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Annual report 2009
02 Operating entities
03 Business profile
10 Directorate
12 Executive committee
13 Chief Executive Officer’s report
18 Chief Financial Officer’s report
25 Sustainability
28 Corporate governance
33 Remuneration report
38 Five-year review
40 Group value-added statement
41 Annual financial statements
93 Shareholders’ information
94 Directors’ interests
95 Notice of Annual General Meeting
98 Administration
99 Form of proxy
Astrapak
Registration number 1995/009169/06
Incorporated in the Republic of South Africa
Share codeAPK
ISINZAE000096962
(“the Company”)ASTRAPAK LIMITED
Contents
www.astrapak.co.za
Astrapak 2009
Astrapak Annual Report 2009
01
ProfileAstrapak Limited and its subsidiaries (“Astrapak” or “the Company” or
“the Group”) are manufacturers and distributors of an extensive range
of plastic packaging products. The Group has manufacturing facilities in
all main centres of South Africa, employs 4 390 people and has annualised
revenues in excess of R3 billion in all operations. The operations are
grouped into various business segments and service mainly the food,
beverage, personal care, pharmaceutical, agricultural, industrial
and retail markets.
The Group is focused on service, innovation and technology and aims to
gain an ever-increasing share of the overall packaging market through a
healthy combination of organic, project and acquisitive growth.
VisionTo be a world-class manufacturer of primary and secondary plastic
packaging products and to create innovative packaging for a
sustainable future.
MissionTo be South Africa’s leading supplier of plastic packaging in whatever
markets or market segments we have chosen to operate in.
02Astrapak Annual Report 2009
Operating entitiesas at 28 February 2009
n Industrial
n Films
n Rigids
n Flexibles
Plastech Group– Plastech Moulders
(Pty) Ltd– PETech (Pty) Ltd– Printech (Pty) Ltd
80%
Hilfort Plastics (Pty) Ltd
100%
Alex White & Company
(Pty) Ltd
100%
Cape Wrappers (Pty) Ltd
100%
Alex White Holdings (Pty) Ltd
100%
Saflite (Cape)
(Pty) Ltd
100%
International Tube
Technology (Pty) Ltd
60%
Holdings (Pty) Ltd
100%
Thermopac (Pty) Ltd
100%
Knilam Packaging (Pty) Ltd
100%
Astrapak Western Cape (Pty) Ltd incorporating the following divisions: – Peninsula Packaging – Plastform – Ultrapak
100%
Barrier Film Converters (Pty) Ltd
100%
Marcom Plastics
(Pty) Ltd
60%
Coralline Investments
(Pty) Ltd
74%
Astrapak Gauteng (Pty) Ltdincorporating the following divisions:– East Rand Plastics– Tristar– City Packaging
100%
Plastop (Pty) Ltd
100%
Cinqpet (Pty) Ltd
100%
Plastop KwaZulu-
Natal (Pty) Ltd
100%
Euro-matic Plastop
(Pty) Ltd
50%
Master Plastics (Pty) Ltd
100%
Tamperpak (Pty) Ltd
100%
Astra Repo
(Pty) Ltd
100%
JJ Precision Plastics
(Pty) Ltd
100%
Diverse Labelling
Consultants (Pty) Ltd
100%
Standard Labels Ltd
49,5%
Pak 2000 (Pty) Ltd
75%
Consupaq (Pty) Ltd
98%
Astraflex (Pty) Ltd
100%
Astrapak KwaZulu-Natal (Pty) Ltd incorporating the following divisions: – Packaging Consultants
100%
Astrapak Annual Report 2009
03
Plusnet/Geotex manufactures rope and shadecloth for industrial and agricultural applications. It also produces plastic fibres that are used as a special reinforcing agent in concrete. These fibres are being used in the production of the infrastructure required for South Africa’s Gautrain project.
International Tube Technology (“ITT”) manufactures a comprehensive range of industrial cores, tubes and composite containers. ITT has gained an enviable reputation for innovation and quality in both products and service. Its entrepreneurial approach and flexibility means that – when it comes to cores and tubes – virtually any design specification can be achieved.
The company also manufactures edgeboard for use in stabilising pallet loads and for edge protection. The use of edgeboard, combined with stretch wrap, provides improved pallet stability, as well as moisture and dust protection, representing cost savings while providing aesthetic appeal.
International Tube Technology
– International Tube Technology – Epping, Cape Town
Plusnet/Geotex
– Plusnet/Geotex – Aureus, Randfontein
3%
Revenue contribution to the Group
2%
Profit from operations contribution to the GroupIndustrial division
Business profile
04Astrapak Annual Report 2009
Business profile continued
Pack-Line Holdings manufactures film products for the industrial, agricultural and general markets. Key lines include shrink film and tubing for an assortment of applications – from prepacked fruit and vegetables to clothing, linen and confectionery products. The company also distributes a range of general packaging items such as tapes and strapping.
Pack-Line Holdings
– Gately, East London
Barrier Film Converters specialises in the manufacture of multilayer barrier films for the packaging of meat, cheese and other food-related products. The company also produces a range of plain and printed film for the general industrial market including the fertiliser industry. Barrier Film Converters has a state-of-the-art five-layer cast line for the production of very sophisticated multilayer films.
Ultrapak focuses on the production of highly decorated films for the food and beverage sector and is the market leader in the supply of printed bread bags. They also extrude the “Ultralam” range of specialty films for the production of milk and other sachets where strength and toughness are a pre-requisite.
Barrier Film Converters
– Prospecton, Durban
– Wilsonia, East London
Ultrapak
Tristar Plastics specialises in pallet stabilisation and related products. It manufactures high-quality shrink and stretch film products, specifically for companies in the cement, brewing, milling, retail, mining and industrial industries. Tristar’s market success is maintained through developing integrated partnerships with customers in order to provide cost-effective packaging solutions.
Tristar Plastics
– Aeroton, Johannesburg
Films division
39%
Revenue contribution to the Group
30%
Profit from operations contribution to the Group
Astrapak Annual Report 2009
East Rand Plastics produces a range of high- and low-density polyethylene films for a wide variety of products. Applications include refuse bags, shrink films, heavy-duty fertiliser sacks, multilayer lamination sheeting, form-fill-seal film, wicketed bags for the bakery industry and agricultural industries. The company also has extensive printing facilities.
Peninsula Packaging is widely acknowledged as one of the market leaders in the manufacture of plain and printed polyethylene films, sheeting, tubing and a variety of bags including wicketed bags. Main markets include the packaging of fresh fruit and vegetables (for local and export markets), fresh fish, general food, beverages, refuse bags and industrial packaging.
Packaging Consultants produces high-quality plain and printed film, tubing and bags for a variety of markets – products include boutique bags, form-fill-seal packaging material (for confectionery, maize and rice), bags for poultry, pet food, frozen vegetables, as well as heavy-duty sacks for agricultural, industrial and chemical products.
Following the installation of state-of-the-art extrusion and printing technology, City Pack has been able to move shrink films into a new era of sophistication and has become one of South Africa’s market leaders in the supply of monolayer and co-extruded, printed film for the shrink-wrapping of foods, beverages and industrial products. City Pack also supplies high-quality printed films for form-fill-seal frozen vegetable packaging.
East Rand Plastics
Peninsula Packaging
Packaging Consultants
City Pack
– Vulcania, Brakpan
– Stikland, Cape Town
– Riverhorse Valley, Durban
– Kya-Sands, Randburg
05
Astrapak Annual Report 2009
06
Business profile continued
JJ Precision Plastics is a focused injection-moulding business that, inter alia, produces the closures for PAK 2000’s petrochemical containers. In addition this company also utilises In Mould Labelling (“IML”) for the production of the Aromat container which won the 2007 Goldpack trophy for innovative packaging. JJ Precision also maintains a modern toolroom for the production and maintenance of moulds.
JJ Precision Plastics
– Pinetown, Durban
Plas-top in Bronkhorstspruit focuses on the production of closures, roll-on bottles, jars and other containers which are mainly supplied into the personal care markets. It is the only company in Africa that utilises “swingplate” injection-moulding technology for the production of closures. Plas-top further specialises in the injection blow-moulding (“IBM”) process for the manufacture of its containers. The company is also able to print and label its containers.
Plas-top
– Ekandustria, Bronkhorstspruit
Cinqpet offers both single-stage and two-stage injection stretch blow-moulding technologies allowing for the production of the widest possible range of PET containers. It specialises in containers and preforms for the soft drink and mineral water bottle markets and also has a range of standard wide-mouth jars and general cosmetics bottles for the personal care industry.
Cinqpet
– Denver, Johannesburg
PAK 2000’s primary business is the manufacture of innovative and cost-effective extrusion blow-moulded polyethylene containers – ranging in size from 200ml to five litres – to the motor vehicle lubricant and petrochemical industry. The company is also able to print and label the containers that it manufactures.
PAK 2000
– Pinetown, Durban
Plastop KZN is among South Africa’s leading manufacturers of rigid plastic bottles, jars, closures and other components for personal-care products and toiletries.
This ISO 9002-accredited factory is primarily a “hole-in-the-wall” operation, supplying Unilever with a vast range of packaging products for its personal-care products.
Plastop KZN
– Prospecton, Durban
Thermopac specialises in the production of thermoformed PP, HIPS and PET plastic packaging for the pharmaceutical, personal care, bakery, confectionery and general food industries. In addition, Thermopac extrudes plastic sheeting for the general thermoforming market. Serving many South African blue-chip companies, it has also aligned itself with overseas companies with which it enjoys technology-sharing arrangements. Thermopac has received the prestigious British Retail Consortium (“BRC”) accreditation.
Thermopac
– Elsies River, Cape Town
Rigids division Revenue contribution to the Group
39%
Profit from operations contribution to the Group
54%
Astrapak Annual Report 2009
07
Cinqplast-Plastop extrusion blow moulds and injection moulds an extensive range of HDPE, PP and PVC bottles, jars and closures. The company is also able to offer a wide range of decoration facilities including UV silkscreen and pad printing, foiling, labelling and sleeving.
This company – a joint venture with Weener Plastics of Germany – is located on the Plastop site and specialises in the manufacture of extrusion blow-moulded hollow PP balls for roll-ons.
The PlasTech group of companies produce a range of small plastic containers for the healthcare, home and personal care, beverage and industrial markets. In addition to being in a position to offer both polyolefin and PVC products, PlasTech also produces a comprehensive range of PET bottles. As an added advantage, PlasTech is able to add value by decorating containers thus broadening its ability to provide a comprehensive in-house service.
Consupaq is a niche producer of jars and tubes for the personal-care industry. The company also extrudes multilayer tubes for those products where additional barrier properties are required. In addition the company offers very high-quality offset and UV silkscreen printing and labelling.
Hilfort operates out of both Cape Town and Bloemfontein and specialises in the production of high-quality PET and HDPE containers – up to five litres in size – mainly for the beverage and food industries. The company also produces a range of closures and has some silkscreen printing capacity. Hilfort recently installed a six-layer extrusion blow moulder for products where high barrier is required.
Cinqplast-Plastop
– Denver, Johannesburg
Euromatic-Plastop
PlasTech
Consupaq
Hilfort Plastics
– Ekandustria, Bronkhorstspruit
– Wilsonia, East London
– Durban North
– Stikland, Cape Town/Bloemfontein
Plastform was founded in 1980 as an independent company and has since grown to become South Africa’s leading supplier of PP and PS thermoformed cups, tubs and trays, primarily for the dairy and food-related markets. They also have a number of offset printers for high-quality decoration of their containers.
Plastform
– Lansdowne, Cape Town
Marcom produces a wide range of thin-wall injection-moulded PP tubs, containers and lids for the dairy industry. They also manufacture some sundry items such as beer cups and food trays for the catering and hospitality sectors. The company specialises in In-Mould Labelling (“IML”) and are also able to decorate their containers through the use of offset printing.
Marcom Plastics
– Rosslyn, Pretoria
Astrapak Annual Report 2009
08
Business profile continued
Initially established to supply PVC shrink labels to the beverage industry, Diverse Labelling Consultants (“DLC”) has since expanded into related technologies, such as tamper-evident neck bands, stretch labels, wraparound labels and flexible packaging for the confectionery industry. DLC operates in South Africa’s labelling market, and enjoys an ever-growing share of the flexible packaging market for the country’s major confectionery manufacturers. It has particular competence in the market for high-quality, flexo-printed, narrow-web flexible packaging materials.
Situated in custom-designed premises, Astraflex works in conjunction with DLC, through a common marketing arm, to provide customers with the mix-and-match convenience of a “one-stop shop”. Customers requiring high-quality printed flexible packaging include producers of confectionery, baked and frozen products, spices and cereals. There are also numerous customers in the pharmaceutical, medical and personal-care sectors.
Tamperpak was established to complement the products offered by DLC – specifically to supply the Gauteng and Cape markets for short-run, undecorated tamper-evident sleeves. The company primarily supplies sleeves into the cosmetic, personal-care, pharmaceutical, food and industrial markets.
Diverse Labelling Consultants*
Astraflex*
Tamperpak*
– Pinetown, Durban
– Pinetown, Durban
– Pinetown, Durban
Saflite was established to take advantage of the burgeoning market in stand-up pouches. In its short history, this innovative operation has taken a sizeable share of the stand-up pouch market for both food and non-food products. The company also offers a range of stand-up pouches with resealable zippers, providing customers the added convenience of easily resealable packs – a strong marketing plus for brand owners. Applications include confectionery, baking powder, dry yeast, DIY products, pet foods, pool chemicals, fabric softeners and, more recently, unique stand-up pouches for wine.
Saflite
– Diep River, Cape Town
Flexibles division Revenue contribution to the Group
19%
Profit from operations contribution to the Group
14%
*Denotes discontinued operations
09
Astrapak Annual Report 2009
Astrapak Flexibles is the sales and marketing company within the Flexibles Division. It strives to provide customers with the mix-and-match convenience of a “one-stop shop” for flexible packaging and labelling solutions.
Astrapak Flexibles*
– Durban, Johannesburg
Cape Wrappers specialises in very modern printing, laminating and blown film technology. Capabilities include flexographic printing to eight colours and a variety of laminating methods. The company supplies packaging material to a number of industries, focuses on blue-chip and multinational companies and fosters long-term relationships with its customers. The factory is AIB certified and has won numerous local and international quality awards.
Cape Wrappers*
– Paarl
Astra Repro provides an invaluable service to the Flexibles Division and the Group as a whole via its dedicated in-house reproduction facility. In addition to ensuring that prepress adjustments and proprietary know-how remain strictly confidential, the in-house reproduction capabilities bring numerous advantages for the Group operations and their customers, including improved turnaround times, reduced costs and improved control over the production of photopolymer printing plates.
Astra Repro*
– Pinetown, Durban
Alex White is a sheet-fed litho printer specialising in a number of packaging niche markets. The major products supplied are in-mould, wraparound and canning labels.
The company also produces pre-paid cellular phone cards and a range of horticultural packaging.
Alex White
– Lea Glen, Roodepoort
Knilam manufactures very specialised packaging systems utilising Modified Atmosphere Packaging (“MAP”) technology. Applications are typically for shelf-life extension of perishable food products, such as fresh produce. In addition, the company processes and supplies peelable lidding film systems.
Knilam Packaging
– Westlake, Cape Town
Standard Labels specialises in printing high-quality plastic and paper labels, packaging films and shrink sleeves for their home, as well as the wider Indian Ocean and East African markets. With a focus on beverage labelling, Standard Labels enjoys a major share of the Mauritian, Réunion and East African markets.
Standard Labels*
– Mauritius
*Denotes discontinued operations
Astrapak Annual Report 2009
10
Directorate
BCom (Accounting)Chairperson Independent non-executive director
Phumzile Langeni is also the Executive Chairperson of Afropulse Group. She previously served as an economic adviser to the Honourable BP Sonjica, the Minister of Minerals and Energy. Prior to that Ms Langeni was Vice President of Investor Relations and an executive director of Anooraq Resources. A stock-broker by profession, Ms Langeni has served as an executive director of Barnard Jacobs Mellet (“BJM”) Securities, Mazwai Securities and Real Africa Durolink (“RAD”) Securities. Ms Langeni has been involved in some substantial market transactions, including the Sanlam IPO, the Telkom IPO. Ms Langeni serves on the boards and sub-committees of Massmart Holdings, Imperial Holdings, the Port Regulator, the Mineworkers’ Investment Company (“MIC”), Peermont Holdings, Born Free Investments 55, Double Ring Trading, Summer Sun Trading, Two Ships Trading, Lloyd Vincent Investments and Transaction Capital.
Phumzile Langeni x (35)
Chief Executive OfficerExecutive director
Marco Baglione started in the packaging industry in March 1984. He progressed through the ranks within Nampak Limited before leaving to establish PAK 2000 in Durban in 1994. He joined Astrapak in 1997 when the company acquired an equity share in PAK 2000. He was appointed Divisional Chief Executive – Rigids Division in July 2002. Marco was appointed Chief Executive Officer on 6 June 2008.
Marco Baglione † • (47)
BCom (Accounting)Chief Financial OfficerExecutive director
Manley Diedloff completed his articles with Fisher Hoffman & Stride in December 1994. He was then employed as a Financial Manager with Bupa Health Services in the United Kingdom before joining HSBC Bank Plc as Internal Audit Manager. Upon his return to South Africa, he joined Grinaker Construction as an accountant and after three years moved to Astrapak as Group Accountant. He was appointed to the Board on 1 January 2005 and has held various positions in Astrapak including that of Group Financial Manager, Group Commercial Manager and Business Development Director. He was appointed Chief Financial Officer on 1 December 2008.
Manley Diedloff • (39)
BA LLB, Dip Company Law, Dip TaxNon-executive director
Paul Botha is Chief Executive Officer of Metier and principal of the Lereko Metier Capital Growth Fund. He is an Attorney and Notary Public having been in private practice since 1986. In 1998 he established an advisory division for Brait and was its CEO until 2003. Previously he was a senior commercial law partner in the Johannesburg practice of Bell Dewar & Hall, where he specialised in mergers and acquisitions and cross-border work across a number of industries. Paul has an outstanding record in executing more than 250 corporate transactions of which the majority have involved private equity transactions and the entrepreneurial multi-disciplinary assignments which Metier targets.
Paul Botha †‡* (46)
Astrapak Annual Report 2009
11
† Member of the Remuneration Committee
* Member of the Audit Committee
x Nominations Committee
‡ Non-independent
• Transformation Committee
BCompt (Hons), CA(SA)Company Secretary
Elmarie Cornelius completed her articles with Logista Incorporated in 2002 and qualified as CA in 2006. She worked as internal auditor, accountant, group accountant and financial manager for South African Forestry Company Limited with a brief stint as accountant at Marlin Granite (Pty) Ltd in between. Before joining Astrapak in November 2008 she worked for the Road Accident Fund as manager.
Elmarie Cornelius (31)
Higher Diploma – Mechanical Engineering, MBA, Diploma in Company Direction Engineering, Government Certificate of CompetencyNon-executive director
David Noko started his career at GEC (now Alstom), an international manufacturing company. In 1987, he joined South African Breweries where he reached senior management level in 1991. He then joined Pepsi Cola International in 1994. In 1997 he joined Air Chefs (Pty) Ltd, the largest airline catering company in South Africa at the time and took over as CEO in 1999. From 2002 to date, he has been at De Beers where he was appointed Managing Director in February 2006.
B Journ, BSc Hons (Psych), MSc (Clin Psych)Non-executive director
Khumo Seopela was appointed to the Board on 27 March 2007. She has more than 13 years’ experience in the mining industry within various human resources-related roles and has worked in a wide variety of capacities. She is an Executive Director at Royal Bafokeng Holdings (“RBH”), responsible for HR and transformation. Prior to joining RBH in February 2007, she was the Vice President, Human Capital of Lonmin Plc, South African operations. She was a member of the executive as well as the Chief Executive Forum of Lonmin. Prior to that she was the head of transformation at De Beers Consolidated Mines and a member of that company’s executive committee. Khumo has also worked for Anglo American Platinum Corporation as the Group HR Planning Consultant and has occupied senior HR roles at Transnet and Goldfields of South Africa.
David Noko † (50)
Independent non-executive director
After taking banking exams in Germany he worked for banks in Canada, Switzerland and France. Dresdner Bank AG transferred him to London to establish the Bank’s office there. As general manager he ran Dresdner Bank in London for 25 years and subsequently managed their business as Geographic Head for South and southern Africa in Johannesburg. He retired in 2002 and now is Non-executive director on a number of listed and unlisted companies in SA, Germany and UK.
Günter Steffens * (72)Khumo Seopela ‡ x (44)
Astrapak Annual Report 2009
12
Executive committee
Keith Watkins (57)
Group Marketing ExecutiveChief Operating Officer
Charles Muller (50)
Films Inland
Herman Jacobs (48)
Films Coastal
Geoff Cuttler (54)
Barrier Products
Henk de Klerk (39)
Rigids CoastalRigids Inland
Alan Payne (52)
Rigids PET
Robin Olbrich (48)Craig Lowe (46)
“Changing ways and a re-energised team has impacted positively on the
Group as a whole. Well done to all our employees.’’
Marco Baglione – Chief Executive Officer
Chief Executive Officer’s report
Astrapak Annual Report 2009
13
Astrapak Annual Report 2009
14
Chief Executive Officer’s report continued
Group reviewTurning around a tough start
The tough operating conditions that commenced in the
previous financial year continued into the 2009 financial year
and, at the halfway mark, our results were below target.
The first six months up to August 2008 were characterised
by continually rising polymer prices, a general slowdown in
consumer spending, continued high local interest rates, rising
fuel prices and an inability to recoup these increases from
customers timeously. Turnover was static save for raw material
price-related increases whilst we experienced margin loss
across all areas of the business.
A shortage of locally produced polymers necessitated increases
of imported product. The longer lead times required greater
stockholdings and, together with the high prevailing interest
rates, impacted dramatically on working capital and gearing.
However, despite all these challenges, I am pleased to report
that in the second half of the year we have seen a significant
turnaround.
Turnover from continuing operations increased by 16% for the
year ended February 2009 to R2,75 billion, with profits from
operations, excluding a loss on the sale of a subsidiary, increasing
by 13% to R251 million. Net debt reduced by 21% and cash
generated from operations rose by 207%. This has been
achieved in spite of a real decline in non-durable household
consumption expenditure. Although local interest rates started
a slow decline at the end of 2008, the effective interest rate
for the year was 1,7% higher than the previous year and this
resulted in a greater interest expense.
Focused strategy introduced
Since October 2008 a 10-point strategy was introduced.
This five-year programme has several distinct phases which
is expected to result in a more professional, streamlined and
focused business model.
In line with the 10-point strategy, we re-organised our operational
and management structures. The Rigids and Films Divisions now
have their own divisional boards which include a divisional financial
director for each. Selected individuals from these two entities
comprise the Executive Committee which takes responsibility
for all operational matters for the Group. This has resulted in
improved communication, clarified reporting lines and increased
accounting and management skills at operational level. In addition,
a Group marketing position has been created to ensure a more
coordinated, collaborative and cohesive approach to developing
integrated packaging solutions for customers.
A common company-wide integrated management information
system has been lacking and, as a result, Syspro, which has been
in place in several of the Rigids’ companies, has now been rolled
out to every operating entity within the Group.
Along with this, the introduction of World Class Manufacturing
(WCM) – a total quality management system – is proving to
be another of the cornerstones of the Group’s turnaround.
Not only are we bringing each operation in line with global
benchmarks – of real value for many of our internationally
aligned customers – it just makes good business sense.
Traditionally, change is met with resistance but the manner in
which WCM has been accepted and embraced on the shop
floor is extremely satisfying.
Astrapak Annual Report 2009
15
Through WCM workers across the spectrum are empowered
to make decisions and the sense of ownership and pride that
it brings is inspiring. Our internal newsletter Unpacked is full
of real-life savings and improvements achieved through this
programme.
Improved communication and management information systems
have combined to draw down inventories of both raw materials
and finished goods. Debtors’ days have been reduced and
performance benchmarks introduced. Improvement in cash flow
is evidence of these initiatives.
Product innovation is one of the core benefits of plastic over
other packaging materials, but this requires ongoing capital
investment. We have introduced a more stringent process
of capital expenditure approval to ensure that projects
embarked upon meet their timing and profitability projections
as scheduled. In addition, we are looking to expand our
international technology-sharing agreements as it makes sense
to partner with organisations that are already leaders in their
area of specialisation rather than to re-invent the wheel locally.
An aggressive plan to extract unnecessary costs from the entire
operation is well under way. Signalling the serious intent of this
programme was the immediate decision to relocate head office
from leased premises in Sandton to owned premises at the
Denver operation in South-east Johannesburg. We are targeting
significant cost reductions over the next two financial years, but
we will not cut corners or embark on activities that prejudice
quality, delivery or our core values. We are committed to a
least-cost mantra so as to ensure we secure full value at every
point in the business.
Bulk of Flexibles to be sold
A significant truth to emerge from a review of our business is
that we would not be good parents to some of our existing
Flexible businesses into the future. Within Astrapak, Films and
Rigids have historically accounted for around 80% of turnover
and almost 90% of profit. Astrapak has decided to focus on
these core areas and therefore decided to divest of most of
the Flexibles’ companies within the Group.
Two companies – Knilam and Saflite – occupy key niche
markets and, together with Alex White, will be retained and
will be incorporated into the Films and Industrials Divisions
respectively. Saflite has taken the international wine market by
storm with their world-first Astrapouch®, an environmentally
friendly alternative to traditional glass bottles. Growth potential
in this new packaging category is enormous.
This transaction with Afripack Consumer Flexibles (Pty) Ltd,
a wholly owned subsidiary of Afripack (Pty) Ltd, is still subject
to a number of conditions precedent being fulfilled, which
includes Competition Commission approval. The proceeds
will be used to settle all third-party liabilities related to the
operations being disposed of, with the remainder earmarked
to reduce the Group’s overall gearing.
Strategically it is our intention to grow our presence in the Films
and Rigids markets.
Films Division continues to develop into a good
business
The Films business has struggled from a margin perspective in
recent years but improved performances at East Rand Plastics
and Packaging Consultants – the two biggest operations in the
Division – have significantly improved financial performance.
Revenue was up almost 16% and operating profit over 69% to
R88 million. Once again, the introduction of WCM has made a
meaningful impact on performance in this Division and the roll-
out process to all operations is well under way.
Astrapak Annual Report 2009
16
Chief Executive Officer’s report continued
Rigids Division, a business with opportunity
Turnover growth of just over 16% in the Rigids Division has
been largely on the back of rising input prices. While margins
decreased slightly in the face of market conditions already
mentioned, profit at R154 million ensured that Rigids was the
largest contributor to the Group’s bottom line.
The Division embarked on an extensive skills upgrade
programme with client-facing staff. This improved professionalism
is evident in the results and a similar programme will be
extended to all Group companies in the current financial year.
Industrial returns a mixed bag
While revenue was up almost 44%, operating margins were
almost halved because of trading difficulties at ITT, where
production volumes declined because of the closure of their
largest customer.
Niche player Geotex/Plusnet benefited from significant capital
investment and the successes achieved through its innovative
approach are likely to open new doors in the construction and
mining sectors in the future.
Board changes
Several changes were made to the Board and reported during
the year.
In keeping with recommendations of the King Code of Good
Corporate Governance the Board was re-organised and is now
made up of a majority of independent non-executive directors
who head up the various sub-committees. Changes made to
non-executive directors included:
> Khumo Seopela has stepped down as acting chairperson and
will continue to serve as a non-executive director.
> Independent non-executive director John Buchanan has
resigned.
> Phumzile Langeni has been appointed as independent non-
executive director and chairperson.
> Günter Steffens has been appointed as independent
non-executive director and will Chair the Audit and Risk
Committees.
Details of other changes to the Board appear on pages 28 and
29 of this annual report.
Outlook, optimism tempered with reality
Ongoing uncertainty in global markets continues to exert
negative influence in South Africa. This along with still relatively
high local interest rates, a slowing economy and increasing
threats of job lay-offs in several sectors is of concern to us as
suppliers of packaging to the consumer and industrial markets.
While the Rand has held its own against other currencies,
the much-anticipated global increase in supply of polymers is
taking longer to come on stream because of global economic
jitters. The polymer outlook therefore is for expected price
increases in the short- to medium-term. In addition, prospects
of significant increases in the cost of electricity are of major
concern and will have a real impact on cost of production.
