2005 results announcement 2005 results share price comparison fleet shipping markets trading,...

2005

Results

Announcement

2005 Results

Share Price Comparison

Fleet

Shipping Markets

Trading, Freight and Financial Services

Business Plan

Conclusion

Agenda

2005

Results

Announcement

HandysizeHandysizeBulkBulk

CarriersCarriers

PanamaxPanamaxBulkBulk

CarriersCarriers

CapesizeCapesizeBulkBulk

CarriersCarriers

ChemicalChemicalTankersTankers

ProductProductTankersTankers

ContainerContainershipsships

TotalTotal

Average number of ships 17,3 1,7 6,8 2,0 6,5 1,5 35,8

Revenue (US$/day) 18,000 20,600 26,700 11,600 19,800 11,400 19,500

Cost (US$/day) (Incl interest) 7,700 8,600 18,000 10,400 12,400 8,400 10,700

Annual Contribution (US$m) 65,0 7,4 21,6 0,9 17,6 1,7 114,2

Trading Profit on ship sale (US$m) 9,8

Ship Contributions (US$m) 124,0

Ship Contributions (Rm) 786

Other Shipping Operations / Overheads / Forex / Other interest 37

Taxation (30)

Earnings - Shipping (Contribution to Group profits - 89% (2004 – 91%)) 793

Earnings - Trading, Freight and Financial Services 120

Group Overheads / Interest / STC / Pref dividends (62)

Total Earnings Attributable to Ordinary Shareholders 851

Detailed Income Statement

2005 Results

2005

Results

Announcement

20052005RmRm

20042004RmRm CommentsComments

Fixed Assets / Investments 7,114 4,849• Ships / Landfreight expansion / Increased market value,

Goodwill

Current Assets 1,754 449 • Trading / Assets held for sale

Total Assets 8,868 5,298

Equity 6,483 3,833 • Earnings / Pref issue / Increased market value

Net Debt 879 630

Other Liabilities 1,506 835 • Trading / New consol

Total Equity and Liabilities 8, 868 5,298

Balance Sheet - Including Mark to Market Values

2005 Results

Net Debt : Equity 0,14 : 1 0,17 : 1

2005

Results

Announcement

20052005RmRm

Cash From Operations 1,239

Preference Share Capital Raised 488

Dividend Paid (201)

Capex (1,704)

- Ships 612

- Bulk Product Trading 834

- Freight / Other 258

Finance Raised 236

Other 32

Net Cash Flow 90

Cash Flow

2005 Results

2005

Results

Announcement

Ordinary share performanceOrdinary share performance 20052005 20042004 20032003 20022002 20012001 20002000 19991999

No. of ordinary shares in issue m 461,6 454,6 480,7 472,5 496,6 570,8 570,4

Weighted average ordinary shares m 458,5 450,2 477,7 480,9 527,7 570,4 570,4

Headline Earnings per share cents 185,3 121,4 50,2 35,0 24,5 13,1 (11.9)

Earnings per share cents 185,7 121,3 50,2 34,4 24,1 13,0 (11,6)

Cash Earnings per share cents 214,1 164,7 46,1 33,9 31,3 16,3 (7,0)

Dividends per share cents 52,0 35,0 12,0 8,0 5,6 4,0 -

Dividend cover times 3,5 3,4 4,2 4,2 4,1 3,3 -

Cash dividend cover times 4,1 4,7 3,8 4,1 5,3 4,1 -

Net worth per share at market value cents 1,300 841

Key Performance Indicators

2005 Results

2005

Results

Announcement

ProfitabilityProfitability TgtTgt 20052005 20042004 20032003 20022002 20012001 20002000 19991999

Operating margin % 12,4 20,2 14,5 9,6 8,1 8,7 (4,1)

Margin excluding Trading % 24,2 20,2 14,5 9,6 8,1 8,7 (4,1)

Return on net assets % 39,6 39,0 19,9 14,7 11,0 10,6 (2,7)

Return on ordinary s/h funds % 17,5 74,6 75,7 42,4 26,7 20,2 16,1 (15,9)

Return on market value % 17,3

Key Performance Indicators

2005 Results

Leverage and liquidityLeverage and liquidity TgtTgt 20052005 20042004 20032003 20022002 20012001 20002000 19991999

