Wrap Text
Nampak Limited - Interim Report And Dividend Declaration For The Six Months
Ended 31 March 2003
NAMPAK LIMITED
(Registration number 1968/008070/06)
(Incorporated in the Republic of South Africa)
SHARE CODE: NPK
ISIN: ZAE 000004933
INTERIM REPORT AND DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 MARCH 2003
HIGHLIGHTS
REVENUE UP 55%
OPERATING PROFIT UP 60%
ATTRIBUTABLE PROFIT UP 41%
HEADLINE EARNINGS PER SHARE UP 24%
Group income statement
Audited
Unaudited year
6 months ended
ended
31 March 30 Sept 30 Sept
2003 2002 Change 2002
Note Rm Rm % Rm
Revenue 9 424.1 6 079.7 55.0 13 684.7
Operating profit 1 835.8 523.3 59.7 1 257.0
before abnormal
items
Abnormal items 2 (39.4) (6.1) (98.7)
Operating profit 3 796.4 517.2 54.0 1 158.3
after abnormal items
Net finance costs 4 (152.6) (45.5) (122.9)
Investment income 5.6 2.3 2.6
Profit before tax 649.4 474.0 37.0 1 038.0
Income tax (209.5) (158.0) (352.2)
Profit after tax 439.9 316.0 39.2 685.8
Share of associate 0.1 - -
companies" profits
Minority interest (10.8) (11.0) (28.7)
Attributable to 429.2 305.0 40.7 657.1
shareholders in
Nampak Limited
Number of ordinary
shares in issue
(000) 640 400 509 426 640 178
Weighted average 640 426 509 420 531 237
number of ordinary
shares on which
headline earnings
and basic earnings
per share are based
(000)
Weighted average 641 986 511 229 534 617
number of ordinary
shares on which
diluted headline
earnings and diluted
basic earnings per
share are based
(000)
Headline earnings 73.2 59.1 23.9 140.9
per ordinary share
(cents)
Basic earnings per 67.0 59.9 11.9 123.7
share (cents)
Dividend per share 22.5 19.6 15.0 60.6
(cents)
Fully diluted
headline earnings
per share (cents) 73.0 58.9 23.9 140.0
Fully diluted 66.9 59.7 12.1 122.9
earnings per share
(cents)
Determination of
headline earnings
Attributable profit 429.2 305.0 657.1
for the period per
income statement
Adjusted for:
Goodwill 30.2 1.8 13.9
amortisation
Re-organisation
costs 7.1 - 29.0
Impairment losses - - 86.0
Net profit on sale (3.7) (10.1) (46.6)
of assets/operations
Loss on re- 2.1 2.2 4.5
organisation of debt
Tax effects 4.0 2.4 4.5
Headline earnings 7 468.9 301.3 55.6 748.4
for the period
Note:
March 2002 and September 2002 headline earnings calculation have been restated
as set out in Note 7 to comply with Circular 7/2002 - Headline Earnings.
