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Unaudited interim report and dividend declaration for the six months ended 31 March 2014
Nampak Limited
Registration number 1968/008070/06
Incorporated in the Republic of South Africa
Share code: NPK
ISIN: ZAE000071676
Unaudited interim report and dividend declaration for the six months ended 31 March 2014
Highlights
- HEPS from continuing operations up 9%
- Trading profit up 10%
- Trading profit in the rest of Africa up 23%
- Acquisition of Alucan Packaging in Nigeria for R3.3 billion
- Capital expenditure R1.0 billion
- Dividend increased by 10%
Group performance
Headline earnings per share from continuing operations rose by 9% to 121.4 cents as a result of the improvement in
trading profit and a reduction in the effective tax rate.
Revenue grew by 12% with South Africa increasing by 9%, the rest of Africa by 24% and the United Kingdom by 22% in
rand terms.
Group trading profit increased by 10%, with the rest of Africa increasing by 23%. The rest of Africa now constitutes
24% of the Group’s trading profit, up from 22% in the previous year. Alucan Packaging Limited was acquired effective
25 February 2014 and contributed positively to the trading results in the period under review. Group operating profit
declined by 2% due to once-off capital profits of R111 million included in the prior year.
The group continues to invest substantial amounts of capital to grow its presence in the rest of Africa and to further
consolidate and strengthen its South African base. R3.3 billion was invested in Alucan Packaging Limited in Nigeria and
R1.0 billion was spent on capital projects in the six months, predominantly in the beverage can and glass businesses in
South Africa.
As a consequence of the above as well as the investment of R1.2 billion in working capital, net finance costs
increased to R173 million from R102 million in the previous year. Net debt to equity now stands at 82% and net debt to EBITDA at
2.0 times which is well within management’s and the board’s self-imposed mandates.
The effective tax rate was 16.6% compared to 21.0% in 2013 and was favourably impacted by government incentives in
Angola and South Africa and lower tax rates in jurisdictions outside of South Africa.
The interim gross dividend has been increased by 10% to 46.0 cents per share.
Geographical review (continuing operations)
Revenue Trading profit* Margin
2014 2013 2014 2013 2014 2013
Rm Rm Rm Rm % %
South Africa 7 137 6 569 609 596 8.5 9.1
Rest of Africa 1 509 1 215 261 212 17.3 17.4
United Kingdom 1 149 941 72 61 6.3 6.5
Corporate Services 134 106
Total 9 795 8 725 1 076 975 11.0 11.2
*Operating profit before abnormal items
South Africa
Trading profit increased marginally but the margin declined to 8.5%. An improved performance from the metals and glass
segment was offset by a reduced trading profit from the plastics segment. The paper and flexibles and tissue segments
were at a similar level to last year. 2013 included a once-off profit on the sale of PET in-plant equipment in the
Plastics segment.
Rest of Africa
Trading profit increased by 23% due to a further improvement in performance from Angola and from both the metals and
paper operations in Nigeria as well as a small contribution from Alucan. Malawi also had a good six months on increased
tobacco box sales whilst Zambia was negatively affected by a shift to alternative forms of packaging.
United Kingdom
Trading profit in constant currency declined by 14% to £3.6 million from £4.2 million in 2013 as a result of higher
pension fund costs following the adoption of the revised IAS 19 accounting standard. Sales volumes were ahead of last year
due mainly to a fire at a competitor’s premises. As a result of the weaker exchange rate, trading profit in rand
improved by 18%.
Corporate Services
Trading profit includes property rental income, corporate head office costs as well as translation gains on foreign
currency loans.
Segmental review (continuing operations)
Metals and Glass Revenue Trading profit* Margin
2014 2013 2014 2013 2014 2013
Rm Rm Rm Rm % %
South Africa 3 669 3 152 413 347 11.3 11.0
Rest of Africa 1 010 809 167 123 16.5 15.2
Total 4 679 3 961 580 470 12.4 11.9
*Operating profit before abnormal items
South Africa
There was good demand for beverage cans with the 440ml pack contributing to most of the volume growth. The conversion
of beverage cans from tinplate to aluminium is well advanced with a new aluminium manufacturing line installed and
commissioned at the Springs factory. An existing tinplate line at Springs has been converted to aluminium and another is in
the process of being converted.
Fish can sales were higher as a result of a carry-over from the 2013 fishing season. There was good demand for both
vegetable and rectangular metal cans. Fruit can sales were lower as a result of lost market share. There was strong demand
for aerosol cans whilst sales of paint and polish cans were at a similar level to last year.
