| Mon 10 Mar 2003, 17:57 | | TRENCOR LIMITED/ MOBILE INDUSTRIES LIMITED - PROVI |
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TRENCOR LIMITED/ MOBILE INDUSTRIES LIMITED - PROVISIONAL RESULTS FOR THE YEAR
ENDED 31 DECEMBER 2002
TRENCOR LIMITED
REG NO 1955/002869/06
SHARE CODE: ISIN:
TRE ZAE000007506
TED2 ZAE000007282
MOBILE INDUSTRIES LIMITED
REG NO 1968/014997/06
SHARE CODE: ISIN:
MOB ZAE000004602
MBN ZAE000012274
MOBD ZAE000004610
PROVISIONAL RESULTS for the year ended 31 December 2002
The current reporting period is for the year ended 31 December 2002. Following
a change in the financial year-ends from 30 June to 31 December in 2001, the
previous reporting period was for 18 months.
Abridged income statements
TRENCOR MOBILE
UNAUDITED AUDITED UNAUDITED AUDITED
12 MONTHS 18 MONTHS 12 MONTHS 18 MONTHS
ENDED ENDED ENDED ENDED
31 DEC 31 DEC 31 DEC 31 DEC
R MILLION 2002 2001 2002 2001
Revenue (including certain
exchange differences) (Note 2) 589,0 4 436,1 19,7 49,5
Trading income before
items listed below: 563,0 616,4 15,4 42,5
Exchange (losses)/gains:
Translation of long-term
receivables included in revenue (1 420,4) 2 120,8 - -
Translation of borrowings
and investments (net) 70,8 (11,6) - -
Changes in discount rates relating
to long-term receivables 132,9 (88,0) - -
Net long-term receivable
revaluation adjustment 545,2 (1 075,2) - -
(Loss)/Income from operations (108,5) 1 562,4 15,4 42,5
Net interest expense - Textainer (225,7) (286,8) - -
- Other (105,9) (187,6) (14,5) (38,7)
(440,1) 1 088,0 0,9 3,8
Attributable income/(loss) of
associate companies 4,9 (15,5) (163,8) 344,2
(loss)/Income before abnormal items (435,2) 1 072,5 (162,9) 348,0
Abnormal items (Note 3) (19,9) 77,3 (11,4) 37,1
(loss)/Income before taxation (455,1) 1 149,8 (174,3) 385,1
Taxation (165,4) 269,3 0,5 1,9
(loss)/Income after taxation (289,7) 880,5 (174,8) 383,2
outside shareholders" interest 80,3 77,2 0,2 0,6
Net (loss)/income attributable
to shareholders (370,0) 803,3 (175,0) 382,6
Number of shares in issue (million) 153,0 152,8 897,8 897,8
Weighted average number of shares
in issue (million) 152,9 152,8 897,8 897,8
Undiluted (loss)/earnings
per share (cents) (242,0) 525,7 (19,5) 42,6
Diluted (loss)/earnings
per share (cents) (Note 4.1) - 451,6 - 36,6
Undiluted headline (loss)/earnings
per share (cents) (Note 4) (230,3) 465,1 (18,2) 38,4
Diluted headline (loss)/earnings
per share (cents) (Note 4.1) - 400,6 - 33,0
Period-end rate of exchange:
SA rand to US dollar 8,66 12,06 8,66 12,06
Abridged balance sheets
TRENCOR MOBILE
UNAUDITED AUDITED UNAUDITED AUDITED
31 DEC 31 DEC 31 DEC 31 DEC
2002 2001 2002 2001
Assets
Non-current assets
Property, plant and equipment 5 619,4 6 078,9 - -
Investment properties 33,7 33,7 - -
Intangible assets and goodwill 16,1 35,6 - -
Investments 102,5 141,9 936,4 1 217,8
Long-term loans 20,0 28,5 - -
Net investment in direct
finance leases 66,1 70,9 - -
Participation in export partnerships - - 6,6 7,0
Long-term receivables 2 065,1 2 900,4 24,4 57,2
7 922,9 9 289,9 967,4 1 282,0
Current assets (Note 6) 1 043,8 1 116,4 21,1 75,5
Total assets 8 966,7 10 406,3 988,5 1 357,5
Equity and liabilities
Capital and reserve
Share capital and premium 165,6 164,5 66,5 66,5
Reserves 1 567,2 2 159,4 755,6 1 036,9
Shareholders" equity 1 732,8 2 323,9 822,1 1 103,4
Interest of outside shareholders
in subsidiaries 460,4 635,0 3,7 3,5
Total shareholders" funds 2 193,2 2 958,9 825,8 1 106,9
Convertible debentures 260,5 260,5 127,6 127,6
Other non-current liabilities
