unaudited interim results and dividend announcementgrindrod.co.za/uploads/documents/2/booklet...

UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2008

Headline earnings per share up 95%Interim ordinary dividend up 100%

Strong balance sheet and cash flows

2 2008 UNAUDITED INTERIM REPORT AND DIVIDEND ANNOUNCEMENT

CONDENSED INCOME STATEMENT

Unaudited Unaudited Audited30 June 30 June 31 December

% 2008 2007 2007Change R000 R000 R000

Revenue 93 13 533 860 7 003 294 17 077 359

Trading profit 92 1 435 909 749 083 1 583 707Depreciation and amortisation (111 995) (80 232) (217 920)

Operating profit before interest and taxation 1 323 914 668 851 1 365 787Non-trading items 1 628 6 570 3 508Interest received 54 035 46 241 109 324Interest paid (136 819) (104 665) (239 849)

Profit before share of associates’ profit 1 242 758 616 997 1 238 770Share of associates’ profit before taxation 33 529 32 663 62 953

Profit before taxation 1 276 287 649 660 1 301 723Taxation (123 688) (36 739) (15 803)

Profit for the year 1 152 599 612 921 1 285 920

Attributable toOrdinary shareholders 94 1 104 515 570 507 1 195 293Preference shareholders 45 283 36 535 76 872

Equity holders of the parent 1 149 798 607 042 1 272 165Minority Interest 2 801 5 879 13 755

1 152 599 612 921 1 285 920

Exchange rates (R/US$)Opening exchange rate 6,89 7,00 7,00Closing exchange rate 7,86 7,06 6,89Average exchange rate 7,67 7,18 7,07

RECONCILIATION OF HEADLINE EARNINGSProfit attributable to ordinary shareholders 1 104 515 570 507 1 195 293Adjusted for: (1 628) (6 570) (3 516)

IAS 38 Impairment of Goodwill 2 716IAS 38 Impairment of Intangible Asset 2 843IFRS 3 Negative Goodwill Realised (144) (7 026)IAS 16 Impairment of Plant and Equipment 3 420IFRS 3 Net Loss on Disposal of Investments (2 758) 399 2 058IAS 16 Net Loss/(Profit) on Sale of Plant and Equipment 1 130 (6 802) (7 519)Other Non-trading Items (23)Total Tax Effects of Adjustments (8)

Headline earnings 1 102 887 563 937 1 191 777

32008 UNAUDITED INTERIM REPORT AND DIVIDEND ANNOUNCEMENT


% 2008 2007 2007Change R000 R000 R000

ORDINARY SHARE PERFORMANCENumber of shares in issue less treasury shares (000’s) 452 558 453 449 455 459Weighted average number of shares

on which earnings per share are based (000’s) 454 237 452 604 452 934Diluted weighted average number of shares on

which diluted earnings per share are based (000’s) 461 618 463 546 462 417Earnings per share

Basic (cents) 93 243,2 126,1 263,9Diluted (cents) 94 239,3 123,1 258,5

Headline earnings per shareBasic (cents) 95 242,8 124,6 263,1Diluted (cents) 238,9 121,7 257,7

Distribution/dividends per shareInterim (cents) 100 68,0 34,0 34,0Final (cents) – – 44,0

Distribution/dividend cover (times) 3,6 3,7 3,4

DIVISIONAL ANALYSIS OF EARNINGSRevenueShipping 2 919 071 1 804 836 3 683 812Trading 9 447 090 4 478 829 11 334 072Freight Services 1 129 282 688 349 1 984 647Financial Services 38 417 31 280 74 828

13 533 860 7 003 294 17 077 359

Trading profit(Earnings before interest, taxation, depreciation and amortisation)Shipping 1 182 225 558 315 1 135 143Trading 48 768 45 060 119 223Freight Services 193 868 128 408 290 544Financial Services 11 048 17 300 38 797

1 435 909 749 083 1 583 707

Operating profit before interest and taxationShipping 1 139 775 527 419 1 034 429Trading 45 053 44 240 112 332Freight Services 128 883 80 462 181 471Financial Services 10 203 16 730 37 555

1 323 914 668 851 1 365 787

Attributable incomeShipping 991 795 478 539 982 488Trading 20 091 29 338 63 277Freight Services 81 401 48 929 113 306Financial Services 11 228 13 701 36 222

