Grindrod Limited (GND) Earnings Call Transcript & Summary

Good morning, and welcome to Grindrod's 2025 Annual Financial Results Presentation. My name is Reshmee Soni from Investor Relations. I am delighted to welcome our analysts, shareholders and members of our management team this morning. Thank you for your interest in Grindrod. A special welcome to our nonexecutive directors who are also online. Today's session, we will cover the 2025 financial performance, having a look at our financial performance, our divisional performance, ending with our outlook. We will then proceed to a question-and-answer session. With us this morning are CEO, Kwazi Mabaso; and Fathima Ally, our CFO. Before we commence, please take note of the forward-looking slide on your screen. I will allow you to peruse this at your own time. And with that, I hand over to Kwazi.

Thank you, Reshmee. Good morning, everyone, and thank you for taking time to join us today. The year 2025 was marked by geopolitical tensions and trade policy uncertainty. Our success in executing our strategy and continued focus on operational excellence has assisted in limiting the impact of this volatility. We closed off on key strategic milestones in 2025. We concluded the ZAR 1.4 billion TCM acquisition, which is now under our full control. We successfully executed an exit from our shareholding in our nonstrategic Marine Fuels business, securing cash of ZAR 102 million. We exited our exposure to KwaZulu-Natal, North Coast property and secured ZAR 500 million in the process. Now let's take a closer look at the macroeconomic environment. As I have stated earlier, the period under review reflects a complex global operating environment, one that is characterized by elevated geopolitical risks and challenging environment. This has placed pressure on regional economic conditions resulting in shifting demand for commodities that we move for our customers. Looking at the key regions where we operate and where our customers export to, starting with China, China recorded an economic growth rate of 5% despite reduced iron ore demand resulting from a 4.6% decrease in steel production. This decline was attributable to a slow property sector and a weak infrastructure investment. India, the key importer of South Africa's thermal coal grew its economy by 7.3% in 2025, continuing its streak as the fastest-growing economy in the world. Although South Africa's economic growth at 1.3% is an improvement from the sub 1% growth, this still falls short of the required rate to mitigate the structural economic challenges such as high unemployment rate. Mozambique economy grew 1.1%, a substantial drop in the performance we have seen in the past, but LNG project activity is expected to underpin a recovery going forward. The rest of the SADC region's economic growth is expected to be supported by the strengthening of the mining sector. On the next slide, we'll take a closer look at the 2025 price performance of the commodities we handle for our customers. Overall prices outside copper continued to underperform. Chrome ore prices experienced notable fluctuations during the year. We saw an increase in chrome ore exports as South Africa's smelting capacity slowed due to energy challenges. On the other hand, iron ore prices started softer into 2025 and peaked in the second half of the year as China stimulated its steel sector. Coal prices fell in 2025 as India's output rose, which had an adverse effect on South African coal demand. Now I'll take you through our performance overview. Safety remains a priority at Grindrod. Our focus on driving a safe working environment for our employees through BASSOPA safety awareness campaign resulted in Grindrod achieving a year of 0 fatalities. We achieved a record lost time injury frequency rate of 0.16 across all our operations. This demonstrates the employees' dedication to maintaining safe practices. We delivered record volumes in Maputo and Matola terminals, delivering growth rates of 6% and 22%, respectively. I'll give more color to this performance in the next section. However, it's safe to say that our decision to buy up shareholding in Matola Terminal TCM was a strategic breakthrough. As a result of the record volumes, our EBITDA grew by 13% to ZAR 2.3 billion, translating into headlines growth of 17% to ZAR 1.2 billion. We generated ZAR 2 billion of cash from operations at decent EBITDA cash conversion rate of 1.3%, and we held ZAR 3.9 billion in cash at year-end. Consistent with our dividend policy, the group has declared an ordinary dividend of ZAR 0.252 per share for the 6-month period. This brings the total ordinary dividend for the year to ZAR 0.482 per share, marking a 21% increase. We have received more than ZAR 1 billion from noncore assets for the year. The Board has subsequently approved a further once-off special dividend of ZAR 0.43 per share for the 6-month period. As a result, 49% of noncore proceeds have been returned to shareholders. Between ordinary and special dividend, Grindrod has returned ZAR 476 million to shareholders for the 6-month period, bringing the total number returned to shareholders for the full year to ZAR 862 million. Now let us look at our Port and Terminals volume performance. Strong chrome market, partly buoyed by increased chrome ore export from South Africa and Zimbabwe contributed to yet another strong volume growth in Maputo port, culminating in a record performance of 15.2 million tonnes. Maputo has achieved a compounded annual growth rate of 14% since 2021. Moving to Matola. Conclusion of strategic buy-up of control of Matola Terminal was key in enabling Grindrod to unlock operational efficiencies. The reduction of vessel turnaround time by 30% and 11% for coal and magnetite, respectively, resulted in the terminal achieving a record of 9.9 million tonnes, marking the highest throughput in its history. This performance is at 83% of the committed capacity expansion to 12 million tonnes required in the sub-concession extension. Now let's move on to our Logistics segment. The Logistics segment remains a critical enabler to our Port and Terminals business. This segment gives Grindrod the ability to offer an integrated logistics solution to our customers, a solution that is cost effective and efficient. This ability remains Grindrod's market differentiator. Performance in ships agency and clearing and forwarding was soft. Our graphite operations slowed down last year, but recent market development points to a recovery in this business. We have substantially concluded our locomotives refurbishment program we announced previously, which we managed in line with our expected timing of rail open access in South Africa. Engagement with Transnet Rail Infrastructure Manager, TRIM, on Rail Open Access continues with expectation to close the negotiations after the revised network statement has been issued, which is expected in April. I'll now hand over to Fathima to share more insight on the financial performance.

