Wrap Text
Unaudited Condensed Consolidated Interim Financial Results for the Six Months Ended 31 December 2018
TRELLIDOR HOLDINGS LIMITED
(Registration number 1970/015401/06)
Share Code: TRL
ISIN: ZAE000209342
("the Company" or "Group")
UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
SALIENT POINTS
29.8c Headline earnings per share
(2018: 35.2 cents)
9.1c Interim dividend declared per share
(2018: 11.0 cents)
R56m EBITDA for the six months
(2018: R65 million)
R25m Cash from operations for the six months
(2018: R24 million)
20% Return on invested capital
(2018: 25%)
COMMENTARY
Introduction
Trellidor Holdings Limited ("Group") comprises the Trellidor business ("Trellidor") and the Taylor Group businesses ("Taylor").
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.
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 despite the tough economic conditions that prevailed and continue
to negatively impact consumer spending throughout South Africa and Africa, particularly in the middle-income market.
The Taylor Group was fully exposed to the decline in consumer disposable income, particularly in the Western Cape.
Group Revenue for the six months decreased by 4% to R286 million (2018: R297 million). The Group's gross profit margin
of 45% (2018: 46%) was down primarily due to: increased material costs, under recovery of semi variable expenses and
above inflation wage increases. Operating expenses were well managed, increasing by only 3% over the prior year period.
Profit after tax of R33 million and earnings per share of 29.8 cents declined by 17% and 15% respectively.
Net cash from operating activities of R25 million grew by 3%.
In line with the special resolutions passed at the 2017 AGM, the Group repurchased a further 642 705 Group shares during
the period. These were purchased out of available cash resources at an aggregate value of R3.0 million.
Segments
Trellidor
A solid performance given the tough economic conditions, with strategies to protect and improve margins implemented,
and tight overhead expenditure management. Revenue declined by 2%. International sales grew by 9% underpinned by a
strong performance in the UK where two major projects commenced including the installation of the newly developed and
certified product for stations in the London Underground. This was partially offset by a weaker performance in southern
Africa. The efficiency enhancement project was implemented in August 2018, and has yielded better than expected
results, helping to improve gross margin to 47.8% (2018: 47.7%) despite a reduction in revenue. Recurring overheads
remain well managed growing by 2% over the comparative period. Operating profit before interest decreased by less than
1%.
Taylor
Revenue declined by 7%. The continued weak economic conditions, particularly in the Western Cape impacted negatively
on the business. Despite measures being implemented to mitigate the impact on gross margins, margins dropped to
40.8% (2018: 43.9%). These measures are however expected to benefit the business over time. Recurring overheads
were well managed growing by 5%. The combined effect of the reduced revenue, weaker margins and inflation caused
operating profit before interest to decrease by 39%. Net working capital absorbed cash of R11 million in the six-month
period. The reduced sales volumes led to the business being overstocked at the close of the period. This yields an
opportunity in the following six months, to recover the cash absorbed in the first six.
Prospects
Although the weak economic environment is anticipated to continue, some upside from improved market conditions in
West and East Africa and further traction from projects in the UK is expected.
The successful strategies to improve margin and control overheads will continue. Projects focused on material supply and
efficiency enhancement are expected to gather momentum and yield further savings. The Group is more streamlined and
has the capacity to significantly outperform in a more supportive economy.
At the same time strategies to grow sales are in progress. The geographic expansion of the Taylor business is progressing
well with sales through the Trellidor franchise base growing 158% over the corresponding FY18 period. Efforts to accelerate
geographic growth through investment in Taylor's sales capacity in South Africa and opening new Trellidor distributorships
in Africa continue. Taylor launched a new external blind during March 2019, which is expected to further enhance growth
opportunities.
Several synergistic acquisition opportunities are being considered to advance the distribution growth and product
development strategies of the Group. The Group is conservatively financed (Debt/EBITDA ratio of 0.9) and will utilize debt
capacity to finance smaller add on acquisitions.
