| Thu 24 Feb 2005, 12:34 | | Final results announcement for the year ended 31 D |
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Grindrod Limited - Final results announcement for the year ended 31 December
2004
GRINDROD LIMITED
Incorporated in the Republic of South Africa
Registration number 1966/009846/06
Share code: GND ISIN number: ZAE000052247
AUDITED RESULTS AND DIVIDEND ANNOUNCEMENT
* 146% INCREASE IN HEADLINE EARNINGS PER SHARE
* 198% INCREASE IN FINAL DIVIDEND
* 206% INCREASE IN CASH GENERATED FROM OPERATIONS
GROUP INCOME STATEMENT
Year ended 31 December
Audited Audited
2004 2003 Change
R000 R000 %
Revenue 3 012 454 1 976 418 52
Trading profit 694 485 334 951
Depreciation (77 643) (55 100)
Operating profit before
interest and taxation 616 842 279 851
Non-trading items (4 337) 161
Interest received 38 129 49 760
Interest paid (100 106) (116 832)
Profit before taxation 550 528 212 940 159
Taxation (42 661) (4 489)
Profit after taxation 507 867 208 451
Share of associate companies` profit 42 735 31 704
Profit for the year 550 602 240 155
Outside shareholders` interest (705) (256)
Profit attributable to shareholders 549 897 239 899 129
Reconciliation of headline earnings
Profit attributable to shareholders 549 897 239 899
Adjusted for non-trading items 6 905 (161)
Amortisation of goodwill and
intangible asset 7 328 1 286
Impairment of goodwill 1 014 -
Share of associate company`s
impairment of goodwill 2 568 -
Facility closure costs - 1 696
Profit on sale of investments (3 499) (1 040)
Profit on sale of plant and equipment (506) (2 103)
Headline earnings 556 802 239 738 132
Number of shares in issue (000`s) 90 922 96 137
Weighted average number of shares
on which earnings per share
are based (000`s) 90 044 95 542
Diluted weighted average number
of shares on which diluted earnings
per share are based (000`s) 94 630 100 367
Earnings per share (cents)
Basic 610,70 251,10
Diluted 581,10 239,00
Headline earnings per share (cents)
Basic 618,40 250,90 146
Diluted 588,40 238,90
Dividends per share (cents)
Paid 50,00 18,00
Declared 125,00 42,00 198
Dividend cover (times) 3,47 4,16
Exchange rates (R/US$)
Opening exchange rate 6,64 8,63
Closing exchange rate 5,65 6,64
Average exchange rate 6,47 7,59
DIVISIONAL ANALYSIS OF EARNINGS
Year ended 31 December
Audited Audited
2004 2003
R000 R000
Shipping Services 501 487 192 676
Freight and Financial Services 48 410 47 223
549 897 239 899
GROUP BALANCE SHEET
31 December
Audited Audited
2004 2003
R000 R000
Ships, property, plant and equipment 1 529 363 961 884
Intangible assets 42 355 37 074
Investments in associates 144 253 133 989
Deferred taxation 30 456 6 953
Financial assets and other investments 81 648 181 527
Bank balances and cash 345 655 244 994
Other current assets 444 014 528 305
Total assets 2 617 744 2 094 726
Ordinary shareholders` equity 842 800 608 952
Outside shareholders` interest 8 100 7 428
Deferred taxation 8 362 2 228
Provision for post retirement medical aid 52 355 49 790
Interest bearing debt 970 963 856 515
1 882 580 1 524 913
Other liabilities 735 164 569 813
Total equity and liabilities 2 617 744 2 094 726
Net debt: equity ratio 0,49:1 0,61:1
Capital expenditure 558 963 290 773
Capital commitments
Authorised by directors and contracted for 813 238 865 742
Due within one year 249 338 429 200
Due thereafter 563 900 436 542
Authorised by directors not yet contracted for 428 939 12 658
GROUP CASH FLOW
Year ended 31 December
Audited Audited
2004 2003
R000 R000
Cash generated from operations excluding
working capital 738 196 241 514
Working capital movements 25 221 (2 214)
Net interest paid (64 122) (85 628)
Net dividends paid (60 616) (29 557)
Taxation paid (3 766) (2 698)
Net cash inflow from operating activities 634 913 121 417
Acquisition of ships, property, plant and
equipment and investments (705 738) (347 763)
Proceeds from disposal of ships, property,
plant and equipment and investments 100 898 443 590
Loans repaid by associate companies 1 772 13 818
Finance lease receipts 18 233 23 591
Net cash (outflow)/inflow from
investing activities (584 835) 133 236
Repurchase of ordinary share capital (106 146) (732)
Proceeds from issue of ordinary share capital 6 146 2 951
Proceeds from long-term borrowings 485 194 96 581
Payment of capital portion of long-term
borrowings (229 079) (262 991)
Short-term loan (repaid)/raised (129 711) 17 131
Net cash inflow/(outflow) from
financing activities 26 404 (147 060)
Net increase in cash and cash equivalents 76 482 107 593
Cash and cash equivalents at beginning of year 189 150 85 844
Proportional consolidation of joint venture - 2 183
Difference arising on translation (8 335) (6 470)
Cash and cash equivalents at end of year 257 297 189 150
STATEMENT OF CHANGES IN EQUITY
Foreign currency
