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TRANSPACO LIMITED - Unaudited condensed interim group results for the six months to 31 December 2016 and dividend announcement

Release Date: 22/02/2017 07:05
Code(s): TPC     PDF:  
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Unaudited condensed interim group results for the six  months to 31 December 2016 and dividend announcement

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

Registration number 1951/000799/06  
ISIN: ZAE000007480  Share code: TPC
("Transpaco" or "the group")

UNAUDITED CONDENSED INTERIM GROUP RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2016 AND 
DIVIDEND ANNOUNCEMENT

- Net asset value per share   1 671 cents
- Headline earnings per share   178 cents
- Dividend per share             48 cents

INTRODUCTION
Transpaco's performance, reflecting a 7% decrease in headline earnings per share (HEPS), as a result 
of a continued challenging economic environment, was below expectations. 

The group's margins remained under pressure declining slightly during the period. Expenses were well 
contained and below inflation. However, sales volumes did not reach anticipated levels. 

All Transpaco operations traded favourably with certain divisions outperforming the previous year.

Transpaco's balance sheet remains strong due to continued stringent working capital management and 
the group's performance for the six months.

FINANCIAL RESULTS
                                                 December      December             %    
Group                                                2016          2015      decrease    
Turnover (R'm)                                      903,6         912,5          (1,0)   
Operating profit (R'm)                               82,4          89,3          (7,7)   
Headline earnings (R'm)                              58,5          62,8          (7,0)   
Earnings per share (cents)                          177,8         190,4          (6,6)   
Headline earnings per share (cents)                 177,9         190,6          (6,7)   
Diluted headline earnings per share (cents)         177,8         190,3          (6,6)   


Headline earning per share for the 12 calendar months ended 31 December 2016 increased 3,3% to 
317,4 cents (December 2015: 307,2)

The group's net interest-bearing debt-to-equity (gearing) position is 8,0% (December 2015: 17,6%).

Net asset value per share increased by 11,2% to 1 671 cents (December 2015: 1 503 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.

Transpaco has concluded an agreement to purchase the Johannesburg property from which Transpaco 
Recycling operates. The transaction will be finalised during the financial year.

TRANSFORMATION
Transpaco's seventh independent accreditation process in respect of Black Economic Empowerment 
reflected a Level 4 value added contributor. 

Transformation remains a key strategic imperative of the group.

DIVIDEND 
The board has declared an interim gross cash dividend out of income reserves of 48,0 cents per share 
(December 2015: 52,0 cents per share) for the six-month period ended 31 December 2016. After applying the 
dividend withholding tax of 15%, a net interim dividend of 40,80000 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, 14 March 2017
Shares trade ex-dividend                   Wednesday, 15 March 2017
Record date                                   Friday, 17 March 2017
Payment date                                  Monday, 20 March 2017

Share certificates may not be dematerialised or rematerialised between Wednesday, 15 March 2017 and 
Friday, 17 March 2017, 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 SAICA 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 2016. 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").

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); HA Botha*ˆ; 
SR Bouzaglou; SI Jacobson*; SP van der Linde (Lead Independent Director)*ˆ 
*non-executive  ˆindependent non-executive

