AstraPak Limited FY 2014 financial results

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AstraPak Limited on the Johannesburg Stock Exchange has released their Full Year Results. Check out insights into this company in their presentation which appears below. Sign up to theinvestormailinglist.com to recieve earnings presentations of all listed companies in Africa by email.

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AstraPak Limited FY 2014 financial results

  1. 1. Charting our course Audited provisional financial results for the twelve months ended 28 February 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”)
  2. 2. Astrapak audited provisional financial results for the twelve months ended 28 February 20141 COMMENTARY Strategic update During 2014 the executive leadership team of Astrapak has progressed well with the implementation of the turnaround strategy and has completed the first phase of the two-year recovery time-frame objective. There is a good understanding of where the Group is best positioned for the future. Since the conclusion of an extensive review and development of a recovery plan, led by Chief Executive Officer Robin Moore, all stakeholders have been kept informed on the detail of the turnaround strategy, implementation timeframe and financial objectives. The 2013 financial results presentation and the 2013 annual report both gave stakeholders a detailed picture of what had gone wrong, what was still right and what was going to be done to correct Astrapak’s performance. At the interim stage, a detailed progress report was provided in the financial results presentation. Similarly, a full year report back is provided and stakeholders are invited to access this via the website and read it in conjunction with this commentary. In summary, the Group’s strategy is to focus on core end markets and develop operations of appropriate scale with the right mix of technologies and equipment to supply to internationally benchmarked norms and which importantly are sustainable into the future. The first year of the plan has been well executed in the following key areas: • Identifying core markets and contracting key customers • Closing and selling off certain underperforming operations • Exiting unprofitable work • Selling off non-core properties to raise cash • Finalising the East Rand insurance settlement and conserving the cash as well as managing working capital • Consolidation of plant and equipment – supported by investment where required – to create operations with modern efficient equipment • Implementing a Code of Conduct and driving performance management • Improving risk management and health and safety standards • Changing people, structures and culture. This has released cash, set the platform for the future and given the Group time to execute on the rest of the strategy, but has had the implication of adding significant costs in the short to medium term. In addition to the actions mentioned above, other strategic options are being considered and stakeholders will continue to be appraised as and when appropriate. Nevertheless, the big changes are now behind the Group. A new operational and leadership structure is in place, the asset base and IT systems are modern and effective and Astrapak holds leading marketing positions in its chosen markets. The financial position is sound. Despite the rationalisation, Astrapak retains a national presence with a capability to supply to internationally benchmarked norms for multinational customers. An important challenge has been to retain the focus on growth, business improvement and earning customer confidence whilst simultaneously executing on the strategy. Necessary qualitative improvements have been made that encapsulate our philosophy of charting a new course and are a prerequisite to ensuring we achieve our optimal return objectives within five financial years. There is more to be done to reach the level of professionalism and efficiency we aspire to. The total Group staff complement has been reduced with every layer of the organisation and every business unit affected. Renewal has also required investment in attracting key skills. The financial results in 2014 include a number of material exceptional and non-recurring losses with insurance proceeds and profit on sale of a property, in particular, skewing comparison. From a statutory accounting point of view positive headline earnings adjustments to attributable income only reflect part of the total amount in exceptional and
