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Transpaco Limited - Reviewed results and dividend announcement
TRANSPACO LIMITED
Reg. No. 1951/000799/06ISIN: ZAE000007480Share Code: TPC
Reviewed results for the year ended 30 June 2006 and dividend
announcementNATURE OF BUSINESSThe Transpaco group is engaged in the
manufacture, recycling and distribution of paper and plastic packaging
products.
CORPORATE ACTIVITYDuring the year ended 30 June 2006 ("the year") Transpaco
embarked on a number of strategic corporate activities.
BEE TransactionThe final phase of Transpaco"s BEE transaction was completed
at the beginning of the year, with the repurchase of and payment for 5 246
054 ordinary shares at R6.30 per share.
Rigid DivisionThe injection moulding and heavy duty vacuum forming business
of Transpaco was sold during the year. The resources released as a result
of this disposal were re-deployed in Transpaco Specialised Films, which has
successfully established a foothold in the pallet stabilisation market.
Recycling DivisionTranspaco successfully negotiated the acquisition of the
assets of Recycling Plastics, the post-consumer recycling division of Sasol
Products. This transaction was concluded subsequent to year-end and will
enable Transpaco to increase its post-consumer recycling capabilities by
50%. The acquisition is in line with Transpaco"s commitment to the plastic
recycling industry.
The Recycling Division exited the export market for virgin plastics raw
material to sub-Saharan African states as this activity is no longer
viable.
Flexible DivisionTranspaco commenced negotiation for the purchase of
certain assets of Nampak Products Limited"s retail plastic bags business.
This transaction, which was concluded subsequent to year-end, is subject to
several suspensive conditions which include inter alia, Competition
Commission approval, shareholders" approval and a due diligence
examination. The transaction, once finalised, should allow for growth.
In this regard, shareholders" attention is drawn to the announcement
released today.
FINANCIAL RESULTSHeadline earnings per share for continuing operations
declined by 2% to 62,2 cents (June 2005: 63,8 cents). Headline earnings per
share declined by 13% to 58,8 cents (June 2005: 67,9 cents).
Turnover for continuing operations increased by 22% to R340,6 million (June
2005: R279,7 million) as a result of the additional turnover from Britepak,
the establishment of Specialised Films and growth in other Transpaco
divisions.
The increase in operating expenses and depreciation is largely due to the
inclusion of Britepak for a full 12-month period, Specialised Films being
fully operational and additional plant acquired at several of Transpaco"s
divisions. Expenses in existing continuing operations were well contained.
Transpaco"s tax rate increased from 15% in 2005 to 22% for the year as a
result of a reduction in government tax benefits. The tax rate will
normalise over time.
Cash generated from operating activities increased to R23,9 million (June
2005: R15,3 million) due to efficient working capital management and the
funds released from discontinuing 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 Films and the purchase of plant at several of
Transpaco"s divisions. Interest cover is a comfortable 5,6 times.
The inclusion of convertible preference shares (which did not exist during
the previous year) in calculating diluted headline earnings per share for
continuing operations contributed to a reduction of 12% to 52,1 cents (June
2005: 59,4 cents).
Transpaco"s cash resources were R23,8 million (June 2005: R47,5 million).
The movement in cash resources of R23,7 million is largely a result of the
funds needed to conclude the BEE transaction which required Transpaco to
repurchase 5 246 054 shares in terms of the specific buy-back on 4 July
2005 at a cost of R33,1 million. 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 1 324 000 shares.
The ranking number of ordinary shares in issue decreased by 5 124 000
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 decreased by 2% to R4,00 (June 2005: R4,08).
PROSPECTSThe corporate activity referred to above should have a positive
effect on group earnings. Transpaco will continue to pursue organic growth
and strategic acquisitions.
DIVIDENDThe board has declared a final dividend of 12 cents per share to
shareholders recorded in the register on Friday 22 September 2006, payable
on Tuesday 26 September 2006. Together with the interim dividend of 8 cents
per share, this results in a total dividend for the year of 20 cents per
share (2005: 20 cents).