Date 22 February 2017

STATEMENT OF COMPREHENSIVE INCOME                                                                           
                                                   Unaudited                   Unaudited          Audited           
                                                    6 months           %        6 months        12 months          
R'000                                               Dec 2016      change        Dec 2015        June 2016          
Revenue                                              905 676                     913 817        1 714 724          
Turnover                                             903 641        (1,0)        912 532        1 712 376          
Cost of sales                                       (581 068)                   (586 777)      (1 099 905)         
Profit before operating costs and depreciation       322 573        (1,0)        325 755          612 471          
Operating costs                                     (218 122)                   (215 899)        (412 613)         
Depreciation                                         (22 045)                    (20 530)         (42 878)         
Operating profit                                      82 406        (7,7)         89 326          156 980          
Finance income                                         2 035                       1 285            2 348          
Finance costs                                         (3 252)                     (3 218)          (6 767)         
Profit before taxation                                81 189        (7,1)         87 393          152 561          
Taxation                                             (22 767)                    (24 593)         (43 313)         
Profit for the period                                 58 422        (7,0)         62 800          109 248          
Other comprehensive income                                 -                           -                -          
Total comprehensive income                            58 422        (7,0)         62 800          109 248          
Weighted average ranking number of 
shares in issue ('000)                                32 858                      32 978           32 838          
Diluted weighted average ranking  
number of shares in issue ('000)                      32 883                      33 022           32 883          
Earnings per share (cents)                             177,8        (6,6)          190,4            332,7          
Diluted earnings per share (cents)                     177,7        (6,6)          190,2            332,2          
Headline earnings per share (cents)                    177,9        (6,7)          190,6            330,1          
Diluted headline earnings per share (cents)            177,8        (6,6)          190,3            329,6          
Dividend per share (cents)*                             48,0        (7,7)           52,0           150,00          
*Dividend declared after the period                                                                                
Reconciliation of headline earnings (R'000)                                                                       
Basic earnings                                        58 422                      62 800          109 248          
Loss/(profit) on disposal of property, 
plant and equipment                                       41                          48             (851)         
Headline earnings                                     58 463        (7,0)         62 848          108 397          
                                                                                   
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                                                               
                                          Issued                 
                                           share         Share         Other    Distributable         
R'000                                    capital       premium      reserves          reserve         Total         
Balance at 30 June 2015 (audited)            328        11 019         4 005          439 824       455 176          
Profit for the period                          -             -             -           62 800        62 800          
Other comprehensive income                     -             -             -                -             -          
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          
Profit for the period                          -             -             -           46 448        46 448          
Other comprehensive income                     -             -             -                -             -          
Total comprehensive income                     -             -             -           46 448        46 448          
Dividend paid                                  -             -             -          (17 114)      (17 114)          
Balance at 30 June 2016 (audited)            328        11 019         4 005          507 602       522 954          
Profit for the period                          -             -             -           58 422        58 422          
Other comprehensive income                     -             -             -                -             -          
Total comprehensive income                     -             -             -           58 422        58 422          
Dividend paid                                  -             -             -          (32 271)      (32 271)          
Balance at 31 December 2016 (unaudited)      328        11 019         4 005          533 753       549 105          
                                     
STATEMENT OF FINANCIAL POSITION                                                                  
                                                        Unaudited       Unaudited         Audited           
                                                         6 months        6 months       12 months           
R'000                                                    Dec 2016        Dec 2015       June 2016          
ASSETS                                                                                                     
Non-current assets                                        335 408         304 501         311 664          
 Property, plant and equipment                            292 309         266 288         267 823          
 Intangibles                                               17 855             482          17 855          
 Goodwill                                                  23 195          35 704          23 195          
 Deferred taxation                                          2 049           2 027           2 791          
Current assets                                            579 930         529 067         558 051          
 Inventories                                              184 987         176 686         212 704          
 Trade and other receivables                              339 454         333 187         259 524          
 Taxation receivable                                          275           3 634             656          
 Cash and cash equivalents                                 55 214          15 560          85 167     
TOTAL ASSETS                                              915 338         833 568         869 715          
EQUITY AND LIABILITIES                                                                                     
Capital and reserves                                      549 105         493 620         522 954          
 Issued share capital                                         328             328             328          
 Share premium                                             11 019          11 019          11 019          
 Other reserves                                             4 005           4 005           4 005          
 Distributable reserve                                    533 753         478 268         507 602          
Non-current liabilities                                   129 520         118 947          99 345          
 Interest-bearing borrowings                               86 362          82 815          58 733          
 Deferred income                                           13 365           7 648          12 007          
 Deferred taxation                                         29 793          28 484          28 605          
Current liabilities                                       236 713         221 001         247 416          
 Trade payables and accruals                              201 180         172 055         201 221          
 Provisions                                                15 798          28 338          29 462          
 Current portion of interest-bearing borrowings            12 974          19 379          14 077          
 Deferred income                                            2 812             870           2 098          
 Taxation payable                                           3 949             359             558               
TOTAL EQUITY AND LIABILITIES                              915 338         833 568         869 715          
Number of shares in issue ('000)                                                                           
Number of shares (net of treasury shares)                  32 841          32 821          32 821          
Net movement in treasury shares                                20              20              20          
Ranking number of shares                                   32 861          32 841          32 841          
Salient features                                                                                           
Net asset value per share (cents)                           1 671           1 503           1 592          
Operating margin %                                            9,1             9,8             9,2          
Net interest-bearing debt:equity ratio %                      8,0            17,6        Net cash          
                                                                                         positive          

