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GNDE - GND / GNDP - Grindrod Limited - Audited results and dividend announcement for

26/02/2009 07:05:02

GND GNDP
GND
GND / GNDP - Grindrod Limited - Audited results and dividend announcement for
the year ended 31 December 2008
GRINDROD LIMITED
Incorporated in the Republic of South Africa
Registration number: 1966/009846/06
Share code: GND and GNDP
ISIN: ZAE000072328 and ZAE000071106
AUDITED RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
? Earnings up 81%
? Headline earnings per share up 95%
? Ordinary dividends for the year up 74%
? Strong balance sheet, cash flows and contracted earnings
CONDENSED INCOME STATEMENT
Audited Audited
31 December 31 December
% 2008 2007*
Change R000 R000
Revenue 88 33 736 910 17 946 727
Trading profit 91 3 026 017 1 583 707
Depreciation and amortisation (240 942) (217 920)
Operating profit before interest and
taxation 104 2 785 075 1 365 787
Non-trading items (163 567) 3 508
Interest received 138 711 109 324
Interest paid (314 071) (239 849)
Profit before share of associate
profit 2 446 148 1 238 770
Share of associate companies' profit
before taxation 66 076 62 953
Profit before taxation 2 512 224 1 301 723
Taxation (243 030) (15 803)
Profit for the year 2 269 194 1 285 920
Attributable to
Ordinary shareholders 81 2 157 890 1 195 293
Preference shareholders 90 892 76 872
Grindrod Limited shareholders 2 248 782 1 272 165
Minority interest 20 412 13 755
2 269 194 1 285 920
Exchange rates (R/US Dollar)
Opening exchange rate 6,89 7,00
Closing exchange rate 9,45 6,89
Average exchange rate 8,27 7,07
RECONCILIATION OF HEADLINE EARNINGS
Audited Audited
31 December 31 December
2008 2007*
R000 R000
Profit attributable to ordinary shareholders 2 157 890 1 195 293
Adjusted for: 163 567 (3 516)
IAS 38 Impairment of Goodwill 12 987 2 716
IAS 38 Impairment of Intangible Asset in
Respect of Charters 62 660 2 843
IFRS 3 Negative Goodwill Realised (216) (7 026)
IAS 16 Impairment of Ships, Plant and Equipment 93 772 3 420
IFRS 3 Net (Profit)/Loss on Disposal of
Investments (43 179) 2 058
IAS 16 Net Loss/(Profit) on Sale of Plant and
Equipment 1 386 (7 519)
IAS 21 FCTR Adjustment 35 912 -
Total tax effects of adjustments 245 (8)
Headline earnings 2 321 457 1 191 777
ORDINARY SHARE PERFORMANCE
Audited Audited
% 31 December 31 December
Change 2008 2007*
Number of shares in issue less
treasury shares (000's) 450 252 455 459
Weighted average number of shares on
which earnings per share are based (000's) 453 640 452 934
Diluted weighted average number of shares
on which diluted earnings per share
are based (000's) 459 930 462 417
Earnings per share (cents)
Basic 80 475,7 263,9
Diluted 82 469,2 258,5
Headline earnings per share (cents)
Basic 95 511,7 263,1
Diluted 96 504,7 257,7
Dividends/distribution
per share (cents) 74 136,0 78,0
Interim 68,0 34,0
Final 68,0 44,0
Dividend/distribution cover (times) 3,5 3,4
DIVISIONAL ANALYSIS
Audited Audited
31 December 31 December
2008 2007*
R000 R000
Revenue
Shipping 7 069 205 4 373 572
Trading 24 022 393 11 334 072
Freight Services 2 551 792 2 164 255
Financial Services 93 520 74 828
33 736 910 17 946 727
Trading profit (earnings before interest,
taxation,
depreciation and amortisation)
Shipping 2 366 873 1 135 143
Trading 230 177 119 223
Freight Services 382 557 290 544
Financial Services 46 410 38 797
3 026 017 1 583 707
Operating profit before interest and taxation
Shipping 2 272 002 1 034 429
Trading 221 920 112 332
Freight Services 246 547 181 471
Financial Services 44 606 37 555
2 785 075 1 365 787
Attributable income
Shipping 1 794 758 982 488
Trading 128 672 63 277
Freight Services 198 133 113 306
Financial Services 36 327 36 222
2 157 890 1 195 293
* Restated due to the application of the revised International Accounting
Standards 7 and 16.
