| Thu 4 May 2006, 9:06 | | Astrapak Limited - Reviewed Results For The Year E |
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APK
APK
Astrapak Limited - Reviewed Results For The Year Ended 28 February 2006
ASTRAPAK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/009169/06)
ISIN: ZAE000030938
Share Code: APK
REVIEWED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2006
- Revenue up 14%
- EBITDA up 17%
- Gearing down to 17%
- Attributable profit up 27%
- Headline earnings per linked unit up 8%
- Fully diluted headline earnings per linked unit up 13%
- Return on equity of 32%
- Distribution to linked unit holders up 32%
- 20% BEE shareholding completed
COMMENTARY
GROUP PROFILE - Astrapak Limited ("Astrapak" or "the Company" or "the Group"),
headquartered in Sandton, manufactures and distributes an extensive range of
plastic packaging products. 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 UNITHOLDERS - The 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 year under review the Group evaluated numerous acquisition
opportunities and projects. The Group concluded the acquisitions of Hilfort
Plastics Proprietary Limited ("Hilfort") and Consupaq Proprietary Limited
("Consupaq") as well as purchasing the remaining minority interests in Barrier
Films Proprietary Limited ("Barrier Films"), Master Plastics Proprietary Limited
("Master Plastics") and Thermopac Proprietary Limited ("Thermopac").
FINANCIAL RESULTS - The financial results for the year ended 28 February 2006
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 (Proprietary) Limited ("RBF") (a wholly- owned company of the
Royal Bafokeng Nation), and of the implementation of International Financial
Reporting Standards ("IFRS").
Turnover for the year increased by 14% over the prior year. Acquisitions
accounted for 7% of this growth, volume growth 5% and raw material-related price
increases 2%.
EBITDA increased to R323,8 m (R277,3 m) representing an absolute increase of 17%
and an EBITDA margin of 17,3% (16,8%). The resultant trading income was R221,7 m
(R182,7 m), an increase of 21,3% over the prior year and yielding a margin of
11,8% (11,1%).
Taxation increased to R36,9 m (R33,4 m). The Group"s effective taxation rate was
20% (22,5%) due to the utilisation of certain tax losses.
Cash flows from operations, together with the cash from RBF, facilitated the
following capital outflows:
- A part payment for the acquisition of Hilfort for R55 m;
- The acquisition of 60% of Consupaq for R23 m;
- The acquisition of the remaining minority interest"s in Master Plastics and
Thermopac for R15,3 m;
- The repurchase of 3,463 m Astrapak linked units for R40,8 m;
- A further investment into Barrier Films of R17,7 m; and
- R183,9 m (R155,2 m) on replacement and expansion capital expenditure.
The resultant effect on net interest bearing debt was a reduction of R30,0 m
from R152,1 m to R122,1 m. The net interest bearing debt to equity ratio reduced
from 30% to 17%.
Headline earnings per linked unit ("HEPLU") increased by 8% over the prior year
to 125,8 cents (116,5 cents). Fully diluted earnings per linked united increased
by 13% over the prior year
PROSPECTS - Demand for packaging in the local market remains encouraging as a
result of consumer spending patterns and current interest rates.
The sustained high oil price has had an effect on results during the year. The
Group remains committed to minimising the effect of raw material price increases
to customers and ultimately consumers by focussing 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 EVENTS - On 26 April 2006 the shareholders of Alex White
Holdings ("Alex White") approved the scheme of arrangement in terms of section
311 of the Companies Act (Act 61 of 1973), as amended, in respect of the firm
intention made by Astrapak to acquire the entire ordinary issued share capital
of Alex White. The implementation of the scheme is still subject to Competition
Commission approval, sanction by the High Court of South Africa and the
registration of the sanction order with the Registrar of Companies.
JSE LIMITED ("JSE") LISTING REQUIREMENTS - The directors of the Company ensured
compliance with the JSE Listings Requirements during the year under review.
BASIS OF ACCOUNTING - The Group has adopted IFRS for the year ended 28 February
2006. These 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 results.
ACCOUNTING POLICIES - The accounting policies as set out in the 2005 annual
report have been consistently applied in producing these results, except for the
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.
SIGNIFICANT CHANGES TO THE GROUP"S ACCOUNTING POLICIES AS A RESULT OF THE
ADOPTION OF IFRS AND OTHER RESTATEMENTS
PROPERTY, PLANT AND EQUIPMENT
The Group has restated the comparative information for the effects of adopting
IAS 16 - Property, Plant and Equipment.
For the year 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 R12 m. 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.
GOODWILL
All 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 TRANSACTIONS
The 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 year 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 PAYMENTS
Payments 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.
