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Astrapak - Unaudited Results For The Six Months Ended 31 August 2005
Astrapak Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/009169/06)
Share Code APK
ISIN ZAE000030938
("Astrapak") or ("the Company" or "the Group")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2005
* Revenue up 17%
* EBITDA up 18%* Attributable income up 31%* Headline earnings per linked unit
up 11%* Cash flow from operations up 20%* Gearing down to 22%* 20% BEE
shareholding completed
CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited
Unaudited restated restated
six months six months 12 months
ended ended ended
31 August 31 August 28 February
(R"000) 2005 2004 2005
Revenue 891 293 761 980 1 650 227
Cost of sales 609 325 519 861 1 129 054
Gross profit 281 968 242 119 521 173
Net operating expenses 136 613 119 119 246 973
Income before interest, 145 355 123 000 274 200
taxation, depreciation and
amortisation
Depreciation 45 349 41 022 89 963
Amortisation of goodwill - 2 333 4 666
Trading income 100 006 79 645 179 571
Exceptional item (1) - 4 671 12 783
Operating income 100 006 84 316 192 354
Net interest paid 14 849 21 627 41 129
Income before debenture interest 85 157 62 689 151 225
Debenture interest 3 979 2 685 5 883
Income before taxation 81 178 60 004 145 342
Taxation 19 689 13 561 32 662
Income after taxation 61 489 46 443 112 680
Share of associates net income 1 196 1 415 2 885
after taxation
Income attributable to minority 3 330 2 592 5 828
shareholders
Attributable income 59 355 45 266 109 737
Headline income 64 342 45 916 111 392
(1) Exceptional item
The exceptional item is made up - 4 671 12 783
of:
Gain on disposal of - 9 171 9 171
empowerment shareholding in PAK
2000
Impairment of assets - (4 500) (4 388)
Profit on replacement of - - 8 000
destroyed plant and equipment
Earnings per linked unit (cents) 53.1 50.9 121.5
Attributable income 49.8 48.0 115.3
Debenture interest 3.3 2.8 6.2
Earnings per linked unit 48.6 45.2 105.9
- fully diluted (cents)
Attributable income 45.3 42.4 99.7
Debenture interest 3.3 2.8 6.2
Headline earnings per linked 54.0 48.7 117.1
unit (cents)
Headline income 50.7 45.9 110.9
Debenture interest 3.3 2.8 6.2
Headline earnings per linked 49.0 43.0 101.3
unit
- fully diluted (cents)
Headline income 45.7 40.1 95.1
Debenture interest 3.3 2.8 6.2
Number of linked units in issue 119 127 94 217 95 158
(000s)
Number of linked units in issue 131 122 106 882 110 018
- fully diluted (000s)
Reconciliation between
attributable income and headline
income
Attributable income 59 355 45 266 109 737
Debenture interest 3 979 2 685 5 883
Amortisation of goodwill - 2 333 4 666
Net profit after tax and (554) (743) (5 228)
minorities on disposal of
property, plant and equipment
Net loss/(profit) on exercise 1 562 - (41)
of options
Net gain on disposal of - (7 900) (7 900)
empowerment shareholding in PAK
2000 after tax
Impairment of asset after - 4 275 4 275
minorities
Headline income 64 342 45 916 111 392
CONSOLIDATED BALANCE SHEETS
Unaudited Unaudited
Unaudited restated restated
six months six months 12 months
ended ended ended
31 August 31 August 28 February
(R"000) 2005 2004 2005
Assets
Non-current assets 680 510 532 008 568 237
Property, plant and equipment 586 192 440 759 477 241
Deferred taxation 30 149 27 318 32 111
Goodwill 46 608 34 574 42 086
Loans and investments 17 561 29 357 16 799
Currents assets 640 409 461 910 540 560
Inventories 220 207 160 240 186 960
Trade and other receivables 297 160 249 608 255 376
Cash resources 123 042 52 062 98 224
Total assets 1 320 919 993 918 1 108 797
Equity and liabilities
Linked unitholders" funds 635 157 349 680 494 535
Share capital and share 201 602 108 84 437
premium
Retained income 440 856 338 359 402 830
Capital reserves (2) 4 243 2 046 2 951
Non-distributable reserves 628 2 307 858
Treasury shares (71 943) (39 902) (48 950)
Ordinary shareholders funds 575 386 302 918 442 126
Debentures 59 771 46 762 52 409
Minority interest 15 552 21 665 23 535
Non-current liabilities 207 859 187 159 194 200
Long-term interest-bearing 145 852 145 932 145 058
debt
Deferred taxation 62 007 41 227 49 142
Current liabilities 462 351 435 414 396 527
Trade and other payables 342 779 279 835 285 345
Linked unitholders for 3 147 2 685 5 883
debenture interest
Short-term interest-bearing 116 425 152 894 105 299
debt