CONDENSED BALANCE SHEET
Audited Audited
31 December 31 December
2008 2007*
R000 R000
Ships, property, terminals, vehicles and
equipment 4 540 514 3 046 945
Intangible assets 713 046 521 063
Investments in associates 316 746 236 420
Deferred taxation 159 352 138 069
Derivative financial assets and other
investments 191 238 162 250
Loans and advances to bank customers 1 049 761 965 964
Liquid assets and short-term negotiable
securities 138 553 228 938
Bank balances and cash 2 403 087 1 254 611
Non-current assets held for sale 2 245 141 608
Other current assets 4 469 033 3 232 192
Total assets 13 983 575 9 928 060
Shareholders' equity 6 712 696 3 378 332
Minority interest 62 316 60 643
Total equity 6 775 012 3 438 975
Deferred taxation 18 527 33 224
Provision for post retirement medical aid 77 900 72 819
Income received in advance 151 200 -
Deposits from bank customers 1 507 046 1 397 073
Interest-bearing debt 1 963 564 2 306 187
10 493 249 7 248 278
Non-current liabilities associated
with assets held for sale - 90 573
Other liabilities 3 490 326 2 589 209
Total funding 13 983 575 9 928 060
Net worth per ordinary share - at book value
(cents) 1 336 590
Net debt: equity ratio (0,05):1 0,29:1
Capital expenditure 2 158 501 1 822 793
Capital commitments
Authorised by directors and contracted for 3 245 998 2 283 959
Due within one year 1 647 309 1 081 564
Due thereafter 1 598 689 1 202 395
Authorised by directors not yet contracted for 277 000 715 178
CONDENSED CASH FLOW STATEMENT
Audited Audited
31 December 31 December
2008 2007*
R000 R000
Cash generated from operations 4 312 221 1 909 710
Net interest paid (175 360) (130 525)
Net dividends paid (604 394) (330 707)
Taxation paid (176 571) (46 721)
3 355 896 1 401 757
Net bank advances to customers and other
short-term negotiables 116 561 171 301
Net cash flows from operating activities 3 472 457 1 573 058
Acquisition of ships, property, terminals,
vehicles and equipment and investments (2 158 501) (1 822 794)
Proceeds from disposal of property,
terminals, vehicles and equipment
and investments 340 624 72 635
Intangible assets acquired (916) (5 491)
Loans advanced to associate companies (15 415) -
Net cash flows used in investing activities (1 834 208) (1 755 650)
Repurchase of ordinary share capital (212 936) -
Proceeds from issue of ordinary share capital 3 044 6 509
Long-term borrowings raised 643 072 484 111
Payment of capital portion of long-term
borrowings (637 433) (411 519)
Short-term loans (repaid)/raised (436 589) 92 563
Net cash flows (used in)/from financing
activities (640 842) 171 664
Net increase/(decrease) in cash and
cash equivalents 997 407 (10 928)
Cash and cash equivalents at beginning of the
year 711 739 732 055
Difference arising on translation 265 960 (9 388)
Cash and cash equivalents at end of the year 1 975 106 711 739
CONDENSED CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
Audited Audited
31 December 31 December
2007 IAS 16 2007*
R000 R000 R000
EXTRACTS FROM CONDENSED INCOME
STATEMENT
Revenue 17 077 359 869 368 17 946 727
EXTRACTS FROM CONDENSED BALANCE
SHEET
Non-current asset held for sale 293 547 (151 939) 141 608
Other current assets 3 080 253 151 939 3 232 192
EXTRACTS FROM CONDENSED CASH FLOW
STATEMENT
Cash generated from operations 931 220 641 838 1 573 058
Proceeds from disposal of ships,
property, terminals, vehicles and
equipment and investments 714 473 (641 838) 72 635
* Restated due to the application of the revised International Accounting
Standards 7 and 16.
