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TRANSPACO LIMITED - Reviewed condensed consolidated results for the year ended 30 June 2015 and dividend announcement

Release Date: 19/08/2015 07:05
Code(s): TPC     PDF:  
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Reviewed condensed consolidated results for the year ended 30 June 2015 and dividend announcement

TRANSPACO LIMITED 
(Incorporated in the Republic of South Africa) 
(Registration number 1951/000799/06)
Share code: TPC    ISIN: ZAE000007480
("Transpaco")

REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 
30 JUNE 2015 AND DIVIDEND ANNOUNCEMENT

GROUP TURNOVER UP 9% 
HEADLINE EARNINGS PER SHARE UP 16% 
TOTAL DIVIDEND PER SHARE 108 CENTS

A leading manufacturer, recycler and distributor of plastic 
and paper packaging products

Introduction
The significant increase in headline earnings for the year to June 2015 
is indicative of Transpaco’s resilience in still challenging times. 
After enduring a debilitating industry-wide strike during July and 
August 2014, Transpaco clawed back approximately R10 million of lost 
earnings and surpassed the previous year’s headline earnings performance 
by a gratifying 16,9%.

The group continued its strong performance, with good turnover growth and 
a meaningful increase in headline earnings per share (HEPS) as above.

Turnover of R1,36 billion was attributable to a combination of volume 
growth and price increases. Effective marketing and sales strategies 
remain key drivers of maintaining this momentum.

Transpaco’s performance was further strengthened by controlled operating 
costs, which increased by 6,4% year-on-year against an 8,7% increase 
in turnover. This was achieved by improved manufacturing, distribution 
and administration efficiencies.

Well-managed working capital resulted in net interest received and a 
strong net cash positive position being maintained.

Notwithstanding that margins remained under pressure from higher input 
costs - notably energy and raw materials - the group operating margin 
increased to 8,1% (June 2014: 7,8%).

Financial Results
Group operating profit increased by 12,6% to R110,1 million 
(June 2014: R97,8 million) on turnover of R1 356,0 million, 
up 8,7% (June 2014: R1 247,4 million).

Transpaco’s total comprehensive income improved by 13,8 % to 
R79,3 million (June 2014: R69,7 million) and earnings per share 
(EPS) by 13,3% to 245,3 cents (June 2014: 216,5 cents).

Headline earnings grew by 16,9% to R78,7 million (June 2014: 
R67,3 million) and HEPS by 16,3% to 243,3 cents (June 2014: 209,2 cents).

The weighted average number of shares in issue in calculating EPS 
and HEPS was 32 323 000, compared to 32 164 000 in the previous year.

Diluted HEPS increased 18,2% to 242,8 cents (June 2014: 205,5 cents).
Cash generated from operations increased to R144,8 million 
(June 2014: R121,0 million). Cash and cash equivalents at year-end 
were R153,6 million (June 2014: R91,3 million). Transpaco’s net 
interest-bearing debt-to-equity position remains cash positive.

Net asset value per share increased by 11,0% to 1 387 cents 
(June 2014: 1 249 cents).

Directorate
Archie Aaron has served with distinction on the Transpaco board since 
1977 and as chairman for the past twelve years. His dedication, 
commitment and contribution to Transpaco has been instrumental 
in the group’s success. In relinquishing the role of chairman but 
remaining on the board Archie has paved the way for Derek Thomas, 
appointed as Chairman effective 1 July 2015, to bring a youthful 
vitality as well as his sound business skills and leadership qualities 
to Transpaco.

Prospects
The acquisition of East Rand Plastics, South Africa’s premier refuse 
bag manufacturer, took effect from 1 August 2015. The business will 
be incorporated into Transpaco for an eleven-month period in the 
following financial year and is expected to be earnings enhancing 
into the future.

While a challenging trading environment prevails, management will 
remain focused on sound business and financial fundamentals in order 
to achieve Transpaco’s organic growth ambitions.

Expansion opportunities including acquisitions continue to be pursued.

Transformation
Transpaco’s sixth independent accreditation process in respect of 
Black Economic Empowerment reflected a Level 4 value added 
contributor. Consequently Transpaco customers can attribute 125% 
of their purchases from Transpaco to preferential procurement.

Dividend
The board has declared a final gross cash dividend out of income 
reserves of 74,0 cents per share, resulting in total dividends of 
108,0 cents per share for the year ended 30 June 2015 (June 2014: 
93,0 cents per share), an increase of 16,1%. After applying the 
dividend withholding tax of 15% a net final dividend of 
62,90000 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 number is 9975/112/71/6.

The salient dates for the dividend are as follows:
Last date to trade shares cum dividend   Friday, 11 September 2015
Shares trade ex dividend                 Monday, 14 September 2015
Record date                              Friday, 18 September 2015
Payment date                             Monday, 21 September 2015

Share certificates may not be dematerialised or rematerialised 
between Monday, 14 September 2015 and Friday, 18 September 2015, 
both days inclusive.

