UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 30 June 2015

Transcription

1 UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended an integrated business

2 an integrated business Highlights 1 Condensed consolidated income statement 2 Condensed consolidated statement of other comprehensive income 4 Condensed consolidated statement of financial position 5 Condensed consolidated statement of cash flows 6 Condensed consolidated statement of changes in equity 7 Segmental analysis 8 Fair value of financial instruments 9 Contingent assets/liabilities 10 Business review 11 Declaration of interim dividend 14 Corporate information 15

3 HIGHLIGHTS The group continued to position itself for long-term growth, progressing the strategic capital projects and making further investments, expanding its integrated source-to-destination logistics services, in both commodity and geographic diversification. EBITDA remained flat at R943 million, inclusive of joint ventures (H1 : R945 million) Headline earnings up 2% to R327.9 million (H1 : R320.6 million) Headline earnings per share down 16% to 43.6 cents (H1 : 52.0 cents) Earnings per share down 64% to 40.3 cents (H1 : cents) Net asset value per share up to cents (H1 : cents) Interim ordinary dividend per share remains unchanged at 13.6 cents per share (H1 : 13.6 cents) Net cash R88.8 million (H1 : R244.8 million) Weighted average number of ordinary shares in issue up 22% to million (H1 : million) UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 1

4 CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE * Revenue Earnings before interest, taxation, depreciation and amortisation Depreciation and amortisation ( ) ( ) ( ) Operating profit before interest and taxation Non-trading items (23 528) Interest received Interest paid ( ) ( ) ( ) Profit before share of joint venture and associate companies profit Share of joint venture companies profit after taxation Share of associate companies profit after taxation Profit before taxation Taxation ( ) ( ) ( ) Net profit for the period Attributable to: Ordinary shareholders Preference shareholders Owners of the parent Non-controlling interests (1 914) Exchange rates (R/US$) Opening exchange rate Closing exchange rate Average exchange rate * Restated to disclose the Commodity Logistics businesses and Financial Services division as continuing operations. 2 UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended

5 Reconciliation of headline earnings Profit attributable to ordinary shareholders Adjusted for: ( ) ( ) Impairment of goodwill Impairment of other investments Impairment of ships, intangibles, plant and equipment Net profit on disposal of investments (2 389) ( ) ( ) Net (profit)/loss on disposal of plant and equipment (318) Negative goodwill realised (2 645) (23 187) (23 521) Foreign currency translation reserve release (124) (6 289) (99 744) Joint ventures: Foreign currency translation reserve release Net (profit)/loss on disposal of plant and equipment (11) (3 536) 162 Impairment of ships, plant and equipment Total taxation effects of adjustments (1 121) (40 408) Headline earnings Ordinary share performance Number of shares in issue less treasury shares (000s) Weighted average number of shares (basic) (000s) Diluted weighted average number of shares (000s) Earnings per share: (cents) Basic Diluted Headline earnings per share: (cents) Basic Diluted Dividends per share: (cents) Interim Final 20.0 Dividend cover (headline) (times) UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 3

6 CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE Profit for the period Other comprehensive income: Items that may be reclassified subsequently to profit and loss Exchange differences on translating foreign operations Net movement in cash flow hedges (77 368) Business combination acquisition (901) (1 455) Items that will not be reclassified subsequently to profit and loss Actuarial gains Total comprehensive income for the period Total comprehensive income attributable to: Owners of the parent Non-controlling interest (1 922) UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended

7 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE Ships, property, terminals, vehicles and equipment Intangible assets Investments in joint ventures Investments in associates Deferred taxation Other investments and derivative financial assets Recoverables on cancelled ships Total non-current assets Loans and advances to bank customers Liquid assets and short-term negotiable securities Bank balances and cash Other current assets Non-current assets held for sale Total assets Shareholders equity Non-controlling interests Total equity Interest-bearing borrowings Financial services funding instruments Deferred taxation Other non-current liabilities Non-current liabilities Deposits from bank customers Current interest-bearing borrowings Financial services funding instruments Other liabilities Non-current liabilities associated with assets held for sale Total equity and liabilities Net worth per ordinary share at book value (cents) Net debt:equity ratio (0.01):1 (0.01):1 (0.03):1 Capital expenditure US$000 US$000 US$000 Capital commitments Authorised by directors and contracted for Due within one year Due thereafter Authorised by directors not yet contracted for UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 5

