Sasol Limited (SSL) Q4 2020 Earnings Report, Transcript and Summary

A very warm welcome to all joining this call today. The full set of results was published earlier this morning on our website; and for the purposes of this conference call, we will highlight the key salient features only. Our full year results are characterized by a story of two halves. Despite the challenges we faced in the first half of the financial year, Sasol delivered a sound operational performance. The second half saw the COVID-19 pandemic cause a seismic shift in our operating context, underscored by significant volatility and uncertainty. This financial year was also our peak gearing period as we approached the near completion of the LCCP. Geopolitical dynamics in the latter half of the year saw the Brent crude oil price collapse, while the onset of the pandemic placed even greater pressure on our balance sheet. These external shocks impacted Sasol dramatically, requiring us to act swiftly to stabilize the business in the short term through decisive actions. One of the early decisive steps we took was to conserve cash in the order of US$1 billion. We exceeded this target in less than four months; regrettably we experienced six tragic fatalities this past year. Investigations into every fatality of my priority with the aim to fastrack these investigations to quickly establish the root causes and implement corrective measures. Core to our safety focus is the world class process systems and tools we use to embed these as second nature in the hearts and minds of our people. The focus on safety became heightened with the state of the Coronavirus globally, and we promptly put measures in place to curtail its spread within our business. This includes revised shifts and work schedules to support social distancing, anti-crowding at all our operations, increased screening, disinfection, and contact tracing and enabling people to work from home Furthermore, we converted hostels into quarantine and self-isolation facilities for recovering employees and contractors in Secunda. Also, we supported communities in Asai [Ph] and Mozambique with a donation of sanitizers and other aid. Turning now to our operational performance. Despite the unprecedented challenges experienced in the second half of the year, mining improved production by 2%. Our Secunda Synfuels Operations experienced an 8% decline in production, while Natref decreased by 34% due to the drop in fuels demand in South Africa. At our North American operations, our production volumes were nearly a third higher as the cracker achieved nameplate capacity and is currently producing at maximum run rates. At our Eurasian Operations, production was marginally down by 2%, but was partially offset by the increase in surfactant demand. Looking at the LCCP, I'm pleased to report construction is now complete, while the restoration work to the LDPE unit is progressing well and is expected to be online in October this year. Capital expenditure on the LCCP is still within guidance, and despite the impact of lower product prices, a positive EBITDA was realised in the second half of the year compared to a loss in the first half. The fall out in the oil markets led to a 37% drop in Brent crude oil price in the second half of the year, partially offset by the rand weakening against the dollar by 13%. Our cash fixed costs remained flat, which is remarkable in a year where costs were still ramping up in support of new assets. We also improved working capital and reduced our capital spend through focused management actions. We did, however, book 112 billion rand in impairments reflecting the current depressed macro environment with a softer outlook on price recovery. Our expanded asset divestment program has yielded good interest in relation to a number of our assets despite the macro environment uncertainty. We progressed transactions to realize approximately US$600 million, which includes the sale of the air separation units located in Secunda to Air Liquide, a 51% share in the explosives business to Enaex, as well as the sale of our interest in the Escravos GTL plant in Nigeria to Chevron. In terms of the partnering discussions at our U.S. Base Chemicals assets, the process is well advanced, so I hope that we can provide a more detailed update very soon. I believe we are on track to deliver disposals consistent with our March 2020 objective of beyond $2 billion. We also aim to improve the bottom-end of this target significantly by the end of financial year 2021. For financial year 2021, we will continue to execute against our response plan objectives to keep liquidity strong and bring down our leverage. The final major step on our de-leveraging pathway is the rights issue to be executed in the second half of the financial year. We want to implement this when the amount required is well defined and we can do so based on a clearer and more robust financial position. In addition to this, it is crucial that we reset the organisation to be sustainably profitable in a low oil price environment, therefore our Sasol 2.0 initiative – this initiative will enable our longer-term ambitions of the future Sasol. We plan to share more detail of the of this Sasol 2.0 target etcetera at our investor update by November this year. So what does -- what does the future Sasol look like? Future Sasol is streamlined, focused, and positioned to succeed. Sasol will be an attractive investment by delivering good returns, which are underpinned by low cost, higher margins, strong capital discipline, and business sustainability. This will allow Sasol to deliver better for all its stakeholders, including taking an important role that we have to play in South Africa's energy transition to a lower carbon economy. Our business portfolios are distinct and customer centric, responsible for their own profit and loss and support -- supported by a leaner center, a simple and more agile organization where people are energized and enabled to realize their full potential. Our strong technical engineering and marketing capabilities will enable Sasol to deliver better solution to our customers. Lastly, delivering on people, planet, and profit outcomes will see us enhance our employee value proposition, foster stronger relationships with stakeholders and return value to shareholders. As a first step towards repositioning the business, we reviewed and updated our strategy to bring focus to the two distinct and core businesses; Chemicals and Energy, where we currently have strong market positions and capabilities. For chemicals, we will transition towards specialty chemicals over time, where our differentiated capabilities and strong market positions will position us to grow. The energy portfolio will consist of the entire Southern African value chain. The key focus will be to improve cash generation to cost efficiencies, high margins, and advancing our greenhouse gas emission reduction plan as well as air quality goals. We are proud to provide a glimpse of our 2030 emission reduction roadmap for our South African energy value chain. This roadmap shows the path to achieve our committed minimum 10% reduction in greenhouse gas emissions by 2030 of our 2017 baseline, and it also sets us up for greater reductions post 2013. This further support the country's energy transition. The successful delivery of future Sasol will be a challenging journey, and we have highlighted a few key deliverables required to achieve this in our presentation. The past year has been very challenging for Sasol, but we can reflect with some satisfaction on what has been achieved. For LCCP, we have delivered against our revised targets of scheduled and cost set in 2019. Second, we delivered on the self-help measures announced in March 2020, and thirdly, through future Sasol, we are resetting for Sasol to be a profitable, sustainable and resilient business in a low oil price environment. I believe this is a credible record of the delivery through a very challenging period. As we move to the next phase of delivery, we remain focused on our actions to stabilize the business and create a clear pathway to a deleveraged balance sheet. And on that note, I'm going to hand over to Paul. Paul?

