Wrap Text
Reviewed condensed consolidated financial information and cash dividend declaration for the year ended 30 June 2017
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
CONSOLIDATED FINANCIAL INFORMATION
AND CASH DIVIDEND DECLARATION
FOR THE YEAR ENDED 30 JUNE 2017
KEY
FEATURES
REVENUE STABLE AT
R1.5 billion
OPERATING PROFIT
UP 20% TO R77 million
GROUP NHEPS DOWN 30% TO
15 cents
FULL YEAR DPS DOWN 45%
TO 3 cents
CONDENSED CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Reviewed Re-presented
12 months reviewed 12 months
ended 30 June 2017 ended 30 June 2016
R'm R'm
CONTINUING OPERATIONS
Revenue 1 524 1 521
Cost of sales (956) (997)
Gross profit 568 524
Other income - 6
Operating expenses (491) (466)
Operating profit 77 64
Impairment of assets and loss on disposal of investments (458) (72)
Retrenchment, restructuring and closure costs (25) (14)
Net operating loss (406) (22)
Share of (losses)/profit from equity accounted investments (1) 2
Finance income 13 6
Finance costs (30) (27)
Loss before taxation (424) (41)
Taxation 4 7
Loss for the year from continuing operations (420) (34)
DISCONTINUED OPERATIONS
Profit for the year from discontinued operations 8 71
(Loss)/profit for the year (412) 37
Other comprehensive (loss)/income:
Items that may be reclassified through profit or loss
Foreign currency translation movements (59) 33
Total comprehensive (loss)/income for the year (471) 70
(Loss)/profit attributable to:
Ordinary shareholders of the group (437) 28
- Continuing operations (420) (36)
- Discontinued operations (17) 64
Non-controlling interest 25 9
- Continuing operations - 2
- Discontinued operations 25 7
(412) 37
Total comprehensive (loss)/income attributable to:
Ordinary shareholders of the group (464) 43
Non-controlling interest (7) 27
(471) 70
Reconciliation of net operating loss to EBITDA and normalised EBITDA
Net operating loss (406) (22)
Depreciation and amortisation 44 56
Loss on disposal of investments 2 -
Impairment of property, plant and equipment 27 28
Impairment of rental assets 31 -
Impairment of investments 5 -
Impairment of intangible assets 2 27
Impairment of goodwill 391 17
EBITDA from continuing operations 96 106
Retrenchment and restructuring costs 25 11
Closure of operations - 3
Normalised EBITDA from continuing operations 121 120
- Normalised EBITDA from discontinued operations 93 78
Normalised Group EBITDA 214 198
Reconciliation of attributable (loss)/profit to headline earnings
(Loss)/profit attributable to ordinary shareholders (437) 28
Loss on disposal of investments 2 -
Loss on disposal of subsidiaries 55 -
Impairment of property, plant and equipment 27 28
Impairment of rental assets 31 -
Impairment of investments 4 -
Impairment of intangible assets 2 27
Impairment of goodwill 391 17
Taxation effects arising on above items (18) (15)
Headline earnings 57 85
- Continuing operations 21 21
- Discontinued operations 36 64
Reconciliation of headline earnings to normalised headline earnings
Headline earnings 57 85
Adjustment to headline earnings net of tax
Retrenchment and restructuring costs 18 9
Closure of operations - 3
Start-up costs - 5
Amortisation of intangible assets raised on acquisition 4 8
Normalised headline earnings 79 110
- Continuing operations 43 41
- Discontinued operations 36 69
Weighted average number of shares in issue ('m) 524 512
Diluted Weighted average number of shares in issue ('m) 530 516
Attributable (loss)/earnings per share (cents)
Aggregate
- Basic (83,38) 5,58
- Diluted (82,44) 5,54
Continuing operations
- Basic (80,09) (6,99)
- Diluted (79,19) (6,94)
Discontinued operations
- Basic (3,29) 12,57
- Diluted (3,25) 12,48
Headline earnings per share (cents)
Aggregate
- Basic 10,81 16,61
- Diluted 10,69 16,49
Continuing operations
- Basic 3,99 4,13
- Diluted 3,95 4,10
Discontinued operations
- Basic 6,82 12,48
- Diluted 6,74 12,39
Normalised headline earnings per share (cents)
Aggregate
- Basic 15,01 21,40
- Diluted 14,84 21,32
Continuing operations
- Basic 8,19 7,95
- Diluted 8,10 7,95
Discontinued operations
- Basic 6,82 13,45
- Diluted 6,74 13,37
Interim dividend per share (cents) - 3,50
Final dividend per share (cents) declared after year-end 3,00 2,00
CONDENSED CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Non-
