Exxaro Resources Limited (EXX) Earnings Call Transcript & Summary

Thank you. Good morning, ladies and gentlemen, and welcome to our first virtual results presentation for the interim period of June 30, 2020. We acknowledge and share with you the importance and the need to maintain the protocols to prevent, but also to manage the spread of the infection of the coronavirus. And hence, we've observed the practice of social distancing and the wearing of masks. However, whilst presenting and, also later on, when responding to questions, the masks will be temporarily removed. And this is just to make sure that you can hear the speaker. But maybe just to move on then. Despite these circumstances, we are really pleased that we are still able to connect with you and to deliver what I can call a splendid set of results. Please be comfortable and safe where you're located. And I'd like to invite Mxolisi, who will start with the presentation. And he'll give us the results overview and, later on, come back after Dr. Nombasa Tsengwa and Riaan Koppeschaar have presented the operational performance and the financial results. Mxolisi, if I can ask you to please take us through the results overview. Thank you.

Thank you, Mzila. Good morning, ladies and gentlemen and also a special welcome to all the board members who are also in attendance. It is a pleasure for me to be with you today as we present Exxaro's financial results for the first 6 months of 2020. We are pleased to announce a strong operational and financial performance for the first half of 2020, in keeping with our mining and energy strategy. Exxaro is a resilient resources company and responsible coal producer with a focus on cash generation. In the short to medium term, our objective is to efficiently mine our coal assets and contribute to energy security in South Africa and, in the long term, support the just energy transition to a low-carbon South African economy and society. This long-term strategy is supported by our ESG framework. With regards to safety, 0 harm remains Exxaro's key business objective and one that is anchored on our safety campaign, Khetha Ukuphepha, which was launched last year. For the period under review, our LTIFR improved by 36% and is recorded at 0.07 against our set target of 0.11. We are also pleased to report that we have achieved a record milestone of 41 consecutive months as at August 1, 2020, without a fatality. It is also pleasing that Exxaro has maintained its ESG performance score of 4 out of 5 in terms of its overall media rating in the FTSE Russell ESG Index. In addition, as a result of this consistent performance, since the beginning of 2018, Exxaro has been accepted in the FTSE4Good Index. In relation to our climate change policy, we remain committed to the implementation of the TCFD recommendations across Exxaro, in line with our energy development strategy. We started with an assessment process prior to the COVID-19 lockdown. And due to this delay, the publication of the recommendation report will now be in the second half of this year. In relation to our operational performance, we achieved a record coal export volumes of 5.9 million tonnes, 23% higher than the second half of 2019. This achievement was enabled, amongst others, by our classification as an essential service, driven by market demand and logistics efficiency and operational excellence, which Nombasa will touch on. The 23% increase in export volumes was a major contributor to the increase in revenue despite lower prices, but also taking full advantage of the weaker rand for the benefit of foreign exchange earnings that is much needed for the country in the response to the COVID-19 pandemic. I am pleased to talk about synergy. Our renewable wind energy business, which is now a 100% subsidiary. We started this business in 2012 as a 50-50 JV with Tata Power, has been delivering electricity to the grid since 2016. Electricity generation has been in line with the seasonal wind performance for the first half of the year. Riaan will share operational and financial performance for the period of consolidation. The full consolidation of Cennergi's revenue and EBITDA is a pleasing step in the direction of an important growth platform that would enable us to realize our future energy ambitions. The 30% increase in core EBITDA is mainly attributed to higher revenue from our coal business and the consolidation of Cennergi from 1 April 2020, partially offset by higher costs associated with our higher export volumes. This, together with the improved performance in our iron ore investment, contributed to a 16% increase in core HEPS of ZAR 13.39 per share. Given this performance, the Board has declared an interim dividend of ZAR 6.43 per share under very challenging circumstances. We maintained our dividend policy of passing through 100% of SIOC dividend and paying 3x coal earnings cover for the period. This distribution will go a long way to benefiting not only our normal shareholders, but also our employees in the ESOP scheme and then also the Community Benefit Scheme. We have delivered this strong performance despite the difficult operating period for the past 6 months dominated by the devastating impact of COVID-19 pandemic. We have experienced and observed the consequences of this pandemic, so I will not dwell on this slide. Suffice it to mention the weakened prices in our basket of commodities, including the API coal price reaching a low of $42 a tonne during this period. Both these domestic and global economies remained tenuous despite stimulus packages for an economic recovery. The exchange rate may serve as a buffer for volatile commodity prices. The cumulative impact of COVID-19 and resulting disruptions is a new normal. Exxaro has a responsible commodities producer has made the resiliency of the company and its stakeholders a critical priority. We have approached our response, both from -- in immediate term response actions as well as planning for the long-term with shared responsibility through collaboration with stakeholders. We have implemented a series of COVID-19 response measures across all our operations and also at our head office connection as well as in our host communities. These response measures and protocols are aligned with government regulations and the Mineral Council South Africa, which aim to ensure that we reduce and delay infections as well as manage associated COVID risks. We have been working with both provincial and local government as well as through the MCSA to provide required accessories to our host communities to maintain safety and health and prevent the spread of infections. Among several initiatives, we have donated ZAR 20 million to the Solidarity Fund at the start of the lockdown. We have provided food parcels, masks and sanitizers to our communities, including appropriate safety clothing for health care workers. We have provided support to the value of ZAR 14 million to 15 small businesses employing a total of 690 people through loan repayment holidays of 2 to 6 months and also bridging finance. This was undertaken through our enterprise and supplier development program. Further, through the MCSA, Exxaro has been part of actions to minimize infections throughout ensuring sufficient testing facilities are available at the peak of the pandemic. Exxaro has acquired 2 testing facilities for employees, one each in Limpopo and Mpumalanga, in partnership with Eskom and Seriti Resources, respectively. These facilities will be made available to the public as well. It is important to note that current testing rates for the mining industry are well ahead of the national testing rates, and recovery rates are in the region of 60%. We embarked on several cash preservation initiatives through capital optimization and cost management. Employee retention was a priority throughout this period, and hence, executives and other management and specialist-categories' employees sacrificed annual increases in the beginning of April in order to avert any employee retrenchments. The Board also took similar measures and sacrificed their annual increases. The COVID-19 crisis presents an opportunity to rethink the future of South Africa and resilience of the industry and economy. It requires that social partners work together on an accelerated economic recovery plan, focusing on inclusive growth, prosperity and prosperity for all citizens. The success of the country's economic recovery plan as put forward by Business for South Africa requires a social and economic compact between all partners with focus on shared prosperity, including some of the critical structural and institutional reforms. This also economic compact between government, business and labor must do everything to improve the country's competitiveness ranking with inclusive growth as being paramount. There is a further need to restore confidence in the criminal justice system. There is an urgent requirement to accelerate institutional reforms at state-owned enterprises. Government ultimately needs to create a much more stable, predictable and competitive policies, regulatory and operating environment for improving competitiveness and encouraging investment in the economy. And for the sake of our country, bold, courageous, decisive and sometimes very unpopular decisions, which are critical for the survival of this country now and into the future, are required to be taken urgently. Now let me hand over to Nombasa, who will take us through the coal operational performance.