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 offices during normal office hours.
DISTRIBUTION TO LINKED UNITHOLDERS - Notice is hereby given that debenture
interest of 5,25 cents (6,2 cents) per linked unit totalling R7,1 m (R8,4 m)
will be paid. The interest payment approximates the average prime rate of
interest for the financial year ended 28 February 2006. In addition, Astrapak
will be paying an ordinary dividend of 24,75 cents (16,5 cents) per linked unit
totalling R33,4 m (R22,3 m) to linked unit holders for the year ended 28
February 2006. The total combined debenture interest and dividend distribution
will be 30,0 cents (22,7 cents) per linked unit totalling R40,5 m (R30,7 m)
Both distributions will be payable on Monday, 5 June 2006 to linked unit holders
recorded in the register on Friday, 2 June 2006. The last day to trade cum-
distribution will be Friday, 26 May 2006 and the linked units will commence
trading ex-distribution on Monday, 29 May 2006. Linked unit certificates may not
be dematerialised or rematerialised between Monday, 29 May 2006 and Friday, 2
June 2006, both days inclusive.
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 results achieved by the Group.
For and on behalf of the Board
R Crewe-Brown H A Todd Sandton
(Chief Executive Officer) (Financial Director) 4 May 2006
CONSOLIDATED INCOME STATEMENTS
Audited
Reviewed Previously
Actual Restated reported
(R"000) 2006 2005 2005
Revenue 1 873 962 1 650 227 1 650 227
Cost of sales 1 376 059 1 214 518 1 214 518
Gross profit 497 903 435 709 435 709
Other operating income 19 044 17 441 17 441
Distribution and selling costs 149 923 129 015 129 015
Administrative and other
expenses 148 884 145 060 142 424
Share of results of associates 3 530 3 619 3 619
Trading income 221 670 182 694 185 330
Exceptional item (1) - 12 783 12 783
Profit from operations 221 670 195 477 198 113
Investment income 3 665 2 416 2 416
Finance costs 40 865 49 428 49 428
Profit before taxation 184 470 148 465 151 101
Taxation 36 859 33 396 33 396
Profit for the period 147 611 115 069 117 705
Attributable to: -
Linked unit holders of the
parent 138 999 109 241 111 877
Minority interest 8 612 5 828 5 828
Profit for the period 147 611 115 069 117 705
(1) Exceptional item - 12 783 12 783
The exceptional item is made
up of: -
Gain on disposal of empowerment
shareholding in PAK 2000 - 9 171 9 171
Impairment of asset - (4 388) (4 388)
Profit on replacement of
destroyed plant and equipment - 8 000 8 000
Earnings per linked unit (cents) 122.5 121.0 123.8
Attributable income 116.6 114.8 117.6
Debenture interest 5.9 6.2 6.2
Prior to IFRS and other
adjustments earnings per
linked unit would have been
reflected as: 125.5 123.8
Earnings per linked unit - fully
diluted (cents) 111.8 105.5 107.9
Attributable income 105.9 99.3 101.7
Debenture interest 5.9 6.2 6.2
Weighted number of linked units
in issue (000"s) 119 187 95 158 95 158
Weighted number of linked units
in issue - fully diluted (000"s) 131 272 110 018 110 018
Reconciliation between profit
attributable to linked unit
holders of the parent income
and headline earnings
Profit attributable to equity
holders of the parent 138 999 109 241 111 877
Debenture interest 6 984 5 883 5 883
Amortisation of goodwill - 4 666 4 666
Net loss / (profit) on disposal
of property, plant and equipment 1 773 (5 381) (5 381)
Net profit after tax on disposal
of 25% investment in PAK 2000 - (9 171) (9 171)
Net loss / (profit) after tax on
exercise of options 2 289 (41) (41)
Net cost on impairment of assets - 4 388 4 388
Tax effect (71) 1 438 1 438
Attributable to minorities (2) (127) (127)
Headline earnings 149 972 110 896 113 532
Headline earnings per linked
unit (cents) 125.9 116.6 119.3
Attributable income 120.0 110.4 113.1
Debenture interest 5.9 6.2 6.2
Prior to IFRS and other
adjustments, headline earnings
per linked unit would have been
reflected as: 128.8 119.3
Headline earnings per linked
unit - fully diluted (cents) 114.3 100.9 103.2
Attributable income 108.4 94.6 97.0
Debenture interest 5.9 6.2 6.2
Reconciliation between trading
income and EBITDA
