Wrap Text
Provisional condensed results for the financial year ended 30 June 2013
TORRE INDUSTRIAL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2012/144604/06)
Share code: TOR ISIN: ZAE000169322
(“Torre” or “the Company” or “the Group”)
PROVISIONAL CONDENSED RESULTS FOR THE FINANCIAL YEAR ENDED 30
JUNE 2013
REVIEWED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Reviewed Audited 12
12 months months
ended 30 ended 30
June 2013 June 2012
Notes R'000 R’000
Revenue 83 077 52 011
Cost of sales (41 416) (27 167)
Gross profit 41 661 24 844
Other income 1 8 273 4 080
Operating expenses (38 262) (19 513)
EBITDA 11 672 9 411
Depreciation & Amortisation (7 544) (6 651)
Finance costs (5 911) (5 270)
Restructuring costs 2 - (1 129)
Investment income 488 10
Profit / Loss before taxation (1 295) (3 629)
Taxation 3 6 294 -
Profit / (Loss) after taxation 4 999 (3 629)
Other comprehensive income/(loss) - -
Total comprehensive income/(loss) 4 999 (3 629)
Comprehensive income attributable to:
Ordinary shareholders of the Group 5 013 (3 629)
Non-controlling interest (14) -
4 999 (3 629)
Reconciliation of attributable profits /
(losses) to headline losses
Profits / (Losses) attributable to
ordinary shareholders 5 013 (3 629)
Restructuring costs - 1 129
Gains from Loan Write-offs (note 4) (1 464) (496)
Settlement Gains on Creditors - (3 161)
Profit on sale of PPE (136) -
Taxation effect of the above items 311 -
Headline profit / (loss) attributable to
ordinary shareholders 3 724 (6 157)
Weighted average number of shares in
issue (‘000) 86 354 574 463
Earnings / (Loss) per share (cents) 5.80 (0.63)
Headline Earnings / (Loss) per share
(cents) 4.31 (1.07)
Shareholders are reminded that in terms of the mirror listing
and scheme of arrangement, details of which were contained in a
circular dated 14 September 2012, Torre was listed after having
purchased all of the shares of SA French Limited (“SA French”).
611 791 380 ordinary SA French shares were acquired by Torre on
the basis of a swap of 1 (one) Torre share for every 10 (ten) SA
French shares. Due to the nature of this transaction there are a
significantly lower number of shares in issue for the period
ended 30 June 2013 than there were in the prior comparable
period.
REVIEWED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed 12 Audited 12
months months
ended 30 ended 30
June 2013 June 2012
R'000 R'000
ASSETS
Non-current assets 214 960 90 960
Property, plant and equipment 116 202 90 960
Goodwill (note 5) 67 675 -
Deferred tax (note 3) 28 531 -
Investment in associate 1 769 -
Operating lease asset 783 -
Current assets 117 184 15 984
Inventories 39 002 8 792
Trade and other receivables 41 196 6 828
Other financial assets 12 371 -
Operating lease asset 187 -
Cash and cash equivalents 24 428 364
TOTAL ASSETS 332 144 106 944
EQUITY AND LIABILITIES
Total Equity 174 152 52 047
Non-controlling interests (14) -
Equity Attributable to Owners of the
Company 174 165 52 047
Share capital 178 123 61 017
Merger reserve 9 746 9 746
Revaluation reserve - 162
Accumulated losses (13 704) (18 878)
Non-current liabilities 94 367 19 978
Installment sale agreements 11 797 19 107
Other financial liabilities 16 822 871
Deferred tax (note 3) 25 092 -
Deferred purchase consideration
(note 6) 40 656 -
Current liabilities 63 625 34 919
Installment sale agreements 10 939 8 060
Other financial liabilities 12 011 7 538
Trade and other payables 33 917 13 727
Deferred purchase consideration 1 532 -
Loan from shareholders - 4 071
Tax payable 1 037 -
Bank overdraft 4 189 1 523
TOTAL EQUITIES AND LIABILITIES 332 144 106 944
Number of shares in issue (‘000) 180 316 611 791
Net asset value per share (cents) 96.58 8.51
Net tangible asset value per share
(cents) 59.05 8.51
REVIEWED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to Owners of the Non- Total
