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GNDE - GND - Grindrod Limited - Audited results and final dividend announcement for the

21/02/2008 09:54:35

GND GNDP
GND
GND - Grindrod Limited - Audited results and final dividend announcement for the
year ended 31 december 2007
GRINDROD LIMITED
Registration number: 1966/009846/06
Incorporated in the Republic of South Africa
Share code: GND & GNDP
ISIN: ZAE000072328 & ZAE000071106
AUDITED RESULTS AND FINAL DIVIDEND ANNOUNCEMENT FOR THE YEAR ENDED
31 DECEMBER 2007
19% Increase in headline earnings per share
18% Increase in dividend distribution to ordinary shareholders
Strong
Balance sheet up
Cash flows up
CONDENSED INCOME STATEMENT
Year ended 31 December
% Audited Audited
Change 2007 2006
R000 R000
Revenue 37 17 077 359 12 507 237
Trading profit 21 1 577 446 1 307 731
Depreciation and amortisation (211 659) (182 645)
Operating profit before interest and
taxation 1 365 787 1 125 086
Non-trading items 3 508 (39 434)
Interest received 109 324 66 377
Interest paid (239 849) (137 242)
Profit before share of associates'
profit 1 238 770 1 014 787
Share of associates' profit before
taxation 62 953 127 560
Profit before taxation 1 301 723 1 142 347
Taxation (15 803) (75 868)
Profit for the year 1 285 920 1 066 479
Attributable to
Ordinary shareholders 19 1 195 293 1 008 113
Preference shareholders 76 872 64 238
Equity holders of Grindrod 1 272 165 1 072 351
Minority interest 13 755 (5 872)
1 285 920 1 066 479
Exchange rates (R/US$)
Opening exchange rate 7,00 6,31
Closing exchange rate 6,89 7,00
Average exchange rate 7,07 6,78
RECONCILIATION OF HEADLINE EARNINGS
Profit attributable to ordinary
shareholders 1 195 293 1 008 113
Adjusted for: (3 516) (1 945)
IAS 38 impairment of goodwill 2 716 2 120
IAS 38 impairment of intangible asset 2 843 3 100
IFRS 3 negative goodwill realised (7 026) (1 188)
IAS 16 impairment of plant and
equipment 3 420 30 539
IFRS 3 net loss on disposal of
investments 2 058 1 164
IAS 16 net (profit)/loss on sale of
plant and equipment (7 519) 4 213
Re-measurements included in equity
accounted earnings of associates - (49 386)
Other non-trading items - (514)
Total tax effects of adjustments (8) 8 007
Headline earnings 18 1 191 777 1 006 168
ORDINARY SHARE PERFORMANCE
Number of shares in issue less
treasury shares (000's) 455 459 449 179
Weighted average number of shares on
which earnings per share are based (000's) 452 934 455 719
Diluted weighted average number of
shares on which diluted earnings per share are
based (000's) 462 417 468 765
Earnings per share (cents)
Basic 263,9 221,2
Diluted 258,5 215,1
Headline earnings per share (cents)
Basic 19 263,1 220,8
Diluted 257,7 214,6
Distribution/dividends per share
(cents)
Interim 34,0 28,0
Final 44,0 38,0
Distribution/dividend cover (times) 3,4 3,4
DIVISIONAL ANALYSIS
Year ended 31 December
Audited Audited
2007 2006
R000 R000
Revenue
Shipping 3 683 812 2 768 831
Trading 11 334 072 8 323 849
Freight Services 1 984 647 1 389 262
Freight Services before disposal adjustments 1 901 471 1 386 085
Disposal adjustments 83 176 3 177
Financial Services 74 828 25 295
17 077 359 12 507 237
Trading profit (earnings before interest,
taxation, depreciation and amortisation)
Shipping 1 128 760 1 027 360
Trading 119 468 51 170
Freight Services 290 417 223 435
Freight Services before disposal adjustments 343 354 229 412
Disposal adjustments (52 937) (5 977)
Financial Services 38 797 5 766
1 577 442 1 307 731
Operating profit before interest and taxation
Shipping 1 034 307 937 507
Trading 112 577 45 216
Freight Services 181 345 136 651
Freight Services before disposal adjustments 240 631 144 451
Disposal adjustments (59 286) (7 800)
Financial Services 37 555 5 712
1 365 784 1 125 086
Attributable income
Shipping 982 365 866 723
Trading 63 521 24 614
