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GNDE - GRINDROD LIMITED - Uunaudited interim results for the six months ended 30 June 2012 and dividend announcement

22/08/2012 07:05:00

GND GNDP 201208220002A
Uunaudited interim results for the six months ended 30 June 2012 and dividend announcement

GRINDROD LIMITED
(Registration number: 1966/0009846/06)
Share code: GND & GNDP
ISIN: ZAE000072328 & ZAE000071106
(Grindrod or the Company)

UNAUDITED INTERIM RESULTS
AND DIVIDEND ANNOUNCEMENT
for the six months ended 30 June 2012

Attributable income increased 119% to
R608,4 million (H1 2011: R277,4 million)
Headline earnings per share up 25% to
69,4 cents (H1 2011: 55,7 cents)
Cash generated from operations
R890,6 million (H1 2011: utilised R115,8 million)
Net debt to equity decreased to 5%
(December 2011: 10%)
Interim ordinary dividend maintained at
17,5 cents per share despite
134 million more shares in issue

CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
30 June 30 June* 31 December
Change 2012 2011 2011
% R000 R000 R000
Revenue 9 18 785 950 17 264 123 35 885 258
Earnings before interest, taxation,
depreciation and amortisation 8 546 705 504 113 1 005 537
Depreciation and amortisation (196 714) (162 249) (362 979)
Operating profit before interest and taxation 2 349 991 341 864 642 558
Non-trading items 239 318 23 505 60 152
Interest received 100 816 70 484 169 709
Interest paid (119 425) (109 219) (218 647)
Profit before share of joint venture and
associate companies' profit 570 700 326 634 653 772
Share of joint venture companies' profit
after taxation 189 263 57 941 114 024
Share of associate companies' profit
after taxation 5 843 8 424 4 291
Profit before taxation 765 806 392 999 772 087
Taxation (124 833) (79 511) (175 363)
Profit for the period 640 973 313 488 596 724
Attributable to:
Ordinary shareholders 119 608 439 277 353 530 905
Preference shareholders 29 223 26 413 53 271
Owners of the parent 637 662 303 766 584 176
Non-controlling interests 3 311 9 722 12 548
640 973 313 488 596 724
Exchange rates (R/US$)
Opening exchange rate 8,11 6,62 6,62
Closing exchange rate 8,34 6,76 8,11
Average exchange rate 7,95 6,91 7,27

RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited Audited
30 June 30 June* 31 December
2012 2011 2011
R000 R000 R000
Profit attributable to ordinary shareholders 608 439 277 353 530 905
Adjusted for: (198 790) (23 505) (54 543)
IAS 38 Impairment of goodwill 9 168
IAS 38 Impairment of other investments 8 274 5 849
IAS 16 Impairment/(reversal of impairment)
of ships, plant and equipment 116 686 331 (18 067)
IFRS 3 Net profit on disposal of investments (289 517) (22 775) (48 180)
IAS 16 Net loss/(profit) on sale of plant and equipment 1 012 (1 061) (8 922)
IAS 21 FCTR adjustment on disposal of investment
Joint ventures: (13 853)
IFRS 3 Negative goodwill realised (35 232)
IAS 16 Impairment of ships, plant and equipment 13 840
Total taxation effects of adjustments 5 609

Headline earnings 409 649 253 848 476 362

ORDINARY SHARE PERFORMANCE
Unaudited Unaudited Audited
30 June 30 June* 31 December
Change 2012 2011 2011
% R000 R000 R000
Number of shares in issue
less treasury shares (000's) 590 336 455 953 589 536
Weighted average number of shares
on which earnings per share are based (000's) 590 081 455 930 478 234
Diluted weighted average number of
shares on which diluted earnings per
share are based (000's) 590 465 457 055 479 192
Earnings per share (cents)
Basic 70 103,1 60,8 111,0
Diluted 70 103,0 60,7 110,8
Headline earnings per share (cents)
Basic 25 69,4 55,7 99,6
Diluted 25 69,4 55,5 99,4
Dividends per share (cents) 17,5 17,5 29,5
Interim 17,5 17,5 17,5
Final 12,0
Dividend cover (times) 5,9 3,5 3,8

* Restated due to the early adoption of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements,
IAS 27 (as revised in 2011) Separate Financial Statements, IAS 28 (as revised in 2011) Investments in Associates and
Joint Ventures and IFRS 12 Disclosure of Interests in Other Entities.

SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
30 June 30 June* 31 December**
2012 2011 2011
R000 R000 R000
Revenue
Freight Services 1 853 166 1 510 709 3 190 083
Trading 15 496 462 14 251 855 29 756 780
Shipping 2 213 782 1 942 859 3 914 926
Financial Services 94 331 67 279 193 558
Group 322 3 793 433
19 658 063 17 776 495 37 055 780
Segmental adjustments*** (872 113) (512 372) (1 170 522)
18 785 950 17 264 123 35 885 258
Earnings before interest, taxation, depreciation and
amortisation
Freight Services 358 112 284 703 680 726
Trading 197 380 109 776 218 474
Shipping 158 289 177 801 245 322
Financial Services 43 998 29 866 81 512
Group 6 101 (13 046) (1 312)
763 880 589 100 1 224 722
Segmental adjustments*** (217 175) (84 987) (219 185)
546 705 504 113 1 005 537
Operating profit before interest and taxation
Freight Services 252 613 191 087 480 689
Trading 188 699 102 036 202 866
Shipping 46 951 98 978 53 729
Financial Services 43 432 29 345 80 462
Group 4 596 (14 844) (4 623)
536 291 406 602 813 123
Segmental adjustments*** (186 300) (64 738) (170 565)
349 991 341 864 642 558
Share of associate companies' profit after taxation
Freight Services 21 621 8 424 4 291
Segmental adjustments*** (15 778)
5 843 8 424 4 291
Share of joint venture companies' profit after taxation
Freight Services 90 730 30 367 66 638
Trading 89 850 18 439 32 973
Shipping 8 683 9 135 14 413
189 263 57 941 114 024
Segmental adjustments*** (189 263) (57 941) (114 024)

Attributable income to ordinary shareholders
Freight Services 580 225 153 588 317 831
Trading 96 172 72 741 143 989
Shipping (121 061) 46 239 6 801
Financial Services 21 727 21 084 58 398
Group 31 376 (16 299) 3 886
608 439 277 353 530 905

* Restated due to the early adoption of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements,
IAS 27 (as revised in 2011) Separate Financial Statements, IAS 28 (as revised in 2011) Investments in Associates
and Joint Ventures and IFRS 12 Disclosure of Interests in Other Entities.

** Restated due to segmental adjustments in relation to IFRS 8 Operating Segments.

*** Segmental adjustments relate to joint ventures necessary to reconcile to IFRS. Joint venture earnings are reviewed
together with subsidiaries by the key decision-maker.

CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 30 June* 31 December
2012 2011 2011
R000 R000 R000
Ships, property, terminals, vehicles and equipment 5 396 345 5 220 602 5 267 565
Investment property 26 526 22 096
Intangible assets 651 922 627 420 547 931
Investments in joint ventures 1 537 893 613 680 719 528
Investments in associates 69 319 252 119 266 081
Deferred taxation 61 007 143 064 89 472
Other investments and derivative financial assets 367 566 364 234 129 478
Recoverables on cancelled ships 374 267 380 566
Total non-current assets 8 484 845 7 221 119 7 422 717
Loans and advances to bank customers 2 413 115 2 059 514 2 073 903
Liquid assets and short-term negotiable securities 200 971 105 359 190 259
Short-term loans 872 301 382 103 771 658
Bank balances and cash 3 810 059 1 128 061 2 979 172
Other current assets 4 065 097 4 745 917 3 525 376
Non-current assets held for sale 72 607 3 467 286
Total assets 19 918 995 15 642 073 20 430 371
Shareholders' equity 9 913 596 6 108 875 9 216 769
Non-controlling interests 99 668 95 632 94 336
Total equity 10 013 264 6 204 507 9 311 105
Deferred taxation 153 098 127 668 124 796
Interest-bearing borrowings 2 387 108 1 522 438 2 226 575
Other non-current liabilities 87 477 49 265 86 005
Non-current liabilities 2 627 683 1 699 371 2 437 376
Deposits from bank customers 3 901 667 2 623 823 2 910 945
Current interest-bearing borrowings 1 834 915 2 320 698 2 147 704
Other liabilities 1 541 466 2 793 674 1 206 290
Non-current liabilities associated with assets
held for sale 2 416 951
Total equity and liabilities 19 918 995 15 642 073 20 430 371
Net worth per ordinary share at book value (cents) 1 554 1 177 1 454
Net debt:equity ratio 0,05:1 0,45:1 0,10:1
Capital expenditure 322 018 551 978 1 166 228
Capital commitments 1 755 000 1 826 113 472 423
Authorised by directors and contracted for 1 574 000 1 064 751 247 016
Due within one year 1 469 000 543 753 199 190
Due thereafter 105 000 520 998 47 826
Authorised by directors not yet contracted for 181 000 761 362 225 407

