Wrap Text
Audited Preliminary Group Results and Dividend Declaration for the year ended 30 September 2014
Nampak Limited
(Registration number 1968/008070/06)
(Incorporated in the Republic of South Africa)
Share code: NPK ISIN: ZAE 000071676
Audited preliminary group results and dividend declaration
for the year ended 30 September 2014
Highlights
- Revenue up 10%
- Trading profit from continuing operations up 8%
- Headline earnings per share from continuing operations up 14%
- Trading profit from the rest of Africa up 25%
- Group trading profit contribution from the rest of Africa up from
26% in 2013 to 30%
- Final dividend per share of 107.0 cents up 9%
- Capital expenditure of R2.6 billion
- Agreement signed for the sale of Corrugated, Sacks and Tissue
for R1.6 billion
- Bevcan Nigeria acquisition for R3.3 billion
- Group cost management and business improvement initiatives commenced and
benefits expected in the next financial year
Comments from the CEO, André de Ruyter
Nampak had a strong 2014, marked by continued delivery on its ambitious
strategy both to unlock further value from our base business and to
accelerate growth in the rest of Africa. The contribution to trading
income of operations in the rest of Africa increased to 30% from 26% in
2013. During the year we took a critical look at our business and put in
place various overhead cost management and business improvement programmes.
Active portfolio management continues to be a theme, with an agreement
reached on the disposal of the South African Corrugated, Sacks and Tissue
divisions. We also continue to pursue a number of growth opportunities
in east and west Africa. While the impairment of our paper division
depressed operating profit compared to prior years, the underlying trading
income has shown a positive upward trend of 8%, bolstered by our rest of
Africa operations.
Notable achievements in South Africa in the year were the commissioning of
the third glass furnace, the sale of the Cartons and Labels division and
the conversion of our beverage can lines in Springs to aluminium.
Throughout our operations, the launch of the ‘buy better, make better,
sell better’ business improvement initiatives, as well as the concerted
efforts to improve our safety record have continued to drive performance.
The group also achieved a Level 3 B-BBEE rating as certified by the ratings
agency, Empowerdex, up from Level 4 in 2013.
With the outlook for South African economic growth modest at best, Nampak
is putting a strong emphasis on rigorous management of factors under its
control. Already established as the packaging leader in Africa, with
operations in 11 African countries beyond South Africa’s borders
contributing more than a quarter of trading profit, we continue to focus
on taking advantage of Africa’s upward growth trajectory.
Group performance review
Group performance from continuing operations
Restated
2014 2013
Rm Rm ? %
Revenue 19 971 18 086 10
Trading profit 2 048 1 901 8
Abnormal items (433) 20
Operating profit 1 615 1 921 (16)
Basic earnings per share (cents per share) 191.4 221.3 (14)
Headline earnings per share (cents per share) 237.1 207.7 14
Dividend per share (cents per share) 153.0 140.0 9
In 2014, overall group performance was in line with expectations. Headline
earnings per share from continuing operations rose by 14% to 237.1 cents
from 207.7 cents, supported by a 10% increase in revenue and an 8%
increase in trading profit. Trading profit from the rest of Africa
increased by 25% from R495 million to R616 million due primarily to the
contribution of Bevcan Nigeria and the continued good performance from our
Angola beverage can operation. The group trading margin at 10.3% was
marginally lower than last year.
The group recorded net abnormal losses from continuing operations of
R433.2 million compared to a R20.1 million net gain in 2013. This was
mainly due to charges attributable to the impairment of the South African
Corrugated, Sacks and Tissue divisions arising from the proposed
disposal. As a result, group operating profit was down 16%.
The 2014 net finance costs increased by 65% to R327 million. Net
borrowings increased by R4.6 billion year on year following the
acquisition of Bevcan Nigeria and the capital expenditure invested in
various projects during the year. Working capital was well controlled. It
is slightly lower than last year and showed a significant improvement from
the levels reported at half-year. Net debt to equity at the end of the
financial year was 73% compared to 16% in 2013 and 82% at half-year. Net
debt to EBITDA at 2.0 times, was within our internal self-imposed mandate
of 2.5 times and the external mandate of 3.0 times.
The effective group tax rate for continuing operations was 5.7% compared
to 21.8% in 2013, favourably impacted by government incentives in South
Africa as well as lower tax rates in jurisdictions outside South Africa.
The final dividend was increased by 9% to 107.0 cents per share resulting
in a total of 153.0 cents for the year (2013: 140.0 cents per share).
