| Tue 6 May 2003, 14:35 | | Reviewed Results For The Year Ended 28 February 20 |
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Astrapak Limited -
ASTRAPAK LIMITED
Astrapak Limited
(Registration number : 1995/009169/06)
ISIN : ZAE000030938
Share Code : APK
REVIEWED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2003
Highlights
- Revenue up 65%
- Operating income up 71%
- Headline earnings per linked unit up 30%
- Return on Equity of 36%
COMMENTARY
Group Profile
Astrapak Limited ("Astrapak" or "the Group") manufactures and supplies
sophisticated plastic packaging products and services to most segments of the
plastic packaging market, from printed flexible packaging to specialised rigid
containers.
The Group has manufacturing facilities in all the main centres of South Africa
and also has a joint venture in Mauritius. The operations are divided into
three divisions, namely Films, Rigids and Flexibles; and supply the food,
beverage, confectionery, agricultural, consumer, cosmetic, personal care,
petrochemical, pharmaceutical, textile and industrial markets.
Astrapak has, since inception, invested in businesses that are market leaders or
have significant technological advantages to exploit 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
Astrapak"s strategy is aimed at exploiting the innovation-led growth in plastic
packaging, which it believes will continue to gain an increasing share of the
packaging market at large. The Group plans to achieve this through continued
acquisitive and organic growth as well as through the implementation of new and
opportunistic business initiatives.
The Group has evaluated numerous capital allocation opportunities during the
year under review and invested to achieve an optimal result for linked
unitholders. This resulted in the following capital allocations:
R77,2m for plant replacement as well as expansionary capital expenditure;
R31,8m for the establishment of Astraflex (Pty) Ltd, a new business initiative
aimed at capitalising on opportunities in the printing and conversion of
specialised flexible packaging materials;
R 123,8m for the acquisition of a 75% interest in Master Plastics (Proprietary)
Limited ("Master Plastics"); and
R15,0m for the purchase of the certain minorities in subsidiaries.
Master Plastics, through its subsidiaries, is an acknowledged leader in bottle
and closure manufacture and is an ideal complement to the Astrapak Rigid"s
portfolio. It gives the Group access to the latest PET production technology
and a license for highly specialised machinery used in the production of
personal care containers. The acquisition, effective 1 March 2002, has met
expectations for the period under review and has had a positive impact on
headline earnings. Further synergies and efficiencies are expected from the
Master Plastics" business in the next financial year.
Given the recent improvement in the linked unit price, the Group will continue
to evaluate the optimal funding balance between debt and equity. The
introduction of an Economic Value Added incentive scheme, implemented with
effect from 1 March 2003, will further assist in driving the methodology of
capital rationing deeper into the Group.
Financial results
Group turnover increased by 65,2% to R1 348,4m (R816,3m), attributable to:
Pricing increase 11,2%
Volume growth 10,1%
Acquisitive growth 43,9%
Turnover in the second half of the year represented 52,9% (55,4%) of the total
turnover and is now more balanced due to the complementary nature of the Master
Plastics" revenue stream.
Raw material pricing was influenced by rising polymer prices which were partly
offset by the steady strengthening of the Rand. Despite the upward pressure on
raw material prices, operating income increased by 70,9% to R140,0m (R81,9m)
which included the Master Plastics" results and benefited from increased
operating efficiencies throughout the Group. This resulted in a further
improvement in operating margin from 10,0% to 10,4%.
Net interest paid increased significantly due to the funding of the Master
Plastics acquisition. Despite the increased interest rates during the period,
the after tax contribution of Master Plastics exceeded the interest on the
associated acquisition funding.
An effective tax rate of 25,2% (20,9%) was achieved due to the utilisation of
government incentives and tax losses.
Headline earnings per linked unit increased by 30,3% to 74,9 cents (57,5 cents).
The acquisition of Master Plastics had a positive effect on headline earnings,
contributing 6,9 cents per linked unit.
Net debt increased by R202,9m to R255,5m (R52,6m), mainly due to the acquisition
of Master Plastics, capital expenditure and the purchase of minority interests.
The resultant debt equity ratio improved from 111,6% at half year to 102,7% and
is expected to continue this positive trend in the future as a consequence of
net operating cash inflows.
Net cash from operating activities increased by R56,1m to R113,6m (R57,9m) and
can be attributed to continued tight control over working capital and the
contribution by Master Plastics.
