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Provisional reviewed condensed results for the year ended 30 June 2015
TORRE INDUSTRIES LIMITED
Incorporated in the Republic of South Africa
(Registration number 2012/144604/06)
Share code: TOR ISIN: ZAE000188629
("Torre" or "the Group")
PROVISIONAL REVIEWED CONDENSED RESULTS
FOR THE YEAR ENDED 30 JUNE 2015
RESULTS HIGHLIGHTS
REVENUE increased by 208% to R1.33billion
EBITDA increased by 238% to R192million
HEPS increased by 150% to 30.26c
FULL YEAR DPS of 7.5c
NAVPS increased by 72% to 264.95c
PROVISIONAL REVIEWED CONDENSED FINANCIAL
INFORMATION FOR THE YEAR ENDED 30 JUNE 2015
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
Reviewed Audited
2015 2014
For the year ended 30 June R'000 R'000
Revenue 1 332 407 433 130
Cost of sales (869 536) (273 681)
Gross profit 462 871 159 449
Other income 14 608 12 275
Operating expenses (335 795) (131 045)
Operating profit 141 684 40 679
EBITDA 192 276 56 940
Depreciation, amortisation and impairments (50 592) (16 261)
Income from equity accounted investments 1 375 1 862
Finance income 7 822 4 443
Finance costs (26 620) (10 006)
Profit before taxation 124 261 36 978
Taxation (21 854) (8 131)
Profit after taxation 102 407 28 847
Other comprehensive income/(loss):
Items that may be reclassified through profit or loss
Foreign currency translation movements 7 536 (2 223)
Interest rate hedge fair value adjustment (421) -
Total comprehensive income for the year 109 522 26 624
Profit attributable to:
Ordinary shareholders of the group 98 760 27 700
Non-controlling interests 3 647 1 147
102 407 28 847
Total comprehensive income attributable to:
Ordinary shareholders of the group 105 875 25 477
Non-controlling interests 3 647 1 147
109 522 26 624
Reconciliation of attributable profit to headline earnings
Profit attributable to ordinary shareholders 98 760 27 700
Gain on bargain purchases - (5 716)
Fair value gain on re-measurement of investments - (446)
Profit on sale of investment (1 125) -
Impairment of rental assets 12 645 4 696
(Profit)/loss on the sale of property, plant and equipment (277) 477
Taxation (3 279) (1 196)
Headline earnings attributable to ordinary shareholders 106 724 25 515
Weighted average number of shares in issue (‘000) 352 712 211 044
Diluted weighted average number of shares in issue (‘000) 357 448 211 044
Earnings per share (cents) 28.00 13.13
Diluted earnings per share (cents) 27.63 13.13
Headline earnings per share (cents) 30.26 12.09
Diluted headline earnings per share (cents) 29.86 12.09
Interim dividend per share (cents) 3.5 -
Final dividend per share (cents) (declared 10 September 2015) 4.0 -
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Attributable to Owners of the Company NCI(1) Equity
Stated Other Retained
Capital Reserves FCTR(2) Income NCI Total
For the year ended 30 June R'000 R'000 R'000 R'000 R'000 R'000
Balance as at 30 June 2013 (audited) 178 123 9 746 - (13 698) (14) 174 157
Shares issued 300 262 - - - - 300 262
Share issue costs (12 730) - - - - (12 730)
Profit after taxation - - - 27 700 1 147 28 847
Movement in FCTR - - (2 223) - - (2 223)
Balance as at 30 June 2014 (audited) 465 655 9 746 (2 223) 14 002 1 133 488 313
Shares issued 789 247 - - - - 789 247
Share issue costs (10 431) - - - - (10 431)
Treasury shares (21 294) - - - - (21 294)
Share based payment expense - 1 794 - - - 1 794
Interest rate hedge fair value adjustment - (421) - - - (421)
NCI acquired through business combinations - - - - 2 211 2 211
Dividends paid - - - (12 267) - (12 267)
Transactions with NCI - - - (31 581) 26 410 (5 171)
Profit after taxation - - - 98 760 3 647 102 407
Movement in FCTR - - 7 536 - - 7 536
Balance as at 30 June 2015 (reviewed) 1 223 177 11 119 5 313 68 914 33 401 1 341 924
(1) Non-controlling interests
(2) Foreign currency translation reserve