Astrapak Annual Report 2009
17
Our outlook, however, is cautiously optimistic. The 10-point plan
to improve internal efficiencies, professionalise our business
and adopt WCM has already shown huge improvements in
the short term. The turnaround in the second half of the 2009
financial year was mainly as a result of these activities and
I expect the benefits to grow as we become better at their
implementation. We are well advanced with initiatives to reduce
our consumption of electricity and have recently completed
an audit in this regard. Actions proposed to improve our
consumption are already being implemented.
Changing ways and a re-energised team has impacted positively
on the Group as a whole. Well done to all our employees.
Warm note of thanks
The 2009 financial year will likely be remembered as a
watershed year in Astrapak’s history. Turbulent market
conditions – both locally and internationally – created
conditions that required the Group to focus inwardly on the
short term.
It has been the buy-in and commitment of our 4 390-member
workforce that has made the biggest positive impact. There is
a sense of renewed energy and enthusiasm – the kind of spirit
that founded the Group. Importantly, it’s tempered with the
realities of being part of a larger entity and the responsibilities
that it brings.
On behalf of the Board and shareholders, I extend our sincere
appreciation for the efforts shown from shop floor to board
room. Without everybody’s involvement and buy-in we would
not be as far down the turnaround road as we now are.
We would also like to extend a warm word of thanks to all
our former directors who have resigned or retired during the
year, with a special mention to Ray Crewe-Brown who was
instrumental in guiding Astrapak over the last ten years.
We are looking forward to a successful future. We have re-
organised our business, instituted new controls, focusing on
extracting internal synergies and have a committed workforce
in place. We understand that customers are our life-blood and
that we need to treat people with dignity.
Marco Baglione
Chief Executive Officer
31 July 2009
“Through its various initiatives and ongoing capital investment
programme a platform for long-term value creation is being laid
which bodes well for the future of the business.’’
Manley Diedloff – Chief Financial Officer
Chief Financial Officer’s reportincorporating the divisional review
18Astrapak Annual Report 2009
Astrapak Annual Report 2009
19
Stakeholders are advised to read this report in conjunction with
the consolidated annual financial statements presented on pages
41 to 92. The purpose of this report is to provide further insight
into the financial performance and position of the Group and
the key factors which influence the financial results.
Key factors affecting operating performance
a. Polymer and crude oil prices
The crude oil price has increased significantly since 2006 and
has become more volatile in recent years due to the rapid
growth in the Asian economies and their consumption, coupled
with an erosion of excess oil production capacity.
LDPE price and trend line for 2001 to 2009
2001
■ LDPE ■ Linear (LDPE)
0
4 000
8 000
12 000
16 000
2009
The same issues are impacting directly on polymer prices. Although
there is a direct correlation between polymer and crude oil prices
over a prolonged period, supply and demand have in recent years
been more of a driver than the crude oil price. When the crude oil
price is on the increase, we have seen polymer prices increasing at
a faster rate than the oil price and when crude oil prices are on the
decrease we have seen polymer prices decrease at a much slower
rate than the crude oil price, if at all. The eagerly awaited additional
polymer production capacity which was due to be on stream in
2008 has been delayed given the current economic climate and
there is therefore still a shortage of polymers around the world
which will continue to impact negatively on the price of polymers
going forward. What is required now is stability in polymer prices
as this will allow converters to protect margins from any further
downward pressures.
b. Exchange rates
The Rand/US Dollar and other exchange rates significantly
affect a large proportion of our business. Local polymer prices
are based on import parity and as a result the exchange rate
can have a significant impact on the cost of our materials and
therefore our operating margins.
As the equipment utilised in our production processes cannot
be produced locally we import such equipment and the
exchange rate can therefore impact on initial capital outlay. In
periods of extreme currency volatility the exchange rate can
impact materially on the feasibility of a capital project.
In order to protect our operations from the effects of exchange
rate volatility, taking into account the weakening Rand over the
long term, we hedge both our capital expenditure and foreign
currency denominated imports by means of forward exchange
contracts. This hedging strategy enables us to better predict
cash flows and thus manage our working capital and debt more
effectively.
Astrapak Annual Report 2009
20
Chief Financial Officer’s report continued incorporating the divisional review
c. Consumer spending
In the current economic climate and with international markets
remaining volatile, consumer confidence and spending will
remain under pressure. The 4% reduction in interest rates by
the Reserve Bank, together with the massive capital expansion
projects undertaken by government will assist in stimulating
the local economy and forecasts are for growth in non-durable
consumer spending to turn positive during the next 12-month
period, compared with a negative trend over the last three
quarters.
% change in non-durable consumer spending (quarterly)
2003
2004
2005
2006
2007
2008
2009
Quarterly % change in consumer spending for 2003 to end of 1st quarter 2009
-2
-1
0
1
2
3
4
5
6
7
8
volume growth came mainly at the expense of competitors and
as a result of product substitution.
d. Cost environment
The steep expected increase in the cost of electricity and other
expected cost increases in areas such as wages and distribution
are of concern to the Group. This being said, capital allocation
and cost-reduction programmes, tighter financial disciplines
and plant-level productivity initiatives are being targeted to
ensure that the Group continues to grow margins, cash flow,
profitability and returns to shareholders.
e. Capital projects
Most of our operations are highly dependent upon the use
of advanced and ever-changing technologies and a number
of our expansion projects are integrated across a number of
our businesses. These technologies can affect, amongst others,
the competitiveness of products, the continuity of operations
and capacity and efficiency of production. Given the current
economic climate all capital projects, irrespective of the value
thereof, are presented to the Board for approval. A number
of exciting projects are currently under consideration and
the benefits of these capital investments should manifest
themselves in the numbers over the next reporting period.
Although the Board has adopted a very cautious approach
in this regard it should not jeopardise the future earnings of
the Group.
The positive volume growth of 3% reported by the Group over
the last 12 months again illustrates the defensive qualities of
the portfolio of companies and products within the Group. This
21
Astrapak Annual Report 2009
Financial performance
Items that had a significant impact on the financial results for the financial year :
A number of items impacted significantly either on the results reported or the format in which the results were presented:
Item or event Impact on results or presentation thereof
In a SENS announcement dated 31 March 2009 the Group
advised shareholders that it had agreed terms for the disposal
of certain businesses within the Flexibles Division to Afripack
Consumer Flexibles (Pty) Ltd, a wholly owned subsidiary of
Afripack (Pty) Ltd.
The disclosure requirements of IFRS 5: Non-current assets held-for-
sale and discontinued operations were adopted:
> Depreciation on relevant assets ceased as at date decision to
dispose was made;
> Income statement results were split between continuing and
discontinued operations;> All sale assets and liabilities were re-allocated to assets held-
for-sale (current assets) and liabilities directly related to assets
held-for-sale (current liabilities);
> Net book value of sale assets and liabilities were marked
to sale proceeds and impairments processed to the extent
required;> All deferred tax assets were reviewed and impaired to the
extent that it would not be utilised through the proposed
transaction.
A resolutive condition contained in the sale of shares
agreement entered into with the original vendors of Riverbend
Trade and Invest 50 (Pty) Ltd (“Spuntech”) was fulfilled and as
a result the sale agreement is null and void.
For accounting purposes this had to be treated as a disposal
of a subsidiary. This resulted in the Group recognising a loss
on disposal expense of R13,6 million during the current
financial year. The amount represents the total potential loss
for the Group and no further expenses should be incurred in
respect of this matter. The parties are still in arbitration and any
recoveries will be recorded as receipts in future periods.
Impairment review on all assets. As required in terms of International Financial Reporting
Standards a full review and valuation of all assets was
undertaken by the Group and deferred tax assets to the
value of R21,7 million were identified for impairment. These
impairments are non-recurring in nature and the actual tax
losses will still be available for utilisation in future periods.
IAS 39: Financial Instruments: Measurement and Recognition. As required in terms of IAS 39 a liability was raised to reflect
the financial liability of the Group in relation to contractual put
options afforded to minorities – this amounted to R18,9 million.
The comparative numbers were restated to reflect the liability
of R44,4 million as at the end of the previous financial year.
Expenditure of a once-off nature. During the financial year non-recurring expenditure of
approximately R5,0 million was incurred by the Group. This
included various professional and consultancy fees.
Astrapak Annual Report 2009
22
Chief Financial Officer’s report continued incorporating the divisional review
Financial performance – an overview
Challenging trading conditions prevailed throughout the financial
year with downward pressure on margins remaining a feature of
the results. Relentless increases in polymer prices during the first
three quarters of the financial year, negative growth in consumer
spending, especially in higher-end markets, and a continued
resistance from customers to accept price increases timeously
all impacted negatively on margins. To combat these pressures an
aggressive approach focused on reducing costs, improving internal
efficiencies and extracting synergies was adopted in the second
half of the year and this impacted positively on the results and will
continue to do so into the future.
Higher interest rates during the year had a material impact
on the Group as they affected consumer spending and the
cost of servicing debt providers and preference shareholders.
The average interest rate during the year under review was
1,7% higher than during the comparative period. The current
downward trend in interest rates should impact positively on
the results of the Group going forward.
Turnover for the year increased by 16% compared to the prior
year. Acquisitions accounted for 1% of the increase in turnover,
volume growth in turn accounted for 3%, whilst 12% was due
to sales price increases related to the recovery of raw material
and other input costs.
Profit from continuing operations, excluding the loss on the sale of
Riverbend Trade and Invest 50 (Pty) Ltd (“Spuntech”), increased
by 13% to R250,9 million (2008: R221,2 million) and the resultant
operating margin decreased to 9,1% (2008: 9,3%). Operating
overheads increased by 17% as a result of an increase in capacity
from capital investment, increases in distribution costs associated
with increased fuel prices, wage increases in excess of inflation,
significant increases in the cost of electricity and other aspects of
a rapidly increasing cost environment. Once-off expenditure of
approximately R5,0 million was incurred during the year. During the
year the Group introduced measures to address increasing costs
and initial benefits from these measures have already materialised.
A resolutive condition contained in the sale of shares
agreement entered into with the original vendors of Spuntech
was fulfilled and as a result the sale agreement is null and void.
An impairment expense totalling R13,6 million has been made
in the year and this is accounted for as a loss on the disposal
of a subsidiary. This expense is not of a trading nature and is
added back for the purposes of determining headline earnings
and therefore headline earnings per share (“HEPS”).
Net interest paid of R85,8 million (2008: R66,2 million) was
significantly higher than that of the prior year as a consequence
of higher interest rates, and increased borrowings utilised for
expansion, capital expenditure and working capital requirements
during the first half of the year. Attention applied to working
capital management reduced working capital investment by
R81,4 million and this impacted positively on the level of gearing
by year-end.
Taxation amounted to R82,9 million (2008: R42,4 million) and
includes the payment of Secondary Taxation on Companies
of R2,0 million (2008: R6,2 million and the reversal of certain
deferred tax assets, totalling R21,7 million, raised in subsidiary
Astrapak Annual Report 2009
23
companies during prior financial periods. In addition, tax losses
totalling R22,7 million were incurred against which no deferred
tax assets were raised. As a result the effective tax rate was an
unusually high 54,7% (2008: 27,4%). The sustainable future tax
rate is expected to approximate the company income tax rate
of 28%.
The loss on discontinued operations for the period was
R3,6 million (2008: R1,3 million).
No new acquisitions or major investments were completed by
the Group during the period under review. Capital expenditure
incurred was R188,7 million and the Group acquired minority
interests in the Plastech group of companies, Consupaq (Pty)
Ltd, Saflite Cape (Pty) Ltd and Astra Repro (Pty) Ltd for a total
purchase consideration of R31,6 million.
Improved cash generation by operations, the lower capital
investment and the release of R81,4 million from working
capital, meant that the Group was able to reduce its net debt
position to R441,9 million (2008: R562,2 million) resulting in the
ratio of net interest-bearing debt to equity decreasing from
72% in the prior year to 53%. This is expected to reduce further
in the financial year ahead.
HEPS increased by 4,5% against the comparative period to
72,1 cents (2008: 69,0 cents). Fully diluted HEPS increased by
6,4%. Normalising HEPS for the effect of the non-recurring
deferred tax asset reversals would have resulted in HEPS
growth of 23%, being 84,7 cents per share.
The comparative figures for 29 February 2008 were restated to
reflect the disclosure requirements of IFRS 5. The comparatives
were further restated to reflect the financial liability of the
Group in relation to contractual put options afforded to
minorities. This liability was raised in terms of IAS 39: Financial
Instruments: Recognition and Measurement. This restatement
does not impact on the income statement for the comparative
period. The standard does not allow for the valuation and
bringing to book of the corresponding call option issued in
favour of the Group and only the liability is therefore recognised
in terms of this standard.
Financial performance – Divisional
Overall all divisions were faced with the same challenging
trading conditions. The focus on continual improvement
delivered cost savings which assisted in growing margins during
the second half of the financial year.
The innovation and product renovation strategy is continuing
to create new opportunities and a number of new projects are
currently under consideration across all the divisions. Through its
various initiatives and ongoing capital investment programme a
platform for long-term value creation is being laid which bodes
well for the future of the business. All of this has translated into
significant top-line growth across all divisions and will continue
to do in the future.
Profitability, for reasons already mentioned, was a particular
challenge with Rigids and Industrial performing below
expectations. Industrials was negatively impacted as a result of
the significant loss of turnover suffered by ITT with the closure
of the SANS plant in Cape Town. Rigids was negatively impacted
by customer resistance to timeously accept price increases,
shortages in the dairy industry and a slowdown in spending by
consumers on higher-end packaging. Films and Flexibles showed
improvements in performance but are still performing well
below expectations.
Profitability into the future will be enhanced by increased focus on
efficiencies, rigorous cost-management programmes, the extraction
of synergies across divisions and a customer-centric approach.
Astrapak Annual Report 2009
24
Chief Financial Officer’s report continued incorporating the divisional review
Divisional and Group performance 2008 and 2009
R’000 2009 2008 % change
Films DivisionTurnover 1 283 970 1 108 201 15,9Operating income 86 396 52 182 65,6Operating margin (%) 6,7 4,7
Rigids DivisionTurnover 1 282 346 1 102 982 16,3Operating income 153 832 149 616 2,8Operating margin (%) 12,0 13,6
Industrial Division (including discontinued operations)Turnover 81 851 56 965 43,7Operating income 4 242 5 449 (22,2)Operating margin (%) 5,2 9,6
Flexibles Division*Turnover 614 922 552 729 11,3Operating income 39 690 22 246 78,4Operating margin (%) 6,5 4,0
*Including discontinued operations.
Financial strategies and targets
The Group reviews its performance by focusing on certain key
financial ratios which it believes takes into account all of the
key drivers impacting on the financial results.
The Group has defined a number of targets to measure its
financial performance against and continually monitors its
performance against these targets. When necessary, targets
are revised to take into account any changes in the Group’s
strategic outlook. The key indicators of our operating
performance during the year were as follows:
Restated20082009
ProfitabilityTurnover (continuing) (R’000) 2 750 2 366EBITDA (continuing) (R’000) 379 331Operating margin (continuing) (%) 9,1 9,3Headline earnings per share (cents) 72,1 69,0
Financing and liquidityNet debt to equity (%) 52,6 71,9Net working capital days 36,8 43,9Current ratio (:1) 1,4 1,3
Asset managementCapital expenditure (R’000) 188 717 262 531Asset turn (times) 2,5 2,1Return on assets managed (ROAM) (%) 21,8 17,1
DividendsThe economic outlook for 2009 remains weak, with limited
visibility, continuing volatility and downward pressure on margins.
Notwithstanding the success of the measures taken to date, the
Board has decided not to declare a dividend for the financial
year being reported in order to preserve funding for the Group’s
strategic internal growth options which the Board believes to be
very attractive. The position in respect of dividend payments will
be re-assessed by the Board in the future.
Under normal economic and trading conditions, the Group should
seek to maintain its stated distribution policy as recorded in note
21 on page 71 of this annual report.
AcknowledgementsThrough the dedication and enthusiasm of our financial
personnel, we will strive to produce quality financial information
for all stakeholders, which reflects our objectives and values.
We extend our thanks to all for their ongoing support and
commitment.
Manley Diedloff
Chief Financial Officer
31 July 2009
Astrapak Annual Report 2009
25
Sustainability
The Group recognises the value of and its obligation towards its people and will continue to invest heavily in training and development at all levels
IntroductionThe Group continues to be committed to sustainable
development and accountability as good corporate citizens.
Corporate accountability expects corporations to be more than
just profitable – they must demonstrate sustainable economic,
environmental and social performance over the long term. In
addition, South Africa faces its own challenges of economic and
social transformation.
The aim of this sustainability report is to demonstrate the
Group’s commitment to all stakeholders.
Our peopleThe Group recognises that its employees hold the key to its
ability to operate profitably, transform successfully and achieve
the leadership position it strives for.
The Group’s internal cultures place a strong emphasis on
skills development and training and, concurrently, the fostering
of a diverse and dynamic workplace, which capitalises on its
inherent potential.
The Group has a variety of participative structures at different
levels to allow for dealing with issues that affect employees.
These include collective bargaining mechanisms, safety
committees, employment equity and skills development
committees, transformation committees, productivity
committees and other participative forums. These structures
are designed to enhance an already healthy employee and
employer relationship through effective sharing of information,
the identification and resolution of issues of conflict as well as
consultation between various levels of employees.
The Group employs 4 390 people and although each company
has its own human resources policies and procedures, all
operate within the overall procedures of the Group’s human
resource directives.
Health and safetyThe Group is committed to maintaining a healthy and safe
working environment for all its employees. Health and safety
policies and stringent risk control standards are in place at all
of the Group subsidiaries.
Through the internal risk management process and external risk management authorities, regular reviews of safety, health and environmental standards and practices are undertaken.
It is the Group’s objective to promote the health and well-being of all employees, to offer specific personal and environmental protection against work-induced or work-aggravated hazards and not to place employees in work situations detrimental to their health.
EnvironmentAs a manufacturer of packaging materials the Group is well aware of the impact that its products and processes can have on the environment in which we live. As a good corporate citizen the Group acknowledges that it has, together with the end-user, an obligation to ensure that the environment is protected.
Astrapak therefore remains unequivocally committed to meeting and exceeding all applicable environmental rules and regulations and in so doing ensuring that it remains a responsible manufacturer and supplier of plastic packaging. The Group actively strives to preserve the environment, prevent pollution, eliminate waste generation and reduce all unnecessary resource consumption.
Key aspects of our environmental responsibility include the following:
Environmental leviesThe Group supports the collection of the various
environmental levies on polymer consumed and are paying
members of a number of industry organisations such as PETCO
and the Polystyrene Packaging Council (“PSPC”). Management
also plays an important role in the various industry bodies
including the Plastics Federation of SA (“PFSA”), the Polymer
Convertors Association (“PCA”) and the Packaging Council
of SA (“PACSA”).
We are also actively involved in the different initiatives to
address the potential impact of the recently promulgated Waste
Management Bill.
Three “Rs”The Group proudly supports and practises the principles of
Reduce, Reuse and Recycle. Our operations make every effort
Astrapak Annual Report 2009
26
Sustainability continued
to recover and recycle all scrap and waste polymer for reuse
in non-critical applications such as refuse bags. Several of the
factories have also installed in-house recycling equipment to
facilitate this process.
Recycling logosIn order to support the sorting – and ultimately the recycling – of
plastic items produced from the different polymers we endeavour
to incorporate, wherever possible, the internationally recognised
recycling identification logos (1 to 7) onto our packaging.
EnergyWe continue to ensure the efficient use of energy throughout
all of our operations. During the year the Group commissioned
an external energy audit to find ways to conserve and minimise
its consumption of electricity. The Group is currently acting on
the findings of this energy audit.
Biodegradable polymersThe Group recognises the international trends towards so called
“environmentally friendly” and biodegradable packaging and
is keeping abreast of various global market initiatives. Hydro-
biodegradable polymers such as those made from alternatives
to fossil fuels (eg PLA from corn) are being evaluated on a
continual basis. Unfortunately short supply, relative high cost and
lack of suitable composting facilities in South Africa have seen the
emergence of very few commercial applications.
Although the Group has continued with the inclusion of special
oxo-biodegradable additives – that break down the chemical
bonds of the polymer into film for bread bags there remains
industry concern that these materials are in fact not only
contaminating the recycling stream but also are destroying
packaging that should rather be recovered and recycled.
Broad-Based Black Economic EmpowermentThe Group, a Level 4 contributor, is committed to Broad-
Based Black Economic Empowerment (“B-BBEE”) and has
incorporated and implemented numerous structures and
strategies to ensure that it reaches acceptable levels of
compliance with the current and future requirements of any
legislation or codes of good practice. Besides viewing it as part
of its overall corporate responsibility, the Group believes the
following benefits can be derived:
> demonstration of the Group’s commitment to B-BBEE and
its contribution to the social and economic upliftment of the
country and its people;
> the preservation and enhancement of the Group’s current
markets and profitability;
> increased competitiveness of the Group; and
> increased attraction and retention of suitable black talent.
The Astrapak Limited Transformation Committee continues to
make a valuable contribution to ensuring that the Group moves
towards these acceptable levels of compliance. This committee,
which is chaired by senior management, is representative of the
Group’s workforce.
OwnershipThe effective ownership and economic interest of black people,
as defined in the dti Codes, (as read with its explanatory
memorandum) is in excess of 55,0%. This is mainly as a result of
the 20% equity stake held by the Royal Bafokeng Nation and the
28,4% stake held by the Lereko Metier Capital Growth Fund.
The Royal Bafokeng Nation, through its investment arm, holds
an equity stake of 20% in the Group. This is true broad-based
empowerment as the financial benefits are enjoyed by all
300 000 members of the Royal Bafokeng Nation, which has a
long track record of investing in the upliftment of its communities.
The Royal Bafokeng Nation has invested more than R2 billion in
infrastructure and development over the last few years.
Management, control, employment equity and skills developmentThe Group recognises its obligation to its employees and
stakeholders to ensure that its organisational structures and
human resources meet its current, short- and longer-term
business objectives. All Group companies are committed to
the training and development of employees at all levels and
to developing their potential through education, training, skills
transfer and targeted development programmes.
Rigorous strategies have been put in place to achieve this and
progress against targets is regularly monitored at all levels
within the Group. Participative structures have been established
within each company in the Group to effectively consult and
communicate on all matters in this regard.
Astrapak Annual Report 2009
27
The focus will remain on the identification, development
and retention of our people to ensure that we have the
appropriate people to lead the Group into the future.
Succession plans are drawn up and updated on a regular basis
to ensure the early identification of employees with potential
for advancement.
Although successes have been achieved in these areas, there is
ample room for further progress.
Enterprise developmentThe Group subscribes to the principles of supporting and
developing SMMEs and other similar organisations.
Izakhamzi Plastics (Pty) Ltd, one of the Group’s largest
enterprise development initiatives, has gone from strength
to strength over the last few years and remains one of the
preferred suppliers of refuse bags to municipalities within
South Africa. Together with our partners in this venture, we
are currently investigating further opportunities to expand the
capacity of the operation.
One of the cornerstones of the Group’s BEE strategy is to partner
with appropriate black companies for specific initiatives. Where
there is a good cultural fit and mutual respect, these relationships
may be formalised to ensure ongoing participation in future
initiatives.
Preferential procurementThe Group’s preferential procurement strategy addresses the
principles outlined in the dti Codes of Good Practice, whilst
continuing to uphold the Group’s excellent standards and
customer service levels. This strategy is used as a tool to achieve
the Group’s economic goals and to encourage socio-economic
transformation.
By involving itself in both preferential procurement and
enterprise development, the Group is able to position itself
effectively in terms of its own procurement needs.
Corporate social responsibilityThe Group has allocated a fixed percentage of its after-tax
profits to corporate social investment and supports the
following key focus areas:
> bursary schemes;
> training programmes in black schools;
> sports development; and
> health and welfare.
The Group has a formalised approach to corporate social
investment and the Astrapak Transformation Committee is
tasked with tackling areas of need in the communities in which
the Group operates. As far as possible, the selected focus areas
are aligned with government’s national priorities of education,
job creation and poverty alleviation.
The Group initiatives included the following:
SOS Children’s VillageAstrapak had previously committed to a minimum three-
year sponsorship of a house in the SOS Children’s Village in
Thornton, Cape Town. During this financial year Astrapak has
supported an additional house in the SOS Children’s Village
in Durban.
SOS Children’s Village is an international network of centres
operating in 135 countries around the world, caring for
over 300 000 orphaned and abandoned children. Children
are admitted with no regard for race, religion or nationality
and are given a permanent home in preparation for an
independent adult life. SOS encourages sponsors to become
part of the children’s lives, as an uncle-figure rather than a
faceless benefactor and it is in this regard that employees have
embraced their new-found family.
South African Institute of Entrepreneurs (“SAIE”)Over the last few years Astrapak has supported a community
outreach programme to provide scholars in the North West
region with entrepreneurial and basic business management
skills to enable them to conduct small businesses. It is estimated
that the impact of the first year of the SAIE programme would
be felt by more than 14 120 learners. The programme involved
the training of 728 educators from 81 schools in the region.
The programme has proven to be popular and very successful.
Astrapak again contributed to this initiative in the current year
and this enabled SAIE to extend their reach and offer the
programme to more scholars.
Astrapak Annual Report 2009
28
Corporate governance
IntroductionThe Board of Directors and management are committed to
the highest standards of corporate governance and are proud
of our moral and ethical business practices and standards, we
are also committed to timely and relevant reporting to all
stakeholders.
The Group supports the standards of good corporate
governance as set out by the King reports and associated Code
of Corporate Practices and Conduct. The Board of Directors
affirms its commitment to the principles endorsed by King II
which include transparency, independence, accountability,
fairness and responsibility. Astrapak has complied in all material
respects with King II for the financial year ended 28 February
2009. Astrapak also complies with all of the requirements for
corporate governance of the JSE Limited.
The Board and management continually review and enhance
the control and governance systems to ensure that the business
of the Group is managed within determined risk and ethical
parameters.
EthicsThe Group’s value system expects all its employees to maintain
high standards of integrity and ethics in dealings with suppliers,
customers, business partners, stakeholders, government and
society at large. The Board does not tolerate any form of
corruption, violation of law or unethical business practices. It
also advocates confidentiality in respect of information regarding
employees and information regarding the Group itself.
Astrapak is committed to:
> Carrying on of business through fair commercial competitive
practices;
> Removing discrimination and promoting employees through
training and development; and
> Being pro-active towards dealing with environmental and
social issues.
Astrapak prohibits any anti-competitive conduct which also includes
collusive conduct amongst parties or persons. Astrapak will not
tolerate any contravention of the Competition Commission
legislation and considers any infringement of this legislation by any
of its employees as a summarily dismissible offence.
Board of DirectorsDuring the last 12 months a number of steps have been taken
to re-align the strategic focus of the Board and to further
comply with the King Code of Good Corporate Governance.
The Board of Directors has a unitary structure which at the
date of this report, comprises five non-executive directors, of
which three are independent non-executive directors, and two
executive directors.
The following changes occurred to the Board of Directors
between 1 March 2008 and the date of this annual report:
Retirements and resignations:
> Mr R Crewe-Brown retired as chief executive officer and
executive director on 6 June 2008;
> Mr WJ Venter retired as executive director on
30 November 2008;
> Mr G Petzer resigned as executive director on
30 November 2008;
> Mr HA Todd resigned as financial director on
30 November 2008;
> Mr TG Kgage resigned as non-executive director on
30 November 2008;
> Mr J Buchanan resigned as independent non-executive
director on 18 March 2009.
Appointments:
> Mr M Baglione was appointed as chief executive officer on
6 June 2008;
> Mr PC Botha was appointed as non-executive director on
30 July 2008;
Astrapak Annual Report 2009
29
> Mr M Diedloff was appointed as chief financial officer on
1 December 2008;
> Ms P Langeni was appointed as chairperson and independent
non-executive director on 18 March 2009;
> Mr G Steffens was appointed as an independent non-
executive director and chairman of the Audit and Risk
Committee on 18 March 2009.
