Grindrod Limited (GND) Earnings Call Transcript & Summary

Good morning, everyone. Thanks for joining us. I see one of my Board members here today. I'd like to acknowledge [ Jizan Kite ]. And here coming in, my Chairperson. Thank you for joining us this morning. And really thanks, everyone, for coming through. And for those who are joining us virtually, we welcome you and over the phone. I hope I audible enough. But before we kick off, I'd like to thank our employees, who delivered on these results. They take full credit for it. As you know, the trading conditions were extremely difficult last year, and I suspect they continue to be difficult, and they've shown their commitment to Grindrod's success. We note it. I also would like to note and highlight that between myself and Fathima. We will take you through these numbers and the results for the year. So if you've got any questions, please flag them. I think at the end of the session, we will take some few questions from the floor. And those who are joining us online, we'll send their questions through. I think they'll come through verbally, they will take some questions. Preferably less questions here. We are available next week for those who want one-on-one to get more insight on the numbers and the results. So please use that opportunity, either you use Fathima's e-mail to send your questions or you send them through to our group's secretary. To kick off, we had a sad year around our performance on safety, particularly in the second half of this year. So even though LTIFR which is a major of intensity of our injuries, still remains on target. We are really certain by the loss of life at our terminals. In particular, this incident happened at GML. And we're also concerned about the deteriorating trend of our safety KPIs across the board. What have we done, we are putting all stops to improve our safety performance with some specific intervention programs running across the group. We've actually go into one of them as operation [indiscernible], which has got third principles based on the risk assessment we've done across our businesses so that you can address the specific issues that you picked up. So our commitment to safe working environment for all our employees remain unwavering. So what was the context under which we delivered this set of results. So if you look at China, which is the key importer of minerals, the growth is projected at 5.2% for 2023. I'm not sure if anyone has got the final numbers, but is expected to slow down to 4.5% this year, which will improve -- will add to the trading challenges. On the other hand, India is growing strong. In Q3 2023, they achieved 8.4% of economic growth. This is phenomenal if you consider that the global growth is expected at around 2.9% this year. So this translates to roughly about 7.6% of annual growth in terms of the calendar year. If you look at Mozambique, where we actually operate, they're also showing good growth, 5% GDP growth. In fact, Mozambique has been relatively stable and strong. So they did 5% in 2023. In fact, this is the strongest since 2015. And this compares to 4.4% in 2022. So things are looking relatively positive. Even if you look at the inflation numbers, they are sitting at around 5.3% for 2023 and is expected to further slowdown to 4.2% this year. Coming back home, unfortunately, we are still experiencing some headwinds in terms of our economic growth. If you look at the latest reserve bank statistics or forecast. It's at around 0.6%, which is quite sad and is expected to average around 1.4% per annum between 2024 and 2026. So it's going to be tough. [indiscernible] in general, the economic growth is projected at around 3.3% for 2023, but it -- we've seen some challenges coming through, the drought in Zambia, is becoming problematic. We're also seeing some debt issues that remain difficult to actually resolve and that's impacting their ability to redirect the copper mines, which are so much needed for their economic growth. So this is a bit of a concern for us. East Africa remains a positive growth region. I suspect it's going to be the highest growth in Africa probably between 2023 and 2024, projection of 4.5%. The economic growth outlook in general remains positive in this region. But it does not go without its challenges. You've seen some of the currency devaluations presently. On the back of, yes, interest rates remain pretty high, which puts pressure on inflationary outlook and serviceability of the public debt in that region. So it's a tough environment that you've had. And I suspect, I'm not sure to what extent you would agree with me that it will continue into 2024. Now closer to what we do in terms of the commodities that we handle, again, I've quite a switch of commodities ranging from coal to EV-based cargo types and containers. So broadly, if you look at this, these 3 sets of numbers here, you've got not so good, which are on the double digits on the upper end, covering lithium, which is a bit of a surprise for us, as you know, is one of the cargo types that we are targeting heavily. So it dropped 41% year-on-year, but it's on the back of high growth that you've seen in the past years. The other one that is severely suffered is coal, 55% drop. On coal, which is average below $100 a tonne. So I'm sure I'm going to get a lot of questions around what that means for our business. And then container volume or container rate, apologies, 49% drop. Now as some of you will be fully aware, we do container depot handling in nationally and particularly more so in Devon through our joint venture partners and our own container depot handling business. You compounded that with the logistics constraints that we are seeing the impact on operations is severe. The second type, if you look at the analysis, are the ones that I think have been relatively resilient. We're seeing just a marginal downtick on those commodities. That includes copper, which is only done 4%year-on-year. So it's still relatively at high rates. The other one is iron ore, which has been quite resilient to date and continues to sort of performing or at least hold quite shoot. The only commodity that seems to have done well and continues to do well is chrome. Now for those of you who understand our operations, chrome is handled in the Port of Maputo, MPDC. And later on, you'll see the positive impact that has had on our results. Now this portfolio of commodities, if things work according to one's diversification strategy, you should be seeing an uptick on commodity and the downtick on the other. But it does not completely work in that fashion at times. So on the backdrop of those difficult conditions, I'm pleased to report that at Grindrod, we achieved EBITDA growth of 16% to ZAR 2.5 billion if you compare to last year. We grew our headline earnings by 29% to ZAR 1.4 billion. We