Grindrod Limited (GND) Earnings Call Transcript & Summary

Good morning, everybody. Welcome from Grindrod offices in Durban. A very different scenario to what we normally do. So we're feeling a little lonely here in Durban. Hope you can see us perfectly. On my right, I have David Polkinghorne, Chief Executive of Grindrod Bank; on my left, I have Xolani Mbambo, Finance Director of Grindrod Limited; and myself, Andrew Waller, the CEO. Thank you very much for giving up the time to join us this morning. Your time is important to us, and we hope that we present well and that you get enough information out of our presentation to make the right decisions regarding your investment in Grindrod. Mike Hankinson, our Chairman, normally sits with us at the front table. He is behind the screen at the moment. And also, the Investor Analyst Society (sic) [ Investment Analyst Society ] normally hosts us. Mike Brown, thank you once again. He normally introduces us, but thank you, Mike, for the Investment Analyst Society and all that they do for us. This presentation and the recording will be found on the website, along with the results, the investor -- the analyst information that we add to the information that we published. The Q&A section is open. If you would like to ask us questions, please trot those upfront, and we'll take those questions at the end. If there are too many, we will get back to you by e-mail. Alternatively, you can e-mail Fathima Ally, who will commence as the Finance Director of Grindrod from the 1st of September. You'll see on this front slide, a map of Southern Africa with a number of corridors on it. That's our map. It doesn't represent the area that Grindrod operates in solely. We obviously have businesses elsewhere as well. But this is the key focus for us as Grindrod, and we love to add little pieces of corridor, showing that we are impacting on the corridors and assisting Southern Africa in getting its product to the world and of course, assisting in getting products into South Africa. So an important part of our strategy. Before I get to the financial numbers, I'd just like to share a little bit of the overview in the -- of the first 6 months and a few of the highlights. Firstly, looking at the operating environment. As you've all experienced, a very difficult 6 months for all of us in the world. It followed a really good first quarter for Grindrod. We had exceptional first quarter results, following on from a good prior year. And fortunately, that enabled us to cover a bit of the hard times that we experienced in the quarter 2. As you will already be aware, in the second quarter, we were managing to operate some of our businesses as essential services, but a number of them were closed completely. And as you would expect for an organization that operates across borders, that has been very challenging for a number of the businesses too. Our first challenge was to make sure that our people were safe. Hats off to all our ship people and our management teams for doing a great job in that regard. What we've managed to achieve over this time has been amazing. A lot of work done on making sure teams are off-site and on-site. And that if an infection occurs, we can pull the team out and replace them as well as a lot of work being done behind the scenes in support -- ensuring we support the people that contact -- contract the disease. So great work on the teams on the ground, on the front end. We had to make sure that we were generating revenue to cover our costs. And of course, then you have the back-end teams that are working on the cost base, making sure we're restructured as much as we could, cut costs where we didn't need to. And of course, a lot of work done by the finance teams, ensuring that we've got facilities available to us should we need them with the different banking -- banks that we have in place. So a very testing first half year, but that's no different to any of you. We are very fortunate as Grindrod to be able to operate in some of the environments, and we'll touch on a little bit of that as we go through the presentation. Our next slide is just some of the highlights. And as I said, we will touch a little bit more on these as we go through. But I thought before we get into the numbers, just some key highlights. The volumes in the Maputo Port were resilient, and we're very pleased that we were able to record around 9 million tonnes for the year -- for the half year. The Matola Terminal did a really good first half, premised on a very first good quarter, I must admit, but great volumes through that Matola Terminal, notwithstanding the closure of the border for some several weeks. In the intermodal business, we were able to assist a lot with a port congestion during the lockdown and moving essential containers in and out of the port as well as to other ports. We delivered a fourth vessel into the Northern Mozambique area because despite the lockdown in South Africa and some restrictions in Mozambique, there was still product needed to be going up to the north. So that was a pleasing result to get a fourth ship into the area. We've managed now to get 2 locomotives and 54 wagons onto the Dar es Salaam line, which is pleasing. As you know, we've got a number of locomotives that have to be brought back from Sierra Leone that we're looking to deploy. The bank has had a very good first half, very cautious on their lending and developing the SME and platform banking initiatives, as we -- even through this lockdown period. The disposal process, as you would expect, a little bit delayed. Potential acquirers can't engage the disposal groups quite as easily, and we'll look to pushing that on a bit in the second half. So those are the key highlights that I wanted to pull out before we started the financial presentation. Xolani, over to you.

