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TRANSPACO LIMITED - Unaudited condensed interim group results for the six months to 31 December 2015 and dividend announcement

Release Date: 17/02/2016 07:05
Code(s): TPC     PDF:  
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Unaudited condensed interim group results for the six months to 31 December 2015 and dividend announcement

TRANSPACO LIMITED

(Incorporated in the Republic of South Africa)
Reg. No. 1951/000799/06
ISIN: ZAE000007480
Share Code: TPC
(“Transpaco” or “the company” or “the group”)


UNAUDITED CONDENSED INTERIM GROUP RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2015 
AND DIVIDEND ANNOUNCEMENT    


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


REVENUE UP 27%
HEADLINE EARNINGS PER SHARE UP 50%
DIVIDEND PER SHARE 52,0 CENTS


INTRODUCTION
Transpaco’s performance, reflecting a 50,4% increase in headline earnings per share
(HEPS), exceeded expectations despite a continued challenging economic environment.

The group’s margins, while remaining under pressure improved as raw material prices
stabilised during the period. Controlled expenses, increased volumes in certain
operations and the inclusion of East Rand Plastics for five months all contributed to
Transpaco’s pleasing results.

All Transpaco operations impacted favourably on group profits with several
outperforming the previous year.

East Rand Plastics, acquired by Transpaco effective 1 August 2015, is trading well and
is expected to continue making a positive contribution to group profits.

FINANCIAL RESULTS
                                                   December     December            %
Group                                                  2015         2014     Increase
Turnover (R’m)                                        912,5        716,2         27,4
Operating profit (R’m)                                 89,3         56,8         57,2
Headline earnings (R’m)                                62,8         40,8         54,1
Earnings per share (cents)                            190,4        126,8         50,2
Headline earnings per share (cents)                   190,6        126,7         50,4
Diluted headline earnings per share (cents)           190,3        124,7         52,6
     
Headline earning per share for the twelve calendar months ended 31 December 2015
increased 61% to 307,2 cents (December 2014: 191,4 cents.

The group’s net interest-bearing debt-to-equity (gearing) position is 17,6% 
(December 2014: net cash positive).

The variation in gearing and net interest paid is attributable to funds utilised to 
acquire East Rand Plastics and additional working capital requirements.

Net asset value per share increased by 14,0% to 1 503 cents (December 2014: 1 319 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
52,0 cents per share (December 2014: 34,0 cents per share) for the six-month period
ended 31 December 2015. After applying the dividend withholding tax of 15%, a net
interim dividend of 44,20000 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 March 2016
Shares trade ex dividend                          Monday, 14 March 2016
Record date                                       Friday, 18 March 2016
Payment date                                      Tuesday,22 March 2016

Share certificates may not be dematerialised or rematerialised between Monday, 
14 March 2016 and Friday, 18 March 2016, both days inclusive.

BASIS OF PREPARATION AND ACCOUNTING POLICIES
The group’s 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 South African
Institute of Chartered Accountants Financial Reporting Guides as issued by the
Accounting Practices Committee, Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council 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 2015. The group has not early adopted any other standard, 
interpretation or amendment that has been issued but is not yet effective.

The group’s unaudited interim financial statements comply with IAS 34 – Interim
Financial Reporting (“IAS 34”). The interim report should be read in conjunction with 
the Transpaco 2015 annual report.

BUSINESS COMBINATION
On 1 August 2015, the group acquired the East Rand Plastics division of Astrapak 
Manufacturing (Pty) Limited, a wholly owned subsidiary of Astrapak Limited. East Rand 
Plastics operates as a manufacturer of polyethylene flexible packaging materials and is 
predominantly active in the production of refuse bags and bin liners.

The information disclosed in the annual report for the period ended 30 June 2015 has
not changed to date and remains provisional. For more detail refer to the Transpaco 2015
annual report, note 10.

From the date of acquisition to 31 December 2015, the East Rand Plastics business
contributed R82,6 million to group revenue and R5,8 million to profits after tax.

