U.S. Markets closed

Grindrod Shipping Holdings Ltd. First Half 2019 Financial Results

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • GSH.JO
  • GRIN

SINGAPORE, Aug. 28, 2019 (GLOBE NEWSWIRE) -- Grindrod Shipping Holdings Ltd. (GRIN) (GSH) (“Grindrod Shipping” or “Company” or “we” or “us” or “our”), a global provider of maritime transportation services in the drybulk and product tanker sectors, today announced its first half 2019 earnings results for the period ended June 30, 2019.

Financial Highlights for the first half of the year ended June 30, 2019

  • Revenues of $167.2 million

  • Gross profit of $5.9 million

  • Adjusted EBITDA of $14.7 million(2)

  • Loss for the period of ($19.0 million) or ($0.99) per ordinary share including a ($4.3) million impairment loss on vessel sales

  • Handysize and Supramax/Ultramax TCE per day of $7,030 and $10,481, respectively, outperformed the Baltic Handysize TC Index (“BHSI”) and Baltic Supramax-58 TC Index (“BSI-58”) benchmarks by approximately 22.2% and 34.2% respectively(1)(2)

  • Medium Range (“MR”) product tanker TCE per day of $14,276 outperformed Clarksons’ Average MR Clean Earnings per day assessment of $12,448 by approximately 14.7%, and small tanker TCE per day of $12,015(1)(2)

  • Period end cash and cash equivalents (including restricted cash) of $50.5 million

(1) The proportionate share of our joint ventures is not reflected in our condensed consolidated and combined statement of profit and loss, but is reflected in our segment results.
(2) Adjusted EBITDA and TCE per day are non-GAAP financial measures. For the definitions of these non-GAAP financial measures and the reconciliation of these measures to the most directly comparable financial measure calculated and presented in accordance with GAAP, please refer to the definitions and reconciliations at the end of this press release.

Operational Highlights for the first half of the year ended June 30, 2019

  • We sold the 2005-built Handysize vessel IVS Kawana for a gross price of $7.8 million with delivery to the buyers in April 2019.

  • We took delivery of the IVS Phoenix, a Japanese-built eco ultramax drybulk carrier newbuilding in June 2019. The vessel has been chartered-in from its owner for a minimum period of three years with options to extend for up to two additional years, at Grindrod Shipping’s election.

  • In June 2019, we completed a financing arrangement with a Japanese shipowner relating to the 2010-built Handysize vessel IVS Knot for a cash amount of $13.0 million. The transaction generated net proceeds of $6.3 million after settling the debt associated with the vessel. The IVS Knot continues to be considered part of our owned fleet.

  • We wound up the Leopard Tankers JV with Vitol, resulting in the Company acquiring 100% ownership of the 2013-built Medium Range eco tankers Leopard Sun and Leopard Moon in January and February, respectively, for $27.0 million per vessel.

  • Our joint venture with Engen Petroleum sold the 2010-built Medium Range tanker Lavela for a gross price of $14.9 million with delivery to the buyers in March 2019. The vessel was the last vessel owned by this joint venture.

  • We sold the 2011-built small product tanker Umgeni for a gross price of $8.9 million with delivery to the buyers in June 2019.

Latest Developments

  • We have agreed in principle to acquire the 33.25% stake of one of our two JV partners in IVS Bulk, which would result in increasing our ownership percentage to 66.75%. We are currently in advanced discussions with lenders to refinance all of the existing debt of IVS Bulk, as well as provide us sufficient capital to acquire the additional 33.25% stake. The remaining partner intends to retain its 33.25% stake in IVS Bulk. We can provide no assurance that we will complete the acquisition until such time that agreements have been finalized and the financing has been obtained.

  • On August 8th, we took delivery of the IVS Okudogo, one of our two owned Ultramax eco new buildings built in Japan. We finalized and drew down $15.7 million in financing with IYO Bank in conjunction with the delivery. An additional $15.7 million remains available to partially finance the purchase of the IVS Prestwick, which is expected in late September.

  • Subject to documentation, we have agreed to enter into a financing arrangement with a Japanese shipowner on attractive terms relating to the 2011-built Handysize vessel IVS Kinglet. The transaction would be on similar terms to the recently completed IVS Knot financing and would result in net cash proceeds of $6.3 million, after repayment of debt associated with the vessel. The transaction is expected to be completed in late September, though we can provide no assurances that the transaction will close.

CEO Commentary

Martyn Wade, the Chief Executive Officer of Grindrod Shipping, commented:

“Our operations in the first half of 2019 showed a slight improvement in revenue, gross profit, and Adjusted EBITDA with a slight decline in net income from the first half of 2018, reflecting weaker drybulk markets, partially offset by a stronger product tanker market. Within that context, we continued to demonstrate our ability to outperform the relevant industry benchmarks in both our drybulk and tanker fleets. Specifically, for the first half of 2019, our TCE per day in the Handysize segment was $7,030 compared to the BHSI of $5,753 (adjusted for 5.0% commissions), an outperformance of approximately 22.2%, whereas in the Ultramax/Supramax segment our TCE per day was $10,481 compared to the BSI-58 of $7,807 (adjusted for 5.0% commissions), an outperformance of approximately 34.2%. On the tanker side, the markets started strong in the winter months before coming off in the second half of the period as refinery maintenance season picked up, impacting charter rates. Still, we achieved an MR tanker TCE per day of $14,276 during the first half of 2019 compared to $12,448 for the Clarksons MR Clean Average Earnings assessment, an outperformance of approximately 14.7%.