Controlling Total
Attributable to Owners of the Company Interests Equity
Non-
Stated Other Retained controlling
capital FCTR* reserves income interests Total
R'm R'm R'm R'm R'm R'm
Audited balance as at 01 July 2015 1 223 5 12 69 33 1 342
Shares issued 2 - - - - 2
Treasury shares sold 23 - - - - 23
Share based payment expense - - 4 - - 4
Dividends paid 14 - - (40) - (26)
Profit for the year - - - 28 9 37
Transactions with NCI 57 - - 2 134 193
Movement in FCTR - 15 - - 18 33
Audited balance as at 30 June 2016 1 319 20 16 59 194 1 608
Shares repurchased (15) - - - - (15)
Dividends paid - - - (11) - (11)
(Loss)/profit for the year - - - (437) 25 (412)
Transactions with NCI - - - (6) 39 33
Disposal of discontinued operations - - - - (222) (222)
Movement in FCTR - (27) - - (32) (59)
Reviewed balance as at 30 June 2017 1 304 (7) 16 (395) 4 922
* Foreign currency translation reserve
CONDENSED CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Reviewed as at Audited as at
30 June 30 June
2017 2016
R'm R'm
ASSETS
Non-current assets 439 1 321
Property, plant and equipment 79 120
Rental assets 79 296
Intangible assets 146 137
Goodwill 73 599
Deferred tax 43 42
Finance leases 18 60
Investment in associates 1 65
Other financial assets - 2
Current assets 953 1 105
Inventories 344 489
Trade and other receivables 247 338
Loan receivable 174 -
Other financial assets 6 77
Cash and cash equivalents 182 201
TOTAL ASSETS 1 392 2 426
EQUITY AND LIABILITIES
TOTAL EQUITY 922 1 608
Equity attributable to owners of the company 918 1 414
Stated capital 1 304 1 319
Foreign currency translation reserve (7) 20
Other reserves 16 16
(Accumulated loss)/retained income (395) 59
Non-Controlling Interests 4 194
Non-current liabilities 140 247
Interest bearing borrowings 92 171
Deferred purchase consideration 3 19
Deferred tax 40 50
Other financial liabilities 5 7
Current liabilities 330 571
Interest bearing borrowings 45 59
Trade and other payables 254 410
Deferred purchase consideration 2 20
Taxation payable 8 1
Bank overdraft 21 81
TOTAL EQUITY AND LIABILITIES 1 392 2 426
Number of shares in issue 514 197 105 525 058 445
Net asset value per share (cents) 179 268
Net tangible asset value per share (cents) 136 129
CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS
Reviewed Re-presented
12 months reviewed 12 months
ended 30 June ended 30 June
2017 2016
R'm R'm
Net cash flow from operating activities 27 5
Cash generated from trading 188 158
Net working capital movements (129) (127)
Net finance costs and taxation paid (32) (26)
Net cash flow from investing activities - (299)
Capital expenditure on property, plant, equipment and rental assets (153) (116)
Acquisition of business operations net of cash (16) (25)
Increase in investments and associates - (53)
Proceeds on business disposals net of cash 229 -
Decrease in deferred purchase consideration (28) (35)
Increase in financial assets (32) (70)
Net cash flow from financing activities 13 334
Treasury shares sold - 23
(Decrease)/increase in interest bearing borrowings (9) 143
Dividends paid (11) (25)
Transactions with non-controlling interest 33 193
Total cash movement for the year 40 40
Cash at the beginning of the year 120 76
Effect of exchange rate movement on cash balances 1 4
Net cash at the end of the year 161 120
NOTES TO THE
CONDENSED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The provisional condensed consolidated financial information has been prepared in accordance with the framework concepts, the
measurement and recognition requirements of International Financial Reporting Standards (IFRS), 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"), and the requirements of the South
African Companies Act 71 of 2008 as amended ("Companies Act"). The accounting policies are consistent with the annual financial statements
for the year ended 30 June 2016, taking into account the various amendments now effective. The adoption of new and amended account-
ing standards has not had any material impact on the financial information. The directors take full responsibility for the preparation of the
provisional report and that the financial information has been correctly extracted from the underlying financial statements.
