As a result of the strong performance across the group, turnover grew by 34% to R249.2 million (R186.0 million). Earnings per share improved by 51% to 52.8c (34.9c). Headline earnings per share increased by 41% to 52.3c (37.1c). 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.
The acquisition of the retail plastic bag division in Cape Town from Nampak Products Ltd, 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 (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 (R4.22).
Dividend
The board has declared an interim dividend of 10cps (8cps) to shareholders.
Prospects
The corporate activities will have a positive effect on group earnings. Transpaco will continue to pursue organic growth and strategic acquisitions.
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