STATEMENT OF CHANGES IN EQUITY
Share capital,
premium and equity Hedging Foreign currency
compensation reserve translation 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 3 045
Share-based
payments 2 865
Financial
instrument hedge 572 704
Deferred tax on
gains/losses
recognised directly
in equity (2 328) 1 389
Repurchase of
shares (192 106)
Foreign currency
translation
adjustments 84 (50 934) 1 371 102
Transfer to accumulated
profit
Minority interest acquired
Minority interest disposed
Profit attributable to
shareholders
Dividends paid
Balance as at 31
December 2008 12 828 153 855 1 393 267
Attributable to
General Accumulated equity holders
risk reserve profit of Grindrod
R000 R000 R000
Balance as at 31
December 2006 100 2 329 289 2 824 543
Share options
exercised 6509
Share-based
payments 3360
Financial
instrument hedge (610 733)
Hedge reserve
releases 318 066
Foreign currency
translation
adjustments (23 219)
Foreign currency
translation
realised (9085)
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 3 045
Share-based
payments 2 865
Financial
instrument hedge 572 704
Deferred tax on
gains/losses
recognised directly
in equity (939)
Repurchase of
shares (20 833) (212 939)
Foreign currency
translation
adjustments 1 320 252
Transfer to
accumulated profit (5 525) 5 525 -
Minority interest
acquired -
Minority interest
disposed -
Profit
attributable to
shareholders 2 248 782 2 248 782
Dividends paid (599 406) (599 406)
Balance as at 31
December 2008 - 5 152 746 6 712 696
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 3 045
Share-based payments 2 865
Financial instrument hedge 572 704
Deferred tax on gains/losses
recognised directly in equity (939)
Repurchase of shares (212 939)
Foreign currency translation adjustments 639 1 320 891
Transfer to accumulated profit -
Minority interest acquired (320) (320)
Minority interest disposed 533 533
Profit attributable to shareholders 20 412 2 269 194
Dividends paid (19 591) (618 997)
Balance as at 31 December 2008 62 316 6 775 012
COMMENTS
OVERVIEW
Grindrod Limited generated earnings of R2 157 billion for the year ended 31
December 2008 (2007:R1 195 billion), up 81% on the prior year, while headline
earnings per share increased by 95% to 512 cents per share (2007: 263 cents).
The difference between earnings and headline earnings is largely attributable
to impairment of ship values. Ordinary dividends per share for the year have
increased by 74% with a final dividend of 68 cents per ordinary share(2007: 44
cents). The board also declared a preference share dividend of 623 cents per
share (2007: 550 cents). Return on ordinary shareholders' funds was 50,2%
(2007: 50,8%).
Divisional earnings 2008 2007 Comments
(US$ millions)
Shipping
Profit from owned and
Long-term chartered ships 226 160 Increased shipping rates
Profit/(loss) from ship
operating activities 39 (14) Expansion of operations and
improved performance
Profit from ship sales 62 27
Overheads/impairments/
provisions (105) (35) Increased impairments/onerous
contract provisions
222 138
(R millions)
Total Group
Shipping (US$ profit
converted to Rands) 1 794 982
Trading 129 63 Increased shareholding; improved
profitability
Freight Services 198 114 Improved volumes/growth in
activities
Financial Services 36 36 Shareholding reduced to 81,1% in
June 2007
Earnings attributable to
ordinary shareholders 2 157 1 195
The tanker market remained largely stable in the past year, however, both
record highs and all time lows were experienced in drybulk shipping markets.
The effects of the credit crisis impacted on the global economy, resulting in
significant reduction in shipping activity. In spite of this, Shipping
continued to be the major profit contributor at 83% of total earnings.
This was mainly due to the high level of contract cover, increased tanker and
drybulk earnings, profits earned on ship sales and the benefit from a weaker
Rand/US Dollar exchange rate.
These results include a substantial charge in respect of ship impairments,
onerous contracts, once off taxation as a result of a restructure within the
Shipping division and increased STC charges.
Trading had an excellent second half, which resulted in earnings growth of 105%
for the year. Freight Services experienced strong growth in earnings of 74%,
particularly from Terminal and Intermodal activities. Financial Services
results were impacted by the reduced shareholding as a result of the
empowerment transaction, declining equity markets and the slowdown in local
economic activity but nonetheless achieved the same earnings as the previous
year.
SHAREHOLDERS' EQUITY
Shareholders' equity increased from R3 378 million at 31 December 2007 to
R6 713 million due to the strong earnings, the effect of the weaker Rand/US
Dollar exchange rate and the revaluation of hedging instruments as required in
terms of IAS 39.
During the year, the group repurchased 8 776 542 ordinary shares at an average
price of R23,41 and a total of 100 000 preference shares at an average price of
R95,34. The treasury shares are held by a subsidiary.
CASH FLOW AND BORROWINGS
Cash generated from operations was R4 312 million, a growth of 126% over the
2007 year. Cash outflow included capital expenditure of R2 158 million and
dividends paid of R607 million during the year. This resulted in net borrowings
decreasing from R981 million at 31 December 2007 to a net cash position of
R325 million at 31 December 2008. The higher Rand interest rates increased the
net interest charge by 34% to R175 million. There was very little benefit from
interest earned on US Dollar cash resources but the group's balance sheet
benefited through the weaker Rand/US Dollar exchange rate. The group's
debt:equity ratio improved from 29% to a surplus net cash position of 5%.
The strong balance sheet, favourable liquidity position, high level of contract
cover and low cost fleet provide a platform for the group to conclude
investment opportunities at the appropriate time.