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
Reviewed Audited
2015 2014
As at 30 June R'000 R'000
ASSETS
Non-current assets 1 123 820 521 894
Property, plant and equipment 155 984 66 444
Rental assets 200 233 149 680
Intangible assets 175 889 61 975
Goodwill 527 953 200 471
Deferred tax 30 923 25 643
Finance leases 26 115 11 892
Investment in associates 4 870 3 631
Other financial assets 1 853 2 158
Current assets 848 252 434 937
Inventories 413 886 212 072
Trade and other receivables 311 918 113 817
Cash and cash equivalents 90 343 98 404
Other financial assets 32 105 10 644
TOTAL ASSETS 1 972 072 956 831
EQUITY AND LIABILITIES
Total equity 1 341 924 488 313
Equity Attributable to owners of the Company 1 308 523 487 180
Stated capital 1 223 177 465 655
Foreign currency translation reserve 5 313 (2 223)
Other reserves 11 119 9 746
Retained income 68 914 14 002
Non-controlling interests 33 401 1 133
Non-current liabilities 103 225 204 350
Interest bearing borrowings 11 541 108 512
Deferred purchase consideration 21 935 61 196
Deferred tax 67 081 28 365
Other financial liabilities 2 668 6 277
Current liabilities 526 923 264 168
Interest bearing borrowings 30 057 14 769
Bank overdraft 14 665 41 420
Deferred purchase consideration 47 655 22 955
Taxation payable 1 122 3 214
Trade and other payables 430 334 149 918
Other financial liabilities 3 090 31 892
TOTAL EQUITY AND LIABILITIES 1 972 072 956 831
Number of shares in issue 506 490 226 316 726 094
Net asset value per share (cents) 264.95 154.18
Net tangible asset value per share (cents) 125.98 71.31
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
Reviewed Audited
2015 2014
For the year ended 30 June R'000 R'000
Net cash flow from operating activities 117 016 19 103
Cash generated from trading 178 101 71 561
Net working capital movements (37 497) (45 464)
Net finance costs and taxation paid (23 588) (6 994)
Net cash flow from investing activities (248 858) (308 286)
Acquisition of property, plant and equipment and rental assets (118 464) (34 458)
Proceeds on sale of investment and assets 2 015 2 010
Decrease in financial liabilities (28 060) (185)
Acquisition of business operations (104 349) (268 618)
Increase in other investing activities - (7 035)
Net cash flow from financing activities 150 202 326 448
Proceeds from shares issued 331 082 287 533
(Decrease)/increase in interest bearing borrowings (124 592) 96 859
Dividends paid (12 267) -
Decrease in other financing activities (44 021) (57 944)
Total cash movement for the year 18 360 37 265
Cash at the beginning of the year 56 984 20 240
Effect of exchange rate movement on cash balances 334 (521)
Net cash at the end of the year 75 678 56 984
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The provisional reviewed condensed financial information has been prepared in accordance
with the framework concepts, the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), and specifically the disclosure requirements of IAS 34,
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council,
the listings requirements of the JSE Limited ("JSE") for provisional reports, and the
requirements of the South African Companies Act 71 of 2008 ("Companies Act").
The accounting policies are consistent with the annual financial statements for
the year ended 30 June 2014, taking into account the various amendments now effective.
The adoption of new and amended accounting standards which are effective for the current
financial year has not had any material impact on the financial information. The directors
take full responsibility for the preparation of the provisional financial information.
2. FINANCIAL PREPARATION AND REVIEW
These results have been prepared by S Mansingh CA (SA), Group Financial Manager, which
preparation was supervised by SR Midlane CA (SA), the Chief Financial Officer.