Thank you, Kwazi. Good morning, everybody, and a warm welcome from my side. It's certainly a pleasure this morning to deliver Grindrod's performance for financial year 2025. Before you, you'll see our income statement and the numbers that we're presenting today, both from an income statement and a balance sheet perspective, have been put together on a segmental basis, which means that the impact of our joint ventures are proportionately included based on our effective shareholding on a line-by-line basis. Our core business performed well for us in 2025. Core revenue up 1% and core EBITDA up 13%. This is largely attributable to the stellar performance coming out of the Matola terminal with volumes up 22%, as Kwazi mentioned earlier. This was offset somewhat by performance in our Logistics segment, which we'll delve into further once we look at the segmental performance in detail. Pleasingly, overall EBITDA margins for the group improved year-on-year by 11%, reflected at 30% for the financial year 2025. Significant corporate activity prevailed for us in 2025 and reflected, you will see nontrading items on screen at ZAR 927 million. The Matola buy-up contributes ZAR 937 million of that, comprising both a gain on disposal as required by the accounting standards as well as the release of foreign currency translation reserves. The Marine Fuels investment, as divested from in the first half of the year, attributing to the drop of revenue and EBITDA, also contributed to nontrading items in terms of a net gain of ZAR 34 million. Our share of associate earnings, which represents performance of the port in Maputo is up 3% year-on-year. Volumes were up 6% and record milestones were met. The performance was slightly offset by tax obligations that was recorded due to the change in tax regimes in the United Arab Emirates. Our overall effective tax rate for the group sat at 31%. Now if you take profit before share of associate earnings and ignore the effects of nontrading items as well as withholding tax effects, which were elevated in the current year following repatriation of dividends from Matola post the buy-up, that's how we arrive at the 31%. Overall, net profit attributable to our ordinary shareholders are reported at ZAR 2.1 billion, 559% up on the prior year, and our core headline earnings at ZAR 1.2 billion, 17% up on the prior year. Our core headline earnings in cents per share closed at ZAR 1.765. If we look at our segmental performance, Port and Terminals doing really well for us. Revenue and EBITDA margins up 20% and 44%, respectively. Again, big contributor being Matola. Matola has been transformational for Grindrod in terms of financial performance as well as financial position. The acquisition has played out exactly as we expected with it being and reflecting as a major earnings and cash contributor. We are excited in moving forward with this asset. Our overall normalized margins, reflecting the impacts of the Matola acquisition and the overall uptick in our Port and Terminals volumes, dry bulk specifically, are reported at 44%, firmly up from the 36% I had reported to you in H1 of this year. Our headline earnings for this segment closed at ZAR 1.1 billion with strong return on equity at 24%. Our Port and Terminals business remains a U.S. dollar-anchored business with 89% of our EBITDA earned offshore. Our Logistics segment faced headwinds in the current financial year. Commodity prices saw a downward shift in our transport brokering business, which put pressure on an already low-margin business. Our graphite contract was renegotiated in the current year, and we moved from a fixed fee model and now earning a variable fee. Revenue and earnings, respectively, moving forward will now be aligned to volumes that we report. Our rail deployment was low. However, we have significantly advanced on our refurbishment program. Ships agency and the container business performance was subdued, largely linked to market challenges. Overall, revenue and EBITDA down 10% and 18%, respectively. And normalized margins, once you ignore transport brokering as well as the COVID-19 business interruption reported in the first half, sat at 25%, whilst at the low end of management's target, still within the range that we target for our enabling business. And this is an important principle. The Logistics business, as Kwazi mentioned, is an enabler to Port and Terminals. It is imperative to how we bring our integrated, efficient and cost-effective solutions to our customers. Overall, this segment gave us ZAR 212 million of headline earnings. And this segment, again, strongly rooted as a rand-anchored business with 83% of our EBITDA earned onshore in South Africa. From a balance sheet perspective, due to the significant impacts of the Matola acquisition, we have represented the December 2024 balance sheet. This will allow better comparability by us notionally including 100% of Matola as it reflects in the December 2025 numbers. We spent ZAR 1.5 billion in terms of capital expenditure in the current year, 81% of that being expansionary. And