wells we've drilled and one we've remediated that started to flow out of the PPA reservoir. And that restored the volumes that we've seen historically in terms of a volume flow output from the PPA field over the last year, and that's also the reason why we could flow 10% more that was driven by our own internal needs as well as market growth. So with that, I'm going to ask Priscila to weigh in on further context.

Thanks for that question. Just a few comments before I answer it specifically. You recall that we've articulated that reserves are accounted for on P90 and also are only limited to Sasol's share and not the total volume that includes our partners. So when you look at our reserves at the end of the financial year on the P90, the three wells were already accounted for because they considered the fact that most of the conditions are already met at a P90 level. If you then look at the year ahead, at the financial year and FY 2024, we expect that we will probably be revising our reserves higher. And the increase in the reserves will be expected to come from the PSA. During the year-end, I articulated about there are certain conditions that are still outstanding with regard to the PSA. And part of that is to ensure that we have the commercial contract signed between us and Mozambique. That is now in the process of being finalized, and that will be followed by ability to flow the volumes to South Africa. With that commercialization in place, we should see the reserves going up. Again, to reaffirm, we report on the plateau based on the P50, which then implies that what you see in that there's a huge discrepancy that you can't reconcile as such. So in a nutshell, we should focus more on the resources because reserves are more stringent in terms of the SEC rules, as you've highlighted. And I hope that answers your question.

Thank you, Priscila. We move then to Hermann on the mining question.

Thank you for the question. From a mining perspective, our challenge is that due to a limitation of available pit room, we're finding it very difficult to currently mine at balance in our reserves between good reserves, medium -- reserves of medium quality and then very difficult reserves to mine due to mini lava intrusions into that reserves. So what we need to do is we need to open up additional areas that have better quality coal. We are busy with the accelerated plan. That entails blasting through some of these lava rock walls. It also entails establishing additional ventilation shafts so that you can get that balance between good reserves, reserves of medium quality and poor quality at a much more acceptable level than what we have it currently. At this point in time, some months we mine with only 10% to 15% of our sections actually in good quality of coal, and we need to address that. We're busy with that program to address that. That entails improved drilling so that we've got better information of the geology underground so that we can have less surprises. And it also is including an increase of the skills and of our teams actually mining stone work, the teams that do the drilling and the blasting to open up the areas. And we're also accelerating the establishment of our ventilation shaft so that when you have these reserve areas open that you actually have ventilation to conclude or to continue with that mining. It's not a short-term solution in the next three to six months. It's a solution that we're working hard on. And the benefits you will only see in about 12 to -- in the period 12 to 24 months from now. Maybe just from a cost perspective, some of the costs that we've seen are specific increase at mining related to security costs. We do experience from time to time community unrest, not specifically aimed at Sasol Mining. But we are targeted from a Sasol Mining perspective to act as a facilitator between the parties. And then to get our attention, many of our infrastructure is targeted. And we appointed additional security to help us to look after that. And we have also -- from time to time, we have security teams underground to address challenges that we experienced with cable theft.

I think let me pick up also just the question around the broader cash fixed cost, also referencing the cash fixed cost increase in the fuels business. So Gerhard mentioned a 15% increase in our fuels cash fixed cost. I think important to note that in terms of our integrated value chain, there's allocation of cash fixed cost between fuels and Chemicals Africa. So a big part of the 15% increase has just been to the extent that we produced more fuels volumes relative to chemicals volumes that there was a reallocation of cash fixed cost there. Gerhard, so a big aspect of that came through just that. And of course, that will vary according to the slight mix in those segments. Other aspects have been kind of above inflationary increases in aspects such as energy and other aspects that relates to maintenance. And I think perhaps just more broadly than the Sasol 2.0 recon that we do, so as you track the performance of Sasol 2.0 not only in the segment, kind of we do the same, but also on the group as a whole. And I think to that extent, and I mentioned that in the presentation, although we've recognized a 5% increase in cash fixed costs year-on-year, just the absolute numbers in the income statement. If one splits out -- and we've, of course, seen an increase -- a significant depreciation in the rand, which on top of high inflation in the non-rand environment, we've seen then a translation impact. If we split out that -- we split out inflation and one-off aspects, we've actually reduced cash fixed cost by 1%. And I think if we go into the individual components, there are kind of proof points to that. For example, in our headcount, we've reduced headcount by about 500 period-on-period, aspects such as third-party spend. Kind of there we also can show examples to make sure that it's not just slides and promises, but that it comes through in the cash fixed cost and in the P&L and in the cash flow statement. I think importantly, and to the extent that the question is, do we -- can we do more? We have seen sort of the pressure in our business at the back end of last year. So we have increased our cash fixed cost savings targets by a further ZAR2 billion. So you would see the ZAR4.1 billion run rate that we've generated -- kind of savings we've generated for the half year. So that's another -- about another -- so ZAR4.2 billion is the half year -- ZAR4.1 billion rather. ZAR8.2 billion if you annualize that. That is above the ZAR7 billion that we've shown at the full year. So we've generated another ZAR1 billion of cash fixed cost savings. And we will continue that focus and announce further initiatives and successes as we deliver those.

