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Reviewed condensed consolidated results for the year ended 30 June 2016 and dividend announcement
Transpaco Limited
Registration number: 1951/000799/06
Share code: TPC
ISIN: ZAE000007480
Registration No. 1951/000799/06
(“Transpaco” or “the group”)
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2016 AND DIVIDEND ANNOUNCEMENT
A leading manufacturer, recycler and distributor of plastic and paper packaging products
TURNOVER UP 26%
HEADLINE EARNINGS PER SHARE UP 36%
TOTAL DIVIDEND PER SHARE 150 CENTS
INTRODUCTION
The pleasing 38% increase in headline earnings for the year to June 2016 (the year) is testament to Transpaco’s
resilience in challenging economic times.
A robust performance in the Plastics Division and a strong contribution from East Rand Plastics boosted
Transpaco’s turnover growth surpassing the previous year by 26%. The increase in turnover to R1,71 billion was
attributable to a combination of volume growth, price increases and the inclusion of East Rand Plastics for
11 months. Focused marketing and sales strategies remain key drivers in maintaining this momentum.
Transpaco’s performance was supported by controlled operating costs through improved manufacturing, distribution
and administration efficiencies.
Notwithstanding that margins remained under pressure from higher input costs - notably energy, labour and certain
raw materials - the group operating margin increased to 9,2% (June 2015: 8,1%).
FINANCIAL RESULTS
June June %
2016 2015 increase
Turnover (R’m) 1 712,4 1 356,0 26,3
Operating profits (R’m) 157,0 110,1 42,5
Total comprehensive income (R’m) 109,2 79,3 37,8
Headline earnings (R’m) 108,4 78,7 37,8
Earnings per share (cents) 332,7 245,3 35,6
Headline earnings per share (cents) 330,1 243,3 35,7
Diluted headline earnings per share (cents) 329,6 242,8 35,7
Net asset value per share (cents) 1 592 1 387 14,8
The weighted average number of shares in issue in calculating EPS and HEPS was 32 838 000 (June 2015: 32 323 000).
Additional plant and equipment acquired during the year and the funding required for the purchase of the business
and prope`rty of East Rand Plastics resulted in an increase in long-term borrowings.
Cash generated from operations decreased to R139,1 million (June 2015: R144,8 million). Cash and cash equivalents
at year-end were R85,2 million (June 2015: R153,6 million). Efficient working capital management minimised net
interest paid and resulted in Transpaco’s net interest-bearing debt-to-equity position remaining cash positive.
Prospects
While a challenging trading environment prevails, particularly in the Recycling Division given a slow down in
demand for recycled plastic raw material locally and in neighbouring countries, 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.
Transformation
Transpaco’s seventh 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.
During the year, Transpaco has focused its transformation initiatives on skills, supplier and enterprise
development. Further, the use of long-term labour broker employees has ceased.
Directorship
Archie Aaron, who served on the Transpaco board since 1987 and as Chairman from 2003 to 2015, resigned from the
board during the year.
Archie’s contribution, dedication and support have played a pivotal role in the development, growth and success
of Transpaco.
We thank him for his leadership, guidance and advice which will continue to influence the group’s culture in the
future.
Dividend
The board has declared a final gross cash dividend out of income reserves of 98,0 cents per share, resulting in
total dividends of 150,0 cents per share for the year ended 30 June 2016 (June 2015: 108,0 cents per share), an
increase of 38,9%. After applying the dividend withholding tax of 15%, a net final dividend of 83,30000 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 Tuesday, 13 September 2016
Shares trade ex dividend Wednesday, 14 September 2016
Record date Friday, 16 September 2016
Payment date Monday, 19 September 2016
Share certificates may not be dematerialised or rematerialised between Wednesday, 14 September 2016 and Friday,
16 September 2016, both days inclusive.
Business Combination
Transpaco acquired the business and property of East Rand Plastics with effect from 1 August 2015. The purchase
price for the business was R110 million. It has proved impracticable to report on the turnover and net profit after
tax values resulting from the acquisition. Post the combination, certain East Rand Plastics business activities were
merged with existing Transpaco business activities and vice versa particularly since December 2015. This has made it
difficult to identify which portion can be attributed solely to the acquisition and which portion came from existing
operations.
The information disclosed in the annual report for the for the year ended 30 June 2015 has not changed. For more
detail refer to the Transpaco 2015 annual report, note 10.
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 Accounting 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 2015. 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 2016. The presentation and disclosure comply with International Accounting Standard (IAS) 34.
