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TRANSPACO LIMITED - Unaudited condensed interim group results for the six months to 31 December 2018 and dividend announcement

Release Date: 20/02/2019 07:05
Code(s): TPC     PDF:  
 
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Unaudited condensed interim group results for the six months to 31 December 2018 and dividend announcement

Transpaco Limited
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 2018 
and dividend announcement

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

Net asset value per share 1 908 cents  
Headline earnings per share 112,4 cents  
Dividend per share 30 cents


INTRODUCTION
Transpaco's results reflect a 33,2% decrease in headline earnings per share ("HEPS"). 

An unprecedented and protracted three-month plastic industry strike coupled with a depressed consumer
environment and stagnant economy, resulted in the decline in performance.  

Notwithstanding a 23,6% increase in revenue, mainly as a result of the acquisition of Future Packaging,
operating profit declined by 26,4%.

The group's expenses and gross profit percentages continued to be well-managed and controlled. However, 
this was insufficient to offset the effects of the strike and poor trading conditions.

The plastic industry strike commenced in October 2018 impacting several Transpaco operations during the
group's busiest period, October to December. Although not officially ended, Transpaco managed to negotiate 
the return to work by all striking employees by 7 January 2019 which occurred in stages during the strike.
Unfortunately, Transpaco Recycling was closed for the full three-month duration.

Transpaco's balance sheet remains robust as the group continues its strict working capital management
strategy.


Financial results
Group                           December      December      % increase/    
                                    2018          2017        (decrease)   
Revenue (R'm)                    1 083,5         876,8             23,6    
Operating profit (R'm)              57,8          78,5            (26,4)   
Headline earnings (R'm)             37,0          55,3            (33,2)   
Earnings per share (cents)         112,0         168,2            (33,4)   
HEPS (cents)                       112,4         168,3            (33,2)   
Diluted HEPS (cents)               112,4         168,3            (33,2)   



The group's net interest-bearing debt-to-equity (gearing) position increased to 18,8% (December 2017: 6,2%).

Transpaco's net asset value per share increased by 5,8% to 1 908 cents (December 2017: 1 803 cents).   


Goodwill
In terms of IFRS 3 - Business Combinations, management will perform a final purchase price allocation
("PPA") to determine the fair value of the assets and liabilities acquired on the acquisition of the Future
Packaging group. The PPA exercise will be completed during the current financial year.


Transformation
With the introduction of the revised BBBEE scorecard, Transpaco moved from level 4 to level 6 for the 2018
financial year.  

We are pleased to advise that Transpaco has since year-end, through various strategic initiatives, regained
its level 4 position on the revised BBEEE scorecard, with the full intention of further improvement in the
future.


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 30,0 cents per share
(December 2017: 45,0 cents per share) for the six-month period ended 31 December 2018. After applying the 
dividend withholding tax of 20%, a net interim dividend of 24,00000 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 
32 886 359 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, 12 March 2019
Shares trade ex dividend                        Wednesday, 13 March 2019
Record date                                     Friday, 15 March 2019
Payment date                                    Monday, 18 March 2019
Share certificates may not be dematerialised or rematerialised between Wednesday, 13 March 2019 and Friday,
15 March 2019, both days inclusive.


Basis of preparation and accounting policies
The group's unaudited condensed interim financial results for the six-month period ended 31 December 2018 have 
been prepared in accordance with IAS 34 - Interim Financial Reporting ("IAS 34"), 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 unaudited condensed interim group 
financial results 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 consolidated financial statements as at 30 June 2018.

New standards, interpretations and amendments adopted by the Group
The accounting policies adopted in the preparation of the unaudited condensed interim financial results are
consistent with those applied in the preparation of the group's annual financial statements for the year ended
30 June 2018, save for the adoption of new standards effective for reporting periods beginning on or after 
1 January 2018. The group has not early adopted any other standard, interpretation or amendment that has been
issued but is not yet effective.

The group has applied both IFRS 9 - Financial Instruments and IFRS 15 - Revenue from Contracts with
Customers using the modified retrospective approach. IFRS 9 has had an insignificant impact for the group due 
to the low-value short-term nature of debtors. IFRS 15 has had an insignificant impact for the group as the 
group does not sell products based on multiple-element arrangements or on a provisional or variable pricing 
basis.

The group has assessed the potential impact of IFRS 16 on the financial statements of the group and
concluded that IFRS 16 will have an impact on the recognition of leases for which management is still 
assessing. The standard is effective for periods beginning on or after 1 January 2019 and will be implemented 
by the group from 1 July 2019. 

Various other new and amended IFRS and IFRIC interpretations have been issued and are effective. However,
they are not applicable to the group's activities during the period.


