Wrap Text
APK/APKP - Astrapak Limited - Unaudited results for the six months ended 31
August 2011
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 RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2011
Commentary
Overview
The consumer economy remains under pressure and demand has softened in a
number of markets served by Astrapak ("the Group"). Faced with these
challenges customers have continued to exert pressure on pricing and
competition among converters has been fierce.
The Group was also negatively impacted by industry wide strikes during July
2011. This was followed by industrial action at a number of the Group`s major
customers during July and August that resulted in limited or no deliveries to
these customers. The industrial action impacted 80% of the Group`s operations
and lasted approximately 10 working days, resulting in lower than anticipated
revenues and profits during this period.
On a more positive note, the end of the reporting period saw the arrival of a
number of the capital items that form part of the Flexible investment
project. At the date of reporting, commissioning of these items was well
under way at numerous businesses and testing and trialling is at an advanced
stage. The remaining capital items are expected to be received and
commissioned by the end of November 2011. We remain confident that these
investments will improve the prospects for the Flexible Division and the
Group as a whole into the future.
In addition, a number of growth projects, which were previously delayed due
to both internal and external factors, have now commenced and a positive
impact should be expected during the second half of the financial year.
Financial results
For the period ended 31 August 2011, reported turnover, at R1,30 billion
(2010: R1,35 billion), decreased by 3,6% against the comparative period. The
decrease in turnover was mainly as a result of a 5,5% decline in volumes,
which can largely be attributed to the industrial action during the month of
July 2011.
The financial results continue to reflect the increased cost of operations,
primarily related to energy, labour and distribution
costs. Astrapak has placed increased emphasis on managing and removing costs
as input price increases are difficult to pass on in this competitive market.
The resulting gross profit decreased by 4,1% to R254,7 million (2010: R265,5
million). Costs associated with selling, administration and distribution
overheads totalled R185,5 million (2010: R199,6 million) representing a
decrease of 7,1% over the comparative period. This reduction is largely a
result of a concerted effort by management to reduce costs in light of top
line pressures, but also reflects some lower costs associated with lost
revenues during the industrial action.
The Group benefitted from further improvements to net interest paid, which
reduced by 11,2% to R13,4 million (2010: R15,1 million).
This was achieved despite subdued operational performance, increased capital
investment and difficult working capital conditions.
Taxation amounted to R18,6 million (2010: R17,6 million) and includes the
payment of Secondary Taxation on Companies ("STC") of R2,3 million. The
effective tax rate was 32,0% (2010: 31,6%) or approximately 28% after
correcting for STC.
HEPS from continuing operations increased by 3,4% to 24,4 cents (2010: 23,6
cents), while fully diluted HEPS from continuing operations increased by 3,9%
to 24,0 cents (2010: 23,1 cents).
Capital expenditure incurred was R110,5 million (2010: R129,7 million) and
included investments in the Flexible Division as well as a number of growth
projects. The benefits of both will be seen towards the end of the current
financial year once the items of plant have been delivered and commissioned.
Gearing, measured by net interest-bearing debt to equity, decreased from
40,2% in the prior year to 39,1%, while net debt increased to R406,0 million
(2010: R383,5 million). Management will continue to focus on cash generation
and prudent capital allocation as well as improved treasury and working
capital management.
Working capital management has been complicated by polymer supply issues and
customers continuing to extend payment terms. The investment in net working
capital increased by 7,6% to R351,3 million from R326,4 million at the end of
February 2011. This represents a 49,3 day net working capital cycle compared
to 41,5 days at the end of February 2011. The target for the Group remains 37
days despite the more difficult trading conditions and various strategies
have been implemented to reduce actual working capital days to more
acceptable levels.
Changes to the Board of Directors
No changes to the Board occurred during the reported period.
Subsequent events
There have been no material subsequent events and no material change in the
Group`s contingent liabilities since the 31st of
August 2011.
Prospects
The Group expects that the challenging market conditions will remain over the
next six months. As such, management will continue to drive the strategic
objectives with an immediate focus on extracting value from the investments
in the Flexible Division and improving returns on the Group`s asset base.
Acknowledgements
The Board would like to express its appreciation to all its stakeholders for
their commitment, efforts and support during the past financial year.
