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GNDE - Grindrod Limited - 2005 Audited Results And Divide

22/02/2006 14:12:01

GND GNDP
GND
Grindrod Limited - 2005 Audited Results And Dividend Announcement
Grindrod Limited
Registration number 1966/009846/06
Incorporated in the Republic of South Africa
Share code: GND & GNDP
ISIN: ZAE000072328 & ZAE000071106
2005 AUDITED RESULTS AND DIVIDEND ANNOUNCEMENT
- 56% increase in profit attributable to ordinary shareholders
- 53% increase in headline earnings per share
- 49% increase in annual dividends
GROUP INCOME STATEMENT
Year ended 31 December
Audited Audited
2005 2004 Change
R000 R000 %
Revenue 7 449 145 2 974 325 150
Trading profit 1 047 342 678 110 54
Depreciation (121 705) (75 835)
Operating profit before
interest and taxation 925 637 602 275
Non-trading items 3 451 2 036
Interest received 53 859 38 129
Interest paid (140 639) (100 327)
Profit before associate
companies and taxation 842 308 542 113
Share of associate
companies profit
before tax 88 544 52 760
Profit before taxation 930 852 594 873
Taxation (65 152) (47 966)
Profit after taxation 865 700 546 907
Attributable to
minority interest 730 (717)
Profit attributable
to shareholders 866 430 546 190
Preference dividends (15 206) -
Profit attributable to
ordinary shareholders 851 224 546 190 56
Reconciliation of
headline earnings
Profit attributable
to ordinary shareholders 851 224 546 190
Adjusted for non-trading items (1 799) 532
Impairment of goodwill 39 1 969
Share of associate company"s
impairment of goodwill 1 652 2 568
Impairment of plant and equipment 707 -
Profit on sale of investments (115) (3 499)
Profit on sale of
plant and equipment (4 082) (506)
Headline earnings 849 425 546 722 55
Number of shares
in issue (000"s) 461 626 454 610
Weighted average
number of shares on
which earnings per
share are based (000"s) 458 490 450 220
Diluted weighted average
number of shares
on which diluted earnings
per share
are based (000"s) 476 577 473 150
Earnings per
share (cents)
Basic 185,7 121,3
Diluted 178,6 115,4
Headline earnings
per share (cents)
Basic 185,3 121,4 53
Diluted 178,2 115,5
Dividends per
share (cents)
Paid 20,0 10,0
Declared 32,0 25,0
Dividend cover (times) 3,5 3,4
Exchange rates (R/US$)
Opening exchange rate 5,65 6,64
Closing exchange rate 6,31 5,65
Average exchange rate 6,38 6,47
DIVISIONAL ANALYSIS OF EARNINGS
Year ended 31 December
Audited Audited
2005 2004
R000 R000
Shipping services 762 519 494 647
Trading, freight
and financial services 88 705 51 543
851 224 546 190
GROUP BALANCE SHEET
31 December
Audited Audited
2005 2004
R000 R000
Ships, property,
plant and equipment 2 069 178 1 535 104
Intangible assets 250 525 49 767
Investments in associates 125 339 144 896
Deferred taxation 69 330 37 065
Financial assets
and other investments 53 758 54 610
Bank balances and cash 655 457 345 655
Other current assets 1 755 030 475 888
Total assets 4 978 617 2 642 985
Shareholders equity 1 937 199 833 322
Minority interest 6 753 8 044
Deferred taxation 20 340 4 445
Provision for post
retirement medical aid 64 944 52 355
Interest bearing debt 1 533 900 973 764
3 563 136 1 871 930
Other liabilities 1 415 481 771 055
Total funding 4 978 617 2 642 985
Net debt:equity ratio 0,33:1 0,53:1
Capital expenditure 648 135 558 963
Capital commitments
Authorised by directors
and contracted for 1 194 320 813 238
Due within one year 430 644 249 338
Due thereafter 763 676 563 900
Authorised by directors
not yet contracted for 309 260 428 939
GROUP CASH FLOW
Cash generated
from operations 1 367 477 635 962
Net interest paid (96 056) (64 343)
Net dividends paid (201 234) (60 616)
Taxation paid (32 251) (3 766)
Net cash inflow from
operating activities 1 037 936 507 237
Acquisition of
ships, property,
plant and equipment
and investments (1 704 380) (580 862)
Proceeds from disposal
of ships,
property, plant and
equipment and investments 14 241 100 898
Loans repaid by
associate companies 2 378 1 772
Finance lease receipts - 18 233
Net cash outflow
from investing activities (1 687 761) (459 959)
Repurchase of
ordinary share capital (2 243) (106 146)
Proceeds from issue
of ordinary share capital 3 454 6 146
Proceeds from issue
of preference
share capital 487 780 -
Long-term borrowings raised 459 011 487 994
