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Astrapak Limited - Results For The Six Months Ended 31 August 2002
Astrapak Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/009169/06)
JSE Share code APK ISIN ZAE000030938
RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2002
* Revenue up 65%
* Operating income up 70%
* Headline earnings per linked unit up 28%
CONSOLIDATED INCOME STATEMENTS
Audit reviewed
Actual Actual
R000`s 2002 2001
Revenue 635 692 386 253
Existing operations 458 230 386 253
Acquired operations 177 462 -
Cost of sales 445 183 270 235
Gross profit 190 509 116 018
Gross profit percentage 30% 30%
Net operating expenses 93 956 62 695
Income before interest, taxation,
depreciation and amortisation 96 553 53 323
Depreciation 30 529 14 893
Amortisation of intangible assets 1 792 570
Operating income before interest and taxation 64 232 37 860
Existing operations 44 857 37 860
Acquired operations 19 375 -
Net interest paid 22 490 7 324
Income before debenture interest 41 742 30 536
Debenture interest 3 671 4 514
Income before taxation 38 071 26 022
Existing operations 32 867 26 022
Acquired operations (net of acquisition interest) 5 204 -
Taxation 7 511 4 518
Income after taxation 30 560 21 504
Share of associates net income after taxation 1 187 695
Income attributable to minority shareholders 4 935 1 557
Attributable income 26 812 20 642
Headline income 32 275 25 726
Earnings per linked unit (cents) 31,8 25,8
Attributable income (cents) 28,0 21,2
Debenture interest (cents) 3,8 4,6
Headline earnings per linked unit (cents) 33,7 26,4
Attributable income (cents) 29,9 21,8
Debenture interest (cents) 3,8 4,6
Headline earnings per linked unit - fully diluted (cents) 30,7 24,3
Attributable income (cents) 26,9 19,7
Debenture interest (cents) 3,8 4,6
Number of linked units in issue (000`s) 95 608 97 436
Number of linked units in issue - fully diluted (000`s) 106 337 107 947
Reconciliation between attributable
income and headline income
Attributable income 26 812 20 642
Debenture interest 3 671 4 514
Amortisation of intangible assets 1 792 570
Headline income 32 275 25 726
CONSOLIDATED BALANCE SHEETS
Audit reviewed
Actual Actual
R000`s 2002 2001
Assets
Non-current assets 410 395 209 590
Property, plant and equipment 357 927 181 257
Deferred taxation 14 718 15 441
Intangible assets 31 730 9 649
Loans and investments 6 020 3 243
Current assets 448 971 270 119
Inventories 154 487 89 582
Trade and other receivables 211 922 133 233
Cash resources 82 562 47 304
Total assets 859 366 479 709
Equity and liabilities
Capital and reserves (Equity) 168 720 125 112
Share capital 108 108
Retained income 184 937 135 910
Non-distributable reserves 6 016 7 353
Treasury shares (22 341) (18 259)
Debentures 47 804 48 649
Linked unitholders` funds 216 524 173 761
Outside shareholders` interest 45 050 16 620
Non-current liabilities 253 914 97 493
Long-term interest bearing debt 227 905 79 530
Deferred taxation 26 009 17 963
Current liabilities 343 878 191 835
Trade and other payables 243 854 143 614
Linked unitholders for debenture interest 3 671 4 514
Short-term interest bearing debt 96 353 43 707
Total equity and liabilities 859 366 479 709
Additional information
Capital expenditure (R000`s) 46 778 21 816
Capital commitments (R000`s)
- contracted not spent 15 808 27 550
- authorised not contracted 1 165 -
Net asset value per linked unit (cents) 226 178
Net tangible asset value per linked unit (cents) 193 168
Net interest bearing debt as a percentage
of linked unitholders` funds (%) 112 44
Net interest bearing debt (R000`s) 241 696 75 933
Long-term interest bearing debt 227 905 79 530
Short-term interest bearing debt 96 353 43 707
Cash resources 82 562 47 304
ABRIDGED CONSOLIDATED CASH FLOW STATEMENTS
Audit reviewed
Actual Actual
R000`s 2002 2001
Cash generated from operations 94 860 50 801
Investment in working capital 15 767 (19 504)
Non-cash transactions 846 108
Net financing costs and taxation paid (32 680) (11 527)
Net cash inflow before distribution to linked unitholders 78 793 19 878
Interest and dividend distribution to linked unitholders (11 049) (11 311)
Net cash inflow from operating activities 67 744 8 567
Capital expenditure (46 778) (21 816)
Acquisition of subsidiaries and minority interests (165 453) (196)
Proceeds on the disposal of assets 1 816 1 334
Cash outflow from investing activities (210 415) (20 678)
Net cash inflow from financing activities 125 254 1 658
Net decrease in cash equivalents (17 417) (10 453)
STATEMENT OF CHANGES IN EQUITY
Audit reviewed
Actual Actual
R000`s 2002 2001
Equity as at 1 March 146 018 105 562
Equity as previously reported 152 248 110 378
Depreciation of investment properties (AC 135) (6 230) (4 816)
Attributable income 26 812 20 642
Transfer to deferred tax asset (668) (667)
Acquisition of treasury shares - (371)