1 104 515 570 507 1 195 293



2008 2007 2007R000 R000 R000

Ships, property, terminals, vehicles and equipment 3 599 081 2 577 406 3 046 945Intangible assets 585 977 409 860 521 063Investments in associates 275 041 237 114 236 420Deferred taxation 99 112 97 485 138 069Financial assets and other investments 399 254 190 052 162 250Loans and advances to bank customers 902 592 766 313 965 964Liquid assets and short-term negotiable assets 59 268 72 715 228 938Bank balances and cash 1 565 781 1 223 269 1 254 611Non-current assets held for sale 441 264 179 439 293 547Other current assets 4 119 015 2 233 323 3 080 253

Total assets 12 046 385 7 986 976 9 928 060

Shareholders’ equity 4 606 719 3 103 526 3 378 332Minority interest 64 325 5 139 60 643

Total equity 4 671 044 3 108 665 3 438 975Deferred taxation 37 015 49 305 33 224Provision for post retirement medical aid 72 955 65 976 72 819Deposits from bank customers 1 257 798 783 856 1 397 073Interest-bearing debt 2 714 348 2 244 742 2 306 187

8 753 160 6 252 544 7 248 278Non-current liabilities associated with assets held for sale 43 477 – 90 573Other liabilities 3 249 748 1 734 432 2 589 209

Total funding 12 046 385 7 986 976 9 928 060

Net worth per ordinary share – at book value (cents) 868 520 590Net debt:equity ratio 0,14:1 0,25:1 0,23:1Capital expenditure 1 085 314 737 172 1 822 793Capital commitmentsAuthorised by directors and contracted for 2 048 053 2 633 363 2 283 959

Due within one year 912 310 1 501 695 1 081 564Due thereafter 1 135 743 1 131 668 1 202 395

Authorised by directors not yet contracted for 1 356 641 229 358 715 178

CONDENSED BALANCE SHEET



2008 2007 2007R000 R000 R000

Cash generated from operations 1 341 930 731 830 1 529 617Working capital movements 3 154 (191 291) (261 745)Net interest paid (82 784) (40 137) (130 525)Net dividends paid (246 749) (206 519) (330 707)Taxation paid (75 292) (26 309) (46 721)

940 259 267 574 759 919Net bank advances to customers and other

short-term negotiables (61 718) (125 161) 171 301

Net cash flows from operating activities 878 541 142 413 931 220

Acquisition of ships, property, terminals, vehicles and equipment and investments (1 085 314) (737 172) (1 822 794)

Proceeds from disposal of ships, property, terminals,vehicles and equipment and investments 298 024 441 862 714 473

Intangible assets acquired (24 192) (5 141) (5 491)

Net cash flows used in investing activities (811 482) (300 451) (1 113 812)

Repurchase of ordinary share capital (150 890) – –Proceeds from issue of ordinary share capital 2 385 3 033 6 509Long-term borrowings raised 404 790 62 203 484 111Payment of capital portion of long-term borrowings (263 094) (249 799) (411 519)Short-term loan raised 41 295 128 467 92 563

Net cash flows from financing activities 34 486 (56 096) 171 664

Net increase in cash and cash equivalents 101 545 (214 134) (10 928)Cash and cash equivalents at beginning of the year 711 739 732 055 732 055

Difference arising on translation 55 761 3 306 (9 388)

Cash and cash equivalents at end of the year 869 045 521 227 711 739

CONDENSED CASH FLOW STATEMENT


Share capital, Foreignpremium currency

and equity Hedging translationcompensation reserve reserve

R000 R000 R000

Balance as at 31 December 2006 514 994 (72 920) 53 080 Share options exercised 6 509Share-based payments 3 360Financial instrument hedge (610 733)Hedge reserve releases 318 066 Foreign currency translation adjustments (23 219)Foreign currency translation realised (9 085)Transfer from accumulated profitMinority interest acquiredProfit attributable to shareholdersDistribution of share premium (325 923)Dividends paid

Balance as at 31 December 2007 198 940 (365 587) 20 776

Share options exercised 2 385Share-based payments 1 138Financial instrument hedge 44 512Repurchase of shares (150 890)Foreign currency translation adjustments 431 719 General risk reserve releasedMinority interest acquiredProfit attributable to shareholdersDividends paid

