Good morning, and welcome to Sasol Limited's presentation of the financial results for the financial year 2024. Thank you for dialing in and listening to our announcement today. My name is Tiffany Sydow from Investor Relations. And with me is Simon Baloyi, President and CEO of Sasol and Hanre Rossouw, Chief Financial Officer. Simon will start today's presentation with some opening remarks and an overview of the business performance. The financials will be covered in more detail by Hanre, and Simon will then conclude on strategy. We will have a Q&A session following the presentation, accessible through both the webcast and teleconference platforms. Before we get into the main agenda, I'd ask that you please take a note of our forward-looking statements shown on the slide. Please perusing your own time and note the important information regarding statements that are made in this presentation. Thank you. And I will now hand over to Simon to commence his presentation.

Good day, everyone, and welcome. In the past five months, since I started my tenure as President and CEO, I have drawn on 20 years of Sasol experience to implement a few decisive actions to bring about meaningful change. Let me share a few examples with you. In April, I commenced streamlining of Sasol's operating model. This entailed revising the portfolios of the Group Executive Committee and senior leadership levels. These changes were made to improve accountability, collaboration and to have created a clearer focus between business of today and business of the future. Regarding strategy, we have already defined a framework to guide our priorities and ambition. This framework has two pillars: one, strengthen and grow and two, transform. I'll touch on this in more detail shortly. Furthermore, recognizing the agent needs to improve our short-term performance, I implemented focus areas to unlock opportunities. This enabled us to deliver a strong fourth quarter performance. My vision for Sasol is to build a profitable and sustainable business. We must achieve this vision by safely delivering value to our shareholders, customers, communities through inspired people. I am deeply honored to lead Sasol at this pivotal moment. Team Sasol is fully committed to ensure that we thrive as the pioneers of our great company had intended. We have an excellent portfolio of global assets and a solid customer base and integrated technologies. But what truly excites me is that people of Sasol. With nearly 30,000 employees worldwide united by shared people, team Sasol is the true driving force behind our success. It is for this very reason that I'm certain that we did not send all our team members safely home during FY 2024. This is not acceptable. Safety is a critical issue, and I'll spend more time on this topic shortly.…

Thank you, Simon, and good morning, ladies and gentlemen. As Simon has highlighted, we have navigated through significant challenges and achieved some improvements in the second half of the financial year. Despite these improvements, our financial results were impacted by a range of factors owing to operational issues and the challenging macro environment. Let me start with the macro environment that we had to navigate this financial year. Oil prices continue to soften in the second half of the financial year, decreasing by 3% when compared to the prior financial year, which was partially offset, however, by a 5% weaker rand. A 2% increase in the rand oil price was realized compared to the prior year. However, the closing exchange rate was stronger, which positively impacted the translation of our U.S. dollar-denominated debt. We observed a 13% increase in petrol differentials, but diesel differentials were down 22% compared to last year, negatively impacting our fuels business. We continue to see some respite in lower ethane and energy input costs contributing to slightly improved margins in our international chemicals business. However, energy input costs remain elevated compared to historic levels. Sasol achieved polyethylene prices decreased by 8% due to persistent weak demand and global oversupply. Looking ahead, we expect continued pricing and demand volatility in the short term given the uncertain global market sentiment and ongoing geopolitical events. These challenges require continued agility and efforts to adapt to market demand and enhance margins. We must also maintain our cost and capital discipline through our business transformation program. Turning to the results for the financial year 2024. The underlying operating performance was mostly in line with the revised market guidance. Despite the improved business performance in the second half of the financial year, we experienced a significant decrease in our cash generation…

Thank you Hanre. As I mentioned earlier, we are committed to unlocking the full potential of our business and building a more sustainable future Sasol. To achieve this, we are refining our strategy to proactively address challenges. We will also leverage our competitive advantages to seize opportunities. As I said at the outset, our strategic framework revolves around two pillars: strengthen and grow and transform. To recap, in the short term, we'll focus on enhancing delivery from our core businesses and maximize cash flow. In the medium term, we aim to maintain this performance while scaling transformation opportunities. Over the long term, we plan to optimize and transform our portfolio. This we will do by leveraging existing assets and exploring new sustainable growth opportunities. Our environmental commitments remain central to our strategy. Here, we need to maintain a balanced and measured approach across our people, plant and profit goals. This ensures that every strategic decision we make support our environmental ambition and social responsibility and returns to shareholders. As always, we welcome ongoing input from all stakeholders as we optimize our approach to transform our businesses. I look forward to this work progressing and sharing more details at our Capital Markets Day in 2025. Regarding the energy transition, this is influenced by multiple factors, including the imperative for energy security and adjust transition. By remaining agile and responsive, we are adapting to these changes and shaping our strategic objectives. Given this context, it is essential that we optimize the execution of our GHG roadmap. This is to ensure maximize value from Secunda operations for energy security and to enable a gas transition. Transformation is not just about responding to change. It's about seizing new opportunities. We are focused on identifying and building scalable growth opportunities around the new sustainable value…

