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TPC - Transpaco Limited - Reviewed results for the year ended 30 June 2008 and
dividend announcement
Transpaco Limited
Reg. No. 1951/000799/06
ISIN: ZAE000007480
Share Code: TPC
A leading manufacturer, recycler and distributor of plastic and paper packaging
products
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008 AND DIVIDEND ANNOUNCEMENT
TURNOVER UP 33% | HEADLINE EARNINGS PER SHARE UP 10% | DIVIDEND PER SHARE UP 12%
INTRODUCTION
Transpaco achieved pleasing results for the year ended 30 June 2008 ("the year")
notwithstanding difficult trading conditions as the Group faced unprecedented
increases in the price of raw materials, rising interest rates and high fuel and
energy-related costs.
FINANCIAL RESULTS
Headline earnings per share (HEPS) increased by 10,0 % to 91,3 cents (June 2007:
83,0 cents). Operating profit grew by 34,8% to R52,5 million (June 2007: R39,0
million). The 32,7% increase in turnover to R720,2 million (June 2007: R542,6
million) was driven mainly by organic growth in the Recycling and Packaging
divisions and the inclusion of the Cape-based plastic bag business for a full 12
month period. The Group`s operating costs remained well controlled, reflected in
the increase in operating profits outperforming the increase in turnover. The
significant increase in HEPS in the second half of the year compared to the same
period in the previous financial year, is encouraging for the year ahead.
Increases in operating costs, depreciation and net interest paid arose from the
various expansion programmes put in place during the previous financial year in
line with strategy. Interest cover is a satisfactory 3,4 times.
The ranking and weighted numbers of shares in issue increased due to shares
being taken up in terms of the Transpaco Share Option Scheme. This also affected
diluted earnings per share.
The increase in the weighted number of shares in issue restricted growth in
earnings per share and HEPS to 11,2% and 10,0%, respectively, notwithstanding an
increase in profit after taxation of 16,5%.
Cash generated from operations increased to R61,7 million (June 2007: R12,6
million) as a result of higher operating profit and stringent management of
working capital.
Net asset value per share increased by 13,8% to 511 cents (June 2007: 449
cents).
PROSPECTS
The Cape-based plastic bag factory is running well. The importation of retail
bags has been completely eliminated and replaced by local production at the
facility. The board is confident that this operation will continue to grow
sustainably over the long term.
The Specialised Films division, operating in the pallet stabilisation film
market, has installed additional plant and substantially increased production
capacity. Its positioning in a robust market has ensured a positive outlook for
future growth. High virgin raw material prices are benefiting the Recycling
division as plastic manufacturers seek to convert an increasing amount of
product to recycled material. Supply of post-consumer plastic waste, the primary
raw material of this division, has improved.
Britepak, the Group`s printed folded carton division, has also improved
efficiency and increased capacity through the installation of additional plant,
enabling the division to take advantage of developments in the local
pharmaceutical industry.
It is anticipated that the remaining divisions of the Group will continue to
post organic growth supported by an investment in plant in excess of R100
million over the past 2 years. While organic growth remains a key strategic
objective of Transpaco, the Group will also continue to pursue appropriate
acquisitions.
TRANSFORMATION
Transpaco is continually forging relationships with broad-based BEE suppliers
and promoting Employment Equity within the Group. In addition Skills Development
remains a primary transformation objective of management.
Particular attention will be placed in the year ahead on Enterprise Development
and Corporate Social Responsibility.
The broad-based BEE transaction with CEPPWAWU Investments, concluded in June
2005, continues to have a favourable impact on the Group`s growth.
DIVIDEND
The board has declared a final dividend of 18 cents per share, resulting in a
total dividend of 28 cents for the year (June 2007: 25 cents). The final
dividend will be payable on Monday 29 September 2008.
The last day to trade cum dividend will be Thursday 18 September 2008. Shares
will commence trading ex dividend from the commencement of business on Friday 19
September 2008. The record date will be Friday 26 September 2008.
Share certificates may not be dematerialised or rematerialised between Friday,
19 September 2008 and Friday, 26 September 2008, both days inclusive.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated financial information has been prepared in accordance
with the recognition and measurement criteria of all applicable statements and
interpretations of International Financial Reporting Standards (IFRS) and is
presented in terms of disclosure requirements set out in IAS 34 - Interim
Financial Reporting. The accounting policies applied to the condensed
consolidated financial information are consistent with those applied in the
annual financial statements for the year ended 30 June 2007, save for the
adoption of IFRS 7 Financial Instruments: Disclosures. This is a disclosure
standard which has no impact on the recognition and measurement of financial
instruments and consequently has no impact on profit or loss or equity for the
year.
