Sharenet Sites 
Sharenet Sites
Reviewed Condensed Consolidated Financial Statements for year ended 31 December 2017, declaration of cash dividend
Trencor Limited
(Incorporated in the Republic of South Africa)
Registration number 1955/002869/06
Share code: TRE | ISIN: ZAE000007506
("Trencor" or "the company")
Reviewed Condensed Consolidated Financial Statements
for the year ended 31 December 2017 and declaration of cash dividend
COMMENTARY
GROUP
- Trading profit increased from a R468 million loss in 2016 to a profit of R2 100 million.
This mainly reflects a stronger performance by Textainer Group Holdings Limited ("Textainer")
(NYSE: TGH) and TAC Limited ("TAC") due to improved business performance in stronger
trading conditions.
- Headline earnings per share were 117 cents (2016: headline loss per share 435 cents).
- The year-end SA rand to US dollar exchange rate was R12,37 (2016: R13,58). The average
SA rand to US dollar exchange rate for the year was R13,29 (2016: R14,72).
- Based on the relevant spot exchange rates and the listed share prices of Textainer, the net
asset values ("NAV") of Trencor at the dates below were as follows:
31 December 2017 31 December 2016
Textainer share price US$21,50 US$7,45
Spot exchange rate
US$1 equals R12,37 R13,58
R million R per share R million R per share
Beneficiary interest in Textainer 7 255 40,97 2 760 15,58
Beneficiary interest in TAC (US
GAAP NAV) 1 004 5,67 1 069 6,04
Cash (excluding in Textainer
and TAC) 1 095 6,19 1 489 8,40
Other net assets 273 1,54 238 1,35
Total NAV of Trencor 9 627 54,37 5 556 31,37
- Consolidated gearing ratio at 31 December 2017 was 303% (2016: 289%), with all debt in
Textainer and TAC.
- Final dividend of 50 cents per share declared, making a total of 100 cents per share for the
year (2016: total 130 cents per share).
TEXTAINER: 47,78% beneficiary interest at 31 December 2017 (2016: 48,04%)
US GAAP results
- Net income attributable to common shareholders for the year was US$19,4 million (2016:
loss US$52,5 million – an immaterial correction was recorded for US GAAP statutory
reporting purposes from the US$50,7 million loss previously reported).
- Recorded US$8,1 million container impairment expense (2016: US$94,6 million).
The decrease in 2017 was mainly due to a smaller impairment required to write down
containers held for sale to estimated fair value, and a reversal of previously recorded
impairments on containers held for sale, both primarily due to rising used container selling
prices during 2017.
- Interest expense increased from US$85,2 million in 2016 to US$117,5 million in 2017 due
to increased borrowing costs.
- Average fleet utilisation for the year was 96,4% (2016: 94,7%).
- Capex orders for investment in new containers of approximately US$625 million during 2017
(2016: US$480 million).
- Total fleet under management at 31 December 2017 was 3 279 892 (2016: 3 142 556)
20 foot equivalent units of which Textainer itself owned 78,8% (2016: 81,0%).
- Textainer's results may be viewed on its website www.textainer.com.
CONVERTING US GAAP RESULTS OF TEXTAINER AND TAC TO IFRS FOR FINANCIAL
REPORTING BY TRENCOR
The results of Textainer and TAC, reporting under US GAAP, are converted to IFRS for inclusion
in the results of Trencor, which is required to report under IFRS. Differences in accounting
treatment between US GAAP and IFRS, in the areas of impairment testing and a revision of the
residual values of the container fleets, cause significant differences in financial results reported
under the respective accounting conventions.
Despite improved conditions in the container leasing market, having to discount future cash
flows at higher rates has led to significant impairments to the container fleets in 2017. The rates
used are influenced by beta risk factors and the costs of debt. US GAAP testing for impairment in
the current and prior year did not identify any impairment of the container fleets.
