Grindrod Limited (GND) Earnings Call Transcript & Summary

Good morning. Indeed, we exist to promote Africa trade with the world. And most importantly, touch the lives of the communities in which we operate. I'm joined on stage by Fathima Ally. She's my CFO. She will probably be talking a lot more with more than half of yourselves that would be looking to understand numbers a bit more. I'm hoping that her job is relatively easier today and no complex accounting and technical issues to explain. Before we proceed, I'd like to acknowledge my Chairperson, Cheryl Carolus, who has joined us here today. I can see two Board members, Deepak and Zimkhitha. Thanks for your support this morning. Most importantly, I'd like to thank our investors who have confidence in us to look after your share capital and make sure that we do our risk management and the required return commensurate with those risks. And I'd like to also welcome the funders who are here today, and some of them have enabled us to deliver what we have, especially on the dividend side, I'll explain that a bit more as we proceed. And I'd like to welcome everyone else here in this venue. I also would like to acknowledge the attendance on online, virtually and on stream. Welcome, everyone. Thank you for spending time with us and coming here to listen to us. Before I proceed, I actually would like to thank my colleagues because I can see a few faces here. Those are the guys that make my job and Fathima's job easier. They are always there on the trenches and making sure that we deliver what we promise to our investors and the stakeholders. A special welcome to our PBR colleagues. I can see some of them at the back, and they're promising me that they're doing some good work for us. And I can't wait to see that being delivered. So to [crack on], we believe in working safely. For the first 6 months of this year, we had no fatality. Our injuries were only 7 against 9 last year, an improvement. But nevertheless, injuries are not acceptable to us at all. The LTIFR, which is a severity rate that we measure and we use the benchmark of 0.5 for every 200,000 hours worked, came in at 2 -- 0.36. You recall last year, we ended at about 0.4, and the target is 0.5. So we've done pretty good well. And thanks to the team that continue to ensure that we work safely. We had interesting macro economic environment under which we delivered these results. And I'm not even covering the environmental issues, particularly in Maputo that we faced at the start of this year. I'm sure some of you have forgotten about Cyclone Freddy. That kept coming and going and coming and going, anyone that was putting a spell on our facility. But on the macroeconomic environment, we are pleased that we are actually focused on the regions that shows some growth and resilience despite the factors that we see at the global level. So if you look at Mozambique, in particular, where we are concentrated, the economic growth is around 4.7%. And the inflation actually has dropped to by almost a 2-year low of 5.7%, which is quite pleasing for us because that's where we operate. And if you look in South Africa, unfortunately, there are some headwinds that we are currently navigating, all a way of the energy issues that we face, the inflation, the high unemployment rate, which is quite structural. So that's a challenge that we currently face. As a signatory to South Africa, Grindrod is playing its part in ensuring that we navigate those issues. So the economic growth that is currently projected is around 0.3% for the full year, we saw 0.4% for this year. This is very low, and one hopes that some initiatives will be put in place to see an upturn on those. And if you look at the slide deck, on a product scale, the growth is projected at around [indiscernible]. But there is a concern around the cost of capital as a result of the increasing interest rates. And the reality is that we've got some interesting projects that we are implementing, including Matola, so we watch that development very carefully. The exciting region for us is Africa. The growth is around 4.5%, although there is issues around inflation. But this region is expected to be the highest performing this year and well into 2024. So we're very excited by those developments. But on a global basis, where the commodities go into that we move, if you look at India, India is doing well. They revised their GDP growth to 6.1% from the initial estimate of 5.9%. China, China is growing at 6.3% in the second quarter. It is lower than the 6.9% that was projected. But we need to note that in the first quarter, the growth was only 4.5%. So there are positive signs, but I think there are challenges that are currently structured in that region, and we've seen some incentives that are being put by the government to ensure that they propped the economy. But the growth rate is projected at around 5%. Sometimes we miss the days when China used to grow at 7%, 8% and even 10%. It looks like those days are gone. One particular issue that is coming up in China is youth unemployment, which is at a record 20 -- 21%. That's for the age group between 16 and 20 and 24 years. So that's somewhat concerning. But India and China continue to be the dominant importers for our [indiscernible]. Now if you look at the commodity prices that was in play as we deliver these results, we are actually seeing the softening of the prices, particularly the coal. We all know that the base was relatively high last year with the geopolitics at play, which is creating some constraints on energy supply. And therefore, coal was in demand. Going into this year, the Ports in Europe, in particular, had excess stock, and the winter was milder than expected. And as a result of that, we started to see the drop in coal, but also the gas prices are now easing. As a result, we're starting to see the softening of those prices. We also know that the container rates from a shipping perspective are also slowing down or softening. And some of you will remember the shipping days. It sounds like it's many years ago. But as recent as a year or 2 years ago, the container rates were relatively high. To this day, they're quite low. For me, the interesting one was the lithium. You look at lithium dropping 26% year-on-year. The pace is still relatively high. If you look at the price growth, which was [indiscernible] 37%, 2022 versus 2021. We suspect that social term blip. The demand for this particular cargo, we think it's going to be strong and need to remain strong. And as I indicated, at the beginning of this year. It's one of the commodities that we are focusing on. That's why I said I'm quite pleased to see my BBR colleagues here today. The chrome and ferrochrome remained strong. Maybe on the ferro or not as strong as we would like to see, but they haven't lost the gains that they've had in the past 2 years. The chrome ore is quite strong, and we are bullish on the chrome side. For the rest of the commodities were softer on the -- and the softening was more on the single-digits basis. So it's quite pleasing that we still were able to deliver these results on the backdrop of those macroeconomic environment, both from the global economy perspective, regional economic perspective, as well as the pricing. Now coming to the chase on the highlights, which I'm sure is what we are all looking for. Maputo on an operational basis delivered record volumes, 5.9 million tonnes. For some of you who understand how far we've been at Maputo, in 2007, the facility was doing 5 million tonnes overall, including subconcessions. And it has had last year that we delivered 27 million tonnes. We did a high-level calculation that works out to around between 9% and 10% compounded annual growth rate every year. That's pleasing performance, but it comes with commitment, investment. Over that period, we invested about $800 million to upgrade the facility with -- in the recent 5 years, we probably have spent around $200 million on that. So it is an exciting stuff to see happening or exciting development to see happening. And it's patience that come with the investment, and also the trust from the Mozambican government on the private sector to play as a key role in ensuring that we deliver on the infrastructure. Come 2043, the government will have a good asset. And some of you may wish to visit that facility. So they delivered 30% record volume for the first half of this year. Our own terminals in Mozambique, I'm covering both the Tripart terminal in the main port as well as Matola across, delivered a growth of 17%, which is quite pleasing for us. Individually, GML delivered 38% growth on last year. Matola delivered 10% growth on last year. So that's quite pleasing for us. And I will remind you again that on Matola in particular, because of the magnetite cargo that we handle and the equipment structure that we have on the key side, we had Cyclone Freddy. And I really want to single out the team of Matola who had ensured that despite all those challenges, they still delivered 10% growth. So it's really hard rack, and I'm privileged to actually have this team. On the financial side, you see the strong EBITDA of ZAR 1.1 billion, growth of 16%. I'm not going to say much on that. I don't want to take the shine away from Fathima. But what is quite pleasing for me is that we are able to give shareholders return that is past us to give our target of 15% ROE. We're currently sitting at 19%. So we're quite pleased with that performance, and we commit to continue on that. Core headline earnings growth of 26% to ZAR 563 million compared to the same period last year. Again, a very pleasing performance for us. Now a combination of that headline performance growth, strong growth. The large cash holding. Some of you may have rushed through the results and see the amount of cash that we have. But for me, the most important part of it is the funding project that's currently in progress on Matola side, which appears to be very positive. I'd like to push or to put a lead arranger for us under pressure on that, but the signs are positive. And you will recall that of the ZAR 1.1 billion cash from the bank, we reserved it, in that number was a ZAR 600 million that was put aside for Matola project development for any potential equity contribution required. So the progress that the team are making on funding looks promising. And as a result, Fathima convinced me to request the Board to double up the dividends. So we're quite pleased with that development. If we look at the actual Ports and Terminals, the actual highlights, I've sort of mentioned -- covered all of them. But one of the items you have seen on the video, the big banner is 1 million tonnes for 2 months in April and May that was achieved by the main port on chrome and ferrochrome. So that, to me, is exciting. What I'd like to see is that 1 million tonnes being a norm and then at least 10x a year if we allow 2 months of maintenance. We have invested on 2 mobile Huber cranes, again, to increase the key side capacity for the main port. This is in response to the strong demand for the footprint at the Port and also at a subconcession level for dry bulk cargo movement. If you look at our main terminals as Grindrod, have indicated growth of 38% in GML and also 10% in TCM. We are progressing very well on funding for Matola, as I've indicated earlier. And the feasibility study is ongoing, and the design of the key components for the plant are currently ongoing. Without putting the team under pressure, I'm hoping we will start placing orders in Q1 2024. To remind you, the additional capacity that will come from that project is between 4 million tonnes