2. FINANCIAL PREPARATION AND REVIEW
These results have been prepared by M Du Plessis CA (SA), the Group Financial Manager, under the supervision of S Mansingh CA (SA),
the Chief Financial Officer. The results were approved by the board of directors on 28 August 2017. The provisional reviewed condensed
consolidated financial information has been reviewed in terms of ISRE 2410 by Deloitte & Touche, the Group's auditors. An unmodified review
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 a 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 REPORT
Segmental disclosure has been revised from 1 July 2016 in order to comply with the requirements of IFRS 5: Non-current assets held for
sale and discontinued operations. The segmental information below has been expanded to incorporate the disposal of the Kanu Equipment
Limited group, as well as the operations of Reng/GoPro which is now disclosed as discontinued operations. The Elephant Lifting Equipment
business was previously included as part of the Capital Equipment segment. This has been revised and the business is now included as part of
the Parts and Components segment. Comparative information has been restated to take the aforementioned changes into account.
Reviewed Restated
2017 2016
R'm R'm
Segment revenue
Parts and Components 907 882
Analytical Services 271 295
Capital Equipment 340 357
Central and Eliminations 6 (13)
Continuing operations 1 524 1 521
Discontinued operations 562 499
Segment operating profit/(loss)
Parts and Components 63 55
Analytical Services 40 48
Capital Equipment 2 (1)
Central and Eliminations (28) (38)
Continuing operations 77 64
Discontinued operations 82 68
Segment depreciation and amortisation
Parts and Components (9) (20)
Analytical Services (16) (17)
Capital Equipment (15) (15)
Central and Eliminations (4) (4)
Continuing operations (44) (56)
Discontinued operations (11) (10)
Segment impairment of assets and loss on disposals of investments
Parts and Components (260) (69)
Analytical Services (104) -
Capital Equipment (90) (3)
Central and Eliminations (4) -
Continuing operations (458) (72)
Discontinued operations (55) -
Segment retrenchment, restructuring and closure costs
Parts and Components (4) (5)
Analytical Services (13) (3)
Capital Equipment (2) -
Central and Eliminations (6) (6)
Continuing operations (25) (14)
Discontinued operations - (8)
Segment assets
Parts and Components 530 807
Analytical Services 265 346
Capital Equipment 296 1 208
Central and Eliminations 301 65
Total 1 392 2 426
Segment liabilities
Parts and Components (164) (181)
Analytical Services (81) (92)
Capital Equipment (63) (366)
Central and Eliminations (162) (179)
Total (470) (818)
Revenue streams
Part sales 975 931
Services 319 336
Equipment sales 176 216
Rentals 54 38
Continuing operations 1 524 1 521
Discontinued operations 562 501
Revenue generated from continued operations for the year was R1 282 million (2016: R1 247 million) from South Africa and R242 million
(2016: R274 million) from the rest of the world.
Revenue generated from discontinued operations for the year was R65 million (2016: R85 million) from South Africa and R493 million
(2016: R419 million) from the rest of the world.
4.BUSINESS COMBINATIONS
Transformer
Top Class Chemistry
R'm Automotive Services
Property, plant and equipment - 2
Intangible assets 1 16
Trade and other receivables 4 -
Inventory 4 -
Overdraft (1) -
Trade and other payables (15) -
Interest bearing borrowings - (1)
Deferred tax 4
Net assets acquired by group (3) 17
Goodwill 3 -
Purchase consideration - 17
Paid by cash - 15
Paid by loan raised - 2
Reconciliation of cash outflow on acquisitions
Paid by cash - (15)
Net cash and equivalents in subsidiary acquired (1) -
Total cash outflow on acquisitions (1) (15)
These acquisitions were concluded on the basis that all acquired businesses are operational within the existing segments of the Group, thus
the board identified these based on their ability to assist the Group with its expansion and growth.
Goodwill is based on the provisional fair values of the assets and liabilities, including identifiable intangible assets at acquisition date.
Effective control was obtained through the purchase of the majority of the equity of these businesses.
Goodwill arose on these transactions because the cost of these combinations included a control premium. In addition, the consideration paid
for these combinations effectively included amounts in relation to the benefit of expected synergies, revenue growth and future market
development. These benefits are not recognised separately from goodwill as they do not meet the recognition criteria for identifiable
intangible assets.
