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GNDE - GND / GNDP - Grindrod Limited - Unaudited Interim Results And Dividend

20/08/2008 12:01:04

GND GNDP
GND
GND / GNDP - Grindrod Limited - Unaudited Interim Results And Dividend
Announcement For The Six Months Ended 30 June 2008
GRINDROD LIMITED
Incorporated in the Republic of South Africa
Registration number: 1966/009846/06
ISIN: ZAE000072328 & ZAE000071106
Share code: GND & GNDP
- Headline earnings per share up 95%
- Interim ordinary dividend up 100%
- Strong balance sheet and cash flows
UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE SIX MONTHS ENDED
30 JUNE 2008
CONDENSED INCOME STATEMENT
Unaudited Unaudited Audited
30 June 30 June 31 December
% 2008 2007 2007
Change R000 R000 R000
Revenue 93 13 533 860 7 003 294 17 077 359
Trading profit 92 1 435 909 749 083 1 583 707
Depreciation and
amortisation (111 995) (80 232) (217 920)
Operating profit before
interest and taxation 1 323 914 668 851 1 365 787
Non-trading items 1 628 6 570 3 508
Interest received 54 035 46 241 109 324
Interest paid (136 819) (104 665) (239 849)
Profit before share of
associates' profit 1 242 758 616 997 1 238 770
Share of associates'
profit before taxation 33 529 32 663 62 953
Profit before taxation 1 276 287 649 660 1 301 7 23
Taxation (123 688) (36 739) (15 803)
Profit for the year 1 152 599 612 921 1 285 920
Attributable to
Ordinary shareholders 94 1 104 515 570 507 1 195 293
Preference shareholders 45 283 36 535 76 872
Equity holders of the
parent 1 149 798 607 042 1 272 165
Minority Interest 2 801 5 879 13 755
1 152 599 612 921 1 285 920
Exchange rates (R/US$)
Opening exchange rate 6,89 7,00 7,00
Closing exchange rate 7,86 7,06 6,89
Average exchange rate 7,67 7,18 7,07
DIVISIONAL ANALYSIS OF EARNINGS
Unaudited Unaudited Audited
30 June 30 June 31 December
2008 2007 2007
R000 R000 R000
Revenue
Shipping 2 919 071 1 804 836 3 683 812
Trading 9 447 090 4 478 829 11 334 072
Freight Services 1 129 282 688 349 1 984 647
Financial Services 38 417 31 280 74 828
13 533 860 7 003 294 17 077 359
Trading profit
(Earnings before interest,
taxation,
depreciation and amortisation)
Shipping 1 182 225 558 315 1 135 143
Trading 48 768 45 060 119 223
Freight Services 193 868 128 408 290 544
Financial Services 11 048 17 300 38 797
1 435 909 749 083 1 583 707
Operating profit before interest
and taxation
Shipping 1 139 775 527 419 1 034 429
Trading 45 053 44 240 112 332
Freight Services 128 883 80 462 181 471
Financial Services 10 203 16 730 37 555
1 323 914 668 851 1 365 787
Attributable income
Shipping 991 795 478 539 982 488
Trading 20 091 29 338 63 277
Freight Services 81 401 48 929 113 306
Financial Services 11 228 13 701 36 222
1 104 515 570 507 1 195 293
CONDENSED BALANCE SHEET
Unaudited Unaudited Audited
30 June 30 June 31 December
2008 2007 2007
R000 R000 R000
Ships, property, terminals,
vehicles and equipment 3 599 081 2 577 406 3 046 945
Intangible assets 585 977 409 860 521 063
Investments in associates 275 041 237 114 236 420
Deferred taxation 99 112 97 485 138 069
Financial assets and other
investments 399 254 190 052 162 250
Loans and advances to bank
customers 902 592 766 313 965 964
Liquid assets and short-term
negotiable assets 59 268 72 715 228 938
Bank balances and cash 1 565 781 1 223 269 1 254 611
Non-current assets held for sale 441 264 179 439 293 547
Other current assets 4 119 015 2 233 323 3 080 253
Total assets 12 046 385 7 986 976 9 928 060
Shareholders' equity 4 606 719 3 103 526 3 378 3 32
Minority interest 64 325 5 139 60 643
Total equity 4 671 044 3 108 665 3 438 975
Deferred taxation 37 015 49 305 33 224
Provision for post retirement
medical aid 72 955 65 976 72 819
Deposits from bank customers 1 257 798 783 856 1 397 073
Interest-bearing debt 2 714 348 2 244 742 2 306 187
8 753 160 6 252 544 7 248 278
Non-current liabilities
associated with assets held for
sale 43 477 - 90 573
Other liabilities 3 249 748 1 734 432 2 589 209
Total funding 12 046 385 7 986 976 9 928 060
Net worth per ordinary share - at
book value (cents) 868 520 590
Net debt: equity ratio 0,14:1 0,25:1 0,23:1
Capital expenditure 1 085 314 737 172 1 822 793
Capital commitments
Authorised by directors and
contracted for 2 048 053 2 633 363 2 283 959
Due within one year 912 310 1 501 695 1 081 564
Due thereafter 1 135 743 1 131 668 1 202 395
Authorised by directors not yet
contracted for 1 356 641 229 358 715 178
CONDENSED CASH FLOW STATEMENT
Unaudited Unaudited Audited
30 June 30 June 3 1 December
2008 2007 2007
R000 R000 R000
Cash generated from operations 1 341 930 731 830 1 529 617
Working capital movements 3 154 (191 291) (261 745)
Net interest paid (82 784) (40 137) (130 525)
Net dividends paid (246 749) (206 519) (33 0 707)
Taxation paid (75 292) (26 309) (46 721)
940 259 267 574 759 919
Net bank advances to customers
