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Grindrod Limited -
(Registration number 1966/009846/06)
(Incorporated in the Republic of South Africa)
(Share code: GND ISIN: ZAE000030805)
(Share code: GNN ISIN: ZAE000030813)
2003 INTERIM REPORT AND DIVIDEND ANNOUNCEMENT
* 24% Increase in headline earnings per share
* 29% Increase in interim dividend
GROUP INCOME STATEMENT
Six months Six months Year
ended 30 Ended 30 ended 31
June June December
2003 2002 2002
(Unaudited) (Unaudited) Change (Audited)
R000 R000 % R000
Revenue 1 026 805 1 112 839 2 163 594
Trading income 160 597 125 470 268 185
Depreciation (34 295) (30 572) (61 940)
Operating income
before interest
and taxation 126 302 94 898 33 206 245
Non-trading
items (2 369) 712 (2 814)
Interest
received 13 552 16 296 24 319
Interest paid (55 099) (35 856) (60 846)
Income before
taxation 82 386 76 050 166 904
Taxation (2 142) (1 994) (19 378)
Income after
taxation 80 244 74 056 147 526
Income from
associated
companies 13 059 6 993 18 902
Income after
taxation
including
associated
companies 93 303 81 049 166 428
Outside
shareholders"
interest (257) (984) (990)
Income
attributable to
shareholders 93 046 80 065 165 438
Reconciliation
of headline
earnings
Income
attributable to
shareholders 93 046 80 065 165 438
Adjusted for non-
trading items
2 369 (712) 2 814
Goodwill 2 611 345 1 200
Cost of
discontinuing
operations - - 3 878
Profit on sale
of containers
and
equipment (242) (1 057) (2 264)
Headline
earnings 95 415 79 353 20 168 252
Number of shares
in issue less
treasury shares
(000"s) 95 360 94 165 94 497
Weighted average
number of
shares on which
earnings
per share are
based (000"s) 95 100 97 682 96 172
Diluted weighted
average number
of
shares on which
diluted earnings
per share are
based (000"s) 100 602 102 341 102 179
Earnings per
share (cents)
Basic 97,8 82,0 172,0
Diluted 92,5 78,2 161,9
Headline
earnings per
share (cents)
Basic 100,3 81,2 24 174,9
Diluted 94,8 77,5 164,7
Dividends per
share (cents)
Interim 18,0 14,0 29 14,0
Final - - 26,0
Dividend cover
(times) 5,4 6,1 4,2
Exchange rates
(R/US$)
Opening exchange
rate 8,63 12,00 12,00
Closing exchange
rate 7,49 10,40 8,63
Average exchange
rate 8,07 11,03 10,54
DIVISIONAL ANALYSIS OF EARNINGS
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
R000 R000 R000
Shipping Services 76 288 53 279 104 045
Continuing 76 288 70 779 121 644
operations
Discontinued - (17 500) (17 599)
operations
Freight and
Financial Services 16 758 26 786 61 393
93 046 80 065 165 438
GROUP BALANCE SHEET
31 December
30 June 30 June
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
R000 R000 R000
Fixed assets 835 990 1 188 662 1 093 476
Goodwill 19 747 15 039 16 208
Investments in 121 611 170 075 132 054
associates
Cash and other
investments 80 389 172 060 177 908
Bank balances and 227 775 128 181 194 904
cash
Other current assets 382 868 265 195 290 118
Total assets 1 668 380 1 939 212 1 904 668
Ordinary
shareholders" equity 525 378 604 451 521 499
Shareholders equity
excluding NDR 500 410 361 531 430 566
Non-distributable
reserves 24 968 242 920 90 933
Outside
shareholders" 6 234 3 233 3 239
interest
Deferred taxation 2 685 405 12 121
Provision for post-
retirement medical 60 031 66 323 57 735
aid
Interest bearing 799 431 852 716 959 013
debt
1 393 759 1 527 128 1 553 607
Other liabilities 274 621 412 084 351 061
Total funding 1 668 380 1 939 212 1 904 668
Net debt : equity 0,70 : 1 0,91 : 1 1,07 : 1
ratio
Capital expenditure 111 130 301 902 358 325
Capital commitments
Authorised by
directors and 642 871 525 272 735 629
contracted for
Due within one year 371 056 184 106 126 351
Due thereafter 271 815 341 166 609 278
Authorised by
directors not yet 26 447 4 398 13 266
contracted for
STATEMENT OF CHANGES IN EQUITY
Foreign
Share currency
capital and
and premium other Accumulated
reserves profit Total
R000 R000 R000 R000
Balance at 31
December 2001 119 950 379 579 217 180 716 709
Share options
exercised 4 142 4 142
Cancellation of
share capital (34 326) (34 326)
Treasury shares
acquired (8 458) (8 458)