The market for glass bottles declined and continued to be impacted by increased exports of wine in bulk and the
ongoing shift away from glass to cans and PET bottles. Construction of the third furnace is on schedule for commissioning in
July 2014. The business will then be in position to offer the broad spectrum of colours to customers without the need for
expensive and time consuming colour changes. At the same time, an investment is being made in a UPS (uninterrupted
power supply) at a substantial cost to mitigate the impact of unreliable power supply. The investment in the third furnace
and the UPS will improve efficiencies and margins.
Rest of Africa
The beverage can operation in Angola continued to perform well and benefitted from additional can filling capacity
installed at customers. The imposition of import duties is encouraging brand owners to establish local filling operations
and this will further promote can demand. A second can manufacturing line is on order for commissioning during
December 2014.
The Alucan beverage can business in Nigeria was acquired effective 25 February 2014 and sales volumes are growing in
line with expectations. The general line can operation in Nigeria improved its performance against last year. In East
Africa there was strong volume growth although some food can sales in Kenya were lost to in-house manufacture by the
largest customer. The operation in Zimbabwe suffered from a lack of consumer demand and generally poor economic conditions.
Paper and Flexibles Revenue Trading profit* Margin
2014 2013 2014 2013 2014 2013
Rm Rm Rm Rm % %
South Africa 1 524 1 487 37 40 2.4 2.7
Rest of Africa 499 406 94 89 18.8 21.9
Total 2 023 1 893 131 129 6.5 6.8
*Operating profit before abnormal items
South Africa
Demand for corrugated boxes from the agricultural sector was negatively impacted by poor weather conditions in the
Western Cape and was partially offset by market-share gains in the commercial sector where conditions were weak during the
period.
The flexible packaging market was relatively strong in the first quarter but demand has since weakened across all
major segments. The weaker rand resulted in higher raw material prices and a lag in recovering the additional costs resulted
in margins coming under pressure.
Despite an improvement in cement sack sales, imports of sugar and market share losses resulted in lower overall paper
sack volumes.
Approval by the Competition authorities is still awaited in respect of the cartons and labels business which was sold
last year. The business performed better during the period under review although the overall market for cartons and labels
remains subdued. The business is classified as a discontinued operation.
Rest of Africa
There was strong volume growth at the cartons business in Nigeria with an increased contribution from non-cigarette
customers. Sorghum beer carton sales in Zambia were lower as a result of a shift to alternative forms of packaging.
Increased sales of tobacco boxes resulted in an improved performance from the business in Malawi.
Plastics Revenue Trading profit* Margin
2014 2013 2014 2013 2014 2013
Rm Rm Rm Rm % %
South Africa 1 247 1 220 113 162 9.1 13.3
United Kingdom 1 149 941 72 61 6.3 6.5
Total 2 396 2 161 185 223 7.7 10.3
*Operating profit before abnormal items
South Africa
There was reduced consumer demand for milk and juice and this together with some loss of market share contributed to
lower sales of plastic bottles. Market share was gained in sorghum beer cartons whilst sales to Botswana stabilised
following the change in legislation last year. All the PET in-plant operations have now been sold to the respective customers
and the business is now focused on the supply of lower-margin pre-forms.
Sales of metal closures for wine and spirits were depressed partly as a result of increased bulk wine exports. Food
jar metal closures showed good growth whilst sales of plastic closures for sports drink, carbonated soft drink and water
bottles also increased.
Sales of large drums to alcohol-export customers increased but there was reduced demand for small drums. There were
higher sales of intermediate bulk containers. Plastic crate volumes were lower as a result of reduced customer demand and
a shortage of raw material. The plastic crate and drum business has been restructured which will result in lower costs.
The toothpaste tube business had a slow start to the year due to overstocking in the market. Volumes have since
improved as a result of export sales by the major customer.
Trading profits in 2013 were enhanced by a gain of R25 million on the sale of in-plant PET equipment.
United Kingdom
Sales volumes were ahead of last year due mainly to a fire at a competitor’s premises. Over 500 million patented
Infini lightweight bottles have now been sold to dairies in the United Kingdom containing up to 20% of recycled material.
Trading profit declined to £3.6 million from £4.2 million in 2013 as a result of higher pension fund costs following the
adoption of the revised IAS 19 accounting standard. The average exchange rate to the pound was R17.22 compared to R13.92
in 2013.
Tissue Revenue Trading profit* Margin
2014 2013 2014 2013 2014 2013
Rm Rm Rm Rm % %
South Africa 697 710 46 47 6.6 6.6
*Operating profit before abnormal items
Overall volumes were up on the prior year but selling price pressure contributed to the lower trading profit.
Outlook
Trading conditions in South Africa are expected to remain challenging in the short term. The rest of Africa is
expected to continue generating good results.
