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GND GNDP
GND
GND/GNDP - Grindrod Limited - Unaudited interim results and dividend
announcement for the six months ended 30 June 2010
GRINDROD LIMITED
(Registration number: 1966/0009846/06)
Share code: GND & GNDP
ISIN: ZAE000072328 & ZAE000071106
("Grindrod" or "the Company")
UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 30
June 2010
* Attributable income down 10% to R435,5 million
* Headline earnings per share of 95,4 cents
* Return on ordinary shareholder`s funds exceeds 16% annualised
* Interim ordinary dividend of 27 cents per share
* Capacity for substantial growth
CONDENSED INCOME STATEMENT
30 June 30 June 31 December
(Unaudited) (Unaudited) (Audited)
2010 2009 Change 2009
R000 R000 % R000
Revenue 14 883 863 12 420 348 20 27 692 041
Trading profit 685 582 801 412 (14) 1 434 922
Depreciation and
amortisation (157 946) (147 742) (292 400)
Operating profit
before interest and
taxation 527 636 653 670 (19) 1 142 522
Non-trading items 738 5 965 13 881
Interest received 93 032 77 179 161 328
Interest paid (86 944) (150 119) (252 695)
Profit before share
of associates` profit 534 462 586 695 1 065 036
Share of associates`
profit before taxation 36 699 35 032 76 465
Profit before taxation 571 161 621 727 (8) 1 141 501
Taxation (97 081) (91 230) (188 075)
Profit for the period 474 080 530 497 953 426
Profit attributable to
Ordinary shareholders 435 493 483 780 (10) 872 763
Preference shareholders 30 017 39 426 69 023
Grindrod Limited
shareholders 465 510 523 206 941 786
Minority interest 8 570 7 291 11 640
474 080 530 497 953 426
Exchange rates
(R/US$)
Opening exchange rate 7,37 9,45 9,45
Closing exchange rate 7,65 7,77 7,37
Average exchange rate 7,54 9,24 8,46
RECONCILIATION OF
HEADLINE EARNINGS
Profit attributable
to ordinary
shareholders 435 493 483 780 872 763
Adjusted for: (2 145) (5 965) (15 445)
IAS 38 impairment of
goodwill 10 044 - 990
IAS 38 reversal of
impairment of intangible
assets in respect of
charters (746) - (46 886)
IFRS 3 negative
goodwill released (473) - (156)
IFRS 3 net profit on
disposal of investments (9 936) (3 328) (2 081)
IAS 16 impairment of
ships, plant and equipment 760 894 36 731
IAS 16 net profit on
disposal of plant
and equipment (680) (2 726) (1 674)
IAS 21 FCTR
adjustment on disposal
of business 292 (805) (805)
Total taxation effects
of adjustments (1 406) - (1 564)
Headline earnings 433 348 477 815 857 318
ORDINARY SHARE PERFORMANCE
Number of shares in
issue less treasury
shares (000`s) 454 503 452 384 454 203
Weighted average
number of shares on
which earnings per
share are based
(000`s) 454 469 451 944 452 278
Diluted weighted
average number of
shares on which diluted
earnings per share
are based (000`s) 456 450 455 243 454 436
Earnings per share (cents)
Basic 95,8 107,0 (10) 193,0
Diluted 95,4 106,3 (10) 192,1
Headline earnings
per share (cents)
Basic 95,4 105,7 (10) 189,6
Diluted 94,9 105,0 (10) 188,7
Dividends per share (cents)
Interim 27,0 30,0 (10) 30,0
Final 30,0
Dividend cover (times) 3,5 3,6 3,2
STATEMENT OF OTHER COMPREHENSIVE INCOME
30 June 30 June 31 December
(Unaudited) (Unaudited) (Audited)
2010 2009 2009
R000 R000 R000
Profit for the period 474 080 530 497 953 426
Other comprehensive income:
Exchange differences on
translating foreign operations 173 621 (854 387) (1 122 650)
