| Mon 26 Jul 2004, 14:42 | | INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT |
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GRINDROD LIMITED - INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT
GRINDROD LIMITED
(Registration number 1966/009846/06)
(Incorporated in the Republic of South Africa)
Share code: GND ISIN number: ZAE000052247
2004 Interim Report and Dividend Announcement
155% increase in headline earnings per share
178% increase in interim dividend
149% increase in cash generated from operations
GROUP INCOME STATEMENT
Six months ended Year ended
30 June 31 December
Unaudited Unaudited Audited
2004 2003 Change 2003
R000 R000 % R000
Revenue 1 409 446 1 026 805 37 1 976 418
Trading income 308 874 160 597 334 951
Depreciation (32 268) (34 295) (55 100)
Operating income before
interest and taxation 276 606 126 302 279 851
Non-trading items (2 834) (2 369) 161
Interest received 15 983 13 552 49 760
Interest paid (51 013) (55 099) (116 832)
Income before taxation 238 742 82 386 212 940
Taxation (26 552) (2 142) (4 489)
Income after taxation 212 190 80 244 208 451
Income from associate
companies net of
taxation 15 032 13 059 31 704
Income after taxation
including associated
companies 227 222 93 303 240 155
Outside shareholders`
interest (271) (257) (256)
Income attributable to
shareholders 226 951 93 046 144 239 899
Reconciliation of
headline earnings
Income attributable to
shareholders 226 951 93 046 239 899
Adjusted for non-trading
items 2 834 2 369 (161)
Goodwill 3 240 2 611 1 286
Facility closure cost - - 1 696
Profit on sale of
investments - - (1 040)
Profit on sale of
containers and equipment (406) (242) (2 103)
Headline earnings 229 785 95 415 141 239 738
Number of shares in
issue (000`s) 89 266 95 360 96 137
Weighted average number
of shares on which
earnings per share are
based (000`s) 89 702 95 100 95 542
Diluted weighted average
number of shares on
which diluted earnings
per share are based
(000`s) 95 536 100 602 100 367
Earnings per share
(cents)
Basic 253,0 97,8 251,1
Diluted 237,6 92,5 239,0
Headline earnings per
share (cents)
Basic 256,2 100,3 155 250,9
Diluted 240,5 94,8 238,9
Dividends per share
(cents)
Interim 50,0 18,0 178 18,0
Final - - 42,0
Dividend cover (times) 5,1 5,4 4,2
Interest cover (times) 7,8 3,0 4,2
Exchange rates (R/US$)
Opening exchange rate 6,64 8,63 8,63
Closing exchange rate 6,16 7,49 6,64
Average exchange rate 6,70 8,07 7,59
GROUP BALANCE SHEET
30 June 30 June 31 December
Unaudited Unaudited Audited
2004 2003 2003
R000 R000 R000
Fixed assets 1 344 522 835 990 961 884
Intangible assets 33 838 19 747 37 074
Investments in associates 128 872 121 611 133 989
Deferred taxation 3 164 - 4 725
Financial assets and other
investments 78 910 80 389 181 527
Bank balances and cash 328 702 227 775 244 994
Other current assets 418 282 382 868 528 305
Total assets 2 336 290 1 668 380 2 092 498
Ordinary shareholders` equity 646 084 525 378 608 952
Outside shareholders` interest 7 699 6 234 7 428
Deferred taxation - 2 685 -
Provision for post retirement
medical aid 51 266 60 031 49 790
Interest bearing debt 910 047 799 431 856 515
1 615 096 1 393 759 1,522 685
Other liabilities 721 194 274 621 569 813
Total funding 2 336 290 1 668 380 2 092 498
Net debt : equity ratio 0,77:1 0,70:1 0,61:1
Capital expenditure 283 206 111 130 242 457
Capital commitments
Authorised by directors and
contracted for 1 013 563 642 871 865 742
Due within one year 368 594 371 056 429 200
Due thereafter 644 969 271 815 436 542
Authorised by directors not 226 663 26 447 12 658
yet contracted for
DIVISIONAL ANALYSIS OF EARNINGS
30 June 30 June 31 December
Unaudited Unaudited Audited
2004 2003 2003
R000 R000 R000
Shipping Services 209 173 76 288 192 676
Freight and Financial Services 17 778 16 758 47 223
226 951 93 046 239 899
STATEMENT OF CHANGES IN EQUITY
Share Foreign
capital currency Accu-
and and other mulated
premium reserves profit Total
R000 R000 R000 R000
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
translation adjustments (113 204) (113 204)
Attributable to exchange
rate movement (87 759) (87 759)
Realised on repayment of
loans/sale of ships (34 601) (34 601)
Deferred taxation effect