Thank you, Simon. This concludes our results presentation for today, and we'll commence with the question-and-answer session after a short five minute break. Thank you. [Break]

Good morning, and welcome to this question-and-answer session for Sasol's 2024 Financial Results. With us in the room today are other members of Sasol's Group executive management team. To my left, Antje Gerber, EVP of International Chemicals. On my right-hand side, starting with Christian Herrmann, EVP of Marketing and Sales, Energy & Chemicals Southern Africa, Victor Bester next to him, the Executive Vice President of Operations and Projects; and on my far right, Hermann Wenhold, EVP of Mining, Risk and SHE. Also participating online, we have a few other executives, Vuyo Kahla, who is the EVP of Commercial and Legal, Sarushen Pillay the EVP of Business Building Strategy and Technology and Charlotte Mokoena, EVP of Human Resources and Stakeholder Relations and Corporate Affairs. You are welcome to submit your questions online via the platform – our streaming platform on the right hand side of the screen, you will find a dialogue box where you can submit your questions. Alternatively, you can also dial0in via our chorus call link and you have the opportunity to voice over your question once prompted. I'll be alternating between the two platforms to ensure that we have effective participation during the session today. With that, I'll start with the questions coming through the online platform. I'll direct the first set of questions to Hanre. A lot of questions received on the impairments and some context around that. Perhaps I'll read just the first three questions on the impairment theme from Lorato Chone at Momentum Investments, what has caused these impairments, which led to the losses experienced by the group? And in your analyst book, you unpacked the impairments related to the ethane value chain, where you state including options based on adjusting current asset and/or value chain footprint. Are you considering a full exit from Chemicals America or what other options are being considered and that's from Warren Riley at Bateleur Capital. Also from [Ray Stain] (ph) who is a private investor and [indiscernible] from Bateleur Capital. The last question in the series revolves around the free cash flow and breakeven rand oil price, which is a standard question we get for all results. I think I'll hand over to you with those set of questions, Hanre.

Thank you, Tiffany. I think firstly, perhaps just background on impairments. Of course, we all know it's an accounting aspect that at the end of each financial period. You have to assess the carrying value of your asset base. And I think what we've seen and certainly the accounting standards talks about the impairment indicator being your market cap being significantly lower than the net asset value on the books. So to that extent, we had a net asset value of over ZAR300 a share. Share price has already reflected that a lot of value has been lost in kind of lower financial outlook. So I think that really then triggers the impairment assessment, and we do that by each cash-generating unit to assess the carrying value of that. Perhaps just to unpack then the big impact on the U.S. impairment and the U.S. chemical assets. And there, we've seen a significant decline in our long-term pricing. Note 8 in the financial statements unpacks the assumptions. There we've seen kind of lower ethane ethylene and polyethylene prices and that change in prices has dropped the carrying value then of those assets. The question around the -- including of option based on adjusting current asset and portfolio really relates to our assessment of the cash generating units, the way that we operate those assets. So no way does it infer any ambition to sell or restructure the portfolio? It really relates to the assessment of the asset base when we do the carrying value assessments. Then just lastly, Tiffany, in terms of the free cash flow for the South African value chain. Last year, we saw around $58 a barrel going forward, expect that with the cost initiatives to be around $55 a barrel. I think important that one has to then look also at the rand-dollar exchange rate. And if you apply that, it's just over 100 -- sorry, just over ZAR1,000 per barrel is then the breakeven of the South African value chain. Thanks.

Thank you, Hanre. I think a further question just on the detailed assumptions. I think you've already covered that in reference Note 8 in our F’s, that was from Andrew Snowdowne at Sanlam Investment. I think then similar theme to impairments, there are a few questions around the international chemicals and the business outlook. Simon, perhaps a question for you. Could you talk about what's going on in the Chems Americas segment? You've had an operating loss before the impairments and barely any free cash flow. This is despite close to record low ethane prices and very different from what the peers in the U.S. are seeing. Are there any issues specific to the portfolio or assets that are driving this disconnect and this comes from Sriharsha Pappu at HSBC. I'll leave -- pause there.

Yes. Thank you, Tiffany. Thank you, Sriharsha, for your question. You remember in Chemicals America, our value chain there is, I mean, is relatively divided into two, which is your [indiscernible] and the units associated with the [indiscernible] and downstream units. So I mean, the utilization of our [indiscernible] that's, I mean, on par with our peers. However, the demand in the downstream units, I mean, and this is a global issue, the demand in the downstream units is below where we expect it to be. And I mean, as we've said during the presentation, we're already intervening costs. That's what we've seen our peers doing. So we're intervening in that segment to make sure that we will rationalize, I mean, some of the assets if we need to do so. But there's nothing specific that's having into the asset are what generally, the market sees especially on the downstream units.