  3. 3. Astrapak audited provisional financial results for the twelve months ended 28 February 2014 2 non-recurring items. Significant expense items were incurred this past financial year as part of the turnaround plan. EBITDA, operating profit and earnings reported are thus understated in relation to what the Board would view as a normalised continuing level of performance. The financial benefits of actions taken will begin to show during the 2015 financial year, as previously communicated by management. Trading review Efforts to improve the competitive position of key portfolio companies has resulted in growth in volume on a comparable basis, with the core Rigids segment growing volume by 6%. Polymer is by far the largest item in cost of sales and is influenced by oil prices and the exchange rate, both of which are outside customer and convertor control. The South African rand averaged R9,99 to the US dollar for the year versus R8,38 in the prior year, a 19% weakening. The focus on pricing and procurement coordination has mitigated the effect of these input price increases in the year and is expected to yield further benefits in years to come. Multi-national tendering and international benchmarking are the norm with particular key accounts and Astrapak is embracing these procurement preferences and rising to the competitive challenge. Management makes a concerted effort to engage proactively and openly with customers. The Group has been well placed in respect of important tenders and contracts from leading local and multinational companies and is already benefitting from this. Astrapak was also recognised by the Institute of Packing in the 2013 Gold Pack Awards. Group companies secured a number of gold medals and citations, a Judges’Special Mention for Best Export Pack Fit-for-Purpose in the perishable food category and in particular the Gold Pack Trophy for the Robertson’s Spice Cap of which the brand owner is valued customer Unilever. Astrapak Rigids total revenue exceeded R2 billion for the first time. Excluding intergroup revenue of R153 million net revenue increased by 17% to R1,9 billion. The Moulding division, the largest within Astrapak Rigids, produced an especially strong result at the revenue line. The result benefitted from the rationalisation of the Cinqplast-Plastop Denver site in Gauteng with injection moulding equipment consolidated on one site at JJ Precision in KwaZulu- Natal. Long-term supply contracts are a being achieved within the Mouldings customer base that provide certainty and create alignment between supplier and customer. The PET division continued to struggle in an industry segment characterised by excess capacity and increasingly difficult market dynamics. The extent of Astrapak’s exposure to this category is being reviewed. The Forming division is benefitting from the strategic review that has yielded opportunities for optimising throughput via a clear focus on two key market segments within FMCG. Astrapak Flexibles revenue has declined in line with the strategy to consolidate product range and footprint. Flexibles revenue on a continuing basis and net of intergroup revenue of R36,4 million declined by 24% to R640,5 million. With the insurance claims process for the disruptive fire at East Rand Plastics finalised, work began in the second half of the financial year on re- positioning Astrapak Flexibles in line with the new Group structure and strategy. As East Rand Plastics accounted for almost half of Astrapak Flexibles turnover a successful resolution of the insurance claim was necessary before a proper optimisation plan could be executed. The plan is for Astrapak Flexibles to be a smaller but more profitable unit than in the past. The structural aspects of the plan were completed during May 2014 and management is now working toward optimising returns on the revised asset base.