Review of 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
DJJ Thomas PN Abelheim L Weinberg
Non-executive Chairman Chief Executive Financial Director
Date 22 August 2016
STATEMENT OF COMPREHENSIVE INCOME
R’000 Reviewed % Reviewed
12 months change 12 months
June 2016 June 2015
Revenue 1 714 724 1 358 739
Turnover 1 712 376 26,3 1 356 025
Cost of sales (1 099 905) (891 763)
Profit before operating costs and depreciation 612 471 31,9 464 262
Operating costs (412 613) (319 148)
Depreciation (42 878) (34 967)
Operating profit 156 980 42,5 110 147
Finance income 2 348 2 714
Finance costs (6 767) (2 480)
Profit before taxation 152 561 38,2 110 381
Taxation (43 313) (31 095)
Profit for the year 109 248 79 286
Other comprehensive income - -
Total comprehensive income for the year 109 248 37,8 79 286
Weighted average ranking number of shares in issue (’000) 32 838 32 323
Diluted weighted average ranking number of shares in issue (’000) 32 883 32 388
Earnings per share (cents) 332,7 35,6 245,3
Diluted earnings per share (cents) 332,2 35,7 244,8
Headline earnings per share (cents) 330,1 35,7 243,3
Diluted headline earnings per share (cents) 329,6 35,7 242,8
Dividend per share (cents)* 150,0 38,9 108,0
* Includes interim dividend of 52 cents (June 2015 - 34 cents) and
a dividend declared after the period of 98 cents (June 2015 - 74 cents)
Reconciliation of headline earnings (R’000)
Basic earnings 109 248 79 286
Profit on disposal of property, plant and equipment (851) (636)
Headline earnings 108 397 37,8 78 650
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Distri-
R’000 Share Share Other butable
capital premium reserves reserve Total
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)
Share capital issued 1 - - - 1
Inflow of treasury shares 5 - - 2 086 2 091
Balance at 30 June 2015 328 11 019 4 005 439 824 455 176
Profit for the year - - - 109 248 109 248
Other comprehensive income - - - - -
Total comprehensive income - - - 109 248 109 248
Dividend paid - - - (41 470) (41 470)
Balance at 30 June 2016 328 11 019 4 005 507 602 522 954
STATEMENT OF FINANCIAL POSITION
R’000 Reviewed Reviewed
12 months 12 months
June 2016 June 2015
ASSETS
Non-current assets 311 664 205 680
Property, plant and equipment 267 823 199 813
Intangibles 17 855 482
Goodwill 23 195 3 204
Deferred taxation 2 791 2 181
Current assets 558 051 523 763
Inventories 212 704 164 428
Trade and other receivables 259 524 202 635
Taxation receivable 656 3 100
Cash and cash equivalents 85 167 153 600
TOTAL ASSETS 869 715 729 443
EQUITY AND LIABILITIES
Capital and reserves 522 954 455 176
Issued share capital 328 328
Share premium 11 019 11 019
Other reserve 4 005 4 005
Distributable reserve 507 602 439 824
Non-current liabilities 99 345 50 424
Interest-bearing borrowings 58 733 18 598
Deferred income 12 007 7 639
Deferred taxation 28 605 24 187
Current liabilities 247 416 223 843
Trade payables and accruals 201 221 187 847
Provisions 29 462 23 379
Current portion of interest-bearing borrowings 14 077 11 484
Deferred income 2 098 1 131
Taxation payable 558 2
TOTAL EQUITY AND LIABILITIES 869 715 729 443
Number of shares in issue (’000)
Number of shares (net of treasury shares) 32 821 32 337
Net movement in treasury shares 20 484
Ranking number of shares 32 841 32 821
Salient features
Net asset value per share (cents) 1 592 1 387
Operating margin % 9,2 8,1
Net interest-bearing debt:equity ratio % Net cash Net cash
positive positive
CAPITAL COMMITMENTS
R’000 Reviewed Reviewed
12 months 12 months
June 2016 June 2015
Capital expenditure authorised and contracted
Property, plant and equipment 39 665 12 417
STATEMENT OF CASH FLOWS
R’000 Reviewed Reviewed
12 months 12 months
June 2016 June 2015
Cash flow from operating activities
Cash generated from operations 139 091 144 772
Dividends paid (41 470) (28 534)
Finance income received 2 348 2 714
Finance costs paid (6 767) (2 480)
Taxation paid (41 370) (28 050)
Net cash inflow from operating activities 51 832 88 422
Cash flow used in investing activities
Proceeds on disposal of property, plant and equipment 2 777 1 290
Acquisition of business (109 650) -
Expansion and replacement of property, plant and equipment (56 120) (28 023)
Proceeds from short-term receivables - 642
Net cash outflow from investing activities (162 993) (26 091)
Cash flow used in financing activities
Proceeds from treasury shares - 2 091
Proceeds from share capital issued - 1
Proceeds from borrowings 90 622 8 192
Repayment of borrowings (47 894) (10 281)
Net cash inflow from financing activities 42 728 3
Net movement in cash for the year (68 433) 62 334
Cash and cash equivalents at the beginning of the year 153 600 91 266
Cash and cash equivalents at the end of the year 85 167 153 600
SEGMENTAL ANALYSIS
R’000 Paper Properties
Plastic and Board and Group Total
Products Products Services Group
Turnover - 2016 1 231 286 481 090 - 1 712 376
Turnover to all customers 1 279 154 509 897 - 1 789 051
Less turnover to internal customers 47 868 28 807 - 76 675
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
Operating profit - 2016 99 626 50 929 6 425 156 980
Operating profit - 2015 54 810 51 191 4 146 110 147
Profit before tax - 2016 95 436 49 299 7 826 152 561
Profit before tax - 2015 54 054 50 146 6 181 110 381
Capital expenditure - 2016 33 798 17 645 4 677 56 120
Capital expenditure - 2015 14 880 12 783 360 28 023
Assets - 2016 549 871 192 446 127 398 869 715
Assets - 2015 408 648 182 698 138 097 729 443
Liabilities - 2016 217 105 97 766 31 890 346 761
Liabilities - 2015 160 827 95 210 18 230 274 267
DIRECTORS
DJJ Thomas (Chairman)*; PN Abelheim (Chief Executive); L Weinberg (Financial Director); HA Botha**;
SR Bouzaglou; SI Jacobson*; SP van der Linde (Lead Independent Director)**
*non-executive
**independent non-executive
Transpaco Limited
Registration number: 1951/000799/06
Share code: TPC
ISIN: ZAE000007480
Auditors
Ernst & Young Inc.
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
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