Payment of capital
portion of
long-term borrowings (352 079) (229 079)
Short-term loan
raised/(repaid) 129 192 (129 711)
Net cash inflow from
financing activities 725 115 29 204
Net increase in cash
and cash equivalents 75 290 76 482
Cash and cash equivalents
at beginning of the year 257 297 189 150
Difference arising
on translation 14 984 (8 335)
Cash and cash equivalent
at end of the year 347 571 257 297
Reconciliation of previous SA GAAP to IFRS
Income
Equity statement
IFRS transition date Audited Audited
1 January 31 Dec 31 Dec
2004 2004 2004
R000 R000 R000
As previously reported
under SA GAAP 608 952 842 800 549 897
IFRS 2 Share based
payments - -
Accumulated profit (202) (1 327) (1 125)
Equity compensation
reserve 202 1 327 -
IFRS 3 Business
combinations
Impairment of goodwill (3 018) (3 018) -
Negative goodwill released 5 977 5 977 -
Reversal of amortisation - 4 669 4 669
IAS 16 Property,
plant and equipment
Reduction in depreciation 2 412 5 839 3 427
Taxation effect (434) (1 045) (611)
IAS 17 Leases
Leases capitalised (861) (917) (56)
Taxation effect 275 275 -
IAS 21 Foreign
currencies
(functional currency)
Accumulated profit (8 626) (7 884) 742
Foreign currency
translation 8 701 9 334 -
Restated under IFRS 613 378 856 030 556 943
IAS 17 Leases
Operating lease
smoothing (24 312) (39 565) (15 253)
Taxation effect 6 796 11 296 4 500
Foreign currency
translation 3 064 5 561 -
Restated after IFRS
and operating leases 598 926 833 322 546 190
STATEMENT OF CHANGES IN EQUITY
Foreign
Share capital, currency
premium and equity Hedging translation Accumulated
compensation reserve reserve profit
R000 R000 R000 R000
Balance at
31 December
2003 83 527 - (22 271) 547 696
IFRS
adjustments 202 8 701 (4 477)
Operating
leases
adjustment 3 064 (17 516)
As restated 83 729 - (10 506) 525 703
Share
options
exercised 6 146
Shares
repurchased
and
cancelled (83 375) (22 771)
IFRS 2 Share
based
payments 1 125
Foreign
currency
translation
adjustments (81 234)
Financial
instrument
hedge (49 725)
Minority
interest
acquired
Profit
attributable
to
shareholders 546 190
Dividends
paid (81 960)
Balance at
31 December
2004 7 625 (49 725) (91 740) 967 162
IAS 39
adjustment (15 325)
As restated 7 625 (49 725) (91 740) 951 837
Share
options
exercised 3 454
Shares
repurchased
and
cancelled (2 243)
IFRS 2 Share
based
payments 1 464
Preference
shares
issued 500 000
Share issue
expenses (12 220)
Foreign
currency
translation
adjustments (8 265)
Financial
instrument
hedge (7 721)
Minority
interest
acquired
Profit
attributable
to
shareholders 866 430
Dividends
paid (221 697)
Balance at
31 December
2005 498 080 (57 446) (100 005) 1 596 570
Attributable to
equity holders Minority Total
of Grindrod interest equity
R000 R000 R000
Balance at
31 December 2003 608 952 7 428 616 380
IFRS adjustments 4 426 326 4 752
Operating leases
adjustment (14 452) (394) (14 846)
As restated 598 926 7 360 606 286
Share options
exercised 6 146 6 146
Shares repurchased
and cancelled (106 146) (106 146)
IFRS 2 Share
based payments 1 125 1 125
Foreign currency
translation
adjustments (81 234) (81 234)
Financial
instrument hedge (49 725) (49 725)
Minority interest
acquired - (33) (33)
Profit attributable
to shareholders 546 190 717 546 907
Dividends paid (81 960) (81 960)
Balance at
31 December 2004 833 322 8 044 841 366
IAS 39 adjustment (15 325) (15 325)
As restated 817 997 8 044 826 041
Share options
exercised 3 454 3 454
Shares repurchased
and cancelled (2 243) (2 243)
IFRS 2 Share
based payments 1 464 1 464
Preference
shares issued 500 000 500 000
Share issue
expenses (12 220) (12 220)
Foreign currency
translation
adjustments (8 265) 59 (8 206)
Financial
instrument hedge (7 721) (7 721)
Minority
interest acquired - (620) (620)
Profit attributable
to shareholders 866 430 (730) 865 700
Dividends paid (221 697) (221 697)
Balance at
31 December 2005 1 937 199 6 753 1 943 952
COMMENTS
The Board of Directors is pleased to report a 56% growth in earnings to R851
million for the 2005 financial year. Headline earnings per share are R1,85
which is 53% up on the prior year, restated for the 5:1 share split and
International Financial Reporting Standards (IFRS). This is in line with the
trading statement issued on 23 November 2005.
