Contributions to Sasol, and wish them all the very best in future endeavors. We're now pleased to welcome also Mr. Tim Cumming and David Eyton, appointed as Non-executive Directors, and Mr. Walt Bruns, appointed as Chief Financial Officer and Executive Director. We remain committed to ensuring that we have a diverse board with all the required competencies to execute on our mandate at all times. As is the custom at Sasol, at our meetings, we will now start with a safety moment. I would like to ask our CEO, Simon Baloyi, to present the safety moment.
Thank you, Muriel, and good day, ladies and gentlemen. Safety is our number one priority, and together with operational discipline forms the foundation that underpins Sasol's Zero Harm aspiration. With our people at the center of our business, safety is critical and important to all of us. For today's safety moment, I'll reflect on our recent safety performance, including the tragic fatalities experienced in 2024. I will also outline the actions we are taking to advance our journey towards Zero Harm, ensuring that everyone goes home safely every day. As a leadership team, we are deeply saddened that we were unable to ensure the safe return of all our team members to their families during the last year. This is a profound loss that weighs heavily on my heart, and it's a stark reminder of the responsibility we carry every single day.
We have lost five colleagues in FY2024, one colleague since the start of FY2025. We remember the following colleagues: Sfiso Maduna , industrial cleaning supervisor from Secunda Operation. Mthobisi Mahlobo , a shuttle car operator from Thubelisha Mine. Dumisani Dumile, scaffold builder from Secunda Operation. Xolani Dube , continuous mine operator from Bosjesspruit Mine. Francois Lubbe , electromechanic artisan from Syferfontein Mine. Mzwandile Dlamini , scaffold builder from Secunda Operation. These individuals were more than just colleagues. They were friends, family members, and members of our communities. Before continuing with today's proceedings, I'd like to ask that we take a moment to remember those colleagues who have lost their lives and to share again our heartfelt condolences with their families, friends, and colleagues. Thank you, ladies and gentlemen. We have intensified our efforts to ensure that everyone adheres to the highest standards of operational rigor.
This includes providing extensive face-to-face and online training to all our employees and service providers, ensuring that everyone that enters our sites complies with our safety standards. Our current key safety focus areas include embedding the best practices within the High Severity Incident Prevention Program, fostering stronger collaboration with our service providers to ensure safety standards are consistently applied and maintained throughout all our operations, driving a safety culture through leader-led initiatives, emphasizing frontline engagement and accountability. By implementing improved ways of working, we aim to reinforce a culture where safety is prioritized and integrated into everyday practices. Additionally, we are enabling integrated systems for safety, health, and environment management to streamline processes, enhance visibility, and mitigate risk.
The board, together with the Sasol leadership team and our workforce, are firmly committed to continuously improving our safety performance with the ambition of Zero Harm to ensure that we send everyone home safely. Thank you. I'll now hand back to Muriel to do the chairperson's address.
Thank you for sharing that safety moment with us, Simon. The world remains volatile, and maintaining the supply of affordable and sustainable energy to meet the needs of society remains crucial. These needs have to be met in a way that safeguards the planet from environmental degradation. I want to take this opportunity to make it clear that the board and management's commitment to climate action remains unwavering. We are committed to unlocking the full potential of our business and building a more sustainable future, Sasol. To achieve this, we are refining our strategy to proactively address challenges while leveraging our competitive advantages to seize opportunities. It is worth noting that Sasol is among the largest procurers of renewable energy through PPAs in South Africa at present. Sasol also continues to fulfill its social responsibility in the countries where we operate.
As mentioned in our Integrated Report, beyond the positive contribution of our activities to the economies of our host nations, including representing 5.9% of the GDP of South Africa, we committed ZAR 693.2 million in social investment globally during the year. Each day, nearly 30,000 members of Team Sasol work at our facilities or offices around the world. I want to take this opportunity to thank them for all their dedication and hard work over the past year. Before I hand over to Simon and Walt and go into the formal business of the meeting, including voting on the proposed resolutions and also responding to your questions, we will watch a video on Sasol's contribution to society and the economy. I now hand over to Simon.
Thank you, Muriel. It is a privilege to be here for my first AGM as President and CEO of Sasol. First and foremost, I'd like to extend my sincere thank you to our shareholders, stakeholders, Sasol employees, and the board. Transitions in leadership come with their own set of opportunities and challenges. I'm truly grateful for your support, trust, and encouragement. I want to emphasize that our strategic direction is clear and unwavering. We are dedicated to unlocking the full potential of our existing business, strengthening our foundation, and transitioning to a sustainable, future-ready Sasol. Our focus remains on meeting our customer needs while advancing innovative solutions to meet their sustainable needs for the future. Throughout this journey, we are committed to creating value for all our stakeholders and continue to make a meaningful contribution to society at large.
Let me take a moment to highlight some of the key aspects of our financial year 2024 performance and the initiatives we are implementing to improve our business delivery. In mining, half of our sections have met the productivity target, with 70% of the sections within 5% of the target range. However, performance at the tail end is pulling down the overall average, and we are identifying further opportunities to improve performance in these sections. A major milestone was achieved in Mozambique with early gas flow from the PSA license in May 2024. This early gas flow assisted us in partially mitigating the negative impact of coal quality on our production. Our chemical businesses continue to face global market conditions, with pricing and demand pressures impacting margins significantly. We were, however, able to increase volumes in all three of our major regions.
Looking ahead, we have outlined several strategic plans that will take us forward. We'll remain focused on improving the quality, quantity, and cost of coal from our mining operations, with a final investment decision on the Destoning Project expected before the end of this calendar year. Simultaneously, we are repositioning our international chemical business to improve overall competitiveness and cash flow generation from this business. We will look to further drive operational and commercial excellence across the different businesses to improve reliability and enhance the customer value proposition. Finally, proactive engagement with all our stakeholders in an evolving regulatory landscape remains fundamental to our business, supporting Sasol's transition journey. In summary, while we continue to face the challenges in the macro and operating environment, I'm confident that Team Sasol's dedication to continuous improvement will ensure strong, sustainable performance for the long term.