Group balance sheet
Audited
Unaudited year
6 months ended ended
31 March 30 Sept
2003 2002 2002
Note Rm Rm Rm
Assets
Non-current assets 5 618.6 3 727.8 6 372.0
Property, plant and 4 258.1 3 476.5 5 075.8
equipment
Intangible assets 1 126.9 63.8 1 145.8
Investments and 233.6 187.5 150.4
associates
Current assets 5 827.5 4 199.5 6 872.7
Inventories 2 122.0 1 315.3 2 142.7
Trade and other 2 641.5 1 920.9 3 116.4
receivables
Bank balances, deposits 5 1 064.0 963.3 1 613.6
and cash
Total assets 11 446.1 7 927.3 13 244.7
Equity and liabilities
Capital and reserves 4 650.2 2 851.8 4 814.8
Capital 2 032.7 357.7 2 031.4
Non-distributable (139.2) 148.7 185.0
reserves
Accumulated profits 2 756.7 2 345.4 2 598.4
Minority interest 144.2 97.3 100.7
Non-current liabilities 1 786.4 1 491.1 2 327.8
Interest bearing debt 5 1 281.8 1 327.1 1 879.1
Net long term retirement 119.6 (99.3) 64.5
benefit obligation
Deferred tax liabilities 385.0 263.3 384.2
Current liabilities 4 865.3 3 487.1 6 001.4
Trade and other payables 3 288.8 2 316.4 3 920.8
Interest bearing debt 1 446.5 1 090.0 1 897.3
Tax liabilities 130.0 80.7 183.3
Total equity and 11 446.1 7 927.3 13 244.7
liabilities
Total borrowings: total 57% 82% 77%
shareholders" funds
Net borrowings: total 35% 49% 44%
shareholders" funds
Total liabilities: total 128% 163% 160%
shareholders" funds
Net worth per ordinary
share (cents) calculated
on number of ordinary
shares in issue of 640
400 (2002: 509 426)
726 560 752
Tangible net worth per 550 547 573
ordinary share (cents)
calculated on number of
ordinary shares in issue
of 640 400 (2002: 509
426)
Group statement of changes in equity
Audited
Unaudited year
6 months ended ended
31 March 30 Sept
2003 2002 2002
Note Rm Rm Rm
Equity at beginning of 4 814.8 2 627.6 2 627.6
period
Change in accounting 6 (8.5) - -
policy
Changes in capital 1.3 0.1 1 673.8
Share capital 1.3 0.1 6.5
Share premium - - 1 667.3
Changes in non- (324.2) 100.0 136.3
distributable reserves
(Decrease)/increase in (324.1) 100.0 136.3
foreign currency
translation reserve
Transfer to retained (0.1) - -
earnings
Changes in accumulated 166.8 124.1 377.1
profit
Goodwill reversal - - 6.2
Subsidiaries not - - (3.2)
previously consolidated
Attributable profit for 429.2 305.0 657.1
the period
Preference shares - - - (0.1)
dividends
Ordinary shares - (262.5) (180.9) (282.9)
dividends
Transfer from non- 0.1 - -
distributable reserves
Equity at the end of the 4 650.2 2 851.8 4 814.8
period
Group cash flow statement
Audited
Unaudited year
6 months ended ended
31 March 30 Sept
2003 2002 2002
Note Rm Rm Rm
Cash operating profit 1 176.8 765.1 1 819.0
Working capital changes (285.2) (102.6) (66.5)
Net interest paid (152.6) (45.5) (122.9)
Investment income 5.6 2.3 2.6
Tax paid (235.0) (104.4) (299.0)
Dividends paid (263.7) (189.0) (308.8)
Net cash inflow from 245.9 325.9 1 024.4
operating activities
Expansion capital (161.5) (190.1) (391.7)
expenditure
Replacement capital (186.0) (201.5) (392.7)
expenditure
Acquisition of businesses (41.0) (275.7) (287.3)
Proceeds on the sale of
property, plant,
equipment and businesses
146.9 70.1 160.0
Net cash outflow from (22.2) (18.9) (27.7)
other activities
Net cash (outflow)/inflow (17.9) (290.2) 85.0
before financing
activities
Net cash outflow from (51.3) (338.7) (463.4)
financing activities
Net decrease in cash and (69.2) (628.9) (378.4)
cash equivalents
Cash and cash equivalents 121.9 408.3 408.3
at beginning of period
Translation of cash in (122.4) 93.9 92.0
foreign subsidiaries
Cash and cash equivalents 5 (69.7) (126.7) 121.9
