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GNDE - GND/GNDP - Grindrod Bank - 2009 unaudited interim results and dividend

20/08/2009 07:30:02

GND GNDP
GND
GND/GNDP - Grindrod Bank - 2009 unaudited interim results and dividend
announcement
Grindrod Bank Limited
Registration number: 1966/009846/06
Incorporated in the Republic of South Africa
Share code: GND&GNDP
ISIN:ZAE000072328 & ZAE000071106
2009 UNAUDITED INTERIM RESULTS AND
DIVIDEND ANNOUNCEMENT
Headline earnings per share of 105,7 cents
Interim ordinary dividend of 30 cents per share
Strong balance sheet and liquidity
CONDENSED INCOME STATEMENT
30 June 30 June
(Unaudited) (Unaudited)
2009 2008
R000 R000
Revenue 12 420 348 13 964 024
Trading profit 801 412 1 435 909
Depreciation and amortisation (147 742) (111 995)
Operating profit before interest and taxation 653 670 1 323 914
Non-trading items 5 965 1 628
Interest received 77 179 54 035
Interest paid (150 119) (136 819)
Profit before share of associates' profit 586 695 1 242 758
Share of associates' profit before taxation 35 032 33 529
Profit before taxation 621 727 1 276 287
Taxation (91 230) (123 688)
Profit for the period 530 497 1 152 599
Profit attributable to
Ordinary shareholders 483 780 1 104 515
Preference shareholders 39 426 45 283
Equity holders of the parent 523 206 1 149 798
Minority interest 7 291 2 801
530 497 1 152 599
Exchange rates (R/US$)
Opening exchange rate 9,45 6,89
Closing exchange rate 7,77 7,86
Average exchange rate 9,24 7,67
RECONCILIATION OF HEADLINE
EARNINGS
Profit attributable to ordinary shareholders 483 780 1 104 515
Adjusted for: (5 965) (1 628)
IAS 38 impairment of goodwill
IAS 38 impairment of intangible asset
IFRS 3 negative goodwill realised
IAS 16 impairment of plant and equipment 894
IFRS 3 net profit on disposal of investments (3 328) (2 758)
IAS 16 net (profit)/loss on sale of plant and
equipment (2 726) 1 130
IAS 21 the effect of changes on foreign
exchange rates (805)
Headline earnings 477 815 1 102 887
ORDINARY SHARE PERFORMANCE
Number of shares in issue less treasury
shares (000's) 452 384 452 558
Weighted average number of shares on
which earnings per share are based (000's) 451 944 454 237
Diluted weighted average number of
shares on which diluted earnings
per share are based (000's) 455 243 461 618
Earnings per share (cents)
Basic 107,0 243,2
Diluted 106,3 239,3
Headline earnings per share (cents)
Basic 105,7 242,8
Diluted 105,0 238,9
Dividends per share (cents)
Interim 30,0 68,0
Final
Dividend cover (times) 3,6 3,6
31 December
(Audited)
Change 2008
% R000
Revenue (11) 33 736 910
Trading profit (44) 3 026 017
Depreciation and amortisation (240 942)
Operating profit before interest and taxation (51) 2 785 075
Non-trading items (163 567)
Interest received 138 711
Interest paid (314 071)
Profit before share of associates' profit 2 446 148
Share of associates' profit before taxation 66 076
Profit before taxation 2 512 224
Taxation (243 030)
Profit for the period 2 269 194
Profit attributable to
Ordinary shareholders (56) 2 157 890
Preference shareholders 90 892
Equity holders of the parent 2 248 782
Minority interest 20 412
2 269 194
Exchange rates (R/US$)
Opening exchange rate 6,89
Closing exchange rate 9,45
Average exchange rate 8,27
RECONCILIATION OF HEADLINE
EARNINGS
Profit attributable to ordinary shareholders 2 157 890
Adjusted for: 163 567
IAS 38 impairment of goodwill 12 987
IAS 38 impairment of intangible asset 62 660
IFRS 3 negative goodwill realised (216)
IAS 16 impairment of plant and equipment 93 772
IFRS 3 net profit on disposal of investments (43 179)
IAS 16 net (profit)/loss on sale of plant and
equipment 1 631
IAS 21 the effect of changes on foreign