retain our strong liquidity with a cash balance of around ZAR 2.5 billion on a legal basis. And it's about ZAR 3 billion if you include joint venture cash that's sitting in those businesses. I'm expecting questions around that liquidity, but I will leave it for Fathima to response to it. We also achieved a return on equity of 19%. The challenges last year that 15% as a target did not sit well given the inflationary pressures. As well as the rising cost of capital. So our target has now moved up 16%, so we comfortably achieved that. So on the back of these financial KPIs and taking into account our investment commitment and challenging trading environment in the short to midterm term, we were able to secure support from the Board to grow the final dividend to the shareholders by 71% to 38% per share. This brings the total dividend for the year to $0.724 per share, up 84% in 2022. I hope we've encouraged you enough to hold on to our share. This level of dividend places us at 2.1x dividend cover on core headline earnings. And this is -- we considered this to be a generous dividend payout when considering our target of between 3x and 4x dividend cover on headline earnings. However, my CFO has warned me and has indicated that we will return to the range of between 3x and 4x in the next interim dividend cycle. The good news is that the extension of the concession to operate at the Port of Maputo through MPDC, until 2058 was confirmed and formally granted by the government of Mozambique in February 2024, this year, and reflects actively on the sustainability of the concession port operations as well as our investment in the port of 24.7%. So those who will be with us, we've extended the life beyond probably my working life in Grindrod. I received the call this morning pending our negotiations on the back of this extension in terms of our sub-concession extension. I am pleased to confirm that on that call, I was assured that a corresponding sub-concession extension for the Matola Terminal will be granted, and we are looking to be signing off on that in the next few days. So that is confirmed. The negotiations on the remaining 2 concessions or sub-concessions which is the [indiscernible] terminal and GMS sub-concessions those negotiations are underway. I have no doubt that we will secure them. If you move on to the Port and Terminals, I've summarized it there, but I'll just take you through the highlights. The Port and Terminal segment did well. This is despite challenging areas at our terminals. The Drybulk that is operated by MPDC, achieved a record volume growth of 20% compared to 2022. The strong demand for the footprint on this facility, in particular, continues to be unabated particularly for chrome customers. Mozambique and Matola, which is our Grindrod Terminals, delivered record performances across the board, each growing its volume by 10% and 22% on prior year, respectively. Notably, the volume flow into the main port for chrome in terms of rail improved by some 8%, which is really encouraging in terms of the rail performance. Continuing on the highlights. The compounded annual growth rate of 23% since 2020 on the port side was achieved, which is phenomenal performance. And at the current rate that was achieved in February of 1.3 million tonnes, you can record the numbers if they repeated that how the 2024 will look like. Despite 30% drop in volume in Richards Bay, of the convert those challenges that we've had for over 2 years. Overall volume level from [indiscernible] terminals remained at 16% -- sorry, at 16 million tonnes. The compounded annual growth rate of 19% was achieved since 2020. We are encouraged by the growing interest from our customers to commit long-term on our facilities, particularly on the main port. Following the concession extension at MPTC, we are seeing customers calling for contract terms longer than 3 to 5 years being requested. This is a vote of confidence from our customers in terms of service offering that you provide to them. Now if you move on to the logistics segment of our business. We spent ZAR 700 million of CapEx in that business. ZAR 200 of that was spent on rail, locomotives in particular. This shows our intent on our rail strategy because it's key for us to unlock cargo volume flows to our own terminals. The rail operations last year moved a total of 9.2 million tonnes. Covering iron ore, manganese, general freight, coal in Sierra Leone, Eswatini, Northern Cape and through [ PBR ] in Zambia and Zimbabwe. We are relentless in pursuing collaborative breakthrough opportunities with the various rail authorities, operators and customers to unlock potential in the SADC region. Focusing on the corridors where we operate. So rail is critical for us. Rail remains the only sustainable solution for drybulk, cargo movement, both from environmental as well as cost-effective NAS perspective. Record performance continues in our ships agency, clearing and forwarding businesses. I'm glad to see [indiscernible] here, achieving a 49% growth combined in their earnings compared to 2022. The non-core, we have fully impaired the carrying value of ZAR 241 million of our non-core investment. The material one that was remaining, which is the Taxi Finance business. I suppose it comes as new surprise for some of us, seeing the distress in that industry in general. So this marks the end of Grindrod's material exposure to the private equity investment portfolio. It's been an interesting journey for all of us. It's been difficult news to bring to the investors. We are pleased that we were able to absorb this impairment, recovery of not cost property backed loans and advances remain difficult. And the initiatives that we are working on are yet to yield positive results. So we request your patience in that regard. This property exposure has no liability commitment. So please take comfort from that. And at half year, we reported that our security ranking on this property was improved on the waterfall, where we now rank first on the property to the value of ZAR 90 million. So any potential proceeds that realizes, we now rank fast. But before the interim, we're ranking second. We communicated at the interim that we are closely monitoring the developments on the [ club met ] for any possible catalytic potential of this development on our no-cost property exposure. We are also a shareholder in the [ club met ] development. Margins on the marine fuel reselling business were impacted by lower oil prices. We expect the volumes on that business to tick up. The Red Sea are resulting in demand for marine fuel as a result of vessels having to traverse via the Cape of Good Hope. We continue to engage with the co-shareholder on the way for it on this business, and I'm hoping that at some stage, I will deliver positive results. Thank you. I will leave it to Fathima.