The results were approved by the board of directors on 9 September 2015.
The provisional financial information has been reviewed in terms of ISRE 2410 by
Deloitte & Touche, the Group's auditors. An unmodified conclusion has been issued by
Deloitte & Touche. This review conclusion does not necessarily cover all the information
contained in this announcement and shareholders are therefore advised that in order to
obtain full understanding of the nature of the auditor's work they should
obtain a copy of the review conclusion together with the financial information from
the registered office of the Company.
3. SEGMENT INFORMATION
Segments are consistent with the disclosure at 30 June 2014 and consist of Plant and
Equipment, Services and Supplies and Financial Solutions. Central and Eliminations deal
with other business not forming part of a distinct segment. Segment results have largely
been impacted by the inclusion of the full year's results of acquisitions concluded in
the prior period. Operating profit is the key measure of segmental performance.
For the operations acquired in the current financial year, Elephant Lifting Equipment,
acquired 1 January 2015, has been included in the Plant and Equipment segment and Set Point,
acquired 1 May 2015, has been included in the Services and Supplies segment.
SEGMENT REPORT
Reviewed Audited
2015 2014
R'000 R'000
Segment revenue
Plant and Equipment 455 613 169 188
Services and Supplies 874 151 263 942
Financial Solutions 6 032 -
Central and Eliminations (3 389) -
1 332 407 433 130
Segment operating profit
Plant and Equipment 49 335 11 899
Services and Supplies 82 204 28 456
Financial Solutions 3 266 -
Central and Eliminations 6 879 324
141 684 40 679
Segment assets
Plant and Equipment 855 282 338 763
Services and Supplies 1 102 896 556 538
Financial Solutions 10 860 -
Central and Eliminations 3 034 61 530
1 972 072 956 831
Segment liabilities
Plant and Equipment 504 035 159 060
Services and Supplies 658 232 225 214
Financial Solutions 10 283 -
Central and Eliminations (542 402) 84 244
630 148 468 518
Segment depreciation, amortisation and impairments
Plant and Equipment 27 301 12 941
Services and Supplies 17 263 3 268
Financial Solutions 1 439 -
Central and Eliminations 4 589 52
50 592 16 261
4. BUSINESS COMBINATIONS
Elephant Lifting
Set Point Equipment Other
R'000 R'000 R'000
Non-current assets 180 453 26 637 14 930
Current assets 209 504 66 835 2 251
Non-current liabilities (38 208) (5 774) -
Current liabilities (187 131) (20 910) (10 463)
Fair value of net assets acquired 164 618 66 788 6 718
Non-controlling interests (2 211) - -
Fair value of purchase consideration 333 000 180 000 32 750
Goodwill 170 593 113 212 26 032
On 1 May 2015, the Group gained control of 100% of the share capital of Set Point Group
Proprietary Limited for R333 million (74 million shares at R4.50 per share being the
fair value at as 1 May 2015), which is included in the Services and Supplies segment.
The acquired business has contributed R91 million of revenue to the group results.
It has also contributed R14 million to the group operating profit for the period
from 1 May 2015 to 30 June 2015.
On 1 January 2015, the Group gained control of 100% of the share capital of Elephant
Lifting Equipment Proprietary Limited for R180 million (R126 million cash, R24 million
shares, (6 million shares at R3.93 per share) and R30 million deferred), which is
included in the Plant and Equipment segment. The acquired business has contributed
R79 million of revenue to the group results. It has also contributed R18 million to
the group operating profit for the period from 1 January 2015 to 30 June 2015.
On a pro-forma basis, had these acquisitions been included for the full financial year,
revenue contribution from these businesses would have been R702 million, whilst net
operating profit contribution would have been R117 million. Other acquisitions
completed in the financial year were Minosucra SARL, DR Forklifts and Transport et
Negoce Ivoirien ("TNI"). Fair value of net assets acquired as well as the purchase
consideration of all acquisitions are provisional in terms of IFRS 3
Business Combinations.