Declaration of ordinary dividend number 84
Notice is hereby given that a gross interim ordinary dividend number 84 of 46.0 cents per share (2013: 42.0 cents per
share) has been declared in respect of the six months ended 31 March 2014, payable to shareholders recorded as such in
the register of the company at the close of business on the record date, Friday, 4 July 2014. The last day to trade to
participate in the dividend is Friday, 27 June 2014. Shares will commence trading “ex” dividend from Monday, 30 June 2014.
The important dates pertaining to this dividend are as follows:
Last day to trade ordinary shares “cum” dividend Friday, 27 June 2014
Ordinary shares trade “ex” dividend Monday, 30 June 2014
Record date Friday, 4 July 2014
Payment date Monday, 7 July 2014
Ordinary share certificates may not be dematerialised or rematerialised between Monday, 30 June 2014 and Friday,
4 July 2014, both days inclusive.
In accordance with the JSE Listings Requirements, the following additional information is disclosed:
The dividend has been declared from income reserves;
The dividend withholding tax rate is 15%;
No secondary tax on companies credits have been utilised;
The net local dividend amount is 39.1 cents per share for shareholders liable to pay the dividends tax and 46.0
cents per share for shareholders exempt from paying the dividends tax;
The issued number of ordinary shares at the declaration date is 700 643 220; and
Nampak Limited’s tax number is 9875081714.
Changes in the directorate
Mr AM de Ruyter was appointed an executive director and CEO designate on 1 January 2014 and was appointed CEO
on 1 March 2014.
Mrs V Magwentshu resigned as a non-executive director on 6 February 2014. Ms NV Lila was appointed as a non-executive
director on 13 February 2014.
Mr AB Marshall retired from the Group on 31 March 2014.
On behalf of the board
T T Mboweni AM de Ruyter
Chairman Chief executive officer
27 May 2014
Summarised group statement of comprehensive income
Restated Restated
Unaudited Unaudited
6 months ended 6 months ended Year ended
31 March 2014 31 March 2013 Change 30 Sep 2013
Notes Rm Rm % Rm
Continuing operations
Revenue 9 795.2 8 725.2 12.3 18 035.4
Operating profit 3 1 065.4 1 085.9 (1.9) 1 931.8
Finance costs 200.5 118.9 252.5
Finance income 27.8 16.7 39.1
Income from investments 7.2 5.4 5.4
Share of profit from associates and joint ventures 1.9 18.1 15.7
Profit before tax 901.8 1 007.2 (10.5) 1 739.5
Taxation 149.8 211.1 384.5
Profit for the period from continuing operations 752.0 796.1 (5.5) 1 355.0
Discontinued operation
Loss for the period from discontinued operation 5 (11.4) (17.3) (87.9)
Profit for the period 740.6 778.8 (4.9) 1 267.1
Other comprehensive income/(expense) for the period, net of tax
Items that will not be reclassified to profit or loss
Net actuarial losses from retirement benefit obligations - - (406.5)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations 14 111.0 237.9 653.4
(Losses)/gains on cash flow hedges (3.4) 5.4 9.6
Other comprehensive income/(expense) for the period, net of tax 107.6 243.3 (55.8) 256.5
Total comprehensive income for the period 848.2 1 022.1 1 523.6
Profit attributable to:
Owners of Nampak Limited 729.3 775.2 (5.9) 1 286.5
Non-controlling interest in subsidiaries 11.3 3.6 (19.4)
740.6 778.8 1 267.1
Total comprehensive income/(expense) attributable to:
Owners of Nampak Limited 839.5 1 023.0 1 549.2
Non-controlling interest in subsidiaries 8.7 (0.9) (25.6)
848.2 1 022.1 1 523.6
Continuing operations
Basic earnings per share (cents) 124.3 133.6 (7.0) 231.7
Fully diluted basic earnings per share (cents) 116.9 127.0 (7.9) 217.5
Headline earnings per ordinary share (cents) 121.4 111.8 8.6 217.5
Fully diluted headline earnings per share (cents) 114.3 106.4 7.4 204.3
Continuing and discontinued operations
Basic earnings per share (cents) 122.4 130.7 (6.4) 216.9
Fully diluted basic earnings per share (cents) 115.1 124.2 (7.3) 203.7
Headline earnings per ordinary share (cents) 121.5 108.8 11.7 209.3
Fully diluted headline earnings per share (cents) 114.3 103.6 10.3 196.6
Dividend per share (cents) 46.0 42.0 (100.0) 140.0
Summarised group statement of financial position
Restated Restated
Unaudited Unaudited
6 months ended 6 months ended Year ended
31 March 2014 31 March 2013 30 Sep 2013
Notes Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment and investment property 8 668.7 6 971.3 7 283.8
Goodwill and other intangible assets 3 179.8 808.5 814.5
Joint ventures, associates and other investments 316.2 194.9 204.7
