TRELLIDOR HOLDINGS LIMITED - SUMMARISED PROVISIONAL AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2018

Release Date: 11/09/2018 08:45
Code(s): TRL
 
Wrap Text
SUMMARISED PROVISIONAL AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2018

Trellidor Holdings Limited                        
(Registration number 1970/015401/06)                              
Share code: TRL                                   
ISIN: ZAE000209342                                
("Trellidor", "the Company" or "Group") 

SUMMARISED PROVISIONAL AUDITED FINANCIAL RESULTS
FOR THE YEAR ENDED 30 JUNE 2018

HIGHLIGHTS

UP 9.3%
   Net cash from operating activities

   28%
   Return on capital

   16.2
   Cents per share final dividend

COMMENTARY

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

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

The Taylor Group business incorporates Taylor, a major manufacturer and distributor of custom-made blinds, decorative
and security shutters and NMC, an importer and distributor of cornicing and skirting products. The Taylor Group has a
strong presence in the Western and Southern Cape.

Overview
The Trellidor business produced a solid performance reflecting its strong positioning in and the defensive qualities of the
security sector despite the tough economic conditions during the period which negatively impacted consumer spending
throughout South Africa and Africa, particularly in the middle-income market. The Taylor Group however was fully exposed
to the decline in consumer disposable income.

Group revenue for the year grew 2.6% to R539.0 million (2017: R525.3 million) in these difficult trading conditions.

The Group's gross profit margin of 45.6% was lower compared to the previous year (47.7%), predominantly due to;
increased material costs, a change in sales mix (higher proportion of sales of premium product) and an under recovery of
an above inflationary increase in labour cost. Operating expenses were well managed and increased by 4% year-on-year.

Accordingly, profit after tax of R59.6 million and earnings per share of 54.4 cents for the year declined 10% and 8%
respectively.

The Group's strong cash-generating capacity was reflected in the net cash from operating activities of R68.1 million which
grew by 9.3%. As previously reported, the second tranche of the Taylor business acquisition purchase price of R30 million
was paid from cash reserves in July 2017.

During the year the Group purchased 446,535 Group shares on the open market valued at R2.6m. These shares were
cancelled after year end.

The Group has interest-bearing liabilities of R93.0 million which incurred R8.3 million of net interest for the year ended
30 June 2018. The Group's gearing is at a conservative level and its financial risk is well managed - interest cover is
9.6 times.

The results presentation will be uploaded onto the company's website during the course of the week ending 14 September 2018.

Segments
Trellidor
Revenue grew 5% to R331.6 million. The product diversification and geographic expansion strategies generated new
product and international sales growth of 23% and 12%, respectively. This is a pleasing outcome of these strategies.

Gross margin reduced to 46.8% (2017: 49.0%), due primarily to a change in sales mix and under recovery of an above
inflationary increase in labour costs.

Recurring overhead cost growth was below inflation. Operating profit before interest declined by 1.7% to R64.9 million.
Net cash from operating activities of R49.8 million grew by 12%.

Taylor Group
Revenue declined by 0.3% to R208.8 million. Taylor experienced strong shutter sales but this was offset by weaker blind
sales. NMC which accounts for 13% of Taylor Group sales was severely impacted by the slowdown in the construction
sector.

Gross margin reduced to 43.7% (2017: 45.7%) due predominantly to higher material input costs.

Overheads were negatively impacted by new product launch expenses and foreign exchange losses of R3.2 million (2017:
R0.9 million). Operating profit before interest decreased by 31.3% to R31.8 million. Net cash from operating activities of
R18.3 million grew by 1%.

Dividend
The Board of Directors has declared a final gross dividend of 16.2 cents (2017: 19.5 cents) per ordinary share. This brings
the total gross dividend for the year ended 30 June 2018 to 27.2 cents (2017: 30.0 cents).

In addition, the Group purchased on the open market and cancelled 446,535 Group shares valued at R2.6 million.

Prospects
The introduction of the new product set over the last few years and the synergistic acquisition of the Taylor Group have
diversified and grown the Group's revenue stream. These strategies have proven to be successful as indicated above and
will continue to drive strong growth in 2019. In this respect, the strategy to sell certain Taylor products through the Trellidor
distribution network will be accelerated in 2019.

New franchisees have been signed in Africa and a dedicated team focused on growing the Group's distribution in Africa
is developing new opportunities.

The Group has capacity to benefit from operational gearing generated by strategies focused on increasing sales volumes.

