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NAMPAK LIMITED
(Registration number 1968/008070/06)
(Incorporated in the Republic of South Africa)
ISIN CODE: ZAE000004933 SHARE CODE: NPK
AUDITED GROUP RESULTS FOR THE YEAR ENDED
30 SEPTEMBER 2001
GROUP INCOME STATEMENT
2001 2000 Change
Notes Rm Rm %
Revenue 10 474.3 9 632.8 8.7
Operating profit before
abnormal items 1 860.5 955.7 (10.0)
Abnormal items 2 (158.2) (33.1)
Operating profit after
abnormal items 3&4 702.3 922.6 (23.9)
Net finance costs 6 (71.0) (49.9)
Investment income 2.5 9.6
Profit before taxation 633.8 882.3 (28.2)
Taxation 171.4 215.0
Profit after taxation 462.4 667.3 (30.7)
Share of associate companies'
losses - 1.4
Attributable to outside
shareholders in subsidiaries 41.0 46.2
Attributable to shareholders
of Nampak Limited 421.4 619.7 (32.0)
Number of ordinary shares
in issue (000) 509 406 509 350
Weighted average number of
ordinary shares on which headline
earnings and basic earnings per
share are based (000) 509 361 509 050
Weighted average number of
ordinary shares on which diluted
headline earnings and diluted basic
earnings per share are based (000) 509 361 510 418
Headline earnings per ordinary
share (cents) 88.1 121.1 (27.3)
Basic earnings per share (cents) 82.7 121.7 (32.0)
Dividend per share (cents) 53.3 53.3
Fully diluted headline earnings
per share (cents) 88.1 120.8 (27.2)
Fully diluted earnings per
share (cents) 82.7 121.4 (31.9)
Determination of headline earnings
Attributable profit for the year
per income statement 421.4 619.7
After tax adjustment for :
Net loss/(profit) on sale of
assets/operations 0.5 (0.4)
Impairment loss on properties 16.0 -
Goodwill amortisation (4.2) (4.9)
Provision for retrenchments 12.2 -
Loss on re-organisation of debt 2.6 2.3
Headline earnings for the year 448.5 616.7 (27.3)
Comparatives have been restated for
the change in accounting policy (refer to Note 5).
GROUP BALANCE SHEET
2001 2000
Notes Rm Rm
Assets
Non-current assets 3 567.6 3 351.7
Property, plant and
equipment and intangibles 3 426.8 3 239.3
Investments and associates 140.8 112.4
Current assets 4 109.8 3 573.3
Inventories 1 236.1 1 146.1
Trade & other receivables 1 862.6 1 685.9
Bank balances, deposits
and cash 7 1 011.1 741.3
Total assets 7 677.4 6 925.0
Equity & liabilities
Capital and reserves 2 801.8 2 436.0
Capital 357.6 357.1
Non-distributable reserves 54.7 10.5
Retained earnings 5 2 389.5 2 068.4
Outside shareholders' interest 242.2 222.0
Non-current liabilities 2 387.3 1 832.5
Interest bearing debt 7 1 971.6 1 453.4
Deferred taxation 415.7 379.1
Current liabilities 2 246.1 2 434.5
Trade and other payables 2 249.0 2 123.5
Taxation (2.9) 130.2
Shareholders for dividend - 180.8
Total equity and liabilities 7 677.4 6 925.0
Total borrowings : total
shareholders'funds 64.8% 54.7%
Net borrowings : total
shareholders' funds 31.6% 26.8%
Total liabilities: total
shareholders' funds 152.2% 160.5%
Net asset value per ordinary
share (cents) 550 478
GROUP STATEMENT OF CHANGES IN EQUITY
2001 2000
Rm Rm
Equity at beginning of the year 2 436.0 2 988.3
Change in accounting policy (106.4)
Changes in capital 0.5 3.2
Share capital - 0.1
Share premium on new issue 0.5 3.1
Changes in non-distributable
reserves 44.2 (63.6)
Increase/(decrease) in foreign
currency translation reserve 44.2 (74.1)
Transfer from retained earnings - 10.5
Changes in retained earnings 321.1 (385.5)
Goodwill written off (0.7) (723.2)
Susidiaries not previously
consolidated (7.8) -
Attributable profit for the year 421.4 619.7
