Grindrod Limited generated earnings of R780 million for the year ended 31 December 2010 (2009: R873 million), down 11% on the prior year. Headline earnings per share decreased by 12% to 168 cents per share (2009: 190 cents per share). The decline in earnings and headline earnings per share was primarily due to a R166 million impact from the stronger Rand/US Dollar exchange rate, lower profits on the sale of ships of R21 million (2009: R253 million) and business development costs. Volume growth in ship operating activities, together with improved profitability from Freight Services and Financial Services contributed positively to results.

Headline earnings per share (cents)Dividends/distribution per share/cover (cents)

Total ordinary dividends of 54 cents per share for the year (2009: 60 cents) have been declared. Dividend cover remains consistent with the prior year at 3,2 times. A final preference share dividend of 386 cents per share (2009: 428 cents) was declared. Return on ordinary shareholders’ funds was 15,4% (2009: 15,9%), notwithstanding the substantial investment in ships under construction and terminal facilities under development which are not yet fully utilised.

2010 Attributable income by division2009 Attributable income by division

The strategy to diversify the group from shipping to an integrated freight and logistics business continues to bear fruit with 54% of earnings being generated by non-shipping businesses. 

The group’s balance sheet remains sound although materially impacted by the strong year end closing exchange rate of R6,62/US Dollar. The debt:equity ratio has increased to 32%, following the conclusion of planned acquisitions by the group. There is substantial capacity for debt funding to drive further expansion of the group’s businesses.

Capital expenditure and commitments
Capital expenditure for 2010 and approved capital expenditure for the next three years is set out below:

Description expenditure Capital commitments and approved expenditure
R million  2010 2011 2012 2013 commitments
Ships 1 027 803 194 34 1 031
Property and terminals 179 238 74 1 313
Equipment, locomotives          
   and vehicles 209 93 6 5 104
Subtotal 1 415 134 274 40 1 448
of businesses Acquisition 307
Total 1 722 134 274 40 1 448

The Shipping division took delivery of four tankers, two bulk carriers and contracted to build a further two handysize bulk carriers during the year under review. In addition, the division concluded the acquisition of a Rotterdam based bunker tanker business.

A settlement agreement was entered into resolving all disputes and arbitrations previously reported with a Chinese shipyard. This has resulted in two of the five cancelled 16 500 dwt product tanker ship contracts being reinstated.

The major allocation of capital expenditure in Freight Services was directed to the expansion of the Maputo Coal Terminal capacity from 4 million to 6 million tonnes per annum and the acquisition of Fuelogic, a South African based petrochemical road transportation service provider.

Freight Services continues to focus on the growth of its South African operations and infrastructure opportunities in Mozambique and other parts of Africa.

Trading acquired a new bunker trading business and continues to evaluate further supply chain investment opportunities in the agricultural and mineral sectors.

The group has capacity for an additional R7 billion to R8 billion of capital expenditure over the next three years.

Cash flow and borrowings

Cash generated from operations was R775 million (2009: R918 million). Cash outflows included capital expenditure of R1 722 million and dividends of R302 million. This resulted in the net debt position of R258 million at 31 December 2009 increasing to R1 904 million at 31 December 2010. The group had net interest expenses of R61 million for the year compared to R91 million in 2009, mainly due to low net debt levels during the year, lower Rand interest rates and the utilisation of US Dollar cash to reduce Rand debt.

The group has adequate funding available for all its capital commitments through its cash resources, cash generated from operations and existing bank facilities.

  Net cash/debt analysis  

Shareholders' Equity

Shareholders’ equity increased to R5,9 billion at 31 December 2010 (2009: R5,7 billion), mainly due to retained profits, the impact of which was reduced by the effect of the strong closing Rand/US Dollar exchange rate.

9 179 348 ordinary shares repurchased by subsidiaries prior years continue to be held in treasury.

Return on ordinary shareholders' funds Net debt/EBITDA

Divisional Operating Reviews


The division’s drybulk business performed well with the handysize ships generating good profits due to an improved spot market, efficient fleet operation and low vessel costs. The panamax ships continued to generate healthy profits under their fixed income charters. The capesize ships benefited from a high level of contract cover, which mitigated the extreme market volatility. Margins were adversely affected by the ongoing piracy risks which resulted in deviation costs to fufill contractual commitments.