and 5 million tonnes of dry [bulk]. And the facility will be largely [magnetized]. I've included this slide just to share the trends that we've been running through. You can see the Port side, stellar performance. So you may be disappointed on the terminal volume side that we remain static. Within that number, we are showing growth [48%] metals, 38% in GML and 10% in TCM, dollar-based margins. We do have challenges in [Richards Bay] that we're currently navigating. You will remember that in the quarter 4 of 2021, our conveyor belt that links our Navi trade facility to the main port are spent down on the Port side. And we are working tirelessly with Transnet, who have committed and have actually started to work on the restoration of that belt. We remain hopeful that either the end of this year or the beginning of Q1 next year, the belt will be up and running. To give you the picture, we are currently moving trucks into the port in order to move our cargo. And the damage to the infrastructure of the port is a very sad thing. The benefit that comes with the belt, not only is the avoidance of the damage to the port infrastructure, but it's also the efficiency that comes with the belt, which creates kind of a cargo flow of about 1,000 tonnes per hour and improves the loading rates for the vessels. And out of that one is able to hopefully increase the number of vessels that we handle. I am putting pressure to my new CEO of terminals to make it happen. The compounded annual growth rate of 24% using the pace of 2020 on the port side is commendable, and 20% on the Grindrod dry-bulk terminal. If you zoom in on the logistics, which is essentially the -- if you look at Grindrod, maybe if I can just explain a little bit. We've got the infrastructure, which are very critical for us strategically. They are barriers to entry, and they give us that competitive edge. We then said, if we want to be able to control the flow of cargo into those facilities, we need to be involved in the logistics value chain. And we did that by developing various capability, which sits in the logistics. So when you look at logistics, we think of the capability in terms of moving cargo inland into the port, whether through setting up a drybulk terminal inland or setting up to warehouses inland or using rail to flow the cargo, which is beneficial, by the way, on ESG perspective or temporarily using trucks, or any activity that enables us to flow the cargo cost effectively and efficiently into our port. We do see customers having an appetite for a holistic solution, and we're quite pleased that we're starting to see an uptick on that, particularly driven by the alternative solution that we tend to be able to bring on the table in the challenging times that we currently face in our logistics profession. So Northern Mozambique performed very well, 15% growth on earnings. That is very pleasing for us. East Africa expansion is progressing. We've invested ZAR 207 million on key equipment, including the landing craft, which is a versatile vessel that lands anywhere without a sophisticated infrastructure. And some of you remember in 2021, when we did an LNG project in Northern Mozambique, we had 12 of those on sea. And that was an immediate response to the damage to the road infrastructure as a result of rain. So we know what these small things can do in those environments. Agents and clearing and foreign business, actually, these businesses have been improving over the years nicely. And with this integration of the logistics value chain service profiling we give to these customers, we're seeing an increase in the uptake. New customers, big customers, I can't mention their names, signing up on contract logistics in our Rollick-Grindrod joint venture with Rollick International. Also seeing decent increase in port calls for ships agency service profiling that we provide to our customers as part of the package. Our newly formed business joint venture with Maersk and Grindrod that we announced last year and implemented at the beginning of this year is progressing very well. I had the benefit of visiting the sites and the employees. I was impressed with the speed at which the integration is happening. As you all know, any major operations, people are key in that. And I think the team has done a pretty good job to make sure that employees gel. And the next step now is investing in those facilities and expand. Remember, the business model for the merger is that ultimately, every Maersk box that touches South Africa is handled by this entity. So the extended the dilution down to 49% of the bigger value that will be created makes sense. And I hope we'll start seeing a nice ramp up on that business going forward. We've got United container type of business, which is wholly owned by Grindrod. We have reforecast on that business because the other shipping lines are also looking for a service offering. So we are putting that business in place. We've recapitalized it to port new equipment, and we've expanded in Denver facility. In fact, if you go to Denver facility of that 55 square -- square meter facility will be very impressive. I invite you to go and visit our operations there. If you look at our rail business in Sierra Leone, you remember that you've got iron ore out of Tonkolili mine into Propel port. We run the entire value chain for the customer, literally a pit to port, in a true sense of the word. We've moved 10 million tonnes of iron ore from the restart of that business in February 2021. I say restart because we were in that project in 2012. And when the iron ore price dropped, we moved out, but we retained some of the locomotives in country to show commitment going forward. And when the project was restarted whether to deliver service -- so we are proud of what we've done there. And it demonstrates the capability that we have within our group, not just on the rolling stock, but on operations, the drivers, the maintenance, the whole combo, if I can borrow from that. The pleasing one for me is the resumption of operations in Zambia. You will recall that in 2012, we made an entry and it didn't end well. But with relationship rebuilding through our PBR, I am pleased that in June actually of this year, June of this year, we started to inject locomotives out of our sister company, PVR. And to this day, we are moving cargo northbound. And I'm pleased that we are on the verge of the deploying further for locomotives in that preparation. So there's an exciting development in the rail business. That's a testament to our commitment on rail business as a key enabler for trade in Africa, whether interregional or export. The concept of "borderless" train is close to my heart. This is key to ensuring that we are moving cargo seamlessly, that we are able to support landlocked countries to access the port. It is a difficult concept to execute, of course, because it requires collaboration amongst all the rail players. But the exciting part of it is that we've actually done it in eSwatini. When we designed -- or when the team came up with the concept of a siding in eSwatini, we realized the constraint on the rail side. And the conversation with our participation in it between eSwatini Rail and CFM enabled the flow of trains, borderless. In other words, the train just moves. In fact, today, I think it's an excellent concept because they don't even switch the drivers. The train, and a CFM train from Mozambique, it runs all the way from the -- to deciding, collect the cargo and move it back. I'm hoping that on making a correct statement from the team. You will also recall that there was a test concept under chrome ferrochrome last year was CFM and TFR really embarked on a chrome train flow-through similar concept, except that this changes the crew. That went successfully. And as a result, was expanded to our subconcession terminals. So as it is now, we are running trains borderless, and the support from Transnet is very immense in this regard, and we are very grateful for their engagement between themselves and CFM. And we collaborate in any way possible to make sure that when the train arrives in Matola or in GML, the turnaround is quite quickly, because that's how they create value as rail operators. So there's a quite exciting development in the logistics as an enabler to unlock the value in our facilities. Moving on to the non core. We've got an asset that remains with us in the form of a tax refinance business. That asset's unfortunately with where the interest rates are, which have been disruptive in the market for some of you who have observed what's been happening in that industry. As a result, the deal that we are working on since last year has collapsed. So that deal is off the table as we speak. So we are currently exploring alternative disposal mechanism, and we've got a few meetings lined up to work on that, and we'll report when there's something concrete coming through. The big one is not cost land. We record that we've got ZAR 1 billion rent exposure in our balance sheet in the form of a receivable, which is underpinned or secured by land in [ Lifedale ] and Eddington north of [Consolata]. It's a beautiful land. It's got beautiful coastal area. And if you know any investor interested, I can share the numbers when we're done with the results. It is a challenge to extract ZAR 1 billion at this stage. The value of the land is quite high, actually. It's a premium land, both from residential development perspective as well as from industrial development perspective. We've got a few projects that are currently at play potentially, and one is for a big -- I need to put it correctly here -- [ PR ] making company, that will result in some revenue stream coming through. The second one, unrelated to this land, is -- some of you may have seen it. It's a project on [ CloudMed ], and there is a buzz on that. And as shareholders of that structure, we are watching very carefully the developments. The hope is that with that development, there will be some catalystic benefit or catalytic benefit of the entire footprint that we currently have. But we are very mindful of the excess availability of land, particularly through [Tonga], some of you are aware of that. And the third one is the CT development. We are also a shareholder in that plot of land. It sits at zero in the balance sheet, by the way. That development is quite advanced, and we're working with the core shareholders to see how we exit that. So as management, we continue to explore the mechanism around how we extract that ZAR 1 billion. The exciting part that the management have worked on, thanks to Fathima and the team, is that some of you may have indicated the lay of security against those bonds and particularly in the one that's of interest to us, we were sitting fed. And I'm quite pleased that to the extent of about ZAR 0.5 billion, we now rank first, which means that any proceeds that come out of that property, it is ZAR 0.5 billion comes to Grindrod, and we'll continue to explore are mechanism to make sure that we improve our position on those. And if you look at our Marine Fuel operation, which is our reselling business based in Dubai, it did well. But unfortunately, because it's essentially a reselling business, its profits are impacted by movement in the oil price. So their results were impacted by 40% compared to last year because of the oil price movements. Again, we continue to work with the core shareholders very closely. And I'm hoping that we'll be on the verge of coming with something tangible to present to the shareholders. I would like to preempt the current conversation. Thank you. I will leave it to Fathima to take over.