Total equity and liabilities 1 320 919 993 918 1 108 797
(2) Capital reserve
The capital reserve has arisen due to theadoption of IFRS 2 and relates to
employeeshare options valued using the Black Scholesmethod
Additional information
Capital expenditure (R"000) 109 915 64 787 155 173
Capital commitments (R"000)
- contracted not spent 33 415 17 448 19 641
- authorised not contracted 140 16 386 4 245
Net asset value per linked unit 533 371 520
(cents)
Net tangible asset value per 494 334 475
linked unit (cents)
Net interest bearing debt as a 22 71 31
percentage of equity (%)
Net interest-bearing debt 139 235 246 764 152 133
(R"000)
Long-term interest-bearing 145 852 145 932 145 058
debt
Short-term interest-bearing 116 425 152 894 105 299
debt
Cash resources (123 042) (52 062) (98 224)
ABRIDGED CONSOLIDATED CASH FLOW STATEMENTS
Unaudited Unaudited
Unaudited restated restated
six months six months 12 months
ended ended ended
31 August 31 August 28 February
(R 000) 2005 2004 2005
Cash generated from operations 146 679 121 731 288 793
(Increase)/decrease in working (5 200) 8 510 3 697
capital
Non-cash transactions (443) 1 087 (9 538)
Net financing costs and (24 311) (25 110) (80 437)
taxation paid
Net cash inflow before 116 725 106 218 202 515
distribution to linked
unitholders
Interest and dividend (28 295) (13 849) (13 049)
distribution to linked
unitholders
Net cash inflow from operating 88 430 92 369 189 466
activities
Capital expenditure (109 915) (64 787) (155 173)
Acquisition of subsidiaries and (56 153) (60 273) (34 022)
minority interests
Proceeds on the disposal of 3 056 1 950 24 252
assets
Cash outflow from investing (163 012) (123 110) (164 943)
activities
Net cash inflow/(outflow) from 102 561 (60 527) (8 214)
financing activities
Net increase/(decrease) in cash 27 979 (91 268) 16 309
equivalents
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
Unaudited restated restated
six months six months 12 months
ended ended ended
31 August 31 August 28 February
(R "000) 2005 2004 2005
Equity reported under IFRS as 494 535 328 031 328 031
at 1 March
Equity as previously reported 498 803 331 969 331 969
under SA GAAP (audited)
Adoption of IFRS 2 -
Introduction of capital
reserve in respect of share- 2 950 1 141 1 141
based payments
Adoption of IAS 17 : Straight- (4 268) (3 938) (3 938)
lining of operating leases
Adoption of IFRS 2 - Share- (2 950) (1 141) (1 141)
based payments
Attributable income 59 355 45 266 109 737
Expensing of share-based 1 293 905 1 810
payments for the
year charged to capital reserve
Issue of shares at premium 117 165 - 84 329
Transfer to deferred tax asset (669) (669) (1 337)
Increase/(decrease) in foreign 439 98 (683)
currency translation reserve
Acquisition of treasury shares (15 631) (17 736) (21 137)
and debentures
Ordinary dividends paid to (21 330) (6 215) (6 215)
linked unitholders
Equity as at 31 August/28 635 157 349 680 494 535
February
SEGMENTAL ANALYSIS
(R"000) Films Rigids Flexibles Group
Revenue - 2005 375 009 364 219 152 065 891 293
Revenue - 2004 343 463 298 015 120 502 761 980
Trading income - 2005 30 189 52 370 17 447 100 006
Trading income 28 472 41 664 9 509 79 645
- 2004 (restated)
Depreciation - 2005 8 442 31 235 5 672 45 349
Depreciation - 2004 13 219 21 941 5 862 41 022
Capital expenditure - 2005 44 919 61 092 3 904 109 915
Capital expenditure - 2004 15 720 47 973 1 094 64 787
Total assets - 2005 511 215 633 829 175 875 1 320 919
Total assets - 2004 380 160 469 199 144 559 993 918
Total liabilities - 2005 310 773 252 385 109 557 672 715
Total liabilities 258 989 276 505 86 809 622 303
- 2004 (restated)
COMMENTARY
Group profileAstrapak Limited, headquartered in Sandton, manufactures and
distributes an extensive range of plastic packaging products achieving
annualised revenues of more than R1,8 billion. The Group has manufacturing
facilities in all the main centres of South Africa and a joint venture in
Mauritius and employs more than 3 000 people.
The operations are grouped into three divisions - Films, Rigids and Flexibles -
and service principally the pharmaceutical, personal care, food and beverage,
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 unitholdersThe Group remains focused on the innovation-led
growth in plastic packaging, which it believes will continue to gain an
increasing share of the packaging market, and plans to expand through continued
organic and acquisitive growth.