exchange rates 35 912
Headline earnings 2 321 457
ORDINARY SHARE PERFORMANCE
Number of shares in issue less treasury
shares (000's) 450 252
Weighted average number of shares on
which earnings per share are based (000's) 453 640
Diluted weighted average number of
shares on which diluted earnings
per share are based (000's) 459 930
Earnings per share (cents)
Basic (56) 475,7
Diluted (56) 469,2
Headline earnings per share (cents)
Basic (56) 511,7
Diluted 504,7
Dividends per share (cents)
Interim (56) 68,0
Final 68,0
Dividend cover (times) 3,5
CONDENSED STATEMENT OF CASH FLOWS
30 June 30 June 31 December
(Unaudited) (Unaudited) (Audited)
2009 2008 2008
R000 R000 R000
Cash generated from operations 1 159 470 1 636 534 3 076 375
Working capital movements (144 793) 3 154 1 235 846
Net interest paid (72 940) (82 784) (175 360)
Net dividends paid (278 224) (246 749) (604 394)
Taxation paid (164 864) (75 292) (176 571)
498 649 1 234 863 3 355 896
Net bank (advances to)/deposits
from customers and other
short-term negotiables (151 510) (61 718) 116 561
Net cash flows from operating
activities 347 139 1 173 145 3 472 457
Acquisition of ships, property,
terminals, vehicles and
equipment and investments (800 816) (1 085 314) (2 158 501)
Proceeds from disposal of
property, terminals,
vehicles and equipment and
investments 56 766 3 420 340 624
Intangible assets acquired (1 253) (24 192) (916)
Loans repaid by associate
companies (15 415)
Net cash flows used in
investing activities (745 303) (1 106 086) (1 834 208)
Repurchase of ordinary share
capital (150 890) (212 936)
Proceeds from issue of ordinary
share capital 8 359 2 385 3 044
Long-term borrowings raised 224 581 404 790 643 072
Payment of capital portion of
long-term borrowings (102 122) (263 094) (637 433)
Short-term loans (repaid)/raised (20 973) 41 295 (436 589)
Net cash flows from/(used in)
financing activities 109 845 34 486 (640 842)
Net(decrease)/increase in
cash and cash equivalents (288 319) 101 545 997 407
Cash and cash equivalent sat
beginning
of the period 1 975 106 711 739 711 739
Difference arising on
translation (216 325) 55 761 265 960
Cash and cash equivalent sat
end of the period 1 470 462 869 045 1 975 106
STATEMENT OF FINANCIAL POSITION
30 June 30 June
(Unaudited) (Unaudited)
2009 2008
R000 R000
Ships, property, terminals, vehicles and
equipment 4 152 229 3 599 081
Intangible assets 805 061 585 977
Investments in associates 252 811 275 041
Deferred taxation 178 025 99 112
Financial assets and other investments 183 673 399 254
Loans and advances to bank customers 1 129 515 902 592
Liquid assets and short-term negotiable assets 145 701 59 268
Bank balances and cash 1 565 844 1 565 781
Non-current assets held for sale 2 048 441 264
Other current assets 3 648 138 4 119 015
Total assets 12 063 045 12 046 385
Interest of shareholders of Grindrod Limited 5 854 433 4 606 719
Minority interest 96 319 64 325
Interest of all shareholders 5 950 752 4 671 044
Deferred taxation 20 917 37 015
Provision for post-retirement medical aid 75 085 72 955
Deposits from bank customers 1 435 153 1 257 798
Interest-bearing debt 1 672 988 2 714 348
9 154 895 8 753 160
Non-current liabilities associated with assets
held for sale 43 477
Other liabilities 2 908 150 3 249 748
Total funding 12 063 045 12 046 385
Net worth per ordinary share
at book value (cents) 1 130 868
Net debt:equity ratio 0,006:1 0,14:1
Capital expenditure 800 816 1 085 314
Capital commitments
Authorised by directors and contracted for 2 189 011 2 048 053
Due within one year 1 272 355 912 310
Due thereafter 916 656 1 135 743
Authorised by directors not yet contracted for 11 862 1 356 641
DIVISIONAL ANALYSIS
Revenue
Shipping 2 012 189 3 349 700
