Trellidor Holdings Ltd. · JSE:TRL
Trellidor — H1 2020 Earnings Presentation
36 slides from Trellidor's earnings presentation, March 2020
Slide 1: Trellidor Holdings Limited Half Year Results Ending 31 December 2019
TRELLIDOR HOLDINGS LIMITED HALF YEAR RESULTS ENDING 31 DECEMBER 2019
Slide 2: Strategic Objectives for 2020
STRATEGIC OBJECTIVES FOR 2020 As reported in the 2019 year ended results, key strategic objectives set for the Group were as follows: TERRY DENNISON GROUP CEO ➢ Continue with the share-buy buy program ➢ Optimising our balance sheet by increasing gearing to finance long-term organic growth ➢ Ongoing
Slide 3: Strategic Objectives Update
STRATEGIC OBJECTIVES UPDATE Continue with the share-buy back program: ➢ Repurchase of 5 561 547 Group shares out of cash resources at an aggregate value of TERRY DENNISON GROUP CEO R22 million at an average price per share of R3.94 Optimising our balance sheet by increasing gearing to finance long-t
Slide 4: Strategic Objectives Update
STRATEGIC OBJECTIVES UPDATE Ongoing focus on cash generation and return on invested capital ➢ Net cash from operating activities grew by 27% compared to the prior period TERRY DENNISON GROUP CEO ➢ Achieved an 19% reduction in Taylor’s inventory over the comparative period while maintaining supply re
Slide 5: Strategic Objectives Update
STRATEGIC OBJECTIVES UPDATE Enhancement of route to market in South Africa and abroad to facilitate growth TERRY DENNISON GROUP CEO ➢ Our recently acquired Durbanville franchise achieved growth of 24% in the current reporting period ➢ Sale and purchase agreements to acquire 3 franchises in the eThek
Slide 6: Strategic Objectives Update
STRATEGIC OBJECTIVES UPDATE Improving operational efficiencies and active cost management within the Group: TERRY DENNISON GROUP CEO ➢ Gross margins were relatively flat despite a reduction in revenue ➢ Overheads were well managed below inflation, increasing by 1.5% ➢ The following measures in Taylo
Slide 7: Strategic Objectives Update
STRATEGIC OBJECTIVES UPDATE Introduction of new products both locally and abroad: ➢ Both businesses are in the development stages of new products for both the local TERRY DENNISON GROUP CEO and international market ➢ Product launches are planned for the remainder of the 2020 calendar year 7
Slide 8: Prospects
PROSPECTS Share-buy back program ➢ The current share price continues to undervalue the business and so we will TERRY DENNISON GROUP CEO continue to apply excess cash to buy-back shares to enhance shareholder value Enhancement of route to market in South Africa and abroad to facilitate growth ➢ The l
Slide 9: Prospects
PROSPECTS Improving operational efficiencies and active cost management within the Group TERRY DENNISON GROUP CEO ➢ The weak economic environment is anticipated to continue and as result the tight control of operational overheads and focus on margin retention will persist ➢ Group buying strategies o
Slide 10: Prospects
PROSPECTS The Group remains focused on its core growth strategies of which the Board believes will position it to benefit from any improving economic TERRY DENNISON GROUP CEO conditions: ➢ Brand leadership ➢ Diversifying its product range ➢ Distribution enhancement ➢ Growth in South Africa, Africa a
Slide 11: Group Financial Overview
DIPRUARRRAREE }9 | sal iia TRELLID@R Keity GROUP FINANCIAL OVERVIEW
Slide 12: Adoption of IFRS 16: Leases
