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Unaudited Condensed Interim Results for the six months to 31 December 2014 and dividend announcement
TRANSPACO LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1951/000799/06)
Share code: TPC & ISIN: ZAE000007480
("Transpaco")
UNAUDITED CONDENSED INTERIM GROUP RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2014 AND DIVIDEND ANNOUNCEMENT
REVENUE UP 7%
HEADLINE EARNINGS PER SHARE DOWN 12%
DIVIDEND PER SHARE 34,0 CENTS
A leading manufacturer, recycler and distributor of plastic and paper packaging products
Introduction
Notwithstanding a still challenging economic environment the directors are satisfied with Transpaco’s performance.
The group’s margins remained under pressure as raw material prices continued to increase during the period, driven by the weakening exchange rate and high international pricing. However, controlled expenses and higher volumes helped to mitigate the impact on the group’s performance.
Plastic raw material prices will soften during the following six-month period.
Several additional factors outside of the control of management adversely affected the group in the period, most notably the national plastic industry strike during July and August 2014. As a result of the strike operating profits reduced by around R10 million, mainly in the Plastic Division.
The national rolling power outages are a further factor affecting the efficiencies of all Transpaco factories, resulting in additional costs.
When comparing this period directly to the same period last year, cognisance must be taken of the change in the Department of Trade and Industry (DTI) programmes in which the group has participated. Previously the grants were released in stages and accounted for as such. With the new DTI grants a once-off amount is received and amortised over the depreciated life of the related asset. During the previous period Transpaco accounted for R1,5 million worth of DTI grants, compared to R252 000 for the period under review.
Financial Results
Group headline earnings decreased by 12,2%% to R40,8 million (December 2013: R46,5 million). Headline earnings per share (HEPS) reduced by 12,3% to 126,7 cents (December 2013: 144,5 cents). Earnings per share (EPS) decreased by 12,4%, to 126,8 cents (December 2013: 144,7 cents).
Diluted HEPS decreased by 12,1% to 124,7 cents (December 2013: 141,9 cents).
Total operating profit decreased 12,0% to R56,8 million (December 2013: R64,6 million) on turnover of R716,2 million, up 7,3% (December 2013: R667,6 million). Operating profit in the Paper and Board division increased against a reduction in the Plastic division.
During the period Transpaco generated R6,3 million from operating activities compared to utilising R7,9 million in the comparative period. The group’s net interest-bearing debt-to-equity position improved to a net cash positive position (December 2013: 5,3% geared).
Net asset value per share increased by 8,1% to 1,319 cents (December 2013: 1,220 cents).
Prospects
The group will continue its proven business strategy, targeting organic growth while maintaining strict financial control and at the same time identifying and pursuing appropriate acquisitions.
Dividend
The board has declared an interim gross cash dividend out of income reserves of 34 cents per share (December 2013: 39,0 cents per share) for the six-month period ended 31 December 2014. No STC credits have been utilised. After applying the dividend withholding tax of 15%, a net interim dividend of 28,90000 cents per share will be paid to those shareholders who are not exempt from the dividends tax. The issued shares at the date of declaration is 33 317 482 ordinary shares. The Income Tax reference no. is 9975/112/71/6.
The salient dates for the dividend are as follows:
Last date to trade shares cum dividend Friday, 13 March 2015
Shares trade ex dividend Monday, 16 March 2015
Record date Friday, 20 March 2015
Payment date Monday, 23 March 2015
Share certificates may not be dematerialised or rematerialised between Monday, 16 March 2015 and Friday, 20 March 2015, both days inclusive.
Basis of Preparation and Accounting Policies
The unaudited interim financial results have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), its interpretations issued by the IFRS Interpretations Committee, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the presentation and disclosure requirements set out in IAS 34 – Interim Financial Reporting and comply with the JSE Listings Requirements and the Companies Act of South Africa. The accounting policies are consistent in all material respects with those applied in the preparation of the group’s annual financial statements for the year ended 30 June 2014. Transpaco has adopted all applicable new and amended standards, the effect of which had no material impact on the unaudited interim financial results.
Approval and Preparation
These unaudited interim financial results have been prepared under the direction and supervision of the Financial Director, L Weinberg CA (SA).