During the period under review the Group evaluated numerous acquisition
opportunities and concluded the acquisition of Hilfort Plastics (Pty) Limited
("Hilfort").
Financial resultsThe financial results for the period included the effects of
continued growth in consumer spending, increased raw material input costs, the
receipt of a R125m cash investment as the final payment of the black economic
empowerment transaction concluded with Royal Bafokeng Finance (Pty) Limited
("RBF") (a wholly owned subsidiary of the Royal Bafokeng Nation), and of the
implementation of International Financial Reporting Standards ("IFRS").
Turnover for the period increased by 17% over the prior year. The acquisition of
Hilfort accounted for 6%, volume growth 6% and raw material related price
increases of 5%.
EBITDA increased to R145,4m (R123m), which included the IFRS effect of expensing
share-based payments and straight lining of lease costs, representing an
absolute increase of 18,2% and an EBITDA margin of 16,3% (16,1%). The
depreciation charge for the year was favourably influenced by the implementation
of IFRS that required that fixed assets be written off over their useful lives.
This resulted in an ongoing reduction to depreciation of R6m. The resultant
trading income was R100,0m (R79,6m), an increase of 25,6% over the prior year
and yielding a margin of 11,2%. On a like-for-like basis (excluding the effects
of depreciation reductions) trading income increased by 17,7% over the prior
year with a margin of 10,5% (10,5%).
The receipt of cash for linked units from RBF reduced net interest bearing debt
and consequently interest paid reduced to R14,8m (R21,6m).
The provision for taxation increased to R19,7m (R13,6m) on account of the
increased secondary tax on companies as a result of the enhanced ordinary
dividends paid in May 2005 and the consolidation of Hilfort. The Group"s
effective taxation rate was 24,3% (22,6%).
Cash flows from the Group"s operations, together with the cash from RBF,
facilitated the following capital outflows:
* The acquisition of 100% of Hilfort for a maximum consideration of R85m. R55m
thereof was paid in May 2005. The remainder of the purchase price is subject to
a profit warranty to February 2006;
* The purchase of the remaining 5% of Master Plastics (Pty) Limited for R12,3m;
* The purchase of the remaining 2,5% of Thermopac (Pty) Limited for R2,9m;
* The purchase of 2,6m Astrapak linked units for R31,0m; and
* R109,9m on capital expenditure, mainly for capacity enhancing projects.
The resultant effect on net interest bearing debt was a reduction of R107,5m
from R246,8m to R139,2m. The net interest bearing debt to equity ratio reduced
from 71% to 22%.
Headline earnings per linked unit ("HEPLU") increased by 11% over the prior year
to 54,0 cents (48,7 cents). The dilutionary effect of the additional 27m linked
units issued to RBF was partly offset by the net IFRS adjustments.
ProspectsDemand for packaging remains good in the local market as a result of
consumer spending patterns and current interest rates.
The sustained high oil price has had an effect on results during the period and
the Group remains committed to minimising the effect of raw material price
increases to customers and ultimately consumers by focusing on cost extraction
and efficiency improvements on a continuous basis.
The Group is well placed to continue funding further growth within the plastic
packaging environment.
Post balance sheet eventsAstrapak acquired 60% of Consupaq (Pty) Limited for
R22,8m on 1 September 2005. Consupaq specialises in the manufacture of plastic
tubes and injection moulded jars for the personal care, pharmaceutical and
cosmetic industries.
Astrapak acquired the remaining minority interest (2%) in Barrier Film
Converters (Proprietary) Limited.
JSE Limited ("JSE") Listings RequirementsThe directors of the Company ensured
compliance with the JSE Listings Requirements during the year under review.
Basis of accountingThe Group has adopted IFRS for the year ended 28 February
2006. These interim results have been prepared and presented in accordance with
IAS 34 - Interim Financial Reporting.
The annual financial statements for the year ended 28 February 2006 will be the
Group"s first consolidated IFRS-compliant financial statements and hence IFRS 1
- First Time Adoption of IFRS has been applied in preparing these interim
results.
Accounting policiesThe accounting policies as set out in the 2005 annual report
have been consistently applied in producing these results, except for the
significant changes to the Group"s accounting policies as a result of the
adoption of IFRS as detailed below.
Comparative figures have been restated where applicable as required by IFRS and
are reflected as "unaudited" as the adjustments have not been audited by the
Company"s external auditors.
Significant changes to the Group"s accounting policies as a result of the
adoption of IFRS
Property, plant and equipmentIn terms of IAS 16 - Property, Plant and Equipment,
no adjustments have been made to the prior year"s results, as the adjustment to
the residual values and the component approach of depreciating assets was
considered immaterial.
For the period under review, the Group reviewed the useful life of all
categories of property, plant and equipment that resulted in a reduction in the
depreciation cost of R6,3m. The change in accounting estimate is expected to
benefit the Group on an ongoing basis into the foreseeable future.
