| Tue 8 May 2007, 7:30 | | APK - Astrapak Limited - Reviewed Results: Year En |
|
APK
APK
APK - Astrapak Limited - Reviewed Results: Year Ended 28 February 2007
ASTRAPAK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/009169/06)
Share code: APK & ISIN: ZAE000030938
REVENUE UP 21%
EBITDA UP 12%
PROFIT FOR THE YEAR UP 6%
HEADLINE EARNINGS FLAT
REDEMPTION OF DEBENTURE
TOTAL DISTRIBUTION OF 82 CENTS PER LINKED UNIT
SIGNIFICANT INVESTMENT MADE
Reviewed Results for the year ended 28 February 2007
COMMENTARY
Group Profile
Astrapak Limited and its subsidiaries ("Astrapak" or "the Company" or "the
Group"), headquartered in Sandton, manufactures and distributes an extensive
range of plastic packaging products achieving annualised revenues in excess of
R2,2bn. The Group has manufacturing facilities in all the main centres of
South Africa and a joint venture in Mauritius and employs 3 900 people in
South Africa.
The operations are grouped into three divisions - Films, Rigids and Flexibles
- and service principally the food, beverage, personal care and
pharmaceutical, agricultural, industrial and retail markets.
Astrapak has, since inception, invested in businesses that are market leaders
or have significant technological advantages to benefit from the global move
towards plastic packaging. The Group focuses on service, innovation and
technology in order to achieve superior returns and growth in earnings for
Linked Unitholders.
Message to Linked Unitholders
The Group remains focused on innovation-led growth in plastic packaging, which
should continue to gain an increasing share of the packaging market, and plans
to expand through continued organic and acquisitive growth.
The financial results for the year were characterised by continued growth in
consumer spending and extraordinarily high increase in raw material input
costs. In addition, significant further investment in capital expenditure, new
projects, linked unit buy-backs and the acquisition of Alex White Holdings
Limited ("Alex White"), Plastform (a division of Consol Limited) ("Plastform")
and the Plastech group of companies ("Plastech") ("the acquisitions") all of
which contributed to a higher interest expense for the year. The results were
also adversely affected by the restatement of the taxation expense by Astrapak
and the under-performance of some operating entities.
Astrapak concluded a preference share issue amounting to R150m (before share
issue expenses of R7,4m) in November 2006 and concluded conditional agreements
with financial institutions in terms of which funding of up to R1bn will be
made available to the Group. This will provide the Group with capacity for
continued organic and acquisitive growth.
Financial Results
Turnover for the period increased by 20.8% over the prior year. The
acquisitions accounted for 8.9% of the increased turnover, volume growth 3.7%
and raw material related price increases of 8.2%.
EBITDA increased to R361,6m (R323,8m), an increase of 11.7% and an EBITDA
margin of 16.3% (17.6%). The reduction in margin is primarily attributable to
extraordinarily high polymer price increases during the year. The size and
frequency of the increases made it extremely difficult to recover these costs
from customers. Despite a drop in oil prices during the second half of the
financial year, polymer prices have remained firm due to a world wide supply
shortage. The resultant profit from operations was R246,4m (R221,7m), an
increase of 11.1% over the prior year and yielding an operating margin of
11.1% (12.0%).
Finance costs of R51,1m (R40,9m), which includes the provision for debenture
interest of R6,8m (R7,0m), increased by 25% and included finance charges
associated with the acquisitions; a buy-back of linked units; capital
expenditure and an increase in working capital requirements.
The taxation expense amounted to R51,7m (R46,6m restated) for the year. This
amount includes the restatement of the taxation expense at Astrapak as a
result of the re-assessment by the South African Revenue Services ("SARS") of
the tax returns for 2003 and 2004, as reported in the SENS announcement dated
23 February 2007. The required adjustment to the current year results amounts
to a reduction in profit of R10,0m (R9,7m), or 8,3 cents (8,2 cents) per
linked unit. The Group`s effective taxation rate was 26.1% (25.3% restated)
and includes the provision for secondary tax on companies relating to both the
ordinary and preference share dividends.
