Trencor boxed in by ‘onerous’ JSE reporting demands
Exchange stipulates an arduous individual audit of its entire container fleet – about three million units
Trencor, a well-regarded company that has been listed on the JSE since 1955, faces the indignity of having its shares suspended after accounting intricacies delayed the publication of its financial results beyond the stipulated reporting deadline of three months.
Trencor – which holds a major stake in New York Stock Exchange-listed container leasing firm Textainer as its main asset – indicated it had lodged a formal objection to a JSE decision to suspend trade in the company’s shares from Wednesday.
Trencor said the formal objection had prompted the JSE to undertake not to suspend trade pending further representations. The JSE’s final decision is expected within the next few business days.
Opportune Investments CEO Chris Logan – a long-time Trencor shareholder – said it would be an extraordinary decision by the JSE to suspend trade in Trencor shares.“This would prejudice Trencor’s shareholders, Trencor itself and the JSE’s reputation.”
He said the reason for the delay in publishing Trencor’s year to end December results was well known and understood. It stems from the “onerous and time-consuming exercise of converting the American GAAP (generally accepted accounting practices) compliant results of Textainer to IFRS (international Financial Reporting Standards)”.
This accounting process involves an arduous individual audit of Textainer’s entire container fleet – about three million units.
Logan argued that no Trencor shareholders bothered looking at the IFRS conversion.“It’s easy to understand why … particularly when you consider Steinhoff used IFRS to boost the value of its assets and income. Notwithstanding the vast Steinhoff manipulation, Steinhoff trades away merrily and Trencor shareholders get stuck with this JSE irrationality.”
At Trencor’s last AGM, chairman David Nurek – referring specifically to the effort to finalise the depreciation of fleet and impairment numbers – said that it cost “tens of millions of rand to produce these two figures that no one really looks at”.
Trencor has since taken steps to relieve its accounting headache. In a SENS announcement released on January 2, the company detailed a voting limitation deed between its subsidiary Halco and Textainer.
This means Trencor – via Halco, which holds the 48% stake in Textainer – will limit its shareholder voting rights in Textainer in terms of the appointment and removal of directors.
This would ensure that Trencor will be regarded – for purposes of IFRS – as being not controlling or having significant influence over Textainer.
This means that the future financial results of Textainer will no longer have to be consolidated and converted into IFRS in Trencor’s results.
Trencor said it would be in a position to publish its reviewed provisional results before the end of May and would distribute its audited annual financial statements before the end of June.