The strict separation of roles of the independent non-executive
chair and the chief executive officer underpins the Board’s
policy of a clear division of responsibilities at this level. This
ensures a balance of authority and precludes any one director
exercising unfettered powers of decision-making. The profiles
of the directorate are contained on pages 10 and 11 in this
annual report.
The appointment of new directors is approved by the Board as
a whole, subject to shareholder confirmation at the following
annual general meeting. An orientation programme for new
directors is in place to ensure they are adequately briefed
and have the required knowledge of the Group’s structure,
operations and policies to enable them to fulfil their company
duties and responsibilities.
The Board sets the strategic objectives of the Group, determines
investment policies, agrees on performance criteria and delegates
to management the detailed planning and implementation of
those objectives and policies. The Board monitors compliance
with policies and achievements against objectives by holding
management accountable for its activities. All directors bring
independent judgement to the issues of strategy, performance,
resources, key appointments and standards of conduct.
The Board meets approximately six times a year and has a
formal schedule of matters reserved to it. The Board retains full
and effective control over the Group and monitors executive
management through a structured approach to reporting and
accountability under the auspices of an Executive Committee.
Board committeesFive principal committees of the Board, to which certain
functions have been delegated, were in place during the year.
Each of these committees, other than the Executive and
Transformation Committees, is chaired by an independent
non-executive director.
Executive Committee
The Executive Committee is chaired by the Group chief
executive officer and all divisions or business units within the
Group have a representative on the committee. The committee
meetings are also attended by the Group chief financial officer
and Group company secretary. The committee meets monthly
as well as on an ad hoc basis for urgent matters of business.
It is the responsibility of the Executive Committee to develop
the Group’s operating strategy, its business plan and corporate
policies for Board approval, and to implement and monitor
these in accordance with the Board’s directives.
Audit and Risk Committee
The Audit and Risk Committee comprises two non-executive
directors, one of whom is independent and is responsible
for chairing the committee. The external auditors have
unrestricted access to the Audit and Risk Committee and
attend meetings to report their findings and to discuss
accounting, auditing, internal control and financial reporting
matters. The committee meets at least three times a year and
these meetings are also attended, by invitation, by the chief
executive officer and chief financial officer. The committee
operates in accordance with a written charter authorised by
the Board. Other members of the management team attend
as required.
The objectives of the Audit and Risk Committee are to:
> assess whether management has created and maintained
adequate systems of internal control;
> review the scope and outcome of both internal and external
audits;
The Group’s value system expects all its employees to maintain high standards of integrity and ethics in dealings with suppliers, customers, business partners, stakeholders, government and society at large
Astrapak Annual Report 2009
30
Corporate governance continued
> ensure the Board makes informed decisions and is aware
of the implications of such decisions regarding accounting
policies, practices and disclosures;
> identify and report on the status of financial reporting;
> establish and maintain an understanding of the risks impacting
on the business;
> ensure proper risk assessments are carried out and that a risk
profile is determined by management;
> evaluate the mitigating controls and other assurances in
identifying, assessing and managing risks;
> monitor and satisfy corporate governance reporting
requirements;
> recommend and evaluate the extent to which external
auditors are engaged for non-audit services and evaluate
their independence;
> satisfy itself of the expertise, experience and performance of
the chief financial officer and the internal audit function; and
> monitor the group’s risk management and report thereon.
Remuneration Committee
The Remuneration Committee consists of an independent
non-executive director, one non-executive director and the
Group chief executive officer. The committee is chaired by an
independent non-executive director. The Group chief executive
officer is excluded from review of his own remuneration.
The overall strategy is to ensure that the executives are
rewarded for their contribution to the Group’s operating
and financial performance at levels which take account of
industry, market and country benchmarks. To promote goal
congruence, share incentives are considered to be critical
elements of executive incentive pay. The committee meets
at least twice a year and is responsible for formulating
a strategy for senior executives in the Group. It also
makes recommendations to the Board concerning the
remuneration policies and principles of the Group. In addition
the Remuneration Committee is responsible for making
recommendations to the Board on all fees payable by the
Group to non-executive directors for membership of both
the Board and any Board sub-committees.
Transformation Committee
The Transformation Committee has been responsible for
incorporating, implementing and monitoring numerous
structures and strategies to ensure that Astrapak reaches
acceptable levels of compliance with the current and future
requirements of any legislation or codes of good practice.
The Astrapak Limited Transformation Committee consists of a
healthy combination of senior members of management and
workforce representatives. The committee meets two to three
times per year and its objectives are to:
> change and develop a culture that celebrates diversity;
> develop broader economic participation;
> develop a skills-based personnel profile more inclusive and
representative of the demographics; and
> measure achievements of transformation within the Group.
Nominations Committee
The Nominations Committee is empowered to consider the
composition of the Board and its committees. It considers
retirement, appointment, and replacement of directors, and is
required to make appropriate recommendations to the Board.
The committee also evaluates the balance of skills, knowledge
and experience of the Board.
The committee consists of two non-executive directors. It is
chaired by the chairman of the Board.
Insider tradingNo employee may deal directly or indirectly in Astrapak shares
on the basis of unpublished information regarding its affairs. No
director or officer may trade in the shares of the Company
during a closed period determined by the Board. The closed
periods are between the reporting period date and the date
of publication of results for the period. Where appropriate, a
closed period is also operated during periods where major
transactions are being negotiated and a public announcement
is imminent.
Astrapak Annual Report 2009
31
Employment practicesThe Group and its employees aim to be professional in all their
business dealings and strive to enhance the Group’s reputation
in the business community. The Group endeavours to form solid
and lasting relationships with customers and suppliers.
The Group continues to pursue its employment equity
objectives and invests in the development of its employees and
rewards their performance. Every employee undertakes to act
in a professional manner with other employees and to respect
the cultural, religious and ethnic diversity of the workplace.
The Group respects the values, culture and beliefs of the
communities in which it operates and undertakes to consult
with the communities on matters that affect them.
The Group believes in the importance of a clean and healthy
work environment for the well-being of its employees. All
Group companies strive to achieve the highest safety and
environmental standards.
CollusionAstrapak prohibits any anti-competitive conduct which also
includes collusive conduct amongst parties or persons. Astrapak
will not tolerate any contravention of any applicable legislation
by any of its employees. The Group regards this as a summarily
dismissible offence.
Going concernThe Board of Directors believes that the Group has adequate
resources and facilities available to continue to operate in the
foreseeable future. The Board, therefore, continues to apply the
going-concern basis in preparing the annual financial statements.
Internal controlThe directors are responsible for the Group’s systems of
internal control and for reviewing their effectiveness. The
Group’s systems of internal control are designed and operated
to support the identification, evaluation and management
of risks affecting the Group and the environment in which
it operates. As such, they are subject to constant review as
circumstances change and new risks emerge.
Assurance on compliance with internal control systems and on
their effectiveness is obtained by regular review by management
of financial controls, internal audit reviews and testing of certain
aspects of the internal control financial systems by the external
auditors during the course of their statutory examinations. The
Board has taken into account the results of all the work carried
out by internal and external auditors to review the activities of
the Group.
For the year under review, nothing has come to the attention
of the directors to indicate any material breakdown in the
functioning of controls, procedures and systems.
Risk managementThe Board of Directors is ultimately responsible for the Group’s risk
management system and for reviewing its effectiveness. The focus of
risk management is to support the delivery of business objectives by
identifying, assessing, managing and monitoring risk across the Group.
Management is responsible for a continual process of developing
and enhancing its risk and control procedures to improve the
mechanisms for identifying and monitoring risks.
There is a process of regularly reporting to the Board through
the Audit and Risk Committee on the status of the risk
management process and internal control systems, and any
evolving risk issues or internal control breakdowns that may
have occurred.
Assurance on compliance with systems of internal control and
on their effectiveness is obtained through regular management
reviews, internal audit reviews, and testing of certain aspects of
the systems by the external auditors during the course of their
statutory examinations.
Risks are further controlled and managed by Group policies that
limit exposure in specific areas such as treasury, procurement
and external insurance programmes.
Astrapak Annual Report 2009
32
Corporate governance continued
BoardExecutive
CommitteeAudit and Risk
CommitteeRemuneration Committee
Transformation Committee
Nomination Committee
A B A B A B A B A B A B
DC Noko 9 7 — — — — 3 3 — — — — G Petzer 8 5 8 7 — — — — 1 1 — — HA Todd 8 7 8 6 — 3* — — — — — — JF Buchanan 9 8 — — 5 5 — — — — — — K Watkins — — 7 7 — — — — — — — — KP Seopela 9 6 — — — — — — — — 2 2 M Baglione 9 8 10 10 — 1* — 2* 2 2 2 2 M Diedloff 9 9 10 10 — 4* — 3* 2 2 — — PC Botha 3 3 — — 2 2 1 1 — — 2 2 R Crewe-Brown 3 3 2 2 — — 1 1 — — — — TG Kgage 8 6 — — 4 4 — — — — — — WJ Venter 6 6 7 6 — — — — 1 1 — —
Column A: Indicates the number of meetings held during the period the director was a member of the Board and/or committee.
Column B: Indicates the number of meetings attended during the period the director was a member of the Board and/or committee.*By invitation.
Internal auditThe internal audit function consists of a local team operating
throughout the Group’s principal business units. Internal audit
reports administratively to the chief financial officer and
functionally to the chairman of the Audit and Risk Committee
and coordinates with external auditors to ensure appropriate
coverage and to minimise duplication of efforts.
The internal audit function operates in terms of a formal charter
and is an appraisal function whose primary mandate is to examine
and evaluate the effectiveness of the applicable operating activities,
the attendant business risks, including those which arise subsequent
to year-end, and the systems of internal control, so as to bring
material deficiencies and instances of non-compliance to the
attention of the Audit and Risk Committee, external auditors and
operational management for resolution.
Price-sensitive informationIn accordance with the JSE Limited’s guidelines on price-
sensitive information, the Company has adopted policies dealing
with the following:
> Determination of price-sensitive information;
> Discussion with the press, institutions and shareholders; and
> “Closed” periods during which no director or employee of
the Group is allowed to trade in the Company’s shares.
Relationship with investorsIt is Group policy to pursue dialogue with institutional shareholders.
To achieve this dialogue, there have been a number of presentations
to, and meetings with, investors and analysts to communicate the
strategy and performance of the Group.
The quality of this information is based on the standards of
promptness, relevance and transparency.
The Group encourages all shareholders to attend its annual
general meeting, which provides shareholders with the
opportunity to pose questions to the Board of Directors.
Astrapak Annual Report 2009
33
Remuneration report
This report on remuneration and other related matters covers the issues dealt with by the Remuneration Committee. Further details regarding the committee and its duties can be found on page 30 of this annual report.
Remuneration policiesThe remuneration policies are formulated to attract and retain the correct quality of executives and to give recognition to superior individual and team performance. The attraction and retention of these executives requires remuneration structures that are seen as fair, transparent and competitive when benchmarked.
Incentive and share option schemes are used as mechanisms to align the goals of management with those of shareholders. These schemes are designed to ensure sustainable growth in earnings through the setting of demanding performance targets.
Remuneration: Executive directorsExecutive directors’ remuneration packages consist of four elements, namely:> fixed remuneration;> flexible remuneration;> share options; and> the cash financed stock plan.
Fixed remuneration: Guaranteed remunerationFixed remuneration includes guaranteed cash and the value of all benefit contributions, such as provident fund and medical aid. These are benchmarked annually against similar industries and positions of similar responsibility. The benchmarking process, therefore, takes into account the size and complexity of the executive’s position as well as giving due consideration to the relative size and performance of the businesses for which the executive assumes responsibility.
The committee is satisfied that fair and transparent remuneration procedures and practices are applied and that all executives are appropriately remunerated.
The fixed remuneration earned by the executives is reflected in Table 2 on page 35 of this annual report.
Flexible remuneration: Incentive bonus schemeA portion of the executives’ earnings is provided in the form of an annual incentive bonus, which is introduced to motivate the executives to deliver sustainable growth.
For the year under review the incentive bonus target was primarily based on the achievement of specified financial performance targets. A portion of the incentive bonus was linked to individual performance targets or key performance areas. The goals of the incentive scheme are:> to align the expectations of management and shareholders;> to make employees think and act like shareholders and by
doing so create a value-based culture within the Company;> to create a sense of ownership and pride; and> to further assist in driving the methodology of capital
rationing.
The Remuneration Committee reviews and approves the design of the incentive bonus scheme, which includes the approval of appropriate targets at the commencement of the period covered by the scheme. The committee ensures that these targets are fair to both the executives and the shareholders. The committee is also responsible for the approval or authorisation of any payments under the incentive bonus scheme.
The flexible remuneration earned by the executives is reflected in Table 2 on page 35 of this report.
Share option schemeThe aggregate number of shares reserved for the Astrapak Limited Linked Unit Incentive Scheme may not at any time exceed 21 621 000 shares, representing 20% of the Company’s issued share capital before the Black Economic Empowerment transaction with the Royal Bafokeng Nation.
The maximum number of share options available to any one beneficiary is 5 405 250 shares, representing 25% of the capital of the Company available for the purpose of the share option scheme.
All issues were approved by the Remuneration Committee prior to the issue of such options. No share options were issued during the current financial year. As at 28 February 2009 3 631 960 (2008: 4 459 793) share options had been issued and not yet exercised by participants of the share incentive scheme.
The remuneration policies are formulated to attract and retain motivated top-quality people and to give recognition to superior individual and team performance
Astrapak Annual Report 2009
34
greatest benefit to its employees at the minimum cost to the Company, is efficient in terms of share dilution and, at the same time, aligns with shareholders’ interests. No additional issues occurred under the SEIS during the financial year under review.
Remuneration: Non-executive directorsNon-executive directors are remunerated for their services based on the number of meetings attended, their level of contribution and responsibility. The chief executive officer recommends the proposed non-executive director fee structures after obtaining input from external consultants regarding market trends and current pay practices.
Non-executive directors’ remuneration is approved by shareholders in general meeting.
The remuneration earned by the non-executive directors is reflected in Table 3 on page 36 of this report.
Interest of directors in contractsThe directors did not have any material interest in any transaction of any significance with the Company or any of its subsidiaries.
The values for share options exercised/ceded were calculated by multiplying the number of share options exercised by the difference between the option price and market value on the date the options were exercised.
Subsequent to the end of the financial year, on 9 March 2009, a further 9 450 000 options were issued to a selected number of participants within the Group. The options were issued subject to the following terms and conditions:> participants are required to enter into a two-year restraint
of trade agreement with the Company;> option issue price was R6,84 as determined by the rules of
the Astrapak Limited Linked Unit Trust Scheme;> options to lapse after eight years from date of issue;> 40% of options to vest after three years and the remaining
60% after five years from date of issue, but vesting will be subject to certain key performance targets, mostly of a financial nature, being achieved;
> all options issued to the chief executive officer, chief financial officer and chief operating officer will only vest after five years from date of issue.
A reconciliation of the total options in issue and movements during the financial year appears in Table 1 on page 34 of this annual report, whilst a summary of options issued to and excercised by executive directors appears in Table 4 on page 37 of this annual report
Cash Financed Stock PlanIn 2008, and in addition to the existing share option scheme, the Company adopted a new share-based executive incentive scheme (“SEIS”) known as the Astrapak Cash Financed Stock Plan. The new SEIS aptly addresses retention, is hedged against financial risk, aligns with performance, confers the
Table 1: Reconciliation of option movements2009 2008
Number
of options
Weightedaverage
price pershare
(in Rand)Number
of options
Weightedaverage
price pershare
(in Rand)
Outstanding at the beginning of the period 4 459 793 4,22 7 451 082 4,47 Granted during the period — — — —Forfeited or cancelled during the period — — 676 675 9,53 Exercised during the period 827 833 2,16 2 314 614 3,46 Expired during the period — — — —Outstanding at the end of the period 3 631 960 4,08 4 459 793 4,22 Exerciseable at the end of the period 3 320 857 3,67 2 583 577 3,64
Remuneration report continued
Astrapak Annual Report 2009
35
Table 2: Executive directors’ remuneration 2009 (Rand)
NameBasic salary
Carallowance
Benefit fund
contri-butions
Total fixed
remune-ration
Total flexible
remune-ration
Total fixed and
flexibleremune-
ration
Shareoptions
exercised/ceded*
CashFinanced
Stock Plan**
Totalremune-
ration
M Baglione 2 497 758 90 610 49 800 2 638 168 463 575 3 101 743 — — 3 101 743 R Crewe-Brown (1) 713 871 39 821 7 896 761 588 3 553 299 4 314 887 — — 4 314 887 M Diedloff 1 597 418 145 512 9 338 1 752 268 368 500 2 120 768 — — 2 120 768 G Petzer (2) 1 319 212 107 163 40 829 1 467 204 437 850 1 905 054 — — 1 905 054 HA Todd (2) 925 924 117 000 918 1 043 842 427 158 1 471 000 1 417 975 — 2 888 975 WJ Venter (3) 1 655 515 109 790 13 072 1 778 377 964 183 2 742 560 574 671 — 3 317 231 Total 8 709 698 609 896 121 853 9 441 447 6 214 565 15 656 012 1 992 646 — 17 648 658
Executive directors’ remuneration 2008 (Rand)
NameBasic salary
Carallowance
Benefit fund
contri-butions
Total fixed
remune-ration
Total flexible
remune-ration
Total fixed and
flexibleremune-
ration
Shareoptions
exercised/ceded*
CashFinanced
Stock Plan**
Totalremune-
ration
M Baglione 1 839 973 90 611 36 250 1 966 834 400 262 2 367 096 3 581 057 1 973 070 7 921 223 R Crewe-Brown 2 393 862 159 284 29 244 2 582 390 771 013 3 353 403 — 2 630 760 5 984 163 M Diedloff 1 359 329 145 512 5 120 1 509 961 461 590 1 971 551 2 048 699 1 753 840 5 774 090 G Petzer 1 644 296 142 884 45 470 1 832 650 823 209 2 655 859 272 534 1 534 610 4 463 003 HA Todd 1 141 719 156 000 4 926 1 302 645 325 210 1 627 855 2 612 596 767 305 5 007 756 WJ Venter 2 072 667 138 981 16 105 2 227 753 393 280 2 621 033 4 050 109 1 534 610 8 205 752
Total 10 451 846 833 272 137 115 11 422 233 3 174 564 14 596 797 12 564 995 10 194 195 37 355 987
* The values for share options exercised/ceded were calculated by multiplying the number of share options exercised by the difference between the option price and market value on the date the options were exercised.
** The amount reflected in this column relates to the pre-tax bonus amount declared to the executive in terms of the share-based executive incentive scheme. The executive is required to use the after-tax proceeds to acquire shares in the Company and the shares are then released to the executive over a predetermined period, which in the case of the first issue dated May 2007 represents a period of six years.
(1) Retired on 6 June 2008(2) Resigned as at 30 November 2008(3) Retired on 30 November 2008
Astrapak Annual Report 2009
36
Table 3: Non-executive directors’ remuneration 2009 (Rand)
NameDirectors’
feesCommittee
feesConsulting
servicesTotal
remuneration
PC Botha 60 000 60 000 — 120 000** DC Noko 120 000 150 000 30 000 300 000 JF Buchanan 160 000 150 000 75 000 385 000 KP Seopela 120 000 — — 120 000* TG Kgage 90 000 45 000 — 135 000* Total 550 000 405 000 105 000 1 060 000
Non-executive directors’ remuneration 2008 (Rand)
NameDirectors’
feesCommittee
feesConsulting
servicesTotal
remuneration
PC Botha 115 000 80 000 253 375 448 375**RT Dalais 100 000 60 000 — 160 000** DC Noko 40 000 30 000 — 70 000 JF Buchanan 60 000 30 000 — 90 000 KP Seopela 130 000 — — 130 000* TG Kgage 120 000 45 000 — 165 000*
Total 565 000 245 000 253 375 1 063 375
* Paid to Royal Bafokeng Finance (Pty) Ltd.** Paid to Metier Investment & Advising Services (Pty) Ltd and its subsidiaries.
Remuneration report continued
Astrapak Annual Report 2009
37
Table 4: Executive and non-executive directors’ share options
Options granted to date
NameOptionsgranted
Originalissue price
(cents)
Revisedissue price
(cents)sub-
sequent todebenture
redemptionDate
grantedExpiry
date
Optionsexercised
to date
Optionscancelled
to date
Balanceas at
date ofreport
M Baglione 342 000 240 189 14 April 2002 14 April 2010 342 000 — — 758 000 240 190 18 October 2002 18 October 2010 624 667 — 133 333 100 000 375 322 05 May 2003 05 May 2011 91 784 8 216 — 120 000 895 816 08 November 2004 08 November 2012 40 000 — 80 000
1 850 000 684 684 09 March 2009 09 March 2017 — — 1 850 000
3 170 000 1 098 451 8 216 2 063 333
R Crewe-Brown# 693 000 240 189 14 April 2002 14 April 2010 231 000 — 462 000 907 000 240 190 18 October 2002 18 October 2010 169 000 — 738 000 200 000 375 322 05 May 2003 05 May 2011 — 70 705 129 295 200 000 895 816 08 November 2004 08 November 2012 — — 200 000
2 000 000 400 000 70 705 1 529 295
M Diedloff 135 000 240 189 14 April 2002 14 April 2010 135 000 — — 365 000 240 190 18 October 2002 18 October 2010 315 001 — 49 999 150 000 375 322 05 May 2003 05 May 2011 137 676 12 324 — 100 000 895 816 08 November 2004 08 November 2012 33 333 — 66 667
1 050 000 684 684 09 March 2009 09 March 2017 — — 1 050 000
1 800 000 621 010 12 324 1 166 666
G Petzer 378 000 240 189 14 April 2002 14 April 2010 378 000 — — 722 000 240 190 18 October 2002 18 October 2010 722 000 — — 100 000 375 322 05 May 2003 05 May 2011 91 784 8 216 —
1 200 000 1 191 784 8 216 —
HA Todd* 180 000 240 189 14 April 2002 14 April 2010 180 000 — — 520 000 240 190 18 October 2002 18 October 2010 520 000 — — 100 000 375 322 05 May 2003 05 May 2011 91 784 8 216 — 80 000 895 816 08 November 2004 08 November 2012 26 667 53 333 —
880 000 818 451 61 549 —
WJ Venter^ 750 000 240 190 18 October 2002 18 October 2010 750 000 — — 250 000 375 322 05 May 2003 05 May 2011 229 461 20 539 — 150 000 895 816 08 November 2004 08 November 2012 50 000 100 000 —
1 150 000 1 029 461 120 539 — # R Crewe-Brown retired on 6 June 2008 and has the right to exercise all or any of his options at any time prior to the expiry of any option allotment, it being recorded
that the last exercise date will be 8 November 2012 . * H A Todd resigned on 30 November 2008 and in terms of the Astrapak Limited Linked Unit Trust Scheme rules had 30 days within which to exercise all or part of
his options – 53 333 of the options issued on 8 November 2004 were not exercised and therefore lapsed. ^ WJ Venter retired on 30 November 2008 and in terms of the Astrapak Limited Linked Unit Trust Scheme rules had 30 days within which to exercise all or part of his
options – 100 000 of the options issued on 8 November 2004 were not exercised and therefore lapsed.
Astrapak Annual Report 2009
38
Five-year review for the year ended 28 February 2009
R’m 2009Restated(1)
2008 2008Restated(2)
2007 2006 2005
OPERATING RESULTS Revenue 2 749,8 2 366,1 2 820,9 2 223,0 1 840,0 1 624,5 Profit before interest and taxation 237,3 221,2 229,5 228,0 221,7 182,7 Exceptional items — — — — — 12,8 Net interest paid (85,8) (64,1) (72,6) (41,5) (30,2) (41,1)Interest paid to debenture holders — (2,1) (2,1) (6,8) (7,0) (5,9)Profit before taxation 151,5 155,0 154,8 179,7 184,5 148,5 Taxation (82,9) (42,4) (43,5) (47,2) (46,7) (37,8)Profit for the year from continuing operations 68,6 112,6 111,3 132,5 137,8 110,7 Loss for the year from discontinued operations (3,6) (1,3) — — — — Profit attributable to ordinary shareholders (2007 and prior : linked unitholders) 42,0 87,6 87,6 118,1 129,2 104,9 Profit attributable to preference shareholders 18,1 16,2 16,2 4,6 — — Profit attributable to minority shareholders 4,8 7,6 7,6 9,8 8,6 5,8 Headline earnings 85,1 81,1 81,1 126,9 140,2 106,6 FundingTotal equity 869,5 817,8 862,2 872,3 717,3 516,1 Deferred tax liabilities 139,9 126,7 126,7 99,6 78,9 49,8 Debt > interest bearing 552,0 618,8 618,8 414,8 266,5 250,4 > non-interest bearing 517,6 541,6 497,2 403,6 380,5 291,8 Total funds 2 079,0 2 104,9 2 104,9 1 790,3 1 443,2 1 108,1 Assets managed Property, plant and equipment 845,3 926,1 926,1 764,9 615,8 481,0 Deferred tax assets 31,2 57,6 57,6 36,3 29,0 27,6 Investments and loans 6,8 18,3 18,3 16,8 17,1 16,7 Investment in associates 0,5 0,3 0,3 0,2 0,2 0,1 Goodwill and intangible assets 149,3 149,1 149,1 110,2 90,2 42,1 Current assets 1 045,9 953,5 953,5 861,9 690,9 540,6 Total assets managed 2 079,0 2 104,9 2 104,9 1 790,3 1 443,2 1 108,1 Number of ordinary shares (2007 and prior: linked units) in issue at the end of the financial year (000) 135 131 135 131 135 131 135 131 135 131 120 117 Weighted average number of ordinary shares (2007 and prior: linked units) in issue during the year (000) 118 037 117 524 117 524 119 390 119 187 95 158 Weighted number of ordinary shares (2007 and prior : linked units) in issue during the year – fully diluted (000) 121 669 123 361 123 361 127 745 131 272 110 018 (1) The 2008 financial year was restated for the effects of the discontinued operation.(2) The 2007 financial year has been restated for the effects of the fraud at Astraflex and the incorrect treatment of a tax holiday at another subsidiary.