Good morning, everybody, and a warm welcome from my perspective. I think Xolani has done well to talk to a lot of the factors, challenges, tailwind headwinds that have impacted our business and certainly, our performance for our 2023 financial year. Overall, a good performance certainly surpassed our expectations and again, excluding -- the sentiments of Xolani for all the teams on the ground who have all consistently delivered strong performance for us this year. But I think most pleasing for me is the strides that we're making towards the achievement of the strategy that we certainly hold ourselves accountable to. I think we closed this year with a very strong core business and a healthy balance sheet. But if we continue further into the results for the year, certainly, from an income statement perspective, I think key factors impacting financial results, Xolani talked to a lot of the markets coming off compared to the conditions that we saw in FY 2022. We saw it in the charter markets. We see it in the commodity market, and we certainly experienced it in the container markets as well. The second factor really that drove an impacted performance as well as our balance sheet, the corporate transactions that we had in the year. Both of them, both of the significant ones happened in the first half. So we would have reported it to you at interim to refresh the memory. The first was a joint venture transaction around our Grindrod Logistics business with Maersk, where we own a 49% interest in that JV and the second being us buying out the joint venture partners in the Richards Bay empowerment structure, which forms part of our terminals business. Revenue is certainly under stride. It looks like our core business revenue is flat. But again, if you normalize for charters and value-added services, again, if you recall, value-added services was the initiative we embarked on in 2022, where we aimed to have bigger participation from a profitability perspective around the boom of the coal prices. And again, we've seen really a 16% growth in our core business revenue once you normalize an adjust for that. Certainly, we're also seeing that in the trading profit or EBITDA line with one additional factor to consider around the removal of the impairment that we booked again on certain preference shares in that Richard Bay Empowerment structure. Good news is we've managed in our core business to maintain what we believe is strong EBITDA margin at 34.5%. Our depreciation has increased 19%, really a function of the extent of capitalization, and we'll look at that further once we look at the balance sheet in a few minutes. Our nontrading items, these are really the items that we adjust for to report headline earnings. And nothing significant to report on in the second half with the big factors driving that having been reported on at interim. Again, around the corporate transactions, profit on the disposal of our business and the JV with Maersk as well as certain impairments that we booked on taking control of the Navitrade business. Our interest -- our net interest is looking better. Really, this is the consequence of the ring-fenced cash that we hold on balance sheet. Essentially, this is cash that we're holding coming out of the disposal of Grindrod Bank in 2022 and for which we have earmarked certain growth projects expansionary in nature. The port, like Xolani said, exceptional performance for us. That's what contributed to the 57% improvement that you're seeing on screen. And happy to see that in our core business, our effective tax rate is maintaining at around 32%, which is really the rate that drives the tax in Mozambique which is where we earn a majority of our earnings from. Our core business delivering earnings at ZAR 1.3 billion and headline earnings of ZAR 1.4 billion, 29% uplift on the year before. If I touch on our noncore and again, this is the marine fuels business as well as our private equity. From a private equity perspective, Xolani's talked to the impairments that we've recorded, essentially withering down to the more significant extent the work we've got to do in that space. And again, that 10% impact on the overall headline loss is because of the 39% shift we saw in marine fuels business with the softening of the oil prices. Grindrod as a whole, reporting headline earnings of ZAR 1 billion for this financial year, which is 36% up on the previous year. If we take a closer look at the segments, again, of the backdrop that Xolani had initially. Ports and terminals, really the star performer this year, 19% uplift in revenue, 29% uplift in EBITDA. Strong EBITDA margins and strong return on equity and still very much a U.S. dollar weighted business for Grindrod. From a logistics perspective, a bit of analysis to do here, again, because of the market conditions, charters and containers really impacted the logistics business significantly. And again, the shift in our percentage shareholding in the Maersk business from the logistics business from 100 to 49 also impacting this. So once you adjust revenue for charters, and the 51% loss of our shareholding in the business, you actually see 41% uplift on revenue, and you see 23% uplift in EBITDA. Margins normalized to around 33% comparative to the 31% that we've seen in the current financial year. We'll talk to some normalizations on the headline earnings on this slide now. From an earnings potential, you see the ZAR 1.4 billion overall for the group, 35% uplift in port and terminal, and not much normalization. No real abnormal items or market