at end of period
Notes
Audited
Unaudited year
6 months ended ended
31 March 30 Sept
2003 2002 Change 2002
Rm Rm % Rm
1. Operating profit
before abnormal items
South Africa 630.1 425.7 48.0 1 068.6
Africa 30.2 1.0 2 920.0 20.9
Europe 175.5 96.6 81.7 167.5
835.8 523.3 59.7 1 257.0
2. Abnormal items
Retrenchment costs (15.2) (4.9) (15.8)
Restructuring costs (7.3) - (36.2)
Impairment loss - - (86.0)
Profit on disposal of 10.0 1.0 44.7
property
Loss on disposal of (24.8) - (0.9)
operations
Loss on re-organisation (2.1) (2.2) (4.5)
of debt
(39.4) (6.1) (98.7)
3. Operating profit after
abnormal items
South Africa 627.8 421.0 49.1 1 063.2
Africa 30.1 1.0 2 910.0 20.9
Europe 138.5 95.2 45.5 74.2
796.4 517.2 54.0 1 158.3
4. Net finance costs
Interest paid (169.4) (93.1) (283.7)
Interest received 16.8 47.6 160.8
(152.6) (45.5) (122.9)
5. Cash and cash
equivalents
Interest bearing debt (2 728.2) (2 417.1) (3 776.4)
Less long term 1 281.8 1 327.1 1 879.1
liabilities
Less short term portion 312.7 - 405.6
of long term liabilities
Less bank balances, 1 064.0 963.3 1 613.6
deposits and cash
(69.7) (126.7) 121.9
6. Change in accounting
policy
Fair value adjustment
AC133 - Financial
Instruments: Recognition
and Measurement
Balance Sheet:
Retained income (12.2)
Taxation 3.7
Net decrease (8.5)
Income statement:
Fair value - forward (63.7)
exchange contracts
Fair value - aluminium (6.7)
futures
(70.4)
Taxation 21.1
Net expense (49.3)
7.Reconciliation of
headline earnings
Headline earnings as 289.1 736.2
previously stated
Circular 7/2002
adjustments:
Provision for 12.2 12.2
retrenchments
Headline earnings as 301.3 748.4
restated
8. Supplementary
information
Depreciation 359.6 258.5 556.5
Capital expenditure 347.5 391.6 784.4
- expansion 161.5 190.1 391.7
- replacement 186.0 201.5 392.7
Capital commitments 186.3 324.0 540.1
- contracted 131.7 186.1 174.2
- approved not contracted 54.6 137.9 365.9
Lease commitments 401.2 221.1 591.7
- land and buildings 345.0 182.1 508.3
- other 56.2 39.0 83.4
Contingent liabilities * 144.4 2.3 147.9
* Includes a put option in favour of Fasic Africa (Pty) Ltd for R126 million
exercisable if Kimberly-Clark Corporation USA exits South Africa before 31 March
2004 subject to certain exit conditions. The directors have assessed the
financial performance of Kimberly-Clark Southern Africa (Pty) Ltd and are
satisfied that an exercise of the put option is remote. Also includes a
guarantee in respect of a property lease for R14 million.
Segmental report (after abnormal items and AC133)
Revenue
Unaudited Year
6 months ended ended
31 March 30 Sept
2003 2002 2002 2003
Rm Rm Rm Rm
After
Abnormal
Items
METALS 2 125.5 1 557.3 3 330.0 303.6
Africa 2 125.5 1 557.3 3 330.0 303.6
PAPER 4 002.4 1 801.6 4 637.8 347.1
Africa 2 433.5 1 801.6 4 066.6 232.3
Europe 1 568.9 - 571.2 114.8
PLASTICS 2 779.6 2 332.1 4 900.6 162.3
Africa 1 611.9 1 061.1 2 356.3 151.7
Europe 1 167.7 1 271.0 2 544.3 10.6
NAMITECH 324.3 199.6 469.7 34.0
OTHER 192.3 189.1 346.6 19.8
Africa 231.2 220.8 429.8 6.3
Europe 125.2 84.6 140.9 13.5
Intergroup
eliminations (164.1) (116.3) (224.1) -
TOTAL 9 424.1 6 079.7 13 684.7 866.8
GEOGRAPHICAL
ANALYSIS
South Africa 6 468.6 4 800.3 10 446.9 697.8
Africa 257.8 40.1 205.5 30.1
Europe 2 861.8 1 355.6 3 256.4 138.9
Europe - NPE 1 167.7 1 271.0 2 544.3 10.6
Europe - NIL 125.2 84.6 142.0 15.2
Europe - MY 1 568.9 - 570.1 113.1
Intergroup
eliminations (164.1) (116.3) (224.1) -
TOTAL 9 424.1 6 079.7 13 684.7 866.8
Operating profit
before abnormal
items
South Africa
Africa
Europe
Paper
Plastics
Other
