TRELLIDOR HOLDINGS LIMITED - Unaudited Interim Financial Results For The Six Months Ended 31 December 2017 And Interim Dividend Declaration

Release Date: 19/03/2018 16:00
Code(s): TRL
 
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Unaudited Interim Financial Results For The Six Months Ended 31 December 2017 And Interim Dividend Declaration

Trellidor Holdings Limited                        
(Registration number 1970/015401/06)                              
Share code: TRL                                   
ISIN: ZAE000209342                                
("Trellidor", "the Company" or "Group")           
                                                  
UNAUDITED INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

HIGHLIGHTS

5% Up
Headline earnings per share of 35.2 cents

5% Up
Interim dividend declared of 11.0 cents per share

COMMENTARY

Introduction
Trellidor Holdings Limited ("Group") comprises of the Trellidor and Taylor businesses.  

Trellidor is the market leading manufacturer of custom-made barrier security products, distributed via a dedicated and
skilled franchise network situated throughout South Africa, Africa and the UK.

Taylor is a major manufacturer and distributor of custom-made blinds, decorative and security shutters and distributor
of imported cornicing and skirting mouldings. Taylor has a strong market presence in the Western and Southern Cape.

Overview
Group revenue for the six months grew by 5% despite difficult trading conditions. Gross profit margin of 46.1%
(2017:48.1%) was down primarily due to sales mix and input price pressures with steel and aluminium input prices
increasing 13% and 9% respectively. Operating expenses were well managed and have increased by 1% over prior year.
The once off acquisition related expenses in the prior year (c.R3.9 million) were not repeated in the current year and once
adjusted for, the operating expenses increased in line with inflation. Profit after tax and earnings per share grew by 5% and
cash generated from operating activities is in line with the prior year.

With the Taylor business having achieved its earn out targets for the 12 months ended 30 April 2017, the Group paid the
R30 million second tranche of the acquisition purchase price from cash reserves in July 2017. 

In line with shareholder special resolutions passed at the 2016 and 2017 AGM's, the Group repurchased 446 535
Trellidor shares on the open market during the period. The shares were purchased out of available cash resources at an
aggregate value of R2.6 million. These shares are currently being held as treasury shares.

Segments
Trellidor
Revenue grew by 7%. In line with the product diversification strategy, new product sales grew by 34%. International sales
grew by 7% in subdued economic conditions in Africa. Gross margin reduced to 47.9% (2017: 49.3%) due primarily to
higher raw material prices and a change in product mix. Recurring overheads remain well managed to below inflationary
increases. Operating profit before interest increased by 6.9%.

Taylor
Revenue grew by 2%. Strong shutter sales were offset by weaker blinds sales and poor performance from the mouldings
business which was impacted by the slowdown in the completion of building projects. Gross margin reduced to 43.7%
(2017: 46.3%) due to higher input costs. Operating profit before interest decreased by 3.7%.

Prospects
Following the ANC elections in December 2017, there has been an improvement in consumer confidence which may lead
to improved economic activity. It is also expected that a stronger rand will assist in reducing input price pressures.

In the Africa market, improving commodity prices and better availability of foreign exchange should lead to improved
economic conditions which we expect will culminate in stronger demand for our products. We are anticipating strong sales
from the UK in the second half of the year due to demand from key clients.

The acquisition of Taylor and in particular the roll-out of the Taylor product set has been successful, with the majority of
Trellidor franchises now in a position to sell Taylor products. The full benefit of this strategy will be realised in future years.

The Trellidor business unit has embarked on an efficiency enhancement project which requires capital expenditure of
c. R12 million with a calculated payback period of less than two years. Capital expenditure will include extra building space
and new machinery.

The Group remains focused on its core growth strategies of brand leadership; diversifying its product range; distribution
growth in South Africa and Africa; and acquisitions, which will position it well to benefit from improving economic conditions.

Dividend
The board of directors approved an interim gross dividend of 11.0 cents (2017: 10.5 cents) per ordinary share in respect
of the six months ended 31 December 2017.

TM Dennison
Chief Executive Officer

19 March 2018

CASH DIVIDEND DECLARATION

Notice is hereby given that the Directors have declared an interim gross dividend of 11.0 cents per ordinary share for the
six months ended 31 December 2017.

The dividend has been declared from income reserves. A South African dividend withholding tax of 20% will be applicable
to all shareholders who are not exempt or entitled to a reduced rate in terms of the applicable double-tax agreement.
The interim net ordinary dividend is 8.8 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, 10 April 2018
Shares commence trading "ex" dividend                                                          Wednesday, 11 April 2018
Record date                                                                                       Friday, 13 April 2018
Payment date                                                                                      Monday, 16 April 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 11 April 2018 and Friday,
13 April 2018, both days inclusive.

CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
at 31 December 2017

                                                                                                  Restated
                                                                              Unaudited at    Unaudited at   Audited at
                                                                               31 December     31 December      30 June
                                                                                      2017            2016         2017
                                                                                     R'000           R'000        R'000
Assets
Non-current assets
Property, plant and equipment                                                       54 558          50 742       51 500
Goodwill                                                                            74 401          73 536       74 401
Intangible assets                                                                   44 359          49 302       46 741
Other financial assets                                                                 945             500          287
Deferred tax assets                                                                  2 816           2 069        3 687
                                                                                   177 079         176 149      176 616
Current assets
Inventories                                                                         95 706          74 618       94 724
Trade and other receivables                                                         60 764          60 433       61 779
Other financial assets                                                               1 173           1 274          794
Current tax receivable                                                                  27               -            -
Cash and cash equivalents                                                           10 394          41 029       55 103
                                                                                   168 064         177 354      212 400
Total assets                                                                       345 143         353 503      389 016
Equity and liabilities
Equity
Share capital                                                                       45 759          45 759       45 759
Treasury shares                                                                    (2 570)               -            -
Other reserves                                                                       2 931           1 207        2 031
Retained earnings                                                                  156 309         122 681      139 273
Equity attributable to owners of the company                                       202 429         169 647      187 063
Non-controlling interests                                                            5 816           4 236        4 827
Total equity                                                                       208 245         173 883      191 890
Liabilities
Non-current liabilities
Other financial liabilities                                                         77 694          97 391       86 090
Deferred tax liabilities                                                             4 142           7 652        4 439
                                                                                    81 836         105 043       90 529
Current liabilities
Trade and other payables                                                            33 728          26 945       52 617
Other financial liabilities                                                         20 852          46 375       49 886
Current tax payables                                                                     -             783        3 647
Provisions                                                                             482             474          447
                                                                                    55 062          74 577      106 597
Total liabilities                                                                  136 898         179 620      197 126
Total equity and liabilities                                                       345 143         353 503      389 016

CONDENSED CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the six months ended 31 December 2017

                                                                                 Unaudited        Unaudited     Audited
                                                                                six months       six months        year
                                                                                     ended            ended       ended
                                                                               31 December      31 December     30 June
                                                                                      2017             2016        2017
                                                                      Note           R'000            R'000       R'000
Revenue                                                                            297 358          282 811     525 384
Cost of sales                                                                    (160 187)        (146 768)   (274 878)
Gross profit                                                                       137 171          136 043     250 506
Other income                                                                         3 475            2 380       6 711
Operating expenses                                                                (81 801)         (81 071)   (154 917)
Operating profit                                                                    58 845           57 352     102 300
Investment revenue                                                                     879            1 486       3 107
Finance costs                                                                      (5 034)          (6 515)    (12 183)
Profit before tax                                                                   54 690           52 323      93 224
Taxation                                                                 3        (15 580)         (14 948)    (27 234)
Profit for the period                                                               39 110           37 375      65 990
Other comprehensive income:
Items that will not be reclassified to profit or loss
Exchange differences on translating foreign operations                               (165)            (329)       (710)
Unwinding of cash flow hedge                                                             -              496         662
Income tax related to items that may be reclassified                                     -                -           -
Other comprehensive income for the period
 net of taxation                                                                     (165)              167        (48)
Total comprehensive income for the period                                           38 945           37 542      65 942
Profit attributable to:
Owners of the company                                                               38 096           36 298      64 265
Non-controlling interests                                                            1 013            1 077       1 725
                                                                                    39 110           37 375      65 990
Total comprehensive income attributable to:
Owners of the company                                                               37 956           36 514      64 323
Non-controlling interests                                                              989            1 028       1 619
                                                                                    38 945           37 542      65 942
Earnings per share for profit for the period attributable
to the owners of the company during the period
Earnings per share                                        (cents)         4           35.2             33.5        59.3
Diluted earnings per share                                (cents)         4           35.2             32.0        59.3

CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2017
                                        Attributable to equity holders of the company
                                                                                                         Non-
                                     Share         Treasury            Other           Retained   controlling      Total
                                   capital           shares         reserves           earnings     interests     equity
                                     R'000            R'000            R'000              R'000         R'000      R'000
Balance at 1 July 2016              45 759                -              582            103 501         (846)    148 996
Total comprehensive income
for the period                           -                -              216             36 298         1 028     37 542
Employee share option                    -                -              409                  -             -        409
Dividends                                -                -                -           (17 118)             -   (17 118)
Sale of shares in subsidiary
to non-controlling interest              -                -                -                  -         4 054      4 054
Balance at 31 December 2016         45 759                -            1 207            122 681         4 236    173 883
Total comprehensive income
for the period                           -                -            (158)             27 967           591     28 400
Employee share option                    -                -              982                  -             -        982
Dividends                                -                -                -           (11 375)             -   (11 375)
Balance at 30 June 2017             45 759                -            2 031            139 273         4 827    191 890
Total comprehensive income
for the period                           -                -            (140)             38 096           989     38 945
Treasury shares acquired                 -          (2 570)                -                  -             -    (2 570)
Employee share option                    -                -            1 040                  -             -      1 040
Dividends                                -                -                -           (21 060)             -   (21 060)
Balance at 31 December 2017         45 759          (2 570)            2 931            156 309         5 816    208 245

CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
for the six months ended 31 December 2017
                                                                                  Unaudited        Unaudited     Audited
                                                                                 six months       six months        year
                                                                                      ended            ended       ended
                                                                                31 December      31 December     30 June
                                                                                       2017             2016        2017
                                                                                      R'000            R'000       R'000
Cash generated from operations                                                       47 108           45 376     104 626
Interest revenue                                                                        879            1 486       3 107
Finance costs                                                                       (5 034)          (6 515)    (12 183)
Tax paid                                                                           (18 679)         (16 050)    (33 230)
Net cash from operating activities                                                   24 274           24 297      62 320
Cash flows from investing activities
Purchase of property, plant and equipment                                           (6 654)          (5 835)     (9 071)
Business combinations                                                              (30 000)        (123 140)   (124 005)
Other investing activities                                                          (1 207)              178       1 041
Net cash used in investing activities                                              (37 861)        (128 797)   (132 035)
Cash flows from financing activities
Repayment of other financial liabilities                                            (9 680)         (26 518)    (35 891)
Advance of other financial liabilities                                                2 250           95 756      95 756
Dividends paid                                                                     (21 060)         (17 118)    (28 493)
Purchase of Treasury shares                                                         (2 570)                -           -
Minority investment                                                                       -            4 054       4 054
Net cash from financing activities                                                 (31 060)           56 174      35 426
Net (decrease)/increase in cash and cash equivalents                               (44 647)         (48 326)    (34 289)
Cash and cash equivalents at the beginning of the period                             55 103           89 388      89 388
Exchange (loss)/gains on cash and cash equivalents                                     (62)             (33)           4
Cash and cash equivalents at the end of the period                                   10 394           41 029      55 103

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL RESULTS
for the six months ended 31 December 2017

1. Basis of preparation
   The unaudited condensed consolidated interim financial information for the six months ended 31 December 2017 has
   been prepared and presented in accordance with the SAICA Financial Reporting Guideline as issued by the Accounting
   Practices Committee, 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 and methods of computation used in preparation of
   the condensed consolidated interim financial information are in terms of IFRS and consistent with those applied in the
   annual financial statements for the year ended 30 June 2017.

   The results have not been reviewed or audited by the Group's Auditors. The results were approved by the Board of
   Directors on 15 March 2018.

2. Segmental information
                                                                     Unaudited          Unaudited            Audited
                                                                    six months         six months               year
                                                                         ended              ended              ended
                                                                   31 December        31 December            30 June
                                                                          2017               2016               2017
                                                                         R'000              R'000              R'000
    Revenue
    Trellidor                                                          174 999            163 026            315 903
    Taylor                                                             122 359            119 785            209 481
                                                                       297 358            282 811            525 384
    Operating profit before interest
    Trellidor                                                           36 253             33 901             66 086
    Taylor                                                              22 592             23 451             36 214
                                                                        58 845             57 352            102 300
    Reconciling items
    Net finance costs                                                  (4 155)            (5 029)            (9 076)
                                                                        54 690             52 323             93 224
    The one-off costs, refer note 4, have been included in the
    relevant segments above.
    Total assets
    Trellidor                                                          126 810            123 565            125 725
    Taylor                                                             205 096            186 840            204 501
                                                                       331 906            310 405            330 226
    Reconciling items
    Cash and cash equivalents                                           10 394             41 029             55 103
    Current tax receivable and deferred tax                              2 843              2 069              3 687
                                                                       345 143            353 503            389 016

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 2017 was 28.5% (31 December 2016: 28.6%;
   30 June 2017: 29.2%).