Balance as at 30 June 2008 51 573 (321 075) 452 495

STATEMENT OF CHANGES IN EQUITY


AttributableGrindrod Bank to equity

general risk Accumulated holders of Minority Totalreserve profit Grindrod interest equity

R000 R000 R000 R000 R000

100 2 329 289 2 824 543 (1 755) 2 822 7886 509 6 5093 360 3 360

(610 733) (610 733)318 066 318 066(23 219) 18 (23 201)(9 085) (9 085)

5 425 (5 425) – –– 48 625 48 625

1 272 165 1 272 165 13 755 1 285 920(325 923) (325 923)

(77 351) (77 351) (77 351)

5 525 3 518 678 3 378 332 60 643 3 438 975

2 385 2 3851 138 1 138

(368) 44 144 44 144(150 890) (150 890)431 719 745 432 464

(5 525) 5 525 – –– 136 136

1 149 798 1 149 798 2 801 1 152 599(249 907) (249 907) (249 907)

– 4 423 726 4 606 719 64 325 4 671 044


OVERVIEWGrindrod Limited generated earnings of R1 104,5 million for the six months ended 30 June 2008 (H1 2007: R570,5 million),up 94% on the corresponding period of the prior year, while headline earnings per share increased by 95% to 242,8 centsper share (H1 2007: 124,6 cents). Interim ordinary dividend per share has increased by 100% to 68 cents (H1 2007:34 cents). The Board also declared a preference share dividend of 589 cents per share (H1 2007: 498 cents). Return onordinary shareholders’ funds was 68% (H1 2007: 52%).

Divisional earnings H1 2008 H1 2007 Comments

Shipping (US$ million)Profit from owned and long-term chartered ships 122,2 67,9 Strong shipping markets; good

contractsProfit/(loss) from ship operating activities 10,6 (7,1) Improved Parcel Service performanceProfit from ship sales 25,7 19,8Overheads/forex/other interest/tax/preference dividends (29,2) (13,9) Increased taxation and interest charge

129,3 66,7

Total group (R million)Shipping 992 479Trading 20 29 Strikes in ArgentinaFreight Services 81 49Financial Services 11 14 19% sold to BEE/management

Attributable earnings 1 104 571

Shipping continued to be the major profit contributor at 90% of total earnings, 107% up on the corresponding period. Theseresults were achieved against the backdrop of a continued buoyant shipping market and substantial demand for commodities.Drybulk markets continue to be firm and the tanker market has performed well.

Freight Services experienced good growth in earnings of 65%. Trading did not perform as expected, but is positioned for astrong second half. Financial Services results were impacted by the reduced shareholding, declining equity markets and theslowdown in local economic activity.

COMMENTS

2000 2001 2002 2003 2004 2005 2006 2007 June2008

2,03,4

5,64,2

9,710,7

15,9

10,5

16,0

INTEREST COVER(times cover)

16,1

2000 2001 2002 2003 2004 2005 2006 2007 June2008

20,226,7

42,4

75,7 74,6

57,250,8

68,0

RETURN ON ORDINARY SHAREHOLDERS’ FUNDS(percentage)


H1 2008 H1 2007Balance sheet* R million R million Comments

Ships (owned and chartered at market value) 17 076 11 968 Higher ship valuesOther fixed assets/investments 2 581 1 800 Increased terminal infrastructure and

shareholding in MPDC Bank loans, advances and liquid assets 962 839Current assets 4 119 2 234 Increased volumes and prices in

Trading and Freight Services

Total assets 24 738 16 841

Equity 14 320 8 702 Higher ship values/retained earningsNet book debt 667 777Capitalised charter obligations 5 133 4 729Bank deposits 1 258 784Other liabilities 3 360 1 849 Increased volumes and prices in

Trading and Freight Services

Total equity and liabilities 24 738 16 841

Adjusted debt:equity 0,05 0,09

(*adjusted for capitalised chartered fleet and ship revaluations)

Note: This excludes any revaluation of other businesses

Capital expenditure and commitments

Capital expenditure Capital commitments

Six months Six monthsR million to June to DecemberDescription 2008 2008 2009 2010 Thereafter Total

Ships 652 674 1 045 657 456 2 832Property 92 144 146 10 – 300Terminals 38 80 – – – 80Vehicles and

equipment 102 114 1 1 4 120

884 1 012 1 192 668 460 3 332Investment in

new businesses 201 72 – – – 72

Total 1 085 1 084 1 192 668 460 3 404

These commitments will be funded by cash resources, cash generated from operations and bank financing facilities.