Trading income 221 670 182 694 185 330
Depreciation 102 070 89 963 89 963
Amortisation of intangibles 18 4 666 4 666
Earnings before interest,
taxation, depreciation and
amortisation (EBITDA) 323 758 277 323 279 959
CONSOLIDATED BALANCE SHEETS
Audited
Reviewed Previously
Actual Restated reported
(R"000) 2006 2005 2005
Assets
Non-current assets 764 323 571 967 568 237
Property, plant and equipment 615 821 480 971 477 241
Deferred taxation 41 017 32 111 32 111
Goodwill and trademarks 90 228 42 086 42 086
Loans and investments 17 257 16 799 16 799
Currents assets 690 916 540 561 540 561
Inventories 245 192 186 960 186 960
Trade and other receivables 301 268 255 377 255 377
Cash resources 144 456 98 224 98 224
Total assets 1 455 239 1 112 528 1 108 798
Equity and liabilities
Total equity 731 739 520 530 522 337
Share capital and share premium 199 502 84 437 84 437
Retained income 523 107 405 438 410 048
Non-distributable reserves 17 858 858
Capital reserve (2) 5 333 2 803 -
Treasury shares (79 450) (48 950) (48 950)
Ordinary shareholders" funds 648 509 444 586 446 393
Debentures 59 616 52 409 52 409
Equity attributable to linked
unitholders 708 125 496 995 498 802
Minority interest 23 614 23 535 23 535
Non-current liabilities 222 795 194 886 194 200
Long term interest-bearing debt 144 371 145 058 145 058
Deferred taxation 78 424 49 828 49 142
Current liabilities 500 705 397 112 392 261
Trade and other payables 372 271 285 930 281 079
Linked unitholders for debenture
interest 6 260 5 883 5 883
Short term interest-bearing debt 122 174 105 299 105 299
Total equity and liabilities 1 455 239 1 112 528 1 108 798
(2) Capital reserve
The capital reserve has arisen
due to the adoption of IFRS 2
and relates to employee share
options valued using the Black
Scholes method.
Additional information
Capital expenditure 183 863 155 173 155 173
Capital commitments
- contracted not spent 21 265 19 641 19 641
- authorised not contracted 20 998 4 245 4 245
Net asset value per linked
unit (cents) 594 522 524
Net tangible asset value per
linked unit (cents) 518 478 480
Net interest bearing debt as a
percentage of equity (%) 17 31 30
Net interest bearing debt 122 089 152 133 152 133
Long term interest-bearing debt 144 371 145 058 145 058
Short term interest-bearing debt 122 174 105 299 105 299
Cash resources (144 456) (98 224) (98 224)
ABRIDGED CONSOLIDATED CASH FLOW STATEMENTS
Audited
Reviewed Previously
Actual Restated reported
(R"000) 2006 2005 2005
Cash generated from operations 326 798 289 123 289 123
Decrease in working capital 2 816 3 367 3 367
Non cash transactions -
(profit) / loss on disposal
of assets and investments (1 773) (9 538) (9 538)
Net financing costs and taxation
paid (62 205) (80 437) (80 437)
Net cash inflow before
distribution to linked
unitholders 265 636 202 515 202 515
Interest and dividend
distribution to linked
unitholders (27 135) (13 049) (13 049)
Net cash inflow from operating
activities 238 501 189 466 189 466
Capital expenditure (183 863) (155 173) (155 173)
Acquisition of subsidiaries
and minority interests (121 034) (34 022) (34 022)
Proceeds on the disposal of
assets and investments 6 819 24 252 24 252
Cash outflow from investing
activities (298 078) (164 943) (164 943)
Net cash inflow / (outflow) from
financing activities 96 504 (8 214) (8 214)
Net increase in cash equivalents 36 927 16 309 16 309
RECONCILIATION OF PREVIOUS SA GAAP TO IFRS
Reviewed Restated
(R "000) 2006 2005
Balance sheet
Equity as previously reported -
SA GAAP 522 338 387 270
IFRS adjustments - -
Adoption of IFRS 2 - Introduction
of capital reserve in respect of
share-based payments 2 803 1 080
Adoption of IFRS 2 - Retained income effect
In respect of share-based payments (2 803) (1 080)
SA GAAP adjustments (1 808) (895)
Property, plant and equipment
depreciation adjustment 3 957 3 957
Straight-lining of operating
leases adjustment (5 765) (4 852)
Restated opening equity - IFRS 520 530 386 375
Income statement
Profit attributable to linked unit
holders of the parent - SA GAAP 142 579 111 878
IFRS adjustments (2 530) (1 723)
Adoption of IFRS 2 - retained income effect
