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Grindrod Limited - Final Results and Dividend Announcement
Grindrod Limited
(Registration number 1966/009846/06)
(Incorporated in the Republic of South Africa)
Share code: GND ISIN number: ZAE000052247
2003 Final Results and Dividend Announcement
43% increase in headline earnings per share
62% increase in final dividend
GROUP INCOME STATEMENT
Year ended Year ended
31 December 31 December
Reviewed Audited
2003 2002 Change
R000 R000 %
Revenue 1 976 418 2 163 594
Trading income 334 951 268 185
Depreciation (55 100) (61 940)
Operating income before
interest and taxation 279 851 206 245 36
Non-trading items 161 (2 814)
Interest received 49 760 24 319
Interest paid (116 832) (60 846)
Income before taxation 212 940 166 904
Taxation (4 489) (19 378)
Income after taxation 208 451 147 526
Income from associated
companies 31 704 18 902
Income after taxation
including associated companies 240 155 166 428
Outside shareholders" interest (256) (990)
Income attributable to
shareholders 239 899 165 438 45
Reconciliation of headline
earnings
Income attributable to
shareholders 239 899 165 438
Adjusted for non-trading items (161) 2 814
Amortisation of goodwill 1 286 1 200
Facility closure costs 1 696 -
Cost of discontinuing
operations - 3 878
Profit on sale of
investments (1 040) -
Profit on sale of containers
and equipment (2 103) (2 264)
Headline earnings 239 738 168 252 42
Number of shares in issue
(2002: less treasury shares)
(000"s) 96 137 94 497
Weighted average number of
shares on which earnings per 95 542 96 172
share are based (000"s)
Diluted weighted average 100 367 102 179
number of shares on which
diluted earnings per share
are based (000"s)
Earnings per share (cents)
Basic 251,1 172,0
Diluted 239,0 161,9
Headline earnings per share
(cents)
Basic 250,9 174,9 43
Diluted 238,9 164,7
Dividends per share (cents)
Paid 18,0 14,0
Declared 42,0 26,0 62
Dividend cover (times) 4,16 4,19
Exchange rates (R/US$)
Opening exchange rate 8,63 12,00
Closing exchange rate 6,64 8,63
Average exchange rate 7,59 10,54
GROUP BALANCE SHEET
31 December 31 December
Reviewed Audited
2003 2002
R000 R000
Property, plant and equipment 961 884 1 093 476
Intangible assets 37 074 16 208
Investments in associates 133 989 132 054
Equity investment - 25 213
Deferred taxation 4 725 -
Financial assets and other investments 181 527 152 695
Bank balances and cash 244 994 194 904
Other current assets 528 305 290 118
Total assets 2 092 498 1 904 668
Ordinary shareholders" equity 608 952 521 499
Outside shareholders" interest 7 428 3 239
Deferred taxation - 12 121
Provision for post retirement
medical aid 49 790 57 735
Interest-bearing debt 856 515 959 013
1 522 685 1 553 607
Other liabilities 569 813 351 061
Total funding 2 092 498 1 904 668
Net debt:equity ratio 0,61:1 1,07:1
Capital expenditure 242 457 358 325
Capital commitments
Authorised by directors and
contracted for 865 742 735 629
Due within one year 429 200 126 351
Due thereafter 436 542 609 278
Authorised by directors not yet 12 658 13 266
contracted for
STATEMENT OF CHANGES IN EQUITY
Share Foreign Accumulated Total
capital and currency profit
premium and other
reserves
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 (34 326) (34 326)
capital
Treasury shares (8 458) (8 458)
acquired
Foreign currency (288 646) (288 646)
translation adjustments
Attributable to (172 250) (172 250)
exchange rate movement
Realised on repayment (116 396) (116 396)
of loans/sale of ships
Profit attributable to 165 438 165 438
ordinary shareholders
Dividends paid (33 360) (33 360)
Balance at 31 December
2002 81 308 90 933 349 258 521 499
Adjustment on adoption
of AC133 604 604
As restated 81 308 90 933 349 862 522 103
Share options exercised 2 951 2 951
Cancellation of share
capital (732) (732)
Foreign currency (113 204) (113 204)
translation adjustments
Attributable to (87 759) (87 759)
exchange rate movement
Realised on repayment (34 601) (34 601)
of loans/sale of ships
Deferred taxation 9 156 9 156
effect on sale of ship
Profit attributable to 239 899 239 899
ordinary shareholders
Dividends paid (42 065) (42 065)
Balance at
31 December 2003 83 527 (22 271) 547 696 608 952
GROUP CASH FLOW STATEMENT
31 December 31 December
Reviewed Audited
2003 2002
R000 R000
Cash generated from operations 241 514 202 378
excluding working capital
Working capital movements (2 214) (130 155)
Net interest paid (85 628) (41 985)
Net dividends paid (29 557) (28 191)
Taxation paid (2 698) (1 621)
