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  Unaudited Interim Results 2002     E-mail

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COMMENTS ON RESULTS

Trading | Finance | Tax Queries | Dividend | Mobile


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.

TRENCOR

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).

TRADING

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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FINANCE

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.

TAX QUERIES

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 years.

DIVIDEND

The board of directors does not recommend the payment of an interim dividend.

MOBILE

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 does.

ON BEHALF OF THE BOARDS

NI JOWELL CHAIRMAN TRENCOR LIMITED
C JOWELL  
CHAIRMAN MOBILE INDUSTRIES LIMITED

22 AUGUST 2002

REGISTERED OFFICE:
1313 MAIN TOWER
STANDARD BANK CENTRE
HEERENGRACHT
CAPE TOWN 8001

REGISTRARS:
COMPUTERSHARE INVESTOR SERVICES LIMITED
2ND FLOOR EDURA, 41 FOX STREET
JOHANNESBURG 2001
(PO BOX 61051 MARSHALLTOWN 2107)

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