Operational improvements are targeted, particularly to increase gross margin. During the period capital expenditure of
R6.0 million out of a planned total R12.0 million was made in an efficiency-enhancing project, which is expected to yield
a payback period of two years. The capital expenditure includes factory expansion and new machinery. This project was
implemented in August 2018 and will start producing full benefits from January 2019.

The Group will also continue to seek synergistic acquisition opportunities.

Auditor's report
The summarised consolidated financial results have been extracted from audited consolidated annual financial statements
but is itself not audited. The consolidated annual financial statements from which this report is extracted have been
audited by Mazars on which they expressed an unmodified opinion. A copy of the consolidated financial statements for
the year ended 30 June 2018 together with the audit report is available for inspection at the company's registered office.
The directors take full responsibility for the preparation of the summarised report and that the financial information has
been correctly extracted from the underlying consolidated annual financial statements. The consolidated annual financial
statements were approved by the board on 6 September 2018.

Information included under the heading "Prospects" and any reference to future financial information included in the
audited summarised consolidated financial results have not been audited or reviewed. 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 their
report with the accompanying financial results from the company's registered office.

TM Dennison
Chief Executive Officer

11 September 2018

CASH DIVIDEND DECLARATION

Notice is hereby given that the directors have declared a final gross dividend of 16.20 cents per share for the year ended
30 June 2018.

The dividend has been declared from income reserves. A dividend withholding tax of 20% will be applicable to all
shareholders who are not exempt. The final net ordinary dividend is 12.96 cents per share for ordinary shareholders.

The issued share capital at the declaration date is 107 893 583 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, 2 October 2018
Shares commence trading "ex" dividend                                                         Wednesday, 3 October 2018
Record date                                                                                      Friday, 5 October 2018
Payment date                                                                                     Monday, 8 October 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 3 October 2018 and Friday, 5 October
2018, both days inclusive.

SUMMARISED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
at 30 June 2018

                                                                             Audited   Audited
                                                                             30 June   30 June
                                                                                2018      2017
                                                                      Note     R'000     R'000
Assets
Non-current assets
Property, plant and equipment                                                 61 175    51 500
Goodwill                                                                      74 401    74 401
Intangible assets                                                             42 363    46 741
Other financial assets                                                           693       287
Deferred tax assets                                                            3 443     3 687
                                                                             182 075   176 616
Current assets
Inventories                                                             5    106 374    94 724
Trade and other receivables                                                   61 377    61 779
Other financial assets                                                         1 565       794
Current tax receivable                                                         2 202         -
Cash and cash equivalents                                                     27 128    55 103
                                                                             198 646   212 400
Total assets                                                                 380 721   389 016
Equity and liabilities
Equity
Stated capital                                                                43 188    45 759
Reserves                                                                       4 253     2 031
Retained income                                                              165 107   139 273
Equity attributable to owners of the company                                 212 548   187 063
Non-controlling interests                                                      5 626     4 827
Total equity                                                                 218 174   191 890
Liabilities
Non-current liabilities
Other financial liabilities                                             6     71 364    86 090
Deferred tax liabilities                                                       2 610     4 439
                                                                              73 974    90 529
Current liabilities
Trade and other payables                                                7     65 681    52 617
Other financial liabilities                                             6     21 687    49 886
Current tax payables                                                             894     3 647
Warranty provisions                                                              311       447
                                                                              88 573   106 597
Total liabilities                                                            162 547   197 126
Total equity and liabilities                                                 380 721   389 016

SUMMARISED CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2018

                                                                           Audited     Audited
                                                                           30 June     30 June
                                                                              2018        2017
                                                                    Note     R'000       R'000
Revenue                                                                    538 984     525 384
Cost of sales                                                             (293 070)   (274 878)
Gross profit                                                               245 914     250 506
Other income                                                                 7 395       6 711
Operating expenses                                                        (161 409)   (154 917)
Operating profit before interest and tax                              3     91 900     102 300
Investment revenue                                                           1 302       3 107
Finance costs                                                               (9 595)    (12 183)
Profit before tax                                                           83 607      93 224
Taxation                                                                   (24 029)    (27 234)
Profit for the year                                                         59 578      65 990

Other comprehensive income:
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations                        (108)       (710)
Reclassification of hedging reserves to profit and loss                          -         662
Income tax related to items that may be reclassified                             -           -
Other comprehensive income for the year net of taxation                       (108)        (48)
Total comprehensive income for the year                                     59 470      65 942
Profit attributable to:
Owners of the company                                                       58 763      64 265
Non-controlling interests                                                      815       1 725
                                                                            59 578      65 990
Total comprehensive income attributable to:
Owners of the company                                                       58 671      64,323
Non-controlling interests                                                      799       1 619
                                                                            59 470      65 942
Earnings per share for profit for the period attributable
to the owners of the company during the year
Earnings and diluted earnings per share                   (cents)     4       54.4        59.3