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
DJJ Thomas                     PN Abelheim                    L Weinberg
Non-executive Chairman         Chief Executive                Financial Director

DIRECTORS
DJJ Thomas (Chairman) PN Abelheim (Chief Executive); L Weinberg (Financial Director); 
AJ Aaron*^; HA Botha*^; SR Bouzaglou; SI Jacobson*; 
SP van der Linde (Lead Independent Director)*^            *non-executive ^independent

Date:                   17 February 2016
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 Ltd
                        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 2015      change    Dec 2014    June 2015
Revenue                                      913 817                 717 484    1 358 739
Turnover                                     912 532      27,4       716 178    1 356 025
Cost of sales                               (586 777)               (476 431)    (891 763)
Profit before operating costs 
and depreciation                             325 755      35,9       239 747      464 262
Operating costs                             (215 899)               (165 784)    (319 148)
Depreciation                                 (20 530)                (17 121)     (34 967)
Operating profit                              89 326      57,2        56 842      110 147
Finance income                                 1 285                   1 306        2 714
Finance costs                                 (3 218)                 (1 267)      (2 480)
Profit before taxation                        87 393      53,6        56 881      110 381
Taxation                                     (24 593)                (16 043)     (31 095)
Profit for the period                         62 800      53,8        40 838       79 286
Other comprehensive income                         –                       –            –
Total comprehensive income                    62 800      53,8        40 838       79 286
Weighted average ranking  
number of shares in issue (’000)              32 978                  32 198       32 323
Diluted weighted average ranking 
number of shares in issue (’000)              33 022                  32 707       32 388
Earnings per share (cents)                     190,4      50,2         126,8        245,3
Diluted earnings per share (cents)             190,2      52,3         124,9        244,8
Headline earnings per share (cents)            190,6      50,4         126,7        243,3
Diluted headline earnings per share (cents)    190,3      52,6         124,7        242,8
Dividend per share (cents)*                     52,0      52,9          34,0        108,0
Reconcilliation of headline earnings (R’000)                        
Basic earnings                                62 800                  40 838       79 286
Loss/(Profit) on disposal of property, 
plant and equipment                               48                     (47)        (636)
Headline earnings                             62 848      54,1        40 791       78 650
*Dividend declared after the period                        



STATEMENTS OF FINANCIAL POSITION
                                                      Unaudited    Unaudited      Audited
                                                       6 months     6 months    12 months
R’000                                                  Dec 2015     Dec 2014    June 2015
ASSETS                  
Non-current assets                                      304 501      203 368      205 680
    Property, plant and equipment                       266 288      198 396      199 813
    Intangibles                                             482          482          482
    Goodwill                                             35 704        3 204        3 204
    Deferred taxation                                     2 027        1 286        2 181
Current assets                                          529 067      445 765      523 763
    Inventories                                         176 686      139 108      164 428
    Trade and other receivables                         333 187      247 581      202 635
    Taxation receivable                                   3 634        3 502        3 100
    Cash and cash equivalents                            15 560       55 574      153 600
TOTAL ASSETS                                            833 568      649 133      729 443
EQUITY AND LIABILITIES                  
Capital and reserves                                    493 620      425 753      455 176
    Issued share capital                                    328          323          328
    Share premium                                        11 019       11 019       11 019
    Other reserves                                        4 005        4 004        4 005
    Distributable reserve                               478 268      410 407      439 824
Non-current liabilities                                 118 947       46 795       50 424
    Interest-bearing borrowings                          82 815       16 926       18 598
    Deferred income                                       7 648        5 163        7 639
    Deferred taxation                                    28 484       24 706       24 187
Current liabilities                                     221 001      176 585      223 843
    Trade payables and accruals                         172 055      146 539      187 847
    Provisions                                           28 338       19 260       23 379
    Current portion of interest-bearing borrowings       19 379       10 186       11 484
    Deferred income                                         870          504        1 131
    Taxation payable                                        359           96            2
TOTAL EQUITY AND LIABILITIES                            833 568      649 133      729 443
Number of shares in issue(‘000)                  
Number of shares (net of treasury shares)                32 821       32 197       32 337
Net movement in treasury shares                              20           89          484
Ranking number of shares                                 32 841       32 286       32 821
Salient features                  
Net asset value per share (cents)                         1 503        1 319        1 387
Operating margin %                                          9,8          7,9          8,1
Net interest-bearing debt: equity ratio %                  17,6     Net cash     Net cash
                                                                    positive     positive