The favourable shipping markets, despite the dry bulk markets being slightly
lower than 2004, continued to benefit the group"s spot fleet while the high
level of contracted shipping revenue provided a solid earnings base. The
trading, freight and financial services division improved its performance and
looks set to become a more significant contributor to the group"s earnings.
Shipping services
Shipping services" strong performance with earnings growth of 54% over the
prior year contributed 89% of the group"s earnings.
Island View Shipping (IVS) owns, charters and operates a fleet of capesize,
panamax and handysize bulk carriers which have been contracted in at favourable
costs. IVS performed well in the strong dry bulk markets through the
Lauritzen/IVS handysize pool and good contractual income from the capesize and
panamax vessels. IVS grew its fleet during the year through the delivery of two
chartered panamax bulk carriers, and one owned and five chartered handysize
vessels. Ships still to deliver include one chartered capesize and three
chartered handysize bulk carriers also contracted in at favourable rates.
Unicorn Shipping owns, charters and operates a fleet of product and chemical
tankers and containerships which have also been contracted in at historically
favourable rates. Unicorn benefited significantly from improved tanker markets,
particularly in the second half of the year and continues to maintain a
balanced fleet employment strategy with ships in the spot market and on
long-term charter. Translation gains from a weaker Rand/US$ exchange rate and
the profit realised through the purchase and sale of a product tanker
newbuilding contributed further to the strong earnings growth. During the year,
Unicorn acquired three ships for use in specific trades operated by the group
and still has 10 owned and four long-term chartered product and chemical
tankers contracted at low prices for delivery over the next three years.
The group"s strategy to diversify risk through having a mix of ships out on
long-term charter or with contracted revenue, and employed in the spot market
remains a key focus. Market risk is also managed through the diversification of
the group"s fleet by having a mix of dry bulk ships, tankers and
containerships. Currently 61% of the group"s fleet (by dwt) has been contracted
out for 2006 with 41% in 2007 and 20% in 2008. In addition, the group continues
to monitor ship values and, where appropriate, will contract profits through
ship sales. Unicorn has contracted for the sale of a 50% interest in a product
tanker. The trading profit on this disposal will only be recognised in 2006
once this transaction is completed.
Trading, freight and financial services
The group"s trading, freight and financial services division reported an
improved performance with a 72% growth in earnings over the prior year from a
low base.
During the year, the group established a bulk product trading division with the
acquisition of Atlas Trading and Shipping (agricultural commodities), 50% of
Cockett Marine Oil (marine bunker fuels) and 50% of Oreport (mining
commodities). These operations have performed well since their acquisition and
are expected to contribute significantly to group profits in the future.
Grindrod ships agencies traded well in a competitive market and improved its
contribution to the division"s profits.
Ocean Africa Container Lines, the group"s seafreight logistics partnership with
Safmarine, had an excellent year with good earnings growth.
Marriott, the group"s investment in banking, property management and asset
management performed well during the year. Subject to regulatory approval,
Marriott has disposed of its property and asset management operations. The
impact of this disposal, if approved, will be accounted for in 2006.
The group"s landfreight logistics operations had a mixed year with excellent
performances from the division"s established operations being offset by the
turnaround costs incurred by the more recent acquisitions. During the year, in
line with the group"s strategy to expand its non-shipping operations, the
following acquisitions were made:
African Portland Industries, a bulk terminal operator in Namibia and
Mocambique
50% of Sheltam Rail, a locomotive operator
Additional warehousing facilities in Grindrod J&J Logistics
Sea Munye"s bulk product warehousing operations in Richards Bay
Increased share in RAhlig-Grindrod from 42,5% to 50%
Subsequent to year end, a joint venture with Lauritzen Cool Logistics to
provide South African perishable goods logistics services was concluded.
The group"s strategy is to increase the profit contribution from freight
operations through the acquisition or development of complementary businesses
to ensure that a full range of services is provided to our customers.
