Good morning and good afternoon, ladies and gentlemen. And welcome to the Sasol Interim Financial Results Conference Call. Today’s call will be hosted by David Constable, Chief Executive Officer; and Paul Victor, Acting Chief Financial Officer. Following the formal presentation by Sasol management, an interactive Q&A session will be available. A copy of today's slide presentation is available at www.sasol.com. We would like to draw your attention to the forward-looking statement on slide two in the pack. I would now like to hand the call over to David Constable. Please go ahead, sir.

Thank you, Operator. Good morning, good afternoon, good evening, everyone. Thank you for joining us on the conference call today. Joining me from Sasol here in Johannesburg are Paul Victor, our Acting CFO; Bernard Klingenberg, Group Executive of South African Energy; Riaan Rademan, our Group Executive for Mining and Business Enablement; and Ernst Oberholster, Group Executive for International Energy, Technology and New Business Development. Also dialing in from our North American head office in Houston is Steve Cornell, Executive Vice President for International Operations; and connecting from our Hamburg office in Germany, Fleetwood Grobler, Group Executive for Global Chemicals. Today, we announced another excellent groupwide performance to contextualise the half-year and before we run through the presentation you have in front of you, let me start by reflecting on the recent past. As a company, we have come a long way in the last two and a half years. Looking back, for us, at Sasol, FY12 was all about goal-setting and consolidation. During that time, we carefully assessed our areas of competitive advantage and where we could do better. We drove operational improvements and focused on safe, stable and reliable operations. We refined our strategic agenda and narrowed in on two broad regional strategies. First, our nurture and grow strategy, primarily here in Southern Africa, where we seek to enhance our strong position in the region, and secondly, our expand and deliver strategy, which is underpinned by our North American aspirations and specifically, our U.S. growth programme. At our results announcement in September last year, I told you that our 2013 financial year would be a watershed for Sasol. After all, in FY13, we consciously moved away from coal-to-liquids growth and stepped up our gas-to-liquids ambitions. At the same time, we accelerated our low-carbon power generation initiatives and drove safe…

Thanks David. Good morning and good afternoon ladies and gentlemen. I am delighted to present the 2014 financial interim overview to you today. The group has delivered another set of record results, well within the guided earnings range previously announced to the market. Before I move into more detail of the results, I would like to make a couple of introductory remarks. First, management’s continued focus on factors within our control has resulted in strong overall business performance with overall improved volumes ahead of internal production targets. We have also contained the increase in normalised cash fixed costs to within inflation, despite a very challenging South African cost environment. We continue to demonstrate our commitment to our progressive dividend policy, through a record 40% increase in our interim dividend. And finally, our strong balance sheet remains resilient on the back of strong cash flow generation, which continues to position Sasol quite well to fund our attractive growth projects, deliver on our progressive dividend policy as well as provide a sufficient buffer for volatility. Moving onto Slide 11. The macro-economic environment remains volatile and uncertain. The average rand/U.S. dollar exchange rate was 19% weaker compared to the comparable period, with a relatively flat average Brent crude oil price, improved chemical process and a strong increase in Henry Hub prices. The Sasol business remains sensitive to significant movement in oil price and rand/U.S. dollar exchange rate. And we remind you of our sensitivity to each of these variable which we issue with a health warning in uncertain markets. We estimate that a 10c change in the annual average rand/U.S. dollar exchange rate and a $1 change in the crude oil price will affect our profit from global operations by approximately 936 million rand and 702 million rand, respectively. Moving onto Slide 12.…

Thank you very much, Paul. I have just got a couple of slides to go through before we get to questions. Looking at slide 24, the focus here is on our key capital project milestones. We continue to progress the front-end engineering and design of our U.S. growth programme, which includes our world-scale ethane cracker complex and a GTL facility in Louisiana. It’s anticipated that we’ll reach the final investment decision for the cracker project within this calendar year, with FID for the U.S. GTL plant to follow 18 months to 24 months thereafter. Turning to Uzbekistan GTL, we are in an extended FEED phase on the project. The majority of the technical FEED activities have been completed. FID for this project is dependent upon securing project funding and signing up a new partner to take up 19% of our current stake in the venture. We anticipate reaching financial close during the second half of the 2014 calendar year. In Nigeria, the Escravos GTL project is in start-up. Beneficial operation for the first train is expected before the end of June. In South Africa, our 1.3 billion rand C3 stabilisation project in Secunda remains on track, and is expected to be in operation by the middle of this calendar year. In Louisiana, we have successfully commissioned our first-of-a-kind 100,000 ton per year ethylene tetramerisation unit for the production of co-monomers. We expect the plant to be fully operational by the end of this financial year. Looking at our drive to develop further low carbon power opportunities, we are completing the development of a 140 megawatt gas-fired power plant at Ressano Garcia, Mozambique, in partnership with the country’s state-owned utility company. Beneficial operation remains on track for the middle of this calendar year. Now before I close, I would like to…

(Operator Instructions) Our first question comes from Jarrett Geldenhuys from Investec. Please go ahead with your question.