Thank you very much, Mx. Good morning, ladies and gents. It is truly a privilege to present the operational performance results for not only a challenging first half of 2020 versus the second half of 2019, but also half of confusion and deep anxiety as a result of COVID-19 pandemic, which has impacted the last quarter the most. So we're starting off on the safety front as we always do. I can comfortably report that there is effectiveness in our Khetha Ukuphepha, "Safety always, all the way," program, with the 17% improvement in our LTIFR and 14 months, as Mxolisi say, without a fatality, which is the longest period we've ever had in the company. We really commend all our teams for driving zero harm so hard. You will recall on this slide, we always include environmental information and results, and you'll find all of that information on Slide 29. The reason being, we want to share COVID-19-related issues on this slide. As you are well aware, as an Eskom supplier and an exporter of coal, we were classified as an essential service, and we responded as follows: at Grootegeluk, we ran 800% capacity throughout. Also at Belfast and Leeuwpan, we also operated at 100%; at Matla, at 75%; and while at ECC and Mafube, we were at 50%. To mitigate full stockpiles at RBCT, all non-Eskom-supplying operations went on a 10-day shut over the Easter period. And this allowed us to manage costs across all our operations and also managing exposure of our employees as we slowly ramped up the logistics chain. The Matla operation, early in the lockdown, was one of the mines that had a surprise from for Minister Gwede Mantashe. And I'm pleased to report that our compliance to regulations was assessed to be of a high standard, and Matla was viewed as a benchmark in the industry. Currently, at Level 3, all our operations are back on full capacity, except for Matla, which is operating at 80% of its normal production. And this is really due to the changes that we've done as far as the shift patterns are concerned, which had to implement to improve social distancing. I won't go into depth as far as the operational or the test labs that we have introduced and we are rolling out, but pleasing to say that those testing labs, which is in 2 areas at the Waterberg and at Matla operations, are being commissioned as we speak. So going into the early week, next week, we will be testing for COVID-19. As at yesterday, which is the 12th of August, we confirmed -- we had confirmed cases of 474 with 3 deaths. And really, condolences to the families, the friends and colleagues of the 3 colleagues that had departed as a result of COVID-19. However, we continuously review the measures we have implemented across all our operations to ensure that we minimize the impact of the pandemic to our employees. And as projects are busy ramping up, post lockdown -- sorry, post Level 3, we ensure that the same protocols that are applicable to our employees are also adhered to by our contractors. Now moving on to production and sales volumes, and you will see from the 2 bar graphs that production was higher by 2%, while sales were slightly down in the second half. And you will also see from the table, the net increase of 0.4 million tonnes of product. And I'll unpack that for you in terms of what the movements look like. Just taking you back to what we've told you in March. You will recall, even before then, we talked about the challenges that Grootegeluk experiencing from Medupi offtake. But subsequent to that, the challenge is that we reported earlier, we can now say that Medupi has been able to improve its uptake, resulting in Grootegeluk being up by 1.1 million tonnes. The Belfast ramp-up also contributed very well, 0.4 million tonnes, however, partly offset by lower production at ECC, at Leeuwpan and at Matla due to COVID-19, especially in the second half of -- sorry, in the second quarter of this first half. Now moving on to sales as well. You'll see the net decrease of about 0.1 million tonnes due to the new agreements that we're expecting from Eskom for ECC and Leeuwpan not yet realized as well as the reduced market demand due to the pandemic, offset by increased sales at Grootegeluk to Medupi, as I've already mentioned, and a 1.1 million tonnes increase in exports and sales, which is in the first half. So if we look at the second half of 2020, we forecast products and sales to be lower in the first half due to the following: the GG6 shut from September for commissioning as well as planned maintenance at other plants at Grootegeluk; and then lower buy-ins, which we are not planning for; and then as far as sales in terms of lower Eskom contractual requirement from Grootegeluk; and our view of the Indian demand, which is uncertain, in addition to the monsoon season that the Indian market has just entered into; and potential weather disruptions that we often experience at this time of the year at RBCT. Now coming on to the export slides. Very pleased to report that exports increased by 23%, as Mxolisi has already said, on the back of a very good marketing performance despite market conditions, which were disruptive due to COVID-19. This was also supported by good product availability from all our operations as well as very good logistics performance. As far as the top right-hand graph, you will see a reduction in the Indian exports, but also a material increase to other Asian countries. We have witnessed very good demand from Pakistan and a significant increase in sales to Vietnam during this period. If you then look at the graph, which is the bottom left graph, you will see that our sales mix, we were able to produce and sell a higher-value product mix. We continue to see very good demand in the RB2 market, and we expect this trend to continue into the second half. As far as the RB1 profile going forward, you will see from the same graph I've just referred to, that it is actually a testament to the contribution of the capital invested in the Belfast and GG6 projects now realizing. You will also see in the bottom left -- in the bottom right graph as well that the higher value mix has contributed positively towards narrowing the realized average sales price to the average API4 price. And globally, the estimate is that the seaborne market is in a 30 million tonne surplus. And the total sales for 2020 is expected to be down at least 70 million tonnes compared to 2019. And really, our balanced portfolio between Eskom, domestic and export sales, create an effective market buffer, protecting our margins, especially at current price levels. And our divested product mix enables us to respond competitively to ever-changing market conditions. And now looking at our costs. And once again, very pleased to report a reduction on our rented tonne of 7.7%, despite the consistent high stripping ratios, partially assisted by higher product tonnes. This is a confirmation of our ongoing efforts to remain low on the cost curve. So I'll unpack this cost for you to say despite the following uncontrollable reductions, which all amount to ZAR 23 per tonne, comprising of foreign exchange gains of ZAR 279 million. We appreciate when ForEx is favorable, but we must also talk about it when it is unfavorable. But this time, it was indeed favorable. Life of mine rehabilitation provision, downward adjustment of ZAR 230 million, assisted by our efficient ongoing rehabilitation. Lower royalties and carbon tax of ZAR 92 million, offset by increases on selling and distribution cost of ZAR 171 million linked to higher export sales. And there were additional controllable savings, which we achieved during this period amounting to ZAR 9 per tonne, starting with contractor cost saving of ZAR 129 million, mainly at ECC linked to lower production and lower stripping ratios, partly offset by higher cost at Belfast with their increased production. Savings on general expenses, energy, maintenance, and drilling and blasting of ZAR 112 million. And normal inflation increases of ZAR 82 million at an average of 2%, lower than the average mining inflation. So on stripping ratios, as we have mentioned before, they were slightly lower, yes, and are expected to decrease further at all these, except at 2 business units, which is Mafube and Leeuwpan. These high stripping ratios costs are expected to remain with us for the next few years, as indicated to you, as I said in March. If I can just spend 1 minute on the stripping ratios. Where we come from with the stripping ratios is when we entered the new reserves in Mpumalanga. Especially at Mafube, at Leeuwpan, that's when we saw an increase in their average stripping ratios than before. Belfast entered at a much higher stripping ratio of about 11% and just about, and that will continue over its life of mine. So when we talk about stripping ratios, this is what we're talking about in terms of where the increase has come from. However, in some cases, we do prestrip during rainy seasons, as we are doing right now at Belfast, where we'll prestrip, so that we can benefit into the future. I just thought I must make those 2 differentiators of the fact that we will continue at these levels at those 2 operations. In addition to the cost performance we described above, we indicated to you at the FD close -- preclose that we were targeting additional savings amounting to ZAR 500 million of cost and ZAR 900 million on CapEx for 2020. This forecast on additional specific initiatives, which were directed at combating the COVID-19 impact on our business, we have already achieved a savings of ZAR 380 million on costs and ZAR 560 million on CapEx against these targets. This performance is reflected as trends in the bottom-left graph. We continue to drive productivity improvements through all our operational excellence initiatives, including digitalization processes across the whole value chain. This is all in relation to our drive to remain lower on the cost curve. On my last slide, we look at the total CapEx expenditure as planned for the following 5 years. Looking at total CapEx, it is expected to be turned 12% lower than our previous guidance. Looking at the expansion CapEx. It is also expected to be 44% lower, and this is mainly due to the fact that we have now excluded the Thabametsi CapEx from the plan due to the uncertainty regarding the IPP. Any changes that we see in this project, we will advise as in due course. As mentioned in March, the delayed experience on the GG expansion project due to contractor issues as well as the impact of COVID is expected to increase the project cost by 10%, which is equal to ZAR 500 million. The estimated impact of the pandemic on the project time line is a further 3-month delay, thus, shifting the project time line 6 to 9 months. The mine is continuously working with the project team to make sure that we mitigate the impact of these delays. Belfast construction CapEx is within budget. However, some post-construction activities, which are linked to plant commission delays, have resulted in the final overall project expected to be ZAR 500 million higher than planned. These delays have called -- thus caused operational readiness costs to be higher by ZAR 100 million and planned revenue not realizing of about ZAR 400 million due to lower production costs, lower production tonnes -- sorry, and lower product qualities, which is exacerbated by lower prices achieved in this period. On sustaining CapEx for the 5 years, it is in line with previous guidance, as you can see from the graph on the right, and includes the latest sustaining and replacement strategies. In closing, ladies and gents, you will agree that my coal team and our support functions colleagues have delivered the best result any resilient team could have under very tough operating and unpredictable market conditions. And this performance demonstrates that Exxaro has a robust portfolio of assets that has enabled us to deliver during a difficult period over the past 6 months. We are, therefore, well positioned to continue to support the country's energy transition where coal still continues to play a significant role through maximizing the value of the core business, through our early value strategy that we've been talking about, thus avoiding stranded assets; managing our costs to ensure that we continue to be competitive, both domestically and offshore. We continue our operational excellence initiatives, such as our digitalization program to enable our people to work smarter and safer. Our market-to-resource optimization approach, rendering the business more adaptive to the dynamics of the market; disciplined and optimization of our CapEx program to ensure our core returns; and most importantly, this is achieved through our professional and very competent employees, which I must again commend to the -- for the excellent results. Now I hand over to Koppes.