REVIEW OF INDEPENDENT AUDITORS
The Group`s auditors Ernst & Young Inc. have reviewed the condensed consolidated
financial information for the year. Their 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 Chief Executive Financial Director
Chairman
SEGMENTAL ANALYSIS
R`000 Rigids Recycling Flexibles Packaging Properties Total
and Group
Services
Turnover -
2008 57 123 87 229 354 010 221 817 - 720 179
Turnover -
2007 61 743 66 119 242 939 171 787 - 542 588
Operating
profit -
2008 999 7 851 14 358 22 414 6 906 52 528
Operating
profit -
2007 1 183 8 974 8 221 19 164 1 412 38 954
CONSOLIDATED INCOME STATEMENT
R`000 Reviewed Audited
12 months 12 months
June 2008 June 2007
Turnover 720 179 542 588
Cost of sales 499 149 372 752
Profit before operating costs and
depreciation 221 030 169 836
Operating costs 146 858 113 662
Depreciation 21 644 17 220
Operating profit 52 528 38 954
Net interest paid 15 335 7 339
Profit before taxation 37 193 31 615
Taxation 11 578 9 626
Profit after taxation 25 615 21 989
Weighted average number of shares
in issue (`000) 27 579 26 332
Diluted weighted average number of
shares in issue (`000) 31 576 31 568
Earnings per share (cents) 92,9 83,5
Headline earnings per share
(cents) 91,3 83,0
Diluted earnings per share (cents) 81,1 69,7
Diluted headline earnings per
share (cents) 79,7 69,2
Dividend per share (cents)* 28,0 25,0
Reconciliation of headline earnings (R`000)
Basic earnings 25 615 21 989
Profit on disposal of property,
plant and equipment (444) (137)
Headline earnings 25 171 21 852
*Includes interim dividend of 10 cents (June 2007: 10 cents) and a
dividend declared after year-end of 18 cents (June 2007: 15 cents).
CAPITAL COMMITMENTS
R`000 Reviewed Audited
12 months 12 months
June 2008 June 2007
Capital expenditure authorised and
contracted
Property, plant and equipment 8 512 31 723
CONSOLIDATED BALANCE SHEET
R`000 Reviewed Audited12 months
12 months June 2007
June 2008
ASSETS
Non-current assets 152 001 123 085
Property, plant and equipment 143 665 115 267
Intangibles 482 482
Goodwill 3 204 3 204
Unlisted investments 3 369 2 549
Deferred taxation 1 281 1 583
Current assets 258 492 239 777
Inventories 86 033 69 536
Trade receivables 140 278 144 779
Taxation 4 898 5 661
Cash and cash equivalents 27 283 19 801
TOTAL ASSETS 410 493 362 862
EQUITY AND LIABILITIES
Capital and reserves 150 700 131 293
Issued capital 277 272
Preference shareholders
interest 9 273 9 273
Non-distributable reserve 1 901 1 773
Distributable reserve 139 249 119 975
Non-current liabilities 82 598 62 085
Preference share liability 3 897 4 672
Interest-bearing borrowings 70 525 51 623
Deferred taxation 8 176 5 790
Current liabilities 177 195 169 484
Trade and other payables 113 984 114 013
Provisions 5 599 4 420
Current portion of interest-
bearing borrowings 20 601 19 645
Bank overdraft 37 011 31 406
TOTAL EQUITY AND LIABILITIES 410 493 362 862
Number of shares in issue (`000)
Number of shares in issue (net of
4 410 000 treasury shares) 27 159 26 079
Net movement on treasury shares 535 1 080
Ranking number of shares 27 694 27 159
Salient features
Net asset value per share (cents) 511 449
Interest cover (x) 3,4 5,3
Operating margin (%) 7,3 7,2
ABRIDGED CONSOLIDATED CASH FLOW
R`000 Reviewed Audited
12 months 12 months
June 2008 June 2007
Cash flow from operating
activities
Cash generated from operations 61 673 12 585
Ordinary dividend paid (6 914) (5 835)
Increase in provisions 1 179 1 070
Net interest paid (15 335) (7 339)
Taxation paid (8 127) (10 222)
Net cash in/(out) flow from
operating activities 32 476 (9 741)
Cash flow from investing
activities
Proceeds on disposal of property,
plant and equipment 739 550
Acquisition of property, plant and (50 179) (19 724)
equipment
Acquisition of business - (29 792)
(Increase)/decrease in unlisted
investments (820) 448
Net cash outflow from investing
activities (50 260) (48 518)
Cash flow from financing
activities
Net movement on treasury shares 578 1 433
Decrease in preference share
liability (775) (709)
Increase in long-term borrowings 18 902 17 508
Increase in short-term borrowings 956 4 634
Net cash inflow from financing
activities 19 661 22 866
Net movement in cash for the year 1 877 (35 393)
Cash and cash equivalents at the
beginning of the year (11 605) 23 788
Cash and cash equivalents at the
end of the year (9 728) (11 605)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
R`000 Reviewed Audited12 months
12 months June 2007
June 2008
Opening balance 131 293 113 621
Net profit for the year 25 615 21 989
Share-based payment 128 85
Dividend (6 914) (5 835)
Net movement on treasury shares 578 1 433
Closing balance 150 700 131 293
DIRECTORS
AJ 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 25 August 2008
Auditors Ernst & Young Inc.
Sponsor Investec Bank Limited
Registered Office 331 6th Street, Wynberg, Sandton
Transfer Secretaries Computershare Investor Services (Pty) Limited, 70
Marshall Street, Johannesburg
Website www.transpaco.co.za
Date: 25/08/2008 16:41:09 Supplied by www.sharenet.co.za
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