The drybulk market in the first half of 2019 showed signs of weakness reflecting trade wars, the Vale dam disaster, swine flu in China impacting soybean imports, a general slowdown in Chinese imports, and other market disruptions. Yet, we believe that the long-term fundamentals appear positive reflecting the reduced supply outlook combined with steady demand especially for minor bulks, which are typically carried by Grindrod Shipping’s vessels. Already, we have experienced an increase in charter rates thus far in the second half, especially in the last few weeks, where the BHSI and BSI-58 have reached rates of $9,250 and $14,507, respectively, as of August 27, 2019. We also expect the product tanker market to improve given the increase in refining capacity and dislocation between refiners and end users combined with the low orderbook for MR tankers. Furthermore, the implementation of the IMO 2020 regulations may have a positive impact on the overall market further limiting supply as the result of higher scrapping rates, increased off hires, vessel repositioning, and slow steaming.

A core focus since our listing in June 2018 has been to streamline our corporate and financial structure by reducing the number of off-balance sheet joint ventures which will allow investors to more easily understand our operating and financial performance. To this end, we wound up our Leopard Tankers joint venture with Vitol and our Petrochemical Shipping joint venture with Engen Petroleum. We also agreed in principle to acquire the stake of one of our joint venture partners in IVS Bulk, which would allow us to consolidate its 12 vessels in our financials going forward.

We believe that the current drybulk and product tanker markets present attractive consolidation and growth opportunities and that Grindrod Shipping is well positioned to take advantage of them, leveraging our competitive advantages which include our modern, high quality Japanese built fleet, our ability to maximize revenue through the use of in-house commercial pools and cargoes, and our close commercial relationships with global and regional industry players.”

Results for the Six Months Ended June 30, 2019 and 2018

In comparison to the results for the first half of 2018, the results for the first half of 2019 were impacted by lower TCE per day rates achieved in our handysize and ultramax/supramax drybulk carrier segments, reflecting the weaker spot markets in these segments, and higher TCE per day rates achieved in our medium range and small tanker segments, reflecting the stronger spot markets in these segments. In all of these four segments vessel operating costs per day were lower for the first half of 2019 in comparison to the first half of 2018. Administrative expenses were lower in the first half of 2019 as compared to the first half of 2018, and the results for the first half of 2019 include the impairment of vessels and a foreign exchange loss, whereas the results for the first half of 2018 include a profit on sale of the OACL and Unicorn Bunker businesses and foreign exchange gains.

Revenue was $167.2 million for the six months ended June 30, 2019 and $150.8 million for the six months ended June 30, 2018. Vessel revenue was $147.7 million for the six months ended June 30, 2019 and $147.4 million for the six months ended June 30, 2018.

In the drybulk business, handysize total revenue and supramax/ultramax total revenue was $59.0 million and $72.0 million, respectively, for the six months ended June 30, 2019, and $53.8 million and $73.7 million, respectively, for the six months ended June 30, 2018. Handysize vessel revenue and supramax/ultramax vessel revenue was $50.2 million and $71.4 million, respectively, for the six months ended June 30, 2019, and $53.0 million and $73.1 million, respectively, for the six months ended June 30, 2018.

In the tankers business, our medium range tankers and small tankers total revenues were $27.6 million and $15.9 million, respectively, for the six months ended June 30, 2019, and $18.9 million and $9.0 million, respectively, for the six months ended June 30, 2018. Medium range tankers and small tankers vessel revenues were $20.3 million and $7.4 million, respectively, for the six months ended June 30, 2019 and $18.9 million and $9.0 million, respectively for the six months ended June 30, 2018.

Handysize TCE per day was $7,030 per day for the six months ended June 30, 2019 and $8,997 per day for the six months ended June 30, 2018. Supramax/ultramax TCE per day was to $10,481 per day for the six months ended June 30, 2019 and $11,092 per day for the six months ended June 30, 2018.

Medium range tankers TCE per day was $14,276 per day for the six months ended June 30, 2019 and $11,570 per day for the six ended June 30, 2018. Small tankers TCE per day was $12,015 per day for the six months ended June 30, 2019 and $11,323 per day for the six months ended June 30, 2018.

Cost of sales was $161.3 million for the six months ended June 30, 2019 and $148.4 million for the six months ended June 30, 2018. In the drybulk business, our handysize segment and supramax/ultramax segment cost of sales was $60.5 million and $72.6 million, respectively, for the six months ended June 30, 2019 and $50.6 million and $74.8 million, respectively, for the six months ended June 30, 2018.

Handysize voyage expenses and supramax/ultramax voyage expenses were $27.3 million and $37.1 million, respectively, for the six months ended June 30, 2019 and $24.8 million and $35.3 million, respectively, for the six months ended June 30, 2018. Handysize vessel operating costs and supramax/ultramax vessel operating costs were $11.9 million and $1.6 million, respectively, for the six months ended June 30, 2019, and $13.1 million and $1.7 million, respectively, for the six months ended June 30, 2018. Handysize vessel operating costs per day were $4,980 per day for the six months ended June 30, 2019 and $5,238 per day for the six months ended June 30, 2018. Supramax/ultramax vessel operating costs per day were $4,428 per day for the six months ended June 30, 2019 and $4,616 per day for the six months ended June 30, 2018.

The long-term charter-in costs per day for our supramax/ultramax fleet was $12,695 per day during the first six months of 2019. During this period, out of 3,271 operating days in the supramax/ultramax segment, 44.8% were fulfilled with owned/long-term chartered-in vessels and the remaining 55.2% with short-term chartered-in vessels.

In the tankers business, medium range tankers and small tankers cost of sales were $24.5 million and $14.3 million, respectively, for the six months ended June 30, 2019 and $19.7 million and $8.4 million, respectively, for the six months ended June 30, 2018.

