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APK APKP
APK
APK - Astrapak - Unaudited interim results for the six months ended
31 August 2009
ASTRAPAK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/009169/06)
Share code: APK
ISIN: ZAE000096962
Share code: APKP
ISIN: ZAE000087201
("Astrapak" or "the Group")
Unaudited interim results for the six months ended 31 August 2009
- EBITDA from continuing operations up 14%
- EPS from continuing operations up 821%
- HEPS from continuing operations up 824%
- Gearing down to 34%
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
six months
ended
31 August
(R`000) Notes change 2009
CONTINUING OPERATIONS
Revenue (4) 1 255 368
Cost of sales (939 555)
Gross profit 11 315 813
Other operating income 490
Distribution and selling costs (92 855)
Administrative and other expenses (102 459)
Share of results of associates 69
Profit from operations before 24 121 058
loss on disposal of subsidiary
Loss on disposal of subsidiary -
Profit from operations 9 24 121 058
Investment income 12 716
Finance costs (40 480)
Profit before taxation 73 93 294
Taxation (29 174)
Profit for the period from 281 64 120
continuing operations
DISCONTINUED OPERATIONS
(Loss)/profit for the period from 10 (406) (14 246)
discontinued operations
Profit for the period 132 49 874
Other comprehensive income 1 747
CONTINUING OPERATIONS
Expensing of share-based payments 4 001
for the year
DISCONTINUED OPERATIONS
Effect of foreign currency (2 254)
translations
Total comprehensive income for 113 51 621
the period
Attributable to:
Ordinary shareholders of the 204 39 618
parent
- Profit for the period: from 52 117
continuing operations
- (Loss)/profit for the period (14 246)
from discontinued operations
- Other comprehensive income for 1 747
the period
Preference shareholders of the 7 614
parent
Minority interest 4 389
- Profit for the period: from 4 389
continuing operations
- Profit for the period from -
discontinued operations
Total comprehensive income for 113 51 621
the period
Earnings per ordinary share 11 269 32,1
(cents)
- Continuing operations 821 44,2
- Discontinued operations (410) (12,1)
Fully diluted earnings per 11 275 31,5
ordinary share (cents)
- Continuing operations 843 43,4
- Discontinued operations (413) (11,9)
Preference dividend paid and 7 614
accrued
Preference dividend per share 507,60
(cents)
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
Unaudited
Unaudited previously Audited
restated reported financial
six months six months year
ended ended ended
31 August 31 August 28 February
2008 2008 2009
CONTINUING OPERATIONS
Revenue 1 302 575 1 573 838 2 749 771
Cost of sales (1 017 468) (1 240 894) (2 143 375)
Gross profit 285 107 332 944 606 396
Other operating income 5 195 4 904 9 316
Distribution and selling costs (92 910) (108 336) (185 880)
Administrative and other (100 033) (126 007) (179 138)
expenses
Share of results of associates - 1 508 183
Profit from operations before 97 359 105 013 250 877
loss on disposal of subsidiary
Loss on disposal of subsidiary - - (13 607)
Profit from operations 97 359 105 013 237 270
Investment income 13 011 13 235 31 040
Finance costs (56 331) (59 366) (116 842)
Profit before taxation 54 039 58 882 151 468
Taxation (37 195) (37 385) (82 914)
Profit for the period from 16 844 21 497 68 554
continuing operations
DISCONTINUED OPERATIONS
(Loss)/profit for the period 4 653 - (3 622)
from discontinued operations
Profit for the period 21 497 21 497 64 932
Other comprehensive income 2 724 2 724 10 317
CONTINUING OPERATIONS
Expensing of share-based 2 724 2 724 9 682
payments for the year
DISCONTINUED OPERATIONS
Effect of foreign currency - - 635
translations
Total comprehensive income for 24 221 24 221 75 249
the period
Attributable to:
Ordinary shareholders of the 13 012 13 012 52 313
parent
- Profit for the period: from 5 694 10 288 45 779
continuing operations
- (Loss)/profit for the period 4 594 - (3 783)
from discontinued operations
- Other comprehensive income 2 724 2 724 10 317
