Good day and thank you for standing by. Welcome to the SAPI Q42026 results call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question please press star 1 and 1 again. Please be advised that today's conference has been recorded. I will now like to hand the conference over to your speaker today, Steve Binnie, CEO. Please go ahead.

Thank you, operator. Good day to everybody. Thanks for joining us. As always, I'll go through the investor presentation, calling out the page numbers as we move through. And firstly, just on page two, just drawing your attention to Our guidance on forward-looking statements. Page 3 is the key numbers for the year. These are annual numbers and a lot of this we've talked about in previous earnings calls. It was clearly a challenging year where we had significant headwinds, markets Thank you very much for joining us. There were positives, and they did gain momentum as we moved through the year. DWP prices, which initially came off, and we'll see it on a later slide, initially came off, but then subsequently strengthened in the latter part of the year. Very pleased with the progress of the ramp up of the volumes coming out of our Somerset PM2 mill, which was a big investment for us. Initially, obviously, as you know, started a little bit slow. Thank you very much. The negative movement in the exchange rates, the stronger rent, did have an impact on our forestry fair valuation which obviously has to go through the P&L as well. Moving to slide four is our earnings bridge comparing the year to last year. We've done it in a different format to previously because we thought this was a better way to explain the key The key drivers behind our performance, and we focus on the key levers or influences to our results. And you can see, I'm not going to go through every bar, but you can see that the pulp price had a major impact year on year, albeit did recover in the second half of the year. If you look at the year as a whole, a major negative impact. And similarly, even in the paper, All of these segments, both on packaging and graphics, a negative impact. You do get the benefits from the higher packaging volumes coming through, but other negatives, graphic papers would be no surprise to you. It does decline the volumes each year. But the currency shifts predominantly, obviously, the stronger dollar. which had a major impact on our rent costs, but also on the Euro as well. It had some impact there. And then the delivery costs, which is the shipping costs, the higher oil prices coming through, and then similarly on variable costs, the higher chemicals, the impact, once again, linked Link to higher oil prices as well, but not just chemicals. In Europe, we've seen higher wood prices come through and energy prices overall globally under pressure. We did a lot of great work on saving costs, but clearly not enough to mitigate all the impacts that are here. And that's what gives rise to the lower EBITDA that you see, the 294. Turning to page five, the quarter itself. I'm pleased to say that the quarter was better. Still many pressures, but the pressures have shifted. Our market conditions, we are starting to see improvement coming through. Dissolving pulp is better. The packaging markets are better. In the US, in SBS specifically, market has tightened. We have seen selling prices increase and further increases have been announced. So the market conditions for packaging in the US, specifically SDS, are better and we are more optimistic in the year ahead. And that will obviously be supported by higher volumes. But it's not just there. Globally, packaging markets are starting to rise. You've seen container board prices in Europe follow the U.S. upwards, and we think that can have a positive impact here in South Africa as we move through the new financial year. I'm optimistic that there can be benefits there coming through. So all in all, packaging is better than when we spoke three months ago. No surprise, you do have your annual declining volumes but a strong focus on cost discipline to ensure that the margins remain reasonable and obviously proactive management of capacity helps us there as well. And then slide six has the same earnings bridge but on the quarter and you can see that the main drivers that I talked about, you're seeing pricing benefits And then similarly, a little bit on packaging, but clearly more to follow. The volumes coming through, but offset by the currency and the higher fuel and chemical prices. Good savings on fixed costs. giving us the $99 million. So to summarize, still headwinds out there, but it's predominantly linked now to the higher costs associated with the war in the Middle East. Market conditions are better than when we previously talked. And just to show you evidence of that, slide 7, Firstly, dissolving pulp. You can see since the beginning of calendar 26, we've seen a progressive improvement. Just to remind you, there is a lag impact on that, but market conditions have improved. There's a healthy underlying demand for fibers, viscose. Downstream inventories are relatively low. Ironically, the exchange rate movements do support pricing as well, and we've seen DWP prices continue to rise. At the moment, today, it's $9.24 a tonne. And you can see on the right-hand side, fibre prices going up as well. Then turning to slide eight, which is another big earnings driver for the year ahead. The Somerset ramp up, really, really pleased with how things have gone. We've been able to secure more volume, gain market share, like we promised. And as I said, we ended the quarter with our machines full, record volumes, you would expect record volumes as you ramp up, but very proud of what we've achieved. And in the year ahead, As I said, the machine is now full. It's about increasing the speed and getting all the efficiencies associated with all of that. And then on the pricing side, the first price increase has been realized at the end of the quarter. And you'll see the benefits in the quarter ahead. We've now announced two further increases, not just us, the whole market. and like you've seen with the first increase, it does take a little bit of time to be realized into our numbers, but we are optimistic about achieving those price increases. The other thing I should say is that there has been significant capacity coming out of this market, so we're feeling a lot better in the year ahead. and you'll get the progressive improvement, higher volumes and higher pricing. Slide 9 has the graphics, markets. US, underlying demand does continue to decline just like Europe but because capacity has come out, the market balance is better, you see relatively stable prices coming through. In Europe, a little bit tougher because of the excess capacity. We did get a little bit of an increase earlier in the year, and we have announced price increases in recent weeks, but it is more difficult. Nevertheless, we are focused on recovering the higher costs. Slide 10. This shows our main categories of costs. We have seen the headwinds of the higher chemicals coming through and delivery costs. In Europe, yes, higher wood costs coming through in the energy as well. Most of that is in the base, the one headache, the immediate headache at the moment, as I've talked about. In the higher elevated oil prices. And that's what we've put into our outlook statement that we will talk about a little bit later. Slide 11, two specific costs, and it's mainly impacts on