Wrap Text
Reviewed provisional condensed consolidtaed results for the year ended 30 June 2019
and dividend announcement.
TRANSPACO LIMITED
Registration number 1951/000799/06
ISIN: zae000007480
Share code: TPC
("Transpaco" or "the group")
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2019
AND DIVIDEND ANNOUNCEMENT
HIGHLIGHTS
- Net asset value per share 1 940 cents
- HEPS down 42% to 172,3 cents
- Total dividend per share 80 cents
INTRODUCTION
2019 has been a challenging year for Transpaco.
A stagnant economy compounded by the three-month plastic industry strike resulted in the 41,3% decline in
the group's performance. Operating profit fell by 35,4% notwithstanding an increase in revenue of 15,3%.
The increase in revenue was attributable to the inclusion of Future Packaging for the full year compared
to the four months in the previous year.
Poor trading conditions due to the state of the economy and reduced consumer spend prevented the recovery
of increased costs and did not allow for expected turnover growth.
The strike occurred during Transpaco's busiest period negatively affecting three operations directly and
several others indirectly.
The demand for post-consumer recycled material remains flat and has been adversely affected by international
market forces.
Despite stringent cost control, continued focus on sales and marketing and sound working capital management,
the operating margin decreased to 4,5% (June 2018: 8,1%).
Future Packaging is a high-turnover, low-margin trading business. As a consequence this contributed to the
reduction in the group's operating margin.
The anti-plastic debate continues and in particular the unfavourable sentiment towards retail plastic bags.
Transpaco is actively engaging with all interested parties, including the Department of Environmental Affairs,
retail shopping mall landlords, retailers and environmental bodies, in an effort to dispel misconceptions
related to the overstated impact retail plastic bags have on the environment.
The paper division including general packaging was also negatively impacted by economic difficulties.
FINANCIAL RESULTS
%
June June increase/
2019 2018 (decrease
Revenue (R'm) 1 985,1 1 721,9 15,3
Operating profits (R'm) 89,9 139,2 (35,4)
Total comprehensive income (R'm) 57,2 97,5 (41,3)
Headline earnings (R'm) 56,7 97,0 (41,6)
Earnings per share (cents) 173,9 298,8 (41,8)
Headline earnings per share (cents) 172,3 297,4 (42,0)
Diluted headline earnings per share (cents) 172,3 297,4 (42,0)
Net asset value per share (cents) 1 940,0 1 886,0 2,9
The weighted average number of shares in issue in calculating EPS and HEPS was 32 886 000
(June 2018: 32 629 000).
Cash generated from operations decreased to R124,4 million (June 2018: R125,7 million). Cash and cash
equivalents at year-end were R36,7 million (June 2018: R60,4million). Efficient working capital
management minimised net interest paid and resulted in Transpaco's net interest-bearing debt-to-equity
position being restricted to 10,5% (June 2018: 11,6%) while maintaining a robust balance sheet.
PROSPECTS
The South African trading environment remains difficult.
Management will continue its proven business strategy of maintaining strict financial control and
generating revenue growth.
Transpaco Cores and Tubes has entered the paper straw market with the establishment of a dedicated
paper straw production facility.
Transpaco has commenced manufacturing retail shopping bags produced from compostable materials as an
alternative solution to traditional retail plastic bags.
Further, we are exploring the viability of establishing a retail bag production facility to manufacture
bags from two alternate materials.
Strategic acquisition opportunities when identified, will be pursued.
TRANSFORMATION
Transpaco's ninth independent accreditation process in respect of Black Economic Empowerment (BEE)
reflected a Level 4 value added contributor, which has improved on the previous year's rating
(June 2018: Level 6) due to increased transformation spend and attention to all scorecard categories.
Transpaco has registered for the YES programme and employed 60 youth in its Back to School operation.
We are expecting a substantial improvement in our BEE level at the next evaluation as a result of
the initiative.
DIVIDEND
The board has declared a final gross cash dividend out of income reserves of 50,0 cents per share, resulting
in total dividends of 80,0 cents per share for the year ended 30 June 2019 (June 2018: 135,0 cents per share).
After applying the dividend withholding tax of 20%, a net final dividend of 40,00000 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, 10 September 2019
Shares trade ex dividend Wednesday, 11 September 2019
Record date Friday, 13 September 2019
Payment date Monday, 16 September 2019
Share certificates may not be dematerialised or rematerialised between Wednesday, 11 September 2019 and
Friday, 13 September 2019, both days inclusive.
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 of
South Africa. 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 2018, except for
the new standards adopted as detailed below. 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 2019. The presentation and disclosure complies with
International Accounting Standard (IAS) 34.
The fair value of the assets and liabilities approximate the carrying amounts largely due to the short-term
maturities of these instruments. Interest-bearing borrowings are not materially different from their calculated
fair values due to market-related rates embedded into the terms of these borrowings.