and other short-term
negotiables (61 718) (125 161) 171 301
Net cash flows from operating
activities 878 541 142 413 931 220
Acquisition of ships, property,
terminals, vehicles and
equipment and investments (1 085 314) (737 172) (1 822 794)
Proceeds from disposal of ships,
property, terminals, vehicles
and equipment and investments 298 024 441 862 714 473
Intangible assets acquired (24 192) (5 141) (5 491)
Net cash flows used in investing
activities (811 482) (300 451) (1 113 812)
Repurchase of ordinary share
capital (150 890) - -
Proceeds from issue of ordinary
share capital 2385 3 033 6 509
Long - term borrowings raised 404 790 62 203 484 111
Payment of capital portion of
long - term borrowings (263 094) (249 799) (411 519)
Short-term loan raised 41 295 128 467 92 563
Net cash flows from financing
activities 34 486 (56 096) 171 664
Net increase in cash and cash
equivalents 101 545 (214 134) (10 928)
Cash and cash equivalents at
beginning of the year 711 739 732 055 732 055
Difference arising on translation 55 761 3 306 (9 388)
Cash and cash equivalents at end
of the year 869 045 521 227 711 739
STATEMENT OF CHANGES IN EQUITY
Share capital, Foreign
premium currency
and equity Hedging translation
compensation reserve reserve
R000 R000 R000
Balance as at 31 December 2006 514 994 (72 920) 53 080
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
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) 20 776
Share options exercised 2 385
Share-based payments 1 138
Financial instrument hedge 44 512
Repurchase of shares (150 890)
Foreign currency translation
adjustments 431 719
General risk reserve released
Minority interest acquired
Profit attributable to
shareholders
Dividends paid
Balance as at 30 June 2008 51 573 (321 075) 452 495
Attributable
Grindrod Bank to equity
general risk Accumulated holders of
reserve profit Grindrod
R000 R000 R000
Balance as at 31 December
2006 100 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 (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 5 525 3 518 678 3 378 332
Share options exercised 2 385
Share-based payments 1 138
Financial instrument hedge (368) 44 144
Repurchase of shares (150 890)
Foreign currency translation
adjustments 431 719
General risk reserve released (5 525) 5 525 -
Minority interest acquired -
Profit attributable to
shareholders 1 149 798 1 149 798
Dividends paid (249 907) (249 907)
Balance as at 30 June 2008 - 4 423 726 4 606 719
Minority Total
interest equity
R000 R000
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
Share options exercised 2 385
Share-based payments 1 138
Financial instrument hedge 44 144
Repurchase of shares (150 890)
Foreign currency translation adjustments 745 432 464
General risk reserve released -
Minority interest acquired 136 136
Profit attributable to shareholders 2 801 1 152 599
Dividends paid (249 907)
Balance as at 30 June 2008 64 325 4 671 044
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited Audited
30 June 30 June 31 December
2008 2007 2007
R000 R000 R000
Profit attributable to ordinary
shareholders 1 104 515 570 507 1 195 293
Adjusted for: (1 628) (6 570) (3 516)
IAS 38 Impairment of Goodwill 2 716
IAS 38 Impairment of Intangible Asset 2 843
IFRS 3 Negative Goodwill Realised (144) (7 026)
IAS 16 Impairment of Plant and Equipment 3 420
IFRS 3 Net Loss on Disposal of
Investments (2 758) 399 2 058
IAS 16 Net Loss/(Profit) on Sale of
Plant and Equipment 1 130 (6 802) (7 519)
Other Non - trading Items (23)
Total Tax Effects of Adjustments (8)
Headline earnings 1 102 887 563 937 1 191 777
ORDINARY SHARE PERFORMANCE
Unaudited Unaudited Audited
30 June 30 June 31 December
% 2008 2007 2007
Change R000 R000 R000
Number of shares in
issue less treasury
shares (000's) 452 558 453 449 455 459
Weighted average number
of shares
on which earnings per
share are based (000's) 454 237 452 604 452 934
Diluted weighted average
number of shares
on which diluted
earnings per share are
based (000's) 461 618 463 546 462 417
Earnings per share
Basic (cents) 93 243,2 126,1 263,9
Diluted (cents) 94 239,3 123,1 258,5
Headline earnings per share
Basic (cents) 95 242,8 124,6 263,1
Diluted (cents) 238,9 121,7 257,7
Distribution/dividends
per share
Interim (cents) 100 68,0 34,0 34,0
Final (cents) - - 44,0
Distribution/dividend
cover (times) 3,6 3,7 3,4
COMMENTS
OVERVIEW
Grindrod Limited generated earnings of R1 104,5 million for the six months
ended 30 June 2008 (H1 2007: R570,5 million), up 94% on the corresponding
period of the prior year, while headline earnings per share increased by 95%
to 242,8 cents per share (H1 2007: 124,6 cents). Interim ordinary dividend per
share has increased by 100% to 68 cents (H1 2007: 34 cents). The Board also
declared a preference share dividend of 589 cents per share (H1 2007: 498
cents). Return on ordinary shareholders' funds was 68% (H1 2007: 52%).