South Africa, has been the sulfur prices, which have risen dramatically. It's a slide you've seen previously. And the impact of the and the delivery costs. And this is just South Africa. You can see roughly about 400 million Rand each on the year's earnings, so a significant headwind. The next slide, 12, which is our net debt and leverage ratio. Obviously, with the lower earnings, our leverage I'm pleased with all the initiatives that we've put in place that we've managed to keep our debt relatively constant year on year and you look across the last six quarters there's a little bit of an exchange rate impact on there that does have a negative impact so broadly we've been able despite having a very low level of profitability we've been able to keep the debt relatively constant as we move forward into the new financial year and as we drop those lower quarters from last year that will mean that our earnings goes up and it will mean that the leverage ratios will start to come down as we progressively move through the quarters in addition to the debt reduction, the absolute debt reduction. Slide 13 talks to our liquidity and our debt We still have substantial flexibility cash on hand with our undrawn facilities, RCF facilities. The major refinancing that we have coming up in the next 18 months time is our 2028 bond and that's something that we've already begun to think about and you know we'll pinpoint the right time to to refinance that in the months ahead. Moving to slide 14 is the cash flow, the lower profitability having an impact on the cash flow. CapEx, we did commit to you all that we would reduce discretionary CapEx. We haven't cut back on maintenance. The bare minimum that we need to ensure that our mills continue to operate optimally and we ended the year I think the number was 210 and we're estimating 240 for next year. Turning to the segments and a lot of these themes I've touched on so I'm going to go fairly quickly. Firstly on slide 16 the pulp segment Progressive improvements. We did see the port, the Durban port, giving us significant challenges during the quarter. There was productivity issues there and there was a backlog created and it meant that there was a 38,000 tonne spillover into the new financial year. It causes disruption, clearly. but we do anticipate that we will be able to catch that up hopefully in Q1, that backlog. But overall, markets better, but the strong RAND and the elevated costs linked to the war in Middle East did impact on margins. Slide 17 is the packaging segment. A tough year. Clearly we had the commencement of the ramp up in the Somerset mill and that does impact profitability and overall selling prices across all the regions were lower so that had an impact and that's why we are driving now to get higher selling prices to recover Those are the lost selling prices, particularly in the North American SBS market. And you saw that on an earlier slide. And then in graphics, the volumes down 11% year on year, mainly linked to the structural decline and the fact that we obviously converted at Somerset, so we took graphics The margins were reasonable for the year and you know a strong focus on discipline cost management but obviously in Europe we do have that there is excess capacity in that market and you see that all summarized regionally in slide 19. I don't intend going through that maybe the only one just to call out is the South African volumes and a big chunk of that is linked to the port issues at Durban. That 21% decline that you see in the top right box. Slide 20 has our fried strategy, our core fundamentals. I've shown you this before. It continues to drive and guide us. I don't intend going through this, but with our renewed focus on back to basics, this guides us. you know slide 21 about controlling what we can control and and firstly on the on the portfolio side we've got the ramp up of Somerset PM2 which I talked about going very well the UPM potential joint venture the key the key decision now is lies with the European Competition Commission and we did put out an announcement yesterday that we We will know one way or another in the next few weeks. And then a big focus on pricing. As I've indicated many times throughout this presentation, our costs are rising and we need to mitigate that impact and we've been driving these selling price increases to mitigate against that. With a strong disciplined capital allocation, we've talked about CapEx, working capital, a strong focus. There was an outflow in Q4, but that was linked predominantly to the delays at the shipping at the Durban port and a buildup of inventory. The back to basics focus and we've set ourselves in each of the region cost-saving targets across variables and effects. Our key priority as I said earlier is to reduce debt and reduce the leverage ratio. The next three slides are just what are our key focus areas in the respective regions. Europe it's about completing the The joint venture proposal with a strong focus on cost savings targets and those we will continue to work on regardless of the process with the potential joint venture. And then in North America, the story there is to execute on the selling price increases that have been announced and ramp up the volumes further, improve the product mix to boost profitability. And then in South Africa, we continue to have the strong RAND. It's important that we focus on what we can control. So a strong focus on operational efficiencies, where we can take out costs out of the business and maintain operational efficiencies. all of those contributing to improved profitability in the year ahead. Slide 25 has the joint venture, nothing new to report there other than, as you know, we're waiting on the decision from the European competition authorities. Slide 26 has all our ESG awards and many of these we're very proud of. perhaps the most recent one once again in the Forbes top global employers best employers SAPI once again was ranked as one of the best employers one of the few South African companies and one of the few in our industry that has continuously been ranked there and equally or even more proud that we are ranked as one of the world's top companies for women. So turning to the outlook statement and slide 28, to summarize everything that I've been saying so far, there are green shoots, market conditions have improved in our pulp segment, market conditions have improved in our packaging segment. The graphics side of things, no surprises. The structural decline continues and a strong focus on cost. A focus on getting price recovery that I've mentioned through, we do have the higher costs. So getting that recovery through, but we do have elevated oil prices. And I know we all watch the Brent crude prices. They are very volatile but that has a significant impact on the profitability in the quarter and that's taken into account in our earnings guidance. We do have shuts in the quarter of 41 million. That's mainly the Cloquet shut but there is a smaller shut at Somerset as well in the So, taking that all into account, strong focus on costs, strong focus on productivity, taking into account the current market conditions, which I said are improving a little bit, the scheduled shuts, the elevated oil price. When we take that all into account, that's why we gave the guidance that the earnings would be down. Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. Operator? Yes, as a reminder, to ask a question,