The following investments and capital expenditure totalling R410m were made
during the year which was funded by a mixture of the proceeds of the
preference share issue, Group cash flows and financing facilities:
- The acquisition of 100% of Alex White for R58,0m;
- The acquisition of the business of Plastform for R73,0m;
- The acquisition of 80% of Plastech for R11,6m;
- The purchase of 25% of Tamperpak (Proprietary) Limited for R2,4m;
- The purchase of 6,951m linked units for R91,4m; and
- R174m on capital expenditure.
In addition to the above, higher working capital requirements resulted in an
increase in net interest bearing debt of R165,6m to R287,7m (R122,1m). The net
interest bearing debt to equity ratio increased from 18% to 33%.
Headline earnings per linked unit ("HEPLU") increased by 0.3% over the prior
year (restated) to 117,9 cents (117,7 cents). Fully diluted HEPLU increased by
3.1%. Profit attributable to Linked Unitholders of the parent amounted to
R132,0m (R129,2m restated).
Prospects
Household consumer spending is forecast to continue growing. Notwithstanding
short-term polymer price increases, the medium-term outlook is for lower
prices and better raw material availability.
The Group`s significant investments over the prior year and the attention
given to underperforming units are expected to increase the Group`s capacity
and make a positive contribution in the new year.
The enhancement of the Group`s capital structure will provide it with
additional financing capabilities to continue with its growth strategy.
Post Balance Sheet Events
Subsequent to 28 February 2007, the Group completed the acquisition of
Ultrapak (a division of Durban Bag (Proprietary) Limited) for a cash
consideration of R40m. The acquisition became effective on 1 April 2007.
The remaining 30% minority shareholding of Knilam Packaging (Proprietary)
Limited was acquired with effect from 1 March 2007 for a consideration of
R8.0m.
The new financing facilities of R1bn became unconditional in all respects on
13 April 2007.
Redemption of debentures
The Board has resolved to redeem the remaining portion of the debentures
constituting the linked unit. The authority to redeem the debentures was given
to the directors of the Company by both ordinary shareholders and debenture
holders at a general meeting held on the 24th of October 2006. In future, the
listed instrument on the JSE will trade as an ordinary share.
JSE Limited ("JSE") Listings Requirements
The directors of the Company ensured compliance with the JSE Listings
Requirements during the year under review.
Basis of Accounting
These results have been prepared and presented in accordance with IAS 34 -
Interim Financial Reporting.
Accounting Policies
The accounting policies as set out in the 2006 annual report have been
consistently applied in producing these results, except for restatements
required in terms of Circular 9/2006 issued by the South African Institute of
Chartered Accountants ("SAICA") in respect of the treatment of discounts
allowed and received.
Comparative Figures
The comparative figures have also been restated to account for the revised
taxation assessment received from SARS in respect of 2003 and 2004 tax years
and the estimated effect on subsequent years.
Review by Independent Auditors
The Group`s auditors, Deloitte & Touche, have reviewed these year end results.
Their unmodified review report is available for inspection at the Group`s
registered offices during normal office hours.
Distribution to Linked Unitholders
Notice is hereby given that debenture interest of 5.73 cents (5.25 cents) per
linked unit totalling R7,7m (R7,1m) will be paid. The interest payment
approximates the average prime rate of interest for the financial year ended
28 February 2007. Astrapak will be paying an ordinary dividend of 24.75 cents
(24.75 cents) per linked unit totalling R33,4m (R33,4m) to linked unit holders
for the year ended 28 February 2007. The total combined debenture interest and
dividend distribution will be 30.48 cents (30.00 cents) per linked unit
totalling R41,2m (R40,5m).
Furthermore, the redemption of the debenture (50 cents), as discussed above,
plus the accrued interest of 1.65 cents per debenture for the period 1 March
2007 to the expected date of redemption, will take place (with the consent of
the JSE) simultaneously with the dividend and interest distributions.
The combined distribution to Linked Unitholders will total 82.13 cents per
linked unit and will be payable on Monday, 4 June 2007 to linked unit holders
recorded in the register on Friday, 1 June 2007. The last day to trade cum-
distribution will be Friday, 25 May 2007 and the linked units will commence
trading ex-distribution on Monday, 28 May 2007. Linked unit certificates may
not be dematerialised or rematerialised after Friday, 25 May 2007.