Reconciliation of Textainer US GAAP to IFRS:
2017 2016
US$ million US$ million
Profit/(Loss) attributable to shareholders per US GAAP 19,4 (52,5)
Adjustments:
Non-cash IFRS impairment loss (94,4) (154,8)
IFRS reduced depreciation/(additional depreciation) 14,5 (78,1)
IFRS tax effect of the above and other 17,4 24,8
Loss attributable to shareholders per IFRS (43,1) (260,6)
Reconciliation of TAC US GAAP to IFRS:
2017 2016
US$ million US$ million
Profit/(Loss) attributable to shareholders per US GAAP 2,5 (1,9)
Adjustments:
Non-cash IFRS impairment loss (3,3) (0,1)
IFRS reduced depreciation/(additional depreciation) 2,1 (1,8)
IFRS tax effect of the above and other 0,2 (5,0)
Profit/(Loss) attributable to shareholders per IFRS 1,5 (8,8)
EVENTS AFTER THE REPORTING PERIOD
At 31 December 2017, Trencor had a 47,8% beneficiary interest in Textainer through Halco
Holdings Inc. ("Halco") under the Halco Trust ("Trust"). At Halco's request, Textainer and
Halco entered into a Voting Limitation Deed ("VLD"), effective 1 January 2018, whereby
Halco agreed to limit or restrict its shareholder voting rights in Textainer, solely in respect of
the appointment and/or removal of directors and then only to the extent necessary to ensure
that Trencor would be regarded for purposes of IFRS as being neither in control of nor having
significant influence over Textainer. All Halco's voting rights, save for the said limitation or
restriction, were unaffected by the VLD.
Accordingly, as from 1 January 2018, the financial results of Textainer, reporting under US
GAAP, are no longer required to be converted into IFRS for inclusion in the results of Trencor,
thus eliminating significant commercial issues (e.g. the time-consuming and expensive
conversion process, delays in Trencor's financial reporting, reputational risks and the like) for
Trencor and Textainer and their respective shareholders. As Trencor will be regarded in terms of
IFRS as being neither in control of nor having significant influence over Textainer, Textainer will be
accounted for by Trencor as an investment measured at fair value through profit or loss, which
fair value information will be more meaningful.
The financial impact of the VLD and of the consequential deconsolidation of Textainer in terms
of IFRS is set out in note 10.
The NAV of Textainer as reported at 31 December 2017 will be deconsolidated and the financial
instrument at fair value through profit or loss will be recognised based on the fair value of
Textainer's shares at 1 January 2018. The gain of R2 579 million on deconsolidation of Textainer
will be excluded from headline earnings and has no tax consequences.
On 20 February 2018, Trencor, as a nominated beneficiary of the Trust, received a vesting and
distribution from the Trust of the entire issued share capital of Halco. Halco is the holder of
47,8% of the shares in Textainer and 100% of the shares in TAC. This vesting and distribution
will have no financial consequences.
Before the vesting and distribution were effected, as is customary in the Trust's jurisdiction, Trencor
had to provide an indemnity to, inter alia, the trustee of the Trust. The indemnity terminates on
31 December 2024. The maximum exposure was initially limited to the value of the assets
distributed which in substance left the Trustee in the same position as it enjoyed under the
deed of settlement of the Trust. The maximum exposure under such indemnity has since been
reduced to a considerably smaller amount of US$62 million.
On 11 May 2018, Halco declared to its sole shareholder, Trencor, three dividends, namely
47,8% of the shares in Textainer, 100% of the shares in TAC (these dividends constituting the
entirety of Halco's shareholdings in Textainer and TAC) and a cash amount of US$8 million. As a
result, Trencor now owns 47,8% of Textainer and 100% of TAC. These dividends will have no
financial consequences.
DECLARATION OF CASH DIVIDEND
The board has declared a final gross cash dividend (number 105) of 50 cents per share out of
distributable reserves in respect of the year ended 31 December 2017.
The salient dates pertaining to the dividend payment are as follows:
Last day to trade cum the dividend Tuesday, 12 June 2018
Trading commences ex the dividend Wednesday, 13 June 2018
Record date Friday, 15 June 2018
Payment date Monday, 18 June 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 13 June
2018 and Friday, 15 June 2018, both days inclusive.
Note that:
- Dividend withholding tax at the rate of 20% will be applicable to shareholders who
are not exempt from this tax, which will result in a net dividend of 40 cents per share to
these shareholders;
- Trencor's tax reference number is 9676002711; and
- Trencor's issued share capital at the declaration date is R885 340 (177 068 011 ordinary
shares of 0,5 cent each).