Hi. Good afternoon, everyone. Just one question on operations and then one question more on just the balance sheet. The first one on the operations, I am just a little bit concerned about volume losses in Natref in the second half of the year as well as in mining -- external mining sales. If you can just comment on the percentage decline derivatives to 1H. And then the second, the strategy question, just really relates to, I suppose, your U.S. capital commitments. I mean, are you still very much comfortable with your CapEx guidance for both the ethane cracker and second of all for the GTL plant? And really, where this is coming from is effectively Shell just basically pulling out of GTL in the U.S., with their initial capital estimate up 50% to 60% being the main reason, so just a comment on that please. Thank you.

Thanks, Jarrett, for the questions. I think first on the volume losses in Natref that’s kind of a put and take. And with the shutdown last year, the percentages, I think, were up to 77% this first half. But Bernard, why don’t you take on Natref please?

Jarrett, this is Bernard. If you’re talking about the second half of the current financial year, we’ve moved the shutdown from…

The first half of this financial year, yes.

The first half of financial year, we -- shutdown has moved out, so that’s why the second half will look a little bit lower than the first half. Otherwise, as David said, the facilities are running quite well.

Mining. The question on mining was around, do you say volumes or -- Jarrett volumes…

Yes, volumes please, David.

Riaan?

Yes, hi, good afternoon, Jarrett. Yes, if we compare the forecasted second half to the first half, we had in the second quarter of financial year '14, we had labor issues which is now being solved, number one. And number two, we had some issues with just developments, specifically with some tough areas geologically, and we believe that’s been soft. And thirdly now, the Tweedraai mine expansion at Syferfontein Colliery, that’s the expansion into the high wall, that will come online we hope in the next two to three weeks. We’re just waiting for some permitting issues to be solved. So we are quite comfortable that the volumes will pick up and we don’t see any supply issues to Synfuels.

Thank you.

Thanks, Riaan. And on to capital commitments and specifically in North America, generally the cracker, as you can see from our results that the existing cracker in Louisiana is certainly printing money for us with the low ethane feedstock costs. And we are looking forward to getting to an FID decision on the new cracker and derivative units here in calendar year '14. So, that’s full steam ahead on the cracker. We want to expand that production capacity as quickly as possible and are looking forward to moving forward in the project. The GTL also from our perspective and our technology, numbers still look very robust. Doing lots of homework, we’ve kicked off the FEED in Italy with Technip, looking at different options for over-the-fencing certain capital to our suppliers, industrial gases, possibly co-generation. So still lots of work to be done on the front-end before we can nail down the capital estimate on the GTL, but so far so good and we are very comfortable. The decision on Shell’s part, obviously, they are pulling back their CapEx in a number of regions in the world, the Arctic, Australia, in the U.S. specifically Louisiana and elsewhere as they made a challenge with other things going on, on their side. So if you just compare two technologies, we are very comfortable that, for example, our reactor intensity in our ability to scale up our reactors in comparison to the other technology we’re competing against is superior and we’re -- like I said, still very, very bullish on the GTL plant in the U.S. Next -- thanks Jarrett. Next question.

Thanks. Your next question comes from Gerhard Engelbrecht from Macquarie. Please go ahead with your question.

Good afternoon and thank you. David, now just a couple of questions around Phoenix. Now that you are well into the project, can you maybe give us some guidance as to what the optimum headcount levels in the organizations -- in the organization is? And how much of the 3 billion rand saving costs would you say are labor costs and what are the other costs that you've been taking out of the business? And I guess from Paul's chart it looks like it's about 4 billion, 4.2 billion rand worth of costs for the project. How much of that would be deductible from tax? Maybe if you can give us some guidance on that. And then just, maybe, I was hoping that the permits for the Lake Charles facilities would come through by the end of last year. It doesn't seem to have happened yet. Can you give us an update on where you stand with the permits?

