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TRENCOR LIMITED - Reviewed Results for the Year Ended 31 December 2012 and Declaration of Cash Dividend

Release Date: 21/02/2013 17:48
Code(s): TRE     PDF:  
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Reviewed Results for the Year Ended 31 December 2012 and Declaration of Cash Dividend

Trencor Limited
(Incorporated in the Republic of South Africa)
Registration No. 1955/002869/06 
Share code: TRE 
ISIN: ZAE000007506 
('the company' or 'Trencor')

Reviewed Results
for the year ended 31 December 2012 
and declaration of cash dividend

COMMENTARY

GROUP

-  Trading profit from continuing operations after net financing costs increased by 7% from
   R1 529 million in 2011 to R1 636 million.
-  Headline earnings per share (including the effect of net realised and unrealised foreign exchange
   translation gains) were 559,6 cents (2011: 559,3 cents).
-  Adjusted headline earnings per share (which excludes the effect of net unrealised foreign
   exchange translation gains), at 546,1 cents (2011: 482,4 cents), were up by 13,2%.
-  Net unrealised foreign exchange gains arising on translation of net dollar receivables and the
   related valuation adjustments, not included in adjusted headline earnings per share, were
   R33 million or 13,5 cents per share (2011: gain R191 million or 76,9 cents per share).
-  These different earnings are better reflected in tabular form:

                                                                     2012        2011
                                                                Cents per       Cents
                                                                    share   per share
Headline earnings including, in 2011, gains on containers sold
pursuant to TMCL restructuring (35,7 cents per share)               559,6       559,3
Deduct: Unrealised foreign exchange translation gains                13,5        76,9
Adjusted headline earnings                                          546,1       482,4

-  Consolidated gearing ratio at 31 December 2012 was 165% (2011: 173%). All of the interest-
   bearing debt is in Textainer.
-  Based on the spot exchange rate of US$1 = R8,48 and the price of Textainer's shares listed on the
   NYSE on 31 December 2012 (US$31,46 per share), the net asset value of Trencor at that date
   was as follows:

                                       R million    R per share
Net beneficiary interest in Textainer    7 277,5          41,09
Net interest in long-term receivables      646,7           3,65
Cash                                     1 669,0           9,43
Net liabilities                          (111,2)         (0,63)
                                         9 482,0          53,54

-  Final dividend of 150 cents per share declared, making a total of 215 cents per share for the year
   (2011: total 175 cents per share), an increase of 23% over the previous year.

Textainer: 48,9% interest at 31 December 2012 (2011: 60,8%)

-  Net profit for the year in US GAAP was US$197,5* million (2011: US$189,6* million). Adjusted
   to conform with International Financial Reporting Standards, Textainer's net profit was
   US$200,2* million (2011: US$194,0* million) (*  Excludes bargain purchase gain of US$9,4 million 
   and in 2011 included a non-cash gain of US$15,5 million arising on the sale of containers to the 
   prior non-controlling interest in Textainer Marine Containers Ltd.)
-  Average fleet utilisation for the year was 97,2%, compared with 98,3% for 2011. 82% of the fleet
   is subject to long-term and direct financing leases.
-  Total capital expenditure for both the owned and managed fleets was US$1,2 billion for the year,
   used to purchase new and used containers.
-  At 31 December 2012 Textainer owned 72,7% of the total fleet of 2 775 000 TEU; at
   31 December 2011 it owned 58,6% of the then fleet of 2 469 000 TEU.
-  Declared dividends totalling US$1,63 per share in respect of 2012 (2011: US$1,28 per share).
-  On 20 December 2012 Textainer acquired a 50,1% interest in TAP Funding Ltd, a container-
   owning company whose containers are managed by Textainer, for US$20 million. The acquisition
   resulted in a bargain purchase gain which has been recorded in the statement of comprehensive
   income. The bargain purchase gain arose due to Textainer's particular ability to accommodate the
   transaction needs of TAP's selling shareholders. Specifically, the transaction allows approximately
   half of TAP's existing shareholders to continue their investment in TAP and allows TAP to continue
   to buy containers that will be managed by Textainer on TAP's behalf, thus enabling TAP to
   maintain a young fleet of containers that can be readily financed. The transaction also allowed
   TAP's other shareholders immediate liquidity in cash. As Textainer was already managing TAP's
   assets, Textainer was able to complete the transaction in an expedited manner without the need
   for due diligence.
-  Raised a net US$185,2 million of new equity through the issue of 6 125 000 shares during
   September 2012. At the same time, Halco Holdings Inc sold 2,5 million shares in Textainer,
   realising net proceeds of US$75,1 million. These net proceeds of the sale by Halco are intended
   to be distributed to Trencor, subject to the approval of the board of Halco Holdings Inc and the
   trustees and protectors of the Halco Trust. In this event, the board of Trencor intends to pay a
   special dividend of approximately 360 cents per share in the second quarter of 2013.
-  Ended the year with a debt-to-equity ratio of 2,16:1. In 2012 the company completed
   approximately US$2,4 billion of financing in the debt and equity markets, resulting in over
   US$1,3 billion in net incremental funding.
-  Textainer's results may be viewed on its website www.textainer.com.