Astrapak Annual Report 2009
39
2009Restated(1)
2008 2008Restated(2)
2007 2006 2005
RATIOS AND STATISTICS Earnings Earnings per ordinary share (2007 and prior : linked unit) (cents) 35,5 76,3 76,3 105,4 114,3 116,4 Headline earnings per ordinary share (2007 and prior : linked unit) (cents) 72,1 69,0 69,0 106,3 117,6 112,0 Profitability Return on net tangible assets (%) 35,0 37,7 38,8 39,2 47,7 55,5 Operating profit margin (%) 8,6 9,3 8,1 10,3 12,0 12,0 Funding and liquidity Interest-bearing debt to equity – net of cash (:100) 56,9 60,1 57,0 31,0 23,5 34,4 Total liabilities to equity (excluding deferred tax) – net of cash (:100) 116,4 126,4 114,7 77,3 76,5 91,0 Current ratio (:100) 147,0 129,0 189,3 130,6 137,5 136,1 Interest cover (times) 2,8 3,5 3,2 5,5 7,3 4,8 Ordinary share (2007 and prior: linked unit) statistics Net asset value per ordinary share (2007 and prior : linked unit) (cents) 736,6 695,9 733,6 730,6 601,8 542,4 Net tangible asset value per ordinary share (2007 and prior : linked unit) (cents) 610,1 569,0 606,8 638,3 526,1 498,0 JSE market prices (cents) > year-end 671,0 820,0 820,0 1 335,0 1 400,0 1 200,0 > high 900,0 1 595,0 1 595,0 1 511,0 1 500,0 1 210,0 > low 535,0 750,0 750,0 1 122,0 1 000,0 640,0 > average price traded at during the year 874,4 1 232,5 1 232,5 1 319,6 1 214,8 861,0 Ordinary shares (2007 and prior : linked units) traded during the year (000) 63 414,0 67 410 67 410 58 508 42 667 53 123 Market capitalisation 28/29 February (R’m) 906,7 1 108,1 1 108,1 1 804,0 1 891,8 1 441,4 Earnings yield (%) 10,7 12,2 12,2 8,9 7,7 8,4 Price earnings ratio 29/28 February (:100) 9,3 8,2 8,2 11,3 13,0 11,9
Astrapak Annual Report 2009
40
Group value-added statement for the year ended 28 February 2009
R’000 Notes 2009Restated
2008
CONTINUING OPERATIONSWealth createdRevenue 2 749 771 2 366 104 Paid to suppliers for materials and services (1 974 293) (1 637 583)Value added 775 477 728 521
Interest received 31 040 14 667
Total wealth created 806 518 743 188
Wealth distributed Employees 1 401 022 379 578 Providers of capital 152 089 126 297 Interest paid on borrowings 116 842 78 780 Interest paid to debenture holders — 2 083 Preference dividends paid to outside shareholders 18 125 16 160 Ordinary dividends paid to outside shareholders 17 122 29 274 Central and local government 2 44 596 39 980
Wealth reinvested Reinvested in the Group to maintain and develop operations 208 810 197 334 Depreciation 128 133 109 414 Retained profit 41 129 82 143 Deferred taxation 39 548 5 777
Total wealth distributed 806 518 743 188
Value-added ratios Number of employees (28/29 February) 3 877 3 599 Revenue per employee (R’000) 709 657 Value added per employee (R’000) 200 202 Wealth added per employee (R’000) 208 206 Average benefit per employee (R’000) 103 105
NOTES TO THE GROUP VALUE-ADDED STATEMENT1. Employees Salaries, wages, overtime payments, commission, bonuses and allowances employer contributions and fringe benefits 401 022 379 578
2. Central and local governmentCurrent taxation 41 355 30 413 Secondary tax on companies 2 011 6 244 Rates and taxes paid to local authorities 2 381 3 325 Customs duties, import surcharges and excise taxes 1 800 3 845
Gross contribution to central and local government 47 547 43 826
Less: Government cash grants and subsidies (2 951) (3 847)
44 596 39 980
Astrapak Annual Report 2009
41
Annual financial statements
42 Independent auditors’ report
43 Directors’ responsibility statement
43 Secretarial certification
44 Directors’ report
46 Balance sheets
47 Income statements
48 Statements of changes in equity
49 Cash flow statements
50 Reconciliation of prior year balances and movements
51 Significant accounting policies
58 Notes to the annual financial statements
92 Annexure 1 – details of land and buildings
16%Revenue up
15%EBITDA up
6%HEPS (fully diluted) up
207%Cash from operating activities up
21%Net debt down
Astrapak Annual Report 2009
42
Independent auditors’ reportfor the year ended 28 February 2009
To THE SHAREHolDERS of ASTRAPAk lImITEDWe have audited the Group annual financial statements and annual financial statements of Astrapak Limited, which comprise the directors’ report, the consolidated and separate balance sheets as at 28 February 2009, the consolidated and separate income statements, the consolidated and separate statements of changes in equity and the consolidated and separate cash-flow statements for the year then ended, a summary of significant accounting policies and other explanatory notes, as set out on pages 46 to 92.
Directors’ responsibility for the financial statementsThe Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall financial statement presentation.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
opinionIn our opinion, these consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Astrapak Limited as at 28 February 2009, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.
Deloitte & ToucheRegistered AuditorsPer L Taljaard – Partner31 July 2009Buildings 1 and 2, Deloitte PlaceThe Woodlands Office Park, Woodlands DriveSandton
National Executive: GG Gelink Chief Executive, AE Swiegers Chief Operating Officer, GM Pinnock Audit, DL Kennedy Tax and Legal and Risk, L Geeringh Consulting, L Bam Corporate Finance, CR Beukman Finance, TJ Brown Clients & Markets, NT Mtoba Chairman of the Board, CR Qually Deputy Chairman of the Board.
A full list of partners and directors is available on request.
Astrapak Annual Report 2009
43
Directors’ responsibility statement for the year ended 28 February 2009
The directors of the Company are responsible for the maintenance of adequate accounting records and the preparation and integrity of the annual financial statements and related information. The annual financial statements have been prepared in accordance with the Companies Act of South Africa, International Financial Reporting Standards and the AC 500 standards as required by the Accounting Practices Board.
The Group’s independent auditors, Deloitte & Touche, have audited the annual financial statements and their unmodified report appears on the previous page.
The directors are also responsible for the systems of internal control. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the annual financial statements, and to adequately safeguard, verify and maintain accountability of assets, and to prevent and detect material misstatement and loss. The systems are implemented and monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.
The annual financial statements are prepared on a going-concern basis. Nothing has come to the attention of the directors to indicate that the Group will not remain a going concern for the foreseeable future.
The annual financial statements set out on pages 46 to 92 were approved by the Board of Directors and are signed on their behalf by:
m Baglione m DiedloffChief executive officer Chief financial officerDenver Denver31 July 2009 31 July 2009
In accordance with section 268G(d) of the Companies Act, it is hereby certified that to the best of my knowledge the Company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of the Act and that such returns are true and correct for the financial period ended 28 February 2009.
E CorneliusCompany SecretarySandton31 July 2009
Secretarial certificationfor the year ended 28 February 2009
Astrapak Annual Report 2009
44
Directors’ report
The directors’ report on the Company and the Group for the year ended 28 February 2009 is as follows:
Nature of businessAstrapak Limited and its subsidiaries (“Astrapak” or “the Company” or “the Group”) are manufacturers and distributors of an extensive range of plastic packaging products. The Group has manufacturing facilities in all main centres of South Africa, employs 4 390 people and has annualised revenues in excess of R3 billion. The operations are grouped into various business segments and service mainly the food, beverage, personal-care, pharmaceutical, agricultural, industrial and retail markets.
Trading resultsA summary of the Group’s trading results is set out below including discontinued operations:
R’m 2009 Restated
2008
Revenue 3 263,1 2 820,9
Profit from operations (before loss on disposal of subsidiary) 284,1 229,5
Profit for the year 64,9 111,3
Attributable to ordinary shareholders 42,0 87,6
Attributable to preference shareholders of the parent 18,1 16,2
Earnings per ordinary share (cents) 35,5 76,3
Headline earnings per ordinary share (cents) 72,1 69,0
Share capitalDetails of the authorised and issued share capital are given in note 10 to the annual financial statements.
Ten percent of the unissued share capital was placed under the control of the directors in terms of section 221 of the Companies Act 61 of 1973 at the annual general meeting held on 25 September 2008.
Preference sharesThe non-redeemable, non-participating, cumulative preference shareholders will receive, if declared, dividends which are payable by 31 March and 30 September each year. Dividends are calculated based on 80% of the average daily prime rate which prevailed in respect of the relevant period for which the dividend is calculated.
Subsidiaries Details of operating entities are set out in note 28 to the financial statements.
A number of special resolutions were passed by subsidiary companies. None of these resolutions is of significance to the shareholders in assessing the state of affairs of the Group.
DirectorsThe names of the directors of the Company are listed on pages 10 and 11 of this report.
The following resignations and appointments occurred during the year ended 28 February 2009 and between the year-end and the date of this annual report:
Retirements and resignations:> Mr R Crewe-Brown retired as chief executive officer and
executive director on 6 June 2008;> Mr WJ Venter retired as executive director on
30 November 2008;> Mr G Petzer resigned as executive director on
30 November 2008;> Mr HA Todd resigned as financial director on
30 November 2008;> Mr TG Kgage resigned as non-executive director on
30 November 2008;> Mr J Buchanan resigned as independent non-executive
director on 18 March 2009.
Appointments:> Mr M Baglione was appointed as chief executive officer
on 6 June 2008;> Mr PC Botha was appointed as non-executive director
on 30 July 2008;> Mr M Diedloff was appointed as chief financial officer
on 1 December 2008;> Ms P Langeni was appointed as chairperson and independent
non-executive director on 18 March 2009;> Mr G Steffens was appointed as an independent non-
executive director and chairman of the Audit and Risk Committee on 18 March 2009.
Astrapak Annual Report 2009
45
In accordance with the Company’s Articles of Association, one-third of the directors shall retire at the forthcoming Annual General Meeting but, being eligible, offer themselves for re-election and shall be deemed not to have vacated their respective offices. (Refer to notice of meeting on page 95 for further details).
Directors’ remunerationThe aggregate remuneration and benefits paid to the executive and non-executive directors of the Group for the year ended 28 February 2009 are set out in the Remuneration Report on pages 33 to 37 of this annual report and notes 17 and 30 to the annual financial statements.
Astrapak limited linked Unit Trust SchemeFurther details on the Astrapak Limited Linked Unit Trust Scheme (“the scheme”) and the number of options issued to executive directors in terms of such scheme are set out in the Remuneration Report on pages 33 to 37 of this annual report.
Property, plant and equipmentDuring the year the Group acquired property, plant and equipment to the value of R188,7 million (2008: R262,5 million restated). Further details of property, plant and equipment are set out on pages 58 and 59 of this annual report.
Profits or losses of subsidiary companiesThe total after-tax profit by subsidiaries attributable to the Group was R148 831 665 (2008: R176 363 541). Subsidiaries incurred losses of R102 023 920 (2008: R81 027 428).
Distributions to ordinary shareholdersThe economic outlook for 2009 remains weak, with limited visibility, continuing volatility and downward pressure on margins. Notwithstanding the success of the various measures taken to date, the Board has decided not to declare a dividend for the financial year ending 28 February 2009 in order to preserve funding for the Group’s strategic internal growth options which the Board believes to be attractive. The position in respect of dividends will be re-assessed by the Board in future.
Comparative figuresThe comparative figures for 29 February 2008 have been restated to reflect the disclosure requirements of IFRS 5.
The comparatives have further been restated to reflect the financial liability of the Group in relation to contractual put options afforded to minorities. This liability had to be raised in terms of IAS 39: Financial Instruments: Recognition and Measurement. This restatement does not impact on the income statement for the comparative period. The standard does not allow for the valuation and bringing to book of the corresponding call option issued in favour of the Group and only the liability is therefore recognised in terms of this standard.
Subsequent eventsAs previously stated, Ms P Langeni (Chairperson) and Mr G Steffens were appointed as independent non-executive directors of Astrapak Limited on18 March 2009 and Mr J Buchanan resigned on 18 March 2009 as an independent non-executive director.
On 9 March 2009, a further 9 450 000 options were issued to a selected number of participants within the Group. The options were issued subject to the following terms and conditions:> Participants are required to enter into a two-year restraint
of trade agreement with the Company;> Option issue price was R6,84 as determined by the Rules
of the Astrapak Limited linked Unit Trust Scheme;> Options to lapse after eight years from date of issue;> 40% of options to vest after three years and the remaining
60% after five years from date of issue, but vesting will be subject to certain key performance targets, mostly of a financial nature, being achieved;
> All options issued to the chief executive officer, chief financial officer and chief operating officer will only vest after five years from date of issue.
Astrapak Annual Report 2009
46
Balance sheetsas at 28 February 2009
Group Company
2009Restated
2008 R’000 Notes 2009 2008
ASSETS1 033 186 1 151 470 Non-current assets 493 418 527 944
845 307 926 092 Property, plant and equipment 1 — — 149 352 149 054 Goodwill 2 — —
6 86 Trademarks 3 — — 31 240 57 610 Deferred tax assets 4 — — 6 811 18 342 Investments and loans 5 — 22 908
470 286 Investment in associate company 6 — — — — Investment in subsidiaries 7 493 418 505 036
1 045 857 953 483 Current assets 2 963 16 084
229 956 372 476 Inventories 8 — — 379 799 511 980 Accounts receivable 9 321 233
— — Dividends receivable — 15 000 110 110 56 649 Cash and short-term investments 14 2 642 851
8 463 12 378 Taxation receivable — — 317 529 — Assets classified as held-for-sale 13 — —
2 079 043 2 104 953 Total assets 496 381 544 028
EQUITY AND lIABIlITIES 869 482 817 774 Total equity 480 380 521 318
135 135 Ordinary share capital 10 135 135 199 367 199 367 Ordinary share premium 10 199 367 199 367 671 814 646 940 Retained income 127 203 169 559
1 449 814 Non-distributable reserves 11 — — 339 (9 343) Capital reserve 11 085 9 667
(18 887) (44 438) Minority put option — — (156 697) (154 168) Treasury shares 12 — — 697 520 639 307 Equity attributable to ordinary shareholders of the parent 337 790 378 728
2 2 Preference share capital 10 2 2 142 588 142 588 Preference share premium 10 142 588 142 588 29 372 35 877 Minority interest — —
499 812 548 081 Non-current liabilities 5 252 —
341 052 376 947 Long-term interest-bearing debt 14 — — 18 887 44 438 Financial liabilities — —
— — Loans from group companies 5 5 252 — 139 873 126 696 Deferred tax liabilities 4 — —
709 749 739 098 Current liabilities 10 749 22 710
370 916 450 897 Accounts payable 15 2 481 3 332 6 810 10 256 Provisions 16 — —
150 096 241 908 Short-term interest-bearing debt 14 14 13 21 342 28 702 Taxation payable 750 12 030 7 504 7 335 Shareholders for preference dividends 7 504 7 335
153 081 — Liabilities relating to assets held-for-sale 13 — —
2 079 043 2 104 953 Total equity and liabilities 496 381 544 028
Astrapak Annual Report 2009
47
Income statements for the year ended 28 February 2009
Group Company
2009Restated
2008 R’000 Notes 2009 2008
Continuing operations2 749 771 2 366 104 Revenue — —
(2 143 375) (1 841 903) Cost of sales — —
606 396 524 201 Gross profit — — — — Dividends received — 24 000
9 316 15 617 Other operating income — 14 520(185 880) (171 126) Distribution and selling costs — — (192 745) (147 514) Administrative and other operating expenses (5 198) (5 266)
183 52 Share of results of associate company and joint venture — —
237 270 221 230 Profit/(loss) from operations 17 (5 198) 33 254 31 040 14 667 Investment income 18 21 885 23 617
(116 842) (80 863) Finance costs 18 (22 549) (22 780)
151 468 155 034 Profit/(loss) before taxation (5 862) 34 091(82 914) (42 434) Taxation (expense)/benefit 19 1 225 (7 075)
68 554 112 600Profit/(loss) for the year from continuing operations (4 637) 27 016Discontinued operations
(3 622) (1 269) Loss for the year from discontinued operations 42 — —
64 932 111 331 Profit/(loss) for the year (4 637) 27 016
Attributable to: 41 996 87 573 Ordinary shareholders of the parent (22 762) 10 856 45 779 89 292 – Continuing operations (22 762) 10 856(3 783) (1 719) – Discontinued operations — —
18 125 16 160 Preference shareholders of the parent 18 125 16 160 4 811 7 598 Minority interest — — 4 650 7 148 – Continuing operations — — 161 450 – Discontinued operations — —
64 932 111 331 Profit/(loss) for the year (4 637) 27 016
35,5 76,3 Earnings per ordinary share (cents) 20 34,5 72,8 Diluted earnings per ordinary share (cents) 20
Astrapak Annual Report 2009
48
Statements of changes in equityfor the year ended 28 February 2009
R‘000
Ordinaryshare
capital and
premiumRetained
income
Non-distri-
butablereserve
Capital reserve
Minorityput
optionTreasury
sharesDeben-
tures
Attri-butable
toordinary
share-holders
Pre-ference
share capital
and premium
Minorityinterests
Total equity
GRoUPRestated balances at 28 february 2007 199 502 588 641 (1 269) 8 490 — (154 872) 58 005 698 497 142 602 31 149 872 248 Foreign currency translation — — 2 083 — — — — 2 083 — — 2 083 Expensing of share-based payments for the year — — — (17 833) — — — (17 833) — — (17 833)Adjustments to minority interest — — — — — — — — — (670) (670)Share issue expenses — — — — — — — — (12) — (12)
Net income and expense for the year recognised directly in equity — — 2 083 (17 833) — — — (15 750) (12) (670) (16 432)Profit for the year — 103 733 — — — — — 103 733 — 7 598 111 331 Net ordinary dividends paid — (29 274) — — — — — (29 274) — (2 200) (31 474)Preference dividends paid — (16 160) — — — — — (16 160) — — (16 160)Acquisition of treasury shares (1) — — — — — 704 — 704 — — 704 Redemption of debentures — — — — — — (58 005) (58 005) — — (58 005)
Balances as at 29 february 2008 as previously reported 199 502 646 940 814 (9 343) — (154 168) — 683 745 142 590 35 877 862 212 Put options for minority interests IAS 39 — — — — (44 438) — — (44 438) — — (44 438)
Balances as at 29 february 2008 restated 199 502 646 940 814 (9 343) (44 438) (154 168) — 639 307 142 590 35 877 817 774 Foreign currency translation — — 635 — — — — 635 — — 635 Expensing of share-based payments for the year — — — 9 682 — — — 9 682 — — 9 682
Net income and expense for the year recognised directly in equity — — 635 9 682 — — — 10 317 — — 10 317 Profit for the year — 60 121 — — — — — 60 121 — 4 811 64 932 Net ordinary dividends paid — (17 122) — — — — — (17 122) — (2 139) (19 261)Contributions made by minorities — — — — — — — — — 2 649 2 649 Acquisition of minority interest — — — — — — — — — (11 826) (11 826)Preference dividends paid — (18 125) — — — — — (18 125) — — (18 125)Exercise of put options by minority shareholders — — — — 25 551 — — 25 551 — — 25 551 Exercise of options — — — — — 2 749 — 2 749 — — 2 749 Incentive scheme reversals — — — — — (5 278) — (5 278) — — (5 278)
Balances as at 28 february 2009 199 502 671 814 1 449 339 (18 887) (156 697) — 697 520 142 590 29 372 869 482
ComPANYBalances as at 28 february 2007 199 502 192 148 — 8 490 — — 67 565 467 705 142 602 — 610 307Expensing of share-based payments for the year — — — 1 177 — — — 1 177 — — 1 177Share issue expenses — — — — — — — — (12) — (12)
Net income and expense for the year recognised directly in equity — — — 1 177 — — — 1 177 (12) — 1 165 Profit for the year — 27 016 — — — — — 27 016 — — 27 016Net ordinary dividends paid — (33 445) — — — — — (33 445) — — (33 445)Preference dividends paid — (16 160) — — — — — (16 160) — — (16 160)Redemption of debentures — — — — — — (67 565) (67 565) — — (67 565)
Balances as at 29 february 2008 199 502 169 559 — 9 667 — — — 378 728 142 590 — 521 318
Expensing of share-based payments for the year — — — 1 418 — — — 1 418 — — 1 418
Net income and expense for the year recognised directly in equity — — — 1 418 — — — 1 418 — — 1 418
Loss for the year — (4 637) — — — — — (4 637) — — (4 637)Net ordinary dividends paid — (19 594) — — — — — (19 594) — — (19 594)Preference dividends paid — (18 125) — — — — — (18 125) — — (18 125)
Balances as at 28 february 2009 199 502 127 203 — 11 085 — — — 337 790 142 590 — 480 380
Note 1: This movement is net of the movement in treasury shares held by the Astrapak Linked Unit Trust for share options.
Astrapak Annual Report 2009
49
Cash flow statements for the year ended 28 February 2009
Group Company
2009 2008 R’000 Notes 2009 2008
Cash flows from operating activities 507 087 261 103 Cash generated from operations 36 10 281 8 462 31 208 14 844 Interest received 36 21 885 23 617
(122 359) (87 470)Interest paid (excluding interest distribution to ordinary shareholders) 36 (22 549) (20 548)
(35 078) (42 694) Net dividends paid (37 550) (37 865)(49 844) (29 348) Taxation paid 37 (10 055) (6 688)
— (8 729) Interest distribution to ordinary shareholders — (9 972)
331 014 107 706Net cash inflow/(outflow) from operating activities (37 988) (42 994)
Cash flows from investing activities (11 826) — Increase in investment in subsidiary companies (5 322) (59 066)
— (53 416) Acquisition of subsidiary companies 38 — — — 1 193 Decrease in investment in joint ventures — —
(188 717) (262 532) Additions to property, plant and equipment 39 — — 510 (9 224) Increase/(decrease) in minority interest — —
— (76) Additions to trademarks — — (19 757) (5 662) Goodwill on acquisition of minority interests — —
2 983 796 Decrease in investments and loans 22 908 19 806(547) — Cash of subsidiary disposed of 28.3 — —
9 151 12 278 Proceeds on disposal of plant and equipment 40 — 606
(208 203) (316 643)Net cash (outflow)/inflow from investing activities 17 586 (38 654)
Cash flows from financing activities — (12) Decrease in preference share premium — (12) — (58 005) Decrease in debentures — (67 565)
(5 278) 704 Acquisition of treasury shares — — 2 749 — Proceeds on disposal of treasury shares — —
— — Decrease in loans to subsidiary companies 22 192 184 012 7 640 212 704 Increase in long-term liabilities — —
23 933 (14 255) Increase/(decrease) in short-term interest-bearing debt — (61 754)
29 044 141 136 Net cash inflow from financing activities 22 192 54 681
151 855 (67 801)Net increase/(decrease) in cash and cash equivalents 1 790 (26 967)
(41 792) 26 009Cash and cash equivalents at the beginning of the year 838 27 805
110 063 (41 792) Cash and cash equivalents at the end of the year 41 2 628 838
Astrapak Annual Report 2009
50
Reconciliation of prior year balances and movementsfor the year ended 28 February 2009
R’000
Balances aspreviously
stated 29 February
2008 Adjustment
Restated balances
29 February 2008
GroupMinority put option — (44 438) (44 438)Financial liabilities (minority put option) — 44 438 44 438
The comparatives have been restated to reflect the financial liability of the Group in relation to contractual put options afforded to minorities. The restatement does not impact on the income statement or cash flow statement for the comparative period and has no impact on earnings per share or headline earnings per share.
Astrapak Annual Report 2009
51
Significant accounting policiesfor the year ended 28 February 2009
1. GENERAl INfoRmATIoN Astrapak Limited is a company incorporated under
the Companies Act of South Africa. The address of the
registered office is given on page 98. The nature of the
Group’s operations and its principal activities are set out
on pages 3 to 9.
These financial statements are presented in South African
Rand because that is the currency of the primary
economic environment in which the Group operates.
The financial statements have been prepared in
accordance with International Financial Reporting
Standards (“IFRS”) and in the manner required by the
Companies Act in South Africa.
The financial statements have been prepared in a manner
consistent with the prior year. The historical cost basis has
been applied to the preparation of the financial statements
except for the revaluation of certain financial instruments.
The principal accounting policies are set out below.
2. BASIS of CoNSolIDATIoN The consolidated financial statements incorporate
the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up
to 28/29 February each year. Control is achieved where
the Company has the power to govern the financial and
operating policies of an investee entity so as to obtain
benefits from its activities.
On acquisition, the assets and liabilities and contingent
liabilities of a subsidiary are measured at their fair values
at the date of acquisition. The acquisition of subsidiaries
is accounted for using the purchase method. Any excess
of the cost of acquisition over the fair values of the
identifiable net assets acquired is recognised as goodwill.
Any deficiency of the cost of acquisition below the fair
values of the identifiable net assets acquired (that is
discount on acquisition) is credited to profit or loss in the
period of acquisition. The interest of minority shareholders
is stated at the minority’s proportion of the fair values
of the assets and liabilities recognised. Subsequently, any
losses applicable to the minority interest in excess of the
minority interest are allocated against the interests of
the parent.
The results of subsidiaries acquired or disposed of
during the year are included in the consolidated income
statement from the effective date of acquisition or up to
the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to align the accounting policies
used with those used by the Group.
All intra-group transactions, balances, income and
expenses are eliminated on consolidation.
3. INVESTmENTS IN ASSoCIATES An associate is an entity over which the Group is in a
position to exercise significant influence, but not control
or joint control, through participation in the financial and
operating policy decisions of the investee.
The results and assets and liabilities of associates are
incorporated in these financial statements using the
equity method of accounting except when classified
as held-for-sale, in which case it is accounted for under
IFRS 5.
Investments in associates are carried in the balance sheet
at cost as adjusted by post-acquisition changes in the
Group’s share of the net assets of the associate, less any
impairment in the value of individual investments. Losses
of the associates in excess of the Group’s interest in those
associates are not recognised.
Any excess of the cost of acquisition over the Group’s
share of the fair values of the identifiable net assets of
the associate at the date of acquisition is recognised as
goodwill. Any deficiency of the cost of acquisition below
the Group’s share of the fair values of the identifiable net
assets of the associate at the date of acquisition (that is
discount on acquisition) is credited in profit or loss in the
period of acquisition.
Where a Group company transacts with an associate of
the Group, profits or losses are eliminated to the extent
of the Group’s interest in the relevant associate. Losses
may provide evidence of an impairment of the asset
transferred, in which case appropriate provision is made
for impairment.
Astrapak Annual Report 2009
52
Significant accounting policies continued
for the year ended 28 February 2009
4. JoINT VENTURES A joint venture is a contractual arrangement whereby the
Group and outside parties undertake an economic activity
which is subject to joint control.
Joint venture arrangements undertaken in a separate entity
are referred to as jointly controlled entities. The Group
reports its interests in jointly controlled entities using the
equity method, in terms of which the post-acquisition results
of the joint venture are included in the income statement.
5. GooDWIll Goodwill arising on consolidation represents the excess
of the cost of acquisition over the Group’s interest in
the fair value of the identifiable assets and liabilities of a
subsidiary, associate or jointly controlled entity at the date
of acquisition.
Goodwill is initially recognised as an asset at cost and
reviewed for impairment at least annually. Any impairment
is recognised immediately in profit or loss and is not
subsequently reversed.
On disposal of a subsidiary, associate or jointly controlled
entity, the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
6. REVENUE RECoGNITIoN Revenue is measured at the fair value of the
consideration received or receivable and represents
amounts receivable for goods and services provided in
the normal course of business, net of trade discounts,
VAT and other sales-related taxes.
Sales of goods are recognised when goods are delivered
and title has passed.
Interest income is accrued on a time basis, by reference to
the principal outstanding and at the effective interest rate
applicable.
Dividend income from investments is recognised when
the shareholders’ rights to receive payment have been
established.
7. lEASING Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified
as operating leases.
Assets held under finance leases are recognised as assets
of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined
at the inception of the lease. The corresponding liability
to the lessor is included in the balance sheet as a finance
lease obligation. Lease payments are apportioned between
finance charges and reduction of the lease obligation so
as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged directly
against income, unless they are directly attributable to
qualifying assets, in which case they are capitalised in
accordance with the Group’s general policy on borrowing
costs.
Rentals payable under operating leases are charged to
income on a straight-line basis over the term of the
relevant lease.
Benefits received and receivable as an incentive to enter
into an operating lease are also spread on a straight-line
basis over the lease term.
8. foREIGN CURRENCIES Transactions in currencies other than South African Rand
are recorded at the rates of exchange prevailing on the
dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in
foreign currencies are translated at the rates prevailing
on the balance sheet date. Non-monetary assets and
liabilities carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at
the date when the fair value was determined. Gains or
losses arising on translation are included in net profit or
loss for the period, except for exchange differences arising
on non-monetary assets and liabilities where the changes
in fair value are recognised directly in equity.
To hedge its exposure to certain foreign exchange risks,
the Group enters into forward contracts and options (see
below for details of the Group’s accounting policies in
respect of such derivative financial instruments).
9. BoRRoWING CoSTS Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which
are assets that necessarily take a substantial period of
time to prepare for their intended use or sale, are added
to the cost of those assets, until such time as the assets
are substantially ready for their intended use or sale.
Investment income earned on the temporary investment
Astrapak Annual Report 2009
53
of specific borrowings, pending their expenditure on
qualifying assets, is deducted from the borrowing costs
eligible for capitalisation.
All other borrowing costs are recognised in profit or loss
in the period in which they are incurred.
10. GoVERNmENT GRANTS Government grants are recognised as income over the
periods necessary to match them with the costs they are
intended to compensate on a systematic basis.
11. PRofIT fRom oPERATIoNS Profit from operations is stated after the share of results
of associates but before investment income and finance
costs.
12. RETIREmENT BENEfIT CoSTS Payments to defined contribution retirement benefit
schemes are charged as an expense as they fall due.
13. ImPAIRmENT, EXClUDING GooDWIll On an annual basis, the Group reviews all assets, both
tangible and intangible, carried on the balance sheet for
impairment. Where the recoverable amount of an asset
or cash-generating unit is estimated to be lower than
its carrying amount, its carrying amount is reduced to
its recoverable amount. Impairment losses are charged
against income in the period in which they are identified.