Thanks, Andrew. Good morning to everyone, and thank you for joining us on this Grindrod virtual interim results announcement. Grindrod had a solid start to the year in its continuing operations, which followed from a strong quarter 4 last year, as Andrew alluded earlier. However, COVID lockdown in April and May impacted our revenue, resulting in a 5% decline compared to last year. The cost-cutting initiatives mitigated the revenue loss, enabling Grindrod to deliver trading profit growth of 10% compared to last year. Grindrod, through its B-BBEE structure and its treasury shares, holds over just about 1.8 million shipping shares. The share price on shipping dropped from ZAR 97 a share in December last year to ZAR 48 in June of this year. This resulted in a loss of about 80 -- ZAR 90 million as at the June reporting date. Just for your interest, the price as of yesterday was sitting at around ZAR 63, so there's a bit of comeback on that price. We also repatriated about $28 million of reserves from Mozambique to make funds available in South Africa during the COVID lockdown this year or this half year. The withholding tax that is payable on those repatriation is about 8%, which resulted in about ZAR 32 million of withholding tax payable to Mozambique tax authorities. We also recorded a foreign exchange translation loss of around ZAR 19 million on our U.S. dollar lease liability. This results from the -- one of the vessel that was being chartered to operate in our Seafreight business. This is 1 of the 4 vessels that we chartered, which is a foreign fleet. A combination of these factors resulted in an abnormal charge to our income statement of about ZAR 141 million. As a result of this, our headline earnings dropped to ZAR 23.4 million compared to ZAR 166 million last year. Net profit was similar impact that we experienced. What is pleasing is our trading profit conversion to cash, which looked good. The trading profit of ZAR 458 million converted to about ZAR 507 million of cash generated. That was up 40% on 2019. Our net debt-to-equity ratio is sitting at around 5%. The net asset value at ZAR 12.34 increased from ZAR 11.75 last year. And the primary reason for that is the weaker rand from about ZAR 14 to ZAR 17.33 to the dollar when we translated our foreign assets. You'll see when you look at my financials in the analysis of equity that our FCTR increased by ZAR 809 million, which offsets the ZAR 272 million loss. As Andrew indicated earlier, we were fortunate to secure facilities, additional headroom on our facilities of ZAR 450 million pre-COVID lockdown. Post lockdown, that facility headroom has increased to ZAR 526 million. The next slide really shows the resilience in our operating segments as business unit level. As you will see, the Port and Terminals contributed headline earnings of ZAR 97 million compared to ZAR 102 million. This is commendable in the current difficult trading conditions. Our logistics business at ZAR 44 million, reasonably compared to ZAR 47 million last year. Our bank at ZAR 33 million was impacted by specific provisions in our advances books, and David will talk more -- a bit more in that when he covers his section. What has really hurt us the most is at group level, where we included those abnormal items of ZAR 141 million that I talked to earlier. And of that ZAR 141 million, ZAR 109 million is noncash. Just to give a bit of a picture. Our headline earnings as currently reported is sitting at ZAR 23 million. If we remove those 3 items that I talked to earlier, being the shipping share loss, the withholding tax and the foreign exchange loss on lease liability on one of the vessels that hasn't moved to Malaysia, we're looking at about ZAR 164 million of earnings that would have been generated at headline earnings level compared to an equivalent amount of ZAR 150 million last year. We are now moving to divisional performance, just to give a highlight on the performance by each segment. If we look at the ports and terminals, again, this is just reported on management basis, so that you get a clearer view of how the segments have performed. Although revenue on ports and terminals dropped by 6%, it is pleasing that we maintained our EBITDA margins at over 