Moving back to the online questions. I know there are a few more callers queued on Chorus Call. I'll get to you in a few minutes. A theme of questions from Irina Schulenburg from Old Mutual Investment Group, tagging on to cash flow and cash optimization. 1 half free cash flow is an absorption of 6.5 billion. Can you comment on what levers exist for half two to generate cash or step up cash flow? You also speak of optimization of the portfolio. Is this the cash and cost management? Or does it include a wider review of ops, which may be deemed noncore? And is this all part of the group's agenda to pay down debt? I think that's a similar theme of questions. Hanre, perhaps we can address that.

Thanks, Irina, for that question. So I think important to note in terms of the first half versus second half, as I said, that there is some seasonality. So to the extent that we have had the phase shutdown in the first half in Secunda, we do typically see a stronger second half. And then I think both Fleetwood and I have signaled that we've got confidence in the ability of Team Sasol to really take on that task again to generate stronger cash flow in the second half. So I think in terms of operational performance itself, it typically sees a better second half. The other aspect, as you note, is that working capital. And I think to Chris' question earlier, kind of the ZAR6.5 billion negative cash flow that we've seen in the first half, ZAR7.7 billion of that has been absorption of cash from working capital. So if we exclude that, so it's still a reasonable kind of -- or some generation of cash flow. I certainly wouldn't claim on we'd be happy with just kind of around the ZAR2 billion or ZAR3 billion free cash flow generation from the business. There are also other aspects that is seasonal. So to the extent that we typically see higher cash payments of tax in the first half. So that to an extent, the expectation is on the second half that we'll see lower payment of cash tax as well. So there are some factors. But I think more importantly is just kind of the step-up that we are pushing in terms of just operational performance. And as Fleetwood said, there are certainly areas that we are not happy with in the performance of the first half. And you've got the commitment from Team Sasol really to really pull this together for the second half.

Thanks, Hanre. Another theme of questions coming around portfolio optimization. Fleet...

I did miss that also from Irina, did ask about portfolio optimization. So I didn't purposely dodge that. I think I did note other aspects that we are looking towards in terms of kind of further ways that we can manage cost. I think optimization of the portfolio, of course, to the extent that the -- there is a benefit in cost or cash release, that is a part benefit that we could see from the optimization of the portfolio. But we do -- in terms of our capital allocation framework and the rigor that we've got in our process to evaluate the whole of the portfolio, kind of we do go through asset -- continuous asset reviews of underperforming assets. So to the extent that, that will unlock value, that's the primary driver of value and risk. That is the way that we kind of we look at our portfolio and specific assets. Does that still fit within the portfolio? Is it worth more if we sell it? Can we maintain it? Do we drive kind of further optimization if we decide to keep it in the portfolio? So those are all aspects that come into it. There's certainly no need to sell assets to generate cash. I think where there's the ability, for example, of selling an asset and it releases cash, that could be a way to address it as well. But that would not be the primary goal in terms of an asset portfolio. It is more to optimize the cash generation of assets to realize value.

