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Transpaco - Interim Group results for the 6 months ended 31 December 2005
TRANSPACO LIMITED
Reg. No. 1951/000799/06
ISIN: ZAE000007480
Share Code: TPC
Interim Group results for the 6 months ended 31 December 2005
NATURE OF BUSINESS
The Transpaco group is engaged in the manufacture, recycling and distribution of
paper and plastic packaging products.
THE PERIOD UNDER REVIEW
The 6 month period ended 31 December 2005 was particularly challenging for
Transpaco.
The strong Rand and high oil prices continued to have an adverse effect on the
local plastics manufacturing sector. Transpaco"s margins experienced pressure
from import replacement competition and the high costs of plastic raw materials
resulting from the application of import parity pricing.
The discontinuation of Rigid Plastics has been completed. The closure has
released funds which will be redeployed into growth opportunities.
Transpaco has further discontinued export trading of polymer raw material into
sub-Sahara Africa as it has become increasingly difficult for those countries to
obtain hard currencies to fund their liabilities.
The two strategic developments undertaken by Transpaco during the 2005 financial
year have been fully incorporated into Transpaco"s structure. The entry into the
printed folded carton market with the acquisition of Britepak has proved very
successful. Additional plant has been purchased to upgrade equipment and
increase capacity.
Specialised Films, which produces pallet stabilisation film, has gained
substantial market share enabling Transpaco to become a significant supplier of
this product in South Africa.
FINANCIAL RESULTS
Headline earnings per share for continuing operations declined by 15% to 40,6
cents (Dec 2004: 47,8 cents). Combined headline earnings per share declined by
25% to 37,1 cents (Dec 2004: 49,2 cents).
Turnover for continuing operations increased by 24% to R174,5 million (Dec 2004:
R140,2 million) as a result of the additional turnover from Britepak and the
establishment of Specialised Films. Combined turnover increased by 9% to R186,1
million (Dec 2004: R170,3 million).
The increase in operating expenses and depreciation is largely due to the
Britepak acquisition which took place in March of 2005 and Specialised Films now
being fully operational. Excluding Britepak and Specialised Films expenses
decreased by 0,8% for continuing operations.
The increase in cash generated from operations to R13,7 million (Dec 2004: R1,4
million) is due to efficient working capital management and the funds generated
from discontinued operations.
The increase in net interest paid is attributable to the inclusion of interest-
bearing debt assumed on the acquisition of Britepak, the establishment of
Specialised Film and the purchase of plant at several of Transpaco"s divisions.
Interest cover is at a comfortable 6,3 times.
The inclusion of convertible preference shares (which did not exist during the
previous period) in calculating diluted headline earning per share resulted in a
reduction of 30% to 31,9 cents (Dec 2004: 45,7 cents).
Transpaco"s cash resources were R15,8 million (Dec 2004: R4,8 million) The
movement in cash resources from R47,5 million in June 2005 to R15,8 million at
December 2005 is as a result of the funds required to conclude the BEE
transaction whereby Transpaco repurchased 5 246 054 shares in terms of the
specific buy back on 4 July 2005. This transaction also impacted on share
capital and reserves.
The net movement in weighted average number of ordinary shares in issue reflects
a decrease of 1 325 000 shares. The ranking number of ordinary shares in issue
decreased by 512 900 shares due to:
- the net movement on treasury shares of 2 923 000; and
- 2 208 000 shares repurchased and cancelled.
Net asset value per share increased by 6,3% to R4,22 (Dec 2004: R3,97).
THE BOARD
Transpaco regrets to announce that Muzi Buthelezi passed away during December
2005. Transpaco is grateful for his contribution during his short term. A
successor is in the process of being finalised.
ACQUISITION
Transpaco is in the process of acquiring the plant and equipment of Recycling
Plastic, the recycling subsidiary of Sasol Polymers subject to certain
suspensive conditions. If the transaction is completed, the additional equipment
will add capacity to existing recycling facilities which will benefit Transpaco
in the future.
The group will continue to pursue organic growth and strategic acquisitions.