Good morning, ladies and gentlemen. It's a pleasure to present our interim results for the 6-month period ending 30 June 2020. The results will be compared to the 6-month period ending 31 December 2019. So on the first slide, the high-level overview of our core results highlights the difference between our own managed operations depicted at the top and income from our equity-accounted investments at the bottom. Taking into account the difficult trading environment, we are pleased that revenue increased 2% to ZAR 14.1 billion and EBITDA increased 30% to ZAR 3.9 billion. I will unpack the details in the following slides. The contribution from our nonmanaged operations showed a significant increase with equity income increasing to ZAR 2.4 billion, mainly due to the performance of our investment in SIOC. This translated into core headline earnings per share of ZAR 13.39, an improvement of 16%. On the next slide, you will see the noncore adjustments made to earnings to report on normalized earnings. Most of these adjustments are JSE headline earnings adjustments with the main item being the profit on the deemed disposal of our 50% shareholding in the Cennergi JV. Further details are also included in the backup slide. Keep in mind that Cennergi's results are now consolidated into our accounts as from the 1st of April. Also note that we are now recognizing noncontrolling interest for the external shareholders of our BEE partners, Eyesizwe RF, as from the 1st of November 2019. We will then look at the core numbers. On the revenue waterfall graph, as already explained, prices realized were lower in the domestic and export markets. On our exports, although the benchmark API4 price was 7% lower, we still managed to realize a price of $52 a tonne, in line with the second half of 2019. When we look at our volumes, domestic volumes decreased as a result of the reasons Nombasa already alluded to. Our export volumes increased 23%, mainly due to higher coal availability from our own operations with Belfast ramping up and also a very good contribution from Grootegeluk. The negative variance at ferrous relates to FerroAlloys where sales volumes were negatively impacted by COVID-19. The average rand-dollar spot rate was also 13% weaker, and we achieved -- realized rand-dollar exchange rate of ZAR 16.39 compared to ZAR 15.14 in the second half of 2019. The other revenue bucket was lower, mainly due to the transfer of the Arnot mine on the 1st of February 2020. Revenue from our captive Matla mine was ZAR 264 million lower due to lower production as a result of the COVID measures. When we look at EBITDA, the revenue variance was already unpacked on the previous slide. On inflation, LIBOR inflation was close to 0%, our diesel cost, 5.9% lower and electricity cost increased at the average cost of 4.5%, with the rest of the cost at PPI of below 2%. The employee cost was nearly flat as we did not grant salary increases to management and specialist-category employees as a result of the COVID savings initiatives. This was partially offset by additional COVID allowances paid to our employees at the mines during Level 5 as well as additional hired labor to comply with COVID-19 sanitization protocols. The decrease in the rehabilitation cost is mainly due to higher discount rates used for environmental provisioning. The operational cost was lower due to lower production volumes, especially at the Mpumalanga operations, offset, to some extent, by the increase in production at the Belfast mine. The negative variance on distribution cost is in line with the higher export sales. And the net positive ForEx variance is a combination of realized and unrealized foreign exchange differences due to the weaker rand-dollar exchange rate. The synergy bucket presents the operational cost for the 2 wind farms for the 3-month period. And the general bucket, Other, includes higher insurance claims received of ZAR 43 million. On the next table, we split out the revenue and EBITDA for our core operations with a further breakdown of the coal segment between the Waterberg and Mpumalanga. We are very pleased about the increase in revenue and EBITDA at the Waterberg operations. The decrease in EBITDA in the Mpumalanga segment is mainly driven by the lower export prices and lower domestic volumes, which we already explained. In the other coal segment, the decrease is mainly due to the rehabilitation adjustments that I already explained on the previous slide. It should also be noted that the Belfast mine was still in a ramp-up phase during the first half of 2020, with revenue and expenses amounting to a net profit of ZAR 65 million to be capitalized to the asset. The capitalization of cost ceased at the end of February this year. So this translated into a very healthy EBITDA margin of 26% for the coal business. We will then look at the energy business. As mentioned earlier, Exxaro acquired Tata's 50% shareholding for a total purchase consideration of ZAR 1.64 billion, including purchase price adjustments. Cennergi is, therefore, consolidated into our accounts as from the 1st of April. The opening balance sheet after the purchase price allocation is included in the backup slides. For the 3-month period, Cennergi generated energy of 176 gigawatt hours, which is slightly below expectation due to lower wind speeds, offset to some extent, by better equipment availability. It should also be noted that the project finance debt of ZAR 4.7 billion will mature over time and be fully settled in 2031, and it has got no recourse to the Exxaro balance sheet. The debt is also hedged through interest rate swaps at an average rate of about 12%. Hedge accounting is applied, so this mark-to-market movements will have no impact on the Exxaro profit and loss account. I will also share the detailed generation from Cennergi. So as a background, Cennergi owns 2 wind farms: the Tsitsikamma Community Farm with an installed capacity of 95-megawatt; and Amakhala Emoyeni with an installed capacity of 134 megawatt. Electricity generated for the first 6 months amounted to almost 350 gigawatt hours, in line with previous years. The wind patterns are seasonal and generation is usually higher in the second half of the year, as can be seen from the graphs. 2019 was an exceptional good year for generation, especially July. And you can see there that Amakhala generated almost 150% of its intended target. Since the start of the operations in 2016, both facilities have maintained an equipment availability factor of around 98% and an average capacity factor of 36% at Amakhala and 40% at Tsitsikamma. If we look at the core attributable earnings, the financing cost line. So that includes interest costs associated with Cennergi of ZAR 137 million. We also capitalized interest of ZAR 230 million at our Belfast and GG6 projects. Looking at equity income. Mafube, our 50% JV with Anglo, the equity accounted income was ZAR 35 million. The increase in equity income from SIOC to ZAR 2.3 billion was supported by strong iron ore prices as a result of global iron ore supply disruptions. Tronox only consists of Exxaro's 26% interest in the South African operations. The equity income decreased from ZAR 125 million to ZAR 95 million due to lower sales volumes and prices as a result of COVID-19. Cennergi includes our 50% share of the equity income for the period January to March before we consolidated the investment. The other category includes ZAR 48 million loss from Insect Technology Group where start-up costs are still being incurred. Black Mountain is now held for sale and is not reflected here. And as Mxolisi pointed out, we are in the final stages of concluding a sales agreement, and we hope to complete that in the next couple of weeks. As mentioned, Eyesizwe RF repaid the acquisition debt in November. And we are now recognizing noncontrolling interest on their external shareholders as from the first of November. So this then resulted in core attributable earnings per share of ZAR 13.39, up 16%. Just a reminder, again, of our capital allocation framework. So from our free cash flow generation, our first priority is to service interest and capital to our debt providers; then sustaining capital to ensure a safe working environment and to sustain our operations; thirdly, to expand our coal operations and to extend the life of our mines; we then, fourthly, pay dividends to our shareholders in line with the revised dividend policy. And only then will we pay the -- allocate capital for growth in terms of our energy and mineral strategy. To the extent that we've got surplus cash, we will then make -- look to make further distributions to shareholders. In implementing our capital allocation, we aim for our net debt EBITDA ratio, excluding Cennergi, always remain below 1.5x cover. So if we then look at the cash inflows for the first half of 2020, it totaled ZAR 5.9 billion, of which ZAR 4.3 billion was our own managed operations, and dividends comprised of ZAR 1.6 billion, mainly from SIOC. In terms of our capital allocation framework, we then paid financing costs, sustaining capital and expansion capital at the coal operations. We paid dividends of just over ZAR 2 billion, and included in the ZAR 1.9 billion for growth is the ZAR 1.6 billion that we paid to acquire Tata's 50% shareholding in Cennergi. Included in the other bucket of ZAR 327 million is the last payment of the ECC deferred purchase consideration. So this then resulted in a closing net debt position at 30 June of ZAR 10.5 billion, which includes the synergy project finance debt of ZAR 4.7 billion, resulting in a net debt equity ratio of 28% and a net debt EBITDA cover ratio of 0.9, excluding Cennergi, well within our targets. So as Mxolisi also pointed out, as a result of this, resilient performance in one of the most difficult trading environment, I'm pleased to announce that the Board has resolved to pay an interim dividend of ZAR 6.43. In terms of our dividend policy, it's a combination of the SIOC pass-through dividend of ZAR 4.76 as well as a dividend from our own coal operations of ZAR 1.67, resulting in an overall cover ratio of 1.9x core attributable earnings of the group. So with that, also, I want to echo Nombasa's sentiment. All the employees at Exxaro, whether you're at the business unit, in a support function, I think, a very sterling performance under very trying circumstances. And then also the finance team, I think it took a great effort to put this together during the lockdown. I'm not going to single out anybody, but the effort all around is appreciated. So I hand back over to Mxolisi.

