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GNDE - GND/GNDP - GRINDROD - Audited results for the year ended 31 December 2010 and

24/02/2011 08:00:04

GND GNDP
GND
GND/GNDP - GRINDROD - Audited results for the year ended 31 December 2010 and
dividend declaration
GRINDROD
Registration number: 1966/009846/06
Share code: GND and GNDP
Incorporated in the Republic of South Africa
ISIN: ZAE000072328 and ZAE000071106
Audited results and dividend announcement
Attributable income down 11% to R780 million
Headline earnings per share of 168 cents (2009: 190 cents)
54% of earnings from non-shipping businesses
Return on ordinary shareholders' funds of 15,4%
Final ordinary dividend of 27 cents per share,
totaling 54 cents for the year
CONDENSED CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2010 31 December 31 December
Audited Audited
Change 2010 2009
% R000 R000
Revenue 9 30 202 885 27 692 041
Trading profit (9) 1 304 135 1 434 922
Depreciation and amortisation (340 472) (292 400)
Operating profit before interest and
taxation (16) 963 663 1 142 522
Non-trading items 12 421 13 881
Interest received 135 204 161 328
Interest paid (196 675) (252 695)
Profit before share of associates' profit 914 613 1 065 036
Share of associate companies' profit
before taxation 84 304 76 465
Profit before taxation 998 917 1 141 501
Taxation (153 842) (188 075)
Profit for the year 845 075 953 426
Attributable to
Ordinary shareholders (11) 780 252 872 763
Preference shareholders 58 594 69 023
Owners of the parent 838 846 941 786
Non-controlling interests 6 229 11 640
845 075 953 426
Exchange rates (R/US$)
Opening exchange rate 7,37 9,45
Closing exchange rate 6,62 7,37
Average exchange rate 7,34 8,46
RECONCILIATION OF HEADLINE EARNINGS
Profit attributable to ordinary shareholders 780 252 872 763
Adjusted for: (18 375) (15 445)
IAS 38 - Impairment of goodwill 35 960 990
IAS 38 - Reversal of impairment of
intangible asset in respect of charters (1 452) (46 886)
IFRS 3 - Negative goodwill realised (473) (156)
IAS 16 - (reversal of impairment)/impairment of
ships, property plant and equipment (19 989) 36 731
IFRS 3 - Net profit on disposal of investments (11 327) (2 081)
IAS 16 - Net profit on sale of plant
and equipment (1 489) (1 674)
IAS 21 - FCTR adjustment on disposal of investment (16 856) (805)
Total taxation effects of adjustments (2 749) (1 564)
Headline earnings 761 877 857 318
ORDINARY SHARE PERFORMANCE
Number of shares in issue less treasury
shares (000's) 455 803 454 203
Weighted average number of shares on
which earnings per share are based (000's) 454 591 452 278
Diluted weighted average number of
shares on which
diluted earnings per share are based
(000's) 455 912 454 436
Earnings per share (cents)
Basic (11) 171,6 193,0
Diluted (11) 171,1 192,1
Headline earnings per share (cents)
Basic (12) 167,6 189,6
Diluted (11) 167,1 188,7
Dividends per share (cents) (10) 54,0 60,0
Interim 27,0 30,0
Final 27,0 30,0
Dividend cover (times) 3,2 3,2
CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2010 31 December 31 December
Audited Audited
2010 2009
R000 R000
Profit for the year 845 075 953 426
Other comprehensive income
Exchange differences on translating
foreign operations
Exchange differences arising during the year (417 966) (1 114 942)
Realisation of foreign operations disposed of in
the year (16 856) (7 708)
(434 822) (1 122 650)
Cash flow hedges
Losses during the year (92 356) (172 691)
Reclassification adjustments for amounts
recognised in profit/(loss) 108 912 (143 860)
Reclassification adjustments for amounts
recognised in assets 60 455
16 616 (316 096)
Total comprehensive income/(loss) for the year 426 869 (485 320)
Total comprehensive income/(loss) attributable to:
Owners of the parent 419 554 (499 211)
Non-controlling interests 7 315 13 891
426 869 (485 320)
BUSINESS COMBINATIONS
For the year ended 31 December 2010
During the year the group
acquired the following
businesses: Percentage Date Purchase
acquired acquired consideration
(%) R000
Company acquired
United Barge Owners B.V. and
Associated Bunkeroil Contractors
B.V. 100 1 May 2010 82 878
Fuelogic (Pty) Limited 100 21 Apr 2010 159 887
Sinpor Trading (Pty) Limited 50 1 Feb 2010 4 894
247 659
These businesses comprise the
following net assets:
Fair value
Net assets acquired R000
Ships, property, terminals, vehicles and equipment 472 028
Intangible assets 4 441
Investments 5 807
Taxation 3 480
Working capital 45 752
Cash and bank (54 757)
Long-term liabilities (303 492)
Deferred taxation (62 305)
Total 110 954
Goodwill and intangible assets
arising on acquisition 136 705
247 659
All assets were acquired at fair value. The goodwill arising on the acquisition
of these businesses is attributable to the anticipated profitability of these
businesses and synergies expected. From the dates of their acquisition, the
acquired businesses contributed attributable profit of R13 797 000.
CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
As at the year ended 31 December 2010 31 December 31 December
Audited Audited
2010 2009
R000 R000
Ships, property, terminals, vehicles and equipment 5 121 449 3 923 378
Intangible assets 869 254 830 663
Investments in associates 342 824 283 068
Deferred taxation 179 126 159 088
Other investments and derivative financial assets 92 528 185 376
Recoverables on cancelled ships - 238 589
Loans and advances to bank customers 1 709 796 1 483 314
Liquid assets and short-term negotiable securities 129 365 104 092
Short-term loans 519 818 -
Bank balances and cash 1 277 172 1 917 695
Other current assets 4 010 330 3 493 156
Non-current asset held for sale - 12 680
Total assets 14 251 662 12 631 099
Shareholders' equity 5 856 861 5 737 980
Non-controlling interests 113 854 98 146
Total equity 5 970 715 5 836 126
Deferred taxation 124 889 22 277
Provision for post-retirement medical aid 50 622 77 868
Income received in advance - 88 441
Deposits from bank customers 2 016 137 1 756 126
Interest-bearing borrowings 3 524 736 2 246 462
11 687 099 10 027 300
Non-current liabilities associated with assets
held for sale - 5 193
Other liabilities 2 564 563 2 598 606
Total funding 14 251 662 12 631 099
Net worth per ordinary share - at book value
(cents) 1 147 1 122
Net debt:equity ratio 0,32:1 0,04:1
Capital expenditure 1 722 322 1 407 629
Capital commitments 1 448 100 2 299 496
Authorised by directors and contracted for 1 047 339 2 243 062
Due within one year 813 190 1 455 328
Due thereafter 234 149 787 734
Authorised by directors not yet contracted for 400 761 56 434
SEGMENTAL ANALYSIS
At 31 December 2010 31 December 31 December
Audited Audited
2010 2009
R000 R000
Revenue
Shipping 4 264 011 4 918 406
Freight Services 2 642 990 2 302 323
Trading 23 101 027 20 335 439
Financial Services 192 531 135 695
Group costs 2 326 178
30 202 885 27 692 041
Trading profit (earnings before interest,
taxation, depreciation and amortisation)
Shipping 543 880 774 174
Freight Services 478 750 387 239
Trading 188 414 255 743
Financial Services 90 240 54 193
Group costs 2 851 (36 427)
1 304 135 1 434 922
Operating profit before interest and taxation
Shipping 405 707 647 292
Freight Services 292 562 233 903
Trading 176 727 249 264
Financial Services 88 997 52 192
Group costs (330) (40 129)
963 663 1 142 522
Attributable income to ordinary shareholders
Shipping 362 220 492 482
Freight Services 262 080 221 717
Trading 120 074 181 233
Financial Services 44 952 35 500
Group costs (9 074) (58 169)
780 252 872 763
CONDENSED STATEMENT OF CASH FLOWS
For the year ended 31 December 2010 31 December 31 December
Audited Audited
2010 2009
R000 R000
Cash generated from operations 775 085 917 747
Net interest paid (61 471) (91 367)
Net dividends paid (302 468) (460 868)
Taxation paid (183 625) (240 459)
227 521 125 053
Net bank advances to customers and other
short-term negotiables 8 257 (150 013)
Net cash flows generated from/(utilised in)
operating activities
before ship sales and purchases 235 778 (24 960)
Net proceeds on disposal of ships and locomotives 145 778 756 728
Proceeds on disposal of ships and locomotives 145 778 1 257 467
Cash payments on ship options exercised - (500 739)
Capital expenditure on ships and locomotives (1 040 159) (793 207)
Net cash flows utilised in operating activities (658 603) (61 439)
Acquisition of property, terminals, vehicles and
equipment and investments (670 008) (578 139)
Proceeds from disposal of property, terminals,
vehicles
and equipment and investments 82 376 51 498
Intangible assets acquired (12 155) (36 283)
Disposal of investment in subsidiary (2 650) -
Loans (advanced to)/repaid by joint venture
and associate companies (20 161) 27 386
Net cash flows utilised in investing activities (622 598) (535 538)
Proceeds from issue of ordinary share capital 8 693 13 209
Proceeds from disposal of treasury shares 6 769 -
Non-controlling interest investment in subsidiary 10 000 3 780
Loan from non-controlling interest shareholders - 15 853
Long-term interest-bearing debt raised 1 104 194 591 700
Payment of capital portion of long-term
interest-bearing debt (361 367) (447 341)
Short-term interest-bearing debt issued (439 511) -