Trading 9 314 514 9 448 545
Freight Services 1 031 552 1 127 362
Financial Services 62 093 38 417
Group costs
12 420 348 13 964 024
Trading profit (earnings before interest,
taxation, depreciation and amortisation)
Shipping 498 153 1 213 578
Trading 133 233 45 291
Freight Services 157 048 176 719
Financial Services 26 843 11 665
Group costs (13 865) (11 345)
801 412 1 435 909
Operating profit before interest
and taxation
Shipping 431 808 1 171 842
Trading 130 270 41 037
Freight Services 79 596 111 560
Financial Services 25 861 10 820
Group costs (13 865) (11 345)
653 670 1 323 914
Attributable income
Shipping 337 209 1 038 656
Trading 84 585 12 804
Freight Services 88 696 76 921
Financial Services 17 878 9 731
Group costs (44 588) (33 599)
483 780 1 104 515
31 December
(Audited)
Change 2008
% R000
Ships, property, terminals, vehicles and
equipment 4 540 514
Intangible assets 713 046
Investments in associates 316 746
Deferred taxation 159 352
Financial assets and other investments 191 238
Loans and advances to bank customers 1 049 761
Liquid assets and short-term negotiable assets 138 553
Bank balances and cash 2 403 087
Non-current assets held for sale 2 245
Other current assets 4 469 033
Total assets 13 983 575
Interest of shareholders of Grindrod Limited 6 712 696
Minority interest 62 315
Interest of all shareholders 6 775 011
Deferred taxation 18 527
Provision for post-retirement medical aid 77 900
Deposits from bank customers 1 507 046
Interest-bearing debt 1 963 564
10 342 048
Non-current liabilities associated with assets
held for sale
Other liabilities 3 641 527
Total funding 13 983 575
Net worth per ordinary share
at book value (cents) 1 336
Net debt : equity ratio (0,05):1
Capital expenditure 2 158 501
Capital commitments
Authorised by directors and contracted for 3 245 998
Due within one year 1 647 309
Due thereafter 1 598 689
Authorised by directors not yet contracted for 277 000
DIVISIONAL ANALYSIS
Revenue
Shipping (40) 7 069 205
Trading (1) 24 022 393
Freight Services (8) 2 551 792
Financial Services 62 93 520
Group costs
(11) 33 736 910
Trading profit (earnings before interest,
taxation, depreciation and amortisation)
Shipping (59) 2 387 639
Trading 194 230 429
Freight Services (11) 378 102
Financial Services 130 46 409
Group costs (22) (16 561)
(44) 3 026 017
Operating profit before interest
and taxation
Shipping (63) 2 292 302
Trading 217 221 938
Freight Services (29) 242 792
Financial Services 139 44 605
Group costs (22) (16 561)
(51) 2 785 075
Attributable income
Shipping (68) 1 862 364
Trading 561 131 842
Freight Services 15 188 654
Financial Services 84 34 614
Group costs (33) (59 584)
(56) 2 157 890
STATEMENT OF OTHER COMPREHENSIVE INCOME
30 June 30 June 31 December
(Unaudited) (Unaudited) (Audited)
2009 2008 2008
R000 R000 R000
Profit for the period 530 497 1 152 599 2 269 194
Other comprehensive income
Exchange differences on
translating foreign operations (854 387) 432 464 1 322 280
Cash flow hedges (210 782) 44 144 570 376
Other comprehensive income for
the period, net of taxation (1 065 169) 476 608 1 892 656
Total comprehensive income for
the period (534 672) 1 629 207 4 161 850
Total comprehensive income
attributable to
Equity holders of the parent (541 965) 1 625 661 4 140 799
Minority interest 7 293 3 546 21 051
(534 672) 1 629 207 4 161 850
STATEMENT OF CHANGES IN EQUITY
Share capital, Foreign currency
premium and equity Hedging translation
compensation reserve reserve
R000 R000 R000
Balance as at 31
December 2007 198 940 (365 587) 20 776
Share options exercised 3 045
Share-based payments 2 865
Repurchase of shares (192 106)
Minority interest
acquired
Minority interest disposed