8 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE * * Operating profit before working capital changes Working capital changes* Cash generated from operations Net interest paid (8 933) (64 867) (34 563) Net dividends paid (49 126) ( ) ( ) Taxation paid ( ) (93 338) ( ) Net bank advances to customers and other short-term negotiables ( ) ( ) ( ) Deposits Retail Banking ( ) ( ) ( ) Other ( ) (18 823) (14 223) Net cash flows (utilised in)/generated from operating activities before ship sales and purchases ( ) ( ) Refund on ships under construction cancelled Proceeds on disposal of ships Cash payments on ship options exercised ( ) ( ) Capital expenditure on ships (7 773) (15 405) ( ) Net cash flows (utilised in)/generated from operating activities ( ) ( ) Acquisition of investments, subsidiaries, property, terminals, vehicles and equipment ( ) ( ) ( ) Net (outflow)/proceeds from disposal of property, terminals, vehicles, equipment and investments (8 358) Net receipt from/(payments made to acquire) finance lease receivables (66 151) (4 834) Intangible assets acquired (2 035) (11 170) (58 248) Proceeds from disposal of intangible assets Funds advanced to joint ventures and associate companies* ( ) (85 359) ( ) Acquisition of preference share investment ( ) ( ) Acquisition of additional investments in subsidiaries, joint ventures and associates (64 066) (77 460) ( ) Net cash flows utilised in investing activities ( ) ( ) ( ) Net proceeds from issue of ordinary share capital Acquisition of treasury shares (19 027) (37 563) Proceeds from disposal of treasury shares 144 Long-term interest-bearing debt raised Payment of capital portion of long-term interestbearing debt ( ) ( ) ( ) Short-term interest-bearing debt raised/(repaid) ( ) ( ) Net cash flows (utilised in)/generated from financing activities ( ) Net (decrease)/increase in cash and cash equivalents ( ) ( ) Cash and cash equivalents at beginning of the period Difference arising on translation (3 807) Cash and cash equivalents at end of the period * The comparative consolidated statement of cash flows has been restated to disclose funds provided to joint ventures as investing activities in terms of IAS 7: Statement of Cash Flows. 6 UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended

9 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE Share capital and share premium Balance at beginning of the period Share options vested Share issue Treasury shares acquired (19 027) (37 563) Treasury shares sold 144 Preference share capital Balance at beginning of the period Equity compensation reserve Balance at beginning of the period Share-based payments Share options vested (6 892) (4 778) Foreign currency translation reserve Balance at beginning of the period Foreign currency translation realised (2 130) (6 289) (99 744) Foreign currency translation adjustments Other non-distributable statutory reserves ( ) (34 487) ( ) Balance at beginning of the period ( ) (23 151) (23 151) Financial instrument hedge settlement Foreign currency translation adjustments (5 053) 787 (1 455) Fair value adjustment on hedging reserve (76 975) Deferred tax effect on cash flow hedge (393) Net business combination acquisition (17 670) (12 340) (21 118) Movement in accumulated profit Balance at beginning of the period Actuarial gains recognised Profit for the period Ordinary dividends paid ( ) ( ) ( ) Preference dividends paid (29 870) (28 804) (59 094) Total interest of shareholders of the company Equity attributable to non-controlling interests of the company Balance at beginning of the period Foreign currency translation adjustments (8) Business acquisitions Non-controlling interest disposed (1 494) (55 633) (78 685) (Loss)/profit for the period (1 914) Dividends paid (3 717) (5 815) (6 910) Total equity attributable to shareholders of the company UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 7

