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GRINDROD LIMITED - Updated pro forma financial effects

Release Date: 31/08/2020 13:30
Code(s): GND GNDP     PDF:  
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Updated pro forma financial effects

GRINDROD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1966/009846/06)
Share code: GND and GNDP
ISIN: ZAE000072328 and ZAE000071106
("Grindrod" or the “Company")


UPDATED PRO FORMA FINANCIAL EFFECTS - SPECIFIC REPURCHASE OF 64 MILLION GRINDROD SHARES AND 
ACQUISITION OF 1.6 MILLION GRINDROD SHIPPING SHARES


1. Background

   Grindrod shareholders are referred to the SENS announcement dated 21 July 2020 (“Terms Announcement”)
   and the circular dated 7 August 2020 (“Distribution Date”), regarding the specific repurchase by 
   Grindrod of 64 million Grindrod ordinary shares and the acquisition of 1.6 million ordinary shares 
   in Grindrod Shipping Holdings Limited from Newshelf 1279 (RF) Proprietary Limited (“Transaction”),
   which document incorporates a notice of general meeting of Grindrod shareholders to be held on Monday,
   7 September 2020 (“Circular”).

   Full copies of the Terms Announcement and the Circular, can be obtained from the Company’s website as
   follows:
   Terms Announcement:  www.grindrod.co.za/Pages/Investor-Relations
   Circular:            http://www.grindrod.co.za/Pages/Securities-Exchange-Newsfeed

   In compliance with paragraph 8.25(a) of the JSE Listings Requirements (“Listings Requirements”), the
   pro forma financial effects of the Transaction (“Pro Forma Effects”) contained in the Circular were based
   on the most recent completed financial period, being the published audited financial results of Grindrod and
   its subsidiaries (“Group” or “Grindrod Group”) in respect of the 12 month period ended 31 December 2019
   (“Year-End Figures”).

   According to paragraph 11.56 (b) and (c) of the Listings Requirements, the JSE Limited (“JSE”) must be
   advised immediately and a supplementary circular published if, at any time after a circular has been
   published and before the relevant shareholders meeting, the applicant becomes aware that a significant
   new matter has arisen, the inclusion of information on which the new matter would have been required to
   be disclosed in the original circular had such information been known at that time, and in the context of the
   publication of the pro forma financial effects, “significant” means a change of 10% or more from the original
   pro forma financial effects included in the circular.

   On 27 August 2020, the Grindrod Group published its unaudited and unreviewed financial results in respect
   of the six-month period ended 30 June 2020 (“Interim Figures”). If the Interim Figures had been published
   before the Distribution Date, the Pro Forma Effects contained in the Circular would have been based on the
   Interim Figures. Furthermore, due to a difference of more than 10% when comparing the Pro Forma Effects
   based on the Year-End Figures versus the Interim Figures, it is necessary for the Company to publish
   updated Pro Forma Effects (“Updated Pro Forma Effects”). Shareholders are advised that the JSE has
   agreed to allow the Company to publish the Updated Pro Forma Effects on SENS, the details of which are
   contained in paragraph 2 below.


2. Updated Pro Forma Effects of the Transaction

   The Updated Pro Forma Effects below should be read in conjunction the Circular which contains, inter alia,
   the background to, and terms of the Transaction, and the pro forma financial effects of the Transaction.
   Grindrod shareholders should specifically refer to paragraphs 1 to 4, paragraph 9 and Annexure 2 of the
   Circular in this regard.

   The Updated Pro Forma Effects below are provided for illustrative purposes only and, because of their
   nature, may not fairly present the financial position or results of operations or cash flows of the Group. The
   Updated Pro Forma Effects have been prepared to illustrate the impact of the Transaction on the Interim
   Figures, based on the assumption that the Transaction took place on 1 January 2020 for purposes of the
   pro forma consolidated statement of comprehensive income and on 30 June 2020 for purposes of the pro
   forma consolidated statement of financial position.

   The Updated Pro Forma Effects have been prepared using the accounting policies of the Grindrod Group,
   which comply with IFRS and are consistent with those applied in Grindrod’s consolidated annual financial
   statements for the year ended 31 December 2019.

   The Updated Pro Forma Effects are the responsibility of the board of directors of Grindrod. The Company’s
   external auditors, Deloitte & Touche (“Deloitte”), have issued an unmodified reporting accountant’s report
   on the Updated Pro Forma Effects dated 28 August 2020 (“Reporting Accountant’s Report”). In preparing
   the Reporting Accountant’s Report, Deloitte conducted its engagement in accordance with the International
   Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation
   of Pro Forma Financial Information Included in a Prospectus which is applicable to an engagement of this
   nature.