for the period
Preference shareholders of the 9 143 9 143 18 125
parent
Minority interest 2 066 2 066 4 811
- Profit for the period: from 2 007 2 066 4 650
continuing operations
- Profit for the period from 59 - 161
discontinued operations
Total comprehensive income for 24 221 24 221 75 249
the period
Earnings per ordinary share 8,7 8,7 35,5
(cents)
- Continuing operations 4,8 8,7 38,6
- Discontinued operations 3,9 - (3,1)
Fully diluted earnings per 8,4 8,4 34,5
ordinary share (cents)
- Continuing operations 4,6 8,4 37,5
- Discontinued operations 3,8 - (3,0)
Preference dividend paid and 9 143 9 143 18 125
accrued
Preference dividend per share 609,53 609,53 1 208,33
(cents)
RECONCILIATION OF HEADLINE EARNINGS
Unaudited
six months
ended
% 31 August
(R`000) Notes change 2009
Profit for the period 268 37 871
contributable to ordinary
shareholders
- continuing operations 52 117
- discontinued operations (14 246)
Headline earnings adjustments
- Loss on exercise of options 1 771
- Loss on disposal of -
subsidiary
- Measurement to fair value of -
assets held for sale
- Impairment of goodwill in -
respect of assets classified as
held for sale
- Loss on disposal of assets 4 350
out of Flexible operations
- IAS 16: Loss/(profit) on 1 703
disposal of property, plant and
equipment
- Total tax effect of 5 212
adjustments
- Total minority interest of (5)
adjustments
Headline earnings attributable 380 50 902
to ordinary shareholders
- continuing operations 829 55 584
- discontinued operations (202) (4 682)
Headline earnings per ordinary 11 379 43,1
share (cents)
- continuing operations 824 47,1
- discontinued operations (203) (4,0)
Fully diluted headline earnings 11 387 42,4
per ordinary share (cents)
- continuing operations 845 46,3
- discontinued operations (203) (3,9)
RECONCILIATION OF HEADLINE EARNINGS (CONTINUED)
Unaudited
Unaudited previously Audited
restated reported financial
six months six months year
ended ended ended
31 August 31 August 28 February
(R`000) 2008 2008 2008
Profit for the period 10 288 10 288 41 996
contributable to ordinary
shareholders
- continuing operations 5 694 10 288 45 779
- discontinued operations 4 594 - (3 783)
Headline earnings adjustments
- Loss on exercise of options 290 290 960
- Loss on disposal of - - 13 607
subsidiary
- Measurement to fair value of - - 15 380
assets held for sale
- Impairment of goodwill in - - 13 143
respect of assets classified as
held for sale
- Loss on disposal of assets - - -
out of Flexible operations
- IAS 16: Loss/(profit) on 20 20 (355)
disposal of property, plant and
equipment
- Total tax effect of (4) (4) 40
adjustments
- Total minority interest of - - 294
adjustments
Headline earnings attributable 10 594 10 594 85 065
to ordinary shareholders
- continuing operations 5 980 10 594 73 468
- discontinued operations 4 594 - 11 597
Headline earnings per ordinary 9,0 9,0 72,1
share (cents)
- continuing operations 5,1 9,0 62,3
- discontinued operations 3,9 - 9,8
Fully diluted headline earnings 8,7 8,7 69,9
per ordinary share (cents)
- continuing operations 4,9 8,7 60,4
- discontinued operations 3,8 - 9,5
CONDENSED STATEMENT OF FINANCIAL POSITION
Audited
Unaudited Unaudited financial
six months six months year
ended ended ended
% 31 August 31 August 28 February
(R`000) Notes change 2009 2008 2009
Assets
Non-current assets (6) 1 126 466 1 192 605 1 033 186
Property, plant and 3 920 499 962 007 845 307
equipment
Deferred taxation 13 698 47 438 31 240
Goodwill and 149 863 165 539 149 358
trademarks
Loans and investments 4 42 406 17 621 7 281
Current assets (16) 852 314 1 020 223 1 045 857
Inventories 5 248 483 363 974 229 956
Trade and other 406 368 551 171 388 262
receivables
Cash resources 155 447 105 078 110 110
Assets classified as 6 42 016 - 317 529
held for sale
Total assets (11) 1 978 780 2 212 828 2 079 043
Equity and
liabilities
Total equity 14 918 726 809 354 869 482
Equity attributable 742 795 636 406 697 520
to ordinary
shareholders of the
parent
Preference share 142 590 142 590 142 590