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No problem. We will now take our first question from the line of Brian Morgan from RMB Morgan Stanley. Please go ahead.

Good afternoon, team. Thanks for the presentation. A couple of questions from my side. Can I start with this one, please? Can you give us a steer on the energy refund that you're expecting for

The energy rebate is slightly lower than the prior year. Not by much, but slightly lower, which is linked to lower usage. Marco, if you can hear me, maybe if you want to elaborate a little bit further.

Yeah, Brian, it will indeed for Europe be slightly less. It depends on the usage, depends on the pricing mechanism that is being applied by the local authorities.

And in some cases, Brian, it's also the structure of the package that slightly changes year on year and that has led us to believe that for the coming quarter it will be slightly less than last year.

Okay, that's very good. Thank you. Steve, can you dive into the port operations a little bit? We've had 38,000 tons of DWP locked up. Could you give us an idea of your confidence around whether that will be cleared through this quarter?

Yeah. What I'll do, Brian, I'll let Graeme go into more detail. He's had some meetings with the port authorities in the last few days. Yeah, a major headache for us. Not only the fact that the sales slipped into the new quarter, but you can imagine you have to find storage space for this inventory and so on. And just to make it clear that it was initially maybe triggered by a software update that was done by the port authorities, but it's not only that. And Graeme will go into Maybe a little bit more detail, but we are confident that we can catch up in the quarter. Graeme, over to you.