Thank you, Fleetwood. Good afternoon ladies and Gentlemen. Today, we outlined a set of results that were delivered during a volatile and challenging economic environment. The oil price collapse and COVID-19 crisis came at a time when our balance sheet was already at peak getting -- placing a significant strain on our liquidity position. While oil prices have since recovered to about US$40 dollars to the barrel, the pricing outlook for energy and chemicals indicate a lower for longer environment going forward and this together with all the fee value adjustments that we had to book in a record resulted in impairments totalling R112 billion. Since March of 2020, we also took immediate steps to implement a comprehensive response plan to stabilise the business in the short term, targeting to raise cash of up to US$6 billion by the end of financial year 2021 to repay our debt, which I’m sure we’ll talk about in a couple of minutes. I’m also pleased to report that we exceeded this 2020 response plan target for self-help measures conserving cash well in excess of US$1 billion and the ultimate target achievement was roundabout 25% higher than the US$1 billion, also intensified our focus on cost containment and successfully managed to keep our cash costs fixed costs flat in nominal terms for the year at R58 billion, and in real terms a reduction was roundabout 5% on a year-on-year basis. This is despite a 10% first half increase, so effectively we've reduced that in six months’ time and also nullified the inflation impact in the last six months. Also successfully engaged our lenders to [indiscernible] our covenant at year end, as well as lifting the December 2020 covenant from 3 times to 4 times net debt to EBITDA to support our balance sheet to some flexibility as we navigate towards the leverage in our balance sheet. Very important to note that our asset disposal program has delivered at this point in time, more than US$1 billion of assets owned since its inception in November 2017. So this also named the $1 billion [Indiscernible] that we announced recently into account. Let me then provide a quick recap of the salient items of this set of results. As we did mention, our adjusted EBITDA decreased by 27%, and this is really, really largely as a result of a 40% decrease in oil and product process. We now normally look at oil process or barrel [Ph] prices that indicates a close to 3% decline, but we can't forget that in all product spectrums of chemicals as well as our refining margins and product margins, we saw a significant decrease, and with this, we also saw some demand destruction as a result of COVID, and as we communicated to you before, an LCCP sort of losses, which we mostly incurred during the first half of the financial year. We also delivered a stellar cost and robust cash performance and we reported a 14% increase in sales volumes mostly in the Chemicals business, due to the ramp up of the LCCP and that was in accordance with the guidance that we provided. As such, the decrease in cash generated by operating activities was despite these headwinds limited to 18% as a result of decisive cash cost, working capital and capital management, as we earlier indicated as from the 17th of March to you, in terms of those measures that we are willing to take, and we did achieve on all of those. Earnings were also negatively impacted by increased LCCP depreciation and interest charges now charged to the income statement as a result of the LCCP complex being operational, so most of the interest now flows to the income statement. With all the LCCP units mostly on line, we do expect a much better match between revenue cost and cash flow for financial year 2021 and as of the end of the middle to end of the second six months, we have started to see the cash inflection of positive EBITDAs flowing from the LCCP. Core headline earnings per share was $14.79 per share, which was for these reasons provided saw 61% down on the previous year. Next, our focus on the balance sheet. We took these decisive actions as I've mentioned and we maintain a strong focus on cash during this reporting period, with a strong emphasis on free cash flow and a free cash flow excluding growth capital, and realized a level of R8.5 billion for the second half, completed R2.6 billion in this first half and again show you kind of the level of how we impacted our cash flows positively and proactively in the second half. We've also been managed to maintain our cash inflection point that we reached in January 2020, which we spoke about and actually in our analysts book you will find a very useful analysis of the cash inflection point at the back end, I think it's on page 42, where you specifically can see that virtually in the second, six months of the year, we maintain to say cash positive, and most of the cash negative outflows related to the first six months of the year. We're also pleased with the improvements that we made to stabilize and improve our liquidity position throughout the various self-help measures. We currently have a liquidity buffer of $2.5 billion to allow us to extend further macroeconomic volatility. I also want to refer you to slide two note 17 in the annual financial statements, because the $2.4 billion is a combination of $2 billion of pure cash and $500 million in terms of committed facilities available at our disposal. Hedging program will remain in place, issued [ph] the balance sheet against any further market exposure and we’ll continue to hedge the book on a continuous basis. And we can also provide you some updates on that as well. And we do remain committed to manage the balance sheet to lower gearing levels especially net of EBITDA. We are making very good progress on the asset disposal program, and we do remain committed to selling these assets at the base value. Given these efforts, we still hold the view that the rights issued upto $2 billion is needed to receive the long term capital structure of the company. Now, again, we have received many questions and again, we'll talk about that quite a bit. In terms of the rights issue, but the rights issue has now been scheduled for the second half of the year. We did say in the past that it will be the last results that you will consider, but if I take into account the self-help measures as well as the quantum of asset disposals, we do believe that they are a place for rights issues in a $45 long term world to assist us to reset the capital base to sustainably manage the company going forward. I think the board will really consider before we indicate the final size of the rights issue, which really need to be fit for purpose. And we’re very sensitive towards the quantum of this, that at this point it's on -- we've got a good sense of the self-help measures. The macroeconomics are improving and are much higher today as what our forecast indicates, but we've heard it is volatile, COVID-19 is not over yet, demand destruction is not over again. So we'll keep on closely monitoring the macro economic development in our results. And it will also give us a sense of not only how to view these assets, but the whole suite of assets that we operate using towards disposals planned out towards the end of the year, before we have to make a final decision. This is rather in our view giving us a position of strength to really kind of position the rights issue according to the right size. After we've taken all of these factors into account, only then the board will make that decision. I acknowledge and I think Fleetwood as well, that is my cause some overhang for us for a couple of months. But we do believe that this is the most prudent option. We have considered it in many different ways. And we would rather want to go in this kind of step-by-step approach before we make a final decision on the rights issue. And of course, the smaller debater, but ultimately all these data points need to inform the final decision point. Looking beyond in then is the shorter measures, we've also agreed a framework for future Sasol, which features a debt covenant, and this will really position us in addition to all these measures that we spoke about, to really have a sustainable business with a strong investment base in a low oil price environment. But more details will be shared at our planned investor day, later during this year. And we do will provide you with all the necessary information on that day, so you can get a sense of how value will be created in Sasol 2.0 and future Sasol when we speak to you. Let me just lastly focus on the outlook for financial 2021. The impact of the COVID-19 pandemic, as I've mentioned just now and the macroeconomic swings are expected to continue, and they may still weigh in this forecast that we provide to you now. So ultimately, please state the forecast with the help of warning, we do believe that we've been reasonably conservative in our forecast, but I think it's always important that one always takes into account the volatile times that we operate in. Mining is expected to ramp up to its targeted production levels. It was really a focus on continued safety and operations efficiency. We have been pleased with what we've seen thus far, but more to go. The South African liquid fuels sales volumes are all expected to range between 54 and 55 million barrels and that Secunda Synfuels production is expected to be between 7.7 and 7.8 million tonnes and energy can make the deduction that normally will be used as a swing producer in in reaching these average volumes. ORYX average utilisation rate is between 75% and 80% as train 2 still resumes operations in the second quarter of financial year 2021. Good results from train 1 of the shutout, but train 2 still need to start up. Performance Chemicals' sales volumes are also expected to increase by 3% to 5% and excluding the LCCP, the volumes are expected to remain flat for our global assets. While Chemical sales volumes are expected to increase by 25% as well and excluding the LCCP we also expect that our foundation business will be able to add between 1% and 2% of extra volumes. We also are targeting the balance sheet debt by down of up to $6 billion by the end of financial year 2021. And that is taking the self-help measures macroeconomic developments, asset disposals and fit for purpose right issue into account. Through our comprehensive response plan, we are focused to manage our net debt to EBITDA to be low covenant levels and our covenant level for December of 4 times can be achieved through these asset disposals and self-help measures alone, I think is also one of the questions that can arise. But again, we can talk about that a little bit more. In conclusion, we continue to face significant challenges as Fleetwood mentioned as a business, and with our focus on the key actions required at this time we are really confident that we can steer the ship through very difficult times going forward. We had to make the tough decisions. We made those, and we are very much on a beta footing compared to two months ago. And on that note, I'll hand back to the team, who will open the conference call now for your questions and answer. Thank you very much.