Segmental performance review
Segmental report (continuing operations)
Trading Trading
Revenue profit* margin
Restated Restated Restated
2014 2013 2014 2013 2014 2013
Rm Rm Rm Rm Rm Rm
South Africa 14 462.2 13 404.0 969.7 1 142.2 6.7 8.5
Metals and Glass 7 300.7 6 466.8 601.7 676.7 8.2 10.5
Paper and Flexibles 3 240.4 3 116.8 67.9 104.4 2.1 3.3
Plastics 2 496.6 2 383.9 187.8 252.7 7.5 10.6
Tissue 1 424.5 1 436.5 112.3 108.4 7.9 7.5
Rest of Africa 3 294.2 2 744.0 616.2 494.6 18.7 18.0
Metals 2 250.2 1 736.2 409.3 291.5 18.2 16.8
Paper 1 044.0 1 007.8 206.9 203.1 19.8 20.2
United Kingdom 2 214.1 1 937.8 143.9 162.0 6.5 8.4
Plastics 2 214.1 1 937.8 143.9 162.0 6.5 8.4
Corporate Services — — 317.9 102.2 — —
Total 19 970.5 18 085.8 2 047.7 1 901.0 10.3 10.5
* Operating profit before abnormal items.
South Africa
The South African trading conditions continued to be challenging with an
average GDP growth rate of below 1.5% for the period. Revenue increased by
8% while trading profit decreased by 15% from R1.1 billion in 2013 to R970
million in 2014. The trading margin declined to 6.7%. This was mainly due
to margin pressure experienced in the Paper, Flexibles and Plastics
divisions coupled with a negative Glass performance resulting from
production constraints and higher overhead costs incurred during the
commissioning and ramp-up of the third furnace. Bevcan and DivFood
benefitted from volume growth and good cost control. Lower selling prices
agreed by the Metals and Glass divisions to secure long-term supply
contracts also had an impact.
The 27-day industry-wide strike in July by NUMSA led to the loss of some
Metals and Rigid plastics production. Despite our best efforts to continue
operating, significant intimidation prevented our people from reporting to
work. We managed to keep our customers supplied; however, we were forced
to declare force majeure at our metals businesses a few days before the
strike ended.
Metals and Glass
Nampak Bevcan reported strong growth supported by the continued solid
increase in demand for the 440ml beverage can. The increased volumes
offset the impact of lower average selling prices agreed to as part of
long-term supply contracts. Whilst the recent increase in demand for
beverage cans has been driven by our customers in the alcohol segment, we
are starting to see improving demand for beverage cans in the carbonated
soft drink (CSD) market.
Nampak’s DivFood division produced improved results in 2014, benefiting
from stronger performances in the vegetable and fish canning as well as in
the aluminium aerosol markets. These outweighed the negative impact of
emerging competition in the fruit canning sector. The weaker rand led to
increases in tinplate prices, the under recovery of which was offset by
volume growth driven by increased local product canning activity replacing
pre-packed can imports. This, together with a larger fish quota granted to
the industry, supported DivFood’s performance. Volumes in the diversified
side of the business were stable.
The South African glass market remained depressed in the year due to weak
consumer demand and the substitution in certain sectors of the glass
market into cans and PET bottles. Nampak Glass’s performance was
negatively impacted by a severe capacity constraint in the last quarter of
the financial year as a result of the late commissioning of the third
furnace and production inefficiencies experienced by the other two
furnaces. This had a negative impact on costs and output which resulted in
Nampak Glass making an operating loss for the year. The third furnace was
successfully commissioned and is now ramping up production. In addition,
management has taken decisive steps to address operational issues and as a
consequence, all three furnaces are anticipated to be fully stabilised in
the first quarter of the calendar year 2015. Demand in the glass market is
expected to remain relatively flat in the year ahead, but we expect the
benefits of operating the new third furnace to improve profitability
in 2015.
Paper and Flexibles
Nampak Corrugated performed reasonably well because of strong overall
market demand even though the demand from the agricultural sector was
weak. Inclement weather in the Western Cape resulted in poor crop yields,
leading to reduced demand from farmers. Raw material availability was
negatively impacted by lower recycled paper volumes due to heavy summer
rains on the Highveld that led to higher wastage. This affected recycled
paper prices, which were also adversely impacted by the weak Rand.
Initiatives aimed at improved wastage and efficiencies at our paper mill
were implemented resulting in a plant that is more efficient, cost
effective and produces better quality paper with greater consistency.