Medium range tankers voyage expenses and small tankers voyage expenses were $3.9 million and $1.1 million, respectively, for the six months ended June 30, 2019 and $3.8 million and $2.2 million, respectively, for the six months ended June 30, 2018. Medium range tankers vessel operating costs and small tankers vessel operating costs were $5.2 million and $3.5 million, respectively, for the six months ended June 30, 2019 and $5.9 million and $4.9 million, respectively, for the six months ended June 30, 2018. Medium range tankers vessel operating costs per day were $6,576 per day for the six months ended June 30, 2019 and $7,279 per day for the six months ended June 30, 2018. Small tankers vessel operating costs per day were $6,516 per day for the six months ended June 30, 2019 and $7,750 per day for the six months ended June 30, 2018.

The long-term charter-in costs per day for our medium range tanker fleet was $15,298 per day during the first six months of 2019 and during this period all of the operating days in the medium range segment were fulfilled with owned/long-term chartered-in vessels. The Company did not have any long-term or short-term chartered-in small tankers during this period.

Gross profit was $5.9 million for the six months ended June 30, 2019 and $2.4 million for the six months ended June 30, 2018.

Other operating (expense) income was operating expense of $4.8 million for the six months ended June 30, 2019 and $6.0 million operating income for the six months ended June 30, 2018.

Administrative expenses were $13.3 million for the six months ended June 30, 2019 and $17.3 million for the six months ended June 30, 2018.

Share of losses of joint ventures was a loss of $1.5 million for the six months ended June 30, 2019 and a loss of $1.4 million for the six months ended June 30, 2018.

Interest income was $1.2 million for the six months ended June 30, 2019 and $1.9 million for the six months ended June 30, 2018.

Interest expense was $5.8 million for the six months ended June 30, 2019 and $3.0 million for the six months ended June 30, 2018.

Income tax expense was $0.6 million for the six months ended June 30, 2019 and $2.1 million for the six months ended June 30, 2018.

Loss for the six months ended June 30, 2019 was $19.0 million and loss for the six months ended June 30, 2018 was $13.5 million.

Cash used in operating activities was an outflow of $32.4 million for the six months ended June 30, 2019 and an outflow of $46.2 million for the six months ended June 30, 2018. Cash generated from investing activities was an inflow of $31.2 million for the six months ended June 30, 2019 and an inflow of $33.2 million for the six months ended June 30, 2018. Cash generated from financing activities was an inflow of $2.8 million for the six months ended June 30, 2019 and an inflow of $19.5 million for the six months ended June 30, 2018.

As of June 30, 2019, we had cash and cash equivalents (including restricted cash) of $50.5 million.

Conference Call details

Tomorrow, Thursday, August 29, 2019 at 8:00 a.m. Eastern Daylight Time / 2:00 p.m. South African Standard Time / 8:00pm Singapore Time, the Company’s management will host a conference call and webcast to discuss the earnings results.

Conference Call details: Participants should dial into the call 10 minutes before the scheduled time using the following numbers: +1 866 966 1396 (US Toll Free Dial In), 0800 376 7922 (UK Toll Free Dial In), +800 852 6250 (Singapore Toll Free Dial In), 0800 014 553 (South Africa Toll Free Dial In), +44 (0)2071 928 000 (International Standard Dial In). Please enter code: 6092049.

An audio replay of the conference call will be available until Thursday, September 5, 2019, by dialing +1 866 331 1332 (US Toll Free Dial In), +44 (0)3333 009 785 (International Standard Dial In), +65 3158 3995 (Singapore Dial In), or 0800 014 706 (South Africa Toll Free Dial In). Access Code 6092049.

Audio Webcast - Slides Presentation

There will be an audio webcast of the conference call, accessible via the internet through the Grindrod Shipping website www.grinshipping.com. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

The slide presentation of the financial results for the first half ended June 30, 2019 will be accessible in PDF format 10 minutes prior to the conference call and webcast on the Investor Relations section of our website located at www.grinshipping.com. Participants to the webcast can download the PDF presentation. The conference call will take participants through the slide presentation on the website.

About Grindrod Shipping Holdings Ltd.

Grindrod Shipping owns and operates a diversified fleet of owned and long-term and short-term chartered-in drybulk vessels and product tankers. The drybulk business, which operates under the brand “Island View Shipping” (“IVS”) includes a fleet of 17 handysize drybulk carriers and 14 supramax/ultramax drybulk carriers on the water, with three ultramax drybulk carriers under construction in Japan due be delivered in 2019 and 2020. The tanker business, which operates under the brand “Unicorn Shipping” (“Unicorn”) includes a fleet of seven medium range tankers and two small tankers. The Company is based in Singapore, with offices in London, Durban, Tokyo, Cape Town and Rotterdam. Grindrod Shipping is listed on NASDAQ under the ticker “GRIN” and on the JSE under the ticker “GSH”.

Fleet Table

The following table sets forth certain summary information regarding our fleet as of the date of this press release:

Drybulk Carriers — Owned Fleet (24 Vessels)

Vessel Name

Built

Country of
Build

DWT

Ownership
Percentage

Type of Employment

Handysize – Eco

IVS Tembe(3)

2016

Japan

37,740

33.5%

IVS Commercial(7)

IVS Sunbird(3)

2015

Japan

33,400

33.5%

IVS Handysize Pool

IVS Thanda(3)

2015

Japan

37,720

33.5%

IVS Commercial(7)

IVS Kestrel(3)

2014

Japan

32,770

33.5%

IVS Handysize Pool

IVS Phinda(3)

2014

Japan

37,720

33.5%

IVS Commercial(7)

IVS Sparrowhawk(3)

2014

Japan

33,420

33.5%

IVS Handysize Pool

Handysize

IVS Merlion

2013

China

32,070

100%

IVS Handysize Pool

IVS Raffles

2013

China

32,050

100%

IVS Handysize Pool

IVS Ibis

2012

Japan

28,240

100%

IVS Handysize Pool

IVS Kinglet(8)