5. MATERIAL BALANCE SHEET MOVEMENTS
Stated capital has increased with the share based payments for the acquisition
of businesses, mainly Set Point amounting to R333 million and
the issues of shares under a private placement in May 2015 of R349 million.
R21 million was paid out for the purchase of treasury shares in
June 2015, under the Company's general authority.
Goodwill increased as a result of the acquisition of Minosucra SARL, DR Forklifts,
TNI, Elephant Lifting Equipment and Set Point, as well as IFRS 3 provisional
measurement adjustments (R15 million) relating to the acquisition of Control
Instruments Group and Manhand SA. Intangible assets, trade and other receivables,
inventories and trade and other payables have all increased as a result of
the acquisitions. Transaction with non-controlling interest relate to the
change in shareholding in Power Parts and Torre Equipment Africa.
Interest bearing borrowings have decreased as a result of the repayment of
the Absa term facilities.
6. SUBSEQUENT EVENTS
There are no adjusting or other material events that have occurred since
30 June 2015 which have a financial impact on the financial information presented.
7. OTHER
There are no material contingencies, commitments nor legal matters to report.
The only material related party transaction which took place related to the
acquisition of Set Point and this was specifically dealt with through an
independent fairness opinion included in a circular and approved at the
shareholder meeting in May 2015. Other related party transactions include
directors' remuneration, rent and consulting services incurred by the Group.
The Group does not have any material items reported at fair value at year end.
Certain financial instruments, being foreign exchange contracts
and interest rate swaps are measured at fair value using Level II inputs.
There are no level I or Level III reported fair value measures.
COMMENTARY
INTRODUCTION
Torre Industries Limited is a JSE-listed industrial group that specialises in:
- the value added distribution of branded capital equipment, either for rental
or sale;
- the supply of critical parts and support services to the automotive, mining,
construction and industrial sectors; and
- the provision of specialised financial solutions to assist customers in
financing their capital programs.
Torre is headquartered in City Deep, Johannesburg and employs over 1500 staff with
a physical presence in 14 African countries, including
South Africa.
HIGHLIGHTS
Key achievements for the year include, inter alia:
- revenue, EBITDA and HEPS growth of 208%, 238% and 150% respectively;
- a final dividend of R0.04 per share, declared 10 September 2015, resulting in
an attributable full year dividend of R0.075 per share;
- the successful turnaround of Torre Parts and Components
(previously Torre Automotive);
- the acquisitions of Elephant Lifting Equipment and Set Point;
- the placement of R349m of new Torre shares with Mineworkers Investment
Company and Safika Holdings; and
- an increased level of BEE ownership in the Group to 27.1%.
FINANCIAL REVIEW
The Group delivered results in line with internal targets as a result of the
successful integration of the various acquisitions that have been
completed since listing in November 2012. This was despite an external operating
environment that was extremely difficult throughout the
year in all the markets in which the Group operates.
REVENUE AND EBITDA
Group revenue grew by R899 million to R1.33 billion, predominantly driven by
the full year inclusion of acquisitions completed in the prior
year, in particular Torre Parts and Components (previously Torre Automotive).
This pattern will continue in the new financial year as Elephant
Lifting Equipment and Set Point will be included for the full year.
In addition all business units grew revenue organically from
the prior year.
Other income was mainly as a result of once-off adjustments to the TGS
deferred purchase consideration liability and a loan write off, which
was off-set by impairment losses of rental assets.
EBITDA grew by R136 million to R192 million with satisfactory performances from
most business units in the second half, in particular SA French, Manhand, Torre
Equipment Africa (previously Kanu Equipment) and Torre Automotive.
CASH AND DEBT
The Group's cash generated from operating activities increased to
R117 million compared to R19 million in the prior year. In addition the
Group raised R363 million of new equity via the issue of new shares for cash.
The proceeds of the share issue were used to repay R235 million of the
Absa term facilities. Absa have subsequently provided the Group with R400m
of committed term facilities as well as various working capital
lines and uncommitted facilities.
