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MASTER PLASTICS LIMITED - Condensed Consolidated Financial Statements for the Financial Period ended 28 February 2017

Release Date: 26/05/2017 17:47
Code(s): MAP     PDF:  
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Condensed Consolidated Financial Statements for the Financial Period ended 28 February 2017

MASTER PLASTICS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2016/323930/06)
Share code: MAP   ISIN: ZAE000242921
("Master Plastics" or "the Company")

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the financial period ended 28 February 2017

KEY HIGHLIGHTS
- Unbundling and Listing effected 24 May 2017
- Profit Estimate and Aggregate Profit Estimate as per Pre-Listing Statement achieved

COMMENTARY 
INTRODUCTION
The Master Plastics Group ("the Group") was unbundled from the Astrapak Limited Group on 24 May 2017. 
In order to give effect to this and prior to the implementation of the unbundling, Master Plastics was 
incorporated and a number of companies and/or assets were disposed of to the Company through a series 
of "asset-for-share-transactions" at the end of January 2017 and February 2017, which resulted in the 
establishment of the Group. The Group includes the manufacturing businesses of Barrier Film Converters, 
(Pty) Ltd ("Barrier Film Converters") Peninsula Packaging and Plusnet-Geotex.

FINANCIAL RESULTS
In terms of International Financial Reporting Standards ("IFRS"), the Group will herewith only report the
trading results of the respective entities for the periods that they were part of the Group and accordingly will
only recognise the trading results of Barrier Film Converters, Micawber 430 (Pty) Ltd and Micawber 451 (Pty) Ltd 
for one month, while the trading results of Peninsula Packaging and Plusnet-Geotex, both material components of 
the Company and the Group as acquired on 28 February 2017, will not be recognised in the trading results reported. 
All entities will,however, be accounted for in the Statement of Financial Position as at 28 February 2017. As the 
Group was only established in the 2017 financial year, no comparatives will be presented in accordance with IFRS.

The Group will, as a result of the above, report a basic loss and headline loss of R0,6 million or 13,9 cents 
per share given a weighted average number of shares of 4 186 939 (compared to an issued share capital of
135 131 250) for the reporting period. These amounts are not representative of the actual performance of the
Group's underlying businesses over the financial year and shareholders should look to the aggregated
profit estimate in the Pre-listing Statement dated 5 May 2017 issued to shareholders ("the Prelisting
Statement"), and the below earnings metrics for an accurate reflection of the actual financial performance of 
the businesses over the 12-month period ended 28 February 2017, which is representative of trading results which 
the Group would expect to report when it will be able to consolidate operational results for the full period being 
reported on.

In the annexures to the Pre-listing Statement, combined historical financial information, pro forma financial 
information, a profit estimate to 28 February 2017, an aggregated profit estimate to 28 February 2017 and a 
profit forecast to 28 February 2018 were presented and the basis of preparation and assumptions applicable to 
each of these were detailed.

We advise that both the profit estimate and aggregated profit estimate, as presented in Annexure 5 of the
Pre-listing Statement, were achieved by the Group for the financial period ended 28 February 2017 when applying
the same basis of preparation and assumptions as detailed in the relevant annexures. An aggregated earnings
per share ("EPS") of 36.0 cents and an aggregated headline earnings per share ("HEPS") of 25.6 cents (compared
to the aggregated EPS and HEPS of 36.0 cents and 24.0 cents respectively per the aggregated profit estimate set
out in Annexure 5 of the Pre-listing Statement) would accordingly have been reported for the financial year
ended 28 February 2017 had the results of all the operations within the Group been accounted for during the
full 12-month period being reported on.

PROSPECTS
The Group will continue to focus on the execution of its stated business strategy and invest in opportunities to 
enhance efficiency and in support of organic growth being experienced by the existing customer base.

Trading conditions remain challenging in an economy with a rather depressed outlook, but the Group is
confident that the exposure to more defensive market segments and a continued focus on operational performance 
will support and underwrite its strategic efforts. 