capital and share
premium
Minority interest 33 341 30 358 29 372
Non-current (13) 439 203 505 351 499 812
liabilities
Long-term interest- 303 023 325 072 341 052
bearing debt
Long-term Financial 18 608 44 438 18 887
liabilities
Deferred taxation 117 572 135 841 139 873
Current liabilities (31) 620 851 898 123 709 749
Trade and other 454 769 536 643 399 068
payables
Shareholders for 6 233 7 803 7 504
preference dividends
Short-term interest- 152 808 353 677 150 096
bearing debt
Liabilities relating 6 7 041 - 153 081
to assets held for
sale
Total equity and (11) 1 978 780 2 212 828 2 079 043
liabilities
CONDENSED STATEMENT OF CHANGES IN EQUITY
Audited
Unaudited Unaudited financial
six months six months year
ended ended ended
31 August 31 August 28 February
(R`000) Notes 2009 2008 2009
Opening balance - as 869 482 862 212 862 212
previously reported
Comprising of:
Ordinary share capital and 199 502 199 502 199 502
premium
Retained income 671 814 646 940 646 940
Non-distributable reserves 1 449 814 814
Capital reserve 7 339 (9 343) (9 343)
Minority put options (18 887) - -
Treasury shares (156 697) (154 168) (154 168)
Equity attributable to 697 520 683 745 683 745
ordinary shareholders of the
parent
Preference share capital and 142 590 142 590 142 590
premium
Minority interest 29 372 35 877 35 877
Put options for minority - (44 438) (44 438)
interests IAS39
Opening balance - restated 869 482 817 774 817 774
Movements:
Total comprehensive income 51 621 24 221 75 249
Ordinary dividends paid - (17 422) (19 261)
Preference dividends paid (7 614) (9 143) (18 125)
Contributions made by - 2 554 2 649
minorities
Acquisition of minority (420) (9 840) (11 826)
interest
Exercise of put options by 279 - 25 551
minority shareholders
Reduction in treasury shares 5 378 1 210 2 749
due to exercise of options
Incentive scheme reversals - - (5 278)
Closing balance 918 726 809 354 869 482
Comprising of:
Ordinary share capital and 199 502 199 502 199 502
premium
Retained income 709 685 640 105 671 814
Non-distributable reserves (805) 814 1 449
Capital reserve 7 4 340 (6 619) 339
Minority put options (18 608) (44 438) (18 887)
Treasury shares (151 319) (152 958) (156 697)
Equity attributable to 742 795 636 406 697 520
ordinary shareholders of the
parent
Preference share capital and 142 590 142 590 142 590
premium
Minority interest 33 341 30 358 29 372
Total equity 918 726 809 354 869 482
CONDENSED STATEMENT OF CASH FLOWS
Audited
Unaudited Unaudited financial
six months six months year
ended ended ended
% 31 August 31 August 28 February
(R`000) Notes change 2009 2008 2009
Cash generated from 5 184 290 175 765 467 673
operations
Decrease/(Increase) in (3 443) 30 946 81 399
working capital
Non cash transactions (1 703) (20) (41 775)
Net financing costs (49 806) (66 670) (140 994)
and taxation paid
Net cash inflow before 129 338 140 021 366 303
distributions to
shareholders
Debenture interest and (8 884) (25 797) (35 289)
dividend distribution
to shareholders
Net cash inflow from 5 120 454 114 224 331 014
operating activities
Capital expenditure (96 358) (107 067) (188 717)
Acquisition of (1 520) (21 470) (29 147)
investments,
subsidiaries and
minority interests
Proceeds on the 117 729 - -
disposal of assets
held for sale
Proceeds on the 728 1 636 9 151
disposal of property,
plant and equipment
Net cash 20 579 (126 901) (208 713)
inflow/(outflow) from
investing activities
Net cash (outflow)/ (90 579) 74 193 29 554
inflow from financing
activities
Net increase in cash 50 454 61 516 151 855
and cash equivalents
Net cash and cash 110 063 (41 791) (41 792)
equivalents at the
beginning of the year
Net cash and cash 8 714 160 517 19 725 110 063
equivalents at the end
of the year
SEGMENT REPORT
(R`000) Films Rigids Flexibles Industrial
Revenue for the segment - 593 263 670 259 48 784 20 775
2009
Transactions with other
operating segments
of the Group - 2009 (39 937) (34 958) (2 818) -
External customers - 2009 553 326 635 301 45 966 20 775
