Torre Industries Limited releases its interim results for the six months ended 31 December 2016

Media release
28 February 2017

Torre Industries Limited releases its interim results for the six months ended 31 December 2016

HIGHLIGHTS

• revenue from continuing operations grew 7%, compared to 2HFY16
• normalised EBITDA from continuing operations grew 117%, compared to 2HFY16
• normalised HEPS grew 36% to 7.46c compared to 2HFY16
• successful relocation of 4 business units to one premises
• finalisation of the agreement to sell off the remaining 55% interest in subsidiary Kanu Equipment to African Agriculture Fund for US$27.2 million

Johannesburg, 28 February 2017, Torre Industries Limited (Torre) delivered disappointing results for the six months ended 31 December 2016, in a difficult market.

Commenting on the results, Torre industries CEO, Johan Botes, said:

“This is a tale of two halves for Torre ‒ these interim results follow a challenging second half of the 2016 financial year that was characterised by low levels of activity from customers across most areas of the Group’s operations. A focus on improving operational efficiencies has resulted in a significant improvement when compared to 2HFY16. These signs of recovery proves our initiatives are working.”

Revenue from continuing operations decreased by R57 million to R802 million (2015: R859 million), mainly as a result of a once-off sale in the Analytical Services segment relating to a contract in Namibia in the prior period.

Normalised EBITDA from continued operations decreased by R36 million to R65 million (2015: R101 million) following benefits derived in the prior period from the once-off sale and an adjustment to deferred purchase consideration liabilities.

Revenue and normalised EBITDA from continuing operations however increased by R53 million to R802 million (2HFY16: R749 million) and R35 million to R65 million (2HFY16: R30 million) respectively as the Group benefited from operational improvements that were initiated at the end of the 2016 financial year.

The Group’s debt levels remained at similar levels to June 2016 as operations managed their working capital effectively during the period. Cash generated from continuing operating activities increased by 13% to R26 million (2015: R23 million).

Torre has reached agreement with African Agriculture Fund who will acquire Torre’s 55% shareholding in and loan claims against Kanu Equipment for a total consideration of US$27.2m. Torre will receive $13.5m on the effective date (no later than 30 April 2017) and the balance of the purchase price will be paid over a period of 14 months.

Botes continued, “We are seeing evidence of positive outlooks from our customer base although the sustainability of the commodity recovery remains uncertain. The Group’s focus will continue to be on organic growth and increasing its market share of its existing operations while continuing to reduce costs. Various cost cutting initiatives have been implemented throughout the Group and are expected to start bearing fruit over the next 12 to 24 months.”

A strategic review by the board is underway and expected to be complete at the end of March to confirm the Group’s strategy to decrease its reliance on capital equipment; focus on Southern Africa; align costs in line with the weak economic environment; consolidate back offices while maintaining separate front offices; evaluate bolt-on acquisitions; and enhance human capital through learning and development and strategic appointments.

Torre Executive Deputy Chairman and CEO of Stellar Capital, Charles Pettit said, “Torre is a strategically important asset in the Stellar Capital portfolio and remains our core holding in the industrial sector. The strategic board review will further calibrate the future strategy of the company and we are confident in the management team and the long term prospects for the business.”

ENDS

About Torre Industries

Torre Industries Limited is a JSE-listed industrial Group that specialises in:

• the value added distribution of branded capital equipment, either for rental or sale;
• the supply of critical parts and components to the automotive, mining, construction, manufacturing and industrial sectors; and
• the provision of specialised analytical and testing services to exploration and mining companies as well as commercial laboratories.

Torre is headquartered in Modderfontein, Johannesburg and employs over 1 600 staff with a physical presence in 14 African countries, including South Africa.

For further information: www.torreindustries.com

Issued by FTI Consulting:

For interviews, visuals or further information, please contact:

Sherryn Schooling

+27 (0) 21 487 9027 direct

+27 (0) 82 776 2840 mobile

sherryn.schooling@fticonsulting.com

On behalf of Torre Industries:

Shivan Mansingh

+27 (0) 11 923-7000

+27 (0) 71 365 5908 mobile

shivan@torreindustries.com