Trellidor Holdings Ltd. · JSE:TRL
Trellidor — FY2018 Earnings Presentation
29 slides from Trellidor's earnings presentation, June 2018
Slide 1: Audited Final Results for the Year Ended 30 June 2018
TRELLIDOR HOLDINGS LIMITED AUDITED FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2018
Slide 2: Group Highlights
GROUP HIGHLIGHTS 9,3% Net Cash from Operating activities 28% Return on capital 16,2 cents per share Final dividend declared (Full year dividend 27,2 cents) Slide 2
Slide 3: Group Highlights
GROUP HIGHLIGHTS • Launched Shutterguard MkII and new rollerblind range – Taylor • Commenced factory efficiency project – implemented August 2018 - Trellidor • SR3 project – London Underground design, specification and first orders – Trellidor • Implemented new ERP system at Taylor factory - Taylor
Slide 4: Group Growth Strategies
GROUP GROWTH STRATEGIES • Acquisitive growth – acquisition of Taylor concluded FY 2017 • Period of bedding down • R30m Agterskot paid in July 2017 from cash reserves • Further acquisitions targeted from FY 2019 • Diversified product offering • Trellidor Security Shutter launched in FY 2017 • Alumini
Slide 5: Group Overview – Trellidor
GROUP OVERVIEW Trellidor • Trellidor is the market leading manufacturer of custom-made barrier security products • Distribution through dedicated and skilled owner-operated franchisees in South Africa and throughout Africa • Further representation in Israel, UK and parts of Europe • Products manufac
Slide 6: Group Overview – Taylor
GROUP OVERVIEW Taylor • Acquisition of Taylor Blinds and Shutters and NMC South Africa “Taylor” business effective 7 July 2016 diversifies revenue • Taylor is a major manufacturer and distributor of a range of custom-made blinds, and a range of decorative and security shutters • Strong distribution
Slide 7: New Product – TA600 and LPCB SR3
NEW PRODUCT – TA600 and LPCB SR3 Substantive in-house developed product Slide 7
Slide 8: New Product – Taylor
NEW PRODUCT – TAYLOR Shutterguard Mark II New Roller Blind Range 8
Slide 9: Financial Overview
GROUP FINANCIAL OVERVIEW Slide 9
Slide 10: Group Financial Performance
GROUP FINANCIAL PERFORMANCE Group financial performance (R'm) FY 2015 FY 2016 FY 2017 FY 2018 FY 18 vs FY 17 CAGR Revenue 293,8 313,4 525,4 539,0 3% 22% Gross Profit 148,9 157,3 250,5 245,9 -2% 18% EBITDA 72,8 81,5 113,9 103,5 -9% 12% Profit after tax 45,5 54,2 66,0 59,6 -10% 9% Dividends declared 4
Slide 11: Group Financial Performance
GROUP FINANCIAL PERFORMANCE • H2 trading reflects the CAGR 22% deteriorating economy • Strong growth in the premium products offset by weaker middle income market Slide 11
Slide 12: Group Financial Performance
GROUP FINANCIAL PERFORMANCE • Margins declined due to: CAGR 12% • Lower volumes in tough economic conditions • Product mix – higher H1 growth in lower margin premium products • Pricing strategies to maintain and grow market share Slide 12
Slide 13: Group Balance Sheet
GROUP BALANCE SHEET • Debt/EBITDA ratio 0.9x • Interest bearing debt of R93m at year end • R19,8m interest bearing debt repaid during the year • Debt/Equity ratio of 43% • R30m second tranche of business combination paid July 2017 Ratios FY 2015 FY 2016 FY 2017 FY 2018 Debt/Equity 33% 18% 55% 43% In
Slide 14: Net Working Capital
GROUP NET WORKING CAPITAL • Working capital investment increased mainly due to acquisition of Taylor • Accounts receivable are in-line with trading • Seasonal inventory investment at year end building for high season Net investment in working % of turnover capital (R'm) annualised • New terms negoti
Slide 15: Capital Allocation
CAPITAL ALLOCATION Capital applied during the year: • Capex of R16,4m of which R6m was for the efficiency project • Mergers and Acquisitions • R30m Agterskot payment - July 2017 • Debt Servicing • Paydown interest bearing liabilities - R19,8m • Net interest - R8,3m • Return to shareholders • Dividen
Slide 16: Segments