PREPARATION OF FINANCIAL STATEMENTS
These condensed consolidated financial statements have been prepared by management under the supervision
of the financial director, Ric Sieni CA(SA). The directors take full responsibility for the preparation
of the financial statements.
REVIEW REPORT
The condensed consolidated financial statements, which comprise of the statement of financial
position at 31 December 2017 and the statement of profit or loss and other comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended
and the notes to such financial statements, have been reviewed by Trencor's independent
auditors, KPMG Inc, who expressed an unmodified review conclusion.
The auditor's report does not necessarily report on all of the information contained in these
financial results. Shareholders are therefore advised that in order to obtain a full understanding
of the nature of the auditor's engagement, they should obtain a copy of the auditor's report
together with the accompanying financial information from the company's registered office.
DIRECTORATE AND COMMITTEES
On 28 November 2017, Hennie van der Merwe was appointed to the social and ethics
committee in the place of Jimmy McQueen. Roddy Sparks was appointed as lead independent
director on 19 December 2017 and, on 17 May 2018, Hennie van der Merwe and Ric Sieni
were appointed to the risk committee.
On behalf of the board
David Nurek
Chairman
22 May 2018
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
at 31 December 2017
Reviewed Audited
R million 2017 2016
ASSETS
Property, plant and equipment 44 793 49 060
Intangible assets and goodwill 282 367
Investment in equity accounted investee 114 121
Net investment in finance leases 496 983
Derivative financial instruments 100 63
Deferred tax assets 19 18
Restricted cash 1 105 737
Total non-current assets 46 909 51 349
Inventories 403 434
Trade and other receivables 1 440 2 017
Current portion of net investment in finance leases 427 467
Current tax asset – 18
Cash and cash equivalents 3 134 2 837
Total current assets 5 404 5 773
Total assets 52 313 57 122
EQUITY
Share capital and premium 44 44
Reserves 7 004 8 155
Total equity attributable to equity holders of the company 7 048 8 199
Non-controlling interests 5 387 6 218
Total equity 12 435 14 417
LIABILITIES
Interest-bearing borrowings 35 008 4 913
Derivative financial instruments – 17
Deferred revenue 25 30
Deferred tax liabilities 28 66
Total non-current liabilities 35 061 5 026
Trade and other payables 2 080 719
Current tax liabilities 123 136
Current portion of interest-bearing borrowings 2 611 36 755
Current portion of amounts attributable to third parties in
respect of long-term receivables – 65
Current portion of deferred revenue 3 4
Total current liabilities 4 817 37 679
Total liabilities 39 878 42 705
Total equity and liabilities 52 313 57 122
Capital expenditure incurred during the year 5 750 7 210
Capital expenditure committed and authorised, but not yet
incurred 2 365 –
Ratio to total equity:
Total liabilities (%) 320,7 296,2
Interest-bearing borrowings (%) 302,5 289,0
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 31 December 2017
Reviewed Audited
R million 2017 2016
Revenue (note 2) 8 344 9 373
Trading profit/(loss) 2 100 (468)
Realised and unrealised exchange losses on translation of
long-term receivables, excluding fair value adjustment – (89)
Fair value adjustment on net long-term receivables – 338
Impairment of property, plant and equipment (note 4) (1 098) (2 460)
Available-for-sale financial asset – reclassification from other
comprehensive loss – 33
Compensation receivable from third party in respect of
impairment of property, plant and equipment – 289
Operating profit/(loss) before net finance expenses (note 3) 1 002 (2 357)
Net finance expenses (note 5) (1 586) (1 394)
Finance expenses Interest expense (1 704) (1 406)
Realised and unrealised gains/(losses)
on derivative financial instruments 50 (45)
Finance income Interest income 68 57
Share of profit/(loss) of equity accounted investee (net of tax) 4 (6)
Loss before tax (580) (3 757)
Income tax expense/(credit) 30 (11)
