Troubled Trencor warns of hefty loss
Just 24 hours after a warning that it faces suspension from the JSE, container group Trencor has released a trading statement alerting shareholders to a hefty loss for the 12 months December 2016. The loss a share is expected to be as high as 992c.
On Thursday, Trencor, one of the world’s largest container-leasing groups, said poor economic conditions in the global container industry during 2016 and the bankruptcy of Hanjin Shipping, a large client, had a materially detrimental effect on its results.
This was exacerbated by International Financial Reporting Standard (IFRS) requirements. These forced Trencor to charge additional depreciation on its fleet of 2.5-million containers.
The expected 992c loss a share in 2016 compares with a loss of 43c in financial 2015.
On Wednesday, the JSE issued a statement advising investors that Trencor had failed to submit its provisional results within the three-months stipulated in the JSE’s listings requirements. If it failed to submit these by the end of April “its listing will be suspended”.
The company issued a Sens statement in response, saying it was not in a position to publish its provisional results “due to the onerous and time-consuming exercise in converting to IFRS the US GAAP-compliant results of Textainer Group Holdings in which Trencor has a 48% beneficiary interest”.
Group CEO Jimmy McQueen said the company expected to release the reviewed results next week.
He explained the source of the problem was that the two accounting systems (IFRS and US GAAP) treated “resale value” differently.
This difference became particularly onerous after the decline in market conditions during financial 2015.
The directors’ report of that year refers to the reporting challenge, particularly in the area of impairment testing and residual values of the container fleets.
“The complex and time-consuming calculations required to make the necessary IFRS adjustments ... for the large owned container fleets resulted in a delay in the issuance of these results and may continue to do so in the future,” the directors said in 2015.