STATEMENTS OF CASH FLOWS
                                                      Unaudited    Unaudited      Audited
                                                       6 months     6 months    12 months
R’000                                                  Dec 2015     Dec 2014    June 2015
Cash flow from operating activities                  
   Cash (utilised)/generated from operations            (23 185)       6 283      144 772
   Dividends paid                                       (24 356)     (17 505)     (28 534)
   Finance costs                                         (3 218)      (1 267)      (2 480)
   Finance income                                         1 285        1 306        2 714
   Taxation paid                                        (20 319)     (11 892)     (28 050)
Net cash (outflow)/inflow from operating activities     (69 793)     (23 075)      88 422
Cash flow from investing activities                  
   Proceeds on disposal of property, 
    plant and equipment                                     784          330        1 290
   Acquisition of business                             (109 651)           –            –
   Expansion and replacement of property,
   plant and equipment                                  (31 492)      (8 619)     (28 023)
   Proceeds from short-term receivables                       –          642          642
Net cash outflow from investing activities             (140 359)      (7 647)     (26 091)
Cash flow from financing activities                  
   Proceeds from borrowings                              78 637            –        8 192
   Repayment of borrowings                               (6 525)      (5 059)     (10 281)
   Proceeds from share capital                                –            –            1
   Proceeds from treasury shares                              –           89        2 091
Net cash inflow/(outflow) from financing activities      72 112       (4 970)           3
Net movement in cash for the period                    (138 040)     (35 692)      62 334
Cash and cash equivalents at the beginning 
of the period                                           153 600       91 266       91 266
Cash and cash equivalents at the end of the period       15 560       55 574      153 600



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                         Issued                          Distri-
                                          Share      Share     Other    butable
R’000                                   Capital    Premium  Reserves    Reserve     Total
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) 
Inflow of treasury shares                     1          –         –         88        89 
Balance at 31 December 2014 (unaudited)     323     11 019     4 004    410 407   425 753 
Total comprehensive income                    –          –          –    38 448    38 448 
Share-based payments                          –          –          1         –         1 
Dividend paid                                 –          –          –   (11 029)  (11 029) 
Share capital issued                          1          –          –         –         1 
Inflow of treasury shares                     4          –          –     1 998     2 002 
Balance at 30 June 2015 (audited)           328     11 019      4 005   439 824   455 176 
Total comprehensive income                    –          –          –    62 800    62 800 
Dividend paid                                 –          –          –   (24 356)  (24 356) 
Balance at 31 December 2015 (unaudited)     328     11 019      4 005   478 268   493 620 



CAPITAL COMMITMENTS
                                                      Unaudited     Unaudited     Audited
                                                       6 months      6 months   12 months
R’000                                                  Dec 2015      Dec 2014   June 2015
Capital expenditure authorised and contracted                  
Property, plant and equipment                             9 741         9 974      12 417



SEGMENTAL ANALYSIS
                                                           Paper   Properties
                                            Plastic    and Board    and Group
R’000                                       Product     Products     Services       Total
Revenue – December 2015                     665 281      247 285        1 251     913 817 
Revenue to all customers                    682 375      263 236        1 251     946 862 
Less revenue to internal customers           17 094       15 951            –      33 045 
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 – June 2015                         898 727      457 435        2 577   1 358 739 
Revenue to all customers                    977 793      479 964        2 577   1 460 334 
Less revenue to internal customers           79 066       22 529            –     101 595 
Operating profit – December 2015             60 168       27 035        2 123      89 326 
Operating profit – December 2014             28 676       25 188        2 978      56 842 
Operating profit – June 2015                 54 810       51 191        4 146     110 147 
Profit before tax– December 2015             59 849       26 263        1 281      87 393 
Profit before tax – December 2014            28 127       24 758        3 996      56 881 
Profit before tax – June 2015                54 054       50 146        6 181     110 381 
Capital expenditure – December 2015          22 467        6 321        2 704      31 492 
Capital expenditure – December 2014           6 686        1 775          158       8 619 
Capital expenditure – June 2015              14 880       12 783          360      28 023 
Assets – December 2015                      591 058      202 738       39 772     833 568 
Assets – December 2014                      417 795      175 668       55 670     649 133 
Assets – June 2015                          408 648      182 698      138 097     729 443 
Liabilities – December 2015                 226 223       83 931       29 794     339 948 
Liabilities – December 2014                 136 538       71 452       15 390     223 380 
Liabilities – June 2015                     160 827       95 210       18 230     274 267 
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