Grindrod might list shipping business
GRINDROD’S board would investigate a separate offshore listing of its shipping business to unlock more value, the company said yesterday.
The listed integrated logistics service supplier said it expected the listing process to be concluded before the first half of next year.
Mike Hankinson, the executive chairman of Grindrod, said: “The Grindrod board has for many years reiterated the intention to separate the shipping business from the balance of the group, as it does not believe that the value of the shipping business is fairly reflected in the Grindrod share price.”
The company said it had appointed South African and foreign advisers in the fields of shipping, law and finance to work with it on unbundling the shipping business and listing it on an international exchange that supported shipping groups, with an inward listing in South Africa.
The company’s profits, excluding its rail business, for the six months to the end of June tanked from R367 million to R126m.
The group last year announced plans to exit the locomotive assembly sector after it reported a loss of R1.1 billion, driven by a R675m impairment in the group’s rail business.
In June, the Competition Commission recommended to the Competition Tribunal the proposed sale, without conditions, of Grindrod’s rail construction businesses to WBHO Construction and Faku Family Enterprises for an undisclosed sum.
The company said the closure of the rail assembly businesses held for sale resulted in losses and impairments of R255m and, consequently, a headline loss of R128.9m for the six months to the end of June. This was a 66 percent improvement, compared with the headline loss of R381m last year.
The company said volumes handled by dry-bulk terminals increased 62 percent, while capacity at its Matola and Richards Bay dry-bulk terminals was fully contracted for the remainder of the year.
Revenue, including joint ventures, jumped from R11bn to R13.4bn in the period under review.
Hankinson said the group’s financial services arm continued to grow profits and generate a good return on capital.
“There is ongoing engagement with the relevant parties on the SA Social Security Agency (Sassa) grant payment contract, and Grindrod is working with all parties to help find a solution for (Grindrod) bank and South Africa in general.
“Despite ongoing engagement with the relevant parties on the Sassa grant payment contract, there is still no clarity on the plans to transition the contract to a new service provider.”
Sassa uses Grindrod Bank to make monthly payments of R11bn to more than 10 million recipients.