At year end the Group ended with a net cash (cash and cash equivalents less
interest bearing borrowings) position of R34 million, representing
a net cash-to-equity ratio of 3%, compared to 17% net debt-to equity ratio as
at 31 December 2014. The Group achieved an interest cover
ratio of 10x for the period.
REVIEW OF OPERATIONS
PLANT AND EQUIPMENT
Torre Equipment Africa
In the second half of the year the West and Central African businesses of
Kanu Equipment were merged with the TGS operation in Zimbabwe to form
Torre Equipment Africa. The normalisation of the environment in
Sierra Leone and Liberia facilitated the launch of our operations in
those markets and both contributed profitably to Group results.
Ivory Coast continued to perform well, while Ghana and Congo
experienced softer markets.
SA French
SA French delivered its strongest performance since the 2008 financial crisis,
with a performance that was ahead of budget. This was driven by full utilisation
of its rental fleet, consistent tower crane sales throughout the year, tight
cost control and an enhanced focus on service and support.
Elephant Lifting Equipment
Elephant contributed satisfactorily to Group profits and cash flow in
the second half following the completion of its acquisition effective
1 January 2015. The distress in the mining and oil & gas sectors is
however expected to have a particularly negative impact on this business
unit in the new financial year.
Manhand
Manhand performed well in the second half, despite a generally tough
environment for the forklift market in South Africa. Costs have been
kept under control and a consistent level of sales can now be forecast
each month at a higher level than in the past. The operation is also
investing in the expansion of the rental fleet to meet the increased
demand for our cost effective range of forklifts.
The Group has taken the initiative to consolidate SA French, Elephant Lifting
and Manhand into a single unit to be named Torre Lifting Solutions. A number of
cost and revenue efficiencies are expected to be realised from this initiative.
SERVICES AND SUPPLIES
Torre Parts and Components
Torre Parts and Components had a strong year, performing ahead of the
budget that was set when Control Instruments was acquired. The management
team have done an admirable job in repositioning this business unit in a
tough trading environment and a number of new opportunities are currently
being developed to further strengthen its competitive position.
In the new financial year certain business units from Set Point have
been merged into Torre Parts and Components.
Tractor and Grader Supplies (TGS)
TGS had a difficult year as a result of the strikes in the mining industry
and the slowdown in the mining sector from the decrease in commodity prices.
A stringent focus on costs resulted in an improved profit performance in the
second half and a strengthened management team will continue with this
focus in the new financial year.
Set Point
The Set Point acquisition was effective from 1 May 2015. Set Point performed in
line with budget for the 2 months in which its results were consolidated into the
Group results. In the new financial year a number of initiatives have been launched
to consolidate smaller business units from Set Point with existing Torre
operations and to combine and rationalise the Torre and Set Point head
offices structures.
FINANCIAL SOLUTIONS
Torre Capital
Torre Capital commenced operations in August 2014 with an initial focus on providing
rentals and finance leases to Manhand customers. In the new financial year a third
party credit fund has been launched to attract external investors and to provide
financing to our customers in Africa externally from the Group balance sheet.
In the new financial year, Torre Capital will be included in Central and Eliminations
and there will be no Financial Solutions segment going forward.
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 9 September 2015 authorised and ratified the
Company to provide financial assistance to its subsidiary companies in terms of
section 45 of the Companies Act, pursuant to the authority granted to the Board by
shareholders on 10 December 2014. The approved financial assistance included
guarantees on behalf of Group companies and general facilities and loans to Group
companies already provided totaling R403 million. Further approval was authorised to
provide financial assistance in a maximum aggregate amount of R750 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 8 December 2015.
PROSPECTS
The annualisation of the Elephant Lifting Equipment and Set Point acquisitions are
expected to underpin an increase in profitability in the new financial year,
notwithstanding an expected continuation of challenging trading conditions. In addition our
strong balance sheet and access to substantial committed credit facilities mean that we
are well positioned to take advantage of investment opportunities at this low
point in the cycle.