Net cash inflow from operating
activities 121 417 426
Acquisition of fixed assets and
investments (304 573) (232 566)
Proceeds from disposal of fixed assets 443 590 20 389
and investments
Cost of discontinuing operations - (3 878)
Settlement of forward exchange
contracts for ships (43 190) -
Loans repaid by associated companies 13 818 26 693
Finance lease receipts 23 591 29 283
Net cash inflow/(outflow) from
investing activities 133 236 (160 079)
Repurchase of ordinary share capital (732) (42 784)
Proceeds from issue of ordinary share
capital 2 951 4 142
Proceeds from borrowings 96 581 60 014
Payment of capital portion of long term
borrowings (262 991) (122 956)
Short term loan raised 17 131 90 957
Net cash outflow from financing
activities (147 060) (10 627)
Net increase/(decrease) in cash and
cash equivalents 107 593 (170 280)
Cash and equivalents at beginning of
period 85 844 297 232
Proportional consolidation of joint 2 183 -
venture
Difference arising on translation (6 470) (41 108)
Cash and cash equivalents at end of
period 189 150 85 844
DIVISIONAL ANALYSIS OF EARNINGS
Year ended 31 Year ended 31
December December
Reviewed Audited
2003 2002
R000 R000
Shipping Services 192 676 104 045
Continuing operations 192 676 121 644
Discontinued operations - (17 599)
Freight and Financial Services 47 223 61 393
239 899 165 438
COMMENTS
The group is pleased to announce an increase in earnings of 45% to R239,9
million for the year to 31 December 2003. This translates into headline earnings
of 250,9 cents per share which is 43% up on last year. These earnings equate to
a 42% return on average shareholders" funds. US Dollar income is up by 121%.
The group has enjoyed the benefits of high shipping markets and their effect on
the group"s substantial investment in these markets over the last three years.
It has also benefited from the freight logistics businesses, all of which were
profitable in 2003.
The strength of the Rand against the US Dollar has had a negative effect on
earnings and has resulted in revenue, after adjusting for previously
consolidated subsidiaries in the prior year, increasing by 10% in Rand terms.
However, US Dollar revenue increased by 46%.
Freight and Financial Services
The group"s freight services division performed well despite the strength of the
Rand against the US Dollar, which affected earnings as this business is strongly
export driven.
Grindrod Ships Agencies continues to produce positive results.
Expansion in the group"s Landfreight Logistics businesses has been limited
during the year. However it has a broad customer base across a wide spectrum of
freight logistics and will increase its cross marketing initiatives during 2004
in order to provide our customer base with additional group logistical services.
Together with its empowerment partners and international partners the group will
be seeking opportunities to expand warehousing and terminal facilities in
Southern African ports.
The Seafreight Logistics business has been rebranded from Unifeeder to United
Africa Container Lines. It services the African coastal feeder, domestic and
regional shipping needs in partnership with Safmarine Container Lines and
performed well during the period.
Marriott, the financial services investment, continues to increase its assets
under management, through its traditional niche of property management as well
as through other income products under the brand name Marriott - Income
Specialists.
Shipping Services
Shipping Services achieved good levels of profitability despite the negative
effect of the strong Rand.
Unicorn Shipping, in addition to owning ships, operates mainly in the chemical
and product tanker markets. It did well to achieve good levels of profitability
as it was adversely affected by a strong Rand.
Island View Shipping achieved strong growth as it took advantage of high
shipping markets through its increased charter fleet, which had been chartered-
in over the past number of years. The fleet of chartered-in vessels is employed
worldwide and is a new business initiative that Island View Shipping has
developed since its acquisition by the group. Its traditional parcel service out
of South Africa, which requires the charter-in of vessels on a short-term basis,
has been negatively affected by high charter rates and the effect of the strong
Rand on South African exporters. This trading was, however, more than offset by
positive results from the international charter business.