43%, similar to last year. If you do a high-level calculation, our return on equity or net asset value on ports and terminals is fitted at around 8%, which is a comparable number to last year. Looking at Logistics business. Again, we recorded a revenue drop, but the margin remained relatively -- in fact, marginally up on last year, which is also pleasing because it compensated for the drop in earnings. All of this ability to maintain our margins is on the backdrop of cost-cutting initiatives that we went through to with the group. At bank, the revenue remained stable. However, at EBITDA level and net profit level, the impact of the specific provision, which sits at around ZAR 32 million, as going through those numbers, has a reduction from ZAR 91 million EBITDA to just about ZAR 60 million in the current year. It's an effect flow-through on the net profit level. What is also pleasing about bank is that its core lending -- sorry, its core deposits remained relatively stable, only dropping 5%. I will leave it to David to talk a bit more on that. I'm also pleased to say that the liquidity coverage as well as the capital adequacy ratios are in line, in fact, better than the regulatory minimum required. Moving on to our discontinued operations. I thought I'd share a little bit more on the numbers so that you get a feel of where this segment currently sits. We processed fair value losses of ZAR 270.2 million in our private equity book. This was as a result of the COVID impact on our underlying [ investee ] businesses. So the movement from the closing balance of fair value that we reported in December 2019 to June '19 -- to June 2020 has dropped by ZAR 270 million. That has resulted in that net loss of ZAR 336 million that we report in our numbers. The noncurrent assets held for sale at ZAR 4.1 billion consists of our Marine Fuel trading business and Agri -- and the remaining Agri business as well as now the private equity book and the advances against the properties. Last year, the Marine Fuel and Agri business was sitting at ZAR 986 million, fair value, currently sitting at around ZAR 1.2 billion. The reason for the increase is the revaluation of our investment in Marine Fuel business as a result of the weaker foreign exchange rate. In the private equity book, we've got about ZAR 1.5 billion of private equity book sitting in the ZAR 4.1 billion. We've got ZAR 1.2 billion of advances against North coast property as well as the property investments, which sits at around ZAR 0.5 billion. The debt associated with the private equity book and other investments is sitting at ZAR 873 million. ZAR 1.2 billion in addition to that is intercompany -- internal funding. Moving on to our net debt reconciliation. At group level, we moved from ZAR 69 million of net debt in December 2019 to ZAR 451 million at the close of the first half of this year. ZAR 507 million is what we reported on as cash generated from operations. Between ZAR 40 million and ZAR 50 million of that came from bank. We applied part of that to our interest, dividends and taxation. We also applied that to our CapEx. We applied -- and within that CapEx of ZAR 160 million, in addition, we had ZAR 60 million of additional leases and only had about ZAR 35 million of additional investments, making up the ZAR 256 million in that category. We had an outflow in terms of settling our participatory contribution on the pref investment structure that is running through our Grindrod Investment Trust. And in that number, we also have foreign exchange differences. And that's how we got to the ZAR 451 million. What is also -- would be useful for you is the additional information that we add on our website, where you'll get more details on the analysis of our debt. But the small table at the top right-hand corner of this slide shows the net debt at group level, which I reconcile to ZAR 451 million. But if you exclude bank, which tends to distort the numbers as a result of inclusion of the deposit book, for instance, we are talking about ZAR 2.8 billion of net debt. If we remove the IFRS 16 debt from those numbers, the group position changes to net cash and the remaining Grindrod businesses, excluding bank, the net debt drops to ZAR 1.6 billion. Thank you.