For and on behalf of the Board
Marco Baglione M Diedloff
(Chief Executive Officer) (Chief Financial Officer)
Denver
30 September 2011
Condensed consolidated statement of comprehensive income
Audited
Unaudited Unaudited financial
six months six months year
ended ended ended
% 31 August 31 August 28 February
(R`000) Notes change 2011 2010 2011
CONTINUING
OPERATIONS
Revenue 8 (3,6) 1 300 437 1 349 220 2 705 377
Cost of sales (1 045 756) (1 083 769) (2 129 876)
Gross profit (4,1) 254 681 265 451 575 501
Distribution (99 831) (102 021) (205 687)
and selling
costs
Administrative (85 683) (97 555) (177 990)
and other
expenses
Other items of 2 298 4 891 (1 527)
income and
expenditure
Profit from 9 1,0 71 465 70 766 190 297
operations
Investment 3 837 4 551 24 531
income
Finance costs (17 216) (19 610) (56 306)
Profit before 4,3 58 086 55 707 158 522
taxation
Taxation (18 603) (17 583) (49 080)
Profit for the 3,6 39 483 38 124 109 442
period from
continuing
operations
DISCONTINUED
OPERATIONS
Profit for the 10 (100,0) - 211 360
period from
discontinued
operations
Total 3,0 39 483 38 335 109 802
comprehensive
income for the
period
Attributable
to:
Ordinary 1,0 29 134 28 854 88 340
shareholders
of the parent
- Profit for 29 134 28 643 87 980
the period
from
continuing
operations
- Profit for - 211 360
the period
from
discontinued
operations
Preference
shareholders
of the parent 5 444 6 096 11 527
Non- 4 905 3 385 9 935
controlling
interest
Total 3,0 39 483 38 335 109 802
comprehensive
income for the
period
Earnings per 11 0,4 24,2 24,1 73,7
ordinary share
(cents)
- continuing 1,3 24,2 23,9 73,4
operations
- (100,0) - 0,2 0,3
discontinued
operations
Fully diluted 11 0,8 23,8 23,6 71,9
earnings per
ordinary share
(cents)
- continuing 1,7 23,8 23,4 71,6
operations
- (100,0) - 0,2 0,3
discontinued
operations
Preference 5 444 6 096 11 527
dividend paid
and accrued
Preference 362,90 406,40 768,50
dividend per
preference
share (cents)
Reconciliation of headline earnings
Audited
Unaudited Unaudited financial
six months six months year
ended ended ended
% 31 August 31 August 28 February
(R`000) Notes change 2011 2010 2011
Profit for the 1,0 29 134 28 854 88 340
period
contributable
to ordinary
shareholders
- continuing 29 134 28 643 87 980
operations
- discontinued - 211 360
operations
Headline
earnings
adjustments
- IAS 39: Loss
on exercise of
options 20 - 190
- IAS 27: - - (27)
Profit on
disposal of
subsidiary
- IAS 16:
Loss/(profit)
on disposal of
property,
plant and
equipment 420 (411) (98)
- Total tax (116) 47 28
effect of
adjustments
- Total non- (52) 14 61
controlling
interest share
of adjustments
Headline
earnings
attributable
to ordinary
shareholders 3,2 29 406 28 504 88 494
- continuing 3,9 29 406 28 293 88 134
operations
- discontinued (100,0) - 211 360
operations
Headline 11 2,5 24,4 23,8 73,8
earnings per
ordinary share
(cents)
- continuing 3,4 24,4 23,6 73,5
operations
- discontinued (100,0) - 0,2 0,3
operations
Fully diluted
headline
earnings per
ordinary share
(cents) 11 3,0 24,0 23,3 72,0
- continuing 3,9 24,0 23,1 71,7
operations
- discontinued (100,0) - 0,2 0,3
operations
Condensed consolidated 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 2011 2010 2011
Assets
Non-current 4,5 1 301 316 1 244 887 1 262 666
assets
Property, 2 1 089 905 1 033 159 1 053 330
plant and
equipment
Deferred 16 696 18 907 17 144
taxation
Goodwill and 149 700 149 700 149 700
trademarks
Loans and 3 45 015 43 121 42 492
investments
Current assets 6,3 856 272 805 638 885 654
Inventories 4 294 720 262 027 290 003
Trade and 511 113 479 882 511 007
other
receivables
Cash and cash 5 50 439 63 729 84 644
equivalents
Assets 6 - - -
classified as
held for sale
Total assets 5,2 2 157 588 2 050 525 2 148 320
Equity and
liabilities
Total equity 8,7 1 082 780 996 075 1 080 544
Equity 894 651 826 420 898 083
attributable
to ordinary
shareholders
of the parent
Preference 142 590 142 590 142 590
share capital
and share
premium
Non- 45 539 27 065 39 871