SUMMARISED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2018

                                                                        Total
                                                                 attributable
                                                                    to owners           Non-
                               Stated       Total     Retained         of the    controlling       Total
                              capital    reserves       income        company      interests      equity
                                R'000       R'000        R'000          R'000          R'000       R'000

Balance at 1 July 2016         45 759         582      103 501        149 842           (846)    148 996
Total comprehensive 
income for the period               -          58       64 265         64 323          1 619      65 942
Employee share option               -       1 391            -          1 391              -       1 391
Dividends                           -           -      (28 493)       (28 493)             -     (28 493)
Sale of shares in subsidiary 
to non-controlling interest         -           -            -              -          4 054       4 054
Balance at 30 June 2017        45 759       2 031      139 273        187 063          4 827     191 890
Total comprehensive 
income for the period               -         (92)      58 763         58 671            799      59 470
Employees share option              -       2 314            -          2 314              -       2 314
Dividend                            -           -      (32 929)       (32 929)             -     (32 929)
Own shares                     (2 571)          -            -         (2 571)             -      (2 571)
Balance at 30 June 2018        43 188       4 253      165 107        212 548          5 626     218 174

SUMMARISED CONSOLIDATED
STATEMENT OF CASH FLOWS
for the year ended 30 June 2018

                                                                            Audited    Audited
                                                                            30 June    30 June
                                                                               2018       2017
                                                                              R'000      R'000
Cash flows from operating activities                            
Cash generated from operations                                              106 947    104 626
Interest income                                                               1 302      3 107
Finance costs                                                                (9 537)   (12 183)
Tax paid                                                                    (30 569)   (33 230)
Net cash from operating activities                                           68 143     62 320
Cash flows from investing activities                            
Business combinations                                                             -   (124 005)
Purchase of property, plant and equipment                                   (16 416)    (9 071)
Other                                                                        (1 504)     1 041
Net cash used in investing activities                                       (17 920)  (132 035)
Cash flows from financing activities                            
Purchase of own shares                                                       (2 571)         -
Net proceeds from other financial liabilities                               (42 983)    59 865
Dividends paid                                                              (32 929)   (28 493)
Proceeds on sale of shares to non-controlling interest                            -      4 054
Net cash from financing activities                                          (78 483)    35 426
Total cash movement for the year                                            (28 260)   (34 289)
Cash at the beginning of the year                                            55 103     89 388
Effect of exchange rate movement on cash balances                               285          4
Cash and cash equivalents at the end of the period                           27 128     55 103
                            
NOTES TO THE SUMMARISED                            
CONSOLIDATED FINANCIAL RESULTS
for the year ended 30 June 2018

1. Basis of preparation
   The provisional audited summarised consolidated financial results for the year ended 30 June 2018 has been prepared
   and presented in accordance with the framework concepts and the measurement and recognition requirements
   of International Financial Reporting Standards ("IFRS"), the SAICA Financial Reporting Guides as issued by the
   Accounting Practices Committee, the Listings Requirements of the JSE Limited, contains 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 summarised consolidated financial information are in terms of IFRS and consistent with those
   applied in the annual financial statements for the year ended 30 June 2017.

2. Segmental information

                                                                              Audited    Audited
                                                                              30 June    30 June
                                                                                 2018       2017
                                                                                R'000      R'000
   Revenue 
   Trellidor                                                                  331 576    315 903
   Taylor                                                                     208 820    209 481
   Inter-segment                                                               (1 412)         -
                                                                              538 984    525 384
   Operating profit before interest and tax
   Trellidor                                                                  64 956     66 086
   Taylor                                                                     31 835     46 307
                                                                               96 791    112 393
   Reconciling items 
   Net finance costs                                                           (8 293)    (9 076)
   Acquisition costs                                                                -     (2 474)
   Amortisation of the client database                                         (4 891)    (4 891)
   Fair value adjustment on deferred consideration                                  -     (2 728)
   Profit before tax                                                           83 607     93 224
   Total assets 
   Trellidor                                                                  141 356    125 725
   Taylor                                                                     209 112    204 501
   Inter-segment                                                                 (318)         -
                                                                              350 150    330 226
   Reconciling items 
   Cash and cash equivalents                                                   27 128     55 103
   Deferred tax                                                                 3 443      3 687
   Total as per statement of financial position                               380 721    389 016
   Revenue by location of customer - geographical information 
   South Africa                                                               475 431    470 019
   Foreign                                                                     63 553     55 365
                                                                              538 984    525 384

