Wrap Text
Unaudited interim results for the six months ended 31 August 2014
Astrapak Limited
Unaudited interim results for the six months ended 31 August 2014
(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 company“ or “the Group”)
Charting a new course
COMMENTARY
Strategic update
The period under review coincides with the conclusion of eighteen months of the Group’s two-year recovery time-frame objective.
While substantial expense items are being captured as part of the turnaround plan, from a financial strength
perspective the Group is in a much stronger position than it was at the commencement of the plan. The reported earnings do not,
as yet, reflect the extent of the transformative initiatives undertaken. However, the Group has been particularly
successful at conserving cash and bringing attention to detail in working capital management. These measures have given the
Group the platform to execute on its recovery plan without increasing the gearing levels within the Group or having to seek
further funding.
Measures implemented during the previous financial year placed the Group in a stronger position to rise to the
challenge of a weakening market as the period unfolded, score notable and strategic contract wins, and achieve selling price
recoveries.
A difficult trading environment, real or imagined, is no longer an excuse for hiding lack of competitiveness. As we move along
our business improvement journey we continue to identify areas of non-compliance to good business practices and, where this is
found, we hold individuals to account and take the required corrective actions.
In our previous report-back to shareholders we advised that while big changes were behind the Group we were not done
and other strategic options were under consideration, to be executed through the 2015 financial year. Four Rigids
businesses were up for review due to the changing market fundamentals, as were components of the PET portfolio.
The focus remains on optimising people and assets where Astrapak has scale and technological advantages in its core
chosen markets and where it has the credentials to engage with customers in a partnership of equals on fair and
sustainable terms. Any business that does not meet, or has no prospect of meeting, our criteria for future optimal returns will
not form part of the Astrapak portfolio.
The Group successfully achieved fair value in its disposal of PET convertor Hilfort Plastics Cape Town to Boxmore
Plastics SA Proprietary Limited, effective 14 July 2014. Retrenchment costs of R7,4 million associated with this have been
accounted for in the current results.
For accounting purposes, Cinqplast Denver is now treated as a discontinued operation and estimated closure costs have
provisionally been provided for. Consultations have commenced with affected stakeholders on the closure.
Consultations are also in progress to streamline operations in the Eastern Cape so as to eliminate loss-making product
lines and enable us to take on a strategically important multi-year contract from a leading international customer with
a personal care market focus.
The Flexibles reorganisation continues and there are now three sites of scale within focused sectors of the market.
Revenue has continued to decline by design as we eliminate low-margin turnover. These sites have recently received
BRC and food safety accreditations, important qualifications in fulfilling our business plans.
In line with the rationalisation, properties continue to be disposed of in an orderly manner and potential risks
associated with onerous leases successfully mitigated. In the prior period certain property leases were reclassified from
operational to financial leases to the benefit of net asset value.
Procurement and supply chain initiatives, spearheaded by a dedicated executive, are a work in progress that have
already delivered meaningful Group-wide benefits.
Specific administrative costs too are being trimmed as the manufacturing footprint is slimmed down to focus on
end-markets served from a base of operational scale benchmarked to internationally competitive standards. Shared services
that are common for Group effectiveness are being centralised and thus we are systematically eliminating divisional
duplication and improving control. The corporate office has been strengthened by the investment in vitally important skills and
our human resources and training and development functions have been enhanced to assist with culture change initiatives
and improvement of the operational skills base. While this results in a temporarily elevated expense level, this will
normalise as the Group is brought under control within the new structure.
Trading review
For the first four months of the current period the Group was tracking in line with budget and, other than once-off
costs associated with restructuring, such as retrenchments and impairments, profitable with a promising outlook.
Management was, however, conscious of an upset to this promising underlying picture posed by looming labour unrest that would
affect manufacturing businesses during July. Potential what-if scenarios were assessed.
Country-wide strikes in July in the metals and engineering and allied sectors followed on from the five-month
platinum-mining strike. This manufacturing sector strike action had a damaging impact on the Group. Intimidation, violence and
vandalism was widespread. The labour unrest, which was not limited to Astrapak or the industry, was among the worst that
the Group has experienced and resulted in Astrapak converting operations being badly affected and the majority unable to
function for almost the entire month.
The Astrapak management team implemented a number of contingency plans and successfully engaged with all relevant
parties. In certain instances, there was no alternative but to declare force majeure with a limited number of directly
affected customers.