The adoption of certain new standards, which became effective in the current period, has resulted in minor
changes to accounting policies and disclosure, none of which have had a material impact on the financial
position or performance of the group.
IFRS 9: FINANCIAL INSTRUMENTS
The group adopted IFRS 9 with effect from 1 July 2018 using the modified retrospective approach and comparative
information has not been restated.
Classification and measurement
IFRS 9 requires all financial assets to be classified and measured on the basis of the group's business
model for managing the financial assets and the contractual cash flow characteristics of the financial
assets. Management have assessed the business models which apply to the financial assets held by the group
and the financial instruments have been classified into the appropriate IFRS 9 categories. The group's
financial assets comprise trade receivables and cash and cash equivalents. These assets are measured at
amortised cost under both IFRS 9 and IAS 39.
Impairment
The adoption of IFRS 9 has changed the group's accounting for impairment losses for financial assets by
replacing IAS 39's incurred loss approach with a forward-looking expected credit loss (ECL) approach.
For trade and other receivables, the group has applied the standard's simplified approach and has calculated
ECLs based on lifetime expected credit losses. The group calculates ECL on an individual debtor basis based
on the group's historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment.
There is no material impact from the application of IFRS 9.
IFRS 15: REVENUE FROM CONTRACTS WITH CUSTOMERS
The group adopted IFRS 15 with effect from 1 July 2018 using the modified retrospective approach and comparative
information has not been restated.
The group's revenue from contracts with customers arises from its principal activities of sales of goods.
This generally includes one performance obligation.
The group has concluded that revenue from sale of goods should be recognised at the point in time when
control of the items is transferred to the customer, generally at the point of sale. Therefore, the adoption
of IFRS 15 did not have a material impact on the timing of revenue recognition.
IFRS: 16 LEASES
IFRS 16 introduces significant changes to lessee accounting as it removes the distinction between operating and
finance leases under IAS 17 and requires a lessee to recognise a right-of-use asset and a lease liability at
commencement for all leases, except for short-term leases and leases of low value assets. IFRS 16 will be
effective for the group for the financial year commencing 1 July 2019.
IFRS 16 will impact most significantly the group's leases relating to property, plant, equipment and vehicles.
The group has elected to apply IFRS 16 using the modified retrospective approach.
The transition will relate to the capitalising of property, plant and onto the statement of financial position
in the form of a right of use asset, together with the corresponding lease liability. Changes to the statement
of comprehensive income will result in the current operating lease costs being replaced by an amortisation
of the right-of-use asset and calculated lease finance costs on the interest line. Other areas of the
statutory metrics that will be impacted by the adoption of the standard include operating profit, EBITDA
and earnings per share. We will provide first time disclosure in the publication of our 2019 annual
financial statements.
Review by independent auditors
The group's auditors, Ernst & Young Inc., have reviewed the provisional 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 provisional 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: 20 August 2019
STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
12 months % 12 months
R'000 June 2019 change June 2018
Revenue^ 1 985 139 15,3 1 721 876
Cost of sales (1 325 883) (1 095 588)
Profit before operating costs and depreciation 659 256 5,3 626 288
Operating costs (525 951) (446 423)
Depreciation (43 437) (40 656)
Operating profit 89 868 (35,4) 139 209
Finance income 1 284 3 237
Finance costs (12 345) (7 404)
Profit before taxation 78 807 (41,6) 135 042
Taxation (21 619) (37 556)
Profit for the year 57 188 97 486
Other comprehensive income - -
Total comprehensive income for the year 57 188 (41,3) 97 486
Weighted average ranking number of shares in issue ('000) 32 886 32 629
Diluted weighted average ranking number of shares in issue ('000) 32 886 32 629
Earnings per share (cents) 173,9 (41,8) 298,8
Diluted earnings per share (cents) 173,9 (41,8) 298,8
Headline earnings per share (cents) 172,3 (42,0) 297,4
Diluted headline earnings per share (cents) 172,3 (42,0) 297,4
Dividend per share (cents)* 80,0 (40,7) 135,0
