Sasol Limited

Good morning, and welcome to SASL's interim results presentation for financial year 2026. My name is Tiffany Sido from Investor Relations, and on behalf of the SASL executive management team, we are pleased that you could join us today. With me is Simon Beloy, our president and CEO of SASL, and Walt Bruns, the chief financial officer. The group executive management team is also present and will join for the market call, which follows directly after the presentations. A reminder that the presentation and all supporting financial materials are available on our website. Turning to the agenda for today, a reminder that our strategy follows a two-pillar approach. Firstly, to strengthen our foundation business, where Simon will begin today's presentation with our business overview, then followed by Walt, who will take us through the financial performance for the half year. The second pillar addresses our pathway to grow and transform the business in the long term, where Simon will conclude and provide an update on our progress. A market call will then follow immediately after the presentation, where you can submit your questions via the webcast or join in the teleconference facilities. A reminder that the presentation contains some forward-looking statements, and more detail is reflected on the slide in front of you. I would now like to hand over to Simon to commence his presentation. Thank you.

Good day, everyone. Thank you for joining us today. We value your time. The business environment remains volatile and the challenges are real. Our priorities are clear and our execution is improving. Our strategy shared at Capital Market Day in May 2025 remains unchanged to strengthen our foundation business while positioning us all to grow and transform. Today, I'll take you through the progress we're making on the journey, the areas where we see traction, and where our focus lies for the second half of the financial year. Let me start by framing the key themes for today. Firstly, safety. Nothing is more important than ensuring that every employee and every service provider returns home safely to their loved ones. While we are seeing encouraging improvements in leading indicators, the tragic fatality in September is a stark reminder that we are not yet where we need to be. Secondly, operational delivery in southern Africa. Our focus on coal quality, reliability and disciplined maintenance is starting to restore stability across the entire value chain. Thirdly, international chemicals. The research is progressing. Markets are, however, tougher than we anticipated. but the actions within our control are delivering structural cost improvements and positioning the business for recovery. Fourthly, cash flow and balance sheet resilience. Despite challenging macros, we generated positive free cash flow by executing on the levers within our control. And finally, we continue to advance our grow and transform strategy in a pragmatic, value-accretive manner, which I'll cover towards the end of the presentation. At Capital Markets Day, we made clear commitments to strengthen the foundation business. What matters now is delivery. I am pleased to say that we are delivering against most of those commitments. The distilling plant reached beneficial operation in December on plan and is already improving coal quality and supporting more stable operations at Sekunda. Our Southern Africa value chain cash break-even price ended around 53 USD per barrel, ahead of our fully target range of 60 to 55 USD per barrel. This reflects higher production and sales volume, together with disciplined cost and capital management. Given softer chemical pricing and a stronger rent outlook, we are maintaining our guidance range. In international chemicals, adjusted EBITDA improves year on year despite challenging markets, supported by early benefits from self-help measures. While our self-help measures are progressing and will ramp up in the second half, we have revised our fully adjusted EBITDA and margin guidance, which I'll talk through in more detail shortly. Net debt ended at $3.8 billion, and our continuous focus on cash generation and cash flow resilience remains central to our delivery regime pathway. Walt will unpack the key drivers in more detail. Finally, supporting the grow and transform pillar, we secured an additional 300 megawatts of renewable energy, bringing the total to more than 1.2 gigawatts on the path to 2 gigawatts by 2030. This reinforces an important point. We are focused on the value drivers, we understand the challenges, and we are executing with purpose. Turning to safety, the fatality in September 2025 was unacceptable and deeply regrettable. Our investigation into this incident identified some gaps in risk awareness and inconsistent adherence to safety rules. In response, we have taken decisive action. This includes strengthening both leadership and personal accountability, reinforcing standards, intensifying our focus on high-risk activities, and finally improving service provider safety management. These actions are strengthening competence, rigor and ownership where it matters most – at the frontline. While there's no room for complacency, we are encouraged by improvements in living indicators, including fewer hospitalizations and lost workday cases, lower injury severity, and most importantly, no major process safety incidents over the past 18 months. Safety is the foundation of everything we do. We will continue to embody the learnings, strengthen our safety culture, and hold ourselves and our partners accountable to ensure that every person returns home safely every day. I'll now touch on a few highlights of our financial performance. Despite the challenging macro environment, overall, Team Sasol delivered a robust performance in the areas within our control. We improved margin realization, reduced cash fix costs, and