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

Date 19 February 2019


Statement of comprehensive income
                                                     Unaudited                  Unaudited          Audited 
                                                      6 months           %       6 months        12 months 
R'000                                                 Dec 2018      change       Dec 2017        June 2018 
Revenue                                              1 083 475        23,6        876 774        1 721 876 
Cost of sales                                         (713 223)                  (550 605)      (1 095 588)
Profit before operating costs and depreciation         370 252        13,5         326169          626 288 
Operating costs                                       (287 422)                  (223 523)        (446 423)
Depreciation                                           (25 007)                   (24 109)         (40 656)
Operating profit                                        57 823       (26,4)        78 537          139 209 
Finance income                                             676                      2 220            3 237 
Finance costs                                           (7 157)                    (3 896)          (7 404)
Profit before taxation                                  51 342       (33,2)        76 861          135 042 
Taxation                                               (14 526)                   (21 551)         (37 556)
Profit for the period                                   36 816       (33,4)        55 310            97486 
Other comprehensive income                                   -                          -                - 
Total comprehensive income                              36 816       (33,4)        55 310           97 486 
Weighted average ranking number of shares 
in issue ('000)                                         32 886                     32 883           32 629 
Diluted weighted average ranking number of 
shares in issue ('000)                                  32 886                     32 883           32 629 
Earnings per share (cents)                               112,0       (33,4)         168,2            298,8 
Diluted earnings per share (cents)                       112,0       (33,4)         168,2            298,8 
Headline earnings per share (cents)                      112,4       (33,2)         168,3            297,4 
Diluted headline earnings per share (cents)              112,4       (33,2)         168,3            297,4 
Dividend per share (cents)*                               30,0       (33,3)          45,0            135,0 
*Dividend declared after the period                                                                        
Reconciliation of headline earnings (R'000)                                                              
Basic earnings                                          36 816                     55 310           97 486 
Loss/(profit) on disposal of property, 
plant and equipment                                        139                         35             (462)
Headline earnings                                       36 955       (33,2)        55 345           97 024 



Statement of changes in equity          
                                            Issued                                                       
                                             share       Share       Other     Distributable            
R'000                                      capital     premium    reserves           reserve      Total
Balance at 30 June 2017 (audited)              328      11 019       4 005           545 873    561 225 
Profit for the period                            -           -           -            55 310     55 310 
Other comprehensive income                       -           -           -                 -          - 
Total comprehensive income                       -           -           -            55 310     55 310 
Dividend paid                                    -           -           -           (23 742)   (23 742) 
Transfer                                                              (50)                50          - 
Balance at 31 December 2017 (unaudited)        328      11 019       3 955           577 491    592 793 
Profit for the period                            -           -           -            42 176     42 176 
Other comprehensive income                       -           -           -                 -          - 
Total comprehensive income                       -           -           -            42 176     42 176 
Transfer                                         -           -     (3 955)             3 955          - 
Dividend paid                                    -           -           -           (14 838)   (14 838) 
Balance at 30 June 2018 (audited)              328      11 019           -           608 784    620 131 
Profit for the period                            -           -           -            36 816     36 816 
Other comprehensive income                       -           -           -                 -          - 
Total comprehensive income                       -           -           -            36 816     36 816 
Dividend paid                                    -           -           -           (29 597)   (29 597) 
Transfer                                         -           -           -                 -          - 
Balance at 31 December 2018 (unaudited)        328      11 019           -           616 003    627 350 
                                                                                                        


Statement of financial position                                                                        
                                                         Unaudited         Unaudited           Audited 
                                                          6 months          6 months         12 months 
R'000                                                     Dec 2018          Dec 2017         June 2018 
ASSETS                                                                                                 
Non-current assets                                         434 979           368 635           432 831 
Property, plant and equipment                              348 916           325 686           347 019 
Intangibles                                                 17 855            17 855            17 855 
Goodwill                                                    64 182            23 195            64 182 
Deferred taxation                                            4 026             1 899             3 775 
Current assets                                             658 699           578 638           649 978 
Inventories                                                229 615           172 810           259 846 
Trade and other receivables                                391 180           368 668           328 796 
Taxation receivable                                           3311               669               888 
Cash and cash equivalents                                   34 593            36 491            60 448 
                                                                                                       