Interest-bearing borrowings 4 488,8 4 763,9 18,3 51,9
Amounts attributable to third
parties in respect of
long-term receivables 397,4 431,6 - -
Derivative instruments 171,0 130,9 - -
Deferred taxation 273,7 594,2 5,8 6,2
7 784,6 9 140,0 977,5 1 292,6
Current liabilities (Note 7) 1 182,1 1 266,3 11,0 65,0
Total equity and liabilities 8 966,7 10 406,3 988,5 1 357,6
Capital expenditure incurred
during the period 1 993,9 1 467,5 - -
Capital expenditure committed and
authorised, but not yet incurred 201,6 7,8 - -
Market value of listed investments 14,7 49,1 749,7 881,8
Directors" valuation of
unlisted investments 87,8 92,8 - -
Ratio to aggregate of total
shareholders" funds and
convertible debentures
Total liabilities excluding
convertible debentures (%) 265,4 223,2 3,7 10,0
Interest-bearing debt excluding
convertible debentures (%) 204,8 172,9 2,8 8,6
Abridged statements of changes in shareholders" funds
TRENCOR MOBILE
UNAUDITED AUDITED UNAUDITED AUDITED
12 MONTHS 18 MONTHS 12 MONTHS 18 MONTHS
ENDED ENDED ENDED ENDED
31 DEC 31 DEC 31 DEC 31 DEC
2002 2001 2002 2001
Balance at the beginning
of the period 2 323,9 1 312,9 1 103,4 645,0
Proceeds on issue of shares 1,1 - - -
Movements in distributable reserves (370,0) 804,1 (175,0) 382,6
Net (loss)/income for the period (370,0) 803,3 (175,0) 382,6
Transfer from non-distributable
reserves - 0,8 - -
Movements in non-distributable
reserves (222,2) 206,9 (106,3) 75,8
Currency translation differences (210,6) 275,5 - -
Change in holding in associate company - - (1,1) -
Realisation on sale of property - 2,2 - -
Unrecognised loss on derivative
instruments (in Textainer)
Cumulative effect due to change
in accounting policy - (21,9) - -
Net change in unrecognised
loss-current period (11,6) (48,1) - -
Fair-value adjustment - available
for sale investment (20,6) (38,3) - -
Reserves of associate companies - (0,8) (105,2) 75,8
Impairment of available sale
investment transferred to
income statement 20,6 38,3 - -
Balance at the end of the period 1 732,8 2 323,9 822,1 1 103,4
Abridged cash flow statements
TRENCOR MOBILE
UNAUDITED AUDITED UNAUDITED AUDITED
12 MONTHS 18 MONTHS 12 MONTHS 18 MONTHS
ENDED ENDED ENDED ENDED
31 DEC 31 DEC 31 DEC 31 DEC
2002 2001 2002 2001
Cash generated from operations 879,8 656,1 88,1 119,1
Interest received 21,4 28,7 7,7 14,7
Interest paid (346,3) (502,8) (14,5) (38,7)
Dividends received - 0,1 - -
Dividends paid to outside shareholders (20,0) (23,4) - -
Taxation paid (24,3) (24,6) (6,0) (0,7)
Net cash inflow from
operating activities 510,6 134,1 75,3 94,4
Cash flows from
investing activities (1 972,0) (1 216,4) - (0,1)
Cash flows from
financing activities 1 792,3 962,0 (78,8) (83,9)
Net increase/(decrease) in cash
and cash equivalents before
exchange rate changes 330,9 (120,3) (3,5) 10,4
Net cash and cash equivalents
at the beginning of the period 128,1 67,0 8,6 (1,8)
Effects of exchange rate changes
on cash and cash equivalents (90,4) 181,4 - -
Net cash and cash equivalents
at the end of the period 368,6 128,1 5,1 8,6
Notes to the abridged financial statements
1. These consolidated abridged financial statements are prepared in accordance
with South African Statements of Generally Accepted Accounting Practice. The
accounting policies used in the preparation of the provisional financial
statements are consistent with those used in the annual financial statements for
the 18 months ended 31 December 2001, except for the adoption of AC 135
Investment Properties for the first time during 2002.