controlling
interest
Non-current (2,2) 444 705 454 822 417 195
liabilities
Long-term 285 423 307 331 257 892
interest-
bearing debt
Long-term 3 261 5 598 1 671
financial
liabilities
Deferred 156 021 141 893 157 632
taxation
Current 5,1 630 103 599 628 650 581
liabilities
Trade and 454 532 454 618 474 578
other payables
Shareholders
for preference
dividends 4 509 5 096 8 994
Short-term 171 062 139 914 167 009
interest-
bearing debt
Liabilities 6 - - -
relating to
assets held
for sale
Total equity 5,2 2 157 588 2 050 525 2 148 320
and
liabilities
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited
six six financial
months months year
ended ended ended
31 August 31 August 28 February
(R`000) Notes 2011 2010 2011
Opening balance 1 080 544 991 335 991 335
Comprising of:
Ordinary share capital 199 502 199 502 199 502
and premium
Retained income 834 278 778 704 778 704
Capital reserve 7 16 707 9 832 9 832
Non-controlling put (1 671) (20 044) (20 044)
options
Treasury shares (150 733) (152 197) (152 197)
Equity attributable to 898 083 815 797 815 797
ordinary shareholders
of the parent
Preference share 142 590 142 590 142 590
capital and premium
Non-controlling 39 871 32 948 32 948
interest
Movements:
Total comprehensive 39 267 38 335 109 802
income
Ordinary dividends (31 863) (35 676) (36 644)
paid
Preference dividends (5 444) (6 096) (11 527)
paid
Contributions made by 763 189 11 236
non-controlling
interest
Acquisition of non- - (10 370) (10 370)
controlling interest
Exercise of put - 10 000 10 000
options by non-
controlling interest
shareholders
Adjustment of fair
value of put options (1 590) 4 446 8 373
Reduction in treasury 1 603 - 1 655
shares due to exercise
of options
Incentive scheme - - (191)
movements
Share-based expense (716) 3 912 6 875
for the period
Closing balance 1 082 564 996 075 1 080 544
Comprising of:
Ordinary share capital 199 502 199 502 199 502
and premium
Retained income 831 332 770 969 834 278
Capital reserve 7 16 875 13 744 16 707
Non-controlling put (3 261) (5 598) (1 671)
options
Treasury shares (150 013) (152 197) (150 733)
Equity attributable to 894 435 826 420 898 083
ordinary shareholders
of the parent
Preference share 142 590 142 590 142 590
capital and premium
Non-controlling 45 539 27 065 39 871
interest
Total equity 1 082 564 996 075 1 080 544
Condensed consolidated 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 2011 2010 2011
Cash generated (2,5) 138 316 141 816 337 655
from operations
Increase in (17 614) (10 699) (51 938)
working capital
Non-cash 420 411 98
transactions
Net financing (40 400) (45 316) (73 982)
costs and
taxation paid
Net cash inflow (6,4) 80 722 86 212 211 833
from activities
before
distributions to
shareholders
Dividend (41 792) (41 957) (44 055)
distribution to
all shareholders
Net cash inflow
from operating
activities (12,0) 38 930 44 254 167 778
Capital (110 496) (129 724) (223 146)
expenditure
Net movement of (1 760) (17 213) (2 546)
investments,
subsidiaries and
non-controlling
interests
Proceeds on the - 4 037 -
disposal of
assets held for
sale
Proceeds on the 6 647 2 892 3 559
disposal of
property, plant
and equipment
Net cash outflow (105 609) (140 008) (222 133)
from investing
activities
Net cash 32 474 19 060 (1 423)
inflow/(outflow)
from financing
activities
Net decrease in (34 205) (76 693) (55 778)
cash and cash
equivalents
Net cash and cash 84 644 140 422 140 422
equivalents at
the beginning of
the period
Net cash and cash 5 (20,9) 50 439 63 729 84 644
equivalents at
the end of the
period
Condensed consolidated segmental analysis
Total
continuing
(R`000) Rigids Flexibles operations
Revenue for segment 2011 771 574 632 456 1 404 030
2010 754 013 702 370 1 456 383
Transactions with other 2011 (62 121) (41 472) (103 593)
operating segments of the
Group
2010 (54 269) (52 894) (107 163)
Revenue for external 2011 709 453 590 984 1 300 437
customers
2010 699 744 649 476 1 349 220
Profit from operations 2011 67 239 4 226 71 465
(segment result)
2010 63 383 7 383 70 766