  4. 4. Astrapak audited provisional financial results for the twelve months ended 28 February 20143 Financial review Group revenue from continuing operations increased by 3% to R2,53 billion. Polymer tonnage consumed in production declined by 11,0% to 72 954 tons, entirely as a result of the downsizing of the Flexible division. Favourable pricing, procurement and customer relationship strategies yielded a positive pricing outcome in an inflationary raw material environment. Gross profit from continuing operations decreased 9,3% to R514,1 million with the main contributors being the increased cost of workings and loss of profits at East Rand Plastics, a write-off at Barrier Films, headcount reductions and other essential business clean-up costs. Increased costs and loss of profits at East Rand Plastics was to an extent reimbursed by the insurers, but the reimbursement is reflected as other items of income and expenditure. Totalling R83,9 million, the negative impact of these items on the gross profit is material in relation to the result for 2014. To this point, there were a number of insurance related and restructuring items that negatively impacted the overall result. In addition to the afore- mentioned R83,9 million, a further R51,1 million in exceptional items, consisting of asset impairments and an insurance estimate adjustment, and additional restructuring and headcount reduction costs of R25,9 million were expensed. These costs are aligned with the objectives of the recovery plan. The Group has managed its cost base well in an inflationary environment with selling, administration and distribution costs increasing by only 2,2% to R511,9 million. There is scope for a reduction in this cost base as the operational performance starts improving. Consequently, profit before interest, tax depreciation and amortisation from continuing operations of R145,6 million decreased by 42,5% with the margin declining to 5,8% from 10,3%. The depreciation charge of R104,6 million is 10% lower. Profit from continuing operations before exceptional items decreased by 70,1% to R40,9 million. Net finance costs of R32,8 million decreased by 10%. This equates to a PBITDA interest cover ratio of 4,4 times. An after tax loss of R28,3 million was recorded by the discontinued operations as represented by Packaging Consultants. Packaging Consultants was discontinued during the first half and the premises disposed of to a third party. The productive asset base and important skills were distributed within the Astrapak Flexibles segment as part of the optimisation plan. Total loss for continuing and discontinued operations is R81,7 million, equating to 67,5 cents per share of which 44,1 cents is attributable to continuing operations and 23,4 cents to the discontinued operations. The headline loss from continuing operations attributable to ordinary shareholders is R14,6 million, equating to 12,1 cents per share. In the prior year headline earnings from continuing operations was R30,7 million, equating to 25,4 cents per share. Capital expenditure of R209 million is attributable to a R33,4 million carry forward of investment projects from the prior year, a R 16.3m investment into the Flexible restructure and a consideration of R13,7 million paid for a strategic asset base in East London. The remainder of the capital expenditure represented a few significant items that align fully with Group strategies. Investment in plant and equipment is anticipated to be in line with depreciation in future. Net debt reduced from R522,1 million as at 28 February 2013 to R342,6 million as at 28 February 2014, a decline of R179,5 million. The debt to equity ratio reduced from 41,9% to 29,6%. A provision for insurance proceeds in the amount of R295,4 million was previously raised with final settlement in the amount R272,1 million, with no restrictions on the utilisation of these funds. But by downsizing rather than reinvesting in the Flexible Division, the funds have been better preserved and deployed.
  5. 5. Astrapak audited provisional financial results for the twelve months ended 28 February 2014 4 Net cash inflows from operating activities at R359,4 million were distorted by insurance proceeds. In the prior year the provision for insurance proceeds was reflected within accounts receivable. The major components of working capital, namely stock, debtors and creditors, have been carefully managed and compare favourably with the prior year. The business of Alex White Co was disposed of as a going concern to Tadbik Pack SA (Pty) Limited (“Tadbik”) on the basis of a vendor loan to Tadbik in the amount of R7,6 million. The loan, which attracts prime rate of interest, is payable in 36 equal monthly instalments. Security is provided by the holding company of Tadbik. In line with the rationalisation, a number of properties were successfully disposed of. Comparative results were restated due to a reclassification of certain property leases from operational to financial leases. The impact on the profitability of the Group is not material, but the financial position and net asset value is greatly enhanced. Prospects During 2014 