Company Controll Equity
ing
Interest
Revalu Non-
Share -ation Merger Controll
Capi- Re- Re- Retained ing In-
tal serve serve Income terest Total
R'000 R'000 R'000 R'000 R'000 R'000
Balance as at
30 June 2011 56 475 162 12 343 (15 249) - 53 731
Shares issued 4 542 - - - - 4 542
Rights issue
costs - - (2 597) - - (2 597)
Loss for the
period - - - (3 629) - (3 629)
Balance as at
30 June 2012 61 017 162 9 746 (18 878) - 52 047
Shares issued 126 818 - - - - 126 818
Rights issue
costs (9 712) - - - - (9 712)
Reversing
revaluation
reserve - (162) - 162 - -
Profit for the
period - - - 5 013 (14) 4 999
Balance as at
30 June 2013 178 123 - 9 746 (13 704) (14) 174 152
REVIEWED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
12 months 12 months
ended ended
30 June 2013 30 June 2012
R’000 R’000
Net cash flow from operating activities (1 328) (3 058)
Net cash flow from investing activities (63 579) (80)
Net cash flow from financing activities 86 305 820
Total cash movement for the period 21 398 (2 318)
Cash at the beginning of the period (1 159) 1 159
Total cash at the end of the period 20 239 (1 159)
Notes
1 Other income is largely related to gains generated from the
restructuring of liabilities.
2 Prior year restructuring costs relate to the costs created by
the implementation of the Manitowoc settlement and consist
primarily of the reversal of forex gains made in the 2009 and
2010 financial years.
3 SA French and Forktech have assessed tax losses. As the Group is
now profitable and underlying businesses are all going concerns,
the Group has recognised deferred tax assets relevant to those
entities.
4 Gains on loan write-off arise from: (1) settlement of loan owing
to SA French Group Trust; and (2) settlement of loan owing to
the Van Tonder Family Trust.
5 Goodwill arises on the difference between the acquisition price
(including managements’ best estimate of deferred purchase
consideration) and net asset value of: (1) Forktech R6.6
million; and (2) Tractor and Grader Suppliers R61.1 million
6 The deferred purchase consideration for the acquisition of
Tractor and Grader Supplies will be settled by the issue of
Torre shares at the 30-day VWAP as at the trading day
immediately preceding the final determination of the relevant
earn-out consideration. The maximum cash component of the
deferred purchase consideration is capped at R10 million over a
2-year period.
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting Policies
The reviewed financial statements have been prepared in
accordance with the SAICA Financial Reporting Guidelines, IAS
34: Interim Financial Reporting, the Companies Act of South
Africa, 2008 and the Listings Requirements of the JSE. The
accounting policies are consistent with the annual financial
statements for the year ended 30 June 2012, except for the
merger accounting used in the consolidated accounts in relation
to the acquisition by Torre of SA French. Prior period equity
has been reclassified to take the nature of the merger
accounting into account.
2. Financial preparation and review
These results have been prepared by Marcel du Plessis, the Group
Financial Manager and which preparation was supervised by Roy
Midlane, the Group Financial Director.
The annual financial results and SENS announcement have been
reviewed by RSM Betty & Dickson (JHB), the Group's auditors,
which review opinion is unqualified. The auditor’s review
opinion does not necessarily cover all of the information
contained in this announcement. Shareholders are therefore
advised that in order to obtain a full understanding of the
nature of the auditor’s work they should obtain a copy of the
review opinion together with the accompanying financial
information from the registered office of the company.