Thank you, Hanre. I think you've covered quite a few questions from -- on asset sales and the possibility of further deleveraging through asset sales, both from [Peter Kromberg] at Merger Market, [Raystan] as well as Sashank Lanka from Bank of America. So thanks for that. I'm going to shift gear a little bit back to operations. There have been a few questions around the coal destoning project and when this is expected to receive or achieve FID? That comes from [Tabo Malloy] from [The Fund]. Also questioning if there are other measures aimed at improving coal quality? And if so, how far along in development are they? I think, again, from Sashank Lanka from Bank of America, update on the FID CapEx for destoning as well. Fleetwood, if I could direct those to you.

Yes. Thank you. Thank you for those questions, [Tabo] and Sashank. So the destoning project is maturing through its stage gate decision process. We have indicated that we will focus on a final investment decision in Q4 of this calendar year. So that's towards the end of 2024. The critical path here is our licenses in terms of environmental procedures, et cetera. And that's why that is driving the schedule. Back at the [ranch], we are developing the project at the best balance between schedule and cost. And we believe that we will only be in a position, Sashank, also to indicate to you what the CapEx for that is once we take the FID decision as is customary when Sasol invests in large projects. We will then make that CapEx magnitude available. With respect to the other items that we are focusing on in terms of how do we address coal quality. We are, and I've indicated this, integrated center of coal management in terms of blending that we have established in Secunda operations and mining in a close collaboration so that we, in time, get the right blending stream from the purchased and the five collieries that bring the coal into the facility. And that remains a key way of addressing coal quality and the right mix of coal into Secunda operations.

Thank you, Fleetwood, for that. I'm going to switch to a question on the regulatory challenges from David Fraser at Peregrine. His question is, is it not time to have an honest conversation with the cabinet of South Africa to articulate the full economic and social implication of full compliance with the current climate change trajectory so that all parties can either accept and sign off on these implications or look to revive the policy to potentially mitigate some of those impacts?

I'll start off, and I'm going to ask Simon also to weigh in on our collaboration and engagement. So suffice to say, and I've mentioned it very clearly in my presentation today, that we are engaging with all stakeholders that is part and parcel of this landscape in terms of the issues we need to progress and to provide context and understanding of the issues in much more detail to what the implications are of doing nothing, doing something or maybe doing the right thing for the South African economy, as you alluded to. So all of these factors will continue to play out. But maybe, Simon, you've got other additional impact perspectives.

Thank you, Fleetwood. Thank you, David. I mean that's a very valid question. We see the South African government as a partner as our country also has, I mean, 80% of its energy as coal as we stand. We both have to embark on this, what you call, a just transition. So I wholeheartedly agree with you that we will continue with the -- I mean, the discussions so that we can both have an outcome that will ensure that we can transition both -- I mean, Sasol and the South Africa economy, I mean not just to mention. So thank you for that. And we'll continue with those engagements.

Thank you for that, Simon. I'm going to switch back to Chorus Call. There are two more questions queued. Over to you, operator.

We have a question from Adrian Hammond of SBG.

Yes, I have two questions. Firstly, it's pleasing to note that you're up the post 2030 Synfuels production to 7 million tons from 6.7. This obviously hinges on the destoning. And when that FID comes through, will you reverse the impairments you have done so far? If you can just give us some color on that and how you think about that? And then secondly, I assume also the profile also hinges on the carbon tax you've assumed. And that is, of course, still somewhat up in the air. If you could just remind us what you've assumed and how are you progressing potential discussions with government on that front? And then lastly, I just want to understand your gas plateau. It's also pleasing to note there that you've extended the potential plateau to 2030 and beyond. Could you reconcile that with your ability to continue supplying your customers which you've earmarked to end of 2026?

I think the two questions with respect to the impairment and the tax, I'm going to ask Hanre to weigh in on that. And then the one on the gas extension, Priscila, if you can take that one.