Thanks, Steve. Obviously the initial event was the software update, which was obviously done in the peak of the citrus season when oats was already under quite a lot of pressure. That obviously very rapidly caused A backup in obviously not only ours, but everybody's containers, which then flowed into pressure on warehousing space around the area. But the ongoing challenges largely relate around equipment availability and reliability, particularly the gantry cranes. We have had, we've been working with the port authorities and shipping lines to get additional containers and many others. My most recent interactions though with the port authorities and particularly ICTSI on the DGT terminal, which is where all the containers go out, I think are very encouraging. There's a lot of new equipment arriving from end of December onwards. There's a big program to refurbish the existing entry canes that are in the port because obviously ICTSR have only recently just got operational control over there. And then I think that plus the work that we've been doing both with them but separately in terms of looking for alternative ways to get the volumes out of the country gives us, I think, good confidence around our ability to catch up all of those volumes within this quarter.

Thanks, Graeme.

Back to you, Brian. That's great. Thank you, guys. And last question is just on these euro bonds. Just maybe if you can chat to us a little bit about the interactions that you've had on that so far and then also any potential to do a secured lending deal here.

Look, as you would imagine, you have ongoing dialogue with your banks and your advisors, as we do with any bond refinancing, and you try to pinpoint the right time. As part of that conversation, you consider all options. Clearly, the bond market generally has weakened. It's not just CEPI. All the bond markets have weakened. You know, as you evaluate the flexibility and the costs, you know, you will consider all options. But, you know, as we get closer to the date, we'll be able to give a more specific update. But, you know, we are confident that one way or another, we'll be able to refinance.

Okay. Just to follow up there, Steve, would you be able to use South African assets against that?

Look, we're looking at all options, Brian. Clearly, we've got assets in the US, we've got assets in South Africa. So we're not at that stage yet, Brian, and our prize one would be to refinance in the bond market.

Okay, cool. Thank you.

Thank you. We will now take the next question from the line of James Twyman from Prescient. Please go ahead.

Yes, hello. Thank you very much and thank you for the presentation. First question from me is just back to this DWP inventory in Durban, which was 38,000 tons at the end of the quarter. Could you say roughly where it is now, whether there has been any reduction? So far in the quarter.

Mohamed, do you want to talk to that specifically?

Yes, so the 38,000 tonnes we have, if I look at what we've actually invoiced in October, we have made up around 10,000 tonnes out of that 38 that we've invoiced.

And the plan, as Graeme mentioned, is to try and get through all the remaining 28 by the end of the quarter.

Okay, that's great. And then you mentioned on the call that the EU is going to make a final decision on the joint venture in the next few weeks. So is this the final, final decision? And if so, does that mean you put all your final solutions to their concerns in and it's now just a waiting game?

Yeah, as you saw from our announcement yesterday, we've proposed The next step is that the Commission has to evaluate that and then they typically go through a testing process with market participants and ultimately that will influence their final decision.

and then a couple more, if I may. In terms of the Somerset mill, given the ramp up in packaging paper production, what is your estimate of what sort of tonnage increase we could see next year compared with this year?

By the time we got to the end of the quarter, as I said, now we were relatively full. We've got the progressive ramp up on the street. I'll pass you to Mike, and he can talk broadly just about the volumes for the year.

So, James, we're, I'd say, ahead of what we had for a startup curve as far as equipment overall efficiency. And the machines run it very well, and the products very well received out in the field, and we're essentially sold out. At this stage, we do have a speed ramp up that was planned, but the exact volume we have about, I guess I'm struggling to give you an exact number, but

Yeah, maybe I can just comment there. I think, you know, what we said is that we would reach an operating rate, James, as you know, we talked to the PM1 and PM2 together as a unit because we, you know, we optimized production across those two and we reached, you know, an operating rate across the two machines by the end of Q4 of about 85% operating rate and we anticipate, as we've indicated we'll ramp up to full capacity run rate by the end of the year. So yeah, you can phase up that run rate and work out the additional planages for the year.

