Wrap Text
Unaudited Interim Financial Results For The Six Months Ended 31 December 2016
TRELLIDOR HOLDINGS LIMITED
(Registration Number 1970/015401/06)
20 Aberdare Drive, Phoenix Industrial Park, Durban, 4001
(P.O. Box 20173, Durban North 4016)
Share Code: TRL
ISIN: ZAE000209342
("Trellidor Group" or "Group")
UNAUDITED INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
Highlights
UP 24%
Headline earnings per share
of 33.5 cents
UP 31%
Diluted Core Headline earnings
per share of 37.7 cents
UP 14%
Interim dividend declared
of 10.5 cents per share
Commentary
Introduction
In accordance with its growth strategy Trellidor Holdings Limited ("Group") acquired the Taylor Blinds and NMC businesses
("Taylor"), effective 7 July 2016. The Group now comprises Trellidor and Taylor.
Trellidor is the market leading manufacturer of custom-made barrier security products, distributed via a dedicated and
skilled franchise network situated throughout South Africa. In addition, franchisees in Africa, the UK and Australia support,
design and install the products.
Taylor is a major manufacturer and distributor of custom-made blinds, decorative and security shutters and cornicing/
skirting products. Taylor has a strong presence in the Western and Southern Cape with limited distribution in other areas
of South Africa and Africa.
Overview
Following the Taylor acquisition, Group revenue for the six months grew 71% to R283 million albeit in difficult trading
conditions. The Group's gross profit margin of 48% was in line with expectations. Operating expenses as a ratio to
revenue have increased marginally to 28.7% (December 2015: 28.3%) due to acquisition related expenses of R2.5 million,
amortisation of intangibles in line with IFRS of R2.5 million and foreign exchange losses of R2.2 million (December 2015:
R2.2 million gain) during the period.
The Taylor acquisition was funded by cash of R51 million which was raised by a new issue of shares on listing and new
and acquired debt of R90 million. The increase in gearing has resulted in net interest incurred of R5 million (9 times
interest cover) for the period compared to R0.6 million in the previous period.
Profit after tax for the six months grew by 30% and earnings per share by 21% to 33.5 cents per share. Diluted core
headline earnings per share (see note 4), which is headline earnings per share after adjusting for certain IFRS charges and
once-off expenses grew by 31% to 37.7 cents per share.
Cash generated from operating activities has grown 71% to R24.3 million.
Segments
Trellidor
The tough economic conditions continued during the period and negatively impacted consumer spending throughout
South Africa and its neighbouring states. Revenue declined by 1% notwithstanding 17% growth in international sales.
Gross margin reduced from 50.5% to 49.3% due in part to lower revenues and higher raw material prices. Recurring
overheads were well managed to below inflationary increases. However operating profit before interest declined 17%
as a result of operational gearing and foreign exchange losses of R1.4 million (December 2015: R2.2 million foreign
exchange gain).
Taylor
The business is included in the Group's results for the first time. Taylor has performed in line with expectations formulated
on acquisition, which is pleasing given the tough economic conditions.
Dividend
The Board of Directors is pleased to announce an interim gross dividend of 10.5 cents (2015: 9.2 cents) per ordinary share
in respect of the six months ended 31 December 2016.
Prospects
Trellidor added the new security shutter to its range of products early in the financial year. The roll out of this strategy
has progressed well and is in line with expectations. Expansion of the franchise distribution network in Africa including
the implementation of assembly shops in existing territories continues. International sales now account for over 16% of
Trellidor sales.
The acquisition of Taylor has provided a platform for growth into a new segment of the market and diversified the Group's
revenue streams. Distribution synergies with Trellidor, particularly in Africa and outside the Western and Southern Cape and
a broadening of the Taylor product range are key growth strategies which are being pursued.
The economic environment remains fragile and therefore in addition to its revenue growth strategies the Group will
continue to focus on efficiencies, improved utilisation of materials, overhead control and pricing strategies to mitigate
these challenges.