10 SEGMENTAL ANALYSIS FOR THE SIX MONTHS ENDED 30 JUNE * Revenue Freight Services Shipping Financial Services Group Segmental adjustments ** ( ) ( ) ( ) Earnings before interest, taxation, depreciation and amortisation Freight Services Shipping Financial Services Group ( ) (13 890) (42 750) Segmental adjustments ** ( ) ( ) ( ) Operating profit/(loss) before interest and taxation Freight Services Shipping Financial Services Group ( ) (19 967) (58 597) Segmental adjustments ** ( ) ( ) ( ) Share of associate companies profit after taxation Freight Services Group Profit/(loss) attributable to ordinary shareholders Freight Services Shipping Financial Services Group (45 455) (54 091) * The prior period has been restated to disclose the Commodity Logistics businesses and Financial Services division as continuing operations and a change in basis of segmentation. ** Joint venture earnings are reviewed together with subsidiaries by the key decision-makers. Segmental adjustments relate to joint ventures and are necessary to reconcile to IFRS presentation. 8 UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended

11 FAIR VALUE OF FINANCIAL INSTRUMENTS AS AT 30 JUNE The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable: Level 1 quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs) Level 1 Level 2 Level 3 Total Financial assets Derivative financial assets Financial assets designated at fair value through profit or loss Total Financial liabilities Derivative financial instruments (54 833) (54 833) Total (54 833) (54 833) Level 1 Level 2 Level 3 Total Financial assets Derivative financial assets Derivative financial assets^ Financial assets designated at fair value through profit or loss^ Total Financial liabilities Derivative financial instruments (4 883) (4 883) Derivative financial instruments^ (16 785) (16 785) Total (21 668) (21 668) ^ Included in assets classified as held-for-sale. UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 9

12 FAIR VALUE OF FINANCIAL INSTRUMENTS (continued) AS AT 30 JUNE Level 1 Level 2 Level 3 Total Financial assets Financial assets designated at fair value through profit or loss Total Financial liabilities Derivative financial instruments (88 540) (88 540) Total (88 540) (88 540) Reconciliation of Level 3 fair value measurements of financial assets Opening balance Additions Disposals (5 757) (102) (19 803) Profit and loss Closing balance CONTINGENT ASSETS/LIABILITIES AS AT 30 JUNE The company guaranteed loans and facilities of subsidiaries and joint ventures amounting to R (December : R ) of which R (December : R ) had been utilised at the end of the period. The company has guaranteed charter-hire payments of subsidiaries amounting to R (December : R ). The charter-hire payments are due by the subsidiaries in varying amounts from to On 2 July, as a result of the decline in the share price, Grindrod placed R on deposit as security with the funders of the BEE consortium to secure the structure. Grindrod continues to have the ability, but no obligation, to increase its funding within the structure should the current lenders wish to exit. 10 UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended

13 BUSINESS REVIEW Overview The volatile markets and slow economies experienced in the first half of presented Grindrod with numerous opportunities and challenges. Lower oil prices resulted in good earnings for the recently increased owned tanker fleet. The increased volumes also benefited the Marine-Fuels business, which was expanded in the prior year to increase coverage in the Far East. The continued weak dry-bulk shipping market, in part as a result of oversupplied tonnage, together with a significant Madagascar contract win, presented ship operating with the opportunity to improve its performance. The owned dry-bulk fleet suffered, with rates remaining well below the cost base. The southern African Container Feeder and Coastal Tanker business performed well on increased volumes. Weak commodity prices affected volume through the mineral terminals despite good support from corridor partners. The ability to substitute magnetite and coal has been of great benefit. The port of Maputo did well to offset the reduced subconcession volumes with significant chrome shipments. Financial close on the port capital dredge and the berth offset project is expected in the fourth quarter of, with all internal approvals complete. The project will boost the competitiveness of the port, and the phase 4 expansion of the Matola magnetite terminal will follow on improved demand. The Richards Bay expansion to 4.5 million tonnes per annum should be complete in the first quarter of Regulatory delays on the Coega liquid-bulk terminal development have delayed construction and commencement of construction is expected in the first quarter The weaker commodity prices also impacted the Rail businesses negatively. Notwithstanding this, new locomotive orders have been signed for second half delivery. Progress on delivering a sustainable solution on the north-south rail corridor and the north-west rail project is hampered by significant excess road haul capacity. Development of a rail siding in Chingola, Zambia, will assist with the solution. The recovery of the Sierra Leone leased locomotive position (force majeure declared by lessee) was an important achievement. Delays in the award of tenders have impacted earnings in the Rail Construction and Signalling businesses. The Integrated Logistics business performed positively despite the closure of the Minerals Intermodal business and low volumes through the new Maputo Intermodal facility. Earnings were boosted by profitable contracts acquired in the clearing and forwarding business. The new Denver facility in Johannesburg is operational and the rail siding will be complete by year-end. Carrier Logistics businesses similarly performed well, producing profits in both the automotive and fuel markets on lower volumes, following the rightsizing and productivity improvement initiatives in the prior year. The Agricultural Logistics business, after good capacity utilisation and following the bumper crop in the prior year, is experiencing much reduced utilisation due to the droughts in. All the Financial Services businesses are performing well and key drivers of assets under management, core funding and advances showed good increases. Headline earnings increased by two per cent to R327.9 million (H1 : R320.6 million), with headline earnings per share decreasing by 16 per cent to 43.6 cents (H1 : 52.0 cents). Attributable earnings of R303.2 million is below prior period earnings of R693.7 million, largely as a consequence of the profit that was recognised on the acquisition of the minority interests in the B-BBEE joint ventures in the prior period. Earnings per share is calculated on a weighted average of million shares (H1 : million shares) primarily as a result of the million shares issued in the prior period. Earnings per share is down 64 per cent to 40.3 cents (H1 : cents). The interim ordinary dividend remains unchanged from the prior period and has been declared at 13.6 cents per share. UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 11