2011

Japan

33,130

100%

IVS Handysize Pool

IVS Magpie

2011

Japan

28,240

100%

IVS Handysize Pool

IVS Orchard

2011

China

32,530

100%

IVS Handysize Pool

IVS Knot(6)(8)

2010

Japan

33,140

100%

IVS Handysize Pool

IVS Sentosa

2010

China

32,700

100%

IVS Handysize Pool

IVS Triview(1)

2009

Japan

32,280

51%

IVS Handysize Pool

IVS Kingbird

2007

Japan

32,560

100%

IVS Handysize Pool

IVS Nightjar

2004

Japan

32,320

100%

IVS Handysize Pool

Supramax/Ultramax – Eco

IVS Okudogo

2019

Japan

61,330

100%

IVS Supramax Pool

IVS Swinley Forest(3)

2017

Japan

60,490

33.5%

IVS Supramax Pool

IVS Gleneagles(3)

2016

Japan

58,070

33.5%

IVS Supramax Pool

IVS North Berwick(3)

2016

Japan

60,480

33.5%

IVS Supramax Pool

IVS Bosch Hoek(3)

2015

Japan

60,270

33.5%

IVS Supramax Pool

IVS Hirono(3)

2015

Japan

60,280

33.5%

IVS Supramax Pool

IVS Wentworth(3)

2015

Japan

58,090

33.5%

IVS Supramax Pool


Drybulk Carriers — Long-Term Charter-In Fleet (7 Vessels)

Vessel Name

Built

Country of
Build

DWT

Charter-In
Period

Type of Employment

Supramax/Ultramax – Eco

IVS Phoenix

2019

Japan

61,470

2022-24(2)

IVS Supramax Pool

IVS Hayakita(6)

2016

Japan

60,400

2023-26(2)

IVS Supramax Pool

IVS Windsor

2016

Japan

60,280

2023-26(2)

IVS Supramax Pool

IVS Augusta(6)

2015

Philippines(4)

57,800

2020-22(2)

IVS Supramax Pool

IVS Pinehurst(6)

2015

Philippines(4)

57,810

2020-22(2)

IVS Supramax Pool

IVS Crimson Creek

2014

Japan

57,950

2019-21(2)

IVS Supramax Pool

IVS Naruo(6)

2014

Japan

60,030

2021-24(2)

IVS Supramax Pool

Drybulk Carriers Under Construction — Owned Fleet (1 Vessel)

Vessel Name

Expected
Delivery

Country of
Build

DWT

Ownership
Percentage

Supramax/Ultramax – Eco

IVS Prestwick

September 2019

Japan

61,000

100%

Drybulk Carriers Under Construction — Long-Term Charter-In Fleet (2 Vessels)

Vessel Name

Expected
Delivery

Country of
Build

DWT

Charter-In
Period

Supramax/Ultramax – Eco

IVS Pebble Beach(6)

3Q 2020

Japan

62,000

2022-24(2)

IVS Atsugi(6)

3Q 2020

Japan

62,000

2022-24(2)


Tankers – Owned Fleet (7 Vessels)

Vessel Name

Built

Country of
Build

DWT

IMO
Designation

Ownership
Percentage

Type of Employment

Medium Range Tankers – Eco

Matuku

2016

South Korea

50,140

II,III

100%

Bareboat Charter (Expires 2020-22) (2)

Leopard Moon

2013

South Korea

50,000

III

100%

Vitol Commercial(5)

Leopard Sun

2013

South Korea

50,000

III

100%

Vitol Commercial(5)

Medium Range Tankers

Rhino

2010

South Korea

39,710

II, III

100%

Handy Tanker Pool

Inyala

2008

South Korea

40,040

III

100%

Handy Tanker Pool

Small Product Tankers

Kowie

2010

China

16,890

II, III

100%

Brostrom Tanker Pool

Breede

2009

China

16,900

II, III

100%

Spot Market and COA

Tankers – Long-Term Charter-In Fleet (2 Vessels)

Vessel Name

Built

Country of
Build

DWT

IMO
Designation

Charter-In
Period

Type of Employment

Medium Range Tankers – Eco

Doric Breeze

2013

South Korea

51,570

II, III

2Q 2020

Vitol Commercial(5)

Doric Pioneer

2013

South Korea

51,570

II, III

1Q 2020

Vitol Commercial(5)

  1. Owned through a joint venture with Mitsui & Co., Ltd. in which we have a 51% interest.

  2. Expiration date range represents the earliest and latest redelivery periods due to extension options.

  3. Owned through a joint venture with Regiment Capital Ltd. and Sankaty European Investments III, S.à.r.l. in which we have a 33.5% interest.

  4. Constructed at Tsuneishi Cebu Shipyard, a subsidiary of Tsuneishi Shipbuilding of Japan.

  5. Our eco product tankers, other than Matuku, are commercially managed by Mansel Pte. Ltd. Mansel, an affiliate of Vitol, procures shipping for various oil cargoes traded by Vitol.

  6. Includes purchase options for Grindrod Shipping. For IVS Augusta and IVS Pinehurst, Grindrod Shipping has the option to purchase either, but not both, of these vessels of its choice.

  7. Commercially managed by Grindrod Shipping alongside the IVS Handysize Pool.

  8. IVS Knot has undergone a financing arrangement in which we sold the vessel but retained the right to control the use of the vessel for a period up to 2030, and we have an option to acquire the vessel commencing in 2021. We regard the vessel as owned since we have retained the right to control the use of the vessel. We expect to enter into a similar arrangement in respect of IVS Kinglet in September 2019 that would result in net cash proceeds of $6.3 million, after repayment of debt associated with IVS Kinglet, though we can provide no assurances that this transaction will be concluded.