DECLARATION OF CASH DIVIDEND

The board has declared a final gross cash dividend (number 94) of 150 cents per share out of
distributable reserves in respect of the year ended 31 December 2012.

The salient dates pertaining to the dividend payment are as follows:
Last day to trade cum the dividend                                   Thursday, 14 March 2013
Trading commences ex the dividend                                      Friday, 15 March 2013
Record date                                                            Friday, 22 March 2013
Payment date                                                           Monday, 25 March 2013

Share certificates may not be dematerialised or rematerialised between Friday, 15 March 2013 and
Friday, 22 March 2013, both days inclusive.

Note that:
  
- As no secondary tax on companies' credits are available, dividend withholding tax at the rate of
  15% will be applicable to shareholders who are not exempt, which will result in a net dividend of
  127,50000 cents per share;
- Trencor's tax reference number is 9676002711; and
- Trencor's issued share capital at the declaration date is R885 340 (177 068 011 ordinary shares
  of 0,5 cent each).

PREPARATION OF FINANCIAL STATEMENTS
These reviewed results have been prepared by management under the supervision of the financial director.

REVIEW OPINION
These results, other than the figures stated in US dollars, have been reviewed by the independent
auditors, KPMG Inc, and their unmodified review report is available for inspection at the registered office.

On behalf of the board

NI Jowell       Chairman

21 February 2013

Directors: NI Jowell* (Chairman), JE Hoelter (USA), C Jowell*, JE McQueen* (Financial), DM Nurek,
E Oblowitz, RJA Sparks, HR van der Merwe*, H Wessels (* executive)
Secretaries: Trencor Services (Pty) Ltd
Registered Office: 1313 Main Tower, Standard Bank Centre, Heerengracht, Cape Town 8001
Transfer Secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall Street,
Johannesburg 2001 (PO Box 61051, Marshalltown 2107)
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Ltd)

Condensed Consolidated statement of financial position                                                                              
at 31 December 2012      
                                                                                                           