Freight Services 113 183 53 969
Freight Services before disposal adjustments 189 386 93 103
Disposal adjustments (76 203) (39 134)
Financial Services 36 222 62 807
Financial Services before disposal adjustments 36 222 15 009
Disposal adjustments - 47 798
1 195 291 1 008 113
CONDENSED BALANCE SHEET
Year ended 31 December
Audited Audited
2007 2006
R000 R000
Ships, property, terminals, vehicles and equipment 3 046 945 2 340 821
Intangible assets 521 063 350 756
Investments in associates 236 420 243 370
Deferred taxation 138 069 70 254
Financial assets and other investments 166 457 111 138
Loans and advances to bank customers 965 964 506 434
Liquid assets and short-term negotiable assets 228 938 173 600
Bank balances and cash 1 254 611 1 065 283
Non-current assets held for sale 293 547 170 947
Other current assets 3 080 253 2 237 802
Total assets 9 932 267 7 270 405
Shareholders' equity 3 378 332 2 824 543
Minority interest 60 643 (1 755)
Total equity 3 438 975 2 822 788
Deferred taxation 33 224 24 324
Provision for post-retirement medical aid 72 819 62 834
Deposits from bank customers 1 397 073 710 904
Interest bearing debt 2 306 187 1 828 711
7 248 278 5 449 561
Non-current liabilities associated with assets
held for sale 90 573 -
Other liabilities 2 593 416 1 820 844
Total funding 9 932 267 7 270 405
Net worth per ordinary share - at book value (cents) 590 461
Net debt:equity ratio 0,23:1 0,19:1
Capital expenditure 1 822 793 1 063 483
Capital commitments
Authorised by directors and contracted for 2 283 959 1 604 066
Due within one year 1 081 564 901 375
Due thereafter 1 202 395 702 691
Authorised by directors not yet contracted for 715 178 172 655
CONDENSED CASH FLOW STATEMENT
Year ended 31 December
Audited Audited
2007 2006
R000 R000
Cash generated from operations 1 529 617 1 286 839
Working capital movements (285 633) (295 267)
Net interest paid (130 525) (77 204)
Net dividends paid (330 707) (104 235)
Taxation paid (46 721) (105 045)
759 919 705 088
Net bank deposits from/(advances to) customers
and other short-term negotiables 171 301 (154 880)
Net cash flows from operating activities 931 220 550 208
Acquisition of ships, property, terminals,
vehicles and equipment and investments (1 822 791) (1 063 483)
Proceeds from disposal of ships, property,
terminals, vehicles and equipment and investments 714 473 659 111
Intangible assets acquired (5 491) (6 168)
Loans repaid by associate companies - (5 071)
Net cash flows used in investing activities (1 113 812) (415 611)
Repurchase of ordinary share capital - (237 679)
Proceeds from issue of ordinary share capital 6 509 6 400
Proceeds from issue of preference share capital - 262 777
Long-term borrowings raised 484 111 276 274
Payment of capital portion of long-term
borrowings (411 519) (548 685)
Short-term loan raised 92 563 459 841
Net cash flows from financing activities 171 664 218 928
Net (decrease)/increase, in cash and cash
equivalents (10 928) 353 525
Cash and equivalents at beginning of the year 732 055 347 571
Difference arising on translation (9 388) 30 959
Cash and cash equivalents at end of the year 711 739 732 055
STATEMENT OF CHANGES IN EQUITY
Share capital
premium and equity Hedging
compensation reserve
R000 R000
Balance as at 31 December 2005 498 080 (57 446)
Share options exercised 6 400
Shares repurchased (255 980)
Share-based payments 3 735
Preference share issue 266 049
Share issue expenses (3 272)
Financial instrument hedge (16 868)
Hedge reserve releases 1 394
Foreign currency translation
adjustments (18)
Foreign currency translation
realised (3 307)
Transfer from accumulated profit
Minority interest acquired
Profit attributable to shareholders
Dividends paid
Balance as at 31 December 2006 514 994 (72 920)
Share options exercised 6 509
Share-based payments 3 360
Financial instrument hedge (610 733)