Thank you Paul and Fleetwood. We have a number of questions that have come through on the webcast facility. So the first set of questions I’ll be able to relate specifically to the rights issue and [Indiscernible] around the rationale for the rights issue as well as the signing of [Indiscernible]. I’ll just run through a few of the specific questions we’ve received. The first one is from Harsha Pappu of HSBC. And the question is the subject on the rights issue has gone from last result to a voting rights issue in the second half of FY21. Could you please detail what has changed, and what management feels that the last result is now the base case? The second question again, the rationale for the rights issue is from Herbert Kharivhe of Investec. And the is, do you still need a rights issue if you're expecting to receive R79 billion from assets held for sale. It will tell you if it’s around US$6.8 million, and with as far as the working capital and asset disposals. So, is a rights issue more about accelerating the imaging process to restructure the company to a point they are delivering process to restructure the company to Sasol 2.0, also around the rational on Chris Nicholson of RMB. And the question is, are we doing the right issue regardless of the results of the process. So the amount of uncertainty outcomes and the accessible do a rights issue. That's just the rational and the difference is computed on the size and the timing is a question here on me. And, again, how would it be determined? Otherwise what sort of damage on the property post the rights issue and lastly from Tom Wrigglesworth of Citibank. When will Sasol provide an update on the potential [Indiscernible] I’ll leave it there for all the questions related to the rights issue.

Right. Let me deal with the rights issue. I’ll try to kind of provide some context in the way that we are thinking about the rights issue. So to Harsha’s point, Harsha, we did highlight on the 17th of March, kind of the order in which we think about the rights issue. At this point in time, we still feel very comfortable with the self-help measures. I think the big decider here will be to say how big the asset disposals range can be. We did provide a range of between $2 billion and $4 billion. And it also depend exactly how the U.S. play out. The U.S. will, of course, be sizable in this decision. So based on our assessment of the right issue, sorry our system of the self-help measures, the sizing and anticipation of what we can kind of deliver in terms of the asset sales, it didn't form, ultimately, most part of our thinking in terms of whether we need a rights issue or not as a last resort. But also quite importantly, we need to look at the date labels in terms of Sasol 2.0, to say in a $45 world and effectively, how will kind of what, what date tables can we actually maintain, manage? How will the value be delivered? When can we return to a dividend paying scenario? And we've also taken that into account. So the combination of both which they also kind of touches a little bit on Chris's question is a sense of the right issue must be able and position us to sustainably add value going forward to weather the storm, and to leave us with a date label and a set of assets that can ultimately draw value for shareholders over the medium to long term. So that I will say is probably the weighing in factor was 2.0 in a $45 goal, to really shape that balance sheet that's needed to ultimately operate a sustainable future. Again, I make the point to say that this can however very fastly change, when macroeconomics turn out to be better than what is expected. And we have seen our assets being super sensitive to higher oil prices and especially rent the barrel prices. Hence the point is to say, give us the six months to see how the macroeconomics plan out. Today, the macro sits at around R800 a barrel. We’ve planned more towards the mid-to-low R600 a barrel. So it's quite significantly different. And it can provide much more cash in a very much, much shorter period of time that will impact the shaping of the rights issue. So ultimately, we do at this point in time, given all our realistic assumptions, at least the world all of a sudden change to $60 long term, which we don't think -- at this point in time. So given those assumptions, we do believe that the rights issue is needed. And ultimately the size as I say will depend on that. Herbie, I think your question is very much again, when you make your, your kind of your accounts, and you do assume a certain outcome on asset disposals, I cannot comment on that assumption. I think we have to take our assumptions into account and what we see, which might differ from your values. And I think if you adjust your values, then ultimately, you may come to the same conclusion as, as we. Last in terms of -- any scenario that the rights issue can be avoided Chris. And ultimately time will. Again, what they say is the right issue up to $2 billion. And we are sensitive to the size they have. And again, we have to look at macroeconomics; we have to look at the other assets coming in for disposal, and whether we can get the real value for that. But it's a very strong process that ultimately will define what that ultimate value may or may not be. So we are very sensitive to this point. We are shareholders ourselves, and we will ultimately will only issue that rights issue to the size, we didn't make sense in our future capital structure. Fleetwood, I don’t know whether there’s anything you would like to add to this as well.

No Paul, I think you summarized it very well. And so I think we, we are going to the responsible way to exhaust all options we as management have before we tapped into shareholders. But I do think we are following a trajectory that is well thought through, and that will be calibrated towards the end of the year.

Yes. And there was one last, but if I can just add that -- maybe ask what level of gearing are we targeting with this right issue? I think that's a fundamental equation. So ultimately, our objective is firstly to get to the below three times covenant, because that is our immediate priority as at the 30th of June of financial 2021. And the rights issue and the shaping of the rights issue will focus on that, but also to kind of get us reasonably below that level. So for us to pay dividends, I think we want kind of the covenants more closer to two times and we are some long way away from that. So ultimately, we do want to kind of go for extended periods of time below that two time covenant over the medium to long term. And the rights issue will also inform that thinking to say, how long will it take us? How can we get there and what is the pathway of the rights issue and thinking as specifically they. And I think, Harsha also coming back to your point earlier, what has changed, is really kind of that thinking of 2.0 and that gearing label of below two times that will also kind of where the rights issue also played into that. We really have one option, and one time to really position the balance sheet now well, in order to have a sustainable balance sheet, and also a company that can add value going forward.

I'm going to move onto the next set of questions. And these specifically deal with the balance sheet, both covenant and liquidity. On the liquidity side, first question is from Gerhard Engelbrecht. And the question is your South African banking facilities have been lowered from 12.3 billion at the end of the first half, currently 9 billion. Why is that? The next question is from [Indiscernible] of Bank of America. And the question is, how do you break down the $2.5 [ph] billion in liquidity? I see 2 billion in cash, but I’d like a clarification on the remainder, also here, any undrawn lines at this stage and if so, what are the maturities on those? And then a few questions dealing specifically with the covenant. The first one is from [Indiscernible] and the question is concerning the first half FY 2021 covenants, are you planning to move most of the CapEx in the second half, working capital, even capital in the meantime, these are the three-year low or oil prices, possibly most likely behind us. So what are you planning to do to achieve additional cash -- on the funds in the first half of FY 2021? And then the next question is from [Indiscernible] without further asset sales or cost savings at current oil prices and with our exchange rate, are you concerned that the exchange rate is – maybe at risk of the breach, and the last questions on the covenants and this is from [Indiscernible] at Barclays. There was a note in the financial statements that certain conditions, in relation to the covenants waiver require a further classification of $1 billion as short term debt on top of the $1 billion due in June 2021. What debt does this additional $1 billion relate to, and why is this the case?