factors influencing that. But from a logistics perspective, the key normalization in the current year is around charter markets. And if you look at normalized headline earnings of ZAR 471 million, that's actually uplift of 32% on 2022. From a group perspective, here, you see the interest again coming in on the ring-fenced cash that really contributed to the 40%. But we closed a normalized headline earnings of [ $1.3 million ] and what we have done because we know a lot of you like to see this in cents per share. This translates to headline earnings from our core business of ZAR 2.04 and normalizes to ZAR 1.94, which is effectively 95% of what we have reported. On to the balance sheet. One bigger normally, you'll see the significant balances in 2022 for noncurrent assets held for sale as well as the liabilities associated with that business. The net carrying value against that in one line for what we disposed off into the Maersk JV, but then you have 49% of it coming in proportionately onto the 2023 balance sheet. A big investment in our property plant equipment, up 31%, and you'll see the stats on the side there. We've invested slightly over ZAR 1.1 billion, with close to 50% of that on expansionary capital in the current year, spread significantly between our logistics and our Port and Terminals business. Big investment for us, like we said, in rail, new rolling stock that we've acquired, locomotives and wagons. And certainly, we had to report that our refurbishment program on the locomotives, which is replacement in nature, also concluded by the end of the year. Investment in our container business, our facilities in Denver and [indiscernible] and then in East Africa for our Pemba warehouse for the ship that we've invested in yellow equipment for the crude oil pipeline projects that we are looking to participate in. And certainly, from a terminals business, we acquired certain strategic leases and also did further replacement CapEx work in our Matola facility in Mozambique. Investments, the ZAR 1.3 billion really represents the carrying value of the port to us, a significant number for us. And if we look at our net current assets, we actually see uplift of close to ZAR 600 million, ZAR 300 million of that is the debtors book coming back for the most JV and the remaining $300 million locked into most of our logistics businesses for the cross-border brokering that we're doing as well as clearing and forwarding. And of course, in the healthy bank balance that Xolani talked about of ZAR 3 billion on a segmental basis. On to non-core, you can see the lock-in coming off of total equity in that business, marine fuels at ZAR 724 million and the residual relating to private equity, but you can see in the investments line total investment sitting at ZAR 94 million, and that book sitting with a carrying value of just ZAR 59 million now. Our land balances still at ZAR 1 billion. And on that, we recorded fair value impairments of close to ZAR 93 million in the current financial year. Overall, balance sheet sitting with equity of ZAR 9.9 billion and a solid asset base of just under ZAR 19 million. In terms of our net debt reconciliation and again, these numbers exclude the impact of the joint ventures. No major significant shift in net debt. We started the year at ZAR 1.3 billion and closed it at ZAR 1.2 billion, but good cash generation during the year of ZAR 1.2 billion, 62% of that went to our interest tax and towards dividends. And then, of course, you see the significant CapEx coming in at ZAR 745 million. The key driver in terms of proceeds from disposal was again on the Maersk transaction, where we saw cash of close to ZAR 272 million coming in. And of course, the impact on leases, largely attributable to lease modifications that we do for leases that are CPI-linked or based. If we look at our total debt for the business or the group, of course, our short-term debt between our overdraft coming off. Again, based on working capital requirements and how we manage that, and we see the maturing of certain of our leases with the lease liabilities coming off. But what you are seeing is that our borrowings have increased by 15% year-on-year. We closed with a net equity ratio of 12%. But of course, as Grindrod, we really pay attention and look closely to our net debt EBITDA, those really give us more stringent measures with respect to the debt capacity that we have. And when we ran the numbers for this financial year, we're sitting with debt capacity of close to ZAR 2 billion. That, together with the ring-fenced cash, I think, places us in a good position for the aspirations that we have, which we look at closer once we get to capital allocation. We closed the year with a net asset value of ZAR 13.68, which is a 13% improvement on the year before. Of course, the devaluation of the rand did have a contributing factor to that, but still close to 82% of that NAV locked into our core business. Equity for our core business sits at ZAR 7.5 billion, and that ZAR 7.5 billion has produced returns of 19% year-on-year. We measure or we look at return on earnings in terms of a target of 16%. So happy to see that we're actually tracking well above that. Think what was also pleasing for me was when we look at our return on invested capital measures for our core business this year. We achieved 16%, we measure that against the WACC we hold ourselves accountable to and that we target and track at 14%. I guess that leaves us to where next or what next for us as Grindrod and Xolani will do the heavy lifting here.

