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Transpaco - Reviewed Results for The Year Ended 30 June 2005
Transpaco Limited
Reg.No.1951/000799/06
Share Code: TPC
ISIN: ZAE000007480
Reviewed Results for The Year Ended 30 June 2005
HIGHLIGHTS INCREASE
HEADLINE EARNINGS PER SHARE 80.2c 12%
DIVIDENDS PER SHARE 20c 11%
NET ASSETS VALUE PER SHARE 404c 14%
NATURE OF BUSINESS
The Transpaco group is engaged in the manufacture, recycling and distribution of
paper and plastic packaging products in South Africa and sub-Saharan Africa.
THE YEAR
During the year ended 30 June 2005 ("the year") Transpaco achieved a number of
strategic goals.
As announced on 12 May 2005 the group concluded a strategic broad-based BEE
transaction that saw Amalgum 36 (Pty) Ltd ("Amalgum"), a wholly-owned subsidiary
of CEPPWAWU Investments (Pty) Ltd ("CI"), acquire an effective 28% interest in
Transpaco. CI is the investment arm of the Chemical, Energy, Paper, Printing,
Wood and Allied Workers Union, which represents the majority of Transpaco"s
workers.
The establishment of Specialised Films (Pty) Ltd ("Specialised Films") in the
pallet stabilisation market, was another important milestone in the group"s
growth strategy. Pallet wrap, a relatively new development within plastic
flexible packaging, is growing at approximately 14% a year.
Further, the aquisition of Britepak (Pty) Ltd ("Britepak") for R18.7 million,
effective 1 March 2005, enabled Transpaco to diversify into the niche area of
printed folded cartons the market for which in South Africa is estimated at R4
billion per year.
As heavy-duty pipe extrusion and injection moulding do not form part of
Transpaco"s long-term strategy, the group is currently exiting this business.
FINANCIAL RESULTS
Headline earnings per share increased by 12% to 80,2 cents (June 2004: 71,9
cents).
Turnover increased by 10% to R332 million (June 2004: R301 million),
attributable mainly to the establishment of Specialised Films, the acquisition
of Britepak and volume growth in the plastic bag business.
Operating income decreased by 2% to R28,9 million (June 2004 : R29,6 million) as
a result of a decline in gross profit margins to 34,32% (June 2004 : 35,62%).
The strong Rand and high oil prices had an adverse effect on the local plastics
manufacturing sector. Transpaco"s margins experienced pressure from import
replacement competition and high costs of plastic raw materials resulting from
the application of import parity pricing. Management"s tight control of
manufacturing expenses has helped to alleviate the impact on operating income.
The decrease in cash generated from operations to R28,8 million (June 2004 :
R42,8 million)is due to the increase in net working capital attributable to the
establishment of Specialised Films and the acquisition of Britepak without the
benefit of a full year"s trading.
The 22% increase in depreciation resulted from additional plant acquired in the
flexible division, the establishment of Specialised Films and the acquisition of
Britepak.
Net interest paid increased by 9% to R3,1 million (June 2004 : R2,9 million) as
a result of the establishment of Specialised Films and net interest-bearing debt
in Britepak. Interest cover remains at a comfortable level of 9,2 times (June
2004: 10,3 times).
Although profit before taxation declined by 3% to R25,8 million (June 2004 :
R26,7 million) profit after taxation increased by 11% to R22,2 million (June
2004 : R20,0 million) due to the utilisation of government investment
incentives.
SHARE CAPITAL
The net movement in the weighted average number of ordinary shares in issue
reflects an increase of 170 000 shares. The ranking number of ordinary shares in
issue increased by 3 989 000 shares due to:
- the issue of 4 968 170 ordinary shares to Amalgum;
- the purchase of 1 400 000 ordinary shares by the Transpaco Share Incentive
Scheme at an average price of R5.93 per share amounting to R8 302 000;
- 421 058 vested options exercised by staff members; and
- the cancellation of 2 962 908 treasury shares held by a subsidiary.
The net asset value per share increased by 14% to 404 cents (June 2004: 355
cents). Transpaco in addition issued 3 312 126 voting preference shares to
Amalgum.
POST BALANCE SHEET EVENTS
Subsequent to year-end the BEE transaction was completed by the repurchase of
and payment for 5 246 054 ordinary shares at R6.30 per share amounting to R33,1
million. 2 208 213 of the ordinary shares repurchased have been cancelled and
the balance of 3 037 841 ordinary shares are currently held as treasury shares
by a subsidiary.
