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GND/GNDP - Grindrod - Unaudited interim results and dividend announcement
GRINDROD LIMITED
Registration number: 1966/009846/06
Incorporated in the Republic of South Africa
Share code: GND & GNDP
ISIN: ZAE000072328 & ZAE000071106
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011
AND DIVIDEND ANNOUNCEMENT
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
30 June 30 June 31 December
Change 2011 2010 2010
% R000 R000 R000
Revenue 19 17 776 495 14 883 863 30 202 885
Trading profit (14) 589 100 685 582 1 304 135
Depreciation and amortisation (182 498) (157 946) (340 472)
Operating profit before
interest and taxation (23) 406 602 527 636 963 663
Non-trading items 23 577 738 12 421
Interest received 72 797 93 032 135 204
Interest paid (121 823) (86 944) (196 675)
Profit before share of
associates` profit 381 153 534 462 914 613
Share of associate companies`
profit before taxation 27 750 36 699 84 304
Profit before taxation 408 903 571 161 998 917
Taxation (95 415) (97 081) (153 842)
Profit for the period 313 488 474 080 845 075
Attributable to
Ordinary shareholders (36) 277 353 435 493 780 252
Preference shareholders 26 413 30 017 58 594
Owners of the parent 303 766 465 510 838 846
Non-controlling interests 9 722 8 570 6 229
313 488 474 080 845 075
Exchange rates (R/US$)
Opening exchange rate 6,62 7,37 7,37
Closing exchange rate 6,76 7,65 6,62
Average exchange rate 6,91 7,54 7,34
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited Audited
30 June 30 June 31 December
2011 2010 2010
R000 R000 R000
Profit attributable to ordinary
shareholders 277 353 435 493 780 252
Adjusted for: (23 577) (2 145) (18 375)
IAS 38 - Impairment of goodwill - 10 044 35 960
IAS 38 - Reversal of impairment of
intangible asset in respect of charters - (746) (1 452)
IFRS 3 - Negative goodwill realised - (473) (473)
IAS 16 - Impairment/(reversal of impairment)
of ships, plant and equipment 331 760 (19 989)
IFRS 3 - Net profit on disposal of
investments (22 775) (9 936) (11 327)
IAS 16 - Net profit on disposal of plant
and equipment (1 133) (680) (1 489)
IAS 21 - FCTR adjustment on disposal
of investment - 292 (16 856)
Total taxation effects of adjustments - (1 406) (2 749)
Headline earnings 253 776 433 348 761 877
ORDINARY SHARE PERFORMANCE
Unaudited Unaudited Audited
30 June 30 June 31 December
Change 2011 2010 2010
% R000 R000 R000
Number of shares in issue
less treasury shares (000`s) 455 953 454 503 455 803
Weighted average number of
shares on which earnings
per share are based (000`s) 455 930 454 469 454 591
Diluted weighted average
number of shares on which
diluted earnings per share
are based (000`s) 457 055 456 450 455 912
Earnings per share (cents)
Basic (37) 60,8 95,8 171,6
Diluted (36) 60,7 95,4 171,1
Headline earnings per share
(cents)
Basic (42) 55,7 95,4 167,6
Diluted (42) 55,5 94,9 167,1
Dividends per share (cents) (36) 17,5 27,0 54,0
Interim 17,5 27,0 27,0
Final - - 27,0
Dividend cover (times) 3,5 3,5 3,2
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
30 June 30 June 31 December
2011 2010 2010
R000 R000 R000
Revenue
Shipping 1 942 859 2 051 609 4 264 011
Freight Services 1 510 709 1 217 824 2 642 990
Trading 14 251 855 11 485 148 23 101 027
Financial Services 67 279 110 782 192 531
Group costs 3 793 18 500 2 326
17 776 495 14 883 863 30 202 885
Trading profit (earnings before
interest, taxation,
depreciation and amortisation)
Shipping 177 801 335 206 543 880
Freight Services 284 703 194 030 478 750
Trading 109 776 104 915 188 414
Financial Services 29 866 45 209 90 240
Group costs (13 046) 6 222 2 851
589 100 685 582 1 304 135
Operating profit before interest and
taxation
Shipping 98 978 279 206 405 707
Freight Services 191 087 100 674 292 562
Trading 102 036 101 846 176 727
Financial Services 29 345 44 562 88 997
Group costs (14 844) 1 348 (330)
406 602 527 636 963 663
Attributable income to ordinary
shareholders
Shipping 46 239 249 615 362 220
Freight Services 153 588 103 314 262 080
Trading 72 741 71 289 120 074
Financial Services 21 084 21 276 44 952
Group costs (16 299) (10 001) (9 074)
277 353 435 493 780 252