Hedge reserve releases 318 066
Foreign currency translation adjustments
Foreign currency translation realised
Transfer from accumulated profit
Minority interest acquired
Profit attributable to shareholders
Distribution of share premium (325 923)
Dividends paid
Balance as at 31 December 2007 198 940 (365 587)
Foreign currency Grindrod Bank
translation general risk
reserve reserve
R000 R000
Balance as at 31 December 2005 (100 005) -
Share options exercised
Shares repurchased
Share-based payments
Preference share issue
Share issue expenses
Financial instrument hedge
Hedge reserve releases
Foreign currency translation
adjustments 156 392
Foreign currency translation
realised (3 307)
Transfer from accumulated profit 100
Minority interest acquired
Profit attributable to shareholders
Dividends paid
Balance as at 31 December 2006 53 080 100
Share options exercised
Share -based payments
Financial instrument hedge
Hedge reserve releases
Foreign currency translation adjustments (23 219)
Foreign currency translation realised (9 085)
Transfer from accumulated profit 5 425
Minority interest acquired
Profit attributable to shareholders
Distribution of share premium
Dividends paid
Balance as at 31 December 2007 27 776 5 525
Attributable to
Accumulated equity holders
profit of Grindrod
R000 R000
Balance as at 31 December 2005 1 596 570 1 937 199
Share options exercised 6 400
Shares repurchased (255 980)
Share-based payments 3 735
Preference share issue 266 049
Share issue expenses (3 272)
Financial instrument hedge (16 868)
Hedge reserve releases 1 394
Foreign currency translation
adjustments 156 374
Foreign currency translation
realised (3 307)
Transfer from accumulated profit (100) -
Minority interest acquired -
Profit attributable to shareholders 1 072 351 1 072 351
Dividends paid (339 532) (339 532)
Balance as at 31 December 2006 2 329 289 2 824 543
Share options exercised 6 509
Share-based payments 3 360
Financial instrument hedge (610 733)
Hedge reserve releases 318 066
Foreign currency translation adjustments (23 219)
Foreign currency translation realised (9 085)
Transfer from accumulated profit (5 425) -
Minority interest acquired -
Profit attributable to shareholders 1 272 165 1 272 165
Distribution of share premium (325 923)
Dividends paid (77 351) (77 351)
Balance as at 31 December 2007 3 518 678 3 378 332
Minority Total
interest equity
R000 R000
Balance as at 31 December 2005 6 753 1 943 952
Share options exercised 6 400
Shares repurchased (255 980)
Share-based payments 3 735
Preference share issue 266 049
Share issue expenses (3 272)
Financial instrument hedge (16 868)
Hedge reserve releases 1 394
Foreign currency translation
adjustments 156 374
Foreign currency translation
realised
Transfer from accumulated profit -
Minority interest acquired (2 636) (2 636)
Profit attributable to shareholders (5 872) 1 066 479
Dividends paid (339 532)
Balance as at 31 December 2006 (1 755) 2 822 788
Share options exercised 6 509
Share-based payments 3 360
Financial instrument hedge (610 733)
Hedge reserve releases 318 066
Foreign currency translation adjustments 18 (23 201)
Foreign currency translation realised (9 085)
Transfer from accumulated profit -
Minority interest acquired 48 625 48 625
Profit attributable to shareholders 13 755 1 285 920
Distribution of share premium (325 923)
Dividends paid (77 351)
Balance as at 31 December 2007 60 643 3 438 975
COMMENTS
The Board of Grindrod Limited is pleased to announce a 19% increase in
earnings to R1,195 billion (2006: R1,008 billion) for the year ended 31
December 2007. Headline earnings per share also increased by 19% to 263,1 cents
per share (2006: 220,8 cents). A final dividend of 44 cents per ordinary share
has been declared, bringing the total dividend/distribution for the year to 78
cents (2006: 66 cents).
