Grindrod : 2021 Grindrod Final Results Booklet

Grindrod Limited

Provisional reviewed results and dividend announcement for the year ended 31 December 2021

OPERATIONAL HIGHLIGHTS

Record volumes of

Port volumes up

Earnings grew by

8.3 million

21%

33%

tonnes handled at

to a record 22.3

for coastal shipping and

Matola drybulk terminal

million tonnes

container depot business

Redeployment of

Earnings growth of

Proceeds received

8 locomotives

157%

R1.0 billion

in Sierra Leone,

in Grindrod Bank,

on the disposal of

4 locomotives sold

with surplus liquidity

investments

to Uganda Rail

in excess of R5.0 billion

FINANCIAL HIGHLIGHTS

Revenue from core

Trading profit* of

Headline earnings

operations* at

from core operations*

R5.2 billion

R1.8 billion

166%

(2020: R4.7 billion), up

(2020: R1.4 billion), from

to R886.5 million

9% on the prior year

core operations, up 32%

(2020: R333.1 million)

on the prior year

Cash generated from

Net asset value per

Final ordinary

operations of

share of

dividend of

R1.0 billion

1 176 cents

20.1 cents

(2020: R0.9 billion), up

(2020: 1 075 cents)

(2020: nil cents)

20% on the prior year

Net debt of equity ratio,

excluding Grindrod Bank

26%

(2020: 38%)

* Inclusive of joint ventures.

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Grindrod Limited

Provisional reviewed results and dividend announcement for the year ended 31 December 2021

BUSINESS REVIEW

Grindrod achieved a commendable performance in its core businesses for the year ended 31 December 2021 underpinned by record mineral volumes handled at its Port and Terminals operations and strong performance from the coastal shipping and container depot business. Grindrod Bank performed well as it continued its focus on quality lending and maintaining healthy capital and liquidity ratios.

Port and Terminals

An efficient and cost-effective customer solutions focus, the operational excellence drive and rail allocation improvement into Matola drybulk terminal yielded positive results in the second half of the year. Overall, Port and Terminals reported robust earnings growth of 70% on 2020, comfortably surpassing its pre-COVID-19 performance level.

Maputo port volumes handled grew 21% to a record 22.3 million tonnes, compared to the prior year. The berth rehabilitation expanded footprint and dedicated rail siding capital projects are now complete, with the dredge of the quayside having commenced.

The Matola drybulk terminal handled a record 8.3 million tonnes, up 50% on the prior year and reported a monthly record volume of one million tonnes in September 2021.

The focus at Port and Terminals is to deliver efficient and cost-effective customer solutions by regularly seeking alternative and additional logistics routes to market for the customer's cargo. This is in addition to continually harnessing our existing routes via Matola, Maputo, Richards Bay, Durban and Walvis Bay, and relentlessly engaging our key stakeholders to ensure sustained relevance.

Logistics

The coastal shipping and container depot business achieved earnings growth of 33%, with the remaining businesses delivering consistent performance for the year.

During November 2021 Grindrod announced a joint venture with Maersk, wherein the logistics activities of Grindrod's Intermodal business will complement the current Maersk operations, the execution of which is subject to various conditions.

The clearing and forwarding business delivered solid results and secured the extension of key customer contracts during the year.

During 2021, Grindrod's activities relating to the liquified natural gas project in Northern Mozambique ceased, due to the insurgency in the Cabo Delgado province, which necessitated impairments and provisioning of R78.2 million. The impact of this indefinite stoppage was mitigated by the resumption of the graphite logistics business in Nacala.

The Rail business redeployed eight of its ten locomotives at Sierra Leone's Tonkolili iron ore mine following its reopening and successfully completed the disposal of four locomotives for US$11.3 million (Grindrod's share is US$4.8 million) to Uganda Rail.

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Grindrod Limited

Provisional reviewed results and dividend announcement for the year ended 31 December 2021

The disposal of the car carrier business is complete, and the disposal of the fuel carrier businesses has progressed. This process necessitated the impairment of goodwill and assets of R266.6 million in the current year.

Bank

Grindrod Bank's earnings improved by 157% from the prior year, despite remaining cautious in its lending activities and retaining surplus liquidity in excess of R5 billion as at 31 December 2021. The Bank's lending and core deposit books increased by 5% and 20% to R8.3 billion and R10.3 billion respectively, from December 2020. During the year, Grindrod Bank concluded an agreement with Shoprite Checkers as a key new platform partner. Grindrod Bank recommenced the project to raise further capital to enable growth and enhance returns.

Group and other

Grindrod successfully sold its Grindrod Shipping shares, generating proceeds of R338.1 million. A fair value gain of R238.2 million has been recorded in the current year.

Balance sheet, cashflow and debt

The Group generated positive cash from operations of R1 039.0 million (2020: R871.1 million) up 19% on the prior year.

The net debt to equity ratio, excluding Grindrod Bank, is 26% (2020: 38%) as at 31 December 2021. In addition, share buy backs of R29.9 million were completed.

Non-core operations

Private equity portfolio

The Private Equity portfolio now consists of only two significant investments. The disposal of the offshore real estate investment was concluded during November 2021 for £17.4 million in addition to several smaller investments. The strategy is to exit the remaining two investments at the right valuations. Disposal proceeds of R311.7 million have been received in the current year.

Results include impairments and fair value losses on the private and property equity portfolio of R318.7 million. The carrying value of these investments, after impairments and fair value losses is R622.0 million.

KwaZulu-Natal north coast property loans

Progress has been made by the various owners of the KwaZulu-Natal north coast properties. Management continues to work with the principals to manage this exposure and settle the loans. Current year results include impairment reversals and fair value gains of R166.8 million.

Marine Fuels and Agricultural Logistics

As previously report, the sale of shares held in Senwes was executed for R376.0 million.

The marine fuels business generated earnings of R40.0 million in the current year. Management continues to work with the Marine Fuels management and co-shareholder in order to exit this investment.

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Grindrod Limited

Provisional reviewed results and dividend announcement for the year ended 31 December 2021

CONDENSED CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2021
			Reviewed	Audited
			31 December	31 December
		2021	2020
			R'000	R'000
Revenue		3 904 984	3 751 156
Trading profit before expected credit loss and depreciation	1 073 778	546 868
and amortisation*
Expected credit loss**		(12 060)	(213 283)
Depreciation and amortisation		(488 109)	(526 299)
Operating profit / (loss) before interest, taxation and non-trading items	573 609	(192 714)
Non-trading items		(401 134)	(194 479)
Interest received		99 933	116 488
Interest paid		(226 432)	(326 292)
Profit / (loss) before share of joint venture and associate companies' profit	45 976	(596 997)
Share of joint venture companies' profit after taxation		287 719	285 303
Share of associate companies' profit after taxation		19 169	20 439
Profit / (loss) before taxation		352 864	(291 255)
Taxation		(101 711)	(119 828)
Profit / (loss) for the year		251 153	(411 083)
Attributable to:
Ordinary shareholders		175 578	(415 219)
Preference shareholders		45 780	51 244
Owners of the parent		221 358	(363 975)
Non-controlling interests		29 795	(47 108)
		251 153	(411 083)
Basic earnings / (loss) per share:	(cents)		26.2	(61.4)
Diluted earnings / (loss) per share	(cents)		26.2	(61.4)

• Current period trading profit includes R33.0 million net fair value losses (2020: R405.4 million) relating to the private equity and property and Grindrod Shipping shares.

• Current period include impairment reversals of R86.8 million (2020: R86.8 million impairment) relating to the private equity and property.

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