Changes to the Board of Directors
On 29 January 2007 Mr Chris Molefe resigned as a non-executive director and
was replaced by Ms Khumo Seopela as a non-executive director to the board of
Astrapak Limited with effect from 27 March 2007.
Acknowledgements
The Board would like to express its appreciation to management and staff for
their efforts during the year.
For and on behalf of the Board
R Crewe-Brown
(Chief Executive Officer)
H A Todd
(Financial Director)
Sandton
8 May 2007
Condensed Consolidated Income Statements
Audited
Previously
Reviewed Restated reported
(R`000) 2007 2006 2006
Revenue 2 223 131 1 840 029 1 873 962
Cost of sales 1 673 781 1 365 254 1 376 059
Gross profit 549 350 474 775 497 903
Other operating income 11 474 8 685 19 044
Distribution and selling costs 156 200 128 784 149 923
Administrative and other
expenses 160 235 136 534 148 882
Share of results of associates 1 984 3 530 3 530
Profit from operations 246 373 221 672 221 672
Investment income 2 835 3 665 3 665
Finance costs 51 130 40 865 40 865
Profit before taxation 198 078 184 472 184 472
Taxation 51 690 46 669 36 859
Profit for the year 146 388 137 803 147 613
Attributable to:
Linked unitholders of the parent 131 954 129 239 139 001
Preference shareholders of
the parent 4 595 - -
Minority interest 9 839 8 564 8 612
Profit for the year 146 388 137 803 147 613
Earnings per linked unit (cents) 117,0 114,3 122,5
Attributable income 110,5 108,4 116,6
Debenture interest 6,5 5,9 5,9
Earnings per linked unit -
fully diluted (cents) 109,8 104,4 111,8
Attributable income 103,3 98,5 105,9
Debenture interest 6,5 5,9 5,9
Weighted number of linked
units in issue (000`s) 119 390 119 187 119 187
Weighted number of linked
units in issue - fully
diluted (000`s) 127 745 131 272 131 272
Ordinary dividends paid 33 445* 33 445 33 445
Ordinary dividend per
linked unit 24,75* 24,75 24,75
Preference dividend accrued 4 595 - -
Preference dividend per share 306,33 - -
*dividends per linked unit for
the year ended 28 February 2007
were declared on 7 May 2007 and
are payable on 4 June 2007.
Reconciliation between profit
attributable to linked
unitholders of the parent and
headline earnings
Profit attributable to linked
unitholders of the parent 131 954 129 239 139 001
Debenture interest 6 808 6 984 6 984
Net loss on exercise of options 3 658 2 289 2 289
Net (profit)/loss on disposal
of property, plant and equipment (1 717) 1 773 1 773
Tax effect 61 (71) (71)
Attributable to minorities 42 (2) (2)
Headline earnings 140 806 140 212 149 974
Headline earnings per
linked unit (cents) 117,9 117,6 125,9
Attributable income 111,4 111,7 120,0
Debenture interest 6,5 5,9 5,9
Headline earnings per linked
unit - fully diluted (cents) 110,2 106,8 114,3
Attributable income 103,7 100,9 108,4
Debenture interest 6,5 5,9 5,9
Reconciliation between profit
from operations and EBITDA
Profit from operations 246 373 221 672 221 672
Depreciation 115 116 102 072 102 072
Amortisation of intangibles 66 18 18
Earnings before interest,
taxation,depreciation and
amortisation (EBITDA) 361 555 323 762 323 762
Condensed Consolidated Balance Sheets
Audited
Previously
Reviewed Restated reported
(R`000) 2007 2006 2006
Asset
Non-current assets 942 160 752 286 764 323
Property, plant and equipment 778 529 615 821 615 821
Deferred taxation 36 315 28 980 41 017
Goodwill and trademarks 110 248 90 228 90 228
Loans and investments 17 068 17 257 17 257