Thanks, Adrian. So effectively, I think glad you noticed the update of and kind of just the indications that we've given that the 6.7 million tons beyond kind of 2030 for Synfuels is, of course, kind of just the outcome of the blunt instrument of impairment and that the focus for us is to kind of to get back to a reasonable production of 7 million tons. Effectively, as we've outlined in the presentation, kind of destoning is a key aspect of that as well as coal quality, in other ways, just to enhance our coal and other feedstock into Synfuels. So that is -- it's not just those levers, but as well as other aspects such as cost control, optimization of capital structure that will inform the -- just the economics of that business, not only to 2030 and beyond. So to the extent that those are then -- and IFRS IAS 36 allows us to only include these enhancements in the assessment of an impairment kind of yes to the extent that when these are in implementation, Adrian, kind of, yes, they'll factor into the impairment calculation. But of course, this is also impacted by aspects such as carbon tax kind of market rates, the exchange rates around oil price. So all those kind of will factor into it. So I can't categorically say kind of when we implement and successfully implement these projects, they address the impairment. But certainly to the extent that they will benefit, it gives us confidence that we could kind of reverse the impairment. Just in terms of carbon tax, then we've not seen any change in our assumptions given that there's not been any updates from government around carbon tax other than the commitment then for allowances to stay in place until 2030. So to the extent that we've got clarity on kind of allowances remaining in place for hard-to-abate industries. We welcome that, and we factored that into our model. But of course, as we get further clarity on the level of allowances, that will then also impact the assessment of not only the impairment, but the viability of our business going forward.

Priscila, can you come through on the gas, please?

Thank you. Just in terms of gas, what Fleetwood highlighted is that currently our plateau remains at FY '28. We are confident with some of the initiatives, including the PT5-C discovery that will be able to expand the gas to FY '30. That's going to take some time as we continue with the required investments to be able to justify and validate some of the underlying assumptions. Having said that, in our FY '28, 2030, that we're feeling confident with, we've also assumed that we will be exiting the gas market, including the MRG as part of the assumptions. What I want to highlight as well is that we've been very clear at Sasol, and we've engaged with customers before, that when we went out to the market to source gas and we came back with LNG, which is not affordable for our operations, we engage with customers and highlight the need for them to commit a commercial contracting to enable an offtake. And at this stage, we are encouraged by the process that the department of trading industry is actually undertaking to be able to ensure that security of supply for the country is actually provided for. At Sasol, together with the IDC, we are providing support. We are also engaging with customers. But at the same time, we are looking at different supply options to extend that plan for customers, but also for our future needs for the country with new customers that might acquire that gas. Our encouragement to the customers is to ensure that they do their own economic modeling and then they confirm as well the viability of their businesses with that future gas aspiration and so that we can accelerate the security of that LNG. It is in the best interest of the country and that of Sasol that we find an amicable and a balance security supply for all in terms of all the options. But as we stand today the opportunities in Mozambique are very limited and we'll be focused more from ensuring that we can preserve Sasol's operations as well in the process.

Thank you, Priscila. A similar question received from [Japo Mongwia] from [SABC News] in terms of the rationale to just discontinue supply of natural gas. So thank you for addressing that. A few more questions on the operational front from -- one from [Tibella Bisza] at Nedbank. Your business is currently facing challenges from all fronts. How does management prioritize what to focus on to steady the ship? And also where would you say you see the easy wins over the next 6 to 12 months? Similarly, a question from Chris Logan at Opportune Investment. The maintenance program that you mentioned at your Transnet, does this mean Sasol will be burdened with a new category of costs? And if so, can you please provide some color on the quantum of the cost in assisting Transnet? Fleetwood?

Thank you, Tiffany, and thank you for those questions. I'm going to ask Simon to weigh in on the first one. And then with respect to the Transnet question and the rolling stock maintenance, I'm going to ask Brad to reflect on that.

Thank you, Fleetwood. For the next six months, I mean, of course, the first priority has to be business performance, focused on, I mean, our operational stability across all fronts. Our performance in the sales and market team to optimize on the gross margin and most importantly, to make sure that we can manage their cost because we have to make sure that we baseline cost for where we're performing. So that's going to be key in all aspects of our business to contain and mature the business will continue to generate free cash flow. So the second half, like Hanre already alluded to, we've got most of the maintenance programs behind us. So we will focus on cash generation as well.