T M Dennison
Chief Executive Officer
13 March 2017
Cash Dividend Declaration
Notice is hereby given that the Directors have declared an interim gross dividend of 10.5 cents per ordinary share for the
six months ended 31 December 2016.
The dividend has been declared from income reserves. A dividend withholding tax of 20% (rate increased from 15% for
any dividend paid on or after 22 February 2017) will be applicable to all shareholders who are not exempt. The interim net
ordinary dividend is 8.4 cents per share for ordinary shareholders.
The issued share capital at the declaration date is 108 340 118 ordinary shares.
The income tax number of the company is 9419378840.
The salient dates for the dividend will be as follows:
Last day of trade to receive a dividend Tuesday, 28 March 2017
Shares commence trading "ex" dividend Wednesday, 29 March 2017
Record date Friday, 31 March 2017
Payment date Monday, 3 April 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 29 March 2017 and Friday, 31 March 2017,
both days inclusive.
Condensed consolidated statement of Financial position
at 31 December 2016
Unaudited at Unaudited at Audited at
31 December 31 December 30 June
2016 2015 2016
Note R R R
Assets
Non-current assets
Property, plant and equipment 50 742 436 42 142 165 42 553 391
Goodwill 61 733 507 2 388 498 2 388 498
Intangible assets 51 097 317 643 430 1 629 879
Other financial assets 500 000 302 293 450 000
Deferred tax assets 2 028 679 2 872 580 3 707 122
166 101 939 48 348 966 50 728 890
Current assets
Inventories 74 618 452 28 360 079 30 796 398
Trade and other receivables 61 268 749 40 324 899 44 434 785
Other financial assets 1 274 168 821 430 1 546 327
Cash and cash equivalents 41 028 590 62 259 513 89 387 613
178 189 959 131 765 921 166 165 123
Total assets 344 291 898 180 114 887 216 894 013
Equity and liabilities
Equity
Share capital 45 759 072 45 759 072 45 759 072
Other reserves 1 207 082 138 191 581 777
Retained earnings 122 681 055 88 161 057 103 500 885
Equity attributable to owners of the company 169 647 209 134 058 320 149 841 734
Non-controlling interests 4 235 667 (1 063 384) (845 811)
Total equity 173 882 876 132 994 936 148 995 923
Liabilities
Non-current liabilities
Other financial liabilities 6 97 391 483 17 458 948 23 366 519
Provisions - 1 216 563 -
97 391 483 18 675 511 23 366 519
Current liabilities
Trade and other payables 25 385 867 22 540 993 37 515 819
Other financial liabilities 6 46 374 870 3 696 556 2 978 150
Current tax payables 782 524 1 966 668 3 563 324
Provisions 474 278 240 223 474 278
73 017 539 28 444 440 44 531 571
Total liabilities 170 409 022 47 119 951 67 898 090
Total equity and liabilities 344 291 898 180 114 887 216 894 013
Condensed consolidated statement of Profit or loss and other comprehensive income
for the six months ended 31 December 2016
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2016 2015 2016
Note R R R
Revenue 282 810 915 165 269 129 313 442 272
Cost of sales (146 768 128) (81 753 325) (156 187 883)
Gross profit 136 042 787 83 515 804 157 254 389
Other income 2 379 773 4 049 029 6 391 171
Operating expenses (81 070 877) (46 716 910) (88 227 231)
Operating profit 57 351 683 40 847 923 75 418 329
Investment revenue 1 486 593 778 669 2 748 580
Finance costs (6 515 468) (1 333 177) (2 291 358)
Profit before tax 52 322 808 40 293 415 75 875 551
Taxation 3 (14 948 056) (11 636 361) (21 684 512)
Profit for the period 37 374 752 28 657 054 54 191 039
Other comprehensive income:
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations (329 461) (183 834) (245 789)
Unwinding of cash flow hedge 496 248 496 248 992 496
Income tax related to items that may be reclassified - - -
Other comprehensive income for the period, net of
taxation 166 787 312 414 746 707
Total comprehensive income for the period 37 541 539 28 969 468 54 937 746
Profit attributable to:
Owners of the company 36 297 909 28 398 462 53 705 581
Non-controlling interests 1 076 843 258 592 485 458
37 374 752 28 657 054 54 191 039
Total comprehensive income attributable to:
Owners of the company 36 514 115 28 738 451 54 489 156
Non-controlling interests 1 027 424 231 017 448 590
37 541 539 28 969 468 54 937 746
Earnings per share for profit for the period
attributable to the owners of the company during
the period