Profitability was adversely impacted due to lost sales, productive downtime, significant underrecovery of costs and
increased costs associated with security and distribution. The direct financial cost to Astrapak associated with this
strike action is estimated to be R30 million and irrecoverable and thus substantially contributing to the Group loss for the
period under review.
A two-year wage settlement between the Plastics Convertors Association and other affected parties and unions had been
previously agreed, with implementation effective 1 July. Astrapak honoured this but was still subjected to strike
action. This agreement differs from that subsequently reached between other parties to end the strike and thus there is an
interim period of uncertainty.
Management will not let medium-term financial return and customer satisfaction objectives be adversely impacted and
downsizing actions were taken immediately following the strike action to protect the commercial
viability of certain operations while measures have been implemented to mitigate the impact of possible future such events.
A rising capital equipment-to-labour ratio is inevitable.
The unsettled labour situation in South Africa exacerbates an already weak economic situation, which has had
implications for consumer spending and capital investment by businesses. Some of our customers have delayed bringing on-stream
growth projects, and inventory rebuild has been slow after the strike.
Tenders and pricing in packaging areas with lower barriers to entry are exceptionally keen as converters seek volume
to keep up capacity even at the expense of return. In more capital intensive sectors of plastic packaging there is
assertive competition from established larger players.
But Astrapak is nonetheless well positioned with key customers in particular focus areas who are looking beyond
the prevailing difficult economic situation for growth. Within moulding and forming technologies, market sectors, such as
personal care and toiletries, automotive lubricants, household goods and food products, are relatively defensive but
require particular excellence and sophistication in manufacturing execution and a need for continued investment.
Two European manufacturing companies in Rigids are in the process of setting up operations in South Africa. This is a
development that is in sympathy with what certain multinational customers desire for longer-term partnerships and
commitment for production with an international rather than a purely parochial perspective. Astrapak’s strategy is precisely
aligned with this and prevailing competitive developments reinforce the correctness and timeliness of our course of
action.
Customer engagement is a top executive priority and invaluable to ensure the Group manages customer expectation in so
far as demand planning and forecasting is concerned and in being quick to respond when deficiencies or problems occur.
Astrapak Rigids’ net revenue increased by 11% to R862,2 million and accounted for 75% of the Group net revenue on a
continuing basis compared with 70% in the comparative period.
The Moulding Division, the largest within Astrapak Rigids, is a particular point of focus to ensure global best
practice in execution on key accounts. Targeted strategic capex was approved. Long-term supply contracts provide Astrapak with
certainty and create alignment between supplier and customer. Injection moulding equipment has been successfully
consolidated on one site in KwaZulu-Natal, while measures are under way to ensure our East London manufacturing capacity is
streamlined to accommodate an important multi-year contract with a major international personal care market customer.
Astrapak’s PET footprint has now been shrunk with the sale of Hilfort Plastics Cape Town and the remaining exposure
will continue to be reviewed.
The Forming Division is performing in line with expectation with an optimised throughput in two key fast-moving
consumer goods segments.
Astrapak Flexibles’ revenue continued to decline in line with the strategy to consolidate product range and footprint.
Flexibles’ revenue on a continuing basis and net of inter-group revenue declined by 14% to R283,7 million. As
previously communicated, a successful resolution of the fire insurance claim was necessary before a proper optimisation plan
could be executed and management is now working toward optimising returns on the revised asset base.
A disciplined approach to pricing and procurement has continued to yield benefits with respect to recovery on cost of
raw materials.
Financial review
The major qualitative improvements that have been under way through the Group have been costly but have not come at
the expense of the balance sheet, which remains sound, and are part of a deliberate change management strategy. If we
do not deliver superior quality products on time and at the right price to customers according to international, not
local, benchmarks we do not have a sustainable business model.
While the statutory reported earnings remain poor, with an attributable loss of R52,3 million and a headline earnings
loss of R40,1 million, there are nevertheless substantial clean-up costs associated with this together with the
unfortunate negative consequences of irrecoverable losses from strikes in July.
Costs relating to these strategic interventions and the strikes amount to R33,2 million and an estimated R30 million
respectively.
Group revenue from continuing operations increased by 3,5% to R1,15 billion. Polymer tonnage consumed in production
declined by 6,6% to 29 396 tonnes, largely a result of the downsizing of the Flexibles Division and elimination of
low-margin business.
Selling price per tonne in Rigids and Flexibles increased by 6% and 22% respectively, compared to the same six-month
period in the prior year. This was achieved against a backdrop of a 5% rise in volume for Rigids and a 29% decline in
Flexibles volume.