Prior year results have been restated to achieve compliance with AC135 -
Depreciation of Investment Properties.
Prospects
The softening of polymer prices and the relative strength of the Rand should
continue to yield positive cost benefits on the local market. It is expected
that direct and indirect exports will slow down due to the strong Rand but the
local economy appears to be maintaining the momentum of 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 year under review.
BASIS OF ACCOUNTING
These consolidated, audit reviewed results for the year 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).
REVIEW BY INDEPENDENT AUDITORS
The Group"s auditors, Deloitte & Touche, have reviewed these year end results.
Their unqualified review report is available for inspection at the Group"s
registered office during normal office hours.
DISTRIBUTION TO LINKED UNITHOLDERS
Notice is hereby given that debenture interest of 8,1 cents per linked unit
(totalling R7,7m) will be paid. The interest payment approximates the average
prime rate of interest for the financial year ended 28 February 2003. In
addition, Astrapak will be paying an ordinary dividend of 3,6 cents per linked
unit (totalling R3,4m) to linked unitholders for the year ended 28 February
2003. The total combined dividend and debenture interest will be 11,7 cents per
linked unit (totalling R11,1m).
Both distributions will be payable on Monday, 2 June 2003 to linked unitholders
recorded in the register on Friday, 30 May 2003. The last date to trade cum-
distribution will be Friday, 23 May 2003 and the linked units will commence
trading ex-distribution on Monday, 26 May 2003. Linked unit certificates may
not be dematerialised or rematerialised between Monday, 26 May 2003 and Friday,
30 May 2003 both days inclusive.
CHANGES TO THE BOARD OF DIRECTORS
Appointments :
Mr M Baglione on 25 July 2002;
Mr W J Venter on 27 February 2003
Resignations:
Mr D T du Toit on 25 July 2002;
Mr C Jadwat on 27 February 2003.
ACKNOWLEDGEMENTS
The Board would like to express its appreciation to management and staff for
their efforts during the year, 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
6 May 2003
REVIEWED RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2003
* Revenue up 65%
* Operating income up 71%
* Headline earnings per linked unit up
30%
* Return on equity of 36%
CONSOLIDATED INCOME STATEMENTS
Audit
reviewed
Actual Actual
(R "000) 2003 2002
Revenue 1,348,440 816,247
Existing operations 989,871 816,247
Acquired operations 358,569 -
Cost of sales 945,517 568,652
Gross profit 402,923 247,595
Gross profit percentage 30% 30%
Net operating expenses 197,143 133,076
Income before interest, taxation, 205,780 114,519
depreciation and amortisation
Depreciation 62,180 31,458
Amortisation of goodwill 3,607 1,140
Operating income before interest and 139,993 81,921
taxation
Existing operations 105,653 81,921
Acquired operations 34,340 -
Net interest paid 46,983 13,942
Income before debenture interest 93,010 67,979
Debenture interest 7,708 7,607
Income before taxation 85,302 60,372
Existing operations 78,833 60,372
Acquired operations (net of acquisition 6,469 -
interest)
Taxation 21,524 12,631
Income after taxation 63,778 47,741
Share of associates net income after 3,173 2,286
taxation
Income attributable to minority 6,644 3,569
shareholders
Attributable income 60,307 46,458
Headline income 71,622 55,765
Earnings per linked unit (cents) 71.1 55.8
Attributable income (cents) 63.1 47.9
Debenture interest (cents) 8.1 7.8
Headline earnings per linked unit (cents) 74.9 57.5
Attributable income (cents) 66.9 49.7
Debenture interest (cents) 8.1 7.8
Headline earnings per linked unit - fully 67.7 52.8
diluted (cents)
Attributable income (cents) 59.6 45.0
Debenture interest (cents) 8.1 7.8
Number of linked units in issue (000"s) 95,608 96,953
Number of linked units in issue - fully 105,776 107,121
diluted (000"s)
Reconciliation between attributable
income and headline income
Attributable income 60,307 46,458