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 30 June 31 December
2011 2010 2010
R000 R000 R000
Ships, property, terminals, vehicles
and equipment 5 722 369 4 763 589 5 121 449
Intangible assets 854 348 905 112 869 254
Investments in associates 372 831 325 024 342 824
Deferred taxation 161 467 162 874 179 126
Other investments and derivative
financial assets 364 754 400 898 92 528
Recoverables on cancelled ships - 511 371 -
Loans and advances to bank customers 2 059 514 1 778 019 1 709 796
Liquid assets and short-term
negotiable securities 105 359 80 335 129 365
Short-term loans 382 103 - 519 818
Bank balances and cash 1 283 758 1 154 197 1 277 172
Other current assets 4 886 454 4 034 640 4 010 330
Non-current asset held for sale - 5 112 -
Total assets 16 192 957 14 121 171 14 251 662
Shareholders` equity 6 108 875 6 219 750 5 856 861
Non-controlling interests 95 632 116 864 113 854
Total equity 6 204 507 6 336 614 5 970 715
Deferred taxation 136 676 14 183 124 889
Provision for post-retirement
medical aid 50 287 77 945 50 622
Income received in advance - 76 500 -
Deposits from bank customers 2 623 823 1 786 984 2 016 137
Interest-bearing borrowings 4 153 534 2 920 580 3 524 736
13 168 827 11 212 806 11 687 099
Non-current liabilities associated
with assets held for sale - 3 734 -
Other liabilities 3 024 130 2 904 631 2 564 563
Total funding 16 192 957 14 121 171 14 251 662
Net worth per ordinary share - at
book value (cents) 1 177 1 205 1 147
Net debt:equity ratio 0,48:1 0,187:1 0,32:1
Capital expenditure 599 575 1 011 866 1 722 322
Capital commitments 1 826 113 1 772 938 1 448 100
Authorised by directors and
contracted for 1 064 751 1 515 992 1 047 339
Due within one year 543 753 1 154 366 813 190
Due thereafter 520 998 361 626 234 149
Authorised by directors not yet
contracted for 761 362 256 946 400 761
CONDENSED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
30 June 30 June 31 December
2011 2010 2010
R000 R000 R000
Operating cash before changes in
working capital 572 592 658 059 1 340 038
Working capital changes (712 680) (265 150) (564 953)
Net interest paid (49 027) (22 926) (61 471)
Net dividends paid (150 999) (166 318) (302 468)
Taxation paid (42 333) (99 275) (183 625)
(382 447) 104 390 227 521
Net bank deposits from/(advances to)
customers and other short-term
negotiables 281 974 (240 089) 8 257
Net cash flows (utilised in)/generated
from operating activities before
ship sales and purchases (100 473) (135 699) 235 778
Proceeds on disposal of
ships and locomotives - 11 632 145 778
Capital expenditure on
ships and locomotives (498 917) (608 498) (1 040 159)
Net cash flows utilised in
operating activities (599 390) (732 565) (658 603)
Acquisition of property, terminals,
vehicles and equipment and investments (100 129) (398 615) (670 008)
Proceeds from disposal of property,
terminals, vehicles and equipment
and investments (7 062) 28 395 82 376
Intangible assets acquired (529) (4 753) (12 155)
Disposal of investment in subsidiary - (4 632) (2 650)
Loans repaid by/(advanced to) joint
venture and associate companies 484 - (20 161)
Net cash flows utilised in
investing activities (107 236) (379 605) (622 598)
Proceeds from issue of ordinary
share capital 358 384 8 693
Proceeds from disposal of treasury
shares - 3 078 6 769
Non-controlling interest investment in
subsidiary - - 10 000
Long-term interest-bearing debt raised 507 563 326 317 1 104 194
Payment of capital portion of long-term
interest-bearing debt (468 966) (159 516) (361 367)
Short-term interest-bearing debt
raised/(issued) 503 614 (42 009) (146 478)
Net cash flows from financing
activities 542 569 128 254 621 811
Net decrease in cash and
cash equivalents (164 057) (983 916) (659 390)
Cash and equivalents at beginning
of the period 967 532 1 669 282 1 669 282
Difference arising on translation (1 045) 15 814 (42 360)
Cash and cash equivalents at end of
the period 802 430 701 180 967 532
STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
30 June 30 June 31 December
2011 2010 2010
R000 R000 R000
Profit for the period 313 488 474 080 845 075
Other comprehensive income
Exchange differences on translating
foreign operations 84 470 173 621 (417 966)