Well alright. Thank you very much for that spread. I will do feature to the service to deal with those details. But he's getting waiting to also motivate other questions and hopefully we'll get just now. On the on the South African bank facility, Gerhard you are right. We did -- debt reduced from 12.3 to 9 billion. As you can appreciate, during this whole covenant renegotiation process, the South African banks also had kind of vague concerns and credit committees and evaluation of our credit lines. I can say that precisely the way we find ourselves now is that all but one banking partner was coming to the fall, and assisting us with, maintaining our credit lines, and helping us to kind of get the guy covenant waiver going. Unfortunately, one bank, a South African bank, unfortunately, at a review of our credit profiles to the subject offset the credit downgrade, and decided to cut the facility online by R3 billion. We had to disclose this to our Banking Group internationally at the time that we renegotiated the facilities. The Banking Group weren’t quite comfortable that they -- and the reasoning was for this bank to do this was based on their assessment of risk, and not something that the other banks are missing. So, yes, it is sitting at R9 billion. We are actually quite comfortable at early onset of oil being the kind of below $20 a barrel. We were concerned that and the South African banks that we may be utilizing these commitments. Today where we stand is we've paid back all our kind of facilities that we’ve used from our South African banks. So we have no -- we haven't tapped into any of the facilities. We operate the through our cash buffer. And we actually now kind of setting up to make sure that we serve as our syndicated facility that's due for in May of next year. That much our liquidity position has improved over the last two months. So this is really one bank going down in terms of the facility, but we are very much okay with it. And the rest of our banking group is also, in agreement with what has happened here. And we can talk maybe tomorrow a little bit more in detail if you want to -- to share more details. Shashank, I thought to answer your question in my feedback to say that you bought point $0.5 billion liquidity, $2 billion cash, 500 intermitted facilities, these facilities or Sasol facilities that they have with the remaining Sasol banks. But again, as I've said, as our liquidity position starts to improve on a month-to-month basis, we actually anticipate this to even further improve over time. I think it's quite important that we don't want to sit on cash too long, because we have a syndicated facility. And what we are now busy doing is deciding to pay off the $1 billion syndicated facility, because we don't want it by industry interest, and actually have cash on the books. So we will kind of start to manage our $42 billion cash in cash equivalents down to more to run about $1 billion of committed facilities and cash and use the remainder to pay the $1 billion facility down in May, and then as we have extra cash we’ll start to buy that down on the RCF. I think that's very important. And we are fortunately at that, in that point, or that point in time. And the other question that comes on governance, and whether we will move capital? I think the one positive thing is on this one, Joe, is that we actually moved our shutdowns on Secunda and Natref into this previous financial year as we mentioned. So most of our sustenance capital goes towards the shutdowns in the first half, we don't have those. So by virtue of design, at least sustenance capital will flow in the first six months as what we are usually used to. Usually 60% to 70% will flow in the first six months. And now it's more the manner of 50:50 between the two halves of the financial year, if I can mention that. And then ultimately based on working capital is a three year loans, and it can be seen as the bottom of the cycle, but we've been very -- it's a sustainable basis, aggressive to manage our working capital down and we will continue to do so. We will continue to look for opportunities, the team has really improved the -- on this dramatically overtime, where the 12.5% is the sustainable target, I will be the first one saying no. And I think more 14% is a good label for us. But give us time again of a half year, it will be something that's high on our agenda and additional cash savings we believe that there is further opportunities to be delivered, to deliver that $1 billion savings for that. [Indiscernible] asked the question, at today's macroeconomics and asset disposal assumptions. Can we achieve a big covenant? Absolutely, we can do that. And then in terms of the face, the conditions and the shortened date? We, when we renegotiated our covenants, we also had to renegotiate as we sell assets, how those asset proceeds will be used to service our day commitments. So of course, in terms of order, the first cash flows that we get from our asset disposals in agreement with the bank goes off against our committed date facilities. That $1 billion syndicated facility goes first, secondly, the $3.9 billion RCF facility as a second. And then thirdly, the bank and loan facility of $1.7 billion rounded, goes first -- off, goes third. As we tide down those big facilities and based on our forecast of our asset disposals, we are going to service those big facilities in financial year 2021. And because it's 12 months ahead of us, we have to reclassify them from fix, sorry from long term to short term. So it's really a matter of as we sell the assets, or see if we'll be tied down, is that component of the RCF, which we believe will ultimately be service asset disposals, and use also the $1 billion data facility. And that's really what's behind that. Nothing more, nothing less. I think I've answered all the questions. Elton [ph]?

Yes. Okay, thank you. Fleetwood before I go through the next set of questions that largely relate to asset disposals. The first question, could we please get an update on the asset sales process by asset and LCCP and ROMPCO are specifically mentioned and also to provide the potential timelines, and the question here makes the point that RX was not mentioned in the asset disposal program and whether this is the best possible sell. Then around the financial impacts, also, under broadly speaking, under disposals, what is expected EBITDA and earnings per share impact from all the disposals we have announced so far. And can you give us the EBITDA/earnings per share impact by asset if possible an essence the same? And then Adrian asks, how will the sale of the ethoxylates separation units and of ROMPCO impact EBIT? Then from -- when is the held-for-sale, in a view the amount of money expected to be received? And then the last question, when can we expect, I guess, the large portion of asset disposals to be complete?

Okay, thank you, Elton. I will start off with the update on the disposal program and with respect to the financial impact; I'm going to pull us both to right indeed. So we have indicated that we are well advanced with our base chemical U.S. asset partnering a process. This is the case we had very strong international interest, both inside and outside the U.S. I think we we've indicated that we in at the moment, in final commercial discussions. We don't want to allude to anything more than that suffices to say, that we believe, we would come to a conclusion, not months from now, but rather weeks from now. So if that could calibrate the timing, it is probably sold within the next month that we would come back to market and, and really announce where we are with that program. With respect to ROMPCO, that is also a process that's unfolding as we have expected. So it is also not months, but maybe within a month, we will come to some decision making in that, in that assets. And now, you need to always take into account that these things may swing a week or two that there's always complications with respect to some of the final terms and conditions, but not -- nonetheless we've got a very focused team, various teams running these divestment programs in parallel. Yes, we haven't put everything on the list. We've done a very gritty, complete and focused asset review program. So we've got a long list that we've prioritized those in terms of complexity, impact, as well as ROIC and other measures. So there are a number of asset disposals that's running still in parallel that might be not at this point in time visible. ORYX, yes, that's still on the cards. I just think we don't see it as a current priority to really push for that one hard, but it's still on the rider, and we will still continue to focus on that. A number of others that we haven't really highlighted, but we're also making good progress with some of the smaller divestments for example, our phenolics business in the U.S. and the like. So, so I think pretty much still working the program for the base of our asset review.

