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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
Date: 19/03/2018 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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