Thanks for the numbers. Just to put some of the numbers in perspective from a shareholder perspective. As Fathima was talking, I was looking at the NAV slide. She tells us that the NAV is -- that is ZAR 13.68. The share price currently is ZAR 12.85. So it looks like we are narrowing down on the discount. And those of you've been patient with us for many years, defer to paying, and I'm sure there's a bit of join. I also presented to be an analyst by a second. I removed, I zeroed out because I've been told many times that the value attached to non-core is 0. So I zero out pocket. I zero out land exposure. And as you know, the private equity book is almost impaired fully. So that leaves us with an adjusted NAV of ZAR 11.22. So if you compare that to a share price of ZAR 12.85, we're sitting at 14% premium or so no more discount if you just do that. So I thought I should just share that. So what from here. Really, our strong EBITDA generation allows us to fulfill our maintenance and asset replacement program. I've said it before that it's critical for us to do that. So we should be in a position to spend around ZAR 2.5 billion in the next 3 years, maintaining our asset base. To put it in perspective, the last investment we did in like 12 hours in 2017 and theoretical capacity of 7.3 million tonnes. Since then, we've done incremental nonconsequential investment in Matola. And as you know, we've now achieved 8.9 million tonnes on that. So for us to get to 12 million tonnes, we need to do an asset replacement, but we prefer to replace old equipment with bigger capacity equipment. So all site Matola upgrade, we're projecting to spend around 20% of our CapEx on rolling stock. Positioning Grindrod to be a regional rail operator within the SADC region. The spend will be ramped up as the confidence and clarity of the structure of the third-party access improves over time. So things are looking positive, but there's some level of certainty required before the Board allows us to go full on the spend. But you continue to incremental grow within our abilities and to the extend that we've got the ability to deploy those locomotives. Overall, our CapEx is governed by our investment policy framework which governs us in terms of the heavy rate we're chasing, reaching 16% and 18% depending on the risk in terms of the regions that we invest the funds to, interesting in this slide is that if you look at the core EBITDA of this year, it more than -- it adequately covers the CapEx commitment for the next 3 years. So the outlook, there is no doubt that you are facing market headwinds and a rise in geopolitical risks, which we have an [indiscernible] impact on the businesses in general and global trade, in particular, in the short and possibly 2 medium term. And if you look at the media statements, the trading houses are sitting with billions of dollars in their balance sheet. They're not giving them to the shareholders. They're keeping them for themselves. They should mean something. You're aware that one of the big coal mining companies in SA sitting on good cash. They're not giving it to the shareholders. They're holding it. There is a reason for that. So we are not alone, but we will -- equally, we were on that 2023 was going to be a challenging year, which it was, but I have full belief that our employees will come to party. So we hope that some improvements will begin to come through, especially as elections worldwide are being finalized most of us globally voting in some form or shape. But closer to home, we've got elections in May coming up. So we need to be prepared. And in Mozambique later this year. So 2 of our countries where we are running our businesses are going through the elections this year. So what is our response to all of these? Cost control, our containment is key. Challenging the CFO and the rest of the businesses to [indiscernible] in the part. And no full capital spend is the way to go and unrelenting focus on driving integrated logistics solution. And healthy balance sheet is what we need to focus on going forward. Just to emphasize, our strategy on cost-effective, efficient integrated logistics is what we are driving relentlessly, rail to feed our port and terminals is critical, and that's why we are investing in rail. So thank you for listening to us this morning. So this marks the end of our formal presentation. We are now ready to take questions from the floor, starting here. And I think later on, we will either read some of them that come through electronically or for those who are on the call. Thank you. No difficult questions, please.