Alright, then the question that's been asked, I'm not going to keep all the details. I think on some of the details, I'm going to hold back in terms of the impact of all these asset sales. And I will tell you why as well. They just quickly get a sense of, I'm just going to give you the EBIT event. I'm going to ask for those, because it shouldn't be anything sinister about this assets that we sold in the past. To give you more of the details on the working capital, the capital impact because you cannot only look at the EBIT impact, you must actually look at the total impact that ultimately flows through into our free cash flow when we sell these assets. But the ones that we sold and the ones I'm going to refer to now is Sasol-Huntsman. The explosive business is scrabbled, as well as Sasol Wilmar, industries in China, those were the full assets that we sold. I’m not going to talk about the pitlane [ph] optimal joint ventures because those relate to the previous period. And, and we've already spoken about those. So we -- let me speak about these four, and ultimately for financial 21, it will have a positive impact on our earnings. It's not a -- but the positive earnings is around about R500 million to R600 million. And why is that? Ultimately the investment enhancement, as well as the Vulmar had positive impacts on our EBITDA that will is an EBIT, which will effectively lose next year. But the explosive business as well as EGTL in terms of the forecast that we had, ultimately had a negative impact on our on our EBIT. And the combined impact of that is, I would say roughly R500 million to R600 million positive on our EBIT next year. These ones exclude the U.S. chemical business, that we are busy disposing – the and separation units, and ROMPCO. So I'm not going to provide you details on those three assets, the last three that I've mentioned, just because of the nature of the negotiations that we are busy in. I do commit that once we complete every asset, so when we say, when we complete a separation unit, we will provide an update on our website to give you a sense of what the implication of that transaction is on EBIT, on working capital, on capital, so that you can get a proper sense. Because specifically with things like AES use, and ROMPCO, I think you need to kind of get your minds really around that. Because it's going to be a little bit changing the nature of the flows of your earnings, because the asset remains, it's only when you sell the asset on such as the chemicals business in the U.S, which will then provide you with the EBIT working capital update in terms of that. So on those last three assets which can be quite significant in terms of how they play out, we will rather provide you with an update on the asset by asset basis as we complete with round about R500 million R600 millions of positive EBIT as a result of the assets that we sold thus far.

Thank you Paul and thank you Fleetwood. I will come to the next set of questions and this is really dealing with the self-help measures. The first two questions are both from Chris Nicholson at RMB. And the question is, first one at least I understand that this may be hard to determine at this point, but at a high level, what percentage of cost reduction do you think are possible or achievable or necessary for the South African liquid fuel value chain to remain competitive? Chris's next question, also dealing with self-help. So on the response plan, how much of the cash fixed cost savings components should we expect to be sustainable over the long term or that eventually reverse. Similarly on the working capital savings, how much is sustainable? How much will reverse? And Chris saying here, I would inventory for example, has helped by low -- has been helped by lower prices. And then the next question from Faisal AlAzmeh of Goldman's. As per the release cash fixed costs was flat year-on-year despite a 10% increase in the first half of FY 2020. What were the measures you enacted and how does some have the risk of reverting back next year? And the last question on self-help measures, this is from Adrian Hammond, Standard Bank. How do you intend achieving a 15% cost savings target by 2025 for SSA, and that will be assessed in South Africa.

Thank you, Elton. And thank you for the question. So I will just kick off the various topics that was raised in terms of the questions. So I think we are very clear as management that the measures that indicated for our self-help in terms of the $2 billion cost savings, that they are some of those that is not sustainable on its own. So for example, we've had salary sacrifices, we had no salary increase, we had no bonus payments. So, that is not sustainable. So we have to think differently about how to make it sustainable. And therefore, when we did make the announcement of those targets, on the 17th of March, we did indicate at the same time, that we have to fundamentally reset the business in Sasol 2.0 to make those savings sustainable. And then how do we think about that? So we are not yet ready to give you specific targets or specific percentage of cost reductions. But it's important to be mindful that we will have a very holistic approach to Sasol 2.0 and it will look at fundamentally the cost packet, it will look at where we can improve gross margin, it will look at how we can deal with sustenance, capital, and how do we think about working capital to be more sustainable? So if you look at the cost packet, of course, it is about operating costs, labor and other operations cost, but it's also about our spin, our procurement on our products and services, and how can we receive that in the future Sasol. There are opportunities, I definitely think when I look at our peer group and how the top quintile is performing, in terms of cost improvement, we can follow suit, there are opportunities there. There's also opportunities to improve, throughput and gross margins through digitalization. I think that would be a key part of what we will be able to leverage in Sasol 2.0. And as I've said, sustenance CapEx, predictive maintenance, all of those play into an area that you can improve yourself. And is there a specific ratio? I think, we think of all three of these main buckets, as equally important to realize our targets and those targets which are mentioned in much more detail as we get to the November date, we will give you an update. Suffice to say, the program is well underway. We are having consulted with the organized labor, we have now reached the point where we can announce that next level of the group structure this week, and then they will be a cadence of four to six week following to the point where we are November target to go live in our new operating model. And therefore we are well on track to get into the Sasol 2.0 and Sasol future, Sasol of the future as we sit here today. Paul?

Thanks, Fleetwood. There’s a couple of questions that requires color, and I think Fleetwood had indicated some color will be provided more towards November as we work through it. I think, again, to re-emphasize the point that Fleetwood made is that, in March and April of this year, we have been quite diligent in identifying plans to make the cash to solve the cash issue for us, in terms of the self-help measures for 20 and 21, that we feel very comfortable with. So even if we don't get increases of duties increases next year, all of those have been planned into our plan. So we feel very comfortable that the $1 billion, that we or more than $1 billion that we achieved and the $1 billion that we plan to achieve this year can be achieved. We have received our July results, and our July results is ahead of our run rate. And again, that gives us reason to believe that if we can just sustain this, that will -- does quite well for us from all dimensions, capital costs, gross margin and so on and so forth. And yes, the world is volatile. And it can change on us quite quickly. And I think, I've said it in the outlook, we are very kind of vigilant about the fact that the world is, is not normal yet. So hence, we do need to stay close to these items. But we do believe to deliver the $1 billion for financial 21 will be very much achievable. And we have provided you those guidance on EBIT and EBITDA as well as capital in analysts book as well for financial 21. The other point that Chris makes, which I think is a very important one. Chris, you've asked this question a couple of times to say, what is that improvement that the South African value chain requires to be a kind of cash positive going forward, and also competitive, In the past during Phoenix in response plan, we did indicate that we want that kind of break-even label at the lower end of $30. So that in a lowball price environment, you can actually kind of sustain profit. But we know that there are severe cost pressures on us going forward. So our sense is in Sasol 2.0, we use $45 as the thin overlap. So in a $45 world, where refining margins and petrol and diesel margins will remain under pressure. How? At what level of profitability and free cash flow generation versus South African value chain operate in to give us a certain rate of return on our assets. That's the thinking process. So, ultimately, that should give you the comfort that we will design, a structure that solves for them and targets that. And the details thereof will then be shared with you in November, but hopefully you can get the sense that that's very much top of mind for us in the way that we, that you want to approach them. And Adrian, on your question. I'm not 100% sure what you're asking 15% cost saving 2025 for SSA. I guess again, when we talk to guys in November about holistic [Ph] and also the VU Energy and chemical deliverables targets, we will be addressing this aspect. And I think we very much are lost to the fact that SSA because of its [Indiscernible] link need to be very profitable to set that dates and dividends going forward. And that will be part of our thinking when we approach you in, in November.

Thank you, Paul. The next set of questions deals with CapEx and these come from Henry and Adrian. I'll just read one of them out because they are quite similar. So CapEx is the $19 billion as guided for FY ‘21, the new level of sustenance/maintenance CapEx, or are you still postponing some spending into FY ‘22? And then any indications of CapEx for FY ‘22 would be helpful especially around your greenhouse gas emission reductions.

