Trading Statement and renewal of cautionary announcement
(Incorporated in the Republic of South Africa)
(Registration No 1955/002869/06)
Share Code: TRE
TRADING STATEMENT AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to Trencor’s trading statement, further trading statements and unaudited interim results for the six months ended 30 June 2016 released on the Stock Exchange News Service (“SENS”) on 3, 12, 18 and 21 October 2016 respectively in which the matter of the Hanjin Shipping Company (“Hanjin”) bankruptcy was referred to.
On 31 August 2016, Hanjin filed for bankruptcy protection in South Korea, the United States and certain other countries in which it previously conducted business. Textainer Group Holdings Limited (“Textainer”), in which Trencor has a 48,2% beneficiary interest, had approximately 114 000 containers on lease to Hanjin both on operating and direct finance leases. In Trencor’s SENS announcements referred to above, shareholders were informed that due to the uncertainty which existed in relation to the potential recovery of the underlying container fleet on lease to Hanjin, an estimate of the financial effect of the recovery process on Textainer, and hence on Trencor, could not be made at that time.
Textainer has now released its third quarter 2016 results in which further information regarding the Hanjin matter has been provided. Shareholders are referred to Textainer’s website www.textainer.com for its full third quarter results announcement.
Shareholders’ attention is drawn to the following extract from Textainer’s results: “To date, we have recovered, booked or approved to recover for turn-in 41% of our containers on lease to Hanjin. We are also actively negotiating the release of another 26% of our containers. As many Hanjin containers are still with shippers, on vessels or held by shipping terminals, we are unable currently to accurately predict the effect of future estimates to be made on the recovery. At this time, we expect to recover between 70% to 90% of our containers. We have $80 million of insurance to cover unrecoverable containers, lost revenue and recovery and repair costs. Due largely to the expected level of these costs and the significant amount of lost revenue, we expect our losses will exceed our insurance coverage.”
An impairment of $4.8 million was recognised by Textainer in its third quarter results in respect of containers unlikely to be recovered.
The impact that the above will have on Trencor’s financial reporting will differ from that which is disclosed by Textainer, as the measurement criteria and net book values of the containers reported by Trencor under IFRS are different to those reported by Textainer under US GAAP.
Further to the interim results announcement for the six months ended 30 June 2016 and the publication by Textainer of its third quarter results, shareholders are advised that a reasonable degree of certainty exists that Trencor will be reporting for the year ending 31 December 2016:
- a headline loss per share (“HLPS”) and adjusted headline loss per share (“AHLPS”) compared to a headline earnings per share of 513 cents and adjusted headline earnings per share of 443 cents reported for the year ended 31 December 2015 (which corresponds to a reduction of at least 513 cents and 443 cents per share respectively);
- more than a 20% reduction (or at least 17 cents per share reduction) in the loss per share (“LPS”) for the year ending 31 December 2016 compared to a LPS of 83 cents reported for the year ended 31 December 2015.
There is currently insufficient certainty to enable Trencor to provide specific guidance on the expected HLPS, AHLPS and LPS ranges for the year ending 31 December 2016, which cannot be estimated at this stage. A further trading statement will be issued once there is a reasonable degree of certainty on the HLPS, AHLPS and LPS ranges for the year ending 31 December 2016, which is anticipated to be closer to the release of the annual results for the year ending 31 December 2016.
The forecast financial information on which this trading statement is based has not been reviewed and reported on by Trencor’s external auditors.
RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement published on SENS on 3 October 2016 wherein it was reported that Hanjin had filed for bankruptcy protection. On the basis that the impact of the Hanjin matter on Textainer and hence on Trencor is the subject of ongoing further assessment, shareholders are advised to continue to exercise caution when dealing in their Trencor shares, until a further announcement is made.
Trencor Services (Pty) Ltd
11 November 2016
Rand Merchant Bank (A division of FirstRand Bank Limited)