Share capital Hedging translation
and premium reserve reserve
R000 R000 R000
Balance at 31 December 2002 81 308 - 90 933
Adjustment on adoption of
AC133
As restated 81 308 - 90 933
Share options exercised 2 951
Cancellation of share
capital (732)
Foreign currency
translation adjustments (113 204)
Attributable to exchange
rate movement (87 759)
Realised on repayment of
loans/sale of ships (34 601)
Deferred taxation effect on
sale of ship 9 156
Profit attributable to
shareholders
Dividends paid
Balance at 31 December 2003 83 527 - (22 271)
Share options exercised 6 146 6 146
Shares repurchased and
cancelled (83 375)
Foreign currency
translation adjustments (84 364)
Financial instrument hedge (49 725)
Profit attributable to
shareholders
Dividends paid
Balance at 31 December 2004 6 298 (49 725) (106 635)
Accumulated
profit Total
R000 R000
Balance at 31 December 2002 349 258 521 499
Adjustment on adoption of AC133 604 604
As restated 349 862 522 103
Share options exercised 2 951
Cancellation of share capital (732)
Foreign currency translation adjustments (113 204)
Attributable to exchange rate movement (87 759)
Realised on repayment of loans/sale of ships (34 601)
Deferred taxation effect on sale of ship 9 156
Profit attributable to shareholders 239 899 239 899
Dividends paid (42 065) (42 065)
Balance at 31 December 2003 547 696 608 952
Share options exercised
Shares repurchased and cancelled (22 771) (106 146)
Foreign currency translation adjustments (84 364)
Financial instrument hedge (49 725)
Profit attributable to shareholders 549 897 549 897
Dividends paid (81 960) (81 960)
Balance at 31 December 2004 992 862 842 800
COMMENTS
The board of directors is pleased to report a 146% increase in headline
earnings per share to 618 cents for the financial year to 31 December 2004
despite the effect of a strong Rand. Headline earnings was R557 million,
an increase of 132% over the prior year.
The group has benefited substantially from an outstanding performance by its
Shipping Services division. This was mainly due to a much larger fleet, the
low fixed fleet cost and strong world shipping markets which maintained high
levels throughout the year. Consequently, US Dollar income was 230% higher than
the prior year but the effect of a strong Rand throughout the year and at year
end resulted in a lower Rand earnings growth on translation. The Freight and
Financial Services division also produced pleasing results despite the negative
effect of the strong Rand on some of the operations.
Shipping Services
Island View Shipping (IVS), the group`s dry bulk owner and operator, produced
substantial earnings from its fleet of handysize and capesize bulk carriers.
These ships were purchased or chartered in at favourable rates and benefited
from the strong dry bulk markets. The IVS parcel service out of South Africa,
however, had a difficult year due to the high cost of chartering in vessels
required to service freight contracts. IVS continued to employ its handysize
vessels in the Lauritzen/IVS pool while most of the capesize ships are on
long-term charter to secure counter parties at favourable charter rates. IVS
continues to expand its fleet with the delivery on charter off our handysize
bulk carriers and a capesize bulk carrier during the year. In 2005 a further
two handysize bulk carriers, two panamax bulk carriers and a handysize bulk
carrier in which the group has a 50% ownership interest will be delivered.
These ships were all contracted some time ago at favourable rates.
Unicorn Shipping, the group`s product and chemical tanker owner and operator,
achieved good trading results but was negatively affected by the stronger Rand
on translation and revaluation. The product and chemical tanker markets have
been firm during the year and strengthened substantially in the last quarter.
Unicorn Shipping took delivery of two product tankers on long-term charters at
favourable rates, in addition to the three owned ships which were delivered
during the year.
Freight and Financial Services
Grindrod ships agencies increased volumes and its customer base significantly
but was not able to grow earnings due to the impact of the strong Rand on its
US Dollar denominated revenue.
The land freight logistics businesses have all performed well during the year
and have expanded operations into fast moving consumer goods and wholesale
furniture logistics and distribution. The group is currently exploring a number
of growth opportunities and is planning to spend a substantial amount on
expansion of businesses in this division.
Ocean Africa Container Lines, the group`s sea freight logistics partnership with
Safmarine Container Lines, performed well and achieved good growth over the
prior year.
Marriott continued to perform well.