Before I highlight some of our progress on our transition journey, it is important to be reminded of the framework we recently laid out, which forms the basis of our strategy. It is centered on two pillars. Pillar One: strengthen and grow our foundation business, and Pillar Two: transform into a more sustainable future Sasol. This approach is phased. In the short term, we will focus on enhancing delivery from our foundation businesses, maximizing cash flow generation to strengthen our balance sheet and build a robust platform. In the medium term, we aim to maintain this performance while scaling transformation opportunities. Over the long term, our focus will be on optimizing and transforming our portfolio, shifting towards more sustainable value pools. Sasol is not standing still, and we have made progress on several fronts. We have signed over 750 MW of renewable energy power purchase agreements.
The Msenge project, with 69 MW of renewable energy capacity, has reached commercial operation, and these electrons are already flowing into our operations. Approximately 430 MW of renewable energy, which includes a combination of solar and wind projects, is also under construction for delivery by 2025 and 2026. These projects represent a practical example of our commitment to scaling up renewable energy in our energy mix. Moving forward, we aim to build on this success, and we are currently exploring options to position ourselves as leaders in renewable energy. We have successfully concluded our appeal related to Clause 12A of the Minimum Emission Standards in South Africa. This allows us to proceed with the implementation of our load-based integrated solution to reduce sulfur dioxide emissions in Secunda. Additionally, we have extended gas supply to our customers from 2026 to mid-2027.
This is critical for supporting the gas industry and serves as a bridge for our customers and the country to transition to LNG. As we transition our company, it is essential that we maintain a balanced and measured approach across our people, planet, and profit goals. This brings me to the next slide and conclusion, where I will outline our transition approach. Next year, Sasol will celebrate its 75th anniversary. Our company was founded to meet the energy needs in South Africa, which was an ambitious task at the time. It was almost an impossible dream, but a group of scientists, engineers, government leaders, and community came together, determined to make fuel from coal using an unproven technology at that time. Today, once again, we stand on the threshold of a renewal phase.
We have the responsibility to transition to a sustainable company, and we are committed to doing it thoughtfully and responsibly. But as we step forward, we remain firmly focused on maximizing value for all our stakeholders. Our transition journey is clear. We are not waiting for the future to come to us. Sasol is already building that future, but we cannot rush this journey. We must make sure that at all times, our customers have products meeting their needs. Thus, our transition pace must align with the market. During this transition, we will be focused on maximizing shareholder value. We will continue to ensure that we build a Sasol that is resilient, future-focused, and capable of delivering long-term sustainable returns. Our people are at the heart of everything we do. We are committed to protecting the jobs and supporting the communities where we operate. These are not just numbers.
These are livelihoods, families, and local economies. We are determined to ensure that as Sasol evolves, we bring our people and communities along with us on this journey. Finally, South Africa's energy needs is another consideration. During this transition, we must align with South Africa's energy needs to continue to provide the reliable energy that powers industries, economies, and daily life. These are the values that will guide us as we build the Sasol of tomorrow. This transition is complex, but with the dedication of the 29,000 extraordinary people here at Sasol, we are ready to take this journey on. Together, we have what it takes to make this journey successful, meaningful, and lasting, not just for ourselves, but for our customers, for our communities, and all the stakeholders. Thank you. I will now hand over to Walt to take you through the financial update.
Thank you, Simon, and good morning, ladies and gentlemen. This is also my first AGM as Chief Financial Officer of Sasol, and I'm honored to be part of it and to have the opportunity to share a summary of our financial year 2024 performance with you today. As Simon mentioned, we have navigated a complex landscape during FY2024, marked by operational challenges and macroeconomic pressures, including a soft oil price, a continued weaker chemical market, and rising input costs associated with higher global inflation. Despite these headwinds, we saw encouraging improvements in the second half of the financial year, reflecting our focus on items within our control, including improved operational performance, strict cost, and capital management. My objective as CFO is to build on this momentum, strengthening our financial performance while driving initiatives that will improve Sasol's resilience and ensure sustainable returns for our shareholders.
I look forward to sharing more of this with you at our Capital Markets Day planned for May 2025. Turning to the FY2024 results, our turnover was ZAR 275 billion, and while 5% lower than prior year, it remained significant in absolute terms, showcasing that we continue to produce products that customers want. Our gross margin percentage also improved from 44% - 46%, reflecting our efforts to reduce our cost of sales and improve our go-to-market strategy. Looking ahead to FY2025, we will continue to drive operational and commercial excellence initiatives to ensure continued higher margin delivery. Our cash fixed costs increased by only 1%, well below inflation, reflecting success in our cost containment initiatives. As part of our journey to reach full potential, we will continue to enforce rigorous cost management practices with a specific focus on external spend.
Our adjusted EBITDA for FY2024 was ZAR 60 billion and 9% lower than FY2023, with contributions from each of the businesses and regions similar to prior year, and Southern Africa remaining the largest regional contributor. It is important to recognize how the diversification of our portfolio across the energy and chemical sectors and across regions enhances the overall stability and performance of our business and mitigates risk. This diversification has again proven beneficial in FY2024, with relatively high energy prices helping to mitigate the effects of lower chemical margins associated with softer market conditions. Unfortunately, a loss before interest and tax of ZAR 27 billion was realized, largely due to negative non-cash adjustments, most notably the impairment in the Chemicals America segment relating to the Specialty Chemicals cash-generating unit of ZAR 46 billion net of tax.