Segment Results of Operations(1)

(In thousands of U.S. dollars)

Six months ended June 30,

2019

2018

Drybulk Carriers Business

Handysize Segment

Revenue

$

58,983

$

53,828

Cost of sales

$

(60,479

)

$

(50,601

)

Supramax/Ultramax Segment

Revenue

$

71,963

$

73,675

Cost of sales

$

(72,569

)

$

(74,755

)

Tanker Business

Medium Range Tanker Segment

Revenue

$

27,647

$

18,921

Cost of sales

$

(24,510

)

$

(19,709

)

Small Tanker Segment

Revenue

$

15,917

$

8,966

Cost of sales

$

(14,284

)

$

(8,378

)

___________________________________


Selected Historical and Statistical Data of Our Operating Fleet

Set forth below are selected historical and statistical data of our operating fleet for the six months ended June 30, 2019 and 2018 that we believe may be useful in better understanding our operating fleet’s financial position and results of operations(1). This table contains certain information regarding TCE per day, vessel operating costs per day and long-term charter-in costs per day which are non-GAAP measures. For a discussion and reconciliation of certain of these measures, see “Non-GAAP Financial Measures” at the end of this press release.

Six months ended June 30,

(In thousands of U.S. dollars)

2019

2018



Drybulk Carriers Business

Handysize Segment

Calendar days(2)

3,306

3,293

Available days(3)

3,285

3,183

Operating days(4)

3,262

3,129

Owned fleet operating days(5)

2,341

2,339

Long-term charter-in days(6)

-

181

Short-term charter-in days(7)

921

609

Fleet utilization(8)

99.3

%

98.3

%

TCE per day(9)

$

7,030

$

8,997

Vessel operating costs per day(10)

$

4,980

$

5,238

Long-term charter-in costs per day(11)

$

-

$

8,600

Supramax/Ultramax Segment

Calendar days(2)

3,285

3,471

Available days(3)

3,280

3,423

Operating days(4)

3,271

3,402

Owned fleet operating days(5)

358

343

Long-term charter-in days(6)

1,106

1,196

Short-term charter-in days(7)

1,807

1,863

Fleet utilization(8)

99.7

%

99.4

%

TCE per day(9)

$

10,481

$

11,092

Vessel operating costs per day(10)

$

4,428

$

4,616

Long-term charter-in costs per day(11)

$

12,695

$

13,049




Tankers Business

Medium Range Tankers Segment

Calendar days(2)

1,149

1,358

Available days(3)

1,149

1,346

Operating days(4)

1,149

1,311

Owned fleet operating days(5)

787

779

Long-term charter-in days(6)

362

532

Short-term charter-in days(7)

-

-

Fleet utilization(8)

100

%

97.4

%

TCE per day(9)

$

14,276

$

11,570

Vessel operating costs per day(10)

$

6,576

$

7,279

Long-term charter-in costs per day(11)

$

15,298

$

15,031

Small Tanker Segment

Calendar days(2)

541

634

Available days(3)

529

610

Operating days(4)

529

600

Owned fleet operating days(5)

529

600

Long-term charter-in days(6)

-

-

Short-term charter-in days(7)

-

-

Fleet utilization(8)

100

%

98.4

%

TCE per day(9)

$

12,015

$

11,323

Vessel operating costs per day(10)

$

6,516

$

7,750

Long-term charter-in costs per day(11)

$

-

$

-

___________________________________________


Unaudited Interim Condensed Consolidated and Combined Statement of Financial Position

June 30,
2019

December 31,
2018

US$’000

US$’000

ASSETS

Current assets

Cash and bank balances

37,855

35,636

Trade receivables

9,986

12,034

Contract assets

3,590

1,959

Other receivables and prepayments

18,227

17,902

Due from related parties

8,222

13,516

Loans to joint ventures

5,469

23,803

Derivative financial instruments

115

-

Inventories

8,605

10,841

92,069

115,691

Assets classified as held for sale

612

7,258

Total current assets

92,681

122,949

Non-current assets

Restricted cash

12,674

11,627

Ships, property, plant and equipment

287,505

249,602

Right of use assets

67,859

-

Interest in joint ventures

52,135

54,560

Intangible assets

132

41

Goodwill

7,448

7,351

Deferred tax assets

1,496

1,497

Total non-current assets

429,249

324,678

Total assets

521,930

447,627

LIABILITIES AND EQUITY

Current liabilities

Trade and other payables

27,156

22,364

Bank loans and other borrowings

18,951

18,323

Lease liabilities

27,169

-

Due to related parties

7,277

6,238

Income tax payable

3,499

3,073

Derivative financial instruments

9

867

Provisions

961

1,578

Contract liabilities

3,639

4,223

Total current liabilities

88,661

56,666


Unaudited Interim Condensed Consolidated and Combined Statement of Financial Position (cont’d)

June 30,
2019

December 31,
2018

US$’000

US$’000

Non-current liabilities

Bank loans and other borrowings

113,505

96,133

Lease liabilities

40,743

-

Trade and other payables

398

403

Retirement benefit obligation

1,880

1,922

Total non-current liabilities

156,526

98,458

Capital and reserves

Share capital

320,683

320,683

Other reserves

(17,946

)

(21,140

)

Accumulated losses

(25,994

)

(7,040

)

Total equity

276,743

292,503

Total equity and liabilities

521,930

447,627



Unaudited Interim Condensed Consolidated and Combined Statement of Profit or Loss

For the six-month period ended June 30

2019

2018

US$’000

US$’000

Revenue

167,220

150,841

Cost of sales

Voyage expenses

(74,382

)