Basis of Preparation and Accounting Policies
The group’s annual financial results have been prepared in 
accordance with the recognition and measurement criteria of 
International Financial Reporting Standards (IFRS) issued by 
the International Standards Board (IASB), its interpretations 
issued by the IFRS Interpretations Committee, the SAICA Financial 
Reporting Guides as issued by the Accounting Practices Committee, 
Financial Reporting Pronouncements as issued by the Financial 
Reporting Standards Council, the JSE Listings Requirements and 
the Companies Act. The principal 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, except for the adoption of new 
standards and interpretations effective as of 1 July 2014. 
The group has not early-adopted any other standard, interpretation 
or amendment that has been issued but is not yet effective.

The condensed consolidated financial statements do not include 
all the information and disclosures required in the annual financial 
statements and should be read in conjunction with the group’s 
annual financial statements for the year ended 30 June 2015. 
The presentation and disclosure complies with International 
Accounting Standard (IAS) 34.

Review by Independent Auditors
The group’s auditors Ernst & Young Inc. have reviewed the 
condensed consolidated financial information for the year. 
The unmodified review report is available for inspection at 
Transpaco’s registered office. The review was performed in 
accordance with ISRE 2410: Review of Interim Financial Information 
Performed by the Independent Auditor of the Entity. Any reference 
to future financial performance included in this announcement 
has not been reviewed or reported on by the group’s external auditors.

Approval and Preparation
These condensed consolidated financial results have been prepared 
under the direction and supervision of the 
Financial Director, L Weinberg CA(SA).

ON BEHALF OF THE BOARD
D Thomas                PN Abelheim                     L Weinberg
Non-executive Chairman  Chief Executive                 Financial Director

DIRECTORS
D Thomas (Chairman)*; PN Abelheim (Chief Executive); 
L Weinberg (Financial Director); A J Aaron**; HA Botha**; 
SR Bouzaglou; SI Jacobson*; 
SP van der Linde (Lead Independent Director)** 

*non-executive ** independent non-executive

Date                 19 August 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

STATEMENT OF COMPREHENSIVE INCOME
                    Reviewed                           Reviewed
                    12 months       %                  12 months
R'000               June 2015       Change             June 2014
                                                             
Revenue             1 358 739                          1 248 997
Turnover            1 356 025       8.7                1 247 386
Cost of sales       (891 763)                         (816 179)
Profit before 
operating costs 
and depreciation    464 262         7.7                431 207
Operating costs    (319 148)                          (300 060)
Depreciation       (34 967)                           (33 303)
Operating profit    110 147         12.6               97 844
Finance income      2 714                              1 611
Finance costs      (2 480)                            (2 635)
Profit before 
taxation            110 381         14.0               96 820
Taxation           (31 095)                           (27 169)
Profit for 
the year            79 286                             69 651
Other comprehensive 
income              -                                  -
Total comprehensive 
income              79 286          13.8               69 651
Weighted average 
ranking number of 
shares in issue 
('000)              32 323                             32 164
Diluted weighted 
average ranking 
number of shares in 
issue ('000)        32 388                             32 748
Earnings per 
share (cents)       245.3           13.3               216.5
Diluted earnings 
per share (cents)   244.8           15.1               212.7
Headline earnings 
per share (cents)   243.3           16.3               209.2
Diluted headline 
earnings per 
share (cents)       242.8           18.2               205.5
Dividend per 
share (cents)*      108.0           16.1               93.0
Reconciliation of 
headline earnings 
(R'000)                                                            
Basic earnings      79 286                             69 651
Profit on disposal 
of property, plant 
and equipment      (636)                              (2 354)
Headline earnings   78 650          16.9               67 297

*Includes interim dividend of 34 cents (June 2014 - 39 cents) 
and a dividend declared after the period of 74 cents 
(June 2014 - 54 cents)


STATEMENT OF FINANCIAL POSITION
                         Reviewed          Reviewed
                         12 months         12 months
R'000                    June 2015         June 2014
ASSETS                              
Non-current assets       205 680           213 606
     Property, plant 
     and equipment       199 813           207 163
     Intangibles         482               482
     Goodwill            3 204             3 204
     Deferred taxation   2 181             2 757
Current assets           523 763           441 404
     Inventories         164 428           161 835
     Trade and other 
     receivables         202 635           183 757
     Short-term 
     receivables         -                 642
     Taxation receivable 3 100             3 904
     Cash and cash 
     equivalents         153 600           91 266
TOTAL ASSETS             729 443           655 010
EQUITY AND LIABILITIES                    
Capital and reserves     455 176           402 183
     Issued share 
     capital             328               322
     Share premium       11 019            11 019
     Other reserve       4 005             3 856
     Distributable 
     reserve             439 824           386 986
Non-current liabilities  50 424            49 222
     Interest-bearing 
     borrowings          18 598            21 539
     Deferred income     7 639             5 230
     Deferred taxation   24 187            22 453
Current liabilities      223 843           203 605
     Trade payables 
     and accruals        187 847           172 988
     Provisions          23 379            19 225
     Current portion of 
     interest-bearing 
     borrowings          11 484            10 632
     Deferred income     1 131             689
     Taxation payable    2                 71
TOTAL EQUITY AND 
LIABILITIES             729 443            655 010
Number of shares in 
issue ('000)                    
Number of shares (net 
of treasury shares)    32 337              32 017
Net movement in 
treasury shares        484                 180
Ranking number of 
shares                 32 821              32 197
Salient features                    
Net asset value per 
share (cents)          1 387               1 249
Operating margin %     8.1                 7.8
Net interest-bearing 
debt : equity ratio %  Net cash positive   Net cash positive