3. Operating profit
   Operating profit before interest for the year is stated after accounting
   for the following, amongst others:
   Operating lease charge - premises                                            7 728      7 270
   Depreciation                                                                 6 471      6 448
   Amortisation of intangible assets                                            5 104      5 108
   Employee benefits                                                          125 885    116 886
   Advertising                                                                 25 555     23 429
   Cartage                                                                      7 307      6 842
   Gas, electricity and water                                                   7 075      7 034

4. Earnings per share
   Profit attributable to ordinary shareholders                                58 763     64 265
   Adjusted for:
   Profit on disposal of property, plant and equipment                           (100)       (86)
   Gross amount                                                                  (150)      (120)
   Non-controlling interest                                                         8          -
   Tax effect                                                                      42         34

   Headline earnings                                                           58 663     64 179
   Adjusted for:
   Amortisation client database                                                 4 891      4 891
   Acquisition costs - Taylor                                                       -      2 474
   Fair value adjustment on contingent consideration                                -      2 728
   Tax effect                                                                  (1 369)    (2 134)
   Non-controlling interest                                                      (264)      (597)
   Core headline earnings                                                      61 921     71 541

                                                                                Number    Number
                                                                                  '000      '000
   Number of shares issued                                                     108 340   108 340
   Weighted average number of ordinary shares in issue during the period       108 021   108 340
   Diluted weighted average number of shares                                   108 021   108 340
   Earnings and diluted earnings per share                         (cents)        54.4      59.3
   Headline and diluted headline earnings per share                (cents)        54.3      59.2
   Core headline and diluted core headline earnings per share      (cents)        57.3      66.0

                                                                              Audited    Audited
                                                                              30 June    30 June
                                                                                 2018       2017
                                                                                R'000      R'000
5. Inventories
   Raw materials, components                                                  101 053     80 544
   Work in progress                                                             1 805      3 222
   Finished goods                                                               1 335      1 772
   Goods in transit                                                             3 276      9 650
                                                                              107 469     95 188
   Provision for obsolescence                                                  (1 095)      (464)
                                                                              106 374     94 724

6. Other financial liabilities
   Nedbank                                                                     25 000     22 264
   First National Bank term loans                                              61 057     77 166
   Wesbank Corporate                                                              693      1 634
   Novaspectacular Investments Proprietary Limited                              6 301      4 912
   Deferred purchase consideration                                                  -     30 000
                                                                               93 051    135 976

7. Trade and other payables
   Trade payables                                                              37 587     25 592
   Amounts received in advance                                                  9 486      6 292
   Accrued leave pay and bonus                                                  9 853      9 425
   Accrued expenses                                                             6 586      8 835
   Other payroll accruals                                                       2 169      2 473
                                                                               65 681     52 617

CORPORATE INFORMATION

Trellidor Holdings Limited                      Auditors and
("Trellidor", "the Company" or "Group")         Independent Reporting Accountants
(Registration number 1970/015401/06)            Mazars
Share code: TRL                                 Mazars House
ISIN: ZAE000209342                              197 Peter Mokaba Road
                                                Morningside
Executive directors                             Durban, 4001
TM Dennison (Chief Executive Officer)           (PO Box 70584, Overport, 4067)
CG Cunningham (Chief Financial Officer)
                                                Corporate Sponsor
Independent non-executive directors             PSG Capital Proprietary Limited
MC Olivier (Chairman)                           (Registration number 2006/015817/07)
RB Patmore                                      1st Floor, Ou Kollege
JB Winship                                      35 Kerk Street
                                                Stellenbosch, 7600
Company Secretary                               (PO Box 7403, Stellenbosch, 7599)
P Nel                                           and
(BComm ACIS)
71 Cotswold Drive                               2nd Floor, Building 3
Westville 3629                                  11 Alice Lane
                                                Sandhurst
Registered office                               Sandton, 2196
20 Aberdare Drive                               (PO Box 650957, Benmore, 2010)
Phoenix Industrial Park
Durban, 4001                                    Transfer Secretaries
(PO Box 20173, Durban North, 4016)              Computershare Investor Services Proprietary Limited
                                                (Registration number 2004/003647/07)
Date of incorporation                           Rosebank Towers
23 November 1970                                15 Biermann Avenue
                                                Rosebank, 2196
Place of incorporation                          (PO Box 61051, Marshalltown, 2107)
South Africa

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



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