CONDENSED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
30 June 30 June* 31 December
2012 2011 2011
R000 R000 R000
Operating profit before changes in working capital 451 654 422 123 1 069 342
Working capital changes 438 976 (537 950) (1 264 377)
Cash generated from/(utilised in) operations 890 630 (115 827) (195 035)
Net interest received/(paid) 25 108 (38 735) (125 180)
Net dividends paid (62 355) (150 999) (230 115)
Taxation paid (43 079) (27 228) (63 004)
810 304 (332 789) (613 334)
Net bank deposits from customers and other
short-term negotiables 555 896 281 974 453 489
Net cash flows generated from/(utilised in) operating
activities before ships sales and purchases 1 366 200 (50 815) (159 845)
Cash receipts on cancelled ships 16 290
Capital expenditure on ships and locomotives (148 686) (498 917) (842 831)
Net cash flows generated from/(utilised in)
operating activities 1 233 804 (549 732) (1 002 676)
Acquisition of property, terminals, vehicles and
equipment and investments (167 298) (52 532) (296 837)
Net proceeds on acquisition of investments 149 152
Proceeds from disposal of property, terminals,
vehicles and equipment and investments 419 296 14 341 80 872
Acquisition of other investments (143 120) (21 476) (23 657)
Proceeds from repayment of share capital by
joint venture 262 235
Intangible assets acquired (6 035) (529) (2 903)
Proceeds from disposal of intangible assets 3 180
Acquisition of joint ventures (321 492)
Loans repaid by/(advanced to) joint venture
and associate companies 484 (13 249)
Net cash flows (utilised in)/generated from
investing activities (66 317) (59 712) 6 461
Proceeds from issue of ordinary share capital 5 900 358 1 983 803
Proceeds from disposal of treasury shares 1 945
Long-term interest-bearing debt raised 542 448 407 555 1 548 382
Payment of capital portion of long-term
interest-bearing debt (521 161) (443 579) (708 718)
Short-term interest-bearing debt (issued)/raised (362 046) 475 819 179 130
Net cash flows (utilised in)/generated from
financing activities (334 859) 440 153 3 004 542
Net increase/(decrease) in cash and
cash equivalents 832 628 (169 291) 2 008 327
Cash and equivalents at beginning of the period 2 901 050 903 846 903 846
Difference arising on translation (15 731) (1 045) (11 123)
Cash and cash equivalents at end of the period 3 717 947 733 510 2 901 050

* Restated due to the early adoption of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements,
IAS 27 (as revised in 2011) Separate Financial Statements, IAS 28 (as revised in 2011) Investments in Associates and
Joint Ventures and IFRS 12 Disclosure of Interests in Other Entities.

STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
30 June 30 June 31 December
2012 2011 2011
R000 R000 R000
Profit for the period 640 973 313 488 596 724
Other comprehensive income
Exchange differences on translating foreign operations 162 936 84 470 901 974
Cash flow hedges (3 375) 10 462 159 665
Total comprehensive income for the period 800 534 408 420 1 658 363
Total comprehensive income attributable to:
Owners of the parent 790 744 400 893 1 648 400
Non-controlling interest 9 790 7 527 9 963
800 534 408 420 1 658 363

