Picture: ISTOCK
Picture: ISTOCK

Specialist investment group Trencor has skipped its interim dividend payment for the first time in decades as the troubled company shores up its dwindling cash resources ahead of a possible share repurchase.

The company, whose investments are focused on marine cargo containers, has struggled to deal with poor performances from its key investments in marine container specialist TAC and Textainer. The latter achieved a return on equity of just 3% in 2017 and lost its long-held number one position in the global container market several years ago to the more asset-hungry Triton, which boasts a return on equity of 16%.

Trencor’s share price has been on a steady downward trajectory since June 2014 when it peaked at R84. The closing R28 on Monday is at a discount of about 34% to the group’s net asset value (NAV). The gap has prompted the board to look at a repurchase of shares, said CEO Hennie van der Merwe on Friday when he released the latest set of disappointing results.

"In view of the current substantial discount in Trencor’s listed share price compared to its NAV per share, the board has determined that it may be appropriate for Trencor to consider a repurchase of its shares," said Van der Merwe as he announced a headline loss of 724c a share for the six months ended June 30.

An additional investment in TAC during the six months has reduced cash available for repurchasing shares to R1.3bn and explains why the board does not see scope for an interim dividend. Van der Merwe said a dividend will be considered for the full-year results.

The last major share repurchase was in 2011 when it spent R417m buying back 10.8-million shares from the Jowell family, which established Trencor as a truck transport business 100 years ago. The shares were repurchased from Neil and Cecil Jowell at an NAV of R38.61 each.

crottya@bdfm.co.za