Deferred tax assets 111.3 75.8 98.6
Other non-current assets 106.3 169.6 152.3
12 382.3 8 220.1 8 553.9
Current assets
Inventories 3 820.7 3 323.2 3 219.8
Trade receivables and other current assets 3 390.3 2 783.5 3 053.0
Tax assets 3.7 2.1 3.6
Bank balances, deposits and cash 10 1 012.6 2 079.9 4 465.0
8 227.3 8 188.7 10 741.4
Assets classified as held for sale 523.7 - 551.6
Total assets 21 133.3 16 408.8 19 846.9
EQUITY AND LIABILITIES
Capital and reserves
Share capital 36.0 35.9 36.0
Capital reserves (682.1) (704.4) (700.3)
Other reserves 39.8 (77.8) (70.2)
Retained earnings 7 950.5 7 544.7 7 806.4
Shareholders' equity 7 344.2 6 798.4 7 071.9
Non-controlling interest (71.4) (55.4) (80.1)
Total equity 7 272.8 6 743.0 6 991.8
Non-current liabilities
Loans and borrowings 3 569.3 1 560.3 3 488.7
Retirement benefit obligation 2 263.9 1 637.2 2 193.3
Deferred tax liabilities 605.6 730.1 519.0
Other non-current liabilities 46.6 14.5 51.8
6 485.4 3 942.1 6 252.8
Current liabilities
Trade payables, provisions and other current liabilities 3 395.7 2 980.7 3 716.5
Bank overdrafts 10 3 126.3 1 813.6 1 806.9
Loans and borrowings 501.5 808.1 695.8
Tax liabilities 140.1 121.3 142.4
7 163.6 5 723.7 6 361.6
Liabilities directly associated with assets classified as 211.5 - 240.7
held for sale
Total equity and liabilities 21 133.3 16 408.8 19 846.9
Summarised group statement of cash flows
Restated Restated
Unaudited Unaudited
6 months ended 6 months ended Year ended
31 March 2014 31 March 2013 30 Sep 2013
Notes Rm Rm Rm
Operating profit before working capital changes 1 537.4 1 325.2 2 572.9
Working capital changes (1 216.7) (744.2) (280.2)
Cash generated from operations 320.7 581.0 2 292.7
Net interest paid (161.2) (103.1) (199.5)
Income from investments 7.2 5.4 5.4
Tax paid (56.1) (165.5) (432.5)
Replacement capital expenditure (405.5) (494.7) (1 043.4)
Cash (utilised in)/retained from operations (294.9) (176.9) 622.7
Dividends paid (585.2) (527.7) (777.4)
Net cash utilised in operating activities (880.1) (704.6) (154.7)
Expansion capital expenditure (606.8) (114.1) (370.9)
Acquisition of businesses 7 (3 336.4) (110.4) (110.4)
Other investing activities (157.5) 79.4 75.3
Net cash utilised before financing activities (4 980.8) (849.7) (560.7)
Net cash (repaid in)/raised from financing activities (98.6) 823.3 2 527.7
Net (decrease)/increase in cash and cash equivalents (5 079.4) (26.4) 1 967.0
Cash and cash equivalents at beginning of period 2 658.1 202.0 202.0
Cash acquired on reconsolidation of Zimbabwe subsidiary - - 6.0
Translation of cash in foreign subsidiaries 307.6 90.7 483.1
Net (overdraft)/cash and cash equivalents at end
of period 10 (2 113.7) 266.3 2 658.1
Summarised group statement of changes in equity
Restated Restated
Unaudited Unaudited
6 months ended 6 months ended Year ended
31 March 2014 31 March 2013 30 Sep 2013
Notes Rm Rm Rm
Opening balance 6 991.8 6 216.4 6 216.4
Net shares issued during the period 98.9 22.6 28.1
Share-based payment expense 10.3 9.6 19.4
Share grants exercised (91.0) - (10.9)
Share of movement in associate's non-distributable reserve (0.2) - 1.2
Transfer from hedging reserve to related assets - - (10.8)
Gain on available-for-sale financial assets - - 2.2
Total comprehensive income for the period 848.2 1 022.1 1 523.6
Dividends paid (585.2) (527.7) (777.4)
Closing balance 7 272.8 6 743.0 6 991.8
Comprising:
Share capital 36.0 35.9 36.0
Capital reserves (682.1) (704.4) (700.3)
Share premium 144.5 40.2 45.6
Treasury shares (1 104.3) (1 104.3) (1 104.3)
Share-based payments reserve 277.7 359.7 358.4
Other reserves 39.8 (77.8) (70.2)
Foreign currency translation reserve 1 030.3 499.5 916.7
Financial instruments hedging reserve 1.0 11.0 4.4
Recognised actuarial losses (984.6) (578.1) (984.6)
Share of non-distributable reserves in associates 12.9 11.8 13.1
Available-for-sale financial assets revaluation reserve (20.0) (22.2) (20.0)
Other 0.2 0.2 0.2
Retained earnings 7 950.5 7 544.7 7 806.4
Shareholders' equity 7 344.2 6 798.4 7 071.9
Non-controlling interest (71.4) (55.4) (80.1)
Total equity 7 272.8 6 743.0 6 991.8
Notes
1. Basis of preparation and accounting policies
The summarised interim consolidated financial statements have been prepared in accordance with the framework concepts,
measurement and recognition criteria of the International Financial Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, the Financial Reporting Pronouncements as issued by
the Financial Reporting Standards Council and in accordance with the Listings Requirements of the JSE Limited.