Subsequent to 30 June 2008 two additional handysize bulk carrier newbuildings were authorised. They have not yet beencontracted.


CASH FLOW AND BORROWINGSCash generated from operations reflected a growth of 83% over the equivalent 2007 period to R1 342 million. Cash outflowincluded capital expenditure of R1 085 million and dividends of R247 million during the period. This resulted in net borrowingsincreasing from R1 051 million at 31 December 2007 to R1 149 million at 30 June 2008. The higher funding, combined withhigher interest rates, increased the net interest charge by 42% to R83 million.The group’s debt:equity ratio decreased from23% to 14% and remains well within the group’s optimal gearing benchmark of 100%.

The strong balance sheet, conservative gearing and high cash generation provides the platform for the group to continue toseek investment opportunities.

SHAREHOLDERS’ EQUITYShareholders’ equity increased from R3 378 million at 31 December 2007 to R4 607 million due to the good earnings andthe effect of the weaker Rand/US Dollar exchange rate.

During the period, the group repurchased 5 751 063 ordinary shares at an average price of R24,92 and a total of 100 000preference shares at an average price of R95,35. The treasury shares are held by a subsidiary.

SHIPPINGShipping achieved revenue growth of 62% and earnings growth of 107%. Margins increased from 29% to 39%, mainly dueto higher contracted and spot earnings. In addition, ship sale profits of R201 million were achieved versus R142 million inthe corresponding period. The softer Rand generated a foreign exchange translation profit of R80,6 million (H1 2007:R4,3 million profit).

H1 2008 H1 2007 PercentageIncome statement R million R million growth (%) Comments

Revenue 2 919 1 805 62EBITDA 1 182 558 112– tankers 274 257 7 Strong shipping markets, good – drybulk 908 301 202 contracts and improvedOperating income 1 140 527 116 performance of Parcel ServiceAttributable income 992 479 107Margin (%) 39 29 34

23%

77%

EBITDA H1 2008

46%

54%

EBITDA H1 2007

Tankers

Drybulk

COMMENTS continued


An analysis of the profit by ship category is as follows:

H1 H1Bulk carriers Tankers 2008 2007

Handysize Panamax Capesize Mid-range Small Chemical Total Total

Average number of owned/long-term chartered ships 20.2 2.0 4.4 7.0 0.7 4.0 38.3 37.5

Average daily revenue (US$) 30 700 20 900 47 000 21 000 8 200 19 300 28 700 21 000Average daily cost (US$) 7 500 9 500 20 500 13 800 8 000 14 600 10 900 10 900Profit (US$ million) 84,8 4,0 20,8 9,2 – 3,4 122,2 67,9

(US$ million)Profit from owned and chartered ships 122,2 67,9Profit from ship operating activities 10,6 (7,1)Profit from ship sales 25,7 19,8Overheads (12,9) (4,5)Profit share expense (6,0) (5,1)Foreign exchange profit 10,5 0,6Taxation (10,6) (0,3)Other interest/preference dividends (10,2) (4,6)

Attributable earnings 129,3 66,7

Converted to Rand (million) 991,8 478,5

Average daily revenues increased by 37% over 2007. The high level of contract cover did, however, result in the group notfully benefiting from the high spot rates during the period. Although drybulk markets have shown some seasonal softeningover the last few weeks, they still remain at levels well above the group’s achieved revenue.

The strong markets have enabled the group to secure substantial contracted profits at very favourable rates, while benefitingfrom high spot rates for the uncovered positions. Management will continue to add to contract cover for 2009 and beyond.

The Parcel Service, which is included in ship operating activities, completed the renewal of contracts of affreightment. These arenow predominantly market linked, which has removed volatility and consequently led to improved earnings in the first half of 2008.

Overheads in the previous period were reduced by the release of a provision.