   A copy of the Reporting Accountant’s Report can be obtained from the Company’s website
   (http://grindrod.com/Pages/InvestorPresentations) and is available for inspection at the Company’s
   registered office (2nd Floor, Grindrod Mews, 106 Margaret Mncadi Avenue, Durban) or at the sponsor’s
   registered office (135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton, 2196, Johannesburg)
   between 09:00 and 17:00 or from the company secretary by emailing Vicky.Commaille@grindrod.com or
   from the sponsor, by emailing sanyab@nedbank.co.za from today, 31 August 2020 to Monday, 7 September 2020, 
   both days inclusive.

                                                             Before the         After the         %
                                                             Transaction        Transaction       Change (4)

   Total number of Grindrod Shares in issue                  762 553 314        698 553 314       (8.39)

   Number of treasury shares held (2)                         85 409 973         21 409 973       (74.93)
     Held by BEE SPV                                          64 000 000         -                (100.00)
     Held by Grindrod subsidiaries and share scheme           21 409 973         21 409 973        -

   Number of Grindrod Shares in issue net of Grindrod        677 143 341        677 143 341        -
   Shares held by Subsidiaries

   Weighted average number of Grindrod Shares in issue       677 532 522        677 532 522        -

   Diluted weighted average number of Grindrod Shares        677 532 522        677 532 522        -
   in issue

   Basic earnings/ (loss) per Grindrod Share (cents)(3):
   From continuing operations                                5.3                4.5               (15.09) (4)
   From discontinued operations                             (49.7)             (49.7)             -

   Diluted earnings/ (loss) per Grindrod Share (cents)(3): 
   From continuing operations                                5.3                4.5               (15.09) (4)
   From discontinued operations                              (49.7)             (49.7)             -

   Headline earnings/ (loss) per Grindrod Share (cents)(3):
   From continuing operations                                3.4                2.6               (23.52) (4)
   From discontinued operations                              (37.6)             (37.6)             -

   Diluted headline earnings/ (loss) per Grindrod Share
   (cents)(3):
   From continuing operations                                3.4                2.6               (23.52) (4)
   From discontinued operations                              (37.6)             (37.6)             -

   Net asset value per Grindrod Share (cents)(5)             1 234              1 233             (0.08)

   Net tangible asset value per Grindrod Share (cents)(5)     1 225             1 224             (0.08)


   Notes:
    1. The definitions and interpretations contained in the Circular apply, mutatis mutandis, to these notes.
    2. The BEE Placement Shares are treated as treasury shares due to the consolidation of BEE SPV
       into Grindrod’s financial results from the year ended December 2018.
    3. The adjustments to the pro forma consolidated statement of comprehensive income in the Circular
       are reconciled to the Updated Pro Forma Effects disclosed above as follows:
         i.   The financial effects of the adjustments in columns 2, 3, 4 and 5 of Annexure 2 to the
              Circular, which amounted to a net after tax profit of R6.7 million, are no longer applicable
              on the assumption that the Transaction took place on 1 January 2020.
        ii.   The financial effects of the adjustment in column 6 of Annexure 2 to the Circular of R3.4
              million remains unchanged.
       iii.   A tax expense of R2.1 million was triggered for the Group on 1 January 2020 due to the
              early redemption of the Class C Preference shares, as explained in note 5 to the pro forma
              consolidated statement of financial position in Annexure 2 to the Circular.
       iv.    The adjustments detailed above in 3 (i), (ii) and (iii) are not continuing in nature.
    4. The relatively large percentage change figures compared to the percentage change figures in
       paragraph 9.5 of the Circular is primarily due to the fact that the denominator relates to a six month
       period whereas the Year-End Figures relate to a 12 month period.
    5. The adjustments used in the pro forma consolidated statement of financial position as at 30 June
       2020 are similar to the adjustments detailed in the Circular, but updated for the latest Interim
       Figures.


3. Responsibility statement

The Board accepts responsibility for the information contained in this announcement insofar as it relates to
Grindrod. To the best of its knowledge and belief, the information contained in this announcement is true and
the announcement does not omit anything likely to affect the importance of the information.


Durban
31 August 2020

Investment Bank, Corporate Advisor and Sponsor
Nedbank Corporate and Investment Banking

Date: 31-08-2020 01:30:00
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