The interim financial statements have been prepared under the supervision of the chief financial officer, G Griffiths CA(SA).
2. Accounting policies and restated comparatives
The accounting policies adopted and methods of computation used are consistent with those applied for the group’s 2013
annual financial statements other than where the group has adopted new or revised accounting standards as set out below.
The group has adopted all the new, revised or amended accounting pronouncements as issued by the IASB which became
effective to the group on 1 October 2013, including some of the more significant changes as listed below.
IFRS 10 Consolidated Financial Statements
The objective of IFRS 10 is to provide the framework on when an entity is controlled and must be consolidated. This
standard is to be applied retrospectively and did not have a material impact on the financial statements in either the
current or comparative periods.
IFRS 11 Joint Arrangements
Where joint arrangements exist the investor is required to assess whether the joint arrangement is a joint operation or a
joint venture based on the legal structure of the investee and the investor’s right to and obligations for the underlying
assets and liabilities of the investee. IFRS 11 requires that joint ventures are equity accounted and eliminates the
proportionate consolidation option of accounting. This standard is to be applied retrospectively and impacted the
financial statements in both the current and comparative periods. The main impact of this change on the statement of
comprehensive income was the reclassification of the contribution of the joint ventures to “share of net profit from
associates and joint ventures” with no impact on net profit, while the main impact of this change on the statement of
financial position was the reclassification of the contribution of the joint ventures to “joint ventures, associates and
other investments” with no impact on net assets. The statement of cash flows was consequently adjusted for the impact on the
statement of financial position. These reclassifications were not material.
IFRS 12 Disclosure of Interest in Other Entities
IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements,
associates and unconsolidated entities. In general, the disclosure requirements in IFRS 12 are more extensive. This standard
is to be applied prospectively, and had no impact on the disclosure in the current period.
IFRS 13 Fair Value Measurement
IFRS 13 aims to improve consistency and reduce complexity by providing a single definition of fair value and a basis for fair
value measurement and disclosure requirements for use across all accounting standards. This standard is to be applied
prospectively, and had no impact on the financial statements in the current period.
IAS 19 Employee Benefits
The amendments to IAS 19 require all actuarial gains and losses to be recognised immediately in other comprehensive income so
that the pension asset or liability reflects the full value of the plan deficit or surplus. This standard is to be applied
retrospectively and did not have a material impact on the financial statements in either the current or comparative periods.
Restatement
In addition to the changes to the comparative financial statements (March 2013 and September 2013) as brought about by the new
and revised accounting standards above, the comparatives for March (March 2013) have also been restated for the impact of the
discontinued operation, whereby the results and the net assets of the discontinued operation have been classified separately
in the statement of comprehensive income and statement of financial position respectively (see note 5).
The unqualified annual financial statements for the year ended 30 September 2013 are available on the Nampak website.
Restatement of prior year financial information as a result of the adoption of change in accounting standards, as set out
above, have not been subject to audit by the external auditors. Restated Restated
Unaudited Unaudited
6 months ended 6 months ended Year ended
31 March 2014 31 March 2013 30 Sep 2013
Rm Rm Rm
3. Included in operating profit are:
Depreciation 363.8 337.3 695.3
Amortisation 21.3 18.4 38.1
Net gain on shareholder loan (see note 4) 99.0 - -
Reconciliation of operating profit and trading profit
Operating profit 1 065.4 1 085.9 1 931.8
Abnormal losses/(gains)* 10.2 (111.1) (20.2)
Retrenchment and restructuring costs 10.1 0.1 30.5
Net impairment losses on investments, plant, property 0.2 0.7 61.4
and equipment, goodwill and other intangible assets
Net loss on disposal of investments - - 0.1
Cash flow hedge ineffectiveness (0.1) (0.4) (0.4)
Net profit on disposal of property - (0.7) (0.8)
Gain on revaluation of original interest in joint venture acquired - (23.2) (23.2)
Gain on reconsolidation of Zimbabwe entities - (87.6) (87.8)
Trading profit 1 075.6 974.8 1 911.6
* Abnormal losses/(gains) are defined as losses and gains which do not arise from normal trading activities or are of such size,
nature or incidence that their disclosure is relevant to explain the performance for the period.