Thank you very much, Koppes. And so just looking forward now. For the second half of 2020, the resulting of global economy is anticipated to bring economic growth recovery. However, the uncertainty about the impact of COVID-19 virus makes any assessment of the global economic outlook very challenging. The impact of the lockdown on South Africa's fragile public finances has been devastating, with gross domestic debt as a percentage of GDP likely to rise significantly toward -- together with a debt service cost. These fiscal imbalances will have a knock-on effect on economic recovery path for South Africa into the second half of 2020. The API4 index price is expected to be supported as activity in the economic seaborne market resumes and a greater supply-demand balance is achieved. However, weak demand and flat pricing is anticipated into the early part of the second half of 2020 as the speed at which coal demand reduced as a result of the lockdown measures far outpaced any supply response. Global seaborne thermal coal trade levels for 2020 are also expected to decline compared to 2019. Despite steady Chinese iron ore demand, a recovery in the seaborne trade is anticipated to offset a modest rebound in ex China steel output. In addition, as China's iron ore port inventories rise towards the end of second half 2020, a softening iron ore market is expected. It is expected that domestic coal demand and pricing will remain relatively stable in consideration of lockdown protocols and the gradual return of industrial customers to full operations. We expect Eskom's offtake to meet the contractual volumes for the year. On the international front, we expect the full impact of the pandemic on coal market to sustain well into the first half of 2021. In line with our digitalization program, we continue to roll out the integrated operation centers across all our operations to enable the visualization of the value chain. This increased visualization as well as data insights gained from our operations will highlight inefficiencies and will enable improved in-time decision-making relating to safety, productivity improvements as well as cost performance. Regarding the Moranbah South coking coal project, Exxaro and Anglo American continue their endeavors to agree on a mutually beneficial development plan and time line. Turning to Exxaro's strategy. In the immediate to medium term, completing the portfolio optimization remains a priority, including the sale of ECC and Leeuwpan as well as the remaining interest in Tronox. The disposal of Black Mountain mining is imminent. The early value coal strategy aims to maximize the value of the coal business and minimize stranded high-value coal reserves, hence, the outlook for higher coal qualities. Beyond this medium term, we must acknowledge that there are structural shifts in the transition to a low-carbon world that Exxaro cannot shelter from. However, we recognize that we have a duty to shareholders and the custodians of our mineral assets to ensure a responsible maximization of our coal assets as part of a transition to a healthier, more equitable and sustainable economy. As such, Exxaro is purposefully and responsibly managing the risk and opportunities that are inherent in the transition by building the relevant capabilities to succeed in a low-carbon economy. We will continue to deploy capital in a carefully and well-considered approach by prioritizing acceptable value distribution with investments in renewable energy. Cennergi represents a solid platform for enhancing our diversification and growth ambitions in this transition path. And therefore, in conclusion, let me also thank our Board, our management team and, really, the broader Exxaro community who have really exceeded my expectation of how, as a people of this company, we have, in a very responsible way, understood the needs of our country during this critical time, understood the needs of our communities in responding to the challenges that they are facing and also, as a people, understanding the need to sacrifice ourselves in responding to those needs. And I'm very proud that I'm part of an organization where people have made themselves very selfless in how they have taken on this great challenge. And so as we look into the second half and as we look forward, I'm very confident that we have people who've got what it takes to succeed, and they have truly demonstrated that in the most difficult time of any part of history that we can remember of where we have performed to the best that we have. And for that, I thank them and I salute them for the great work that they have done. And so ladies and gentlemen, let me also thank you for joining us here today. And I now hand over to Mzila for the question-and-answer session. Thank you.

