Annual Results Announcement 2006

The shipping and freight services group, Grindrod, has increased earnings by 18% to R1008 million for the year ended 31 December 2006. Grindrod’s new CEO, Alan Olivier said that due to strong markets together with the benefits from a growing fleet and a weaker Rand/US$ exchange rate, Shipping Services performed extremely well.He went on to say: “We are pleased with the positive performance from the Trading, Freight and Financial Services divisions in the second half of 2006, resulting in an increase in earnings of 59% over the previous year and contributing 14% of group earnings.” The current high level of ship values and long term charter rates indicate an expectation of continued firm shipping markets in the foreseeable future. The group has a significant level of contracted income in its shipping division with 74% of the fleet fixed out for 2007, 54% in 2008 and 36% in 2009.Contracted profits from these fixtures and from contracted ship sales amounts to US$ 84,2 million in 2007, US$ 40,2 million in 2008, and US$ 18,9 million in 2009. Trading Services contributed significantly to non-shipping profit and Ships Agencies achieved record profits. The Grindrod Freight Services division had an active year with significant acquisitions and major capital expenditure projects being concluded. This division’s contribution was 94% up over last year. The latter half of the year, in conjunction with the consolidation of certain operations, the group also commenced a restructure of Grindrod Freight Services division into distinct operations namely; Grindrod Terminals, Grindrod Intermodal, Grindrod Logistics, Grindrod Rail, Grindrod Port Holdings, Grindrod Seafreight and Grindrod Ships Agencies. Significant expansion of these operations will continue into 2007. There were significant changes in the Financial Services division during the year.The property and asset management operations of Marriott were sold and the remaining 50% of Marriott Corporate Property Bank was acquired.The latter transaction was approved by the South African Reserve Bank on 16 October 2006 and the Bank has been re-branded as Grindrod Bank and recapitalized with the introduction of additional equity.The Bank performed favourably in the latter part of the year growing its advances book and expanding its operations. The Bank acquired a wealth management division and in early 2007 entered into an agreement with Net 1 to provide a card based payment system to the retail market. Group Borrowings & Cash Flow Investment of R1 063 million was made in ship acquisitions, expansion of Freight and Financial Services operations andincreased working capital requirements in the bulk product trading business. However, due to strong operating cash flows and the further issue of R263 million in preference shares, net borrowings reduced from R878 million at 31 December 2005 to R848 million.The group’s debt/equity ratio has reduced from 33% to 19%. Equity Ordinary shareholders’ equity increased from R1 937 million at 31 December 2005 to R2 825 million due to the strong earnings, the issue of preference share capital and the effect of the weaker Rand/US Dollar exchange rate. During the year, the group repurchased 19,4 million ordinary shares at an average price of R12,22.The treasury shares are held by a subsidiary company, Grindrod (South Africa) (Pty) Limited. At a general meeting held on 15 August 2006 Grindrod shareholders approved the creation of an additional 12,5 million cumulative, non-redeemable, non-participating, non-convertible preference shares. Distribution to Shareholders A distribution of share premium in the amount of 38 cents per ordinary share (2005: 32 cents) has been approved by the directors in lieu of a final dividend.A dividend of 470,3 cents per preference share was declared on 1 December 2006 and have been provided for in the group’s results.