Trellidor's financial results: A dividend and further growth strategy

Trellidor Holdings has declared a 12 cents a share dividend at the end of the first phase of its strategy to restore shareholder value.

Directors of the custom-made security barrier manufacturing group said at the release of financial results on Thursday that the dividend for the year to June 30, which compared with zero dividend last year, was paid out because of successful cash generation and debt reduction over the past 24 months.

They said restoration of shareholder value remains their foremost focus - the first phase had been successfully completed, being the significant reduction in debt and stabilising the balance sheet.

This coupled with the disposal during the year of the Tylor shutters and blinds business and NMC interior decorative products business for R51.9 million, meant the group was now well positioned to focus on implementing plans to recoup and grow Trellidor’s share in the domestic, African and UK market, they said.

These plans included allocating additional resources targeting the non-residential market and a geographical expansion strategy of the franchise network, which had already been initiated and was showing signs of promise.

“This with rigorous management of factory efficiencies, costs, margins and strong cash generation, supported reduced corporate costs, debt services and finance charges, will further improve returns on capital,” they said.

In the past year, headline earnings per share fell to 31.5 cents from 36.1 cents the previous year. Trading profit decreased to R29.9m from R34.4m.

However, cash generated from operations for the year increased by 30.1% to R66.5m driven by strong working capital management. Net debt fell to R44.4m, or by 38.4% from R71.3m, contributing to a 30.3% reduction in finance costs to R9.9m from R14.2m.

The Taylor and NMC disposals were because they had not delivered to expectations, with their return on capital below that of Trellidor, the director said. The disposals would help to reduce debt, cut overhead costs, enhance return on capital and open other opportunities for capital allocation designed to restore shareholder value, they said.

Group revenue from continued operations increased by 8.9% to R367.1m. Locally, the Trellidor division revenues performed below expectations, declining by 7.8%, while the rest of Africa showed 1.4% growth. The biggest drop in local sales occurred in the last quarter of the year, which had proven generally difficult across most industries.

Overall revenue from the UK decreased by 14.7%, as expected due to the completion of a significant one-off project last year. The underlying UK market continued to perform well, with revenue excluding project contracts increasing by 55.3% on last year.

Gross profit decreased by 13.6% on the back of lower factory volumes. Operating costs were well controlled, decreasing by 5.7%.

Operating profit fell by 28.3% to R39.8m, underpinned by the decline in UK project revenue and continued strain in the local division.

Trellidor’s share price increased by 4.69% to R2.01 on the JSE on Thursday morning and was 14% below its R2.35 price 12 months ago.

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