Thank you, Simon. I think moving on to our Southern Africa operational side of things. There's a question from Lerato Tshoni from Momentum. And the [indiscernible]. How does the management team plan to respond to the issue of gas depletion expected in the next few years? And if they plan to offset against the expected gas decline?

Yes, I'll start, then I'll hand over to Christian in terms of what. As we previously communicated, gas in the south of Mozambique is getting finished. You remember that as far as our customers are concerned, we did give a date of 2026 as the deadline. However, we did some projects to try and optimize the gas that is there, and we can extend that through in 2027. But in our view, customers have to move to LNG. There's no any other option or with prospects of finding more gas in the South Mozambique. Christian, you can elaborate.

Yes. Thank you very much, Simon. So first of all, we are extremely happy today to extend now by one year from the 2026 time line now to the mid-June 2027. We're also working on other projects that potentially could also extend their time line even to mid-2028. Those projects carry risk, and they come with significant investment. And the FID still has to be taken. We anticipate that to happen in the first half of 2025. But there are opportunities that we are heavily and really intensely looking at in order to serve as a bridge then to the LNG market. And it takes roughly three to four years to prepare and build an LNG infrastructure, and that's what we are interested. And we would like to also continue acting as an aggregator in the gas market in South Africa. And that's the reason why, as we speak right now, we are engaging with our customers, our gas customers, more than 300 in South Africa and starting to set up meetings to see what is the demand going forward because we need to have commitments because, we need to work together in order to make that happen for the future gas supply in South Africa. So bottom line is we are very happy to be able now to extend gas supply coming from Mozambique. But as Simon mentioned, this is finite and we want to work together with our customers to transition into LNG. And maybe Victor would like to add something on the projects and the technicalities what we have done in Mozambique to extend that.

Thank you, Christiaan. I think you've sufficiently answered the question, but I'll just detail out. We have specific projects that are underway. We've taken FID on three infill wells, which will basically supplement our well capacity in Mozambique. We are busy with exploration activities in the PT 5C area. And there, we're actively involved with two wells. And then, of course, we continue to look for opportunities to extend the plateau. But at this stage, our indications are that the plateau will decline towards the end of FY 2028.

Thank you, Simon, Christian, and Victor, for that color. I'm going to switch to Chorus call. Operator, over to you for the first question, please.

Thank you. Our first question come from Adrian Hammond of SBG Securities. Please go ahead.

Yes. Good morning, Simon and Hanre. Thanks for the opportunity. Well done on the improved second half. Simon, firstly, you talked about an asset review. Can you give a bit more color on this? And would you include our CCP as part of that potential sale review? And then I think just curious to get a bit more color on the successful appeal for 12A emission standards to 2030. Is the scope to extend beyond 2050. And any sort of further color on carbon tax allowances beyond 2030 as well. And then for Hanre, just looking at the balance sheet, you're sitting on quite a chunk of cash of ZAR45 billion but you've got debt that could be repaid and reduce your very high finance cost. So what's the plan or thinking around that? And have you done any more hedging as well since the end of June. Thanks.

Yes. Thank you. Adrian. Let me start with -- Yes, the CCP asset review questions and then go over to the turf. So what we're going to do, I mean, the CCP, as we've previously communicated, you remember, we still own, I mean, 50% of the cracker and the two downstream units. We will continuously review that and look at timing. I mean for me, it's all about timing. If you look at where we are right now in the cycle, I mean, it won't be attractive. We don't think that's going to I mean help us to generate any value for the shareholders. But at the right time, you can, I mean, consider that. However, what we want to focus on when we talk about, I mean, a review of our assets, we're going to look at our global international chemicals portfolio. We're going to go through asset by asset, and we're going to take decisive actions on underperforming assets. And it's something that I can -- I mean in a moment, you just add more color to it in terms of your thinking how we're going to approach it. And before I hand over to Antje on the 12A, yes, I mean we're very, very thankful to our teams. I think it was incredible to work with our technical, legal and our communication teams to make sure that we -- I mean, arrived at a successful conclusion of the 12A. I mean, I'll actually encourage many of you who've not seen all our submissions because they are on our website. It was truly a great -- I mean, sure of what is possible. So on the 12A, I mean that at least gives us respite to make sure that we can, I mean, low fully operate our plants and to reduce -- I mean, like we said, this is to make sure you comply to SO2. And you remember, I mean, our SO2 solution as we reduced SO2 has got some integrated benefits. So we'll also derive. Carbon tax is an issue of allowance. Allowances are very, very clear and set to 2030. But you remember, there's no clarity yet. I mean after 2030, we've been engaging. I mean, Treasury is the critical stakeholder here. So we've got some time we've been engaging so that they can afford clarity not only to us, but to the rest of the market, in terms of how the regime is going to progress until 2030. So we'll continue that engagement. We'll contribute that work, and it's something that I mentioned that, that risk still remains. However, if I look at how our team is working with our stakeholders, including the minister managed to deal with the 12A, I'm confident that we should be able to get a successful conclusion on that one, but it requires time. And we'll continue with the engagement. On that note, Antje any more color on the asset review just for the dual international chemicals portfolio.