Loss for the year (610) (3 746)
Other comprehensive loss
Items that are or may be reclassified subsequently to profit or
loss
Foreign currency translation differences (1 239) (2 370)
Change in fair value of available-for-sale financial asset – (9)
Available-for-sale financial asset – reclassification
to profit and loss – (33)
Related income tax – 7
Total comprehensive loss for the year (1 849) (6 151)
Total comprehensive loss for the year attributable to:
Equity holders of the company (983) (3 055)
Non-controlling interests (866) (3 096)
(1 849) (6 151)
Loss for the year attributable to:
Equity holders of the company (321) (1 743)
Non-controlling interests (289) (2 003)
(610) (3 746)
Basic Loss per share (cents) (181,5) (984,4)
Diluted loss per share (cents) (181,5) (984,4)
Number of shares in issue (million) 177,1 177,1
Weighted average number of shares in issue (million) 177,1 177,1
Year-end rate of exchange: SA rand to US dollar 12,37 13,58
Average rate of exchange for the year: SA rand to US dollar 13,29 14,72
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2017
Equity holders of the company
Gain/(Loss)
Foreign Share- on changes
Fair currency based in ownership Non-
Share Share value translation payment interests in Retained controlling Total
R million capital premium reserve reserve reserve subsidiaries income Total interests equity
Balance at 1 January 2016 1 43 35 5 760 374 533 5 034 11 780 9 479 21 259
Total comprehensive loss for the year
Loss for the year – – – – – – (1 743) (1 743) (2 003) (3 746)
Other comprehensive loss for the year
Foreign currency translation differences – – – (1 277) – – – (1 277) (1 093) (2 370)
Available-for-sale financial asset – change in fair value net of tax – – (7) – – – – (7) – (7)
Available-for-sale financial asset – reclassification to profit and loss – – (28) – – – – (28) – (28)
Total other comprehensive loss for the year – – (35) (1 277) – – – (1 312) (1 093) (2 405)
Total comprehensive loss for the year – – (35) (1 277) – – (1 743) (3 055) (3 096) (6 151)
Transactions with owners, recorded directly in equity
Contributions by/(distributions to) owners
Share-based payments – – – – 34 – – 34 37 71
Dividends paid – – – – – – (531) (531) (231) (762)
Total contributions by/(distributions to) owners – – – – 34 – (531) (497) (194) (691)
Changes in ownership interests in subsidiaries – – – – – (29) – (29) 29 –
Total transactions with owners – – – – 34 (29) (531) (526) (165) (691)
Balance at 31 December 2016 1 43 – 4 483 408 504 2 760 8 199 6 218 14 417
Total comprehensive loss for the year
Loss for the year – – – – – – (321) (321) (289) (610)
Other comprehensive loss for the year
Foreign currency translation differences – – – (662) – – – (662) (577) (1 239)
Total other comprehensive loss for the year – – – (662) – – – (662) (577) (1 239)
Total comprehensive loss for the year – – – (662) – – (321) (983) (866) (1 849)
Transactions with owners, recorded directly in equity
Contributions by/(distributions to) owners
Share-based payments – – – – 31 – – 31 34 65
Share options exercised – – – – – – – – 13 13
Dividends paid – – – – – – (177) (177) (34) (211)
Total contributions by/(distributions to) owners – – – – 31 – (177) (146) 13 (133)
Changes in ownership interests in subsidiaries – – – – – (22) – (22) 22 –
Total transactions with owners – – – – 31 (22) (177) (168) 35 (133)
Balance at 31 December 2017 1 43 – 3 821 439 482 2 262 7 048 5 387 12 435
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2017
Reviewed Restated
R million 2017 2016
Cash flows from operating activities
Cash generated from operations 6 920 7 479
Increase in container leasing equipment (4 156) (7 635)
Finance income received 68 57
Finance lease income received 94 167
Finance expenses paid (1 430) (1 236)
Decrease in finance leases 430 795
Receipts from long-term receivables – 928
Payments to third parties in respect of long-term receivables (36) (49)
Dividends paid to equity holders of the company (177) (531)
Dividends paid to non-controlling interests (34) (231)
Income tax paid (62) (205)
Net cash inflow/(outflow) from operating activities 1 617 (461)