Thanks, Chris, for the question on the agreement with Transnet. We'll make more details of that clear during the course of this week. But maintenance costs have always been covered in our contract rates and this new agreement that Fleetwood shared that is an emerging partnership allows us to have clear views of those costs and also for Sasol to participate in the maintenance of the rolling stock. We're very excited about it.

Thank you, Brad. Thanks for those questions, Adrian. Moving on to the next caller queued on Chorus Call.

The next question we have comes from Alex Comer of JPMorgan.

So just a couple of questions from me. Since the year started, we've had this situation in the Red Sea, which has pushed up your chemical prices in Europe, gas prices have come down. So just if we could look at where you are kind of run rate in terms of profitability in Europe, maybe give an indication on that? And then secondly, also similar in the U.S., obviously, the natural gas price and ethane price has fallen there. So just wondering what that's done on a kind of a month-on-month basis, if you give me some indication of where we are, that would be helpful. And then also, look, when I look at this Slide 24 with the tail down from 7.5 or the recovery is 7.5 and then down to 7 or down to 6.7 or whatever. You've got a great big question mark there after 2030. And that question mark, aspirationally seems to show volumes going up. To meet your 2050 target for net zero, that would obviously imply a fairly significant level of decarbonization progress, which is likely to cause a large amount of CapEx to be required, particularly that CapEx spend is going to have to be put in in the not-too-distant future. So given that you've just delinked your dividend payment from earnings and put it on to cash flow, I mean, do you think you'll be paying any dividend at all post 2030, given the aspirations on the decarbonization and the likely cost that is going to put on your cash flows?

Thank you, Alex. I'm going to ask Brad to weigh in on the current changes we see in Europe and in the U.S. in terms of just directionally where we see feedstock is developing towards. And then post 2030, I'm going to ask Hanre and Simon to weigh in on those questions and plans.

Thanks, Alex, for your question. Yes, you're right, in Europe with the disruptions in the Red Sea. We have seen some material prices stabilizing or firming up. I think the big issue that we've seen in Europe that we've commented on is the weak demand. We've seen some slight improvements as we go into this first calendar quarter. I think many of our customers are waiting to see how March turns out before they really start to see or say whether they see the recovery continuing on this basis or whether it's going to be later in the year. But you're right, energy prices have moderated quite a bit, and so that's allowing us to really stabilize our margins. And as we've guided, we continue to work to manage our operating rates during this time of demand recovering. The U.S., we still see low energy prices, so that is allowing us to have competitive costs. And again, we still see the U.S. consumer resilient. So we still see a lot of improvement in demand. I think as we go through the year towards the elections, I think it will be important to see how the narratives evolve and whether that changes any movements on interest rates and what that does for overall demand. But we do guide a second half that we do believe we're going to see the fruits of that recovery starting to come through. It's not going to be rapid, but we expect that we'll see it quarter-over-quarter starting to improve, and we stick with our volume guidance.

Thanks. So Alex, just to get to your question around the 2030 ERR in the emissions road map to 2030. I think just a reminder that 2030 is a commitment for us in terms of the 30% reduction to 2030. But beyond 2030, 2050, we're still talking about a net zero ambition. And I think we've got to be clear that kind of the path beyond 2030 is uncertain. We don't know what the techno-economics would be of those various levers, and we've listed on those share a number of aspects that we will consider towards that journey. And to the extent that we've got a clear capital allocation framework that will look at the kind of the benefits the techno-economic kind of benefits of each of these levers, we will advance and then pull them at the appropriate time. So at all times, then kind of manage our 2030 capital allocation, as we've done now up to 2030 that we will look at what is the returns to our shareholders in kind of pulling these levers. So for example, if it's biomass, do we get a green premium in kind of more expensive biomass to the business. If it's carbon capture, what is the cost of carbon capture relative to the production cost and the penalties in terms of carbon tax? So all of those levers will be considered through a disciplined approach to capital allocation to value. And as I've outlined, we expect that the dividend then would form part of that capital allocation, first order capital allocation, transform the business first, pay the base dividend and then in the second order, considering further cash returns to shareholders. And kind of maybe, Simon, you can just comment on some of these levers that we are investing some money in advancing the consideration of these levers as well.

