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2007 RESULTS PRESENTATION

2007 RESULTS PRESENTATION. AGENDA. 2007 Results Overview of 2007 activities Shipping Trading Freight Services Financial Services Conclusion. 2007 RESULTS. 2007 results. Conclusion. 2007 Activities. Shipping. Trading. Freight Services. Financial Services. INCOME STATEMENT.

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2007 RESULTS PRESENTATION

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  1. 2007 RESULTS PRESENTATION

  2. AGENDA • 2007 Results • Overview of 2007 activities • Shipping • Trading • Freight Services • Financial Services • Conclusion

  3. 2007 RESULTS 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  4. INCOME STATEMENT 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  5. PROFIT FROM SHIPS Owned and long-term chartered * Ship equivalents: operating days divided by 365 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  6. BALANCE SHEET – 31 DECEMBER 2007 Including ship revaluations and with chartered fleet capitalised 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  7. MARKET VALUE OF FLEET 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  8. KEY FINANCIAL RATIOS 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  9. KEY FINANCIAL RATIOS 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  10. OVERVIEW OF 2007 ACTIVITIES 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  11. SHIPPING • 33% revenue growth, 13% earnings growth • Strong drybulk markets • Stable tanker market • High level of contract cover during year • IVS Parcel Service losses – offset by high spot earnings in pool • Forex loss of R10 million due to stronger Rand/ US Dollar closing rate (2006: R53 million profit) • Business focus • Owner/operator • Drybulk - Handysize - Panamax - Capesize • Tankers - Mid-range product - Small product - Chemical • Total fleet in excess of 70 ships 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  12. SHIPPING • 4 ships sold – profit of R195 million (2006: R239 million) • Ordered 8 ships • Took delivery of 5 ships • Contracted sale of 2 ships. Planned sale of further 2 non-core ships • Fleet of 39 ships (excluding bunker barges) will increase to 51 by end of 2011 • Merged Unicorn / IVS into a single entity • Favourable contract renewals by IVS Parcel Service 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  13. TRADING • 36% revenue growth, 158% earnings growth • Improved margins • Strong demand for commodities • Improved performance by Atlas Trading and Shipping • High commodity prices – increased working capital requirement • Upstream investment in chrome production facilities and 25% interest in a manganese mine through 50% holding in Oreport • Business focus • Agricultural commodities - Maize, wheat, soya • Mineral commodities - Chrome, coal, stainless steel, manganese • Bunkers (fuel) etc 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  14. FREIGHT SERVICES • 37% revenue growth, 103% earnings growth before disposal adjustment • Disposal adjustment – closure of PicPack Grindrod fully provided for • Restructure completed • Ports and Terminals, Intermodal, Rail, Seafreight and Ships Agency performed well • Logistics affected by strikes and business closure • Business focus • Ports & Terminals • Intermodal • Logistics • Rail • Seafreight • Ships Agency 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  15. FREIGHT SERVICES • Concluded BEE joint venture – tanker operations / bunker barges • Expansion: • MPDC / Maputo Coal, Car and Ferrochrome Terminals • Increased bulk road transport fleet • Acquired bulk liquid storage facilities • Acquired 50% of Vanguard (heavy logistics) • Terminal developments – Dar es Salaam, Richards Bay, Walvis Bay, Luderitz, Maydon Wharf (Durban) 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  16. FINANCIAL SERVICES • 133% earnings growth • Significant growth in deposits (93%), advances (127%) and assets under management (247%) • Benefits from introduction of additional capital • Concluded BEE transaction • Business focus • Corporate Banking • Corporate Finance • Structured Products • Retail – Smart Card 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  17. SHIPPING 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  18. SHIPPING MARKETS 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  19. SHIPPING MARKETS 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  20. SHIPPING MARKETS Capesize fleet profile – expanding fleet 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  21. SHIPPING MARKETS Handysize fleet profile – declining fleet 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  22. MARKET OUTLOOK Drybulk • Fundamentals remain strong with the East driving the drybulk markets • Recent downturn in spot rates caused by a number of short-term factors (delay in ore price agreements, Brazilian port down time, etc.) • Market has recovered substantially with limited effect on long-term charter rates and ship prices • Continued growth in cargo movement – China still a big driver with India adding momentum to increased demand 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  23. MARKET OUTLOOK • Growth in coal / iron ore movements will offset capesize fleet growth in short-term but expect normalisation towards end of 2009 as newbuildings deliver • Increased scrapping expected as scrap steel prices remain high • Handysize market still has very good fundamentals - an old fleet and a growing demand for these ships • Limited impact from slow down in world