Okay. Couple of questions, actually four questions. So on headcount, what I can say, we are into the project, Gerhard, primarily in our top management structures. We are working hard at the GC -- GC1, GC2 and GC level. So all the way down to three levels below the GC, we will have in place by July 1st. So that we can start up new operating model and news reporting -- financial reporting requirement. So as far as the -- what the headcount will look like for the entire program, too early to say but again as I said earlier, we are very comfortable that there is a quite a bit of upside to its annual 3 billion rand savings that we are targeting in FY16. And again, I’ll just have to say to more to come with respect to work force transition. But we are working at properly, we have through our group partner form and then detailed discussions with all of our stakeholders including the union who have all signed up on our workforce transition policy and how we will be moving forward, so we don’t see any issue there and that’s very good news for us to go forward, obviously, respectful and fair fashion as we move through this process. The split between 3 billion, let’s say, more than 3 billion savings and how much is labour and how much is right across other parts of the line item. We have got 10 different streams that drive these savings from new operating model which drives the different management structure which of course drives headcount. But you have also got inbound supply chain cost savings. You have got fit-for-purpose functions that will be much more cost effective. So you have got operational productivity on the field, big savings coming from improving our productivity in our operation. So I will just quickly check with Riaan. But I don’t think we definitely reached or I haven’t seen those numbers myself put it that way. So, again, more to come on that front as well. This is one for you Paul, the 1.2 billion approximately much it will get to that amount. But over the billion rand and costs for FY14 for Phoenix, looks like Gerhard has done some measurements of our graph there. But I discuss the tax opportunities for deduction of this cost.

Yeah. We haven’t discuss that, currently, what we also have signaled is that, the makeup that cost basically is the implementation of changes to our ERP system, restructuring costs and also the implementation assistance that we obtained from our managing consultant. So, obviously, all three layers we do treat differently from the tax assistance. We have obviously believe that overtime we will be able to deduct the tax. However, the treatment are now quickly you can deduct it, meaning what income by nature whether you can deduct it one year or over a period of years, we still need to finally firm up, but we have to believe that most of the cost will be overtime deductible.

Thanks Paul. And the final question on permits in the U.S. there is two key permits there the air and water permit with the LDEQ, Louisiana Department of Environmental Quality and then the Wetlands permit that's sitting with the core of engineers, all overseen by the Federal EPA or Region 6 EPA out of Dallas. Right now, there is no issues that we see Gerhard, but it is taking longer. There is a lot of paperwork involved and I think the latest for both of them permits to be approved is in the May to June timeframe. Steve Cornell; Steve, are you on the line? I am not sure if you have got anything additional to add to that, but I think that's where we are at right now.

David you said, it will -- the process is progressing, as we hoped. It’s a collaborative process with the relevant agencies and all of the signals are positive and we do expect that by hopefully June or earlier, we will have all permits required.

Okay. Thanks.

Thank you very much.

Thanks Gerhard for the question. So we will move on.

Thank you, sir. Our next question comes from Nishal Ramloutan from UBS. Please go ahead with your question.

Yes. Good afternoon, everyone. Just on your cost reduction program, that 3 billion rand target, can you just indicate is that a real reduction in cash costs or is it a saving from the business as usual trend? And could you just clarify, I think, as Gerhard said, it sort of works out to 4 billion rand, but can you just indicate exactly what’s the amount in FY15 and FY16 in terms of cost to implement this program? And just the last thing, in terms of the Canadian gas field, you’ve had a chance now to discuss new partners there. I mean, what’s their aim with the gas fields in terms of ramp-up and also the end demand for the gas?

Great. Thanks, Nishal. I think I will give the first two to Paul. The first one is the Phoenix 3 billion savings real versus savings from business as usual. Paul?

Yes, Nishal, the 3 billion is a real reduction. So obviously as you normalize it into FY16 or FY15 values, it will be different, so you can take it as a real reduction. The cost to implement the program, we are currently not disclosing it. And for the first year, we’re obviously busy with keeping focuses on management and workforce transition. We are focusing on ERP system implementation and for that we’ve really got our minds around the 1.2 billion. There is obviously a lot more work that you need to do first day one implementation of 1st of July and once we confirm and ramp up the cost for FY15, we will then communicate that when the appropriate time for that is.

Thanks.