Gross profit declined by 13,5% to R186,6 million. As previously mentioned, clean-up costs negatively affected gross
profit, whilst procurement management yielded a positive pricing outcome.
Distribution and selling expenses increased by only 1% whilst administration and other costs are above the benchmark
and reflect the additional costs that are being incurred by the group to introduce the capacity required to execute the
recovery plan as well as a significant amount of costs relating to headcount restructuring and professional fees. The
process of trimming down these costs to within acceptable benchmarks as the turnaround progresses provides scope for
positive future earnings leverage. The reduction in other income largely reflects the high base as a result of prior
insurance reimbursement.
Consequently, profit before interest, tax depreciation and amortisation from continuing operations decreased by 58,3%
to R47,6 million compared to the restated comparative of R114,1 million. Profit margin declined to 4,2% from 10,3%.
The depreciation charge of R52,5 million is 6,2% higher.
Profit from continuing operations before exceptional items reflected a small loss of R4,9 million compared to a
restated profit of R64,6 million.
Net finance costs of R15,3 million equate to a PBITDA interest cover ratio of 3,1 times.
The after-tax loss from continuing operations, after exceptional costs of R7,7 million, was R22,9 million.
An after-tax loss of R21,1 million was recorded by the discontinued operations as represented by Hilfort Plastics Cape
Town and Cinqplast Denver.
Total loss attributable to ordinary shareholders is R52,3 million, equating to 43,2 cents per share of which 25,8
cents is attributable to continuing operations and 17,4 cents to the discontinued operations.
The headline loss from continuing operations attributable to ordinary shareholders is R24,6 million, equating to 20,3
cents per share. In the corresponding restated period headline earnings from continuing operations was R25,6 million,
equating to 21,2 cents per share.
Capital expenditure was R55,5 million and squares with our commitment to keep replacement investment in plant and
equipment in line with depreciation and carefully targeted within the strategic parameters previously communicated.
Net debt reduced from R342,6 million as at 28 February 2014 to R325,8 million as at 31 August 2014, a decline of R16,8
million. The debt to equity ratio was stable at 29,6% and in line with management objectives.
Cash generated from operations after retention of cash from working capital was R70,6 million. While the restated
comparative reflects a figure of R357,6 million this was distorted by insurance proceeds as provision for insurance proceeds
was previously reflected within accounts receivable.
As reflected in the statement of financial position, stock, debtors and creditors remain carefully managed. Net
working capital days have improved to 40 days as at 31 August 2014 from 53 days as at 31 August 2013, a significant
achievement.
Net asset value per share is 910 cents and tangible net asset value per share 818 cents.
Prospects
The financial results continue to reflect the costs and impact of business reengineering, together with the
substantial irrecoverable loss from strike action. Markets served remain soft and not helpful to operational performance, but the
big changes made by the Group place it in a far better medium- to long-term competitive position. Our efforts are paying
off in winning long-term supply contracts. We will not chase sales at the expense of return.
The second six months of the financial year ended 28 February 2015 mark the final phase of the turnaround. We have
some more tidying up to do, and with that is certain to come further costs.
The Group is on track to meet its medium-term return aspirations as previously disclosed.
Astrapak thanks its customers, suppliers and its key shareholders for their support and encouragement.
Changes to the Board
Resignations
Mr Sandile Ngwabi resigned as Company Secretary with effect from 29 August 2014.
Ms Gugu Duda resigned as a non-executive director with effect from 14 May 2014.
Appointments
Mr Manley Diedloff assumed responsibility as Chief Financial Officer effective 1 March 2014 and serves in this
capacity in addition to his role as Group Managing Director.
Mr Thabo Vincent Mokgatlha was appointed as an independent non-executive director to the Board and as a member of the
Audit and Risk Committees with effect from 21 July 2014.
Ms Vashnee Mahadeo was appointed as Company Secretary effective 29 August 2014.
Changes in shareholding
As at 29 August 2014, Coronation Asset Management Proprietary Limited and Regarding Capital Management Proprietary
Limited held 25,90% and 18,76% of Astrapak respectively compared with 28,97% and 14,3% respectively as at 28 February 2014.
Lereko Metier Capital Growth Fund remains the largest single shareholders with an unchanged holding of 29,92%.
Dividend
No ordinary dividend is declared. Recommencement of dividend payments to ordinary shareholders is an important goal
and payments will be determined by reference to the retention needs of the Company for maintenance and growth and in
relation to asset management.