R million                                                                                          Reviewed 2012     Audited 2011   
ASSETS                                                                                                                              
Property, plant and equipment                                                                             24 798           15 600   
Intangible assets                                                                                            283              380   
Investment in equity accounted investee                                                                       40                3   
Investments                                                                                                   66               14   
Long-term receivables                                                                                        699              756   
Net investment in finance leases                                                                             627              444   
Deferred tax assets                                                                                           20               22   
Restricted cash                                                                                              448              370   
Total non-current assets                                                                                  26 981           17 589   
Inventories                                                                                                  195              169   
Trade and other receivables                                                                                  885              773   
Current portion of long-term receivables                                                                     133              285   
Current portion of net investment in finance leases                                                          201              167   
Current tax assets                                                                                             2                2   
Cash and cash equivalents                                                                                  2 513            1 333   
Current assets                                                                                             3 929            2 729   
Total assets                                                                                              30 910           20 318   
EQUITY                                                                                                                              
Share capital and premium                                                                                     44               44   
Reserves                                                                                                   6 370            4 750   
Equity attributable to equity holders of the company                                                       6 414            4 794   
Non-controlling interests                                                                                  4 628            2 188   
Total equity                                                                                              11 042            6 982   
LIABILITIES                                                                                                                         
Interest-bearing borrowings                                                                               17 107           11 031   
Amounts attributable to third parties in respect of long-term receivables                                    156              173   
Derivative financial instruments                                                                              89              131   
Deferred revenue                                                                                              27                9   
Deferred tax liabilities                                                                                     218              224   
Total non-current liabilities                                                                             17 597           11 568   
Trade and other payables                                                                                   1 029              510   
Current tax liabilities                                                                                       83               78   
Current portion of interest-bearing borrowings                                                             1 115            1 076   
Current portion of amounts attributable to third parties in respect of long-term receivables                  30               53   
Current portion of deferred revenue                                                                           14               51   
Current liabilities                                                                                        2 271            1 768   
Total liabilities                                                                                         19 868           13 336   
Total equity and liabilities                                                                              30 910           20 318   
Capital expenditure incurred during the year                                                               8 647            5 396   
Capital expenditure committed and authorised, but not yet incurred                                           193              277   
Directors' valuation of unlisted investments                                                                  66               14   
Ratio to total equity:                                                                                                              
Total liabilities (%)                                                                                      179,9            191,0   
Interest-bearing debt (%)                                                                                  165,0            173,4   

Condensed Consolidated statement of Cash flows                                                                     
for the year ended 31 December 2012     
                                                                           
R million                                                                         Reviewed 2012     Audited 2011   
Cash generated from operations                                                            3 510            2 485   
Increase in container leasing equipment                                                 (8 036)          (5 912)   
Finance income received                                                                      16                5   
Finance expenses paid                                                                     (559)            (335)   
Dividends paid to equity holders of the company                                           (336)            (265)   
Dividends paid to non-controlling interest                                                (302)            (187)   
Income tax paid                                                                            (64)             (43)   
Net cash outflow from operating activities                                              (5 771)          (4 252)   
Cash inflow from investing activities                                                       614              236   
Cash inflow from financing activities                                                     6 253            4 075   
Net increase in cash and cash equivalents before exchange rate fluctuations               1 096               59   
Net cash and cash equivalents at the beginning of the year                                1 333            1 029   
Effects of exchange rate fluctuations on cash and cash equivalents                           84              245   
Net cash and cash equivalents at the end of the year                                      2 513            1 333   