Short-term interest-bearing debt raised 293 033 381 783
Net cash flows from financing activities 621 811 558 984
Net decrease in cash and cash equivalents (659 390) (37 993)
Cash and equivalents at beginning of the year 1 669 282 1 975 106
Difference arising on translation (42 360) (267 831)
Cash and cash equivalents at end of the year 967 532 1 669 282
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2010
Ordinary share Preference
capital share capital
R000 R000
Balance at 31 December 2008 9 2
Share options exercised
Share-based payments
Non-controlling interest acquired
Profit for the year
Other comprehensive income
Total comprehensive income - -
Ordinary dividends paid
Preference dividends paid
Balance at 31 December 2009 9 2
Share options exercised
Share-based payments
Treasury shares sold
Non-controlling interest acquired
Non-controlling interest disposed
Profit for the year
Other comprehensive income
Total comprehensive income - -
Ordinary dividends paid
Preference dividends paid
Balance at 31 December 2010 9 2
Equity
compensation
Share premium reserve
R000 R000
Balance at 31 December 2008 - 12 817
Share options exercised 13 209
Share-based payments 22 954
Non-controlling interest acquired
Profit for the year
Other comprehensive income
Total comprehensive income - -
Ordinary dividends paid
Preference dividends paid
Balance at 31 December 2009 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 year
Other comprehensive income
Total comprehensive income - -
Ordinary dividends paid
Preference dividends paid
Balance at 31 December 2010 28 671 37 300
Foreign
currency
translation Hedging
reserve reserve
R000 R000
Balance at 31 December 2008 1 393 267 153 855
Share options exercised
Share-based payments
Non-controlling interest acquired
Profit for the year
Other comprehensive income (1 117 621) (323 376)
Total comprehensive income (1 117 621) (323 376)
Ordinary dividends paid
Preference dividends paid
Balance at 31 December 2009 275 646 (169 521)
Share options exercised
Share-based payments
Treasury shares sold
Non-controlling interest acquired
Non-controlling interest disposed
Profit for the year
Other comprehensive income (436 107) 16 815
Total comprehensive income (436 107) 16 815
Ordinary dividends paid
Preference dividends paid
Balance at 31 December 2010 (160 461) (152 706)
Accumulated Owners of
profit the parent
R000 R000
Balance at 31 December 2008 5 152 746 6 712 696
Share options exercised 13 209
Share-based payments 22 954
Non-controlling interest acquired -
Profit for the year 941 786 941 786
Other comprehensive income (1 440 997)
Total comprehensive income 941 786 (499 211)
Ordinary dividends paid (442 645) (442 645)
Preference dividends paid (69 023) (69 023)
Balance at 31 December 2009 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 year 838 846 838 846
Other comprehensive income (419 292)
Total comprehensive income 838 846 419 554
Ordinary dividends paid (259 070) (259 070)
Preference dividends paid (58 594) (58 594)
Balance at 31 December 2010 6 104 046 5 856 861
Non-controlling Interest of all
interests shareholders
R000 R000
Balance at 31 December 2008 62 315 6 775 011
Share options exercised 13 209
Share-based payments 22 954
Non-controlling interest acquired 29 633 29 633
Profit for the year 11 640 953 426
Other comprehensive income 2 251 (1 438 746)
Total comprehensive income 13 891 (485 320)
Ordinary dividends paid (7 693) (450 338)
Preference dividends paid (69 023)
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 year 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 (58 894)
Balance at 31 December 2010 113 854 5 970 715
BASIS OF PREPARATION
The condensed consolidated financial statements have been prepared in accordance
with the recognition and measurement criteria of International Financial
Reporting Standards (IFRS) and its interpretations adopted by the International
Accounting Standards Board (IASB) in issue and effective for the group at 31
December 2010 and the AC 500 standards issued by the Accounting Practices Board
or its successor. The results are presented in terms of IAS 34 - Interim
Financial Reporting and comply with the Listings Requirements of the JSE
Limited.