of sale of ship 9 156 9 156
Profit attributable to
ordinary shareholders 239,899 239,899
Dividends paid (42,065) (42,065)
Balance at
31 December 2003 83 527 (22 271) 547 696 608 952
Share options exercised 3 530 3 530
Shares repurchased
and cancelled (83 376) (22 771) (106 147)
Foreign currency
translation adjustments (50 078) (50 078)
Profit attributable to
ordinary shareholders 226 951 226 951
Dividends paid (37 124) (37 124)
Balance at 30 June 2004 3 681 (72 349) 714 752 646 084
GROUP CASH FLOW STATEMENT
30 June 30 June 31 December
Unaudited Unaudited Audited
2004 2003 2003
R000 R000 R000
Cash generated from operations
excluding working capital 322 659 129 758 241 514
Working capital movements 54 043 (46 600) (2 214)
Net interest paid (35 030) (41 547) (85 628)
Net dividends paid (18 770) (15 858) (29 557)
Taxation paid (1 467) (1 732) (2 698)
Net cash inflow from operating
activities 321 435 24 021 121 417
Acquisition of fixed assets
and investments (315 512) (186 525) (347 763)
Proceeds from disposal of
fixed assets and investments 87 156 396 231 443 590
Cost of discontinuing
operations - (4 093) -
Loans repaid by associated
companies 1 772 4 250 13 818
Finance lease receipts 21 608 14 978 23 591
Net cash (outflow)/inflow from
investing activities (204 976) 224 841 133 236
Proceeds from issue of ordinary
share capital 3 530 1 661 2 951
Repurchase of ordinary share
capital (106 147) (732) (732)
Proceeds from borrowings 322 836 - 96 581
Payment of capital portion of
long-term borrowings (45 326) (200 612) (262 991)
Short term loan (repaid)/raised (180 704) 91 899 17 131
Net cash outflow from financing
activities (5 811) (107 784) (147 060)
Net increase in cash and
cash equivalents 110 648 141 078 107 593
Cash and cash equivalents at
beginning of period 189 150 85 844 85 844
Proportional consolidation
Of joint venture - - 2 183
Difference arising on
translation (6 403) (8 165) (6 470)
Cash and cash equivalents
At end of period 293 395 218 757 189 150
COMMENTS
The board of directors is pleased to report a 144% increase in earnings to
R227,0 million for the six months to 30 June 2004. Headline earnings per share
rose to 256,2 cents, an increase of 155% over the six months to 30 June 2003.
The group has continued to benefit from the charters it entered into during
market lows and from the strong shipping markets. The high markets contributed
significantly to a 313% increase in the US Dollar income over the corresponding
period of last year. However, the much stronger Rand negatively impacted on
reported earnings and limited revenue growth to 37%.
Shipping Services
Shipping Services achieved excellent results for the period despite the negative
effect of the strong Rand.
Island View Shipping, the group`s dry bulk owner and operator, has a substantial
fleet of handysize, panamax and capesize bulk carriers owned or chartered in at
favourable rates. Island View Shipping achieved high growth in the period due to
the strong bulk shipping markets and its favourable fleet charter base. Island
View Shipping continues to increase its fleet with the delivery of further
handysize vessels that were contracted for charter some time ago.
In line with the group`s strategy to diversify risk through having a mix of
ships on long term charter and in spot markets, 40% of the fleet (60% if
weighted by tonnage) is currently employed through fixed charters ranging in
term from one to three years. These long-term charters will ensure that the
effect on earnings will be minimised should markets decline in the future.
Although dry bulk shipping markets have come off the record highs of the first
quarter of 2004, they have improved recently and continue to hold at very
favourable levels.
Unicorn Shipping, the group`s product and chemical tanker owner and operator,
achieved solid results in spite of the significant negative impact the strong
Rand has on its performance. Both the product and chemical tanker markets have
been firm during the period and are anticipated to remain strong for the
foreseeable future. Through long term charters and newbuildings on order,
Unicorn Shipping is increasing its fleet size substantially.