Total liabilities to total shareholders’ interests % 130,2 177,1 125,6 184,5 98,8 155,9 233,5

Interest bearing debt to total shareholders’ interests % 100,0 33,0 53,3 61,0 106,6 29,2 105,5 157,8

Interest bearing debt to total shareholders’ interests net of working capital

% 15,8 86,2 48,1 116,7 51,3 113,6 166,3

Interest cover X 3,0 10,7 9,7 4,2 5,6 3,4 2,0 (0,7)

Cash flow to total liabilities % 20,0 36,8 47,8 22,1 13,3 16,4 11,5 (4,4)

Current ratio 1,0 1,1 0,8 1,0 0,6 1,0 0,9 0,9

2005

Results

Announcement

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005

Results

Announcement


20052005RmRm

20042004RmRm

NAV per Balance Sheet 1,449 833

Value of ships over book value 1,130 273

Value of charters 1,429 1,820

Value of options 583 450

Management valuation of unrecognised value in operations 1,404 450

Market NAV 5,995 3,826

Market NAV per share R 13,00 R 8,40

% of current share price 107 % 94 %

Mark to Market Valuation (See Appendix 1 for detail)

Current P/E ratios- JSE average 15,2

- JSE Transport Index 12,8

- Average of SA peer group 11,4

- Grindrod 7,6

2005

Results

Announcement

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005

Results

Announcement

2006 Number 19,4 2,0 5,4 3,6 5,7 1,8 37,9

Cost (US$/day) 8,000 9,100 20,500 11,600 12,300 8,700 10,900

2007 Number 20,7 2,0 5,1 6,2 6,4 1,0 41,4

Cost (US$/day) 8,000 9,100 20,400 12,100 12,300 8,900 10,900

2008 Number 20,7 2,0 4,5 9,9 7,7 1,0 45,8

Cost (US$/day) 8,000 9,100 19,300 11,500 11,900 8,400 10,600

Contracted Inat 31/12/05

HandysizeBulk

Carriers

PanamaxBulk

Carriers

CapesizeBulk

Carriers

ChemicalTankers

ProductTankers

Containerships

Total

Fleet Summary - Owned + Long Term Charter

Fleet

Current Spot Market Rates (US$/day) 15,000 18,000 46,000 15,500 25,000 12,000 20,500

Number of ships to deliver (included in average number above)

2006 + 1 - - 1 + 3 + 1 - + 4

2007 + 1 - - + 3 + 1 - 1 + 4

2008 + 1 - - 2 + 4 + 2 - + 5

Fleet at end of 2008 21 2 3 11 9 1 47

2005

Results

Announcement

In addition: Earnings from non-shipping operations Reinvestment of cash generated Profit from sale of Marriott

Contracted Income

Fleet

Contracted Outat 31/12/05

HandysizeBulk

Carriers

PanamaxBulk

Carriers

CapesizeBulk

Carriers

ChemicalTankers

ProductTankers

Containerships

Total

2006 Number 7,7 2,0 3,4 1,6 4,2 1,8 20,7

Revenue (US$/day) 11,200 20,600 32,000 14,800 17,400 13,200 17,200

2007 Number 4,3 2,0 2,1 2,0 3,0 1,0 14,4

Revenue (US$/day) 8,600 20,700 35,000 16,700 18,500 9,600 17,400

2008 Number 1,4 1,0 1,4 - 2,0 1,0 6,8

Revenue (US$/day) 11,000 20,700 35,000 - 21,000 9,600 20,100

Contracted Earnings 2006 2007 2008

Owned / Long Term Charters US$ 41 m US$ 28 m US$ 18 m

Contracted ship sale US$ 8 m - -

Total US$ 49 m US$ 28 m US$ 18 m

Ongoing process to keep high % of fleet contracted out Further ship sales Will look for opportunities in lower markets

% of fleet contracted out (by dwt)2006 2007 2008

61 % 41 % 20 %

2005

Results

Announcement

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005

Results

Announcement

Handysize

Shipping Markets

Handysize Bulkcarrier Earnings

No. of ships % Fixed Out Rate / day

2006 19,4 40 % US$ 11,200

2007 20,7 21 % US$ 8,600

2008 20,7 7 % US$ 11,000

Current market at US$ 15,000 per day

Average ContractedRevenue

Average Fleet Cost

Comments:

Least affected by recent Chinese New Year but has still recovered positively

Weaker summer predicted but 2006 rates expected to vary between US$ 12,000 - US$ 17,000 per day

Old fleet - scrapping will have to take place

Supply / Demand fundamentals are favourable

SA parcel service benefits in lower markets, therefore is an additional hedge

Ships redeliver soon, therefore should get higher earnings

2005

Results

Announcement

Panamax

Shipping Markets


Average Fleet Cost



2006 2 100 % US$ 20,600

2007 2 100 % US$ 20,700

2008 2 50 % US$ 20,700

Comments:

No exposure for some time

2005

Results

Announcement

Capesize

Shipping Markets


Average Fleet Cost



2006 5,4 63 % US$ 32,000

2007 5,1 41 % US$ 35,000

2008 4,5 31 % US$ 35,000

Comments:

Expected to remain volatile throughout 2006 (between US$ 25,000 and US$ 50,000 per day with occasional spikes)

Main driver still Chinese iron ore / coal

Supply still tight – new deliveries will take up consumption growth

Will look for further cover

2005

Results

Announcement

45 000 DWT PRODUCT TANKERS 1 YEAR CHARTER RATES

0

5000

10000

15000

20000

25000

30000

35000

Jan-

01

Apr

-01

Jul-0

1

Oct

-01

Jan-

02

Apr

-02

Jul-0

2

Oct

-02

Dec

-02

Mar

-03

Jun-

03

Sep

-03

Dec

-03

Mar

-04

Jun-

04

Sep

-04

Dec

-04

Mar

-05

Jun-

05

Sep

-05

Dec

-05

Products

Shipping Markets

Comments:

Continued demand, especially in China

Phase out of single hull tankers

Implementation of Marpol Annex II requirements for the carriage of vegetable oils

Order books full through to 2009 / 2010

Newbuilding prices (to 2009 / 2010) and period rates show no real prospect of easing, indicating optimistic view for the future


2006 5,7 74 % US$ 17,400

2007 6,4 47 % US$ 18,500

2008 7,7 26 % US$ 21,000


Average Fleet Cost


2005

Results

Announcement

$10

$12

$14

$16

$18

$20

Jan-

89Ja

n-90

Jan-

91Ja

n-92

Jan-

93Ja

n-94

Jan-

95Ja

n-96

Jan-

97Ja

n-98

Jan-

99Ja

n-00

Jan-

01Ja

n-02

Jan-

03Ja

n-04

Jan-

05

$8

$10

$12

$14

$16

$18

$20

Jan-

89Ja

n-90

Jan-

91Ja

n-92

Jan-

93Ja

n-94

Jan-

95Ja

n-96

Jan-

97Ja

n-98

Jan-

99Ja

n-00

Jan-

01Ja

n-02

Jan-

03Ja

n-04

Jan-

05

$8

Chemicals

Shipping Markets

Comments:

Demand is expected to grow at between 5 - 6 % over the next 5 years

Chemical exports out of the Arabian Gulf will grow significantly over the next 5 years (increase in tonne-miles)

Implementation of new regulations with respect to vegetable oils will contribute to the tightening of the supply and demand situation

Single hull phase out will contribute to a tightening of supply

Shipyards are full through to 2009 and to a growing degree in 2010

The cost of newbuildings is high and shows a firming trend

Product markets are expected to remain firm, fueled by high import demand from the USA and China


2006 3,6 44 % US$ 14,800

2007 6,2 32 % US$ 16,700

2008 9,9 - -

Current average spot earnings on Grindrod chemical tankers = US$ 15,500 per day


AverageFleetCost

2005

Results

Announcement

2005 Results

Share Price Comparisons

Fleet

Shipping Markets


Business Plan

Conclusion

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005

Results

Announcement

Bulk Product Trading


Provide procurement, logistical and shipping services to end users

Agricultural and mining commodities + shipping bunker fuel

Brand names

Atlas

Oreport

Cockett

Mainly back-to-back trades - limited open positions

High level of risk management

Looking to expand to new markets

2005

Results

Announcement

Landfreight Logistics


Provision of terminal / warehousing, transport, logistical services and ships agency