TOTAL
Operating profit after
abnormal items
Unaudited Year
6 months ended ended
31 March 30 Sept
2003 2003 2002 2002
Rm Rm Rm Rm
After
AC133 Abnormal
adjustment items&
AC133
METALS (14.3) 289.3 169.8 392.7
Africa (14.3) 289.3 169.8 392.7
PAPER (22.7) 324.4 131.4 393.3
Africa (22.7) 209.6 131.4 354.1
Europe - 114.8 - 39.2
PLASTICS (12.7) 149.6 123.8 288.2
Africa (12.7) 139.0 54.2 173.2
Europe - 10.6 69.6 115.0
NAMITECH (7.4) 26.6 19.5 43.6
OTHER (13.3) 6.5 72.7 40.5
Africa (12.9) (6.6) 47.1 120.5
Europe (0.4) 13.1 25.6 (80.0)
Intergroup - - - -
eliminations
TOTAL (70.4) 796.4 517.2 1 158.3
GEOGRAPHICAL ANALYSIS
South Africa (70.0) 627.8 421.0 1 063.2
Africa - 30.1 1.0 20.9
Europe (0.4) 138.5 95.2 74.2
Europe - NPE - 10.6 69.6 115.0
Europe - NIL (0.4) 14.8 25.6 (65.2)
Europe - MY - 113.1 - 24.4
Intergroup - - - -
eliminations
TOTAL (70.4) 796.4 517.2 1 158.3
Operating profit
before abnormal items
South Africa 630.1 425.7 1 068.6
Africa 30.2 1.0 20.9
Europe 175.5 96.6 167.5
Paper 117.6 - 39.2
Plastics 44.7 71.0 121.4
Other 13.2 25.6 6.9
TOTAL 835.8 523.3 1 257.0
Note: The effects of the adoption of AC133 have been shown in the segmental
operating profits for 2003. Since AC133 precludes restatement of prior years the
two sets of figures are not directly comparable.
COMMENTS
INTRODUCTION
Nampak is the largest and most diversified packaging company in Africa and
produces packaging products from metal, paper, plastic and glass. It is also a
major manufacturer and distributor of tissue products and has a significant
position in the paper merchandising market.
The group operates from manufacturing sites in South Africa, Kenya, Malawi,
Mozambique, Namibia, Nigeria, Swaziland, Tanzania, Zambia and Zimbabwe.
Nampak has plastic blow moulding and folding carton businesses in Europe.
Manufacturing facilities are located in the United Kingdom, Belgium, France,
Ireland, Italy and the Netherlands.
REVIEW OF RESULTS
The last six months focused on the merging of Nampak and Malbak (during August
2002) and the integration of the Crown Africa division (acquired August 2002),
which have proceeded well.
Malbak and Crown Africa have been included for the full six months, as compared
to August and September only of the last financial year.
Nampak"s divisions achieved overall real volume growth estimated at 2%. In South
Africa the continuation of exports by its local businesses and its customers was
a major contributor to this growth. In sterling, operating profits in the United
Kingdom and Europe are up on last year, after the inclusion of M.Y. Holdings and
before abnormal items, but the strengthening of the rand has affected the
turnover and profit contribution from these businesses.
Group revenue has grown by 55% and operating profit before abnormal items by
60%. During the period under review AC133 (Financial Instruments: Recognition
and Measurement) was adopted. This resulted in an adjustment to reserves of R8.5
million (after tax), and a charge of R70 million (pre-tax) to the income
statement. This charge consisted of R64 million in respect of foreign exchange
contracts and R6 million in respect of aluminium futures. Without this charge,
operating profit before abnormal items increased by 73%.
The significant increase in net finance costs to R152.6 million (2002: R45.5
million) resulted from the increased borrowings taken on with the acquisitions
carried out last year and group capital expenditure. Interest cover is 5.2
times.
Attributable earnings rose 41% for the half year, with the tax rate at 32.3%
(2002: 33.3%).