economy expected 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  24. MARKET OUTLOOK Tankers • Continued growth in demand: • Slow down of growth in West offset by increased demand in East (China / India) • Refining capacity to be built in supply areas, resulting in increased tonne miles • Legislative / environmental restraints will force scrapping of older vessels 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  25. MARKET OUTLOOK • However, still possible oversupply of larger product tankers from big order book in short-term • Small product and chemical tanker markets have more favourable outlook: • Old fleet (30% single hull) and limited newbuildings due to yard capacity constraints • Increased demand from regional trades and feedering requirements • High stainless steel prices limit further substantial investment in the chemical sector 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  26. STRATEGY • Capesize / panamax: • Expand cover from 2010 through growing cargo base / re-let of panamax • Handysize / handymax: • Maintain some open position • Parcel Service contracts – index linked or hedge to lock-in margin • Expand ship operating capability • Products tankers: • Increase cover in 2009 / 2010 as new ships deliver 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  27. STRATEGY • Chemical tankers: • Continue to employ in the joint service to take advantage of anticipated growth in market and market position • Vessel acquisition: • Limited in short-term due to high pricing • Will look for opportunities to grow handysize fleet • Any future weakness – buying / expansion opportunities 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  28. FLEET OVERVIEW 9 owned 30 chartered 20 owned 31 chartered NB: excludes short-term chartered and ships operated in Freight Services. These total +/- 30 ships 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  29. CONTRACTED PROFITS In addition, +/- 10% of fleet is fixed from 2012 to 2015 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  30. TRADING 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  31. MARKET OUTLOOK • Growing demand for commodities: • Food and feed requirements • Bio fuels • Steel production requirements • Shipping requirements for bunkers • General world economic growth particularly in the East • The growth / demand is expected to continue in the long-term 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  32. STRATEGY • Consolidate under a new Trading CEO • Cautious investment in origination and infrastructure • Co-operation with Freight Services and Shipping 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  33. FREIGHT SERVICES 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  34. MARKET OUTLOOK • Continued demand for commodities from sub-Saharan Africa • Catch-up required in infrastructure spend: • Ports • Terminals • Rail 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  35. STRATEGY • Further simplification and streamlining of the divisional structure: • Ports and Terminals • Intermodal and Logistics • Rail • Seafreight • Ships Agencies • SA ship operations / bunker barges 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  36. STRATEGY • Exit from non-core businesses • Expand port and terminal investments in Maputo (MPDC), Richards Bay, Durban and Walvis Bay • Bring on-stream potential new terminal projects • Refocus rail strategy • Black Economic Empowerment 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  37. FINANCIAL SERVICES 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  38. MARKET OUTLOOK • Continued economic growth in SA • Banking sector impacted by sub-prime crisis, higher interest rates, National Credit Act • Substantial infrastructure and commercial investment requirements • Opportunity for a well structured niche bank in the SA market 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  39. STRATEGY • Grow deposit base • Focused, secure lending book • Generate annuity income from: • Asset management • Investment products • Retail fees (Net1) • Treasury management • Advisory • Brand roll out with more visible market presence 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  40. CONCLUSION 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  41. CONCLUSION • Four distinct operations: Shipping, Trading, Freight Services and Financial Services • No significant synergies • Different risk profiles • Management focus essential • Future unbundling / disposal / merger / international listing of shipping all under consideration • Timing to be triggered by need for capital / market conditions • Improve shareholder value through: • Attracting specialised investors • No conglomerate discount • Simplified operations / easier to analyse • Broaden shareholder base 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

  42. CONCLUSION Sound prospects • Shipping: • Long-term charter rates / ship prices indicate expectation of a firm shipping market in the medium-term • Contracted growth in fleet = 30% • Contracted earnings (2008 = 75% of fleet fixed, 2009 = 45%, 2010 = 28%) • Expectation of weakening of Rand (10 cent move = estimated R20 million income statement impact) • Trading, Freight Services and Financial Services well positioned for growth: • Capacity to invest in expansion • New projects coming on stream • Focus on ports and terminal business • Successful, experienced management team 2007 results Conclusion 2007 Activities Shipping Trading Freight Services Financial Services

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