Operations:

African Portland Industrial Holdings Limited

Terminal / warehousing operations

Transportation -Road & Rail

LogisticalServices

ShipsAgents

2005

Results

Announcement

Landfreight Logistics


Continued expansion through:

- Terminals

- Road

- Rail

- Logistical Services

- Organic growth / Bedding down of new acquisitions

- Minimal goodwill paid, therefore once bedded down will perform

But:

- Will be done judiciously

- NAV based - no large goodwill

BEE will be key

Strengthening of management team

Financial Services

Grow banking

2005

Results

Announcement

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005

Results

Announcement

Business Plan

Today's financial position

- Good earnings

- Strong balance sheet

- Good cash flow

- PE of 7,6 vs Transport Index of 12,8

- Share price 107% of market NAV

Today’s commercial position:

- Low cost, expanding fleet – 61% fixed for 2006

- Handysize bulk carriers – good margin / lower margin ships return from charter in 2006

- Capesize bulk carriers – good margin / 63% fixed out for 2006

- Panamax bulk carriers – fixed out for good margins

- Product / Chemical tankers – high market / ships fixed out at good margins / some ship sales to lock in profits

2005

Results

Announcement

Business Plan

Sustain growth in earnings

- Cross section of shipping markets

- Fix in annuity income

- Ship sales

- Develop less cyclical businesses / Target 25% of 2006 earnings

Capex

- R1,5 bn committed over next 3 years

- R4 bn available for additional capex over next 3 years

• Will buy back shares if PE ratio remains attractive

• Increase in non shipping business to 1/3 of profits

• Restocking of fleet in lower markets

• Develop Grindrod Bank to much larger player

Position could be enhanced if:

- Shipping markets strengthen

- Rand weakens

- Really good buys come along

2005

Results

Announcement

Business Plan

Power of Compound example

Annual earnings assuming 10%

ROI after interest (Rm)

2,0002,000

127127

2006

1,0001,000

335335

2007

1,0001,000

483483

2008

538538 627627

338338

2,538

1,6271,338

Committed capex(Rm)

Additional annual capex to get to 80%

gearing(Rm)

Excludes possible R3bn of additional borrowings against full market value of assets

2005

Results

Announcement

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005 Results


Fleet

Shipping Markets


Business Plan

Conclusion

2005

Results

Announcement

Conclusion

It will be calmer waters with a bigger ship for a while

See no reason to rush it for the sake of trying to grow earnings at the pace of the past

No doubt that Grindrod will see super growth again in time when shipping markets turn, the Rand shows some weakness, and the power of compound works from a very good base

2005

Results

Announcement

2005

Results

Announcement

R m

NAV per Balance Sheet 1,449

Less Book Value of ships (1,640)

Add Market Value of ships Average market value

Product Tankers US$ 45 m

Handysize Bulk Carriers US$ 25 m 2,770

Add Present Value of charters No. of ships Period of charter remaining

Projected Spot Earnings PV @ 8%

Handysize Bulk Carriers 18 8 yrs US$ 11000 US$ 124 m

Panamax Bulk Carriers 2 9 yrs US$ 15,000 US$ 25 m

Capesize Bulk Carriers 7 4 yrs US$ 24,000 US$ 28 m

Chemical Tankers 6 13 yrs US$ 20,000 US$ 28 m

Product Tankers 2 6 yrs US$ 14,900 US$ 21 m US$ 226 m 1,429

Add Present Value of purchase options at end of charter No. of ships Average option

priceExpected market

value PV @ 8%

Handysize Bulk Carriers 15 US$ 9,5 m US$ 14,3 m US$ 39 m

Panamax Bulk Carriers 2 US$ 13,1 m US$ 17,3 m US$ 4 m

Chemical Tankers 5 US\$ 29,0 m US$ 35,8 m US$ 31 m

Product Tankers 2 US$ 28,0 m US$ 37,5 m US$ 18 m US$ 92 m 583

Management valuation of unrecognised value in operations 1,404

Market NAV 5,995

Market NAV per share R 13

Mark to Market Valuation

Appendix 1

2005 results announcement 2005 results share price comparison fleet shipping markets trading,...

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