2005 interim results august 2005

2005 Interim Results

August 2005

2005 Interim Results2005 Interim Results

August 2005August 2005


August 2005

Interim Results

Sustainability

Agenda


August 2005

2005

504504+63%+63%

2005

444444+73%+73%

Interim

Full year

335335

161161

2003

694694+107%+107%

2004

309309+92%+92%

Trading Profit(Rm)

Interim Results

Headline Earnings Per Share(cents)

251251

100100

2003

618618+146%+146%

2004

256256+156%+156%


August 2005

Analysis of earnings for 6 months to June 2005Analysis of earnings for 6 months to June 2005

HandysizeHandysize

BulkBulk

CarriersCarriers

PanamaxPanamax

BulkBulk

CarriersCarriers

CapesizeCapesize

BulkBulk

CarriersCarriers

ProductProduct

TankersTankers

ChemicalChemical

TankersTankers

ContainerContainer

shipsships

TotalTotal

Average number of ships 15,6 1,3 7,7 6,5 2,0 1,1

Revenue (US$/day) 21,100 21,000 28,700 19,500 12,500 10,000

Cost (US$/day) 7,500 8,750 18,200 12,000 9,100 8,200

Contribution (US$m) 38,8 3,0 14,7 9,0 1,2 0,4 67,1

R / US$ exchange rate R6,22

Contribution (Rm) 417

Other Shipping Operations / Overheads (119)

Forex on US$ exposure 81

Total - Shipping Services 379

Freight and Financial Services 29

Profit 408

Interim Results


August 2005

Assumptions Used PV of long term charter rates on remaining open

charter periods to value charters Used current MV of owned fleet to obtain excess fleet value Forecast MV at end of charters used to value options Unrecognised value of other businesses at estimated MV

R

13

9

18

7

7

54

Current value per share Book NAV Excess of MV over BV of ships Value of charters Value of options Unrecognised value of other businesses

Mark to Market valuation of assetsMark to Market valuation of assets

Interim Results


August 2005

Capital Expenditure during interim periodCapital Expenditure during interim period

Shipping Capital Expenditure 182 Contract prices well below current market values

Freight Capital Expenditure 500

Atlas Trading & Shipping - working capital Shipping / Logistics services for grain / soya

Sheltam Grindrod - 50% To take advantage of rail expansion opportunities

African Portland Industries - 90% Walvis Bay / Maputo Bulk Terminals

Sea Munye Richards Bay Bulk Terminals

Expansion through acquisition of logistical plant and equipment

For example Grindrod J&J Logistics

Increased stake in Rohlig Grindrod From 42,5% to 50%

682

Interim Results

Shipping Capital Expenditure Commitments 1,167 Product tankers

Freight Capital Expenditure Commitments 233

Oreport - 50% Shipping / Logistics services for mining products

Cockett Marine - 50% Worldwide shipping bunker supplier

10 locomotives Tender opportunities

1,400

DescriptionDescription RmRm CommentComment


August 2005

Interim Results

Sustainability

Agenda


August 2005

BCIBCI BPIBPI

BHMIBHMI

0

20,000

40,000

60,000

80,000

100,000

120,000

2004 20052003 2002

0

10,000

20,000

30,000

40,000

50,000

60,000

2004 20052002 2003

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2004 20052002 2003

Sustainability

Baltic IndicesBaltic Indices


August 2005

20052005• Bearish during Q2, normalising in later part of Q3 and Q4

• Chinese production output key to iron ore imports

• Coking coal continues to grow, Steam coal growth to meet power generation needs, increase with industrialisation and urbanisation

Source: Clarksons

Sustainability

The outlook for dry bulk shipping ratesThe outlook for dry bulk shipping rates

20062006• Key driver remains Chinese steel demand

• Continued long term demand growth

• Low growth in developed world economies; moderate growth in developing world economies

2007& beyond2007& beyond• Consistent long-term demand in base commodities

• Ageing fleet profile

• Scrappings to increase with “softer” freight rates

• Add. shipyard capacity expansions to be on-stream 2010 and beyond

• Marginal demand to be higher than marginal supply

• Possible boom in 2009


August 2005

Key trends in product market are favourable for strong tanker marketKey trends in product market are favourable for strong tanker market