The IVS profit share arrangement reflected in the results has been “repurchased” with effect from 1 January 2008. The costof this, which will be expensed over the next two to three years, will be substantially less than the previous arrangement.

The tax expense was substantially higher due to the profits of the South African based Parcel Service and the early recognitionof certain deferred tax charges as a result of an internal restructure.

The following transactions were concluded during the period:

Ships delivered Ships sold/redelivered Contracted sales

1 x 40 000 dwt products tanker 2 x 12 800 dwt products tankers (sold) 1 x 6 155 dwt products tanker

2 x 12 800 dwt products tankers 1 x 28 000 dwt handysize bulk carrier (chartered ship redelivered and sold)

1 x 171 000 dwt capesize bulk carrier (chartered ship redelivered)


FLEET OVERVIEW (owned and long-term chartered ships)

Contracted in at Bulk carriers Tankers30 June 2008 Handysize Panamax Capesize Mid-range Small Chemical Total

2008 (second half) Number (average) 18.0 2.0 4.0 8.0 1.1 4.0 37.1Cost (US$/day) 8 700 9 400 19 800 14 300 3 400 14 800 11 600

2009 Number (average) 17.5 2.0 3.0 9.4 3.5 4.0 39.4Cost (US$/day) 8 800 9 400 20 700 14 600 9 300 14 700 11 800

2010 Number (average) 18.3 2.0 3.0 10.5 6.6 4.0 44.4Cost (US$/day) 8 700 9 400 20 600 15 300 10 300 14 700 12 000

2011Number (average) 19.6 2.0 3.5 11.2 9.0 4.5 49.8Cost (US$/day) 8 500 9 400 26 300 15 100 10 500 14 700 12 200

2012Number (average) 21.0 2.0 3.0 11.0 9.0 5.0 51.0Cost (US$/day) 8 200 9 900 27 800 15 200 10 600 14 600 12 000

Current fleet 18 2 4 8 1 4 37*

Net number of ships to deliver2008 (second half) – – – 1 – – 12009 – – (1) 1 3 – 32010 1 – – 2 4 – 72011 2 – – (1) 1 1 32012 – – – – – – –Fleet at end of 2012 21 2 3 11 9 5 51**

* owned fleet 8; chartered fleet 29 (of which 25 have purchase options)** owned fleet 21; chartered fleet 30 (of which 28 have purchase options)

The group’s current core fleet of 37 ships increases to 51 ships by the end of 2012.

In addition, two 4 790 dwt bunker tankers were delivered and deployed in Durban and Cape Town shortly after the close ofthe half year.

COMMENTS continued


Market value of fleet R million Comments

Book value of owned fleet 2 293Excess of market value of owned fleet over book value 1 753 Indicative ship values obtained in consultation

with reputable ship brokers“Book value” of charters with purchase options 5 133 “Book value”= PV at 6% of capital element (i.e.

excluding running costs) of charter commitmentsand purchase option price. Yen options valued atclosing rate

Excess of market value over “book value” of charters 7 580 Indicative ship values obtained in consultationwith purchase options with reputable ship brokers Market value of other long-term charters and contracts 317 Differential between market rates and Grindrod

charter/contract rates; PV at 6%

17 076

Notes:1. Based on June 2008 closing Rand/US Dollar exchange rate of R7,86.2. The above excludes the value in respect of the Parcel Service.

CONTRACTED PROFITSAs at 30 June 2008, 64% of the owned and chartered fleet is contracted for the remainder of 2008, 51% for 2009 and 35%for 2010, as per the table below:

Contracted out at Bulk carriers Tankers30 June 2008 Handysize Panamax Capesize Mid-range Small Chemical Total

2008 (second half)Number (average) 7.8 2.0 3.2 5.9 1.1 1.9 21.9Revenue (US$/day) 21 700 20 800 35 600 20 400 7 900 19 200 22 400

2009Number (average) 3.8 2.0 2.6 6.2 1.5 1.7 17.8Revenue (US$/day) 23 500 20 800 42 000 21 800 14 800 21 000 24 300

2010Number (average) 0.9 2.0 2.4 5.9 1.5 0.8 13.5Revenue (US$/day) 20 200 23 400 40 900 21 900 14 800 21 000 24 600

2011Number (average) 0.7 2.0 2.2 2.9 1.1 – 8.9Revenue (US$/day) 18 300 24 000 43 400 21 900 15 000 – 26 600

2012Number (average) 0.5 2.0 2.2 – – – 4.7Revenue (US$/day) 20 000 24 000 43 100 – – – 32 500

Percentage Charters Ship sales TotalContracted profits of fleet fixed (%) (US$ million) (US$ million) (US$ million)

2008 (second half) 64 40 44 842009 51 73 10 832010 35 46 – 462011 23 27 – 272012 16 18 – 18

In addition, approximately 9% of the fleet is fixed from 2013 to 2015.