Yes. Thank you, Alex. Suffice to say that post 2030, we will not chase volumes at our cost. What we will first do is that we will first re-baseline our business to make sure that when you're running around 7 million tons, it's very profitable. We will have to baseline the cost across the entire business. We will do that. And that will allow us to generate cash. And that cash, we still have to follow our capital allocation framework. The key to growing volumes will be the introduction of sustainable feedstocks in whatever form into our business, whether it be electrons or biomass or whatever would be busy with those studies, and we will engage you when the time comes. I think where we are, our mindset is not to try and decarbonize the Secunda at our cost. But what we do believe is that the facilities that we have gives us a massive advantage to build something from and then that will continue engaging with you.

Thank you, Simon. Moving back to financials. A couple of questions on our debt trajectory. I'm going to direct them to you, Hanre, from [Munira Cava] at [Ex-CheeFund] Management. Can we get an update of the maturing debt and what is the plan for refinancing? Also on the debt theme or the -- do you have any plans to transition more rand-denominated debt in the structure? From [Ana Cuchina] at [T.Rowprice]. And then I think just a little bit of color around the major reasons for the discrepancy between core headline earnings and free cash flow generation. What are the primary reasons for this is the Company, highly capital intensive relative to the amount it depreciates on the income statement? And that comes from [Tabo Malloy], [The Fund].

Thanks, Tiffany. Let me deal with the debt question first. I think effectively, and we've touched upon that earlier in the refinancing question. The only debt maturity that we've got in the near term is a $1.5 billion denominated bond. And to the extent that I've highlighted, the comfort that we've got in our existing liquidity to refinance that, we will address that. Kind of longer term, we will continue to look then to ensure that we've got the right balance between short-term and long-term kind of debt in our balance sheet. But also then to the question around the rand-denominated debt structure, I think it's reasonably obvious that a more balanced between debt that is U.S. dollar denominated and rand denominated is needed. At the moment, as I've highlighted earlier, the kind of about 95% of our debt is dollar-denominated, where kind of 95% of our EBITDA is generated from South Africa. So to the extent that we are slowly and as we see that maturities coming up, we've got the ability to then move dollar-denominated debt to rand-denominated debt. We of course, also have our domestic medium-term note program that we've issued rand debt. So to the extent that we find the appropriate optimization of the funding of capital through tapping the rand kind of debt pool as well, we will certainly do that. But perhaps just to note that kind of historically we've not seen kind of the depth of the bond market in South Africa deep enough to fund the extent of our balance sheet. So we'll always balance kind of the cost of the [ream] of financing and the risk related to kind of dollar versus rand in the refinancing of that debt structure. In terms of core headline earnings and in free cash flow generation, the big gap there, of course, is depreciation relative to sustaining capital. So we've seen that in terms of our annualized, if you look at our depreciation charge, around ZAR16 billion, when I shared our sustaining capital guidance of ZAR33 million to ZAR34 billion. So there's a significant gap then that effectively the earnings kind of does not take into account the full extent of the cash that we are spending at the moment to maintain and sustain our business. Noting that there is an element, of course, of our PSA capital that's in there. And of course, also some of our environmental capital that is kind of pushing that sustaining capital higher kind of than the normalized rate that we expect. Thanks, Stefanie.

Thank you, Hanre. There is a question on safety. Fleetwood, can you perhaps elaborate on the safety challenges you experienced in Q2, leading to the 8% drop in mining productivity? What have you seen in Q3 so far? And how do you expect this to pan out in the second half? From [Yandre Peterser] from [Visio Fund Management].

Yes. Thank you so much, [Yandre]. So as I've mentioned, we have had impacts in the months of November, December, mostly safety related in the incidents that we experienced in the mining environment, and that did set us back. And I'm going to ask Hermann also to weigh in on some of those challenges and also what we've seen now in Q3 so far in terms of the focus that we brought to bear.

