COMMENTS ON RESULTS
Trading | Finance
| Tax Queries | Dividend
Holders of securities in Trencor and Mobile are reminded that the
previous financial period was for the eighteen months ended 31 December
2001. These interim results are unaudited and cover the six
months to 30 June 2002; the comparative figures are for the six
months ended 30 June 2001 and eighteen months ended 31 December
2001, as applicable.
Trading income for the six months ended 30 June
2002 increased by 61% to R261 million from R162 million for the
same period last year. Due however to the strengthening of
the rand, the aggregate loss before tax for the six months under
review was R289 million (30 June 2001: profit R198 million) and
the undiluted headline loss per share was 141,2 cents (30 June 2001:
headline earnings of 66,7 cents).
The main factor giving rise to the loss for the period was a net
downward adjustment in the translation of the present value of the
dollar denominated long-term receivables amounting to R394 million
flowing from the appreciation of the rand during the period from
US$1 = R12,06 to R10,36. Portion of the exchange gains recognised
last year in the translation of the net receivables have now been
reversed, resulting in a loss of R664 million, while the rand equivalent
of the net dollar denominated provision have been reduced by R270
million (the provision in dollars remains unchanged).
Textainer’s fleet utilisation has been improving
steadily from a low point of just under 71% in March and is currently
over 80%. During the period under review Textainer incurred
significant costs in repositioning empty containers into areas of
demand, but the benefits of this will mainly be felt in the second
half of the financial year. Textainer’s contribution to earnings
in the period under review amounted to R36 million compared to R49
million in the same period last year.
TrenStar Inc, Trencor’s 61% owned US subsidiary which offers services
and returnable packaging assets for the supply chain, made excellent
progress during the review period. It achieved a breakthrough
when it acquired, for some R1 billion, the entire beer keg fleet
of Scottish Courage, a major UK brewer, through its 75% owned subsidiary,
Brewers Logistics International Limited (“BLI”). TrenStar
will now make available and manage the fleet of 1,9 million kegs
under a 15-year container services agreement with Scottish Courage.
Negotiations with a second large brewer to enter into a similar
transaction in respect of another substantial fleet of kegs should
be concluded soon. In both instances, the purchase of the
kegs is 100% funded by UK banks. These transactions will not
contribute materially to earnings in the current year. TrenStar
also succeeded in securing new contracts with major companies in
the food and automotive industries in the US.
Trencor Solutions, which is engaged in activities in South Africa
similar to those of TrenStar, is approaching breakeven. It
is anticipated that this trend will continue during the balance
of the year.
The order intake for our stainless steel tank container manufacturing
facility at Parow, near Cape Town, has improved and there appear
to be signs of an improvement in trading conditions in this industry.
The trailer business, in which the group has a 40% interest, traded
satisfactorily during the period under review and made a positive
contribution to group earnings.
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As reported on 10 May 2002, Trencor elected, in
terms of the arrangements with its South African and foreign bankers,
to procure a draw down under the US dollar denominated letter of
credit provided by its two foreign banks and, from the proceeds,
repaid its financial indebtedness to its South African banks in
full. The combined effects of the changing value of the rand
against the dollar and the current interest rate profiles in South
Africa and the US respectively made it beneficial for Trencor to
have these borrowings in US dollars.
An amount of US$56 385 000 was drawn down under the facility on
9 May 2002. The amount drawn down is repayable in fourteen
quarterly instalments of
US$4 027 500 each, which commenced on 20 July 2002 with the final
instalment payable on 20 October 2005. The outstanding balance
bears interest at LIBOR plus 1,825% per annum; the current effective
rate payable on the loan is 3,68% per annum.
Pursuant to the acquisition of the beer keg fleet of Scottish Courage
Limited by BLI, the financial statements of BLI have been consolidated
into those of Trencor. As is the case with the borrowings
of Textainer, all of the borrowings of BLI are ring-fenced and without
recourse to Trencor, or to TrenStar.
The ratio of Trencor’s consolidated interest-bearing debt to permanent
capital, being the sum of total shareholders’ funds and the convertible
debentures, increased from 173% at 31 December 2001 to 210% at 30
June 2002. However, with Textainer and BLI notionally equity
accounted (the debt of these companies is without recourse to Trencor),
this ratio was 44,3% compared to 41,3% at
31 December 2001 and 37% at 30 June 2001.
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 into its fourth year.
It is not possible to anticipate when it will be concluded.
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 thirteen
The board of directors does not recommend the payment
of an interim dividend.
Following the merger of Trencor’s trailer division
into a new entity, in which Trencor has a 40% interest, effective
1 December 2001, the Mobile Industries’ subsidiaries, Mobile Acceptances
and Transport Acceptances, ceased writing new business and are now
just collecting the outstanding debtors book. As Mobile Industries
derives virtually all of its income from dividends it receives from
Trencor, Mobile will not declare dividends unless and until Trencor
ON BEHALF OF THE BOARDS
NI JOWELL CHAIRMAN TRENCOR LIMITED
C JOWELL CHAIRMAN MOBILE INDUSTRIES LIMITED
22 AUGUST 2002
1313 MAIN TOWER
STANDARD BANK CENTRE
CAPE TOWN 8001
COMPUTERSHARE INVESTOR SERVICES LIMITED
2ND FLOOR EDURA, 41 FOX STREET
(PO BOX 61051 MARSHALLTOWN 2107)
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