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NAMPAK LIMITED
(REGISTRATION NUMBER 68/08070/06)
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
GROUP RESULTS AND DIVIDEND DECLARATION - YEAR ENDED 30 SEPTEMBER 1999
THE AUDITED CONSOLIDATED RESULTS OF THE GROUP FOR THE YEAR ARE SET OUT BELOW.
AS REPORTED AT THE HALF YEAR, THE GROUP HAS CHANGED THE BASIS OF ACCOUNTING FOR
DEFERRED TAX FROM THE PARTIAL TO THE COMPREHENSIVE METHOD. PRIOR YEAR FIGURES
HAVE BEEN RESTATED WHERE APPROPRIATE.
INCOME STATEMENT
1999 1998 %
RM RM CHANGE
TURNOVER 7 942,9 7 361,1 8
OPERATING PROFIT 824,9 792,0 4
DIVIDEND INCOME 4,9 16,4
NET INTEREST RECEIVED 30,6 15,2
PROFIT BEFORE TAXATION AND
ABNORMAL ITEMS 860,4 823,6
ABNORMAL ITEMS 1,5 0,7
PROFIT BEFORE TAXATION 861,9 824,3
TAXATION 233,4 308,8
PROFIT AFTER TAXATION 628,5 515,5 22
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS IN SUBSIDIARIES 27,6 16,1
ATTRIBUTABLE TO SHAREHOLDERS
IN NAMPAK LIMITED 600,9 499,4 20
WEIGHTED AVERAGE NUMBER OF
ORDINARY SHARES ON WHICH HEADLINE
EARNINGS AND ATTRIBUTABLE PROFIT
PER SHARE ARE BASED (000) 508 756 508 167
ATTRIBUTABLE PROFIT PER
ORDINARY SHARE (CENTS) 118,1 98,3 20
HEADLINE EARNINGS PER
ORDINARY SHARE (CENTS) 117,6 97,5 21
DIVIDENDS PER ORDINARY SHARE (CENTS) 51,0 43,6 17
DETERMINATION OF HEADLINE EARNINGS
NET PROFIT PER INCOME STATEMENT 600,9 499,4
ADJUSTED FOR :
PROFIT ON SALE OF OPERATIONS
NET OF TAXATION (3,1) (0,4)
LOSS / (PROFIT) ON SALE OF FIXED
ASSETS NET OF TAXATION 0,6 (3,6)
HEADLINE EARNINGS FOR THE YEAR 598,4 495,4
ABRIDGED BALANCE SHEET
1999 1998
RM RM
CAPITAL EMPLOYED
TOTAL SHAREHOLDERS' FUNDS 3 202,7 2 869,7
DEFERRED TAXATION 242,9 350,5
INTEREST BEARING DEBT 268,4 174,7
3 714,0 3 394,9
EMPLOYMENT OF CAPITAL
FIXED ASSETS AND INVESTMENTS 2 496,4 2 351,3
CURRENT ASSETS 3 022,4 2 471,0
- INVENTORIES 975,8 902,6
- ACCOUNTS RECEIVABLE 1 326,5 1 121,0
- CASH RESOURCES 720,1 447,4
TOTAL ASSETS 5 518,8 4 822,3
ACCOUNTS PAYABLE, PROVISIONS AND
SHAREHOLDERS FOR DIVIDEND 1 804,8 1 427,4
3 714,0 3 394,9
NET WORTH PER SHARE (CENTS) 587,3 548,3
ABRIDGED CASH FLOW STATEMENT
1999 1998
RM RM
CASH OPERATING PROFIT 1 137,9 1 040,2
WORKING CAPITAL CHANGES (163,2) 117,5
CASH GENERATED FROM OPERATIONS 974,7 1 157,7
REQUIRED FOR OPERATIONS (357,3) (475,3)
NET CASH INFLOW FROM OPERATING
ACTIVITIES 617,4 682,4
CASH OUTFLOW FROM INVESTING
ACTIVITIES (434,5) (461,6)
NET CASH INFLOW BEFORE FINANCING
ACTIVITIES 182,9 220,8
CASH INFLOW FROM FINANCING
ACTIVITIES 96,8 5,8
NET INCREASE IN CASH AND CASH
EQUIVALENTS 279,7 226,6
REVIEW OF RESULTS
NAMPAK HAD A GOOD YEAR AND DESPITE A DIFFICULT ECONOMIC CLIMATE, HEADLINE
EARNINGS PER SHARE GREW BY 21%.