The tanker business had a difficult year, due to fleet oversupply and slow growth in oil and chemical consumption. The chemical tanker earnings were also adversely affected by pirate activity. The small products tanker earnings declined due to high repair and maintenance costs while the medium range products tankers performed well as a result of good contract cover.

The Shipping division contract cover together, with operational efficiencies resulted in average daily revenues being above average spot rates for the year.

Volumes in the ship operating businesses improved although the more competitive trading environment impacted on margins resulting in slightly reduced profitability.

The division’s financial performance is summarised below:

  Bulk carriers Tankers  
Profit from owned and long-term chartered ships Handysize Panamax Capesize Medium range Small Chemical 2010 Total 2009 Total Growth
Average number of owned/long-term chartered ships 14,7 2,0 3,2 8,7 1,5 4,0 34,1 34,7 (2)
Average daily revenue (US$) 13 600 23 400 34 600 18 600 10 500 15 300 17 500 15 900 10
Average daily cost (US$) 8 800 9 400 23 300 15 600 12 200 14 200 12 800 11 500 (11)
Profit (US$) 25,9 10,2 13,3 9,4 (0,9) 1,7 60 55 9
(US$ million)      
Profit from ship operating activities 28 31 (10)
Profit from ship sales 3 31 (90)
Shipbuilding costs (1) (7) 86
Overheads (27) (28) 4
Funding costs/preference dividends/taxation (8) (17) 53
Foreign exchange losses (6) (5) (20)
  49 60 (18)

Shipping has an owned and long-term chartered fleet of 35 ships which have a market value of R811 million in excess of book value. For 2011, 53% (weighted by revenue) of the ships are contracted out and 24% for 2012. The value of profit contracted is US$30 million for 2011.

A fleet overview, contract cover information and details of the fleet market value calculations are included in a supplementary information presentation on


Commodity demand will remain strong. The outlook for the dry cargo market is, however, challenging in view of the anticipated delivery of a substantial number of ships.

The owned and long-term chartered drybulk fleet has a high level of cover for 2011 at above current market levels through a combination of long-term charters, fixed price contracts of affreightment and freight forward agreements.

Recovery in the product and tanker markets is likely to be slow due to an oversupply of ships and slow economic recovery.

A large portion of the tanker fleet’s fixed rate charters end during 2011. These vessels are likely to be employed in the spot market.

The weak shipping markets are likely to present investment opportunities and lead to scrapping and newbuilding cancellations.

Freight Services

Freight Services accounted for 34% of the group’s earnings, up from 25% in 2009, with attributable income growing by 18% to R262 million.

This growth was achieved in a year disrupted by strikes in the rail and transport sectors, insufficient rail wagons and rationalisation of the road transportation business.

Ports and Terminals

The port of Maputo showed strong growth in profitability, despite the limitations on exports through the harbour as a result of limited rail resources. Total volumes moved through the port increased by 10% to 8,8 million tonnes.

The extension of the concession term for the port of Maputo to 2043 will facilitate the implementation of the master plan for its future development. The dredging of the port to accommodate panamax vessels, which is the first phase of the plan, has been completed. This project has vastly improved the competitiveness of the port of Maputo.

Drybulk terminal operations are conducted in Maputo, Richards Bay, Durban and Walvis Bay. Capacity in the terminals amounted to 12 million tonnes, with 6,92 million tonnes handled through the terminals in 2010. Volumes were restricted by insufficient rail wagon capacity and strike activity.

A further 2 million tonnes of export capacity at the Maputo Coal Terminal was commissioned in February 2011. Additional land has been secured that could potentially see the total capacity expand from 6 million to 25 million tonnes.


The logistics businesses were consolidated under one operational structure during the year. Although profitability improved, the turnaround in performance was slower than anticipated.

The acquisition of Fuelogic increased Grindrod’s presence in the liquid bulk transport sector.


An improved local economy and commodity demand, together with increased capacity and efficiency improvements should result in growth in throughput and revenue. Consequently an improvement in profitability is expected.


Revenue increased by 14% through volume growth and increased commodity prices. Volumes were up 8% to 7,7 million metric tonnes with a strong performance by the marine fuel business.