of that, 75% largely underpinned by the Matola acquisition. The remaining ZAR 362 million was invested in property, plant and equipment, largely in all our facilities and to name a few, our upgrade and our development of our Matola buildings in the current year as well as our Salt River facility in Cape Town linked to our container business and new undercover warehousing facilities in Walvis Bay. Aside from this, other capital acquisitions this year related to steel business, yellow equipment, vehicles and Jersey barriers. Our PPE dropped 5% December '24 to December '25. Whilst additions were significant, we did see depreciation impacts as well as a strengthening of the rand by 12%, which impacted on the translation differences that we booked in the current year. Our intangible assets grew significantly. The Matola acquisition brought on book $86 million of intangibles, both recognized in the form of goodwill as well as customer relationships. In terms of our working capital, our current assets reduced in the current year by 22%. It was very pleasing to see improved collections robustly across our businesses, a testament to the hard work of our finance and commercial teams. This coupled with the down trading in logistics as well as the capitalization of prepayments for rolling stock investments in the prior year contributed to that difference. Our bank and cash balances are up together with our current liabilities. What we experienced this year was significant prefunding that came through from our fuel customers in both the ships agency as well as the clearing and forwarding businesses. What happens here is that the cash is collected and sits on our balance sheet until it is paid over to SARS based on deferment arrangements that we have in place in these businesses. From a liabilities perspective, we saw significant repayments of borrowings. What we also saw was lease liabilities coming to book on renegotiation of the GML concession as well as the Matola acquisition. Our other liabilities have also grown. This is largely in view of the fact that we agreed to certain deferred consideration payments under the COG transaction as well as the fact that we had to recognize deferred tax liabilities linked to the intangible assets that we brought on book and that I mentioned earlier. Overall, we closed this financial year with Grindrod's balance sheet healthy and stable. Our asset base is now rooted firmly to just our core business with all material noncore assets materialized. If we look at how our net debt progressed in this financial year, we closed last year with net debt reported at ZAR 1.5 billion. This was post us ring-fencing funds of ZAR 1.1 billion in anticipation of closing the Matola transaction. Together, this gives us a net restated opening net debt position of ZAR 413 million. We raised in excess of ZAR 2 billion in terms of cash generated from our operations in this financial year. This stemmed from both operational performance as well as the efficient working capital measures that I talked about earlier. Our cash conversion was at 1.3x EBITDA, certainly a record for us looking back into a 10-year history for Grindrod. 27% of this cash was spent towards our interest, tax and dividend obligations. On acquisition of Matola, we brought net cash on book of ZAR 316 million. This comprised of both cash on hand at the time, offset by lease liabilities that were on book. We put ZAR 1.4 billion away in terms of capital expenditure. Again, this largely linked to the Matola transaction where we spent ZAR 1.1 billion, as mentioned earlier. Proceeds on our disposal also amounting to ZAR 1.1 billion and proceeds from noncore taking up 93% of that amount. Our overall noncash movements amounted to ZAR 412 million, again, through the introduction of lease liabilities when the Maputo concession was signed in November this year. We closed the year in a net cash position of ZAR 699 million. If we look at what this comprises, our total debt moved from ZAR 2.9 billion to ZAR 3.2 billion, 10% up. Our borrowings reduced, as indicated earlier, from ZAR 2 billion to ZAR 1.4 billion. We saw net repayments in the year of ZAR 710 million. We saw a significant uptick in our lease liabilities. The Maputo acquisition as well as the signing of the GML concession brought concession-linked lease liabilities onto our book of ZAR 1.1 billion. Our overdraft movements are linked to timing of cash flows. From a cash perspective, we closed the year on ZAR 3.9 billion. Our ZAR 1.4 billion, including ring-fenced cash of last year, give us a net increase in cash of ZAR 1.4 billion in 2025. This resulting in ZAR 700 million arising from the Matola acquisition and ZAR 700 million stemming from the timing of cash flows linked to the prefunding in the ships agency and clearing and forwarding. We closed this year with Grindrod's balance sheet largely ungeared, and we sit with debt capacity that approximates ZAR 4.5 billion. We have plans in place on how to take up this capacity. And to tell you more about that, I'll hand you back to Kwazi. Thank you.

