Trencor lifts trading profit, declares increased dividend

20 February 2015

Trencor Ltd, which derives its income mainly in US dollars, reported a 5% increase in trading profit after net financing costs from R2 038 million in 2013 to R2 144 million in the year to 31 December 2014.

Trencor has a beneficiary interest in Halco Holdings, which in turn owns 48% of New York-listed Textainer Group Holdings, the world’s largest lessor of marine containers and declared a final dividend of 195 cents per share. The total dividend of 267 cents per share for 2014 was 16% more than the 230 cents per share declared in 2013.

Textainer Marine Containers IV Limited (“TMCL IV”), an indirect wholly-owned subsidiary of the Company, extended and amended the facility with Royal Bank of Canada, SunTrust Bank, ABN AMRO Capital USA LLC, and PNC Bank National Association. The interest rate on the TMCL IV facility was lowered to 1.95% over LIBOR during an initial three-year revolving period. Previously the facility was at 2.25% over LIBOR with a two-year revolving period. If the TMCL IV facility is not refinanced or renewed following this three-year period, the interest rate increases to 2.95% over LIBOR and the facility is structured to partially amortize over the next two years and then mature. The Company also lowered the facility’s unused fee and improved other terms. TMCL IV will continue to use the proceeds of the facility to acquire and fund intermodal shipping containers that are at least five years old from Textainer’s other container owning subsidiaries.

Trencor’s chairman, Neil Jowell, said 2014 adjusted headline earnings per share, the true measure of the group’s performance, were 552,1 cents compared with 630,7 cents in 2013. However, the 2013 earnings included a once-off gain of 82,9 cents per share in respect of the option held by Halco Holdings Inc to acquire additional shares in TAC, an owner of marine cargo containers. Thus, on a like for like basis, there was a 0,8% increase in adjusted headline earnings per share.

Adjusted headline earnings excluded the effect of net unrealised foreign exchange translation gains of R67 million – 27,2 cents per share (2013: R159 million – 64,7 cents per share) and in 2013 the gain arising from the modification of certain borrowing terms. Headline earnings per share including the effect of net realised and unrealised foreign exchange translation gains in 2014 were 579,3 cents (2013: 792,6 cents).

Mr Jowell said the net asset value of Trencor was R76,27 a share at December 31. This was based on the spot exchange rate of US$/R11,54 and the price of Textainer’s shares on the NYSE of US$34,32 at that date.

He said Textainer had reported net profit for the year of US$189,4 million (2013: US$182,8 million). Adjusted to conform with International Financial Reporting Standards, Textainer’s net profit was US$171,1 million (2013: US$186,2 million). Textainer declared dividends totalling US$1,88 per share in 2014 (2013: US$1,85 per share).

“Textainer which earns more on owned containers than on managed units continues to increase its ownership of containers.” said Mr Jowell.

He said that at December 31, 2014, Textainer owned 78,9% of the total fleet under management of 3 233 364 TEU (20-foot equivalent units). This compared with ownership at the end of 2013 of 75,6% of the then fleet of 3 040 454 TEU. Total expenditure for both the owned and managed fleets was US$864 million for 2014. This was used to buy 449 000 TEU of new, purchase leaseback and previously managed containers.

“Significantly, average fleet utilisation at Textainer is currently 97,7%, up 3,6% since the beginning of 2014. Average fleet utilisation for 2014 was 96,1%, compared with 94,9% for 2013.”