Total assets 2011 1 179 463 978 125 2 157 588
2010 959 635 1 090 890 2 050 525
Total liabilities 2011 520 649 554 159 1 074 808
2010 349 176 705 274 1 054 450
Capex 2011 70 430 40 066 110 496
2010 92 454 37 270 129 724
Depreciation 2011 44 961 21 894 66 855
2010 46 402 22 013 68 415
Condensed consolidated segmental analysis (continued)
Discon-
tinued Total
(R`000) operations Group
Revenue for segment 2011 - 1 404 030
2010 21 338 1 477 721
Transactions with other 2011 - (103 593)
operating segments of the
Group
2010 (3 921) (111 084)
Revenue for external 2011 - 1 300 437
customers
2010 17 417 1 366 637
Profit from operations 2011 - 71 465
(segment result)
2010 211 70 977
Total assets 2011 - 2 157 588
2010 - 2 050 525
Total liabilities 2011 - 1 074 808
2010 - 1 054 450
Capex 2011 - 110 496
2010 - 129 724
Depreciation 2011 - 66 855
2010 - 68 415
Supplementary information
Unaudited Unaudited Audited
six six financial
months months year
ended ended ended
31 August 31 August 28 February
2011 2010 2011
Number of ordinary shares in 135 131 135 131 135 131
issue (`000)
Weighted average number of 120 333 119 809 119 928
ordinary shares in issue
(`000)
Fully diluted weighted 122 520 122 312 122 909
average number of ordinary
shares in issue (`000)
Number of preference shares 1 500 1 500 1 500
in issue (`000)
Net asset value per share 862 809 868
(cents)
Net tangible asset value per 737 684 743
share (cents)
Closing share price (cents) 837 810 890
Closing price to net asset
value per ordinary share 1,0 1,0 1,0
Closing price to net tangible 1,1 1,2 1,2
asset value per ordinary
share
Market capitalisation (R 1 131,1 1 094,6 1 202,7
million)
Net interest-bearing debt as 39 40 33
a percentage of equity (%)
Net debt 406 046 383 516 340 257
Long-term interest-bearing 285 423 307 331 257 892
debt
Short-term interest-bearing 171 062 139 914 167 009
debt
Cash resources (50 439) (63 729) (84 644)
Interest cover 5,2 4,7 6,0
Net working capital days 49,3 37,9 41,5
Contingent liabilities 6 564 4 646 8 077
Number of employees 4 484 4 052 4 450
- continuing operations 4 484 3 988 4 450
- discontinued operations - 64 -
Earnings before interest, 138 320 138 664 331 118
taxation, depreciation and
amortisation ("EBITDA") -
continuing operations
Earnings before interest, 138 320 139 180 331 783
taxation, depreciation and
amortisation ("EBITDA") -
total group
Earnings before interest, - (516) 665
taxation, depreciation and
amortisation ("EBITDA") -
discontinued operations
Abbreviated notes for the six months ended 31 August 2011
1. Basis of preparation and accounting policies
These condensed consolidated results for the six months ended 31 August 2011
are prepared in accordance with recognition and measurement requirements of
International Financial Reporting Standards ("IFRS"), the AC 500 standards as
issued by the Accounting Practices Board and the information as required by
IAS 34: Interim Financial Reporting and the Companies Act, Act No.71 of 2008
of South Africa. These results have been prepared under the supervision of
the Chief Financial Officer, M Diedloff.
The principal accounting policies and methods of computation adopted are
consistent with those applied for the year ended 28 February 2011.
Unaudited Unaudited Unaudited
six six financial
months months year
ended ended ended
31 August 31 August 28 February
(R`000) 2011 2010 2011
2. Property, plant and
equipment
Opening net carrying amount 1 053 330 974 331 974 331
Additions 110 496 129 724 223 144
Disposals (7 067) (2 481) (3 461)
Depreciation (66 855) (68 415) (140 684)
Closing net carrying amount 1 089 905 1 033 159 1 053 330
Capital expenditure for the 125 254 129 724 223 144
period
Capital commitments
- contracted not spent 46 525 40 129 92 060
- authorised not contracted 6 132 8 790 22 921
The Group`s property
portfolio has a carrying
value of R141 million and a
current market value of R270
million. These properties are
of strategic value to the
Group due to their locations.