TURNOVER, SUPPORTED BY ACQUISITIONS AND THE CONSOLIDATION OF THE TWO MAIN
AFRICAN OPERATIONS, INCREASED BY 8% DESPITE THE WEAKNESS IN CONSUMER SPENDING
WHICH RESULTED IN MARGINALLY NEGATIVE VOLUME GROWTH. OPERATING MARGIN FELL
FROM 10,8% IN 1998 TO 10,4%, PRIMARILY BECAUSE COST INCREASES COULD NOT BE
FULLY RECOVERED IN SELLING PRICES.
A SIGNIFICANT IMPROVEMENT IN INTEREST RECEIVED, RESULTING FROM STRONG CASH
FLOWS, TOGETHER WITH A LOWER EFFECTIVE TAX RATE, MORE THAN COMPENSATED FOR THE
MODERATE IMPROVEMENT IN OPERATING PROFIT.
THE YEAR WAS CHARACTERISED BY SIGNIFICANT ACQUISITION ACTIVITY AND NEW
BUSINESSES WITH AN AGGREGATE VALUE EXCEEDING R1 BILLION WERE ACQUIRED BY WAY OF
CASH AND EXCHANGE OF ASSETS. DESPITE CASH ACQUISITIONS OF R370 MILLION AND
CAPITAL EXPENDITURE OF R204 MILLION, NET CASH ON HAND INCREASED TO R452 MILLION
(1998 : R273 MILLION).
PLANNED STRATEGIC DISPOSALS OF SMALL NON CORE BUSINESSES YIELDED R42 MILLION.
ACQUISITIONS
DURING THE YEAR, THE OPERATIONS OF CROWN CORK SOUTH AFRICA WERE ACQUIRED FOR
SHARES IN NAMPAK'S METALS BUSINESS, ENHANCING THE GROUP'S POSITION IN METALS
PACKAGING.
TWO TISSUE MANUFACTURERS, NATIONAL TISSUE AND GREENFERN, WERE ALSO ACQUIRED,
AND MERGED WITH NAMPAK'S TISSUE DIVISION.
OTHER ACQUISITIONS FOR CASH INCLUDED THE SACK MANUFACTURING OPERATIONS OF ALPHA
AND THE RETAIL CHECK-OUT BAG MANUFACTURING ASSETS OF TRANSPOLY.
ALL ACQUISITIONS HAVE BEDDED DOWN WELL.
IN ADDITION TO THE ABOVE, NAMPAK HOLDINGS (UK) PLC HAS MADE AN OFFER TO ACQUIRE
THE ENTIRE ISSUED CAPITAL OF PLYSU PLC, A COMPANY LISTED ON THE LONDON STOCK
EXCHANGE AND INVOLVED IN THE MANUFACTURE OF PLASTIC CONTAINERS, FOR A CASH
CONSIDERATION OF R970 MILLION. THIS TRANSACTION IS CONDITIONAL ON THE
ACQUISITION NOT BEING REFERRED TO THE COMPETITION COMMISSION IN THE UNITED
KINGDOM. IN THE EVENT THE OFFER BECOMES UNCONDITIONAL, THE EFFECT ON THE
CONSOLIDATED GROUP'S NET ASSET VALUE AND PROFITABILITY IS NOT EXPECTED TO BE
MATERIAL IN THE FIRST YEAR OF OPERATION. IF THE OFFER IS SUCCESSFUL, THE PLYSU
OPERATIONS WILL BE AMALGAMATED WITH THOSE OF BLOWMOCAN, WHICH HAD A MOST
SATISFACTORY YEAR.
DIVISIONAL PERFORMANCE
METALS
DESPITE A TURNOVER INCREASE OF 6%, SUBSTANTIAL PRESSURE ON MARGINS LEFT
OPERATING PROFITS UNCHANGED FROM 1998.
PAPER
TURNOVER GREW ONLY MARGINALLY AND SIGNIFICANT OVERCAPACITY IN THE CORRUGATED
AND CARTON AND PRINT INDUSTRIES REDUCED BOTH MARGINS AND PROFITS SUBSTANTIALLY
IN A HIGHLY COMPETITIVE MARKET.