Where an impairment loss subsequently reverses, the
carrying amount of the asset or cash-generating unit
is increased to the revised estimate of its recoverable
amount, such increase in carrying amount is limited to
the original cost. A reversal of an impairment loss is
recognised in income in the period in which such reversal
is identified.
14. TAXATIoN The tax expense represents the sum of the tax currently
payable and deferred tax.
The tax currently payable is based on taxable profit for
the year. Taxable profit differs from net profit as reported
in the income statement because it excludes items of
income or expense that are taxable or deductible in
other years and it further excludes items that are never
taxable or deductible. The Group’s liability for current tax
is calculated using tax rates that have been enacted by the
balance sheet date.
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying amounts
of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet
liability method.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that
taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures,
except where the Group is able to control the reversal
of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed
at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profits
will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is
settled or the asset is realised. Deferred tax is charged or
credited in the income statement, except when it relates
to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
15. PRoPERTY, PlANT AND EQUIPmENT Property, plant and equipment is accounted for at cost
less accumulated depreciation and any accumulated
impairment. All direct costs, including finance costs relating
to major capital projects, are capitalised up to the date of
commissioning.
Depreciation is charged so as to write off the cost of
assets, other than freehold land, over their estimated
economic useful lives, using the straight-line method.
Depreciation is not provided for on freehold land.
Astrapak Annual Report 2009
54
Significant accounting policies continued
for the year ended 28 February 2009
15. PRoPERTY, PlANT AND EQUIPmENT (continued)
Owner-occupied property, defined as property held for use
in the supply of services or for administration purposes, is
valued at cost less provisions for impairment of value, where
appropriate. Depreciation is provided against the gross cost
of the properties, taking into account the residual value and
estimated life of the property.
Residual values and estimated useful lives are assessed on
an annual basis.
The gain or loss arising on the disposal or scrapping of
property, plant and equipment is recognised in the income
statement.
16. TRADEmARkS Trademarks are measured initially at purchase cost and
are amortised on a straight-line basis over their estimated
useful lives.
17. INVENToRIES Inventories are stated at the lower of cost and net
realisable value. Cost comprises direct materials and,
where applicable, direct labour costs and those overheads
that have been incurred in bringing the inventories to their
present location and condition. Cost is calculated using the
first-in first-out method. Net realisable value represents
the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing, selling
and distribution.
18. fINANCIAl INSTRUmENTS Financial assets and financial liabilities are recognised on
the Group’s balance sheet when the Group has become
a party to contractual provisions of the instrument.
Trade receivables and payables are measured at initial
recognition at fair value, and are subsequently measured
at amortised cost using the effective interest rate method.
Appropriate allowances for estimated irrecoverable trade
payables are recognised in profit or loss when there is
objective evidence that the asset is impaired.
Cash and cash equivalents comprise the net of cash on
hand and overdrafts, demand deposits, and other short-
term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an
insignificant risk of changes in value.
Interest-bearing bank loans and overdrafts are recorded
at the proceeds received, net of direct issue costs. Finance
charges, including premiums payable on settlement or
redemption, are accounted for on an accrual basis to the
income statement using the effective interest rate method
and are added to the carrying amount of the instrument
to the extent they are not settled in the period in which
they arise.
Equity instruments are recorded at the proceeds received,
net of direct issue costs.
The Group uses derivative financial instruments, primarily
foreign currency forward contracts, to hedge its risks
associated with foreign currency. The Group does not use
derivative financial instruments for speculative purposes.
The fair value of these derivatives is recorded and
remeasured at each reporting date.
Changes in fair value of derivative financial instruments
that are designated and effective as hedges of future
cash flows relating to firm commitments and forecast
transactions are recognised directly in equity. If the hedged
firm commitment or forecast transaction results in the
recognition of an asset or a liability, then, at the time the
asset or liability is recognised, the associated gain or loss
on the derivative that had previously been recognised in
equity is included in the initial measurement of the asset
or liability.
Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, exercised or no
longer qualifies for hedge accounting. At that time, any
cumulative gain or loss on the hedging instrument recognised
in equity is retained in equity until the forecast transaction
occurs. If a hedged transaction is no longer expected to
occur, the net cumulative gain or loss recognised in equity is
transferred to net profit or loss for the period.
Changes in fair value of derivative financial instruments
that do not qualify for hedge accounting are recognised
in the income statement as they arise.
Astrapak Annual Report 2009
55
19. PRoVISIoNS Provisions are raised when a present obligation exists as
a result of a past event and it is probable that an outflow
of resources will be required to settle the obligation, and
a reliable estimate can be made of the amount of the
obligation.
20. SHARE-BASED PAYmENTS The Group has applied the requirements of IFRS 2
Share-based Payments. In accordance with the transitional
provisions, IFRS 2 has been applied to all grants of equity
instruments after 7 November 2002 that were unvested
as of 1 March 2005.
The Group issues equity-settled share-based payments to
certain employees.
Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at
the grant date of the equity-settled share-based payments
is expensed on a straight-line basis over the vesting
period, based on the Group’s estimate of shares that will
eventually vest.
Fair value is measured by use of a binomial model. The
expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural
considerations.
21. SEGmENTAl REPoRTING The Group’s reportable segments are strategic business
units that offer different types of products. They are
managed separately, because these units require different
technology and address different market segments.
Most of the businesses were acquired as individual units
within each cluster and the management at the time of
acquisition was largely retained.
films Manufacturers of high-density polyethylene films, low-
density single- and multi-layered films, plain and printed
films, co-extruded film, blown film, film for pallet stretch
wrap and industrial pallet shrink shroud.
Rigids Manufacturers of plastic closures for rigid containers and
jars, clear packaging containers, industrial cores, tubes
and composite cans, paper edgeboard used for pallet
stabilisation, and blow-moulding and decoration of rigid
plastic containers and jars.
flexibles Manufacturers of high-tech polyethylene stretch labels,
PVC shrink labels, wraparound polypropylene labels,
tamper-evident seals, decorated stand-up pouches and
converters and distributors of specialist printed mono-
and composite films.
Industrial Manufacturers of industrial products such as shade netting
and reinforcing materials for concrete.
The accounting policies of the operating segments are the
same as described in the summary of accounting policies.
Management monitors the operating results of business
segments separately for the purposes of making decisions
about resources to be allocated and of assessing
performance. Segment performance is evaluated based on
operating profit or loss. Finance costs, finance income and
income taxes are managed on a group basis. The Group
accounts for intersegment sales and transfers as if the sales
or transfers were to third parties i.e. at current market
prices.
22. NoN-CURRENT ASSETS HElD-foR-SAlE
AND DISCoNTINUED oPERATIoNS Non-current assets and disposal groups classified as held-
for-sale are measured at the lower of carrying amount and
fair value less costs to sell. Non-current assets and disposal
groups are classified as held-for-sale if their carrying
amounts will be recovered through a sale transaction
rather than through continuing use. This condition is
regarded as met only when the sale is highly probable and
the asset or disposal group is available for immediate sale
in its present condition. Management must be committed
to the sale, which should be expected to qualify for
recognition as a completed sale within one year from the
date of classification.
Astrapak Annual Report 2009
56
Significant accounting policies continued
for the year ended 28 February 2009
22. NoN-CURRENT ASSETS HElD-foR-SAlE
AND DISCoNTINUED oPERATIoNS (continued)
In the consolidated income statement of the reporting
period, and of the comparable period of the previous
year, income and expenses from discontinued
operations are reported separately from normal income
and expenses down to the level of profit after taxes,
even when the Group retains a non-controlling interest
in the subsidiary after the sale. The resulting profit or
loss (after taxes) is reported separately in the income
statement.
Property, plant and equipment and intangible assets once
classified as held-for-sale are not depreciated/amortised.
23. HEADlINE EARNINGS PER SHARE The Group has followed the recommendation contained
in Circular 8/2008 Headline Earnings issued by SAICA
and has published headline earnings per share in addition
to attributable earnings per share. Headline earnings
per share has been calculated in accordance with the
requirements of Circular 8/2008. Attributable profit per
share has been based on earnings attributable, including
interest, to ordinary shareholders.
24. JUDGEmENTS AND ESTImATES In the process of applying the Group’s accounting policies,
management has made judgements and estimates that
have an effect on the amounts recognised in the financial
statements.
Property, plant and equipment
Asset impairments The Group evaluates its non-current assets for
impairment annually whenever events or changes in
circumstances indicate that the carrying amount of the
asset may not be recoverable. Judgements regarding the
existence of impairment indicators are based on market
conditions and operational performance of the business.
Future events could cause management to conclude that
impairment indicators exist.
Residual values The Group is required to measure the residual value of
an item of property, plant and equipment. An estimation
is made of the amount it would receive currently for the
asset if the asset were already of the age and condition
expected at the end of its useful life.
IAS 16 requires residual values (if material) to be
estimated first at the date of acquisition and thereafter to
be reviewed at each balance sheet date. If these change
from the prior period, the depreciation charge is adjusted
prospectively.
Useful life The useful life of an asset is the period over which the
Group expects to use the asset, and not necessarily the
asset’s economic life. Useful lives of assets are reviewed
annually. If these change from the prior period, the
depreciation charge is adjusted prospectively.
The Group uses the following indicators to determine
useful lives:
> Expected usage of assets;
> Expected physical wear and tear ;
> Technical or commercial obsolescence.
Discontinued operations On 1 October 2008, the Board of Directors announced
its decision to dispose of certain businesses in the
Flexibles Division. These operations are therefore classified
as a disposal group for sale. The Board considered the
relevant operations as having met the criteria to be
classified as held-for-sale at that date for the following
reasons:
> At 28 February the operations were available for
immediate sale in their current condition subject only
to terms that are usual and customary for sales of such
assets
> A conditional agreement was signed by the buyer
subsequent to year-end which is still subject to
Competition Commission approval
> The Board expects the sale to be completed on or
before 31 August 2009.
For more details on the discontinued operations, refer to
note 42.
Impairment of goodwill Determining whether goodwill is impaired requires an
estimation of the value in use of the cash-generating units
to which goodwill has been allocated. The value-in-use
calculation is based on an estimate of the future cash
flows expected to arise from the cash-generating units
discounted at a suitable pre-tax rate in order to calculate
the present value of the cash-generating units.
Astrapak Annual Report 2009
57
Provisions Provisions are required to be recorded when the Group
has a present legal or constructive obligation as a result
of past events, for which it is probable that an outflow
of economic benefits will occur, and where a reliable
estimate can be made of the amount of the obligation.
Best estimates, being the amount that the Group would
rationally pay to settle the obligation, are recognised as
provisions at balance sheet date. Risks, uncertainties and
future events are taken into account by management
in determining the best estimates. Provisions are
discounted where the effect of discounting is material.
The discount rate used is the rate that reflects current
market assessments of the time value of money and,
where appropriate, the risks specific to the liability, all of
which requires management judgement. All provisions are
reviewed at each balance sheet date.
Various uncertainties can result in obligations not
being considered probable or estimable for significant
periods of time. As a consequence, potentially material
obligations may have no provisions and a change in
facts or circumstances that result in an obligation
becoming probable or estimable can lead to a need
for the establishment of material provisions. In addition,
where estimated amounts vary from initial estimates the
provisions may be revised materially, up or down.
The Group is required to record provisions for
legal contingencies when the occurrence of the
contingency is probable and the amount of the loss
can be reasonably estimated. Liabilities provided for
legal matters require judgements regarding projected
outcomes and ranges of losses based on historical
experience and recommendations of legal counsel.
Litigation is however unpredictable and actual costs
incurred could differ materially from those estimated
at the balance sheet date.
Doubtful debts A debtor or group of debtors is regarded as doubtful if
there is objective evidence, as a result of one or more
events that occurred after initial recognition. The Group
assesses at each balance sheet date whether there is
objective evidence for doubtful debts.
25. NEW INTERNATIoNAl fINANCIAl
REPoRTING STANDARDS Accounting pronouncements adopted at
28 february 2009 During the current year, the Group adopted all of the new
and revised standards and interpretations issued by the
International Accounting Standards Board (the IASB) and the
International Financial Reporting Interpretations Committee
(IFRIC) of the IASB that are relevant to its operations and
effective for the Group’s reporting period.
The Group early adopted IFRS 8 – Operating Segments in
the prior year.
At the date of these financial statements, the following
standards and interpretations were in issue but not yet
effective:
> Amendments to IAS 23 – Borrowing Costs
> IFRIC 12 – Service Concession Agreements
> IFRIC 13 – Customer Loyalty Programmes
> IFRIC 14 – IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their interaction
> IFRIC 15 – Agreements for the Construction of Real
Estate
> IFRIC 16 – Hedges of a Net Investment in a Foreign
Operation
> IFRS 1 – First Time Adoption of IFRS and IAS 27 –
Consolidated and Separate Financial Statements
> IFRS Annual Improvements
> IFRS 8 – Operating Segments
> IFRIC 17 – Distributions of Non-cash Assets to Owners
> IFRIC 18 – Transfers of Assets from Customers
The directors anticipate that the adoption of these standards
and interpretations in future periods will have no material
impact on the financial statements of the Company.
IfRS annual improvements The IASB has published amendments to IFRS, and the
related bases for conclusions and guidance, resulting from
the annual improvements project. Some amendments, in
turn, cause consequential amendments to other IFRS. The
IASB’s annual improvements project provides a vehicle for
making non-urgent but necessary minor amendments to
IFRS. The effective date for most amendments is annual
periods beginning on or after 1 January 2009.
Astrapak Annual Report 2009
58
R’000Land andbuildings
Plant,equipment
and furnitureMotor
vehiclesLeasehold
improvements Total
1. PRoPERTY, PlANT AND EQUIPmENT Group 2009Cost Balance at the beginning of the year 101 109 1 604 855 22 852 25 658 1 754 474 Additions 14 010 163 094 1 721 9 892 188 717 Disposal of subsidiary — (8 752) (84) — (8 836) Transferred to disposal group classified as held-for-sale (11 842) (200 907) (1 926) (928) (215 603) Disposals — (40 586) (2 014) — (42 600)
Balance at the end of the year 103 277 1 517 704 20 549 34 622 1 676 152
Accumulated depreciation and impairmentBalance at the beginning of the year 30 137 771 312 16 142 10 791 828 382 Disposal of subsidiary — (1 957) (43) — (2 000) Charge for the year 3 935 127 024 3 070 2 530 136 559 Impairment loss recognised(1) — 15 380 — — 15 380 Transferred to disposal group classified as held-for-sale (46) (111 794) (1 350) (482) (113 672) Depreciation on disposals — (32 263) (1 541) — (33 804)
Balance at the end of the year 34 026 767 702 16 278 12 839 830 845
Net book value at 28 february 2009 69 251 750 002 4 271 21 783 845 307
Group 2008 Cost Balance at the beginning of the year 104 656 1 329 441 20 785 27 013 1 481 895 Additions 2 030 256 810 2 848 844 262 532 Acquisition of business — 24 925 435 — 25 360 Disposals (5 577) (6 321) (1 216) (2 199) (15 313)
Balance at the end of the year 101 109 1 604 855 22 852 25 658 1 754 474
Accumulated depreciation Balance at the beginning of the year 29 611 665 407 14 803 7 192 717 013 Acquisition of business — 1 328 28 — 1 356 Charge for the year 3 745 110 684 2 484 2 093 119 006 Depreciation on disposals (3 219) (6 107) (1 173) 1 506 (8 993)
Balance at the end of the year 30 137 771 312 16 142 10 791 828 382
Net book value at 29 february 2008 70 972 833 543 6 710 14 867 926 092
R’000 CostAccumulateddepreciation
Net bookvalue
Reconciliation of net book value at 28 february 2009Land and buildings 103 277 34 026 69 251Plant, equipment and furniture 1 517 704 767 702 750 002Motor vehicles 20 549 16 278 4 271Leasehold improvements 34 622 12 839 21 783
1 676 152 830 845 845 307
Notes to the annual financial statementsfor the year ended 28 February 2009
Astrapak Annual Report 2009
59
1. PRoPERTY, PlANT AND EQUIPmENT (continued)
R’000Motor
vehicles
Plant,equipment
and furnitureLeasehold
improvements Total
Company 2008Cost Balance at the beginning of the year 88 1 654 346 2 088Disposals (88) (1 654) (346) (2 088)
Balance at the end of the year — — — —
Accumulated depreciation Balance at the beginning of the year 50 1 183 249 1 482Disposals (50) (1 183) (249) (1 482)
Balance at the end of the year — — — —
Net book value at 29 february 2008 — — — —
Property, plant and equipment is encumbered as detailed in note 14.
Details of land and buildings are included in annexure 1.
Assets held under finance lease are depreciated over the lesser of the expected useful life or the term of the related lease.
Useful lives per category of property, plant and equipment are as follows:Plant and equipment 10 to 12 yearsFurniture and computer equipment 3 to 5 yearsMotor vehicles 5 yearsLeasehold improvements 5 yearsBuildings 20 yearsTrademarks 3 to 5 years
In terms of IAS 16, expected useful lives are reviewed on an annual basis and adjusted if required.
(1) Impairment
The impairment of assets relates to assets of the disposal group identified as held-for-sale which were adjusted to the fair value thereof based on the conditional agreement signed by the purchaser. Refer note 42.
Astrapak Annual Report 2009
60
Group Company
2009 2008 R’000 2009 2008
2. GooDWIll 149 054 110 227 Balance at the beginning of the year — —
Purchases during the year :
— 26 819> acquisition of 100% of Ultrapak, a division of Durban
Bag (Pty) Ltd (“Ultrapak”) — —
— 6 316> acquisition of 60% of Riverbend Trade and Invest 50
(Pty) Ltd (“Spun Technologies”) — — — 30 > acquisition of 74% of Geotex/Plusnet — —
— 4 673> acquisition of remaining 30% of Knilam (Pty) Ltd
(“Knilam”) — — — 259 > acquisition of 4% of Astra Repro (Pty) Ltd — — — 277 > acquisition of 10% of Marcom (Pty) Ltd — — — 120 > acquisition of 100% of Plastform (Pty) Ltd — —
10 367 — > acquisition of 38,3% of Consupaq (Pty) Ltd — — 2 167 — > acquisition of 25% of Saflite (Cape) (Pty) Ltd — — 1 193 — > acquisition of 16% of Astra Repro (Pty) Ltd — —
— 333 > adjustment to PAK 2000 (Pty) Ltd — — 6 030 — > adjustment to Plastech group — —
(6 316) — Goodwill derecognised on subsidiary disposed of(13 143) — Impairment loss recognised — —
149 352 149 054 — —
Reconciliation of net goodwill as at the end of the year :
162 495 149 054Cost (after elimination of amortisation accumulated prior to the adoption of IFRS 3 in 2007) — —
(13 143) — Accumulated impairment losses — —
149 352 149 054 Net carrying value — —
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
61
Group Company
2009
2008 R’000 2009 2008
2. GooDWIll (continued)films Division
31 31 Astrapak Gauteng (East Rand Plastics division) — — 197 197 Astrapak Gauteng (Tristar Plastics division) — —
26 819 26 819 Astrapak Western Cape (Ultrapak division) — — 1 295 1 295 Barrier Film Converters (Pty) Ltd — — 1 809 1 809 Pack-Line Holdings (Pty) Ltd — —
— 6 316 Riverbend Trade and Invest 50 (Pty) Ltd — — — 259 Astra Repro (Pty) Ltd — — — 1 920 Diverse Labelling Consultants (Pty) Ltd — —
14 518 14 518 Knilam Packaging (Pty) Ltd — — 3 343 1 176 Saflite (Cape) (Pty) Ltd — —
— 1 161 Tamperpak (Pty) Ltd — — — 8 610 The Alex White group of companies — —
Rigids Division 6 597 6 597 Astrapak Western Cape (Plastform division) — —
26 693 16 326 Consupaq (Pty) Ltd — — 24 453 24 453 Hilfort Plastics (Pty) Ltd — — 1 418 1 418 JJ Precision Plastics (Pty) Ltd — — 2 568 2 568 Marcom Plastics (Pty) Ltd — — 1 443 1 443 PAK 2000 (Pty) Ltd — —
24 084 24 084 The Master Plastics group of companies — — 10 263 4 233 The Plastech group of companies — — 3 781 3 781 Thermopac (Pty) Ltd — —
Industrial Division 30 30 Coralline Investments (Pty) Ltd (Geotex/Plusnet divisions) — — 10 10 International Tube Technologies (Pty) Ltd — —
149 352 149 054 — —
ImPAIRmENT TESTS foR GooDWIllThe recoverable amount of a cash-generating unit is determined based on the higher of value-in-use or fair value less costs-to-sell. The value-in-use calculations use pre-tax cash flow projections based on financial budgets and plans approved by management covering a five-year period.
Cash flows beyond the five-year period are extrapolated into perpetuity without any growth or inflation.
The discount rate applied is pre-tax at the rate of 15,40% which represents the Group’s weighted average cost of capital.
During the year the goodwill arising from the following business acquisitions was impaired following a decision to dispose of these operations based on fair value less cost-to-sell.
Company
R’000 2009 2008
Alex White group of companies 8 610 —Astra Repro (Pty) Ltd 1 452 —Diverse Labelling Consultants (Pty) Ltd 1 920 —Tamperpak (Pty) Ltd 1 161 —
13 143 —
Astrapak Annual Report 2009
62
Group Company
2009 2008 R’000 2009 2008
3. TRADEmARkS 86 21 Opening balance at the beginning of the year — — — 76 Trademarks registered by Saflite (Pty) Ltd — —(80) (11) Amortisation for the year — — 6 86 Total — —
Reconciliation of net trademarks as at the end of the year
181 181 Cost — — (175) (95) Accumulated amortisation — —
6 86 Net carrying value — — Average useful lives of trademarks are 3 to 5 years
4. DEfERRED TAX
139 324 135 321 Accelerated wear and tear for tax purposes on plant and equipment — —
(10 403) (8 625) Other temporary differences — —(20 288) (57 610) Estimated tax losses — —
108 633 69 086 Net deferred tax liability — —Reconciliation between deferred tax opening and closing balances:
69 086 63 309 Net deferred tax liability at the beginning of the year — — (12 670) (21 295) Increase of tax losses — — 35 131 — Utilisation of tax losses — —
14 861 —Tax losses reversed due to entities that are not expected to generate future taxable profits — —
4 003 19 569 Net originating temporary differences on plant and equipment — —
— (633) Change in tax rate — — (1 778) 8 109 Other temporary differences — —
108 633 69 086 Net deferred tax liability at the end of the year — —Analysed between:
(31 240) (57 610) Deferred tax assets — — 139 873 126 696 Deferred tax liabilities — — 108 633 69 086 Net deferred tax liability at the end of the year — —
5. INVESTmENTS AND loANSInvestments Unlisted
13 227 10 807Investment in label printing Mauritian Joint Venture (49,5% interest held)
776 776 Investment to date at cost — — 22 513 17 834 Equity accounted profit to date (after tax) — — (10 547) (7 653) Dividends received to date — —
485 (150) Foreign exchange translation differences to date — — (13 227) — Transferred to assets held-for-sale — —
6 788 7 484
6 787 899 (2008: 7 483 629) cumulative redeemable preference shares at R1 each in Really Useful Investments No 143 (Pty) Ltd — —
6 788 18 291 — — Listed
— 28 FirstRand Limited (1 505 ordinary shares) — — 3 3 Sanlam Limited (499 ordinary shares) — — 8 8 Old Mutual Limited (700 ordinary shares) — —
12 12Redeemable unsecured Western Province Rugby Football Union Debentures — —
23 51 — — 6 811 18 342 Total investments — —
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
63
Group Company
2009 2008 R’000 2009 2008
5. INVESTmENTS AND loANS (continued)loans
— — Loan to Astrapak Property Development (Pty) Ltd — 28 177 — — Loan from Astrapak Limited Linked Unit Trust Scheme (5 252) (5 269)
The loans are non-interest bearing, unsecured and have no fixed terms of repayment
6 811 18 342 Total (5 252) 22 908
6 788 18 291 Directors’ valuation of unlisted investments — —
24 62 Market value of listed investments — —
Included in the financial results of the Mauritian Joint Venture, Standard Labels Limited, at year-end are:
20 247 21 913 Current assets — — 4 862 7 349 Non-current assets — — 5 608 5 110 Current liabilities — — 636 2 320 Non-current liabilities — —
18 865 19 953 Retained profit at the end of the year — — 28 329 35 447 Revenue — — 2 599 2 858 Retained profit for the year — —
6. INVESTmENT IN ASSoCIATE ComPANY470 286 Unlisted – Izakhamzi Plastics (Pty) Ltd (20% interest held) — —
8 081 7 867 Current assets — — 3 000 566 Non-current assets — — 7 878 6 846 Current liabilities — — 855 181 Non-current liabilities — —
45 756 31 810 Revenue — — 1 007 258 Profit for the year — —
470 286 Equity accounted profit to date — —
470 286 Directors’ valuation of unlisted investment — —
7. INVESTmENT IN SUBSIDIARIES — — Shares at cost 518 910 513 588 — — Indebtedness (25 492) (8 552)
— — Total 493 418 505 036
— — Directors’ valuation 493 418 505 036
Refer note 28 for further details
8. INVENToRIES 67 467 158 925 Raw materials — — 24 834 47 446 Work in progress — —
124 006 149 715 Finished goods — — 13 649 16 390 Consumable stores — —
229 956 372 476 Total — —
Inventories amounting to R1 042 484 (2008: R713 153) are carried at net realisable value.
Astrapak Annual Report 2009
64
Group Company
2009 2008 R’000 2009 2008
9. ACCoUNTS RECEIVABlE 345 976 415 719 Trade receivables — —
(2 396) (6 634) Less: Provision for doubtful debts — —
343 580 409 085 — — 11 262 12 224 Prepayments 238 229
252 1 352 Forward exchange contract assets — —
24 705 89 319 Other (including VAT receivable deposits, etc) 83 4
379 799 511 980 Total 321 233
Refer note 33 for further details
10. SHARE CAPITAl AND SHARE PREmIUm Authorised share capital Ordinary share capital
200 200 200 000 000 shares of 0,1 cent per share 200 200Preference share capital
4 000 4 000 4 000 000 shares of 0,1 cent per share 4 000 4 000
Issued share capital Ordinary share capital
135 135 135 131 250 ordinary shares of 0,1 cent per share 135 135 199 367 199 367 Share premium 199 367 199 367
Preference share capital 2 2 1 500 000 shares of 0,1 cent per share 2 2
142 588 142 588 Share premium 142 588 142 588
The Group’s primary objective when managing capital is to safeguard its ability to continue as a going concern and provide appropriate returns for shareholders.The Group manages and adjusts the capital structure taking into consideration economic conditions and expected future capital requirements. The capital structure may be adjusted by issuing new shares, varying dividend payments and raising or repaying debt.The Group monitors capital on the basis of net debt to adjusted capital. Net debt is calculated as long-term and short-term interest-bearing debt plus overdrafts less cash and cash equivalents. Adjusted capital includes ordinary and preference share capital and premium, retained earnings, non-distributable reserves and debentures less treasury shares. This strategy is consistent with the comparative year presented in these financial statements. The Group targets a net debt to adjusted capital ratio in the range of 30% to 40%.
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
65
Group Company
2009 2008 R’000 2009 2008
10. SHARE CAPITAl AND SHARE PREmIUm (continued)At year-end, the ratios were:
491 148 618 855 Debt 60 887 — Debt reclassified as held-for-sale
(110 110) (56 649) Cash and cash equivalents
441 925 562 206 Net debt
135 135 Ordinary share capital 199 367 199 367 Ordinary share premium 671 814 646 940 Retained income
1 449 814 Non-distributable reserves 339 (9 343) Capital reserve
(18 887) (44 438) Minority put option(156 697) (154 168) Treasury shares
2 2 Preference share capital 142 588 142 588 Preference share premium
840 110 781 897 Adjusted capital
53% 72% Net debt to adjusted capital (%)The decrease was attributable to the repayment of debt. No dividend declaration was made as the current Group strategy is to settle debt. The Group is subject to external capital covenants imposed by external financiers. The requirements of these covenants were met at the relevant measurement dates with the exception of interest cover.