4. Reclassification of shareholder loan
The group had, in previous years, accounted for the shareholder loan between Nampak Products Ltd and its direct subsidiary,
Angolata Lda, as a net investment in a foreign operation in accordance with IAS 21 (The effects of changes in foreign exchange
rates) as no repayment terms were agreed on, nor did short-term expectations of repayment exist at the date that the loan was
granted. The translation gains and losses arising from this loan were therefore recognised in the translation reserve on
consolidation.
Having regard to the repayment of the loan in the current year, the loan was consequently treated as no longer qualifying as part
of the net investment in Angolata Lda and hence reclassified as a normal loan. As a result of this reclassification, the accumulated
net gains in the translation reserve are now being recycled through profit or loss proportionally with the repayment of the loan.
These items are included in trading profit, above, but are excluded from headline earnings (see note 9). Further gains or losses
arising on the loan subsequent to the reclassification are now accounted for in trading profit and included in headline earnings.
Restated Restated
Unaudited Unaudited
6 months ended 6 months ended Year ended
31 March 2014 31 March 2013 30 Sep 2013
Rm Rm Rm
5. Discontinued operation
During May 2013, the board approved of a plan to dispose of the Cartons and
Labels business. On 13 September 2013, the group entered into a sale
agreement to this effect and expects to complete the sale by July 2014.
The disposal is consistent with the group’s strategy of exiting its
non-core and underperforming businesses.
The results of the discontinued operation included in the statement of
comprehensive income are set out below:
Results of the discontinued operation for the period
Revenue 556.8 534.6 1 080.7
Expenses (572.7) (561.5) (1 202.7)
Loss before tax (15.9) (26.9) (122.0)
Attributable income tax benefit 4.5 9.6 34.1
Loss for the period from discontinued operation (11.4) (17.3) (87.9)
Cash flows from the discontinued operation
Net cash flows from operating activities (11.5) (91.9) (7.0)
Net cash flows from investing activities - - 2.9
Net cash flows (11.5) (91.9) (4.1)
The Cartons and Labels business has been classified and accounted for at
31 March as a disposal group held for sale (see note 6). The comparatives for
March (March 2013) have been restated.
6. Assets held for sale
Assets which are expected to be sold in the next 12 months are classified as held
for sale and are presented separately in the statement of financial position.
As described in note 5, the group entered into a sale agreement to dispose of the
Cartons and Labels business with the disposal expected to be completed by July 2014.
The disposal group continues to be disclosed as a discontinued operation during the
current year. It had previously been included in the South Africa Paper and
Flexibles segment for segmental reporting purposes. Impairment losses of
R15.9 million (2013: R55.0 million) have been recognised for the period in respect
of the disposal group.
Assets classified as held for sale
Assets relating to the discontinued operation 523.7 - 551.6
Liabilities associated with assets held for sale
Liabilities relating to the discontinued operation 211.5 - 240.7
7. Business combinations
In line with the group's strategy to grow its core businesses, the group acquired
with effect from 25 February 2014, the entire equity of Alucan Investments
Limited ("AIL") and its sole subsidiary, Alucan Packaging Limited for an amount of
R3 445.1 million paid in cash.
In the previous period, the group acquired with effect from 1 November 2012 the
remaining 50% interest in Elopak SA (Pty) Ltd ("Elopak"), which had been held by Elopak
AS for an amount of R116.2 million paid in cash.
Assets acquired and liabilities recognised at the date
of acquisition:
Current assets
Inventories 114.9 13.5 13.5
Trade and other receivables 81.4 20.8 20.8
Bank and cash 108.7 5.8 5.8
Non-current assets
Property, plant and equipment 708.1 23.2 23.2
Intangibles - 43.9 43.9
Loans - 2.3 2.3
Current liabilities
Trade and other payables (7.2) (7.8) (7.8)
Non-current liabilities
Deferred tax - (16.2) (16.2)
1 005.9 85.5 85.5
The initial accounting for the acquisition of the AIL group had only been
provisionally determined at the end of March 2014 as the necessary market
valuations and other calculations have not been finalised. The assets acquired
and liabilities recognised were therefore based on their carrying values as at
25 February 2014.
Goodwill arising on acquisition
Consideration paid in cash 3 445.1 116.2 116.2
Plus: net gain on revaluation of originally held interest - 23.2 23.2
Less: fair value of identifiable net assets acquired (1 005.9) (85.5) (85.5)
Goodwill arising on acquisition 2 439.2 53.9 53.9
Goodwill arose on the acquisition of AIL and the remaining interest in Elopak
as the cost of the combination included a control premium. The consideration
paid also included the expected benefits of revenue growth and future
profitability.