While Shipping continues to be the major profit contributor, Trading, Freight
Services and Financial Services all recorded good growth in earnings for the
year.
SHIPPING
Dry bulk shipping continued to benefit from the substantial demand for
commodities, in particular in the second half of the year when demand reached
record highs. Tanker markets were also at favourable levels during the year
although not achieving the same levels as the dry sector.
Shipping revenue increased by 33% and earnings by 13% over the previous year.
The strategy of fixing out a portion of the fleet, whilst reducing earnings
volatility in downturns, limits the benefit to be gained in buoyant cyclical
markets such as those experienced over the past year. The same strategy has
also ensured that the new contracts that have been entered into during the year
in these high markets will substantially benefit the group well into the
future. As at 31 December 2007, 75% of the owned and chartered fleet was
contracted out for 2008, 45% for 2009 and 28% for 2010.
This result was achieved notwithstanding the South African shipping operations
incurring losses which arose as a result of having to service fixed rate cargo
contracts at higher spot market rates, lower ship sale profits of R193 million
(2006: R239 million) and a foreign exchange loss of R10 million due to a
stronger South African Rand (2006: R53 million profit).
The following sale, purchase and chartering transactions were entered into
during the past year:
Ships ordered Ships Ships sold/ Contracted
delivered redelivered sales
3 x handysize 2 x handysize 1 x 40 000 dwt 2 x 12 800 dwt
bulk carriers bulk carriers products tanker products tankers
(chartered with (sold) for 2008 delivery
purchase options)
4 x 16 500 dwt 1 x 19 900 dwt 1 x 12 800 dwt
products tankers chemical tanker products tanker
(chartered with (sold)
purchase options)
1 x capesize 1 x 33 000 dwt 2 x 14 000 dwt
bulk carrier chemical tanker chemical tankers
(chartered (chartered with (sold)
for 5 years purchase options)
from 2010)
1 x 177 300 dwt 1 x 177 493 dwt
capesize bulk carrier capesize bulk carrier
(chartered with (redelivered)
purchase options)
The group's current core fleet of 39 ships will increase to 51 ships by the end
of 2011. This is after the planned disposal of 2 non-core handysize bulk
couriers.
Unicorn Shipping and Island View Shipping (IVS) have been merged into a single
business covering both the tanker and dry bulk sectors. In addition, the
division is in the process of expanding its ship operating capability in the
handymax sector which will operate worldwide. This will also complement the
South African based IVS Parcel Service and make use of the substantial cargo
base handled by the group's Trading division.
The IVS Parcel Service, which represents most of the local shipping operations,
has renewed its cargo contracts for 2008 on a market linked basis where
possible. This should ensure that this business will in future be less exposed
to shipping markets.
TRADING
The Trading division performed well during the year with a 36% increase in
revenue, improved margins and a 158% growth in earnings over 2006. This was
mainly due to the contribution by Atlas Trading and Shipping which benefited
from the substantial demand for agricultural commodities in sub-Saharan
Africa, the West Coast of South America and the Mediterranean. The large
increase in commodity prices, together with this strong demand increased the
group's working capital requirements.
FREIGHT SERVICES
Freight Services reported good results for the year. After excluding the
disposal adjustments as depicted in the divisional analysis, revenues increased
by 37%, margins improved to 13% and earnings increased by 103%.
A decision was made to exit the electronics warehousing and distribution
activities of our logistics business as it was not profitable and not core to
the group. Operating losses in this business and closure costs incurred had a
substantial impact on Freight Services' results.
The division continued the restructuring of its operations into distinct
businesses of a more substantial size and this yielded improved results,
particularly in the intermodal business.
