Wrap Text
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
Date: 20/02/2019 07:05:00 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.