Foreign currency
translation
adjustments (288 646) (288 646)
Attributable to
exchange rate
movement (172 250) (172 250)
Realised on
repayment of
loans/sale
of ships (116 396) (116 396)
Profit attributable
to ordinary
shareholders 165 438 165 438
Dividends paid (33 360) (33 360)
Balance at 31
December 2002 81 308 90 933 349 258 521 499
Adjustment on
adoption of AC133 636 636
As restated 81 308 90 933 349 894 522 135
Share options
exercised 1 661 1 661
Cancellation of
share capital (732) (732)
Foreign currency
translation
adjustments (65 965) (65 965)
Attributable to
exchange rate
movement (39 438) (39 438)
Realised on
repayment of
loans/sale of
ships (26 527) (26 527)
Profit attributable
to ordinary
shareholders 93 046 93 046
Dividends paid (24 767) (24 767)
Balance at 30 June
2003 82 237 24 968 418 173 525 378
GROUP CASH FLOW STATEMENT
30 June 30 June 31 December
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
R000 R000 R000
Cash generated from
operations excluding
working capital 129 758 118 416 201 378
Working capital
movements (46 600) (49 241) (129 155)
Net interest paid (41 547) (19 560) (41 985)
Net dividends paid (15 858) (18 153) (28 191)
Taxation paid (1 732) (350) (1 621)
Net cash inflow from
operating activities 24 021 31 112 426
Acquisition of fixed
assets and (186 525) (358 478) (232 566)
investments
Proceeds from
disposal of fixed
assets and
investments 396 231 878 20 389
Cost of
discontinuing (4 093) - (3 878)
operations
Loans repaid
by/(advanced to)
associated companies 4 250 (21 188) 26 693
Finance lease 14 978 - 29 283
receipts
Net cash inflow/
(outflow) from
investing activities 224 841 (378 788) (160 079)
Proceeds from issue
of ordinary share 1 661 2 694 4 142
capital
Repurchase of
ordinary share (732) (39 500) (42 784)
capital
Proceeds from - 123 510 60 014
borrowings
Payment of capital
portion of
long term borrowings (200 612) (44 435) (122 956)
Short term loan 91 899 160 542 90 957
raised
Net cash (outflow)/
inflow from
financing activities (107 784) 202 811 (10 627)
Net
increase/(decrease)
in cash and cash
equivalents 141 078 (144 865) (170 280)
Cash and cash
equivalents at
beginning of period 85 844 297 232 297 232
Difference arising
on translation (8 165) (24 186) (41 108)
Cash and cash
equivalents at end
of period 218 757 128 181 85 844
COMMENTS
RESULTS
The group is pleased to report an increase of 24% in headline earnings per share
to 100,3 cents with headline earnings of R95,4 million for the six months to 30
June 2003. The group results were negatively impacted by the strength of the
Rand against the US Dollar, but this has been offset by improved trading in good
shipping markets.
Revenue has decreased due to the stronger Rand and the deconsolidation of
previously consolidated operations.
Freight and Financial Services
The group"s freight management division, which in many cases is export driven,
has seen a reduction in profitability over the same period last year.
Grindrod Ships Agencies continue to perform well despite a reduction in exports.
This has to some degree been offset by an increase in imports.
The landfreight logistics business continues to expand with the commissioning of
a new facility in Richards Bay for a major customer. In addition, the group has
purchased a majority share in a logistics business now called PicPack Grindrod
allowing entry into the smaller goods warehouse and distribution business.
Since the end of the period under review, a further empowerment transaction has
been concluded with J&J Investments, an empowerment consortium, which will
provide a platform to take advantage of logistics and terminal opportunities in
South African ports.
Seafreight logistics, under the brandname Unifeeder, has continued to perform
well, servicing the African coastal feeder, domestic and regional shipping needs
in partnership with Safmarine Container Line.
Marriott, our financial services investment, increased its assets under
management particularly in the property management divisions and continued its
strong performance.
