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TPC
TPC
TPC - Transpaco Limited - Interim Results for the 6 Months ended 31 December
2006 and Dividend Announcement
Transpaco Limited
Reg. No. 1951/000799/06
ISIN: ZAE000007480
Share Code: TPC
A leading manufacturer, recycler and distributor of plastic and paper packaging
products
INTERIM RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER 2006 AND DIVIDEND
ANNOUNCEMENTTURNOVER UP 34%HEADLINE EARNINGS PER SHARE UP 41%DIVIDEND PER
SHARE UP 25%
INTRODUCTION
Robust organic growth, successful implementation of strategy and expansion of
the Recycling Division contributed to a significant increase in turnover,
resulting in an outstanding performance for the six months ended 31
December 2006 ("interim period").
FINANCIAL RESULTS
Income Statement
As a result of the strong performance across the group, turnover grew by 34% to
R249,2 million (Dec 2005: R186,0 million). Earnings per share improved by
51% to 52,8 cents (Dec 2005: 34,9 cents). Headline earnings per share
increased by 41% to 52,3 cents (Dec 2005: 37,1 cents). The increase in
operating expenses was due to growth in activities. Depreciation increased
in line with acquisitions of plant and equipment.
The increase in the effective tax rate from 23% to 31% is due to a reduction in
government tax benefits.
Balance Sheet and Cash Flow
The acquisition of the retail plastic bag division in Cape Town from Nampak
Products Limited ("the Nampak acquisition"), which took effect on 4
December 2006, has had a material impact on the balance sheet. Transpaco
acquired plant and equipment (R19,7 million) and inventory (R21,9 million).
Certain liabilities have increased accordingly. A portion of the increase
in trade receivables is due to additional sales since the acquisition. The
property acquired in the transaction (R12 million) will be accounted for on
transfer, which is expected shortly.
Cash utilised by operating activities amounted to R4,4 million (Dec 2005: R13,8
million generated) due to the timing of the Nampak acquisition. An
improvement is anticipated during the second half of the year. Net asset
value per share increased by 13% to R4,77 (Dec 2005: R4,22).
CORPORATE ACTIVITIES
During the interim period Transpaco finalised the acquisitions initiated during
the previous financial year as detailed below:
Recycling Division
The acquisition of the plant and equipment of Recycling Plastics from Sasol
Products Limited took effect on 1 October 2006. Production is approaching
anticipated levels with demand for our product exceeding supply. Transpaco
is in the process of upgrading the plant`s extrusion capabilities with the
purchase of highly sophisticated equipment originating out of Austria.
Prospects for this division are very encouraging.
Flexible Division
Notwithstanding the increase in the assets and corresponding liabilities arising
out of the Nampak acquisition, the impact on these results was minimal.
Expectations for the future are positive once the Bellville factory is
fully operational.
PROSPECTS
The corporate activities will have a positive effect on group earnings.
Transpaco will continue to pursue organic growth and strategic
acquisitions.
DIVIDEND
The board has declared an interim dividend of 10 cents per share (Dec 2005: 8
cents per share) to shareholders recorded in the register on Friday 30
March 2007, payable on Monday 2 April 2007. The last day to trade cum
dividend will be Friday 23 March 2007. Shares will commence trading ex
dividend from the commencement of business on Monday 26 March 2007. The
record date will be Friday 30 March 2007. Share certificates may not be
dematerialised or rematerialised between Monday 26 March 2007 and Friday 30
March 2007, both days inclusive.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
These results are prepared in accordance with IAS 34 - Interim Financial
Reporting and comply with the Listings Requirements of JSE Limited and the
South African Companies Act, 1973. The accounting policies used are
consistent in all material respects with those applied in the in the
preparation of the Group`s annual financial statements for the year ended
30 June 2006.
THE BOARD
Harry Botha, who has retired as an executive director, will remain as a non-
executive director. Transpaco thanks Mr Botha for his invaluable
contribution as an executive director and looks forward to his continued
participation in the Group`s future growth.
ON BEHALF OF THE BOARD
AJ Aaron PN Abelheim L WeinbergNon-
executive Chairman Chief Executive Financial Director
DIRECTORS
AJ Aaron (Chairman)*; PN Abelheim (Chief Executive); L Weinberg (Financial
Director); HA Botha*; JS Botha; SR Bouzaglou; SI Jacobson*;
D Thomas*; SP van der Linde*
*non-executiveDate 28 February 2007
Auditors Ernst & Young
Sponsor Investec Bank Limited
Registered Office 331 6th Street, Wynberg, Sandton
Transfer Secretaries Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg
Website www.transpaco.co.za
SEGMENTAL ANALYSIS - Unaudited 6 months Dec 2006
R`000 Rigids Recycling Flexibles Packaging
Turnover - 2006 35 691 35 402 91 154 86 991
Turnover - 2005 33 381 15 523 57 894 67 656
Operating income - 1 615 4 339 7 272 8 752
2006
Operating income - 2 066 1 902 5 269 6 634
2005
SEGMENTAL ANALYSIS - Unaudited 6 months Dec 2006 (Contd)
Properties
and Discon-
Group tinuing
R`000 Services Total Operations Total
Turnover - 2006 - 249 238 - 249 238
