Grindrod Ltd Unsp/Adr

Good morning and welcome to Grinrod's 2025 Annual Financial Results presentation. My name is Reshmi 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 Grinrod. A special welcome to our non-executive 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, our CEO, Quasima Basso, and Fatima Ali, 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. With that, I hand over to Kwazi.

Thank you, Rashmi. 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 1.4 billion rent TCM acquisition, which is now under our full control. We successfully executed an exit from our shareholding in our non-strategic marine fuel business, securing cash of R102 million. We exited our exposure to KwaZulu-Natal North Coast property and secured R500 million in the process. Now let's take a closer look at the macroeconomic environment. As I've 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 a 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 year. 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 melting 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 Green Road. Our focus on driving a safe working environment for our employees through Pasopa Safety R&S campaign resulted in Green Road achieving a year of zero 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 2.3 billion rand, translating into headlines growth of 17% to 1.2 billion rand. We generated 2 billion rand of cash from operations, a decent EBITDA cash conversion rate of 1.3, and we held 3.9 billion rand in cash at year end. Consistent with our dividend policy, the group has declared an ordinary dividend of 25.2 cents per share for the six-month period. This brings the total ordinary dividend for the year to 48.2 cents per share, marking a 21% increase. We have received more than one billion rand from NANCO assets for the year. The board has subsequently approved a further once-off special dividend of 43 cents per share for the six-month period. As a result, 49% of NANCO proceeds have been returned to shareholders. Between ordinary and special dividend, Green Road has retained 476 million rand to shareholders for the six month period. Bringing the total number returned to shareholders for the full year to 862 million rand. Now let us look at our ports 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 Magdolam, Conclusion of strategy buy-up of control of McDonald Terminal was key in enabling Green Road 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 tons, marking the highest throughput in its history. This performance is at 83% of the committed capacity expansion to 12 million tons 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 terminal business. This segment gives GreenRod the ability to offer an integrated logistic solution to our customers, a solution that is cost-effective and efficient. This ability remains GreenRod's market differentiator. Performance in ships agency and clearing forwarding was soft. Our graphite operations slowed down last year, but recent market developments point to a recovery in this business. We have substantially concluded our locomotive refurbishment program we announced previously, which we manage 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 Fatima to share more insight on financial performance.

Thank you, Kwasi. Good morning, everybody, and a warm welcome from my side. It's certainly a pleasure this morning to deliver the Grinroth'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 Metolla terminal with volumes up 22% as Kwasi 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 non-trading items on screen at $927 million. The Mutola buy-up contributes $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 non-trading items in terms of a net gain of $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 non-trading items, as well as withholding tax effects, which were elevated in the current year following repatriation of dividends from Metola post the buy-up. That's how we arrive at the 31%. Overall net profit attributable to our ordinary shareholders are reported at 2.1 billion, 559% up on the prior year. And our core headline earnings at 1.2 billion, 17% up on the prior year. Our core headline earnings in cents per share closed at 176.5%. If we look at our segmental performance, Port and Terminal is doing really well for us. Revenue and EBITDA margins up 20% and 44% respectively. Again, big contributor being Mottola. Mottola has been transformational for Greenrod 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 Metolla 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 $1.1 billion with strong return on equity at 24%. Our port and terminals business remains a US 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. Ship's 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 Kwasi 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 $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 MOTOLA acquisition, we have re-presented the December 2024 balance sheet. This will allow better comparability by us notionally including 100% of MOTOLA as it reflects in the December 2025 numbers. We spent $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 Metolla acquisition. The remaining $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 Metola 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 Walford's Bay. Aside from this, other capital acquisitions this year related to stay-in 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 Metolla 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 pre-funding that came through from our fuel customers in both the ship's 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 Metrella 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 recognise deferred tax liabilities linked to the intangible assets that we brought on book and that I mentioned earlier. Overall, we close this financial year with Grinrod's balance sheet healthy and stable. Our asset base is now rooted firmly to just our core business, with all material non-core assets materialized. If we look at how our net debt progressed in this financial year, we closed last year with net debt reported at $1.5 billion. This was post us ring fencing funds of $1.1 billion in anticipation of closing the Matoala transaction. Together, this gives us a net restated opening net debt position of $413 million. We raised in excess of $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 1.3 times EBITDA, certainly a record for us looking back into a 10-year history for Greenrod. 27% of this cash was spent towards our interest, tax and dividend obligations. On acquisition of Metolla, we brought net cash on book of $316 million. This comprised of both cash on hand at the time, offset by lease liabilities that were on book. We put $1.4 billion away in terms of capital expenditure. Again, this largely linked to the Mutola transaction where we spent $1.1 billion as mentioned earlier. Proceeds on our disposal also amounting to $1.1 billion and proceeds from non-core taking up 93% of that amount. Our overall non-cash movements amounted to $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 $699 million. If we look at what this comprises... Our total debt moved from 2.9 billion to 3.2 billion, 10% up. Our borrowings reduced, as indicated earlier, from 2 billion to 1.4 billion. We saw net repayments in the year of 710 million. we saw 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 1.1 billion. Our overdraft movements are linked to timing of cash flows. From a cash perspective, we closed the year on $3.9 billion. Our $1.4 billion, including ring fence cash of last year, give us a net increase in cash of $1.4 billion in 2024. This resulting in $700 million arising from the Motola acquisition and $700 million stemming from the timing of cash flows linked to the pre-funding in the Ships Agency and clearing and forwarding. We closed this year with Grinrod's balance sheet largely ungeared, and we sit with debt capacity that approximates 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 Kwasi. Thank you.