It's Rowan Goeller from Chronux Research. Xolani, just a question on your terminals and your expectation of volumes, in particular, Matola, GML and Navitrade. GML probably saw a lot of coal going through when the prices were high. So can you just give an indication of where you expect that to go from here? And then Navitrade with the conveyor belt being repaired. What are your expectations for this?

You will know that generally, we don't talk to the forecast. So -- but I will highlight what sort of broadly what we're seeing. You are correct, the coal price has dropped significantly. In fact, I think second half of last year [indiscernible], much of average below $100 a tonne. So for us to ensure that we induce and maintain carbon flow on coal, there are 2 things that we are doing. One is costs. Cost from the terminal perspective, but also cost from the logistics perspective. So if you understand the cost of logistics flow into Maputo, an average truck cost you around $700 tonne from sighting in Wood Bank to Maputo. Train flow cost you around ZAR 350 to ZAR 400. So if one is able to influence and get access to running on rail corridor, certainly create a headroom for our customers, some of whom can actually be in a position to withstand a call drop as far down is $70 depending on the cargo time. So that's one aspect of it. The same aspect of it is that for the port to be efficient, we need to reduce or find a way to minimize the congestion at the border. And for us to be able to do that, the MPDC team are working with the Mozambique team on the Mozambique side. And we are initiating a project where we are going to work hard at more or less trains. One of the things or one of the teams internally within our business is to work closely with rail authorities to ensure that we drive more or les trains. Richards Bay, the party is back. I think it's being commissioned. If it's not fully commissioned at this stage. We expect the performance to start picking up. Again, for that terminal to operate profitably, rail has to work. We've got 2 plants there. We can handle about 28 trains a week, and only we're running at less than 10 trains a week. So these scope to actually grow the volumes. And of course, the diversification strategy is quite key so that there is no single dependency on core. Without answering what the prospects are looking like, I hope I've given you enough to make your judgment. Thank you.

Good morning. My name is Daniel Omar from Risk Insights. We have measured Grindrod's ESG performance for a number of years now, and we have seen that the disclosure in 2022 for ESG emissions, water and waste was commendable. However, we wanted to ask if reporting of energy and green energy specifically as well will be more transparent in the 2023 report.

We'll definitely take that into account. I can tell you that for the past 12 to 18 months, I've been educating myself in a content by provision. And it's quite interesting in this journey of ours. But what we're starting with is to put science-based targets. And that's what we've been pushing hard with the teams and we've rebased our base here and watch out for a better narrative that is quite informative on the next IR.

Thank you. [indiscernible] I think you've seen me in a number of years. How do you see the projects in Northern Mozambique affecting your business? And then if I may, this concession extension [indiscernible], is that customer-based because that's in excess of 35 years that's it on my side, and I thought I heard you talk about 75 years extension and one is on what basis those are done and what the sustainability of that result because a lot of water can go into the bridges during that time. Then please would you explain what your navtrade activities are in relation to [indiscernible]. And then further clarify where you are with Maersk. I hear reference to your joint venture in aspects of logistics. I'd be grateful if you would clarify that, okay. And then finally, if I may, if you're willing to, talk at about the [indiscernible], how you see that affecting our business. Thank you.