These condensed consolidated annual financial statements were approved by the
board of directors on 23 February 2011.
ACCOUNTING POLICIES
The accounting policies adopted and methods of computation used in the
preparation of the condensed consolidated financial statements are in terms of
IFRS and are consistent with those of the annual financial statements for the
year ended 31 December 2009 except for the adoption of new or revised accounting
standards, interpretations and circulars and restatements which are described
below.
None of the changes below have impacted on the 31 December 2008 statement of
financial position and it has therefore not been re-presented.
NEW ACCOUNTING STANDARDS
The group adopted accounting standards and interpretations that became
applicable during the current financial year.
Of the amendments included in the Improvements to IFRS, the following standards
had an impact on the group's accounting policies and methods of computation:
- IFRS 3 - Business combinations;
- IAS 27 - Consolidated and separate financial statements; and
- IAS 28 - Investments in associates
The adoption of the above standards impacts the group as follows:
- Any excess over net asset value arising from the buy-out of non-controlling
interests is recognised in equity.
- Transaction related costs for new acquisitions are expensed in the income
statement.
- Non-controlling interests share in accumulated losses above the equity they
contributed.
Amendments to these standards as noted above have been applied prospectively and
have no material impact on the income statement, statement of comprehensive
income and the statement of financial position.
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the group's
financial statements for the year ended 31 December 2010.
The audit was conducted in accordance with International Standards on Auditing.
They have issued an unmodified audit opinion. These condensed consolidated
annual financial statements have been derived from the group financial
statements and are consistent in all material respects with the group financial
statements.
A copy of their audit report is available for inspection at the company's
registered office.
Any reference to future financial performance included in this announcement has
not been reviewed or reported on by the group's external auditors.
COMMENTS
OVERVIEW
Grindrod Limited generated earnings of R780 million for the year ended 31
December 2010 (2009: R873 million), down 11% on the prior year. Headline
earnings per share decreased by 12% to 168 cents per share (2009: 190 cents per
share). The decline in earnings and headline earnings per share was primarily
due to a R166 million impact from the stronger Rand/US Dollar exchange rate,
lower profits on the sale of ships of R21 million (2009: R253 million) and
business development costs. Volume growth in ship operating activities, together
with improved profitability from Freight Services and Financial Services
contributed positively to results.
Total ordinary dividends per share for the year of 54 cents per share (2009: 60
cents) have been declared.
Dividend cover remains consistent with the prior year at 3,2 times. A final
preference share dividend of 386 cents per share (2009: 428 cents) was declared.
Return on ordinary shareholders' funds was 15,4% (2009: 15,9%), notwithstanding
the substantial investment in ships under construction and terminal facilities
under development which are not yet fully utilised.
The strategy to diversify the group from shipping to an integrated freight and
logistics business continues to bear fruit with 54% of earnings being generated
by non-shipping businesses.