Yes. Thank you, Simon, and thank you for the question, Adrian. Since I joined Sasol in April, the entire leadership team of International Chemicals is doing a reset of the organization. We are reviewing everything in the organization to improve our performance, which is yes, unfortunately, lagging behind, and that includes as well our asset footprint. Luckily, the new operating model allows us work much closer together across America and Europe and assess the asset footprint as well, which we have on both sides of the pond. We have some underperforming assets. We're looking at how can we improve that from a market perspective, go-to-market view, but also, yes, obviously, we will assess all other options, which go with an asset revenue not only in America but also in Europe.

Perhaps, just to talk about the debt reduction plan. I think, Adrian, you correctly pointed out the cash on the balance sheet. And if we take into account also the remaining part on the RCF, we've got a total of about ZAR75 billion of liquidity. I think important that we maintain sufficient liquidity to also go into refinancing. We've got a bond coming up for redemption in 2026, and we'll continue to proactively look at extending the tenor of our bonds, refinancing that. So very comfortable at the moment with that flexibility on the balance sheet. And we will maintain the approach we've done historically to proactively manage that refinancing and make sure that we've got robust liquidity. In terms of hedging, kind of important question, I think also goes back to the earlier question around the breakeven. So to that extent, we continue with limited hedging. We've significantly reduced our hedging now targeting 20% to 35% hedge cover ratio. On the U.S. dollar side, we've got about $1.5 billion of hedges with a floor of around 17, 35, 17, 70 that protects us for a strengthening of the rand. On the oil price side, we've got put options then to also protect any downside exposure below that around the $58 a barrel level. As I've mentioned, it's a lower level, and we do believe that the balance -- a balanced approach that we are taking factors in the overall assessment of risk on the balance sheet.

Thank you, Hanre. Moving on to the next call on Chorus Call.

Thank you. Next question comes from Chris Nicholson of RMB Morgan Stanley. Please go ahead.

Hi, good morning, Simon, Hanre and team. I'm going to just go back to the impairment in the chemical segment again. I think it will clearly be a focus area of these results. Previously, for the U.S. or the American chemical complex, you've guided to a longer-term EBITDA of around $700 million to $900 million. I mean, in your impairment spreadsheet, I suppose, when you cut this for the [indiscernible] with lower prices, that EBITDA will now be lower. So maybe could you give us some clarity on what sort of longer-term EBITDA generation from the Chemical America complexes now implies? That's the first question there. Second question is really on what you're talking about in terms of reviewing the footprint of your assets and potentially taking decisive action. Maybe just a bit more detail on kind of what exactly that involves and kind of what your metrics you'll look at? I mean, are you prepared to keep an asset if it's free cash flow positive, if it's EBITDA positive? Or are you going to apply some kind of hurdle rates? Does it need to earn a certain return on invested capital? So how should we think about that? And I'm just mindful of that, that you've -- obviously, Sasol went through quite an extensive review of the chemical, put all the assets about two, three years back. So I think, yes, let's leave it there for those two questions. Thank you.

Thank you, Chris. Simon, do you want to start?

Yes. Thank you, Chris. I mean, so what we're going to do, I mean, the focus area is actually going to be on making sure that there's a return on investment, on invested capital on the asset and also the ability to generate free cash flow because what we want is that we want the assets to contribute into the group profitability. So that's what we're going to do. And we'll do this on an entire global landscape of all our assets.

Thanks, Chris. Perhaps just to come back to your question around EBITDA guidance. I think for exactly that reason, I would not be venturing into taking another guess at what the price could be. We've seen significant change in long-term assumptions. So to that extent, for example, you'll see in Note 8, I think it's Page 44 in financial statements. We show the updated price assumptions. LLDPE price, for example, is 13% lower with already depressed margins. That, of course, had an impact of lowering the EBITDA forecast in our model. But I think given volatility of price, volatility of input costs, it's best not to try and take a guess on what these long-term estimates would be.

Okay. Thanks for your set of questions, Chris. Moving back to the online platform. There's a couple of questions around our balance sheet management and dividend. Hanre, perhaps for you to address. I'll start with the first two, one from [indiscernible] assets with a new dividend policy, does this mean that Sasol's net debt is now ZAR4 billion before leases. And is it fair to assume that there will not be active debt reduction below this level? I think the second one on a similar theme, how should we approach your CapEx spending over the medium term relative to previous years, just around the plan around getting net debt below ZAR4 billion to bring back dividends and also the plan to reduce gross debt. Similarly, are you planning to introduce any refinancing maturities with more ZAR denominated debt into your total debt mix? And that comes from Gustavo Compass at Jefferies.