DIVIDEND
Having regard to the group"s sound cash position, the board has maintained the
interim dividend at 8 cents per share covered 4,6 times. The dividend will be
paid to shareholders recorded in the register on Friday 31 March 2006 payable on
Monday 3 April 2006.
The last day to trade "cum" dividend will be Friday, 24 March 2006. Shares will
commence trading "ex" dividend from the commencement of business on Monday, 27
March 2006. The record date will be Friday, 31 March 2006. Share certificates
may not be dematerialised or rematerialised between Monday, 27 March 2006 and
Friday, 31 March 2006, both days inclusive.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The group has adopted International Financial Reporting Standards ("IFRS") for
the year ending 30 June 2006. These unaudited interim financial statements for
the six months ended 31 December 2005 have been prepared in accordance with the
Transpaco"s accounting policies and comply with the Listings Requirements of JSE
Limited, the South African Companies Act, 1973 and International Accounting
Standards ("IAS 34") - Interim Financial Reporting, and are covered by IFRS 1 -
First time adoption of IFRS as these are the group"s first financial results
reported under IFRS. These standards are subject to ongoing review
interpretation by the International Accounting Standards Board. Consequently,
IFRS information at year-end may differ from the information contained herein.
The key principle of IFRS 1 - First time adoption of IFRS is full retrospective
adoption of IFRS. This statement however provides exemption from retrospective
application in certain instances due to cost and practical considerations. The
group has elected the following exemptions under IFRS 1:
Property, plant & equipment.
In terms of IFRS 1, a first time adopter may elect to use the fair value of
individual items of property, plant and equipment at transition date as the
deemed cost. Alternatively, a first time adopter may elect to measure individual
items of property, plant and equipment at depreciated cost, determined in
accordance with IFRS. These elections are available to each individual asset.
Transpaco has made this transitional election for buildings, as the
circumstances of each building required.
IFRS 2 - Share-based payment
The group has elected not to apply the provisions of IFRS 2 - Share-based
Payment to options granted on or before 7 November 2002, or to awards granted
after that date but which had vested prior to 1 January 2005.
IFRS 3 - Business combinations
The group has elected not to apply IFRS 3 - Business Combinations
retrospectively to past business combinations that occurred before the date of
transition to IFRS. The carrying cost of goodwill will no longer be amortised
but is subject to annual impairment testing.
IAS 16 - Property, plant and equipment
Previously property, plant and equipment were depreciated on a straight-line
basis and did not take into account the re-assessment of an asset"s useful life
on a regular basis. The revised version of IAS 16 requires that the useful and
residual value of an asset to be reviewed at least each financial year end.
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); HA Botha; JS Botha; SR
Bouzaglou; SI Jacobson*; D Thomas*; SP van der Linde*; L Weinberg
*non-executive
Date 24 February 2006
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
CONTINUING OPERATIONS
Unaudited Unaudited
Restated Restated
(IFRS) (IFRS)
6 months 6 months % 12 months
R"000 Dec 2005 Dec 2004 Change June 2005
Turnover 174 454 140 234 24 279 712
Cost of sales 114 390 85 644 34 173 822
Gross Profit 60 064 54 590 10 105 890