Realisation of foreign operations
disposed of in the period - - (16 856)
Cash flow hedges 10 462 6 831 16 616
Total comprehensive income for
the period 408 420 654 532 426 869
Total comprehensive income
attributable to:
Owners of the parent 400 893 644 320 419 554
Non-controlling interests 7 527 10 212 7 315
408 420 654 532 426 869
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary Preference Equity
share share Share compensation
capital capital premium reserve
R000 R000 R000 R000
Balance at 31 December 2009 9 2 13 209 35 771
Share options exercised 8 693
Share-based payments 1 529
Treasury shares sold 6 769
Non-controlling interest acquired
Non-controlling interest disposed
Profit for the period
Other comprehensive income
Total comprehensive income - - - -
Ordinary dividends paid
Preference dividends paid
Balance at 31 December 2010 9 2 28 671 37 300
Share options exercised 358
Share-based payments 281
Non-controlling interest acquired
Profit for the period
Other comprehensive income
Total comprehensive income - - - -
Ordinary dividends paid
Preference dividends paid
Balance at 30 June 2011 9 2 29 029 37 581
Foreign
currency Owners
translation Hedging Accumulated of the
reserve reserve profit parent
R000 R000 R000 R000
Balance at 31 December
2009 275 646 (169 521) 5 582 864 5 737 980
Share options exercised 8 693
Share-based payments 1 529
Treasury shares sold 6 769
Non-controlling
interest acquired -
Non-controlling
interest disposed -
Profit for the period 838 846 838 846
Other comprehensive
income (436 107) 16 815 (419 292)
Total comprehensive
income (436 107) 16 815 838 846 419 554
Ordinary dividends paid (259 070) (259 070)
Preference dividends
paid (58 594) (58 594)
Balance at 31 December
2010 (160 461) (152 706) 6 104 046 5 856 861
Share options exercised 358
Share-based payments 281
Non-controlling
interest acquired -
Profit for the period 303 766 303 766
Other comprehensive
income 86 665 10 462 97 127
Total comprehensive
income 86 665 10 462 303 766 400 893
Ordinary dividends paid (123 105) (123 105)
Preference dividends
paid (26 413) (26 413)
Balance at 30 June 2011 (73 796) (142 244) 6 258 294 6 108 875
Non- Interest
controlling of all
interests shareholders
R000 R000
Balance at 31 December 2009 98 146 5 836 126
Share options exercised 8 693
Share-based payments 1 529
Treasury shares sold 6 769
Non-controlling interest acquired 10 000 10 000
Non-controlling interest disposed (1 494) (1 494)
Profit for the period 6 229 845 075
Other comprehensive income 1 086 (418 206)
Total comprehensive income 7 315 426 869
Ordinary dividends paid (113) (259 183)
Preference dividends paid (58 594)
Balance at 31 December 2010 113 854 5 970 715
Share options exercised 358
Share-based payments 281
Non-controlling interest acquired (24 459) (24 459)
Profit for the period 9 722 313 488
Other comprehensive income (2 195) 94 932
Total comprehensive income 7 527 408 420
Ordinary dividends paid (1 290) (124 395)
Preference dividends paid (26 413)
Balance at 30 June 2011 95 632 6 204 507
COMMENTS
OVERVIEW
The group generated earnings of R277,4 million for the six months ended 30 June
2011 (H1 2010: R435,5 million), a 36% decline. Headline earnings per share
decreased by 42% to 55,7 cents per share (H1 2010: 95,4 cents per share). The
decline in earnings and headline earnings per share was primarily as a result of
weak shipping markets, lower profitability from ship operating activities and
the impact of the exchange rate.
An interim ordinary dividend of 17,5 cents per share (H1 2010: 27,0 cents per
share) has been declared, maintaining dividend cover at 3,5 times. Return on
ordinary shareholders` funds for the six months was at 10,4% annualised (H1
2010: 16,2% annualised).
Strong earnings growth was achieved by the Freight Services division mainly due
to increased volumes in Terminals. The Trading division showed a marginal
increase in earnings with improved margins against slightly reduced volumes. The
Shipping division`s decline in earnings was attributable to the weak shipping
markets and poor results from the Parcel Service. Financial Services maintained
its prior period level of earnings.