DRYBULK Following an exceptional first half of 2008, the drybulk market has taken the usual “European Summer” downturn and hasalso been affected by the Olympic Games, as the Chinese have temporarily reduced imports. However, market fundamentalsremain positive due to continuing strong commodity demand. This should result in upward pressure on the market during thesecond half of 2008. In particular, the handysize market outlook remains positive.

In the longer term, continuing strong commodity demand from developing countries will see the drybulk seaborne trade grow.The large order book, particularly in the capesize sector, delivering in 2010, could have a dampening effect on the market.The negative effect should be limited as yard delays and possible cancellations, increased scrapping and increased demandfor commodities should balance out the market. The group, however, has significant cargo cover on its capesize fleet to 2015.

TANKERSThe product tanker market has remained firm during the period notwithstanding the pressure on oil demand as a result ofhigh oil prices. A stable market for the remainder of the year and through to 2009 is anticipated.

The outlook thereafter is less certain due to the large tanker order book delivering in 2009. However, predicted strongerdemand from the Eastern developing countries and the scrapping of single hull tankers could mitigate the additional fleetcapacity. In addition new refineries coming on-stream in the Middle East and India will increase trade route distances andconsequently increase utilisation of the world fleet which is likely to offset the potential increased supply of tankers.

The group has, however, contracted out a large percentage of its tanker fleet up until 2011.

150 000 dwt 170 000 dwt 65 000 dwt 70/72 000 dwt 30 000 dwt

2000

-Q1

2000

-Q2

2000

-Q3

2000

-Q4

2001

-Q1

2001

-Q2

2001

-Q3

2001

-Q4

2002

-Q1

2002

-Q2

2002

-Q3

2002

-Q4

2003

-Q1

2003

-Q2

2003

-Q3

2003

-Q4

2004

-Q1

2004

-Q2

2004

-Q3

2004

-Q4

2005

-Q1

2005

-Q2

2005

-Q3

2005

-Q4

2006

-Q1

2006

-Q2

2006

-Q3

2006

-Q4

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

2007

-Q1

2007

-Q2

2007

-Q3

2007

-Q4

2008

-Q1

2008

-Q2

4-Ju

l-08

11-J

ul-0

818

-Jul

-08

25-J

ul-0

81-

Aug-

088-

Aug-

0815

-Aug

-08

BULK CARRIER ONE-YEAR TIME CHARTER RATES(US$/day)

COMMENTS continued


SHIP VALUES The prices of both newbuildings and second hand ships have continued to firm.

As a result of the significant increase in the steel prices, wage increases and machinery price inflation, ship prices are notexpected to decline in the medium term.

Jan 03 Feb 05 Jan 0810 000

15 000

20 000

25 000

30 000

35 000

Jun 03 Nov 03 Apr 04 Sep 04 Jul 05 Dec 05 May 06 Oct 06 Mar 07 Aug 07 Jun 08

ONE-YEAR TIME CHARTER RATE 45-47 000 DWT MODERN PRODUCTS TANKER(US$/day)

20,00

25,00

30,00

35,00

40,00

45,00

50,00

55,00

60,00

Mar 03 Apr 05 Mar 08Aug 03 Jan 04 Jun 04 Nov 04 Sep 05 Feb 06 Jul 06 Dec 06 May 07 Oct 07 Aug 08

47-51 000 DWT PRODUCTS TANKER NEWBUILDING PRICES(US$ million)

Disclaimer: The information supplied herewith is believed to be correct but the accuracy thereof is not guaranteed and the Company and its employees cannot acceptliability for loss suffered in consequence of reliance on the information provided. Provision of this data does not obviate the need to make further appropriate enquiriesand inspections. The information is for the use of the recipient only and is not to be used in any document for the purposes of raising finance without the writtenpermission of Clarkson Research Services Limited.