CAPITAL COMMITMENTS                       
                                                        Unaudited       Unaudited         Audited           
                                                         6 months        6 months       12 months           
R'000                                                    Dec 2016        Dec 2015       June 2016          
Capital expenditure authorised and contracted                                                            
Property, plant and equipment                              30 371           9 741          39 665          
                                                                                                         
STATEMENT OF CASH FLOWS                                                          
                                                        Unaudited       Unaudited         Audited           
                                                         6 months        6 months       12 months           
R'000                                                    Dec 2016        Dec 2015       June 2016          
Cash flow from operating activities                                                                         
 Cash generated/(utilised) from operations                 40 661         (23 185)        139 090          
 Dividends paid                                           (32 271)        (24 356)        (41 470)         
 Finance income received                                    2 035           1 285           2 348          
 Finance costs paid                                        (3 252)         (3 218)         (6 767)         
 Taxation paid                                            (17 064)        (20 319)        (41 369)         
Net cash (outflow)/inflow from operating activities        (9 891)        (69 793)         51 832          
Cash flow used in investing activities                                                                     
 Proceeds on disposal of property, 
  plant and equipment                                         570             783           2 777          
 Acquisition of business                                        -        (109 650)       (109 650)         
 Expansion and replacement of property, 
  plant and equipment                                     (47 158)        (31 492)        (56 120)         
Net cash outflow from investing activities                (46 588)       (140 359)       (162 993)         
Cash flow used in financing activities                                                                     
 Proceeds from borrowings                                  36 363          78 637          90 622          
 Repayment of borrowings                                   (9 837)         (6 525)        (47 894)         
Net cash inflow from financing activities                  26 526          72 112          42 728          
Net movement in cash for the period                       (29 953)       (138 040)        (68 433)         
Cash and cash equivalents at the beginning 
of the period                                              85 167         153 600         153 600          
Cash and cash equivalents at the end of the period         55 214          15 560          85 167          
                                                                             

SEGMENTAL ANALYSIS                                          
Unaudited six months December 2016, six months December 2015 and audited 12 months June 2016                    
                                                               Paper     Properties                     
                                              Plastic      and Board      and Group           Total     
R'000                                        Products       Products       Services           Group          
Revenue - December 2016                       662 831        240 821          2 024         905 676          
Revenue to all customers                      687 644        260 658          2 024         950 326          
Less revenue to internal customers             24 813         19 837              -          44 650          
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 - June 2016                         1 231 499        481 104          2 121       1 714 724          
Revenue to all customers                    1 279 367        509 911          2 121       1 791 399          
Less revenue to internal customers             47 868         28 807              -          76 675          
Operating profit - December 2016               57 098         20 737          4 571          82 406          
Operating profit - December 2015               60 168         27 035          2 123          89 326          
Operating profit - June 2016                   99 626         50 929          6 425         156 980          
Profit before tax - December 2016              56 983         19 732          4 474          81 189          
Profit before tax - December 2015              59 849         26 263          1 281          87 393          
Profit before tax - June 2016                  95 436         49 299          7 826         152 561          
Capital expenditure December 2016              45 562          1 402            194          47 158          
Capital expenditure December 2015              22 467          6 321          2 704          31 492          
Capital expenditure - June 2016                33 798         17 645          4 677          56 120          
Assets - December 2016                        624 701        195 357         95 280         915 338          
Assets - December 2015                        591 058        202 738         39 772         833 568          
Assets - June 2016                            549 871        192 446        127 398         869 715          
Liabilities - December 2016                   255 756         82 307         28 170         366 233          
Liabilities - December 2015                   226 223         83 931         29 794         339 948          
Liabilities - June 2016                       217 105         97 766         31 890         346 761          
                                   
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,
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg 

WEBSITE www.transpaco.co.za
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