Turnover - 2005 - 174 454 11 601 186 055
Operating income - 289 22 267 - 22 267
2006
Operating income - 205 16 076 (2 260) 13 816
2005
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 Dec 2006 Dec 2005 June 2006
Continuing operations
Turnover 249 238 174 454 340 619
Cost of sales 170 664 114 390 222 697
Gross Profit 78 574 60 064 117 922
Operating Costs 48 845 37 687 79 306
Depreciation 7 462 6 301 12 958
Operating Income 22 267 16 076 25 658
Net interest paid 2 315 2 115 4 091
Profit before taxation 19 952 13 961 21 567
Taxation 6 170 3 223 4 791
Profit after taxation from 13 782 10 738 16 776
continuing operations
Discontinuing operations
Loss after tax from - (1 643) (1 533)
discontinuing operations
Profit after taxation 13 782 9 095 15 243
Weighted average number of 26 080 26 084 26 085
shares in issue (`000)
Diluted weighted average 31 153 31 309 31 168
number of shares in issue
(`000)
Earnings per share (cents) 52,8 34,9 58,4
Continuing operations 52,8 41.2 64,3
Discontinuing operations - (6.3) (5.9)
Headline earnings per share 52,3 37,1 58,8
(cents)
Continuing operations 52,3 40,6 62,2
Discontinuing operations - (3,5) (3,5)
Diluted earnings per share 44,2 30,0 48,9
(cents)
Continuing operations 44,2 35,3 53,8
Discontinuing operations - (5,3) (4,9)
Diluted headline earnings per 43,8 31,9 49,2
share (cents)
Continuing operations 43,8 34,8 52,1
Discontinuing operations - (2.9) (2,9)
Dividend per share (cents)* 10,0 8,0 20,0
Reconcilliation of headline
earnings (R`000)
Basic earnings 13 782 9 095 15 243
Impairment - 564 564
Termination costs on disposal - 69 69
of business
Profit on disposal of plant (142) (62) (546)
and equipment
Headline earnings 13 640 9 666 15 330
*Dividend declared after the period
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 Dec 2006 Dec 2005 June 2006
ASSETS
Non-current assets 115 745 83 888 89 545
Property, plant and 108 888 78 113 83 132
equipment
Intangibles 482 482 482
Goodwill 3 203 3 203 3 203
Unlisted investments 2 140 976 1 673
Deferred taxation 1 032 1 114 1 055
Current assets 194 966 130 535 139 981
Unlisted Investments - 1 325 1 325
Inventory 59 648 32 002 36 459
Trade and other receivables 122 296 77 185 73 516
Taxation 4 397 4 210 4 893
Cash and cash equivalents 8 625 15 813 23 788
Non-current assets - 354 252
classified as held-for-sale
TOTAL ASSETS 310 711 214 777 229 778
EQUITY AND LIABILITIES
Capital and reserves 124 298 110 123 113 621
Share capital 261 261 261
Preference shareholders 9 273 9 273 9 273
interest
Non-distributable reserves 1 688 1 688 1 688
Retained earnings 113 076 98 901 102 399
Non-current liabilities 63 856 43 300 44 489
Preference share liability 5 026 5 717 5 381
Interest-bearing borrowings 52 621 32 800 34 018
Deferred taxation 6 209 4 783 5 090
Current liabilities 122 557 61 212 71 571
Trade and other payables 94 509 49 086 56 560
Current portion of interest- 14 631 12 126 15 011
bearing borrowings
Bank overdraft 13 417 - -
Liabilities directly - 142 97
associated with the assets
classified as held-for-sale
TOTAL EQUITY AND LIABILITIES 310 711 214 777 229 778
Number of shares in issue
(`000)
Number of shares in issue (net 26 079 31 203 31 203
of 1 368 955 treasury shares)
Net movement on treasury 3 (2 923) (2 916)
shares
Shares purchased and - (2 208) (2 208)
cancelled
Ranking number of shares 26 082 26 072 26 079
Salient features
Net asset value per share 477 422 400
(cents)
Gearing ratio (%) 62 32 27
Interest cover (x) 9,6 6,3 5,6
Operating margin (%) 8,9 7,4 6,7
ABRIDGED CONSOLIDATED CASH FLOW
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 Dec 2006 Dec 2005 June 2006
Cash flow from operating
activities
Cash (utilised by) / (4 411) 13 818 35 203
generated from operations
Ordinary dividend paid (3 130) (3 124) (5 210)
Net interest paid (2 315) (2 209) (4 219)
Taxation paid (4 532) (1 161) (3 122)
Net cash flow from operating (14 388) 7 324 22 652
activities
Cash flow from investing
activities
Proceeds on disposal of 334 3 580 7 336
property, plant and equipment
Acquisition of property, (33 158) (4 589) (20 058)
plant and equipment
Decrease/(increase) in 858 (765) (137)
unlisted investments
Net cash flow from investing (31 966) (1 774) (12 859)
activities
Cash flow from financing
activities
Net movement in treasury 3 (32 321) (32 885)
shares
Decrease in preference share (355) (312) (648)
liability
(Decrease)/increase in 18 603 (4 010) (2 263)
interest-bearing borrowings
(Decrease)/increase in (477) (549) 2 336
current portion of interest-
bearing borrowings
Net cash flow from financing 17 774 (37 192) (33 460)
activities
Net movement in cash for the (28 580) (31 642) (23 667)
period
Cash and cash equivalents at 23 788 47 455 47 455
the beginning of the period
Cash and cash equivalents at (4 792) 15 813 23 788
the end of the period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 Dec 2006 Dec 2005 June 2006
Opening balance 113 621 136 473 136 473
Profit for the period 13 782 9 095 15 243
IFRS 2 22 - -
Dividend paid (3 130) (3 124) (5 210)
Net movement on treasury 3 (32 321) (32 885)
shares
Closing balance 124 298 110 123 113 621
CAPITAL COMMITMENTS
Unaudited Unaudited Audited
6 months 6 months 12 months
R`000 Dec 2006 Dec 2005 June 2006
Capital expenditure - 312 3 512
authorised but not contracted
Capital expenditure 12 000 - -
contracted
Date: 28/02/2007 14:18:25 Produced by the JSE SENS Department.
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