Nampak Sacks had a difficult year with lower demand in most segments
compounded by more intense competition in the sector. The strike in the
sugar industry as well as increased imports of ready-packed sugar and
cement further depressed demand. Operational and business improvement
programmes implemented in the year resulted in reduced costs. Initiatives
aimed at further reducing operational costs and improving the
competitiveness of the business are planned for the short term.
Nampak Flexibles came under pressure in the year from growing competition
from imports which squeezed margins. There was mixed demand in the
flexible packaging market: the food-related sector was stronger but other
sectors weaker. Volumes were flat in the early part of the year with a
strong recovery evident in more recent months. We are confident that our
R70 million investment in a seven-layer extruder that provides packaging
with an oxygen barrier as well as a faster 10-colour gravure press able to
print complex designs will improve our competitiveness. We continue to
scrutinise the business, looking for opportunities to streamline
operations as well as to better market our offerings.
Tissue
Nampak Tissue reported a marginal improvement in 2014 trading profit and
margin. Our efforts to improve efficiencies and product availability on
retailers’ shelves combined with limited price increases contributed to
the improvement. Export sales increased but local competition for market
share remained intense. A number of competitiveness improvement
initiatives which include opportunities to improve our supply chain
logistics, warehousing and marketing are in place to deliver more value
over time to counter the adverse impact of the weaker rand and flat market
prices.
Nampak Recycling performed well in the year as it kept up with the paper
mills’ performance improvements, and it continues to be a strong pillar of
Nampak’s environmental responsibility drive.
Plastics
Nampak Liquid packaging was negatively impacted by a rise in raw material
costs. Demand for plastic bottles in the dairy industry fell as more
consumers moved towards the consumption of long-life milk (typically
packed in cartons) rather than fresh milk. The continued rise in polymer
prices also put pressure on the division. The market for PET juice bottles
continued to grow, however, margins tightened due to competition. In the
year, we commissioned a R50 million plastic bottle plant in a customer’s
factory in Midrand, for an eight-year supply agreement. Our sales to the
CSD market are now mostly in preforms, since the sale of our in-plant
facilities to our customers. The preform market is a lower-margin business.
The sales of paper cartons improved during the year. Sales of our
extended-shelf-life milk and sorghum cartons increased. Our market share
in these products is growing. Following poor performance in our Megapak
division, we consolidated the drums and crates divisions into the Rigids
and Closures respectively. Cost savings and efficiency improvements are
expected as a result. Competition in the drums market increased resulting
in lower margins and some lost market share. We were not able to pass the
full polymer price increase on to our customers.
Nampak Closures performed well supported by growing demand. There was
growth in demand for closures for plastic beverage bottles which benefited
from increased market penetration of PET. Sales of metal wine closures
improved due to a market share gain as bulk wine exports stabilised. The
tubes business continued to do well on the back of strong demand. The new
tubes facility, installed in the 2012/13 financial year, is running well
and we will consider new capacity as demand grows. Volumes in the crate
business, which is cyclical, declined in the year.
Rest of Africa
The sharp increase in consumer spending in the rest of Africa, supported
by strong GDP growth and high rates of urbanisation continued to support
our growth strategy. The 2014 revenue from our operations in the rest of
Africa increased by 20%. Trading profit increased by 25% to R616 million
and the margin increased to 18.7%. The main driver for this performance was
the 30% increase in revenue and 40% increase in trading profit from the
metals business, boosted by the contribution from Bevcan Nigeria and a
positive performance from Angolata. The weakness of the Rand against the
US Dollar had a positive impact on the results: the average Rand/US Dollar
rate was R10.58 compared to R9.28 a year earlier.
Metals
Trading profit increased by 40% to R409 million with costs well-controlled
and revenue higher than 2013.
Nampak Beverage Cans had a strong year. In Nigeria, where we recently
acquired Bevcan Nigeria for R3.3 billion, the division made a positive
contribution supported by positive market growth. In the short term,
growth in Nigeria is expected to result from the increasing penetration of
beverage cans in the beverage market. The beverage can operation in Angola
performed exceptionally well, with the manufacturing line running at above-
design capacity for most of the year due to increased demand as Coca-Cola
Bottling Luanda’s (CCBL) new line ramped up production.
The demand for general metal packaging in Nigeria improved. In Kenya,
demand remained strong in the year due to strong demand for food and
diversified cans; however this was offset by the commencement of self-
manufacture by a major customer. In March we commissioned additional
crown-manufacturing capacity to cater for market demand. The Zimbabwe
operations contributed positively to trading profit and margin.