Operating Costs 37 687 31 493 20 67 686
BEE IFRS 2 Expense 0 0 3 279
Depreciation 6 301 5 141 23 11 191
Operating profit 16 076 17 956 (10) 23 734
Net financing costs 2 115 999 112 2 934
Profit before taxation 13 961 16 957 (18) 20 800
Taxation 3 223 3 823 (16) 3 115
Profit after taxation 10 738 13 134 (18) 17 685
Weighted average number of 26 084 27 319 27 409
shares in issue ("000)
Diluted weighted average 31 309 29 375 29 375
number of shares in issue
("000)
Earnings per share (cents) 41,2 48,1 (14) 64,5
Headline earnings per 40,6 47,8 (15) 63,8
share (cents)
Diluted earnings per share 35,3 44,7 (21) 60,0
(cents)
Diluted headline earnings 34,8 44,4 (22) 59,4
per share (cents)
Dividend per share
(cents)*
Reconciliation of headline
earnings (R"000)
Basic earnings 10 738 13 134 17 685
Impairment 0 0 0
Termination costs on 0 0 0
disposal of business
Profit on disposal of (144) (85) (189)
plant and equipment
Headline earnings 10 594 13 049 (19) 17 496
DISCONTINUED OPERATIONS
Unaudited Unaudited
Restated Restated
(IFRS) (IFRS)
6 months 6 months 12 months
R"000 Dec 2005 Dec 2004 June 2005
Turnover 11 601 30 106 51 810
Cost of sales 10 861 24 614 43 932
Gross Profit 740 5 492 7 878
Operating Costs 2 962 4 183 4 700
BEE IFRS2 Expense 0 0 0
Depreciation 38 728 1 403
Operating profit (2 260) 581 1 775
Net financing costs 94 43 205
Profit before taxation (2 354) 538 1 570
Taxation (711) 158 451
Profit after taxation (1 643) 380 1 119
Weighted average number of 26 084 27 319 27 409
shares in issue ("000)
Diluted weighted average 31 309 29 375 29 457
number of shares in issue
("000)
Earnings per share (cents) (6,3) 1,4 4,1
Headline earnings per (3,6) 1,4 4,0
share (cents)
Diluted earnings per share (5,2) 1,3 3,8
(cents)
Diluted headline earnings (2,0) 1,3 3,7
per share (cents)
Dividend per share
(cents)*
Reconciliation of headline
earnings (R"000)
Basic earnings (1 643) 380 1119
Impairment 564 0 0
Termination costs on 151 0 0
disposal of business
Profit on disposal of 0 0 (29)
plant and equipment
Headline earnings (928) 380 1 090
COMBINED OPERATIONS
Unaudited Unaudited
Restated Restated
(IFRS) (IFRS)
6 months 6 months & 12 months
R"000 Dec 2005 Dec 2004 Change June 2005
Turnover 186 055 170 340 9 331 522
Cost of sales 125 251 110 258 14 217 754
Gross Profit 60 804 60 082 1 113 768
Operating Costs 40 649 35 676 14 72 386
BEE IFRS2 Expense 0 0 3 279
Depreciation 6 339 5 869 8 12 594
Operating profit 13 816 18 537 (25) 25 509
Net financing costs 2 209 1 042 112 3 139
Profit before taxation 11 607 17 495 (34) 22 370
Taxation 2 512 3 981 (37) 3 566
Profit after taxation 9 095 13 514 (33) 18 804
Weighted average number of 26 084 27 319 27 409
shares in issue ("000)
Diluted weighted average 31 309 29 375 29 457
number of shares in issue
("000)
Earnings per share (cents) 34,9 49,5 (30) 68,6
Headline earnings per 37,1 49,2 (25) 67,8
share (cents)
Diluted earnings per share 30,0 46,0 (35) 63,8
(cents)
Diluted headline earnings 31,9 45,7 (30) 63,1
per share (cents)
Dividend per share 8,0 8,0 20,0
(cents)*
Reconciliation of headline
earnings (R"000)
Basic earnings 9 095 13 514 18 804
Impairment 564 0 0
Termination costs on 151 0 0
disposal of business
Profit on disposal of (144) (85) (218)
plant and equipment
Headline earnings 9 666 13 429 (28) 18 586
*Dividend declared after the period
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited
Restated Restated
(IFRS) (IFRS)
6 months 6 months 12 months
R"000 Dec 2005 Dec 2004 June 2005
ASSETS
Non-current assets 85 213 75 735 85 544
Property, plant and equipment 78 113 74 589 79 541
Intangibles 3 685 481 3 685
Unlisted investments 2 301 0 1 536
Deferred taxation 1 114 665 782