UNAUDITED AUDITED UNAUDITED AUDITED
12 MONTHS 18 MONTHS 12 MONTHS 18 MONTHS
ENDED ENDED ENDED ENDED
31 DEC 31 DEC 31 DEC 31 DEC
2002 2001 2002 2001
2. Revenue
Invoiced sales - goods and services 203,1 756,8 - -
Leasing income 1 176,8 1 168,1 - -
Management fees 276,8 219,3 - -
Finance income 352,7 171,1 19,7 49,5
Realised and unrealised
exchange differences (1 420,4) 2 120,8 - -
589,0 4 436,1 19,7 49,5
3. Abnormal items
Profit on sale of investments - 163,1 - -
Profit on sale of property - 1,2 - -
Premium paid on acquisition of
shares from outside shareholders (0,4) (13,4) - -
Impairment of goodwill (11,7) (10,3) - -
Amortisation of goodwill (4,0) - - -
Discontinued operations 14,1 2,8 - -
Impairment of available
for sale investment (20,6) (38,3) - -
Write down of properties to
open market value - (10,3) - -
Reversal of impairment of plant 2,7 (17,5) - -
Attributable share of abnormal
items of associate company - - (11,4) (37,1)
(19,9) 77,3 (11,4) (37,1)
4. Headline (loss)/earnings
(Loss)/Earnings (370,0) 803,3 (175,0) 382,6
Discontinuing operations - (2,0) - -
Losses incurred up to
date of discontinuance - (1,6) - -
Profit on disposal of fixed assets (6,3) (10,4) - -
Abnormal items, net of taxation 24,2 (78,6) - -
Attributable share of headline
earnings adjustments of
associate company - - 11,4 (37,8)
Headline (loss)/earnings (352,1) 710,7 (163,6) 344,8
Weighted average number of
shares in issue (million) 152,9 152,8 897,8 897,8
Headline (loss)/earnings
per share (cents) (230,3) 465,1 (18,2) 38,4
4.1 The dilution arises as a result of any future conversion of convertible
debentures. The directors are of the opinion that the debentures will not be
converted in the foreseeable future and therefore no dilution is anticipated for
the foreseeable future. No dilutive effect has been presented in respect of the
current year as this would be anti-dilutive.