TISSUE PROFITS IMPROVED FOLLOWING THE ACQUISITIONS.
PLASTICS
TURNOVER ROSE BY 8% AND PROFIT RECOVERIES IN SOME UNDER PERFORMING OPERATIONS
CONTRIBUTED TO AN IMPROVED RESULT.
AFRICA OPERATIONS
PROFITS FROM THE AFRICAN INVESTMENTS IMPROVED DESPITE DIFFICULT ECONOMIC
CONDITIONS. THE RESULTS OF HUNYANI HOLDINGS LIMITED IN ZIMBABWE AND PACKAGING
INDUSTRIES MALAWI WERE CONSOLIDATED FOR THE FIRST TIME THIS YEAR. THIS HAS LED
TO A REDUCTION IN DIVIDEND INCOME WHEN COMPARED WITH 1998 DUE TO THE
RECLASSIFICATION OF PROFITS FROM THESE TWO COMPANIES.
YEAR 2000
PREPARATIONS FOR Y2K ON ALL MISSION CRITICAL SYSTEMS ARE NOW COMPLETE AND THE
GROUP FORESEES NO PROBLEMS ARISING FROM ANY PROCESSES UNDER THE GROUP'S DIRECT
CONTROL.
PROSPECTS
THE SOUTH AFRICAN ECONOMIC FUNDAMENTALS ARE LOOKING STRONGER THAN THEY HAVE
BEEN FOR SEVERAL YEARS AND THERE ARE DEFINITE INDICATIONS THAT THERE WILL BE
REAL GROWTH IN CONSUMER DEMAND IN 2000.
THE GROUP WILL CONTINUE TO REAP BENEFITS FROM ITS COST REDUCTION AND
PRODUCTIVITY IMPROVEMENT INITIATIVES. THIS, TOGETHER WITH IMPROVED DEMAND,
ONGOING STRONG CASH FLOWS AND THE BENEFITS OF THE RECENT ACQUISITIONS SUGGEST A
SOUND EARNINGS IMPROVEMENT IN THE FORTHCOMING YEAR.
DIVIDEND
THE BOARD HAS DECLARED A FINAL DIVIDEND (NO. 62) OF 34,9 CENTS PER SHARE (1998:
28,8 CENTS) PAYABLE TO SHAREHOLDERS REGISTERED ON 3 DECEMBER 1999, MAKING A
TOTAL DISTRIBUTION FOR THE YEAR OF 51,0 CENTS (1998 : 43,6 CENTS). PAYMENT OF
DIVIDENDS BY WAY OF ELECTRONIC FUNDS TRANSFER WILL BE MADE ON 7 JANUARY 2000.
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 7
JANUARY 2000.
ON BEHALF OF THE BOARD
B P CONNELLAN
CHAIRMAN
T EVANS
MANAGING DIRECTOR
4 NOVEMBER 1999
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 G
TOMLINSON, R A WILLIAMS*.
ALTERNATES: P A DE WEERDT, A D S MORAIS (PORTUGUESE), S C NGIDI.
*NON EXECUTIVE
REGISTERED OFFICE: NAMPAK CENTRE, 114 DENNIS ROAD, ATHOLL GARDENS, SANDTON
2196.
(PO BOX 784324, SANDTON 2146, SOUTH AFRICA).
TELEPHONE: (011) 444-7418.
WEBSITE : WWW.NAMPAK.CO.ZA
TRANSFER SECRETARIES: MERCANTILE REGISTRARS LIMITED, 11 DIAGONAL STREET,
JOHANNESBURG 2001. (PO BOX 1053, JOHANNESBURG 2000, SOUTH AFRICA). TELEPHONE
: (011) 370-5000
NAMPAK LIMITED - PRESS RELEASE
(REGISTRATION NUMBER 68/08070/06)
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
GOOD RESULTS FROM NAMPAK DESPITE POOR ECONOMY
DESPITE WEAK CONSUMER SPENDING THROUGHOUT 1999, NAMPAK STILL MANAGED TO
INCREASE HEADLINE EARNINGS PER SHARE BY 21% FOR THE YEAR ENDED 30 SEPTEMBER
1999, HELPED BY A LOWER TAX RATE AND HIGHER INTEREST EARNINGS.