Debenture interest 7,708 7,607
Amortisation of goodwill 3,607 1,140
Loss on disposal of property - 560
Headline income 71,622 55,765
CONSOLIDATED BALANCE SHEETS
Audit
reviewed
Actual Actual
(R "000) 2003 2002
Assets
Non-current assets 441,588 213,427
Property, plant and equipment 387,255 185,403
Deferred taxation 18,112 14,111
Goodwill 30,145 9,080
Loans and investments 6,076 4,833
Currents assets 467,171 289,719
Inventories 138,634 103,651
Trade and other receivables 219,074 138,977
Cash resources 109,463 47,091
Total assets 908,759 503,146
Equity and liabilities
Equity 248,681 193,823
Share capital 108 108
Retained income 214,991 158,126
Dividend reserve 3,442 3,442
Non-distributable reserves 5,347 6,684
Debentures 47,804 47,804
Treasury shares (23,011) (22,341)
Outside shareholders" interest 46,014 18,659
Non-current liabilities 247,466 89,225
Long term interest-bearing debt 215,436 68,367
Deferred taxation 32,030 20,858
Current liabilities 366,598 201,439
Trade and other payables 209,408 162,508
Linked unitholders for debenture interest 7,708 7,607
Short term interest-bearing debt 149,482 31,324
Total equity and liabilities 908,759 503,146
Additional information
Capital expenditure (R "000) 108,992 52,536
Capital commitments (R" 000)
- contracted not spent 6,751 10,608
- authorised not contracted 441 2,497
Net asset value per linked unit (cents) 260 200
Net tangible asset value per linked unit 229 191
(cents)
Net interest bearing debt as a percentage 103 27
of equity (%)
Net interest bearing debt (R "000) 255,455 52,600
Long term interest-bearing debt 215,436 68,367
Short term interest-bearing debt 149,482 31,324
Cash resources (109,463) (47,091)
ABRIDGED CONSOLIDATED CASH FLOW
STATEMENTS
Audit
reviewed
Actual Actual
(R "000) 2003 2002
Cash generated from operations 202,310 114,291
Investment in working capital (8,444) (20,656)
Non cash transactions - profit on 1,570 114
disposal of assets
Net financing costs and taxation paid (70,763) (24,495)
Net cash inflow before distribution to 124,673 69,254
linked unitholders
Interest and dividend distribution to (11,049) (11,311)
linked unitholders
Net cash inflow from operating activities 113,624 57,943
Capital expenditure (108,992) (52,536)
Acquisition of subsidiaries and minority (149,383) (36)
interests
Proceeds on the disposal of assets 3,775 10,779
Cash outflow from investing activities (254,600) (41,793)
Net cash inflow / (outflow) from 128,898 (14,314)
financing activities
Net (decrease) / increase in cash (12,078) 1,836
equivalents
STATEMENT OF CHANGES IN EQUITY
Audit
reviewed
Actual Actual
(R "000) 2003 2002
Equity as at 1 March 193,823 153,367
Equity as previously reported 200,052 158,182
Depreciation of investment properties (AC (6,229) (4,815)
135)
Attributable income 60,307 46,458
Transfer to deferred tax asset (1,336) (1,336)
Acquisition of treasury shares (671) (4,453)
Ordinary dividends paid to linked (3,442) (213)
unitholders
Equity as at 28 February 248,681 193,823
SEGMENTAL ANALYSIS
(R "000) Films Rigids Flexible
Revenue - 2003 579,877 515,237 253,326
Revenue - 2002 499,993 134,141 182,113
Operating income before interest and 50,835 58,529 30,629
taxation - 2003
Operating income before interest and 38,085 18,680 25,156
taxation - 2002
Depreciation - 2003 21,019 33,398 7,763
Depreciation - 2002 18,919 6,892 5,647
Capital expenditure - 2003 27,381 45,887 35,724
Capital expenditure - 2002 26,461 22,019 4,056
Total assets - 2003 358,140 376,029 174,590
Total assets - 2002 298,180 92,897 112,069
Total liabilities - 2003 222,348 276,557 115,159
Total liabilites - 2002 182,894 48,913 58,857
Operating margin - 2003 8.8% 11.4% 12.1%
Operating margin - 2002 7.6% 13.9% 13.8%
Calculation - ROE
- Attributable income 60,307 46,458
- Debenture interest 7,708 7,607
Adjusted for taxation ( deb interest * (1,927) (1,521)
25%)
(a) 66,088 52,544
Linked unitholders funds: 1 March 193,823 159,147
193,823 159,147
Less: intangibles: 1 March (9,080) (9,080)
(b) 184,743 150,067
ROE 35.8% 35.0%
(a / b)