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Ordinary Preference Equity currency Business Interest of Non- Interest
share share Share compensation translation combination Hedging Accumulated the owners controlling of all
capital capital premium reserve reserve reserve reserve profit of the parent interests shareholders
R000 R000 R000 R000 R000 R000 R000 R000 R000 R000 R000
Balance at 31 December 2010 9 2 28 671 37 300 (160 461) (152 706) 6 104 046 5 856 861 113 854 5 970 715
Share options exercised 2 612 2 612 2 612
Share-based payments 647 647 647
Share issue 3 1 999 997 2 000 000 2 000 000
Share issue expenses (18 810) (18 810) (18 810)
Treasury shares sold 1 945 1 945 1 945
Non-controlling interest acquired (18 718) (18 718) (26 277) (44 995)
Profit for the year 584 176 584 176 12 548 596 724
Other comprehensive income 904 559 159 665 1 064 224 (2 585) 1 061 639
Total comprehensive income 904 559 159 665 584 176 1 648 400 9 963 1 658 363
Ordinary dividends paid (202 897) (202 897) (3 204) (206 101)
Preference dividends paid (53 271) (53 271) (53 271)
Balance at 31 December 2011 12 2 2 014 415 37 947 744 098 (18 718) 6 959 6 432 054 9 216 769 94 336 9 311 105
Share options exercised 5 960 5 960 5 960
Share-based payments 140 140 140
Profit for the period 637 662 637 662 3 311 640 973
Other comprehensive income 156 457 (3 375) 153 082 6 479 159 561
Total comprehensive income 156 457 (3 375) 637 662 790 744 9 790 800 534
Ordinary dividends paid (70 794) (70 794) (4 458) (75 252)
Preference dividends paid (29 223) (29 223) (29 223)
Balance at 30 June 2012 12 2 2 020 375 38 087 900 555 (18 718) 3 584 6 969 699 9 913 596 99 668 10 013 264

COMMENTS
Overview
During the six months, Grindrod executed a number of transactions and made substantial progress on
projects aimed at realising its strategy of becoming an integrated freight and logistics service provider, whilst
retaining its position in shipping.

A notable transaction includes the introduction of Vitol as a partner in the coal, oil and tanker businesses.
Good progress has been made towards completing the feasibility study to expand the Maputo coal terminal
by 20 million tonnes.

The group's terminal and marine fuel volumes were strong during the period despite the current environment.
Shipping rates continued to fall during the six-month period. However, the division remained profitable before
the required ship impairment.

The group generated earnings of R608,4 million (H1 2011: R277,4 million), representing a 119% increase.
Headline earnings per share increased by 25% to 69,4 cents per share (H1 2011: 55,7 cents per share). The
non-trading items include the profit on sale of the Maputo coal terminal and the impairment of ship values.
An interim ordinary dividend of 17,5 cents per share (H1 2011: 17,5 cents per share) has been declared.
The group's balance sheet remains sound with total assets of R20 billion. The net debt:equity ratio has
reduced to 5% at 30 June 2012 on the back of the cash-on-hand at the commencement of the year and cash
generated in the period. Net book asset value per share is R15,54.

Capital expenditure and commitments
Capital expenditure for the six months to 30 June 2012 amounted to R787 million, of which 70% was
expansionary and the balance maintenance or replacement capital expenditure. The capital expenditure
comprised payments on two drybulk ships, two tankers, the Maputo coal terminal Phase 3,5 expansion
project, locomotives and coal marketing contracts.

Future capital is committed to the expansion of terminal capacity, rail infrastructure, locomotives and ships.
The commitments exclude any planned expansions of terminal capacity in Maputo (20 million tonnes) and
Richards Bay as well as development of a bulk liquid storage facility at Coega, each of which is subject to final
board consideration.

Capital expenditure Capital commitments Split as follows
Approved Approved
H1 H2 not and
R million 2012 2012 2013 2014 2015+ Total contracted contracted
Freight Services 269 864 157 27 1 048 176 872
Logistics 110 105 130 27 262 42 220
Ports, Terminals
and Rail 159 759 27 786 134 652
Trading 90 48 1 1 4 54 5 49
Shipping 423 161 439 600 600
Drybulk 256 73 103 176 176
Tankers 167 88 336 424 424
Financial Services 53 53 53
Group 5
787 1 126 597 28 4 1 755 181 1 574
Split as follows:
Subsidiaries 322 913 234 28 4 1 179 63 1 116
Joint ventures 465 213 363 576 118 458

Cash flow and borrowings
Operating profit before working capital adjustments reflected R451,7 million (H1 2011: R422,1 million). The
group's working capital position reflects a net inflow for the period of R438,9 million largely due to the disposal
of a 50% interest in Cockett Marine Oil. Capital expenditure on ships, locomotives and terminals was offset by
proceeds from the sale of a 35% interest in the Maputo coal terminal. These movements resulted in the net
debt position reducing to R499 million as at 30 June 2012.

The group is confident that it has adequate funding for all capital commitments through its cash resources
and bank facilities.