The operating profit per ton declined as a result of the growth in low margin marine fuel volumes, together with new business development costs, mainly in the industrial raw materials business. This resulted in a 34% decline in earnings (24% in US Dollars).

The agricultural commodity business recorded a sound financial year, exceeding its US Dollar earnings target, maintaining South African market share and expanding its presence in southern Africa through supply chain projects.

The marine fuel business performed well with new markets and investment activity increasing both the tonnage traded and gross margin per metric ton. The London Queens Channel physical supply project was launched during the year which will position this business as a major bunker supplier in the Thames estuary.


The strong demand for commodity is likely to continue. Participation in new markets, particularly South America, Asia and sub-Saharan Africa, remains a focus, together with investment in supply chain projects. Improved volumes, operating margins and profitability are expected.


Bank profits increased 27% year on year, largely attributable to good income from Corporate Lending, Corporate Finance and Asset Management activities. The Bank remains well funded, supported by a stable and growing deposit base.

The Bank continued its conservative approach to credit and liquidity management. It achieved its aims of growing the lending book, while maintaining a capital adequacy ratio well above the regulatory requirement.


Grindrod Bank is well positioned to take advantage of opportunities in its areas of focus. Strong intellectual capabilities coupled with a sound financial position will assist the Bank to achieve further growth.


No material change has taken place in the affairs of the group between the end of the financial year and the date of this report.


The outlook for commodity demand is positive. Freight Services and Trading businesses will benefit from this demand and provide opportunity for growth. The oversupply of ships, particularly in the drybulk sector, will impact shipping earnings. Group results will remain sensitive to the Rand/US Dollar exchange rate.

For and on behalf of the board

IAJ Clark                                                                                                                     AK Olivier
Chairman                                                                                                                      Chief Executive Officer

Grindrod Limited – Disclaimer: The market value of the fleet is based on valuations obtained from ship brokers and published market information on ship charter rates. These values and rates are subject to risks and uncertainties, as various factors beyond the control of the group may cause values to fluctuate materially subsequent to the date of this announcement.

Clarkson Research Services Limited – Disclaimer: The information supplied herewith is believed to be correct but the accuracy thereof is not guaranteed and the company and its employees cannot accept liability for loss suffered in consequence of reliance on the information provided. Provision of this data does not obviate the need to make further appropriate enquiries and 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 written permission of Clarkson Research Services Limited.

Basis of preparation

The condensed consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB) in issue and effective for the group at 31 December 2010 and the AC 500 standards issued by the Accounting Practices Board or its successor. The results are presented in terms of IAS 34 – Interim Financial Reporting and comply with the Listings Requirements of the JSE Limited.

These condensed consolidated annual financial statements were approved by the board of directors on 23 February 2011.

Accounting policies

The accounting policies adopted and methods of computation used in the preparation of the condensed consolidated financial statements are in terms of IFRS and are consistent with those of the annual financial statements for the year ended 31 December 2009 except for the adoption of new or revised accounting standards, interpretations and circulars and restatements which are described below.

None of the changes below have impacted on the 31 December 2008 statement of financial position and it has therefore not been re-presented.

New accounting standards

The group adopted accounting standards and interpretations that became applicable during the current financial year. 

Of the amendments included in the Improvements to IFRS, the following standards had an impact on the group’s accounting policies and methods of computation:

  • IFRS 3 – Business combinations;
  • IAS 27 – Consolidated and separate financial statements; and
  • IAS 28 – Investments in associates
The adoption of the above standards impacts the group as follows:
  • Any excess over net asset value arising from the buy-out of non-controlling interests is recognised in equity. 
  • Transaction related costs for new acquisitions are expensed in the income statement.
  • Non-controlling interests share in accumulated losses above the equity they contributed.

Amendments to these standards as noted above have been applied prospectively and have no material impact on the income statement, statement of comprehensive income and the statement of financial position.

Audit opinion

The auditors, Deloitte & Touche, have issued their opinion on the group’s financial statements for the year ended 31 December 2010.

The audit was conducted in accordance with International Standards on Auditing. They have issued an unmodified audit opinion. These condensed consolidated annual financial statements have been derived from the group financial statements and are consistent in all material respects with the group financial statements. A copy of their audit report is available for inspection at the company’s registered office.

Any reference to future financial performance included in this announcement has not been reviewed or reported on by the group’s external auditors.