So basically, $19 billion is at this point in time for us the marker for financial ‘21. We put in a lot of efforts to make sure that this number is, kind of representing our plans. It does take into account some deferrals as I've indicated, and it will not take into account our long term sustainability if it's towards a 10% CO2 reduction, but also, the $19 billion also does not take into account the impact of asset disposals going forward. So Henry, that's why we are super sensitive not to provide a target yet for financial year 2022 we have to complete our asset disposal program. We need to kind of get all the details sorted on our sustainability roadmap on CO2 as well as on -- on environmental compliance project, and as well as clean fuels too. And the combination of that would put us in a much better position to ultimately provide meaningful targets for year -- financial ‘20 to ‘25 when we do speak to you at the Capitol Markets Day. These target need to be robust, but they need to kind of ensure business sustainability. So we’ll provide more details. Hopefully you can, you can understand that. At this point of time, the financial year ‘21 number is where we feel very comfortable with to share that with the market.

Thank you. Thank you for that response, Paul. I'll move on to the next set of questions. This relates specifically to LCCP. The first question, very similar from both Faisal and Tom Wrigglesworth. So what is the current long term run rate you're expecting for the U.S. EBITDA? And what about the U.S. Base Chemical’s business? Then under status of operations, this is [Indiscernible]. At the end of the first half, you guided that the LCCP cracker would be operating at nameplate capacity. If you only achieve 80% in Q4, are the operational issues impacting production and ramp up? And then Tom Wrigglesworth are there any longer term contract prices in the organics business. And then lastly also from Tom, do you see any raw material benefits in the period for Performance Chemicals or Base Chemicals that have not unwound [Ph]? Thank you.

Thank you, Elton. I'm going to start off, and I'm also going to ask Brad to talk to the one on organic business that Tom asked. But let us recap a bit we’re all with LCCP. So what we know is that we had a very, very strong ramp up in the last quarter or two, where we have the indication that the cracker ran for the last quarter had 80% and above, it was driven more by the merchant if the lean demand rather than anything else. So as of July, we when demand picked up a bit, we are running about nameplate capacity on the cracker. Our LL unit is running above nameplate capacity. So I think all our other units are running at targeted plant so, so overall we are very satisfied with the throughput of the major and the big commodity units in Lake Charles. And therefore all of those are really going as planned. Now you ask us why don't, can’t we give you a guidance? I think it is very sensitive period right now when we into the discussions on the partnering concept. So rather than give you an indication now and you read something in there that could be good or bad or indifferent in terms of those discussions later on that just waits for that. But what you can take is that we do not see any impediment to still continue the ramp up as we've indicated in our initial plans that needs to be fully at nameplate capacity consistently over a period of two years for our commodity units, and we see very, very clearly we making good progress on that. As I mentioned, LL and the cracker is running above nameplate. The question is you need to do it consistently throughout the year and therefore, we indicated the two year ramp up to 100%. But I think we are seeing everything remains on track to just achieve that. So if I reflect on the question with respect to the LD business. The LD plants we are we are seeing that we are basically through the remediation process. As far as construction go, we've started with pre commissioning activities. So I think we still very much on track to get that unit back by latest, the month of October. If everything and tailwinds go as it now is, it could even be earlier than that. So I'm really excited that we will have that unit back into the fold very soon, in the next month or so. So I think I'm going to stop the and just ask Brad to go in, and then maybe Paul if there’s anything finally that you'd like to add?

Thank you. So with [technical difficulty] for the organic business, we have a mix of short, medium and long term contracts. And those are all then based on prices according to those products in those particular markets. So most of the time, we have them tied directly to some indexes that relate to the underlying cost elements for those product lines, and then of course, the rest of the pricing is built on the market needs for that pricing. So if the question is around, do we have the ability to recover? And do we follow the pricing trends? The answer is yes, we do have that and so none of them are tied to a long term pricing that we would then be exposed positively or negatively to the volatility. Thanks.

Thank you. Thank you for that response. Brad, can we move on. Alright, the next set of questions relates to sustainability and that covers guest supply. First question is from [Indiscernible]. Have you made any progress in prolonging these five guests into your African operations? And can you give more detail, why they increased the long term guest price assumption in the impairment calculation by 46% in U.S. dollars? Our next question is from Alex, and this question is with regards to writedowns. Have we assumed a higher price for peer guests, and heavily written down Sasolburg? And when do you expect your upstream supplies of guests to Sasolburg will be depleted? The next two questions relate to Carbon, also in the other theme of sustainability. And this is from Henry, lower carbon growth options. What do you have in mind here? And then also from Alex, I'm surprised by the relatively small write down at Synfuels' compared to that of your other assets. What carbon price are you assuming? Are you still assuming an asset life to 2015? Do you think actually put the asset life assumption is sustainable [Ph] for the world's biggest 40 minutes of CO2? Given an increasing shift to net zero assumptions amongst your peers? How does your auditor feel about the 2050 asset fund assumption?

Okay, thanks for those questions. I'll start off with gas and the low carbon, and then I think the other questions relate more on the financial side, and now that was looked at. So Paul will deal with those. So, Harak [Ph] with respect to the gas, we have structured already in 2019, a group to look at alternative gas supply into South Africa. Of course, we are actively busy with our own exploration of gas in Mozambique and that activity continues. But we also realistic to say if we are not as successful as we may be aiming to be in southern Mozambique with respect to our own exploration. We also need to be live and planning for how else can we get gas into our value chain. And there, we've done a lot of work, we, we've got quite a good result in terms of how we developed and, and interacted with all the relevant parties from cyclists and Rovuma to general suppliers of LNG to people that that want to invest into LNG and set up kits in terms of Mozambique and other places. So, I can give you an assurance that we have had quite a number of activities that we have scrutinized and looked at. And we've got a pretty good understanding how that might play out. And I've got clear targets in the next year of how we want to progress, those options that we have. Suffice to say, we believe that LNG will play a role in the period up to 2030. And longer term, I think it's clear that we must look at how can we monetize further through infrastructure development that are Rovuma gas fields, and how can that be brought in terms of affordable gas into Southern Africa and Mozambique, because it's an interest of both countries to do just that. So that also is very much the underpinning and informing our greenhouse gas roadmap not only to 2030 but our ambition beyond 2030. Of course, those details we will make available in the capital markets day in 2021. However, I do believe that the 10% that we will give the details of the roadmap, when we publish that now by the end of August, will also give you a much better understanding how do we think about that. And with respect to the lower carbon grant options. So the moment that you look at carbon and you compare gross between a coal based feedstock option, and you look at a gas based feedstock option, there is a lower carbon in the equation. So we will not look at replacing probably all of our feedstock with gas. I think we see gas as a alternative and a complimentary feedstock to our mix in our South African value chain. But however, notwithstanding that, we also think long term about hydrogen. We are the biggest hydrogen producer today, but it's not green hydrogen. So the question is, how do we develop the trajectory to get more into the green hydrogen space. You've noticed, and do did we that there is a lot of focus on hydrogen economy and hydrogen activity, not only in Europe, but globally where people are accelerating developments to enter into that. So when we talk about mobility and a lower carbon business, it will include in terms of our retail and our thinking around fuels, it will include options like electricity, hydrogen, and other mobility options of the future. And therefore, I think we are well positioned if we talk about looking at the lower carbon business, which can comprise all of those elements. I'm going to stop there, and ask Paul to look at the financial part of those discussions.

