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NAMPAK LIMITED - INTERIM REPORT AND DIVIDEND DECLARATION

Release Date: 06/05/1999 13:24
Code(s): NPK NPKPNPP1
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NAMPAK LIMITED
(REGISTRATION NUMBER 68/08070/06)
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)

GROUP INCOME STATEMENT UNAUDITED AUDITED
6 MONTHS ENDED YEAR ENDED 31 MARCH 30 SEPT
1999 1998 CHANGE 1998
RM RM % RM
TURNOVER 3 752,0 3 718,7 1 7 361,1
OPERATING PROFIT 366,8 416,8 (12) 792,0
DIVIDEND INCOME 11,0 9,9 16,4 NET INTEREST RECEIVED
(NOTE 2) 24,8 4,1 15,2 PROFIT BEFORE TAXATION AND
ABNORMAL ITEMS 402,6 430,8 823,6
ABNORMAL ITEMS (NOTE 3) 0,2 - 0,7
PROFIT BEFORE TAXATION 402,8 430,8 (7) 824,3
TAXATION (NOTE 1) 114,1 161,1 308,3
PROFIT AFTER TAXATION 288,7 269,7 7 516,0 ATTRIBUTABLE TO OUTSIDE SHAREHOLDERS IN
SUBSIDIARIES 3,6 7,0 16,2 ATTRIBUTABLE TO SHAREHOLDERS
IN NAMPAK LIMITED 285,1 262,7 9 499,8 NUMBER OF ORDINARY SHARES
IN ISSUE (000) 508 741 508 053 508 731 WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES ON WHICH HEADLINE EARNINGS AND NET PROFIT PER
SHARE ARE BASED (000) 508 733 507 869 508 167 HEADLINE EARNINGS PER ORDINARY SHARE* (NOTE 1)
(CENTS) 55,6 51,2 9 97,6 DIVIDEND PER SHARE
(CENTS) 16,1 14,8 9 43,6 NET PROFIT PER SHARE
(CENTS) 56,0 51,7 8 98,4 *HEADLINE EARNINGS PER ORDINARY SHARE HAS BEEN CALCULATED IN TERMS OF THE REQUIREMENTS OF AC 306. DETERMINATION OF HEADLINE EARNINGS NET PROFIT FOR THE PERIOD
PER INCOME STATEMENT 285,1 262,7 499,8 ADJUSTED FOR: NET PROFIT ON SALE OF
FIXED ASSETS (2,2) (2,6) (3,7) HEADLINE EARNINGS FOR THE
PERIOD 282,9 260,1 496,1
GROUP BALANCE SHEET UNAUDITED AUDITED
6 MONTHS ENDED YEAR ENDED
31 MARCH 30 SEPT
1999 1998 1998
RM RM RM CAPITAL EMPLOYED
SHARE CAPITAL AND PREMIUM 352,1 346,7 352,1
RESERVES (NOTE 1) 2 452,9 2 317,4 2 430,3 INTEREST OF SHAREHOLDERS OF
NAMPAK LIMITED 2 805,0 2 664,1 2 782,4
INTEREST OF OUTSIDE SHAREHOLDERS 91,5 86,3 87,3
INTEREST OF ALL SHAREHOLDERS 2 896,5 2 750,4 2 869,7
DEFERRED TAXATION 337,2 316,1 350,5
INTEREST BEARING DEBT 263,1 112,2 174,7
3 496,8 3 178,7 3 394,9 EMPLOYMENT OF CAPITAL
FIXED ASSETS 2 233,6 2 086,5 2 237,3
INVESTMENTS AND LOANS (NOTE 4) 157,8 52,7 114,0
CURRENT ASSETS 2 233,7 2 087,5 2 471,0
INVENTORIES 953,8 936,1 902,6
ACCOUNTS RECEIVABLE 1 119,8 1 064,1 1 121,0
CASH RESOURCES (NOTE 5) 160,1 87,3 447,4
TOTAL ASSETS 4 625,1 4 226,7 4 822,3
CURRENT LIABILITIES 1 128,3 1 048,0 1 427,4
TAXATION 55,9 37,9 55,2
ACCOUNTS PAYABLE 990,5 934,9 1 225,8
SHAREHOLDERS FOR DIVIDEND 81,9 75,2 146,4
NET CURRENT ASSETS 1 105,4 1 039,5 1 043,6
3 496,8 3 178,7 3 394,9 TOTAL BORROWINGS : TOTAL
SHAREHOLDERS' FUNDS 9,1% 4,1% 6,1% NET BORROWINGS/(CASH) : TOTAL
SHAREHOLDERS' FUNDS 3,6% 0,9% (9,5%)
NET WORTH PER ORDINARY SHARE (CENTS) 569 541 564
GROUP CASH FLOW STATEMENT UNAUDITED AUDITED
6 MONTHS ENDED YEAR ENDED
31 MARCH 30 SEPT
1999 1998 1998
RM RM RM
CASH OPERATING PROFIT 508,3 553,0 1 040,2
WORKING CAPITAL CHANGES (285,8) (156,5) 117,5