CAPITAL EXPENDITURE AND COMMITMENTS
Description Capital expenditure Capital commitments
R million 2008 2009
Ships 1 309 1 377
Property 3 -
Terminals 236 182
Vehicles and equipment 276 69
1 824 1 628
Investment in new businesses 334 19
Total - authorised and
contracted 2 158 1 647
Description Capital commitments Total
R million 2010 Thereafter commitments
Ships 914 572 2 863
Property - - -
Terminals 113 - 295
Vehicles and equipment - - 69
1 027 572 3 227
Investment in new businesses - - 19
Total - authorised and contracted 1 027 572 3 246
These commitments will be funded by cash resources, cash generated from
operations and committed bank financing facilities.
BEE
Subsequent to year end, Freight Services concluded a BEE transaction with
Calulo Petrochemicals (Pty) Limited ("Calulo") and Adopt a School Foundation
("AAS") with the disposal of a 25.1% interest in Grindrod (South Africa) (Pty)
Limited ("GSA"). Calulo is a BEE company with interests in the petrochemical
sector and is Grindrod's empowerment partner in Unical (bunker tanker and
tanker operating). AAS is a section 21 company that supports the development
of schools in previously disadvantaged areas in South Africa. The majority of
Grindrod's 100% owned South African assets fall within GSA.
Grindrod intends re-entering the rail sector through the conclusion of a joint
venture, subject to the remaining conditions precedent being fulfilled, which
will culminate in the establishment of RRL Grindrod, a 53% black owned company.
This business will provide locomotive leasing, rail operations and shunting
services to its clients. RRL Grindrod's intention is to grow its locomotive
fleet to support its client base and position itself to capitalise on business
opportunities arising from rail restructure in South Africa.
BASIS OF PREPARATION
This condensed report complies with International Financial Reporting
Standards, as well as with Schedule 4 of the South African Companies Act and
the disclosure requirements of the JSE Limited's Listings Requirements and has
been prepared in accordance with IAS 34 Interim Financial Reporting. The
condensed report has been prepared using accounting policies that comply with
International Financial Reporting Standards. The accounting policies are
consistent with those applied in the financial statements for the year ended 31
December 2007, except for the early adoption of the revised IAS 16 (property,
plant and equipment) and IAS 7 (cash flow statements). These changes had no
effect on the results but there have been some restatement of the prior year
disclosures. The full impact of these changes will be disclosed in the annual
report.
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 other than the sale of 25,1%
of Grindrod (South Africa) (Pty) Limited to an empowerment group as referred
to above.
PROSPECTS
The 2008 financial year was an extraordinary year in the group's history with
outstanding results achieved mainly through record earnings levels on
contracted and spot drybulk ships, profits earned on ship sales and a weaker
Rand/US Dollar exchange rate.
In spite of the current economic outlook, earnings growth is anticipated from
the Trading, Freight and Financial Services businesses.
The group's balance sheet strength and favourable liquidity position offer a
high level of resilience in these markets and will create opportunities to
expand through acquisition.
The credit crisis and the global economic downturn have impacted shipping
freight movements and this, together with the anticipated growth in world fleet
of ships, is expected to result in continued softer shipping markets in 2009.
However, the group will continue to benefit from a high level of contract cover
at prices above current spot rates and a low cost fleet of ships. There will
nevertheless be a decline in the Shipping division's profitability.
Consequently, the group expects a reduction in earnings in comparison to the
"super profits" achieved in 2008, but still anticipates acceptable returns on
shareholders' funds in 2009.
This prospects statement has not been reviewed by the company's auditors.
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 2008. 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 final dividend of 623 cents per cumulative,
non-redeemable, non-participating and non-convertible preference share (2007:
550 cents) has been declared payable to preference shareholders in accordance
with the timetable below.
ORDINARY DIVIDEND
Notice is hereby given that a final dividend of 68 cents per ordinary share
(2007: 44 cents) has been declared payable to ordinary shareholders in
accordance with the timetable below.
TIMETABLE
Last day to trade cum-dividend Friday, 13 March 2009
Shares commence trading ex-dividend Monday, 16 March 2009
Record date Friday, 20 March 2009
Dividend payment date Monday, 23 March 2009
No dematerialisation or rematerialisation of shares will be allowed for the
period from 16 March 2009 to 20 March 2009, 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
25 February 2009
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, *Non-executive
R A Norton*, D A Polkinghorne, D A Rennie, N Y T Siwendu*, A F Stewart,
L R Stuart-Hill
Registered office
Quadrant House
115 Margaret Mncadi Avenue
Durban, 4001
PO Box 1, Durban, 4000
Sponsor
Grindrod Bank Limited
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
For more information, please refer to our website at www.grindrod.co.za
Date: 26/02/2009 07:05:02 Produced by the JSE SENS Department.
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