Although impairments are a non-cash adjustment, management remains committed to clawback value through various initiatives to improve the business performance of the assets within our portfolio. Our capital spend of ZAR 30 billion decreased by 2% compared to the prior year. It is key to note that the lower capital spend was achieved without compromising on the maintenance and reliability of our assets. We will continue to drive efficiency and effectiveness of our existing capital portfolio to support our future capital needs to transform the business. Although free cash flow for the financial year decreased by 60% compared to prior year, we saw a significant improvement from ZAR 6 billion in the first half to ZAR 8 billion of free cash flow at the end of the financial year.
Unfortunately, this was not sufficient to reduce our net debt, and as such, management and the board took the tough decision to pass on the financial dividend for the financial year 2024 while also revising our dividend policy, which was necessitated by the significant disconnect in recent years between headline earnings and actual cash flow generation alongside elevated leverage levels. Under this new dividend policy, a base dividend will be paid to shareholders based on 30% of free cash flow before discretionary capital, and only if our net debt is expected to be below $4 billion on a sustainable basis. This threshold is critical as it supports our overarching goal of deleveraging the balance sheet while creating financial flexibility to support additional shareholder returns and/or expansionary growth in line with our capital allocation framework.
As I close, I would like to re-emphasize our commitment to strengthening and growing our foundation business with solid action plans to improve future cash flow generation while managing the transition in a way that improves shareholder returns. Thank you for listening, and I will now hand back to Muriel.
Thank you, Walt. We now turn to the business of the AGM. I am comfortable that the notice of meeting has been delivered to shareholders in accordance with the requirements of the Companies Act, that the attendance register has been duly completed, that a quorum of shareholders is present, and that the proxies received are in order. This meeting has therefore been properly constituted. The register of shareholders of the company is open for inspection either electronically or physically at the offices of our share registrars, JSE Investor Services. The minutes of the previous AGM were approved by the directors and signed as a correct record of the proceedings. A copy of these minutes can be obtained from the Group Company Secretary's office. Mr. Andrej Vlada r from Lumi will now explain to us how to ask verbal questions and post written questions as well as vote on the resolutions.
Thank you, Chair, and good afternoon to everybody, or good morning to everybody. Apologies. I will take you through a demonstration of how the platform works. So, for those of you that are logged in as shareholders, you would have logged in with your webcast as a full screen. In the top right-hand corner, there is a full-screen button that you can click on, and that will minimize your screen to the right-hand side of the browser. For those of you that are on smaller devices, such as phones and tablets, your menu options that you'll see on the right of my screen will be on the bottom of your screen. You will notice that the voting is currently open.
For those of you that are shareholders, you can click on the voting button on the left-hand side or the bottom of your screen, and you can scroll through all the resolutions. And all you need to do is click on the option you wish to make. You'll see it highlight in a different color, as well as notify you that your vote has been received. And you will repeat that process for each of the resolutions. And at the top, it will let you know how many items have been completed with regards to voting.
If you look for more information on how to use the platform, you can click on the info screen or the info button, and you'll get the info screen that will explain to you the various aspects of how to use the platform, including how to ask a written question or how to ask a verbal question. To ask a written question, you'll go to the messaging tab. You will click on the ask a question bar, type out your message, and then hit the send key, and you will get a notification that your message has been sent. To do a virtual video Q&A question, you will go to your webcast, and in the top right, you'll see a request to speak button. You'll click on that. You'll see that your webcast will still run.
The audio will be slightly lower, but you'll still be able to keep track of the meeting. Please make sure to let your browser allow the use of your camera and your microphone, so you'll click on allow so that it gets access to that. You then wait for it to initialize, and you then choose your camera, your microphone, as well as the speaker in which you want to listen to the meeting from. Once you are ready, you can choose to blur your background, and then you'll click on the green connect button to connect to an operator who will then check your sound, check your video, and then place you into the queue. During all of this, you will still be able to see and hear the webcast until it is your turn to speak.
At the point that the chair or somebody facilitating the Q&A asks you to speak, you will be sent to stage by the operator, at which point you will then be able to ask your question to the board. Please stay on the line to complete your entire interaction with the board. So, if you do have follow-up questions, please stay connected. And only once you are completely done will you then click on the return to webcast button. Final items is you will see there's a documents tab. If you want a link to the notice of the meeting, you can click on that, and the notice will open in your browser. And then we do have profiles of some of the non-execs, the executives, and the board available for you to see and go through.
If you do struggle, at the bottom of the info page, there is a support helpline where you can either email support or WhatsApp support, or you can send us a support query using the messaging tab, the same as you do for the Q&A. And with that, Chair, I would like to hand back to you.
Thank you, Mr. Vladar. As Chairman of the meeting, I am charged with maintaining order to facilitate the business of today. We are here today to conduct the business of the AGM as prescribed by the Companies Act and set out in the notice of AGM sent to you on the 17th of October 2024. As allowed for in Sasol's memorandum of incorporation, I hereby declare that all resolutions will be voted on by way of a poll. Voting is now open on all resolutions, and you can vote on any resolution at any time until the voting is closed. I'll give you a few minutes' warning before voting is about to close. We are anticipating many questions, so I ask as courtesy to all shareholders that you ensure that your questions are concise and are posed in English. Please do not repeat any questions already asked.
We will do our best to ensure that everyone's questions are answered. However, please note that where Sasol is dealing with litigation, any instruction or conversation between a client and its legal counsel is protected by the principle of legal privilege. This protection ensures that instructions and confidential communication pertaining to legal advice is safeguarded by the law. Sasol will not waive any of these rights and therefore will not answer questions aimed at a discussion of the merits and the strategy adopted in relation to any ongoing litigation. To expedite the process, we will be taking your questions in batches of four. Given that the meeting is virtual, Mr. Alex Anderson will read out the written questions. Please note that although questions might be paraphrased or summarised, the full written question posed is still visible to all directors and shareholders on the electronic platform. Mr.