3. Trading Environment
Trading conditions have been turbulent over the past 12 months,
with a volatile Rand and a slow domestic economy exacerbated by
disruption in the mining and agricultural sectors.
However a significantly strengthened balance sheet and a greater
focus on aftermarket sales and spare parts have allowed Torre to
grow profitably despite this challenging trading environment.
A growing recovery in the construction sector bodes well for SA
French in particular going forward. In addition, all
subsidiaries have been positioned for expansion into Africa in
order to capitalise on the opportunities that exist on the
continent and to develop the Group’s Rand hedge business.
4. Unusual amounts affecting Net Income and Equity
Listing Costs
Costs of R9.7 million directly attributable to the mirror
listing and scheme of arrangement (whereby SA French was
delisted, newly incorporated Torre was listed and SA French
became a wholly-owned subsidiary of Torre) and in respect of the
acquisition of 100% Tractor and Grader Supplies, were incurred
in the period ended 30 June 2013.
These costs were recognised against the Share Capital account as
reflected in the Condensed Consolidated Statement of Changes in
Equity
Segment Report
Reviewed Audited
12 months 12 months
ended ended
30 June 2013 30 June 2012
R’000 R’000
Segment Revenue
Sales: Equipment 23 132 24 324
Sales: Parts 21 313 -
Rental 25 475 24 653
Service and Recoveries 13 157 3 034
83 077 52 011
Segmented Assets
Rental 109 588 90 234
Inventory 39 001 8 792
Property, plant and equipment 6 614 726
Other financial assets 13 342 -
Trade and other receivables 41 079 6 828
Cash and cash equivalents 24 428 364
234 051 106 944
SEGMENT LIABILITIES
The Group’s liabilities are not allocated to any particular
segment.
COMMENTARY
Group takes first steps forward
Highlights
In the period under review, Torre was established as a platform
to build a scalable industrial group. All material targets that
were established for this initial 7 month period were met ahead
of schedule. These targets included, inter alia:
- a substantial capital raising to strengthen the equity base
of the Group and introduce institutional investors to the
shareholder register;
- the conclusion of a material acquisition in the engineering
supplies segment; and
- the establishment of a lean but value-adding head office
infrastructure.
Introduction
The board of directors of Torre (the “Board”) hereby presents
the financial results of the Group for the twelve months ended
30 June 2013. These financial results reflect the consolidated
results of SA French for 12 months from 1 July 2012, Torre for
10 months from 1 September 2012, Forktech for 7 months from 1
December 2012, and Tractor and Grader Supplies for 1 month from
1 June 2013
Group Profile
Torre is a listed industrial holding company that provides
capital equipment, engineering and financing solutions to its
customers in selected markets in Africa. Torre provides a
platform to build a scalable industrial group with the intention
to operate in 3 segments, namely Plant & Equipment, Engineering
Supplies and Trade & Asset Finance. The existing operations
comprise two businesses in the Plant and Equipment segment,
namely SA French and Forktech, and one business in the
Engineering Supplies segment, namely Tractor and Grader
Supplies. The growth and diversification of this portfolio is at
the core of the Group’s strategic plan and activities in this
regard are constantly on-going.
Plant and Equipment
SA French
SA French is the exclusive distributor in Sub-Equatorial Africa
of Potain tower cranes. Potain is a subsidiary of the NYSE
listed Manitowoc Crane Group. SA French also holds distribution
agreements with Merlo SPA (telescopic handlers and self-loading
concrete mixers) and Saltec (rack and pinion passenger and
material hoists). This diversification allows the company to
offer complementary lifting solutions to its clients.
SA French has a rental fleet of over 50 units. The rental
business encompasses a wide range of tower cranes, telescopic
handlers and hoist products. The trend of moving away from end
user ownership towards rental provides opportunity for the
utilisation of this significant fleet.