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**; SR Bouzaglou; SI Jacobson*; D Thomas*; SP van der Linde** *non-executive ** independent non-executive
Date 18 February 2015
Auditors: Ernst & Young Incorporated
Transpaco Limited Registration number: 1951/000799/06
Share code: TPC
ISIN: ZAE000007480
Company secretary: HJ van Niekerk
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
STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months % 6 months 12 months
R'000 Dec 2014 change Dec 2013 June 2014
Revenue 717 484 668 742 1 248 997
Turnover 716 178 7.3 667 596 1 247 386
Cost of sales (476 431) (431 096) (816 179)
Profit before operating
costs and depreciation 239 747 1.4 236 500 431 207
Operating costs (165 784) (155 119) (300 060)
Depreciation (17 121) (16 807) (33 303)
Operating profit 56 842 (12.0) 64 574 97 844
Finance income 1 306 1 146 1 611
Finance costs (1 267) (1 533) (2 635)
Profit before taxation 56 881 (11.4) 64 187 96 820
Taxation (16 043) (17 643) (27 169)
Profit for the period 40 838 (12.3) 46 544 69 651
Other comprehensive income - - -
Total comprehensive income 40 838 (12.3) 46 544 69 651
Weighted average ranking
number of shares in
issue ('000) 32 198 32 164 32 164
Diluted weighted average
ranking number of shares
in issue ('000) 32 707 32 747 32 748
Earnings per share (cents) 126.8 (12.4) 144.7 216.5
Diluted earnings per
share (cents) 124.9 (12.2) 142.1 212.7
Headline earnings per
share (cents) 126.7 (12.3) 144.5 209.2
Diluted headline earnings
per share (cents) 124.7 (12.1) 141.9 205.5
Dividend per share
(cents)* 34.0 (12.8) 39.0 93.0
*Dividend declared after
the period
Reconcilliation of
headline earnings (R'000)
Basic earnings 40 838 46 544 69 651
Profit on disposal of
property,plant
and equipment (47) (75) (2 354)
Headline earnings 40 791 (12.2) 46 469 67 297
STATEMENTS OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 months 6 months 12 months
R'000 Dec 2014 Dec 2013 June 2014
ASSETS
Non-current assets 203 368 202 702 213 606
Property, plant
and equipment 198 396 195 906 207 163
Intangibles 482 482 482
Goodwill 3 204 3 204 3 204
Deferred taxation 1 286 3 110 2 757
Current assets 445 765 392 807 441 404
Inventories 139 108 128 454 161 835
Trade and
other receivables 247 581 243 609 183 757
Short-term
receivables - 2 013 642
Taxation receivable 3 502 1 356 3 904
Cash and
cash equivalents 55 574 17 375 91 266
Non-current assets
classified as
held-for-sale - 885 -
TOTAL ASSETS 649 133 596 394 655 010
EQUITY AND
LIABILITIES
Capital and reserves 425 753 390 489 402 183
Issued share
capital 323 320 322
Share premium 11 019 11 019 11 019
Other reserves 4 004 3 652 3 856
Distributable
reserve 410 407 375 498 386 986
Non-current liabilities 46 795 50 342 49 222
Interest-bearing
borrowings 16 926 26 689 21 539
Deferred income 5 163 - 5 230
Deferred taxation 24 706 23 653 22 453
Current liabilities 176 585 155 563 203 605
Trade payables
and accruals 146 539 123 023 172 988
Provisions 19 260 19 906 19 225
Current portion of
interest-bearing
borrowings 10 186 11 387 10 632
Deferred income 504 - 689
Taxation payable 96 1 114 71
Bank overdraft - 133 -
TOTAL EQUITY
AND LIABILITIES 649 133 596 394 655 010
Number of shares
in issue ('000)
Number of shares
(net of treasury shares)32 197 32 017 32 017
Net movement in
treasury shares 89 2 180
Ranking number
of shares 32 286 32 019 32 197
Salient features
Net asset value per
share (cents) 1 319 1 220 1 249
Operating margin (%) 7.9 9.7 7.8
Net interest-bearing
debt : equity ratio (%) Net cash positive 5.3 Net cash positive
STATEMENTS OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months 12 months
R'000 Dec 2014 Dec 2013 June 2014
Cash flow from
operating activities
Cash generated/
(utilised) from