DIVIDENDS RECEIVED 10,9 10,0 15,3 NET INTEREST RECEIVED
INCLUDING CAPITALISED 23,2 4,1 13,2
TAXATION PAID (126,5) (190,4) (281,2)
CASH AVAILABLE FROM OPERATIONS 130,1 220,2 905,0
DIVIDENDS PAID (146,2) (138,7) (222,6) NET CASH (OUTFLOW)/INFLOW FROM
OPERATING ACTIVITIES (16,1) 81,5 682,4 NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (440,3) (150,9) (461,6) NET CASH OUTFLOW BEFORE FINANCING
ACTIVITIES (456,4) (69,4) (220,8) NET CASH INFLOW/(OUTFLOW)FROM
FINANCING ACTIVITIES 48,6 (5,5) 5,8 NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS (407,8) (74,9) 226,6 CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 370,5 137,3 137,3 FOREIGN CURRENCY TRANSLATION
DIFFERENCES 1,0 0,8 6,6 CASH AND CASH EQUIVALENTS AT END
OF PERIOD (NOTE 5) (36,3) 63,2 370,5
NOTES UNAUDITED AUDITED
6 MONTHS ENDED YEAR ENDED
31 MARCH 30 SEPT
1999 1998 1998
RM RM RM 1. CHANGE IN ACCOUNTING POLICY FOLLOWING THE ISSUE OF REVISED ACCOUNTING STATEMENT AC102 IN MARCH 1999, THE GROUP HAS CHANGED ITS ACCOUNTING POLICY FOR DEFERRED TAXATION FROM THE PARTIAL TO THE COMPREHENSIVE BASIS WITH EFFECT FROM 1 OCTOBER 1998. WHERE APPLICABLE, PRIOR YEAR FIGURES HAVE BEEN RESTATED ON THE NEW BASIS AND THE EFFECT OF THE CHANGE IS SET OUT BELOW: TAXATION CHARGE
PREVIOUSLY REPORTED 128,4 234,7
DEFERRED TAX ADJUSTMENT 32,7 73,6
AS RESTATED 161,1 308,3 NON-DISTRIBUTABLE RESERVES AND RETAINED INCOME
PREVIOUSLY REPORTED 2 553,7 2 702,4
DEFERRED TAX ADJUSTMENT 236,3 272,1
AS RESTATED 2 317,4 2 430,3 HEADLINE EARNINGS PER SHARE (CENTS)
PREVIOUSLY REPORTED 57,6 112,7
DEFERRED TAX ADJUSTMENT 6,4 15,1
AS RESTATED 51,2 97,6 THE CHANGE IN THE CORPORATE TAX RATE FROM 35% TO 30% RESULTED IN A TAX ADJUSTMENT OF R50 MILLION CALCULATED ON THE RESTATED DEFERRED TAX BALANCE AT 30 SEPTEMBER 1998. OF THIS AMOUNT, R25 MILLION HAS BEEN INCLUDED IN THE CURRENT PERIOD TAX CHARGE. 2. NET INTEREST RECEIVED
INTEREST PAID (25,7) (8,4) (20,0)
INTEREST RECEIVED 50,5 12,5 35,2
24,8 4,1 15,2 3. ABNORMAL ITEMS BEFORE TAXATION PROFIT ON DISPOSAL OF LAND
AND BUILDINGS 0,2 - 0,7
0,2 - 0,7 4. INVESTMENTS AND LOANS
DIRECTORS' VALUATION 157,8 52,7 114,0 5. CASH AND CASH EQUIVALENTS
CASH RESOURCES PER BALANCE SHEET 160,1 87,3 447,4 SHORT-TERM BORROWINGS REGARDED
AS CASH EQUIVALENTS (196,4) (24,1) (76,9)
(36,3) 63,2 370,5 6. SUPPLEMENTARY INFORMATION
DEPRECIATION 139,6 136,3 258,8
CAPITAL EXPENDITURE 98,4 143,9 379,7
- EXPANSION 60,8 76,1 172,0
- REPLACEMENT 37,6 67,8 207,7
CAPITAL COMMITMENTS 109,6 242,3 74,2
- CONTRACTED 75,5 172,4 68,9
- APPROVED NOT CONTRACTED 34,1 69,9 5,3
LEASE COMMITMENTS 124,7 140,6 157,8
- LAND AND BUILDINGS 108,9 122,2 140,3
- OTHER 15,8 18,4 17,5
CONTINGENT LIABILITIES 11,1 9,3 13,0
SIX MONTHS OF INDUSTRY RATIONALISATION AND RE-FOCUS
THE GROUP HAS OFTEN REFERRED TO THE DIFFICULT MARKET CONDITIONS RESULTING IN OVER CAPACITY AND THE CONSEQUENT NEED FOR RATIONALISATION IN THE PACKAGING INDUSTRY. DURING THE FIRST SIX MONTHS OF THE CURRENT FINANCIAL YEAR NAMPAK HAS BEEN ACTIVE IN ADDRESSING THESE KEY ISSUES.