Forktech
Forktech is a Cape Town based company engaged in forklift
rentals, sales and repairs as well as the supply of forklift
attachments and accessories. The company principally operates in
the Western Cape providing solutions to the agricultural fresh
produce sector as well as the construction and logistics
sectors. Forktech holds a distributor license for Nissan
forklifts in the Western Cape and is the exclusive distributor
for Nexen forklifts nationally.
Engineering Supplies
Tractor and Grader Supplies
Tractor and Grader Supplies (“TGS”) is an aftermarket parts
supplier for earthmoving machinery in Africa and operates a
rebuild centre that is fully equipped to refurbish components
and rebuild machinery.
TGS is the only aftermarket supplier of OPM quality products,
ranging from engine parts to ground engaging tools. Branded
products distributed include TGS Plus, CTP, Black Cat Blades,
ITM Undercarriage and Titan Ground Engaging Tools. Parts are
supplied for most earthmoving machinery, including but not
limited to Cat, Daewoo, Hyundai, Terex, Bell and Komatsu.
Trade and Asset Finance
Wherever possible Torre seeks to internalise the interest margin
and fees associated with the trade and asset financing
requirements of its operating businesses. The Group also seeks
to obtain attractive financing solutions for its customers in
order to facilitate equipment sales and participate in the fee
income of the financier.
Review of Operations
Plant and Equipment
SA French
An increase in the utilisation rate of the tower crane rental
fleet allowed SA French to perform stronger in the second half
of the prior financial year than in the first half. In addition
a marked increase in enquiries for tower crane purchases bodes
well for the new financial year.
SA French has strategically focused on geographic
diversification and has won profitable tenders in Botswana,
Mozambique, DRC and Kenya over the past 12 months, some of the
benefits of which will only be realised in the new financial
year.
Since the de-listing of SA French, Quentin van Breda has taken
over the day-to-day management of the business, a role which he
had not filled for several years. A new financial director has
also been appointed who previously filled this role prior to the
listing of SA French. The re-instatement of this experienced
management team, combined with a recovery in the construction
equipment market, has yielded immediate results and the business
is expected to contribute positively to the profitability of the
Group going forward.
Forktech
Forktech provided a positive contribution to the Group earnings
in the period under review; however fierce competition, the
truck drivers’ strike, labour unrest in the agricultural sector
and poor seasons for both the deciduous and citrus sectors meant
that this contribution was not as significant as expected. A
strong Yen also impacted on the price competitiveness of the
Nissan product range in the period under review.
Since the completion of the Forktech acquisition significant
resources have been invested into the reporting and
administrative capacity of Forktech and new key hires have now
been finalised in the finance and sales departments. The Nexen
product range is starting to gain traction in the market with
its lower price point and the relationships with existing and
new customers are strong and growing. Consequently Forktech is
expected to increasingly establish itself as a leader in its
core markets in the Western Cape in the coming financial period.
Engineering Supplies
Tractor and Grader Supplies
Tractor and Grader Supplies has had a strong start since its
addition to the Group with effect from 1 June 2013, trading in-
line or ahead of its warranted earnings targets. The aftermarket
parts sector is currently buoyant as miners continue to seek
cost effective solutions to maintain their equipment and TGS is
well positioned to take advantage of this trend.
TGS has a strong and proven management team who have actively
integrated into Torre and added value across a number of
different areas of the Group.
Growth in the year ahead is expected to come from the core
business as well as from enhanced distribution and product range
as Torre invests further in TGS to grow its presence in the
market.
Financial results
Revenue
In addition to the challenges of trading in a weak economic
environment, turnover for SA French was negatively impacted by
labour unrest in the mining and construction sectors. For
Forktech, the labour disputes in late 2012 in the agricultural
sector and the unusually late fruit seasons, amongst other
factors, have caused customers in this industry to continue to
delay their investment and expenditure decisions, impacting
revenue negatively. Tractor and Grader Suppliers made a strong
contribution in its opening month that was ahead of budget.