Revenue for the segment - 653 524 657 933 39 656 24 408
2008
Transactions with other
operating segments
of the Group - 2008 (20 999) (50 593) (1 354) -
External customers - 2008 632 525 607 340 38 302 24 408
Profit from operations 35 586 81 210 3 469 793
(segment result) - 2009
Profit from operations 36 293 64 363 (7 732) 4 435
(segment result) - 2008
Depreciation - 2009 13 350 43 932 2 032 1 120
Depreciation - 2008 12 963 46 068 2 289 650
Capital expenditure - 73 743 12 935 2 677 5 982
2009
Capital expenditure - 18 546 81 261 550 4 710
2008
Total assets - 2009 805 097 997 944 86 664 47 059
Total assets - 2008 747 346 1 026 467 377 720 61 295
Total liabilities - 2009 553 409 433 876 42 382 23 346
Total liabilities - 2008 702 739 469 491 205 275 25 969
SEGMENT REPORT
(CONTINUED)
Total Discon-
continuing tinued Total
(R`000) operations operations Group
Revenue for the segment - 1 333 081 233 851 1 566 932
2009
Transactions with other
operating segments
of the Group - 2009 (77 713) (16 270) (93 983)
External customers - 2009 1 255 368 217 581 1 472 949
Revenue for the segment - 1 375 521 304 968 1 680 489
2008
Transactions with other
operating segments
of the Group - 2008 (72 946) (33 705) (106 651)
External customers - 2008 1 302 575 271 263 1 573 838
Profit from operations 121 058 (7 681) 113 377
(segment result) - 2009
Profit from operations 97 359 7 654 105 013
(segment result) - 2008
Depreciation - 2009 60 434 492 60 926
Depreciation - 2008 61 970 7 526 69 496
Capital expenditure - 95 337 - 95 337
2009
Capital expenditure - 105 067 1 999 107 066
2008
Total assets - 2009 1 936 764 42 016 1 978 780
Total assets - 2008 2 212 828 - 2 212 828
Total liabilities - 2009 1 053 013 7 041 1 060 054
Total liabilities - 2008 1 403 474 - 1 403 474
SUPPLEMENTARY INFORMATION
Audited
Unaudited Unaudited financial
six months six months year
ended ended ended
31 August 31 August 28 February
(R`000) 2009 2008 2009
Number of ordinary shares in issue 135 131 135 131 135 131
(`000)
Weighted average number of 118 018 117 885 118 037
ordinary shares in issue (`000)
Fully diluted weighted average 120 030 121 980 121 669
number of ordinary shares in issue
(`000)
Number of preference shares in 1 500 1 500 1 500
issue
Net asset value per share (cents) 778 687 737
Net tangible asset value per share 651 546 610
(cents)
Closing share price 990 600 671
Closing price to net asset value 1,3 0,9 0,9
per ordinary share
Closing price to net tangible 1,5 1,1 1,1
asset value per ordinary share
Market capitalisation (R million) 1 337,8 810,8 906,7
Net interest-bearing debt as a 34% 74% 53%
percentage of equity (%)
Net debt 300 384 573 671 441 925
Long-term interest-bearing debt 303 023 325 072 341 052
Short-term interest bearing debt 152 808 353 677 210 983
Cash resources (155 447) (105 078) (110 110)
Interest cover 4,4 2,2 2,8
Net working capital days 29,2 44,0 29,1
Contingent liabilities 9 656 37 354 10 144
Number of employees 3 590 4 199 4 390
- continuing operations 3 521 3 636 3 877
- discontinued operations 69 563 513
Earnings before interest, 173 121 174 509 457 829
taxation, depreciation and
amortisation ("EBITDA")
- continuing operations 181 422 159 328 420 799
- discontinued operations (8 301) 15 181 37 030
ABBREVIATED NOTES FOR THE 6 MONTHS ENDED 31 AUGUST 2009
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
These condensed consolidated results for the six months ended 31 August 2009 are
prepared in accordance with recognition and measurement requirements of
International Financial Reporting Standards ("IFRS"), the disclosure
requirements of IAS 34 - Interim Financial Reporting, the South African
Companies Act (Act 61 of 1973, as amended) and in compliance with the Listings
Requirements of the JSE Limited.
The accounting policies applied in the preparation of these results are
consistent with those applied for the year ended 28 February 2009 and the Group
has further adopted Revised IAS 1 - "Presentation of Financial Statements"
("IAS1") and IFRS 8 - "Operating Segments" ("IAS8").