Thanks, Tiffany. Thanks, Gustavo for that question. Firstly, just in terms of what is the debt target. I think certainly, the current base where we are, the ZAR4.1 billion net debt gives us about a 1.5 times net debt-to-EBITDA ratio. So we -- it's a comfortable ratio. But what we're signaling through the dividend policy is that we do want to get debt to below that level, so we will -- from a first order capital allocation perspective, we will prioritize the repayment of debt before dividends then. So to the extent that we are above the ZAR4 billion mark. All cash will go to debt repayment. Only then when we're below the ZAR4 billion, we will continue with debt repayment, 70% of the cash then get for that consideration, 30% going to the dividend. And ultimately, I think as we've signaled previously as well, we do want to target lower leverage ratios than the 1.5 times net debt to EBITDA. In terms of overall absolute gross debt levels, yes, we're sitting around $6 billion of U.S. denominated debt. I think important that we'll continue, as I mentioned earlier, to retain flexibility on that proactive refinancing that kind of we've got through the actions we've had -- we've done in the last 18 to 24 months. I think we're in a very comfortable position, but we'll continue with that track record to proactively manage maturities. To that extent, I can't elaborate on any other current plans other than to say that we will continuously to look at the market opportunities to refinance, but ultimately reduce our absolute gross debt level as well, given cash generation as we pay down debt. The preference then will be to issue more rand debt, and you'll see that in the MTN that we've continued to tap that market, whilst we reduced the U.S. dollar-denominated debt.

Thank you, Hanre. I think two more questions on the balance sheet from [indiscernible] at Nedbank. Previously, we were -- you were able to pay dividend when the net debt was above ZAR4 billion. So how come you decided to skip the dividend this time around? And any cash requirements in the near future that cause the Board to be more cautious. I think that speaks to the new policy. And then I think another question from Egor Fedorov from ING. Do you plan any debt programs linked to your carbon emission reduction in the future?

Thanks. I think important to note that the -- of course, the full year dividend for 2023 was based on our core headline earnings per share. So it's the old 2.5 times to 2.8 times cover ratio. Effectively, what that meant then is we did pay debt out of -- we did pay dividends out of debt. So you would notice that at the end of 2023, we ended at USD 3.8 billion of net debt. And with the ZAR6 billion final dividend that was paid through the year, we effectively geared up to the half year. At the half year, we noted that we will be reviewing the dividend policy, so to that extent, declared a ZAR2 per share dividend. And now with the full year basis and the updated dividend policy, we, of course, passed in on the final dividend, bringing the full year dividend to ZAR2 per share. So I think that the principle really we're trying to base the dividend on is that free cash flow should be the basis of distribution of dividends. Of course, it also flows into the capital allocation framework where we look at that first order capital allocation underpinning that 30% to give a base dividend. But I think very important to actually then add that any further cash generation will also be considered in second order capital allocation where we will look at growth projects, whether it's inorganic, organic growth, all in further cash returns to shareholders. So beyond just the 30% first order allocation, we would look at other returns of cash to shareholders, such as share buybacks, special dividends and the like. Just in terms of debt programs linked to 2030 emission targets, I think that would certainly be on the cards if we consider further bond issuance, and we would have to consider that relative to just kind of green bond sustainability-linked bonds or just plain vanilla bonds. So that is -- that will certainly be concerned.

Thank you for that, Hanre. There's another question on the operational side relating to gas. From Karabo Sime from momentum, what is the expected gas price increase for the South African gas users for the transition to LNG, both from an industrial and household perspective. Simon?

Yes. Thank you, Karabo. I mean if you look at the current price, as regulated by NESA, I mean, it's between $3 and $3.5 per gigajoule. This press will increase around 4 times to 5 times. Of course, LNG is an internationally traded commodity. So you'll have to use the global benchmarks to bring the LNG. Of course, it's always based on oil price multiplier. So today, I mean, at around $80, the LNG prices are around $12, $13. So I mean that's the prices that we can expect.

Great. Thank you. I think there's one last question. If you have any further question to submit, please submit your questions online or queue in chorus call. If there are no further questions, we will end the call a bit earlier. I think there's one further question from the online platform. In the context of your plan to decarbonize the business, are you considering the technologies like carbon capture at your facilities and converting this to carbon products that comes from the [indiscernible] from FLG.

Yes, [indiscernible] Thank you. In terms of, I mean, all future of seasonalities, we're actually working very, very closely with the Departments of Minerals and Energy and the Consoles of Geoscience. We actually have a test pilot program going on in Leandra, that's investigating carbon capture. So of course, if you capture the carbon, you can, I mean, then check if you can make any products from it. But for now, it's only on carbon capture and storage that's being investigated. But you see that as a longer-term outlook.