Paper
Demand for self-opening flour bags for the milling industry in Kenya was
strong and the Bullpak operation had a good year.
In Nigeria, demand for cigarette packaging was flat, but this was offset
by good growth in the commercial sector. The Ibadan operation had a good
year.
In Zambia, sorghum beer carton sales recovered well in the year as the
substitution into PET alternatives stabilised. Malawi had a good year
assisted by increased sales of sorghum beer cartons and corrugated boxes.
In Zambia, we continue to realise efficiency benefits from the new conical
carton printer commissioned early in the year. In Ethiopia, the new
plastic beverage crate line will be commissioned early in the new
financial year.
United Kingdom
Trading profit decreased by 27% to £8.2 million. In Rand terms the trading
income decreased by 11%.
In the year, Nampak Plastics UK performed in line with expectations; but,
turnover and income were below that of the previous year due to a number
of factors, including the ongoing reduction in volumes from a major dairy
and the loss of a major customer. Good cost control contributed to a
satisfactory performance and milk consumption in the UK remained
relatively stable.
The use of recycled materials in the production of Infini bottles varies
from 15% for one customer to 20% for most others, and in the year we made
further progress towards reaching a targeted rate of 30% of recycled HDPE.
The business remains a good generator of cash, a holder of valuable
intellectual property and a rand hedge. In the 2014 financial year, the
average rand/pound rate was R17.54 from R14.49 a year earlier.
Corporate Services
The trading income for the year was favourably impacted by benefits
arising from translation gains on foreign currency denominated loans
amounting to R138 million, R99 million of which was reported at half year.
As part of the cost initiatives underway in the group, a decision was taken
to cap, at CPI, future contributions to the post-retirement medical aid
(PRMA) of active members. This resulted in a net reduction of PRMA costs of
R67 million, due to the reduction of the PRMA liability by R124 million.
Update on key projects
The group continued to invest substantial capital to unlock further value
from existing businesses in South Africa. Total capital expenditure for
the year 2014 amounted to R2.6 billion compared to R1.4 billion in 2013.
We invested R933 million on Nampak Glass’s third furnace, and R432 million
on Nampak Bevcan’s aluminium conversion. In addition, R372 million was
spent on Angolata’s second beverage can line and a new warehouse. The
balance was spent on other smaller projects.
Furnace 3 commissioned and running well
In South Africa, Nampak Glass successfully commissioned the R1.2 billion
third glass furnace and installed a state-of-the-art uninterruptible power
supply (UPS) in July 2014, increasing the total site capacity to around
295 000 tons per annum. As the new furnace ramps up production, we are
leveraging the benefits of operating three furnaces.
Aluminium conversion on track, Springs site fully converted
The conversion of Nampak Bevcan tinplate lines to aluminium progressed
very well. All three lines at Bevcan Springs were fully converted to
aluminium at a cost of R1.2 billion. The last line was commissioned in
August 2014. Given the strong increase in demand, we are installing
another high-speed aluminium line with design capacity of one billion cans
a year at our Rosslyn site, replacing the three current tinplate lines.
This project will be commissioned in the second quarter of calendar 2015
and will include provision for another high-speed line in future. In Cape
Town, we plan to convert the tinplate line to aluminium in the middle
of 2015.
Angola second aluminium beverage can line
In Angola, our beverage can line continued to operate extremely well. Work
is underway on a second line which will use aluminium as a substrate, and
is due to start up in the second quarter of calendar 2015. We expect to
convert the existing tinplate line to aluminium in the medium term.
Other rest of Africa projects
We are investigating a number of glass furnace opportunities in west and
east Africa.
Disposal of Corrugated, Sacks and Tissue divisions
In line with the group’s strategic objective of active portfolio
management, the group announced, subsequent to year-end, the disposal of
the South African Corrugated, Sacks and Tissue businesses for R1.6
billion. The transaction excludes our recycling operation and our 50%
shareholding in Sancella S.A. (Pty) Limited and will be finalised once all
conditions precedent to the disposal are met, which is expected to be in
the first half of the 2015 financial year. In anticipation of the sale
of the business, we impaired the carrying value of these assets by an
amount of R394 million. A separate SENS announcement regarding the
transaction was issued on 20 November 2014 and is available on our
website www.nampak.com.