2. COMPARATIVE FIGURES
Comparative figures have been represented or reclassified as a result of the
following items:
The adoption of IAS 1 and IFRS 8 by Astrapak;
The disclosure requirements associated with IFRS 5 - "Non-current Assets Held
for sale and Discontinued operations ("IFRS5")
As was the case in the financial results for the financial year ended 28
February 2009, the comparatives have been restated to reflect the financial
liability of the Group in relation to contractual put options afforded to
minorities. This liability had to be raised in terms of IAS 39 -"Financial
Instruments: Recognition and Measurement". This restatement does however not
impact on the statement of comprehensive income for the comparative period.
Unaudited Audited
Unaudited restated financial
six months six months year
ended ended ended
31 August 31 August 28 February
2009 2008 2009
3. PROPERTY, PLANT AND EQUIPMENT
Opening net carrying amount 845 307 926 092 926 092
Additions 95 337 107 067 188 717
Classified as assets held for (5 254) - (117 311)
sale
Re-classified from assets 48 466 - -
held for sale
Disposal of subsidiaries - - (6 836)
Disposals (2 431) (1 656) (8 796)
Depreciation (60 926) (69 496) (136 559)
- Continuing operations (60 434) (61 970) (128 133)
- Discontinued operations (492) (7 526) (8 426)
Closing net carrying amount 920 499 962 007 845 307
Capital expenditure for the 95 337 107 067 188 717
period
Capital commitments
- contracted not spent 52 892 52 425 9 680
- authorised not contracted 24 318 37 245 56 618
Certain owned properties, previously classified as assets held for
sale in terms of IFRS 5, have now been reclassified after a decision
was made not to dispose of these properties and to retain them
because of their strategic value. In addition, the property, plant
and equipment in respect of International Tube Technology (Pty) Ltd
has now been classified as assets held for sale. See note 6 in this
regard.
4. LOANS AND INVESTMENTS
Investment in Standard Labels - 9 432 -
Investment in Really Useful 7 092 7 868 6 788
Investments (Pty) Ltd
Investment in Izakhamzi - 286 470
Plastics (Pty) Ltd
Vendor loan to Afripack 35 302 - -
Consumer Flexibles (Pty) Ltd
in terms of Flexibles
disposal transaction
Listed investments - 23 11
Unlisted investments 12 12 12
42 406 17 621 7 281
5. INVENTORIES
Inventories amounting to R 19 321 882 (Feb 2009: R 1 042 484) are
carried at net realisable value.
6. ASSETS HELD FOR SALE AND LIABILITIES RELATING TO ASSETS HELD FOR
SALE
The transaction in terms of which the Group disposed of certain of
its Flexible operations became effective 7 August 2009.
The related disposal of certain properties occupied by these
Flexible operations and the Group`s equity interest in the
Mauritian JV has still not been concluded as at 31 August and these
assets and related liabilities are therefore still disclosed as
held for sale.
As indicated in note 3 above a decision was made not to dispose of
certain owned properties previously classified as held for sale and
these have therefore now been reclassified.
The assets and liabilities relating to International Tube
Technologies (Pty) Limited, a producer of paper cores and tubes,
and Izakhamzi Plastics (Pty) Limited, an associate company, have
been presented as held-for-sale following the directors decision to
dispose of the Group`s equity interests in these companies.
Assets held for sale/sold consists of the following:
Opening balance as at 1 March 317 529 - -
Assets of Flexible disposal (227 117) - 269 063
group disposed (effective date
of transaction 7 August 2009)
Changes in asset values (18 066) - -
Properties classified as held (48 466) - 48 466
for sale (refer note 3 for
reclassification)
International Tube Technology 17 598 - -
(Pty) Limited
Izakhamzi Plastics (Pty) 538 - -
Limited
Closing balance 42 016 - 317 529
Liabilities relating to assets
held for sale/sold consists of
the following:
Opening balance as at 1 March 153 081 - -
Repayment of liabilities (52 561) - 44 161
Properties classified as held - - 16 726
for sale (refer note 3 for
reclassification)
Changes in liability values (26 860)
Assets of Flexible disposal (73 660) - 92 194
group disposed (effective date
of transaction 7 August 2009)
International Tube Technology 7 041 - -
(Pty) Limited
Closing balance 7 041 - 153 081
7. CAPITAL RESERVE
The capital reserve relates to employee share options valued using
the Black Scholes method and the cash financed stock plan.
Included in administrative and other expenses is IFRS 2 - "Share
Based Payments" charges of R4 million (2008: R2,7 million).
