August 2007
INTRODUCTION
• 2007 Interim Results
• Shipping Markets
• Strategy Update
• Conclusion
• Annexures
– A : Market Value of Fleet
– B : Fleet Summary
– C : Shipping Market Report
2007
INTERIM RESULTS
EARNINGS FROM SHIPS
Owned & Long -Term Chartered
Bulk Carriers
Handysize
Daily income
($/day)
Panamax
Tankers
Capesize
Chemical /
Small
Product
Mid-Range
Product
Total
2007
1st
Six
Months
Total
2006
1st
Six
Months
17 500
20 800
42 600
13 300
19 800
21 000
16 600
7 500
9 200
21 000
9 600
14 600
10 900
10 700
Average no.
of ships
18.7
2.0
4.8
5.5
6.5
37.5
39.2
Profit
contribution
$34m
$4m
$19m
$4m
$6m
$67m
$42m
$63m
$35m
$4m
$7m
Daily cost
($/day)
International Operations
SA Based Operations
INCOME STATEMENT
June
2007
June
2006
Growth
%
Comments
Shipping Services
Earnings from ships ($ million)
63.0
35.0
High shipping markets
Trading profits from ship sales ($ million)
19.8
18.5
Forex profit ($ million)
Other income / overheads / other interest ($ million)
0.6
(8.5)
8.3
(4.7)
Profit from international operations ($ million)
74.9
57.1
Profit from international operations (R million)
538
360
Profit from SA based operations
(59)
67
479
427
Trading Services
29
(4)
Freight Services
62
43
Financial Services
14
3
104
42
(13)
(4)
92
38
140.0
571
465
22.6
Stable Rand
31.1
Loss in parcel service; provisions
for contracted losses
12.2
Trading, Freight and Financial Services
Overheads/disposal adjustment
Profit attributable to ordinary shareholders
Increased volumes/margins
116.7
Adjustment i.r.o. disposals in
previous year
BALANCE SHEET
Including Revaluation of Fleet to Market Value
June
2007
Rm
June
2006
Rm
Comments
Fixed Assets / Investments
8 749
5 684
Bank Loans, Advances and
Liquid Assets
839
-
Acquisition of 100% of Grindrod Bank
2 233
2 033
Trading Services – increased volumes
11 821
7 717
8 410
5 805
Net Debt
777
266
Bank Deposits
784
-
Acquisition of 100% of Grindrod Bank
1 850
1 646
Trading Services – increased volumes
11 821
7 717
0.25
0.09
0.10
0.04
Current Assets
Total Assets
Equity
Other Liabilities
Total Equity & Liabilities
Gearing - Book Value
- Fleet at Market Value
R2.9 billion increase in fleet value since June 2006
Increase in profits and fleet value
Increased borrowings to fund acquisitions and expansion
See Annexure A for detail on revaluation of fleet to market value
SHIPPING MARKETS
SHIPPING MARKETS – DRY BULK
BULK CARRIER
Comments
NewNEWBUILDING
Building Prices
BULK CARRIER –
PRICES
100
• Continued demand for commodities
90
80
• Newbuildings not meeting demand
70
US$ mil
60
• Port delays
50
40
• Creation of new trade lanes
30
20
• Good long-term outlook
10
170K DWT Capesize Bulkcarrier Newbuilding Prices
75K DWT Panamax Bulkcarrier Newbuilding Prices
32/35K DWT Handysize Bulkcarrier Newbuilding Prices
2007-Q2
'07-08-03
2007-Q1
2006-Q4
2006-Q3
2006-Q2
2006-Q1
2005-Q4
2005-Q3
2005-Q2
2005-Q1
2004-Q4
2004-Q3
2004-Q2
2004-Q1
2003-Q4
2003-Q3
2003-Q2
2003-Q1
2002-Q4
2002-Q3
2002-Q2
2002-Q1
2001-Q4
2001-Q3
2001-Q2
2001-Q1
2000-Q4
2000-Q3
2000-Q2
2000-Q1
1999-Q4
1999-Q3
1999-Q2
1999-Q1
1998-Q4
1998-Q3
1998-Q2
1998-Q1
1997-Q4
1997-Q3
1997-Q2
1997-Q1
0
120K DWT Capesize Bulkcarrier Newbuilding Prices