THE ACQUISITION OF CROWN CORK SOUTH AFRICA WAS APPROVED BY THE COMPETITION BOARD EARLY IN 1999, SUBJECT TO THE EXCLUSION OF CROWN'S FOOD CAN ACTIVITIES. THIS AGREEMENT BECAME EFFECTIVE 1 APRIL 1999. THE NEW MERGED NAMPAK METALS DIVISION, IN WHICH CROWN CORK & SEAL CO. INC. HOLDS 15%, IS NOW POSITIONED TO ACHIEVE APPROPRIATE ECONOMIES OF SCALE. A TECHNICAL AGREEMENT HAS BEEN CONCLUDED WITH THIS INTERNATIONALLY RENOWNED PARTNER.
IN DECEMBER 1998 THE GROUP ACQUIRED FOR CASH THE TISSUE OPERATIONS OF SWAZI PAPER. EFFECTIVE 1 APRIL 1999 NAMPAK AND THE EMPOWERMENT GROUP DYNAMO MERGED THEIR RESPECTIVE TISSUE BUSINESSES IN A NEW COMPANY IN WHICH DYNAMO HAS A MATERIAL EQUITY INTEREST.
ADDITIONALLY, IN MARCH 1999, THE GROUP ACQUIRED FOR CASH THE ALPHA GROUP'S PAPER CEMENT SACKS MANUFACTURING ACTIVITIES AND COMMENCED THE MERGER OF THESE OPERATIONS WITH ITS EXISTING PAPER SACKS DIVISION.
THE AGGREGATE VALUES OF THE ABOVE ACQUISITIONS, BOTH BY WAY OF CASH AND EXCHANGE OF ASSETS, EXCEEDED R1 BILLION.
SIMULTANEOUSLY WITH THIS RATIONALISATION STRATEGY THE GROUP HAS BEEN REFOCUSING ON ITS CORE BUSINESSES. JIFFY PACKAGING (PROTECTIVE PACKAGING PRODUCTS) WAS DISPOSED OF AND HEADS OF AGREEMENT HAVE BEEN SIGNED FOR THE DISPOSAL OF TWO OTHER SMALL NON-CORE OPERATIONS. SECTORAL INFORMATION
6 MONTHS ENDED YEAR ENDED 31 MARCH INC/ 30 SEPT
1999 1998 (DEC) 1998
PACKAGING RM RM % RM
TURNOVER 2 186,9 2 181,4 0,3 4 433,7
OPERATING PROFIT 288,5 292,7 (1,4) 497,7
MARGIN 13,2% 13,4% 11,2%
TOTAL ASSETS 2 557,5 2 426,7 2 653,0
LOW LEVELS OF DEMAND WERE EXPERIENCED THROUGHOUT THIS SECTOR PLACING MARGINS UNDER PRESSURE. OPERATING PROFIT FELL IN SPITE OF A SIGNIFICANT TURNAROUND IN THE PERFORMANCE OF BLOWMOCAN IN THE UK.
6 MONTHS ENDED YEAR ENDED 31 MARCH INC/ 30 SEPT
1999 1998 (DEC) 1998
PAPER AND PRINTING RM RM % RM
TURNOVER 1 634,5 1 610,5 1,5 3 042,2
OPERATING PROFIT 78,3 124,1 (36,9) 294,3
MARGIN 4,8% 7,7% 9,7%
TOTAL ASSETS 1 907,5 1 712,7 1 721,9
FOR ALL OPERATIONS IN THIS SECTOR THE MARKET REMAINED VERY COMPETITIVE WITH MARGINS UNDER EXTREME PRESSURE. THE BENEFITS OF THE TISSUE RESTRUCTURE WILL BE SEEN ONLY IN THE SECOND HALF OF THE YEAR. REVIEW OF RESULTS
THE GROUP HAS ELECTED TO ADOPT THE COMPREHENSIVE METHOD OF ACCOUNTING FOR DEFERRED TAXATION FOR THE YEAR ENDING 30 SEPTEMBER 1999, AND ALL COMPARATIVES HAVE BEEN RESTATED ACCORDINGLY.