TOTAL ASSETS                                             1 093 678           947 273         1 082 809 
EQUITY AND LIABILITIES                                                                                 
Capital and reserves                                       627 350           592 793           620 131 
Issued share capital                                           328               328               328 
Share premium                                               11 019            11 019            11 019 
Other reserves                                                   -             3 955                 - 
Distributable reserve                                      616 003           577 491           608 784 
Non-current liabilities                                    164 135           101 648           158 362 
Interest-bearing borrowings                                117 247            57 214           113 811 
Deferred income                                             10 815            12 904            11 053 
Deferred taxation                                           36 073            31 530            33 498 
Current liabilities                                        302 193           252 832           304 316 
Trade payables and accruals                                241 766           212 505           250 464 
Provisions                                                  22 133            18 665            32 145 
Current portion of interest-bearing borrowings              34 951            15 911            18 790 
Deferred income                                              2 103             2 111             2 103 
Taxation payable                                             1 137             3 640               814 
Bank overdraft                                                 103                 -                 - 
TOTAL EQUITY AND LIABILITIES                             1 093 678           947 273         1 082 809 
Number of shares in issue ('000)                                                                       
Number of shares (net of treasury shares)                   32 886            32 861            32 861 
Net movement in treasury shares                                  -                25                25 
Ranking number of shares                                    32 886            32 886            32 886 
Salient features                                                                                       
Net asset value per share (cents)                            1 908             1 803             1 886 
Operating margin %                                             5,3               9,0               8,1 
Net interest-bearing debt:equity ratio %                      18,8               6,2              11,6 
                                                                                                       


Capital commitments
                                                         Unaudited         Unaudited            Audited
                                                          6 months          6 months          12 months
R'000                                                     Dec 2018          Dec 2017          June 2017
Capital expenditure authorised and contracted                                                          
Property, plant and equipment                                4 974             7 746             12 812
                                                                                                       


Statement of cash flows
                                                               Unaudited       Unaudited        Audited
                                                                6 months        6 months      12 months
R'000                                                           Dec 2018        Dec 2017      June 2018
Cash flow (used in)/from operating activities                                                          
Cash generated/(utilised) from operations                         31 923          (2 769)       125 713
Dividends paid                                                   (29 597)        (23 742)       (38 580)
Finance income received                                              676           2 220          3 237
Finance costs paid                                                (7 157)         (3 896)        (7 404)
Taxation paid                                                    (14 302)        (14 467)       (35 409)
Net cash (outflow)/inflow from operating activities              (18 457)        (42 654)        47 557
Cash flow used in investing activities                                                                 
Proceeds on disposal of property, plant and equipment                156             307          1 418
Acquisition of business                                                -               -        (96 571)
Expansion and replacement of property, plant and equipment       (27 254)        (11 646)       (38 737)
Net cash outflow from investing activities                       (27 098)        (11 339)      (133 890)
Cash flow from/(used in) financing activities                                                          
Proceeds from borrowings                                          30 163               -         66 434
Repayment of borrowings                                          (10 566)         (9 050)       (19 187)
Net cash inflow/(outflow) from financing activities               19 597          (9 050)        47 247
Net movement in cash for the period                              (25 958)        (63 043)       (39 086)
Cash and cash equivalents at the beginning of the period          60 448          99 534         99 534
Cash and cash equivalents at the end of the period                34 490          36 491         60 448



Segmental analysis
Unaudited six months December 2018, six months December 2017 and audited 12 months June 2018
                                                                 Paper      Properties 
                                               Plastic       and Board       and group                
R'000                                         products        products        services            Total
Revenue - December 2018                        618 487         464 988               -        1 083 475 
Revenue to all customers                       659 293         495 554               -        1 154 847 
Less revenue to internal customers             (40 806)        (30 566)              -          (71 372)
Revenue - December 2017                        639 456         237 318               -          876 774 
Revenue to all customers                       665 571         257 014               -          922 585 
Less revenue to internal customers             (26 115)        (19 696)              -          (45 811)
Revenue - June 2018                          1 126 945         594 931               -        1 721 876 
Revenue to all customers                     1 182 480         637 172               -        1 819 652 
Less revenue to internal customers             (55 535)        (42 241)              -          (97 776)
Operating profit - December 2018                27 894          19 986           9 943           57 823 
Operating profit - December 2017                52 466          20 068           6 003           78 537 
Operating profit - June 2018                    83 980          43 214          12 015          139 209 
Profit before tax - December 2018               26 165          19 674           5 503           51 342 
Profit before tax - December 2017               51 122          19 412           6 327           76 861 
Profit before tax - June 2018                   81 242          42 073          11 727          135 042 
Capital expenditure - December 2018             16 983           3 751           6 520           27 254 
Capital expenditure - December 2017              4 934           3 433           3 279           11 646 
Capital expenditure - June 2018                 26 044           7 660           5 033           38 737 
Assets - December 2018                         605 578         366 171         121 929        1 093 678 
Assets - December 2017                         630 974         182 164         134 135          947 273 
Assets - June 2018                             562 791         365 469         154 549        1 082 809 
Liabilities - December 2018                    209 962         124 517         131 849          466 328 
Liabilities - December 2017                    230 949          72 240          51 291          354 480 
Liabilities - June 2018                        210 443         134 141         118 094          462 678 
                                                                                                        


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


Auditors Ernst & Young Incorporated

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

19 February 2019

Website www.transpaco.co.za

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