Astrapak instituted big changes and the results reflect this. The Group is now focused on delivering superior quality products on time and at the right price to customers. An improved financial result is budgeted for in 2015, the final year of the turnaround phase, and the Group is on track to meet its medium-term return aspirations. The above has not been reviewed and reported on by Astrapak’s external auditors. Changes to the Board Resignations Mr Gene Lapan resigned as Group Finance Director effective 28 February 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. Changes to the roles and responsibilities of directors Mr Paul Botha resigned as a member of the audit committee effective 22 August 2013 in order to comply with King III requirements. Ms Phumzile Langeni resigned as Chairman of the Remuneration Committee effective 22 August 2013. Mr Paul Botha was appointed as Chairman of the Remuneration Committee effective 22 August 2013. Significant changes in shareholding Per the relevant stock exchange news service announcements, accounts under the management of both Coronation Asset Management (Pty) Ltd and Regarding Capital Management (Pty) Ltd purchased shares from Royal Bafokeng (Pty) Ltd. On 28 February 2014 these asset managers held 28,97% and 14,30% of Astrapak respectively. 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 13 May 2014
  6. 6. Astrapak audited provisional financial results for the twelve months ended 28 February 20145 Summary consolidated statement of comprehensive income (R‘000) Notes % change Audited financial year ended 28 February 2014 Restated Audited financial year ended 28 February 20131 CONTINUING OPERATIONS Revenue 9 3,0 2 528 694 2 454 380 Cost of sales (2 014 595) (1 887 580) Gross profit (9,3) 514 099 566 800 Distribution and selling costs (206 216) (198 915) Administrative and other expenses (305 705) (301 923) Other items of income and expenditure 38 757 70 928 Profit from operations before exceptional items (70,1) 40 935 136 890 Exceptional items 10 (51 132) 115 210 (Loss)/profit from operations 11 (104,0) (10 197) 252 100 Investment income 16 020 8 087 Finance costs (48 759) (44 346) (Loss)/profit before taxation (119,9) (42 936) 215 841 Taxation benefit/(expense) 12 365 (44 863) (Loss)/profit for the year from continuing operations (117,9) (30 571) 170 978 DISCONTINUED OPERATIONS Loss for the year from discontinued operations 12 (29,9) (28 346) (21 829) (Loss)/profit for the year (139,5) (58 917) 149 149 Other comprehensive (loss)/ income (14 734) 162 030 Total comprehensive (loss)/income for the year (73 651) 311 179 Attributable to: Ordinary shareholders of the parent (133,7) (96 393) 286 059 – (Loss)/profit for the year from continuing operations (53 313) 145 858 (Loss)/profit for the period from continuing operations before exceptional items (2 181) 30 648 Exceptional items (51 132) 115 210 – Loss for the period from discontinued operations (28 346) (21 829) – Revaluation of land and buildings (net of tax) (14 734) 162 030 Preference shareholders of the parent 11 362 11 369 Non-controlling interest 11 380 13 751 Total comprehensive (loss)/income for the year (73 651) 311 179 (Loss)/earnings per ordinary share (cents) 13 (165,98) (67,5) 102,6 – continuing operations (136,5) (44,1) 120,7 – discontinued operations (29,3) (23,4) (18,1) Fully diluted (loss)/earnings per ordinary share (cents) 13 (165,7) (67,4) 102,6 – continuing operations (136,5) (44,0) 120,7 – discontinued operations (29,3) (23,4) (18,1) Preference dividend paid and accrued 11 362 11 369 Preference dividend per preference share (cents) 757,47 757,93 1 Restated for classification of Packaging Consultants as a discontinued operation and prior year restatement. Refer to note 2.
  7. 7. Astrapak audited provisional financial results for the twelve months ended 28 February 2014 6 Reconciliation of headline earnings (R‘000) Notes % change Audited financial year ended 28 February 2014 Audited financial year ended 28 February 2013 (Loss)/profit for the period attributable to ordinary shareholders (165,8) (81 659) 124 029 – continuing operations (53 313) 145 858 – discontinued operations (28 346) (21 829) Headline (loss)/earnings adjustments – Loss on exercise of options — 265 – Reversal of insurance proceeds 23 333 — – Impairment of property, plant and equipment 40 532 153 263 – Profit on disposal of property, plant and equipment (11 208) (291 604) – Total tax effect of adjustments (10 928) 26 913 – Total non-controlling interest share of adjustments — (765) Headline (loss)/earnings attributable to ordinary shareholders (430,0) (39 930) 12 101 – continuing operations (147,5) (14 593) 30 701 – discontinued operations (36,2) (25 337) (18 600) Headline (loss)/earnings per ordinary share (cents) 13 (429,5) (33,0) 10,0 – continuing operations (147,5) (12,1) 25,4 – discontinued operations (36,0) (20,9) (15,4) Fully diluted headline (loss)/earnings per ordinary share (cents) 13 (428,9) (32,9) 10,0 – continuing operations (147,4) (12,0) 25,4 – discontinued operations (35,7) (20,9) (15,4)