Total comprehensive income 84 519 442 1 372 491
Dividends paid
Balance as at 31 December 2008 12 828 153 855 1 393 267
Share options exercised 8 359
Share-based payments 21 511
Minority interest acquired
Total comprehensive income (210 782) (854 389)
Dividends paid
Balance as at 30 June 2009 42 698 (56 927) 538 878
Attributable to
General risk Accumulated equity holders of
reserve profit Grindrod Limited
R000 R000 R000
Balance as at 31 December 2007 5 525 3 518 678 3 378 332
Share options exercised 3 045
Share-based payments 2 865
Repurchase of shares (20 833) (212 939)
Minority interest acquired
Minority interest disposed
Total comprehensive income (5 525) 2 254 307 4 140 799
Dividends paid (599 406) (599 406)
Balance as at 31 December 2008 5 152 746 6 712 696
Share options exercised 8 359
Share-based payments 21 511
Minority interest acquired
Total comprehensive income 523 206 (541 965)
Dividends paid (346 168) (346 168)
Balance as at 30 June 2009 5 329 784 5 854 433
Minority Total
interest equity
R000 R000
Balance as at 31 December 2007 60 643 3 438 975
Share options exercised 3 045
Share-based payments 2 865
Repurchase of shares (212 939)
Minority interest acquired (320) (320)
Minority interest disposed 532 532
Total comprehensive income 21 051 4 161 850
Dividends paid (19 591) (618 997)
Balance as at 31 December 2008 62 315 6 775 011
Share options exercised 8 359
Share-based payments 21 511
Minority interest acquired 29 650 29 650
Total comprehensive income 7 293 (534 672)
Dividends paid (2 939) (349 107)
Balance as at 30 June 2009 96 319 5 950 752
COMMENTS
OVERVIEW
Grindrod Limited generated earnings of R483,8 million for the six months ended
30 June 2009 (H1 2008: R1 104,5 million), down 56% on the corresponding period
of the prior year which is in line with the trading update issued on 1 July
2009. Headline earnings per share also decreased by 56% to 105,7 cents per
Share (H1 2008: 242,8 cents). An interim ordinary dividend per share of 30
cents (H1 2008: 68 cents) and a preference share dividend of 522,5 cents per
share (H1 2008: 589 cents) have been declared. The annualised return on
ordinary shareholders' funds was 17,5% (H1 2008: 68%).
These results were achieved against the backdrop of a worldwide recession,
leading to substantially reduced economic activity, lower trade volumes,
declining commodity prices and a continued lack of credit, which increased
counter party risk and significantly impacted shipping markets.
In reaction to these conditions, Grindrod focused its efforts on the key
operational areas of:
protecting the balance sheet and ensuring sufficient liquidity;
increasing contract cover and selectively selling ships to lock in value and
improve liquidity;
reducing costs and improving efficiencies to support the earnings base; and
monitoring counter party risk and protecting customer relationships to ensure
continued growth as conditions normalise.
While earnings for the six months were not dissimilar to those achieved prior
to the record levels of 2008, the composition of the earnings has changed. The
actions to diversify the group from Shipping to a broader spectrum of freight
and logistics activities has supported the profitability of the group during
this period although these businesses were by no means unaffected by the global
economic turmoil.
The fortunes of the Shipping division changed substantially since the fourth
quarter of 2008, when shipping markets experienced the sharpest decline in
history. Attributable earnings declined by 68% compared to the first half of
2008 on the back of the significant drop in shipping rates, triggered by the
lack of credit to support international trade and the slowdown in major
economies.