Cash flows from investing activities
Acquisition of property, plant and equipment (14) (22)
Proceeds on disposal of available-for-sale financial asset – 36
Increase in restricted cash (466) (372)
Net cash outflow from investing activities (480) (358)
Cash flows from financing activities
Interest-bearing borrowings repaid (note 11) (23 244) (8 681)
Interest-bearing borrowings raised (note 11) 22 988 8 574
Debt issuance costs incurred (393) (88)
Proceeds on issue of shares by subsidiary 13 –
Net cash outflow from financing activities (636) (195)
Net increase/(decrease) in cash and cash equivalents
before exchange rate fluctuations 501 (1 014)
Cash and cash equivalents at the beginning of the period 2 837 4 241
Effects of exchange rate fluctuations on cash and cash
equivalents (204) (390)
Cash and cash equivalents at the end of the year 3 134 2 837
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 31 December 2017
1. The condensed consolidated financial statements are prepared in accordance with the
requirements of the JSE Limited Listings Requirements for provisional reports and the
requirements of the Companies Act of South Africa. The Listings Requirements require
provisional reports to be prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting
Standards ("IFRS") and the SAICA as Financial Reporting Guides issued by the
Accounting Practices Committee and Financial Pronouncements as issued by Financial
Reporting Standards Council and to also, as a minimum, contain the information
required by IAS 34 Interim Financial Reporting. The accounting policies applied in the
preparation of the condensed consolidated financial statements are in terms of IFRS
and are consistent with those applied in the previous consolidated annual financial statement.
Reviewed Audited
R million 2017 2016
2. Revenue
Goods sold 1 959 2 202
Leasing income 6 224 7 101
Management fees 161 158
Finance income – 1
8 344 9 462
Realised and unrealised exchange differences – (89)
8 344 9 373
3. Operating profit/(loss) before net finance expenses
Other significant items which have been included in
operating profit/(loss) before net finance expenses:
Depreciation 3 048 4 861
Impairment loss incurred – financial assets 15 628
(Write-up)/write-down of inventories (14) 527
4. Impairment of property, plant and equipment
Container leasing equipment
Net impairment loss recognised 1 209 2 107
Impairment (recovery)/loss in respect of containers on
lease not recovered from defaulting customers (111) 353
1 098 2 460
A net impairment loss has been recognised for the year ended 31 December 2017,
reducing the carrying value of container leasing equipment to its recoverable amount.
For the purposes of calculating the impairment loss, the container fleets were grouped
by ownership entity and then by cash-generating units ("CGUs"). CGUs were defined as
containers grouped by container type, as cash flows for the same type of containers are
independent of cash flows of different container types, and are interchangeable with any
other container of the same type within the container fleet. The recoverable amount of
a CGU has been calculated based on its value in use. The pre-tax discount rates used
to discount the future estimated cash flows were 7,2% (2016: 4,3%) and 7,7% (2016:
5,1%) for Textainer and TAC, respectively.
Projected future cash flows were estimated using the assumptions that are part of the
long-term planning forecasts of the entities concerned. These projected future cash flow
assumptions have strengthened during the period as a result of further improvements
in market conditions. Some of the significant estimates and assumptions used to
determine future estimated cash flows were: estimated future lease rates, estimated
utilisation, remaining useful lives, remaining on-hire periods for expired fixed-term
leases, estimated future lease rates, direct container expenses and estimated disposal
prices of containers. In performing the impairment analysis, assumptions used reflected
the contractually stipulated per diem rates, with renewal based on current market rates.