Anderson will also read out the name of the shareholder who wishes to ask a question online and that shareholder's microphone, and should the shareholder wish, his or her camera will then be activated. Turning to resolutions, the following matters have been placed before shareholders today. The full text and explanations have been provided in the notice of the AGM, and I will therefore provide a brief summary only. In relation to the annual financial statements and the social and ethics report, we have the annual financial statements for the financial year ended 30 June 2024, the reports of the directors, the Audit Committee, and the external auditors, as well as the report of the Safety, Social, and Ethics Committee, and as far as non-binding advisory resolutions are concerned, number one is to endorse the company's remuneration policy.
Number two is to endorse the implementation report of the company's remuneration policy. Turning now to ordinary resolutions, number one to re-elect by way of separate votes the retiring directors. First, Ms. Kathy Harper, Mr. Vuyo Kahla, Ms. Trix Kennealy, Mr. Stanley Subramoney. Brief biographies of the directors who have offered themselves for re-election were included with this notice. Ordinary resolution number two is to elect by way of a separate vote the directors who were appointed by the board to fill vacancies: Mr. Simon Baloyi, Mr. Walt Bruns, Mr. Tim Cumming, and Mr. David Eyton. Brief biographies of the directors to be elected were included with this notice. Ordinary resolution number three is to appoint KPMG as independent auditor. Ordinary resolution number four is to elect by way of a separate vote the members of the audit committee. And these are Mr.
David Eyton, and this is subject to his election as a director in terms of ordinary resolution number two. Ms. Kathy Harper, subject to her re-election as a director in terms of ordinary resolution number one. Ms. Trix Kennealy, Chairman, subject to her re-election as director in terms of ordinary resolution number one. Mr. Stanley Subramoney, subject to his re-election as director in terms of ordinary resolution number one. Brief biographies of the audit committee members to be elected were included with this notice. Turning now to our special resolutions. Special resolution number one is to authorize the board to approve that financial assistance may be granted by the company in terms of sections 44 and 45 of the Companies Act.
Special resolution number two is to authorize the board to approve the general repurchase by the company or by any of its subsidiaries of any of the company's ordinary shares and/or Sasol BEE ordinary shares. Special resolution number three is to authorize the board to approve the purchase by the company as part of special resolution number two of its issued ordinary or Sasol BEE ordinary shares from a director and/or prescribed officer of the company and/or persons related to the director or prescribed officer of the company. I will alert you when voting is about to close. We now move to the general question and answer session, and I now open the floor for questions in relation to the resolutions proposed.
Thank you, Chair. We have a few questions online. I will start with the first three that we have in front of us. First one from Mehluli Mncube relating to director elections. With significant board changes and only one board member explicitly identified as having sustainability expertise, are there plans to strengthen the board's expertise and sustainability to navigate increasingly complex environmental headwinds facing Sasol, particularly in light of heightened regulatory and market pressures? The second question from Mehluli is related to safety performance. Year in, year out, we come and raise the same questions on safety, and the company continues to record fatalities year in, year out. Beyond glossy reports and opening safety moments of silence, what long-term actions are being implemented to ensure the zero harm target is finally achieved? How are these measures tied directly to leadership accountability?
Again, that's from Mehluli Mncube from ESG Insights on behalf of Sasol Pension Funds. The next question is from Floyd Liu. How has my investment grown over the last five years? We'll leave it there, Chair, for now.
Thank you very much for those questions from Mr. Mehluli. In as far as the board's skills are concerned in relation to expertise, climate expertise, just important to note that as a collective, the board has the necessary skills and experience to ensure the success of our transition. As part of our succession plan, we continue to augment the necessary skills and experience required for our future Sasol journey. At the moment, we have very specific members on the board that have the required skills, including Mr. Dave Eyton, who has recently been appointed and has extensive experience in energy transition. Our other members on the board that have related experience are available and have been published in our integrated report. And I kindly ask you to turn to the biographies that are on our website, as well as page 130 of our IR.
Then, in relation to safety, the question and the concern that has been raised is understandable, and our aim remains to send everyone home safely every day. In relation to the fatalities that have occurred, we ensure that no stone is left unturned in terms of us understanding what went wrong and making sure that the lessons that are learned are fully implemented across the organization. Our HSI program still remains valid and is comprehensive and is the backbone of our safety, health, and environmental program. We continuously look at ways in which we can improve our safety performance and can assure you that Zero Harm is a real objective that we are committed to. The third question was, how has your investment grown over the last five years, and I will hand over to Simon.
Thank you, Floyd. The investment, I mean, in any company is measured in the share price. So I know where you're asking the question from. And yeah, we want to assure you, as the current management, that we are committed to creating long-term shareholder value going forward. You see, I've clearly outlined the strategies that can help us and the pillars that are going to be key in helping us to make sure that we turn our business around and we create long-term shareholder value. We have outlined the strengthening pillar, which talks to making sure that our foundation businesses are improved across the globe to maximize the cash flow generation. Once we do that, we'll be able to strengthen our balance sheet, thereby creating shareholder equity. And that strong balance sheet will allow us to progress on our transition journey. However, as I've indicated, we are not standing still.
We are hard at work defining how our organization is going to look forward, how our organization is going to look like going forward, and we will share more details with you at the CMD 2025, which is coming in May, where we're going to ensure that we strengthen this foundation and this foundation can allow us to create a long-term shareholder value.
Thank you, Simon. I think those are the three questions that were asked. Have we got further questions?
We do, Chair.
Thank you.
The next question from Mehluli Mncube from ESG Insights. It's an environmental question. Environmental impacts and decarbonization efforts, while Sasol has committed to a 30% reduction in emissions by 2030 and net zero by 2050, how does the board plan to address shareholder concerns regarding the pace and effectiveness of its decarbonization efforts? The next question is a voice question from Karishma Bhoolia .