Thanks, Xolani. Good morning, everybody, and a warm welcome from my side. Lots of new faces in the room, which is exciting for us as management, because it's a testament to a lot of interest in our share and the company and a tribute to all the hard work we've been putting in over the years to really streamline the business and focus on our strategies. Truly a pleasure to deliver the results for the 2023 interim for Grindrod, particularly because we think they're quite strong. In this period, not only have we celebrated positive milestones in the business like we saw through the video and some of the stuff Xolani just touched on, but we've also made very good traction on several of our growth projects that we identified and talked to in previous results presentations. We also continue to reap the benefits of our customer solutions mindset, which we really push hard and we are relentlessly up across the businesses. With respect to the financial performance, if I start with the overall presentation, consistent to how we've always presented this, it is done on a segmental basis, which means that the impact of our joint ventures are all included on a line-by-line basis. I also need to point out that the comparatives for June 2022 have been represented in line with what we did in December because with the disposal of Grindrod Bank, the bank was considered a discontinued operation, and we effectively are now reporting and talking to continuing. Revenue from our core operations firmly up at 32%, and this translated to a 16% uplift in our trading profit. This is largely due to the exception of volume performance, particularly in Matola as well as the Maputo Terminal. We also saw good growth in our East Africa business as well as our Clearing & Forwarding and Ships Agencies business. And again, this from new customers as well as diversifying existing offerings and a bit of organic growth coming through and positive outcomes from renegotiated tariffs and the good work that the teams have done during the course of the period. Our noncore business, some slippage in noncore revenue there coming out of the Marine Fuels business, like Xolani mentioned, linked to the softening of the oil prices. We're glad to see that the losses on the noncore in the EBITDA or trading profit line are reducing. And again, hugely attributable to the significant downsizing of the private equity portfolio book. Our depreciation charge is up 18%. This is because in 2022, we invested quite strongly in increasing the footprint in Matola. Particularly, we now hold the back of port facility almost as large as our key side or frontline stockpile capacity areas, and we also increased footprint in the Maputo Port as well. Our associate earnings, up 85%. This is due to the strong volume growth from the port in view of the chrome and ferrochrome volumes that we saw in the earlier slides. Overall, net profit or earnings for the group from continuing operations up 47%, and in our core businesses, earnings up to 22%. If we take a closer look at some of the KPIs within the various segments, from a port and terminal perspective, the volume that we saw resulted in a 30% uplift on revenue, a 28% uplift in the EBITDA and of course, a 31% uplift in headline earnings, with this business maintaining strong EBITDA margins and very strong return on equity. Our Logistics segment, despite the 12% improvement in revenue, we did see slippage in EBITDA and slippage in headline earnings. But we've done detailed analysis. And hopefully, my next slide will give you some perspective on where those are coming from. But essentially, it's two factors. The Grindrod Logistics transaction that we embarked on and implemented at the beginning of the year, that joint venture saw our interest in the business go from 100% to essentially 49% of the combined business. And the second factor is attributable to the fact that we did see the shipping rates come down, which impacted on the charter earnings that we had, close to 67% this period. What you'll see is that we've included a U.S. dollar-based EBITDA percentage for you this year. Grindrod continues to be a very strong naturally hedged business, which mitigates us to a very large extent against the significant devaluation of the rand that we've been seeing against the U.S. dollar. With the dollarized foreign operations, our Port and Terminals business, you can see constitutes 91% and our Logistics business at 42%. And Logistics well placed for that to improve based on where our growth plans are. This slide is really where I wanted to explain the Logistics segment. So if we look at normalizing this in previous results presentations, we talk to certain one-off items. We continue to adjust those in 2022 as well as for the effects of charters and the effects of the diluted shareholding in Grindrod Logistics. You'll see that we actually have a 33% uplift in headline earnings and a very strong sustainable base going forward. Our group segment, a bit to explain there. Value-added services, which is essentially a Grindrod's initiative that we embarked on last year to help us participate to put more on the commodity side with prices being at the highest that they were. We now deem this segment to be part of group. We previously reported it as part of Terminals, largely because we've reshuffled responsibility areas. And this predominantly falls under what Xolani chases as opposed to what he holds Kwazi, the CEO of Terminals, responsible for. What we also need to note that is in 2022, we saw significant costs come through attributable to withholding taxes for repatriation on Mozambique profits in 2021, and we also saw provisioning come through on our share price-linked option scheme because of the surge that we saw on the Grindrod share price. Adjusting for those factors, we really compare a normalized overhead base of ZAR 62 million last year to what we've seen this year at ZAR 35 million, which is more than -- which is close to having that overhead base. A big contributor to that is the interest that we've been able to realize on the ring-fenced cash that we're holding on balance sheet for the projects. Grindrod's balance sheet remains strong. Key themes to highlight or a large factor driving a lot of the movements -- in December 2022, the Grindrod Logistics business that we were agreed to form the JV on. We disclosed all of the assets at all of the liabilities in one line deemed as held for sale. In June 2023, we proportionately include 49% of this business in each of the respective line items. So a large factor for the movements is attributable to that. But what I also want to point out is certainly within the fixed asset base, we saw investments of close up to ZAR 510 million in this H1 reporting period. We're seeing a spike in our right-of-use assets together with lease liabilities. Again, this is a mix of CPI-linked modifications we need to do on some of our leases and concessions. But additionally, we were also -- we have positive outcome on extending tenure on some of our key footprints. The last thing I really want to point out on the balance sheet is, our shareholders' equity has increased. This is mainly attributable to, of course, our profits. But we need to also point out that we booked close to ZAR 519 million of translation gains in view of the dollar-based dollar operations that I talked about earlier. Our net debt reconciliation -- and we present this excluding joint ventures, so essentially, as you would see, our IFRS balance sheet, we started out the year at ZAR 182 million of net debt. Very strong cash generation for us in the businesses at ZAR 375 million. We saw proceeds coming out of disposal and realization of assets, ZAR 272 million of that ZAR 356 million relates to the cash that came in on the Grindrod Logistics transaction. And of course, the investments that we made, we saw cash of ZAR 426 million. Well, not cash, so investments of ZAR 426 million funded by both cash and debt. Close to 81% of that spend was funded through debt. We closed the period on a net debt of ZAR 241 million. When we look at our net debt as management, we exclude the ring-fenced cash that we talked about. So we look at our operational cash. And if we do that, our net debt for this business sits at ZAR 1.4 billion. Our net debt-to-EBITDA levels sit at close to 1.1 at this point in time. But essentially, what this means is that Grindrod is well positioned with a healthy balance sheet and adequate capacity to raise the debt that we'll be needing to raise in terms of our expansion strategy. It also leaves us in a good space in the cycle of the elevated interest rates that we see now. With respect to our net asset value, we closed the period at ZAR 13.33 per share. This is an increase of the [ ZAR 12.11 ] that you saw in December. ZAR 10.63 of that is tied up or locked into our core asset base, which at a headline earnings of ZAR 2.09, delivers a return on equity of 19% on our core business. What we're quite pleased about is that the efforts that we've put through to work on the structural issues of our balance sheet are certainly deeming foot. At a ROIC level, our core business is tracking very nicely above the targets that we set. We track at 15% ROIC on our core, which -- and we target 13.5%. To talk you through some of the efforts and some of the outlooks for our businesses going through, Xolani has got a couple of specific slides.