optimized capital spent whilst protecting reliability and integrity. Adjusted EBITDA for the group was lower year-on-year, reflecting weaker micro-conditions. However, our cash flow levers were effective and free cash flow ended positive. This is exactly what we mean by disciplined delivery in a very challenging environment. Turning to the business updates, let me first start with mining. As mentioned, the distilling plant reached beneficial operation on schedule and within budget. we are already seeing improvements in coal quality with average sinks now around 12%. External coal purchases remained elevated in the first half during the distilling plant ramp up. While coal purchases will continue in the second half to supplement our own production, it is expected to be lower than the first half and to normalize in financial year 27. The focus is now on firmly increasing our own production volumes reducing external purchases and improving cost competitiveness in support of a more resilient value chain. Gas is an important part of the Southern Africa value chain and broader regional economy. The Plateau Extension projects are progressing well and remain on track to ensure a stable supply profile to financial year 28. In Mozambique, start-up delays at the CCT Gas to Power project have affected the timing of the PSA volumes. To manage this, approved sub-gas arrangements are ensuring continued gas flows to South Africa while the CTT project progresses. Total gas volumes are unchanged. However, a revised gas production profile has deferred gas monetization. Together with a stronger rent US dollar exchange rate, this has resulted in a PSA impairment. We are waiting on optimizing the gas production profile through ongoing performance testing and potential infrastructure improvements in the coming months. Sussex's methane-rich gas bridging solution remains on track, while past applications for the period FY27 to FY30 submitted to NASA for approval. At the same time, we are developing longer-term gas optionality through LNG. We are working closely with our strategic partners to advance gas-to-power options. We are managing our gas portfolio deliberately, protecting near-term supply while keeping value-attractive options open to sustain profitability over time. Across our Southern African business, we are seeing tangible progress in restoring performance. Secunda production increased by 10% year-on-year, supported by the absence of a phase shutdown, improved coal quality and gasifier availability. At NatRef, operational performance also improved and the commissioning of the last low-carbon boiler supports reliability while advancing our emissions objectives. Commercially, we continue to prioritize higher-margin fuel channels. Following PraxSA entering Business Rescue, we stepped into their capacity and maintained stable NADREF operations. This is to ensure that there is reliable supply to South Africa and our Tambo Airport. Our priorities for the second half are clear. sustain reliability at our operation through disciplined maintenance and stable operation, and leverage the increased capacity at NatRef to optimize product placement and maximize value for the group. In Chemicals Africa, our focus is to ramp up sales supported by strong production performance while maintaining benchmark price levels in a softer global market. International chemicals continue to execute on our research priorities outlined at Capital Markets Day. As previously stated, EBITDA increased by 10% year-on-year despite challenging markets. Our margins came under pressure due to a softer global demand, higher feedstock costs and persistently elevated European energy prices. These conditions have weighed across the entire industry. However, delivery on the actions within our control is progressing well. Cash fix costs declined by 6% year-on-year, or 10% when normalized for exchange rates. Asset optimization and variable cost initiatives are starting to deliver benefits, with most borrowing actions completed or nearing completion across the portfolio. Commercial excellence initiatives, including continued focus on value over volume, are underway. While this takes time to flow through our earnings, we expect benefits to increase in the second half. Given the weaker than expected market conditions and unplanned JV ethylene cracker outage at the end of the last year, we have revised our fully adjusted EBITDA guidance from $375 to $450 million. We also revised our margin outlook to a range between 8% to 10%. Importantly, our research phase extends beyond financial year 26. Innovation across the value chain and broader portfolio optimization initiatives are being assessed. These are aimed at further improving competitiveness. These, together with our current actions, support our FY28 target of $750 to $850 million EBITDA. SASOL continues to make a meaningful contribution to society and the communities where we operate. In the past six months, we invested about 200 million rands in social programs aimed at uplifting communities across various sectors and regions where we operate. We invest in multiple education initiatives to address the shortages of critical skills needed in the workplace. We spent around 75 million rands on batteries, skills development, and education initiatives. We continue to invest in community infrastructure in our neighboring communities. For example, the upgrades to the Doan and Panda health centers in Mozambique will help delivery, benefiting over 25,000 community members. In South Africa, we've also supported the successful B20 and G20 events during 2025 with sponsorship and embedding resources to support the execution of the events. These initiatives reflect our belief that long-term value creation for shareholders is inseparable from positive social impact. With that, I'll now hand over to Walt, who'll unpack our financial performance.