Thanks, Xolani. What David and I'll do is just share with you some operational highlights and the focus for the second half on each of our divisions. The first one we would like to look at is the Maputo Port. As I said before, the port maintained its volumes at around 9 million tonnes during the first half, which is an outstanding result given the border post lockdown, which subsequently has opened. But you can imagine with the COVID precautions that have been taken at the border post, the free flow of trucks is not nearly at the same level as prior to COVID. There's a lot of good work that you'll see on this slide, and also that the teams have got in place to assist with that as well as to try to move more product on to rail. And thanks to our partners in Transnet and CFM for assisting us in that regard. We needed to delay the CapEx program that was ongoing in the port. The chrome and lay-down area and the berth, that has recommenced, and some of that facility is now already available. In the second half, we'll need to complete that. And we're also prioritizing the offloading for the wagons in order that we can improve the turnaround times, something that's critical to the rail service providers that we use through to the port. So great work done by the teams in the port under very difficult circumstances. In the terminals, strong performance in the first half, shielded, as we said before, by the first quarter, very much helped by the strong iron ore price. And you'll see later on a later slide that the coal prices impacted slightly on the coal exports. Matola itself, 13% up on the prior period. And then you'll see on the next slide, not good enough, not at the level that we want to be, and there's some way to go to get back to normal. Richards Bay, in fact, operated throughout lockdown, servicing customers, albeit at a lower level. And we are very impressed that we are able to, with the newly completed Seamunye facility, able to load sulfur trains in Richards Bay right up to the Congo. So that was very pleasing for us. Very important for us is diversification of cargo in Richards Bay and to improve the volume throughput, really important that we get that right in the second half. We also managed to acquire the minority stake in the Maputo car terminal back from the minority shareholder. So that is now -- that facility is now completely owned by Grindrod. If I look, indeed, at the -- of the volumes, you will see that the volumes were good on the prior period, '19, but still a long way off our annual capacity. As you know, the teams at Port and Terminals are very focused on getting to the annual capacity. They do the numbers on Matola where they want 600,000 a month in order to get near the target, and we are looking forward to them achieving that in the second half. So -- and as I said before, the Richards Bay number is a little bit off and primarily as a result of the price of coal that's running at the moment. As I said early on in the Logistics business, good contingency planning and work done by this team during the lockdown. You can imagine there was lots of hard work done in -- within the port in the container business. And that was to do with understanding what was essential cargo and what was nonessential, applying services to the essential cargo; and then latterly, stacking the nonessential containers within our -- what are normally empty depots -- empty container depots for the empties returning to the east, they ended up being chock-full with nonessential cargo containers. So lots of work done by our teams during this lockdown, assisting the shipping lines, our customers at Transnet with the congestion that was resulting from a reduction in the volumes -- in the throughput through that port. So great work done by all of those teams evacuating containers from South Africa as well as storing nonessential containers in ports or moving essential cargo around the ports for the shipping lines. We contracted extra space in Port Elizabeth. And as you would have seen, we secured the head lease on our facilities in Maydon Wharf. So we're now directly leasing from Transnet, and that gives us long-term tenure on those leases. The second half will see more alignment of the services, which is important. We're seeing good uptake from the customers, and we're expanding that customer base. Critical for us to continue our relationship with the shipping lines who are so important to South Africa as a whole and our business, and we'll look to expand our facilities as we go. At yesterday's Board meeting, the Board approved 2 more leases for properties in order that we can fast expand on this container business. In Northern Mozambique, exciting development up there for us, and we were fortunate to be able to operate throughout the restrictions that were imposed by the Mozambican government. Building of the facilities in the oil and gas area in the Northern Mozambique was ongoing. You see the ship there full of Grindrod trucks, that it's a roll-on/roll-off ship. So when it gets to the other end, the front of the ship comes down and the trucks drive off. We now have 4 ships running up and down the coast. So very exciting for us delivering cargo to construct what will become a very extensive project up in the Northern Mozambique. Obviously hampered by COVID and also hampered by some of the insurgency that's going around in the area, so we are having to be careful with our people. All of them are within the cordoned-off area that is well maintained by Total and the other oil majors. So important to us is that we develop the intermodal facility, which is outside this cordoned-off area. So we are a little bit anxious to start at the moment, and we will only do so when we are sure of what the future of that area is. And then also for us to open this Malawi corridor a bit more on a continual basis. At some cargoes, we were running backwards and forwards from Malawi, and we'll look to expand that in the second half of the year. On the rail side, as you can imagine, a very difficult time because you had the borders closed and you've got mines in force majeure. So a lot of our locomotives are not being paid for during this period. But since reopening, we've managed to establish ourselves with a few train sets on the Dar es Salaam line, which has been good. A number of the mines, as you all know, have come back. So those have started again, and we're receiving rentals from them. Very important for us is to get this North-South Corridor working. So a lot of work by our rail team, Transnet rail team, together with Zimbabwe and Zambia to get this rail line on the North-South Corridor operating. It is a great corridor. It should be used more, and we need to make sure that we pursue a good solution on this. As you know, we have a number of locomotives that we brought back from Sierra Leone. Those are all undergoing their big 6-year rebuild program. It takes a significant time of -- amount of time to do. We've got 6 now all ready, and they will be deployed up into Africa shortly. And that brings me to the focus on the second half. We now have concluded with African Rolling Stock Solutions, a great company that has a number of concessions and customers where they deploy locomotives at the moment. And we look forward to using their commercial ability to deploy some of these 20 locos in Africa. As I said before, lots of work that ourselves and Transnet are doing on the North-South Corridor. So very pleasing to see a lot of effort being put in by both Transnet -- well, not both, Transnet, Zim Rail, Zambian and ourselves to ensure that we get this corridor running. David?