  8. 8. Astrapak audited provisional financial results for the twelve months ended 28 February 20147 Summary consolidated statement of financial position (R‘000) Notes % change Audited financial year ended 28 February 2014 Restated Audited financial year ended 28 February 2013 Restated Audited financial year ended 29 February 2012 Assets Non-current assets 2,0 1 446 435 1 417 871 1 401 392 Property, plant and equipment 3 1 225 125 1 214 221 1 192 606 Goodwill 117 118 117 118 117 118 Deferred taxation assets 46 868 36 227 44 010 Investment and loans 4 57 324 50 305 47 658 Current assets (23,8) 819 191 1 074 612 852 079 Inventories 5 289 491 281 515 309 024 Accounts receivable 460 211 752 894 515 277 Taxation receivable 6 820 12 976 27 778 Cash and cash equivalents 6 62 669 27 227 — Assets classified as held-for-sale 7 32 098 52 974 7 075 Total assets (9,7) 2 297 724 2 545 457 2 260 546 Equity and liabilities Total equity (7,3) 1 214 748 1 309 914 1 009 431 Equity attributable to ordinary shareholders of the parent 1 014 517 1 104 233 814 239 Preference share capital and share premium 142 590 142 590 142 590 Non-controlling interest 57 641 63 091 52 602 Non-current liabilities (19,0) 452 721 559 138 563 948 Long-term interest-bearing debt 260 901 332 243 382 140 Long-term financial liabilities 904 5 441 4 937 Deferred taxation liabilities 190 916 221 454 176 871 Current liabilities (3,7) 617 284 640 719 687 167 Trade and other payables 464 080 411 085 479 360 Shareholders for preference dividends 4 022 5 041 4 420 Short-term interest-bearing debt 143 981 145 397 184 655 Taxation payable 4 812 7 530 15 602 Bank overdrafts 6 389 71 666 3 130 Liabilities associated with assets held-for-sale 7 12 971 35 686 — Total equity and liabilities (9,7) 2 297 724 2 545 457 2 260 546
  9. 9. Astrapak audited provisional financial results for the twelve months ended 28 February 2014 8 Summary consolidated statement of changes in equity (R‘000) Notes Audited financial year ended 28 February 2014 Restated Audited financial year ended 28 February 2013 Restated Audited financial year ended 29 February 2012 Opening balance 1 309 914 1 009 431 1 070 784 Comprising: Ordinary share capital and premium 199 502 199 502 199 502 Retained income 875 066 751 037 824 518 Capital reserve 8 20 523 18 757 16 707 Non-controlling put options (5 441) (4 937) (1 671) Revaluation reserve 162 030 — — Treasury shares (147 447) (150 120) (150 733) Equity attributable to ordinary shareholders of the parent 1 104 233 814 239 888 323 Preference share capital and premium 142 590 142 590 142 590 Non-controlling interest 63 091 52 602 39 871 Movements: (Loss)/profit for the year (58 917) 149 149 (19 558) Preference dividends paid (11 362) (11 369) (10 830) Ordinary dividends paid to non-controlling interest — (10 500) (31 863) Acquisition of non-controlling interest (36 000) — — Contributions made by non-controlling interest (2 521) 7 238 1 501 Reduction in treasury shares due to exercise of options — 2 673 623 Incentive scheme reversals — — (10) Adjustment of fair value of put options 4 537 (504) (3 266) Capital gains taxation on disposal of revalued properties (5 319) — — Revaluation reserve 13 959 162 030 — Share-based payment expense for the year 457 1 766 2 050 Closing balance 1 214 748 1 309 914 1 009 431 Comprising: Ordinary share capital and premium 199 502 199 502 199 502 Retained income 795 090 875 066 751 037 Capital reserve 8 20 980 20 523 18 757 Non-controlling put options (904) (5 441) (4 937) Revaluation reserve 147 296 162 030 — Treasury shares (147 447) (147 447) (150 120) Equity attributable to ordinary shareholders of the parent 1 014 517 1 104 233 814 239 Preference share capital and premium 142 590 142 590 142 590 Non-controlling interest 57 641 63 091 52 602 Total equity 1 214 748 1 309 914 1 009 431