8. CASH AND CASH EQUIVALENTS
Cash and cash equivalents in 155 447 105 078 110 110
continuing operations
Bank overdrafts - (85 353) (47)
155 447 19 725 110 063
Cash and cash equivalents in 5 070 - -
disposal group held for sale
Net cash and cash equivalents 160 517 19 725 110 063
at the end of the year
9. PROFIT FROM OPERATIONS
Profits from operations are
arrived at after taking the
following into account:
Net (loss)/profit on disposal (1 703) (20) 355
of property, plant and
equipment
Depreciation (60 434) (61 970) (128 133)
Net loss on exercise of share (1 771) (290) (960)
options
IFRS 2 - Share Based Payments (4 001) (2 724) (9 682)
expenses
10. (LOSS) / PROFIT FOR THE PERIOD
FROM DISCONTINUED OPERATIONS
The transaction in terms of which the Group disposed of certain of
its Flexible operations became effective 7 August 2009.
The assets and liabilities relating to International Tube
Technologies (Pty) Limited, a producer of paper cores and tubes, and
Izakhamzi Plastics (Pty) Limited, an associate company, have been
presented as held-for-sale following the directors` decision to
dispose of the Group`s equity interests in these companies.
The results of discontinued operations are therefore represented by
the trading results of these entities for the period being reported
upon, the loss realised upon the disposal of the Flexible disposal
group and any losses recognised on the remeasurement of assets held
for sale.
Revenue 217 581 271 263 513 318
Expenses (222 896) (266 419) (485 384)
(Loss)/profit for period from (5 315) 4 844 27 934
discontinued operations
Loss on disposal of (4 350) - -
discontinued operations
(Loss)/profit before taxation (9 665) 4 844 27 934
from discontinuing operations
Taxation (4 581) (191) (3 033)
(Loss)/profit after taxation of (14 246) 4 653 24 901
discontinued operations
Loss recognised on the - - (28 523)
measurement of assets of the
disposal group
(Loss)/profit for the period (14 246) 4 653 (3 622)
from discontinued operations
The net cash flows incurred by
discontinued operations for the
period are represented below:
Operating cash flows 6 788 956 2 509
Investing cash flows 132 (358) (2 397)
Financing cash flows (4 264) 18 290 20 151
Net increase/(decrease) in cash 2 656 18 888 20 263
and cash equivalents from
discontinued operations
11. EARNINGS PER ORDINARY SHARE AND HEADLINE EARNINGS PER ORDINARY SHARE - BASIC
AND FULLY DILUTED
Earnings per ordinary share are calculated by dividing the profit attributable
to ordinary shareholders of the parent by the weighted average number of shares
in issue over the period that the attributable profit was generated.
Headline earnings per ordinary share are calculated by dividing the headline
earnings attributable to ordinary shareholders of the parent by the weighted
average number of shares in issue over the period that the headline earnings
were generated.
Fully diluted earnings and headline earnings per ordinary share are determined
by adjusting the weighted average number of shares in issue over the period to
assume conversion of all dilutive ordinary shares, being shares issued in terms
of the share incentive trust and the cash financed stock plan.
12. SUBSEQUENT EVENTS
No fact or circumstance material to the appreciation of this report has occurred
between 31 August 2009 and the date of this report.
COMMENTARY
GROUP PROFILE
During the past 12 months Astrapak engaged in a strategic review of its
portfolio of operations, target markets, management structures, capital
structures and its underlying growth strategies. The information extracted
during this review was analysed and used to redefine the future strategy for the
Group.
One of the key decisions flowing from this process was a resolution to focus and
invest in the Group`s core Film and Rigid divisions which resulted in the
following:
- Effective 7 August 2009 Astrapak disposed of certain of its flexible
businesses to Afripack Consumer Flexibles (Pty) Ltd ("Afripack") for a
purchase consideration of R153,65m (refer SENS announcements dated 31 March
2009 and 13 August 2009 ("the SENS announcements"));
- Astrapak disposed of its equity interest in the Mauritian JV and the
property occupied by one of the flexible operations to Afripack for a
purchase consideration of R30,0m. These two transactions are still subject
to certain conditions precedent that should be fulfilled in the near future
(refer to the SENS announcements);
- Astrapak has decided to dispose of its 20% interest in Izakhamzi Plastics
(Pty) Ltd and is currently in the process of finalising the terms of this
transaction. The related asset is therefore disclosed in terms of the
requirements of IFRS 5 - "Discontinued Operations - Assets held for sale"
("IFRS 5");
- Astrapak has decided to dispose of its 60% interest in International Tube
Technology (Pty) Ltd and is currently in the process of finalising the
terms of this disposal. The related assets and liabilities are therefore
disclosed in terms of the requirements of IFRS 5; and
- Effective from 13 August 2009 Astrapak acquired certain assets from Nampak
Flexpak for utilisation within the Films division (refer to the SENS
announcements).