Basic earnings per share (cents) 4 33.5 27.6 50.8
Diluted earnings per share (cents) 4 32.0 27.6 50.8
Condensed consolidated statement of changes in equity
for the six months ended 31 December 2016
Attributable Non-
Share Retained to owners controlling Total
capital Other reserves earnings of the group interests equity
R R R R R R
Balance at 1 July 2015 92 (201 798) 69 762 595 69 560 889 (1 294 401) 68 266 488
Issue of new shares 45 758 980 - - 45 758 980 - 45 758 980
Profit for the period - - 28 398 462 28 398 462 258 592 28 657 054
Other comprehensive income - 339 989 - 339 989 (27 575) 312 414
Total comprehensive
income for the period - 339 989 28 398 462 28 738 451 231 017 28 969 468
Dividends - - (10 000 000) (10 000 000) - (10 000 000)
Balance at 31 December
2015 45 759 072 138 191 88 161 057 134 058 320 (1 063 384) 132 994 936
Profit for the period - - 25 307 119 25 307 119 226 866 25 533 985
Other comprehensive income - 443 586 - 443 586 (9 293) 434 293
Total comprehensive
income for the period - 443 586 25 307 119 25 750 705 217 573 25 968 278
Dividends - - (9 967 291) (9 967 291) - (9 967 291)
Balance at 30 June 2016 45 759 072 581 777 103 500 885 149 841 734 (845 811) 148 995 923
Profit for the period - - 36 297 909 36 297 909 1 076 843 37 374 752
Other comprehensive income - 216 206 - 216 206 (49 419) 166 787
Total comprehensive
income for the period - 216 206 36 297 909 36 514 115 1 027 424 37 541 539
Capital contribution by non-
controlling interest - - - - 4 054 054 4 054 054
Share-based payment cost - 409 099 - 409 099 - 409 099
Dividends - - (17 117 739) (17 117 739) - (17 117 739)
Balance at 31 December
2016 45 759 072 1 207 082 122 681 055 169 647 209 4 235 667 173 882 876
Condensed consolidated statement of cash flows
for the six months ended 31 December 2016
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2016 2015 2016
R R R
Cash flows from operating activities
Cash receipts from customers 268 356 724 169 712 483 309 591 086
Cash paid to suppliers and employees (222 980 093) (143 109 291) (237 177 945)
Cash generated from operations 45 376 631 26 603 192 72 413 141
Interest revenue 1 486 593 778 669 2 748 580
Finance costs (6 515 468) (1 333 177) (2 291 358)
Tax paid (16 050 414) (11 848 343) (21 134 381)
Net cash from operating activities 24 297 342 14 200 341 51 735 982
Cash flows from investing activities
Purchase of property, plant and equipment (5 834 997) (3 909 302) (7 245 822)
Proceeds from sale of property, plant and equipment - 797 299 807 301
Purchase of intangible assets (44 456) (21 767) (1 062 958)
Net proceeds from/(advance of) other financial assets 222 159 412 099 (762 798)
Acquisition of subsidiary (123 139 579) - -
Net cash used in investing activities (128 796 873) (2 721 671) (8 264 277)
Cash flows from financing activities
Repayment of other financial liabilities (26 358 665) (549 213) (971 834)
Advance of other financial liabilities 90 000 000 - 5 806 896
Dividends paid (17 117 739) (10 000 000) (19 967 291)
Net loan from minority 5 596 060 - -
Minority investment 4 054 054 - -
Proceeds on share issue - 45 758 980 45 758 980
Net cash from financing activities 56 173 710 35 209 767 30 626 751
Net (decrease)/increase in cash and cash
equivalents (48 325 821) 46 688 437 74 098 456
Cash and cash equivalents at the beginning of the
period 89 387 613 15 424 293 15 424 293
Exchange (loss)/gains on cash and cash equivalents (33 202) 146 783 (135 136)
Cash and cash equivalents at the end of the period 41 028 590 62 259 513 89 387 613
Notes to the condensed consolidated financial results
for the six months ended 31 December 2016
1. Basis of preparation
The unaudited condensed consolidated interim financial information for the six months ended 31 December 2016
have been prepared and presented in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting
Guideline 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, the information as
required by IAS 34: Interim Financial Reporting and the Companies Act No 71 of 2008, under the supervision of the
Chief Financial Officer, Mr CG Cunningham CA(SA). The accounting policies applied in preparation of the condensed
consolidated interim financial information are consistent with those applied in the financial statements for the year
ended 30 June 2016.