11. NoN-DISTRIBUTABlE RESERVES 814 (1 269) Balance at the beginning of the year — — 635 2 083 Movements in non-distributable reserves — —
1 449 814 Balance at the end of the year — —
Comprising: 1 449 814 Foreign currency translation reserve — —
1 449 814 — —
12. TREASURY SHARES
12 062 14 811
Treasury shares 3 631 960 (2008: 4 459 793 shares) registered in the name of the Astrapak Limited Linked Unit Trust Scheme — —
139 357 139 35712 952 608 (2008: 12 952 608) shares purchased by nominee — —
5 278 —212 639 (2008: Nil) shares that reverted to the employer after resignations — —
156 697 154 168 — —
Astrapak Annual Report 2009
66
Group Company
2009 2008 R’000 2009 2008
13. ASSETS ClASSIfIED AS HElD-foR-SAlE13.1 Assets
269 063 — flexibles disposal group (refer to note 42) — — 101 931 — Property, plant and equipment — — 13 227 — Investment in associate — — 87 384 Inventory 66 521 — Other current assets — —
Portion 1 of Erf 9486, Westmead
48 466 —
This property belongs to Astrapak Property Development (Pty) Ltd and is being kept with a view to sell within the next financial year — —
317 529 — Total assets — —
13.2 liabilities 92 194 — flexibles disposal group (refer to note 42) — —
Portion 1 of Erf 9486, Westmead
16 726 —
Long-term loan used to finance the purchase of this property within Astrapak Property Development (Pty) Ltd — —
44 161 — flexibles long-term liabilities — — All long-term debt of the disposal group which will not be disposed of, but settled upon completion of the disposal of the assets
153 081 — Total liabilities — —
14. INTEREST-BEARING DEBT AND CASH14.1 long term
Secured debt 199 939 189 795 Instalment sale agreements (variable rate) — —
Other variable rate loans: 56 223 98 216 > monthly instalments — —
219 544 207 428 > bi-annual instalments — — 475 706 495 439 Total secured debt 15 395 24 975 Unsecured debt — —
491 101 520 414 Total long-term interest-bearing debt
(150 049) (143 467)Current portion transferred to short-term interest-bearing debt — —
341 052 376 947 Net long-term interest-bearing debt — —
The instalment sale agreements and other variable rate loans are secured by the related property, plant and equipment with net book values of R277 293 773 (2008: R260 169 437). Refer note 1.
Variable rate loansThe monthly instalment loans bear interest at variable money market rates, the majority of which are at prime less 2%, ruling at the rollover dates. Refer to note 34 for details on the movement in prime interest rates. Redemption is reviewed and rolled forward. Security is provided by the underlying property and cession of key-man insurance policies.
The Group’s facilities with its primary bankers comprise:A term loan facility, expiring on 19 April 2012, repayable in bi-annual instalments based on the facility utilised from time to time at a JIBAR-linked rate. This facility was decreased from R600 million to R410 million during the 2008 financial year and the difference allocated to the working capital and asset-based finance facilities described below.
The working capital facility is JIBAR-linked; this facility was increased from R150 million to R215 million during the 2008 financial year.
The asset-based finance facility is repayable in monthly instalments based on the facility utilised from time to time at a prime-related rate. This facility was increased from R250 million to R375 million during the 2008 financial year.
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
67
Group Company
2009 2008 R’000 2009 2008
14. INTEREST-BEARING DEBT AND CASH (continued)
14.1 long term (continued) Analysis of repayments Repayable during the 12 months to:
— 143 467 28 February 2009 — — 150 049 128 990 28 February 2010 — — 144 884 109 048 28 February 2011 — — 113 544 90 690 29 February 2012 — — 68 563 40 754 28 February 2013 — — 12 598 7 465 28 February 2014 — — 1 463 — Thereafter — —
491 101 520 414 Total repayments — —
14.2 Short-term interest-bearing debt 47 98 441 Bank overdrafts 14 13
150 049 143 467 Current portion of long-term interest-bearing debt — —
150 096 241 908 14 13
(110 110) (56 649) 14.3 Cash and short-term investments (2 642) (851)
14.4 Net interest-bearing debt/(cash) 341 052 376 947 Long-term interest-bearing debt — — 150 096 241 908 Short-term interest-bearing debt 14 13 44 161 — Debt of disposal group classified as held-for-sale — —
16 726 —Debt of property development company relating to property held-for-sale — —
(110 110) (56 649) Cash and short-term investments (2 642) (851)
441 925 562 206 (2 628) (838)
The Group evaluated numerous capital allocation opportunities during the year under review and invested to achieve an optimal result for ordinary shareholders. The opportunities that were pursued were funded partly by debt and partly by the cash generated from within the Group. This resulted in a net interest-bearing debt of R441,9 million (2008: R562,2 million). The major capital allocations were:> R188,7 million (2008: R262,5 million) for plant replacement as well as expansionary capital expenditure;> R31,6 million (2008: R9,3 million) for the purchase of certain minority interests;> RNil (2008: R53,4 million) for the purchase of subsidiaries; and> RNil (2008: R67,5 million) for the redemption of debentures.
Where possible the effect of these capital allocations on headline earnings has been disclosed in note 20 of the report. In accordance with the provisions of the Articles of Association adopted by the Company on 17 September 1997, the borrowing powers of the directors are unlimited.
Astrapak Annual Report 2009
68
Group Company
2009 2008 R’000 2009 2008
15. ACCoUNTS PAYABlE 255 741 384 710 Trade payables — —
754 16 459 Forward exchange liabilities — —
114 421 49 728 Accruals and other creditors 2 481 3 332
370 916 450 897 Total 2 481 3 332
R’000 Royalties
Distributorcommis-
sionsCreditnotes Other Total
16. PRoVISIoNS – GRoUP Opening balance 405 494 1 519 7 838 10 256Provided 514 1 313 1 097 3 843 6 767Utilised — (485) (1 714) (5 608) (7 807)
Transferred to liabilities relating to assets held-for-sale — — (643) (1 763) (2 406)
Closing balance 919 1 322 259 4 310 6 810
PRoVISIoNS – ComPANYOpening balance — — — — —
Closing balance — — — — —
Provisions for royalties: Provision raised in terms of licensing agreements for products produced under licence.
Provisions for distributor commissions: Provisions raised in terms of distribution agreements payable to distributors and agents of products.
Other provisions consist of provisions for volume discounts and settlement discounts.
All the provisions are expected to be settled during the next financial year.
Group Company
2009Restated
2008 R’000 2009 2008
17. PRofIT/(loSS) fRom oPERATIoNSProfit from operations has been determined after taking into account the items detailed below:Income:
307 3 062 Government grants — — 5 454 4 725 Foreign exchange gains — — 234 5 992 Net gain on disposal of property, plant and equipment — —
— 3 000 Reversal of impairment – sinkhole — — Expenses: Auditors’ remuneration
4 018 3 462 > audit fees — 85 153 251 > prior year under-provision — — 479 138 > tax and other advisory services — — 105 81 Write-down of inventory to net realisable value — —
4 755 3 932 — 85
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
69
Group Company
2009Restated
2008 R’000 2009 2008
17. PRofIT/(loSS) fRom oPERATIoNS (continued)Directors’ emoluments Non-executive directors> Number of non-executive directors 5 4
> Fees for services as a director 550 565> Fees for services as committee members 405 245> Fees for consulting services 105 253
Executive directors 1 060 1 063> Number of executive directors 2 6
> Basic remuneration 8 710 10 452> Bonus, performance-related payments and ex-gratia 6 214 3 175> Contributions to retirement and medical aid funds 122 137> Other incentives and benefits 610 833
15 656 14 597Less: Paid by subsidiary and non-subsidiary companies (15 656) (14 597)
(Refer to the remuneration report on pages 33 to 36 for a further analysis of aggregate remuneration and benefits paid to executive and non-executive directors.)
80 11 Amortisation of trademarks — — Depreciation
3 935 3 745 > Land and buildings — — 118 859 2 004 > Plant, equipment and furniture — —
2 861 101 492 > Motor vehicles — — 2 478 2 173 > Leasehold improvements — —
128 133 109 414 — —
2 518 2 512 Foreign exchange losses — — Operating lease charges
38 468 28 260 > Land and buildings — — 3 313 2 044 > Plant, equipment and motor vehicles — —
41 781 30 304 — —
13 143 — Impairment of goodwill — — 13 607 — Loss on disposal of subsidiary — —
Staff costs 361 033 339 244 > Salaries and wages — — 25 378 23 098 > Pension and provident fund costs — — 14 611 17 236 > Other — —
401 022 379 578 — —
Number of employees 3 877 3 599 Continuing — —
513 537 Discontinued — —
4 390 4 136 Number of employees — —
18. NET INVESTmENT INComE/(fINANCE CoSTS)
(116 842) (78 780) Interest paid (excluding debenture interest distribution) (22 549) (20 549)— (2 083) Debenture interest distribution — (2 231)
31 040 14 667 Interest received 21 885 23 617
(85 802) (66 196) (664) 837
Astrapak Annual Report 2009
70
Group Company
2009Restated
2008 R’000 2009 2008
19. TAXATIoN 41 355 30 413 Current tax (3 037) — 39 548 5 777 Deferred taxation — 1 057 2 011 6 244 Secondary tax on companies 1 812 6 018
82 914 42 434 Total (1 225) 7 075
%
Reconciliation of rate of taxation 28,0 29,0 South African normal tax rate on companies (28,0) 29,0
— (0,3) > Change in tax rate — — (0,1) (0,6) > Incentive allowances — —
11,3 1,1 > Disallowable expenses 15,9 3,7 (0,4) (3,3) > Non-taxable income — (32,8) (3,3) (3,6) > Prior year losses utilised — — 8,4 — > Tax losses not raised 12,1 — 9,8 — > Impairment of tax losses raised in prior years — —(0,3) 1,1 > Other (51,8) 3,2 1,3 4,0 > Secondary tax on companies 30,9 17,7
54,7 27,4 Effective rate of taxation (20,9) 20,8
R’000
Tax losses 72 458 198 655 Estimated tax losses available to offset future profits — —
105 664 28 047 Tax losses against which no deferred taxation asset was raised 5 799 3 268
20. EARNINGS AND HEADlINE EARNINGS PER oRDINARY SHARE (CENTS)
35,5 76,3 Earnings per ordinary share (cents) — — 38,6 75,6 From continuing operations(3,1) (1,1) From discontinued operations — 1,8 Debenture interest
72,1 69,0 Headline earnings per ordinary share (cents) — —
72,1 67,2 Net headline earnings attributable to ordinary shareholders
— 1,8 Debenture interest 34,5 72,8 Earnings per ordinary share – fully diluted (cents) — — 37,5 72,0 From continuing operations(3,0) (1,0) From discontinued operations — 1,8 Debenture interest
69,9 65,7 Headline earnings per ordinary share – fully diluted (cents) — —
69,9 63,9 Attributable income — 1,8 Debenture interest
118 037 117 524Weighted average number of ordinary shares for the purposes of basic earnings per share
3 632 5 837 Effect of dilutive potential ordinary shares – share options
121 669 123 361Weighted average number of ordinary shares for the purposes of diluted earnings per share
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
71
20. EARNINGS AND HEADlINE EARNINGS PER oRDINARY SHARE (CENTS) (continued)
Gross Taxminorityinterest Net R’000
2009 Reconciliation between attributable profit and headline earnings
129 721 (82 914) (4 811) 41 996 Net profit attributable to ordinary shareholders
960 — — 960 Add: Loss on exercise of options
13 607 — — 13 607 Add: Loss on disinvestment in subsidiary
15 380 — — 15 380 Add: Measurement to fair value of assets classified as held-for-sale
13 143 — — 13 143Add: Impairment of goodwill in respect of assets classified as held-for-sale
(355) 40 294 (21) Less: IAS 16 Profit on disposal of property, plant and equipment
172 456 (82 874) (4 517) 85 065Headline earnings attributable to ordinary shareholders
2008 Reconciliation between attributable profit and headline earnings
137 605 (42 434) (7 598) 87 573 Net profit attributable to ordinary shareholders
2 083 — — 2 083 Add: Distribution to linked unitholders – debenture interest
427 — — 427 Add: Loss on exercise of options
(5 958) 12 (63) (6 009) Less: IAS 16 Profit on disposal of property, plant and equipment
(3 000) — — (3 000)Less: IAS 16 Reversal of impairment of property, plant and equipment
131 157 (42 422) (7 661) 81 074Headline earnings attributable to ordinary shareholders
21. DISTRIBUTIoN PolICYDividend policyThe dividend policy will be to declare and pay the excess of the distributable profits, if any. The distribution policy will be reviewed by the Board of Directors of Astrapak from time to time, in light of prevailing circumstances and future cash requirements.
Group Company
2009 2008 R’000 2009 2008
22. CAPITAl CommITmENTS 9 680 38 186 Authorised, contracted not spent
Capital commitment funding will be sourced from cash generated from operations or other financing arrangements as required.
— —
Astrapak Annual Report 2009
72
Group Company
2009 2008 R’000 2009 2008
23. lEASE CommITmENTSOperating leases
34 292 37 734 > due within one year — — 91 790 130 408 > due within two to five years — — 9 813 26 887 > due thereafter — —
135 895 195 029 Total — —
24. RETIREmENT BENEfITSWith effect from 1 March 1999, the Astrapak Provident and Astrapak Pension Funds were established for the purpose of consolidating the Group’s funds, by transferring all employees in the Group onto the Astrapak Provident and Pension Funds. All the funds are defined contribution funds as governed by the Pension Funds Act, 1956 (Act no 26 of 1956).
All eligible employees are members of either the Astrapak Provident and Pension Funds, or are members of funds within the various industries in which they are employed.
The assets of the funds, at 28 February 2009, are held in administered trust funds, separate from the Group’s assets, and are administered by various pension fund administrators.
The cost of retirement benefits charged to the income statement during the financial period under review amount to:
Group Company
2009 2008 R’000 2009 2008
25 378 23 098 > Continuing operations — — 7 980 5 858 > Discontinued operations — —
33 358 28 956 Total — —
25. CoNTINGENT lIABIlITIES
22 107 44 035
Contingent liabilities in respect of guarantees issued to bankers and other creditors for normal business commitments. — —
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
73
26. fINANCIAl RISk mANAGEmENTThe Group purchases financial instruments in order to finance its operations and to manage the interest rate and currency risks that arise from normal business operations. In addition, financial balances, for example trade debtors, trade creditors, and bank balances, arise from normal business operations within the Group.
The Group finances its operations mainly through retained profits, bank credit borrowings and long-term bank loans.
The Group also enters into derivative transactions, principally, forward currency contracts, forward rate agreements and interest rate swaps in order to manage currency and interest rate risks that may arise.
The risk areas the Group is exposed to are credit risk, treasury risk, interest rate risk, liquidity risk and foreign currency risk. Compliance with the Group’s policies is reviewed at Executive Committee meetings. These policies have remained unchanged throughout the year ended 28 February 2009.
Treasury risk managementThe Group’s treasury risk is managed through the Executive Committee reporting to the Board of Directors. One of the roles of this committee is to decide the appropriate philosophy to be adopted within the Group regarding the management of treasury risks and for considering and managing the Group’s existing financial market risks by adopting strategies within the guidelines set by the Board.
Interest rate risk management Interest rate risk is the possibility that the Group may suffer financial loss if either a fluctuating interest rate or fixed interest rate position is entered into and interest rates move adversely. The Group uses standard market instruments to manage this risk. The risk profile of financial liabilities and assets at balance sheet date is detailed below, which excludes short-term receivables and non-interest bearing short-term payables:
R’000Floating rate
assetsFixed rate
liabilitiesFloating rate
liabilitiesNet
liability
South African Rand (110 110) — 552 035 441 925
Total at 28 february 2009 (110 110) — 552 035 441 925
South African Rand (56 649) 1 502 617 353 562 206
Total at 29 February 2008 (56 649) 1 502 617 353 562 206
Refer to the sensitivity analysis in note 34 for further details.
liquidity risk managementLiquidity risk is the possibility that the Group may suffer financial loss through liquid funds not being available or that excessive finance costs must be paid to obtain funds to meet payment requirements. The Group manages this risk through forecasting and monitoring cash flow requirements on a regular basis, and by maintaining sufficient undrawn facilities. Significant liquid resources were held at year-end. The Group had the following undrawn facilities available at the balance sheet date:
R’000 2009 2008
Expiry period at 28/29 FebruaryWithin one year 100 572 116 559Within two to five years 274 970 202 572
375 542 319 131
The facilities expiring within one year are of a general banking nature and thus subject to review at various dates (usually on an annual basis), and it is expected that this profile will continue.
The facilities expiring beyond two years are utilised primarily to finance capital expenditure, but exclude instalment sales facilities.
foreign currency risk management Foreign currency risk is the risk that the Group may suffer financial loss as a consequence of depreciation in a reporting currency relative to a foreign currency prior to payment of a commitment in that foreign currency, or of the reporting currency strengthening prior to receiving payment in that foreign currency.
The Group has transactional exposures in currencies other than South African Rand. These exposures arise from sales, or purchases, of inventory and capital expenditure.
The Group uses swaps, options and other financial instruments, in particular forward contracts, to manage transactional currency risks. Specific translation risks are managed through the Group’s individual operating units. Speculative positions are not permitted.
Astrapak Annual Report 2009
74
26. fINANCIAl RISk mANAGEmENT (continued)All imports and exports are fully covered at balance sheet date. The values of forward contracts entered into at year-end are:
R’000 2009
2009Held-for-
sale 2008
US Dollars 15 331 17 202 24 765Canadian Dollars — — 3 786Australian Dollars 33 — — Swiss Francs 3 150 95Swedish Kronen — 1 785 — Euro 13 479 16 447 65 917UK Pounds 1 184 262 927
30 030 35 846 95 490
2009 2008Averagecontract
rateClosing
rate
Averagecontract
rateClosing
rate
US Dollars 10,3146 9,9845 7,3411 7,7570 Canadian Dollars — 7,9270 7,8864 7,9114 Australian Dollars 6,8785 6,4215 — 7,0658 Swiss Francs 8,8992 8,5475 6,6333 7,4350 Swedish Kronen 1,3300 1,1076 — 1,2114 Euro 13,0730 12,7215 10,7493 11,7500 UK Pounds 14,8365 14,2384 14,4740 15,4000
Refer to the sensitivity analysis in note 34 for further details.
Credit risk managementPotential concentrations of credit risk consist principally of cash investments and trade receivables. The Group deposits cash surpluses only with major banks of high standing. Trade receivables comprise a large, widespread customer base. Ongoing credit evaluations on the financial condition of customers are performed and, where appropriate, credit guarantee insurance cover is purchased or provisions made. The Group does not consider there to be any significant concentration of credit risk that had not been insured or adequately provided for at balance sheet date. An allowance is made for impairment where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.
fair value of financial instruments The carrying amounts reported in the balance sheet for liquid resources, trade and other receivables and trade payables approximate fair value.
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
75
R’000 Films Rigids Flexibles Industrial
Total continuingoperations
Dis-continuedoperations
Total group
27. SEGmENTAl ANAlYSIS 27.1 Business segment report
(primary report) Revenue – 2009 1 283 970 1 282 346 101 604 81 851 2 749 771 513 318 3 263 089Revenue – 2008 (restated) 1 108 201 1 102 982 97 956 56 965 2 366 104 454 773 2 820 877Profit from operations (segment result) – 2009 (excluding loss on sale of subsidiary) 86 396 153 832 6 407 4 242 250 877 33 283 284 160Profit from operations (segment result) – 2009 (including loss on sale of subsidiary) 72 789 153 832 6 407 4 242 237 270 33 283 270 553 Profit from operations (segment result) – 2008 52 182 149 616 13 983 5 449 221 230 8 263 229 493Government grants – 2009 — 307 — — 307 253 560Government grants – 2008 — 3 054 8 — 3 062 — 3 062foreign exchange gains – 2009 870 1 011 831 2 742 5 454 411 5 865Foreign exchange gains – 2008 227 3 274 466 758 4 725 123 4 848Amortisation of trademarks – 2009 — 3 77 — 80 — 80Amortisation of trademarks – 2008 — 10 1 — 11 — 11Depreciation – 2009 27 940 92 128 5 307 2 758 128 133 8 426 136 559Depreciation – 2008 23 344 80 107 4 182 1 781 109 414 9 592 119 006Share of results of associate company and joint venture – 2009 183 — — — 183 4 679 4 862Share of results of associate company and joint venture – 2008 52 — — — 52 1 414 1 466Salaries, wages and other related expenses – 2009 183 332 191 061 14 393 12 236 401 022 83 019 484 041Salaries, wages and other related expenses – 2008 169 165 178 576 20 110 11 727 379 578 79 847 459 425foreign exchange losses – 2009 773 654 1 015 76 2 518 2 815 5 333Foreign exchange losses – 2008 29 1 846 548 89 2 512 1 343 3 855operating leases – 2009 11 320 25 350 1 849 3 262 41 781 9 432 51 213Operating leases – 2008 10 568 16 384 701 2 651 30 304 9 739 40 043Net (loss)/gain on disposal of property, plant and equipment – 2009 (605) 1 059 (220) — 234 121 355Net gain/(loss) on disposal of property, plant and equipment – 2008 5 779 98 115 — 5 992 (34) 5 958Capital expenditure – 2009 33 959 135 851 1 289 11 969 183 068 5 649 188 717Capital expenditure – 2008 (restated) 54 552 163 734 10 327 3 673 232 286 30 246 262 532Total assets – 2009 627 448 1 018 265 101 417 62 850 1 809 980 269 063 2 079 043 Total assets – 2008 (restated) 773 686 889 450 393 583 48 234 2 104 953 — 2 104 953Total liabilities – 2009 556 221 440 632 91 483 29 031 1 117 367 92 194 1 209 561Total liabilities – 2008 (restated) 694 496 350 253 225 620 16 810 1 287 179 — 1 287 179Investment in associate company and joint venture – 2009 470 — — — 470 13 227 13 697Investment in associate company and joint venture – 2008 286 — 10 807 — 11 093 — 11 093
The Astrapak Group identifies segments based primarily on differences in product type, being Film, Rigid, Flexible or Industrial products. Revenues for the Film, Rigid, Flexible and Industrial segments are derived from sales to Group and external customers. The information above is presented for the Group, and as a result intra-group transactions have been eliminated on consolidation. Details of the nature of the products supplied by each of the Film, Rigid, Flexible and Industrial segments are available in the Business Profile section of this annual report.
Astrapak Annual Report 2009
76
R’000 Films Rigids Flexibles Industrial
Total continuingoperations
Dis-continuedoperations
Total group
27. SEGmENTAl ANAlYSIS (continued)
27.1 Business segment report (primary report) (continued)Reconciliation of revenue2009Revenue for the division 1 347 740 1 368 634 104 243 91 845 2 912 462 572 430 3 484 892Transactions with other operating segments of the Group (63 770) (86 288) (2 639) (9 994) (162 691) (59 112) (221 803)External customers 1 283 970 1 282 346 101 604 81 851 2 749 771 513 318 3 263 0892008Revenue for the division 1 200 491 1 172 860 103 362 64 776 2 541 489 508 896 3 050 385Transactions with other operating segments of the Group (92 290) (69 878) (5 406) (7 811) (175 385) (54 123) (229 508)External customers 1 108 201 1 102 982 97 956 56 965 2 366 104 454 773 2 820 877
Geographical informationWith the exception of the Joint Venture in Mauritius (refer note 5) which is equity accounted, all of the Group’s operations are based in South Africa. Materials and produce are imported and exported to and from South Africa to other regions of the world.
R’000 Films Rigids Flexibles Industrial
Total continuingoperations
Dis-continued
operationsTotal
group
Regional revenue2009Revenue attributable to external customers in South Africa 1 257 694 1 267 839 101 604 67 531 2 694 668 502 232 3 196 900Revenue attributable to external customers in foreign countries 26 276 14 507 — 14 320 55 103 11 086 66 189Total external revenue 1 283 970 1 282 346 101 604 81 851 2 749 771 513 318 3 263 0892008 Revenue attributable to external customers in South Africa 1 091 390 1 094 865 97 956 56 965 2 341 176 442 543 2 783 719Revenue attributable to external customers in foreign countries 16 811 8 117 — — 24 928 12 230 37 158Total external revenue 1 108 201 1 102 982 97 956 56 965 2 366 104 454 773 2 820 877
Reliance on major customersThe extent of reliance on major customers is:
R’000 Films Rigids Flexibles Industrial
Totalcontinuingoperations
Dis-continuedoperations
Total group
Percentageof
continuingoperations
Percentageof all
operations
2009Customer 1 41 326 161 117 2 035 — 204 478 96 072 300 550 7,4% 9,2%Customer 2 — 237 072 892 — 237 964 62 683 300 647 8,7% 9,2%All other customers 1 242 644 884 157 98 677 81 851 2 307 329 354 563 2 661 892 83,9% 81,6%
1 283 970 1 282 346 101 604 81 851 2 749 771 513 318 3 263 089 100% 100%2008 Customer 1 45 492 113 809 — — 159 301 75 669 234 970 6,7% 8,4%Customer 2 221 174 592 127 — 174 940 51 846 226 786 7,4% 8,0%All other customers 1 062 488 814 581 97 829 56 965 2 031 863 327 258 2 359 121 85,9% 83,6%
1 108 201 1 102 982 97 956 56 965 2 366 104 454 773 2 820 877 100% 100%
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
77
IssuedEffective
percentage holdingAmount owing
by/(to) subsidiaryCost of
investmentsordinary
share
R’000 capital
R2009
%2008
%2009
% 2008
R2009
R2008
R
28. ANAlYSIS of INTEREST IN SUBSIDIARY ComPANIES
28.1 Subsidiaries all incorporated in the Republic of South AfricaDirectly held Alex White Holdings (Pty) Ltd 1 812 461 100 100 — — 58 144 58 144Astrapak Finance Company (Pty) Ltd (1) 2 105 100 100 (32 855) (26 574) 178 000 178 000Astrapak Gauteng (Pty) Ltd 100 100 100 (104 077) (98 952) — — Astrapak KwaZulu-Natal (Pty) Ltd 100 100 100 29 336 29 336 — — Astrapak Properties (Pty) Ltd (2) 100 100 100 — — — — Astrapak Property Development (Pty) Ltd (2) 100 100 100 — — — — Astrapak Western Cape (Pty) Ltd 100 100 100 51 403 51 403 — — Hilfort Plastics (Pty) Ltd 120 000 100 100 — — 83 526 83 526International Edgeboard Technology (Pty) Ltd 100 100 100 — — — — Lunifera Investments (Pty) Ltd (3) 1 000 100 100 (1 000) — 1 000 — Master Plastics (Pty) Ltd 563 100 100 — — 181 939 181 939PETech (Pty) Ltd 100 80 80 750 — 3 097 3 097Plastech Moulders (Pty) Ltd 100 80 80 894 — 11 669 7 347PrintTech (Pty) Ltd 100 80 80 63 — 1 173 1 173Indirectly held Alex White & Co (Pty) Ltd 40 000 100 100 — — — — Alex White Investments (Pty) Ltd 242 100 100 — — — — Astra Repro (Pty) Ltd 100 100 80 — — — — Astraflex (Pty) Ltd 100 100 100 26 047 26 047 — — Astrapak Exports (Pty) Ltd 100 100 100 — — — — Barrier Film Converters (Pty) Ltd 1 000 100 100 — — — — Books and Games (Pty) Ltd (3) 2 000 100 100 — — — — Cape Wrappers (Pty) Ltd 35 000 100 100 — — — — Cinqcorp (Pty) Ltd 400 100 100 — — — — Cinqpet (Pty) Ltd 10 100 100 — — — — Cinqprop (Pty) Ltd 100 100 100 — — — — Consupaq (Pty) Ltd 100 98,3 60 — — — — Coralline Investments (Pty) Ltd (4) 100 74 74 — — — — Diverse Labelling Consultants (Pty) Ltd 1 110 100 100 — — — — Durpak (Pty) Ltd 1 000 100 100 — 6 241 — — Euro-matic Plastop (Pty) Ltd 10 000 50 50 — — — — Fruit Wrappers (SA) (Pty) Ltd (3) 36 000 100 100 — — — — Hortiprint Marketing Services (Pty) Ltd (3) 10 000 100 100 — — — — Industrial Publishing Corporation (Pty) Ltd (3) 200 100 100 — — — — International Tube Technology (Pty) Ltd 1 000 000 60 60 — — — — JJ Precision Plastics (Pty) Ltd 200 100 100 — — — — Knilam Packaging (Pty) Ltd 100 100 100 — — — — Lithocraft (Pty) Ltd (3) 100 100 100 — — — — Marcom Plastics (Pty) Ltd 100 60 60 — — — — Maru Dealers (Pty) Ltd (3) 100 100 100 — — — — Multitape Labels (Pty) Ltd 2 107 302 100 100 — — — — Nelspruit Printers (Pty) Ltd (3) 15 000 100 100 — — — — Pack-Line Holdings (Pty) Ltd 750 100 100 — — — — PAK 2000 (Pty) Ltd 4 000 75 75 — — — — Plastools Manufacturing Company (Pty) Ltd 200 100 100 — — — — Plastop (Pty) Ltd 7 046 100 100 — — — — Plastop KwaZulu-Natal (Pty) Ltd 1 000 100 100 — — — — Plastop Leasing (Pty) Ltd 5 100 100 100 — — — — Plastop Properties (Pty) Ltd 200 100 100 — — — — Riverbend Trade and Invest 50 (Pty) Ltd (5) 100 — 60 — — — — Saflite (Cape) (Pty) Ltd 200 100 75 — — — — Systemforms (Pty) Ltd (3) 100 100 100 — — — — Tamperpak (Pty) Ltd 1 000 100 100 — — — — Thermopac (Pty) Ltd 6 000 100 100 — — — — Thermopackaging Natal (Pty) Ltd 100 100 100 — — — — Whitehouse Properties (Glenlea) (Pty) Ltd (2) 100 100 100 — — — — Whitehouse Properties (Natal) (Pty) Ltd (3) 2 100 100 — — — — Whitehouse Properties (Nelspruit) (Pty) Ltd (3) 200 100 100 — — — — Whitehouse Properties (Paarl) (Pty) Ltd (2) 100 100 100 — — — — Whitehouse Properties (Pietermaritzburg) (Pty) Ltd (3) 200 100 100 — — — —
Astrapak Annual Report 2009
78
IssuedEffective
percentage holdingAmount owing
by/(to) subsidiaryCost of
investmentsordinary
share
R’000capital
R2009
%2008
%2009
%2008
R2009
R2008
R
28. ANAlYSIS of INTEREST IN SUBSIDIARY ComPANIES (continued)
28.2 Subsidiaries in process of being deregistered or liquidatedDirectly held Portion 727 Randjiesfontein (Pty) Ltd (3) 2 100 3 947 3 947 362 362
(25 492) (8 552) 518 910 513 588
Subsidiaries are packaging companies, except for:(1) Finance company(2) Property company(3) Dormant companyother information(4) Trading as Plusnet/Geotex(5) Trading as Spun TechnologiesThe Group acquired 38,3% of Consupaq (Pty) Ltd effective 30 April 2008, 25% of Saflite Cape (Pty) Ltd and 16% of Astra Repro (Pty) Ltd effective 1 February 2009.