Thank you, Andrew, and good morning to all of you out there. Before I focus on the slides, I'd like to, well, firstly thank everybody for your participation today and publicly commend the bank staff over this last 3-month period and also to our clients, to thank all of you. I think we've learned a lot about each other over the last 3 months, which, in many ways, has been a positive. And I think some of our numbers bear out the relationships that we've had with our clients and also the way our staff have been able to adapt and really take on what has been an enormously -- or an additional workload and to manage to keep the engagements going. So to all of you, a public thank you and let's hope we've managed to cement new ways of doing business as well as learn what works for us and what doesn't. On the highlights of the first 6 months, and as Andrew alluded to, it was the case of 2 different quarters. We had a very good first quarter and then obviously went into lockdown, and that changed the rules significantly. The overall advances book, as Xolani alluded to, is very stable. We did see some drop-off in January from the 2019 results. But what was very pleasing was that from the end of March, which was effectively the start of lockdown, to the end of June, there was a marginal increase in those deposits. So a lot of the industry fears about massive liquidity challenges in the banking industry, we were able to avert, and we were delighted with that. So that's a very positive from the first half in that respect. On the lending side, on the advances side, again, very cautious in how we've been managing that book. I'll talk a little bit about that in a few minutes. But again, keeping our books stable, having to assess very carefully the value of security underlying our loan base, what is the impact on impairments. And while we've seen enormous challenges across the industry, all the banks reporting significant increase in impairments, we've seen some, and again, I'll talk to that. Cash liquidity. For a bank, obviously, liquidity is always something that they're focused on to ensure continuity. As you will see there, we had over ZAR 4.3 billion of cash liquidity at the end of June. Now I don't know whether he's out there, but if really he was listening and is listening, he will tell me I've become ridiculously conservative as I get older. ZAR 4.3 billion of cash liquidity out of a book of ZAR 9.9 billion would suggest that 50% of our assets are not working. And he's right. So the opportunity that, that presents is, as the market improves, is an enormous opportunity for us to ramp up the business, take advantage of opportunities that are going to present themselves and deploy that cash in a productive way. So while we are being -- or operating with a lazy balance sheet, it's comforting that we're still managing to generate cash and profits, notwithstanding that position. From a ratings perspective, we had our rating reaffirmed at A- -- investment grade at A-. And that's happened post COVID and post the country rating downgrade. So again, for us, a very positive outcome in what was a very unstable time. From a cost perspective, we're not going to get away as an industry from technology advancements and technology having to keep up. So that is an ongoing cost. And regulatory oversight and governance, again, an important component of operating in the banking industry, in the banking sector. So that just becomes part and parcel of how we'll operate. Also, we've seen a positive transformation throughout the bank at Board and senior management level, and again, that will continue to be a focus as we go forward. I'd like to touch just briefly on specific COVID impacts on our loan book and why we haven't necessarily seen the same risks and the same negative impairments that we are picking up in the industry. Firstly, the quality and nature of our property book, and that's a significant part of our advances is commercial property, is because of the quality of the assets underlying those advances, the types of clients that we interact with and also the fact that we're not in the residential market. So we've been fortunate in that respect. We're going into COVID with a conservative approach in terms of loans-to-value. It means that you can afford to take some downward adjustment in terms of your property values and not impact on the overall security that you have. And that talks to the second point there about our focus on secured lending. And that also gives us comfort that we aren't in that unsecured market where you certainly have to start looking at the recoverability of loans without assets underpinning. And not having a significant retail exposure in terms of home loans, cards -- credit cards, et cetera, again, by design, has put us in a position where we're not at the high-end or high-risk exposure in the current market. I don't for 1 minute think that we're not going to see stresses out there. We're seeing it already as we move sort of up the spectrum of higher quality or better positioned businesses, businesses throughout the economy and we know that or under pressure, some more than others and some that you wouldn't have thought would necessarily feel that they have been caught through no fault of their own. So we have to be aware of it. And there's no doubt that there is still pressure and pain to come, and we have to make that -- make it part of our business to work with those clients, with those customers to help them where we can, and that's very much part of our ethos and what we will continue to do. The issue of impairments, I think, is also an important one. The key