Any forward-looking statements in this announcement have not been reviewed nor audited by
the Company's Auditors.
GROUP REORGANISATION
In the period between 30 June 2015 and the date of this report an internal reorganisation
has been initiated in which various Set Point business units have been merged with existing
Torre business units. In addition the head offices of Torre and Set Point have been combined
and rationalised and the operating segments of the Group have been reorganised into
Capital Equipment, Parts & Components and Analytical Services. As part of this process the
Financial Solutions segment has been included in Central and Eliminations as it is no
longer significant and reported as a separate segment.
DIVIDEND POLICY
In accordance with the policy of having dividends covered 4 times by headline earnings
per share, notice is hereby given that the Board declared a final cash dividend of 4 cents
per share (3.4 cents net of dividend withholding tax if applicable) for the 6 month
period ended 30 June 2015 ("Final Dividend"). This dividend was declared on
10 September 2015.
The Final Dividend will be payable to shareholders recorded in the register of the Company
at the close of business on the record date appearing below. This dividend has been declared
from income reserves of the Company.
The number of ordinary shares in issue at the date of this declaration is 506,490,226.
The final dividend of 4 cents will result in a net dividend of 3.4 cents per share for those
shareholders who are not exempt from dividend withholding tax which is at a rate of 15%.
The salient dates applicable to the Final Dividend are as follows:
Finalisation announcement date: Thursday, 10 September 2015
Last date to trade cum dividend: Friday, 25 September 2015
Shares commence trading ex-dividend: Monday, 28 September 2015
Record date: Friday, 2 October 2015
Payment Date: Monday, 5 October 2015
Rematerialised/Dematerialised dates: Monday, 28 September 2015 to Friday, 2 October 2015
No share certificates may be dematerialised or rematerialised between Monday, 28 September 2015
and Friday, 2 October 2015 both days inclusive. Dividend cheques will be posted and electronic
payments made, where applicable, to certificated shareholders on the payment date.
Dematerialised shareholders will have their accounts with their Central Securities Depository
Participant or broker credited on the payment date. The Company`s income tax reference
number is 9698735157.
DIRECTORATE
On 30 April 2015 Mr Joseph Fizelle and Mr Craig Lyons resigned as directors of Torre.
The Board expresses its deep appreciation to both for the valuable contributions that they made
to the Group since 2007 and 2012 respectively.
On 30 April 2015 Mrs Lindiwe Bakoro was appointed as an independent non-executive director and on
13 May 2015 Mrs Mary Bomela, Mr Nchaupe Khaole and Mr Oren Fuchs (as their alternate) were
appointed as non-executive directors of Torre.
Mr Peter van Zyl has indicated that he will stand down as Chairman of the Board following
the next Annual General Meeting scheduled for 8 December 2015. The Board has resolved to appoint
Mr Christopher Seabrooke in his place as Chairman of the Board. In line with good
corporate governance, Mr Peter van Zyl will take over as Chairman of the Remuneration Committee and
Mr Christopher Seabrooke will take
over as Chairman of the Nominations Committee.
APPRECIATION
We are grateful for the support provided to the Group by our employees, customers, suppliers,
shareholders and banking partners. The quality of our business units, products and key stakeholders
allows us to move forward with confidence into the new financial year.
On behalf of the Board
CE Pettit SR Midlane
Chief Executive Officer Chief Financial Officer
10 September 2015
Directors
PJ van Zyl (Chairman)#, CE Pettit (Chief Executive Officer), SR Midlane
(Chief Financial Officer), CS Seabrooke#, MM Ngoasheng#,
LE Bakoro#, MS Bomela*, N Khaole*, O Fuchs* (alternate)
* Non-executive
# Independent non-executive
Company Secretary
Sean Graham
Registered Office
59 Merino Avenue, City Deep, Johannesburg, 2197, South Africa
Sponsor and Corporate Finance Adviser
Stellar Advisers (Pty) Ltd
Transfer secretaries
Link Market Services South Africa (Pty) Ltd
Date: 10/09/2015 09:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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