These results have not been reviewed or reported on by the Group's Auditors. The results were approved by the
Board of Directors on 9 March 2017.
2. Segmental information
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2016 2015 2016
R R R
Revenue
Trellidor 163 025 763 165 269 129 313 442 272
Taylor 119 785 152 - -
282 810 915 165 269 129 313 442 272
Operating profit before interest
Trellidor 33 900 541 40 847 923 75 418 329
Taylor 23 451 142 - -
57 351 683 40 847 923 75 418 329
Total assets
Trellidor 125 633 688 117 855 374 127 506 400
Taylor 177 629 620 - -
303 263 308 117 855 374 127 506 400
Reconciliation of total assets per statement of financial position to total assets per segmental analysis
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2016 2015 2016
R R R
Total assets per statement of financial position 344 291 898 180 114 887 216 894 013
Less: Cash and cash equivalents (41 028 590) (62 259 513) (89 387 613)
Total assets per segmental analysis 303 263 308 117 855 374 127 506 400
3. Taxation
Income tax expense is recognised based on Management's best estimate of the weighted average annual income
tax rate expected for the full financial year applied to the pre-tax income of the interim period. The Group's
consolidated effective tax rate for the six months ended 31 December 2016 was 28.6% (31 December 2015: 28.9%; 30 June 2016: 28.6%).
4. Earnings per share
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2016 2015 2016
R R R
Profit attributable to ordinary shareholders 36 297 909 28 398 462 53 705 581
Adjusted for:
Profit on disposal of property, plant and equipment - (475 097) (541 609)
Gross amount - (659 857) (666 495)
Tax effect - 184 760 124 886
Headline earnings 36 297 909 27 923 365 53 163 972
Adjusted for:
Amortisation of client database - Taylor 2 445 600 - -
Acquisition costs - Taylor 2 473 564 - -
Listing costs - 1 676 690 1 676 690
Fair value adjustment on contingent consideration -
Taylor 1 463 468 - -
Core headline earnings 42 680 541 29 600 055 54 840 662
Number Number Number
Number of shares issued 108 340 118 108 340 118 108 340 118
Weighted average number of ordinary shares in issue
during the period 108 340 118 102 950 625 105 630 646
Contingent consideration - Taylor acquisition 5 000 000 - -
Diluted weighted average number of shares 113 340 118 102 950 625 105 630 646
Basic earnings per share (cents) 33.5 27.6 50.8
Diluted earnings per share (cents) 32.0 27.6 50.8
Headline earnings per share (cents) 33.5 27.1 50.3
Diluted headline earnings per share (cents) 32.0 27.1 50.3
Core headline earnings per share (cents) 39.4 28.8 51.9
Diluted core headline earnings per share (cents) 37.7 28.8 51.9
5. Business combination
As disclosed in the 2016 Annual Report, Trellidor Innovations Proprietary Limited, a 92.5% held subsidiary of
Trellidor Holdings Limited, acquired Taylor (effective 7 July 2016) from Odyssey House Proprietary Limited. As part
of the purchase agreement, a contingent consideration was agreed. This Second Tranche of consideration involves
a cash payment of up to R30 million, alternatively the seller may require the Second Tranche to be settled through
the issue of 5 million Trellidor Group shares at an issue price of R6.00 per share.