Cash flow hedges 6 831 (210 782) (316 096)
Total comprehensive
income/(loss) for the period 654 532 (534 672) (485 320)
Total comprehensive
income/(loss) attributable to:
Grindrod Limited shareholders 644 320 (541 965) (499 211)
Minority shareholders 10 212 7 293 13 891
654 532 (534 672) (485 320)
CONDENSED CHANGES IN DISCLOSURE
Previous Restated
30 June 30 June
(Unaudited) (Unaudited)
2009 IAS 7 2009*
R000 R000 R000
Cash generated from operations 1 014 677 (430 464) 584 213
Net interest paid (72 940) (72 940)
Net dividends paid (278 224) (278 224)
Taxation paid (164 864) (164 864)
498 649 (430 464) 68 185
Net bank advances to customers
and other short-term negotiables (151 510) (151 510)
Net cash flows from/(utilised in)
operating activities
before ships sales and purchases 347 139 (430 464) (83 325)
Net proceeds on disposal of ships - 430 464 430 464
Proceeds on disposal of ships - 541 957 541 957
Cash payments on ship options excercised - (111 493) (111 493)
Capital expenditure on ships - (581 488) (581 488)
Net cash flows from/(utilised in)
operating activities 347 139 (581 488) (234 349)
Acquisition of property,
terminals, vehicles and
equipment and investments (800 816) 581 488 (219 328)
Proceeds from disposal of
property, terminals, vehicles
and equipment and investments 56 766 56 766
Intangible assets acquired (1 253) (1 253)
Net cash flows used in investing
activities (745 303) 581 488 (163 815)
* Restated due to the requirement of IAS 7 Cash Flow Statements which states
that capital expenditure relating to dual purpose assets should be reallocated
from investing activities to operating activities.
STATEMENT OF FINANCIAL POSITION
30 June 30 June 31 December
(Unaudited) (Unaudited) (Audited)
2010 Change 2009 2009
R000 % R000 R000
Ships, property,
terminals, vehicles
and equipment 4 763 589 4 152 229 3 923 378
Intangible assets 905 112 805 061 830 663
Investments in
associates 325 024 252 811 283 068
Deferred taxation 162 874 178 025 159 088
Derivative financial
assets and other
investments 400 898 183 673 185 376
Recoverables on
cancelled ships 511 371 - 238 589
Loans and advances
to bank customers 1 778 019 1 129 515 1 483 314
Liquid assets and
short-term
negotiable
securities 80 335 145 701 104 092
Bank balances and cash 1 154 197 1 565 844 1 917 695
Other current assets 4 034 640 3 648 138 3 493 156
Non-current assets
held for sale 5 112 2 048 12 680
Total assets 14 121 171 12 063 045 12 631 099
Shareholders` equity 6 219 750 5 854 433 5 737 980
Minority interest 116 864 96 319 98 146
Total equity 6 336 614 5 950 752 5 836 126
Deferred taxation 14 183 20 917 22 277
Provision for
post-retirement
medical aid 77 945 75 085 77 868
Income received in
advance 76 500 117 164 88 441
Deposits from bank
customers 1 786 984 1 435 153 1 756 126
Interest-bearing debt 2 920 580 1 672 988 2 246 462
11 212 806 9 272 059 10 027 300
Non-current liabilities
associated with assets
held for sale 3 734 - 5 193
Other liabilities 2 904 631 2 790 986 2 598 606
Total funding 14 121 171 12 063 045 12 631 099
Net worth per
ordinary share - at
book value (cents) 1 205 1 130 1 122
Net debt:equity ratio 0,187:1 0,006:1 0,04:1
Capital expenditure 1 011 866 800 816 1 407 629
Capital commitments
Authorised by directors
and contracted for 1 515 992 2 189 011 2 243 062
Due within one year 1 154 366 1 272 355 1 455 328
Due thereafter 361 626 916 656 7 87 734