Thanks, Fathima. Quick numbers, indeed. Just key takeaway from that is that it looks like a value-added service offering that you'll recall last year, Fathima is asking me to do something on it. I've taken on the challenge, and I'll see what I can deliver on that. I wish she gave it to me when the coal price was sitting at $250 a tonne. But also my key takeaway out of that is that indeed, you've got to [indiscernible] to go and chase for the opportunities or the firepower to do that. And not just on the cash, but also the engagements with the banks indicated that we have quite a strong balance sheet to actually chase good opportunities. So that's what we're working on. I wish those opportunities could come as quick as possible before we are criticized on sitting on the pile of cash. Now our business going forward. This is my favorite slide. You have seen it last year at Pavel. We quite a little bit sophisticated this time, just to show the key prototypes that we are handling. This represents roughly about 22 million tonnes of drybulk cargo handled across all our facilities, including our associate port terminals at 100% basis. So that's what we take is Grindrod, 22 million tonnes in 6 months. That's for me, very exciting as I was putting these numbers and this commentary together. The top five of those commodities cover magnetite, manganese and coal. In fact -- in fact, 3 of the top 5 includes those, and they make up 80% of the volume. So there is a challenge on the cost side for us to make sure they start actively replacing it with friendly -- environmentally friendly cargo types that I've mentioned in my presentation at the start of this year: graphite, lithium, copper, manganese. And the team is working on that. You will see that I've added container, and there's an excitement that comes with the major transaction that we currently have. And for me, it's quite exciting that we'll be touching every Maersk box in our operation. We are working on the medium-term project to -- also a particular project that we're working on to unlock graphite project that will come in the medium term. We are firm believer in a balanced capital allocation framework. Fathima said this so many times in the past, and I'd like to echo that as well. In the order of preference, [ stay in ] business is key. We've got an infrastructure currently. We've got commitment on the master plan, and it's the right thing to do operationally to be doing your [ stay in ] business. CapEx is what actually generates cash to then decide whether you give that cash to shareholders or invest in other exciting projects. The second preference is then injecting that cash to capital projects, particularly on growth or significant brownfield projects, similar to what we are currently doing in Matola. And then we are -- we have a commitment to a sustainable dividend payout to the shareholders. And the range that we talk about is between 3 and 4 on a dividend cover on core headline earnings. We've taken an exception this time around, and I'm hopeful that the shareholders are pleased with that. And then the buyback -- opportunistic buyback, which is a value enhancer in the absence of key projects or in the presence of excess cash. If you look at our performance on this framework, we've generated ZAR 375 million of cash from operations. If you relate it to our earnings that gives us a healthy cash conversion ratio. We firm believer that your earnings should be very close to your cash generated from operations, which requires, therefore, to be disciplined on working capital management. We've declared a dividend of 34.4%, double of last year, which works out to about 47% of total headline earnings this year. On the capital growth, in the first 6 months of this year, we spent $600 million -- sorry, ZAR 600 million, which is -- ZAR 0.6 billion sounds better. And that forecast is on the right regions in terms of what we've committed to spend on East Africa, Northern Mozambique, Container Depot business enhancing our value proposition. Going forward, we've got a project pipeline of sitting at about ZAR 1.9 billion that are close to execution. And it covers container, magnetite, East Africa, rail, terminals manganese. I'd like to see the rail increasing. So we're going to be working on, hopefully, a solid business case with our rail colleagues to ensure that rail gets a fair share of capital allocation in order for us to unlock the logistics corridors in South Africa and SADC. In conclusion, we are committed to ESG. We've got key strategic forecast on ESG. They were highlighted in the video prospective for all. We've generous in terms of our papers, which is the second part of our purpose is to ensure we make a positive impact in our communities. And for us to be able to do that, the company must be sustainable in order to be able to do that. Regenerative environment, we are the users of power. We use water to wash containers. And therefore, it's our core responsibility is to make sure that structurally, on a per tonne, on a PER container basis, we reduce the usage of natural resources. And whenever possible, we become the net exporter within the communities in which we operate of those natural resources. Social and inclusive development, it talks to our CSI program. But most importantly, it talks to our key CSI initiative. Along education, we've got a standing policy in our organization where we -- for every rand that we spend, 70% of must go to education. We firmly believe that education can unshackle someone from poverty -- from poverty. And that is our belief, that 70% of what we do should go towards that. 20% goes to environment, and 10% is discretionary for my team to go and have fun with the customers. And finally, the good governance aspect of it. We've got all the governance in check. And ESG committee, which is sponsored and chaired by myself, covers all this. This is what drives us as Grindrod in terms of the ESG framework, to remain a fatality-free operation. And strong results talk to ensuring that we're sustainable to be able to execute on this ESG driver ambition. Our strategy is very simple. It starts with the customer. Repeat the solution. I said yesterday to our customers that we don't see problems. We see solutions. We don't see challenges. We see opportunities. That's what we are about. And we firmly believe that as Grindrod, we're going to continue to make an impact across SADC and East Africa and some parts of West Africa, Sierra Leone in particular. And we are very committed to get the landlocked countries and give them access to ports. If we're not able to do that, then it becomes difficult to realize, really. But most importantly, we'd like to see the interregional trade improving. Those are very ambitious objectives. But in our small way, we firmly believe we can make an impact. And of course, superior returns to shareholders as well as the dividend. Thank you for listening to us this morning. I am told that the next session is Q&A. I'm hoping we're not going to get difficult questions. The order of events is that we're going to start on the floor here, and then we go on to the online questions. Any questions?

