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2005 Results Share Price Comparison Fleet Shipping Markets Trading, Freight and Financial Services Business Plan Conclus

Agenda. 2005 Results Share Price Comparison Fleet Shipping Markets Trading, Freight and Financial Services Business Plan Conclusion. 2005 Results. Detailed Income Statement. 2005 Results. Balance Sheet - Including Mark to Market Values. 2005 Results. Cash Flow. 2005 Results.

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2005 Results Share Price Comparison Fleet Shipping Markets Trading, Freight and Financial Services Business Plan Conclus

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  1. Agenda • 2005 Results • Share Price Comparison • Fleet • Shipping Markets • Trading, Freight and Financial Services • Business Plan • Conclusion

  2. 2005 Results Detailed Income Statement

  3. 2005 Results Balance Sheet - Including Mark to Market Values

  4. 2005 Results Cash Flow

  5. 2005 Results Key Performance Indicators

  6. 2005 Results Key Performance Indicators

  7. 2005 Results • Share Price Comparison • Fleet • Shipping Markets • Trading, Freight and Financial Services • Business Plan • Conclusion

  8. Share Price Comparison Current P/E ratios • JSE average 15,2 • JSE Transport Index 12,8 • Average of SA peer group 11,4 • Grindrod 7,6 Mark to Market Valuation (See Appendix 1 for detail)

  9. 2005 Results • Share Price Comparison • Fleet • Shipping Markets • Trading, Freight and Financial Services • Business Plan • Conclusion

  10. Fleet Fleet Summary - Owned + Long Term Charter

  11. Fleet Contracted Income In addition: • Earnings from non-shipping operations • Reinvestment of cash generated • Profit from sale of Marriott • Ongoing process to keep high % of fleet contracted out • Further ship sales • Will look for opportunities in lower markets

  12. 2005 Results • Share Price Comparison • Fleet • Shipping Markets • Trading, Freight and Financial Services • Business Plan • Conclusion

  13. Shipping Markets Handysize 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 Handysize Bulkcarrier Earnings Average Contracted Revenue Average Fleet Cost Current market at US$ 15,000 per day • SA parcel service benefits in lower markets, therefore is an additional hedge • Ships redeliver soon, therefore should get higher earnings

  14. Shipping Markets Panamax Comments: • No exposure for some time Average Contracted Revenue Average Fleet Cost Current market at US$ 18,000 per day

  15. Shipping Markets Capesize 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 Average Contracted Revenue Average Fleet Cost Current market at US$ 46,000 per day

  16. Shipping Markets Products 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 Average Contracted Revenue Average Fleet Cost Current market at US$ 25,000 per day

  17. Shipping Markets Chemicals 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 Average Contracted Revenue AverageFleetCost Current average spot earnings on Grindrod chemical tankers = US$ 15,500 per day

  18. 2005 Results • Share Price Comparisons • Fleet • Shipping Markets • Trading, Freight and Financial Services • Business Plan • Conclusion

  19. Trading, Freight and Financial Services 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

  20. Trading, Freight and Financial Services Landfreight Logistics • Provision of terminal / warehousing, transport, logistical services and ships agency • Operations: Terminal / warehousing operations Transportation -Road & Rail LogisticalServices ShipsAgents African Portland Industrial Holdings Limited

  21. Trading, Freight and Financial Services 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

  22. 2005 Results • Share Price Comparisons • Fleet • Shipping Markets • Trading, Freight and Financial Services • Business Plan • Conclusion

  23. 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

  24. 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

  25. Business Plan Power of Compound example 483 Annual earnings assuming 10% ROI after interest (Rm) 335 127 Excludes possible R3bn of additional borrowings against full market value of assets 2,538 2,000 Additional annual capex to get to 80% gearing(Rm) 1,627 1,338 1,000 1,000 627 Committed capex(Rm) 538 338 2006 2007 2008

  26. 2005 Results • Share Price Comparisons • Fleet • Shipping Markets • Trading, Freight and Financial Services • Business Plan • Conclusion

  27. 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 goodbase

  28. Appendix 1 Mark to Market Valuation

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