Ordinary dividends paid to outside shareholders (3 442) (54)
Equity as at 31 August 168 720 125 112
SEGMENTAL ANALYSIS
R000`s Films Rigids Flexibles Group
Revenue - 2002 266 995 252 845 115 852 635 692
Revenue - 2001 242 475 61 872 81 906 386 253
Operating income before
interest and taxation - 2002 20 436 26 698 17 098 64 232
Operating income before interest
and taxation - 2001 21 694 7 669 8 497 37 860
Depreciation - 2002 10 425 16 450 3 654 30 529
Depreciation - 2001 8 880 3 266 2 747 14 893
Capital expenditure - 2002 6 766 22 114 17 898 46 778
Capital expenditure - 2001 13 865 4 556 3 395 21 816
Total assets - 2002 342 001 361 607 155 758 859 366
Total assets - 2001 306 228 73 712 99 769 479 709
Total liabilities - 2002 202 412 296 725 98 655 597 792
Total liabilities - 2001 195 575 36 439 57 314 289 328
Group Profile
Astrapak Limited ("Astrapak" or "the Group") is focused on the manufacture
and supply of sophisticated plastic packaging products and services to most
segments of the plastic packaging markets, from high-volume packaging to
specialized niche products.
The Group is spread across the main centres of South Africa and also has a
joint venture in Mauritius. The operations are grouped into three divisions,
namely Films, Rigids and Flexibles; and focus on supplying into the food,
beverage, confectionery, agricultural, consumer, cosmetic, personal care,
petrochemical, pharmaceutical, textile and industrial markets.
Astrapak has, since inception, invested in plastic companies that are market
leaders or have significant technological advantages to exploit the global move
towards plastic packaging. The Group focuses on innovation and technology in
order to achieve superior returns and growth in earnings for linked unitholders.
Message to Investors
The Group has evaluated numerous opportunities during the period under review
and balanced these to achieve an optimal result for linked unitholders. This
resulted in the following capital allocations:
* R46,8 million for plant replacement as well as expansionary capital
expenditure;
* R123,75 million for the acquisition of 75% of Master Plastics (Proprietary)
Limited ("Master Plastics"). The purchase price of R 123,75 million was
allocated as follows:
R `million
Non-current assets 156,09
Net working capital 65,90
Non-current liabilities (38,31)
Other current liabilities (42,91)
Minority interest (35,52)
105,25
Goodwill on acquisition 18,50
123,75
The introduction of an EVA scheme will further assist in driving the
methodology of capital rationing deeper into the organization.
The Master Plastics acquisition, effective from 1 March 2002, clearly
illustrates Astrapak`s intent of gaining an increasing share of the packaging
market at large and creating a meaningful listed entity. Subsequent to the
acquisition and recent industry consolidation, Astrapak is now the second
largest listed packaging group in South Africa, with annual revenue approaching
the R1,5 billion mark.
Master Plastics is an acknowledged leader in selected market segments in
which it operates and is an ideal complement to the Astrapak Rigid`s portfolio,
giving us access to the latest PET production technology and a license for
highly specialized machinery used in the production of personal care containers.
The acquisition has met all expectations for the period under review and will
allow us significant opportunities for growth and synergy. We expect further
improvement will be shown in Master Plastics over the next 12 months as a result
of ongoing focus on efficiency and material utilization.
The acquisition was funded through debt due to the high cost of equity
funding in the markets at present. For this reason the company has chosen not to
raise equity capital in the past three years. Given the expected and hoped for
improvement in the linked unit price, the Group will continue to evaluate the
optimal funding balance between debt and equity.
Consumer demand has remained buoyant during the period under review and there
was significant growth in direct and indirect exports by many customers as a
result of the weak rand. Despite raw material price increases and higher
interest rates, performance has been satisfactory.
The growth in turnover of 64,6%, includes organic volume growth of 9,0% and
this volume growth once again confirms that plastics is the growth area in
packaging and that Astrapak has achieved a real growth in market share.
Financial results
Group revenue increased by 64,6% to R635,7 million (R386,3 million),
attributable to:
Pricing increase 9,1%
Volume growth 9,0%
Acquisitive growth 46,5%
Notwithstanding the upward pressure on raw material prices, operating income
increased by 69,7% to R64,23 million (R37,86 million), yielding an operating
margin of 10,1% (9,8%). This was due to improved efficiencies in the Flexibles
division and the inclusion of Master Plastics in the results.