But it's at least, you know, you can hear we're pausing giving the exact number because we don't want to do that, but it's at least 100,000 extra for the year.

Okay, thank you very much. But just back to the timing on the EU decision. I think in the next few weeks, whereas I think previously, we're expecting it to be end of the year early next year. So just good to understand where you see the timing from them and how factual the timing is. Like, do they give you an exact date when it is or are they, you know,

And then in terms of pricing, container board prices move annually in South Africa and prices for container board have moved up pretty dramatically over the last six months or so.

How pleased have you been with the price increases that you've managed to achieve? Because I'm sure it's all in the bag now for the year.

Look, one thing I would say to you, James, is that we did change the format of the South African contracts a couple of years ago and it's 50% fixed and 50% variable. So we clearly know the fixed component, and as global prices for container boards rise, that will support further increases in the quarter ahead. Graeme, I don't know if there's anything you want to add to that.

Yeah, just to reiterate that the format has changed. So we have annual volume contracts, and then the pricing components are split. roughly 50-50 with quarterly adjustments as we go through. So the price increases that we've seen particularly in Europe in craft line of board, we would expect for that to be followed through in roughly 50% of our volume as we move through the year.

Okay, thank you very much. And then just a final one if I may, what was the FX impact on Your net debt for the year? For the year.

Brian, I'll get back to you. James, I'll get back to you. I don't know for the year. Just give me a while.

Or the quarter then, the quarter.

You got me there. It wasn't much because your Euro quarter on quarter didn't move much, so I can Thank you.

We will now take the next question.

From the line of Detlef Winkelmann from JP Morgan, please go ahead.

Hi guys, thanks for taking my question. Maybe my first one is on this JV. Obviously, you already have secured financing for the JV as things stand today. I'm just curious, you know, can that be revisited with the fact that, you know, graphic paper profitability is worse than it was, let's say, this time about a year ago and potentially remedies going through the system or is it fixed in nature? Just curious on that and what that means for, you know, you call it $100 million worth of cash.

The decline in graphics was forecasted and was built into the estimates that we provided to the banks. There were no surprises there and the underlying profitability was broadly in line with what we discussed with the banks. That guarantee bridge is in place and will not be influenced by the changing circumstances Nor the slight extension on the deadline from the European authorities. So we still have that flexibility and that's not a concern for us.

Okay, thanks. And maybe just on the second part of that question, just on the remedies as well. I mean, we obviously, and I presume you don't want to tell us what the remedies are or what you guys have proposed, but if the remedies were to exclude I don't know certain mills or they were to delay any closures etc once conclusion the JV would that you know kick start any renegotiation on the on the funding side?

No I mean clearly we can't go into specifics and it's a very sensitive stage but if we look at the impact of all the remedies that have been proposed no that would not have an impact on the the funding that we have in place and the proceeds that we would get from the deal Okay, thank you.

Thank you. We will now take the next question from the line of Zanande Mejiwa from UBS. Please go ahead.

Hello, can you hear me okay? Yes. Hi, thank you for taking my question. Just a couple of questions on my side, just mainly on the guidance. For EBITDA in the first quarter to be below the 99 million despite an expected recovery in the delayed shipments in DWP as well as further improvements in Somerset, I mean beyond the 41 million maintenance impact, what are some of the main offsets that prevent these positives from translating into a sequential EBITDA growth?

You've obviously counted the maintenance and it is a big number. But the main headwind is the higher fuel price and the higher impact on diesel. We're a big diesel user here in South Africa. We have to transport the timber from the forest to the mills. In the US, it has a major impact as well. Diesel prices in the US are, I think, $6.40 at the moment. It's up substantially. So when you take that into account, overall, we are estimating incremental costs. And by the way, it's not just diesel. We've still got high sulfur prices, and linked to the diesel is the shipping cost. So when you take that all into account, and what we did in our outlook statement, we used today's prices. If diesel comes off, the brain crude prices come off, then there is scope for higher profits. We're halfway through the quarter. If that pressure could be relieved, that would be a benefit for us to outperform our outlook guidance.