Current assets 129 210 123 881 161 126
Inventories 32 002 37 048 35 588
Accounts receivable 77 185 79 312 72 428
Taxation 4 210 2 760 5 655
Cash resources 15 813 4 761 47 455
Non-current assets classified 354 5 851 4 738
as held for sale
TOTAL ASSETS 214 777 205 467 251 408
EQUITY AND LIABILITIES
Capital and reserves 110 123 108 727 137 047
Share capital 261 276 312
Share premium 3 279 0 15 952
Preference shareholders 9 273 0 9 273
interest
Non-distributable reserves 1 688 1 688 1 688
Retained earnings 95 622 106 763 109 822
Non-current liabilities 43 300 32 173 46 805
Preference share liability 5 717 0 6 029
Long-term borrowings 32 800 27 488 36 251
Deferred taxation 4 783 4 685 4 525
Current liabilities 61 212 64 567 67 401
Trade and other payables 49 086 56 941 54 754
Short-term borrowings 12 126 7 626 12 647
Liabilities directly 142 0 155
associated with the assets
classified as held for sale
TOTAL EQUITY AND LIABILITIES 214 777 205 467 251 408
Number of shares in issue 000 000 000
Number of shares in issue(net of 31 203 27 214 27 214
1 494 778 treasury shares)
Net movement on treasury (2 923) 139 (979)
shares
Shares purchased and cancelled (2 208) 0 0
Shares issued 0 0 4 968
Ranking number of shares 26 072 27 353 31 203
Salient features
Net asset value per share 422 397 409
(cents)
Gearing ratio % 26 28 5
Shareholders Funds: Total assets 55 54 63
%
Interest cover (x) 6,3 17,8 9,2
Operating margin % 7,4 10,9 8,7
ABRIDGED CONSOLIDATED CASH FLOW
Unaudited Unaudited
Restated Restated
(IFRS) (IFRS)
6 months 6 months 12 months
R"000 Dec 2005 Dec 2004 June 2005
Cash flow from operating
activities
Cash generated from operations 13 736 1 418 28 838
Ordinary dividend paid (3 124) (3 050) (5 197)
Preference dividend paid (292) 0 0
Finance charges (2 209) (1 042) (3 139)
Taxation paid (1 161) (2 298) (5 160)
Net cash flow from operating 6 950 (4 972) 15 342
activities
Cash flow from investing
activities
Proceeds on disposal of 3 642 158 1 467
property, plant and equipment
Acquisition of property, (4 589) (17 707) (21 372)
plant and equipment
Acquisition of new business 0 0 (12 822)
(Increase)/Decrease in (765) 0 1 944
unlisted investments
Net cash flow from investing (1 712) (17 549) (30 783)
activities
Cash flow from financing
activities
Proceeds from ordinary shares 0 0 20 453
issued
Proceeds from preference 0 0 15 302
shares issued
Net movement in treasury (32 895) 189 (7 740)
shares
(Decrease)/Increase in long (3 436) 11 495 14 559
term borrowings
(Decrease)/Increase in short (549) 384 5 108
term borrowings
Net cash flow from financing (36 880) 12 068 47 682
activities
Net movement in cash for the (31 642) (10 453) 32 241
period
Cash and cash equivalents at the 47 455 15 214 15 214
beginning of the period
Cash and cash equivalents at the 15 813 4 761 47 455
end of the period
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
Restated Restated
(IFRS) (IFRS)
6 months 6 months 12 months
R"000 Dec 2005 Dec 2004 June 2005
Opening balance 137 047 96 747 96 491
IFRS transition
Operating leases 0 (262) 0
Property, plant and equipment 0 143 143
IFRS 1 - deemed cost exemption 0 1 541 1 541
Restated balance 137 047 98 169 98 175
Net profit for the period 9 095 13 389 22 204
(previously stated)
Operating leases 0 1 0
Property, plant and equipment 0 128 (38)
Intangibles 0 (99) (83)
Dividend paid (3 124) (3 050) (5 197)
Issue of share capital 0 0 20 453
Net movement on treasury shares (32 895) 189 (7 740)
Preference shareholders interest 0 0 9 273
Restated closing balance 110 123 108 727 137 047
Date: 23/02/2006 04:12:19 PM Supplied by www.sharenet.co.za
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