Thank you. Okay. Let me see if I can recap. So politics in Northern Mozambique. You will recall that in 2021 or 2020, 2021. We were operating the LNG project by Total Energy is exciting. We had close to 12 cities on sea moving up and down, [ selling ] the cargo, all the way from Durban and between Maputo and over the [indiscernible] of Nacala, it was exciting. In fact, at the time, we're approaching quarter of billion rand in clean earnings. And unfortunately, the politics came in the way of us achieving that. We led and we fin out. So as it stands now, the indications are that there are positive developments, but we have not embedded any numbers from that outlook. If anything comes through, it will be an additional revenue stream coming through. What do we think about it? We are guided by what's coming out of the media statements, the team to work clearly with some of the service providers and customers to understand when this thing will reopen. So watch out the media and I think we will get clarity in terms of the progress on that front. You also talked about the concession extension, you ask if it is customary and on what basis, that was done. And I think you mentioned 75 years. Just to clarify, the current concession, the main concession that's granted by the government considering authority, is currently or before the expansion was up to 2023, which was extendable to 2043 by 10 years, provided 3 conditions were met, which were all met. However, because of the level of investment that we -- when I say we MPTC, TPW and ourselves, we're looking to make a report and history of performance that you've done as well as the investment we've done, we're comfortable to apply for an additional 25 years from 2023. So that takes us to 2058 and the government of Mozambique, agreed. On the Navitrade activities, you've asked what activities we are doing there. The other trade is part of the complex in Richards Bay. We're running 4 facilities there, to one with the warehouse and open space for dry power cargo handling and the one contains the share for handling sulfur import, which is not bound. And the fourth one, sorry the third one is the silos for our heavy mineral customers. I saw the customer representative present here today. And then the Navitrade, which is the bulk terminal. Now the bulk terminal is rail-linked and also, to an extent, can receive trucks. It is belt linked into the port, the drybulk terminal of [indiscernible]. So that's the operation. So we receive coal, we hand it and we signed it through the [indiscernible] to load onto the vessels. That's the business we do in Richard's Bay. You also talked about, I think you meant Maersk when I talk about mec. We announced last year a transaction where we were making our container type of businesses nationally in South Africa with the Maersk's container business nationally. That measure was effective beginning of last year, so it has run for a year. And the implementation was completed, Fathima did talk about the impact of that major on the logistics segment of our business. I think you then asked me to talk about Transnet. So look, Transnet will work. If you look at the actions that Transnet are taking, they have made what we believe is good appointments. And for us, if you look at the container depot as an example, a functioning Durbin container terminal is good for our container depot business. And on functioning DCT is not good for our business. Why? Because the container inbound cargo, when it comes off the port needs a container depot facilities. So is the evacuation of the empties. Now if there is constraints on the logistics side, our business stores because our container depot facilities are not storage, there are throughput facilities. That's just one example. So driving Transnet is good for Grindrod business. And probably the rest of logistics peers will agree with me on that front. Thank you.

[indiscernible] Capital. Well done for a very good set of results. I just want to find out, any put to your auto terminal. I mean that's maybe one terminal that's little bit underutilized. I just want to find out what's the structural reasons for that. Is there anything that you can improve to take? I think the capacity is 100,000 and if I'm not mistaken. Just want to find out what you can do to take that utilization up. Thanks.

Very good question. Last year, we're quite excited when it was announced that what is referred to as gray vehicles. We no longer be calling at the point and we'll be calling at Matola -- or sorry, Maputo terminal. We are confident that it's our stake we'll begin to see the result. So that's one aspect. But the second aspect is for us to sustain MCTL, it drives on cargo flow post direction. So we would need to secure importation and match it with the exports. So every work is happening behind the scenes to see if we can return to the days of the BMW, if you recall, back then where we had a contract for export and thereby, we're able to attract the import to balance the cargo and reduce the cost for the terminal. The third element to position MCTL as a transport hub for all the vehicles calling in being distributed north of the region. So those are the 3 Forecast areas for us to get the terminal up and running. But what you of course the time we engaged MPDC and they have agreed jointly that a portion of the facility be made available for project lay down area for -- to support Northern Mozambique. It's one of the facilities that will benefit from the return of the LNG project in Northern Mozambique.

Good morning. It's Troy Dyer from a Strategic Consulting firm. First of all, congratulations on a great set of results. But I think what is more impressive is the way in which you've presented a lot of complex information and feel that the questions. So my point -- my question is from the perspective of strategic management and just forgive a somewhat lengthy question, the link between strategy, finance and enterprise performance management. And it's more of a complementary question than an interrogative question. One gets the sense of great complexity in your business, multiple dimensions to be managed. So it's a question. It's a soft question. Could you give us some insight into -- behind the scenes management of strategic management at Grindrod. How do you craft the system in which so many different moving parts can be managed in a systematic manner. Thank you.