Sure, that's clear. And then I guess my second question is on the North America segment. So, Eva Dodd, we saw a sequential improvement during the quarter. So, I guess my question is how much of the improvement came from some set P2 volumes and operating efficiencies versus paper The next question to that is, what is your realistic quarterly EBITDA run rate once PM2 fully ramps?

There's a lot of questions there. In terms of the quarter itself, you saw the bridge on slide 6, so you can see that The packaging selling price increases that came through, there was a lack as I indicated earlier. So you can see it was relatively small. There's a big impact from volumes as Somerset ramped up and efficiencies at the mill because of the higher volumes. So a lot of the pricing benefit still has to come. In terms of the realistic EBITDA, I'm not going to give you a specific number, but we've targeted progressive improvement. You heard from Mike earlier, we're going to see higher volumes over the course of the year. I said to you at least 100,000 tons, that will benefit you. We're going to see the benefits of the price increases progressively come through. So the 27 earnings will be higher because of those factors. And then as you move into 28, as you annualize the higher volumes, and as you annualize the benefits of the three price increases that we've announced, which recover selling prices some of the way back to where prices used to be, you have a significant improvement in profitability both in 27 and then into 28.

No, that's clear. I'll turn it over. Thank you.

Thank you. We will now take the next question. From the line of call, Griffith from Morgan Stanley, please go ahead.

Hi, can you guys hear me okay? Yes. Great. I guess, yeah, just kind of looking on Q1 here. Given the working capital outflow we just saw in the current quarter, should we be expecting inflow in next quarter or, like, how do we think about this?

Yeah, I'll let Glen go into detail. Clearly, we're going to see a reversal of the 38,000 tons that we talked about and the buildup of inventory ahead of the cloquet shop. But over to you, Glen.

Thanks, Steve. And usually in our quarter one, there is some seasonality impact on the working capital, particularly in South Africa. Graeme highlighted the citrus season. There's also a buildup of some stocks in North America on the packaging side. And we have, there was an uncertainty of supply on our raw materials, so we've We've locked that in to make sure that we don't impact our production. So overall we're expecting a relatively small increase in working capital in this first quarter. But it should start reversing, it will reverse, sorry, later on in quarter two and into quarter three.

But maybe just to offset that, exchange rates have moved further in our favour. And based on current levels, that will offset a small increase in working capital that Glen referred to, and your net debt should be roughly constant.

Got it. Okay, cool. Then quick question about this. If I look at the previous reports, €200 million term loan issued in Feb 26. Is that broken out across a couple of maturities? When I look at your maturity wall, page 13, there's only $142 million in 2031 and then you've got the 29 and 30 stubs. Is that how you think about it?

The $200 million term maturity loan that we put in place in February, it's a three year Yes, where is that reflected in the... Sorry, we're just finding the page 13. Where is that reflected in this graph?

It could be... Yeah, I guess like it's at a five-year tenor, right, which would be 2031, but it should be a higher bar.

It's in 2030, 2031 year.

I guess I'm looking at the 142 and it's just smaller than the 200 essentially issued but you've got other tranches kind of around all right we will can we come back to you that on that one Yeah sure and then I guess just staying on the term loans like are these generally provided by the same guys as the RCF or how's the um yeah what what's the story there um yes they are uh some of the banks that are in the RCF we've got a we've got a 10 banks I think in the RCF and it is a component of that a part of that

Okay, cool. And then I guess on the latest issue, like the one from February, these are obviously pari with the bonds and the structure here. What's the, I guess, the covenant packages differ massively or like, yeah, how does that look?

You're talking about the term loan now?

Yeah, correct.

Yeah, they have the same covenant structure and they are peri-pursuit, yes.

Okay, so same as the bonds, basically. Yes. All right, cool. All right, no, that's great. Thanks very much. Great, thanks.

Thank you. We will now take the next question from the line of Thiel, Durnwald from Caius Capital. Please go ahead.

Hi, good afternoon. Thank you for taking my questions. The first one is relating to a commentary that you made earlier. Your sense on how sticky those price increases are? Because I think we've seen in the sector a lot of price increases get announced and then what is achieved is materially less than the headline numbers and often they are passing through raw material price increases. Now you're talking about the hope of lower diesel costs, lower transportation costs, lower raw material costs. But then still pushing through continuous price increases. Can you a little bit speak about about that dynamic if the two can occur at the same time and the sustainability and all the achievability of the full dollar amount of those price increases?