Authorised by
directors not yet
contracted for 256 946 11 862 56 434
DIVISIONAL ANALYSIS
Revenue
Shipping 2 051 609 2 2 012 189 4 918 406
Trading 11 485 148 23 9 314 514 20 335 439
Freight Services 1 217 824 18 1 031 552 2 302 323
Financial Services 110 782 78 62 093 135 695
Group 18 500 n/a - 178
14 883 863 20 12 420 348 27 692 041
Trading profit
(Earnings before
interest, taxation,
depreciation and
amortisation)
Shipping 335 206 (33) 498 153 774 174
Trading 104 915 (21) 133 233 255 743
Freight Services 194 030 24 157 048 387 239
Financial Services 45 209 68 26 843 54 193
Group 6 222 145 (13 865) (36 427)
685 582 (14) 801 412 1 434 922
Operating profit
before interest and taxation
Shipping 279 206 (35) 431 808 647 292
Trading 101 846 (22) 130 270 249 264
Freight Services 100 674 26 79 596 233 903
Financial Services 44 562 72 25 861 52 192
Group 1 348 110 (13 865) (40 129)
527 636 (19) 653 670 1 142 522
Attributable income
Shipping 249 615 (26) 337 209 492 482
Trading 71 289 (16) 84 585 181 233
Freight Services 103 314 16 88 696 221 717
Financial Services 21 276 19 17 878 35 500
Group (10 001) 78 (44 588) (58 169)
435 493 (10) 483 780 872 763
CONDENSED STATEMENT OF CASH FLOWS
30 June 30 June 31 December
(Unaudited) (Unaudited) (Audited)
2010 2009* 2009
R000 R000 R000
Cash generated from operations 392 909 584 213 917 747
Net interest paid (22 926) (72 940) (91 367)
Net dividends paid (166 318) (278 224) (460 868)
Taxation paid (99 275) (164 864) (240 459)
104 390 68 185 125 053
Net bank advances to customers
and other short-term negotiables (240 089) (151 510) (150 013)
Net cash flows utilised in
operating activities before ship
and locomotive sales and
purchases (135 699) (83 325) (24 960)
Net proceeds on disposal of
ships and locomotives 11 632 430 464 756 728
Proceeds on disposal of ships
and locomotives 11 632 541 957 1 257 467
Cash payments on ship options
exercised - (111 493) (500 739)
Capital expenditure on ships
and locomotives (608 498) (581 488) (793 207)
Net cash flows utilised in
operating activities (732 565) (234 349) (61 439)
Acquisition of property,
terminals, vehicles and
equipment and investments (398 615) (219 328) (578 139)
Proceeds from disposal of
property, terminals, vehicles
and equipment and investments 28 395 56 766 51 498
Intangible assets acquired (4 753) (1 253) (36 283)
Loans repaid by joint venture
and associate companies - - 27 386
Disposal of investment in
subsidiary (4 632) - -
Net cash flows utilised in
investing activities (379 605) (163 815) (535 538)
Proceeds from issue of ordinary
share capital 384 8 359 13 209
Proceeds on disposal of
treasury shares 3 078 - -
Minority investment in
subsidiary - - 3 780
Loan from minority shareholders - - 15 853
Long-term borrowings raised 326 317 224 581 591 700
Payment of capital portion of
long-term borrowings (159 516) (102 122) (447 341)
Short-term loan (repaid)/raised (42 009) (20 973) 381 783
Net cash flows from financing
activities 128 254 109 845 558 984
Net decrease in cash and cash
equivalents (983 916) (288 319) (37 993)
Cash and equivalents at
beginning of the period 1 669 282 1 975 106 1 975 106
Difference arising on translation 15 814 (216 325) (267 831)
Cash and cash equivalents at
end of the period 701 180 1 470 462 1 669 282
* Restated due to a reallocation in relation to IAS 7 Cash Flow Statements.