Preference shares - dividends (0.1) (0.1)
Ordinary shares - dividends (91.7) (271.4)
Transfer to non-distributable
reserves - (10.5)
Equity at the end of the year 2 801.8 2 436.0
GROUP CASH FLOW STATEMENT
2001 2000
Notes Rm Rm
Cash operating profit 1 113.0 1 310.7
Working capital changes (89.5) (182.6)
Net finance costs 6 (71.0) (49.9)
Taxation paid (299.2) (155.7)
Cash available from operations 653.3 922.5
Dividends paid (272.8) (295.7)
Net cash inflow from operating
activities 380.5 626.8
Net cash outflow from investing
activities (381.1) (216.1)
Net cash (outflow)/inflow
before financing activities (0.6) 410.7
Net cash outflow from
financing activities (214.1) (443.0)
Net decrease in cash
and cash equivalents (214.7) (32.3)
Cash and cash equivalents
at beginning of the year 596.8 637.7
Translation of foreign
subsidiaries 26.2 (8.6)
Cash and cash equivalents at
end of the year 7 408.3 596.8
NOTES
2001 2000 Change
Rm Rm %
1. Operating profit before
abnormal items
RSA and Africa trading 617.6 698.2 (11.5)
NamITech trading 39.8 22.5 76.9
Nampak plc trading 119.3 100.0 19.3
Group Property, Treasury and Other 83.8 135.0 (37.9)
860.5 955.7 (10.0)
2. Abnormal items
Retrenchment and restructuring
costs (see below) (98.0)* (23.1)
Product claims (34.2)** (3.1)
Impairment loss on properties (21.5) -
Loss on disposal of property (0.8) (4.6)
Loss on re-organisation of debt (3.7) (2.3)
(158.2) (33.1)
* Retrenchment and restructuring costs have averaged R23.3m per annum over
the past five years.
** Shortfall on Foodcan claim (R21.9m) and Polyfoil export claim (R12.3m).
3. Operating profit after
abnormal items
RSA and Africa trading 490.9 667.5 (26.5)
NamITech trading 37.3 22.3 67.3
Nampak plc trading 111.9 97.8 14.4
Group Property, Treasury and Other 62.2 135.0 (53.9)
702.3 922.6 (23.9)
4. Reconciliation of operating
profit
Operating profit as previously
reported 970.5
Abnormal items as previously
reported (10.0)
Re-allocation of interest received (9.5)
951.0
Change in accounting policy:
Deconsolidation of Zimbabwe
operations (33.3)
Negative goodwill amortised 4.9
922.6
5. Prior year adjustment
Retained income as previously
reported 2 382.9
Deconsolidation of Zimbabwe
operations (10.2)
Negative goodwill written off 4.9
Prior year adjustment - negative
goodwill 69.1
Changes in retained income as
previously reported (378.3)
2 068.4
6. Net finance costs
Interest paid (172.0) (134.4)
Interest received 101.0 75.0
Re-allocation of interest received - 9.5
(71.0) (49.9)
7. Cash and cash equivalents
Interest bearing debt (1 971.6) (1 453.4)
Less: long-term liabilities 1 368.8 1 308.9
Bank balances, deposits and cash 1 011.1 741.3
408.3 596.8
8. Supplementary information
Depreciation 461.1 390.1
Capital expenditure 390.6 413.7
- expansion 145.1 117.6
- replacement 245.5 296.1
Capital commitments 350.6 259.5
- contracted 149.0 200.1
- approved not contracted 201.6 59.4
Lease commitments 264.8 222.5
- land and buildings 229.8 205.0
- other 35.0 17.5
Contingent liabilities 2.7 28.6
SEGMENTAL REPORT AFTER ABNORMAL ITEMS
Revenue Profit from
operations
2001 2000 2001 2000
Rm Rm Rm Rm
METALS 3 096.8 2 992.3 203.5 297.5
Bevcan 1 455.0 1 398.9 109.1 153.7
Foodcan and Divpac 1 181.7 1 176.1 82.8 118.4
Other 460.1 417.3 11.6 25.4
PAPER 3 342.7 3 090.1 242.3 282.7
Corrugated and Printpak 1 736.7 1 586.5 160.5 155.2
Tissue 853.4 794.5 37.9 57.5
Paper Merchants 681.9 622.0 31.5 40.1
Other 70.7 87.1 12.4 29.9
PLASTICS 3 864.5 3 422.7 167.8 180.1
Nampak plc 1 982.4 1 570.9 111.9 97.8