Good morning, Chair.
Third question. Go ahead.
Oh, sorry. Do you want me to go after you've called all the questions?
Please go ahead.
Okay. Good morning, Chair. My name is Karishma Bhoolia, and I'm from Just Share. At your 5 November ESG roundtable, it was indicated that Sasol had not tabled a Say on Climate vote this year as there had been no change in the emission reduction target set in 2021. This explanation doesn't make sense because you tabled votes in 2022 and in 2023, even though the targets had not changed in those years either. In any event, once you have provided details of your optimized emission reduction roadmap at next year's Capital Markets Day, do you intend to resume the annual climate votes for shareholders? I have a second question. Should I continue with it now?
You may proceed with your follow-up question.
My second question is, in 2021, when the Competition Tribunal approved the merger between Air Liquide Large Industries South Africa and the 16 Air Separation Units owned and operated by Sasol, one of the conditions of that merger was that Air Liquide committed to a target, a reduction in carbon emissions associated with the ASUs by 30% within 10 years. Has the Competition Commission engaged Sasol and Air Liquide since 2021 on progress in achieving this commitment? Thank you very much. Those are my two questions.
Thank you, Karishma. And we will take the fourth question, Chair, which I will read from Mehluli Mncube again from ESG Insights. It's related to financial performance. The FY2024 financial performance with a reported loss of ZAR 27.3 billion and significant impairments is appalling, to say the least. How is the board addressing these financial challenges, particularly in relation to improving cash flow generation and reducing net debt to below the $4 billion threshold? Those are the questions for now, Chair.
Thank you very much. In relation to the question that was asked about the effectiveness of our decarbonization efforts, we have a roadmap, and we're tracking implementation of that roadmap. Information about that roadmap has been shared in our respective corporate literature. Sasol's pace is in step with the country and available mitigation measures. We are accelerating renewable energy deployment and energy efficiency. So our roadmap is back and loaded, back and loaded with step change reductions expected towards the end of the decade. The SSEC tracks implementation and will continue to do so at our quarterly engagements with the executive. And we also have the right incentives in place and the right proof points that we monitor along the journey. The next question that was asked about the say on climate change, I'll ask the Chief Executive to attend to that.
Thank you. The question was from Karishma. Karishma, thanks for your question. You're asking about the resolution. Yes, you remember we did indicate that we're busy, I mean, hard at work now to redefine how we're going to implement our ERR. And we will share that work, I mean, at CMD. And that is why we didn't table the resolution. So after we've done that work, we will continue to table the resolution. And suffice to say at this point, as Muriel has just said now, that our roadmap, we will continue to follow that roadmap in terms of energy efficiency, making sure that we increase the renewable energy intake into the factory and then consider other measures to make sure that we adhere to what we have planned to do.
And as we do this, we will, I mean, make sure that we maximize the output from our factories as well. So we're going to do that during this transition phase. On the question on Air Liquide, yes, that is a condition with the Competition Commission. I'm not going to speak to Air Liquide, but I can also tell you that the renewable energy that we're procuring, we're also procuring in step and in line with them. And that will help them to meet their commitment that they've made after 10 years.
Thank you, Simon. In relation to Mr. Mncube's fourth question about the FY2024 performance, I hand over to Walt.
Good morning. Thank you for the question. I think, I mean, we're equally disappointed with the performance in FY2024 with regards to the loss. I think you correctly address the need to improve the cash flow generation and how do we do that. I think the first line that we will, you know, is the revenue line. We have a lot of spare capacity in a number of our plants that we can sell out. So we have this latent potential within our units. We will reduce our cost base through, as I mentioned in my speech, predominantly around the external spend, where we spend significantly on items within our procurement space. And then I think, as I mentioned, that results around the asset optimization, we'll continue to look at assets that are non-performing and make some decisions with regards to those assets.
And in so doing, I think we'll lift the free cash flow generation from our business. We use that free cash flow in line with our capital allocation framework to first pay a dividend to our shareholders and then at least equal to 30% of that. And then we can make some decisions with regards to further reducing our net debt, allocating more to shareholders, and/or potentially looking at some growth capital that we might pursue. Thank you.
Thank you, Walt. We have the next four questions.
Chair, just a question, a reminder of the questions from the call from Karishma Bhoolia.
Sorry, yes, just a rebuttal on the Say on Climate vote. Is the board confirming that after next year's capital markets, the annual vote will return?
The question about the annual vote is informed about the objective reality at the time. So we'll make an assessment post-CMD after there's clarity about the future in terms of our strategy. And then we will then make that decision at that point in time. Thank you.
Next two questions, Chair, that I will read out. Next one is from Floyd Liu. May you please outline the line items for input costs associated with inflation? The second question is from Grant McGillan pertaining to the appointment of the CEO process and the investigation there too, and that it was classified as closed, not investigated. Why does this appear as a new policy only to me?
Thank you for those questions. Are you suggesting we just, is there not a third and a fourth?
Not as yet, Chair.
Not as yet. Okay. So in that case, we'll take the question from Mr. Liu. I'll hand over to Walt.
Yeah, thanks for the question. Almost all our line items in our cost base, whether it's variable, cash fixed cost, or capital, are subject to inflationary pressure, some less so than others, and depending on the inflation rate in the different regions that we operate. What might also drive some of our input costs is feed costs and energy costs, which can increase higher than inflation and are driven by macroeconomic developments in each of those areas. Thank you.
Thank you, Walt. In relation to the question from Mr. Grant McGillan, I'd like to hand over to Vuyo to just address the question that's been asked, the ethics-related question.