It's Rowan Goeller from Chronux Research. I've got a question around your strategy and maybe the different way you may be thinking about your strategy, given what happened over the last year in South Africa in particular, where state logistics has essentially fallen apart. So the opportunity to, first of all, move tonnage that was on Transnet facilities is coming your way. Secondly, Transnet has also opened up some of their facilities to private investment. We've seen that at Durbin. And we're seeing that right now under the tendering of the natural line. Has this opened up new opportunities for Grindrod, relative to what you've been looking at before? I mean, for many years, you've been one of the few players investing in transport infrastructure in South Africa. But the opportunity seems to be growing. So really, my question is in your strategic thinking, what new opportunities are you seeing now, given that sometimes through poor performance opportunities do arrive? Poor performance, I mean Transnet, not you guys.

Thanks for the question. I'd like to respond to that question from Grindrod's perspective. My job strategically is to chase growth projects in line with the framework we put to the Board in November last year. And we are very clear that it's not share the infrastructure. We believe the right infrastructure gives you barrier to entry and therefore, allows you to not going to trade well for other stakeholders, but to sustain yourself. But what it also does is it allows you to create stickiness with the customer because we see how the customers for police. So coming back to your question, what we are seeing in general in SADC and it's also growing in the East Africa is an appetite to invite private players. There is a practical example, of course, which is the Lobito Corridor. You're aware that it was awarded [indiscernible] year or this year, if I'm not mistaken. That's a line that links DRC on the West Coast into Angola. That, to me, is an indication that not only in South Africa, but also in SADC in general, there are opportunities. Of course, we don't chase every opportunity that does not align with your strategic framework. Of course, coming back to South Africa. We've seen a few of the opportunities that came up. The city is an example in point, which I think came out 2 years ago. Grindrod was indeed a participant on that, and we made the least to the top 10. Unfortunately, our European partner could not stomach the risk that they perceive, not us, despite our best efforts to give them assurance that we are here. We are South Africans. We know how this works. But they had their own framework to test those things against. You've heard of the manganese opportunities in the Eastern Cape, recent one that's come out, container in Richards Bay. So these opportunities will come through. And to the extent that they are relevant and they -- they tick our strategic tick box, if I can call it that, we will put our hands up and request to be given an opportunity. I hope I've answered your question. Thank you.

Thank you. You spoke of magnetite. And in your CapEx plan for next year, your major portion seems to be in terms of magnetite.

Correct.

Please, would you elaborate on that?

Yes. We've got a -- thank you for the question. We've got a subconcession in Matola in Mozambique. We are -- we've been under subconcession for -- since 2007 and renewed in 2010, if I'm not mistaken. As part of that subconcession or the master plan or the framework, whichever you call it, they are broad commitments around the development of the assets. And as Grindrod, we have a mandate to fulfill those commitments. In 2016, we did an upgrade on the key site by installing new ship loader. But unfortunately, the commodity prices dropped, and therefore, we stopped the continuous development of the asset. And with the rebound in commodities and the strong demand that seemed to persist despite softening price, we've taken a decision -- subject to what approval, I must emphasize that -- to commit and spend the money that we committed in terms of the master plan. . But what we then -- what then the team said is that you don't just replace the same machine with the old machine. Not the old setting in terms of the capacity with the same machine, rather core for the bigger machines, and stand yourself an opportunity to grow your capacity from -- by between 4 million tonnes and 5 million tonnes. So that's what the spend is about. The terminal is largely magnetite. But when coal price come to where they are and customers come and request for us to assist, we do allocate the capacity to call customers as well. I hope I've answered your question.