The last day to trade "cum" dividend will be Friday 15 September 2006.
Shares will commence trading "ex" dividend from the commencement of
business on Monday 18 September 2006. The record date will be Friday 22
September 2006. Share certificates may not be dematerialised or
rematerialised between Monday 18 and Friday 22 September 2006, both days
inclusive.
BASIS OF PREPARATION AND ACCOUNTING POLICIESThe group has adopted
International Financial Reporting Standards ("IFRS") for the year ended 30
June 2006. These reviewed annual financial statements have been prepared in
accordance with 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.
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:
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. This election is available to each
individual asset. Transpaco has made this transitional election only for
buildings, as the circumstances of each building required.
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.
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 equipmentPreviously 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 be reviewed at least each financial year-end.
REVIEW OF INDEPENDENT AUDITORSThe group"s auditors Ernst & Young have
reviewed the results. Their unqualified review report is available for
inspection at Transpaco"s registered office.
ON BEHALF OF THE BOARD
AJ Aaron PN Abelheim L WeinbergNon-
executive Chairman Chief Executive Financial Director
DIRECTORSAJ Aaron (Chairman)*; PN Abelheim (Chief Executive); L Weinberg
(Financial Director); HA Botha; JS Botha; SR Bouzaglou; SI Jacobson*;
D Thomas*; SP van der Linde**non-executive
Date 30 August 2006
Auditors Ernst & Young
Sponsor Investec Bank Limited
Registered Office 331 6th Street, Wynberg, Sandton
Transfer Secretaries Computershare Investor Services 2004 (Pty)
Limited 70 Marshall
Street, Johannesburg
Website www.transpaco.co.zaCONSOLIDATED INCOME STATEMENT
Reviewed Restated
12 months 12 months
R"000 June 2006 June 2005
Continuing operations
Turnover 340 619 279 712
Cost of sales 222 697 173 822
Gross Profit 117 922 105 890
Operating Costs 79 306 67 686
BEE IFRS 2 Expense - 3 279
Depreciation 12 958 11 161
Operating profit 25 658 23 764
Net interest paid 4 091 2 934
Profit before taxation 21 567 20 830
Taxation 4 791 3 124
Profit after taxation from continuing 16 776 17 706
operations
Discontinuing operations
(Loss)/Profit after tax from (1 533) 1 119
discontinuing operations
Profit after taxation 15 243 18 825
Weighted average number of shares in 26 085 27 409
issue (`000)
Diluted weighted average number of 31 168 29 457
shares in issue (`000)
Earnings per share (cents) 58,4 68,7
Continuing operations 64,3 64,6
Discontinuing operations (5,9) 4,1
Headline earnings per share (cents) 58,8 67,9
Continuing operations 62,2 63,8
Discontinuing operations (3,5) 4,0
Diluted earnings per share (cents) 48,9 63,9
Continuing operations 53,8 60,1
Discontinuing operations (4,9) 3,8
Diluted headline earnings per share 49,2 63,2
(cents)
Continuing operations 52,1 59,4
Discontinuing operations (2,9) 3,7
Dividend per share (cents)* 20,0 20,0
Reconciliation of headline earnings
(R"000)
Basic earnings 15 243 18 825
Impairment 564 -
Termination costs on disposal of 69 -
business
Profit on disposal of plant and (546) (218)
equipment
Headline earnings 15 330 18 607
*Includes interim dividend of 8 cents (June 2005: 8 cents) and a dividend
declared after the period of 12 cents (June 2005: 12 cents)
CONSOLIDATED BALANCE SHEET
Reviewed Restated
R"000 at 30 June 2006 at 30 June 2005
ASSETS
Non-current assets 90 870 84 970
Property, plant and equipment 83 132 78 976