Currents assets 866 558 690 916 690 916
Inventories (1) 317 801 245 192 245 192
Trade and other receivables 421 693 301 268 301 268
Cash resources 127 064 144 456 144 456
Total assets 1 808 718 1 443 202 1 455 239
Equity and liabilities
Total equity 894 033 717 327 731 739
Ordinary share capital and
share premium 199 502 199 502 199 502
Retained income 610 426 508 745 523 109
Non-distributable reserves (1 269) 17 17
Capital reserve (2) 8 490 5 331 5 331
Treasury shares (154 872) (79 450) (79 450)
Ordinary shareholders` funds 662 277 634 145 648 509
Debentures 58 005 59 616 59 616
Equity attributable to linked
unitholders 720 282 693 761 708 125
Preference share capital and
share premium 142 602 - -
Minority interest 31 149 23 566 23 614
Non-current liabilities 255 685 223 288 222 795
Long term interest-bearing debt 158 637 144 371 144 371
Deferred taxation 97 048 78 917 78 424
Current liabilities 659 000 502 587 500 705
Trade and other payables 391 568 374 153 372 271
Linked unitholders for debenture
interest 6 646 6 260 6 260
Shareholders for preference
dividends 4 595 - -
Short term interest-bearing debt 256 191 122 174 122 174
Total equity and liabilities 1 808 718 1 443 202 1 455 239
(1) Inventories
Inventories amounting to
R679 939 (2006: R485 981)are
carried at net realisable value.
(2) Capital reserve
The capital reserve relates to
employee share options valued
using the Black Scholes method.
Additional information
Capital expenditure 174 494 183 863 183 863
Capital commitments
- contracted not spent 65 334 21 265 21 265
- authorised not contracted 17 505 20 998 20 998
Net asset value per linked
unit (cents) 603 582 594
Net tangible asset value
per linked unit (cents) 511 506 518
Net interest-bearing debt
as a percentage of equity (%) 33 18 17
Net interest-bearing debt 287 764 122 089 122 089
Long term interest-bearing debt 158 637 144 371 144 371
Short term interest-bearing debt 256 191 122 174 122 174
Cash resources (127 064) (144 456) (144 456)
Contingent liabilities 4 781 4 940 4 940
Number of linked units in issue 135 131 250 135 131 250 135 131 250
Property, plant and equipment
Opening balance - net book value 615 821 480 971 480 971
Additions 174 494 183 863 183 863
Acquisition of subsidiaries 108 125 61 651 61 651
Depreciation (115 116) (102 072) (102 072)
Disposals - book value (4 795) (8 592) (8 592)
Closing balance - net book value 778 529 615 821 615 821
Condensed Consolidated Cash Flow Statements
Audited
Previously
Reviewed Restated reported
(R`000) 2007 2006 2006
Cash generated from operations 359 344 326 798 326 798
(Increase)/decrease in working
capital (98 060) 2 816 2 816
Non-cash transactions -
profit/(loss) on disposal of
property, plant and equipment 1 717 (1 773) (1 773)
Net financing costs and
taxation paid (91 296) (62 205) (62 205)
Net cash inflow before
distribution to linked
unitholders 171 705 265 636 265 636
Interest and dividend
distribution to linked
unitholders (37 593) (27 135) (27 135)
Net cash inflow from operating
activities 134 112 238 501 238 501
Capital expenditure (174 494) (183 863) (183 863)
Acquisition of investments,
subsidiaries and minority
interests (158 460) (121 034) (121 034)
Proceeds on the disposal of
property, plant and equipment 6 512 6 819 6 819
Cash outflow from investing
activities (326 442) (298 078) (298 078)
Net cash inflow from financing
activities 98 372 96 504 96 504
Net (decrease)/increase in
cash equivalents (93 958) 36 927 36 927