is to determine what are real losses and what are accounting losses. And the IFRS impact and the ECL impact is something that we all have to look at and say, "How big is that impact and how real is it as we apply it looking through the cycle? And what is the likely long-term impact on impairments as opposed to the short-term accounting impact?" I don't know the answer. It will determine -- to be determined by how long the economy is stagnant or how dire the economy is as we move forward and as I say, applying those steps into the models that split out the IFRS adjustments. The other aspect that we've had a lot of work being done and it has incurred a huge amount of time is, firstly, just reporting and different types of information that is having to be gathered to make sure that the regulators, the vetting associations, et cetera, are up to speed with what is happening in the industry. So those reporting requirements, necessary as they are, have imposed a lot of additional work on our teams. And also customer requests for concessions of COVID loans, temporary relief, again, very much part and parcel of what our teams have been working on. So again, that comes back to my early thanks to the hard work that has been put into the business over this period. Focus for the second half. Really, it's about, I think, doing more of the same. I don't see things changing certainly for the next quarter and going through into December. So continue to be very focused on our lending. As you saw, we have capacity. So it's not as if we've gone into our shell. We are looking for those good opportunities. We're continuing to extend credit just with a different set of eyes at the moment and as I said, being continually cautious. The SME banking growth hasn't seen huge advancement in that. And again, I suppose we were fortunate that we're going about it slowly, and it's continuing. But as I said, we're having to just sit on our hands a little bit on that front. The platform banking offering, that hasn't stopped, and we're hoping to have concluded and implemented at least one new client-related platform banking partnership, if not by the end of this year, certainly, during the first quarter of next year. So that's where we see the rest of the year, managing the impact of COVID across the client base and hopefully continuing to service our existing clients as we always have.

Thanks, David.

Thank you.

Within our discontinued operations, we have 3 businesses: Senwes, marine fuels and the private equity business. All 3, as we've advised before, we're looking at attracting great partners for those businesses to continue on their business development. Processes are in place for all of them. As you would imagine, buyers at the moment are looking for a discount, and they're also wanting to engage with the disposal groups, which is obviously a little tricky. So we have seen a delay in that process, but something for us to focus on in the second half. If we look at the outlook and what's important to us at Grindrod. It's very obvious to us that our share price at more than 50% discount to NAV still requires us to focus on building confidence with the investor community. And we know how we internally are going about that process. And we mapped out on this chart and have hopefully talked to some of these items in some detail in the presentation. Firstly, every single one of our businesses operates in a highly dangerous area, in the port, in the terminal, with containers, with trains. We have to have our health and safety on a very high level. That was then obviously overshadowed with some COVID, but we need to both -- keep both of those very much at the forefront of our minds. We've talked about the ramp-up of specific assets, and these assets are very aligned on the corridors that we want to operate in. We think they will add value to the offering that we can deliver to our customers. We've talked a lot about operating efficiency and making sure that our supply chains operate properly. We're working extensively with Transnet and CFM and Zimbabwe Rail, et cetera, on making sure that we can get these corridors operating as they should. We are very fortunate to have enough of our business open during COVID that we were able to cover costs. Notwithstanding, we also have a very strong balance sheet, and we have facilities available to us. We have a program to dispose some assets. We will recover money from that process, and we will obviously look at share buybacks, debt settlement, potentially dividends as those events occur. The management is very focused on execution of the strategy, regular meetings, as you will all have done during COVID and you seem to have worked a lot longer hours than we've ever done before. The management are very focused on their strategy and executing. We're continuing heavily with our transformation efforts, and that's transformation on the color as well as the sex, so making sure that there are lots of women at all levels in our organization. And with the unwinding now of our B-BBEE structure, that equity element of our business, we need to make sure that we address again as we go forward. So a key issue for us to address in the next half year. The confidence, we believe, will come from stability of performance. Grindrod needs to show continued good trading results and hopefully do away with all the debits that we have had in the past in order to restore the shareholder confidence. And hopefully, we will then see that share price lifting. So disciplined allocation of the funds and return of capital where that's appropriate. As to what we see out in the market, you saw from