The recoverable amounts and impairment amounts of the CGUs which were impaired
are as follows:
Reviewed Audited
2017 2016
Recover- Recover-
able Impair- able Impair-
R million amount ment amount ment
Container type
20' Flatrack 177 (2) 205 11
20' Dry freight 14 189 48 15 462 503
20' Refrigerated 204 23 261 2
40' Hi cube 17 613 16 18 974 1 363
40' Dry freight 1 902 (14) 2 563 (9)
40' Refrigerated 8 390 1 120 11 166 234
45' Hi cube 240 18 325 3
42 715 1 209 48 956 2 107
Reviewed Audited
R million 2017 2016
5. Net finance expenses
Finance expenses 1 654 1 451
Interest expense – Textainer 1 616 1 189
Interest expense – TAC 88 217
Realised and unrealised (gains)/losses on derivative
financial instruments (50) 45
Finance income
Interest income – cash and cash equivalents (68) (57)
1 586 1 394
6. Headline earnings/(loss)
Loss attributable to equity holders of the company (321) (1 743)
Impairment of property, plant and equipment 1 098 2 460
Compensation receivable from third party in respect of
impairment of property, plant and equipment – (289)
Available-for-sale financial asset – reclassification from
other comprehensive loss – (33)
Total tax effects of adjustments (17) (31)
Total non-controlling interests' share of adjustments (554) (1 135)
Headline earnings/(loss) 206 (771)
Weighted average number of shares in issue (million) 177,1 177,1
Headline earnings/(loss) per share (cents) 116,5 (435,1)
Diluted headline earnings/(loss) per share (cents) 116,5 (435,1)
7. Segmental reporting
Revenue
Reportable segments
Containers – owning, leasing, management and
trading 8 344 9 459
Containers – finance (including foreign exchange
differences) – (86)
8 344 9 373
Operating profit/(loss) before net finance expenses
Reportable segments
Containers – owning, leasing, management and
trading 1 191 (2 523)
Containers – finance (23) 240
1 168 (2 283)
Unallocated (166) (74)
1 002 (2 357)
Loss before tax
Reportable segments
Containers – owning, leasing, management and
trading (451) (3 975)
Containers – finance (23) 240
(474) (3 735)
Unallocated (106) (22)
(580) (3 757)
Assets
Capital expenditure incurred by the container owning,
leasing, management and trading segment 5 750 7 210
Reviewed Audited
2017 2016
Carrying Fair Carrying Fair
R million amount Value amount Value
8. Financial instruments
The carrying amounts and fair values of
financial assets and financial liabilities are
as follows:
Assets
Held for trading
Derivative financial instruments 100 100 63 63
Loans and receivables
Restricted cash 1 105 1 105 737 737
Trade and other receivables 1 283 1 283 1 731 1 731
Cash and cash equivalents 3 134 3 134 2 837 2 837
Other
Net investment in finance leases 923 938 1 450 1 451
6 545 6 560 6 818 6 819
Liabilities
Liabilities at amortised cost
Interest-bearing borrowings (excluding
debt issuance costs) 37 952 38 013 41 926 41 300
Trade and other payables 2 080 2 080 719 719
Designated at fair value through profit or
loss
Amounts attributable to third parties in
respect of long-term receivables – – 65 65
Held for trading
Derivative financial instruments – – 17 17
40 032 40 093 42 727 42 101
9. Change in estimate
Residual values and useful lives of the container fleets were reassessed at
30 June 2017 and at 31 December 2017. In accordance with IAS 16 Property, Plant
and Equipment residual values are the estimated amounts that the group entities would
currently obtain at the financial reporting date from the disposal of containers, after
deducting the estimated costs of disposal, if the containers were already of the age and
in the condition expected at the end of their useful lives. The reassessment of residual
values and useful lives are accounted for prospectively as a change in accounting
estimate from the date of change in estimate, in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors. The consequence of the
reassessment of residual values on the depreciation charge in 2018 is not considered to
be significant given that the results of Textainer will no longer be consolidated.
10. Events after the reporting period
At 31 December 2017 Trencor had a 47,8% beneficiary interest in Textainer through
Halco Holdings Inc ("Halco") under the Halco Trust ("Trust"). At Halco's request, Textainer
and Halco entered into a Voting Limitation Deed ("VLD"), effective 1 January 2018,
whereby Halco agreed to limit or restrict its shareholder voting rights in Textainer, solely
in respect of the appointment and/or removal of directors and then only to the extent
necessary to ensure that Trencor would be regarded for purposes of IFRS as being
neither in control of nor having significant influence over Textainer. All Halco's voting
rights, save for the said limitation or restriction, were unaffected by the VLD.
Accordingly, as from 1 January 2018, the financial results of Textainer, reporting under
US GAAP, are no longer required to be converted into IFRS for inclusion in the results
of Trencor, thus eliminating significant commercial issues (e.g. the time-consuming
and expensive conversion process, delays in Trencor's financial reporting, reputational
risks and the like) for Trencor and Textainer and their respective shareholders.