23/30K DWT Handysize Bulkcarrier Newbuilding Prices
Spot/
Period
TC rates
Date
Capesize
Panamax
Handysize
Spot rates
Baltic Ave
time
charters
02/03/07
29/06/07
03/08/07
80 584
100 713
107 593
38 437
51 870
57 744
22 478
28 471
34 416
1 Year time
charter
rates
02/03/07
29/06/07
03/08/07
67 500
92 500
106 500
33 250
45 000
54 250
19 500
25 000
29 000
3 year time
charter
rates
02/03/07
29/06/07
03/08/07
53 500
70 000
75 000
26 500
34 000
41 000
16 750
20 500
23 000
5 Year time
charter
rates
14/08/07
60 000
35 000
17 500
BULK CARRIER
1 Year
Time Charter
Rates
BULK CARRIER – 1
YEAR
TIME
CHARTER RATES
120,000
100,000
60,000
40,000
20,000
1 Year Bulkcarrier Timecharter Rates 150,000 dwt
1 Year Bulkcarrier Timecharter Rates 65,000 dwt
1 Year Bulkcarrier Timecharter Rates 30,000 dwt
1 Year Bulkcarrier Timecharter Rates 170,000 dwt
1 Year bulkcarrier Timecharter Rates 70/72,000 dwt
'07-08-03
2007-Q2
2007-Q1
2006-Q4
2006-Q3
2006-Q2
2006-Q1
2005-Q4
2005-Q3
2005-Q2
2005-Q1
2004-Q4
2004-Q3
2004-Q2
2004-Q1
2003-Q4
2003-Q3
2003-Q2
2003-Q1
2002-Q4
2002-Q3
2002-Q2
2002-Q1
2001-Q4
2001-Q3
2001-Q2
2001-Q1
2000-Q4
2000-Q3
2000-Q2
2000-Q1
1999-Q4
1999-Q3
1999-Q2
1999-Q1
1998-Q4
1998-Q3
1998-Q2
1998-Q1
1997-Q4
1997-Q3
1997-Q2
0
1997-Q1
US$ per day
80,000
SHIPPING MARKETS – PRODUCT
TANKERS
Comments
• Relatively stable as expected
• Mid-range ships
 Balanced supply and demand
• Smaller ships
 Undersupplied
• Market outlook
 Cautious in short-term
 Stronger longer-term outlook
- Legislation requirements
- Scrapping
STRATEGY UPDATE
STRATEGY UPDATE
Shipping Services
•
Shipping markets continue to be firm (but higher than expected)
•
Continuing to focus on areas of expertise
•
Fleet expansion in under-invested sectors
 Ordered 2 x 16 500 dwt product tankers
 Ordered 3 x handysize bulk carriers
 Sales contracted for 2 x 12 800 dwt product/chemical tankers
•
Continue to add to long-term contract cover
CONTRACTED EARNINGS
Contracted out at
30/06/2007
2007
Number (Average)
2nd six months
Revenue (US$/day)
2008
Number (Average)
Capesize
Chemical
Mid-Range
Small
4.3
2.3
5.3
-
35.2
20 600
20 800
39 700
15 000
18 500
-
22 400
8.8
2.0
3.7
1.8
6.1
0.4
22.8
18 200
20 700
34 400
20 000
21 000
15 000
22 000
1.6
2.0
2.4
0.8
3.7
1.5
12.0
18 300
20 700
36 700
19 900
20 400
15 000
22 900
0.1
1.1
1.5
-
3.5
1.5
7.7
15 000
20 600
39 000
-
20 400
15 000
23 200
Number (Average)
-
1.0
0.9
-
1.5
1.1
4.5
Revenue (US$/day)
-
20 600
27 500
-
22 000
15 000
20 800
Number (Average)
Number (Average)
Revenue (US$/day)
2011
Panamax
Total
2.0
Revenue (US$/day)
2010
Handysize
Tankers
21.3
Revenue (US$/day)
2009
Bulk Carriers
Contracted profits
(US$m)
% of fleet
fixed
Charters
US$m
Ship sales
US$m
Total
US$m
2007 (2nd half)
89
72
6
78
2008
58
78
11
89
2009
32
36
-
36
2010
18
22
-
22
2011
9
8
-
8
TRADING, FREIGHT & FINANCIAL SERVICES
•
Trading operations now bedded down
•
Freight Services
 Greater focus on infrastructure investment
 Restructure into distinct divisions completed
•
Terminal Development
 Maputo (R100m capital commitment)
- Ferroslab Terminal – operational August 2007
- Car Terminal – operational December 2007