Shipping Services
Shipping Services produced good results by taking advantage of the forecasted
upturn in shipping markets.
Unicorn Shipping was the operation most negatively affected by the strong Rand
as it has a strong net US Dollar revenue flow against high interest charges from
Rand ship loans.
Island View Shipping has seen a substantial increase in profitability during the
period despite problems experienced in the South African bulk parcel service
with increased costs. As previously reported, Island View Shipping increased its
chartered fleet during low shipping markets and is now enjoying the benefits of
using or chartering these vessels into improved world shipping markets. Markets
continue to remain favourable as a result of economic growth in China and the
positive spin-off this is having on the Japanese economy together with other
supply and demand fundamentals.
CAPITAL EXPENDITURE AND CAPITAL COMMITMENTS
Capital expenditure and capital commitments of the group are:
Capital Capital commitments
Description expenditure
6 Months to 6 Months to
R000 30.06.03 31.12.03 2004 2005
Ships 69 271 44 337 358 414 213 859
Bulk Terminals 23 723 13 640 - -
Property, vehicles
and equipment 18 136 39 068 - -
Total 111 130 97 045 358 414 213 859
During the period orders were placed for a further two products tankers to be
built in Korea, bringing the total number of products tankers on order to four.
GROUP BORROWINGS AND CASH FLOW
Group net borrowings decreased to R571,7 million and the debt : equity ratio has
decreased to 70% at 30 June 2003 which is well within the 100% guideline the
group has set. The reduction in net borrowings was due to the retention of
profits and the sale of three vessels during the period which has been partially
offset by progress payments on the product carriers currently under
construction, some of which have been prepaid to benefit from favourable
settlement discounts. Cash from operating activities was negatively impacted by
increased working capital investment from improved trading activity.
EQUITY
During the period the group repurchased and cancelled a further 119 729 "N"
ordinary shares for R731 566 at an average price of R6,11 per share. The group
continues to hold 11,4 million of its own shares in a subsidiary. The group"s
non-distributable reserves resulting primarily from unrealised foreign exchange
gains have reduced mainly as a result of the South African Rand"s appreciation
against the US Dollar.
ACCOUNTING POLICIES AND PRESENTATION
This report has been prepared in accordance with Statements of Generally
Accepted Accounting Practice. The company was required to change its accounting
policy with regard to the recognition and measurement of certain financial
instruments in terms of AC133. The effect of this change in policy on opening
retained income is disclosed in the statement of changes in equity. In terms of
the AC133 transitional provisions, comparatives have not been restated. With the
exception of the above, the accounting policies and methods of computation are
consistent with those applied in the annual financial statements for the year
ended 31 December 2002.
DIVIDEND
An interim dividend of 18 cents per share (2002: 14 cents per share) has been
declared.
PROSPECTS
Despite the continuing strength of the Rand against the US Dollar, the group
remains confident of achieving growth in earnings per share in 2003 through the
current strength in the world shipping markets and growth in existing business
activities.
For and on behalf of the board
WM Grindrod IAJ Clark
Chairman Group Managing Director
13 August 2003
DECLARATION OF INTERIM DIVIDEND
Notice is hereby given that an interim dividend of 18 cents per ordinary and "N"
ordinary share (2002: 14 cents per share) has been declared payable to
shareholders in accordance with the undermentioned timetable. The dividend is
declared in the currency of the Republic of South Africa.
Last day to trade cum-dividend Friday 29 August 2003
Trading ex-dividend commences Monday 1 September 2003
Record date Friday 5 September 2003
Dividend payment date Monday 8 September 2003
No dematerialisation or rematerialisation of shares will be allowed for the
period from 1 September 2003 to
5 September 2003, both days inclusive.
By order of the board
CAS Robertson
Secretary
13 August 2003
Directors: WM Grindrod* (Chairman), DRD White* (Deputy Chairman), IAJ Clark
(Group Managing Director),
H Adams*, IM Groves*, JC Hall* CBE, JG Jones, TJT McClure, RA Norton*, AK
Olivier, DA Rennie, LR Stuart-Hill, RJH Whitley*
*Non-executive
Registered office Postal address
Quadrant House PO Box 1
115 Victoria Embankment Durban
Durban 4001 4000
Transfer secretaries Postal address
Computershare Limited PO Box 61051
70 Marshall Street Marshalltown
Johannesburg 2001 2107
Date: 13/08/2003 12:00:35 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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