Thank you very much, Mxolisi, and thanks to the team for a great presentation. [Operator Instructions]. Already on the webcast, I have a couple of questions, which I will read out. The first questions -- 2 questions from [indiscernible] [ Mtombo Wealth ]. And his first question reads as follows. Can you please provide some color on any possible changes to capital allocation going forward? And can we expect any special dividend from the sale of assets? And his second question is, does Exxaro have any intentions to acquire assets in the green energy segment of the business given the increasing negative outlook for coal?

I can perhaps quickly talk about the capital allocation. So the capital allocation is still in terms of the framework that we just discussed. And as we pointed out, to the extent that there are surplus cash balances, we will look at it to return it to shareholders. Now obviously, we always committed that the majority of the proceeds related to Tronox will be distributed to shareholders, and that is still the intention.

Okay. And I think the second part on the green energy, Mxolisi, will you take that?

Thank you very much, Mzila. I think what we have decided that with the sale of Black Mountain that would want to use those proceeds as part of the financing for the Cennergi acquisition. And so already, that is how we are looking at how we balance between making sure that we give to the shareholders what we've been promising them, especially the way we have looked at ensuring that our promise regarding to what we're returning with regards to the coal, we stick to that in terms of the 2.5 to 3.5x cover. We, at this point in time, are taking our time to really make sure that as we are looking at this transition towards a low-carbon future, that we do it with meticulous diligence in ensuring that we also ensure that we have the necessary capabilities to be able to respond to it. So we are not rushing into it. We are busy looking very carefully of how we're going to take this transition, and we will come back to the market to share that strategy once it is ready to be shared. At this particular point in time, we are not yet ready to share that with the market. But we are very cognizant of our commitment to ensure that we take a very measured approach in terms of how we're going to approach that transition.

Thank you, Mxolisi. There are 3 questions numbers for you from a coal perspective. The first one around the market in terms of the sustainability of the Pakistan and Vietnam markets, and to the extent that you were to diversify and reduce India significance going forward. And the second one is around, given that there's no Thabametsi and Moranbah South, I think it's still a decision pending. Is further growth in the coal business through acquisition an option? And then the last one is around the outlook regarding the 2022 improvement in realized prices versus the benchmark prices, whether the target is contingent on the sale of ECC and Leeuwpan to improve the mix on the grades. I'll repeat those to you. So maybe the first one around the market in Pakistan and Vietnam to the extent to which they're sustainable.