Ports and Terminals had a satisfactory year, notwithstanding rail wagon
capacity constraints and rail rehabilitation works, which reduced the
throughput at the Maputo coal terminal.
Logistics operations were impacted by an illegal strike in its Auto Carrier
operation. Rail achieved good results, which included a profit from the sale of
eight locomotives.
Seafreight once again significantly improved on the previous years results.
Ships Agency is a strong contributor to the division's results and has improved
its market share and volumes during the year under review.
The group's South African tanker operations, together with the newly
established bunker barge business, which are now incorporated in a BEE joint
venture with Calulo Services (Pty) Limited, will in future be included in the
Freight Services division given their regional focus. During the year an
additional bunker barge was ordered, increasing the order book to three.
A major focus of the division has been the development of infrastructural
opportunities particularly centred in the area of Ports and Terminals, which
included:
doubling its interest in the Maputo Port Development Company to 24,7% and the
construction of car and ferrochrome terminals at this port
further investment in the Richards Bay and Durban terminals
acquisition of bulk liquid storage facilities
These and other initiatives are in their infancy and should add considerably to
the division's earnings as they become more established.
FINANCIAL SERVICES
Grindrod Bank substantially improved its results over the prior year. The
results benefited from an increased stake in the business as well as the
additional equity that was introduced. The Bank continued to improve on its
good first half performance in 2007, growing its deposit and advances books and
assets under management significantly over the year.
After adjusting for the impact of the sale of the property and asset management
operations of Marriott in the prior year, revenue increased by 195% and
earnings grew by 133% over 2006.
The Bank completed an empowerment transaction during the year and will look to
further strengthen its empowerment credentials in the future.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital expenditure Capital commitments
R000 2007 2008 2009 2010
Ships 1 039 930 9 60 852 414 454 486 737
Property, terminals,
vehicles and equipment 446 528 512 793 20 126 13 971
1 486 458 1 473 645 434 580 500 708
Investment in
new businesses 336 335 289 000 - -
Total 1 8 22 793 1 762 645 434 580 500 708
R000 Thereafter Total
Ships 301 204 2 163 247
Property, terminals,
vehicles and equipment - 546 890
301 204 2 710 137
Investment in
new businesses - 289 000
Total 301 204 2 999 137
The capital commitments on owned ships covers a variety of new ships ordered
and is made up as follows:
3 x 40 000 dwt products tankers
2 x 33 000 dwt handysize bulk carriers
50% interest in 1 x 32 000 dwt handysize bulk carrier
1 x 28 000 dwt handysize bulk carrier
9 x 16 500 dwt products/chemical tankers
50% interest in 1 x 16 500 dwt products/chemical tanker
2 x 12 800 dwt products tankers (both are under contract to sell)
In addition, two product tankers, one chemical tanker, a handysize and a
capesize bulk carrier are still to deliver on long-term charter.
The significant capital commitments in the Freight Services division are as
follows:
further terminal development in Maputo and Richards Bay
development of an inland vehicle storage facility
expansion of the bulk logistics fleet capacity
the ordering of three bunker barges
Capital commitments will be funded by cash reserves, cash generated from
operations and bank facilities.
GROUP BORROWINGS AND CASH FLOW
Grindrod invested R1,811 billion during the financial year, in ship
acquisitions and the expansion of the Trading, Freight Services and Financial
Services operations. Cash from operations reflected a growth of 19% over the
prior year. Increased trading levels and commodity prices led to higher
working capital requirements in the trading business. This resulted in net
borrowings increasing from R763 million at 31 December 2006 to R1,051 billion
at 31 December 2007. The group's net debt:equity ratio increased from 19% to
23% which is well within the group's benchmark. The group continues to seek
investment opportunities.
SHAREHOLDERS' EQUITY
Shareholders' equity increased from R2,823 billion at 31 December 2006 to
R3,439 billion. The adjustment to the hedging reserves was mainly as a result
of mark -to -market valuations on hedges of shipping earnings. While this
adjustment would be offset by the increase in the value of the ships as a
result of the higher shipping rates, this is not recognised in the group's
balance sheet as it is not the group's policy to revalue ships and ship
charters.