[indiscernible]. Without giving away a lot of IP, I think we've come out very clear in the market. So if you look back in Grindrod, we had 4 divisions, I think I've said this before. And the challenge we had with us 4 divisions that we thought that because they are interrelated, the activities would naturally interrelate. So if you think of a bank, you think of shipping, you think of freight, when you think of trading. So you think the trade us, we'll use the freight and it is shipping and they'll find a trade with bank, right? But life does not break that way. Customers have got a choice. And when a customer book a vessel, they don't necessarily come to under shipping. When they want to trade, they don't necessarily want to be funded by the bank. And by the way, the bank had its own strategy that was different to what the group was. So we had a -- what do you call it, discount overhang or discount overhang from using the right expression and you, guys, challenged us and the previous management embarking strategy to narrow down the business. As freight became elevated, we had to come up with what now going forward. And what now is a cost-effective integrated and efficient logistic solution. It sounds very simple. But for you to be present in the entire value chain from the mine, dropping their time to a vessel does require some level of complexity. Whether like it or not, is the nature of the game. And therefore, you will have to have capability of truck brokering as an example. Rail, we will have to have capability of ships agents of business, clearing and falling, et cetera. But what makes even more sense for us is the access to put, in fact, the ownership of the port and the access to the infrastructure, which I suspect you will struggle to find any other logistics peer that have got a similar access to port whether you talk about Navitrade link through the belt into the DBT of Transnet or you talk about products in MPDC or the terminal operations, both in the main port [indiscernible]. That gives us a competitive advantage. And if you move on to the West Coast, you have WBT, which I can promise by one of my executives that it will be turned around. So we will continue to be looking for strategic infrastructure assets, but the key to unlocking those is the ability of our teams to traverse across the corridor. I will stop there before I say a lot.

Thank you. If I may, picking up on your reply there, in the ports, do you actually manage them? Or do the government authorities manage them under your advice or with your cooperation. And are you still in [ Walter's Bay ].

Correct. So the terminal we manage, the port in Maputo at shareholders and the port itself has got 4 activities. One is the marine, which we don't manage, we just contracted out., is the terminal itself, which is run by the MPDC team and it's the subconcession business, which is container and other operating leases within the port and is the group -- MPDC group provides in terms of running the operation. Any questions online?

There are no questions -- from the conference callers or dial-in. And there we have the some questions on the line.

Okay. That's the end of...

And we've got some online questions Xolani, 3 of them. I'll start with Matt's question. [indiscernible]. He asked, when you're looking to further expand into East Africa, are there opportunities dollar-generating businesses? Or are they -- do they generate revenue in local currency. Matt, the simple answer is dollar. So whether it's freight rates, charter rates, logistics, leasing of equipment, we paid that in U.S. dollars. Of course, some of the cost base might have a local currency impact. But generally, we manage that quite closely. The next question, Xolani, comes from Emira at Engineering East. What are the CapEx demands on Grindrod in terms of the extension of the MPDC concession?

In terms of MPDC concession extension, you have read in the media the top line number, $2 billion, I'm sure. A significant portion of that comes from MPDC itself. If you rewind, we've probably spent $800 million across the present from the inception of the current concession. So it's not an alarming number. If you look at it over the period. In fact, for our TCM subconcession extension, it enhances our proposition for our existing extension sort of our existing CapEx. so there's a ZAR 2 billion headline number split between 3 parties based on the commitment on the extension. But the commitment in each of our without giving away on the concession agreement and subconcession agreements because they are confidential. They are certain requirements that need to be fulfilled. So as an example, the corridor must work. There must be -- there's no point in expanding TCM to 18 million tonnes and the corridor only handle 10 million tonnes. So those nuances are adequately covered for us. I hope I've answered the question.

Xolani [indiscernible] from Standard Bank asks, is any of the work performed by the government and related stakeholders where Transnet and the terminal infrastructure is concerned, first in your business. Do you feel that the inefficiency should be baked in as being more permanent for the short term?

It's difficult for me to answer that question. I don't know the answer.

And then the last question from Sandile at [indiscernible] Wealth, asked us if we got future plans to buy back the preference shares. Again, the answer here is no immediate plans to buy back the preference shares. We do continue to closely monitor this. I think with respect to where we see the debt levels, our preference shares are pinned at about 8% of prime. The big advantage for us is really looking at the tax efficiencies around the structure. And because of the way our group is structured with preferred shares coming out of our holding company, which is mainly a dividend and investment holding company, we just don't see the significant leverage, but it is something that we do monitor quite closely. I don't have any more questions on the online segment.

Thank you for being with us today.