14 BUSINESS REVIEW (continued) Capital expenditure and commitments Capital expenditure Capital commitments Split as follows R million H1 H Total Approved not contracted Approved and contracted Freight Services Port and Terminals Rail Carrier Logistics Integrated Logistics Shipping Dry-bulk Tankers Financial Services 19 Group Split as follows: Subsidiaries Joint ventures The above represents board-approved capital commitments. These commitments exclude planned expenditure, which is subject to final board consideration. Capital continues to be committed to the strategic investment areas of port, terminal and rail infrastructure as well as the dry-bulk shipping fleet. Total capital and investment expenditure was R369.0 million (H1 : R million), of which 75 per cent was expansionary and the balance maintenance or replacement capital expenditure. The capital expenditure mainly comprised payments on the acquisition of dry-bulk vessels, the maintenance and upgrade of terminals handling equipment, increased investment into locomotives and the acquisition of the remaining shareholding in the Asset Management business. Future capital continues to be committed to the expansion of terminal capacity, rail infrastructure, locomotives and ships. Cash flow and borrowings The financial position reflects net cash of R88.8 million (H1 net cash: R244.8 million). Operating profit before working capital adjustments was R673.9 million (H1 : R505.2 million). Working capital contributed to a net inflow of R3.6 million (H1 : R166.6 million net inflow). Statement of financial position With total assets of R31.7 billion (December : R32.8 billion) and no net debt (H1 : no net debt), the group s financial position remains strong. Book net asset value per share is cents (H1 : cents). Shareholders equity increased to R18.1 billion (December : R17.4 billion) as a result of earnings and a gain in the foreign currency translation reserve. The net increase of R514.6 million to the foreign currency translation reserve was due to the weakening of the Rand/US Dollar exchange rate from R11.57/US$ to R12.17/US$. Ordinary shares in issue increased to shares (December : ). 12 UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended

15 Basis of preparation These unaudited condensed interim results for the six months ended have been prepared and presented in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements of the JSE Limited, the information as required by IAS 34: Interim Financial Reporting, and the requirements of the South African Companies Act, No 71 of The accounting policies applied in preparation of these condensed interim results are in terms of IFRS and are consistent with those applied in the previous annual financial statements. Following the board s decision to retain the Financial Services business, the business has been re-instated as a segment in continuing operations. The Commodity Logistics businesses are disclosed as continuing operations. In the Interim Results at June these items had been disclosed as discontinued items. In addition, funds provided to joint ventures were previously disclosed as operating cash flows as they were utilised for working capital by the joint ventures. The consolidated statement of cash flows has been restated to disclose funds provided to joint ventures as investing activities in terms of IAS 7: Statement of Cash Flows. The comparative information has been restated. There is no impact on profit/loss and statement of financial position. The report was prepared under the supervision of the Group Financial Director, Mr AG Waller CA(SA), and has not been audited by the group s external auditors. The unaudited condensed interim results were approved by the board of directors on 20 August. Accounting policies The accounting policies adopted and methods of computation used in the preparation of these unaudited condensed interim financial statements are in terms of IFRS and are consistent with those of the previous consolidated annual financial statements for the year ended. Post balance sheet events There are no material post balance sheet events to report. Change in directorate Grindrod is pleased to announce the appointment of Bongiwe Ntuli to the board as Executive Director: Port, Terminals and Rail. Bongiwe joined the company on 1 May 2008 as Chief Financial Officer for the Freight Services division, appointed as Executive: Corporate Services on 1 December 2012 and thereafter promoted to Executive: Port, Terminals and Rail on 20 August. Bongiwe, a Chartered Accountant, is a director of various major local and international subsidiary companies and associates. The board congratulates Bongiwe on her new appointment and responsibilities and looks forward to her continued valuable contributions. Prospects Grindrod, with its ungeared balance sheet, is well positioned to develop key capital projects and to further capitalise on opportunities. Current depressed commodity prices and dry-bulk shipping rates, although off their recent lows, will continue to put pressure on earnings in the near term. For and on behalf of the board MJ Hankinson AK Olivier Chairman Chief Executive Officer 20 August 20 August UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 13

16 DECLARATION OF INTERIM DIVIDEND Preference dividend Notice is hereby given that a gross interim dividend of cents per cumulative, non-redeemable, non participating and non-convertible preference share (H1 : cents) has been declared out of income reserves for the six-month period ended, payable to preference shareholders in accordance with the timetable below. At 21 August, there are cumulative, non-redeemable, non-participating and non-convertible preference shares in issue. The interim net preference dividend is cents per share for preference shareholders who are not exempt from dividends tax. Ordinary dividend Notice is hereby given that an interim gross dividend of 13.6 cents per ordinary share (H1 : 13.6 cents) has been declared out of income reserves for the six-month period ended, payable to ordinary shareholders in accordance with the timetable below. At 21 August, there are ordinary shares in issue. The interim net ordinary dividend is cents per share for ordinary shareholders who are not exempt from dividends tax. With respect to the preference and ordinary dividends, in terms of the dividends tax effective since 1 April 2012, the following additional information is disclosed: The local dividends tax rate is 15 per cent; and Grindrod Limited s tax reference number is 9435/490/71/0. Timetable Declaration and finalisation date Friday, 21 August Last day to trade cum-dividend Friday, 11 September Shares commence trading ex-dividend Monday, 14 September Record date Friday, 18 September Dividend payment date Monday, 21 September No dematerialisation or rematerialisation of shares will be allowed for the period Monday, 14 September, to Friday, 18 September, both days inclusive. The dividends are declared in the currency of the Republic of South Africa. By order of the board Mrs CI Lewis Group Company Secretary 20 August 14 UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended

17 CORPORATE INFORMATION Directors MJ Hankinson (Chairman)**, AK Olivier (Chief Executive Officer), H Adams**, AC Brahde** (Norwegian), JJ Durand*, MR Faku**, T Fubu**, WD Geach**, GG Gelink**, B Ntuli, DA Polkinghorne, NL Sowazi**, PJ Uys (Alternate)*, MR Wade (British), AG Waller (Group Financial Director), SDM Zungu** * Non-executive, ** Independent non-executive Registered office Quadrant House 115 Margaret Mncadi Avenue Durban 4001 PO Box 1, Durban, 4000 Transfer secretaries Computershare Investor Services Proprietary Limited 70 Marshall Street Johannesburg 2001 PO Box 61051, Marshalltown, 2107 Auditors Deloitte & Touche Designated Audit Partner: Craig Sagar CA(SA) Sponsor Grindrod Bank Limited Fourth Floor Grindrod Tower 8A Protea Place Sandton 2196 PO Box 78011, Sandton, 2146 Registration number: 1966/009846/06 Incorporated in the Republic of South Africa Share code: GND & GNDP ISIN: ZAE and ZAE For more information, please refer to UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 15

18 an integrated business GREYMATTER & FINCH #9053