Freight and Financial Services
The group`s freight and financial services operations increased their earnings
despite the strong rand, which has had a negative effect on volumes and US
Dollar earnings in the export driven businesses.
Grindrod Ships Agencies increased its customer base during the period and
Grindrod International Travel continued to expand through the acquisition of new
operations in major centres.
The landfreight logistics businesses have expanded further into fast moving
consumer goods logistics and distribution through an acquisition during the
period. The group is looking to further grow these businesses through
`greenfield` opportunities, increased market share, as well as the acquisition
of complementary transport and logistic operations, and the development of
warehousing and terminal facilities in Southern African ports. In line with the
group`s commitment to Black Economic Empowerment (BEE), the involvement of BEE
partners in this process will be a key objective.
Ocean Africa Container Lines (formerly Unifeeder), the group`s seafreight
logistics partnership with Safmarine Container Lines servicing regional shipping
and logistical needs, increased its contribution for the period.
The investment in Marriott performed well for the period. Marriott Merchant Bank
increased its fee income while the property and asset management divisions
increased assets under management.
Capital Expenditure and Commitments
Capital expenditure and commitments of the group are:
Capital
Description expenditure Capital commitments
Six months Six months
to 30 June to 31 Dec
R000s 2004 2004 2005 Thereafter
Ships 244 395 281 610 179 267 512 327
Property, plant
and equipment 38 811 29 859 10 500 -
Total 283 206 311 469 189 767 512 327
Two 37 000 dwt product tankers were delivered during the period. Southern Unity
is on charter to oil majors in South Africa through Southern Tankers, a BEE
company, and Nyathi has been chartered by a European oil major. Orders have
been placed for a further two product tankers bringing the number of these ships
still to be delivered to five.
Capital commitments will be funded from cash generated by operations and ship
financing facilities.
The Rand market value of the group`s owned fleet is higher than cost or current
book value, despite the level of the Rand/US Dollar exchange rate.
Group Borrowings and Cash Flow
Strong operating cash flows have resulted in group net borrowings reducing from
R611,5 million at 31 December 2003 to R581,3 million in spite of financing
raised on the delivery of the two product tankers, progress payments on ships
under construction and the share repurchase detailed below. However, the debt :
equity ratio has increased from 61% to 77% as a result of the effect of the
share repurchase and the strong Rand / US Dollar exchange rate on equity. This
is well within the 100% guideline set by the group.
Equity
In February 2004, shareholders approved a specific repurchase of ordinary shares
and the consolidation of the group`s shareholding into one class of share with
the abolishment of the `N` ordinary share structure. As a consequence 8 958 956
ordinary shares acquired for R106,1 million at an average price of R11,84 per
share were cancelled.
Accounting Policies and Presentation
This report has been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice. The accounting policies and methods of
computation are consistent with those applied in the annual financial statements
for the year ended 31 December 2003.
Dividend
An interim dividend of 50,0 cents per share (2003: 18,0 cents per share) has
been declared.
Prospects
Despite the current strength of the Rand against the US Dollar, the group is
confident of achieving similar earnings levels in the second half of 2004
through the current strength in the world shipping markets, the high level of
contracted revenue from charter fixtures and growth in existing business
activities.
For and on behalf of the Board
W M Grindrod I A J Clark
Chairman Group Managing Director
26 July 2004
DECLARATION OF INTERIM DIVIDEND
Notice is hereby given that an interim dividend of 50,0 cents per share (2003:
18,0 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 date to trade cum-dividend Friday, 20 August 2004
Trading ex-dividend commences Monday, 23 August 2004
Record date Friday, 27 August 2004
Dividend payment date Monday, 30 August 2004
No dematerialisation or rematerialisation of shares will be allowed for the
period from 23 August 2004 to 27 August 2004, both days inclusive.
By order of the Board
C A S Robertson
Secretary
26 July 2004
Registered Postal Transfer Postal address
office address secretaries
Quadrant House PO Box 1 Computershare PO Box 61051
115 Victoria Durban Investor Services Marshalltown
Embankment 4000 2004 (Pty) Limited 2107
Durban 4001 70 Marshall Street
Johannesburg 2001
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: 26/07/2004 02:27:01 PM
Produced by the JSE SENS Department