Thank you, Simon. Good morning, ladies and gentlemen, and thank you for joining us today. I will take you through the financial performance for the first half of FY26 and how it reflects tangible delivery against the commitments as we set out in our capital markets day. The macroeconomic environment remains challenging, and the earnings reflect the external pressures. What is important is that we respond on the levers that we control. Tighter cost control, disciplined capital allocation, and better operational execution across the portfolio is strengthening our foundation business and showing up in improved cash flow generation in support of our deleveraging pathway. Turning to the macroeconomic environment, volatility and uncertainty persisted through the first half of FY26. The Brent crude oil price was down 14% year-on-year and together with a stronger RAND exchange rate resulted in a 17% decline in the RAND oil price. The oil market remains in surplus with supply growth and inventory builds outpacing demand. Given ongoing geopolitical uncertainty, we expect oil price volatility to persist in the near term. The strength in RAND against the US dollar weighed on earnings, given the dollar-linked nature of much of our pricing. While this created pressure on the income statement, the stronger closing rate provided balance sheet support by reducing the RAND value of our US dollar denominator debt. Refining margins were a notable positive, supported by improved diesel differentials and stronger operational performance at NARTREF, helping to offset some of the oil price pressure in the fuels business. Chemicals remain the more challenging part of our portfolio, with continued global overcapacity, softer demand, and tariff uncertainty weighing on pricing and margins. While conditions remain subdued, the pace of decline is slowing, selective end markets are stabilizing, and industry rationalization is accelerating, offering cautious optimism for recovery rather than near-term rebound. Against this backdrop of continued macro pressure, our focus remains firmly on the levers within our control. Starting with volumes, we delivered 3% higher sales volumes in the first half of FY26, supported by improved production, while a better sales mix into higher margin channels improved price realization. In the second half, the focus remains on sustaining volume delivery, while continuing to optimize channel mix as markets evolve. On costs, we have not only contained inflation, but reduced overall cash fix costs by 2%, driven by lower labour costs and reduced external spend. We will continue the strict cost control into the second half, while also reducing external feedstock purchases. Capital expenditure was 43% lower than year-on-year, mainly due to the absence of a secunda phase shutdown in the period, lower PSA spend in Mozambique, and reduced environmental compliance capital as these programs near completion. We are also optimizing how our capital spend without compromising on safety or asset integrity. As a result, we have revised our full year capital guidance 2 billion rand lower to 22 to 24 billion for the year. Importantly, the 2 billion rand is not a deferral and not rolling over into later years. We saw a temporary increase in net working capital in the first half of FY26 due to a timing lag between the higher production and sales, with opportunities available to reduce working capital prior to financial year-end. On the balance sheet, liquidity headroom remains robust, with more than US$4 billion available. We will continue to actively manage our balance sheet, including our debt maturity profile, as we prioritize sustainable deleveraging. Finally, we have and will continue to execute our hedging program, which I will unpack further on the next slide. Hedging remains a key component of SASL's approach to managing macroeconomic volatility. We have completed the FY26 hedging program with the FY27 program underway. Given prevailing market conditions, we have utilized a broader range of instruments to maintain appropriate downside protection while being mindful of cost and retaining upside participation. During the first half of FY26, foreign exchange losses, translation losses were largely offset by gains on derivative instruments, demonstrating that our hedging program is working as intended, especially in a stronger RAND environment. For the second half of FY26, the oil price risk is hedged at an effective hedge cover ratio of 55 to 60% and an average floor of approximately $59 per barrel. On the exchange rate, 25 to 30% of our Rand US dollar exposure has been secured primarily through zero-cost collar structures within a range of approximately 18 rand to 22 rand. We plan to complete our FY27 hedging program by the end of FY26. All the self-help measures that I've mentioned play into our deleveraging pathway, which remains our primary focus. We have made good progress in reducing both gross and net debt over the last 18 months, supported by a disciplined capital allocation framework, with gross debt ending 9% lower compared to the prior year. We also improved the regional mix of our debt to better match the underlying cash generation of our assets with a RAND for US dollar bond issuance in July. For the first half of FY26, we ended with a net debt of 3.8 billion US