BRIAN CONNELLAN, CHAIRMAN, SAID THAT THE ACQUISITIONS OF CROWN CORK SOUTH
AFRICA, THE TISSUE BUSINESSES, NATIONAL TISSUE AND GREENFERN, AND CEMENT SACK
PRODUCER, CAPPA SACKS, COMBINED TO PUSH TURNOVER UP 8% TO R7.943 BILLION.
VOLUME GROWTH, EXCLUDING ACQUISITIONS, WAS MARGINALLY NEGATIVE INDICATING THE
TOUGH CONDITIONS IN THE ECONOMY.
CONNELLAN ALSO SAID THAT SOME SMALLER BUSINESSES WITH NON-CORE TECHNOLOGIES
WERE SOLD AS PART OF THE GROUP'S FOCUS STRATEGY.
MANAGING DIRECTOR, TREVOR EVANS, NOTED THAT ALL THE ACQUISITIONS AND MERGERS
WERE BEDDED DOWN AND HAVE ALREADY MADE A POSITIVE CONTRIBUTION TO RESULTS.
OPERATING PROFIT INCREASED BY 4% TO R825 MILLION, ALTHOUGH THE OPERATING MARGIN
DROPPED TO 10.4% FROM 10.8% IN 1998. EVANS SAID THAT THE PACKAGING INDUSTRY
REMAINED HIGHLY COMPETITIVE AS A RESULT OF THE WEAK ECONOMY AND INDUSTRY
OVERCAPACITY AND IT WAS GENERALLY NOT POSSIBLE TO FULLY RECOVER COST INCREASES.
IN THE METALS SECTOR, EVEN WITH EXTRA BUSINESS FROM THE CROWN CORK ACQUISITION,
OPERATING PROFIT WAS STATIC, REFLECTING THE SUBSTANTIAL PRESSURE ON MARGINS.
TURNOVER IN THE PAPER SECTOR GREW ONLY MARGINALLY, BUT OVERCAPACITY IN THE
CARTON AND PRINT AND CORRUGATED INDUSTRIES CAUSED A DROP IN BOTH MARGINS AND
PROFITS. EVANS SAID IT WAS PLEASING THAT BOTH THE MERGER OF THE PAPER
MERCHANTING COMPANIES, SPICERS AND PETERS PAPERS, AND THE TISSUE ACQUISITIONS
WENT SMOOTHLY AND BOTH EXCEEDED PROFIT EXPECTATIONS BY YEAR END.
AS FAR AS THE PLASTICS SECTOR WAS CONCERNED, BOTH TURNOVER AND OPERATING PROFIT
WERE UP, WHICH EVANS SAID WAS DUE TO ACQUISITIONS AND RECOVERIES IN SOME
UNDERPERFORMING BUSINESSES.
PROFITS FROM THE AFRICAN INVESTMENTS WERE MUCH BETTER DESPITE DIFFICULT
ECONOMIC CONDITIONS, WHILST BLOWMOCAN IN THE UNITED KINGDOM, HAD A GOOD YEAR
FOLLOWING IMPROVED EFFICIENCIES AND COST CONTROL.
CONNELLAN SAYS THAT FOR THE FIRST TIME IN SEVERAL YEARS THE FUTURE CAN BE
APPROACHED WITH MORE CONFIDENCE FOLLOWING THE PEACEFUL ELECTION, TIGHT FISCAL
AND MONETARY POLICIES AND A FAR MORE FAVOURABLE INTEREST RATE REGIME.
WITH THE PROPOSED ACQUISITION OF PLYSU PLC AND FURTHER GROWTH OPPORTUNITIES IN
THE REST OF AFRICA, COUPLED WITH AN IMPROVING LOCAL ECONOMY, NAMPAK EXPECTS TO
PRODUCE SOUND EARNINGS GROWTH IN THE YEAR AHEAD, HE CONCLUDED.
4 NOVEMBER 1999
PRODUCED AND RELEASED BY NAMPAK LIMITED.
FOR FURTHER INFORMATION PLEASE CONTACT BRIAN CONNELLAN OR TREVOR EVANS ON (011)
444 7418.
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