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COMMENTS ON RESULTS
Holders of securities in Trencor and Mobile are reminded that the comparative figures are for the eighteen months ended 31 December 2001.
Trading income from our core businesses for the year ended
Headline earnings were, however, unfavourably impacted by the influence
of the significantly stronger rand on the translation of long-term receivables
and the related provision. The rand weakened from
In recognition of the sustained period of lower US dollar interest rates,
the discount rate applied in the valuation of long-term receivables has
been reduced by 1% to 8,5% per annum with effect from
Pursuant to the above, the aggregate loss before tax for the year was
Textainer performed well, particularly in the second half of the year
during which its contribution to group earnings amounted to R88 million;
its contribution for the full year was
TrenStar Inc, our 61% US subsidiary, successfully established its international business activities, particularly in the US and the UK, and opened up new opportunities for TrenStar SA (formerly Trencor Solutions) to export equipment manufactured by itself and others in South Africa. During the year under review, TrenStar, through Brewers Logistics International Ltd (“BLI”), its 75% UK subsidiary, purchased, in two separate transactions, the beer keg fleets of the UK breweries Scottish Courage Ltd and Carlsberg-Tetley Brewing Ltd, and so obtained a 42% market share within the UK beer keg market. On the successful conclusion of pending negotiations with other breweries within the UK that should rise to 65%. These transactions have been fully debt-funded by UK banks at reasonable rates without any monetary guarantee from, or other recourse against, Trencor or TrenStar. After having absorbed significant start-up costs in the year under review, we expect TrenStar to start contributing positively to earnings in 2003.
The rate of production at our stainless steel tank container manufacturing plant in Parow, near Cape Town, increased steadily during the year and we have started 2003 with the best forward order position we have enjoyed for some time. The stronger rand has put pressure on margins and sales, but the facility operated satisfactorily during the year under review.
The trailer business, in which the group now has a 40% interest, traded
satisfactorily during the year and made a positive contribution to group
earnings. This is in pleasing contrast to the
The stronger rand has resulted in a gain of
The ratio of interest-bearing debt to permanent capital increased from
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) has entered its fifth year. We have reason to believe that SARS has completed its enquiries, but it is not possible to anticipate when they will come to any conclusion. The income tax principles underlying the tax treatment of the participation of our partners in the export trade have been the subject of a number of supportive legal opinions, including from various Senior Counsel, and we remain confident that the legal advice received will prevail should SARS seek to challenge the tax treatment.
As previously reported, a successful challenge by SARS 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.
The board of directors has decided not to declare a dividend.
Mr AM Brown resigned as a non-executive director on
As Mobile’s net income is almost entirely dependent upon the receipt of dividends from Trencor, the non-declaration of a dividend by Trencor at this stage has, in turn, caused the board of Mobile not to declare a dividend.
These results have been reviewed by the auditors, KPMG Inc, an their unmodified review reports are available for inspection at the registered office.
ON BEHALF OF THE BOARDS
NI JOWELL CHAIRMAN TRENCOR LIMITED
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