Given the performance and prospects of the Group, the Board believes the current share price undervalues the business
and so will continue to buy-back shares to deliver shareholder value.
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.
The recent addition of our new CFO to the executive team coupled with internal staff restructuring, will provide additional
capacity to drive strategy implementation and increase focus on efficiency in the operating segments.
Dividend
The board of directors approved an interim gross dividend of 9.1 cents (2018: 11.0 cents) per ordinary share in respect of
the six months ended 31 December 2018.
TM Dennison
Chief Executive Officer
27 March 2019
CASH DIVIDEND DECLARATION
Notice is hereby given that the Directors have approved and declared an interim gross dividend of 9.1 cents per ordinary
share for the six months ended 31 December 2018.
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 7.28 cents per share for ordinary shareholders.
The issued share capital at the declaration date is 107,250,878 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 Monday, 15 April 2019
Shares commence trading "ex" dividend Tuesday, 16 April 2019
Record date Thursday, 18 April 2019
Payment date Tuesday, 23 April 2019
Share certificates may not be dematerialised or rematerialised between Tuesday, 16 April 2019 and Thursday, 18 April 2019,
both days inclusive.
STATEMENT OF FINANCIAL POSITION
at 31 December 2018
Unaudited at Unaudited at
31 December 31 December Audited at
2018 2017 30 June 2018
Note R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 66 144 54 558 61 175
Goodwill 74 797 74 401 74 401
Intangible assets 41 610 44 359 42 363
Other financial assets - 945 693
Deferred tax assets 2 643 2 816 3 443
185 194 177 079 182 075
Current assets
Inventories 110 587 95 706 106 374
Trade and other receivables 62 140 60 764 61 377
Other financial assets 2 264 1 173 1 565
Current tax receivable 386 27 2 202
Cash and cash equivalents 18 130 10 394 27 128
193 507 168 064 198 646
Total assets 378 701 345 143 380 721
Equity and liabilities
Equity
Stated capital 40 152 43 189 43 188
Other reserves 5 440 2 931 4 253
Retained earnings 179 749 156 309 165 107
Equity attributable to owners of the Company 225 341 202 429 212 548
Non-controlling interests 6 115 5 816 5 626
Total equity 231 456 208 245 218 174
Liabilities
Non-current liabilities
Other financial liabilities 66 440 77 694 71 364
Deferred tax liabilities 2 398 4 142 2 610
68 838 81 836 73 974
Current liabilities
Trade and other payables 54 705 33 728 65 681
Other financial liabilities 23 391 20 852 21 687
Current tax payables - - 894
Provisions 311 482 311
78 407 55 062 88 573
Total liabilities 147 245 136 898 162 547
Total equity and liabilities 378 701 345 143 380 721
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
for the six months ended 31 December 2018
Unaudited Unaudited
Six months Six months
ended ended Audited
31 December 31 December Year ended
2018 2017 30 June 2018
Note R'000 R'000 R'000
Revenue 286 249 297 358 538 984
Cost of sales (157 366) (160 187) (293 070)
Gross profit 128 883 137 171 245 914
Other income 4 799 3 475 7 395
Operating expenses (83 900) (81 801) (161 409)
Operating profit 49 782 58 845 91 900
Investment revenue 595 879 1 302
Finance costs (4 655) (5 034) (9 595)
Profit before tax 45 722 54 690 83 607
Taxation (13 162) (15 580) (24 029)
Profit for the period 32 560 39 110 59 578
Other comprehensive income:
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations 106 (165) (108)
Income tax related to items that may be reclassified - - -
Other comprehensive income for the period, net
of taxation 106 (165) (108)
Total comprehensive income for the period 32 666 38 945 59 470
Profit attributable to:
Owners of the Company 32 087 38 096 58 763
Non-controlling interests 473 1 013 815
32 560 39 110 59 578
Total comprehensive income attributable to:
Owners of the Company 32 177 37 956 58 671
Non-controlling interests 489 989 799
32 666 38 945 59 470
Earnings per share for profit for the period
attributable to the owners of the Company during
the period
Earnings and diluted earnings per share (cents) 3 29.8 35.2 54.4
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2018
Total
attributable Non-
Stated Total Retained to owners of controlling Total
capital reserves income the company interests equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 July 2017 45 759 2 031 139 273 187 063 4 827 191 890
Total comprehensive income for
the period - (140) 38 096 37 956 989 38 945
Own shares acquired (2 571) - - (2 571) - (2 571)
Employee share option - 1 040 - 1 040 - 1 040
Dividends - - (21 060) (21 060) - (21 060)
Balance at 31 December 2017 43 188 2 931 156 309 202 428 5 816 208 244
Total comprehensive income for
the period - 48 20 667 20 715 (190) 20 525
Employee share option - 1 274 - 1 274 - 1 274
Dividends - - (11 869) (11 869) - (11 869)
Balance at 30 June 2018 43 188 4 253 165 107 212 548 5 626 218 174
Total comprehensive income for
the period - 90 32 087 32 177 489 32 666
Own shares acquired (3 036) - - (3 036) - (3 036)
Employee share option - 1 097 - 1 097 - 1 097
Dividends - - (17 445) (17 445) - (17 445)
Balance at 31 December 2018 40 152 5 440 179 749 225 341 6 115 231 456
STATEMENT OF CASH FLOWS
for the six months ended 31 December 2018
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 December 31 December 30 June
2018 2017 2018
R'000 R'000 R'000
Cash generated from operations 40 668 47 108 106 947
Interest revenue 595 879 1 302
Finance costs (4 655) (5 034) (9 537)
Tax paid (11 652) (18 679) (30 569)
Net cash from operating activities 24 956 24 274 68 143
Cash flows from investing activities
Purchase of property, plant and equipment (8 286) (6 654) (16 416)
Business combinations - (30 000) -
Other investing activities (2 194) (1 207) (1 504)
Net cash used in investing activities (10 480) (37 861) (17 920)
Cash flows from financing activities
Purchase of own shares (3 037) (2 570) (2 571)
Net proceeds from other financial liabilities (3 220) (7 430) (42 983)
Dividends paid (17 445) (21 060) (32 929)
Net cash from financing activities (23 702) (31 060) (78 483)
Net (decrease)/increase in cash and cash equivalents (9 226) (44 647) (28 260)
Cash and cash equivalents at the beginning of the period 27 128 55 103 55 103
Exchange (loss)/gains on cash and cash equivalents 228 (62) 285
Cash and cash equivalents at the end of the period 18 130 10 394 27 128
NOTES TO THE FINANCIAL RESULTS
for the six months ended 31 December 2018
1. Basis of preparation
The unaudited condensed consolidated interim financial information for the six months ended 31 December 2018 has
been prepared and presented in accordance with the Financial Reporting Pronouncements as issued by the Financial
Reporting Standards Council, 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 DJR Judge 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 2018, apart from the effect of IFRS 9 Financial instruments and
IFRS 15 Revenue from contracts with customers which were adopted during the year under review.
The results have not been reviewed or audited by the Group's Auditors. The results were approved by the Board of
Directors on 25 March 2019.
IFRS 9 Financial instruments
IFRS 9 Financial instruments introduces a new expected credit loss impairment model that replaces the incurred loss
model in IAS 39. The Group has adjusted its impairment models using the simplified approach as envisaged by IFRS
9 to incorporate forward looking information and the time value of money. The impact of the earlier recognition of credit
losses under IFRS 9 is not material.
IFRS 15 Revenue from contracts with customers
The effect of IFRS 15 Revenue from contracts with customers has been considered and it has been concluded that
it has no impact on the results of the Group.