Source: Clarkson Research Services Limited

Source: Clarkson Research Services Limited


The Shipping division continues to build its equity base in order to take advantage of acquisitions/fleet expansion opportunitieswhich may present themselves in the medium-term.

TRADINGThe Trading division performed below expectation during the period. While revenue increased by 111%, strikes in Argentinaled to substantial additional shipping costs and delays in voyages in the agricultural commodity business. This resulted in a31% decline in earnings by the division over the first half of 2008. The industrial commodity and marine bunker businessesachieved good results.

Grindrod increased its shareholding to 100% in Cockett Marine during the period and its interest in Oreport Holdings to 100%subsequent to the period under review.


Revenue 9 447 4 479 111 Higher volumes and commodity prices;increased shareholding in Cockett Marine

EBITDA 49 45 9Operating income 45 44 2Attributable income 20 29 (31) Strikes in Argentina Margin (%) 0,5 1,0 (50)

The focus will be to take advantage of commodity demand within current product lines, with far more emphasis on marginsrather than volumes. Furthermore, new strategic opportunities are being investigated in all three operating sectors of Trading.

A stronger second half is anticipated by this division.

COMMENTS continued

BULK CARRIER NEWBUILDING PRICES(US$ million)

2000

-Q1

2000

-Q2

2000

-Q3

2000

-Q4

2001

-Q1

2001

-Q2

2001

-Q3

2001

-Q4

2002

-Q1

2002

-Q2

2002

-Q3

2002

-Q4

2003

-Q1

2003

-Q2

2003

-Q3

2003

-Q4

2004

-Q1

2004

-Q2

2004

-Q3

2004

-Q4

2005

-Q1

2005

-Q2

2005

-Q3

2005

-Q4

2006

-Q1

2006

-Q2

2006

-Q3

2006

-Q4

10,00

20,00

30,00

40,00

50,00

60,00

70,00

80,00

90,00

100,00

2007

-Q1

2007

-Q2

2007

-Q3

2007

-Q4

2008

-Q1

2008

-Q2

7-Au

g-08

170 000 dwt capesize75 000 dwt panamax

32/35 000 dwt handysize120 000 dwt capesize

23/30 000 dwt handysize


FREIGHT SERVICESFreight Services reported substantially improved results for the period. Revenues increased by 64%, and earnings increasedby 65%. Terminals and Intermodal in particular produced solid growth on the prior period. The slowdown in motor vehicle andconsumer retail sales impacted the performance of Logistics, although it recorded a substantial turnaround on the 2007period. Rail performance was in line with expectations, but down on the prior period, which included a profit on sale oflocomotives. Ships Agencies had a strong first half.


Revenue 1 129 688 64EBITDA 194 128 52 Increased volumes in terminals and Operating income 129 80 61 Intermodal through expansion andAttributable income 81 49 65 restructureMargin (%) 11 12 (8)

Freight Services has progressed a number of expansion transactions over the past six months, which include:

• Expansion of the Richards Bay and Maputo terminal facilities, due for completion in the third quarter

• Expansion of Matola Coal Terminal export capacity to 4 million tonnes per annum due for completion in the fourth quarter

• Completion of the first phase of a planned three-phase development of the Maputo Car Terminal in Mozambique

• The joint development of a bulk liquids tank farm in Maputo

• Commencement of the upgrading of Walvis Bay Bulk Terminals facility due for completion early in 2009

• Expansion of Bulk Logistics transport fleet

• Development of a port master plan for the Maputo Port

Further capital commitments/expansion opportunities cover a variety of projects, including:

• Planned expansion of Richards Bay terminal export capacity from 2,4 million to 4 million tonnes per annum

• Further expansion of Matola Coal Terminal export capacity to 6 million tonnes per annum

• Further expansion of the transport fleet

• Construction of “Autoport” vehicle logistics and storage facility

• Acquisition of a petrochemical transport business

• Acquisition of a freight and materials handling business

Cargo demand and the upgrade of the Ressano Garcia rail line, which improves connectivity to the Matola terminal inMozambique, has resulted in substantially improved throughput subsequent to the half year.