dollars. While slightly above our full-year target, we remain on track to achieve net debt below $3.7 billion by year-end, with second-half cash generation expected to be higher through the management actions I mentioned earlier. We remain committed to the debt reduction trajectory as set out at CMD, which showed us reaching the net debt target and associated dividend trigger of $3 billion between FY27 and 28 under different macro assumptions. Given the current macro outlook, the net debt target will likely be achieved in FY28. That said, given the progress we have already made and the head start we have created, we will continue to press and expand on the levers within our control to mitigate the macro headwinds and achieve the target as soon as possible. Turning to more details on the group financial results, the key highlight is the positive free cash flow as defined in our capital allocation framework in the first half of a financial year for the first time in four years and a more than 100% improvement from the prior period. The absolute amount will continue to increase as we further progress the implementation of our plans. Gross margin declined by 6%, reflecting the impact of a 17% lower rand oil price and continued pressure in chemicals pricing, as well as higher variable cost. This was partly offset by stronger refining margins and higher sales volumes. Earnings before interest and tax decreased by 52%, mainly impacted by non-cash remeasurement items. This related to impairments of 7.8 billion rand compared to 5.7 billion rand in the prior year. The current period includes an impairment of 3 billion rand on the Secunda liquid fuels refinery CGU, which remains fully impaired. The recoverable amount of the CGU did improve through management actions, but was negatively impacted by lower forecast price assumptions and a stronger exchange rate. As a reminder, the overall Secunda complex, including the Secunda chemical CGUs, continue to have significant headroom when comparing the total recoverable amount to the net book value. On the Mozambican PSA gas development, we recorded an impairment of R3.9 billion, reflecting the revised gas production profile, as outlined by Simon, and the impact of the stronger RAND dollar exchange rate. Furthermore, a delay in the startup of the CTT gas-to-power project in Mozambique and the higher end-of-job cost estimate resulted in the full impairment of SASL's equity-accounted investment of half a billion rand. Looking at adjusted EBITDA by segment, performance across the portfolio reflects different market and pricing conditions, but also highlights the benefit of diversification. Starting with the Southern Africa value chain, mining EBITDA was lower, mainly due to the phase-out of export coal sales during the period. This was partly offset by redirecting volumes to Secunda operations, which benefits the broader SA value chain. We also realized additional income from leasing our Richards Bay coal terminal capacity. Gas EBITDA declined due to lower volumes as well as the stronger RAND US dollar exchange rate. We expect higher sales volumes in the second half of FY26 as the PSA ramps up. Fuels EBITDA increase supported by higher refining margins and product differentials. This was further supported by higher sales volumes on the back of improved operational performance at Secunda and increased utilization at NARTREF. In chemicals, both Africa and America EBITDA generation remains under pressure. reflecting lower prices, weaker margins and soft demand in global chemical markets. Eurasia saw margin improvements reflecting the benefits of our value over volume strategy and higher palm kernel oil pricing. Overall, the portfolio, supported by targeted strategic initiatives, seeks to balance earnings across sectors and geographies, further improving our resilience in an ever changing global landscape. In closing, our financial priorities for SASL are clear and unchanged. We are focused on improving sustainable cash generation, disciplined capital allocation, deleveraging the balance sheet, and proactive risk management. These priorities have been translated into plans with the key financial metrics for FY26 included in this slide and largely unchanged versus what we told you before. We aim to deliver on our volume targets that Simon shared, keep cash-fix cost increases below inflation, maintain first-order capital within the revised target of R22-24 billion, and manage net working capital between 15.5% and 16.5% as guided at CMD. We remain committed to reducing net debt to below US$3.7 billion by the end of the year, despite the uncertainties in the macroeconomic environment. while continuing to manage risk proactively through the completion of the FY27 hedging program. Ultimately, credibility comes from delivering what we say. We started the journey of delivery at the end of FY25 and built on that momentum in the first half of FY26. We cannot control the macroeconomic environment that we operate in, but we can control how we respond with decisiveness, discipline, and a clear bias for action. This is our commitment to you and underpins how we will continue to create sustainable value for our stakeholders. With that, I will now hand back to Simon for his closing remarks and look forward to engaging in the Q&A session later. Thank you.