The profile of the Group has therefore changed significantly from that reported
in previous periods. The Group is now best described as a manufacturer and
distributor of an extensive range of rigid and film plastic packaging products,
producing annualised continuing revenues in excess of R2,7bn. Manufacturing
facilities are located in all the main centres of South Africa and the Group
employs approximately 3 590 people.
The operations are grouped into four segments - Rigids, Films, Industrials and
Flexibles - servicing mainly food, beverage, personal care, pharmaceutical,
agricultural, industrial and retail markets.
The Group is focused on innovation-led growth in plastic packaging, and plans to
continue expansion through a balance of organic, project and acquisitive growth.
FINANCIAL RESULTS
MARKET CONDITIONS
The ongoing global recession continues to negatively impact on consumers and
consumer spending habits. Discretionary spend has reduced dramatically and
competition for market share amongst convertors has intensified. Notwithstanding
these very challenging trading conditions, the Group believes that it has
managed to grow its overall market share which has contributed to the delivery
of a set of credible results ahead of market expectations.
This pleasing performance was mainly due to the resilience of the Group`s
diversity of products, its strong and ever improving position in key growth
markets and the successful implementation of a number of programs or initiatives
aimed at extracting synergies, reducing the Group`s cost structure and improving
internal efficiencies.
CONTINUING OPERATIONS
Turnover, at R1,26bn (2008: R1,30bn) decreased by 3,7% against the comparative
period.
Towards the end of the last financial year the Group introduced a number of
programs and initiatives aimed at reducing its cost structure, enhancing
efficiencies and extracting synergies - all of these have now started to make
contributions to the financial results of the Group. Gross profit increased by
11% to R315,8m (2008: R285,1m) due to a reduction in direct manufacturing costs,
which was attributable to the recent programs and initiatives adopted by the
Group. Other costs, consisting of selling, administration and distribution
overheads totalled R195,3m (2008: R192,9m) representing only a 1,2% increase
over that of the comparative period.
The cost reductions and efficiency improvements have all impacted positively on
operating profit which increased to R121,1m (2008: R97,4m), yielding an
operating margin of 9,6% (2008: 7,5%). The Group however believes that there is
scope for further enhancement and will continue to drive the various programs
and initiatives to continue to improve operating profit margins.
The Group has benefited from the downward cycle in interest rates which lowered
average interest rates over the period. The prime rate of interest averaged
12,8% compared to 15,1% in the comparative period. Improved working capital and
cash management and the resultant reduction in the average levels of net debt
has led to net interest paid reducing by 36% to R27,8m (2008: R43,3m).
The investment in net working capital has been reduced to R200m (2008: R379m)
representing a net 29 day net working capital cycle. The net working capital
cycle target for the Group is 35 days.
Taxation amounted to R29,2m (2008: R37,2m) and includes the payment of Secondary
Taxation on Companies of R0.9m, The effective tax rate is 31,3% (2008: 68,8%)
and this is mainly as a result of a number of permanent differences and deferred
tax assets not being raised against certain tax losses. The comparative tax rate
of 68,8% was unusually high as a result of a number of deferred tax assets being
impaired by the Group. The sustainable future tax rate is expected to
approximate the company income tax rate of 28% plus STC on any ordinary and
preference dividends paid.
HEPS from continuing operations increased by 824% to 47,1 cents (2008: 5,1
cents). Fully diluted HEPS increased by 845%. As previously mentioned, the
results in the comparative period were negatively impacted upon by certain once-
off items of expenditure and a reversal of a number of deferred tax assets
totalling approximately R20 million. This resulted in a much lower base being
established for comparative purposes and the improvement in HEPS as reported in
this announcement should be normalised for these items to determine the true
growth from operational activities. Normalising for these items, HEPS growth of
114% was achieved over the comparative period.
Other than the transactions set out in the "Group Profile" above, no new
acquisitions or major investments were completed by the Group during the period
under review. Capital expenditure incurred was R95,3m and the Group acquired all
the remaining minority interests in Consupaq (Pty) Limited.