Capital Expenditure and Commitments
Capital expenditure and commitments of the group are:
Capital Capital commitments Total
expenditure 2005 2006 Thereafter commitments
Description R000 R000 R000 R000 R000
Ships 494 540 219 626 183 202 378 698 781 526
Property,
plant and
equipment 64 423 29 712 1 000 1 000 31 712
Total 558 963 249 338 184 202 379 698 813 238
Three 37 000 dwt product tankers were delivered during the period, two are on
long term charter with oil majors with the remaining ship being employed in the
Dorado product tanker pool. Four of these ships are still on order and will be
delivered during the next three years at favourable prices. These include an
additional vessel which was contracted at a low option price to allow for the
sale of one of the new ships in the current high market without reducing the
fleet size. This sale has been concluded and the ship will be delivered at the
end of 2005.
Capital commitments also include a 50% interest in a handysize bulk carrier
which delivered in February 2005, a secondhand container ship in which
ownership is to be transferred in mid 2005 and two 12 800 dwt product/chemical
tankers to be delivered in 2006.
Orders have been placed subsequent to year end for a further two 12 800 dwt
product/chemical tankers for delivery in 2007.
The total expenditure on these new investments which commenced in 2003, will be
about R2 billion.
A 50% holding in the furniture transporter, Boltt Removals, was acquired at the
end of 2004. Since the year end the group has acquired 76% of African Portland
Industrial Holdings Limited, a Namibian listed company with terminal facilities
in Walvis Bay and Maputo and abulk logistics operation with good facilities in
Johannesburg, Cape Town and Durban.
Capital commitments will be funded from cash generated by operations and
financing facilities.
Black Economic Empowerment
The group continued its black economic empowerment initiatives with the Jay &
Jayendra (Pty) Limited/Gam Logistics (Pty) Limited consortiums and other broad
based empowerment groups.
Group Borrowings and Cash Flow
Strong operating cash flows have resulted in group net borrowings increasing
slightly from R611,5 million at 31 December 2003 to R625,3 million, in spite
of financing raised on the delivery of the three product tankers, progress
payments on ships under construction and the share repurchase detailed below.
However, the debt: equity ratio has decreased from 61% to 49% as a result of
the growth in 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. The equity has also been
negatively impacted by the effect of the strong Rand on US Dollar denominated
net assets. However, the market value of the group`s assets is considerably
in excess of the book values.
Directors
Dr SM (Sivi) Gounden and Ms Nomazizi Mtshotshisa were appointed directors on
21 December 2004.
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, except for the adoption of
AC501, Accounting for Secondary Tax on Companies (STC) which requires that to
the extent that it is probable that the entity with the STC credit will declare
dividends on its own, against which unutilised STC credits can be utilised, a
deferred tax asset should be recognised for such STC credits. The effect of the
adoption of this change in accounting policy is an R18,6 million decrease in
the taxation charge.
Independent audit
The financial information set out in this report has been audited by the
group`s auditors, Deloitte & Touche. Their unqualified audit report is
available at the registered office of the company.
Dividend
A final dividend of 125 cents per share (2003: 42 cents per share) has been
declared.
Prospects
The group has a high level of contracted income for 2005 and shipping markets
are expected to remain at relatively high levels. Consequently the group is
confident of achieving further growth in income for 2005.
For and on behalf of the Board
WM Grindrod IAJ Clark
Chairman Group Managing Director
24 February 2005
Declaration of final dividend
Notice is hereby given that a final dividend of 125 cents per share (2003: 42
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, 11 March 2005
Trading ex-dividend commences Monday, 14 March 2005
Record date Friday, 18 March 2005
Dividend payment date Tuesday, 22 March 2005
No dematerialisation or rematerialisation of shares will be allowed for the
period from 14 March 2005 to 18 March 2005, both days inclusive.
Annual General Meeting
The annual general meeting of the company will be held in Durban on Wednesday,
25 May 2005. The annual report will be posted to
shareholders on or about 8 April 2005.
By order of the Board
CAS Robertson
Secretary
24 February 2005
Registered office
Quadrant House
115 Victoria Embankment
Durban 4001
Postal address
PO Box 1
Durban
4000
Transfer secretaries
Computershare Investor Services 2004 (Pty) Ltd
70 Marshall Street
Johannesburg 2001
Postal address
PO Box 61051
Marshalltown
2107
Directors
WM Grindrod* (Chairman), DRD White* (Deputy Chairman),
IAJ Clark (Group Managing Director), H Adams*, Dr SM Gounden*, IM Groves*,
JC Hall* CBE, JG Jones, TJT McClure, N Mtshotshisa*, RA Norton*, AK Olivier,
DA Rennie, AF Stewart, LR Stuart-Hill, RJH Whitley* *Non-executive
A global range of integrated shipping and freight solutions within one company.
www.grindrod.co.za
Date: 24/02/2005 11:30:07 AM
Produced by the JSE SENS Department