STATEMENT OF CASH FLOWS
                       Reviewed            Reviewed
                       12 months           12 months
R'000                  June 2015           June 2014
Cash flow from 
operating activities                    
   Cash generated 
   from operations     144 772             120 977
   Dividends paid     (28 534)            (29 919)
   Finance income      2 714               1 611
   Finance costs      (2 480)             (2 635)
   Taxation paid      (28 050)            (29 271)
Net cash inflow from 
operating activities   88 422              60 763
Cash flow used in 
investing activities                    
   Proceeds on disposal 
   of property, plant 
   and equipment       1 290               4 083
   Expansion and 
   replacement of 
   property, plant 
   and equipment      (28 023)            (46 907)
   Proceeds from 
   long-term 
   receivables         -                   642
   Proceeds from 
   short-term 
   receivables         642                 1 666
Net cash outflow from 
investing activities  (26 091)            (40 516)
Cash flow used in 
financing activities                    
   Proceeds from 
   treasury shares     2 092               1 018
   Proceeds from 
   borrowings          8 192               -
   Repayment of 
   borrowings         (10 281)            (13 685)
Net cash inflow/
(outflow) from 
financing activities   3                  (12 667)
Net movement in cash 
for the year           62 334              7 580
Cash and cash 
equivalents at the 
beginning of the year  91 266              83 686
Cash and cash 
equivalents at the 
end of the year        153 600             91 266

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                      Share          Share          Other           Distributable          
R'000                 Capital        Premium        Reserves        Reserve          Total
Balance at 
30 June 2013          320            11 019         3 358           346 238          360 935
Profit for the year   -              -              -               69 651           69 651
Other comprehensive 
income                -              -              -               -                -
Total comprehensive 
income                -              -              -               69 651           69 651
Share-based payments  -              -              498             -                498
Dividend paid         -              -              -              (29 919)         (29 919)
Inflow of treasury 
shares                2              -              -               1 016            1 018
Balance at 
30 June 2014          322            11 019         3 856           386 986          402 183
Profit for the year   -              -              -               79 286           79 286
Other comprehensive 
income                -              -              -               -                -
Total comprehensive 
income                -              -              -               79 286           79 286
Share-based payments  -              -              149             -                149
Dividend paid         -              -              -              (28 534)         (28 534)
Inflow of treasury 
shares                6              -              -               2 086            2 092
Balance at 
30 June 2015          328            11 019         4 005           439 824          455 176

SEGMENTAL ANALYSIS
                                     Paper          Properties
                      Plastic        and Board      and Group       Total
R'000                 Products       Products       Services        Group 
                                        
Turnover - 2015       898 623        457 402        -               1 356 025
Turnover to all 
customers             977 689        479 931        -               1 457 620
Less turnover to 
internal customers    79 066         22 529         -               101 595
                                        
Turnover - 2014       818 215        429 171        -               1 247 386
Turnover to all 
customers             879 406        452 993        -               1 332 399
Less turnover to 
internal customers    61 191         23 822         -               85 013
                                        
Operating profit - 
2015                  54 810         51 191         4 146           110 147
Operating profit - 
2014                  46 113         46 121         5 610           97 844
                                        
Profit before tax - 
2015                  54 054         50 146         6 181           110 381
Profit before tax - 
2014                  45 125         45 229         6 466           96 820
                                        
Capital expenditure - 
2015                  14 880         12 783         360             28 023
Capital expenditure - 
2014                  41 645         4 715          547             46 907
                                        
Assets - 2015         408 648        182 698        138 097         729 443
Assets - 2014         396 058        165 093        93 859          655 010
                                        
Liabilities - 2015    160 827        95 210         18 230          274 267
Liabilities - 2014    154 979        82 317         15 531          252 827

CAPITAL COMMITMENTS
                      Reviewed          Reviewed
                      12 months          12 months
R'000                 June 2015          June 2014
Capital expenditure 
authorised and 
contracted                    
                    
Property, plant and 
equipment             12 417             10 059

Date: 19/08/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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