As Trencor would be regarded in terms of IFRS as being neither in control of nor having
significant influence over Textainer, Textainer will be accounted for by Trencor as an
investment measured at fair value through profit or loss, which fair value information will
be more meaningful.
The NAV of Textainer as reported at 31 December 2017 will be deconsolidated and
the financial instrument at fair value through profit or loss will be recognised based on
the fair value of Textainer's shares at 1 January 2018. The gain on deconsolidation of
Textainer will be excluded from headline earnings and has no tax consequences, and
is calculated as follows:
R million
Property, plant and equipment 42 237
Intangible assets and goodwill 145
Investment in equity accounted investee 114
Net investment in finance leases 481
Derivative financial instruments 93
Deferred tax assets 19
Restricted cash 1 104
Current assets 3 832
Total assets 48 025
Interest-bearing borrowings (33 180)
Deferred tax liabilities (31)
Deferred revenue (25)
Current liabilities (4 726)
Total liabilities (37 962)
Textainer NAV 10 063
Non-controlling interests (5 387)
Textainer NAV included in Trencor's consolidated results 4 676
Financial instrument at fair value through profit or loss 7 255
Gain on deconsolidation of Textainer 2 579
On 20 February 2018, Trencor, as a nominated beneficiary of the Trust, received a
vesting and distribution from the Trust of the entire issued share capital of Halco. Halco
is the holder of 47,8% of the shares in Textainer and 100% of the shares in TAC. This
vesting and distribution will have no financial consequences.
Before the vesting and distribution were effected, as is customary in the Trust's
jurisdiction, Trencor had to provide an indemnity to inter alia the trustee of the Trust.
The indemnity terminates on 31 December 2024. The maximum exposure was initially
limited to the value of the assets distributed which in substance left the Trustee in the
same position as it enjoyed under the deed of settlement of the Trust. The maximum
exposure under such indemnity has since been reduced to a considerably smaller
amount of US$62 million.
On 11 May 2018, Halco declared to its sole shareholder, Trencor, three dividends,
namely 47,8% of the shares in Textainer, 100% of the shares in TAC (these dividends
constituting the entirety of Halco's shareholdings in Textainer and TAC) and a cash
amount of US$8 million. As a result, Trencor now owns 47,8% of Textainer and 100% of
TAC. These dividends will have no financial consequences.
11. Restatement of the condensed consolidated statement of cash flows
In compiling the consolidated statement of cash flows for the financial year ended
31 December 2016, interest-bearing borrowings raised amounting to R7 629 million
were netted off against interest-bearing borrowings repaid which resulted in both
interest-bearing borrowings raised and repaid being understated by an equal amount
of R7 629 million. The restatement in the current period has no impact on earnings per
share or headline earnings per share, and net cash flows of the group have remained
as previously reported.
Amount
previously Restated
R million reported Change amount
Cash flows from operating activities
Cash generated from operations 7 479 – 7 479
Others (7 940) – (7 940)
Net cash outflow from operating activities (461) – (461)
Cash flows from investing activities (358) – (358)
Cash flows from financing activities
Interest-bearing borrowings repaid (1 052) (7 629) (8 681)
Interest-bearing borrowings raised 945 7 629 8 574
Debt issuance costs incurred (88) – (88)
Net cash outflow from financing activities (195) – (195)
Net decrease in cash and cash equivalents
before exchange rate fluctuations (1 014) – (1 014)
Cash and cash equivalents at the beginning of
the year 4 241 – 4 241
Effects of exchange rate fluctuations on cash
and cash equivalents (390) – (390)
Cash and cash equivalents at the end of the year 2 837 – 2 837
In order to provide a better appreciation of the results of the group's operations, a condensed
consolidated income statement and a condensed consolidated statement of financial position are
also presented in US dollars, as virtually all of the group's consolidated revenue and assets and
much of its expenditure are denominated in that currency. The unreviewed amounts stated in US dollars
have been prepared by management and have been calculated by translating the assets and liabilities at
the period-end rate of exchange, income statement items at the average rate of exchange with the
difference allocated to the foreign currency translation reserve included in equity.