Net interest paid increased significantly due to the debt funding of Master
Plastics.
Taxation of R7,5 million (R4,5 million) results in an effective tax rate of
19,7%. This effective rate of taxation is expected to rise slowly, but
progressively, as tax losses and tax incentives are utilized.
Headline earnings per linked unit increased by 28% to 33,76 cents (26,40
cents). The inclusion of Master Plastics had a headline earnings enhancing
effect of 3% or 0,78 cents, confirming that on an after interest basis there was
a net positive contribution by the acquisition.
Net debt peaked in August 2002 at R241,7 million (R75,9 million) resulting in
a debt equity ratio of 112%. Of this debt, the R123,75 million raised to finance
the Master Plastics acquisition is capped at 16%, with a further amount of R32,5
million being fixed at 11,85%. This debt burden needs to be seen against the
Group`s substantial cash generating capability - net cash inflow from operating
activities rose by R59,2 million to R67,7 million (R8,6 million). The Groups`
target is to reduce the debt equity ratio to below 100% before the end of the
financial year.
The increase in net cash from operating activities was mainly due to tighter
control over working capital requirements. Net working capital increased by
54,8% to R122,6 million (R79,2 million) during a period where turnover increased
by 64,6%.
Capital expenditure of R46,8 million (R21,8 million) was incurred during the
period, predominantly for capacity enhancing projects.
Prior year results have been restated as outlined below:
* To achieve compliance with AC 135, the Group has commenced with the
depreciation of investment properties.
* Inadequate stock count procedures were applied at one of the Group`s
divisions, resulting in an understatement of stock and profits in the prior
year.
Prospects
Inflationary pressures and a high interest rate could impact negatively on
consumer spending. However, on a positive note, an improving rate of exchange
should be beneficial as regards raw material pricing over the next six months.
Overall, we anticipate a continued profit improvement compared with the previous
year.
JSE SECURITIES EXCHANGE SOUTH AFRICA ("JSE") REQUIREMENTS
The directors of the company ensured compliance with the requirements of the
JSE Listing Requirements during the six months under review.
BASIS OF ACCOUNTING
These consolidated, audit reviewed results for the six months were drawn up
in compliance with South African Statements of Generally Accepted Accounting
Practice and the company has complied with the requirements of the Companies Act
1973 (Act 61 of 1973) as amended.
ACCOUNTING POLICIES
The accounting policies as set out in the 2002 annual report have been
consistently applied in producing these results, except for a change in
accounting policy with regard to the depreciation of investment properties (AC
135).
AUDIT REVIEW
The interim results presented above have been reviewed, but not audited, by
Deloitte & Touche, the Group`s auditors. Their limited review report is
available for inspection at the Group`s registered office during normal office
hours.
DISTRIBUTION TO LINKED UNITHOLDERS
A provision for debenture interest of R 3,7 million has been made which
approximates the average prime-rate of interest for the period. Debenture
interest for the full financial year ending 28 February 2003 will be declared
and payable during May 2003.
CHANGES TO THE BOARD OF DIRECTORS
The following appointment was made and resignation accepted:
Mr M Baglione was appointed on 25 July 2002;
Mr D T du Toit resigned with effect 25 July 2002.
ACKNOWLEDGEMENTS
The Board would like to express its appreciation to management and their
staff for their efforts during the six months, which has been a significant
factor in the successful results achieved by the Group.
For and on behalf of the Board
R Crewe-Brown H A Todd
(Chief Executive Officer) (Financial Director)
Sandton
5 November 2002
Registered Office:
1st Floor Wierda Court,
Johan Avenue, Wierda Valley, Sandton.
PO Box 652740, Benmore, 2010,
South Africa. Tel: ++27 11 784 5577/8/9
Fax: ++27 11 784 1569.
Board of directors:
R A Upton* (Chairman)
R Crewe-Brown (Chief Executive Officer)
H A Todd, R T Dalais*, M Baglione,
W F Hirzebruch*, C A Jadwat*, G Petzer
*Non-executive
Registrar:
Computershare Services Limited
Edura, 41 Fox Street, Johannesburg, 2001.
PO Box 61051, Marshalltown, 2107.
Website: www.astrapak.co.za
Operating ENTITIES
Films Division:
City Pack
East Rand Plastics
Packaging Consultants
Pack-Line Holdings
Peninsula Packaging
Tristar Plastics
Durpak
Rigids Division:
Emcape Thermopak
International Edgeboard Technologies
International Tube Technologies
JJ Precision Plastics
Master Plastics
PAK 2000
FLEXIBLES Division:
Astrapak Flexible
Astraflex
Astra Repro
Diverse Labelling Consultants
Packaging Converters
Saflite Cape
Standard Labels
Tamperpak
Date: 05/11/2002 05:01:00 PM Produced by the JSE SENS Department