Good, sir. Thank you very much. Sakkie, I'm going to ask you to answer that question. But maybe the first, I can just quickly talk to is going to be the growth through acquisitions in the coal business or in -- look, we have spoken quite extensively about our early value strategy, which we believe is going to give the business the legs to run into the future and ability for our product mix to really do very well from a response to market point of view and also our attempts and efforts, which we put in our reduction of our unit costs, which we believe that with that and the growth of the value of the product mix and the life of those assets with those with that high value really will take us a long way. And it's a strategy, which we believe is quite defensive and not really needing extra tonnages of coal in this table because we've got that life ahead of us. So there is no intent at this point in time to grow in terms of acquisitions, but to use the coal in the ground and optimize it in actually achieving that that early value. And of course, semi-soft coking coal is what we're working with. As we said earlier, with -- you said at Mzila as well, with Anglo American and the JV in Australia, which we're working very hard to make sure that the projects comes to bear much earlier because it does fit within our product mix, which we plan for the future, and we do see strong markets for it. So nothing planned for acquisitions at all.

Thank you. So Sakkie, over to you.

So have him deal with the 2 questions then on the market.

So the first one, Sakkie, just for a reminder, how you see the Pakistani and Vietnam markets.

Yes. I think on the markets, Pakistan, we believe is a very sustainable market for South Africa going forward. Quite a bit of coal-fired generation capacity has been constructed in Pakistan, and we believe that is there for the medium to the long term. So Pakistan, a very stable market for South Africa. Vietnam has grown remarkably over the past few years where Vietnam, in total, has imported less than 10 million tonnes of coal by 2017, and that is forecast to grow by close to close to 50 million tonnes in 2020. So you can see that there's been a remarkable growth. From a demand perspective, it's not the end of it yet. The growth is continuing where there is a further 2 gigawatts of electricity generation capacity in the coal-fired space added to the Vietnamese fleet in 2020. And a further 7 gigawatt is expected to come on stream through 2022. So again, from a coal-fired generation capacity in Vietnam, very strong growth, and we believe a very sustainable growth going forward. The Vietnamese demand from South Africa is a bit of a more cyclical story. It is not as stable as Pakistan. And we witnessed there what we also witnessed with markets like South Korea, that at times, depending on where the different price indices across the world are, it is in the interest of the Vietnamese buyer to either go to Australia or to go to Russia or to come to South Africa where they get the best price. This has favored us in a big way in the first half of this year. And in fact, I will say, if Vietnam were not such strong buyers of South African coal in the first half, South African industry will have been in serious trouble. Vietnam in the first half have grown to the same volume as Pakistan normally is off taking coal from South Africa, which is our second-biggest customer. If I then, Mzila, can move on to India, the question that was asked in line with that. As you could see, the Indian offtake was quite a bit lower. It is not necessarily an Exxaro product mix story, a little bit of that. But the Indian, specifically, sponge iron industry and the cement industry were hit severely during the COVID lockdowns, and we still see the effect of that in India. So where India, normally, from South Africa, will take about 21 million tonnes of coal per 6-month period, that has dropped to only 16 million tonnes in the past 6 months. And specifically, the second quarter was hit very hard with 10 million tonnes being bought from South Africa in the first quarter, dropping to only 6 million tonnes in the second quarter. So the India market, we still believe in very strongly as a future market from South Africa. It is a market that typically buys between 50% and 60% of South African export coal. And given time, we believe that market will recover. And what we witnessed in the 6-month period is that South Africa was actually not hit as bad as, for example, Indonesia, with the lower-quality coals to the Indian market and to the Chinese market. So we very strongly believe in the Indian market. And although there's uncertainty on the rate of recovery over the next 6 months or 8 months, we believe the recovery will come.

Thanks, Sakkie. And the second question was in relation to the price outlook in terms of realized versus benchmark as to whether that depends on ECC and Leeuwpan in the sale of those 2 assets and the resulting impact on the product mix.

Yes, it will definitely have an effect. For as long as Leeuwpan and ECC stay part of the portfolio, obviously, the lower -- the volume of lower-quality products, specifically on the 48.00 and the RB3 material will play a bigger part in our portfolio, and those products do attract a discount compared to the index. During the past 6 months, we have actually seen that we benefited quite a bit by the higher quality of product in terms of CV on average that we had in the portfolio, as you could see, on the market slide, on the bottom left, the product mix. So we definitely benefited by higher quality mix that we're exporting. And that was partially offset, actually, by a little bit of wider discounts on the subgrades. So your RB2, RB3 and 48.00 witnessed a bit bigger discounts in the past 6 months than in the second half of '19, which actually mitigated the bit of the positive effect that our higher value and higher product -- higher-quality product mix ahead in this period. So Leeuwpan and ECC, going out of the portfolio. As you could see on the bottom left-hand graph, we will see the RB1, RB2 taking up a bigger chunk, and we will benefit from that.

Thank you very much, Sakkie. And then one last question from webcast before I go to Chorus Call. And Riaan this will be for you around Cennergi. Showing a net operating profit margin 49%, can the assumption be made that this is sustainable at this level?

Net operating profit of 48% -- it should be higher. I think in the slide, we show the EBITDA margin…

EBITDA margin.

Is about 80%. But it is sustainable. Remember, the underlying nature of this contract is, if you can produce the wind every year, your tariff increases by CPI. It's a long-term PPA agreement with the revenue increasing by CPI. So the -- as we pointed out there, the operating cost in the business is not very high. So on an annual basis, you're almost looking at, let's say, on a pro forma basis, revenue of ZAR 1.2 billion; your operating cost, ZAR 200 million with ZAR 1 billion EBITDA; financing cost, about ZAR 600 million; and then depreciation after the purchase price allocation of about ZAR 400 million. But it is sustainable going forward, but also dependent on wind. But if you see the history, it's been very stable.

So suffice it to mention, it won't be blown away by the wind. No pun intended. So if I can then move to Chorus Call. I don't know if there are any calls -- or any questions on Chorus Call?

The first question from Brian Morgan of RMB Morgan Stanley.

Just -- can you chat about the early value strategy that you guys talked about? How do I reconcile that to the dearth of expansion CapEx over the next 4 years that you guys outlined? And then maybe related to the early value strategies, how should we be thinking about this? How does it differ from a normal strategy of using available capital to use to spend on projects that beat cost of capital? How does it differ?

Sorry, Brian. Can I ask you to repeat your first question? It wasn't clear.

The first question was on early value strategy and the fact that there's no CapEx in the forecast period.

So basically, we're speaking about an early value coal strategy, but we're not showing any related CapEx to that.

That's right. Yes.

Okay. Yes. Mellis Walker, will respond to that.