28.3 Disposal of subsidiaryOn 30 September 2008 a decision was taken to invoke a resolutive condition with respect to Riverbend Trade & Invest 50 (Pty) Ltd (trading as Spun Technologies). The assets and liabilities of the subsidiary being disposed of at such date were as follows:
% shareholding 60%
SpunTechnologies
R’000
ASSETSProperty, plant and equipment 6 836 Inventory 1 957 Trade and other receivables 4 088 Cash and cash equivalents 547
Total 13 428
lIABIlITIESTrade and other payables 6 137
Total 6 137
Loss on disposal (7 291)Impairment of goodwill at acquisition (6 316)
Loss on disposal (13 607)
Cash flow effect of withdrawal (547)
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
79
R’000
Interestpaid togroup
companies
Interestpaid bygroup
companies
Manage-ment fees
paid togroup
companies
Manage-ment fees
paid bygroup
companies
Netdividends
paid bygroup
companies Treasury
assetsTreasuryliabilities
Amountsowing to
groupcompanies
Amountsowing by
groupcompanies
29. RElATED-PARTY TRANSACTIoNS 2009Alex White Group 5 136 1 277 1 308 — — — 48 963 335 — Astra Repro (Pty) Ltd — 128 180 — 1 250 329 — — — Astraflex (Pty) Ltd 8 675 — 1 644 — — — 58 281 26 047 — Astrapak Ltd 2 271 — — — — — 31 963 15 767 153 612 Astrapak Exports (Pty) Ltd — — — — — — 31 — — Astrapak Finance Company (Pty) Ltd 15 368 74 485 — 23 046 — 307 357 — 188 471 Astrapak Gauteng (Pty) Ltd 28 711 629 4 704 — — 12 302 186 740 86 265 44 872 Astrapak KwaZulu-Natal (Pty) Ltd 3 187 7 011 1 176 — (5 517) 77 465 15 072 155 531 — Astrapak Linked Unit Trust — 114 — — — — 5 252 Astrapak Properties (Pty) Ltd 27 — 240 — — — 30 96 — Astrapak Property Development (Pty) Ltd 3 748 — 240 — — — 30 031 4 590 — Astrapak Western Cape (Pty) Ltd 12 384 2 703 2 952 — (1 050) 35 727 81 589 101 263 608 Barrier Film Converters (Pty) Ltd 6 220 — 324 — — — 43 124 — — Cinqcorp (Pty) Ltd 702 — — — — 5 490 7 641 — Cinqpet (Pty) Ltd 348 — 960 — — — 510 — — Cinqplast Plastop (Pty) Ltd — 3 230 1 824 — — 50 608 — 77 243 5 262 Cinqprop (Pty) Ltd 1 — — — — — 1 212 9 513 — Consupaq (Pty) Ltd — — 168 — — 7 — — — Coralline Investments (Pty) Ltd 1 — 240 — — — 1 — — Diverse Labelling Consultants (Pty) Ltd — 424 900 — — 9 084 — — 1 825 Durpak (Pty) Ltd — — — — — 1 458 — — — Euromatic Plastop (Pty) Ltd 699 343 156 — — 3 575 — 5 262 — Hilfort Plastics (Pty) Ltd — 1 084 1 212 — — 8 051 — — — International Edgeboard Technology (Pty) Ltd — — — — — — 576 — — International Tube Technology (Pty) Ltd 189 — 408 — 500 — 1 197 — — JJ Precision Plastics (Pty) Ltd 1 181 — 240 — — — 11 489 — — Knilam Packaging (Pty) Ltd — 391 336 — — 5 234 — — — Marcom Plastics (Pty) Ltd 1 360 — — — — — 8 333 608 — Master Plastics (Pty) Ltd — — — — — — 92 772 Pack-Line Holdings (Pty) Ltd — 3 504 — — 3 563 — — — PAK 2000 (Pty) Ltd 1 165 — 600 — 5 956 649 — — — Plastop KwaZulu-Natal (Pty) Ltd 66 — 960 — — — 1 796 1 414 — Plastop Leasing (Pty) Ltd — — — — — — — 1 729 4 768 Plastop Properties (Pty) Ltd 852 — 240 — — — 6 720 — — Plastech (Pty) Ltd 1 — 162 — — 27 — — — Portion 727 Randjiesfontein (Pty) Ltd — — — — — 4 473 — Saflite Packaging (Pty) Ltd 7 — 144 — 1 000 — 131 — — Riverbend Trade and Invest 50 (Pty) Ltd 1 051 — — — — — — — — Tamperpak (Pty) Ltd — 515 60 — — 5 085 — — 335 Thermopac (Pty) Ltd — 1 013 1 164 — — 12 758 — — —
93 350 93 350 23 046 23 046 2 139 533 279 533 279 497 777 497 777
All transactions are at arm’s length.
Refer to the Remuneration Report and notes 17 and 30 for details of remuneration to key management personnel.
Astrapak Annual Report 2009
80
R’000
Interestpaid togroup
companies
Interestpaid bygroup
companies
Manage-ment fees
paid togroup
companies
Manage-ment fees
paid bygroup
companies
Netdividends
paid bygroup
companies Treasury
assetsTreasuryliabilities
Amountsowing to
groupcompanies
Amountsowing by
groupcompanies
29. RElATED-PARTY TRANSACTIoNS (continued)2008Alex White Group 752 — 1 080 — — — 11 174 — —Astra Repro (Pty) Ltd — 10 180 — 2 100 1 224 — — —Astraflex (Pty) Ltd 7 155 — 1 320 — — — 52 353 26 087 —Astrapak Ltd 8 454 12 603 — — 25 605 — 94 818 14 892 261 296 Astrapak Exports (Pty) Ltd 76 — — — — — — — —Astrapak Finance Company (Pty) Ltd 8 984 75 104 — 18 324 — 393 849 — 69 599 183 306 Astrapak Gauteng (Pty) Ltd 32 604 250 3 840 — (2 665) 5 770 194 986 86 948 44 871 Astrapak KwaZulu-Natal (Pty) Ltd 8 456 3 678 960 — (8 800) 61 318 6 881 149 495 314 Astrapak Linked Unit Trust — — — — (1 507) — — — 5 269 Astrapak Properties (Pty) Ltd 50 — — — — — 516 — 9 Astrapak Property Development (Pty) Ltd 23 — — — — — 2 477 33 989 3 332 Astrapak Western Cape (Pty) Ltd 19 230 1 175 2 400 — (29 500) 15 009 101 389 109 652 599 Barrier Film Converters (Pty) Ltd 5 982 — 204 — — — 40 270 — —Cinqcorp (Pty) Ltd 564 — — — — — 4 781 7 650 —Cinqpet (Pty) Ltd 254 — 780 — — — 1 909 — —Cinqplast Plastop (Pty) Ltd 32 1 635 1 500 — 10 000 14 295 — 88 569 5 592 Cinqprop (Pty) Ltd — — — — — 1 — 9 513 —Consupaq (Pty) Ltd — — 156 — — — — — —Coralline Investments (Pty) Ltd 6 — — — — — 278 209 —Diverse Labelling Consultants (Pty) Ltd 265 160 720 — — 1 509 — — 1 332 Durpak (Pty) Ltd 3 — — — — — 35 6 241 7 790 Euromatic Plastop (Pty) Ltd 838 373 144 — — 2 914 — 5 406 —Hilfort Plastics (Pty) Ltd — 819 1 020 — 5 000 10 624 — — —International Edgeboard Technology (Pty) Ltd 34 — — — — — 560 — —International Tube Technology (Pty) Ltd 187 — 360 — — — 1 871 — —JJ Precision Plastics (Pty) Ltd 642 — 216 — — — 4 668 — —Knilam Packaging (Pty) Ltd — 95 300 — 3 000 1 521 — — —Marcom Plastics (Pty) Ltd 597 — — — — — 5 930 — —Master Plastics (Pty) Ltd — — — — — — — — 102 772 Pack-Line Holdings (Pty) Ltd 225 — 420 — — 1 086 — 21 —PAK 2000 (Pty) Ltd 551 — 480 — 5 200 — 7 880 — 73 Plastop KwaZulu-Natal (Pty) Ltd 305 41 780 — 9 000 434 — 1 414 —Plastop Leasing (Pty) Ltd — — — — — — 1 729 5 843 Plastop Properties (Pty) Ltd 765 — 240 — — — 5 801 — —Plastech (Pty) Ltd — — 108 — — — — — —Portion 727 Randjiesfontein (Pty) Ltd — — — — — — — 4 473 —Saflite Packaging (Pty) Ltd 6 1 120 — 1 500 27 — — —Riverbend Trade and Invest 50 (Pty) Ltd 329 — — — — — 3 584 6 511 —Tamperpak (Pty) Ltd — 178 36 — 1 500 4 685 — — —Thermopac (Pty) Ltd — 1 247 960 — 25 000 27 895 — — —
97 369 97 369 18 324 18 324 45 433 542 161 542 161 622 398 622 398
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
81
30. oRDINARY SHARE-BASED PAYmENTSEquity-settled linked unit option planThe Group plan provides for a grant price equal to the average price at which the relevant ordinary share traded on the JSE on the 3 (three) trading days immediately preceding the offer date. The vesting period is generally three to four years. If the option remains unexercised after a period of eight years from the date of grant, the option expires. Furthermore, options are forfeited if the employee leaves the Group before the options vest.
2009 2008
Numberof options
Weightedaverage
price perordinary
share (in Rand)
Numberof options
Weightedaverage
price perlinked unit
(in Rand)
Outstanding at the beginning of the period 4 459 793 4,22 7 451 082 4,47 Granted during the period — — — — Forfeited or cancelled during the period — — 676 675 9,53 Exercised during the period 827 833 2,16 2 314 614 3,46
Outstanding at the end of the period 3 631 960 4,08 4 459 793 4,22
Exercisable at the end of the period 3 320 857 3,67 2 583 577 3,64
The weighted average price at the date of exercise of ordinary share options exercised during the period was R6,95 (2008: R14,49). The options outstanding as at 28 February 2009 had a weighted average exercise price of R4,08 (2008: R4,22) and a weighted average remaining contractual life of 0,99 years (2008: 1,42 years).
The inputs into the Black-Scholes model for the various option issues are:Option issue date
28 February2006
20 July2005
8 November2004
14 July2003
5 May2003
Number of options 330 000 100 000 1 361 000 500 000 3 010 000Weighted average ordinary share (2008: linked unit) price at date of issue 14,40 11,28 8,95 4,10 3,75Weighted average exercise or issue price of option 14,40 11,28 8,95 4,10 3,75Expected volatility expressed as % 34,60% 36,90% 42,70% 41,87% 42,70%Time to expiry/Expected life in years 8 8 8 8 8Risk-free rate of return 7,20% 7,60% 8,30% 9,30% 9,50%Forward dividend yield 3,30% 3,30% 3,30% 3,30% 3,30%Value per option in Rand 5,34 4,80 3,86 2,11 1,66
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years.
This was then annualised on the assumption of 252 trading days. The risk-free rate used was that of the R153 government bond yield. The option does not entitle its holder to distributions, and a 3,3% yield was used based on the assumptions that the Group dividend policy will be to distribute one-third of earnings and that the linked unit will trade on an earnings yield of 10%.
The Group recognised total expenses of R1 418 199 and R1 177 145 related to equity-settled linked unit-based payment transactions in 2009 and 2008, respectively.
Astrapak Annual Report 2009
82
Group Company
Loans and
receivables
At fairvalue
throughprofit
or lossHeld to maturity
Availablefor sale
Non-financial
assets and liabilities R’000
Loans and
receivablesHeld to maturity
Non-financial
assets and liabilities
31. BAlANCE SHEET – CATEGoRIES of fINANCIAl INSTRUmENTS2009Assets
— — — — 845 307 Property, plant and equipment — — — — — — — 149 352 Goodwill — — — — — — — 6 Trademarks — — — — — — — 31 240 Deferred tax assets — — — 23 — — — 6 788 Investments and loans (5 252) — 493 418 — — — — 470 Investment in associate company — — — — — — — 229 956 Inventories — — —
343 580 252 — — 35 967 Accounts receivable — — 321 110 110 — — — — Cash and short-term investments 2 642 — —
— — — — 8 463 Taxation receivable — — — — — — — 317 529 Assets classified as held-for-sale — — —
453 713 252 — — 1 625 078 Total assets (2 610) — 493 739
liabilities — — 341 052 — — Long-term interest-bearing debt — — — — — — 18 887 — Financial liabilities — — — — — — — 139 873 Deferred tax liabilities — — — — 754 255 741 — 114 421 Accounts payable — — 2 481 — — — — 6 810 Provisions — — — — — 150 096 — — Short-term interest-bearing debt — 14 — — — — — 21 342 Taxation payable — — 750 — — — — 7 504 Shareholders for preference dividends — — 7 504 — — — — 153 081 Liabilities relating to assets classified as held-for-sale — — —
— 754 746 889 18 887 443 031 Total liabilities — 14 10 735
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Astrapak Annual Report 2009
83
Group Company
Loans and
receivables
At fairvalue
throughprofit
or lossHeld to maturity
Availablefor sale
Non-financial
assets and liabilities R’000
Loans and
receivablesHeld to maturity
Non-financial
assets and liabilities
31. BAlANCE SHEET – CATEGoRIES of fINANCIAl INSTRUmENTS (continued)2008Assets
— — — — 926 092 Property, plant and equipment — — —— — — — 149 054 Goodwill — — —— — — — 86 Trademarks — — —— — — — 57 610 Deferred tax assets — — —
51 — — — 18 291 Investments and loans 22 908 — —— — — — 286 Investment in associate company — — —— — — — 372 476 Inventories — — —
409 085 1 352 — — 101 543 Accounts receivable — — 233 56 649 — — — — Cash and short-term investments 851 — —
— — — — 12 378 Taxation receivable — — —
465 785 1 352 — — 1 637 816 Total assets 23 759 233
liabilities— — 376 947 — — Long-term interest-bearing debt — — —
— — 44 438 — Financial liabilities — — —— — — — 126 696 Deferred tax liabilities — — —— 16 459 384 710 — 49 728 Accounts payable — — 3 332— — — — 10 256 Provisions — — —— — 241 908 — — Short-term interest-bearing debt — 13 —— — — — 28 702 Taxation payable — — 12 030— — — — 7 335 Shareholders for preference dividends — — 7 335
— 16 459 1 003 565 44 438 222 717 Total liabilities — 13 22 697
Astrapak Annual Report 2009
84
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Group Company
Loans and
receivables
At fairvalue
throughprofit
or lossHeld to maturity
Availablefor sale
Non-financial
assets and liabilities R’000
Loans and
receivablesHeld to maturity
Non-financial
assets and liabilities
32. INComE EXPENSES, GAINS AND loSSES BY CATEGoRY of fINANCIAl INSTRUmENT2009Net gains/(losses)Impairments
4 238 — — — — – accounts receivable — — —Total interest income
30 964 — — — — – financial institutions 21 885 — — 49 — — — — – accounts receivable — — — 27 — — — — – other — — —
Total interest expense— — 115 736 — — – financial institutions — 20 279 —— — 80 — — – accounts payable — — —— — — — — – group companies — — —— — — — 1 026 – other — 2 271 —
3 438 (502) — — — Foreign exchange gains/(losses) — — —2008Net gains/(losses)Impairments
(1 004) — — — — – accounts receivable — — —— — — — — Total interest income — — —
14 430 — — — — – financial institutions 11 014 — — 133 — — — — – accounts receivable — — —
— — — — — – group companies 12 603 — — 104 — — — — – other — — —
— — — — — Total interest expense — — —— — 77 961 — — – financial institutions — 12 095 —— — 115 — — – accounts payable — — —— — — — — – group companies — 8 454 —— — — — 2 083 – debentures — — 2 231— — — — 704 – other — — —— — 870 — — Foreign exchange gains — — —
Astrapak Annual Report 2009
85
Group Company
2009 2008 R’000 2009 2008
33. ClASSIfICATIoN of TRADE DEBToRSTrade debtors are classified as follows:Industry
14 901 23 246 Agriculture — — 18 700 26 886 Bakery — — 37 610 40 843 Beverage — — 20 926 25 280 Dairy — — 51 646 81 507 Food — — 6 709 4 905 Government/municipal — — 8 875 11 649 Homecare — —
27 722 24 180 Industrial — — 59 082 53 395 Medical/pharmaceutical/cosmetic — — 8 106 5 190 Others — —
41 171 46 108 Packaging — — 17 910 17 503 Petrochemical — — 28 892 26 077 Retailers — — 3 100 25 807 Confectionery — —
626 3 143 Textile — —
345 976 415 719 — —
Type of customer 83 457 109 206 Listed — —
257 339 302 498 Private — — 2 249 927 Government — — 2 931 3 088 Other — —
345 976 415 719 — —
The allowance for doubtful debts is classified as follows:Industry
193 1 195 Agriculture — — 498 366 Bakery — — 498 988 Beverage — — 54 226 Dairy — —
229 1 259 Food — — — 8 Government/municipal — — — — Homecare — —
230 163 Industrial — — 111 435 Medical/pharmaceutical/cosmetic — — 238 163 Others — — 302 1 293 Packaging — — 20 38 Petrochemical — — — 28 Retailers — — 23 472 Confectionery — — — — Textile — —
2 396 6 634 — —
Astrapak Annual Report 2009
86
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Group Company
2009 2008 R’000 2009 2008
33. ClASSIfICATIoN of TRADE DEBToRS (continued)Type of customer
489 1 417 Listed — — 1 710 5 104 Private — —
92 47 Government — — 105 66 Other — —
2 396 6 634 — —
Reconciliation of allowance for doubtful debts 6 634 5 630 Opening balance — — 1 960 3 789 Add: Increases due to additional doubtful debts — —
(3 242) (2 218) Less: Reversals of previous doubtful debts — — (2 034) (567) Less: Amounts written off against the provision — —
(922) — Transferred to assets held-for-sale — —
2 396 6 634 Closing balance — —
The gross carrying amount of accounts receivable is classified according to the following credit risk criteria:
299 692 360 010 Neither past due nor impaired — — 18 042 26 170 Past due or impaired but terms renegotiated — — 28 042 29 330 Past due or impaired — —
200 209 Collateral obtained — —
345 976 415 719 — —
Certain debtors are covered up to 80% by Credit Guarantee Insurance.
Ageing for the gross carrying amount of trade receivables classified as past due or impaired:
5 709 1 219 0 – 30 days — — 11 624 12 324 30 – 60 days — — 5 811 6 168 60 – 90 days — — 1 542 4 595 90 – 120 days — — 3 552 5 024 120+ days — —
28 238 29 330 Total — —
Credit risk categorisation for the gross carrying amount of trade receivables classified as past due or impaired:
19 147 14 442 High risk — — 55 769 46 090 Medium risk — —
224 776 299 478 Low risk — —
299 692 360 010 — —
The Group uses both internal and external sources to analyse credit risk.Collateral obtained
200 209 A limited suretyship for R200 000 has been obtained to cover these outstanding balances. — —
The value of the suretyship approximates fair value.
Astrapak Annual Report 2009
87
34. SENSITIVITY ANAlYSISInterest rate risk foreign exchange rate risk
+3% -1% +10% -10%
R’000Carryingamount Profit
Othermovements
in equity Profit
Other movements
in equity Profit
Other movements
in equity Profit
Other movements
in equity
2009GroupInvestments and loans 6 811 — — — — — — — — Accounts receivable 379 799 10 — (3) — 124 — (124) — Cash and short-term investments 110 110 6 139 — (2 046) — — — — — Long-term and short-term interest-bearing debt 491 148 (22 946) — 7 649 — — — — — Accounts payable 370 916 (16) — 5 — (1 220) — 1 220 — Total impact before tax (16 813) — 5 605 — (1 096) — 1 096 — Taxation 4 708 — (1 569) — 307 — (307) — Total impact after tax (12 105) — 4 036 — (789) — 789 — CompanyInvestments and loans — — — — — — — — Accounts receivable 321 — — — — — — — — Cash and short-term investments 2 642 4 339 — (1 446) — — — — — Accounts payable 2 481 — — — — — — — — Long-term and short-term interest-bearing debt 14 (4 021) — 1 340 — — — — — Total impact before tax 318 — (106) — — — — — Taxation (89) — 30 — — — — — Total impact after tax 229 — (76) — — — — — 2008GroupInvestments and loans 18 342 — — — — 157 1 357 (129) (1 112)Accounts receivable 511 980 30 — (10) — 572 — (572) — Cash and short-term investments 56 649 3 244 — (1 081) — — — — — Long-term and short-term interest-bearing debt 618 855 19 280 — (6 427) — — — — — Accounts payable 450 897 (26) — 9 — (1 679) — 1 679 — Total impact before tax 22 527 — (7 509) — (950) 1 357 978 (1 112)Taxation (6 533) — 2 178 — 276 (394) (284) 322
Total impact after tax 15 994 — (5 331) — (674) 963 694 (790)
CompanyInvestments and loans 22 908 — — — — — — — — Accounts receivable 233 — — — — — — — — Cash and short-term investments 851 2 451 — (817) — — — — — Accounts payable 3 332 — — — — — — — — Long-term and short-term interest-bearing debt 13 2 692 — (897) — — — — — Total impact before tax 5 143 — (1 714) — — — — — Taxation (1 492) — 497 — — — — —
Total impact after tax 3 651 — (1 217) — — — — —
The above table is calculated based on the following assumptions:Taxation is applied at a flat rate of 28%.The impact of each risk in the table above relates only to changes in that risk variable whilst keeping all other variables constant.Changes in interest rate risk have been calculated by applying the reasonably possible change identified above to the weighted averageprime rate of interest as calculated in the table on page 88.Certain long-term interest-bearing debt is subject to a JIBAR-related interest rate rather than Prime; however the method of calculationapplied above utilising a fixed range of reasonably possible interest rate changes yields similar results.The methods and assumptions are consistent across the years presented unless indicated otherwise.
Astrapak Annual Report 2009
88
Notes to the annual financial statements continuedfor the year ended 28 February 2009
34. SENSITIVITY ANAlYSIS (continued)
Prime rates of interest (source: South African Reserve Bank)
Weighted average (%)for the year ended
28/29 februaryDate Rate (%) 2009 2008
13 October 2006 12,00 8 December 2006 12,50 3,39 8 June 2007 13,00 2,49 17 August 2007 13,50 2,07 12 October 2007 14,00 2,15 7 December 2007 14,50 1,67 3,38
11 April 2008 15,00 2,5913 June 2008 15,50 7,7312 December 2008 15,00 2,306 February 2009 14,00 0,84
15,13 13,48
R’000 Within 1 year 1 to 2 yearsMore than
2 years Total
35. lIQUIDITY RISkFinancial liability maturity analysis2009GroupAccounts payable 370 916 — — 370 916Bank overdrafts 47 — — 47Floating rate liabilities(1) 169 240 163 893 223 864 556 997
CompanyAccounts payable 2 481 — — 2 481Bank overdrafts 14 — — 14
2008GroupAccounts payable 450 897 — — 450 897 Bank overdrafts 98 441 — — 98 441 Floating rate liabilities(1) 161 049 149 433 264 864 575 346
CompanyAccounts payable 3 332 — — 3 332 Bank overdrafts 13 — — 13 (1) The above values are calculated using a risk-adjusted forward yield curve.