(71,513

)

Vessel operating costs

(16,749

)

(16,344

)

Charter hire costs

(30,749

)

(54,280

)

Depreciation and amortisation – owned assets

(8,496

)

(6,649

)

Depreciation – right of use assets

(13,821

)

-

Other expenses

(352

)

354

Cost of ship sale

(16,739

)

-

Gross profit

5,932

2,409

Other operating (expense) income

(4,802

)

5,965

Administrative expenses

(13,313

)

(17,292

)

Share of losses of joint ventures

(1,538

)

(1,372

)

Interest income

1,215

1,945

Interest expense

(5,815

)

(2,961

)

Loss before taxation

(18,321

)

(11,306

)

Income tax expense

(633

)

(2,147

)

Loss for the period

(18,954

)

(13,453

)

Loss per share:

Basic and diluted, loss for the period attributable to ordinary equity holders of the company (per share figures in U.S. dollars)

(0.99

)

(0.71

)

Per share figures based on 19,063,833 ordinary shares


Unudited Summary Statement of Cash Flows

The following table presents cash flow information for each of the six months ended June 30, 2019 and 2018:

Six months ended June 30,

(In thousands of U.S. dollars)

2019

2018

Cash used in operating activities

$

(32,443

)

$

(46,246

)

Cash generated from investing activities

31,171

33,215

Cash generated from financing activities

2,770

19,450

Increase in cash and cash equivalents

1,498

6,419

Cash and cash equivalents, beginning of period

33,498

45,245

Differences in translation

125

(1,269

)

Cash and cash equivalents, end of period

35,121

50,395

Non-GAAP Financial Measures

The financial information included in this press release includes certain “non-GAAP financial measures” as such term is defined in SEC regulations governing the use of non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in, or excluded from, the most directly comparable measure calculated and presented in accordance with IFRS. For example, non-GAAP financial measures may exclude the impact of certain unique and/or non-operating items such as acquisitions, divestitures, restructuring charges, large write-offs or items outside of management’s control. Management believes that the non-GAAP financial measures described below provide investors and analysts useful insight into our financial position and operating performance.

TCE Revenue and TCE per day.

TCE revenue is defined as vessel revenue less voyage expenses. Such TCE revenue, divided by the number of our operating days during the period, is TCE per day. Vessel revenue and voyage expenses as reported for our operating segments include a proportionate share of vessel revenue and voyage expenses attributable to our joint ventures based on our proportionate ownership of the joint ventures for the period the joint venture existed during the relevant period. The number of operating days used to calculate TCE per day also includes the proportionate share of our joint ventures’ operating days for the period the joint venture existed during the relevant period and also includes charter-in days.

TCE per day is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters have to cover voyage expenses and are generally not expressed in per-day amounts while charter hire rates for vessels on time charters do not cover voyage expenses and generally are expressed in per day amounts.

Below is a reconciliation from TCE revenue to revenue:

Six Months ended June 30,

2019

2018

(In thousands of U.S. dollars)

Revenue

Voyage
Expenses

TCE
Revenue

Revenue

Voyage
Expenses

TCE
Revenue

Vessel Revenue

Handysize

50,228

(27,296

)

22,932

52,955

(24,805

)

28,150

Supramax/ultramax

71,401

(37,118

)

34,283

73,082

(35,344

)

37,738

Medium Range Tankers

20,294

(3,891

)

16,403

18,946

(3,773

)

15,173

Small Tankers

7,437

(1,081

)

6,356

8,966

(2,169

)

6,797

Other drybulk carriers

-

1,215

Other tankers

2,569

2,570

Other revenue

19,542

3,424

Adjustments*

(4,251

)

(10,317

)

Revenue

167,220

150,841

______________________________

Vessel operating costs per day.

Vessel operating costs per day represents vessel operating costs divided by the number of calendar days for owned vessels during the period. The vessel operating costs and the number of calendar days used to calculate vessel operating costs per day includes the proportionate share of our joint ventures’ vessel operating costs and operating days for the period the joint venture existed during the relevant period and excludes charter-in costs and charter-in days.

Vessel operating costs per day is a non-GAAP performance measure commonly used in the shipping industry to provide an understanding of the daily technical management costs relating to the running of owned vessels.

Long-term charter-in costs and Long-term charter-in costs per day.

Long-term charter-in costs is defined as the charter costs relating to chartered-in vessels included in our Fleet from time to time, which are vessels for which the period of the charter that we initially commit to is 12 months or more, even if at a given time the remaining period of their charter may be less than 12 months (“long-term charter-in vessels”). Such long-term charter-in costs, divided by the number of operating days for the relevant vessels during the period, is long-term charter-in costs per day.

Before the application of IFRS 16 on January 1, 2019, long-term charter-in costs were included in charter hire costs in the statement of profit and loss. From January 1, 2019, charter hire costs in the statement of profit and loss only includes charter costs that meet the definition of short-term leases in terms of IFRS 16 which, due to practical expedients allowed under IFRS 16, for the period from January 1, 2019 to December 31, 2019 includes charter costs relating to some but not all of our long-term charter-in vessels, with the charter costs relating to the remainder of our long-term charter-in vessels presented as lease payments on ships. Accordingly, charter hire costs and lease payments on ships together comprise “adjusted charter hire costs”.

Long-term charter-in costs and long-term charter-in costs per day are non-GAAP performance measures used primarily to provide an understanding of the total costs and total costs per day relating to the charter-in of the company’s long-term chartered-in vessels.

Below is a reconciliation from long-term charter-in costs to adjusted charter hire costs.