Thanks, Brian, for the question. You'll remember that when we started talking about the early value strategy, we always emphasize the fact that it's going to be capital light. And Nombasa also mentioned in terms of acquisitions, that we actually want to organically grow that value from the assets that we already have and the money that we've invested. So I mean, Belfast, we know that we're ramping that up. GG6, we're getting that commissioned towards the end of this year and really getting to full volumes in 2021. And then Mafube, we've just transitioned to a new reserve. So we don't see huge capital needing to go into the assets. So we're going to really leverage off the being low on the cost curve and really being selective about the way we actually mine and liberate the value in the reserves that we currently have in the plans that we have in the life of mine schedules.

Thank you. Brian, does answer both your questions?

Well, the second one is, how does it differ from a normal -- why do you call it an early value strategy? How does it differ from a normal sort of strategy of deploying capital towards projects that beat cost of capital?

Brian, remember, one thing that doesn't change, obviously, is the capacity of our plants. So we still would mine more or less the same number of tonnes in terms of capability of each operation. But what we did was to focus on those high-value areas of the reserve and making sure that, that is supported by a longer life of mine. So in some cases, so what I mean is you don't need to have an extra plant or anything extra to process high value. It's about how you schedule it and what you select from the ground and what you mix it with in response to what the market requires. So what really drove that strategy was 2 big lenses, which was high value as mainly RB1, without obviously losing your RB3 because RB3 still has a lot of value in some markets, and also making sure that what that product of high value is delivered over a much longer period of time. And in some cases, what it required was that we reschedule or blend the pits differently. I'll give you an example. Grootegeluk has good -- such a long life, has a variability of qualities where, in some cases, you would find a concentration of sulfur. In our reorganization for our high value was to leave some of those areas behind. And our life of mine, from the power station point of view, wasn't compromised, neither was our increase in our high-value products where the seaborne market was compromised. So we had to look at that balance, volumes, qualities, the life and no change in the capacities in the plants necessarily that would require us to schedule or add more capital.

The next question comes from Tim Clark of Standard Bank.

I've got 3 quick questions, please. The first one is just if we can just take a slightly deeper stab or if you can offer a little bit more insight on your value distribution versus your long-term investments portion of your strategy. I hear what you say about coming out and releasing the strategy when you're ready. Am I right to read that the 2.5 to 3.5x coal EBITDA cover will remain? In other words, as your coal earnings grow from all of your projects, you'll be investing more marginally into renewable contracts, right, because you'll still be applying that cover ratio. Is that overreading it? That's the first question. The second question is your other coal cost again coming through high. I appreciate there's some one-offs there, but we seem to have regular one-offs and other coal costs. So can you talk to a sustainable number there? Because it is a big number. It's quite a frightening number when you look at it as a stand-alone number. And then my last question, please, is on just some kind of color or split in Mpumalanga. You've stopped capitalizing Belfast. It's coming online. Can you give us like a unit cost for Belfast or a delivered cost to the port for Belfast because you've got some pretty scary looking kind of negative numbers in Mpumalanga? I appreciate the reasons for those. But please, can you just give us a little color there or try and give us some kind of a split to help us model.

Thanks, Tim. So your -- my understanding of your first question in light of the statement that we made in the results on the balance between value distribution and investment. Looking forward is how that's going to play into the dividend policy.

Yes. Correct. It's 2.5 to 3.5 comp.

In terms of coal earnings?

Coal cover.

Yes.

So at the moment, that is still the dividend policy. And I think what we always told the market is, to the extent that the coal CapEx starts to drop off or reduce, then we will reduce the cover ratio to closer to 2.5x. So currently, we're sitting at 3x. But definitely, going forward, there is now scope to move into closer to the 2.5x.

Okay. Thanks. And then the next 2 questions are related to costs. I didn't catch the second question around the coal cost performance, but you indicated there are some scary numbers. I don't know if anyone else got that.

You've got other in coal costs and that's a big number. What's the outlook for other coal?

ZAR 700 million.

What should we put in as our forecast because you've had quite a lot of historic big numbers there?

All right. And then maybe Mellis will share -- talk about potential to split the Mpumalanga cost and highlight the Belfast cost.

Okay. Thanks, Tim. Just on the one-offs that you mentioned, I mean, the 700 million, I'm assuming you refer to in the segmental reporting, so the bulk of that is related to the corporate allocations that happen from head office. So you see the numbers has varied over the years. It's actually down this half against the previous half. The previous half was about ZAR 900 million. This half is about ZAR 700 million. And I think ZAR 700 million is the number that is sustainable going forward because we pick up our portion of the allocation. I would assume as the group grows, that split -- as the income grows out of the different components that are generating income, then the allocations will be apportioned accordingly. But that's the kind of number that you can expect at least in the foreseeable future. Just repeat the second question was? That was around…

Yes. Just -- let us…

Can I just take a stab on that? So ZAR 700.5 million is 1.4 billion a year of other costs that are allocated. Why do you allocate those to Mpumalanga and to Grootegeluk to the mines if it's shared services or something else? Otherwise, it sounds like a huge number.

Yes. So the business units do pick up their portion of direct service level agreement costs. So the costs that aren't directly related to the business unit services that they receive from a corporate point of view are then a portion to the coal commodity business in terms of the legal entities.

I also feel the mine's enclosure is also included.

Yes. The mine's enclosure are also in there. But yes, the bulk of it is definitely related to corporate allocations. Okay. Then I'm going to move on to the second one, which is Belfast, I think.

Yes. Just in terms of splitting up the…

The cost.

The costs on Mpumalanga.

The Mpumalanga cost, yes. So I mean we…

Focus on Belfast.

Before you said ECC, whatsoever.

Yes. So I think these are the type of questions that we always struggle with to answer. So the first part of the answer that we gave was to give an overall cost for the coal operations. We've also -- you've seen the segmental reporting, which gives you an opportunity to do the calculations per segment, knowing that the volumes that are related to those 2 particular operating segments being Mpumalanga and Commercial Mpumalanga and Waterberg. So that's 2 operations in Mpumalanga being captive and then obviously commercial and then Waterberg as well. Belfast, at the Capital Markets Day, we spent quite a bit of time talking about that in terms of the operating costs. And what we indicated at that point in time was that the numbers that we were seeing were pretty much in line with the original investment that was made in terms of that business. And we're looking, obviously, at -- as we get to steady state, we'll be able to get a better indication of what the expected rand per tonnes will be going forward.

Maybe just to add on just something at Belfast, which was an anomaly, had been the lateness of connectivity to the grid where we had to utilize our own generators. That was also a significant cost, so that's one one-off that we won't see because I think by now we are connected at last already. Yes. So we won't see that one as our sales are quite significant.