The new projects have significant potential and will begin to add substantially to the division’s earnings in the short to medium-term.

Commodity demand, particularly coal, magnetite and ferros remain strong, with this trend expected to continue withcustomers committing to longer-term throughput contracts. This bodes well for performance in the terminal division. Thestrain on domestic consumers has put pressure on the logistics and Intermodal businesses which have nevertheless gainedmarket share in a difficult environment.

Advisors have been appointed to facilitate a BEE transaction in Freight Services to be concluded during 2008.


COMMENTS continued

FINANCIAL SERVICESRevenue increased by 23%, however, mainly as a result of the unfavourable mark to market of equity investments, earningsdecreased by 21% relative to the equivalent period last year. The Bank has maintained a healthy liquidity position. Thepreference share book continues to grow with investors opting for the security of these types of products as opposed to thevolatility of equity markets. A preference share Collective Investment Scheme (Grindrod Diversified Preference Share Fund)was formally launched in May 2008 and already has over R100 million invested.


Revenue 38 31 23EBITDA 11 17 (35) Mark to market on equity investments;Operating income 10 17 (41) 19% sold to BEE/managementAttributable income 11 14 (21)Margin (%) 26 55 (53)

The Bank has noted a slowdown in structured finance activity and quality lending opportunities. It, however, expects a positivecontribution from mezzanine property transactions in the second half of the financial year, but will maintain a conservativeapproach to credit in current financial markets.

BASIS OF PREPARATIONThe results have been prepared in terms of IAS 34 Interim Financial Reporting and are in accordance with the group’saccounting policies which fully comply with International Financial Reporting Standards (IFRS) and are consistent with thoseapplied in the previous year.

PROSPECTSShipping market fundamentals continue to be positive and consequently earnings are expected to remain at firm levels forthe remainder of the 2008 financial year.

The group has significant contract cover and will look to further expand this base for 2009 and beyond.

Further improvement is expected in the performance of the Trading, Freight Services and Financial Services divisions whichare being expanded through investment, mainly in infrastructural development opportunities.

The group expects headline earnings per share for the 2008 financial year to be 80% to 100% higher than the 263,1 centsachieved in 2007.

A trading update to 31 December 2008 was released on 20 August 2008 and shareholders are advised that this has notbeen reviewed or reported on by the group’s auditors.

For and on behalf of the Board

I A J Clark A K OlivierChairman Chief Executive Officer


DECLARATION OF INTERIM DIVIDENDS

PREFERENCE DIVIDENDNotice is hereby given that a dividend of 589 cents per cumulative, non-redeemable, non-participating and non-convertiblepreference share (H1 2007: 498 cents) has been declared payable to preference shareholders in accordance with thetimetable below.

ORDINARY DIVIDENDNotice is hereby given that an interim dividend of 68 cents per ordinary share (H1 2007: 34 cents) has been declared payableto ordinary shareholders in accordance with the timetable below.

TIMETABLELast day to trade cum-dividend Friday, 5 September 2008

Shares commence trading ex-dividend Monday, 8 September 2008

Record date Friday, 12 September 2008

Dividend payment date Monday, 15 September 2008

No dematerialisation or rematerialisation of shares will be allowed for the period from 8 September 2008 to 12 September 2008,both days inclusive.

The dividends are declared in the currency of the Republic of South Africa.

By order of the Board

C A S RobertsonSecretary

20 August 2008

For more information, please refer to our website at www.grindrod.co.za

Directors I A J Clark* (Chairman), A K Olivier (Group CEO), H Adams*, W D Geach*, I M Groves*, J G Jones, T J T McClure, R A Norton*,D A Polkinghorne, D A Rennie, N Y T Siwendu*, A F Stewart, L R Stuart-Hill*Non-executive

Registered office Transfer secretariesQuadrant House Computershare Investor Services (Pty) Limited115 Margaret Mncadi Avenue 70 Marshall StreetDurban Johannesburg4001 2001

PO Box 1 PO Box 61051Durban Marshalltown4000 2107

Registration number: 1966/009846/06 Incorporated in the Republic of South AfricaShare code: GND and GNDP ISIN: ZAE000072328 and ZAE000071106

www.grindrod.co.za

unaudited interim results and dividend announcementgrindrod.co.za/uploads/documents/2/booklet...

Documents