Grindrod Ltd. – Annual report – 31 December 2025
Industry: shipping
2. PROPERTY, TERMINALS, MACHINERY, SHIP, VEHICLES AND EQUIPMENT
Property, terminals, machinery, ship, vehicles and equipment are reflected at cost and are depreciated over their estimated useful lives to estimated residual values, on the straight-line basis as follows:
Terminals, machinery and equipment 5 – 20 years
Information technology equipment 3 – 5 years
Locomotives 12 – 22 years
Ship 5 –15 years
Vehicles 5 – 10 years
Freehold and leasehold properties 25 – 50 years
Depreciation commences when the assets are available for their intended use. Where significant parts of an item have different useful lives to the item itself, these parts are depreciated over their estimated useful lives. The methods of depreciation, useful lives and residual values are reviewed annually.
Locomotives and wagons that are held for rental are initially classified as terminals, machinery, ship, vehicles and equipment. When these assets cease to be rented and a decision is made to sell these assets, the carrying amount is transferred to current assets (inventories) as ‘held-for-sale’. Upon sale of the ‘held-for-sale’ assets, the sales value is recorded in gross revenue and the related carrying value of these assets recorded in cost of sales.
Freehold land is reflected at cost and not depreciated. Buildings are reflected at cost and depreciated to estimated residual value over their useful life to the Group, currently estimated at 25 to 50 years from the date of acquisition.
Properties in the course of construction for production, supply or administrative purposes, are carried at cost, less any recognised impairment loss. Cost includes professional fees. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Expenditure relating to leasehold properties is capitalised and depreciated over the period of the lease.
Right-of-use assets are recognised at the commencement date of the lease and are measured at cost. The cost of right-of-use assets includes the amount of lease liabilities recognised, any initial direct costs and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
An item of property, terminals, machinery, ship, vehicles and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, terminals, machinery, ship, vehicles and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Ship cost comprise acquisition costs and costs directly related to the acquisition up until the time when the asset is ready for use. From time to time the ship is required to be dry-docked for inspection and re-licensing, at which time major repairs and maintenance that cannot be performed while the ship is in operation is generally performed. The Group capitalises the costs associated with dry-docking as they occur by adding them to the cost of the vessel and amortises these costs on the straight-line basis over 5 years, which is generally the period until the next scheduled dry-docking. At the date of acquisition of a vessel, management estimates the component of the cost that corresponds to the economic benefit to be derived until the next scheduled dry-docking of the vessel under the ownership of the Group, and this component is depreciated on the straight-line basis over the remaining period to the estimated dry-docking date.
Accounts examples 