Yeah, look, you've got to look in the different markets, right? Europe is more difficult because there has been excess capacity and As you know, we made one price increase earlier in the year, which was successful, but the second one was not successful. More recently, we've announced another one, and we're working on that as we speak. So it does prove to be more difficult. The US is very different because the market conditions are very different. Demand is increasing. The market balance is more in sync. So you would have seen from that graph that we showed with SPS prices. If you look on what slide is it? It's slide A. You can see the decline of SPS prices over the last couple of years. The market is very different now. It's in balance and we have got higher costs. and that's why we are more confident that we can execute on the selling price increases that we've announced in this market. So very, very different to Europe. South Africa, again, different circumstances because you have a currency at play here and the Rand was substantially stronger which made imports more attractive but What we've seen in more recent times is that container bulk prices initially rose in the US. Europe is now rising. And then the RAND has been, everything's relative, right? But the RAND has been relatively more stable over the course of the last six months to nine months. So that gives us more confidence for selling prices increases in the European markets. and the South African market. Maybe just one last comment on graphics. Same comment. A lot of capacity came out of graphics in the US and that's why you've seen price stability there. In Europe, it's tougher because you have excess capacity.

Okay, understood. Thank you. Regarding cash flows, before I look at movements in debt levels, We're seeing this quarter cash burn of 68 million I think is the right number to look at. And on that basis, is there any limitation to the availability of your RCF given that I'm assuming current cash level is probably as low as you want to go and therefore for the cash burn in the next quarters you'll be counting on the RCF. With the negotiations on the extension of the covenant holiday, Is there any point that with the RCF might not be available anymore or is that fully available to draw? And are there any triggers that would prevent you from drawing on the RCF to fund ongoing cash burn?

Look, what I would say, Glen has gone through the Q1 outlook. There's a very small outflow of cash. Later in the year, we are anticipating improved profitability. and ultimately we will be generating cash for the year so we do we do expect the debt levels to come down and we as you see we do have cash reserves there so in terms of restrictions on our access to the RCF no there's not and as I say leverage ratios will come down and we will be cash positive in the later in the year

Okay, thank you. That is helpful. But just to be very clear, because it's not guaranteed and as an analyst I have to be conservative. So even if the situations were not to improve meaningfully, the RCF would be fully available if the situation stays more or less where it has been to support further cash burn throughout this year. There are no limitations around that.

There is a minimum threshold, but we have more than sufficient headroom on top of that. So within the agreement that we have on the covenant suspension, we have, as I said, we negotiated more than sufficient headroom on that.

Okay, understood. And then a comment that you made earlier in response to a question around the Eurobond. You mentioned that you're speaking to advisors. Have you retained financial or legal advisors regarding your bond refinancing?

No, no, we're talking about the banks. But that's normal practice. You talk to your banks all the time. We're close to them. You try to pinpoint the right time to refinance. Bond markets, They've been very volatile globally and we continue to monitor the markets. Nothing different there to any normal times.

Okay, understood. Thank you. Then the last question, maybe if you can give a little bit more commentary because given the trading price of your bonds generally across the cap stack, The market is making it look extremely difficult to do a normal course bond refi. What are the things that you think would have or should fall in place over the next one or two quarters for you to launch that market bond refi?

We can't give you an exact date when we're going to refinance. We monitor and we'll choose the right time. Clearly, the interest rates on the existing bonds were lower when we did the initial bond issue some years ago. We don't want to do it too soon because you're going to have a higher cost. I can't give you an exact time, but we will look at where market conditions are at. We talked to our banks, as I say. and we'll pinpoint the right time to when to refinance.

Okay, thank you so much. I'll jump back in the queue.

Thank you. That's all the time we have allocated for today's conference call. I would like to hand back over to Steve Binnie for closing remarks.

Yes, thank you operator. We appreciate everybody joining us today and we look forward to discussing our results at the in the Q1. So thank you very much. Bye bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.