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TRANSPACO LIMITED - Reviewed condensed consolidated results for the year ended 30 June 2016 and dividend announcement

Release Date: 23/08/2016 07:05
Code(s): TPC     PDF:  
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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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