Thank you Fleetwood. Harak [Ph] so your question is a super balance. We – when we looked at our guest landscape, there is a little curve and then a depletion curve, that we need to consider in terms of the BVI and PSI in terms of gas fee to Secunda and more so in terms of Sasolburg. We know that the current pricing dispensation cannot be sustained with new volumes required to run these facilities until 2015, 2034 for that part of the gas mix. And hence we’ve considered it a kind of a suite of alternatives in terms of gas pricing. Other, you explore more, you find if you have more gas fines, you look at LNG, and so we really consider it a suite of options. And that kind of give us in a kind of a, also a range of gas prices, which effectively to your point, which I think is a very good, good catch is that the gas prices they did increase quite significantly. And then ultimately, that had an impact in terms of the significant [ph] of the assets. Of course as we’ve developed our gas studies and plans, roadmaps. As Fleetwood indicated, we’ll get better clarity, and these assumptions will need to change in terms of that. I think it would have been wrong to assume that the current gas prices possession continues. In future, we know that cannot be the case. I mean, this is purely based on that assumption of the various options, defining a range and then use that as an assumption. And the question that Alex asked Alex, that's a mouthful of questions. But again, I think the one thing is to say that our base assumption at this point in time is that gold will be bought off the mix until 2050. And it will be of course, much reduced. And we already started to talk about that, but ultimately those reserves will be in some shape or form part of our future until 2050. So in that we say until 2050, it doesn't mean no code. If you appoint this other auditor is happy, and then ultimately they need to take comfort in terms of a guarded reserve base, there's no indication that you have to stop operating on coal. But that even in scenarios way, you get energy even scenarios where you have to potentially turn down Secunda coal is still part of the mix, and hence the user life until 2050 for Secunda then holds from assumptions. perspective. I did like to your point on single point emitter, I think we all get that, but ultimately, in terms of conforming to the CO2 targets, in terms of what we know today, coal is definitely part of that assumption and needs no reason to change your useful life assumption at this point in time. In terms of the carbon tax, again, on the carbon tax we didn't only assume that can carbon tax dispensation we know that, kind of it's very unclear what will happen in two years from now. But we did take other global assumptions in terms of carbon tax pricing into account, in terms of our modeling for Secunda. And hence that gives us a answer on MPD, which I will get to just now. But again, we've taken more aggressive CO2 tax assumptions into account longer term. I think the one thing where you may be right, and I was also on their face in reviewing the, impairments on the energy business, or Secunda is we have to stick to external pricing when we do the evaluation of our revenue side, when it comes to oil pricing. So we use the price stick of [Indiscernible] we use the pricing of wood -- in terms of longer term pricing, and that might be different to our $45 world of pricing that we've taken into account for Sasol 2.0. But we have to, from an ACC perspective, rely on the prospects. Those prospects are a little bit more higher than what we expect oil prices to be. And I guess that's also one of the reasons why this impact is smaller than what you expect. Of course, if they update that level, and there may be some future pressure in terms of that, but that's -- that's the assumption that we have to use to be consistent with our ACC regulations. Hopefully I’ve addressed all the questions. Alright. Thanks

Thank you. Thank you for that Fleetwood. And the responses Brad and Paul. The next set of questions, we going to theme around Sasol 2.0. The first one from Tom Wrigglesworth, any updates as to how executive management compensation will change with the new structure? Then from Herbert Kharivhe what is the timeline to execute on Sasol 2.0? And the last one on the 2.0 is what is the difference between future Sasol Accessible 2.0? Sorry. Yeah, sorry there is another question that comes through. Will you report the results of the old structure of Sasol in tandem with the new Sasol structure for the new financial year to allow comparisons? Thank you.

Okay. Thank you. Thank you, Elton. So I'm going to deal with a couple of questions and Paul will deal with a 14:1. So Tom, with respect to the question on executive management compensation, I think it is a board remit, but the boat will take into consideration a couple of factors. First, I think that it is always a matter that we will have to calibrate our peer group with respect to executive compensation. So I'm aware that the board is reviewing that regularly and it will be reviewed, because the Sasol of the future will perhaps look into a comparison of a different peer group, so that that is first and foremost. Secondly, incentives will also be more representative of the sustainability portion of what we need to deliver on. And I think they would also be some further clarifications and announcements towards the end of the year when that will be very clearly articulated in terms of how do we get also balance incentives, addressing the sustainability roadmap and the implementation hereof. So when we revert to the question around what is the timeline for Sasol 2.0? Basically, there are two phases to it. And let me also address what is the difference between Sasol of future or future Sasol and Sasol 2.0. Basically, you have to see it that Sasol 2.0 is the program that will deliver Sasol of the Future. So Sasol 2.0 is about, what are the targets we need to achieve? How are we going to achieve it? How do we implement it? And when will we reach that? So we've indicated Sasol 2.0 will comprise all of those targets, it has already commenced in terms of the conceptualization, the definition and the creation, creation of what the targets are, we've started with the, with the structure already. As I've said, we will announce the next layer of the structure now this week. So Sasol 2.0 has already commenced in the design, and some phases of execution. That will continue to the period of 2024, 25, which we have said is the full delivery when we see steady state. And so Sasol of the Future will be really the continuous running, what Sasol 2.0 have delivered in the next year or two. So that's how you need to think about that or that’s how we thought about it instead of calling the program Phoenix like we did in 2014, we call the program, Sasol 2.0, it will define the targets. And we will then pursue it and then hopefully get to Future Sasol. So that's how we think about it. And the go live date of when we will run the operations in that form and fashion is targeted for November of this year. And I think we still don't track to deal with it. And I think that raises the questions maybe on the reporting, Paul?

Yes on the reporting, the way that we want to approach this is twofold. For this forthcoming half year, we're going to stick to our old model, and in March of next year, we will present you with the updated restated numbers for Sasol 2.0, or Future Sasol as Fleetwood just explained, and we will also provide you with old numbers. So you will have two sets to compare. Back in the day when we did Phoenix, you will recall that we issued a document a separate document, which we call this segmental overview document. We wrote kind of all the rules up, guide you all the disclosure, documents and the IR thing. I'm looking at them right now we are absolutely focused to do exactly the same, because that helped us quite a bit in making sure that the external market understands the change in our numbers and how it will be reported. We will try to do it before we release the results to give time for you to work through the numbers. So very much the same process that we followed with Phoenix, we will also follow that in this regard. Numbers ahead of time, give you time to work it through, but ultimately half year’s still on the old numbers and from there onwards, will take the new restated numbers and then give you time to work through it before we get to year-end which will then be effectively the new Sasol 2.0 results.

Thank you, Paul. I’ll move on to the next set of questions. They're not themed under any specific area. The first one is Sasol uncertain about the ability to operate is a going concern? The next question it’s very optimistic to believe the oil price will remain above $45 per barrel. What happens if it falls back to 35 or lower? And then the last question on in this section, the issue at hand is that Sasol should never have found itself in this highly leveraged position, what is being done to ensure that future governance is improved to ensure similar projects such as LCCP did not threaten the viability of a company.