On 1 May 2017, the group acquired control of 100% of the share capital of Top Class Automotive Proprietary Limited for R1. This entity is
included in the Parts and Components segment. The fair value of net assets acquired as well as the purchase consideration are provisional
in terms of IFRS 3 Business Combinations. The acquired business has contributed R11 million of revenue to the group results. It has also
contributed R1 million to the group operating profit for the period from 1 May 2017 to 30 June 2017.
On 1 April 2017, the group acquired the business assets of Transformer Chemistry Services CC for R17 million. These assets have been
included in the Analytical Services segment. The fair value of net assets acquired as well as the purchase consideration are provisional in
terms of IFRS 3 Business Combinations. The acquired business has contributed R2 million of revenue to the group results. It has also
contributed R0.5 million to the group operating profit for the period from 1 April 2017 to 30 June 2017.
On a pro-forma basis, had these acquisitions been included for the full financial year, revenue contribution from these businesses would
have been R74 million, whilst net operating profit contribution would have been R7 million.
Control passed to the Group on the above mentioned acquisition dates.
5.DISCONTINUED OPERATIONS
Torre successfully completed the disposal of the following businesses during the current financial year:
Kanu Equipment Limited and Kanu South Africa (Pty) Ltd ("Kanu Group")
Torre disposed of its remaining 55% interest in the Kanu Group during the current financial year for a total purchase consideration of
$27.5 million. The effective date of disposal of the Kanu Group was 31 May 2017 as it ceased to be part of the Torre Group on that day. At
30 June 2017, Torre had received $13.5 million of the total purchase consideration in cash and $1.1 million shares repurchased, with the
remaining amount to be received by 30 June 2018. This disposal group met the relevant recognition criteria to be classified as a discontinued
operation at 30 June 2017. This disposal group formed part of the Capital Equipment segment of the Torre Group.
Reng/GoPro operating division
Torre disposed of the business assets and liabilities of this operating division for a total purchase consideration of R29 million. The effective date
of disposal of the Reng/GoPro division was 31 March 2017. At 30 June 2017, Torre had already received R16 million of the purchase consider-
ation in cash, with the remaining amount to be settled by 30 June 2018. This disposal met the recognition criteria to be classified as a discon-
tinued operation at 30 June 2017. The Reng/GoPro operating division formed part of the Parts and Components segment of the Torre Group.
Financial information relating to the discontinued operations for the year is set out below
12 months 12 months
ended 30 June 2017 ended 30 June 2016
R'm R'm
Revenue 562 501
Gross profit 173 154
Operating expenses (91) (94)
Loss on disposal (55) -
Net finance costs (9) (7)
Profit before tax 18 53
Taxation (10) 18
Profit after tax from discontinued operations 8 71
Cash flows attributable to operating activities (71) (22)
Cash flows attributable to investing activities (175) 46
Cash flows attributable to financing activities 40 17
Cash flow for the period from discontinued operations (206) 41
Business Disposal
Kanu Group Reng/GoPro
R'm R'm
Property, plant and equipment 269 5
Intangible assets 141 -
Investment in associates 9 -
Finance lease assets 153 -
Trade and other receivables 157 15
Inventory 139 25
Bank and cash (60) 2
Trade and other payables (141) (8)
Interest bearing borrowings (69) (1)
Deferred purchase consideration (11) -
Deferred tax 7 -
Tax receivable 7
Net assets disposed of by group 601 38
Non-controlling interest (222) -
Realisation of FCTR 27 -
406 38
Loss on disposal (46) (9)
Sale consideration 360 29
- Paid by cash 155 16
- Paid by loan raised 190 13
- Paid by share buyback 15 -
Reconciliation of cash inflow on disposal
Received in cash 155 16
Net cash (overdraft) disposed 60 (2)
Total cash inflow on disposal 215 14
6.GOODWILL
2017 2016
Opening balance 599 528
Impairments (391) (17)
Disposals (141) -
Additions through business combinations 3 83
12 month measurement period adjustments - 1
Foreign exchange adjustments 3 4
Closing balance 73 599
The recoverable amount of goodwill has been determined on the basis of the value in use method. The value in use method uses the cash
flow projections based on the actual results for the 2017 financial year, adjusted for once off costs such as retrenchments and restructuring
cost. These results are extrapolated by an appropriate growth rate of 7% - 9% (2016: 4.7% - 26.6%) over four years with an annuity calculation
thereafter to represent a terminal value at an avergare rate of 4% - 6% (2016: 5%). These 5 year cumulative cash flows are discounted using
a pre-tax weighted average cost of capital applicable to the going concern acquired during the year ranging between 17.5% and 21.5%
(2015: 13.3% and 16.6%)
For the purpose of the free cash flow calculations, management had to make certain key assumptions. Such assumptions are based on
historical results adjusted for anticipated furture growth. These assumptions are a reflection of management's past experience in the markets
that the acquired businesses operate in.