Improved cash generation and management by operations and the receipt of the
proceeds from the disposal of certain Flexible businesses meant that the Group
was able to reduce its net debt position to R300,4m (2008: R573,7m) resulting in
the ratio of net interest bearing debt to equity decreasing from 72% in the
prior year to 34%. This is expected to reduce further over the remainder of the
financial year ahead as and when the Group receives the proceeds from the
pending sale transactions highlighted under the Group Profile section. This will
also further reduce the Group`s interest expense in the future.
DISCONTINUED OPERATIONS
The loss on discontinued operations for the period was R14,2m (2008: R4,7m
profit). Details of the loss is set out in the notes to the condensed financial
statements.
CHANGES TO THE BOARD OF DIRECTORS
Over the last year the Board has been reorganised and now comprises a majority
of independent non-executive directors and is compliant with the King Report on
Corporate Governance requirements for independent non-executives and committee
structures.
The following changes to the Board occurred during the period:
RESIGNATIONS
Mr J Buchanan resigned on 18 March 2009; and
Ms K P Seopela stepped down as Acting Chairman on 18 March 2009 but continues to
serve as a non-executive director.
APPOINTMENTS
Mr G Z Steffens was appointed as an independent non-executive director on 18
March 2009; and
Ms P Langeni was appointed as independent non-executive Chairman on 18 March
2009.
We would like to thank Mr Buchanan who resigned during the year for his
contribution to the Group.
PROSPECTS
The uncertainty around current economic conditions, local and foreign, will
continue to impact negatively on consumer confidence. The steep increase in the
cost of electricity and other cost increases are of further concern and need to
be monitored and managed on a continuing basis.
The challenge for Astrapak will be to retain and grow market share in its chosen
segments and to ensure that the Group is strategically well positioned to
benefit from an upswing in the economy as and when that occurs. This will be
achieved through improved capital allocation and cost reduction programs,
improved synergies, tighter financial disciplines and various plant level
productivity and efficiency initiatives. In addition, the Group will continue
with its strategy of identifying and addressing underperforming assets; organic
growth and acquisitions to optimise shareholder value from time to time.
INTERIM DIVIDEND
The economic outlook for the remainder of the 2010 financial year remains
uncertain and as a result the Board has decided not to declare an interim
dividend in order to preserve funding for the Group`s strategic growth options
which the Group believes to be attractive and which will enhance shareholder
value into the future.
The position in respect of dividend payments will be re-assessed by the Board at
the end of the 2010 financial year.
ACKNOWLEDGEMENTS
The Board would like to express its appreciation to all its management, staff
and stakeholders for their commitment, efforts and support during the last six
months. These efforts will contribute to Astrapak not only getting through these
difficult economic conditions, but will ensure that it is well positioned to
capitalise as the economy recovers.
For and on behalf of the Board
Marco Baglione Manley Diedloff
(Chief Executive Officer) (Chief Financial Officer)
Sandton
12 October 2009
BOARD OF DIRECTORS:
P Langeni* (Chairman), M Baglione (Chief Executive Officer), M Diedloff (Chief
Financial Officer), P C Botha*, D C Noko*, K P Seopela*, G Z Steffens*,
*Non-executive
COMPANY SECRETARY:
E Cornelius
REGISTERED OFFICE:
5 Kruger Street, Denver, 2011 PO Box 75769, Gardenview, 2047, South Africa
Tel +27 11 615 8011 Fax +27 11 615 9790
REGISTRAR:
Computershare Investor Services (Pty) Ltd Ground Floor, 70 Marshall Street,
Johannesburg, 2001 PO Box 61051, Marshalltown, 2107
OPERATING ENTITIES
FILMS DIVISION:
Barrier Film Converters City Packaging East Rand Plastics Packaging
Consultants Pack-Line Holdings Peninsula Packaging Tristar Plastics
Ultrapak
RIGIDS DIVISION:
Cinqpet Consupaq Hilfort JJ Precision Plastics Marcom Plastics PAK 2000
Plastech Plastform Plas-top Plastop (KwaZulu-Natal) Thermopac
FLEXIBLES DIVISION:
Alex White Knilam Packaging Saflite
INDUSTRIAL:
Plusnet/Geotex
www.astrapak.co.za
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 12/10/2009 14:49:01 Produced by the JSE SENS Department.
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