in respect of share-based payments (2 530) (1 723)
SA GAAP adjustments (1 050) (914)
Straight-lining of operating leases
adjustment (1 479) (914)
Deferred tax impact on IFRS adjustments 429 -
Restated profit attributable to equity
holders of the parent - IFRS 138 999 109 241
RECONCILIATION OF MOVEMENT IN EQUITY AND RESERVES
(R "000) Share Non-
capital and Retained distri-
premium income butable Dividend
reserve reserve
Balance as at
1 March 2004 108 298 172 2 878 6 215
IFRS adjustments (1 975)
Restated balances at
1 March 2004 108 296 197 2 878 6 215
Net income for the
year 109 241
Net ordinary
dividends paid (6 215)
Adjustments to
minority interest
Decrease in foreign
currency translation
reserve (683)
Transfer to deferred
tax asset (1 337)
Acquisition of
treasury shares
Expensing of share
based payments for
the year
Issue of shares
at a premium 84 329
Issue of debentures
Restated balances at
28 February 2005 84 437 405 438 858 -
Net income for
the year 138 999
Net ordinary
dividends paid (21 330)
Adjustments to
minority interest
Decrease in foreign
currency translation
reserve 497
Transfer to deferred
tax asset (1 338)
Acquisition of
treasury shares
Expensing of share
based payments for
the year
Issue of shares
at a premium 115 065
Issue of debentures
Balances at
28 February 2006 199 502 523 107 17 -
RECONCILIATION OF MOVEMENT IN EQUITY AND RESERVES
(R "000) Capital Treasury Minority Total
reserve shares Debentures interests equity
Balance as at
1 March 2004 - (23 208) 47 804 55 301 387 270
IFRS adjustments 1 080 (895)
Restated balances
at 1 March 2004 1 080 (23 208) 47 804 55 301 386 375
Net income for
the year 5 828 115 069
Net ordinary
dividends paid (2 740) (8 955)
Adjustments to
minority interest (34 854) (34 854)
Decrease in foreign
currency translation
reserve (683)
Transfer to
deferred tax asset (1 337)
Acquisition of
treasury shares (25 742) (25 742)
Expensing of share
based payments
for the year 1 723 1 723
Issue of shares
at a premium 84 329
Issue of debentures 4 605 4 605
Restated balances
at 28 February
2005 2 803 (48 950) 52 409 23 535 520 530
Net income for
the year 8 612 147 611
Net ordinary
dividends paid (4 103) (25 433)
Adjustments to
minority interest (4 430) (4 430)
Decrease in foreign
currency translation
reserve 497
Transfer to
deferred tax asset (1 338)
Acquisition of
treasury shares (30 500) (30 500)
Expensing of share
based payments for
the year 2 530 2 530
Issue of shares at
a premium 115 065
Issue of debentures 7 207 7 207
Balances at
28 February 2006 5 333 (79 450) 59 616 23 614 731 739
SEGMENTAL ANALYSIS
(R"000) Films Rigids Flexibles Total
Revenue - 2006 809 752 739 535 324 675 1 873 962
Revenue - 2005 774 623 608 853 266 751 1 650 227
Trading income - 2006 63 261 116 017 42 392 221 670
Trading income - 2005 64 752 91 842 26 100 182 694
Depreciation - 2006 22 669 67 195 12 206 102 070
Depreciation - 2005 28 987 48 817 12 159 89 963
Capital expenditure - 2006 67 026 100 550 16 287 183 863
Capital expenditure - 2005 24 826 116 563 13 784 155 173
Total assets - 2006 629 997 627 047 198 195 1 455 239
Total assets - 2005 464 449 481 906 166 173 1 112 528
Total liabilities - 2006 370 103 240 553 112 844 723 500
Total liabilities - 2005 292 311 204 457 95 230 591 998
BOARD OF DIRECTORS: R A Upton* (Chairman), R Crewe-Brown (Chief Executive
Officer), M Baglione, R T Dalais*, P C Botha*, W J Venter G Petzer, H A Todd, M
Diedloff, T Kgage, C Molefe *Non-executive
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
- FILMS DIVISION: Barrier Film Converters - City Pack - East Rand Plastics -
Packaging Consultants - Pack-Line Holdings - International Edgeboard
Technologies - International Tube Technologies
- Peninsula Packaging - Tristar Plastics
- RIGIDS DIVISION: Cinqpet - Cinqplast Plastop- Hilfort - Consupaq
- JJ Precision Plastics - Marcom Plastics - PAK 2000 - Plastop (KwaZulu-Natal) -
Thermopac
- FLEXIBLES DIVISION: Astrapak Flexible - Astraflex - Astra Repro - Diverse
Labelling Consultants - Knilam Packaging
- Saflite - Standard Labels (Mauritius) - Tamperpak
Date: 04/05/2006 09:07:12 AM Produced by the JSE SENS Department