  10. 10. Astrapak audited provisional financial results for the twelve months ended 28 February 20149 Summary consolidated statement of cash flows (R‘000) Notes % change Audited financial year ended 28 February 2014 Restated Audited financial year ended 28 February 2013 Cash generated from operations before working capital changes (81,9) 85 511 472 044 Increase/(decrease) in working capital 338 887 (280 457) Net interest and taxation paid (52 635) (54 343) Net cash inflow from activities before distributions to shareholders 170,9 371 763 137 244 Dividend distribution to all shareholders (12 381) (21 248) Net cash inflow from operating activities 209,8 359 382 115 996 Capital expenditure (208 950) (149 232) Net movement of investments, subsidiaries and non-controlling interests (42 441) 13 036 Proceeds on disposal of property, plant and equipment 79 602 43 476 Net cash outflow from investing activities (171 789) (92 720) Net cash outflow from financing activities (80 874) (64 585) Net increase/(decrease) in cash and cash equivalents 106 719 (41 309) Net cash and cash equivalents at the beginning of the year (44 439) (3 130) Net cash and cash equivalents at the end of the year 6 240,1 62 280 (44 439)
  11. 11. Astrapak audited provisional financial results for the twelve months ended 28 February 2014 10 Summary consolidated segmental analysis (R‘000) Rigids Flexibles Total continuing operations Dis- continued operations Total Group Revenue for segment 2014 2 041 318 676 922 2 718 240 99 425 2 817 665 2013 1 758 274 902 707 2 660 981 192 270 2 853 251 Transactions with other operating segments of the Group 2014 (153 161) (36 385) (189 546) (7 759) (197 305) 2013 (142 789) (63 812) (206 601) (10 767) (217 368) Revenue for external customers 2014 1 888 157 640 537 2 528 694 91 666 2 620 360 2013 1 615 485 838 895 2 454 380 181 503 2 635 883 Profit from operations before exceptional items 2014 61 585 (20 650) 40 935 (23 014) 17 921 2013 113 837 23 053 136 890 (21 105) 115 785 Total assets 2014 1 617 357 680 367 2 297 724 — 2 297 724 2013 1 532 045 1 013 412 2 545 457 — 2 545 457 Total liabilities 2014 663 277 419 699 1 082 976 — 1 082 976 2013 626 352 609 245 1 235 597 — 1 235 597 Capex 2014 174 106 34 844 208 950 — 208 950 2013 118 556 30 676 149 232 — 149 232 Depreciation 2014 82 522 22 099 104 621 3 137 107 758 2013 79 301 36 949 116 250 8 583 124 833
  12. 12. Astrapak audited provisional financial results for the twelve months ended 28 February 201411 Supplementary information Audited financial year ended 28 February 2014 Restated Audited financial year ended 28 February 2013 Number of ordinary shares in issue ('000) 135 131 135 131 Weighted average number of ordinary shares in issue ('000) 121 016 120 836 Fully diluted weighted average number of ordinary shares in issue ('000) 121 226 120 837 Number of preference shares in issue ('000) 1 500 1 500 Net asset value per share (cents) 956,2 1 031,8 Net tangible asset value per share (cents) 859 935 Closing share price (cents) 700 725 Market capitalisation (R million) 945,92 979,70 Net interest-bearing debt as a percentage of equity (%) 29,6 41,9 Net debt 342 602 522 079 Long-term interest-bearing debt 260 901 332 243 Short-term interest-bearing debt 143 981 145 397 Cash and cash equivalent (62 669) (27 227) Bank overdraft 389 71 666 Interest cover (before exceptional items) 1,3 3,8 Net working capital days 41,2 48,7 Contingent liabilities 6 971 7 635 Number of employees 3 132 3 975 – continuing operations 3 132 3 728 – discontinued operations — 247 Earnings before interest, taxation, depreciation and amortisation (EBITDA) – continuing operations 145 556 253 140 Profit from operations before exceptional items 40 935 136 890 Depreciation 104 621 116 250
  13. 13. Astrapak audited provisional financial results for the twelve months ended 28 February 2014 12 Notes 1. Basis of preparation and accounting policies These summary consolidated annual financial statements for the year ended 28 February 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 Financial Pronouncements as issued by Financial Reporting Standards Council and the requirements of the Companies Act and the information required by IAS 34: Interim Financial Reporting.This provisional report was compiled under the supervision of Manley Diedloff, Group Managing Director and 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 audited annual financial statements for the year ended 28 February 2013. This provisional report is extracted from audited information, but is not itself audited. The directors take full responsibility for the preparation of the report and that the financial information has been correctly extracted from the underlying financial statements. The auditors, Deloitte Touche, have issued an unmodified audit opinion on the complete consolidated and separate financial statements and a copy of that report is available for inspection at the Company’s registered office. Standards and interpretations that were effective in the year were adopted.These did not have a significant impact in the financial statements. 