Thanks for that question. I'm going to just ask Chorus call if they are -- operator, if there are any other queued people on the call?

Yes, ma'am. I have next question comes from Sashank Lanka of Bank of America. Please go ahead.

Yes. Thank you very much for the presentation. I have two questions from my side. One, again, relates to the dividend policy. You do speak about net debt, excluding leases, sustainably being less than $4 billion. So could you just help us understand this better. I'm just wondering in the current coming periods, if you're still around the same net debt levels or slightly lower, would that trigger a dividend restart? Or do you need to see sustained periods of net debt less than $4 billion before you -- and comfortably below $4 billion before you start paying dividends? That's the first question. And the second question is just on your destoning process. You did speak about FID, I think, in Q2 2025. So anything on the CapEx potentially to be spend any guidance you can provide us?

Thanks, Sashank. Let me start with the dividend question. I think you're spot on. So the dividend policy, of course, talks to paying a dividend whilst we're below $4 billion of net debt. We were smidgen above $4 billion. And of course, the dividend policy talks about an assessment of being sustainably below. But I think to the extent that we can predict the market and the current outlook and of course, I'll put that with the requisite health warning but we do currently, if one looks at the performance, the current pricing environment, we do expect them to pay interim and final dividend given the current outlook. But of course, that could change. But I think the important aspect is that using free cash flow as a basis for that payment.

You have the question on destoning, Simon.

Yes. Sashank, thank you so much. Yes, I mean, coal quality remains a critical lever for us to restore our second operations back to the range of 7.5 to 7.6. So to that end, we focus on making sure that we address the coal quality. Destoning is one of those critical interventions that we're busy with. So we're busy with study, and we will take FID, I mean, before the end of this calendar year. And after that, I mean, we'll implement the project, and we start seeing the benefits of destoning.

Thank you, Simon. Operator, are there any further questions on the chorus core platform?

We have no further questions at this stage, ma'am.

Thank you very much. Moving back to the online platform. A follow-up from Gustavo at Jefferies. Could you please elaborate on the medium-term plans around capital spending levels after 2025? Hanre, I think that's for you. And similarly, also from -- I saw a question from Mark Dtoy. Is there any scope to reduce capital expenditure to improve free cash flow generation. I’ll pause there.

Thanks for those questions. And apologies, Gustavo, for remitting to answer that previously. I think important to note that, again, in capital allocation, our first order capital assessment firstly, start with putting the right amount of capital back into the business to sustain the safety and the sustainability ultimately, of those assets. So currently, we're sitting around, as I've mentioned, around ZAR28 billion to ZAR30 billion per annum is the expectation of capital going forward in longer term. You would note that if you look at the previous year and the year before 2023 was actually our peak capital in terms of real -- in terms of real term capital expenditure. So we do expect capital expenditure then to moderate. We've seen peak capital from PSA and that will then see capital decline over the coming years. That's, of course, on a first order capital basis. On a second order capital basis, we're only paying around ZAR1 billion at the moment, and we will look at approving only projects that give us a return in excess of the weighted average cost of capital. So hopefully, that covers the capital. But I think on the second -- that covers I think.

Yes, any opportunities for free cash flow generation to reduce capital, I think we've covered that. Further follow-up or another question from JC Armstrong from [indiscernible]. Would you consider share buybacks in the current financial year given the large cash balance? And if so, what is your guidance on level and volume of shares? And then similarly, also another request for an update on the destoning project relating to CapEx cost and time line, perhaps that one for you, Simon. Hanre, if you could start, please?

Thanks, Jesse. So just coming back to the previous point I made that of course, firstly, the focus is on the base dividend. So in terms of the dividend policy, once we get to below $4 billion of net debt to pay the base dividend. Any excess cash then on a second order will compete with, as I said, organic, inorganic projects together then with assessment on the likes of share buybacks, special dividends and other metrics. So I certainly can't give any guidance on levels or volumes or how we would look at that -- those trade-offs. In terms of destining and CapEx, maybe let me just deal with that as well. It comes back to cost to capital allocation. We do expect to bring that project through to FID in the next six to 12 months. So I think to that extent, we will only give guidance on the exact CapEx and timing of that once it is approved. There are so though that we've made a lot of progress in optimizing the capital spend and derisking that project significantly. So we're confident that project will be assessed. Of course, can't prejudge the outcome of that capital allocation process, but we've got confidence that we've got a very robust project to assess.

Thanks, Simon, perhaps the update on the timing of destoning.

I mean we will take FID like I said before the end of the calendar year. And I mean, first -- and what you previously committed, is that before the end of FY 2027, we'll be fully online with destoning. So we still stick to that guidance.