Condensed consolidated statement of comprehensive income
for the year ended 31 December 2012                                                           
R million                                                                                                             Reviewed 2012     Audited 2011   
Revenue (Note 2)                                                                                                              4 553            4 649   
Trading profit before items listed below                                                                                      2 225            1 944   
Realised and unrealised exchange gains on translation of long-term receivables, excluding fair value adjustment                  54              276   
Net long-term receivable fair value adjustment                                                                                   68             (40)   
Impairment of plant and equipment                                                                                               (6)             (18)   
Bargain purchase gain                                                                                                            80                   
Profit from operations                                                                                                        2 421            2 162   
Net finance expenses (Note 3)                                                                                                 (589)            (415)   
Finance expenses    Interest expense                                                                                         (571)            (315)   
                     Losses on derivative financial instruments                                                               (34)            (105)   
Finance income	    Interest income                                                                                             16                5   
Share of profit/(loss) of equity accounted investee (net of tax)                                                                  2              (2)   
Profit before tax                                                                                                             1 834            1 745   
Income tax expense                                                                                                             (61)            (100)   
Profit for the year                                                                                                           1 773            1 645   
Other comprehensive income                                                                                                                             
Foreign currency translation differences                                                                                        389            1 120   
Change in fair value of available-for-sale financial asset                                                                       52                   
Income tax expense on other comprehensive income                                                                               (10)                   
Total comprehensive income for the year                                                                                       2 204            2 765   
Total comprehensive income for the year attributable to:                                                                                               
Equity holders of the company                                                                                                 1 282            1 720   
Non-controlling interest                                                                                                        922            1 045   
                                                                                                                              2 204            2 765   
Profit attributable to:                                                                                                                                
Equity holders of the company                                                                                                 1 027              991   
Non-controlling interests                                                                                                       746              654   
                                                                                                                              1 773            1 645   
Basic earnings per share (cents)                                                                                              579,9            554,3   
Diluted earnings per share (cents)                                                                                            579,9            554,3   
Number of shares in issue (million)                                                                                           177,1            177,1   
Weighted average number of shares in issue (million)                                                                          177,1            178,8   
Year-end rate of exchange: SA rand to US dollar                                                                                8,48             8,12   
Average rate of exchange for the year: SA rand to US dollar                                                                    8,16             7,20   

Condensed Consolidated statement of Changes in equity                                                                       
for the year ended 31 December 2012 
                                                                                        
R million                                                                                  Reviewed 2012     Audited 2011   
Balance at the beginning of the year                                                               4 794            3 895   
Total comprehensive income for the year                                                            1 282            1 720   
Profit for the year                                                                                1 027              991   
Foreign currency translation differences                                                             213              729   
Net change in fair value of available-for-sale financial asset                                        42                   
Dividends paid                                                                                     (336)            (265)   
Share-based payments                                                                                  52               42   
Changes in ownership interests in subsidiary                                                         330              (8)   
Repurchase of own shares from owners                                                                               (417)   
Share options exercised                                                                                                5   
Sale of shares in subsidiary to non-controlling interest without a change in control                 292                   
Acquisition of non-controlling interest without a change in control                                                (178)   
Shareholders' interest                                                                             6 414            4 794   
Non-controlling interests in subsidiaries                                                          4 628            2 188   
Balance at the beginning of the year                                                               2 188            2 056   
Total comprehensive income for the year                                                              922            1 045   
Profit for the year                                                                                  746              654   
Foreign currency translation differences                                                             176              391   
Dividends paid to non-controlling interest                                                         (302)            (187)   
Share-based payments                                                                                  36               25   
Shares issued by subsidiary                                                                        1 556               42   
Sale of shares in subsidiary to non-controlling interest without a change in control                 324                   
Acquisition of non-controlling interest without a change in control                                                (801)   
Acquisition of subsidiary non-controlling interests                                                  234                   
Changes in ownership interests in subsidiary                                                       (330)                8   
Equity                                                                                            11 042            6 982   

These results can be viewed on the website at www.trencor.net

Notes to the condensed consolidated Preliminary financial statements
for the year ended 31 December 2012

1. These condensed consolidated financial statements have been prepared in accordance with the recognition and measurement requirements of 
   International Financial Reporting Standards (IFRS), the presentation and disclosure requirements of IAS 34 Interim Financial Reporting, 
   the AC 500 Series issued by the Accounting Practices Board, the requirements of the Companies Act, 2008 of South Africa and the 
   JSE Listings Requirements. The accounting policies applied in the preparation of these condensed consolidated financial statements 
   comply with IFRS and are consistent with those used in the annual financial statements for the year ended 31 December 2011. 

