COMMENTS ON RESULTS
Trading | Finance
| Tax Queries | Dividends
| Mobile | Auditors
Holders of securities in Trencor and Mobile are reminded that the
current financial period is for the eighteen months ending 31 December
2001. These interim reports cover the twelve months to 30 June 2001.
Income before tax and non-trade items for the twelve
months ended 30 June 2001 was R399 million (2000: loss R118 million)
and undiluted headline earnings per share were 183,0 cents (2000:
165,0 cents). The further decline in the value of the rand against
the US dollar resulted in a foreign exchange revaluation gain of
R573 million, but also necessitated a currency translation adjustment
to the existing dollar-based provision against the net value of
the long-term receivables, increasing the net provision by R161
million. Management considered it prudent to increase the amount
of this dollar-based provision by a further R37 million in view
of current trading conditions in the global container leasing business;
the aggregate increase in the net adjustment to the long-term receivables
thus amounted to R198 million.
Textainer contributed R114 million to headline earnings (2000: R92
The financial results are based on an exchange
rate of US$1 = R8,07 at
30 June 2001 (2000: US$1 = R6,78).
The decline in Textainer's fleet utilisation, which commenced in
November 2000, continued through until June 2001. Since then the
utilisation level stabilised but has not shown signs of improving.
From the high-point of 85% in September 2000, utilisation has declined
to just over 73%, but management believes that the company is well
positioned to take full advantage when the container leasing market
starts to improve. It is anticipated that the size of the container
fleet under Textainer's management will reach the one million TEU
(twenty foot equivalent units) level before the end of the current
The stainless steel tank container factory at Parow has continued
to produce an outstanding product but due to current weak demand,
volumes remain low. The future of this facility remains under constant
All of our other operations continued to experience difficult trading
conditions during the period. There are no significant seasonal
trading patterns in our businesses.
During June 2001, the company concluded a contract in terms of which
its 40% shareholding in Centricity Inc was exchanged for 546 757
shares in Descartes Systems Group Inc (a Canadian corporation listed
on NASDAQ and the Toronto Stock Exchanges) valued at US$19,70 per
share, the weighted average listed price over 20 days prior to the
conclusion of the contract. This transaction yielded a net gain
of R76 million which has been included in non-trade items. Descartes
shares are currently trading at about US$7 per share, but the directors
do not consider the diminution in value to be permanent.
In August 2001, the group concluded an agreement
with MicroStar Logistics Inc to establish TrenStar Inc, which will
be owned 66% by Trencor Solutions and the balance of 34% by MicroStar's
shareholders. Based in Denver, Colorado, TrenStar will develop internationally
the current activities of Trencor Solutions, which comprise the owning,
management and leasing out of returnable packaging equipment and
the provision of technology and software solutions in transportation
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Textainer's 49,99% interest in Textainer Marine Containers Limited
("TMCL"), a joint venture financing entity with an overseas
financial institution, formed for the purpose of purchasing containers
that will be managed by Textainer, has been accounted for by Trencor
on the proportionate consolidation method on a line-by-line basis.
It is likely that from October 2001, Textainer's shareholding in
TMCL will exceed 50%. In that event, Trencor will fully consolidate
the results of TMCL. This will have an impact on the consolidated
group gearing ratios as indicated below.
Virtually all of the capital expenditure of the group for the period
under review was incurred in TMCL by Textainer in replenishing and
expanding its container fleet; most of these additions were placed
into long-term leases by Textainer.
The ratio of Trencor's consolidated interest-bearing
debt to permanent capital, being the sum of total shareholders'
funds and the convertible debentures, decreased to 133% (had TMCL
been fully consolidated at 30 June 2001, this ratio would have been
144%) from 165% a year ago. With Textainer notionally equity accounted
(its debt is without recourse to Trencor), this ratio was 37% compared
to 62% at 30 June 2000.
The enquiry by the South African Revenue Service ("SARS")
into the tax treatment of the group's export partners' participation
in the export of cargo containers (in respect of transactions entered
into in prior years) continues. It is not possible to anticipate
when it will be concluded. We remain confident that the supportive
legal advice we have received will prevail should SARS seek to challenge
the tax treatment.
As previously reported, a successful challenge
by SARS, which we believe is unlikely, may result in the acceleration
of the payment of a portion of the amounts attributable to third
parties (i.e. our export partners) which are carried at their net
present values, and which would otherwise be paid over periods of
up to fourteen years.
As previously reported, Trencor will not declare
dividends until the advances under its South African banking facilities
have been repaid.
Mobile Acceptances traded satisfactorily during
the twelve months to 30 June 2001. As Mobile Industries derives
most of its income from dividends it receives from Trencor, Mobile
will not declare dividends unless and until Trencor does.
KPMG Inc has been appointed as auditors to all
South African group entities in the place of Arthur Andersen &
Co, effective 29 June 2001. KPMG are auditors to Textainer and most
of our major overseas subsidiaries and associates, whilst Arthur
Andersen has been providing audit services to the Trencor and Mobile
groups locally. It became necessary to appoint a single firm as
auditors to the groups and, after due consideration of all relevant
factors, the appointment was awarded to KPMG.
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Holders of securities in Trencor and Mobile are advised that
the companies are scheduled to transfer to the STRATE (Share Transactions
Totally Electronic) system of electronic settlement on the JSE
Securities Exchange South Africa with effect from Monday
12 November 2001. Trading for electronic settlement commences on
Monday 3 December 2001 with electronic settlement from Monday 10
December 2001. Consequently, paper certificates will no longer be
good for delivery from 3 December 2001. Further information will
be included with the interim reports being posted to holders of
ON BEHALF OF THE BOARDS
NI JOWELL CHAIRMAN TRENCOR LIMITED
C JOWELL CHAIRMAN MOBILE INDUSTRIES LIMITED
28 AUGUST 2001
1313 MAIN TOWER
STANDARD BANK CENTRE
CAPE TOWN 8001
COMPUTERSHARE SERVICES LIMITED
1ST FLOOR EDURA, 41 FOX STREET
(PO BOX 61051 MARSHALLTOWN 2107)
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