How sustainable do you see your volume growth? Your immediate years look pretty good. How do you see it longer term?

Thank you for the question. It's a very good question. So to create sustainability in our volume requires us to diversify. As I've indicated earlier, we've identified niche commodities that we want to focus on. And by transitioning into those commodities, I firmly believe that we will create sustainability for our volumes. And the beauty of that is that those cargo types are not necessarily coming from South Africa alone. They also come from the whiter SADC region and as far out as East Africa and all the way to the DRC. And for me, that's an exciting part once we crack it correctly. So when we look at our volumes right now in terms of the mix, and that's why this slide is key for me, I've said it last year that the small dots represent opportunities. And the KPIs for every of my executives should say, how do we grow this without shrinking the others? And that's, for me, the forecast. But in order to be able to do that, one needs to come up with a unique logistics solution. I mean it's easy to buy a truck and move cargo, but it's difficult to identify a strategic terminal operation, invest in rolling stock and create the entire value chain. And that's where I think as Grindrod, we can play a significant role in ensuring that we create sustainability for these volumes going forward. I hope I've answered your question.

Okay. Perfect. Two questions from me here. The first one is under which circumstances can you sustain the solid returns to shareholders that we've just witnessed? And the second question on aggressive voting against your remuneration policy by shareholders, what's your position on that? And what sort of feedback can you give to potential investors and current shareholders?

Yes. Thank you for that question. So I want to make sure I got your question correct. Your first question was how one -- how sustainable our returns are. So -- okay, sorry?

Especially the dividend.

The dividend. Okay. Got you. Now I understand your question. Of course, the dividend is a function of the extent of growth you're driving the cash position. Because one thing that you need to remember is that the -- what in the old days used to be infrequent indigenous sectors is now becoming frequent. I mean, the things like COVID, before you know it, it's the energy crisis before. And therefore, as management, we've got responsibility to ensure that we maintain adequate liquidity for the business. And I've engaged to banks during COVID when I had the uncommitted facility and came COVID, I said, "I'd like to pull that. So I don't know, you need to put an application and let's discuss it at the credit committee." Then I realized that there's no value of uncommitted facility. So as a result, as management, we have responsibility to ensure that we've got to maintain right liquidity. And also the sustainability of our operations in terms of staying CapEx. So if you saw our framework there, that's what drives us. But most importantly, we've come up with a framework on a dividend payout of between 3 and 4 dividend payment come, which we think allows us at least to ensure that through the cycle, should be able to sustain those dividends. Of course, in good times, we move closer to 3. And sometimes we break the 3 like we've done today. But in difficult times, in anticipation of that, we may tend to move to 4 and maybe sometimes to 4.5. But in the long run, in the same way you maintain a capital structure, we'd want to be within that range. We believe that provides a sustainable dividend flow. Of course, the overarching in all of this is your demand for the cargoes that you move. So if you move into a scenario where there is no demand for cargo and circumstances change, then the conversation is different. I hope I've answered that question. And then the second one, which talks to the unfavorable votes against our remuneration policy and the implementation. As management, I'd prefer not to respond to that question. I think technically, it's reserved for the Remuneration Committee. So I would like to respond to it, but I prefer it that, that is left for RemCom, and I'm sure you can link up with secretary and send the questions that you have. And -- but maybe at a high level, we have embarked on a process to engage shareholders that have voted unfavorably, and we are now in possession of their views, and the Remuneration Committee will then make determination in terms of the way forward in addressing those concerns. Thank you.

You did mention East Africa as a growth region. Can you mention for us which jurisdictions in East Africa you're particularly looking at? And then adjacent to that, you did speak about a focus on providing access to landlocked market. Are there certain jurisdictions within that space that look particularly attractive for you and that you'd focus on going forward? Or are you more driven by the portfolio of commodities and chasing that rather than jurisdictions?

It's a good question. One of the disadvantages of being listed is that you end up saying a lot more than you should and give away your secret sauce. So I'll be very careful how I respond to your question. In Africa in general is attractive to us. Certainly, with the recent change, if you look at Tanzania, for instance, with the recent change in the administration, which has become pro business -- and that comes with opportunities. So I'll stop there. I'm not going to go further in terms of who we're chasing, what we're chasing and which kind of type we're chasing. In terms of providing solution for the landlocked countries, you are absolutely correct. What is happening actually is that those countries have tended to be endowed with the niche cargoes that are well in demand at the moment. So I'm not going to mention which country, which project, but that's our interest. That's why we are keen on it. And the belief in our ability to provide a solution for them is what attracts us to those countries, because they require -- have the amount of investment in rolling stock, in rail tracks and the likes. We've got access to port. So that is complementary.

Thanks for the presentation. Three questions, if I may. The first one, while the slide is up, if you look at your commodity exposure, how significantly are you exposed to the commodity price in terms of the rates that you achieve and risk to volumes? Maybe a question at the time might be easiest.

Okay. So this is an interesting one. Our pending rate is based on the service offering we provide to the customer, of course, underpinned by the cost of getting cargo to the port and load it into the vessel. That's a primary driver in the necessary margins to do that because we are in business. Of course, the one thing that we know about logistics cost is that it's a [indiscernible] purchase from -- by the customer. So what they're looking for is the efficiency and cost reduction. So if one is not able to do that, then any variation in your core commodity price movement -- in fact, not just commodity price movement, the landed costs on destination -- if one is not able to manage your logistics portion within that cost base for the customer, then you run the risk of the cargo not moving at all. And therefore, our job is to ensure that we sustain that. So to what extent is affected, we do some analysis on key commodities. In fact, there are 2 drivers for us, particularly in Mozambique. One is the foreign exchange rate because our cost base is in dollars. And therefore, if there's a solution that runs through South Africa in rand base and rand weakens, then we are at a disadvantage as a port and a terminal. And therefore, we watch that very closely. Not much we can do about it other than continuously ensuring that we drive our costs down. And the second one is, of course, the movement in the FR underlying commodity price. So we tend to work with the customers and where the customers give us the ability to quote on the entire value chain, there is a scope to actually sustain that because you can have a section of a logistics solution as a loss leader if you know that you make money elsewhere. And that tends to be attractive to customers. And there are many other innovative solutions that we try to do to make sure that we remain relevant and competitive as a port and terminal. You can't rely on efficiency alone, because if it's efficiency alone, if the other port comes up, it's more efficient, but the same similar inefficiency index, but they are relatively cheap on prices, you will lose the business. That's what the team does on a daily basis.