Had these transactions been accounted for as at 30 June 2005, the effect would
have been as follows:
Unreviewed
pro forma Reviewed Audited
effect June 2005 June 2004
Capital and reserves (R"000) 102 434 135 484 96 491
Net asset value per share (cents) 395 404 355
Cash resources (R"000) 14 405 47 455 15 214
Net interest-bearing debt (R"000) 40 677 7 627 23 235
Gearing ratio % 40 6 8
Shareholders funds: Total assets % 51 62 61
THE BOARD
Alan Salomon has resigned from the Board. Transpaco thanks him for his
contribution to the group.
Following the BEE transaction we are pleased to welcome Muzi Buthelezi and Derek
Thomas to the Board as non-executive directors with effect from 2 June 2005.
PROSPECTS
Transpaco will continue to pursue organic growth and to identify strategic
acquisitions. The benefit for a full year of the BEE transaction, the
acquisition of Britepak and the establishment of Specialised Films will enhance
the group"s performance. As a result the group is budgeting for future growth.
DIVIDEND
The board has declared a final dividend of 12 cents per share to shareholders
recorded in the register on Friday 23 September 2005, payable on Monday 26
September 2005. Together with the interim dividend of 8 cents per share, this
results in a total dividend for the year of 20 cents per share (June 2004: 18
cents).
The last day to trade cum dividend will be Friday 16 September 2005. Shares will
commence trading ex dividend from the commencement of business on Monday 19
September 2005. The record date will be Friday 23 September 2005. Share
certificates may not be dematerialised or rematerialised between Monday 19 and
Friday 23 September 2005, both days inclusive.
BASIS OF ACCOUNTING
These results are prepared in accordance with South African statements of
Generally Accepted Accounting Practice, the Companies Act and the Listings
Requirements of JSE Limited. The accounting policies used are consistent in all
material respects with those applied in the previous year, save for the revised
accounting treatment of operating leases following the release of Circular
7/2005 - Operating Leases as detailed below.
PRIOR YEAR ADJUSTMENT
Operating leases with fixed rental escalations have now been expensed on a
straight line basis over the lease term in accordance with Circular 7/2005 -
Operating Leases, compared with previously being charged against income on the
basis of the cash flows. This had the effect of increasing the prior year"s
headline earnings per share from 71,8 cents to 71,9 cents. The current year
effect increased net profits by R37 000 (June 2004: R6 000). Accordingly the
audited financial statements for the 12 months ended 30 June 2004 have been
restated.
The Group"s auditors, Ernst & Young, have reviewed the results. The unqualified
review report is available for inspection at Transpaco"s registered office.
ON BEHALF OF THE BOARD
AJ Aaron PN Abelheim L Weinberg
Non-executive Chairman Chief Executive Financial Director
DIRECTORS
AJ Aaron (Chairman)*; PN Abelheim (Chief Executive); L Weinberg (Financial
Director); HA Botha; JS Botha; SR Bouzaglou; M Buthelezi*;
SL Chaitel; DR Hilewitz*; SI Jacobson*;
D Thomas*; SP van der Linde*; *non-executive
DATE 25 August 2005
Auditors Ernst & Young
Sponsor Investec Bank Limited
Registered Office 331 6th Street, Wynberg, Sandton
Transfer Secretaries Computershare Investor Services 2004 (Pty) Ltd
70 Marshall Street, Johannesburg
Website www.transpaco.co.za
CONSOLIDATED INCOME STATEMENT
Reviewed % Change Audited
12 Months 12 Months
R `000 June 2005 June 2004
Turnover 331 522 10 300 796
Cost of sales 217 754 12 193 651
Gross Profit 113 768 6 107 145
Operating Costs 72 270 7 67 300
Depreciation 12 574 22 10 277
Operating Income 28 924 (2) 29 568
Net interest paid 3 139 9 2 871
Profit before taxation 25 785 (3) 26 697
Taxation 3 581 (47) 6 696
Profit after taxation 22 204 11 20 001
Weighted average number of shares in
issue ("000) 27 409 27 239
Diluted weighted average number of 29 457 29 203
shares in issue ("000)