Thank you, Fathima. Our capital allocation framework directs how we deploy capital through the business cycle, enabling us to shift between stay in business CapEx, growth investments and shareholder distributions. Over the past 3 years at Grindrod, the management team has done well to have a business evolution that supported a balance sheet restructuring. This restructuring improves access to both optimized debt capacity and cash reserves. This work was undertaken to position Grindrod to act on growth opportunities as they emerge. Grindrod has completed its strategic reset. The foundation for growth has been laid. We are now moving into disciplined growth execution. We are focusing on strategic infrastructure initiatives for the short to medium term. Several projects are already underway and additional opportunities are being actively pursued. Starting with the Phase 1 of TCM expansion project, the Back-of-Terminal, this project will lift the terminal's capacity to 12 million tonnes. This project is making good progress. We are still on track for the hot commissioning at the beginning of 2027. The Richards Bay container handling facility, which will give Grindrod direct access to the quayside in South Africa remains on track and is expected to be commissioned in 2028. On the Rail Open Access, as I've alluded earlier, negotiations are ongoing, and we are in the process of procuring 50 wagons this year, specifically for rail slots. MPDC is planning to commence a dredging campaign. This is in line with its commitment to grow and develop the Port of Maputo as part of the concession extension to 2058. This will be project funded against the balance sheet of the port dredging company of MPDC. The capital dredging program, once completed, will allow the handling of ultra-large container vessels and the full handling of the Cape size vessels at Matola Terminal. This will increase the quayside capability of TCM to handle 170,000 tonne vessel size. This project should be completed by the end of 2027. During the month of February this year, Transnet released a request for qualification to identify and prequalify potential private sector partners for the Richards Bay dry bulk terminal, in short DBT. Transnet seeks to partner with the private sector to modernize and expand DBT, which is one of South Africa's largest dry bulk export terminals. DBT mainly handles chrome, magnetite and coal. The terminal currently handles around 17 million tonnes with the potential of expanding to 27 million tonnes, which is plus/minus 59%, 60% improvement that is expected. Now for nearly 2 decades, Grindrod has been a long-term partner in the Port of Maputo through our investment in MPDC and as a terminal operator in TCM Matola. Over that period, we have transformed a legacy dry bulk terminal, TCM, into a modern, high-performance export gateway that today plays a critical role in the regional trade. At Matola, we have invested in the upgrading of a berth, deepening key walls, modernizing handling equipment and deploying integrated terminal operating systems. The results speak for themselves. Matola has consistently delivered record volumes. For the last 11 years, we moved from moving 4 million tonnes at Matola to now moving 10 million tonnes, which is about 150% increase. This clearly illustrates Grindrod's capacity to invest and operate reliably on large scale. And we would like to demonstrate that in South Africa. Therefore, Grindrod will participate in this RFQ for Richards Bay. In closing, our strategy is clear. We provide our customers with integrated logistics solutions that are both cost effective and efficient. We are delivering strong operational and financial results. We will continue to deliver incremental volumes through operational excellence underpinned by our tenacious employees who are the heartbeat of Grindrod. Our commitment to generating value for both shareholders and stakeholders will continue to be a priority. Thank you. I'll now hand over to Reshmee for the Q&A.