Headline earnings increased by 56%. Headline earnings per share grew by 24% as
recalculated on the revised basis required by the SAICA Circular 7/2002 which
came into effect from December 2002 and taking into account the increased number
of shares in issue.
Cash flows remained strong, assisted by the sale of property, plant and
businesses, principally in Europe, which raised in total GBP20 million. Net
gearing dropped to 35% (2002: 49%). The balance sheet is sound and well capable
of supporting growth into the future.
DIVISIONAL PERFORMANCE
Metals
Africa
A good operating performance from this sector was enhanced by the acquisition of
Crown"s interests in Anglophone Africa and Crown-Nampak. There was a fall-off in
beverage can volumes following a decline in beer can sales and lower indirect
exports. This was offset by continuing solid demand for food cans for fruit,
vegetables and fish as well as higher sales of general cans to industrial
markets.
With the exception of Nigeria, where sales volumes were lower, all operations
outside South Africa performed better than expected.
Paper
Africa
The integration of Printpak and Kohler Carton & Print to form Nampak Cartons &
Labels proceeded as planned and the businesses are now operating as a single
entity. Market shares were generally retained and a satisfactory operating
performance was achieved on higher export sales.
Demand for corrugated boxes in the local market was weak. However, both direct
and indirect exports of corrugated boxes continued at a satisfactory level
although there was a weakening in the second quarter due to the strength of the
rand. Demand for paper in the local printing market was well down. A highly
competitive market resulted in some loss of market share in toilet tissue.
Despite the ongoing economic problems in Zimbabwe, sales volumes held up well
but in rand terms the results were negatively affected by the sharp devaluation
of the Zimbabwe dollar. The Zimbabwean results continue to be deconsolidated.
Europe
Sales and profits in sterling were in line with expectations despite an
extremely competitive market. The Healthcare and Continental European cartons
sectors continued to perform strongly but the United Kingdom saw some margin
downturn due to price pressure. Performance in rands was adversely affected by
the strengthening of the currency in the period under review.
Plastics
Africa
Demand for PET bottles and associated crates was sound, with good sales to the
carbonated soft drinks and sports drinks markets. The stronger rand caused some
decline in the export of small drums.
Higher demand for milk and juice bottles and improved operational performance
lifted profits in this sector although offset to some extent by a further
decline in sorghum beer carton sales.
Rotoflex and Kohler Flexibles were successfully integrated and customer service
will benefit from this in the future. Demand for packaging served by these
businesses held up well in the early part of the period, but exports have come
under pressure in the latter months due to the appreciating rand.
Uncertainty concerning the impact of new legislation and loss of exports
resulted in some fall off in the demand for plastic shopping bags. Export
volumes of paper sacks and laminated and coated products increased but at lower
margins as a result of the performance of the rand.
Europe
Following a strategic review, the PET business in Spain and the protective
clothing business in the United Kingdom were sold. The continuing businesses
were re-organised into a single, streamlined entity under one management
structure. Abnormal items of R34.1 million were incurred on the disposals and
restructure. These actions will improve profitability in the future. Results
were adversely affected by increased pension costs in compliance with accounting
standards.
Sales of milk and juice bottles were at a similar level to the prior year. The
downturn in agri-chemicals and automotive industries continued to impact on
sales in this sector. Sales overall in sterling were virtually unchanged but
were lower in rand terms due to the stronger currency.
NamITech
Nampak announced on 7 May 2003 that it had sold its interests in NamITech to
Allied Technologies Limited (Altech) for a total consideration of R522.5
million, subject to a number of conditions, including approval of the
competition authorities. Whilst NamITech has experienced significant growth
under Nampak"s control, it was not regarded as a core strategic business.
Nampak anticipated unlocking value from its shareholding in NamITech through a
listing or disposal at an appropriate time in the future. However, approaches
from Altech and others encouraged the group to explore these options earlier
than planned, thus freeing up capacity to further invest in core activities as
opportunities present themselves.