*Includes interim dividend of 30 cents (June 2018 - 45 cents) and a
dividend declared after the period of 50 cents (June 2018 - 90 cents
Reconciliation of headline earnings (R'000)
Basic earnings 57 188 97 486
Profit on disposal of property,plant and equipment (512) (462)
Headline earnings 56 676 (41,6) 97 024
^Refer to segmental analysis
STATEMENT OF CHANGES IN EQUITY
Share Share Other Distributable
R'000 capital premium reserves reserve Total
Balance at 30 June 2017 328 11 019 4 005 545 873 561 225
Profit for the year - - - 97 486 97 486
Other comprehensive income - - - - -
Total comprehensive income - - - 97 486 97 486
Transfer - - (4 005) 4 005 -
Dividend paid - - - (38 580) (38 580)
Balance at 30 June 2018 328 11 019 - 608 784 620 131
Profit for the year - - - 57 188 57 188
Other comprehensive income - - - - -
Total comprehensive income - - - 57 188 57 188
Dividend paid - - - (39 463) (39 463)
Balance at 30 June 2019 328 11 019 - 626 509 637 856
STATEMENT OF FINANCIAL POSITION
Reviewed Audited
12 months 12 months
R'000 June 2019 June 2018
ASSETS
Non-current assets 435 852 432 831
Property, plant and equipment 349 713 347 019
Intangibles 17 855 17 855
Goodwill 64 182 64 182
Deferred taxation 4 102 3 775
Current assets 641 346 649 978
Inventories 215 718 259 846
Trade and other receivables 375 858 328 796
Taxation receivable 1 872 888
Cash and cash equivalents 47 898 60 448
TOTAL ASSETS 1 077 198 1 082 809
EQUITY AND LIABILITIES
Capital and reserves 637 856 620 131
Issued share capital 328 328
Share premium 11 019 11 019
Distributable reserve 626 509 608 784
Non-current liabilities 117 249 158 362
Interest-bearing borrowings 75 597 113 811
Deferred income 9 071 11 053
Deferred taxation 32 581 33 498
Current liabilities 322 093 304 316
Trade payables and accruals 251 234 250 464
Provisions 28 242 32 145
Current portion of interest-bearing borrowings 28 152 18 790
Deferred income 2 009 2 103
Taxation payable 1 241 814
Bank overdraft 11 215 -
TOTAL EQUITY AND LIABILITIES 1 077 198 1 082 809
Number of shares in issue ('000)
Number of shares (net of treasury shares) 32 886 32 861
Net movement in treasury shares - 25
Ranking number of shares 32 886 32 886
Salient features
Net asset value per share (cents) 1 940 1 886
Operating margin % 4,5 8,1
Net interest-bearing debt-to-equity ratio % 10,5 11,6
CAPITAL COMMITMENTS
Reviewed Audited
12 months 12 months
R'000 June 2019 June 2018
Capital expenditure authorised and contracted
Property, plant and equipment 6 146 12 812
STATEMENT OF CASH FLOWS
Reviewed Audited
12 months 12 months
R'000 June 2019 June 2018
Cash flow from operating activities
Cash generated from operations 124 451 125 713
Dividends paid (39 463) (38 580)
Finance income received 1 284 3 237
Finance costs paid (12 345) (7 404)
Taxation paid (23 420) (35 409)
Net cash inflow from operating activities 50 507 47 557
Cash flow used in investing activities
Proceeds on disposal of property, plant and equipment 1 617 1 418
Acquisition of business - (96 571)
Expansion and replacement of property, plant and equipment (47 037) (38 737)
Net cash outflow from investing activities (45 420) (133 890)
Cash flow used in financing activities
Proceeds from borrowings 64 775 66 434
Repayment of borrowings (93 627) (19 187)
Net cash (outflow)/inflow from financing activities (28 852) 47 247
Net movement in cash for the year (23 765) (39 086)
Cash and cash equivalents at the beginning of the year 60 448 99 534
Cash and cash equivalents at the end of the year 36 683 60 448
SEGMENTAL ANALYSIS
Paper Properties
Plastic and Board and Group Total
R'000 Products Products Services Group
Revenue from customers - 2019 1 102 473 882 666 - 1 985 139
Revenue from all customers 1 182 391 938 566 - 2 120 957
Less revenue from internal customers 79 918 55 900 - 135 818
Revenue from customers - 2018 1 126 945 594 931 - 1 721 876
Revenue from all customers 1 182 480 637 172 - 1 819 652
Less revenue from internal customers 55 535 42 241 - 97 776
Operating profit - 2019 35 495 36 904 17 469 89 868
Operating profit - 2018 83 980 43 214 12 015 139 209
Profit before tax - 2019 32 237 36 394 10 176 78 807
Profit before tax - 2018 81 242 42 073 11 727 135 042
Capital expenditure - 2019 27 662 10 425 8 950 47 037
Capital expenditure - 2018 26 044 7 660 5 033 38 737
Assets - 2019 582 899 341 887 152 412 1 077 198
Assets - 2018 562 791 365 469 154 549 1 082 809
Liabilities - 2019 202 878 130 899 105 565 439 342
Liabilities - 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; B Mkhondo?; SP van der Linde (Lead Independent Director)?
*non-executive ?independent non-executive
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
https://senspdf.jse.co.za/documents/2019/jse/isse/TPC/prelims.pdf
Date: 20/08/2019 04:28:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