Holders of preference shares continue to receive dividends in the normal course.
For and on behalf of the Board
Phumzile Langeni
Chairman
Robin Moore
Chief Executive
Manley Diedloff
Chief Financial Officer
Denver
26 September 2014
Condensed consolidated statement of comprehensive income
(R’000) Notes % Unaudited Restated Restated
change six months Unaudited Audited
ended six months financial year
31 August ended ended
2014 31 August 28 February
20131* 2014*
CONTINUING OPERATIONS
Revenue 9 3,5 1 145 946 1 107 117 2 300 728
Cost of sales (959 342) (891 473) (1 882 836)
Gross profit (13,5) 186 604 215 644 417 892
Distribution and selling costs (97 711) (96 330) (193 365)
Administrative and other expenses (108 678) (86 891) (204 205)
Other items of income and expenditure 14 838 32 197 38 325
(Loss)/profit from operations before exceptional items (107,7) (4 947) 64 620 58 647
Exceptional items 10 (7 653) (35 099) (51 132)
(Loss)/profit from operations 11 (142,7) (12 600) 29 521 7 515
Investment income 7 031 6 674 16 020
Finance costs (22 362) (20 285) (48 228)
(Loss)/profit before taxation (275,6) (27 931) 15 910 (24 693)
Taxation benefit/(expense) 5 019 (6 844) 7 256
(Loss)/profit for the period from continuing operations (352,7) (22 912) 9 066 (17 437)
DISCONTINUED OPERATIONS
Loss for the period from discontinued operations 12 21,5 (21 122) (26 897) (41 480)
Loss for the period (147,0) (44 034) (17 831) (58 917)
Other comprehensive loss - - (14 734)
Total comprehensive loss for the period (147,0) (44 034) (17 831) (73 651)
Attributable to:
Ordinary shareholders of the parent (52 319) (28 372) (96 393)
- Loss for the period from continuing operations (31 197) (1 475) (40 179)
Loss for the period from continuing operations before exceptional items (23 544) 33 624 10 953
Exceptional items (7 653) (35 099) (51 132)
- Loss for the period from discontinued operations (21 122) (26 897) (41 480)
- Revaluation of land and buildings (net of tax) - - (14 734)
Preference shareholders of the parent 6 005 5 682 11 362
Non-controlling interest 2 280 4 859 11 380
Total comprehensive loss for the period (147,0) (44 034) (17 831) (73 651)
Loss per ordinary share (cents) 13 (84,4) (43,2) (23,4) (67,5)
- continuing operations (2 050,0) (25,8) (1,2) (33,2)
- discontinued operations 21,6 (17,4) (22,2) (34,3)
Fully diluted loss per ordinary share (cents) 13 (84,1) (43,2) (23,4) (67,4)
- continuing operations (2 050,0) (25,8) (1,2) (33,2)
- discontinued operations 21,6 (17,4) (22,2) (34,2)
Preference dividend paid and accrued 6 005,0 5 682,0 11 362,0
Preference dividend per preference share (cents) 400,33 378,80 757,47
1 Restated for properties which were leased by the Group, where the Group had an option to purchase, has resulted in them being
classified as owned properties and as a result the prior year financial statements have been reclassified to take the full impact
of these properties into account. Refer to note 2.
* Restated for the classification of Cinqplast Denver and Hilfort Cape Town (both divisions of Astrapak Manufacturing Holdings
Proprietary Limited) as discontinued operations . Refer to notes 2 and 12.