Net cash outflow on acquisition
Consideration paid in cash 3,445.1 116.2 116.2
Deduct: bank and cash balances acquired (108.7) (5.8) (5.8)
Net cash outflow on acquisition 3,336.4 110.4 110.4
Impact of the acquisition on the results of the group (current period)
Included in the group net revenue and profit after tax for the period is
R30.7 million and R1.5 million respectively which is attributable to the
interest acquired in AIL.
8. Reconsolidation of the Zimbabwe entities
The group reconsolidated the Zimbabwe operating entities effective
1 October 2012. These entities consist of CarnaudMetalbox Zimbabwe Ltd
("CMB"), a wholly owned subsidiary, and two associates, Hunyani Holdings
Ltd (38.91% interest) and Megapak Zimbabwe (Pvt) Ltd (49% interest). In
addition, the holding company of Megapak Zimbabwe (Pvt) Ltd, Megaplastics
Ltd, being a wholly owned subsidiary, was also reconsolidated effective
1 October 2012. The entities had previously been deconsolidated in 2007
due to Nampak Ltd having lost control over these entities. The
circumstances that led to this loss of control were the threat of
indigenisation and pricing legislation, restrictions on the repatriation
of funds from these entities to their holding companies (outside Zimbabwe)
and the hyperinflationary environment in which these entities were operating.
It is believed that these circumstances no longer exist or their impact has
been reduced significantly such that reconsolidating these entities
reflects a more accurate position of the performance of the group.
On reconsolidation, the equity of CMB was valued at US$ 0.5 million, while
the equity of the associates, Hunyani Holdings Ltd and Megapak Zimbabwe (Pvt)
Ltd, were valued at US$ 10.3 million and US$ 9.5 million respectively.
Assets acquired and liabilities recognised for CMB at
the date of its reconsolidation:
Current assets
Inventories - 29.6 29.6
Trade and other receivables - 21.8 21.8
Bank and cash - 6.0 6.0
Non-current assets
Property, plant and equipment - 38.9 39.1
Current liabilities
Trade and other payables - (69.9) (69.9)
Non-current liabilities
Loans - (11.1) (11.1)
Deferred tax - (2.5) (2.5)
- 12.8 13.0
The initial accounting for the reconsolidation of CMB had only been provisionally determined at the end of March 2013 as the
necessary market valuations and other calculations had not been finalised. The assets acquired and liabilities recognised at that
date were therefore based on their carrying values as at 1 October 2012, which had been provisionally determined as being the
best estimates of their fair value.
The gain on the reconsolidation of the Zimbabwe interests includes a gain of R8.6 million attributable to the fair value of the
original interest in CMB being less than the carrying value of its net identifiable assets.
Restated Restated
Unaudited Unaudited
6 months ended 6 months ended Year ended
31 March 2014 31 March 2013 30 Sep 2013
Rm Rm Rm
9. Determination of headline earnings
Continuing operations
Profit attributable to equity holders of the company for
the period 740.7 792.5 1 374.4
Less: preference dividend - - (0.1)
Basic earnings 740.7 792.5 1 374.3
Adjusted for:
Net impairment losses on investments, property, plant and equipment,
goodwill and other intangible assets 0.2 0.7 61.4
Net loss on disposal of investments - - 0.1
Net profit on disposal of property, plant and equipment
and intangible assets (3.7) (26.3) (24.7)
Gain on revaluation of original interest in joint venture acquired - (23.2) (23.2)
Gain on reconsolidation of Zimbabwe entities - (87.6) (87.8)
Net gain on shareholder loan recycled from translation reserve (23.7) - -
Tax effects and non-controlling interest 10.2 7.0 (10.4)
Headline earnings for the period 723.7 663.1 1 289.7
Continuing and discontinued operations
Profit attributable to equity holders of the company for the period 729.3 775.2 1 286.5
Less: preference dividend - - (0.1)
Basic earnings 729.3 775.2 1 286.4
Adjusted for:
Net impairment losses on investments, property, plant and equipment,
goodwill and other intangible assets 16.1 0.7 116.4
Net loss on disposal of investments - - 0.1
Net profit on disposal of property, plant and equipment
and intangible assets (3.7) (26.9) (25.2)
Gain on revaluation of original interest in joint venture acquired - (23.2) (23.2)
Gain on reconsolidation of Zimbabwe entities - (87.6) (87.8)
Net gain on shareholder loan recycled from translation reserve (23.7) - -
Tax effects and non-controlling interest 5.7 7.2 (25.7)
Headline earnings for the period 723.7 645.4 1 241.0
10. Net (overdraft)/cash and cash equivalents
Bank balances, deposits and cash 1 012.6 2 079.9 4 465.0
Bank overdrafts (3 126.3) (1 813.6) (1 806.9)
(2 113.7) 266.3 2 658.1
11. Supplementary information
Capital expenditure 1 012.3 608.8 1 414.3
- expansion 606.8 114.1 370.9