Thanks a lot, Chair. Mr. McGillan, I'm a little bit surprised that this question is coming up again, particularly in light of the fact that the former chairman of Sasol, Mr. Steve Westwell, had indicated the process that had been carried out in respect of the filling of the vacancy that was to be created of the CEO and had indicated that that process was acted on consistent with what had been said by the board. And the fact that you were not invited to participate or be considered in the final determinations around the CEO was not inconsistent with that process.
And so in light of that, that call was properly closed, even though it had not been sent for investigation, based on the fact that the matter had been properly dealt with and was consistent with the process that had been determined by the board for the filling of the role of CEO.
Just to say in conclusion that the board fully supports the process that was followed to appoint the Chief Executive, we've made the right decision, and we are more than content with the decision that was made and the process had integrity. Further questions?
Chair, the next question is an audio question from Tracey Davies. Please go ahead.
Good morning, Chair.
Good morning.
And good morning to the board. This is Davies from Just Share. Sasol's emissions have increased for the last two years and are expected, according to your reports, to increase again this year. You say that your emission reduction roadmap is back-end loaded and that emissions won't decrease in a linear fashion, but you've made almost no progress in three years since you set the target. And the longer time goes by, the more enormous is the task you have to achieve in a short space of time. When you set your 2030 targets in 2021, did you genuinely think that they were achievable, or were you being overly optimistic in an effort to appease shareholders and climate activists? And one more question, Madam Chair.
In relation to the carbon tax, National Treasury introduced the carbon tax in 2019 at a non-cost-reflective level to give all of South Africa's emitters the opportunity to start restructuring their operations in time for when the transition period ended at the end of 2022. Sasol regularly refers to its efforts to lobby government to prevent the carbon tax from becoming cost-reflective, and in many ways, these efforts have been successful because we have a very low carbon tax with significant tax-free allowances and a rate that remains far too low to incentivize a Just Transition and to ensure that the polluter pays.
Can you please tell us why South Africans and your shareholders should place any faith in the company that giving Sasol a free pass on the polluter pays principle is the best option for the country, or that the revenue forgone by Treasury as a result of the carbon tax allowances will be better spent by Sasol on meeting the macroeconomic and socioeconomic needs of South Africans? Thank you.
Thank you, Tracy. We'll take those two. Just ask Simon to address both questions.
Thank you, Tracy. I will start with the question, and I'll ask Dr. Sarushen Pillay if he can weigh in and add. Firstly, you're asking about faith in the company. We've demonstrated today, Tracy, with our presentation in terms of what we're already doing. The amount of capital that has been invested in renewable energy, to give you an example for us to do what we have now, the kind of megawatts that we are procuring is up to the tune of ZAR 25 billion that's already coming to the country. Sasol is already moving, and we are, I mean, we did take into cognizance, I mean, the whole evolution of the whole carbon tax and how we can be able to make sure we mitigate it. You ask about the 2021 targets, that when we set the target, we were overly ambitious.
We did indicate in 2021, when we set our targets, the prevailing conditions of the market at that time. I mean, as you well know, gas was, I mean, one of, I mean, those big components that we needed. We did indicate as soon as that was not available anymore that we have to relook at our ERR to make sure that we optimize it because we don't have gas, so we have to optimize it. I did indicate during the results roadshow as well, when I gave the financial year 2024 year-end results, that as we optimize the ERR, we'll also make sure that we maximise the Secunda facility. Finally, on the cost-reflective, I mean, to say, is the carbon tax, I mean, cost-reflective and whether we're busy lobbying government to make sure that that doesn't come into play. We're not doing that.
What we're advocating for at Sasol is to make sure that the extent and the pace of the transition is equally matched with the carbon tax to make sure that it's very, very realistic to all of us and not just to Sasol, but to the whole South African industry as you well aware. Sarushen, you can add on to that.
Thank you, Simon. So Tracy, as I mentioned in the ESG roundtable, our emissions are heavily related to our production volumes. And over the last two years, we've had lower production volumes from where we would like to be. And in this current financial year, as we've indicated to the market, we are striving for a higher production level. So we do expect, if we achieve those production volumes, for a slight increase in our emissions. But as you saw from the video and what we've communicated publicly on our renewables, we have already started to see that come online. We've got the Msenge Project now feeding electrons into the grid, and we're seeing those benefits from October this year. Early next year or towards the middle of next year, we'll see the next 100 MW of solar projects coming online.
So as the renewables increasingly start feeding into our facilities, we expect to see further reductions. So you can start seeing that reflected from next year.
Thank you, Sarushen. The next batch of questions, please.
Yes, Chair. The first, this is a comment from Manisha Raghu. Dividends received can't even buy a lot of bread. The next question is from Floyd Liu. May you please explain the new dividend policy in layman's terms? I have the distinct feeling that many shareholders of my BEE ilk would not understand half of the almost AI-generated presentations. Third question is from Grant McGillan. Question to the CEO. When does he scenario planning-wise predict the closure of the company, bearing in mind the circa 60% decline in the share price during his appointment period of 12 months? That's it for now, Chair.
Thank you very much, Floyd, for your question. We will refer to the CFO.
Thanks, Floyd. So just in simple terms, previously our dividend policy was based on a percentage of earnings and not on actual free cash flow. What happened over time is that our earnings and cash flow were separated from each other or diverged because our depreciation expense was much lower than capital expenditure. To avoid us paying dividends or to ensure that we pay dividends rather from free cash flow generated from our operating activities, we therefore changed the policy to 30% of free cash flow, and that ensures that we can afford the dividend and not pay it out of debt or something like that. Thank you.
Thanks, Walt. Over to you, Simon, for Mr. McGillan's question.
Hello, Grant. Yeah, thanks for your question. In terms of prediction, we will never shut down the company. As I've indicated, we're working very hard to make sure we maximize the cash flow generation by taking decisive steps at our global operation, both in Southern Africa and internationally. Here at home in South Africa, we're busy working hard to fix the feedstock. We did indicate to the market that what is holding the South African business back was the quality of our coal into our operations. And we will be taking FID on the destoning project before the end of this month, and we'll start implementing that project at pace. That project is going to allow us to maximize the production from our Secunda operation. And internationally as well, we did indicate to the market that we're busy.