Reconciliation of headline earnings
(R’000) Notes % Unaudited Restated Restated
change six months Unaudited Audited
ended six months financial year
31 August ended ended
2014 31 August 28 February
2013 2014
Loss for the period attributable to ordinary shareholders (84,4) (52 319) (28 372) (81 659)
- continuing operations (31 197) (1 475) (40 179)
- discontinued operations (21 122) (26 897) (41 480)
Headline loss adjustments
- Reversal of insurance proceeds - 23 333 23 333
- Impairment of property, plant and equipment 15 513 11 766 40 532
- Profit on disposal of property, plant and equipment (2 301) (1 277) (11 208)
- Profit on sale of business (2 265) - -
- Total tax effect of adjustments 1 281 (7 314) (10 928)
Headline loss attributable to ordinary shareholders (40 091) (1 864) (39 930)
- continuing operations (24 595) 25 626 (1 459)
- discontinued operations (15 496) (27 490) (38 471)
Headline loss per ordinary share (cents) 13 (2 106,7) (33,1) (1,5) (33,0)
- continuing operations (195,8) (20,3) 21,2 (1,2)
- discontinued operations 43,6 (12,8) (22,7) (31,8)
Fully diluted headline loss per ordinary share (cents) 13 (2 106,7) (33,1) (1,5) (32,9)
- continuing operations (195,8) (20,3) 21,2 (1,2)
- discontinued operations 43,6 (12,8) (22,7) (31,7)
Condensed consolidated statement of financial position
(R’000) Notes % Unaudited Restated Restated
change six months Unaudited Audited
ended six months financial year
31 August ended ended
2014 31 August 28 February
2013 2014
Assets
Non-current assets 3,8 1 420 319 1 368 951 1 446 435
Property, plant and equipment 3 1 183 535 1 164 505 1 225 125
Goodwill 110 776 117 118 117 118
Deferred taxation assets 69 902 27 932 46 868
Investments and loans 4 56 106 59 396 57 324
Current assets (22,0) 762 992 978 594 819 191
Inventories 5 256 473 307 749 289 491
Accounts receivable 451 001 493 792 460 211
Taxation receivable 6 788 7 214 6 820
Cash and cash equivalents 6 48 730 169 839 62 669
Assets classsified as held-for-sale 7 7 284 73 898 32 098
Total assets (9,5) 2 190 595 2 421 443 2 297 724
Equity and liabilities
Total equity (7,3) 1 161 326 1 252 150 1 214 748
Equity attributable to ordinary shareholders of the parent 958 585 1 055 528 1 014 517
Preference share capital and share premium 142 590 142 590 142 590
Non-controlling interest 60 151 54 032 57 641
Non-current liabilities (12,5) 447 195 510 983 452 721
Long-term interest-bearing debt 260 000 307 292 260 901
Long-term financial liabilities 904 5 441 904
Deferred taxation liabilities 186 291 198 250 190 916
Current liabilities (8,2) 582 074 633 783 617 284
Trade and other payables 458 373 479 161 464 080
Shareholders for preference dividends 4 019 4 179 4 022
Short-term interest-bearing debt 114 522 145 800 143 981
Taxation payable 5 160 2 109 4 812
Bank overdrafts 6 - 2 534 389
Liabilities relating to assets held-for-sale 7 - 24 527 12 971
Total equity and liabilities (9,5) 2 190 595 2 421 443 2 297 724
Condensed consolidated statement of changes in equity
(R’000) Notes Unaudited Restated Restated
six months Unaudited Audited
ended six months financial year
31 August ended ended
2014 31 August 28 February
2013 2014
Opening balance 1 214 748 1 309 914 1 309 914
Comprising:
Ordinary share capital and premium 199 502 199 502 199 502
Retained income 795 090 875 066 875 066
Capital reserve 8 20 980 20 523 20 523
Non-controlling put options (904) (5 441) (5 441)
Revaluation reserve 147 296 162 030 162 030
Treasury shares (147 447) (147 447) (147 447)
Equity attributable to ordinary shareholders of the parent 1 014 517 1 104 233 1 104 233
Preference share capital and premium 142 590 142 590 142 590
Non-controlling interest 57 641 63 091 63 091
Movements:
Loss for the period (44 034) (17 831) (58 917)
Preference dividend paid (6 005) (5 682) (11 362)
Acquisition of non-controlling interest - (36 000) (36 000)
Contributions made by non-controlling interest 931 1 054 (2 521)
Adjustment of fair value of put options - - 4 537
Capital gains taxation on disposal of revalued properties - - (5 319)
Reclassification from revaluation reserve to retained income 7 854 - -
Revaluation reserve (7 854) - 13 959
Share-based payment expense for the period (4 314) 695 457
Closing balance 1 161 326 1 252 150 1 214 748
Comprising:
Ordinary share capital and premium 199 502 199 502 199 502
Retained income 751 326 825 665 795 090
Capital reserve 8 16 666 21 218 20 980
Non-controlling put options (904) (5 441) (904)
Revaluation reserve 139 442 162 030 147 296
Treasury shares (147 447) (147 446) (147 447)
Equity attributable to ordinary shareholders of the parent 958 585 1 055 528 1 014 517