BASIS OF PREPARATION
This abridged report complies with IAS 34 - Interim Financial Reporting as well
as with Schedule 4 of the South African Companies Act and the disclosure
requirements of the JSE Limited's Listings Requirements.
The abridged report has been prepared using accounting policies that comply
with IFRS. The accounting policies are consistent with those applied in the
financial statements for the year ended 31 December 2006, except for the
following changes:
The adoption of IFRS 7, IAS1, AC502 and IFRIC 7 - 10 which had no impact on
the financial results
Headline earnings per share was restated to reflect the changes in Circular 8
2007
DIVIDENDS TO SHAREHOLDERS
A final dividend of 44 cents per ordinary share, (2006: 38 cents distribution)
has been approved by the directors, representing an 18% growth in the total
dividend/distribution over the previous year. A dividend of 550 cents per
preference share was declared on 21 November 2007 and has been provided for in
the group's results.
SUBSEQUENT EVENTS
No material change has taken place in the affairs of the group between the end
of the financial year and the date of this report.
PROSPECTS
Shipping market fundamentals continue to be positive and consequently freight
rates are expected to be at favourable levels for 2008. The group also has
significant contracted income at higher levels in its shipping division and
continues to grow its fleet at low contracted costs. The weakening of the
Rand/US Dollar exchange rate should also benefit the shipping division.
Further improvement is expected in the performance of the Trading, Freight
Services and Financial Services divisions which are being expanded through
investment, mainly in infrastructural development opportunities.
Consequently, the group expects to achieve strong growth in earnings for the
2008 financial year.
For and on behalf of the Board
I A J Clark A K Olivier
Chairman Chief Executive Officer
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the group's
financial statements for the year ended 31 December 2007. The audit was
conducted in accordance with International Standards on Auditing.
They have issued an unmodified audit opinion. A copy of their audit report is
available for inspection at the company's registered office. The condensed
financial statements have been derived from the group financial statements and
are consistent in all material respects with the group financial statements.
DECLARATION OF FINAL DIVIDENDS
PREFERENCE DIVIDEND
Notice is hereby given that a dividend of 550 cents per cumulative,
non-redeemable, non participating and non-convertible preference share (2006:
470,3 cents) has been declared and is payable to preference shareholders in
accordance with the timetable below.
ORDINARY DIVIDEND
Notice is hereby given that a final dividend of 44 cents per ordinary share
(2006: 38 cent distribution) has been declared and is payable to ordinary
shareholders in accordance with the timetable below.
TIMETABLE
Last day to trade cum-dividend Friday, 7 March 2008
Shares commence trading ex-dividend Monday, 10 March 2008
Record date Friday, 14 March 2008
Dividend payment date Monday, 17 March 2008
No dematerialisation or rematerialisation of shares will be allowed for the
period from 10 March 2008 to 14 March 2008, both days inclusive.
The dividends are declared in the currency of the Republic of South Africa.
By order of the Board
C A S Robertson
Secretary 20 February 2008
DIRECTORS
I A J Clark* (Chairman), A K Olivier (Group CEO), H Adams*, Dr S M Gounden*,
I M Groves*, J G Jones, T J T McClure N E Mtshotshisa*, R A Norton*,
D A Polkinghorne, D A Rennie, A F Stewart, L R Stuart- Hill
*Non-executive
REGISTERED OFFICE POSTAL ADDRESS
Quadrant House PO Box 1
115 Margaret Mncadi Durban
Durban 4000
4001
TRANSFER SECRETARIES
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street PO Box 61051
Johannesburg Marshalltown
2001 2107
Registration number: 1966/009846/06 Incorporated in the Republic of South
Africa Share code: GND & GNDP ISIN: ZAE000072328 & ZAE000071106
21 February 2008
Date: 21/02/2008 09:54:34 Produced by the JSE SENS Department.
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