Two questions coming from Gerard Engelbrecht, one on chemicals and the other on mining. So we'll start with the chemicals one. The outlook for the detergent raw materials in the U.S., if you derecognize the assessed tax losses, what does it mean? Or does it mean that you don't expect taxable profits on the next -- in the next three to five years in this segment? And I think the second question, Simon, on mining was you spoke about increased own mine coal volumes. Is this outside of the CapEx range of ZAR28 billion to ZAR34 billion also from [indiscernible]. Sorry for the mining question, it was relating to the increase in coal volumes and is this outside of the capital range that we've provided. I think it's first.

Yes, Let's address the mining. I mean, thanks [indiscernible] I mean you remember at mining, I mean, our own color is if you look at the usage of coal that we use in Secunda, I mean we have an existing purchase with one of our partners at around 4 million tonnes. Then previously, we produce the balance ourselves. But right now, our volume guidance is between 30% and 32%, and we're working hard to close then the remaining gap. So all the capital interventions that we need at mining will be within the guidance range of 27% to 32% for our CapEx. So this doesn't talk to additional CapEx required at mining. Then I mean on the feedstock, I mean, Antje, you can -- I mean, just adding on the feedstock, the chemical feedstock for detergent.

Yes. Thank you, Simon, and thank you, Hart, for the question. So while we expect the recovery of this effectance raw materials over the next couple of years, we don't see that being imminent, and we don't bank on any market recovery at the moment. What we are doing is to set up the business in more self-help. That means we are looking at improving the profitability through our new organizational setup new go-to-market strategy, new innovation pipeline reset and also efficiencies across the entire value chain of our business. So yes, I hope that answers your question with regard to the next couple of years in the segment.

Perhaps just on the tax losses, then the write-off. It's not the full tax losses, so there is the assessment then of the recoverability of that. I think Note 11 in the financial statements gives a little bit more detail on the tax loss assessment and deferred tax.

Thank you for that. Another question on mining from Jesse at Fairtree on the Full Potential Program. A question regarding the timing and if the process now complete, which mines would it still need to be rolled out to? And with [indiscernible] end of life, mine only one year out, is there an update on the extension of that contract with [indiscernible] or a different mine with similar volumes. Also another question in the same theme relating to the logistics. What is the limit to the amount of external coal purchase as possible if it needs to be delivered by road. Perhaps I'll just pause there on that set of mining questions.

Yes. I'll start, then I'll allow Herrmann to weigh in. I mean we're also pleased to announce that with [indiscernible], we've extended, I mean, the supply by six months, and we will continue to act together to explore even extending that further. And suffice to say that we already have, I mean, our own plans to make sure that we can supply the required coal to Secunda, even in the event that [indiscernible] contract is not extended. So we sufficiently covered there. On the full performance, I think, Hermann, you can weigh in, in terms of our full performance, project, the Fulco in terms of where we think we've done in some of the sections, but only a little bit of the section still need require us interventions.

Yes. So food performance has largely been completed specifically for our high production mines or larger collieries. We still have to do some final implementation of the full performance at our Impumelelo colliery, but that's the colliery that have very difficult mining conditions. And we are also just prioritizing safety to ensure that we mine the coal safe. And then finally, we are also still just finalizing the full potential program at the [indiscernible] colliery.

Thank you very much. Simon, Hermann. Further question from Ryan Ru on gas. So the question is, would the transition to LNG imply an end to MRG supply. And then one more question on mining post -- from Pallavi Ambekar from Coronation, post the destoning CapEx, what is the expected improvement in coal quality? And can you contextualize it for us versus the quality today.

Okay. And I'll handle both of them. The first one is on LNG. I mean, check where we are, I mean, today, if you -- I mean think about the gas supply, we would not -- I mean, there's no additional gas for our customers after 2027. I mean we might slightly extend to 2028 if those projects come online. What we'll do once that gas has declined, all MRG will be used internally. So there will be no MRG supply. So customers have to transition to LNG. And as we previously said, we're working with the customers to help and to make sure that they can balance in the country because you've seen what has previously stated that, I mean, up to 200 jobs are at stake. So it's something that all of us, and we believe Sasol can be part of the solution to make sure there is LNG. Then the next one is on. Yes, on mining Pallavi, our current coal quality today is at around 14%, 14.5%. The required coal quality is what -- Yes, the [indiscernible] quality is 14%, 14.5%, and the required [indiscernible] in terms of, I mean, quality in the coal is around 12%, and destoning is aiming to address it and send it back to 12%. And once we are at 12%, we'll then be able to run Secunda at full potential as long as we are below 12% on the [indiscernible].

Great. Thank you. Question from Andrew Snowden to you, Simon. Simon mentioned that you are looking at to explore new sustainable growth opportunities. Could you please elaborate on this? And what is meant by the statement?