Then perhaps from 6 months early, I mean, once you see Leeuwpan out, I'm trying to work what the sustainable EBITDA at Mpumalanga is.

The sustainable EBITDA from Mpumalanga.

Post ECC and Leeuwpan.

I think as Mellis pointed out, we're now still in the final phases of ramping up the operation. But I think from next year, once the ECC and Leeuwpan disposals are completed, then it's going to be much more compared.

Much more clearer picture.

And you'll remember that 1 year or 2 ago, we also showed you the EBITDA contribution based on certain assumptions on the coal price. I think at that point in time, we were saying if the coal price was $74 or $75 and the EBITDA in the region of about ZAR 600 million.

At the steady state.

At steady state, that's what we said about 2 years ago.

The next question comes from Thabang Thlaku of SBG Securities.

I'd just say a couple of questions from myself. With regards to Black Mountain, at the [ FDP ] close, you might have said that…

Sorry, Thabang, you're not clear. I don't know if you need to get closer to your mic.

Can you hear me now, Mzila?

That's better.

Okay. What is the delay on Black Mountain given that at the FDP closed, you guys had saved another 3 weeks and you'd make an announcement? So that's my first question. And then that additional ZAR 500 million in Belfast, given numbers as coming, can we assume that it's largely once off? Or could there be sort of like other revenue losses as we go forward with this year? And then -- and what is the EBITDA contribution from exports given this period of sustained low coal pricing?

Okay. Thank you for that. So the first question, progress on Black Mountain.

So Black Mountain, look, we are -- it's just unfortunately that it's taking a bit longer because we also, in terms of the agreement that we've reached with the potential purchaser -- remember, the owner of the other 74% is Vedanta. And in terms of the contract, they also got preemptive rights, et cetera. So we just need to go through all the formalities to get the thing sorted. It is unfortunately taking a bit longer, but we think we're almost there. Then the second one was?

Second one was the 500 million.

So I'll also ask Mellis to talk to it. But -- so firstly, on Belfast, on the CapEx for the construction, there's no overspend. The original construction cost is still within budget. But remember, as part of the project, there's always capitalization of revenue and costs. So this additional ZAR 400 million or ZAR 500 million overspend is additional -- the impact of the cost and revenue that we capitalized to the asset. And then the other ZAR 100 million is additional operational cost that we had to incur on the asset, but that has also been capitalized to the asset. So to be clear, it's nothing on the construction side. It's the capitalization of cost and revenue to the asset that is an additional ZAR 500 million. I don't know whether you want to add anything there, Mellis?

No.

It's a once off. And as I pointed out, we now ceased capitalization at the end of February. So everything now will run through the income statement.

Thanks, Riaan. And then the last question is around the EBITDA contribution, specifically from exports.

So in exports, obviously, the -- if you look at now the current set of results from Mpumalanga, excluding Matla, all of them will be export. But remember, we don't split out the Waterberg, the export. So that, we don't split out the Waterberg, the exports. Yes, so that, we don't split out. Yes, that's integrated.

Okay. I think that's as far as you're going to get with that response, Thabang. All right. Let me come back to the webcast. I'll come back to Chorus Call. And this is a question related to the energy strategy. I don't think the response will be different to the one that was provided before. But it's asking about the growth potential of Exxaro clean energy generation and how we see the South African competitive landscape in terms of who the major competitors are.

Okay. Thank you very much. I think what one needs to appreciate is that the dynamics of the South African renewable energy space is changing fundamentally, especially given the new IRP, which basically, by and large, is biased towards a growth in renewable space. What has also happened is that with the advent of the splitting of Eskom, whereby, in the future, the transmission company will be the buyer and seller of energy, creates a whole different type of liberalization of the energy space in South Africa, something that was not there before. And with that, there's going to be also on top of that with the view that own generation of power has been enabled by the DMRE, by the Minister of DMRE for mining companies to generate their own power, that also creates a whole new opportunity that did not exist before. And by and large, as we have indicated in the past, the mining industry has been very much impacted by Eskom's past performance in terms of providing reliable power to the extent that there's over 2 gigawatts of projects from the mining-related companies of own self-generation. That creates a whole new window that did not exist before the beginning of this year. So we'll seal great opportunities out of this liberalization of the energy sector in South Africa. That lends itself to vast opportunities in terms of what is available. We've already indicated that 2 of our own projects, 2 of our own mines, we are already looking at working on projects, how are we going to bring our own ability to generate power for our own operations. And there's been -- you will have seen Sasol has been out calling for another 10 megawatts in terms of bid opportunities that are out there. Yes, I think just before, there was a slowdown of the RIP program a few years back. At the first 3 windows, I think South Africa was probably the fastest-growing renewable energy in terms of new capacity coming in, in the world. And it really created a lot of opportunities even for a lot of overseas companies to come and take advantage of that. And we see this is going to be a competitive landscape. And hence, why, as you move forward, you've got to make sure that you've got the right capabilities in terms of responding, in terms of finding new opportunities than just simply looking at only -- at the wind mills and also just PVs solar panels. But you start looking at how other opportunities around services becomes very important. And these are the things that we are really making sure that we are analyzing and understanding so that you don't compete where it's very crowded, but you can uniquely identify areas of new growth that didn't exist before in which you can partner with others to actually take advantage of those. So part of our whole -- part of our whole review is who are the right partners like we did with Tata. You start looking at responding to those opportunities that you can also partner with.

Thanks, Mxolisi. There's, I think, somewhat of a follow-up question on that, specifically on Cennergi in terms of what the strategy for Cennergi is and if we'll be looking at buying existing renewable generation? And are we considering participation in the new bid windows? And then lastly, what are the investment requirements for future investments?

We will come back to the market once we've crystallized our strategy around that. At this point in time, Cennergi is a first ring-fenced SPV. And therefore, at this time, it is what it is. And of course, how we respond, we'll be looking at how, beyond Cennergi as a vehicle, do we then respond to the requirements of that growing energy sector.

Thank you. If I can come back to Chorus Call, any questions?

And yes, sir, there are no further questions from the line.

Okay. So thank you very much. We -- I'll now bring the session to an end. And I think it is a pleasure for me to end it with a complement that we received from what some of you may recall, our pensioners, who often follow us and who says a great results and great presentation. You make the pensioners as proud. So with that, ladies and gentlemen, thank you very much for your attention and be safe where you are. And we'll now be meeting with the sell-side analysts at 1:00. Looking forward to that. Thank you.