Intangibles 3 685 3 685
Unlisted investments 2 998 1 536
Deferred taxation 1 055 773
Current assets 138 656 161 126
Inventories 36 459 35 588
Accounts receivable 73 516 72 428
Taxation 4 893 5 655
Cash resources 23 788 47 455
Non-current assets classified as held 252 4 738
for sale
TOTAL ASSETS 229 778 250 834
EQUITY AND LIABILITIES
Capital and reserves 113 621 136 473
Share capital 261 312
Share premium 3 279 15 952
Preference shareholders interest 9 273 9 273
Non-distributable reserves 1 688 1 688
Retained earnings 99 120 109 248
Non-current liabilities 44 489 46 805
Preference share liability 5 381 6 029
Interest-bearing borrowings 34 018 36 251
Deferred taxation 5 090 4 525
Current liabilities 71 571 67 429
Trade and other payables 56 560 54 754
Current portion of interest-bearing 15 011 12 675
borrowings
Liabilities directly associated with 97 127
the assets classified as held for sale
TOTAL EQUITY AND LIABILITIES 229 778 250 834
Number of shares in issue 000 000
Number of shares in issue net of 31 203 27 214
treasury shares (net of 1 372 288
treasury shares)
Net movement on treasury shares (2 916) (979)
Shares purchased and cancelled (2 208) -
Shares issued - 4 968
Ranking number of shares 26 079 31 203
Salient features
Net asset value per share (cents) 400 408
Gearing ratio % 27 5
Shareholders Funds: Total assets % 51 63
Interest cover (x) 5,6 8,1
Operating margin % 6,7 7,7
ABRIDGED CONSOLIDATED CASH FLOW
Reviewed Restated
12 months 12 months
R"000 June 2006 June 2005
Cash flow from operating activities 23 867 15 342
Cash flow from investing activities (14 182) (30 783)
Cash flow from financing activities (33 352) 47 682
Net movement in cash for the year (23 667) 32 241
Cash and cash equivalents at the 47 455 15 214
beginning of the year
Cash and cash equivalents at the end of 23 788 47 455
the year
STATEMENT OF CHANGES IN EQUITY
R"000 Reviewed Restated
12 months 12 months
June 2006 June 2005
Opening balance 136 473 96 491
IFRS transition
Property, plant and equipment - 143
IFRS 1 - deemed cost exemption - 946
Restated balance 136 473 97 580
Net profit for the period (previously 15 243 18 925
stated)
Property, plant and equipment - (17)
Intangibles - (83)
Net profit for the year (adjusted) 15 243 18 825
Dividend paid (5 210) (5 197)
Issue of share capital - 23 732
Net movement on treasury shares (32 885) (7 740)
Preference shareholders interest - 9 273
Restated closing balance 113 621 136 473
IFRS IMPACT ON PROFIT FOR THE PRIOR YEAR
Restated
12 months
R"000 June 2005
As previously reported 22 204
Effect of IAS 16 (100)
Effect of IFRS 2 (3 279)
18 825
IFRS IMPACT ON SHAREHOLDERS" EQUITY
Restated Restated
12 months 12 months
R"000 June 2005 June 2004
As previously reported 97 580 96 491
Effect of IAS 16 (100) 143
Effect of IFRS 1 - 946
97 480 97 580
CAPITAL COMMITMENTS
Reviewed Restated
12 months 12 months
R"000 June 2006 June 2005
Capital expenditure authorised but not
contracted
Plant and equipment 3 512 -
SEGMENTAL ANALYSIS
Rigids Recycling Flexibles Packaging
R"000
Turnover - 2006 58 466 35 063 111 965 135 125
Turnover - 2005 55 568 26 786 111 638 85 720
Operating profit - 2006 2 918 3 947 7 807 9 822
Operating profit - 2005 2 002 3 510 14 448 6 169
SEGMENTAL ANALYSIS (Contd)
Properties Total Discon- Total
and tinuing
Group Operations
R"000 Services
Turnover - 2006 - 340 619 14 185 354 804
Turnover - 2005 - 279 712 51 810 331 522
Operating profit - 2006 1 164 25 658 (2 029) 23 629
Operating profit - 2005 (2 365) 23 764 1 775 25 539
Date: 30/08/2006 03:39:10 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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