To be clear, the rate is a service-based rate, but it's not profit-shared or it links to the commodity price? Or it's...

So again, it's one of those innovative things that I'd like to not say much about it because we do have the ability to participate. So in some of the deals, what we do is, of course, we work on a cost base. And what you then do is you then say to the customer, "Look, if you -- if the index just pick up RP1 spec coal coming through our terminal." If it's $100, this is the rate, or if it's $90, you give them a particular rate with an understanding that if it costs $120, we then participate. So in that scenario, when it comes to I might be presenting depressed margins in difficult times, and I would ask you for forgiveness in that at least we're generating EBITDA. But then if there's an upside in the commodity prices, then we will make it happen. So that's one aspect of it. So there is indeed scenarios where with certain customers, we do that. But in general, it's based on the service profiling. I wouldn't like to expose more of our commercial items, if you can excuse me on that.

The second one is on your infrastructure assets. Can you just give us some sense of -- you've got a concession period, you've invested -- what's the risk that at the end of the concession period, there's a repricing to you or you lose control of the asset? Or is it a secure long-term asset, albeit that it's under concession?

I think the principle of a concession is that -- and that, for me, it's a good question and it's very important how one responds to this, because in most cases, not well, maybe not most -- in some cases, the government gives you a concession, you take over the asset, and the government expects that you'd have done certain things by the end of the concession. I'm a firm believer that the extension or the lack of extension of the concession is in your hands during the concession. If you don't do what you've committed to the government, don't expect to have this extension. If you do what you've committed to the government and create this good asset for the government, then chances are they will extend. They'll have no reason not to, because you've proved that the commitment you've made, you actually deliver on it. That's my own belief. But as a principle, the concessions expire. They remain government assets. So when you get into it, you build a business case that says by the end of this concession, based on the end of concession terms that gets agreed, you hand over the assets. That's how they run as a principle. As a business person, you then need to say, what is it that I can do to make sure that by the time of the concession expiry, the government doesn't even go alternate, they just extend it. But in some instances, because of new procurement policies, they have to open up a process to everybody to participate. So the days -- in the old days of in some regions are gone. But in some regions, we are high risk, the extension becomes an operator.

That's useful. The last question, if I may. On your breakup of your net asset value that you've done out there, if you can just clarify the assets at head office that you -- I think it was 240. As I would understand that the property is sitting in the 164, maybe just to clarify what the 240 is?

A significant portion of that 240 relates to actual properties that we own as Grindrod for our core businesses and footprint that we operate on.

Sort of how the group and then might be led to the logistics of the port operations as required?

Indeed.

It's reasonable. Thanks very much, and well done on the results.

Thank you. Do we now go online?

Just got a quick question [indiscernible] from 36ONE. It's probably a follow-on question, which has asked his first and second question, is to what extent are you exposed to certain kind of commodities? And how dependent upon you -- upon the commodity price in terms of the margins which you can actually charge?

I think I have responded to the question. Our base price is based on the cost of providing services plus a margin. Yes, of course, if the customer feels the pinch as a result of the drop in price, we will then fill the pitch because it's a great [indiscernible]. So to the extent -- and commodity is very -- I mean we did a high-level exercise in [core] at $80. And again, it depends how you run it. If your customer is a minor, it's different if your customer is a trader. Because if your customer is a trader, then the headroom between your price and what they make as margins is that much less. But if it's in mine, it's that much bigger. In addition to that, it depends whether you move on rail or we move on truck. If you move on rail, the rail cost is 2x of your truck costs. So your customer has got much relief. So high job, and that's what I'm sort of pressing the team on, is to make sure that we alternate a solution that is rail-based. Because especially for [ tripart ], we're a firm believer that the cargo type needs to be moved by the right transport modalities. It's not -- you don't have cargo that's supposed to move on truck by rail. It won't make sense. Especially if the end, what I call it the last mile, is significant in that scenario. Whereas on rail, we run all the way to the terminal. So -- so it makes sense then to try paranoia. So a very simple answer. It's driven by to what extent does the customer have the headroom. And also the other aspect of it is, what is the ratio of your logistics cost to the overall price? What you find is that the higher the price and the lower the logistics cost, which may be bad for us as Grindrod, if you look at it in isolation, the bigger the chances of sustaining that. But the lower the landed price, then it makes your cost of logistics that much significant. And therefore, your customer will always be on your case on it. And that's what we leave and rethink in order to make sure that we sustain ourselves. But I cannot take away at the point that if the prices dropped significantly, we do get affected.

We have one caller who has a question.

Thank you. The question comes from Charl de Villiers of Ashburton.

A few questions. I mean, starting off, have there been any developments on the net core tender? I know we are well past the initial date of announcement, but that's kind of standard issue or standard for government in terms of not meeting the source of deadlines. Have you heard anything on NATCO?

I haven't had anything, but I'm probably the wrong person to answer the question. It's -- because I'm a participant, I prefer to say less about it and leave it to the right people in Transnet to be the one that talks to this point. Safe to say that you all know that the proposal was out, and the Peters responded and Grindrod responded. Thank you. I hope I answered your question.

Yes, that's fine. I just wondered if you had heard anything more, I probably expected as much.

No. I have not.

Okay. All right. And then maybe a follow-on on your local strategy. I mean, I know you were refurbing a bunch of locomotives. Some have been deployed. You mentioned on the call earlier that you've got some of them earmarked for future work in Africa. Can you maybe just give us a overall sense of where you are on the local refurbishment and how many of those that are busy being refurbed have already been allocated or earmarked for work yet in East Africa or Zambia or wherever it may be?

We've got a stock of about 60 locomotives. Some of those leads for our own business. I think we've got -- we just find up a new customer on manganese to run the operation. We've deployed 4 of those. And we are party to deploy 4 in Zambia. We've got 6 in Zimbabwe. And we used to deploy [ Presa, ] but that business has stopped for now. In the workshop, we bought 5 secondhand small locomotives that are suitable to run in Sierra Leone. Two of those are in the workshop, and we're hoping they will come out in January. 3 of those will also -- there's a couple allowed to proceed, or we've made a decision already. I'm not sure. And the reason we say that is then we wanted to respond to demand. We don't want to commit capital when there's no clarity on demand. Then we're deploying or deployed for into eSwatini, 2 of those will be dedicated to our operation and to those will be under the watch of ESR. They can deploy them as they see fit. And in Mozambique, we've got 4 locomotives deployed, which they use as please, there's an opportunity to deploy more actually in Mozambique and in Zambia. And I sense now in Zimbabwe, if I'm not mistaken. And there are other opportunities that the team is working on. My sense is that we will soon, if not already, run out of locomotives. And the way we operate, we always say generate cash and utilize your existing assets and then look to invest. So the team has been focusing on that. So we've got these locomotives, deploy them fully, create a business case for yourself to then push the Board and seek a systematic investment. My end game or our end game or journey is that we now need to get into a phase of systematic pitches of locomotives throughout the coming years, because we firmly believe that this is a growing demand. I hope I've answered your question. Sorry, in the workshop, we've got 2 left that will come out in -- out of September, October.