Thank you, Kwazi, and thank you, Fathima. We will now open the floor for questions. [Operator Instructions] We have our first question online. Fathima, I think this one is for you. Thank you, Blessing Phakula from Vunani Securities. What hedging strategies are in place to manage U.S. dollar or foreign currency exposure?

Thank you, Blessing. A really good question. We are fortunate at Grindrod. Our significant and material businesses that are anchored in Mozambique, all operate to functional currency of U.S. dollars. Customer collections are U.S. dollar denominated. And where we do see some foreign currency exposure is where we have our cost base that's denominated in local currencies. But again, these close out very quickly within the working capital cycle. So we do not face significant foreign currency fluctuation in the construct of how our businesses operate. We also ensure that when capital expansion happens, we secure funding in the functional currencies of the entity, which eliminates the need for any functional currency or the volatility that could come through from foreign exchange. Where we are exposed as Grindrod is when we translate into our reporting currencies, we use average exchange rates in the income statement and then, of course, closing rates for the balance sheet. Again, the upside here impacts on the earnings that you report, but you can't really apply hedging strategies for this. It's an accounting construct. In this year, we saw close to ZAR 1 billion worth of impacts from foreign currency on translation. These impacts were not absorbed into our earnings. They were absorbed on balance sheet when we translated those assets. So in closing, very simple construct. Grindrod is naturally hedged. And where we do have exposures, we seek forward covers when needed.

Thank you, Fathima. The next question, thank you, Rowan from Chronux Research. Is there any impact expected from the current Middle East conflict?

Yes. Let me take that one, Reshmee. I think that talks to the geopolitical risk that we have alluded on. And I think it's affecting everyone. And certainly, nowadays, you can't predict what's going to happen. And really, for us, as Grindrod, we tend to focus on what's within our control. We've got our strategy that we are executing. We've got short-term to medium-term infrastructure initiatives that we are highlighting. Safe to say that for us, we are looking at how the commodity prices are behaving as it has a direct impact on the commodities that we are handling. We've already seen at Navitrade, the coal coming to Navitrade increasing because of the slight uptick that we have seen on the coal price. We are already tracking at a run rate of about 2.5 million to 2.8 million tonnes at our Navitrade facility. And even when you look at the inbound volumes that is coming into our Navitrade has increased by over 50% on rail predominantly as well as on road. So that is what we are seeing. But our focus really is what is within our control currently.

Thank you, Kwazi. The next question from Toko, Oystercatcher Investments. Thank you, Toko. I'll perhaps split this for Fathima and Kwazi. The first section, Kwazi, perhaps from your perspective. Please provide an outlook on chrome volumes for the year given government support for the domestic ferrochrome sector. I think the second one, Fathima, perhaps on your side. What is the medium-term margin outlook in each segment over the next 3 to 5 years? Are there any choke points in the current value chain that may attract additional capital or I suspect CapEx? What is the net debt outlook given the strong balance sheet and growth ambitions? And lastly, what is the maximum net debt and EBITDA you can tolerate? Maybe I'll ask Kwazi to start.

Thanks. Obviously, with the discussions that are happening between the producers of chrome so that they can process and only ship ferrochrome, it can only be an uptick for us because ferrochrome also moves through our port of Maputo. However, we know that for every tonne of ferrochrome you produce, you need about 3x of chrome ore for you to process that. So maybe there can be a reduction on chrome ore, but there's sufficient demand in the market for chrome ore. We are currently handling chrome from South Africa and Zimbabwe. And right now, I think even the market share of Zimbabwe chrome ore in our port of Maputo has been hovering around 5% to 7%. And maybe we can see that also becoming strong if the chrome from South Africa subside.

