Trencor wangles its way around reporting dilemma


Trencor wangles its way around reporting dilemma


Published Date: 2018-01-03 | Source: Stephen Gunnion | Author: Stephen Gunnion

Trencor wangles its way around reporting dilemma

The container group aims to get around the different accounting standards in the US and SA that have created a costly headache

Trencor may have found a solution to the complex reporting issues it faces due to its different accounting standards in the US and South Africa but needs the JSE's buy-in.

The container group, which owns a 48% beneficial interest in New York Stock Exchange-listed Textainer through Halco Holdings, is required to convert the US Generally Accepted Accounting Principles (GAAP) financial results of Textainer to International Financial Reporting Standards (IFRS), which is an onerous process and cost it R80 million in audit fees last year.

It says Textainer and Halco have now entered into a Voting Limitation Deed (VLD), effective from 1 January, which will see Halco limit its shareholder voting rights in Textainer when it comes to appointing and removing directors to the extent necessary that Trencor won't be regarded as being in control or having a significant influence over Textainer. It said the VLD wouldn't have a material impact on the economic value of its beneficial interest in Textainer.

The agreement means that Textainer's financial results, reported under US GAAP, won't have to be consolidated and converted into IFRS, eliminating significant commercial issues for both groups and their respective shareholders. Textainer would then be accounted for by Trencor at fair value through profit and loss, which is more meaningful. However, the JSE says the VLD between Textainer and Halco has rendered Trencor non-compliant with its listing requirements. To resolve this, Trencor has proposed that it be reclassified as an "investment entity" under section 15 of the JSE's listing requirements, which the JSE is considering.

If everything goes according to plan, Trencor says the changes will reduce costs, time delays and reputational risks.

Its shares ended 1% down at R47.50. It made the accouncement after the close of trade.


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