• New supply of tankers is known and fixed in the short-run

• Increased demand for refined products in major countries of India, China and United States

• Refining capacity in the US and Europe is essentially at capacity, new refining capacity in the Arabian Gulf that will meet this demand will require long distance transportation

• New restrictions - single hull phase out by 2010

Source: Poten & Partners

Sustainability

The outlook for product tanker shipping ratesThe outlook for product tanker shipping rates


August 2005 Sustainability

ShippingShipping

Locking in shipping incomeLocking in shipping income

Low fleet costLow fleet cost

Expanding fleetExpanding fleet

How the new Grindrod addresses sustainability of earnings,How the new Grindrod addresses sustainability of earnings,given the cyclical nature of Shipping given the cyclical nature of Shipping


August 2005

Shipping :Shipping : Locking in shipping incomeLocking in shipping income

20062006 20072007

By DWT 51 % 36 %

Eg Capesize Bulk Carriers

- Fixed daily earnings

(Current spot = $30 000 pd)

$ 33,000 $ 36,000

Eg Panamax Bulk Carriers

- Fixed daily earnings

(Current spot = $16 000 pd)

$ 21,000 $ 21,000

Total contracted income $ 48 m $ 23 m

Sustainability


August 2005

Owned Fleet (38% of total Grindrod fleet)

eg Product Tankers

- BV R1,043m

- MV R1,671m

Chartered Fleet (62% of total Grindrod fleet)

eg Handysize Bulk Carriers

- 7 year charter rate payable $ 7,500 pd

- current 7 year charter rate $11,500 pd

eg Capesize Bulk Carriers

- 3 year charter rate payable $15,000 pd


eg Panamax Bulk Carriers

- 5 year charter rate payable $ 9,250 pd


Shipping :Shipping : Low fleet costLow fleet cost

Sustainability



Shipping :Shipping : Low fleet cost - Ability to Beat the IndexLow fleet cost - Ability to Beat the Index

eg LB / IVS Handysize Bulkcarrier Pool earnings vs market

Ja

n 0

3

Ma

r 0

3

Ma

y 0

3

Ju

l 0

3

Se

p 0

3

No

v 0

3

Ja

n 0

4

Ma

r 0

4

Ma

y 0

4

Ju

l 0

4

Se

p 0

4

No

v 0

4

Ja

n 0

5

Ma

r 0

5

Ma

y 0

5

Ju

l 0

5

LB / IVS Pool Earnings

Market Earnings

0

5,000

10,000

15,000

20,000

25,000

30,000

US$


August 2005

Shipping :Shipping : Expanding fleetExpanding fleet

CurrentCurrentTo deliverTo deliver

TotalTotal20062006 20072007 20082008 20092009

Owned 11 2 3 2 - 18

On long term charter 29 2 3 - 3 - 1 30

Total 40 4 6 - 1 - 1 48

Sustainability


August 2005

Products / Chemical tankersContainer ships

Handysize - Parcel Service

Handysize - ITAS vesselsCapesize / Panamax

Handysize - LB / IVS Pool

Total fleet = 88 ships18 Owned30 Chartered (long-term)40 Chartered (short-term)

Shipping :Shipping : Expanding fleet - Global positionExpanding fleet - Global position

Sustainability


August 2005

ShippingShipping



Non-shipping expansionNon-shipping expansion

Logistics Logistics

Bulk product tradingBulk product trading

Terminals / RailTerminals / Rail

Sustainability

Expanding fleetExpanding fleet

How the new Grindrod addresses sustainability of earnings,How the new Grindrod addresses sustainability of earnings,given the cyclical nature of Shipping given the cyclical nature of Shipping


August 2005

Shipping currently contributes 90% of Operating Profit

Objective: To be reduced to 67% by 2008

Why can Grindrod successfully expand its non-shipping operations in the face of fierce competition?

