Fixed-security specialist Trellidor expects to report a surge in its full-year financial results to June.
Group headline earnings per share (HEPS) for the year to end-June were expected to be in the range of 35.68c and 36.52c, the company said in a trading update on Monday. It would be a ninefold increase from the previous year’s 4.2c, and up from at least 22.4c the group had expected.
“The increase in EPS and HEPS from the prior reporting period is mainly driven by a strong performance by the UK division,” Trellidor said, adding that this “offset the weak demand in SA”.
Trellidor shares rose by as much as 8.02% on Monday, to the highest level since December 11, before closing 3.52% higher at R2.06. This gives it a market capitalisation of R196m.
The group, brands of which include Trellidor, NMC and Taylor, was founded in Durban in 1976 and listed on the JSE in October 2015. It produces barrier security products that are distributed in SA, the rest of Africa and the UK.
Trellidor has been grappling with two challenges: declining revenue in the domestic market and increased debt levels up to June 2023 at higher interest rates.
Given the level of net debt, the board chaired by Kevin Hodgson took the decision not to declare an interim dividend at the halfway mark. The group would revert to paying dividends once borrowings and gearing levels had normalised, the board said.
The company reassured investors that despite macroeconomic challenges, particularly in the domestic market, its strategies remained focused on improving shareholder value over time. These include restructuring and optimally reducing net debt, further improved working capital management and rigorous cost management, it said.
Trellidor’s board has rejected notions of a rights issue or any sale of individual businesses to reduce debt and vows to continue to focus on optimising revenue generation domestically while leveraging opportunities abroad.
The Financial Mail reported that some shareholders believed that Trellidor would probably need to sell its underperforming Taylor division, even though the group suggested it now had breathing space in its debt obligations.
In December, the board was granted a lifeline after its main lender condoned covenant breaches for the 2023 financial year, quashing any motive for a potential rights issue or the sale of some of its businesses.
The construction materials group said FNB had completed its reviews and subsequently condoned the covenant breaches for the 2023 financial year without amending the existing financial covenants or imposing any additional covenants or conditions.
FNB was set to remeasure the covenants for the ensuing financial period ending June 2024, the Durban-based company added.
In the company’s 2023 integrated report, former chair Mark Olivier said executing the growth strategies and rectifying the breach of covenants would be the main focus in the financial year, adding that the reduction of debt was a priority.
Correction: September 24 2024
This story was corrected to reflect the current chair is Kevin Hodgson.
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