Even though we're facing very, very tough market conditions in the chemical market, we are busy with self-help measures. We've not remained still, so we're busy with self-help. We are completed with the restructuring and transitioning of the top layers in the organization, and we will continue with the rest of the organization to take out costs to improve our cost position, and yeah, so we're busy with those interventions, and finally, the renewables progress that we're making for us is just a seed. We're busy as part of the CMD exploring various options to make sure that we are a significant leader and a major player in the renewable energy space going forward, so I think with that, we're confident that we will strengthen our balance sheet.
With a strong balance sheet, we're going to create ourselves a very, very strong platform to make sure we transition the company.
Thank you, Simon. Further questions?
Yes, Chair. Two audio questions. I will now ask Mehluli Mncub e to please go ahead.
I'm audible. Chair, I would like to lean on my question on safety because I felt that the response that you gave did not give gravity to the question that I was posing and also the gravity of the issue at hand. I think we have been posing issues on safety since 2010 from one chairman to the other. And the issue is you keep on giving the glossy parts and opening safety remarks of silence, but we are saying, when are we going to achieve the target of Zero Harm? And also, how are we going to directly tie this to leadership in terms of saying what's at stake? Are we beating up executives or the board in terms of safety? Because we feel that year in, year out, this issue is not given the gravity that it deserves, and also executives are not penalized beyond just remuneration.
Thank you, Chair.
Thank you, Mr. Mncube. If I can just respond almost immediately before the next question. To the last point that you made in your question, we do have a dispensation in terms of which there is a penalty in terms of the remuneration structure that is employed when we do have fatalities. So that is something that we are already implementing. As I said earlier on, we are committed to addressing our net zero, our Zero H arm ambition. The objective, the HSI program, which is the high severity incident program, remains the backbone for improving SHE performance across the organization. And we have an objective to further mature this program, which is important to make sure that the Life Saving Rules are adhered to. We are pushing really hard to make sure that there's greater visibility on the coal face.
We've got leaders that are increasingly making sure that their visibility and their oversight of the implementation of safety practices is adhered to. So we are intensifying our efforts to make sure that we can realize a situation, as our CEO said, that all our employees, when they go to work, we have the certainty that they will return back home. It is a matter that we take extremely seriously as a board. And I would like to ask Herrmann, who is charged with this day-to-day implementation of safety measures, to just weigh in at this point to provide further information of the comprehensive nature of our safety program.
Thank you very much, Chair. I think it's important to take note that we are also implementing certain structural changes, and we're solving for some systemic issues with a new streamlined structure that we've implemented. We are ensuring that we have more functional oversight from a safety perspective. So we've changed those structures to make sure that the safety professionals have a direct independent line to the GEC so that we can actually help line, but also monitor that line is actually the operations line is actually delivering on their commitments. We are having a drive to ensure that our leadership gets much more involved by safety oversight and checking critical controls associated with our key undesirable events or our top risks as we have that.
Thirdly, from a structural perspective, we are running intensified programs with our service providers, both from an owner perspective as well as from an employee perspective, to ensure that we are all aligned regarding the exact requirements from safety and that we support on that front as well. Thanks, Chair.
Thank you, Herrmann. I'd like us now to. I see there are two more questions. One is from Grant McGillan. Why is this meeting online when there's no reason to present it at the head office? So I'm going to ask Vuyo to attend to that. And then in relation to the question from Floyd, I'm going to ask Sarushen just to come in on the R&D initiatives that we have related to biomass. Over to you, Vuyo.
Thanks a lot, Chair. The meeting is run online to ensure the effective conduct of the business of this meeting of the AGM. As you are aware, last year, due to interruptions, we had to cancel the meeting that had been going at the time. And it is important, bearing in mind that the mechanisms and the platforms we have enable effective participation and ensure that the meeting can be properly conducted with questions fielded in relation to any, as well as members being able to raise any other issues they would want to have raised, including in written form. And so we do believe what is most important is to have the business of the AGM conducted properly, have questions raised and answered, and it becomes lesser material or relevant the form we use as long as it best enables us to ensure effective participation.
We do believe this platform has enabled that. Thank you.
Thanks, Vuyo. Sarushen, if you can just come in on the R&D side of things in relation to Mr. Floyd Liu's question.
Thank you, Chair. How much time do I have? Thank you for the question, Floyd. I think this is an area that we're taking very seriously, and we're devoting a lot of effort. So let me just give you a few highlights. Earlier this year, we did a 5% biomass coal feed trial into our boilers in Sasolburg. We've also, as part of our just transition, we're looking at on-purpose planting crops and what oil-bearing crops we could cultivate in some of our own lands and degraded lands. So together with Charlotte's just transition team, we've just completed a trial planting Solaris. We've created a feedstock research group that's also extending partnerships in our R&D. Next year, we will be recycling our first biosludge into our gasifiers. So this is an area that we take very seriously.
And as the CEO said, part of our transition looks at alternate sustainable feedstocks. And this is something that's going to be or is very high on our priorities, and we're giving it a lot of attention. But I must end with a caveat which talks to the affordability. We will do this in a cost-effective manner. And part of our strategy is developing those biomass feedstock chains in supply chains in South Africa, which then could unlock this as a potential solution for us.
Thank you, Sarushen. Are there any further questions?
Chair, we have an audio question from Robyn Hugo. You may go ahead.
Hello, Chair. Am I audible? Hello, Chair.
You are, Robyn. Go ahead.