- Coal Terminal upgrade – complete December 2007
- Bulk Liquids facility – complete October 2007
- Further terminal opportunities under negotiation
TRADING, FREIGHT & FINANCIAL SERVICES
•
Terminal Development (continued)
 Richards Bay Terminal expansion (R168m capital commitment) – complete June 2008
 Maydon Wharf Facility expansion (R59m capital commitment) – complete October 2007
•
Sold 6 locomotives – commercial decision
•
Other acquisitions
 50% in Vanguard Rigging (Heavy logistics)
 Tate & Lyle Molasses South Africa (Bulk liquids)
 Remaining 50% in Boltt Grindrod
 Remaining 50% in CMC Grindrod
•
Grindrod Bank
 Performing according to plan
 Net 1 initiative taking shape
STRATEGY UPDATE
International Listing/Unbundling
•
Have completed investigation
•
Will revisit when:
 Freight Services properly established
 Capital required
Black Economic Empowerment
•
Concluded Grindrod Bank transaction
•
Freight Services BEE ownership transaction is in progress
CONCLUSION
CONCLUSION
•
Shipping
 Long-term charter rates/ship prices indicate expectation of a firm shipping
market in the medium-term
 Contracted growth in fleet (35% - detail in Annexure B)
 Contracted earnings at good levels (last 6 months 2007 = 89%; 2008 =58%;
2009 = 32%)
•
Trading, Freight and Financial Services
 Well positioned for growth
 Focus on infrastructure
 Will take advantage of regional growth
ANNEXURES
ANNEXURE A
Market Value of Fleet
Rm
Excess of market value over book
value of owned ships
1 266
Indicative values obtained in consultation
with reputable ship brokers
Value of long-term charters
3 483
Differential between Grindrod charter rate
and current rate to replace charter i.e. does
not include expected profit
PV @ 8% (USD WACC) converted at closing
exchange rate
Value of ship purchase options on
chartered ships
1 304
Projected value of ship at end of charter
compared to option strike price
PV @ 8% (USD WACC)
6 053
The group valuation should consist of:
1.
2.
The analyst’s valuation of Grindrod’s SA based operations
A valuation of the international shipping operation taking into account the fleet value,
comparison to peers and the analyst’s estimation of the group’s ability to extract value from its
shipping fleet
ANNEXURE B
Contracted in at
30/06/2008
Bulk Carriers
Tankers
Panamax
Capesize
Chemical
21.0
2.0
5.0
4.4
6.0
1.0
-
39.4
7 500
9 200
20 700
11 400
16 100
9 000
-
11 200
21.2
2.0
4.4
4.0
7.4
1.4
2.0
42.4
8 000
9 200
19 300
14 600
14 600
10 300
5 100
10 900
21.2
2.0
3.0
4.0
8.1
4.2
2.0
44.5
8 100
9 200
21 400
14 600
15 900
11 500
5 600
11 200
21.5
2.0
3.0
4.0
9.3
8.0
2.0
49.8
8 300
9 200
20 800
14 600
16 600
11 600
5 600
11 500
22.6
2.0
2.0
4.5
10.0
9.0
2.0
52.1
8 800
9 200
20 700
14 600
17 100
11 800
5 700
11 600
21
2
5
5
6
1
-
40
2nd half 2007
-
-
-
-1
-
-
-
-1
2008
1
-
-2
-
2
1
2
4
2009
-1
-
-
-
1
3
-
3
2010
1
-
-
-
1
4
-
6
2011
2
-
-1
1
-
-
-
2
24
2
2
5
10
9
2
54
Number
2nd six
months
Cost (US$/day)
2008
Number
Cost (US$/day)
2009
Number
Cost (US$/day)
2010
Number
Cost (US$/day)
2011
Number
Cost (US$/day)
Current Fleet
Small
Total
Handysize
2007
MidRange
Bunker
Barges
Net Number of Ships to Deliver
Fleet at end of 2011