Based on the above assumptions and calculations performed by management it was found that goodwill allocated to the Parts and
Components, Analytical Services and Capital Equipment segments required impairment as their value in use was lower than it's carrying
amount. The impairment recognised in profit or loss for the current period amounted to R391 million (2016: R17 million)
Goodwill has been allocated to the various cash generating units as follows:
Restated
2017 2016
R'm R'm
Parts and Components 34 271
Analytical Services 39 139
Capital Equipment - 189
73 599
7.FAIR VALUE DISCLOSURE
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 swops are measured at fair value using level 2 inputs.
8.MATERIAL BALANCE SHEET MOVEMENTS
Stated capital has decreased by R15 million since 30 June 2016 as a result of a specific share-buyback related to the Kanu Group disposal.
As part of the annual impairment assessment during the 2017 financial year, impairments of goodwill, intangible assets and property, plant
and equipment and rental assets were recognised to the value of R456 million (2016: R72 million).
Net interest bearing borrowings have decreased due to the repayment of debt facilities.
The group's assets and liabilities, as well as non-controlling interests have also decreased as a result of the disposal of the Kanu Group and the
Reng/GoPro operations. Details of the assets and liabilities disposed of are contained in note 5.
9.SUBSEQUENT EVENTS
There are no adjusting subsequent events that have occurred since 30 June 2017 which have a financial impact on the financial information
presented.
10. OTHER
Torre has provided a EUR 4 million (R62 million) guarantee against the Kanu Group's obligations to a supplier until 31 December 2018.
COMMENTARY
INTRODUCTION
Torre is a JSE-Listed industrial group that specialises in:
- The supply of quality parts and components to the equipment and automotive sectors;
- Provision of specialised analytical and testing services to mining companies as well as commercial laboratories; and
- Value-added distribution of branded capital equipment, either for rental or sale.
Headquartered in Modderfontein, Johannesburg, Torre employs over 1 200 people with a physical presence in 11 African countries including
South Africa. Torre has strong BEE credentials, including 28.5% BEE ownership and a level 4 score under the new BEE Codes.
SUMMARY
Key features of the financial year include:
- Revenue stable at R1.5 billion despite a challenging trading environment;
- Gross profit up 8% to R568 million, and operating profit up 20% to R77 million as a result of improved operational efficiencies
and cost control;
- Group NHEPS down 30% to 15.01 cents;
- Continuing operations NHEPS up 3% to 8.19 cents;
- Successful acquisition and integration of Top Class Automotive and Transformer Chemistry Services:
- Disposal of the remaining 55% interest in Kanu Equipment Limited and Kanu Equipment (Pty) Ltd ("Kanu Group") as well as the
operating division Reng/GoPro; and
- A final dividend of 3 cents per share was declared.
CONTINUING OPERATIONS
FINANCIAL REVIEW
The group delivered improved results in the second half of the financial year despite challenging trading conditions in most of its operat-
ing markets following a disappointing performance in the first half. The marked improvement in the second half, which was also stronger
compared to the second half of the 2016 financial year, resulted mainly from an increase in operational efficiencies. As a result of
macro-economic challenges, the group impaired assets of R456 million during the year which mainly includes goodwill, rental assets, and
property, plant and equipment. Further to the re-organisation of the Group, no retrenchments, restructuring costs or asset impairments are
expected in the year ahead. Following the initial receipt of proceeds from the Kanu disposal, the group ended the financial year in a net
cash position of R24 million which adds to the strength of the balance sheet going forward. The Group is well positioned to take advantage
of improvements in trading conditions in its sectors.
REVENUE AND OPERATING PROFIT
Revenue remained stable at R1.5 billion (2016: R1.5 billion). An increase in parts sales by 5% (2017: R975 million; 2016: R931 million)
and rental revenue by 42% (2017: R54 million; 2016: R38 million) was offset by 19% lower equipment sales (2017: R176 million, 2016:
R216 million) as a result of a slowdown in infrastructure spend and 5% lower services revenue (2017: R319 million; 2016: R336 million). The
decrease in services revenue was mainly as a result of a once-off contractual sale in the Analytical Services segment in the previous reporting
period.