Thank you so much. Good morning, Robyn Hugo from Just Share. I have two questions. One about emission reduction targets and baselines, and the second about the Energy Council. Sasol does not report clearly on progress against its emission reduction targets, the first deadline for which is 2026. For example, it does not reflect correct 2017 baselines for its respective 2026 and 2030 emission reduction targets, and it reports its combined energy and chemicals emissions rather than its respective progress per target against distinct baselines. Please, could you confirm that in all future disclosures, Sasol will report clearly against all of its respective emission reduction targets using the correct baselines? My second question. We note that Mr. Baloyi has been appointed the new chair of the Energy Council, following on from Mr. Grobler after he left Sasol.
Is that position reserved for the sitting CEO of Sasol? If not, can you explain the process for selecting the chair, please? For the benefit of your other stakeholders, the Energy Council describes itself as serving as the collective unified voice of the energy sector, and it is supposed to represent the interests of the sector broadly. It's also the secretariat for NECOM, the partnership between the private sector and the South African government that is, at the moment, determining the direction of South Africa's energy future for all of us. Thank you.
Second question on the Energy Council. I'm going to ask Vuyo to attend to that. And then the first question, Simon will respond to regarding our baseline. Simon?
Yes. Thanks, Robyn. In our IR report, I mean, we've clearly indicated how we've arrived at our baseline. I mean, it is possible to disaggregate between chemicals and, I mean, energy. But you remember when we set a target for us, it was a 30% target reduction for the whole organization. So we will, I mean, there's no issue we can show where everything is, but we will continue to still aggregate and show the reduction for the whole organization.
Thanks, Simon. Vuyo on the Energy Council?
Thanks a lot, Chair. I think the first important point to make is that the determinations around the members of the executives or chairs of the board or chairs of the Energy Council, those are not matters that are dealt with directly by Sasol Limited. They're dealt with by the Energy Council. We do believe that as participants in the Energy Council, the members of the Energy Council take into account individuals who can make a contribution to enable effective leadership, take into account the vast challenges that are faced by South Africa in respect of energy transition. And when one takes into account that and the contribution that members would have considered that would be made by Simon, that decision would have informed that decision. And we don't see that position as being reserved for Sasol. That's not the rule in relation to the Energy Council.
It is not reserved for Sasol, but each individual has been elected on their own merit. Thanks.
Thank you, Vuyo. I just want to provide further color to the answer that was provided to Robyn in relation to our reporting. It's not correct that Sasol has been inconsistent in reporting against its target. The baseline for the energy business remains 63 metric tons and 4 million tons. And for the international chemicals business, it is 2.8 million tons. In 2022, following the sale of Air Liquide for our oxygen trains, there was a rebaselining that was conducted according to the Greenhouse Gas Protocol rigorous rules, as Simon indicated. This was transparently disclosed in the 2022 climate change report. If you can look at page 11 of that report, we do provide information related to that. And we followed the protocol, which mandates that divested assets are subtracted from the base year target, and that this rule was then applied in the way that we reported that.
Are there any further questions? I think there's a comment from Floyd Liu to say, Vuyo, the online platform gives shareholders like me from the Northern Cape meaningful opportunity to participate. So that's just a comment. Any further questions?
No further questions at this time, Chair.
No further questions. Okay. If that is the case, oh, I see there's a question from Grant McGillan about the share price, which validates the CEO's appointment was incorrect. Please change the CEO. Absolutely not. Next question, please.
No further questions, Chair.
Thank you very much. I think we are at a point where we want to, I'm sorry, I just need to get to the next part of the proceedings. I want to thank our shareholders and members of the broader stakeholder community for the questions that they've posed. We value your engagement, and we value the input that you provide us as we conduct the business of this company to provide long-term shareholder value for our shareholders and also to support the aspirations of the communities where we operate and also the aspirations of our committed workforce. So thank you very much for the engagement. We will be closing the voting platform in five minutes. Once the voting closes, you will not be able to change any vote cast in respect of any resolution.
If you have not yet cast your vote or want to change any vote, please do so now as we take another question or two. There is a note there that says, "Thank you for your responses. Please refer to sections 4.1 and 5.0 of Just Share 's 11 November investor briefing," which sets out in detail the inconsistencies. I think we've addressed that concern. Any further questions?
No further questions, Chair.
Thanks again for the questions. The polls are now closed, and all votes have been counted. Or are we meant to wait for another five minutes? Okay. My apologies. We are meant to wait for five minutes before we are able to close and provide details of the results. Thank you. Thank you very much. The polls are now closed, and the results are now being shown on the screen. So if I can look at ordinary resolution number one has passed. That's to endorse a non-binding advisory basis. That's on the Rem policy. Then advisory resolution number two has also passed, and that's on a non-binding advisory basis. That's the implementation of the company's remuneration policy. Ordinary resolution number one to reelect Ms. Harper, and then also the reelection of Mr. Kahla, Mrs. Kennealy, and Mr. Subramoney. All those ordinary resolutions have passed. That's one to four.
Then the ordinary resolutions two, one, two, three, and four to elect directors Simon Baloyi, Walt Bruns, Tim Cumming, and David Eyton. All those have also passed. The appointment of KPMG as our auditors. That's ordinary resolution number three has also passed. Ordinary resolution four one, which is for the audit committee. Appointment of Mr. Eyton, 4.2. Kathy Harper, 4.3. The chairman of the audit committee, Mrs. Kennealy. Ordinary resolution number four for the appointment of Mr. Subramoney. All those have been voted in favor, and the results are there. As far as the special resolutions are concerned, number one, to authorize the board to approve financial assistance. That has been passed as well. As well as number two, to authorize the board to approve the general repurchase of shares by the company.
And then special resolution number three, which is purchase of the company's shares from a prescribed officer. That has also passed. This concludes the business of the 45th annual general meeting of Sasol. Thank you for your attention. Please stay safe and goodbye.