Other
Africa
Demand for glass bottles continued at a high level throughout the period. On 1
April 2003 furnace 2 at the glass plant was severely damaged in a fire, which
will result in it being out of production for 6 to 8 months. The company has
received advice that the financial impact of the fire is covered by insurance
and consequently it is anticipated that there will be no adverse effect on the
group.
Income at the operating level was down on last year for the South African
treasury operation. In addition, the contribution in this segment was reduced by
increased goodwill write-offs and increased provision for retirement
liabilities.
Europe
Nampak International Limited (NIL) incorporates income from its African
operations and its offshore treasury operations. Whilst African contributions
have increased with the acquisitions made in 2002, income from supply agreements
was down, due to lower demand in South Africa for coated board.
BASIS OF PREPARATION OF ACCOUNTS
The accounts are prepared in accordance with South African Statements of
Generally Accepted Accounting Practice (SA GAAP) and as such are comparable with
the previous year except for the adoption of AC133 (Financial Instruments:
Recognition and Measurement). Comparatives have not been restated for the
effects of adopting this standard. This interim statement complies with AC127
(Interim Financial Reporting).
DIRECTORATE
On 15 January 2003, Mr RP Becker was appointed an alternate director of Nampak
Limited, with the title of Finance Director: Designate.
On 29 May 2003 the company announced that Mr GE Bortolan, currently Group
Managing Director, would assume the position of Chief Executive Officer from 1
August 2003. Mr T Evans will remain as Chairman.
PROSPECTS
The strength of the rand is currently having a negative effect on packaging
volumes in South Africa, particularly on exports. The strong rand will also
affect the rand profit contributions from Europe. It should be noted that the
second half will be compared to a period in which Malbak and Crown Africa were
included for two months last year. In addition, the change in headline earnings
for the year as recalculated on SAICA Circular 7/2002 will be affected by the
impairment charge incurred in the second half of last financial year.
Whilst an increase in headline earnings for the year is expected, this will be
at a lower level than that achieved at the interim stage.
Having successfully integrated the Malbak and Crown acquisitions and on
completion of the NamITech disposal, the group will be in a far stronger
position to take advantage of future strategic opportunities.
Declaration of Interim Ordinary Dividend No. 69
Notice is hereby given that interim ordinary dividend No. 69 of 22.5 cents per
share (2002: 19.6 cents) has been declared in respect of the six months ended 31
March 2003, payable to shareholders recorded as such in the register at the
close of business on the record date, Friday, 4 July 2003. The last day to trade
to participate in the dividend is Friday, 27 June 2003. Shares will commence
trading "ex" dividend from Monday, 30 June 2003.
The important dates pertaining to this dividend are as follows:
Last day to trade ordinary shares
"cum" dividend Friday, 27 June 2003
Ordinary shares trade
"ex" dividend Monday, 30 June 2003
Record date Friday, 4 July 2003
Payment date Monday, 7 July 2003
Ordinary share certificates may not be dematerialised or rematerialised between
Monday, 30 June 2003 and Friday, 4 July 2003, both days inclusive.
On behalf of the board
T Evans Chairman
GE Bortolan Group Managing Director
29 May 2003
Directors:
T Evans (Chairman), GE Bortolan (Group Managing Director), PL Campbell*, BP
Connellan*, N Cumming, DA Hawton*, MM Katz*, AS Lang (British), AM Marthinusen,
KM Mokoape*, JA Monks (British), ML Ndlovu*, JWC Sayers, RG Tomlinson, MH
Visser*, RA Williams*.
Alternate Directors:
RP Becker, PA de Weerdt, CJ Miller, ADS Morais (Portuguese).
Secretary: NP O"Brien.
*Non-executive
Registered Office:
Nampak Limited
Nampak Centre, 114 Dennis Road, Atholl Gardens, Sandton 2196
PO Box 784324, Sandton 2146, South Africa
Telephone: +27 11 719 6300
WEBSITE: www.nampak.com
Transfer Secretaries:
Computershare Investor Services Limited 70 Marshall Street Johannesburg 2001, PO
Box 1053, Johannesburg 2000, South Africa Telephone: +27 11 370 5000
Date: 29/05/2003 03:25:15 PM Supplied by www.sharenet.co.za
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