These results were achieved against the backdrop of a continued buoyant
shipping market and substantial demand for commodities. Drybulk markets
continue to be firm and the tanker market has performed well.
Shipping continued to be the major profit contributor at 90% of total earnings,
107% up on the corresponding period. Freight Services experienced good growth
in earnings of 65%. Trading did not perform as expected, but is positioned for
a strong second half. Financial Services' results were impacted by the reduced
shareholding, declining equity markets and the slowdown in local economic
activity.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital expenditure Capital commitments
Six months Six months
R million to June to December
Description 2008 2008 2009
Ships 652 674 1 045
Property 92 144 146
Terminals 38 80 -
Vehicles and equipment 102 114 1
884 1 012 1 192
Investment in new businesses 201 72 -
Total 1 085 1 084 1 192
Capital commitments
R million
Description 2010 Thereafter Total
Ships 657 456 2 832
Property 10 - 300
Terminals - - 80
Vehicles and equipment 1 4 120
668 460 3 332
Investment in new businesses - - 72
Total 668 460 3 404
These commitments will be funded by cash resources, cash generated from
operations and bank financing facilities.
Subsequent to 30 June 2008 two additional handysize bulk carrier newbuildings
were authorised. They have not yet been contracted.
CASH FLOW AND BORROWINGS
Cash generated from operations reflected a growth of 83% over the equivalent
2007 period to R1 342 million. Cash outflow included capital expenditure of
R1 085 million and dividends of R247 million during the period. This resulted
in net borrowings increasing from R1 051 million at 31 December 2007 to
R1 149 million at 30 June 2008. The higher funding, combined with higher
interest rates, increased the net interest paid by 42% to R83 million. The
group's debt:equity ratio decreased from 23% to 14% and remains well within the
group's optimal gearing benchmark of 100%. The strong balance sheet,
conservative gearing and high cash generation provides the platform for the
group to continue to seek investment opportunities.
SHAREHOLDERS' EQUITY
Shareholders' equity increased from R3 378 million at 31 December 2007 to
R4 607 million due to the good earnings and the effect of the weaker Rand/US
Dollar exchange rate.
During the period, the group repurchased 5 751 063 ordinary shares at an
average price of R24,92 and a total of 100 000 preference shares at an average
price of R95,35. The treasury shares are held by a subsidiary.
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) and are consistent with
those applied in the previous year.
PROSPECTS
Shipping market fundamentals continue to be positive and consequently earnings
are expected to remain at firm levels for the balance of the 2008 financial
year.
The group has significant contract cover and will look to further expand this
base for 2009 and beyond.
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.
The group expects headline earnings per share for the 2008 financial year to be
80% to 100% higher than the 263,1 cents achieved in 2007.
A trading update to 31 December 2008 was released on 20 August 2008 and
shareholders are advised that this has not been reviewed or reported on by the
group's auditors.
For and on behalf of the Board
I A J Clark A K Olivier
Chairman Chief Executive Officer
DECLARATION OF INTERIM DIVIDENDS
PREFERENCE DIVIDEND
Notice is hereby given that a dividend of 589 cents per cumulative,
non-redeemable, non-participating and non-convertible preference share (H1
2007: 498 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 68 cents per ordinary share
(H1 2007: 34 cents) has been declared payable to ordinary shareholders in
accordance with the timetable below.
TIMETABLE
Last day to trade cum-dividend Friday, 5 September 2008
Shares commence trading ex-dividend Monday, 8 September 2008
Record date Friday, 12 September 2008
Dividend payment date Monday, 15 September 2008
No dematerialisation or rematerialisation of shares will be allowed for the
period from Monday, 8 September 2008 to Friday , 12 September 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 August 2008
DIRECTORS
I A J Clark* (Chairman), A K Olivier (Group CEO), H Adams*, W D Geach*, I M
Groves*, J G Jones, T J T McClure, R A Norton*, D A Polkinghorne, D A Rennie,
N Y T Siwendu*, A F Stewart, L R Stuart-Hill *Non-executive
Registered office Transfer secretaries
Quadrant House Computershare Investor Services (Pty) Limited
115 Margaret Mncadi Avenue 70 Marshall Street
Durban, 4001 Johannesburg, 2001
PO Box 1, Durban, 4000 PO Box 61051, Marshalltown, 2107
Sponsor
Exchange Sponsors (Pty) Limited
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
Grindrod Limited's results will be broadcast live on Summit TV at 10:00am
on 21 August 2008

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