ADOPTION OF IFRS 16: LEASES The Group has adopted IFRS 16 from 1 July 2019 using the modified retrospective transition method and therefore comparative figures have not been restated. DAMIAN JUDGE These lease liabilities are measured at the present value of the remaining lease GROUP CFO payments, di
Slide 13: Adoption of IFRS 16: Leases
ADOPTION OF IFRS 16: LEASES UNAUDITED AT 31 DECEMBER 2019 DAMIAN JUDGE R’000 GROUP CFO CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Reduction of lease rental expense 4 103 Depreciation of right-of-use asset (‘RoU’) (3 760) Finance costs in respect of lease liability (941)
Slide 14: Adoption of IFRS 16: Leases
ADOPTION OF IFRS 16: LEASES UNAUDITED AT 31 DECEMBER 2019 R’000 DAMIAN JUDGE EQUITY GROUP CFO Retrospective adjustment to opening retained earnings at 1 July 2019 - Movement for the period (598) DECREASE IN RETAINED EARNINGS (598) DEFERRED TAX ASSET Retrospective adjustment to deferred tax asset at
Slide 15: Group Financial Performance
GROUP FINANCIAL PERFORMANCE HY 20 vs Group financial performance (R'm) FY 2018 HY 2019 FY 2019 HY 2020 HY 19 Revenue 539.0 286.2 514.9 274.8 -4% DAMIAN JUDGE Gross profit 245.9 128.9 231.9 122.5 -5% GROUP CFO EBITDA 103.5 55.7 81.2 49.1 -12% Profit after tax 59.6 32.6 43.0 26.8 -18% Dividends paid 3
Slide 16: Group Financial Performance
GROUP FINANCIAL PERFORMANCE Adverse economic conditions in RSA continue DAMIAN JUDGE GROUP CFO As a result the Group revenue is down 4% year-on-year The decline highlights the importance of the sales growth strategies being implemented 16
Slide 17: Group Financial Performance
GROUP FINANCIAL PERFORMANCE EBITDA declined due to: ➢ Lower volumes in tough economic conditions DAMIAN JUDGE ➢ Inflationary impact on input costs GROUP CFO Mitigating factors: ➢ Improved factory efficiencies in Trellidor ➢ Tighter cost controls across the Group Future interventions: ➢ Centralising
Slide 18: Group Balance Sheet
GROUP BALANCE SHEET Debt/Equity ratio of 51% (2019: 39%) DAMIAN JUDGE GROUP CFO Debt/EBITDA ratio of 1.4x (2019: 0.9x) Interest bearing debt of R110m (2019: R90m) Ratios HY 2018 FY 2018 HY 2019 FY 2019 HY 2020 Debt/Equity 47% 43% 39% 35% 51% Interest Cover 11.7x 9.6x 10.7x 7.9x 8.4x 18
Slide 19: Group Net Working Capital
GROUP NET WORKING CAPITAL Reduction in inventory coincides with a reduction in payables DAMIAN JUDGE GROUP CFO Accounts receivable are in line with trading Group procurement initiative has resulted in a targeted inventory reduction in Taylor 19
Slide 20: Group Summarised Cash Flow
GROUP SUMMARISED CASH FLOW DAMIAN JUDGE GROUP CFO 20
Slide 21: Capital Allocation
CAPITAL ALLOCATION Return to shareholders ➢ Final dividend of R12m (2019: R17m) DAMIAN JUDGE ➢ R22m spent on the buy-back of 5 561 547 shares at an average price GROUP CFO of R3.94 per share Debt Servicing ➢ Paydown interest bearing liabilities prior to refinancing of R11m ➢ Net interest R4.5m 21
Slide 22: Capital Allocation
CAPITAL ALLOCATION CAPEX ➢ R3.6m which is in line with our targeted spend and equals DAMIAN JUDGE depreciation GROUP CFO H2 2020 Key Capital Commitments ➢ R11m to acquire four local franchise operations has been deployed 22
Slide 23: Segments
TRELLIDOR J THE ULTIMATE CRIME BARRIER, SEGMENTS
Slide 24: Trellidor – Sales Analysis