Operating profit increased by 20% to R77 million (2016: R64 million) as a result of improved cost control and operational efficiencies following
significant restructuring costs incurred in the first half of the financial year. Operating profit excludes impairments of assets, loss on disposal of
investments, retrenchment, restructuring and closure costs.
CASH AND DEBT
During the year Torre repaid R43 million of term debt in South Africa. In June 2017 Torre received $13.5 million (R177 million) from the
disposal of the remaining 55% interest in Kanu Equipment Limited resulting in the group being in a net cash position of R24 million (cash of
R182 million less interest bearing borrowings of R158 million) at year end. Subsequent to year end, the proceeds were repatriated to South
Africa and used to voluntarily repay R50 million of term debt and the full overdraft balance. The group's balance sheet is now in a strong
position for future acquisitions and organic growth initiatives.
DISCONTINUED OPERATIONS
Discontinued operations include the disposal of the Kanu Group and the operating division Reng/GoPro.
Torre disposed of the remaining 55% interest in the Kanu Group, effective 31 May 2017, for a total sale consideration of $27.5 million
(R360 million), which consisted of $26.4 million (R345 million) in cash and $1.1 million (R15 million) in the specific repurchase of Torre shares.
The repurchase of Torre shares was concluded before the end of the 2017 financial year, as well as the receipt of $13.5 million (R177 million)
with the balance payable within the next 12 to 18 months. Torre will receive a US Dollar interest rate of 7.5% on the outstanding balance. This
amount has been disclosed as a loan receivable in current assets.
Torre also disposed of the operating division Reng/GoPro, effective 31 March 2017, for a total sale consideration of R29 million, of which
R16 million was received before the end of the 2017 financial year and the balance will be received within the next 12 months.
REVIEW OF OPERATIONS
The Parts and Components segment comprises the following businesses: Torre Parts and Components ("TPC"), Tractor & Grader Supplies ("TGS")
and Elephant Lifting. TPC, TGS and Elephant Lifting manufacture and/or distribute quality branded parts, components and consumable items in
various markets including automotive, commercial, industrial and mining.
This segment benefitted significantly from operational improvements that were initiated towards the end of the 2016 financial year and as a
result, yielded a 15% improvement in operating profit. Following the focus that was applied to strengthening and broadening our customer
relationships and distribution channels across these businesses, costs have been rationalised to align the businesses to the current trading
environment and future prospects.
The Analytical Services segment comprises the following businesses: WearCheck, AMIS and Set Point Laboratories. WearCheck is the leading oil
condition monitoring company in Africa, servicing a large number of markets through the scientific analysis of used oil from mechanical and
electrical systems. AMIS is a leading international manufacturer and supplier of a wide range of matrix certified CRM's. Set Point Laboratories
is an ISO 17025 accredited analytical chemistry laboratory.
This segment improved performance significantly in the second half of the 2017 financial year following a challenging first half mainly
due to depressed levels of mining exploration that significantly impacted Set Point Laboratories. As a result of the state of the mining and
exploration industries, Set Point Laboratories was restructured during the first half of the financial year to ensure its financial viability. Both AMIS
and WearCheck performed satisfactorily during the period under review and the prospects for these businesses remain positive.
Following the disposal of Kanu Equipment Limited, the Capital Equipment segment now comprises the following businesses: SA French,
Manhand, and Letaba. These businesses are collectively involved in the rental and sale of equipment, including pumps, tower cranes and
forklifts.
Despite a challenging economic environment this segment returned to profitability in the second half of the 2017 financial year mainly as a
result of Letaba posting favourable results. Additional restructuring costs were incurred in SA French and Manhand as a result of moving to
their new consolidated premises. Further reductions in head count were mostly incurred in the first half of the financial year. The focus in this
segment is to contain costs while continuing to invest strategically. This is to ensure that we protect and gain market share while also ensuring
that our customers are well supported through the cycle.
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 28 August 2017
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 7 December 2016. The approved financial assistance included guarantees
on behalf of Group companies and general facilities and loans to Group companies already provided totalling R750 million.
CHANGES TO THE BOARD
Mr Roy Midlane resigned as Chief Financial Officer effective 26 August 2016. Roy remained on the Board as a non-executive director until the
conclusion of the Mandatory Offer process by Stellar Capital Partners Ltd to Torre shareholders in October 2016.