TURNOVER GREW BY 1%, BUT OPERATING PROFIT DECLINED BY 12% TO R366,8 MILLION, A CLEAR INDICATION OF THE HIGHLY COMPETITIVE STATE OF THE MARKET AND DECLINING VOLUMES BROUGHT ABOUT BY THE RECESSIONARY TREND IN THE ECONOMY. GOOD CASH MANAGEMENT, STRICT CONTROL OVER CAPITAL EXPENDITURE, A SIGNIFICANTLY LOWER EFFECTIVE TAX RATE AND IMPROVED RESULTS FROM THE AFRICA INVESTMENTS, RESULTED IN HEADLINE EARNINGS PER SHARE INCREASING BY 9% TO 55,6 CENTS PER SHARE. CASH AVAILABLE FROM OPERATIONS AMOUNTED TO R130,1 MILLION (1998: R220,2 MILLION) WHILST CAPITAL EXPENDITURE FOR THE PERIOD TOTALED R98,4 MILLION (1998: R143,9 MILLION). YEAR 2000 COMPLIANCE
THE GROUP'S PREPARATION FOR THE YEAR 2000 IS CLEARLY SET OUT IN THE LATEST ANNUAL REPORT. NAMPAK CONTINUES TO MEET ITS IMPLEMENTATION DEADLINES IN THIS REGARD, WITH PROGRESS MONITORED BY THE AUDIT COMMITTEE AND THE BOARD OF DIRECTORS OF THE COMPANY. COST ESTIMATES, INCLUDING CAPITAL EXPENDITURE, HAVE NOT CHANGED MATERIALLY. PROSPECTS
FURTHER ANTICIPATED INTEREST RATE CUTS WILL PROVIDE SOME STIMULATION TO THE ECONOMY AND SHOULD CONTRIBUTE TO LIMITED VOLUME GROWTH IN THE NEXT SIX MONTHS. THE ACQUISITIONS AND MERGERS REFERRED TO ABOVE WILL ENHANCE THE GROUP'S RESULTS DURING THE FORTHCOMING PERIOD, AND POSITION THE GROUP MORE STRONGLY FOR THE NEXT FEW YEARS. ASSUMING THAT THERE ARE NO MAJOR DISRUPTIONS TO THE ECONOMY, EARNINGS FOR THE FULL YEAR ARE EXPECTED TO SHOW GROWTH AT A HIGHER RATE THAN THAT ACHIEVED IN THE FIRST HALF. DIVIDEND
THE DIRECTORS HAVE DECLARED AN INTERIM DIVIDEND (NO. 61) OF 16,1 CENTS PER SHARE (1998: 14,8 CENTS) WHICH IS COVERED 3,5 TIMES AND IS PAYABLE TO
SHAREHOLDERS REGISTERED ON 28 MAY 1999. PAYMENT OF DIVIDENDS BY WAY OF ELECTRONIC FUNDS TRANSFER WILL BE MADE ON 9 JULY 1999. SHAREHOLDERS WHO HAVE NOT ALREADY ELECTED TO RECEIVE PAYMENT BY WAY OF ELECTRONIC FUNDS TRANSFER ARE URGED TO DO SO IN VIEW OF THE CONTINUED HIGH LEVELS OF CHEQUE FRAUD.
DIVIDEND CHEQUES WILL BE POSTED TO SHAREHOLDERS ON 9 JULY 1999. ON BEHALF OF THE BOARD B P CONNELLAN CHAIRMAN T EVANS MANAGING DIRECTOR 18 MAY 1999 REGISTERED OFFICE: NAMPAK CENTRE 114 DENNIS ROAD ATHOLL GARDENS SANDTON 2196 (P O BOX 784324 SANDTON 2146) TELEPHONE: (011) 444-7418 TRANSFER SECRETARIES: RAND REGISTRARS LIMITED BLOCK C 100 NORTHERN PARKWAY ORMONDE 2091 (P O BOX 82549 SOUTHDALE 2135) TELEPHONE: (011) 496-2222 WEBSITE: WWW.NAMPAK.CO.ZA
DIRECTORS: B P CONNELLAN (CHAIRMAN), T EVANS (MANAGING), G E BORTOLAN, P L CAMPBELL*, D E COOPER*, N CUMMING, G V D DUFFEY, D A HAWTON*, M M KATZ*, A S LANG (BRITISH), A M MARTHINUSEN, K M MOKOAPE*, L M NDLOVU*, J W C SAYERS, R A WILLIAMS*.
ALTERNATE DIRECTORS: P A DE WEERDT, A D S MORAIS (PORTUGUESE), R G TOMLINSON. *NON-EXECUTIVE

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