All right. So ultimately, as you can appreciate in terms of uncertainty about our ability as a guy concerned, that was probably one of the most critical items that the board and management had to consider over the past couple of months. And I can assure you and Fleetwood can also testify to that. The board appointed their own independent advisors, EY to make sure that ultimately that going concern assumptions and the basis on which we derive it is in line with what EY has experienced in other companies globally going through the same circumstances, that the assumptions that management has taken is, is really reasonable and suitable. And EY was also throughout the whole process independently, looking over our shoulders when we negotiated with the banks, and the discussions and agreements of banks and covenant labels for the asset disposal process to review that investments stay off. So, they both really ensured that they are comfortable that yes, first in the first instance, the company is a going concern for that immediate legal requirement, but then also as we move to both Sasol 2.0 and Future Sasol, it is by virtue of the principle of going concern needs to be designed to be a going concern going forward. And hence we do believe with our analysis of 2.0 and taking $45 world into account, that's definitely going to be kind of addressed. And we do see ourselves as a going concern, going forward on the principle of that. And later we also want to add a lot of value going forward. I guess the second question being asked is, is it optimistic that oil price will remain about $45? And what if it happens falls back to $35. In the short term, we do believe that the volatility is large enough for the oil prices to go back to $35 to the barrel. Gains [ph] we have worked over 600 plus rent a barrel, which again, if you didn't take a $35 world will get you a certain rent dollar exchange rate, which is not too far off from what you’ve seen today. So ultimately we are ready if oil prices do go back to $35 to kind of sustain our operations. We have been effective in putting hedges in place. We are busy completing quarter three in terms of our hedging program, and we are targeting 37 nations. So even if oil prices fall to $35 to the barrel, on the oil price exposure, we want to cover that out at 37. Once we complete it with quarter three, we’ll immediately go to quarter four. And we want to go I said to a 37 mid kind of coverage for financial year 21. Obviously what happens after that, we'll keep on with the routing aging program. If oil prices sustainably going to 35, we don't see that will. And a lot of analysis has been done in terms of that not only by us, but will we be able to sustain those shocks. I think that's a critical bit. And our sense would be even in a $45 world, if oil prices go for a 24 months to a $35 period, i.e. a future recession, that our operating model and business structure will be able to do to stomach that. So, we are definitely looking at that in terms of our analysis. We should also the next question that Fleetwood people will answer in terms of capital allocation, because that's ultimately, if you have a prudent capital allocation, and your business competitiveness is properly set in a $45 world, you should be able to actually manage your business effectively going forward.

Thank you, Paul. So with respect to the decision on big and similar projects and how to avert that. So first of all, we have already made that decision in 2017 at our capital markets day, when we said we will never do a size like the LCCP project on our own, or a big single investment like that, to expose the company to. So at that time, we also said we will follow a very strict capital allocation framework, which will be biased towards making sure that we don't have an outcome like we have had in when we made the decision to invest in LCCP in the size and in the time, and within the business assumptions that was prevalent at the time. To have a much more robust capital application framework, we would look at many more scenarios in terms of macros, etcetera that is part and parcel of our refocus of our framework since 2017. And I think you will agree with us that we haven't made any, any large enough announcements and we will also not, we will stick to the commitment and look at bite [Ph] sized chunks that is commensurate with the size of company and the risk that we will be able to detect. So I think that that gives you the sense that we have already made that decision and governance is already in place to address that.

Thank you Fleetwood and Paul. We are near the end of our contracts of time. So we have two more questions that we’ll take at this time. The first one from [Indiscernible] at Standard. How does trading activity in SSR and energy compare to pre-COVID levels? Has they been a material recovery? And if so, has production been able to ramp up to meet any increase in demand? And then our last question for today, can you please quantify the impact of COVID-19 and your FY ‘20 EBITDA? Is your targeted cash breakeven to pair off? What is your targeted cash breakeven prepare for FY ‘21 and [Indiscernible] at ABO Capital Markets.

Alright thanks, Elton. This would be the last questions that we now take. I think we need to look at COVID-19 in fact in the South African value chain through two lenses. One lens, is has there been any impact to run our operations because of our own people been impacted by COVID-19. And we can say without a doubt that this financial year we've concluded that there was no impact to run our operations because of own people being impacted by COVID-19. We have done all the proactive and precautionary measures to ensure safe working practices at work and therefore that one is good. We have seen a commensurate with a pickup in terms of the month of July and August we have been impacted on the mines with respect to some of the sections there. We run at any point in time 62 mining sections. We had a impact to be able to run that of six, seven sections, but we've immediately mitigated it through bringing in hired labor, and also to buy in more coal. As we've seen the numbers coming through in the last couple of weeks, while actually the last ten days, we’ve seen the plateau and the decrease in the COVID cases, also very in line what we observe in South Africa. So I do believe we do not see any immediate further risk with COVID-19 in fact, on own workforce to be able to run our facilities. Now, let me revert back to the question in terms of COVID impact on demand in South Africa. And there we had been throttling Synfuels for just under two months to take care of demand impact and we also did the same by shutting down Natref just over two months to be able to mitigate the demand impacts. We've started up those facilities and Natref we are running for market demand. So, we do not run at the moment at full capacity, and we have to take cognizance of jet fuel that is not fully recovered. So that is an area that we supply into market demand. Specifically, with respect to jet fuel, which is one of the areas that we need to monitor very closely. But with respect to Synfuels, we've ramped up fully to the potential we have, and we can place all of those products both on fuel and on chemicals since the end of the year, since we've started up and ramped up our production So, so we running our facilities as planned, mainly informed by market demand at this point in time.

Wayne [ph] you asked a detailed question on the EBITDA side in terms of a COVID. And I guess it's going to be very difficult to quantify, because one part of COVID brought oil price down. And what part of the kind of the trade wars that have been all thrust down. And how do you translate that into the chemical process? I guess it's, it's super, super difficult to give you like a exact answer, other than to say that, kind of the effect that all processes just moved from the $50 to the $20, that $50 move that it takes for those two months, were quite dire. And I think on the sensitivities, you will be able to calculate that. Then there was a bit of relief on the rent dollar side, because obviously, because of the risk, the rent kind of bottomed out and then provided a bit of relief. So it's very difficult for us to kind of say theoretically, what is the COVID impact for EBITDA, for financial term key in terms of -- in terms of that, hopefully you forgive me for that for not being able and volunteer to give you a specific answer on that one. And on the targeted breakeven level to barrel for financial ‘21. Specifically, I think Chris also asked me this question a couple of times. And so, ultimately of our $1 billion cash sellout -- been introduced for financial to anyone, we will be able now to sustain a breakeven label for the Secunda Integrated value chain on a free cash basis, meaning of the effect, -- capital into account of let’s say round about $35 to the barrel, even maybe lower. This is a number that we are continuously working at to get as low as possible through I will say a myriad of a non-sustainable measures measured in ‘21 terms and then light on sustainable measures as 2.0 kicks in, so we will be relatively pointed out as to sustain authorizers in a 30,35 level for over a year period for financial year ‘21 if you just look at breakeven levels. But we'll also update you more on that in November. But a lot has been done to make sure that we are quite agile. And you probably have seen in our numbers for financial ’20 how quickly we can actually manage our cost structure. We do believe that with those measures that we've taken for ‘21 on the free cash basis, that we have, we've actually been able to get that level of 37 that I've spoken before to get that much lower in finance, utility wise. But like I say, a combination of short term and medium term type of sustainability impacts.

Okay. Thank you, Paul. And I would also like to thank for your participation in the call, and also for all your questions. We look forward to engaging further with you in the coming weeks. Also note, that any residual questions that remains from this call will be dealt with through our IR team, and you can expect that I will be engaging with you to clarify. So, with that, thank you operator, we can now call close the call