Six Months ended June 30,

2019

(In thousands of U.S. dollars)

Charter hire
costs

Lease
payments
on Ships

Adjusted
charter hire
costs

Long-term
charter-in
costs

Short-
term
charter-in
costs

Adjusted
charter
hire costs

Handysize

7,153

-

7,153

-

7,153

7,153

Supramax/ultramax

21,329

11,938

33,267

14,041

19,226

33,267

Medium Range Tankers

2,769

2,769

5,538

5,538

-

5,538

Small Tankers

-

-

-

-

-

-

Others

-

-

-

-

Adjustments(*)

(502

)

-

(502

)

(502

)

30,749

14,707

45,456

45,456


Six Months ended June 30,

2018

(In thousands of U.S. dollars)

Charter hire
costs

Lease
payments
on Ships

Adjusted
charter hire
costs

Long-term
charter-in
costs

Short-
term
charter-in
costs

Adjusted
charter
hire costs

Handysize

8,418

-

8,418

1,556

6,862

8,418

Supramax/ultramax

36,680

-

36,680

15,607

21,073

36,680

Medium Range Tankers

7,990

-

7,990

7,990

-

7,990

Small Tankers

-

-

-

-

-

-

Others

1,468

-

1,468

1,468

Adjustments(*)

(276

)

-

(276

)

(276

)

54,280

-

54,280

54,280

_________________________________


EBITDA and Adjusted EBITDA.

EBITDA is defined as earnings before income tax expense or credit, interest income, interest expense, share of (profit)/loss of joint ventures and depreciation and amortization. For periods commencing January 1, 2019, interest expense and depreciation and amortization include amounts relating to leases and classified, as appropriate, as interest expense or depreciation – right of use assets under the application of IFRS 16. Adjusted EBITDA is EBITDA adjusted to exclude the items set forth in the table below, which represent certain non-recurring, non-operating or other items that we believe are not indicative of the ongoing performance of our core operations.

EBITDA and Adjusted EBITDA are used by analysts in the shipping industry as common performance measures to compare results across peers. EBITDA and Adjusted EBITDA are not items recognized by IFRS, and should not be considered in isolation or used as alternatives to loss for the period or any other indicator of our operating performance.

Our presentation of EBITDA and Adjusted EBITDA is intended to supplement investors’ understanding of our operating performance by providing information regarding our ongoing performance that exclude items we believe do not directly affect our core operations and enhancing the comparability of our ongoing performance across periods. Our management considers EBITDA and Adjusted EBITDA to be useful to investors because such performance measures provide information regarding the profitability of our core operations and facilitate comparison of our operating performance to the operating performance of our peers. Additionally, our management uses EBITDA and Adjusted EBITDA as measures when reviewing our operating performance. While we believe these measures are useful to investors, the definitions of EBITDA and Adjusted EBITDA used by us may not be comparable to similar measures used by other companies.

The table below presents the reconciliation between loss for the period to EBITDA and Adjusted EBITDA for the six months ended June 30, 2019 and June, 30 2018:

Six Months ended

June 30,

(In thousands of U.S. dollars)

2019

2018

Loss for the period

$

(18,954

)

$

(13,453

)

Adjusted for:

Income tax expense

633

2,147

Interest income

(1,215

)

(1,945

)

Interest expense

5,815

2,961

Share of losses of joint ventures

1,538

1,372

Depreciation and amortization

22,610

6,763

EBITDA

$

10,427

$

(2,155

)

Adjusted for

Listing costs

-

4,079

Impairment loss on ships

4,304

-

Gain on disposals of businesses

-

(3,255

)

Gain on deemed disposal of previously held joint venture

-

(324

)

ADJUSTED EBITDA

$

14,731

$

(1,655

)

Headline Loss.

The Johannesburg Stock Exchange, or JSE, requires that we calculate and publicly disclose Headline Loss Per Share and Diluted Headline Loss Per Share. Headline Loss Per Share is calculated using net income which has been determined based on IFRS. Accordingly, this may differ from the Headline Loss Per Share calculation of other companies listed on the JSE because such companies may report their financial results under a different financial reporting framework such as U.S. GAAP.

Headline Loss for the period represents Loss for the period adjusted for the re-measurements that are more closely aligned to the operating or trading results as set forth below, and Headline Loss Per Share represents this figure divided by the weighted average number of ordinary shares outstanding for the period.


The table below presents a reconciliation between Loss for the period to Headline Loss for the six months ended June 30, 2019 and June, 30 2018.

Six Months ended June 30,

(In thousands of U.S. dollars, other than per share data)

2019

2018

Reconciliation between loss for the period and headline loss:

Loss for the period

$

(18,954

)

$

(13,453

)

Adjusted for:

- Impairment loss on joint venture’s ship

-

1,423

- Impairment loss on ships

4,304

-

- Loss (Gain) on disposals of plant and equipment

193

(63

)

- Gain on disposals of businesses

-

(3,255

)

- Gain on deemed disposal of previously held joint venture

-

(324

)

- Capital gains tax on sale of businesses

-

1,809

Headline Loss

$

(14,457

)

$

(13,863

)

Number of shares on which the per share figures have been calculated

19,063,833

19,063,833

Basic and diluted loss per share

$

(0.99

)

$

(0.71

)

Basic and diluted headline loss per share

$

(0.76

)

$

(0.73

)


IFRS 16
.

The “Unaudited Interim Condensed Consolidated and Combined Statement of Profit or Loss” and “Unaudited Summary Statement of Cash Flows” sections in this press release reflects the adoption of IFRS 16 on January 1, 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. We have presented below, the amounts by which each financial statement line item is affected in the current reporting period by the application of IFRS 16 as compared to IAS 17 Leases (“IAS 17”) that was in effect before the change.