2. Segmental information
Unaudited Unaudited
Six months Six months
ended ended Audited
31 December 31 December Year ended
2018 2017 30 June 2018
R'000 R'000 R'000
Revenue
Trellidor 172 339 176 101 331 576
Taylor 113 921 122 359 208 820
Inter segment (11) (1 102) (1 412)
286 249 297 358 538 984
Operating profit before interest and tax
Trellidor 35 989 36 253 64 956
Taylor 16 239 25 038 31 835
52 228 61 291 96 791
Reconciling items
Net finance costs (4 060) (4 155) (8 293)
Amortisation of the client database (2 446) (2 446) (4 891)
45 722 54 690 83 607
Total assets
Trellidor 143 577 127 434 141 356
Taylor 214 582 204 586 209 112
Inter-segment (231) (87) (318)
357 928 331 933 350 150
Reconciling items
Cash and cash equivalents 18 130 10 394 27 128
Deferred tax 2 643 2 816 3 443
Total as per statement of financial position 378 701 345 143 380 721
3. Earnings per share
Unaudited Unaudited
Six months Six months
ended ended Audited
31 December 31 December Year ended
2018 2017 30 June 2018
R'000 R'000 R'000
Profit attributable to ordinary shareholders 32 087 38 096 58 763
Adjusted for:
Profit on disposal of property, plant and equipment (12) (100)
Gross amount - (17) (150)
Non-controlling interest - - 8
Tax effect - 5 42
Headline earnings 32 087 38 084 58 663
Number Number Number
'000s '000s '000s
Number of shares issued 107 251 108 340 108 340
Weighted average number of ordinary shares in issue
during the period 107 569 108 146 108 021
Diluted weighted average number of shares 107 569 108 146 108 021
Earnings and diluted earnings per share (cents) 29.8 35.2 54.4
Headline and diluted headline earnings per share (cents) 29.8 35.2 54.3
4. Changes to the board
There were no changes to the board of directors during the period under review.
5. Events after reporting date
Subsequent to the end of the period under review, Mr CG Cunningham stepped down as CFO of the company on
1 March 2019 and Mr DJR Judge was appointed as CFO on 1 March 2019.
CORPORATE INFORMATION
Trellidor Holdings Limited
(Registration number 1970/015401/06)
20 Aberdare Drive, Phoenix Industrial Park
Durban,
(PO Box 20173, Durban North 4016)
Share Code: TRL
ISIN: ZAE000209342
("the Company" or "Group")
Directors of Trellidor
MC Olivier (Chairman)*#
TM Dennison (Chief Executive Officer)
DJR Judge (Chief Financial Officer)+
JB Winship*#
RB Patmore*#
*Non-executive
#Independent
+Appointed 1 March 2019
Company Secretary
P Nel
(BComm FCIS)
71 Cotswold Drive
Westville, 3629
Registered office
20 Aberdare Drive
Phoenix Industrial Park
Durban, 4001
(PO Box 20173, Durban North, 4016)
Date of incorporation
23 November 1970
Place of incorporation
South Africa
Auditors and
Independent Reporting Accountants
Mazars
Mazars House
197 Peter Mokaba Road
Morningside
Durban, 4001
(PO Box 70584, Overport, 4067)
Corporate sponsor
PSG Capital (Pty) Ltd
(Registration Number 2006/015817/07)
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch, 7600
(PO Box 7403, Stellenbosch, 7599)
and
2nd Floor, Building 3
11 Alice Lane
Sandhurst
Sandton, 2196
(PO Box 650957, Benmore, 2010)
Transfer Secretaries
Computershare Investor Services (Pty) Ltd
(Registration Number 2004/003647/07)
Rosebank Towers, 15 Biermann Avenue
Rosebank, 2196
(PO Box 61051, Marshalltown, 2107)
Announcement date
27 March 2019
Date: 27/03/2019 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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