And am I right in saying -- I mean, given -- I mean, obviously, refurbing these and almost doing this brownfield, the return on these assets should be a lot better than obviously going out in the future once you've kind of used up all your spare locos at the upper refurbishment, et cetera, you're -- potentially, your future returns will be lower than the returns that you can generate over the kind of -- over the next few years with the locos that you've just refurbed and deployed. Is that a fair assumption?

Yes. You're spot on. Actually, it's twofold. One is those locos are more versatile in where we apply them. It's difficult to take a brand-new asset and run on a line that is not developed. So what we've said is let's develop these assets, let's deploy them, let them run and thereby creating cash not just for Grindrod, but also for the rail operators in the region. And once we start building the business case, then the next step is do we then form a consortium to then start improving the line so that you can then start deploying newer locomotives? So for us, if the line doesn't run and the business case of a let's build a line, let's inject locomotives, your cost base, because it's all current cost, becomes huge. If I give you an example, you're planning a new locomotive, the standard 1 that can pull 80 wagons of magnetite, 60-tonne per wagon can cost you $3.5 million. The ones that we revamp, we'll carry them at our books in about $1.5 million. So you can see that there is an advantage in terms of being able to put a solution relatively quickly. And also from the mid-term perspective, the new locos of course will take you about 2.5 to 3 years to deliver. What is the revamped 1, depending on who you use, it can take a year or 1.5 years. So there are those dynamics at play and those parameters that 1 is to work with.

That's very helpful. I mean maybe one last question, which just trying to tease out maybe a little bit more from you, but I understand the sensitivity around your East Africa, Zambian opportunity. I mean, without going into customer specifics, I mean, can you maybe just compare where you could -- where you would like this business to be from a contribution point of -- point of view, be it tonnes relative to your current Mozambican footprint or South African footprint? I mean, where do you see that opportunity, say, 5 years, hence, some what you know now.

Yes. So a combination of equipment investment, rolling stock investment and the potential business acquisition. I'd like -- I want to mention my revenue or measured by the investment size. A minimum of a billion rent investment -- overall investment or a single acquisition. That would define the impact positively of scaling up in that region. I hope that answers your question.

Okay. That's -- and the returns you expect from that? Can you just give a returning capital? I mean, is that...

I guess 15%.

15%. All right.

Correct. Look, in times, I mean my individual corporate my M&A side here, we always IQ this. In some instances, we do chase 18%, where we feel -- if we feel the risk is high. But in general, it's 15% that we chase. I'd like to ask that if there are any other questions, we are available after this session, because I'm sure there may be others that want to leave, but we are available to answer any questions between now. Okay.

If I may. Sorry, one question. Getting back to your ROE. You mentioned just now, again, in the context of that discussion on the locos and your project with your target at 15% and you're currently performing at 19%, do you see your 19% sustainable? And will you lift your target? Or will you leave your target at 15%?

So we do 2 targets. One is ROE, 15% target and the other one is ROIC, that we want to be above.

13.45%.

Yes, which the -- the one is more cost of funding, making sure that you can create economic value. I think 15 is a decent number. We have been looking at it relative to our work of late because of the increased cost of debt. But we think interest rates have peaked now. And therefore, there is no particular reason to revise them. As I've said, [area], the -- in some projects where we feel that the risk is too high, we do chase 18%. If we don't get that, we won't take the project. Thank you.

A couple of questions online. Do you want to take it?

Okay.

So Wallace from Stain Management asks, how much of cash is the business currently generating on a look-through basis? The significant amount of operations running through JVs and associates makes it difficult to assess. So this is an interesting question. Remember, for JVs and associates, we as Grindrod, we've got equity share, but our ability to control what happens with cash generated is limited to what we would vote for in conjunction with our JV partners. What we track and what we manage quite rigidly is sticking to the dividend policies that we've agreed upon. But if you really wanted that indication on cash generation, if you look at our EBITDA level currently, on a segmental basis at ZAR 1.1 billion, our JVs contribute close to 50% of that. The second question Wallace asked was how much of the coal that you export through Matola and Maputo is transported by road? And does this make sense, given where the coal prices are? I can ask you the ratio of coal to road, if you want.

So typically, in [indiscernible] road-to-rail is about 80-20, roughly. In Matola, it's 60-40 roughly, which is -- but at the moment, the run rate is around 50-50, which is not ideal. But we're hoping that we'll start to see the improvement in that ratio as a result of -- and remember, that sort of unmolded ratio does not only include coal. It also is magnetite. So maybe I might need to work out the cost per seat number, unless we have it.

I do have it. So on coal, if we look at both our facilities, Maputo and Matola, on average road, we have 69%. But what's quite nice is on magnetite, which is predominantly moved out of Matola, that's where rail really steps up and we had about 90% of volume that we moved down on rail. Wallace asked a third question that there are a couple of -- sorry, that was Matt. Matt from 36ONE asked a couple of questions. What do you think graphite volumes in Northern Mozambique look like over the next 12 months, given that Sierra has ramped down production? So remember, as Grindrod, when we entered into this very specific customer solution, we were -- or the team was smart enough at that point in time to structure that contract in terms of a fixed fee arrangement as well as a variable fee arrangement. The fixed fee we earn, regardless of volume that the mine would put through. And our fixed fee at the moment runs at about $1.2 million a month. We earn that regardless of whether production is on or where the production is eased. The variable rate is where we don't really make a whole lot of headline earnings, and we base that is if we incur it, we recover it. And that's the model that we apply on that contract. Any updates on the Total LNG project in Mozambique?

No update. All we can talk about is speculation and what you hear in the market. As Grindrod, we do see some inquiries coming through, but nothing of substance has materialized yet. So it's a wait-and-see game. Thank you.

Not that. How do you rate the chances of creating a manganese solution through Namibia?

Can I just to -- skip that question?

Or we'll come back to you on that one, Matt. And the last question that he asked, should that party rail open up, what is the strategy initially? Would you look to sign up commodity companies on long-term contracts and then buy in locals, or you have capacity to start straight away?

I mean without being specific to what Grindrod would do, but typically, if you're going to invest in the rolling stock, there are 2 components that you require. One is security of the duration of the concession or access, whichever you call it, but secondly is an underpin, which should be long term. At minimum, it must be 5 years at minimum, with the hope that you will renew because you hardly get customers that give you 20-year contracts. But if it's a concession where the volume is captive is there, we just from road to rail, you don't need to believe in your business on to actually capture it. That's just general answer. Thank you. Thanks for your patience.

Thank you.