R million                                                                                                                         Reviewed 2012     Audited 2011   
2. Revenue                                                                                                                                                         
Goods sold and services rendered                                                                                                          1 134           1 765*   
Leasing income                                                                                                                            3 130            2 378   
Management fees                                                                                                                             221              212   
Finance income                                                                                                                               14               18   
                                                                                                                                          4 499            4 373   
Realised and unrealised exchange differences                                                                                                 54              276   
                                                                                                                                          4 553            4 649   
* Includes R899 million  containers sold to
  non-controling interests                                                                                          
3. Net finance expenses                                                                                                                                            
Finance expenses                                                                                                                            605              420   
Interest expense  Textainer                                                                                                                571              315   
Losses on derivative financial instruments                                                                                                   34              105   
Finance income                                                                                                                                                     
Interest income  cash and cash equivalents                                                                                                (16)              (5)   
                                                                                                                                            589              415   
4. Headline earnings                                                                                                                                               
Profit attributable to equity holders of the company                                                                                      1 027              991   
Impairment of property, plant and equipment                                                                                                   6               18   
Gain on disposal of property, plant and equipment                                                                                                           (1)   
Bargain purchase gain                                                                                                                      (80)                   
Total non-controlling interests' share of adjustments                                                                                        38              (7)   
Headline earnings                                                                                                                           991            1 001   
Weighted average number of shares in issue (million)                                                                                      177,1            178,8   
Headline earnings per share (cents)                                                                                                       559,6            559,3   
Diluted headline earnings per share (cents)                                                                                               559,6            559,3   
Adjusted headline earnings                                                                                                                                         
Headline earnings (as above)                                                                                                                991            1 001   
Net gain on translation of net US dollar receivables                                                                                       (33)            (191)   
Total tax effects of adjustments                                                                                                              9               53   
Adjusted headline earnings                                                                                                                  967              863   
Undiluted adjusted headline earnings per share (cents)                                                                                    546,1            482,4   
Diluted adjusted headline earnings per share (cents)                                                                                      546,1            482,4   
5. Segmental reporting                                                                                                                                             
Revenue                                                                                                                                                            
Reportable segments                                                                                                                                                
Containers  finance (including exchange differences)                                                                                        70              296   
Containers  owning, leasing, management and reselling                                                                                    4 483           4 3531   
                                                                                                                                          4 553            4 649   
Profit from operations                                                                                                                                             
Reportable segments                                                                                                                                                
Containers  finance                                                                                                                        130              248   
Containers  owning, leasing, management and reselling                                                                                   2 330²           1 934²   
                                                                                                                                          2 460            2 182   
Unallocated                                                                                                                                (39)             (20)   
                                                                                                                                          2 421            2 162   
Profit before taxation                                                                                                                                             
Reportable segments                                                                                                                                                
Containers  finance                                                                                                                        130              248   
Containers  owning, leasing, management and reselling                                                                                   1 728²           1 512²   
                                                                                                                                          1 858            1 760   
Unallocated                                                                                                                                (24)             (15)   
                                                                                                                                          1 834            1 745   
1 Includes R899 million revenue  containers sold to non-controlling interest                                                                                     

2 Includes R80 million  bargain purchase gain. (2011: R134 million gain  containers sold to
  non-controlling interest)                                        

Assets                                                                                                                                                             
Capital expenditure incurred by the container owning, leasing, management and reselling segment                                           8 646            5 396   

In order to provide a better appreciation of the results of the group's activities, a condensed consolidated income statement and
a condensed consolidated statement of financial position are also presented in US dollars, as virtually all of the group's revenue
and assets and much of its expenditure are denominated in that currency. The amounts stated in US dollars have been prepared
by management and are unaudited.