Thank you, Reshmee. Reshmee, you keep me honest here, but I think the first part of the question was around margin stability in our segments. So from a Port and Terminals perspective, we believe that our 44% margin is sticky. You must remember that in the current financial year, we actually consolidated Matola for 7 months in the year. So the first 5 months still came in at 35%. So we've got 5 months' worth of EBITDA uplift that can prevail. But as we've communicated before, our business is cyclical. And the thresholds that we hold for our Port and Terminals business are within a construct of between 35% and 40%, and we stick to those thresholds. From a Logistics perspective, with this business being an enabler to Port and Terminals and with us really moving forward on our integrated solutions strategy, as mentioned, our low end of the threshold is 25%. So it would need to be a really compelling customer opportunity that will allow us to work in breach of those thresholds. But we do have limits in place, and we do believe that those EBITDA margins based on our current business is sustainable. In terms of our net cash, the question was whether we expect the ZAR 699 million to prevail. With the dividend declarations that we have now, that will actually eat up -- both from an ordinary as well as preference dividends, it will eat up ZAR 510 million of that capacity. Overall, long term, depending on when those opportunities that Kwazi mentioned come into fruition, we expect that our net debt position will be depressed as Grindrod. But we are in a growth phase, and that's certainly not abnormal for business planning or in anticipation of growth. I think the last bit of the question was how much we can tolerate in terms of our net debt or EBITDA. We work to tolerating 2x our EBITDA. And again, if we're presented with a really good opportunity, we might work to 2.5x, but we hold ourselves accountable to 2x, again, because of the cyclicality of our business.

Thank you, Fathima. Maybe perhaps to move towards the Logistics segment, Kwazi. We have 2 questions in this regard. The first from Alistair Lea of Coronation. Your logistics businesses have not performed well for a while now. What is the short and medium-term outlook for these businesses. Thank you, Alistair. And the second one from Mike Lawrenson. Thank you, Mike. Congrats on an excellent set of results. What can be done in the short term to optimize resources in Logistics division and improve operating performance without impacting long-term aspirations?

Thanks for that, Reshmee, and thanks for those questions, Alistair and Mike. When you look at our Logistics business, our Logistics business, you've got rail there, you've got our graphite business, you've got container business and then you've also got road transport as well as our ship agency business. Our ships agency business, it's always solid. So there isn't much movement there. Road transport is directly linked with the coal commodity cycle. If coal is down, we'll see road transport also going down. Our graphite business, as also Fathima alluded earlier on, is that we are now moving into a variable contract with our customer after we were earning a fixed fee from the customer. But what is exciting is that the developments in the future is that we are now going to be getting consistent volumes from our graphite customer, the indication of roughly about 30,000 tonnes a quarter, and they are preferring to use our Pemba facility, the dry bulk instead of the Nacala Intermodal facility. So there is an uptick there. On the rail side, where we've seen really a decrease over the last year or so, it's because we deliberately went on an aggressive locomotive refurbishment program. I mean, last year, we refurbished 10 locomotives out of the 13 locomotives that we repatriated from Sierra Leone. And we did that so that we get ready for the Rail Open Access opportunities. But however, even this year, our focus on the rail will be to increase our deployment rate because currently, it's below 50%. And this year, we're going to up that, our local deployment rate, because we have now completed our aggressive locomotive refurbishment program. And then lastly, we've seen the container improving from last year, and we're hoping that it will continue to improve as we move forward. I think I've covered all the segments.

Thank you, Kwazi. The next one from Cobus, Value Capital Partners. Thank you, Cobus. Congrats on a good set of results. What is the expected time line for the PSP opportunity in the Richards Bay dry bulk terminals? Does the Richards Bay dry bulk terminal generate revenue in USD or ZAR, or does it depend on the commodity handled? Kwazi, maybe I'll take the second part on the U.S. dollar and ZAR. And on that Cobus, the terminal, as we understand it, does ZAR. Remember, we are at a request for qualification. So we are indeed in an early stage, and that level of detail has not been made available. Kwazi, if you can assist with the time lines?

Yes. The time line, the RFQ will close in August. And thereafter, then the RFP process will commence. Certainly, from our side, like I alluded earlier on, we are ready for this opportunity. We know that it's still at an early stage, but we've been waiting for this opportunity to come in the market, and we are ready.

Thank you, Kwazi. Perhaps, Fathima, we can go back a little to the debt. [ Jaco from Rena Investments ]. Thank you for your question. Are you perhaps contemplating reducing interest-bearing debt with the cash that you have?