I'll give you a high-level costs. I mean, my guidance is we'll be busy with the WACC. And I mean we will want to give you a detailed feedback at Capital Markets Day next year, around April, May. However, like I said in my presentation, we see various opportunities like in renewable energy, Sasol could play a bigger role, but we'll explore all of those. And I can assure you that we're going to be very disciplined because for us, it's not transition at all costs. If we see that there's no projects or possible pathways, we'll always maximize the outcome and return cash to the shareholders.

Great. Thank you, Simon. I think one final question we have online from [indiscernible] from PSG Wealth. Can you please give an update on the Competition Commission appeal? And perhaps we want to defer to Vuyo for this one. Vuyo, are you online? Could you please come in.

Thank you. The question is around whether we can -- would be raising a competition appeal.

Correct. That's right Vuyo. The status update on the competition appeal process.

Okay. I think the key point to emphasize on that is that we have now closed the appeal process in respect of the jurisdiction issue impacting on the tribunal. And so what we're focusing on is getting to prepare ourselves to respond to the allegations around excessive pricing that have been raised by the condition commission in the referral. We do, of course, factor into the preparations for that. The fact that the competition appeal court itself had already indicated that the very fact that [indiscernible] informs the price that gets charged is a factor to be considered in any defense in relation to the referral at the tribunal. And so we're preparing now to deal with the referral and await further directions on that.

Thank you very much. I think we have a few last questions streaming in. A few follow-ups from Sashank Lanka from Bank of America. From the impairments in the Chemical business in the U.S., it seems it's more likely more in the specialty segment and what has changed there in the last six months? Could some of these impairments be reversed? And I think second question from Sashank would you like to revise some of the 2030 ESG targets in the CMD next year? I'll defer that one to you, Simon.

Thanks, if perhaps just discuss the impairment then on the chemical business. I think since the half year review, Sashank, we certainly saw further deterioration in prices. At that point, we expected a reasonably sharp recovery. So it's not only the medium term, but then also the long-term pricing that we have adjusted lower. And with the low margins that we've already had in that business, of course, that has a significant impact on the DCF on the carrying value. The further impact has also been the weighted average cost of capital. So at the previous financial year was around 8%, that increased to around 9% and now 9.4%. All the detailed assumptions are in that note that I've referenced earlier. And to your point then, can it be reversed? Of course, yes, we are looking to enhance the profitability of that business. Those plans cannot be incorporated yet in an impairment assessment. You have to have implemented the plans and have that approved in your budget. So to the extent that management interventions are not factored in, yes, that, of course, will also see a flowback of value. But then, of course, also, such as the financing cost and the price outlook could also then lead to potential reversal of that impairment. On the 2030 target. I think I'm safe to say at the group level, we remain committed to the 2030 target. I mean, as you can see, during the presentation, I elaborated that we continue with renewable energy, energy efficiency, those projects are ongoing. However, what we're busy working on is to make sure that we can enhance and preserve value from our asset operation. And so we'll be tweaking the execution of the entire roadmap and we'll share more details with you at Capital Markets Day.

Thank you, Simon. I think the final question comes from Harold, more broadly on the business. In a world of lower chemical prices for longer, gas drying up, and production potentially lower at Secunda, do you think a ZAR3 billion to ZAR4 billion long-term debt target is sufficient or suitable?

Thanks, Harold. I think a very [indiscernible] question. Certainly, we look at net debt from an absolute level as well as a gearing ratio level. So to the extent that the 1.5 time net debt to EBITDA and the ZAR4 billion is the trigger for a dividend payment. We do see that as the upper end of a risk tolerance level. In terms of target level, we've always said previously that we do look to get lower gearing and especially given the longer-term outlook, those gearing targets will be lower. We'll give an update of the target gearing longer term at the Capital Markets Day as well. coming next year.

Thank you, Hanre. Simon. A final question from Jesse Armstrong from Fairtree. On the Synfuels product mix. There was a swing of 48% refined products at Synfuels from 47%. Is this a function of coal quality or was this something else intentional? And what is your expectation going forward of the -- I think the fuels to chemical ratio is the one in question, yes?

Our stable fuel to chemicals ratio is always, I mean, a 60-40 split. And that's usually set not by the coal quality, but set by the catalyst that we use and the catalyst is constant and fixed. So usually, there's no change there. When you start seeing the ratio changing as well we're experiencing logistic challenges, and we start sloping the chemicals back into the fuel and then we produce more fuel. So that's what we're dealing with. However, I mean, I must comment Transnet that we're seeing massive improvements in that. So as soon as we stop sloping, that ratio will be restored.

Great. Thank you. I think that wraps up the session for today. Thank you for your participation online and via Chorus Call. Thank you to Simon, Hanre and the executive management team for your participation. With that, we wish you a safe and wonderful day. Thank you.