And then finally on the Canadian gas new partner, very pleased to have Progress Energy on Board whose current organization Petronas is a good partners of ours in various plays around the world. So it’s good to have a strong partner on board with us and they also are the -- if you will, the big dog in Western Canada shale gas. They have the most acreage and the most -- in fact, I think they have got 28 drill rigs north of us still operating right now. And they are operating a much more -- I think up to 25% lower drilling in completion cost which we want to take advantage of as well to learn from that. So we are exciting about them coming on board. Their play north of us is for the LNG facility that Petronas is working on over on the coast of British Columbia. So that gas will go to that direction, but this play into our field gives them additional optionality and we will be working on -- as they get on board, I think the deal finalizes on Wednesday when we can actually start talking to them seriously about what the plans look like going forward, but again very positive partner for us. And I am sure we will be aligned on the field development as we proceed and with the low gas prices that means keeping the rig count at a reasonably -- at fairly low level. Ernst, anything to add?

Nothing to add.

Thanks, Nishal. Question?

Thank you, sir. Our next question comes from Alex Comer from JPMorgan. Please go ahead, sir.

Hi, guys. My first question is -- it looks like you've kept your CapEx forecasts the same for this year and next year. And yet, if I add up the coal tar and the VOC and the tank and the wax, amongst other things, about another 2.5 billion on there, and obviously the currency has weakened. So how confident are you in your CapEx forecasts in the face of that? And then maybe, also looking at the ethylene cracker, I think today as soon as you come out with an announcement on project. The world and his brother wants to build crackers on the U.S. Gulf Coast. The wage rates are already going up. There's a fair chance that we are going to see some CapEx inflation. Could you maybe just compare or contrast the issues locally and in the Gulf Coast, and how you intend to bring down the CapEx inflation in both areas? That's my first question. Then also, if I look at the U.S. profits, about 270 million, so if I sort of multiply that up on the size of your cracker for the new project, I get to around about 2 billion. Is that your expectation roughly for run rate on the project? Yes, those are my two questions. Thanks.

Okay, great. Thanks, Alex. We will start with the CapEx and our confidence in those numbers when taking into consideration coal tar and VOC, Paul is going to take that. Thanks, Paul.

Thanks, Alex. Yes. So basically for FY15, we do quite believe that we are still comfortable with 50 billion rand. And also, you have to bear in mind that the capital expenditure and cash flow associated with those projects will be still doubtful in FY15 and most will actually spend post FY15. Also in FY15, there is a couple of projects that fall off your list and some that comes on your list. So in evaluating our preferred portfolio, we do believe that the 50 billion rand still reflect the views of the preferred portfolio despite these increases in capital cost that we currently see.

Thanks, Paul. On containment of CapEx inflation, maybe myself and Steve will take the Gulf Coast and I will look to Ernst to talk locally. Alex, in the most recent discussions with our colleagues in the U.S. and also with our contractors, it seems like the big heating up in the market, hyper volatility in the marketplace on the Gulf Coast has not taken place, as we have originally thought it would, or as the industry was projecting for manpower loading and the billions of dollars that are going to be FID there in LNG terminals and crackers and our GTL in the future. So we don’t see that pressure materializing on wage rate at this moment. Again, not knock on wood that the permits come in here in a timely fashion and we get into the field and get the plant build by late 2017, then we feel we will be ahead of that curve. And like I said they all seem to be pushing out in time which is helpful. So Steve, anything to add inflation, cost inflation, CapEx cost inflation on the Gulf?

Yeah, let me add, I think you’re right that what we’re saying is that the big petrochemical major contracts are based enough that we’re not seeing the rapid increase in the wage rates. The other thing, I think, to our favour on that is that most of the big refining expansions have wound down and completed. So it looks like the supply-demand is still in okay shape and we’re not seeing anything unusual in terms of the wage areas. And just to add one other thing we’re doing in out contract strategy is really focusing on cost certainty. So not getting into too much detail, but we absolutely are focused on making sure we have cost certainty going into and coming out of the project.

Thank you, Steve. Ernst, a little closer to home, any comments on interest and inflation, and we are coming to wage season as well. But cost inflation and lower productivity remains the issue, but we are focusing on our capital excellence program, so our planning and our engineering and the work that we do upfront doing all the proper delivery later, that is the key focus from the outside. But cost inflation and productivity remain the issues which we have to follow closely and focus on in South Africa.

I think also in our strategic board discussions, Alex, we come across something that’s done elsewhere in the world. Bernard can probably help me out here on some of these more challenging projects. We’re looking to start to modularize our facilities that you can -- some of our CapEx work at Secunda and put that work into workshops where the productivity is much better than out in the field. And Bernard, any -- just the pricing we’re thinking about that on and I think we’re looking at it very positively.