5. Segmental reporting
Revenue
Trailers - 434,2
Supply chain management 274,3 59,5
Container operations - sales
and finance (1 068,3) 2 279,7
Container operations - owning,
leasing-out and management 1 299,9 1 497,8
Container operations -
manufacturing 81,7 153,6
Other 1,4 11,3
589,0 4 436,1
(Loss)/Income from operations
Trailers - (38,4)
Supply chain management (43,0) (38,2)
Container operations - sales
and finance (545,0) 1 192,6
Container operations - owning,
leasing-out and management 469,0 553,4
Container operations -
manufacturing (16,4) 14,2
Other 26,9 (121,2)
(108,5) 1 562,4
6. Current assets
Inventories 51,3 93,8 - -
Accounts receivable 612,3 714,1 0,1 0,2
Current portion of long-term loans 11,6 1,0 13,6 58,0
Amount owing by affiliated company - - 2,3 8,7
Cash and cash equivalents 368,6 307,5 5,1 8,6
1 043,8 1 116,4 21,1 75,5
7. Current liabilities
Accounts payable 439,2 359,2 0,9 4,5
Provisions 75,8 76,1 - -
Taxation 90,5 9,0 1,5 6,7
Bank overdrafts and short-term loans - 179,4 - -
Current portion of
interest-bearing borrowings 537,5 623,5 8,6 53,8
Deferred income 39,1 19,1 - -
1 182,1 1 266,3 11,0 65,0
Comments
Holders of securities in Trencor and Mobile are reminded that the comparative
figures are for the eighteen months ended 31 December 2001.
TRENCOR
Trading income from our core businesses for the year ended 31 December 2002
showed an improving trend to R563 million compared to R616 million over the
previous 18-month period.
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 R6,78 to R12,06 against the US
dollar in the 18-month period ended 31 December 2001, but recovered to R8,66 at
31 December 2002. The effect of this change is that the company reported an
unrealised exchange gain on the translation of its long-term receivables (net of
provisions) of approximately R1,2 billion in 2001 whilst, during the year under
review, a net R870 million of this gain has effectively been reversed. A net
gain of R71 million on translation of certain dollar-denominated loans and
investments was also recorded.
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 1 January 2002. After adjusting for
currency differences and debtor provisions, the net positive impact on pre-tax
income of this change is R53 million.
Pursuant to the above, the aggregate loss before tax for the year was R455
million (18 months to 31 December 2001: profit R1,15 billion) and the undiluted
headline loss per share was 230 cents (2001: headline earnings of 465 cents).
Trading
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 R124 million. Its container fleet utilisation
at the end of the year was 89%, compared to 71% at the same time in the previous
period. The size of the fleet under management was 962 000 TEU (twenty foot
equivalent unit) at the end of the year, of which more than half were leased-out
under long-term leases. The fleet under management exceeded one million TEU by
the end of January 2003. 77% of the 462 600 TEU of containers owned by Textainer
itself are in long-term leases.
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 R27 million loss reported in the
period prior to the merger which took effect on 1 December 2001.
Finance
The stronger rand has resulted in a gain of R85 million on translation of the
outstanding balance of the US dollar loans, most of which were raised by the
company during the year under review. The proceeds of the loan raised in 2002
were applied in repaying rand obligations to South African lenders. The amount
outstanding under this facility at 31 December 2002 was US$48,3 million and the
interest rate was 3,55% per annum.
The ratio of interest-bearing debt to permanent capital increased from 173%
at 31 December 2001 to 205% at 31 December 2002, mainly as a result of increased
borrowings to fund the beer keg purchases. However, with Textainer and BLI
notionally equity accounted (the debt of these companies is without recourse to
Trencor) this ratio was 38% compared to 41% at 31 December 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) 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.
Dividend
The board of directors has decided not to declare a dividend.
Directorate
Mr AM Brown resigned as a non-executive director on 19 November 2002. Mr JE
Hoelter, former president and CEO of Textainer Group Holdings Ltd, was appointed
as an independent non-executive director with effect from 2 December 2002.
MOBILE
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.
ON BEHALF OF THE BOARDS
NI JOWELL CHAIRMAN TRENCOR LIMITED
C JOWELL CHAIRMAN MOBILE INDUSTRIES LIMITED
10 MARCH 2003
Registered Office: Registrars:
1313 Main Tower Computershare Investor Services Limited
Standard Bank Centre 70 Marshall Street
Heerengracht Johannesburg 2001
Cape Town 8001 (PO Box 61051 Marshalltown 2107)
THESE RESULTS CAN BE VIEWED ON THE WEBSITES:
HTTP://WWW.TRENCOR.NET AND HTTP://MOBILE-INDUSTRIES.NET