Net cash and cash equivalents
at the beginningof the year 119 967 83 040 83 040
Net cash and cash equivalents
at the end of the year 26 009 119 967 119 967
Segmental Analysis
(R `000) Films Rigids Flexibles Total
Revenue - 2007 907 597 846 194 469 340 2 223 131
Revenue - 2006 (restated) 788 558 733 385 318 086 1 840 029
Profit from operations
(segment result) - 2007 67 872 126 489 52 012 246 373
Profit from operations
(segment result) - 2006 63 262 116 017 42 393 221 672
Depreciation - 2007 25 167 72 917 17 032 115 116
Depreciation - 2006 22 669 67 196 12 207 102 072
Capital expenditure - 2007 43 577 101 546 29 371 174 494
Capital expenditure - 2006 67 026 100 550 16 287 183 863
Total assets - 2007 683 391 789 488 335 839 1 808 718
Total assets - 2006
(restated) 617 960 627 047 198 195 1 443 202
Total liabilities - 2007 564 963 166 950 182 772 914 685
Total liabilities 2006
(restated) 372 768 240 264 112 843 725 875
Reconciliation of Prior Year Balances and Movements
Balances as
previously Restated
stated balances
28 February 28 February
(R`000) 2006 Adjustment 2006
Deferred taxation - asset 41 017 (12 037) 28 980
Retained earnings 523 109 (14 364) 508 745
Deferred taxation - liability 78 424 493 78 917
Trade and other payables 372 271 1 882 374 153
Minority interest 23 614 (48) 23 566
Taxation expense 36 859 9 762 46 621
The restatements above are due to a reassessment of income tax for Astrapak
Limited for 2003 and 2004 and the estimated effect on subsequent years.
Revenue 1 873 962 (33 933) 1 840 029
Cost of Sales 1 376 059 (10 805) 1 365 254
Other operating income 19 044 (10 359) 8 685
Distribution and selling costs 149 923 (21 139) 128 784
Administrative and other
expenses 148 882 (12 348) 136 534
The restatements above are due to corrections required to comply with Circular
9/2006 issued by the South African Instituted of Chartered Accountants in
respect of the classification of discounts.
Acquisition of Subsidiaries
(R`000) Alex White Plastform Plastech Total
Fair value of assets
acquired
Property, plant and
equipment 65 649 25 198 17 278 108 126
Deferred taxation (5 700) (518) (770) (6 988)
Other investments 12 - 404 416
Long-term liabilities (21 047) - (8 094) (29 141)
Accounts receivable 34 421 20 104 4 903 59 428
Cash resources (12 104) - (1 165) (13 269)
Inventory 23 392 24 595 2 727 50 714
Accounts payable (28 981) (2 819) (2 057) (33 857)
Taxation (194) - 133 (60)
Short-term interest-
bearing debt (5 976) - (4 129) (10 105)
Trademarks 60 - - 60
49 532 66 560 9 230 125 322
Cash and cash
equivalents acquired 12 104 - 1 165 13 269
Goodwill on acquisition 8 610 6 477 4 233 19 320
Net cash effect of purchase
of subsidiaries 70 246 73 037 14 628 157 911
Proft after tax since the
date of acquisition
included in the Group`s
results for the year
ended 28 February 2007 1 746 3 870 12 5 628
It is not practical to establish the revenue and profit after tax of the
combined entity should the above business combinations have been included for
the entire financial year ended 28 February 2007.
No entities were disposed of as a result of these business combinations.
Goodwill on acquisition arose due to the present value of future profits (cost
of the acquisition) exceeding the Group`s interest in the fair value of the
identifiable assets and liabilities of the subsidiary at the date of
acquisition.
The transactions above were accounted for using the purchase method.