David's slides that he has a lot of liquidity available to him. You know that as a banker, he will look to deploy it cautiously when the time is right. So good opportunity sitting there on David's balance sheet. And on freight services, we similarly have got a number of opportunities available to us. Yes, Northern Mozambique at the moment has a lot of unrest, and there's a lot of work being done by a number of parties in that area. The commitment by the oil majors and their funding banks to that site is extensive. Those people are playing a pivotal role in ensuring that the right type of activity is done to allay the fears in that area. It's been a little difficult for us as Grindrod to participate in some of the conversations face-to-face in Mozambique on that -- on what's happening in the north, but we certainly keep abreast of it on a regular basis. And of course, it's important for us to have our people safe when they work in that environment. But good opportunity in Northern Mozambique. We still believe that rail corridor is good for us, and we're working together with Transnet actively to get that right. You will have seen the price of iron ore, the price of copper are still very strong. And that obviously underpins that corridor and the Maputo Terminal that we operate through. Coal is a little bit weak. And of course, graphite and lithium will remain weak until we get the economies going and the demand for EV vehicles come back. So we still expect that to happen in the future, a short-term look we foresee for the next 6 months or 8 months as we go forward. On the container side, a little bit concerning on the imports. We don't see massive improvements in container handling through our ports, and that is a little bit concerning but to be expected, I think, as the South African consumer wrestles with how much money to spend on and on what products. And we see that also in our car carrier business, where not enough of you are buying new vehicles. So our car carriers are standing a bit. So if I can appeal to you, please go out and buy that new car. So a little bit subdued in that area. We've had a really good time with the citrus exports, working very hard with the association and with shipping lines to assist in getting containers with citrus out, and that's helped a lot in that segment. So all in all, our second half looking -- will look a lot better than -- can't not look a lot better than the first half. So we're very excited about making sure that we get that second half underway and which we already have. We took a decision yesterday as a Board not to declare a dividend. Part of that is because we have not completely clear sight of where we're going. We decided to hold back. We obviously have also taken the decision to cut a number of salaries, retrenchments, restructuring. So it would be inappropriate to start paying dividends right at the moment. But obviously, that will come under review at the future Board meetings. That concludes our presentation today. Thank you all of you for the time that you've committed to us and for listening to us. I will ask Alison if she has received any questions that we could answer for you immediately. If they are very technical questions, as I said before, we're very happy to answer any of those and either on one-on-ones or by e-mail. Alison, have you got any questions for us?

Morning, Andrew. Yes, we've got a couple of questions from [ Sandile Magagula ]. First question is what percentage of the loan book is made up of loan restructuring requests and temporary relief?

Thank you. Okay. The answer to that is -- well, to put a little bit of context to it, there are 145 loans that have been given concessions. And those concessions range from -- in the property space, where normally you would be paying capital and interest to possibly paying interest-only for a few months, in some cases allowing to pay the rental only. So that's the type of concession that we've been given. The -- so as I say, 145 loans in total, so not that many from a numbers perspective. And what that translates to, from a cash flow perspective, is where we would normally have been anticipating getting cash repayment of roughly ZAR 35 million a month. We were anticipating ZAR 35 million in terms of the concessions we offered. It's translated into a cash flow impact of ZAR 25 million a month. So again, insignificant in terms of the impact of our total loan book. And ironically, what it has done is actually allowed us to maintain the loan book at levels without having to write new loans to replace what is being written down. I hope that answers the question.

Thanks, David. Alison?

Thank you, David. The second question from [ Sandile ] is how do you intend to use proceeds that will accrue from disposable -- disposal of assets? Is there a chance of increased dividends?

Thank you, [ Sandile ]. I get asked that question regularly by a number of the people that are listening in today, is it very important, is the capital allocation decision? You've seen where we are focused as a business. And we do spend some money on assets, as you know, in our business. But we -- our first and primary goal is to ensure that our balance sheet is right, so making sure our debt is at the right level. And the second thing is to make sure that we repay capital if we don't see the opportunities to deploy. So I think there's a very good chance that we could, either by way of buyback or by way of dividend, declare some of this money to the shareholders. It does remain for us to conclude these transactions, however. And we need to focus to make sure that, that happens. [Audio Gap]