- replacement 405.5 494.3 1 010.5
- intangibles - 0.4 32.9
Capital commitments 3 387.6 2 338.3 2 386.1
- contracted 1 266.4 766.5 1 113.3
- approved not contracted 2 121.2 1 571.8 1 272.8
Lease commitments 209.3 257.7 312.1
- land and buildings 148.2 139.4 244.9
- other 61.1 118.3 67.2
Contingent liabilities 3.8 5.6 6.2
- customer claims and guarantees 3.8 5.6 3.0
- tax contingent liabilities - - 3.2
12. Share statistics
Ordinary shares in issue (000) 700 643 697 484 697 897
Ordinary shares in issue - net of treasury shares (000) 596 346 593 187 593 600
Weighted average number of ordinary shares on which headline earnings
and basic earnings per share are based (000) 595 853 593 001 593 064
Weighted average number of ordinary shares on which
diluted headline earnings and diluted basic earnings
per share are based (000) 642 289 630 324 639 500
13. Additional disclosures
EBITDA* 1 467.1 1 431.5 2 690.7
Net gearing 82% 29% 19%
Net debt: EBITDA* 2.0 times 0.7 times 0.2 times
Interest cover 6.2 times 9.5 times 8.9 times
EBITDA: Interest cover* 8.4 times 14.0 times 12.6 times
Return on equity - continuing operations 21% 25% 21%
Return on net assets - continuing operations 16% 20% 19%
Net worth per ordinary share (cents)** 1 220 1 137 1 178
Tangible net worth per ordinary share (cents)** 686 1 000 1 041
**EBITDA is calculated before net impairments
**Calculated on ordinary shares in issue - net of treasury shares
Where applicable, comparative ratios have been restated due to the implementation of the new accounting standard on joint
arrangements (see note 2).
14. Translation reserve movement
Due to the weakening of the rand, a translation gain of R125.5 million (2013: R 237.9 million gain) was realised for the period.
Net translation gains on the shareholder loan between Nampak Products Ltd and Angolata Lda of R14.5 million after tax were recycled
from the translation reserve in the current period on the reclassification of the loan (see note 4).
The closing exchange rates at 31 March 2014 for the rand against the UK pound and US dollar respectively were 17.55
(September 2013: 16.25) and 10.52 (September 2013: 10.05).
15. Related party transactions
Group companies, in the ordinary course of business, entered into various purchase and sale transactions with associates, joint
ventures and other related parties. The effect of these transactions is included in the financial performance and results of the group.
Administration
Independent non-executive directors:
TT Mboweni (Chairman), RC Andersen, E Ikazoboh, RJ Khoza, NV Lila, PM Madi, I Mkhari, DC Moephuli, CWN Molope,
RV Smither, PM Surgey.
Executive directors:
AM de Ruyter (Chief executive officer), G Griffiths (Chief financial officer),
FV Tshiqi (Group human resources director).
Secretary:
NP O’Brien
Registered office:
Nampak Centre, 114 Dennis Road, Atholl Gardens. Sandton 2196, South Africa
(PO Box 784324 Sandton 2146, South Africa)
Telephone +27 11 719 6300
Share registrar:
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg 2001, South Africa
(PO Box 61051 Marshalltown 2107, South Africa)
Telephone +27 11 370 5000
Sponsor:
UBS South Africa (Pty) Limited
Disclaimer
We may make statements that are not historical facts and relate to analyses and other information based on forecasts
of future results and estimates of amounts not yet determinable. These are forward-looking statements as defined in the
U.S. Private Securities Litigation Reform Act of 1995. Words such as “believe”,”anticipate”, “expect”, “intend”, “seek”,
“will”, “plan”, “could”, “may”,”endeavour” and “project” and similar expressions are intended to identify such
forward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking
statements involve inherent risks and uncertainties, both general and specific, and there are risks that predictions,
forecasts, projections and other forward-looking statements will not be achieved.
If one or more of these risks materialise, or should underlying assumptions prove incorrect, actual results may be
very different from those anticipated. The factors that could cause our actual results to differ materially from the plans,
objectives, expectations, estimates and intentions in such forward-looking statements are discussed in each year’s
annual report. Forward-looking statements apply only as of the date on which they are made, and we do not undertake other
than in terms of the Listings Requirements of the JSE Limited, to update or revise any statement, whether as a result of
new information, future events or otherwise. All profit forecasts published in this report are unaudited. Investors are
cautioned not to place undue reliance on any forward-looking statements contained herein.
Website: www.nampak.com
Date: 27/05/2014 01:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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