TRELLIDOR – SALES ANALYSIS Overall revenue has declined by 7% across the Trellidor markets International revenue growth of 6% driven by a DAMIAN JUDGE GROUP CFO strong performance on the African continent with African sales growing 22% The Ghana operation showed pleasing results with a 19% growth ye
Slide 25: Trellidor – Sales Analysis
TRELLIDOR – SALES ANALYSIS Diversified product range spans income groups which mitigates weak middle and upper middle class economy DAMIAN JUDGE GROUP CFO The product mix remains consistent with prior periods It is pleasing to note the relatively improved performance of Traditional Trellidor product
Slide 26: Trellidor – Trading Margin
TRELLIDOR – TRADING MARGIN Improved trading margin despite muted sales DAMIAN JUDGE There has been a slight increase in wage GROUP CFO cost % as result of semi-variable costs not being fully recovered Slight materials efficiency achieved through the mix of sales in line with the improved performance
Slide 27: Segments
THE @EXSeRle):) GROUP | GSH. TAYi SEGMENTS fAvRGR BLINDS & SHUTTERS Est.1959
Slide 28: Taylor – Sales Analysis
TAYLOR – SALES ANALYSIS A slight recovery in the Western Cape economy has resulted in Taylor showing revenue growth of 1.3%, despite weaker sales in Gauteng DAMIAN JUDGE GROUP CFO Sales of Taylor products through the Trellidor Franchise network grew 6%, reflecting the continued success of this initi
Slide 29: Taylor – Sales Analysis
TAYLOR – SALES ANALYSIS Turnover well spread across product types Constant innovation and development to keep up with trends DAMIAN JUDGE GROUP CFO It is pleasing to note an increase in blind sales year-on-year Product Type HY 2019 FY 2019 HY 2020 Aluminium shutters 45% 43% 44% PVC Shutters 11% 10%
Slide 30: Taylor – Trading Margin
TAYLOR – TRADING MARGIN Cost control measures implemented have been successful in managing manufacturing costs and wages DAMIAN JUDGE GROUP CFO Group buying strategies have been implemented and savings are expected through the course of H2 2020 Improvements in the Taylor factory process are ongoing
Slide 31: Additional Information
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Slide 32: Group Summarised Cash Flow
GROUP SUMMARISED CASH FLOW Group summarised cash flow (R'm) FY 2018 HY 2019 FY 2019 HY 2020 EBITDA 103.5 55.7 81.2 49.1 Movement in non cash items (incl provisions) 3.4 1.1 3.1 -1.9 Net working capital movement 0.1 -16.0 -13.6 -0.6 Inventory -12.3 -4.2 -2.2 14.0 DAMIAN JUDGE Accounts receivable 0.9
Slide 33: Group Summarised Balance Sheet
GROUP SUMMARISED BALANCE SHEET Summarised balance sheet (R'm) FY 2018 HY 2019 FY 2019 HY 2020 Non current assets Property, plant and equipment 61.2 66.1 64.9 78.2 Goodwill and other intangibles 116.8 116.4 113.5 111.7 Deferred Tax 3.4 2.6 1.6 0.5 Other financial assets 0.7 0.0 0.8 0.7 DAMIAN JUDGE G
Slide 34: Group Financial Performance
GROUP FINANCIAL PERFORMANCE Core HEPS (R'm) FY 2018 HY 2019 FY 2019 HY 2020 HY 20 vs HY 19 Profit attributable to ordinary shareholders 58.8 32.1 42.9 26.3 -18% Adjusted for: Profit on disposal of property, plant and equipment (0.1) - 0.3 0.5 DAMIAN JUDGE Headline earnings 58.7 32.1 43.0 26.8 -17% G
Slide 35: Salient Points
SALIENT POINTS 25.6c Headline earnings per share (2019: 29.8c) DAMIAN JUDGE GROUP CFO 8.0c Final dividend declared per share (2019: 9.1c) R49m EBITDA (2019: R56m) R32m Cash from Operating Activities (2019: R25m) 15% Return on Invested Capital (2019: 20%) 35
Slide 36: Thank You
TERRY DENNISON DAMIAN JUDGE GROUP CEO GROUP CFO THANK YOU