BROAD-BASED BLACK ECONOMIC EMPOWERMENT
The Group is committed to transformation and achieved a Level 4 (Empowered Supplier) accreditation at its
first rating in accordance with the Codes of Good Practice issued in terms of section 91(1) of the Broad-Based
Black Economic Empowerment Act 53 of 2003 (gazetted 11 October 2013).

CHANGES TO THE BOARD OF DIRECTORS
Appointments:
Mr M Diedloff was appointed as Executive Director & Chief Executive Officer on 28 November 2016.

The following directors were appointed to the Board of Directors of the Company ("the Board") on 13 April 2017:
Ms P Langeni as Independent Non-Executive Chairperson;
Ms S Ratlhagane as Executive Director and Chief Financial Officer;
Mr T Mokgatlha as Independent Non-Executive Director;
Mr G Steffens as Independent Non-Executive Director;
Mr C McDougall as Independent Non-Executive Director; and
Mr P Botha as Non-Executive Director.

SUBSEQUENT EVENTS AND DIVIDEND DECLARATIONS
Events that occurred post the financial year end are detailed in note 13 to the Condensed Consolidated
Financial Statements. This includes details of the dividend declaration by Master Plastics to Astrapak Limited, 
its sole shareholder at the date of the dividend declaration.

APPROVAL AND PREPARATION
The Condensed Financial Statements presented herein have been prepared under the direction and supervision
of the Chief Financial Officer, Salome Ratlhagane CA(SA).

DOCUMENTS
The Pre-listing Statement and this announcement is available via Master Plastics' website: 
www.masterplasticsgroup.com or from the registered office of the Company, or its Corporate and Designated 
Adviser Merchantec Proprietary Limited, Monday to Friday 08h30 to 16h30.

ACKNOWLEDGEMENT AND APPRECIATION
The Board of Directors would like to express its appreciation to all stakeholders for their commitment,
efforts and support during the various processes relating to the Group.

On behalf of the Board

Manley Diedloff              Salome Ratlhagane            Rivonia          
Chief Executive Officer      Chief Financial Officer      26 May 2017      

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                
for the financial period ended 28 February 2017                                 
                                                             Reviewed     
                                                            financial     
                                                         period ended     
                                                          28 February     
                                                                 2017    
                                              Notes           (R'000)   
Revenue                                          11             9 347    
Cost of sales                                                  (7 382)    
Gross profit                                                    1 965    
Administrative and other expenses                              (2 453)    
Distribution and selling costs                                   (421)    
Loss from operations                                             (909)    
Investment income                                                 103    
Finance cost                                                       (2)    
Loss before taxation                                             (808)    
Taxation expense                                                  226    
Loss for the period                                              (582)    
Other comprehensive loss                                            -    
Total comprehensive loss for the period                          (582)    
Loss per ordinary share (cents)                  12             (13,9)    
HEADLINE LOSS PER ORDINARY SHARE                                         
Headline loss per ordinary share (cents)         12             (13,9)    

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION                  
for the financial period ended 28 February 2017                              
                                                             Reviewed     
                                                            financial     
                                                         period ended     
                                                          28 February     
                                                                 2017    
                                              Notes           (R'000)   
Assets                                                                   
Non-current assets                                            154 407    
Property, plant and equipment                     7           145 759    
Deferred taxation assets                                        8 648    
Current assets                                                211 656    
Inventories                                                    46 260    
Accounts receivable                                            71 214    
Cash and cash equivalents                        13            94 182    
Assets classified as held-for-sale                7               214    
Total assets                                                  366 277    
Equity and liabilities                                                   
Total equity                                                  227 238    
Equity attributable to ordinary              
shareholders of the parent                                    227 238    
Non-current liabilities                                        43 759    
Long-term interest-bearing debt                   8             5 974    
Long-term financial liability                     9            15 528    
Deferred taxation liabilities                                  22 257    
Current liabilities                                            95 280    
Trade and other payables                         13            87 393    
Short-term interest-bearing debt                  8             6 843    
Taxation payable                                                1 044    
Total equity and liabilities                                  366 277    
                                             