Our management believes that these non-GAAP measures provide comparability of the financial results and cash flow position that was reported for the six months ended June 30, 2018 and also believes that these non-GAAP measures provide investors the ability to better understand the results from the primary operation of our business in 2019 compared with 2018. These non-GAAP financial measures should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP.


Impact of IFRS 16 on the Statement of Profit or Loss for the six months ended June 30, 2019

(In thousands of U.S. dollars)

Under
previous
IFRS

Adoption of
IFRS 16 (i)

Under new
IFRS

Cost of sales

Charter hire costs

$

(45,453

)

$

14,704

$

(30,749

)

Vessel operating costs

(16,820

)

71

(16,749

)

Depreciation – right of use assets

-

(13,821

)

(13,821

)

Administrative expenses

(13,320

)

7

(13,313

)

Interest expense

(4,073

)

(1,742

)

(5,815

)


Impact of IFRS 16 on the Statement of Cash Flows for the six months ended June 30, 2019

(In thousands of U.S. dollars)

Under
previous
IFRS

Adoption of
IFRS 16 (ii)

Under new
IFRS

Cash used in operating activities

(45,687)

13,244

(32,443)

Cash generated from financing activities

16,014

(13,244)

2,770

(i) The standard requires the change in the amount and presentation of expenses related to leases formerly recorded as operating leases. Operating leases were previously recorded as “Charter hire costs” for ships, “Vessel operating costs” for ship equipment and “Administrative expenses” for property. When applying IFRS 16, the expense is split into “Interest expense” and “Depreciation – right of use assets”. Expenses relating to short-term leases and low value leases will continue to be expensed and disclosed in line with the previous treatment.

(ii) Payments of operating leases were previously presented as part of net cash flows used in operating activities. Under IFRS 16, the cash payments under the leases will be split between cash payments for the interest portion of the lease liability and cash payments for the principal portion. Payments for the principal portion will be presented in the financing activities and payments for the interest portion will remain in the operating activities.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995 with respect to Grindrod Shipping’s financial condition, results of operations, cash flows, business strategies, operating efficiencies, competitive position, growth opportunities, plans and objectives of management, and other matters. These forward looking statements, including, among others, those relating to our future business prospects, revenues and income, are necessarily estimates and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Accordingly, these forward-looking statements should be considered in light of various important factors, including those set forth below. Words such as “may,” “expects,” “intends,” “plans,” “believes,” “anticipates,” “hopes,” “estimates,” and variations of such words and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by Grindrod Shipping at the time these statements were made. Although Grindrod Shipping believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Grindrod Shipping. Actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation, Grindrod Shipping’s future operating or financial results; the strength of world economies, including, in particular, in China and the rest of the Asia-Pacific region; cyclicality of the drybulk and tanker markets, including general drybulk and tanker shipping market conditions and trends, including fluctuations in charter hire rates and vessel values; changes in supply and demand in the drybulk and tanker shipping industries, including the market for Grindrod Shipping’s vessels; changes in the value of Grindrod Shipping’s vessels; changes in Grindrod Shipping’s business strategy and expected capital spending or operating expenses, including drydocking, surveys, upgrades and insurance costs; competition within the drybulk and tanker industries; seasonal fluctuations within the drybulk and tanker industries; Grindrod Shipping’s ability to employ its vessels in the spot market and its ability to enter into time charters after its current charters expire; general economic conditions and conditions in the oil and coal industries; Grindrod Shipping’s ability to satisfy the technical, health, safety and compliance standards of its customers, especially major oil companies and oil producers; the failure of counterparties to our contracts to fully perform their obligations with Grindrod Shipping; Grindrod Shipping’s ability to execute its growth strategy; international political and economic conditions including additional tariffs imposed by China and the United States; potential disruption of shipping routes due to weather, accidents, political events, natural disasters or other catastrophic events; vessel breakdowns; corruption, piracy, military conflicts, political instability and terrorism in locations where we may operate; fluctuations in interest rates and foreign exchange rates and the uncertainty surrounding the continued existence of the London Interbank Offered Rate; changes in the costs associated with owning and operating Grindrod Shipping’s vessels; changes in, and Grindrod Shipping’s compliance with, governmental, tax, environmental, health and safety regulations including the International Maritime Organization, or IMO 2020, regulations limiting sulfur content in fuels; potential liability from pending or future litigation; Grindrod Shipping’s ability to procure or have access to financing, its liquidity and the adequacy of cash flows for its operation; the continued borrowing availability under Grindrod Shipping’s debt agreements and compliance with the covenants contained therein; Grindrod Shipping’s ability to fund future capital expenditures and investments in the construction, acquisition and refurbishment of its vessels; Grindrod Shipping’s dependence on key personnel; Grindrod Shipping’s expectations regarding the availability of vessel acquisitions and its ability to buy and sell vessels and to charter-in vessels as planned or at prices we deem satisfactory; adequacy of Grindrod Shipping’s insurance coverage; effects of new technological innovation and advances in vessel design; Grindrod Shipping’s ability to realize the benefits of the separation from Grindrod Limited;Grindrod Shipping’s ability to operate as an independent entity; and the other factors set out in “Item 3. Key Information-Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2018 filed with the Securities and Exchange Commission. Grindrod Shipping undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events except as required by law.

Company Contact:
Martyn Wade / Stephen Griffiths
CEO / CFO
Grindrod Shipping Holdings Ltd.
200 Cantonment Road, #03-01 Southpoint
Singapore, 089763
Email: ir@grindrodshipping.com
Website: www.grinshipping.com

Investor Relations / Media Contact:
Nicolas Bornozis / Judit Csepregi
Capital Link, Inc.
230 Park Avenue, Suite 1536
New York, N.Y. 10169
Tel.: (212) 661-7566
Fax: (212) 661-7526
Email: grindrod@capitallink.com