Preference share capital and premium 142 590 142 590 142 590
Non-controlling interest 60 151 54 032 57 641
Total equity 1 161 326 1 252 150 1 214 748
Condensed consolidated statement of cash flows
(R’000) Notes % Unaudited Restated Restated
change six months Unaudited Audited
ended six months financial year
31 August ended ended
2014 31 August 28 February
2013 2014
Cash generated from operations before working capital changes (39,6) 34 092 56 448 85 511
Decrease in working capital 36 521 301 167 338 887
Net interest and taxation paid (30 286) (26 342) (52 635)
Net cash inflow from activities before distributions to shareholders (87,8) 40 327 331 273 371 763
Dividend distribution to all shareholders (6 008) (6 543) (12 381)
Net cash inflow from operating activities (89,4) 34 319 324 730 359 382
Capital expenditure (55 482) (62 694) (208 950)
Net movement of investments, subsidiaries and non controlling interests 2 148 (37 936) (42 441)
Proceeds on disposal of property, plant and equipments 48 796 13 363 79 602
Net cash outflow from investing activities (4 538) (87 267) (171 789)
Net cash outflow from financing activities (43 331) (25 719) (80 874)
Net (decrease)/increase in cash and cash equivalents (13 550) 211 744 106 719
Net cash and cash equivalents at the beginning of the period 62 280 (44 439) (44 439)
Net cash and cash equivalents at end of the period 6 (70,9) 48 730 167 305 62 280
Condensed consolidated segmental analysis
(R’000) Rigids Flexibles Total Discon- Total
continuing tinued Group
operations operations
Revenue for segment 2014 932 271 290 642 1 222 913 107 238 1 330 151
2013 859 248 359 153 1 218 401 204 340 1 422 741
Transactions with other operating segments of the Group 2014 (70 032) (6 935) (76 967) (539) (77 506)
2013 (80 853) (30 431) (111 284) (6 713) (117 997)
Revenue for external customers 2014 862 239 283 707 1 145 946 106 699 1 252 645
2013 778 395 328 722 1 107 117 197 627 1 304 744
(Loss)/profit from operations before exceptional items 2014 (2 769) (2 178) (4 947) (20 567) (25 514)
2013 58 417 6 203 64 620 (36 314) 28 306
Total assets 2014 1 540 469 650 126 2 190 595 - 2 190 595
2013 1 606 425 815 018 2 421 443 - 2 421 443
Total liabilities 2014 630 313 398 956 1 029 269 - 1 029 269
2013 633 487 535 806 1 169 293 - 1 169 293
Capex 2014 36 033 19 449 55 482 - 55 482
2013 57 804 4 890 62 694 - 62 694
Depreciation 2014 41 757 10 751 52 508 3 269 55 777
2013 36 122 13 310 49 432 5 477 54 909
Supplementary information
Unaudited Restated Restated
six months Unaudited Audited
ended six months financial year
31 August ended ended
2014 31 August 28 February
2013 2014
Number of ordinary shares in issue (‘000) 135 131 135 131 135 131
Weighted average number of ordinary shares in issue (‘000) 121 016 121 016 121 016
Fully diluted weighted average number of ordinary shares in issue (‘000) 121 234 121 024 121 226
Number of preference shares in issue (‘000) 1 500 1 500 1 500
Net asset value per share (cents) 910 990 956
Net tangible asset value per share (cents) 818 893 859
Closing share price (cents) 680 610 700
Market capitalisation (R million) 919 824 946
Net interest-bearing debt as percentage of equity (%) 29,6 23,9 29,6
Net debt 325 792 285 787 342 602
Long-term interest-bearing debt 260 000 307 292 260 901
Short-term interest-bearing debt 114 522 145 800 143 981
Cash and cash equivalents (48 730) (169 839) (62 669)
Bank overdraft - 2 534 389
Interest cover (before exceptional items) (0,3) 4,7 1,8
Net working capital days 40 53 45
Contingent liabilities 6 971 4 574 6 971
Number of employees 3 059 3 422 3 132
- continuing operations 2 863 3 105 2 921
- discontinued operations 196 317 211
Earnings before interest, taxation, depreciation and amortisation (“EBITDA”)
- continuing operations 47 561 114 052 153 475
(Loss)/profit from operations before exceptional items (4 947) 64 620 58 647
Depreciation 52 508 49 432 94 828
Notes
1. Basis of consolidation These condensed consolidated financial statements for the half year ended 31 August 2014 have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (“IFRS”), the SAICA
Financial Reporting Guide as issued by the Accounting Practices Committee and the information required by IAS 34: Interim Financial
Reporting. This report was compiled under the supervision of Manley Diedloff, Group Chief Financial Officer. The accounting policies
used in the preparation of these results are in accordance with IFRS and are consistent in all material respects with those used in
the consolidated audited annual financial statements for the year ended 28 February 2014.