Earnings per share (cents) 81.0 10 73.4
Diluted earnings per share (cents) 75.4 10 68.5
Headline earnings per share (cents) 80.2 12 71.9
Diluted headline earnings per share 74.6 11 67.0
(cents)
Dividend per share (cents)* 20.0 11 18.0
Reconciliation of headline earnings
(R"000)
Basic earnings 22 204 20 001
(Profit) on disposal of plant and
equipment (218) (426)
Headline earnings 21 986 13 19 575
*Includes interim dividend of 8c (June 2004: 7 cents) and a dividend declared
after the period of 12 cents (June 2004: 11 cents)
DISCONTINUING OPERATIONS
Continuing Operations Discontinuing
Operations
Reviewed Audited Reviewed Audited
12 months 12 months 12 months 12 months
R"000 June 2005 June 2004 June 2005 June 2004
Turnover 315 329 279 743 16 193 21 053
Profit/(Loss) after taxation 22 220 19 382 (16) 619
Net asset value 133 226 94 217 2 258 2 274
CONSOLIDATED BALANCE SHEET
Reviewed Audited
12 months 12 months
R"000 June 2005 June 2004
ASSETS
Non-current assets 88 689 68 889
Property, plant and equipment 82 587 66 908
Intangibles 564 600
Unlisted investments 1 536 0
Goodwill 3 204 0
Deferred taxation 798 1 381
Current assets 161 126 104 741
Inventories 35 588 28 104
Accounts receivable 72 428 57 930
Taxation 5 655 3 493
Cash resources 47 455 15 214
TOTAL ASSETS 249 815 173 630
EQUITY AND LIABILITIES
Capital and reserves 135 484 96 491
Issued capital 312 272
Share premium 12 673 0
Preference shareholders interest 9 273 0
Reserves 1 688 1 688
Accumulated profit 111 538 94 531
Non-current liabilities 46 902 20 388
Preference share liability 6 029 0
Interest-bearing borrowings 36 378 15 993
Deferred taxation 4 495 4 395
Current liabilities 67 429 56 751
Trade and other payables 54 754 49 509
Current portion of interest bearing 12 675 7 242
borrowings
TOTAL EQUITY AND LIABILITIES 249 815 173 630
Number of shares in issue "000 "000
Number of shares in issue net of treasury 27 214 27 786
shares
(net of 3 478 744 treasury shares)
Options exercised 421 0
Shares purchased by share incentive scheme (1 400) (572)
Shares issued 4 968 0
Ranking number of shares 31 203 27 214
Salient features
Net asset value per share (cents) 404 355
Gearing ratio % 6 8
Shareholders funds: Total assets % 62 61
Interest cover (x) 9.2 10.3
Operating margin % 8.7 9.8
ABRIDGED CONSOLIDATED CASH FLOW
Reviewed Audited
12 Months 12 Months
R`0000 June 2005 June 2004
Cash flow from operating activities
Cash generated from operations 28 838 42 819
Dividend paid (5 197) (6 106)
Finance charges (3 139) (2 871)
Taxation paid (5 160) (5 781)
Net cash flow from operating activities 15 342 28 061
Cash flow from investing activities
Proceeds on disposal of property, plant and 1 467 2 006
equipment
Acquisition of plant and equipment (21 372) (24 477)
Acquisition of new business (12 822) 0
Decrease in unlisted investments 1 944 0
Net cash flow from investing activities (30 783) (22 471)
Cash flow from financing activities
Proceeds from ordinary shares issued 20 453 0
Proceeds from preference shares issued 15 302 0
Net movement in treasury shares (7 740) (2 103)
Increase in long-term borrowings 14 559 3 284
Increase in short-term borrowings 5 108 462
Employee compensation reserve 0 (130)
Net cash flow from financing activities 47 682 1 513
Net movement in cash for the year 32 241 7 103
Cash and cash equivalents at the beginning of 15 214 8 111
the year
Cash and cash equivalents at the end of the 47 455 15 214
year
STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
12 months 12 months
R"000 June 2005 June 2004
Opening balance 96 491 85 091
Prior year adjustment 0 (262)
Restated balance 96 491 84 829
Earnings attributable to shareholders 22 204 20 001
Employee compensation reserve 0 (130)
Dividend paid (5 197) (6 106)
Issue of share capital 20 453 0
Net movement in treasury shares (7 740) (2 103)
Pref shareholders interest 9 273 0
Closing balance 135 484 96 491
Date: 25/08/2005 04:48:10 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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