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                                      
for the financial period ended 28 February 2017                                      
                                                                             Reviewed     
                                                                            financial     
                                                                         period ended     
                                                                          28 February     
                                                                                 2017    
                                                              Notes           (R'000)   
Cash utilised operations before working capital changes                          (664)    
Decrease in working capital                                                     2 830    
Net interest and taxation paid                                                   (663)    
Net cash inflow from operating activities                                       1 503    
Capital expenditure                                               7            (1 118)    
Acquisition of businesses - cash balances acquired                6            93 797    
Net cash inflow from investing activities                                      92 679    
Net increase in cash and cash equivalents                                      94 182    
Net cash and cash equivalents at beginning of the period                            -    
Net cash and cash equivalents at end of the period                             94 182    

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                                           
for the financial period ended 28 February 2017                                              
                                                                             Reviewed     
                                                                            financial     
                                                                         period ended    
                                                                          28 February     
                                                                                 2017    
(R'000)                                                       Notes           (R'000)   
Opening balance                                                                     -    
Movements:                                                                               
Ordinary share capital issued                                     6           235 404    
Common control reserve on acquisition of equity       
interests in subsidiaries                                        10            (7 584)    
Loss for the period                                                              (582)    
Closing balance                                                               227 238    
Comprising:                                                                              
Ordinary share capital                                                        235 404    
Retained loss                                                                    (582)    
Common control reserve on acquisition of              
equity interests in subsidiaries                                               (7 584)    
Total equity                                                                  227 238    

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS             
for the financial period ended 28 February 2017             
                                                                   
1.  STATEMENT OF COMPLIANCE                            
    The provisional condensed consolidated financial statements for the period ended 28 February 2017 
    have been prepared in accordance with the framework concepts and the measurement and recognition 
    requirements of International Financial Reporting Standards ("IFRS"), the SAICA Financial Reporting 
    Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as 
    issued by the Financial Reporting Standards Council, and to also, as a minimum, contain the 
    information required by IAS 34: Interim Financial Reporting, the Listings Requirements of the 
    JSE Limited and the requirements of the Companies Act, 2008 (Act 71 of 2008), as amended (" the 
    Companies Act"). The provisional report has been prepared using accounting policies that comply with 
    IFRS which are consistent in all material respects with those of Astrapak Limited applied in the 
    financial statements for the year ended 28 February 2017. The provisional condensed consolidated 
    financial statements have been prepared internally under the supervision of the Chief Financial Officer, 
    Salome Ratlhagane, CA(SA).                             

2.  REVIEW CONCLUSION     
    The provisional condensed consolidated financial statements for the period ended 28 February 2017 have been 
    independently reviewed by the Group's auditor, Deloitte & Touche. The review was conducted in accordance with 
    ISRE 2410 "Review of Interim Financial Information performed by the Independent Auditor of the Entity". 
    A copy of their unmodified review conclusion is available for inspection at the Company's registered office. 
    Any reference to future financial performance included in this announcement has not been reviewed or reported 
    on by the Company's auditors. The auditor's report does not necessarily report on all of the information 
    contained in this announcement/provisional report. Shareholders are therefore advised that in order to 
    obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of that 
    report together with the accompanying financial information from the registered office of the Company. 
    The directors take full responsibility for the preparation of the provisional report.            

3.  ACCOUNTING POLICIES                      
    The accounting policies adopted in the preparation of the provisional condensed consolidated financial 
    statements are consistent with IFRS.                   