2. Comparative figures Discontinued operations The comparative figures have been restated due to the classification of Packaging Consultants (a division of Astrapak Manufacturing Holdings (Proprietary) Limited) as discontinued operation. Prior period restatement Certain leases, which related to properties occupied by Group companies, has been reclassified from operational to financial 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 Financial Position and the Net AssetValue of the Group is material as market value of these respective properties is well in excess of the option exercise value, therefore enhancing both the financial position and net asset value of the Group.The prior year financial statements have accordingly been restated as follows to fully reflect the impact of this reclassification: R’000 28 February 2013 Impact of error Impact on profit for the year Decrease in cost of sales 12 009 Increase in administration and other operating expenses (1 597) Increase in finance costs (8 953) Increase in taxation (884) Increase in profit for the year 575 Impact on other comprehensive income Increase in other comprehensive income 66 258 28 February 2013 28 February 2012 R’000 Impact of error As previously reported Impact of error As previously reported Statement of financial position impact Property, plant and equipment 109 500 1 104 721 52 437 1 140 169 Accounts receivable 8 476 744 418 10 025 505 202 Assets classified as held-for-sale 22 800 30 174 — 7 075 Retained income (10 609) 885 675 (11 184) 762 221 Revaluation reserve 66 258 95 772 — — Deferred taxation liabilities 20 278 201 177 4 094 172 777 Long-term interest-bearing debt 45 349 286 894 64 850 317 290 Short-term interest-bearing debt 5 732 139 665 4 752 179 903 Liabilities associated with assets held-for-sale 13 769 21 917 — — 28 February 2013 R’000 Impact of error As previously reported Statement of cash flows impact Net cash inflow from operating activities 4 739 111 257 Net cash outflow from investing activities — (92 720) Net cash outflow from financing activities (4 739) (59 846)
  14. 14. Astrapak audited provisional financial results for the twelve months ended 28 February 201413 Notes(continued) (R‘000) Audited financial year ended 28 February 2014 Audited financial year ended 28 February 2013 3. Property, plant and equipment Opening net carrying amount 1 214 221 1 192 606 Additions 208 950 149 233 Classified as assets held-for-sale (2 300) (45 756) Revaluation of properties 17 183 199 312 Disposals (64 640) (11 732) Impairment (40 531) (144 608) Depreciation (107 758) (124 833) Closing net carrying amount 1 225 125 1 214 221 Capital expenditure for the year 208 950 149 232 Capital commitments – contracted not spent 15 094 14 409 – authorised not contracted 1 795 19 254 4. Loans and investments Vendor loan to Afripack Consumer Flexibles (Pty) Ltd in terms of Flexibles disposal transaction 50 881 50 293 Vendor loan to Tadbik Pack SA ( Pty) Ltd on disposal of Alex White Co-operation 6 431 — Unlisted investments 12 12 Loans and investments at end of the year 57 324 50 305 5. Inventories Inventories amounting to R51 479 (2013: R38 300) are carried at net realisable value. 6. Cash and cash equivalents Cash and cash equivalents 62 669 27 227 Bank overdrafts (389) (71 666) Net cash and cash equivalents at the end of the year 62 280 (44 439)
  15. 15. Astrapak audited provisional financial results for the twelve months ended 28 February 2014 14 7. Assets held-for-sale and liabilities relating to assets held for sale Assets held-for-sale and liabilities held-for-sale relate to assets and liabilities of Astrapak Property Holdings Proprietary Limited Assets held-for-sale/sold consists of the following: Opening balance as at the beginning of the year 52 974 7 075 Inventory — 10 069 Trade and other receivables — 2 720 Cash and cash equivalents — 9 Assets previously held-for-sale disposed of (23 176) (4 000) Impairment of plant and equipment previously classified as held-for sale — (8 655) Property, plant and equipment classified as held-for