The Trading division's earnings grew considerably on the back of operational
improvement, increased margins and the buy up to 100% of the marine fuel and
industrial raw materials trading businesses. Despite extremely difficult
trading conditions in the Logistics, Intermodal and Ships Agency businesses,
Freight Services grew earnings by 15% through a good performance from Terminals.
Financial Services experienced growth in earnings of 84%, with commendable
performance across key portfolios.
It is pleasing to note that Grindrod (South Africa) (Pty) Limited has achieved
level 3 BEE contributor status in 2009. Included in the group cost above is a
once-off R21 million IFRS 2 charge against headline earnings for the BEE deal
between Grindrod (South Africa) (Pty) Limited, Calulo Petrochemical and the
Adopt-a-School Foundation, announced in February 2009, together with
Listing related overheads and secondary tax on companies (STC).
CAPITAL EXPENDITURE AND COMMITMENTS
Capital expenditure Capital commitments
Descriptions Six months Six months
to June to December
(R millions) 2009 2009 2010
Ships 582 465 910
Property and terminals 122 127 186
Vehicles and equipment 72 19 5
776 611 1 101
Acquisition of businesses 25 14
Total 801 625 1 101
Capital commitments
Total
R million 2011 commitments
Ships 473 1 848
Property and terminals 313
Vehicles and equipment 2 26
475 2 187
Acquisition of businesses 14
Total 475 2 201
Ship new building contracts make up the bulk of the capital commitments. While
it is difficult to determine current market values of these contracts,
management is comfortable that the contract prices are in line with value-in-
use assessments.
In addition to the above, provision has been made for a goodwill payment due
as a result of a final settlement reached in relation to the acquisition of a
trading business.
CASH FLOW AND BORROWINGS
Cash generated from operations was R1 159 million (H1 2008: R1 637 million).
Cash outflows included capital expenditure of R801 million and net dividends of
R278 million during the period. This resulted in net debt increasing from a net
cash position of R325 million at 31 December 2008 to a net debt position of R37
million at 30 June 2009 and a net debt : equity ratio of less than 1%. Net
interest costs, although decreasing by 12% are still significant due to low
interest earned on substantial US Dollar cash resources.
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 decreased from R6713 million at 31 December 2008 to R5854
million at 30 June 2009 due to the effect of the stronger Rand/US Dollar
exchange rate and the revaluation of hedging instruments. During the period, 19
044 230 ordinary shares and 100 000 preference shares, held by a subsidiary
company, were delisted.
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 period with the exception of the revised IAS 1,
Presentation of Financial Statements and IFRS 8 Operating Segments which were
adopted in the current year. The adoption of these new standards has resulted
in certain disclosure reclassifications, but has not resulted in any changes in
accounting policy.
PROSPECTS
The credit crisis and global economic downturn have impacted volumes of cargo
moved by sea, as well as land-based freight services businesses. However, there
has been recent improvement in international business activity, particularly in
the demand for and price of commodities. A recovery in shipping markets will,
however, be countered by the delivery of a large number of new ships in the
short-term.
The group has a low cost fleet of ships, a high level of contract cover,
considerable cash resources and continues to anticipate earnings growth from its
Trading, Freight Services and Financial Services businesses for the full year.
This positions it favourably for a recovery in world markets in the medium-
term. The group will have lower earnings for the full year compared with
the extraordinary levels achieved in 2008.
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 522,5 cents per cumulative,
non-redeemable, non-participating and non-convertible preference share (H1
2008: 589 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 30 cents per ordinary share
(H12008:68cents) has been declared, payable to ordinary shareholders in
accordance with the timetable below.
TIMETABLE
Last day to trade cum-dividend Friday, 4 September 2009
Shares commence trading ex-dividend Monday, 7 September 2009
Record date Friday, 11 September 2009
Dividend payment date Monday, 14 September 2009
No dematerialisation or rematerialisation of shares will be allowed for the
period from 7 September 2009 to 11 September 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
19 August 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, R A Norton*,
D A Polkinghorne, D A Rennie, N Y T Siwendu*, A F Stewart, LRStuart-Hill
*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
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: 20/08/2009 07:30:01 Produced by the JSE SENS Department.
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