Ernst, it is particularly in the cost optimization space where you couldn't stay congested in such accomplished Brownfield projects, where we've looked to modularization and moving construction offsite as an opportunity. And there's actually real benefit for us in doing that.

Thanks Bernard. Last question, multi question, let’s go with the $2 billion, the profit and the run rate.

Alex, basically, we don’t disclose our operating profit that we are going to generate from these assets. However what we've indicated previously is that we still believe that these assets returns sufficient returns to justify the company’s hurdle rate requirements on invested capital of 30% above the weighted average cost of capital. We also indicated the range of production output that we can expect from this plant to deliver. So basically all of those who will culminate and ultimately we also have a positive impact in the cash flow generation going forward from our U.S. businesses that we will also apply in the funding of our GTL projects. So again, it's a project that makes good sense at the stage.

Thanks Paul. That was the cracker we were talking about. I didn’t clarify that. Good, thanks Alex. We can take another question. It looks like from Tassin.

Your next question comes from Tassin Meyer, Citigroup. Please go ahead now.

Good afternoon, everyone. Just a couple of questions. I guess the first one from me is if we look at the performance of Secunda, which was clearly exceptional in H1. Can you maybe guide us through the thinking behind your $7.4 million ton level of production you guide to? Is this going to be raised? Are we still comfortable? And then, linked to that is if we look at H2 and going forward, what kind of cost performance do we expect, again given how strong the performance was in H1? The second question I have is just relating to the ethane cracker. We've heard you speak about the Canadian asset as being uneconomical, or a feedstock hedge for future feedstock requirements in the U.S. Can you explain for me where we are in terms of feedstock arrangements for things like the ethane cracker in particular? How far along are we? How is Sasol going to look to manage those feedstock requirements going forward? And then, finally, if you could just give some more clarity perhaps on the profitability of the South African polymers business into the second half, as you see it at present.

Hey thanks, Tassin. Let’s start with, Bernard, Secunda, great first -- since it was great first half taking into consideration that largest shutdown ever and great performance on volumes guidance, I think we still where we were at start of the year.

Yeah. The guidance, we still haven't committed to (indiscernible). We have some work that we want to use toward the end of the period as on the second GHHER, if the current planning -- according to our current plans, that’s why we stood in the 7.3 to 7.5 range for that. And remember if we take out the impact of the total shutdown on an annual basis this really talks to a number that would normalize in 7.4 or 7.5 range, but we comfortable with that. I mean the second question was about…

Cost performance in the second half.

Paul, go ahead.

Okay. So basically what we also indicated in my voice over is that, we do you expect to spend more money during the second half of the financial year to ensure further plant stability. A lot of these funds will be spent in the Synfuels business. And also, the PPA with Eskom falls away in the second half of this financial year, which obviously on the year-by-year basis increase the cost. So, in essence, what we signal that the cost for the second half of the financial year for Synfuel will be moderately higher compared to PPI.

Thanks, Paul. Next question is on ethane cracker feedstock and the contracts that we’re looking at. It’s a great time you are buying ethane obviously in the U.S. and the way we look at that as we take, we are going to be taking about 80% on term contracts, Tassin, one to three years, three to five years and then the other 20% will be spot. We’ve identified all of the feedstock required. And I think and in fact, actually we’ve got a second option that may even bring us additional competition into our contracts. So that’s going well. I don’t -- I’m not sure if they’re all signed up yet. I can either ask Ernst or Steve to comment on how things are going on the contracts themselves.

Yeah. As far as -- Steve go ahead.

Steve go ahead.

Yeah. So the negotiations are very close to complete. As you said, we have some different options that we were pursuing and they are getting very near the finalization on that. Ernst, you may want to add something to that.

Nothing to add.

No. Good. Great. Okay. Last one, profitability of SA Polymers. It's a good news story that since last time we spoke to all of you, things are going extremely well. The ethylene purification unit has been just a great addition to the kit. So, Paul, any other words on those.

Absolutely. It's contributing to growth significantly. We also see the benefits of the business turnaround programme of management that's been implemented over the past 12 months. But, again, we expect a very good certainly six months from polymers.

Yeah. Thanks, Paul. I think that’s it for today. I want to thank everyone for calling in and thank you for your interest in Sasol and until we speak to you again, please stay safe. Thank you.

Thanks. Ladies and gentlemen that concludes today’s Sasol Interim Financial Results Conference Call. Thank you for participation. You may now disconnect.