Operating costs
Eliminating unnecessary overhead costs is a critical component
of the Group’s strategy to deliver margin improvement and cash
flows. Every effort is made to reduce costs in line with the
owner-manager culture of the Group.
The operating expenses in the current financial period were
impacted by a number of once-off costs associated with the
corporate activity undertaken by Torre in this period, as well
as costs associated with the final clean-up of legacy issues in
SA French. In addition the consolidation of Torre head office
costs for a 10 month period, while new acquisitions were
consolidated for shorter periods, has negatively impacted the
operating margin of the Group in the period under review.
Borrowings
Torre continues to reduce its debt levels as cash flows improve.
The restructuring of SA French’s operations necessitated
temporary reliance on expensive bridge finance facilities, which
resulted in increased financing costs. These have been repaid
post year end and the interest burden on this business unit will
therefore reduce going forward.
Torre is committed to maintaining a conservative balance sheet
while also ensuring that an appropriate level of debt is
utilised to gear returns from the investments that are made into
both new and existing operations.
Financial Assistance
Notice is hereby given in terms of section 45 (5) (a) of the
Companies Act that the Board of the company at a meeting held on
11 September 2013, authorised and ratified the company to
provide financial assistance to its subsidiary companies in
terms of section 45 of the Act, pursuant to the authority
granted to the Board by shareholders on 24 August 2012. The
approved financial assistance included guarantees on behalf of
Group companies and general facilities and loans to Group
companies already provided totaling R33.3 million. Further
approval was authorised to provide financial assistance in a
maximum aggregate amount of R10 million, on terms and conditions
approved by the Board, as determined by any executive director
of the Company from time to time under delegated authority,
until the Board meeting scheduled for March 2014.
Prospects
There are signs of a recovery in the construction equipment
market as orders are being received by SA French and all of its
cranes are out on rental. However, the Group faces challenges in
the materials handling industry as in the short term key
customers continue to delay their investment decisions due to
the uncertain economic environment. The strong performance of
the aftermarket parts sector is expected to continue in the new
financial year.
Torre expects to complete a number of acquisitions in the
current financial period with at least two of these being
explored via existing subsidiaries. Our acquisition strategy is
methodical and new opportunities are rigorously screened to
ensure that we only progress deals that are consistent with our
strategic plan and which will be value accretive for our
shareholders.
The Board is confident and excited about Torre’s future and its
ability to achieve the key strategic and financial targets that
have been established for the Group.
Subsequent events
A significant sale of tower cranes to a major construction
company during the course of July 2013 has allowed SA French to
repay short and long term debt in excess of R20 million.
Dividend policy
No dividend has been declared for the period.
Directorate
Mr Sandile Swana resigned as an independent non-executive
director of Torre with effect from 22 July 2013. The Board
thanks Mr Swana for his contribution as a director of Torre and
previously of SA French. No other changes to the directorate
have been made since the publication of the interim results in
April 2013.
Appreciation
We thank the employees of our business units for their loyalty,
hard work and commitment to the vision of the Group.
Furthermore, we thank our shareholders for their support and
backing.
On behalf of the Board
CE Pettit SR Midlane
Chief Executive Officer Financial Director
25 September 2013
Directors
PJ van Zyl (Chairman)*, CE Pettit (Chief Executive Officer), SR
Midlane (Financial Director), QCA van Breda, JWLM Fizelle^, CWJ
Lyons#, Alan Keschner#
* Non-executive
^ Lead independent non-executive
# Independent non-executive
Company Secretary
Neil Esterhuysen & Associates Inc.
Registered Office
Office 202, Cape Quarter, The Square, 27 Somerset Road, Green
Point, Cape Town, South Africa
Corporate Adviser
AfrAsia Corporate Finance (Pty) Ltd
Designated Adviser
PSG Capital (Pty) Ltd
Transfer secretaries
Link Market Services South Africa (Pty) Ltd
Date: 25/09/2013 11:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