2. Comparative figures
Discontinued operations
The comparative figures have been restated due to the classification of Hilfort Plastics Cape Town and Cinqplast Denver (both divisions
of Astrapak Manufacturing Holdings Proprietary Limited) as discontinued operations.
Prior year restatement
Certain leases, which related to properties occupied by Group companies, have been reclassified from operational to finance leases due
to options to acquire issued to the holding company. Although the impact on the Statement of Comprehensive Income is not material,
the impact on the Statement of the Financial Position and the Net Asset Value of the Group is material as the market value of these
respective properties is well in excess of the option exercise value, therefore enhancing both the financial position and the net
asset value of the Group. The prior year financial statements have been accordingly restated as follows to fully reflect the impact
of this reclassification:
R’000 31 August
2013
Impact of error
Impact on profit for the period
Decrease in cost of sales 7 220
Increase in administrative and other expenses (560)
Increase in finance costs (4 220)
Increase in taxation (683)
Increase in profit for the period 1 757
Impact on other comprehensive income
Increase in other comprehensive income 66 258
31 August 2013
R’000 Impact As previously
of error reported
Statement of financial position impact
Property, plant and equipment 67 000 1 097 505
Accounts receivable 7 918 485 874
Assets classified as held-for-sale 65 300 8 598
Retained income (8 852) 834 516
Revaluation reserve 66 258 95 772
Deferred taxation liabilities 20 961 177 289
Long-term interest-bearing debt 33 326 273 966
Short-term interest-bearing debt 3 997 141 803
Liabilities associated with assets held-for-sale 24 527 -
31 August 2013
Impact As previously
of error reported
Statement of cash flows impact
Net cash (outflow)/inflow from operating activities (2 277) 327 007
Net cash outflow from investing activities - (87 267)
Net cash inflow/(outflow) from financing activities 2 277 (27 996)
Unaudited Restated Restated
six months Unaudited Audited
ended six months financial year
31 August ended ended
2014 31 August 28 February
2013 2014
3. Property, plant and equipment
Opening net carrying value 1 225 125 1 214 221 1 214 221
Additions 55 482 62 694 208 950
Classified as assets held-for-sale - (42 500) (2 300)
Revaluation of properties - - 17 183
Disposals (25 782) (3 235) (64 640)
Impairment (15 513) (11 766) (40 531)
Depreciation (55 777) (54 909) (107 758)
Closing net carrying value 1 183 535 1 164 505 1 225 125
Capital expenditure for the period 55 482 62 694 208 950
Capital commitments
- contracted not spent 33 006 69 333 15 094
- authorised not contracted 28 335 20 050 1 795
4. Investments and loans
Vendor loan to Afripak Consumer Flexibles Proprietary Limited 50 936 51 733 50 881
in terms of Flexibles disposal transaction
Vendor loan to Tadbik Pack SA Proprietary Limited on disposal of
Alex White & Company 5 158 7 651 6 431
Unlisted investment 12 12 12
Investments and loans at the end of the period 56 106 59 396 57 324
5. Inventories
Inventories amounting to R65 131 (February 2014: R51 479) are
carried at net realisable value.
6. Cash and cash equivalents
Cash and cash equivalents 48 730 169 839 62 669
Bank overdrafts - (2 534) (389)
Net cash and cash equivalents at the end of the period 48 730 167 305 62 280
7. Assets held-for-sale and liabilities relating to assets held-for-sale
Assets held-for-sale relates to Astrapak Property Holdings
Proprietary Limited property which is in the process of being
disposed of
Opening balance at the beginning of the period 32 098 52 974 52 974
Assets previously held-for-sale disposed of (24 814) (21 576) (23 176)
Property, plant and equipment classified as held-for-sale - 42 500 2 300
Assets held-for-sale at the end of the period 7 284 73 898 32 098
Liabilities relating to assets held-for-sale consist of the following:
Opening balance as at the beginning of the period 12 971 35 686 35 686
Long-term loans - 12 971
Liabilities previously classified as held-for-sale disposed of or
transferred (12 971) (11 159) (21 882)
Liabilities previously classified as held-for-sale settled - - (13 804)
Liabilities relating to assets held-for-sale at the end of the period - 24 527 12 971
8. Capital reserve
The capital reserve relates to employee share options valued
using the Black Scholes method and the cash financed stock plan.