STATEMENT OF CHANGES IN EQUITY
Share capital,
premium and equity
compensation Foreign currency
reserve Hedging reserve translation reserve
R000 R000 R000
Balance as
at 31 December 2008 12 828 153 855 1 393 267
Share options exercised 13 209
Share-based payments 22 954
Minority interest acquired
Profit for the year
Other comprehensive income (323 376) (1 117 621)
Total comprehensive income - (323 376) (1 117 621)
Dividends paid
Balance as at
31 December 2009 48 991 (169 521) 275 646
Share options exercised 384
Share-based payments 358
Treasury shares disposed 3 078
Minority interest acquired
Minority interest disposed
Profit for the period
Other comprehensive income 6 831 171 979
Total comprehensive income - 6 831 171 979
Dividends paid
Balance as at
30 June 2010 52 811 (162 690) 447 625
Interest of
shareholders of
Accumulated profit Grindrod Limited Minority interest
R000 R000 R000
Balance as at
31 December 2008 5 152 746 6 712 696 62 315
Share options exercised 13 209
Share-based payments 22 954
Minority interest acquired - 29 633
Profit for the year 941 786 941 786 11 640
Other comprehensive income (1 440 997) 2 251
Total comprehensive
income 941 786 (499 211) 13 891
Dividends paid (511 668) (511 668) (7 693)
Balance as at
31 December 2009 5 582 864 5 737 980 98 146
Share options exercised 384
Share-based payments 358
Treasury shares disposed 3 078
Minority interest acquired - 10 000
Minority interest disposed - (1 494)
Profit for the period 465 510 465 510 8 570
Other comprehensive
income 178 810 1 642
Total comprehensive
income 465 510 644 320 10 212
Dividends paid (166 370) (166 370)
Balance as at
30 June 2010 5 882 004 6 219 750 116 864
Interest of all
shareholders
R000
Balance as at 31 December 2008 6 775 011
Share options exercised 13 209
Share-based payments 22 954
Minority interest acquired 29 633
Profit for the year 953 426
Other comprehensive income (1 438 746)
Total comprehensive income (485 320)
Dividends paid (519 361)
Balance as at 31 December 2009 5 836 126
Share options exercised 384
Share-based payments 358
Treasury shares disposed 3 078
Minority interest acquired 10 000
Minority interest disposed (1 494)
Profit for the period 474 080
Other comprehensive income 180 452
Total comprehensive income 654 532
Dividends paid (166 370)
Balance as at 30 June 2010 6 336 614
COMMENTS
OVERVIEW
The group generated earnings of R435,5 million for the six months ended 30 June
2010 (H1 2009: R483,8 million), down 10% on the corresponding period of the
prior year. Headline earnings per share decreased by 10% to 95,4 cents per
share (H1 2009: 105,7 cents per share). The decline in earnings and headline
earnings per share was primarily due to a stronger Rand/US Dollar exchange rate
and no ship sale profits compared to a profit of R152 million in the prior
period. However, stronger dry bulk markets and interest earned on cancelled
ship newbuilding contracts in H1 2010, reduced their impact.
An interim ordinary dividend of 27 cents per share (H1 2009: 30 cents per
share) was declared. Dividend cover has been maintained at 3,5 times in line
with historical practice. Return on ordinary shareholders` funds for the six
months was an acceptable 16,2% annualised.
The Shipping and Trading divisions reported lower earnings for the interim
period for the reasons set out above, however, the group continues to benefit
from the growth of the Freight Services operations.
Despite the impact of internal and external industrial action, good earnings
growth was achieved by this division and by Financial Services. Group costs
were significantly lower due to the recognition of a once-off BEE cost in the
prior period.
The group`s balance sheet is sound and although the debt:equity ratio has
increased to 18,7%, due to a number of acquisitions by the group, there is
still substantial capacity for debt funding to drive expansion of the group`s
businesses.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital
expenditure Capital commitments
Six months Six months
Description to June to December Total
R million 2010 2010 2011 2012 commitments
Ships 604 505 640 92 1 237
Property and terminals 48 240 152 - 392
Vehicles, equipment and
software 82 71 2 1 74
734 816 794 93 1 703
Acquisition of
businesses 278 53 17 - 70
Total 1 012 869 811 93 1 773
Major items of capital expenditure for the period included instalments paid
under the group`s newbuilding ship orders, the purchase of ships, the expansion
of drybulk terminal capacity, the acquisition of a bunker shipping and trading
operation and an investment in a petrochemical road transport company.
CASH FLOW AND BORROWINGS
Cash generated from operations was R392,9 million (H1 2009: R584,2 million).
Cash outflows included capital expenditure of R1 012 million and dividends of
R166,3 million during the period. This resulted in the net debt position of
R258 million at 31 December 2009 increasing to R1 183 million at 30 June 2010
and the net debt:equity ratio rising from 4,4% to 18,7%. The group generated
net interest income of R6 million for the period compared to an expense of R73
million in the prior period mainly due to low net debt levels during most of
the period, interest earned on cancelled ship newbuilding contracts and the
utilisation of US Dollar cash to reduce Rand debt.
