Shipping

	2008	2007*
Revenue (Rm)	7 069	4 374
Total assets (Rm)	5 995	3 425
Attributable income (Rm)	1 794	982
Operating margin (%)	32,1	23,7
Number of employees	375	271
Average number of ships operated	56	62
Owned	12	8
Long-term charter	25	30
Short-term charter	19	24

* 2007 restated (refer to note 2 of the annual financial statements).

The main drivers for the excellent financial results in the Shipping division were:

•	a higher level of contract cover;
•	increased tanker fleet and earnings;
•	increased drybulk spot earnings;
•	expansion of the international cargo operating business; and
•	ships sold at higher average values.

A detailed review of the division’s results is included in the financial director’s report.

BUSINESS ACTIVITIES
The shipping business is split into three segments as follows:
•	Tankers
	Owned and long-term charters of mid-range product tankers, small product tankers and chemical tankers.
•	Drybulk
	Owned and long-term charters of handysize, panamax and capesize bulk carriers.
•	Ship operating activities
	All other shipping operating activities including the Parcel Service, ITAS, handymax, bunker barges and Unicorn Calulo tankers.

Tankers

Unicorn Shipping operates product tankers and chemical tankers from its offices in the United Kingdom and South Africa. The United Kingdom office houses its commercial operations whilst the South African office focuses on the marine and technical aspects of the fleet. Unicorn owned three drybulk carriers of which two ships were sold in 2008 and one has been sold in 2009.

Unicorn took delivery of two tankers (one in joint venture). No new tankers were ordered.

Two newbuilding tankers were sold (contracted in 2007) and Unicorn has contracted to sell three tankers in 2009, one being to an existing 50/50 joint venture.

The sector will benefit from a large portion of the tanker fleet being time chartered-out for periods of up to three years and has only a 50% interest in a products tanker on the spot market during 2009.

The division’s customer base consists of oil majors, blue chip international chemical majors and large international operators. Accordingly, the fleet has a high percentage of secure earnings in 2009 and beyond.

Drybulk

The Island View Shipping (IVS) division has as its core competency the shipping of drybulk cargoes worldwide. IVS is based in Singapore and has numerous offices worldwide including the U.A.E., Denmark, The Netherlands, Japan and South Africa.

It focuses mainly on handysize, panamax and capesize bulk carriers. The division operates the vessels commercially and moved approximately 11 million tonnes of cargo in 2008 (2007: approximately 12 million tonnes). It enters into freighting contracts with blue-chip shippers and counterparties.

The charter periods are predominantly long-term charters from two to seven years and generally include the right to acquire the vessels at predetermined prices.

The handysize fleet is deployed into the market via a freighting agreement with partners J Lauritzen of Denmark.

The division took delivery of two handysize bulk carriers (one in joint venture) and ordered four newbuilding handysize bulk carriers in a joint venture which will deliver during 2009 and 2010.

A supramax bulk carrier has also been chartered for a two-year period commencing in 2009.

A handysize bulk carrier was sold (chartered ship with options) and two capesize bulk carriers were re-delivered when their charters terminated.

The Cape Desk performed well on the back of strong demand for large bulk ships. It continued to secure long-term freighting business to be carried by already contracted time chartered vessels. Two panamax ships are chartered out to acceptable counterparties for an average of five years, providing locked-in margins and certainty of earnings in this sector.

Ship operating activities

The Parcel Service was integrated into the international business during the year, allowing synergies with the international ship ownership and operations to be realised. The South African service employs between eight and 11 vessels per month on routes from southern Africa to the North West Continent, the Mediterranean, the United Kingdom and the United States of America. The service carries a wide variety of bulk cargoes including ferrochrome, chrome ore, alloys, mineral sands, concentrates, grains, vermiculite and fluorspar. Key in this service is the ability of the division to segregate individual holds (i.e. parcelling). The charter periods are predominantly short term (30 to 45 days).

The Parcel Service completed the renegotiation of its contracts of affreightment which are now predominantly market linked. This has removed volatility and consequently led to a return to profitability in 2008.

The Islands Service was fully integrated into the division by the acquisition during the year of the remaining interest in Island Trading and Shipping (ITAS). The Islands Service provides bulk shipping services from Europe, South America and Australasia into South Africa and the Indian Ocean Islands.

The Parcel and Islands Services moved approximately 3 million tonnes of cargo in 2008 (2007: 4 million tonnes).

A handymax operation was successfully established during the year.

In 2008, Unicorn announced the formation of a partnership with Calulo Services, an empowered South African petrochemical group. The joint venture consists of two companies, Unicorn Calulo Shipping Services, which focus on tanker shipping on the South African coast and Unicorn Calulo Bunker Services, which operates sophisticated bunker barges in South African ports under long-term agreements with the South African oil majors.

Unicorn Calulo Shipping Services operates chartered-in products tankers on the South African coast for the local oil majors.

Unicorn Calulo Bunker Services took delivery of two bunker barges in mid- 2008 for deployment in Durban and Cape Town. A third barge is being built in Durban for delivery in 2009.