Shareholders' equity
The total number of ordinary shares in issue is 599 515 314. The 9 179 348 ordinary shares repurchased
in prior years, continue to be held in treasury. 2 150 000 of these shares have been allocated to
the group forfeitable share plan, as approved by shareholders at the Annual General Meeting on 30 May 2012.

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, No 71 of 2008 and the JSE Listings Requirements. These accounting policies are
consistent with those applied in the previous half-year, except for the adoption of IFRS 10 Consolidated
Financial Statements, IFRS 11 Joint Arrangements, IAS 27 (as revised in 2011) Separate Financial Statements,
IAS 28 (as revised in 2011) Investments in Associates and IFRS 12 Disclosure of Interests in Other Entities.
These statements have been retrospectively applied.

The accounting for the acquisitions and disposals made by the group has been provisionally determined as at
30 June 2012. The group disposed of net assets of R613,8 million during the period. At the date of finalisation
of these results, the necessary market values and other calculations had not been finalised and they have
therefore been provisionally determined based on the directors' best estimates of the likely values.

These unaudited interim results have been prepared under the supervision of AG Waller, CA(SA).

DIRECTORATE/EXECUTIVE
Mr MH Visser passed away tragically on 26 April 2012. His contribution will be missed. Messrs JJ Durand and
PJ Liddiard (as alternate) were appointed to the board with effect from 9 May 2012.

Mr AF Stewart resigned from the board on 31 May 2012. The board of directors express appreciation for his
contribution. Mr WP Hartmann, responsible for the Trading division, was appointed to the executive committee
on 1 June 2012.

PROSPECTS
The group anticipates an increase in full year earnings in 2012.

Statements contained throughout this announcement regarding the prospects of the group have not been
reviewed or reported on by the group's external auditors.

For and on behalf of the board
IAJ Clark AK Olivier
Chairman Chief Executive Officer

DECLARATION OF INTERIM DIVIDENDS
Preference dividend
Notice is hereby given that an interim gross dividend of 395 cents per cumulative, non-redeemable, non-
participating and non-convertible preference share (H1 2011: 357 cents) has been declared for the six month
period ending 30 June 2012, payable to preference shareholders in accordance with the timetable below.
In terms of the dividend tax effective 1 April 2012, the following additional information is disclosed:

The local dividend tax rate is 15%;
No STC credits will be utilised for the interim preference dividend;
7 400 000 cumulative, non-redeemable, non-participating and non-convertible preference shares are in
issue;
The net preference dividend is 335,750 cents per share for preference shareholders who are not exempt
from dividends tax; and
Grindrod Limited's tax reference number is 9435/490/71/0.

Ordinary dividend
Notice is hereby given that an interim gross dividend of 17,5 cents per ordinary share (H1 2011: 17,5 cents)
has been declared for the six month period ending 30 June 2012, payable to ordinary shareholders in
accordance with the timetable below.

In terms of the dividend tax effective 1 April 2012, the following additional information is disclosed:
The local dividend tax rate is 15%;
No STC credits will be utilised for the interim ordinary dividend;
599 515 314 ordinary shares are in issue;
The net ordinary dividend is 14,875 cents per share for ordinary shareholders who are not exempt from
dividends tax; and
Grindrod Limited's tax reference number is 9435/490/71/0.

Timetable
Last day to trade cum-dividend Friday, 7 September 2012
Shares commence trading ex-dividend Monday, 10 September 2012
Record date Friday, 14 September 2012
Dividend payment date Monday, 17 September 2012

No dematerialisation or rematerialisation of shares will be allowed for the period Monday, 10 September 2012
to Friday, 14 September 2012, both days inclusive.

The dividends are declared in the currency of the Republic of South Africa.

By order of the board
CAS Robertson
Secretary

21 August 2012

Directors
IAJ Clark* (Chairman), AK Olivier (Group CEO), H Adams*, JJ Durand*, MR Faku*, WD Geach*, IM Groves*,
MJ Hankinson*, PJ Liddiard (Alternate)*, DA Polkinghorne, DA Rennie, MR Wade, AG Waller, SDM Zungu*
*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
First Floor, Building 3, North Wing, Commerce Square, 39 Rivonia Road, Sandhurst, Sandton, 2146
PO Box 78011, Sandton, 2146
Registration number: 1966/009846/06
Incorporated in the Republic of South Africa
Share code: GND and GNDP
ISIN: ZAE000072328 and ZAE000071106

For more information, please refer to our website at: www.grindrod.co.za



Date: 22/08/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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