TRELLIDGR ) THE ULTIMATE CRIME BARRIER SEGMENTS
Slide 17: Sales Analysis - Trellidor Division
SALES ANALYSIS - TRELLIDOR DIVISION • Revenue growth of 4% in South Africa driven by outlying areas growth of 8% • International revenue growth of 12% driven by excellent growth in the UK of 187% • Africa, excluding Ghana, grew by 18% driven mainly by East and Southern Africa • West African economie
Slide 18: Sales Analysis - Trellidor Division
SALES ANALYSIS - TRELLIDOR DIVISION • Growth in new product sales of 23%, driven by Trellidor Security Shutter growth of 109%. • Diversified product range spans income groups which mitigates weak middle and upper middle class economy Product Type FY 2017 FY 2018 Traditional Trellidor 73% 68% Clear G
Slide 19: Trading Margin - Trellidor Division
TRADING MARGIN - TRELLIDOR DIVISION • Relatively stable trading margin despite muted sales • Growth in premium product sales offset by volume reduction on higher margin products • New wage increment agreement signed in September 2017 sees lower increment rates than previous. Average of circa 8% vs 1
Slide 20: Sales Analysis – Taylor Division
SALES ANALYSIS – TAYLOR DIVISION • Concentration of sales in the Western and Southern Cape • Johannesburg – weak demand stalled growth • Geographic growth opportunity using proven Trellidor model – Products introduced to Trellidor franchisees achieved sales of R7.8m for part of the year – strong gro
Slide 21: Sales Analysis – Taylor Division
SALES ANALYSIS – TAYLOR DIVISION • Turnover well spread by product • Constant innovation and development to keep up with trends • Strong growth in aluminium shutters and roller blinds offset by weak middle income market • Launched Shutterguard MkII and Hurricane MkII in May 2018 • New range of rolle
Slide 22: Trading Margin – Taylor Division
TRADING MARGIN – TAYLOR DIVISION • Efficient factory with significant spare Cost of sales – costs as % of net sales capacity, particularly in Blinds divisions • Pricing strategies to maintain and grow market share impacted trading margin • Implemented new ERP system in May 2018 – assist in managing
Slide 23: Summarised Cash Flow
GROUP SUMMARISED CASH FLOW Group summarised cash flow (R'm) FY 2016 FY 2017 FY 2018 EBITDA 81.5 113.9 103.5 Movement in non cash items (incl provisions) (5.9) 4.2 3.4 Net working capital movement (3.3) (13.4) 0.1 Inventory (9.4) (23.1) (12.3) Accounts receivable (3.7) 3.4 0.9 Accounts payable 9.8 6.
Slide 24: Summarised Cash Flow
GROUP SUMMARISED CASH FLOW Cash conversion (R’m) Remains highly cash generative Slide 24
Slide 25: Summarised Cash Flow
GROUP SUMMARISED CASH FLOW • Strong cash generation in H2 • Interest bearing debt paid down by R19,8m • Working capital – • new terms negotiated with certain suppliers in return for larger more efficient orders • higher inventory offset by higher payables • new product growth requires increased inve
Slide 26: Summarised Balance Sheet
GROUP SUMMARISED BALANCE SHEET Summarised balance sheet (R'm) FY 2016 FY 2016 FY 2017 FY 2018 Non current assets Property, plant and equipment 42,6 51,5 61,2 Goodwill and other intangibles 4,0 121,1 116,8 Deferred Tax 3,7 3,7 3,4 Other financial assets 0,4 0,3 0,7 50,7 176,6 182,1 Current assets Inv
Slide 27: Prospects
PROSPECTS • Targeted improvement in trading margins to previously achieved levels – strategies are in place • Factory efficiency project implemented in August 2018 • Driving geographic growth in Taylor ▪ Growth from Trellidor channel is targeted ▪ Strategy to accelerate geographic growth is in place
Slide 28: Thank You
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Slide 29: Group Financial Performance
GROUP FINANCIAL PERFORMANCE Core HEPS (R'm) FY 2016 FY 2017 FY 2018 FY 18 vs FY 17 Profit attributable to ordinary shareholders 53.7 64.3 58.8 -9% Adjusted for: Profit on disposal of property, plant and equipment (0.5) (0.1) (0.1) Headline earnings 53.2 64.2 58.7 -9% Adjusted for: Amortisation of cu