operations 6 283 (7 916) 120 977
Dividends paid (17 505) (17 295) (29 919)
Finance costs (1 267) (1 533) (2 635)
Finance income 1 306 1 146 1 611
Taxation paid (11 892) (15 307) (29 271)
Net cash (outflow)/inflow
from operating activities(23 075) (40 905) 60 763
Cash flow from investing
activities
Proceeds on disposal
of property, plant
and equipment 330 270 4 083
Expansion and
replacement of
property, plant
and equipment (8 619) (18 977) (46 907)
Decrease in
long-term
receivables - 642 642
Decrease in
short-term
receivables 642 295 1 666
Net cash outflow from
investing activities (7 647) (17 770) (40 516)
Cash flow from financing
activities
Decrease in
interest-bearings
borrowings (4 613) (5 923) (11 073)
Decrease in current
portion of
interest-bearing
borrowings (446) (1 857) (2 612)
Movement in treasury
shares 89 11 1 018
Net cash outflow
from financing activities(4 970) (7 769) (12 667)
Net movement in cash
for the period (35 692) (66 444) 7 580
Cash and cash equivalents
at the beginning of
the period 91 266 83 686 83 686
Cash and cash equivalents
at the end of the period 55 574 17 242 91 266
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Issued Distri-
Share Share Other butable
R'000 Capital premium Reserves Reserve Total
Balance at
30 June 2013(audited) 320 11 019 3 358 346 238 360 935
Total comprehensive
income - - - 46 544 46 544
Share-based payments - - 294 - 294
Dividend paid - - - (17 295) (17 295)
Movement in treasury
shares - - - 11 11
Balance at
31 December 2013
(unaudited) 320 11 019 3 652 375 498 390 489
Total comprehensive
income - - - 23 107 23 107
Share-based payments - - 204 - 204
Dividend paid - - - (12 624) (12 624)
Movement in treasury
shares 2 - - 1 005 1 007
Balance at
30 June 2014 (audited) 322 11 019 3 856 386 986 402 183
Total comprehensive
income - - - 40 838 40 838
Share-based payments - - 148 - 148
Dividend paid - - - (17 505) (17 505)
Movement in treasury
shares 1 - - 88 89
Balance at
31 December 2014
(unaudited) 323 11 019 4 004 410 407 425 753
SEGMENTAL ANALYSIS
Paper and Properties
Plastic Board and Group
R'000 Products Products Services Total
Revenue -
December 2014 484 639 231 594 1 251 717 484
Revenue to
all customers 522 552 242 534 1 251 766 337
Less revenue
to internal customers 37 913 10 940 - 48 853
Revenue -
December 2013 447 386 220 343 1 013 668 742
Revenue to
all customers 479 026 233 594 1 013 713 633
Less revenue to
internal customers 31 640 13 251 - 44 891
Revenue - June 2014 818 408 429 190 1 399 1 248 997
Revenue to
all customers 879 599 453 012 1 399 1 334 010
Less revenue to
internal customers 61 191 23 822 - 85 013
Operating profit -
December 2014 28 676 25 188 2 978 56 842
Operating profit -
December 2013 39 358 22 728 2 488 64 574
Operating profit -
June 2014 46 113 46 121 5 610 97 844
Profit before tax -
December 2014 28 127 24 758 3 996 56 881
Profit before tax -
December 2013 38 787 22 183 3 217 64 187
Profit before tax -
June 2014 45 125 45 229 6 466 96 820
Capital expenditure -
December 2014 6 686 1 775 158 8 619
Capital expenditure -
December 2013 17 140 1 344 493 18 977
Capital expenditure -
June 2014 41 645 4 715 547 46 907
Assets - December 2014 417 795 175 668 55 670 649 133
Assets - December 2013 395 971 158 746 41 677 596 394
Assets - June 2014 396 058 165 093 93 859 655 010
Liabilities -
December 2014 136 538 71 452 15 390 223 380
Liabilities -
December 2013 122 154 62 745 21 006 205 905
Liabilities -
June 2014 154 979 82 317 15 531 252 827
CAPITAL COMMITMENTS
Unaudited Unaudited Audited
6 months 6 months 12 months
R'000 Dec 2014 Dec 2013 June 2014
Capital expenditure
authorised and
contracted
Property, plant
and equipment 9 974 13 258 10 059
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