4.  COMPARATIVE FIGURES                             
    As Master Plastics was only established during the financial period ended 28 February 2017, no comparative 
    figures are presented.                                          

5.  SEGMENTAL ANALYSIS                                       
    As the financial information reported on relate to only 1 (one) month's trading and is mainly attributable 
    to the business of Barrier Film Converters and due to the timing of the transactions in terms of which Master 
    Plastics acquired the underlying operations a segmentation of the financial information reported would not 
    be meaningful.                                          

6.  ESTABLISHMENT OF THE MASTER PLASTICS GROUP                  
    In line with Astrapak Limited's resolved strategy aimed at becoming a focused rigid packaging business and 
    pursuant to an offer from RPC Plc, the Board of Directors of Astrapak resolved to unbundle Master Plastics 
    to its ordinary shareholders by way of a distribution in specie in terms of section 46(1)(a)(ii) of the 
    Companies Act and section 46 of the Income Tax Act. In order to give effect to this and prior to the 
    implementation of the unbundling, Master Plastics was incorporated and a number of companies and/or assets 
    were disposed of to Master Plastics through a series of "asset-for-share-transactions" at the end of 
    January 2017 and February 2017, which resulted in the establishment of the Master Plastics Group. 
    The Master Plastics Group has accordingly only been trading for a period of 1 month during the period 
    being reported upon.                                          
    
    The "asset-for-share-transactions" and a breakdown of the assets and liabilities so acquired by 
    Master Plastics is presented below. All assets and liabilities were acquired at fair value.                
                                                           Rand value              No of     
                                                            of shares             no par     
                                                               issued       value shares     
                                                              (R'000)             issued    
    Shares and share claims acquired 31 January 2017 
    (100% voting interest):                           
    - Barrier Film Converters (Pty) Limited                    79 650             36 446    
    - Micabwer 430 (Pty) Limited                                6 912              8 954    
    - Micawber 451 (Pty) Limited                                6 511              6 746    
                                                                                            
    Businesses acquired as at 28 February 2017:                                             
    - Peninsula Packaging                                      75 279             22 277    
    - Plusnet Geotex                                           25 431             22 277    
    - Property letting enterprises                             24 806             16 154    
    - Astrapak Investments                                     16 815             22 277    
                                                              235 404            135 131    
                                                                                        
    The following assets and liabilities were acquired by Master Plastics Group as a result 
    of the aforementioned transactions:                                          
                                                                                 (R'000)   
    Properties                                                                    22 238    
    Plant and equipment                                                          122 862    
    Deferred tax assets                                                            7 938    
    Inventory                                                                     46 133    
    Trade and other debtors*                                                      73 851    
    Cash and cash equivalents                                                     93 797    
                                                                                            
    Long-term interest-bearing debt (refer note 8)                                (5 974)    
    Long-term financial liabilities (refer note 9)                               (15 528)    
    Deferred tax liabilities                                                     (23 581)    
    Trade and other creditors*                                                   (87 073)    
    Short-term interest-bearing debt (refer note 8)                               (6 843)    
    Net asset value acquired                                                     227 820    
    Common control reserve                                                         7 584    
    Share issue                                                                  235 404    
    * These are measured at fair value and designated as level 1 in the fair value hierarchy         

7.  PROPERTY PLANT AND EQUIPMENT                                                             
                                                                                Reviewed     
                                                                               financial     
                                                                            period ended     
                                                                             28 February     
                                                                                    2017     
                                                                                 (R'000)   
    Opening net carrying value                                                         -    
    Additions - restructuring per note 6                                         145 100    
    Additions - post-restructuring                                                 1 118    
    Depreciation                                                                    (245)    
    Assets classified as held for sale - excess production equipment                (214)    
    Closing net carrying value                                                   145 759    
    Capital expenditure for the period (excluding                      
    acquired through restructure)                                                  1 118    
    Capital commitments                                                                      
    - contracted not spent                                                         5 520    
    - authorised not contracted                                                        -    

8.  LONG-TERM AND SHORT-TERM INTEREST BEARING DEBT           
    Long-term and short-term interest bearing debt represent asset based finance liabilities which are measured 
    at amortised cost using the effective interest rate method. These are designated as level 1 in the fair 
    value hierarchy.                                          

9.  LONG-TERM FINANCIAL LIABILITY                     
    The long-term financial liability of R15.528 million represents the final estimated payment due to the vendor 
    of Coralline Investments (Pty) Limited at the end of the financial year ending 28 February 2019. This amount 
    is estimated based on the valuation formula agreed between the parties as part of the transaction in terms 
    of which the minority interest in Coralline Investments (Pty) Limited was acquired by Astrapak Investments 
    prior to the disposal of the business to Master Plastics as part of the restructure detailed in 6 above.                    