sale 2 300 45 756 Assets held-for-sale at the end of the year 32 098 52 974 Liabilities relating to assets held-for-sale sold consists of the following: Opening balance as at the beginning of the period 35 686 — Long-term loans 12 971 21 882 Trade creditors — 10 807 Bank overdrafts — 2 997 Liabilities previously classified as held-for-sale disposed or transferred (21 882) Liabilities previously classified as held-for-sale settled (13 804) — Liabilities relating to assets held-for-sale at the end of the year 12 971 35 686 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 Payments” charges of R0,45 million (2013: R1,8 million) 9. Revenue Revenue for the Group 2 718 240 2 660 981 Transactions with other entities within the Group (189 546) (206 601) Revenue for external customers 2 528 694 2 454 380 Volume (in '000 tons) 72 954 81 952 10. Exceptional items Insurance (reversal)/income relating to property, plant and equipment destroyed in fire at East Rand Plastics (23 333) 263 860 Impairment of property, plant and equipment relating to fire at East Rand Plastics — (56 308) Impairment of property, plant and equipment (27 799) (92 342) Exceptional items (51 132) 115 210 (R‘000) Audited financial year ended 28 February 2014 Audited financial year ended 28 February 2013 Notes(continued)
  16. 16. Astrapak audited provisional financial results for the twelve months ended 28 February 201415 11. Profit from operations Profit from operations for continuing operations are arrived at after taking the following into account: Net profit on disposal of property, plant and equipment 2 655 27 615 Depreciation 104 621 116 250 IFRS 2 share-based payment expenses 457 1 766 12. Loss for the year from discontinued operations The Group classified Packaging Consultants a division of Astrapak Manufacturing Holdings Proprietary Limited, as discontinued operations as part of its strategy to rationalise the Flexibles division. Previous years discontinued operations relates to City packaging and Ultrapak (both divisions of Astrapak Manufacturing Holdings Proprietary Limited Revenue 91 666 181 503 Cost of sales (111 002) (180 520) Gross (loss)/profit (19 336) 983 Other income 9 085 — Distribution and selling costs (6 630) (13 708) Administrative and other operating expenses (6 133) (8 380) Loss from operations before exceptional items from discontinued operations (23 014) (21 105) Exceptional items – impairment (12 732) (5 614) Loss from operation from discontinued operations (35 746) (26 719) Investment income 519 25 Finance costs (5 579) (4 008) Loss before taxation from discontinued operations (40 806) (30 702) Taxation 12 460 8 873 Loss for the period from discontinued operations (28 346) (21 829) The net cash flows incurred by discontinued operations for the period are represented below: Operating cash inflow 5 575 7 941 Investing cash inflow 63 544 11 413 Financing cash outflow (75 463) (17 113) Net (decrease)/increase in cash and cash equivalents from discontinued operations (6 344) 2 241 13. (Loss)/earnings per ordinary share and headline (loss)/earnings per ordinary share – basic and fully diluted (Loss)/earnings per ordinary share is calculated by dividing the (loss)/profit attributable to ordinary shareholders of the parent by the weighted average number of shares in issue over the period that the attributable (loss)/profit was generated. Headline (loss)/earnings per ordinary share is calculated by dividing the headline (loss)/earnings attributable to ordinary shareholders of the parent by the weighted average number of shares in issue over the period that the headline (loss)/earnings were generated. Fully diluted (loss)/earnings and headline (loss)/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. 14. Subsequent events No fact or circumstance material to the appreciation of this report has occurred between 28 February 2014 and the date of this report. (R‘000) Audited financial year ended 28 February 2014 Audited financial year ended 28 February 2013
  17. 17. 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*, G P Duda* *Non-executive Company Secretary: S Ngwabi 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 (Pty) Ltd › 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 › Plastop (KwaZulu-Natal) › Thermopac › Weener – Plastop For more information on our business please go to: www.astrapak.co.za BASTION GRAPHICS
  18. 18. For more information on our business please go to: www.astrapak.co.za

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