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TRANSPACO LIMITED - Unaudited Condensed Interim Results for the six months to 31 December 2014 and dividend announcement

Release Date: 18/02/2015 07:05
Code(s): TPC     PDF:  
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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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