Shipping markets are likely to remain strong in 2004 as a result of economic
growth in China and a strong demand for ships for world trade which is not being
met by the supply of new vessels into the market.
Capital Expenditure and Capital Commitments
Capital expenditure and capital commitments of the group are:
Capital Capital Capital Capital
Description expenditure commitments commitments commitments
R000s 2003 2004 2005 Thereafter
Ships 140 565 409 920 182 562 253 980
Property, plant and
equipment 101 892 19 280 - -
Total 242 457 429 200 182 562 253 980
During the year, orders were placed for a further two product tankers to be
built in Korea. Subsequent to year end, orders were placed for a further product
tanker, bringing the total number of product tankers on order to five, as well
as a 32 000 dwt handysize bulk carrier to be built in Japan for delivery in
2004. The group will own a 50% share in the latter vessel in partnership with a
worldwide shipping group.
Group Borrowings and Cash Flow
Group net borrowings decreased from R764 million to R612 million and the
debt:equity ratio has decreased to 61% at 31 December 2003. This is within the
100% guideline set by the group. The reduction in net borrowings is due to the
retention of profits and the sale of three vessels during the year, partially
offset by progress payments on the product carriers.
Equity
During the year, the group repurchased and cancelled 119 729 `N" ordinary shares
at an average price of R6,11 per share. The company also cancelled 6 632 450
ordinary shares and 4 775 150 `N" ordinary shares previously repurchased and
held by a subsidiary company. Since year end, the group has repurchased and
cancelled 8 958 956 ordinary shares for R106 million at an average price of
R11,84 per share.
The group"s non-distributable reserves resulting primarily from unrealised
foreign exchange gains have been negatively impacted by the South African Rand"s
appreciation against the US Dollar.
In February 2004, shareholders agreed to consolidate the group"s shareholding
into one class of share with the dismantling of the `N" ordinary share
structure.
Appointment of Director
During the year, Anthony (Tony) Fraser Stewart was appointed Financial Director.
Accounting Policies and Presentation
This report has been prepared in accordance with South African 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.
The financial results for the year ended 31 December 2003 have been reviewed by
the auditors of the company, Morrison Murray, and their report is available for
inspection at the registered office of the company.
Dividend
A final dividend of 42 cents per share (2002: 26 cents per share) has been
declared, bringing the total dividend for the year to 60 cents per share.
Prospects
The group has taken advantage of the current high shipping markets and chartered
certain of its vessels on medium term contracts at favourable rates. Other
vessels are being traded on shorter terms to take advantage of the current high
spot markets for these vessels. The Freight Services businesses will benefit
from its broad base logistical service and cross marketing of these products.
The group is confident of achieving strong growth in earnings per share in 2004.
For and on behalf of the Board
W M Grindrod I A J Clark
Chairman Group Managing Director
19 February 2004
DECLARATION OF DIVIDEND
Notice is hereby given that a final dividend of 42 cents per ordinary share
(2002: 26 cents per share) has been declared payable to shareholders in
accordance with the under-mentioned timetable. The dividend is declared in the
currency of the Republic of South Africa.
Last date to trade cum-dividend Friday, 12 March 2004
Trading ex-dividend commences Monday, 15 March 2004
Record date Friday, 19 March 2004
Dividend payment date Tuesday, 23 March 2004
No dematerialisation or rematerialisation of shares will be allowed for the
period from 15 March 2004 to 19 March 2004, both days inclusive.
Annual General Meeting
The annual general meeting of the company will be held at the registered office
of the company on Wednesday, 26 May 2004. The annual report will be posted to
shareholders on or about 8 April 2004.
By order of the Board
C A S Robertson
Secretary
19 February 2004
Registered office
Quadrant House
115 Victoria Embankment
Durban 4001
Postal address
PO Box 1
Durban
4000
Transfer secretaries
Computershare Limited
70 Marshall Street
Johannesburg 2001
Postal address
PO Box 61051
Marshalltown
2107
Directors: W M Grindrod * (Chairman), D R D White* (Deputy Chairman), I A J
Clark (Group Managing Director), H Adams*, I M Groves*, J C Hall* CBE, J G
Jones, T J T McClure, R A Norton*, A K Olivier, D A Rennie, A F Stewart, L R
Stuart-Hill, R J H Whitley*
*Non-executive
Date: 19/02/2004 12:53:14 PM Produced by the JSE SENS Department
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