Thank you, Fleetwood. Thank you, Yandre. We've had two tragic fatalities at Sasol Mining in quarter two, the one in October and the other one in December. The one was equipment related and the other one was related to a side wall failure, so geology related. What happens when we have a fatality when we experience such a tragic incident, we actually stop our operations. And in many times, you stopped the operations of all sections that mine in that specific area or if you find that it's a cultural element that contributed to the tragic fatality, you will stop an entire color to retrain and reengage with your people. So the consequence of that is that once you experience a fatality, you have a significant impact on your production, which is okay because something is wrong and we need to fix it. What we also do is from a caring perspective, we make sure that we look after the families, but we then have a memorial with a family with that entire colliery, which also brings about which all our employees are allowed to then attend, and that also has an impact on productivity. What we also see from time to time is that you have incidents that has potential serious implications, although it didn't lead to injury or harm. But you will then also stop a colliery or a section. And we also, which we welcome, have regular engagements and inspections from the DMRE that we see as a third and a fourth party auditing entity that helps us with a total objective view. And they also, from time to time, decide that they see things that they're not comfortable with. We engage with them, we stop the sections, and we then go back to the DMRE before we start up these sections to give them an indication of what we've done. For the third quarter, so far, we are seeing an improvement in our productivity from the low levels that we experienced in quarter two. And for February, we are seeing a return to the levels that we've seen in quarter one of this financial year.

Thank you very much for that color, Hermann. I think I'm going to take one last question online, and then there is one more caller queued on the Chorus Call system. The last online question comes from [Nantaler Nequta] at Nedbank Private Wealth. We've seen some of the -- we've seen peers lower some of the ESG targets in recent months. Is management open to the idea of scaling back some of the GHG targets with 2030 fast approaching? Fleetwood, I'll direct that one to you.

Yes. Thank you for that question. I've a number of times emphasized that our targets are quite clearly published and it comprise areas that we're working hard on to achieve. And it is also a balance between people, planet and profit. And that is an assessment that is -- will be taking place continuously going forward. And so if there is an area that we need to assess having regard to those factors, we will do that. If we can execute and those factors remains in balance, we will do that. So I think at this point in time, the plans are to assess and to make sure that with the targets and with our means that remains in balance.

Thank you very much. Chorus Call, could we please have the last question?

The last question comes from Sashank Lanka of Bank of America.

Just one quick follow-up on my side with regards to the dividend. Handre, I'm just wondering how should we look at dividends for the second half of this year? I mean it seems like the first half, you based it both on what core hubs would be and the fact that free cash flows were negative. So just wondering if you should give us a similar mechanism while forecasting our dividends for the second half? That's the first part of the question. The second part is just when you spoke about your previous dividend policy, you gave us a net debt-to-EBITDA target of less than 1.5x. Will that still be there when you link your dividend policy to free cash flows?

Thanks, Sashank. I'm going to unfortunately keep you in suspense. I don't want to kind of run ahead of the Board in terms of our assessment. I think to the extent though that I've noted that free cash flow would be -- and is considered to be a reasonable element to guide our performance and guide the debt -- the dividend payout. So the expectation for a full year dividend then should be based on our ability and our generation of free cash flow. So I think to the extent that going to have committed that we will share this at the full year, kind of what percentage and at what level we allocate that. I think that, unfortunately, we'll have to wait and see. But I think likewise, you make an important point that to the extent that the existing dividend policy talks about a comfortable net debt to EBITDA level of around kind of -- we've wanted less than 3 billion, but we're aiming for 1.5 or lower, and that we want in absolute debt terms, we want net debt to be below 5 billion to pay a dividend. Those are also aspects that we will reconsider in terms of, clearly, they're articulating an updated dividend policy. So at the moment, unfortunately, the only thing I can say is watch the space, and we'll provide a detailed update at the full year. Thanks, Sashank.

Thank you for your question, Sashank. With that, I'm going to wrap up the session. Unfortunately, we are out of time. Thank you once again for your participation in this interim results Q&A session. I do see a few more questions coming through. I will follow up with you after the session via e-mail or call. Thank you very much. We wish you a safe and wonderful day.