Rotoflex and Sacks 643.2 573.5 0.2 27.4
Petpak and Liquid 615.6 603.1 39.4 29.7
Other 623.3 675.2 16.3 25.2
NAMITECH 256.5 149.3 37.3 22.3
OTHER (86.2) (21.6) 51.4 140.0
Property and Treasury - - 69.9 93.0
Other (86.2) (21.6) (18.5) 47.0
TOTAL 10 474.3 9 632.8 702.3 922.6
GEOGRAPHICAL ANALYSIS
South Africa 8 507.3 7 976.8 585.7 742.0
Africa 70.8 87.1 12.3 29.9
Europe 1 982.4 1 570.9 111.9 97.8
Inter-group eliminations
and other (86.2) (2.0) (7.6) 52.9
TOTAL 10 474.3 9 632.8 702.3 922.6
REVIEW OF RESULTS
Trading conditions in the second half of the year remained difficult, with
margins before abnormal expenses still under pressure but improving on the
first half in South Africa. The group continued with the major
restructuring programme and further abnormal costs of R94.3 million were
incurred in the second half, bringing total restructuring and abnormal costs
to R158.2 million for the year.
Turnover increased by 8.7% to R10 474 million. Operating profit declined by
10% before abnormal items and by 23.9% after abnormal items.
After net finance costs of R71 million, principally payable on overseas
borrowings to buy Plysu plc (now known as Nampak plc), attributable profit
after tax and minorities amounted to R421.4 million, being 32% down on the
previous year.
Headline earnings per share declined by 27.3% after taking into account the
deconsolidation of the group's Zimbabwean businesses.
The balance sheet remains strong with the group having generated R381
million of cash from operations, after abnormal costs and the adverse
effects of extra tax payments, and the rand's depreciation against sterling.
The South African operations ended the year with net cash in excess of R408
million.
DIVISIONAL PERFORMANCE
Metals
Sales volumes were similar to the previous year with margins in most areas
under pressure. Substantial restructuring costs were incurred with two
factories being closed and further retrenchments at Bevcan, Divpac and
Foodcan. The lower cost base will result in improved profitability in the
future.
Glass experienced major electricity supply problems, which disrupted
production. The division made a loss at operating profit level.
Paper
Corrugated and Printpak showed some sales growth and limited growth in
operating profit, with the benefits of prior and current year restructuring
starting to materialise.
Tissue results were affected by poor volumes in the first half due to its
price leadership position. As competitor pricing lifted, volumes showed
some recovery but high raw material prices and weak consumer demand also
contributed towards unsatisfactory levels of profitability.
Paper Merchants experienced low demand and this, together with a highly
competitive environment, resulted in a reduction of profitability.
Plastics
Nampak Europe has completed restructuring its core businesses and disposed
of non-core activities and certain of its surplus properties. A number of
in-plant projects referred to at the half year are now in the process of
installation. These are linked to long term supply contracts. When fully
installed these plants will ensure a strong presence in the fresh milk
market and support future profitability and cash flow.
Rotoflex-Quix and Sacks incurred significant restructuring costs for the
year and are forecasting improved profitability for 2002.
Petpak and Liquid were able to partially recover last year's raw material
price increases and experienced relatively stable demand in the second half
of the year.