The useful life of the assets will be reviewed on a continuous basis and
adjustments will be made accordingly.
GoodwillAll business combinations are accounted for by applying the "purchase
method". Goodwill represents amounts arising on acquisitions of subsidiaries. In
respect of business combinations that have occurred since the IFRS transition
date, 1 March 2004, goodwill represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets and contingent
liabilities acquired.
The Group has made an election in terms of IFRS 1 that IFRS 3 will only be
applied from 1 March 2004. In respect of acquisitions prior to this date,
goodwill is included as at 1 March 2004 at the amount previously reported under
South African Statements of Generally Accepted Accounting Practice. The
classification and accounting treatment of business combinations that occurred
prior to 1 March 2004 has not been reconsidered in preparing the Group"s opening
IFRS balance sheet at 1 March 2004.
From 1 March 2004, goodwill is stated at cost less accumulated impairment
losses. Goodwill is allocated to cash-generating units and is no longer
amortised, but tested annually for impairment.
Previously, goodwill arising on each acquisition was amortised over its useful
life on a straight-line basis.
Share-based payment transactionsThe fair value of share options granted to
employees is recognised as an employee expense with a corresponding increase in
equity - capital reserves. The fair value is measured at grant date and expended
over the period during which the employee becomes unconditionally entitled to
the equity instruments (the vesting period). The fair value of the instruments
granted is measured using the Black Scholes valuation methodology, taking into
account the terms and conditions upon which the instruments are granted. This
accounting policy has been applied to all equity instruments granted after 7
November 2002 that had not yet vested by 1 March 2005. The fair value of share-
based payments was not recognised under the Group"s previous accounting results.
Straight lining of operating lease paymentsPayments due under operating leases
are recognised in the income statement on a straight-line basis over the term of
the lease.
Past practice, whereby operating lease payments were expended on a payments
basis, was based on an interpretation that was generally used by entities in
South Africa. This interpretation considered the contractual payments basis as
being most representative of the time pattern of the entity"s benefit obtained
from the leased property. The global spotlight has led to the view that the
entity is obliged to adopt the straight-line basis of accounting for all
operating lease payments. The adjustment has been made as required by IAS 8 with
the necessary restatement of comparative results.
Future developments under IFRSThese financial results have been prepared on the
Group"s expectation of standards that will be applicable at 28 February 2006,
being the first time that the Group will prepare financial statements under
IFRS. Changes to the information presented in this report may be required due to
one or more of the following reasons:
* Further standards and interpretations may be issued that could be applicable
to the financial year ending 28 February 2006;
* Interpretations may differ as practice develops; and
* Tax legislation and tax related interpretation might develop further.
Distribution to linked unitholdersA provision for debenture interest of R4m has
been made, which approximates the average prime rate of interest for the six
months ended 31 August 2005. Debenture interest for the full year ending 28
February 2006 will be declared and is payable in May 2006.
AcknowledgementsThe Board would like to express its appreciation to management
and staff for their efforts during the period, which has been a significant
factor in the results achieved by the Group.
For and on behalf of the Board
R Crewe-Brown H A Todd Sandton(Chief Executive
Officer) (Financial Director) 26 October 2005
RIGIDS DIVISION* Cinqpet* Cinqplast Plastop* Hilfort Plastics
* JJPrecision Plastics* Marcom Plastics* PAK 2000* Plastop (KwaZulu-Natal)*
Thermopac
FILMS DIVISION* Barrier Film Convertors* City Packaging
* East Rand Plastics* International Edgeboard Technologies* International Tube
Technologies* Packaging Consultants* Pack-Line Holdings* Peninsula Packaging*
Tristar Plastics
FLEXIBLES DIVISION* Astrapak Flexible* Astraflex* Astra Repro* Diverse Labelling
Consultants* Knilam Packaging* Saflite (Cape)* Standard Labels (Mauritius)*
Tamperpak
Registered Office:1st Floor Wierda Court,Johan Avenue, Wierda Valley, Sandton.PO
Box 652740, Benmore, 2010.South Africa. Tel: ++27 11 784 5577/8/9Fax: ++27 11
784 1569.
Board of directors:R A Upton* (Chairman)R Crewe-Brown (Chief Executive Officer)M
Baglione, RT Dalais*, PC Botha*,C Molefe*, T Kgage*
WJ Venter, G Petzer, HA Todd, M Diedloff
*Non-executive
Registrar:Computershare Investor Services 2004 (Pty) LimitedGround Floor, 70
Marshall Street, Johannesburg, 2001.PO Box 61051, Marshalltown, 2107
Website: www.astrapak.co.za
Date: 26/10/2005 07:05:49 AM Produced by the JSE SENS Department