Astrapak Annual Report 2009
89
Group Company
2009 2008 R’000 2009 2008
36. CASH GENERATED fRom oPERATIoNS 179 402 154 785 Profit/(loss) before taxation (5 862) 34 091 151 468 155 034 – continuing 27 934 (249) – discontinued
Adjustments for : — — Dividends received — (24 000)
136 559 119 006 Depreciation — — 128 133 109 414 – continuing
8 426 9 592 – discontinued 80 11 Amortisation of trademarks — —
(355) (5 958) Gain on disposal of property, plant and equipment — — (234) (5 992) – continuing(121) 34 – discontinued
13 607 — Loss on disposal of investment in subsidiary — — 635 2 083 Translation differences on investments and loans — —
(4 862) (1 466) Share of results of associates and joint venture — — (183) (52) – continuing
(4 679) (1 414) – discontinued 9 682 (17 833) Equity accounted share option expenses 1 418 1 177
(31 208) (14 844) Interest received (21 885) (23 617)(31 040) (14 667) – continuing
(168) (177) – discontinued 122 359 89 553 Finance costs (including debenture interest distribution) 22 549 22 780 116 842 80 863 – continuing
5 517 8 690 – discontinued
425 899 325 337 Operating profit/(loss) before working capital changes (3 780) 10 431
Adjustments for working capital changes: 53 179 (53 376) Decrease/(increase) in inventories — —
13 108 (74 481) Decrease/(increase) in accounts receivable 14 912 2 49314 901 63 623 Increase/(decrease) in accounts payable (851) (4 462)
81 188 (64 234) 14 061 (1 969)
507 087 261 103 10 281 8 462
37. TAXATIoN PAID 16 324 8 037 Amounts unpaid at the beginning of the year 12 030 12 700 46 399 37 677 Amounts charged to the income statement (1 225) 6 018 43 366 36 657 – continuing (1 225) (10 018) 3 033 1 020 – discontinued — —
— (42) Paid in respect of prior years — — (12 879) (16 324) Amounts unpaid at the end of the year (750) (12 030)
49 844 29 348 10 055 6 688
Astrapak Annual Report 2009
90
Notes to the annual financial statements continuedfor the year ended 28 February 2009
Group Company
2009 2008 R’000 2009 2008
38. ACQUISITIoN of SUBSIDIARY ComPANIESFair value of assets acquired
— 24 004 Property, plant and equipment — — — — Deferred taxation — — — (5 606) Long-term liabilities — — — 30 368 Accounts receivable — — — (2 267) Cash resources — — — 6 005 Inventory — — — (27 705) Accounts payable — — — — Taxation — — — (2 586) Current portion of long-term liabilities — — — (4 229) Shareholders’ loans — — — — Investments — — — — Trademarks — —
— 17 984 — — — 2 267 Less: Cash resources acquired — — — 33 165 Add: Goodwill on acquisition — —
— 53 416 Cash outflow arising on acquisition — —
39. ADDITIoNS To PRoPERTY, PlANT AND EQUIPmENT
163 094 256 810 Plant, equipment and furniture — — 1 721 2 848 Motor vehicles — — 9 892 844 Leasehold improvements — —
14 010 2 030 Land and buildings — —
188 717 262 532 — —
The above-listed additions to property, plant and equipment consist of:
171 371 237 760 Expansion — — 17 346 24 772 Replacement — —
188 717 262 532 — —
40. PRoCEEDS oN DISPoSAl of PlANT AND EQUIPmENT
8 796 6 320 Net book value of disposals — 606 355 5 958 Gain on disposal of property, plant and equipment — —
9 151 12 278 — 606
41. CASH AND CASH EQUIVAlENTS AT THE END of THE YEAR
110 110 56 649 Cash and short-term investments 2 642 851(47) (98 441) Bank overdrafts (14) (13)
110 063 (41 792) 2 628 838
Astrapak Annual Report 2009
91
42. DISCoNTINUED oPERATIoNSThe assets and liabilities relating to certain of the Flexibles operations have been presented as held-for-sale following the directors’ decision to dispose of the assets and certain liabilities on 1 October 2008.The conditional agreement that was signed on 16 March 2009 includes the assets and certain liabilities of the following companies:Astraflex (Pty) LtdAstrapak Flexibles (a division of Astrapak KwaZulu-Natal (Pty) Ltd)Astra Repro (Pty) LtdCape Wrappers (Pty) LtdDiverse Labelling Consultants (Pty) Ltd including its equity accounted investment in Standard Labels (Mauritius)Tamperpak (Pty) LtdWhite House Properties (Paarl) (Pty) LtdThe completion date for the transaction is expected on or about 31 July 2009.
Disposal unit
R’000 2009 2008
Operating cash flows 2 509 (16 496)Investing cash flows (2 397) (32 154)Financing cash flows 20 151 49 416
Total cash flows 20 263 766
Assets of disposal group Property, plant and equipment 101 931 —Investment in associate 13 227 —Inventory 87 384 —Other current assets 66 521 —
Total 269 063 —
Liabilities of disposal group Trade and other payables 92 194 —
Total 92 194 —
Cumulative income or expense recognised directly in equity relating to disposal groupclassified as held-for-saleForeign exchange translation adjustments 1 449 814
Analysis of the result of discontinued operations, and the result recognised on the remeasurement of assets of the disposal group, is as follows:Revenue 513 318 454 773Expense (485 384) (455 022)
Profit/(loss) before tax of discontinued operations 27 934 (249)Tax (3 033) (1 020)
Profit/(loss) after tax of discontinued operations 24 901 (1 269)
Loss recognised on the remeasurement of assets of the disposal group (28 523) —
Loss for the year from discontinued operations (3 622) (1 269)
Astrapak Annual Report 2009
92
Annexure 1 – details of land and buildings for the year ended 28 February 2009
PropertiesOwner Description of premises Erf
2009Cost
R’000
2008Cost
R’000
Astrapak Gauteng (Pty) LtdFactory and offices utilised by East Rand Plastics Stand 95, Vulcania, Brakpan 139 139
Astrapak Gauteng (Pty) LtdFactory and offices utilised by East Rand Plastics
Portion 40 of the farm Koolbult 121 IR 6 574 6 574
Astrapak Gauteng (Pty) LtdFactory and offices utilised by East Rand Plastics Stand 87, Vulcania, Brakpan 4 397 4 013
Astrapak KwaZulu-Natal (Pty) Ltd
Factory and offices utilised by Diverse Labelling Consultants, Astrapak Exports and Astra Repro Sub 1 of lot 2823, Pinetown 11 384 11 384
Astrapak Property Development (Pty) Ltd
Factory and offices utilised by Plusnet/Geotex
District 42, 13 Bussing Road, Aureus, Randfontein 117 117
Astrapak Properties (Pty) LtdFactory and offices utilised by Thermopac
Erf 22380, Goodwood, Western Cape 3 759 3 759
Astrapak Western Cape (Pty) LtdFactory, warehousing and office block utilised by Plastform Erf 166194, Cape Town 19 589 16 606
Cape Wrappers (Pty) LtdFactories and offices utilised by Cape Wrappers (Pty) Ltd Erf 10357, Dal Josaphat, Paarl — 6 985
Cinqcorp (Pty) LtdFactory and offices utilised by Cinqpet, Thermopac and Consupaq
Erf 756, 757 and 758 Denver Extension 12, Gauteng 20 875 11 992
Cinqprop (Pty) LtdFactory and offices utilised by Plastop Erf 594, Denver, Gauteng 21 763 20 251
Plastop Leasing (Pty) LtdFactory and offices utilised by Plastop
Stands 84 and 960 Bronkhorstspruit Gauteng — 56
Plastop Properties (Pty) LtdFactory and offices utilised by Plastop KwaZulu-Natal
Lot 2354, Isipingo Ext 12, KwaZulu-Natal 7 811 7 507
Whitehouse Properties (Glenlea) (Pty) Ltd
Factory and offices utilised by Alex White & Co (Pty) Ltd
Erf 93, Township of Lea Glen district Roodepoort 6 869 6 869
Whitehouse Properties (Paarl) (Pty) Ltd
Factory and offices utilised by Cape Wrappers (Pty) Ltd Erf 5017, Paarl — 4 857
103 277 101 109
Properties of the disposal group held-for-sale
Cape Wrappers (Pty) LtdFactories and offices utilised by Cape Wrappers (Pty) Ltd Erf 10357, Dal Josaphat, Paarl 6 985 —
Whitehouse Properties (Paarl) (Pty) Ltd
Factory and offices utilised by Cape Wrappers (Pty) Ltd Erf 5017, Paarl 4 857 —
11 842 —
Properties of Astrapak Property Development (Pty) ltd held-for-sale
Astrapak Property Development (Pty) Ltd
Factory and offices utilised by Plusnet/Geotex
District 42, 13 Bussing Road, Aureus, Randfontein 7 138 —
Astrapak Property Development (Pty) Ltd
Factory and offices utilised by JJ Precision Plastics Erf 9486, Westmead, Pinetown 36 715 —
Astrapak Property Development (Pty) Ltd
Factory and offices utilised by Astrapak KwaZulu-Natal
Leasehold improvements on portion 28 of Erf 1 Riverhorse Valley 2 873 —
Astrapak Property Development (Pty) Ltd
Factory and offices utilised by Astrapak Gauteng
Portions 43 & 44 of the farm Koolbult 121 IR 1 740 —
48 466 —
Astrapak Annual Report 2009
93
Shareholders’ informationas at 28 February 2009
ANAlYSIS of SHAREHolDERS Register date: 28 february 2009 Issued share capital: 135 131 250 shares
SHAREHolDER SPREADNo. of
shareholders %No. of shares %
1 – 1 000 shares 410 39,85 237 437 0,181 001 – 10 000 shares 412 40,04 1 586 200 1,1710 001 – 100 000 shares 130 12,63 4 057 373 3,00100 001 – 1 000 000 shares 60 5,83 21 985 661 16,271 000 001 shares and over 17 1,65 107 264 579 79,38
1 029 100 135 131 250 100
DISTRIBUTIoN of SHAREHolDERSNo. of
shareholders %No. of shares %
Banks 3 0,29 568 826 0,42Brokers 8 0,78 754 278 0,56Close corporations 17 1,65 51 809 0,04Empowerment 1 0,10 27 026 250 20,00Endowment funds 9 0,87 518 674 0,38Individuals 760 73,86 4 835 427 3,58Insurance companies 10 0,97 2 729 580 2,02Investment companies 7 0,68 2 001 488 1,48Medical aid schemes 1 0,10 8 046 0,01Mutual funds 47 4,57 62 978 769 46,61Nominees and trusts 82 7,97 4 738 948 3,51Other companies 8 0,78 12 675 0,01Pension funds 48 4,66 15 030 884 11,12Private companies 28 2,72 13 875 596 10,26
1 029 100 135 131 250 100
NoN–PUBlIC/PUBlIC SHAREHolDERSNo. of
shareholders %No. of shares %
Non-public shareholders 7 0,7 101 768 492 75,3 Directors of the Company holdings 2 0,2 651 577 0,5 Strategic Holdings (more than 10%) 3 0,3 84 532 347 62,5 Astrapak Linked Unit Trust Fund 1 0,1 3 631 960 2,7 Tristar Plastics (subsidiary of Astrapak Limited) 1 0,1 12 952 608 9,6 Public shareholders 1 022 99,3 33 362 758 24,7
1 029 100 135 131 250 100
Beneficial shareholders holding of 3% or moreNo. of shares %
Lereko Metier Capital Growth Fund 38 916 857 28,80Royal Bafokeng Finance 27 026 250 20,00Frater Asset Management 18 589 240 13,76Tristar Plastics (subsidiary of Astrapak Limited) 12 952 608 9,59Corolife Special Opportunities Portfolio 5 684 354 4,21
SHAREHolDERS’ DIARYordinary shareholders’ diaryFebruary Financial year-end September Annual general meeting
MayPreliminary results announcement for the year ended 28 February 2009 October
Interim results announcement for the period ending 31 August 2009
July Annual report published
Astrapak Annual Report 2009
94
Directors’ interestsas at 28 February 2009
DirectorBeneficial
DirectBeneficial
IndirectUnitholding
(%)
Interest in shares as at 29 february 2008 2 171 293 95 138 1,6%M Baglione 397 292 56 700 0,3%R Crewe-Brown 256 716 38 438 0,2%M Diedloff 70 672 — 0,1%G Petzer 676 959 — 0,5%H Todd 180 911 — 0,1%WJ Venter 588 743 — 0,4%
Net purchases/(sales) from 1 march 2008 to 28 february 2009 (2 000 563) 39 997 804 28,2%M Baglione 116 100 (56 700) 0,0%R Crewe-Brown‡ (256 716) (38 438) (0,2%)PC Botha† — 40 092 942 29,7%M Diedloff — — 0,0%G Petzer# (676 959) — (0,5%)H Todd# (460 911) — (0,3%)WJ Venter* (722 077) — (0,5%)
Exercise of options from 1 march 2008 to 28 february 2009 413 334 — 0,3%
M Baglione — — 0,0%
M Diedloff — — 0,0%G Petzer — — 0,0%H Todd 280 000 — 0,2%WJ Venter 133 334 — 0,1%
Interest in shares as at 28 february 2009 584 064 40 092 942 30,1%M Baglione 513 392 — 0,4%PC Botha — 40 092 942 29,7%M Diedloff 70 672 — 0,1%G Petzer — — 0,0%H Todd — — 0,0%WJ Venter — — 0,0%# Mr G Petzer and Mr H Todd resigned as executive directors of Astrapak Limited with effect
from 30 November 2008 and their shares are therefore no longer reflected as an interest held by a director of the Company.
* Mr WJ Venter retired as an executive director of Astrapak Limited with effect from 30 November 2008 and his shares are therefore no longer reflected as an interest held by a director of the Company.
† The shares held by PC Botha in Astrapak Limited are held in his capacity as principal, trustee or director of a number of entities including the Lereko Metier Capital Growth Fund.
‡ Mr R Crewe-Brown retired as an executive director of Astrapak Limited with effect from 6 June 2008.
The number of linked units held by directors changed as follows between 1 march 2009 and the date of this report:
Interest in ordinary shares 593 064 40 442 529 30,4%M Baglione 522 392 2 050 0,4%PC Botha — 40 440 479 29,9%M Diedloff 70 672 — 0,1%
Astrapak Annual Report 2009
95
ordinary shareholders’ information – notice of Annual General meeting as at 28 February 2009
Notice is hereby given that the Annual General Meeting of the ordinary shareholders of Astrapak Limited (“Company” or “the Group”) will be held at the Southern Sun Grayston, corner Rivonia Road and Grayston Drive, Sandown, Johannesburg on Wednesday, 30 September 2009 at 09:00 for the following purposes:
oRDINARY BUSINESS 1. ordinary resolution number 1 To receive, consider and approve the annual financial
statements of the Company and the Group together with the reports of the directors and auditors for the year ended 28 February 2009.
2. ordinary resolution number 2 To elect a director in the place of Ms P Langeni who retires
in terms of the Company’s Articles of Association and who, being eligible, offers herself for re-election. A brief CV appears on page10 of this report.
3. ordinary resolution number 3 To elect a director in the place of Mr GZ Steffens who
retires in terms of the Company’s Articles of Association and who, being eligible, offers himself for re-election. A brief CV appears on page 11 of this report.
4. ordinary resolution number 4 To elect a director in the place of Mr PC Botha who retires
in terms of the Company’s Articles of Association and who, being eligible, offers himself for re-election. A brief CV appears on page 10 of this report.
5. ordinary resolution number 5 To elect a director in the place of Mr M Baglione who
retires in terms of the Company’s Articles of Association and who, being eligible, offers himself for re-election. A brief CV appears on page 10 of this report.
6. ordinary resolution number 6 To consider and re-appoint Deloitte & Touche as auditors
of the Company and to appoint Mr L Taljaart as the designated auditor to hold office for the ensuing year and to approve their remuneration.
7. ordinary resolution number 7 To approve the directors’ remuneration for the year ended
28 February 2009.
GENERAl AUTHoRITY To REPURCHASE oRDINARY SHARES Special resolution 1Ordinary shareholders are requested to consider and, if deemed fit, pass with or without modification, the following special resolution:
Resolved that the Company’s directors be hereby authorised, by way of a renewable general authority, to repurchase ordinary shares in the Company and permit any subsidiary of the Company to purchase ordinary shares in the Company, as and when deemed appropriate, subject to Section 85 to 89 of the Act, the Articles of Association of the Company, the Listings Requirements and the following limitations, namely that:> any such acquisition of ordinary shares shall be effected
through the order book operated by JSE Limited’s (“the JSE”) trading system and done without any prior understanding or arrangement between the Company and the counter party (reported trades are prohibited);
> this general authority shall not extend beyond 15 months from the date of this Annual General Meeting or the date of the next Annual General Meeting, whichever is the earlier ;
> a press announcement will be published as soon as the Company has acquired ordinary shares constituting, on a cumulative basis, 3% of the number of the ordinary shares in issue as at the time the authority was granted;
> acquisitions of ordinary shares in the aggregate in any one financial year may not exceed 20% of the Company’s issued ordinary share capital as at the beginning of the financial year ;
> in determining the price at which ordinary shares issued by the Company will be acquired, the maximum premium at which such ordinary shares may be acquired will be 10% of the weighted average of the market value at which such ordinary shares are traded on the JSE, as determined over the five business days immediately preceding the date of such acquisition;
> the sponsor to the Company provides a letter on the adequacy of working capital in terms of section 2.12 of the Listings Requirements prior to any repurchases being implemented on the open market of the JSE; and
> to the extent it is needed, the consent of the debt providers to the Company and the Group has been obtained prior to any repurchases being implemented on the open market of the JSE.
> after such repurchase the Company will still comply with paragraphs 3.37 to 3.41 of the Listings Requirements concerning shareholder spread requirements;
> the Company or its subsidiary may not repurchase securities during a prohibited period as defined in the Listings Requirements unless they have in place a repurchase programme where the dates and quantities of securities to be traded during the relevant period are fixed (not subject to any variation) and full details of the programme have been disclosed in an announcement over SENS prior to the commencement of the prohibited period;
> and the Company only appoints one agent to effect any repurchase(s) on its behalf.
Astrapak Annual Report 2009
96
ordinary shareholders’ information – notice of Annual General meeting continued as at 28 February 2009
The directors undertake that the Company shall not make any payment to acquire any ordinary shares issued by the Company if there are reasonable grounds for believing that for a period of 12 months after the date of the repurchase:> the Company and the Group will be unable to pay its debts
in the ordinary course of business;> the assets of the Company and the Group, being fairly valued
in terms of International Financial Reporting Standards and on a basis consistent with the last financial year of the Company, will be less than the liabilities of the Company and the Group;
> the ordinary share capital and reserves of the Company and the Group will be inadequate for ordinary business purposes; and
> the working capital available to the Company and the Group will be inadequate for ordinary business purposes.
> upon entering the market to proceed with the repurchase, the Company’s sponsor has not confirmed the adequacy of the Company’s and the Group’s working capital for the purposes of undertaking a repurchase of shares in writing to the JSE.
Statement of Board’s intentionThe Board has no immediate intention to use this authority to repurchase ordinary shares. However, the Board is of the opinion that this authority should be in place should it become appropriate to undertake an ordinary share repurchase in the future.
REASoN AND EffECT foR SPECIAl RESolUTIoN NUmBER 1The Board believes it to be in the best interests of the Company that ordinary shareholders pass a special resolution granting the Company a general authority for the acquisition by the Company of its own ordinary shares or to permit any subsidiary of the Company to purchase ordinary shares in the Company should such acquisition be in the interests of the Company. Such general authority will provide the directors with the flexibility, subject to the requirements of the Act and the Listings Requirements, to repurchase ordinary shares should it be in the best interests of the Company at any time while the general authority subsists.
SPECIAl RESolUTIoN 2Ordinary shareholders are requested to consider and, if deemed fit, pass with or without modification, the following special resolution:Amend the Articles of Association of the Company by inserting the following clause 74.4.10.
“If there is an amendment to the Income Tax Act that results in Preference Dividends being subject to a dividend or withholding tax other than STC, and such amendment results
in (i) a reduction of the net Preference Dividend being paid by the Company and (ii) the Company gaining a benefit from the amendment, then the Preference Dividend payable will be adjusted by the lower of:
> the net benefit the Company will gain as a result of the abolition of STC and the introduction of a dividend or withholding tax; or
> a sufficient increase in the preference share dividend such that the preference shareholders receive the same dividend after tax as they currently receive, immediately after the introduction of the dividend or withholding tax.
REASoN AND EffECT foR SPECIAl RESolUTIoN NUmBER 2The Honourable Minister of Finance announced the phasing out of STC and the introduction of a withholding tax on all company distributions received by a shareholder, including dividends received in respect of preference shares. These changes will be effected in two stages. Firstly, the rate of STC was reduced from 12,5% to 10% with effect from 1 October 2007 and secondly, STC will be replaced with a dividend tax, expected to be 10%, at shareholder level, which is planned for 2010 or 2011 (“the proposed amendments”).
The proposed amendments will shift the tax obligation from Astrapak to preference shareholders as STC (payable by the Company) is replaced with a withholding tax (payable by the preference shareholders on receipt of the preference share dividends). In practice the proposed amendments will result in the Company withholding the tax on the preference share dividend and paying the preference shareholder the dividend net of tax. This could result in preference shareholders receiving a lesser amount than they currently receive tax-free if the dividend on preference shares is not adjusted.
The provisions of Astrapak’s Articles of Association (“articles”) relating to preference shares currently do not cater specifically for the proposed amendments. The articles will have to be amended to allow the Company to adjust its preference share dividend to ensure that preference shareholders are not prejudiced as a result of the proposed amendments. In essence, on the basis of the Company’s present knowledge and with the benefit of the legislation that has been passed but is not yet in operation, the Company proposes grossing up the preference share dividend. The gross up will be the lower of the net benefit the Company will gain as a result of the abolition of STC or a sufficient increase in the preference share dividend such that the preference shareholders receive the same dividend after tax as they currently receive, immediately after the introduction of the withholding tax.
Astrapak Annual Report 2009
97
The implementation of this, however, is subject to:> the publication of the final taxation regulations, legislation and
effective date in the Government Gazette; and> the passing of the above required special resolution by the
ordinary shareholders of Astrapak; and> the passing of the above required special resolutions by the
preference shareholders of Astrapak in a separate general meeting still to be held; and
> possible regulatory approvals, to the extent required.
The Company will publish further announcements in this regard to keep ordinary and preference shareholders informed of developments.
GENERAl DISCloSUREThe Listings Requirements require the following disclosures, some of which are elsewhere in the annual report of which this notice forms part, as set out below:Directors and management – pages 10 and 11;Major shareholders of the Company – page 93;Directors’ interests in securities – page 94; andShare capital of the company – page 65
lITIGATIoN STATEmENTIn terms of section 11.26 of the Listings Requirements, the directors, whose names are given on page 10 and 11 of the annual report of which this notice forms part, are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Group’s financial position.
DIRECToRS’ RESPoNSIBIlITY STATEmENTThe directors, whose names are given on pages 10 and 11 of the annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to this resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this resolution contains all information required by law and the Listings Requirements.
mATERIAl CHANGEOther than the facts and developments reported on in this annual report, there have been no material changes in the financial or trading position of the Company and its subsidiaries since the date of signature of the audit report and the date of this notice.
VoTING Shares held by the share trust and treasury shares held by subsidiary companies will not have their votes taken account for the above Special resolutions number 1 and 2.
VoTING AND PRoXIESShareholders who have not dematerialised their ordinary shares or who have dematerialised their ordinary shares with ‘own name’ registration are entitled to attend and vote at the meeting and are entitled to appoint a proxy or proxies to attend, speak and vote in their stead. The person so appointed need not be a shareholder.
A form of proxy setting out the relevant instructions for its completion is enclosed for use by an ordinary shareholder who wishes to be represented at the annual general meeting. Completion of a form of proxy will not preclude such ordinary shareholder from attending and voting (in preference to that ordinary shareholder’s proxy) at the Annual General Meeting. Proxy forms must be forwarded to reach the registered office of the Company’s transfer secretaries, Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001 or posted to the transfer secretaries at PO Box 61051, Marshalltown, 2107, South Africa so as to be received by them by not later than 09:00 on Tuesday, 29 September 2009.On a show of hands, every shareholder of the Company present in person or represented by proxy shall have one vote only. On a poll, every shareholder of the Company shall have one vote for every ordinary share held in the Company by such shareholder.
Shareholders who have dematerialised their ordinary shares, other than those shareholders who have dematerialised their ordinary shares with ‘own name’ registration, should contact their CSDP or broker in the manner and time stipulated in their agreement:> to furnish them with their voting instructions; and> in the event that they wish to attend the meeting, to obtain
the necessary authority to do so.
Equity securities held by a share trust or scheme will not have their votes taken into account for the purposes of resolutions passed in terms of the JSE Listings Requirements.
E CorneliusCompany SecretarySandton31 July 2009
Astrapak Annual Report 2009
98
Administration
BUSINESS ADDRESS AND REGISTERED offICE 5 Kruger StreetDenverJohannesburg
PoSTAl ADDRESS PO Box 75769Gardenview2047
TRANSfER SECRETARIES Computershare Investor Services (Pty) Ltd70 Marshall Street, JohannesburgPO Box 61051Marshalltown 2107
AUDIToRS Deloitte & ToucheBuildings 1 and 2Deloitte PlaceThe Woodlands Woodlands DriveWoodmead, Sandton
PRINCIPAl BANkERSABSA Bank Ltd ABSA Towers North180 Commissioner StreetJohannesburg
Nedbank Group Ltd135 Rivonia RoadSandown
SPoNSoR Rand Merchant Bank (A division of FirstRand Bank Limited)1 Merchant PlaceCnr Fredman Drive and Rivonia RoadSandton
CoRPoRATE lAW ADVISERS Paul Botha & Associates (Pty) Ltd39 Rivonia RoadSandhurst
WEBSITE ADDRESS www.astrapak.co.za
SHARE CoDES Ordinary shares: APK ISIN: ZAE000096962Preference shares: APKP ISIN: ZAE000087201
Astrapak Annual Report 2009
99
form of proxy – ordinary shareholders for the year ended 28 February 2009
This form is only to be completed by certificated and ‘own name’ registered dematerialised ordinary shareholders.
Registration number 1995/009169/06Incorporated in the Republic of South Africa
Share code: APK ISIN: ZAE000096962(“the Company”)
An ordinary shareholder entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy, or proxies, to attend, speak and vote thereat in his/her stead. A proxy need not also be an ordinary shareholder of the Company. All forms of proxy must be lodged with the transfer secretaries, Computershare Investor Services (Pty) Ltd, by not later than 09:00 on Tuesday, 29 September 2009.
Ordinary shareholders, other than own name registered dematerialised ordinary shareholders, that have dematerialised their ordinary shares with a Central Securities Depository Participant (“CSDP”) or broker, must arrange with the CSDP or broker concerned to provide them with the necessary authorisations to attend the Annual General Meeting. Alternatively, the ordinary shareholders concerned must instruct them as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the ordinary shareholders concerned and the CSDP or broker concerned.
I/We (name)
of (address)
being a shareholder(s) of the above mentioned company, hereby appoint:
or failing him/her,
the chairman of the Annual General Meeting,
as my/our proxy to vote for me/us on my/our behalf at the annual general meeting of the Company to be held at 09:00 on Wednesday, 30 September 2009.
Signed at this day of 2009
Signature
Please indicate in the space below how you wish your votes to be cast by inserting the number of ordinary shares in the appropriate space. If you return this form duly signed, without any specific instructions, the proxy shall be entitled to vote as he/she thinks fit.
In favour of AgainstAbstain
from voting
1. Ordinary resolution number 1 – To receive, consider and approve annual financial statements
2. Ordinary resolution number 2 – Re-election of Ms P Langeni
3. Ordinary resolution number 3 – Re-election of Mr G Steffens
4. Ordinary resolution number 4 – Re-election of Mr PC Botha
5. Ordinary resolution number 5 – Re-election of Mr M Baglione
6. Ordinary resolution number 6 – Appoint auditors and approve their remuneration
7. Ordinary resolution number 7 – Approval of directors’ remuneration
8. Special resolution number 1 – General authority to repurchase ordinary shares
9. Special resolution number 2 – Amend the Articles of Association of the Company
Please read the notes on the reverse side hereof.
ASTRAPAk lImITED
Astrapak Annual Report 2009
100
Notes to proxy
1. An ordinary shareholder may insert the names of one or more proxies (who need not be ordinary shareholders of the Company) in the space provided, with or without deleting the words ‘the chairman of the Annual General Meeting’. The person whose name appears first on the form of proxy and has not been deleted will be entitled to act in priority to those whose names follow. In the event that no names are filled in, the proxy shall be exercised by the chairman of the Annual General Meeting.
2. An ordinary shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes in the space provided. Failure to comply with the above will be deemed to authorise the proxy to vote as he/she thinks fit. However, where the proxy is the chairman, such failure shall be deemed to authorise the chairman to vote in favour of the resolutions. An ordinary shareholder or his/her proxy is not obliged to use all the votes exercisable by the ordinary shareholder or his/her proxy.
3. The completion and lodging of this form of proxy shall in no way preclude the ordinary shareholder from attending, speaking and voting in person at the Annual General Meeting to the exclusion of any proxy appointed in terms hereof.
4. Should this form of proxy not be completed and/or received in accordance with these notes, the chairman may accept or reject it, provided that in respect of its acceptance the chairman is satisfied as to the manner in which the ordinary shareholder wishes to vote.
5. This form of proxy shall be valid for any adjournment of the Annual General Meeting as well as the Annual General Meeting to which it relates, unless the contrary is stated hereon.
6. Where this form of proxy is signed under power of attorney, such power of attorney must accompany this form of proxy unless it has been registered previously with the Company.
7. Where ordinary shares are held jointly, all joint ordinary shareholders are required to sign.
8. This form of proxy must be returned to the transfer secretaries of the Company, Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), to be received by no later than 09:00 on 29 September 2009.
9. Ordinary shareholders who have dematerialised their ordinary shares with a CSDP or broker must arrange with the CSDP or broker concerned to provide them with the necessary authorisations to attend the Annual General Meeting or the ordinary shareholders concerned must instruct them as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the ordinary shareholders concerned and the CSDP or broker concerned.
BASTION GRAPHICS
ASTRAPAK LIMITED