Capital expenditure and commitments
Capital expenditure and commitments of the group are:
Description Capital expenditure Capital commitments
R000 2005 2006 2007 Thereafter
Ships 489 900 343 991 626 446 337 762
Property, plant
and equipment 158 235 194 381 1 000 -
648 135 538 372 627 446 337 762
Investment in
new businesses 1 056 245 - - -
Total 1 704 380 538 372 627 446 337 762
Two handysize bulk carriers, a feeder, a containership and a small product
tanker were delivered during the year. The orders placed for the additional
three product tankers brings the total number of newbuildings on order and
still to deliver to 10.
The group contracted for the purchase of 10 locomotives through its 50%
interest in Sheltam Grindrod.
The group disposed of a 40 000 dwt product tanker newbuilding on delivery from
the shipyard and has contracted to sell a 50% interest in a 45 000 dwt tanker
for delivery in 2006. In addition, the group plans to dispose of a 50% interest
in two handysize bulk carriers in 2006.
Capital commitments will be funded by cash reserves, cash generated from
operations and bank financing facilities.
Group borrowings and cash flow
Investment of R1,7 billion was made in ship acquisitions, bulk product trading
operations and landfreight expansion.
Due to strong operating cash flows and the issue of R488 million in preference
shares, net borrowings only increased from R628 million at 31 December 2004 to
R878 million. The group"s debt:equity ratio has improved from 53% to 33% as a
result of good earnings and the preference share issue discussed under Equity.
The group continues to seek investment expansion opportunities.
Equity
Shareholders equity increased from R833 million at 31 December 2004 to R1 937
million due to the good earnings and the issue of preference share capital.
The group raised R488 million during the year through a preference share issue
which has been utilised to accelerate the group"s expansion process. The shares
were listed on 22 August 2005.
Subsequent to year end the group raised a further R263 million in preference
share capital. These shares were listed on 17 February 2006.
Accounting policies and presentation
The report has been prepared in accordance with IFRS. IFRS and the revised
IAS39 Financial Instruments were adopted with effect from 1 January 2005. The
effect of the adoption of IFRS, IAS17 and IAS39 is set out in the Statement of
Changes in Equity and accompanying note included in this report. The previous
year"s figures have been restated for the effects of IFRS and IAS17.
Dividends
A final dividend of 32 cents per ordinary share (2004: 25 cents) has been
declared. Total dividends for the year amount to 52 cents per share (2004: 35
cents). Dividends on preference shares amounting to R3,038 per share were
declared on 22 November 2005 and have been provided for in the group"s results.
Prospects
Dry bulk shipping markets are expected to be at lower levels in 2006 and the
Rand/US$ exchange rate is forecast to be at similar levels to 2005. However, as
a result of an expanded, low cost, diversified fleet of ships, the high level
of contracted income, the anticipated strong performance by the non-shipping
operations and profits from re-investment of cash generated, the board expects
that the group will achieve growth in earnings for the year to December 2006.
For and on behalf of the Board
WM Grindrod IAJ Clark
Chairman Chief Executive Officer
22 February 2006
Declaration of dividends
Preference dividend
Notice is hereby given that a preference dividend of R3,038 per share has been
declared payable to preference shareholders in accordance with the
undermentioned timetable.
Ordinary dividend
Notice is hereby given that a final dividend of 32 cents per share (2004: 25
cents per share) has been declared payable to ordinary shareholders in
accordance with the undermentioned timetable.
Timetable
Last day to trade cum-dividend Friday, 10 March 2006
Trading ex-dividend commences Monday, 13 March 2006
Record date Friday, 17 March 2006
Dividend payment date Monday, 20 March 2006
No dematerialisation or rematerialisation of shares will be allowed for the
period from 13 March 2006 to 17 March 2006, both days inclusive.
The dividends are declared in the currency of the Republic of South Africa.
Annual general meeting
The annual general meeting of the company will be held in Durban on Wednesday,
24 May 2006. The annual report will be posted to shareholders on or about 7
April 2006.
By order of the Board
CAS Robertson
Secretary
22 February 2006
Registered office
Quadrant House
115 Victoria
Embankment
Durban 4001
Postal address
PO Box 1
Durban
4000
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Johannesburg 2001
Postal address
PO Box 61051
Marshalltown
2107
Directors
WM Grindrod* (Chairman), DRD White* (Deputy Chairman), IAJ Clark (Group CEO),
H Adams*, Dr SM Gounden*, IM Groves*, JG Jones, TJT McClure, N Mtshotshisa*,
RA Norton*, AK Olivier, DA Rennie, AF Stewart, LR Stuart-Hill
RJH Whitley* *Non-executive
Registration number 1966/009846/06
Incorporated in the Republic of South Africa
Share code: GND & GNDP
ISIN: ZAE000072328 & ZAE000071106
www.grindrod.co.za
Date: 22/02/2006 02:12:16 PM Produced by the JSE SENS Department


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