The group's balance sheet remains sound although materially impacted by the
strong year-end closing exchange rate of R6,62/US Dollar. The debt:equity ratio
has increased to 32%, following the conclusion of planned acquisitions by the
group. There is substantial capacity for debt funding to drive further expansion
of the group's businesses.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital expenditure for 2010 and approved capital expenditure for the next three
years is set out below:
Capital Capital commitments
Description expenditure and approved expenditure
Total
R million 2010 2011 2012 2013 commitments
Ships 1 027 803 194 34 1 031
Property and terminals 179 238 74 1 313
Equipment, locomotives and
vehicles 209 93 6 5 104
Subtotal 1 415 1 134 274 40 1 448
Acquisition of businesses 307 - - - -
Total 1 722 1 134 274 40 1 448
The Shipping division took delivery of four tankers, two bulk carriers and
contracted to build a further two handysize bulk carriers during the year under
review. In addition, the division concluded the acquisition of a Rotterdam-based
bunker tanker business.
A settlement agreement was entered into resolving all disputes and arbitrations
previously reported with a Chinese shipyard. This has resulted in two of the
five cancelled 16 500 dwt products tanker ship contracts being reinstated.
The major allocation of capital expenditure in Freight Services was directed to
the expansion of the Maputo Coal Terminal capacity from 4 million to 6 million
tonnes per annum and the acquisition of Fuelogic, a South African based
petrochemical road transportation service provider.
Freight Services continues to focus on the growth of its South African
operations and infrastructure opportunities in Mozambique and other parts of
Africa.
Trading acquired a Rotterdam based bunker trading business and continues to
evaluate further supply chain investment opportunities in the agricultural and
mineral sectors.
The group has capacity for an additional R7 billion to R8 billion of capital
expenditure over the next three years.
CASH FLOW AND BORROWINGS
Cash generated from operations was R775 million (2009: R918 million). Cash
outflows included capital expenditure of R1 722 million and dividends of R302
million. This resulted in the net debt position of R258 million at 31 December
2009 increasing to R1 904 million at 31 December 2010. The group had net
interest expenses of R61 million for the year compared to an expense of R91
million in 2009, mainly due to low net debt levels during the year, lower Rand
interest rates and the utilisation of US Dollar cash to reduce Rand debt.
The group has adequate funding available for all its capital commitments through
its cash resources, cash generated from operations and existing bank facilities.
SHAREHOLDERS' EQUITY
Shareholders' equity increased to R5,9 billion at 31 December 2010 (2009: R5,7
billion), mainly due to retained profits, the impact of which was reduced by the
effect of the strong closing Rand/US Dollar exchange rate.
9 179 348 ordinary shares repurchased by subsidiaries in prior years continue to
be held in treasury.
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
The outlook for commodity demand is positive. The Freight Services and Trading
businesses will benefit from this demand and provide opportunity for growth. The
oversupply of ships, particularly in the drybulk sector, will impact shipping
earnings.
The group results remain sensitive to the Rand/US Dollar exchange rate.
For and on behalf of the board
IAJ Clark AK Olivier
Chairman Chief Executive Officer
DECLARATION OF FINAL DIVIDENDS
Preference dividend
Notice is hereby given that a final dividend of 386 cents per cumulative, non-
redeemable, non-participating and non-convertible preference share (2009: 429
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 27 cents per ordinary share
(2009: 30 cents) has been declared, payable to ordinary shareholders in
accordance with the timetable below.
Timetable
Last day to trade cum-dividend Friday, 11 March 2011
Shares commence trading ex-dividend Monday, 14 March 2011
Record date Friday, 18 March 2011
Dividend payment date Tuesday, 22 March 2011
No dematerialisation or rematerialisation of shares will be allowed for the
period from Monday, 14 March 2011 to Friday, 18 March 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 23 February 2011
DIRECTORS
IAJ Clark* (Chairman), AK Olivier (Group CEO), H Adams*, MR Faku*, WD Geach*,
IM Groves*, MJ Hankinson*, JG Jones, DA Polkinghorne, DA Rennie, AF Stewart,
LR Stuart-Hill, SDM Zungu* *Non-executive
Registered office
Quadrant House
115 Margaret Mncadi Avenue
Durban
4001
PO Box 1
Durban
4000
Sponsor
Grindrod Bank Limited
39 Rivonia Road
Sandton
2146
PO Box 78011
Sandton
2146
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
Registration number: 1966/009846/06
Share code: GND and GNDP
Incorporated in the Republic of South Africa
ISIN: ZAE000072328 and ZAE000071106
Date: 24/02/2011 08:00:03 Produced by the JSE SENS Department.
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