Mr Charles Pettit accepted the position of Deputy Chairman and relinquished the position of Chief Executive Officer on 26 August 2016.
Mr Johan Botes (previously the Group Chief Operating Officer) was appointed as Chief Executive Officer of Torre on 26 August 2016.
Mr Shivan Mansingh (previously the Group Financial Manager) was appointed as Chief Financial Officer on 26 August 2016.
Mr Charles Pettit stepped down as Executive Deputy Chairman on 30 June 2017 but has remained on the Board as a non-executive director.
Mr Jon Hillary was appointed as full-time Executive Deputy Chairman of Torre effective 1 July 2017 to work with the existing executive team
to build the Group, with a specific focus on strategic growth initiatives.
There were no other changes to the Board during the year ended 30 June 2017 or up to date of this report.
STRATEGIC REVIEW AND OUTLOOK
Trading conditions remain challenging but, having completed its restructuring, Torre is well positioned to benefit from any improvement in the
economy or in the sectors it services. Although the once-off impairment of assets has reduced the on-balance sheet capital, it is now soundly
based on productive assets. In addition Torre has no net debt and has a material vendor receivable due from Kanu which will further enhance
group liquidity. Torre anticipates stable or improved earnings in the coming financial year through organic and acquisitive growth.
Organically we seek to:
- Right size and eliminate excess costs where still required;
- Diversify our product offering through geographic expansion and reach;
- Develop new and innovative ideas to expand market share aided by the use of technology where appropriate; and
- Drive new partnerships and investments to achieve greater distribution ability.
On the M&A front the management team is reviewing and assessing a number of focused, bolt-on and stand-alone acquisitions. Our stronger
balance sheet, improved and better integrated group and a clear strategic outlook provides us with a solid platform from which to deliver
growth in the medium term.
CASH DIVIDEND DECLARATION
In accordance with the policy of having dividends covered 4 times by normalised headline earnings per share, notice is hereby given that
the Board declared a final gross cash dividend of 3 cents per share (2.4 cents net of dividend withholding tax at 20% if applicable) for the
12 month period ended 30 June 2017 ("Final Dividend"). No scrip dividend is offered as the share price is materially below the board's
assessment of intrinsic value.
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 514,197,105. The salient dates applicable to the Final Dividend are
as follows:
Declaration date: Monday, 28 August 2017
Last date to trade cum dividend: Tuesday, 19 September 2017
Shares commence trading ex-dividend: Wednesday, 20 September 2017
Record date: Friday, 22 September 2017
Payment Date: Tuesday, 26 September 2017
No share certificates may be dematerialised or rematerialised between Wednesday, 20 September 2017 and Friday, 22 September 2017 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.
RESULTS PRESENTATION
Torre will be hosting its full year results presentation and a live webcast for investors at 10h00 CAT on 30 August 2017. The live webcast can
be accessed via the webcast icon on the homepage of the Company's website: http://www.torreindustries.com
CALL/DIAL-IN DETAILS
South Africa (Toll Free): 0 800 200 648
Johannesburg: 011 535 3600
USA and Canada (Toll Free): 1 855 481 5362
Other countries: +27 11 535 3600
Any forward-looking statements in this announcement have not been reviewed nor audited by the Company's Auditors.
On behalf of the Board
CS Seabrooke
Chairman of the Board
28 August 2017
DIRECTORS
CS Seabrooke (Chairman)#, JW Hillary (Executive Deputy Chairman), JT Botes (Chief Executive Officer), S Mansingh (Chief Financial Officer),
PJ Van Zyl*, MM Ngoasheng#, LE Mthimunye-Bakoro#, MS Bomela*, N Khaole*, CE Pettit*
* Non-executive
# Independent non-executive
COMPANY SECRETARY
Sean Graham
REGISTERED OFFICE
11 Avalon Road, Westlake View Ext 11, Modderfontein, 1609, South Africa
SPONSOR
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
TRANSFER SECRETARIES
Link Market Services South Africa (Pty) Ltd
SENS released date: 30 August 2017
A: 11 Avalon Road, Westlake View Ext. 11, Modderfontein, 1609, South Africa
P: PO Box 856, Isando,1600, South Africa
T: +27 (0) 11 923 7000
www.torreindustries.com
Date: 30/08/2017 08:00:00 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,
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