The group is confident that it has adequate funding available for all capital
commitments through its cash resources, cash generated from operations and
existing committed bank facilities.
SHAREHOLDERS` EQUITY
Shareholders` equity increased from R5 738 million at 31 December 2009 to R6
220 million at 30 June 2010 due mainly to retained profits and to the effect of
the weaker closing Rand/US Dollar exchange rate.
9 179 348 ordinary shares repurchased by subsidiaries in prior years continue
to be held in treasury.
BASIS OF PREPARATION
The results have been prepared in terms of IAS 34 Interim Financial Reporting
and are in accordance with the group`s accounting policies which fully comply
with International Financial Reporting Standards (IFRS), the Companies Act as
amended and the JSE Listings Requirements. They are consistent with those
applied in the previous year except for the June 2009 condensed cash flow
statement which has been restated due to a reallocation in relation to IAS 7
Cash Flow Statements. This reallocation has resulted in certain disclosure
changes, but has not resulted in any changes in accounting policy.
The accounting for the acquisition of Fuelogic (Proprietary) Limited and the
Associated Bunkeroil Contractors group has only been provisionally determined
as at 30 June 2010. At the date of finalisation of these results, the necessary
market valuations and other calculations had not been finalised and they have
therefore only been provisionally determined based on the directors` best
estimates of the likely values.
DIRECTORATE
TJT McClure retired as an Executive Director of Grindrod Limited effective
31 July 2010. The board of directors wishes to express appreciation for his
significant contribution to the Company.
PROSPECTS
Continuing strong growth from China, India and Brazil is anticipated together
with an upturn in other economies, although at a relatively subdued level.
Volatility is likely in shipping, commodity and financial markets
which may offer opportunities to the group.
The high contract cover will reduce the group`s exposure to possible Shipping
Market fluctuations.
The group results are sensitive to Rand/US Dollar exchange rates.
Acceptable returns on shareholders` funds are expected for 2010.
Statements contained throughout this announcement regarding the prospects of
The group have not been reviewed or reported on by the group`s external
auditors
For and on behalf of the board
IAJ Clark AK Olivier
Chairman Chief Executive Officer
DECLARATION OF INTERIM DIVIDENDS
PREFERENCE DIVIDEND
Notice is hereby given that a dividend of 406 cents per cumulative,
non-redeemable, non-participating and non-convertible preference share (H1
2009: 522,5 cents) has been declared, payable to preference shareholders in
accordance with the timetable below.
ORDINARY DIVIDEND
Notice is hereby given that an interim dividend of 27 cents per ordinary share
(H1 2009: 30 cents) has been declared, payable to ordinary shareholders in
accordance with the timetable below.
TIMETABLE
Last day to trade cum-dividend Friday, 3 September 2010
Shares commence trading ex-dividend Monday, 6 September 2010
Record date Friday, 10 September 2010
Dividend payment date Monday, 13 September 2010
No dematerialisation or rematerialisation of shares will be allowed for the
period from 6 September 2010 to 10 September 2010, both days inclusive.
The dividends are declared in the currency of the Republic of South Africa.
By order of the board
CAS Robertson
Secretary
19 August 2010
Directors IAJ Clark* (Chairman), AK Olivier (Group CEO), H Adams*, MR Faku*,
WD Geach* IM Groves*, MJ Hankinson*, JG Jones, DA Polkinghorne,
DA Rennie, AF Stewart, LR Stuart-Hill, SDM Zungu*.
*Non-executive
Registered office
Quadrant House
115 Margaret Mncadi Avenue
Durban
4001
PO Box 1
Durban
4000
Registration number: 1966/009846/06
Share code: GND & GNDP
Sponsor
Grindrod Bank Limited
39 Rivonia Road
Sandton
Po Box 78011
Sandton
2146
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
Incorporated in the Republic of South Africa
ISIN: ZAE000072328 & ZAE000071106
For more information, please refer to our website at www.grindrod.co.za
Date: 19/08/2010 08:15:01 Produced by the JSE SENS Department.
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