The fair value of the contingent consideration at date of purchase was R27 272 000, whilst the estimated fair value
at reporting date is R28 735 468. For purposes of determining this fair value a discount rate of 10.5% was applied
and it has been assumed that the target of R33 million after-tax profit (before interest) for the 12-month period
ending 30 April 2017 will be achieved.
Total identifiable net assets (excluding goodwill) of R98.5 million was acquired (plant and equipment R6 million; intangible
assets R52 million; inventories R39.9 million; trade and other receivables R22.1 million; cash and cash equivalents
R7.5 million; other financial liabilities R19.8 million and trade and other payables R9.2 million) for a cash consideration of
R130.6 million and deferred consideration of R27.3 million (as discussed above). The accounting for the business combination
remains provisional. The non-controlling interest has not been accounted for as part of the acquisition, due to the minority being
invested in Trellidor Innovations Proprietary Limited, the acquirer of Taylor.
6. Other financial liabilities
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2016 2015 2016
R R R
At fair value through profit or loss
Absa Bank Limited - interest rate swap 116 603 636 285 441 175
Odyssey House - Contingent consideration 28 735 468 - -
Held at amortised cost
BOE Private Bank 23 132 450 18 437 692 23 915 935
Wesbank Corporate - First National Bank Limited 1 521 592 2 081 527 1 987 559
First National Bank Limited 84 664 180 - -
Novaspectacular Proprietary Limited 5 596 060 - -
143 766 353 21 155 504 26 344 669
Non-current liabilities 97 391 483 17 458 948 23 366 519
Current liabilities 46 374 870 3 696 556 2 978 150
143 766 353 21 155 504 26 344 669
During the year the Group obtained term loans from First National Bank Limited with a 60 month term at an interest
rate of prime less 0.5% and a term loan from Novaspectacular Proprietary Limited with a 60 month term at an
interest rate of prime plus 0.5%. Novaspectacular Proprietary Limited has a minority interest in Trellidor
Innovations Proprietary Limited.
7. Events after balance sheet date
There have been no material reportable events between the end of the period and the date of this report.
8. Changes to the Board
There were no changes to the Board of Directors during the period under review.
Corporate information
Directors of Trellidor
MC Olivier (Chairman)*#
TM Dennison (Chief Executive Officer)
CG Cunningham (Chief Financial Officer)
JB Winship *(#)
RB Patmore *(#)
* Non-executive
(#) Independent
Company Secretary
P Nel
(BComm FCIS)
71 Cotswold Drive
Westville, 3629
Registered Office
20 Aberdare Drive
Phoenix Industrial Park
Durban, 4001
(P.O. Box 20173, Durban North, 4016)
Date of Incorporation
23 November 1970
Place of Incorporation
South Africa
Auditors and Independent Reporting Accountants
Mazars
Mazars House
197 Peter Mokaba Road
Morningside
Durban, 4001
(P.O. Box 70584, Overport, 4067)
Corporate sponsor
PSG Capital (Pty) Ltd
(Registration Number 2006/015817/07)
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch, 7600
(P.O. Box 7403, Stellenbosch, 7599)
and
1st Floor, Building 8
Inanda Greens Business Park
54 Wierda Road West,
Wierda Valley,
Sandton, 2196
(P.O. Box 650957, Benmore, 2010)
Transfer Secretaries
Computershare Investor Services (Pty) Ltd
(Registration Number 2004/003647/07)
Rosebank Towers,
15 Biermann Avenue,
Rosebank, 2196
(P.O. Box 61051, Marshalltown, 2107)
Date: 13/03/2017 04:00:00 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.
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