Unaudited Trencor condensed consolidated income statement 
in US dollars for the year ended 31 December 2012
                                                                                 Unaudited    Unaudited
US$ Million                                                                           2012         2011
Revenue                                                                              551,8        620,5
Trading profit before items listed below                                             272,8        271,3
Realised and unrealised exchange gains on translation of long-term receivables         0,4          4,7
Net long-term receivable fair value adjustment                                        11,0          6,1
Impairment of plant and equipment                                                    (0,8)        (2,4)
Bargain purchase gain                                                                  9,4            
Profit from operations                                                               292,8        279,7
Net finance expenses                                                                (72,2)       (57,8)
  Finance expense  Interest expense                                                (70,0)       (43,7)
	           Losses on derivative financial instruments                       (4,2)       (14,7)
  Finance income   Interest income                                                    2,0          0,6
Share of profit/(loss) of equity accounted investee (net of tax)                       0,3        (0,2)
Profit before tax                                                                    220,9        221,7
Income tax expense                                                                   (6,4)        (7,8)
Profit for the year                                                                  214,5        213,9

Attributable to:
Equity holders of the company                                                        123,3        122,7
Non-controlling interests                                                             91,2         91,2
                                                                                     214,5        213,9

Number of shares in issue (million)                                                  177,1        177,1
Weighted average number of shares in issue (million)                                 177,1        178,8
Basic earnings per share (US cents)                                                   69,6         68,6
Diluted earnings per share (US cents)                                                 69,6         68,6
Headline earnings per share (US cents)                                                67,3         69,2
Diluted headline earnings per share (US cents)                                        67,3         69,2
Adjusted headline earnings per share (US cents)                                       67,0         66,6
Diluted adjusted headline earnings per share (US cents)                               67,0         66,6
Year-end rate of exchange: SA rand to US dollar                                       8,48         8,12
Average rate of exchange for the year: SA rand to US dollar                           8,16         7,20

Trading profit from operations comprises:
 Textainer                                                                           276,5        251,8
 Textainer  gain on sale of containers to non-controlling interest                               20,4
 Other                                                                               (3,7)        (0,9)

                                                                                     272,8        271,3
Unaudited Trencor condensed consolidated statement of financial position
in US dollars at 31 December 2012
                                                                                               Unaudited   Unaudited   
US$ million                                                                                         2012        2011   
ASSETS                                                                                                                 
Property, plant and equipment                                                                    2 924,3     1 921,2   
Long-term receivables                                                                               82,5        93,1   
Other non-current assets                                                                           174,9       151,8   
Non-current assets                                                                               3 181,7     2 166,1   
Current assets                                                                                     463,3       336,1   
Inventories                                                                                         23,0        20,8   
Trade and other receivables                                                                        104,4        95,3   
Current portion of long-term receivables                                                            15,7        35,1   
Current portion of net investment in finance leases                                                 23,7        20,6   
Current tax assets                                                                                   0,2         0,2   
Cash and cash equivalents                                                                          296,3       164,1   
Total assets                                                                                     3 645,0     2 502,2   
Equity and liabilities                                                                                                 
Equity attributable to equity holders of the company                                               756,3       590,6   
Non-controlling interests                                                                          545,7       269,4   
Total equity                                                                                     1 302,0       860,0   
LIABILITIES                                                                                                            
Interest-bearing borrowings                                                                      2 017,4     1 358,5   
Amounts attributable to third parties in respect of long-term receivables                           18,4        21,3   
Derivative financial instruments                                                                    10,5        16,1   
Deferred revenue                                                                                     3,2         1,1   
Deferred tax liabilities                                                                            25,7        27,6   
Total non-current liabilities                                                                    2 075,2     1 424,6   
Current liabilities                                                                                267,8       217,6   
Trade and other payables                                                                           121,3        62,8   
Current tax liability                                                                                9,8         9,6   
Current portion of amounts attributable to third parties in respect of long-term receivables         3,5         6,5   
Current portion of interest-bearing borrowings                                                     131,5       132,5   
Current portion of deferred revenue                                                                  1,7         6,2   
Total liabilities                                                                                2 343,0     1 642,2   
Total equity and liabilities                                                                     3 645,0     2 502,2   
Ratio to total equity:                                                                                                 
Total liabilities (%)                                                                              179,9       191,0   
Interest-bearing debt (%)                                                                          165,0       173,4   
Date: 21/02/2013 05:48:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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