4. Earnings per share
                                                                                             Restated
                                                                            Unaudited       Unaudited        Audited
                                                                           Six months      Six months           Year
                                                                                ended           ended          ended
                                                                          31 December     31 December        30 June
                                                                                 2017            2016           2017
                                                                                R'000           R'000          R'000
   Profit attributable to ordinary shareholders                                38 096          36 298         64 265
   Adjusted for:
   Profit on disposal of property, plant and equipment                           (12)               -           (86)
   Gross amount                                                                  (17)               -          (120)
   Tax effect                                                                       5               -             34

   Headline earnings                                                           38 084          36 298         64 179
   Adjusted for:
   Amortisation of client database - Taylor                                     2 445           2 445          4 891
   Acquisition costs - Taylor                                                       -           2 474          2 474
   Fair value adjustment on contingent consideration - Taylor                       -           1 463          2 728
   Tax effect thereon                                                           (685)         (1 094)        (2 134)
   Non-controlling interests                                                    (132)           (397)          (597)
   Core headline earnings                                                      39 712         41 189*         71 541
   * Refer to note 5.
                                                                               Number          Number         Number
                                                                                 '000            '000           '000
   Number of shares issued                                                    108 340         108 340        108 340
   Weighted average number of ordinary shares in issue
   during the period                                                          108 146         108 340        108 340
   Contingent consideration - Taylor acquisition                                    -           5 000              -
   Diluted weighted average number of shares                                  108 146         113 340        108 340
   Earnings per share                                          (cents)           35.2            33.5           59.3
   Diluted earnings per share                                  (cents)           35.2            32.0           59.3
   Headline earnings per share                                 (cents)           35.2            33.5           59.2
   Diluted headline earnings per share                         (cents)           35.2            32.0           59.2
   Core headline earnings per share                            (cents)           36.7            38.0           66.0
   Diluted core headline earnings per share                    (cents)           36.7            36.3           66.0

5. Finalisation of business combination
   As disclosed in the 2017 Annual Report, Trellidor Innovations Proprietary Limited, a 92.5% held subsidiary of Trellidor
   Holdings Limited, acquired the Taylor business (effective 7 July 2016) from Odyssey House Proprietary Limited. As
   noted in the business combination note in the annual report as at 31 December 2016 the accounting for the business
   combination was provisional. Subsequent to 31 December 2016 the accounting of the business combination was
   finalised and is reported below. In addition, the 31 December 2016 core headline earnings has been updated for the
   tax effect of the finalisation of the business combination.
                                                                                     31 December
                                                                                            2016         31 December
                                                                                   as previously                2016
                                                                                          stated            Restated
   Fair value of assets acquired and liabilities assumed                                   R'000               R'000
   Property, plant and equipment                                                           6 002               6 002
   Intangible assets                                                                      51 971              50 175
   Inventories                                                                            39 922              40 844
   Trade and other receivables                                                            22 142              20 736
   Cash and cash equivalents                                                               7 466               7 466
   Other financial liabilities                                                          (19 773)            (19 773)
   Deferred tax liability                                                                      -             (7 612)
   Trade and other payables                                                              (9 197)             (8 182)
   Current tax payable                                                                         -             (2 927)
   Total identifiable net assets                                                          98 533              86 730
   Goodwill                                                                               59 345              71 148
                                                                                         157 878             157 878
   Acquisition date fair value of consideration paid
   Cash                                                                                (130 606)           (130 606)
   Deferred consideration                                                               (27 272)            (27 272)
                                                                                       (157 878)           (157 878)


6. Events after reporting date
   There have been no material reportable events between the end of the period and the date of this report.

7. Changes to the Board
   There were no changes to the Board of Directors during the period under review.

CORPORATE INFORMATION


Trellidor Holdings Limited                           Auditors and
(Registration number 1970/015401/06)                 Independent Reporting Accountants
20 Aberdare Drive, Phoenix Industrial Park, Durban   Mazars
(PO Box 20173, Durban North, 4016)                   Mazars House
Share code: TRL                                      197 Peter Mokaba Road
ISIN: ZAE000209342                                   Morningside
("Trellidor", "the Company" or "Group")              Durban, 4001
                                                     (PO Box 70584, Overport, 4067)
Directors
MC Olivier (Chairman)*#                              Corporate Sponsor
TM Dennison (Chief Executive Officer)                PSG Capital Proprietary Limited
CG Cunningham (Chief Financial Officer)              (Registration number 2006/015817/07)
RB Patmore*#                                         1st Floor, Ou Kollege
JB Winship*#                                         35 Kerk Street
* Non-executive                                      Stellenbosch, 7600
# Independent                                        (PO Box 7403, Stellenbosch, 7599)

                                                     and                                                     
Company Secretary
P Nel                                                2nd Floor, Building 3
(BComm FCIS)                                         11 Alice Lane
71 Cotswold Drive                                    Sandhurst
Westville 3629                                       Sandton, 2196
                                                     (PO Box 650957, Benmore, 2010)
Registered office
20 Aberdare Drive                                    Transfer Secretaries
Phoenix Industrial Park                              Computershare Investor Services Proprietary Limited
Durban, 4001                                         (Registration number 2004/003647/07)
(PO Box 20173, Durban North, 4016)                   Rosebank Towers, 15 Biermann Avenue
                                                     Rosebank, 2196
Date of incorporation                                (PO Box 61051, Marshalltown, 2107)
23 November 1970

Place of incorporation
South Africa

Website
http://www.trellidor.co.za



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