UNREVIEWED CONDENSED CONSOLIDATED INCOME
STATEMENT IN US DOLLARS
for the year ended 31 December 2017
Unreviewed Unreviewed
US$ million 2017 2016
Revenue 627.8 641.8
Trading profit/(loss) 158,0 (32,2)
Realised and unrealised exchange losses on translation of long-
term receivables, excluding fair value adjustment (0,2) (0,9)
Fair value adjustment on net long-term receivables – 22,1
Impairment of property, plant and equipment (89,4) (178,9)
Available-for-sale financial asset – reclassification from other
comprehensive income – 2,1
Compensation receivable from third party in respect of
impairment of property, plant and equipment – 19,4
Operating profit/(loss) before net finance expenses 68,4 (168,4)
Net finance expenses (119,3) (95,1)
Finance expenses Interest expense (128,2) (95,9)
Realised and unrealised gains/(losses) on
derivative financial instruments 3,8 (3,1)
Finance income Interest income 5,1 3,9
Share of profit/(loss) of equity accounted investee (net of tax) 0,3 (0,4)
Loss before tax (50,6) (263,9)
Income tax expense 2,1 0,2
Loss for the year (52,7) (264,1)
Attributable to:
Equity holders of the company (27,5) (122,0)
Non-controlling interests (25,2) (142,1)
(52,7) (264,1)
Loss per share (US cents) (15,5) (68,9)
Diluted loss per share (US cents) (15,5) (68,9)
Headline earnings/(loss) per share (US cents) 8,7 (28,5)
Diluted headline earnings/(loss) per share (US cents) 8,7 (28,5)
Number of shares in issue (million) 177,1 177,1
Weighted average number of shares in issue (million) 177,1 177,1
Year-end rate of exchange: SA rand to US dollar 12,37 13,58
Average rate of exchange for the year: SA rand to US dollar 13,29 14,72
Trading profit/(loss) from operations comprises:
Textainer and TAC 172,3 (23,4)
Other (14,3) (8,8)
158,0 (32,2)
UNREVIEWED CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION IN US DOLLARS
at 31 December 2017
Unreviewed Unreviewed
US$ million 2017 2016
ASSETS
Property, plant and equipment 3 621,1 3 612,7
Other non-current assets 171,0 168,5
Total non-current assets 3 792,1 3 781,2
Total current assets 437,0 425,0
Inventories 32,6 31,9
Trade and other receivables 116,5 149,8
Current portion of net investment in finance leases 34,5 34,4
Cash and cash equivalents 253,4 208,9
Total assets 4 229,1 4 206,2
EQUITY
Equity attributable to equity holders of the company 569,9 603,7
Non-controlling interests 435,5 457,8
Total equity 1 005,4 1 061,5
LIABILITIES
Interest-bearing borrowings 2 830,1 361,8
Derivative financial instruments – 1,2
Deferred revenue 2,0 2,3
Deferred tax liabilities 2,2 4,8
Total non-current liabilities 2 834,3 370,1
Total current liabilities 389,4 2 774,6
Trade and other payables 168,1 52,9
Current tax liabilities 10,0 10,0
Current portion of amounts attributable to third parties in
respect of long-term receivables – 4,8
Current portion of interest-bearing borrowings 211,1 2 706,6
Current portion of deferred revenue 0,2 0,3
Total liabilities 3 223,7 3 144,7
Total equity and liabilities 4 229,1 4 206,2
Ratio to total equity:
Total liabilities (%) 320,7 296,2
Interest-bearing borrowings (%) 302,5 289,0
Directors: David Nurek (Chairman), Jimmy McQueen, Eddy Oblowitz, Ric Sieni* (Financial),
Roddy Sparks, Hennie van der Merwe* (CEO), Herman Wessels (*Executive)
Secretaries: Trencor Services Proprietary Limited
Registered office: 13th Floor, The Towers South, Heerengracht, Cape Town 8001
Transfer Secretaries: Computershare Investor Services Proprietary Limited,
Rosebank Towers, 15 Biermann Avenue, Rosebank 2196
(PO Box 61051, Marshalltown 2107)
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
www.trencor.net
Date: 22/05/2018 03:13:00 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.