Thank you so much for the question. I think the question is an important one. In fact, it talks to a significant project that we have ongoing at the moment, whereas Grindrod, we're looking to restructure our debt and put it into what's commonly known as a common terms arrangement structure involving all of our main bankers. What this construct will do based on our indicative models that we've put together is reduce our interest burden over the period of our debt, which is lower than 5 years, up to ZAR 40 million over that period triggered by the refinancing. So we are constantly looking at measures on how it is we can be efficient from a cost perspective. But again, how it is we have a construct that would allow us to move forward in terms of our growth plans.

Thanks, Fathima. Kwazi, maybe perhaps this is back to you. Wallace Steyn from Steyn Capital Management. To what extent can you expect the dredging program and Matola upgrade to disrupt volumes in the short term?

That's a good question, Wallace. I think our approach in executing this program has been a modular approach. I mean if you remember, even our Matola expansion program, there was an option of going big, but we decided to do it -- split it into 2 Phase 1, Phase 2, so that we minimize disruption to our operation. So with the capital dredging program, the same approach will be adopted. We don't want to disrupt the ongoing operation in our operations. So we're going to continue taking a modular approach in executing our projects.

Thanks, Kwazi. Fathima, maybe back to you. There's a few questions on CapEx, and it may be worthwhile noting what's in the booklet versus the presentation. The first question is from Matthew, Blue Quadrant. Thank you, Matthew. What is the guidance for CapEx in 2026? And what is that split between H1 and H2? The second is from Alexa of Fairtree. Regarding the CapEx plans you've provided for the years ahead, how much of the CapEx is fixed? And how much wiggle room do you have to back out of certain capital commitments?

Thank you. I think if we go back to the first question, in the booklet that we released on SENS this morning, a capital expenditure and commitment note is included as Note 9 in that booklet. If you look at that booklet, in terms of the future years, we've actually disclosed all of our authorized capital expenditure, which is reflected at approximately ZAR 1.2 billion. A big part of this is skewed toward Port and Terminals. We are currently a go on our Back-of-Terminal project, as Kwazi mentioned earlier, looking to do all the heavy lifting in 2026. Again, with respect to how it plays out between H1 and H2, it's difficult to say. A project is dependent on various eventualities, weather being one of them, engineering milestones, et cetera. But like I said, we are targeting to close this project and do all the heavy lifting in 2026 with commissioning early in 2027. I think the second question was around whether we see the CapEx fixed or is there wiggle room. In the booklet, we also disclosed how much of this authorized CapEx is contracted for. And you will see a significant portion of that is contracted for. Of course, the timing on our cash flows is what we can control depending on how projects advance.

Thanks, Fathima. The next one, Kwazi, I think perhaps from your perspective. Thank you, Bruce, for your question. Kwazi, can you please give us information on the top 2 to 3 destinations for coal exports and chrome exports?

Thank you, Reshmee, for that. When you look at the 16.7 million tonnes that we have moved as Grindrod, of that 16.7 million tonnes, 41% is magnetite and that entire magnetite is destined for China. And 34% has been coal, and that is destined for South Asia as well as some parts of Europe, but predominantly, it's in the Asia part of the world. Chrome is also following the same route, which is mostly China and South Asia. So that is where predominantly our destination of the commodities that we are exporting.

Thank you, Kwazi. The next question from Mike again. Thank you, Mike. I think, Fathima, this is perhaps for you. Working capital release of approximately ZAR 500 million in FY '25 appears to be largely due to ships agency prefunds of ZAR 700 million. Can you provide guidance as to whether this is a once-off or permanent benefit?

Thank you for the question, Mike. As I mentioned earlier, these cash flows come from prefunding that customers give to our ships agency and clearing and forwarding business. And again, it's prefunding because we have deferment arrangements within which we need to pay those funds over to SARS in the form of VAT. That construct is here to stay. It is very critical to how our clearing and forwarding and our ships agency businesses operate. But what is volatile is the quantum of prefunding we can hold. That is entirely customer dependent. So in short, the ZAR 700 million timing and not permanent.

Thank you, Fathima. Having a look, there seems to be no further questions online. With that, I think that concludes our morning presentation. I thank everyone for their insightful questions. We appreciate your support, and we appreciate you joining us this morning. If you have any further questions, please do not hesitate to reach out to Investor Relations. My details are on the slide that is currently being presented. With that, thank you again for your support. Thank you, and have a good day.