Condensed Consolidated Statement Of Changes In Equity
Ordinary
share Non-
capital distribut-
and Retained able Capital Treasury
(R`000) premium income reserve reserve shares
Balances as at
28 February 2005 84 437 405 438 858 2 803 (48 950)
Adjustments to
taxation and
deferred tax
asset/liability (4 602)
Restated balances
as at
28 February 2005 84 437 400 836 858 2 803 (48 950)
Net income for the
year as previously
stated 139 001
Adjustments to
taxation and
deferred tax
asset/liability (9 762)
Net ordinary
dividends paid (21 330)
Adjustments to
minority interest
Increase in foreign
currency translation
reserve 497
Transfer to
deferred tax asset (1 338)
Acquisition of
treasury shares (1) (30 500)
Expensing of share
based payments
for the year 2 528
Issue of shares
at a premium 115 065
Issue of debentures 7 207
Restated balances
as at
28 February 2006 199 502 508 745 17 5 331 (79 450)
Net income for
the year 136 549
Net ordinary
dividends paid (30 273)
Preference
dividends paid (4 595)
Adjustments to
minority interest
Increase in foreign
currency translation
reserve 52
Transfer to
deferred tax asset (1 338)
Acquisition of
treasury shares (1) (75 422)
Expensing of
share-based payments
for the year 3 159
Issue of preference
shares at a premium
Balances as at
28 February 2007 199 502 610 426 (1 269) 8 490 (154 872)
Condensed Consolidated Statement Of Changes In Equity (continued)
Attribut-
able to
linked
unit- Preference
holders share and
Deben- of the capital Minority Total
(R`000) tures parent premium interests equity
Balances as at
28 February 2005 52 409 496 995 - 23 535 520 530
Adjustments to
taxation and
deferred tax
asset/liability (4 602) (4 602)
Restated balances
as at 28
February 2005 52 409 492 393 - 23 535 515 928
Net income for
the year as
previously stated 139 001 8 612 147 613
Adjustments to
taxation and
deferred tax
asset/liability (9 762) (48) (9 810)
Net ordinary
dividends paid (21 330) (4 103) (25 433)
Adjustments to
minority interest - (4 430) (4 430)
Increase in foreign
currency translation
reserve 497 497
Transfer to deferred
tax asset (1 338) (1 338)
Acquisition of
treasury shares (1) (30 500) (30 500)
Expensing of share
based payments
for the year 2 528 2 528
Issue of shares
at a premium 115 065 115 065
Issue of debentures 7 207 7 207
Restated balances
as at
28 February 2006 59 616 693 761 - 23 566 717 327
Net income for
the year 136 549 9 839 146 388
Net ordinary
dividends paid (30 273) (2 650) (32 923)
Preference dividends
paid (4 595) (4 595)
Adjustments to
minority interest - 394 394
Increase in foreign
currency translation
reserve 52 52
Transfer to deferred
tax asset (1 338) (1 338)
Acquisition of
treasury shares (1) (1 611) (77 033) (77 033)
Expensing of share-
based payments for
the year 3 159 3 159
Issue of preference
shares at a premium - 142 602 142 602
Balances as at
28 February 2007 58 005 720 282 142 602 31 149 894 033
Note 1: This movement is net of the movement in treasury shares held by the
Astrapak Linked Unit Trust for share options.
Board of Directors:
R T Dalais*(Acting Chairman), R Crewe-Brown (Chief Executive Officer), P C
Botha*, T Kgage*, K Seopela*, M Baglione, M Diedloff, G Petzer, H A Todd, W J
Venter
*Non-executive
Company Secretary:
G A S King
Registered Office:
1st Floor Wierda Court, Johan Avenue, Wierda Valley, Sandton P O Box 652740,
Benmore, 2010, South Africa * Tel +27 11 784 5577/8/9 * Fax +27 11 784 1569
Registrar:
Computershare Investor Services 2004 (Pty) Ltd * Ground Floor, 70 Marshall
Street, Johannesburg, 2001 * P O Box 61051, Marshalltown, 2107
Operating entities
Films Division: Barrier Film Converters * City Packaging * East Rand Plastics
* International Edgeboard Technologies * International Tube Technologies *
Packaging Consultants * Pack-Line Holdings * Peninsula Packaging * Tristar
Plastics
Rigids Division: Cinqpet * Consupaq * Hilfort * JJ Precision Plastics * Marcom
Plastics * PAK 2000 * Plastech * Plastform * Plas-top * Plastop (KwaZulu-
Natal) * Thermopac
Flexibles Division: Alex White * Astrapak Flexible * Astraflex * Astra Repro
* Cape Wrappers * Diverse Labelling Consultants * Knilam Packaging * Saflite
Standard Labels (Mauritius) * Tamperpak
Date: 08/05/2007 07:30:02 Produced by the JSE SENS Department.