3. Loans and investments
Investment in Really Useful - 2 934 -
Investments (Pty) Ltd
Vendor loan to Afripack 45 003 40 175 42 480
Consumer Flexibles (Pty) Ltd
in terms of Flexibles
disposal transaction
Unlisted investments 12 12 12
Loans and investments at end 45 015 43 121 42 492
of the period
4. Inventories
Inventories amounting to
R1404 011 (Feb 2011: R1 604
652) are carried at net
realisable value.
5. Cash and cash equivalents
Cash and cash equivalents 120 279 126 146 102 898
Bank overdrafts (69 840) (62 417) (18 254)
Net cash and cash equivalents 50 439 63 729 84 644
at the end of the year
6. Assets held for sale and
liabilities relating to
assets held for sale
The sale of International
Tube Technology (Pty) Limited
and International Edgeboard
Technology (Pty) Limited was
concluded in the prior year
on the 23 July 2010.
Assets held for sale/sold
consists of the following:
Opening balance as at 1 March - 11 381 11 381
Assets of ITT disposal group - (11 381) (11 381)
disposed (effective date of
transaction 23 July 2010)
Assets held for sale at the - - -
end of the period
Liabilities relating to
assets held for sale/sold
consists of the following:
Opening balance as at 1 March - 8 076 8 076
Liabilities relating to - (8 076) (8 076)
disposal group classified to
held for sale
Liabilities relating to - - -
assets held for sale at the
end of the period
7. Capital reserve
The capital reserve relates
to employee share options
valued using the Black
Scholes method and the cash
financed stock plan.
8. Revenue
Revenue for the Group 1 404 030 1 456 383 2 955 483
Transactions with other (103 593) (107 163) (250 106)
entities within the Group
Revenue for external 1 300 437 1 349 220 2 705 377
customers
Volume (in `000 tons) 44 513 47 105 99 366
9. Profit from operations
Profit from operations are
arrived at after taking the
following into account:
Net loss/(profit) on disposal 420 (411) (98)
of property, plant and
equipment
Depreciation 66 855 68 415 140 684
Net loss on exercise of share 20 - 190
options
10. Loss for the period from
discontinued operations
The Group disposed of
International Tube Technology
(Pty) Limited and
International Edgeboard
Technology (Pty) Limited in
the prior year.
The results of discontinued
operations is therefore
represented by the trading
results
of these entities for the
period being reported upon,
the loss realised upon the
disposal of the disposal
group and any losses
recognised on the
remeasurement of assets held
for sale.
Revenue - 17 417 17 417
Expenses - (17 206) (17 057)
Profit before taxation from - 211 360
discontinuing operations
Taxation - - -
Profit for the period from - 211 360
discontinued operations
The net cash flows incurred
by discontinued operations
for the period are
represented below:
Operating cash outflows - (3 842) (3 842)
Investing cash inflows - 397 397
Financing cash inflows - 1 082 1 082
Net decrease in cash and cash - (2 363) (2 363)
equivalents from discontinued
operations
11. Earnings per ordinary share and headline earnings per ordinary share -
basic and fully diluted
Earnings per ordinary share is 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 is 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
was generated.
Fully diluted earnings and headline earnings per ordinary share is 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 2011 and the date of this report.
Board of Directors: P Langeni* (Chair), M Baglione (Chief Executive Officer),
M Diedloff (Chief Financial Officer), P C Botha*, D C Noko*, K P Shongwe*, G
Z Steffens*
*Non-executive
Company Secretary: X Vabaza
Registered Office: 5 Kruger Street, Denver, 2011. PO Box 75769, Gardenview,
2047, South Africa. Tel +27 11 615 8011 Fax +27 11 615 9790
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Registrar: Computershare Investor Services (Pty) Ltd. Ground Floor, 70
Marshall Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107
Operating entities
Flexibles Division: Alex White, Barrier Film Converters, City Packaging, East
Rand Plastics, Knilam Packaging, Packaging Consultants, Peninsula Packaging,
Plusnet/Geotex, Saflite, Tristar Plastics, Ultrapak
Rigids Division: Cinqpet, Consupaq, Hilfort, JJ Precision Plastics, Marcom
Plastics, PAK 2000, Plastech, Plastform, Plastop, Plastop (KwaZulu-Natal),
Thermopac, Weener - Plastop
www.astrapak.co.za
Date: 30/09/2011 13:51:03 Supplied by www.sharenet.co.za
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