Megapak had to contend with very poor demand for crates whilst Polyfoil was
adversely affected by low export demand and a product liability claim.
NamITech
NamITech continued to show satisfactory growth in its core businesses and
expanded its activities in the secure payments area with the acquisition of
Velocit-e. After year-end NamITech acquired The South African Certification
Authority - a provider of VeriSign's digital certification and internet
security solutions.
Africa
Whilst the African businesses continue to perform satisfactorily, the
continuing political uncertainty in Zimbabwe and the hyper devaluation of
its currency, resulted in the decision in the second half of the year to
account for those businesses in Zimbabwe on a cash received basis only.
Comparatives have been restated accordingly.
Other
The decline in Property and Treasury income relates principally to the lower
utilisation of group properties as the restructuring programme was
completed. An impairment write down of R16 million (net of deferred tax) in
respect of group properties was incurred.
The decline in "Other" is due to various abnormal costs incurred including
consulting costs, retrenchments, re-allocation of internal charges and
additional staffing required to manage and control the restructuring
programme in its totality. In addition, the previous year included
accumulated income brought forward from prior years in respect of the
offshore operations.
CHANGE IN ACCOUNTING POLICIES
The group prepares its accounts in accordance with South African Statements
of Generally Accepted Accounting Practice. During the year the group
changed its accounting policies in respect of Provisions, Impairment and
Goodwill to comply with new standards.
PROSPECTS
Recent global events have resulted in increased uncertainty with regard to
economic growth and currency fluctuation. However, the nature of the
packaging industry is such that it may be less affected than many other
industries.
The European operations are forecasting a marginal decline in sterling
earnings in 2002 as the in-plant capital expenditure comes on stream with
some duplication of operational costs.
NamITech is expected to continue to show good profit growth.
In South Africa the restructuring exercise has established a much lower cost
base and the businesses are well positioned to deliver a significant
improvement in profits in 2002.
Overall, strong growth for the group is expected in the year ahead.
Shareholders are referred to the cautionary announcement with regard to the
negotiations between Nampak and Malbak released on 2 November 2001.
SHARE TRANSACTIONS TOTALLY ELECTRONIC ("STRATE")
Nampak Limited has been selected by the JSE Securities Exchange South Africa
("JSE") to transfer its issued share capital to the electronic STRATE
environment effective from 3 December 2001. In terms of the JSE's revised
listings requirements, Nampak's move to STRATE is obligatory and it will
ensure participation in a sophisticated settlement process, which is on a
par with international best practice.
There are three significant dates which form part of Nampak's move to
STRATE:
3 December 2001 - Dematerialisation commences;
24 December 2001 - Electronic trading commences;
3 January 2002 - Electronic settlement commences.
If you require further information regarding STRATE, they may be contacted
at +27 11 520-7700 or by email at liaisondesk@strate.co.za
DIVIDEND
The board has declared a final dividend (No. 66) of 35.5 cents per share
(2000: 35.5 cents) payable to shareholders registered on 30 November 2001,
making a total distribution for the year of 53.3 cents (2000: 53.3 cents).
Payment of dividends by way of electronic funds transfer will be made on 8
January 2002. 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 8 January 2002.
On behalf of the board
T Evans Chairman
G E Bortolan Group managing director
6 November 2001
Directors: T Evans (Chairman), G E Bortolan (Group managing director), P L
Campbell*, B P Connellan*, 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*, M L
Ndlovu*, J W C Sayers, R G Tomlinson, R A Williams*.
Alternate directors: P A de Weerdt, A D S Morais (Portuguese).
Secretary: N P O'Brien.
*Non-executive
Registered office: Nampak Centre, 114 Dennis Road, Atholl Gardens, Sandton
2196, South Africa.
(P O Box 784324, Sandton 2146, South Africa). Telephone: +27 11 719-6300
Website : www.nampak.co.za
Transfer secretaries: Mercantile Registrars Limited, 11 Diagonal Street,
Johannesburg 2001, South Africa. (P O Box 1053, Johannesburg 2000, South
Africa). Telephone : +27 11 370-5000
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