Included in administrative and other expenses is IFRS 2 -
“Share-based payment” charges of R4,3 million income
(February 2014: R0,45 million expense)
9. Revenue
Revenue for the Group 1 222 913 1 218 401 2 490 274
Transactions with other entities in the Group (76 967) (111 284) (189 546)
Revenue for external customers 1 145 946 1 107 117 2 300 728
Volume (in ‘000 tons) 29 396 31 488 65 364
10. Exceptional items
Insurance reversal relating to property, plant and equipment
destroyed in fire at East Rand Plastics - (23 333) (23 333)
Impairment of property, plant and equipment (7 653) (11 766) (27 799)
Exceptional items (7 653) (35 099) (51 132)
11. (Loss)/profit from operations
(Loss)/profit from continuing operations is arrived at after
taking the following into account:
Net profit on disposal of property, plant and equipment 2 301 453 2 655
Depreciation 52 508 49 432 94 828
IFRS 2 share-based payment (income)/expense (4 314) 695 457
12. Loss for the period from discontinued operations
The Group classified Hilfort Pastics Cape Town and Cinplast Denver
(both divisions of Astrapak Manufacturing Holdings
Proprietary Limited), as discontinued operations as part of its
strategy to rationalise the Rigids division. Previous
period discontinued operations relate to Packaging Consultants
(a division of Astrapak Manufacturing Holdings Proprietary Limited)
Revenue 106 699 197 627 319 632
Cost of sales (109 699) (200 127) (242 761)
Gross (loss)/profit (3 000) (2 500) 76 871
Other income 1 022 (6 545) 9 517
Distribution and selling costs (7 554) (12 869) (19 481)
Administrative and other operating expenses (11 035) (14 400) (107 633)
Loss from operations before exceptional items from discontinued operations (20 567) (36 314) (40 726)
Exceptional items (7 860) - (12 732)
Loss from operations from discontinued operations (28 427) (36 314) (53 458)
Investment income 68 147 519
Finance costs (962) (2 122) (6 110)
Loss before taxation from discontinued operations (29 321) (38 289) (59 049)
Taxation benefit 8 199 11 392 17 569
Loss after taxation from discontinued operations (21 122) (26 897) (41 480)
Net cash flows incurred by discontinued operations for the
period are represented below:
Operating cash outflow (2 531) (35 296) (32 162)
Investing cash inflow 745 36 610 89 709
Financing cash outflow (3 798) (10 439) (62 232)
Net decrease in cash and cash equivalents from discontinued operations (5 584) (9 125) (4 685)
13. Loss per ordinary share and headline loss per ordinary share - basic and fully diluted
Loss per ordinary share is calculated by dividing the loss attributable to ordinary shareholders of the parent by the
weighted average number of shares in issue over the period that the attributable loss was generated.
Headline loss per ordinary share is calculated by dividing the headline loss attributable to ordinary shareholders of
the parent by the weighted average number of shares in issue over the period that the headline loss was generated.
Fully diluted loss and headline loss 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.
14. Subsequent events
No facts or circumstances material to the appreciation of this report has occurred between 31 August 2014 and the date
of this report.
Board of Directors: P Langeni* (Chair), R Moore (Chief Executive Officer),
M Diedloff (Group Managing Director and Chief Financial Officer),
P C Botha*, C McDougall*, G Z Steffens*, T V Mokgatlha* *Non-executive
Company Secretary: V Mahadeo
Registered Office: 5 Kruger Street, Denver, 2094 › PO Box 75769,
Gardenview, 2047, South Africa › Tel +27 11 615 8011
› Fax +27 11 615 9790
Registrar: Computershare Investor Services Proprietary Limited
› Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Sponsor: Rand Merchant Bank (a division of FirstRand Bank Limited)
Operating entities
Flexibles Division: Barrier Film Converters › East Rand Plastics
› Knilam Packaging › Peninsula Packaging › Plusnet/Geotex › Saflite
Rigids Division: Cinqpet › Consupaq › Hilfort › JJ Precision Plastics
› Marcom Plastics › PAK 2000 › Plastech › Plastform › Plastop (Bronkhorstspruit)
› Plastop (KwaZulu-Natal) › Thermopac › Weener - Plastop
For more information on our business please go to: www.astrapak.co.za
Date: 29/09/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