10. COMMON CONTROL RESERVE                   
    The common control reserve arose on the acquisition of equity interest by Master Plastics in Barrier Film 
    Converters (Pty) Limited, Micawber 430 (Pty) Limited and Micawber 451 (Pty) Limited in terms of the 
    restructure detailed in note 6 above and represents the differential between the net asset value acquired 
    and the value of shares issued for such net asset value by Master Plastics.                                          

11. REVENUE                       
                                                                                Reviewed     
                                                                               financial     
                                                                            period ended     
                                                                             28 February     
                                                                                    2017     
                                                                                   R'000    
    Revenue for the Group                                                          9 347    
    Transactions with other entities in the Group                                      -    
    Revenue for external customers                                                 9 347    

12. LOSS PER ORDINARY SHARE AND HEADLINE LOSS PER ORDINARY SHARE                           
    Loss per ordinary share is calculated by dividing the reported loss for the period by the weighted average 
    number of shares in issue over the period that the attributable loss was generated.   

    Headline loss per ordinary share is calculated by dividing the headline loss attributable to ordinary 
    shareholders of the parent by the weighted average number of shares in issue over the period that the 
    headline loss were generated.                                          

    As there were no headline adjustable items for the period the loss per ordinary share and headline loss 
    per ordinary share is the same.                                          

13. SUBSEQUENT EVENTS                                     
    The following subsequent events have occurred between 28 February 2017 and the date of this report:   

    All resolutions relating to the ordinary and preference share schemes proposed by Astrapak Limited pursuant 
    to the offer from RPC plc were duly passed on 12 May 2017 and accordingly the listing and unbundling of Master 
    Plastics became unconditional and effected on 24 May 2017.                                          

    The amount due to the vendor of Coralline investments (Pty) Limited was settled in full on 17 May 2017. 
    The amount of R6.43 million, which included interest of R0,21 million, was settled out of cash resources and 
    in accordance with the relevant sale agreement. The amount due was reflected as part of trade and other 
    payables in the Statement of Financial Position on 28 February 2017.                                          

    Master Plastics declared and paid a dividend of R75 million to Astrapak Limited on Monday, 22 May 2017 
    from its cash resources. The relevant resolutions, including those in relation to section 46 (solvency and 
    liquidity) and section 75 (financial interests) of the Companies Act, where applicable, were duly passed. 
    The dividend will not impact on the ability of Master Plastics to deliver on the profit forecast provided 
    in the Pre-listing Statement.                                          

SUPPLEMENTARY INFORMATION                                     
for the financial period ended 28 February 2017                          
                                                                               Financial     
                                                                            period ended     
                                                                             28 February     
                                                                                    2017    
Number of ordinary shares in issue                    
at 28 February 2017 ('000)                                                       135 131    
Weighted average number of ordinary shares in         
issue during financial period ('000)                                               4 187    
Fully diluted weighted average number of ordinary     
shares in issue during financial period ('000)                                     4 187    
Net asset value per share (cents)                                                    168    
Net tangible asset value per share (cents)                                           168    
Net cash                                                                          81 365    
Long-term interest-bearing debt                                                    5 974    
Short-term interest-bearing debt                                                   6 843    
Cash and cash equivalents                                                        (94 182)    
Loss before interest, taxation, depreciation and      
amortisation ("LBITDA")                                                             (664)    
Loss from operations                                                                (909)    
Depreciation                                                                         245    



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