• Existing skills base and additional skills acquired

• Partnerships with industry experts

• Complementary to shipping

• Cross marketing of customer base

Non-shipping expansion: Diversification of earnings streamNon-shipping expansion: Diversification of earnings stream

Sustainability


August 2005

Non-shipping expansion: Good Products / Services / Customers / PartnersNon-shipping expansion: Good Products / Services / Customers / Partners

SeaMunye

Sheltam

Atlas

Sustainability


August 2005

Ships AgencyAuto CarriersBoltt GrindrodCMC GrindrodGrindrod PCAGrindrod J&J

Picpack GrindrodRohlig-Grindrod

Ocean AfricaSheltam

IVSUnicorn ShippingSouthern Tankers



Ocean AfricaUnicorn ShippingSouthern Tankers

Cockett Marine

Ships AgencyCMC GrindrodGrindrod J&J

Rohlig-GrindrodOcean Africa

SheltamUnicorn ShippingSouthern Tankers

Ships AgencyAuto CarriersGrindrod J&J

Rohlig-GrindrodOcean Africa

Unicorn ShippingSouthern Tankers

Ships AgencyRohlig-Grindrod

APIOcean Africa

Unicorn ShippingIVS

Southern Tankers

CAPETOWN

PORTELIZABETH

EASTLONDON

MAPUTOJOHANNESBURG

WALVISBAY

Ships AgencyAPI

Ocean AfricaUnicorn ShippingSouthern Tankers

RICHARDS BAY

Ships AgencyKusasa BT

Kusasa LogisticsSea MunyeNavitrade

Rohlig-GrindrodStar BiomassOcean Africa

SheltamIVS

DURBAN



SheltamOreport

Non-shipping expansion: Southern Africa coverageNon-shipping expansion: Southern Africa coverage

Sustainability


August 2005

Other strategic initiativesOther strategic initiatives

Sustainability

Pref share issuePref share issue

Share split Share split

International listingInternational listing

Other strategic initiativesOther strategic initiativesShippingShipping



Non-shipping expansionNon-shipping expansion

Logistics Logistics

Bulk product tradingBulk product trading

Terminals / RailTerminals / RailExpanding fleetExpanding fleet


August 2005

Preference shares will not dilute HEPS, as Grindrod’s target ROE > cost of servicing the preference shares

Have good income base to ensure preference share serviceability

R500m raised from preference share issue to be spent on:

• Growing rail operations

• Public / Private partnerships

• Further non-shipping expansion / possible major acquisitions

• Shipping opportunities in low markets

Other strategic initiatives :Other strategic initiatives : Preference share issuePreference share issue

Sustainability


August 2005

Improve marketability / liquidity

Widen shareholder base

More accessible to new shareholders

Subject to shareholder approval

Sustainability

Other strategic initiatives :Other strategic initiatives : Share splitShare split


August 2005

Being investigated

Will proceed if beneficial to shareholders

Comparable listed shipping company PE ratios = +- 7

Share prices of listed shipping companies generally trade at a premium to NAV

Sustainability

Other strategic initiatives :Other strategic initiatives : International listingInternational listing


August 2005

Ensure high level of contracted / annuity income – R400m

• Contracted shipping income

• Tanker earnings - more stable market

• Freight and Financial services

New investments - Power of Compound – R250m

• Utilisation of cash from operations

• Utilisation of cash from preference share issue

• Target Debt / Equity = 80%

• Target ROE = 20%

Profits from Bulk Product Trading – R100m

Good management of shipping in lower markets – R150m

• Mainly Handysize bulk carriers in more volatile market

Critical success factors and an example of what can be achievedCritical success factors and an example of what can be achieved

Sustainability



Possible Balance Sheet if targets metPossible Balance Sheet if targets met

2004

B/Sheet

CapexPossible

B/Sheet2005 2006 2007

Total Assets (excl Cash) 2,062 +2,250 +1500 +1,700 7,512

Less Other Liabilities (794) (794)

1,268 +2,250 +1,500 +1,700 6718

Equity 850 +675 +800 +925 3,250

Preference Share capital +500 500

Net Debt 418 +1075 +700 +775 2968

1,268 +2,250 +1,500 +1,700 6,718

Debt / Equity 49 % 80 %

2005 interim results august 2005

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