The group`s balance sheet remains sound with a debt:equity ratio of 47,5% at 30
June 2011.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital
Description expenditure
Six months Six months Capital
to June to December commitments
R million 2011 2011 2012
Ships 499 507 521
Property 14 57 208
Terminals 35 144 16
Vehicles, locomotives and equipment 47 196 9
595 904 754
Acquisition of businesses 4 21 -
Intangible assets 1 13 -
Total 600 938 754
Capital commitments Total
R million 2013 2014 commitments
Ships 41 - 1 069
Property 83 - 348
Terminals 1 1 162
Vehicles, locomotives and equipment 4 4 213
129 5 1 792
Acquisition of businesses - - 21
Intangible assets - - 13
Total 129 5 1 826
Capital expenditure was directed towards the group`s ship newbuilding programme
and the expansion of terminal capacity. Future capital commitments are to be
utilised for expanding of capacity of terminals, purchasing of locomotives and
ships.
The commitments exclude the further expansion of capacity in Maputo and Richards
Bay currently being developed.
CASH FLOW AND BORROWINGS
Operating profit before working capital changes was R572,6 million (H1 2010:
R658,1 million). Cash outflows include investment in working capital of R712,7
million largely as a result of a rise in commodity prices, capital expenditure
of R599,6 million and dividends of R151,6 million. This resulted in the net debt
position at 31 December 2010 of R1 904 million increasing to R2 947 million at
30 June 2011 and the net debt: equity ratio rising from 31,9% to 47,5%. The
group incurred a net interest expense of R49,0 million for the period compared
to net interest income of R6,1 million in the same period of the prior year,
mainly attributable to the increased borrowings.
The group is confident that it has secured adequate funding for all capital
commitments through its cash resources and bank borrowings.
SHAREHOLDERS` EQUITY
Shareholders` equity increased from R5 857 million at 31 December 2010 to R6 109
million due to retained profits and the effect of the weaker closing Rand/US
Dollar exchange rate.
The 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, 71
of 2008 (as amended), and the JSE Listings Requirements. They are consistent
with those applied in the previous year.
The accounting for the acquisitions and disposals made by the group has been
provisionally determined as at 30 June 2011. The group disposed of net assets of
R26,1 million during the period. A net consideration of R48,4 million was
received in respect of these transactions. At the date of the finalisation of
these results, the necessary market valuations and other calculations had not
been finalised and they have therefore, been provisionally determined based on
the directors` best estimates of the likely values.
DIRECTORATE/EXECUTIVE
Messrs JG Jones and LR Stuart-Hill retired from the board effective 30 June
2011. Mr BJ McIlmurray, a member of the executive committee also retired on 30
June 2011.
The board of directors wish to express appreciation for their respective
contributions to the company. Mr HJ Gray was appointed to the executive
committee on 1 June 2011 and is responsible for the logistics operations.
PROSPECTS
The positive yet volatile global commodity demand is expected to continue which
will provide opportunities for growth in the Freight Services and Trading
businesses whilst the oversupply of ships, particularly in the drybulk sector,
will continue to impact shipping earnings. Group results remain sensitive to the
Rand/US Dollar exchange rate.
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 357 cents per cumulative, non-
redeemable, non-participating and non-convertible preference share has been
declared, payable to preference shareholders in accordance with the timetable
below.
Ordinary dividend
Notice is hereby given that an interim dividend of 17,5 cents per ordinary share
has been declared, payable to ordinary shareholders in accordance with the
timetable below.
Timetable
Last day to trade cum-dividend Friday, 2 September 2011
Shares commence trading ex-dividend Monday, 5 September 2011
Record date Friday, 9 September 2011
Dividend payment date Monday, 12 September 2011
No dematerialisation or rematerialisation of shares will be allowed for the
period from Monday, 5 September 2011 to Friday, 9 September 2011, both days
inclusive.
The dividends are declared in the currency of the Republic of South Africa.
By order of the board
CAS Robertson
Secretary
17 August 2011
Directors
IAJ Clark* (Chairman), AK Olivier (Group CEO)
H Adams*, MR Faku*, WD Geach*, IM Groves*
MJ Hankinson*, DA Polkinghorne, DA Rennie
AF Stewart, AG Waller, SDM Zungu*
*Non-executive
Registered office
Quadrant House, 115 Margaret Mncadi Avenue
Durban, 4001
PO Box 1, Durban, 4000
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Sponsor
Grindrod Bank Limited
First Floor, Building 3, North Wing
Commerce Square, 39 Rivonia Road
Sandhurst, Sandton, 2146
PO Box 78011, Sandton, 2146
Registration number: 1966/009846/06
Incorporated in the Republic of South Africa
Share code: GND & GNDP
ISIN: ZAE000072328 & ZAE000071106
For more information, please refer to our
website at: www.grindrod.co.za
Date: 18/08/2011 08:00:49 Supplied by www.sharenet.co.za
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