Corporate activity
With effect from 1 March 2014, Nampak acquired Alucan Packaging Limited, a
beverage can manufacturing factory in Nigeria that has capacity to produce
about one billion cans per annum. The operation, which was renamed Bevcan
Nigeria, has been ramping up production and contributed positively to the
rest of Africa performance. The expansion of the factory will see capacity
rise to about two billion cans per annum within the next two to three years.
Nampak communicated in September 2013 the conclusion of an agreement to
sell the Nampak Cartons and Labels business to a subsidiary of Caxton and
CTP Publishers and Printers Limited. The sale was subject to a number of
conditions precedent, including approval by the competition authorities.
The Competition Tribunal approved the transaction on 9 July 2014, and the
transaction became effective on 1 August 2014.
Nampak is acquiring a majority shareholding in Hunyani Holdings Limited,
to be renamed Nampak Zimbabwe Limited, through the consolidation of the
entities Hunyani Holdings Limited, Carnaud Metalbox Zimbabwe Limited and
MegaPak Zimbabwe (Private) Limited. The transaction is expected to be
completed in the first quarter of the 2015 financial year.
The company bought out the joint venture partner’s share (51%) in Bullpak
Limited in Kenya with effect of 1 September 2014.
In the current financial year, Nampak deconsolidated Red Coral Investments
23 (Pty) Limited in accordance with IFRS 10: Consolidated Financial
Statements, with retrospective application. As a result, the weighted
average number of ordinary shares in issue increased by 32 million shares.
This had the following impact on headline earnings per share from
continuing operations:
2014 2013
Headline earnings per share before deconsolidation (cents) 249.8 217.5
Headline earnings per share after deconsolidation (cents) 237.1 207.7
Profit outlook
The South African business environment is expected to remain challenging
in 2015. However, we will continue to focus on unlocking value from our
base business. We expect efficiency gains from the aluminium conversion
and the new glass furnace to contribute to earnings in the year ahead.
In the rest of Africa, Nampak is strategically well-placed with strong
market positions and a growing presence. We are pursuing our strategic
objective to accelerate growth in the rest of Africa to ensure that this
contributes to sustainable earnings in the longer term.
Declaration of Ordinary Dividend Number 85
Notice is hereby given that a gross final ordinary dividend number 85 of
107.0 cents per share (2013: 98.0 cents per share) has been declared in
respect of the year ended 30 September 2014, payable to shareholders
recorded as such in the register of the company at the close of business
on the record date, Friday 16 January 2015. The last day to trade to
participate in the dividend is Friday 9 January 2015. Shares will commence
trading “ex” dividend from Monday, 12 January 2015.
The important dates pertaining to this dividend are as follows:
Last day to trade ordinary shares “cum” dividend Friday, 9 January 2015
Ordinary shares trade “ex” dividend Monday, 12 January 2015
Record date Friday, 16 January 2015
Payment date Monday, 19 January 2015
Ordinary share certificates may not be de-materialised or re-materialised
between Monday, 12 January 2015 and Friday, 16 January 2015, 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 (“STC”) credits have been utilised;
The net local dividend amount is 90.95 cents per share for shareholders
liable to pay dividends tax and 107.0 cents per share for shareholders
exempt from paying dividends tax;
The issued number of ordinary shares at the declaration date is
700 707 537; and
Nampak Limited’s tax number is 9875081714.
On behalf of the board
TT Mboweni AM de Ruyter
Chairman Chief executive officer
20 November 2014
Summarised group statement of comprehensive income
Restated
2014 2013
Notes Rm Rm
Continuing operations
Revenue 19 970.5 18 085.8
Operating profit 3 1 614.5 1 921.1
Finance costs (384.4) (236.0)
Finance income 57.4 37.9
Income from investments 7.2 5.4
Share of profit of joint ventures and
associates 15.5 15.7
Profit before tax 1 310.2 1 744.1
Taxation 74.5 380.6
Profit for the year from continuing operations 1 235.7 1 363.5
Discontinued operations
Loss for the year from discontinued operations 5 (32.1) (87.9)
Profit for the year 1 203.6 1 275.6
Other comprehensive income/(expense), net of tax
Items that will not be reclassified to profit
or loss
Net actuarial gain/(loss) from retirement
benefit obligations 10.2 (398.1)
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translation of foreign
operations 381.9 653.4
Gains on cash flow hedges 1.1 9.6
Other comprehensive income for the year, net
of tax 393.2 264.9
Total comprehensive income for the period 1 596.8 1 540.5
Profit/(loss) attributable to:
Owners of Nampak Limited 1 169.4 1 295.0
Non-controlling interest in subsidiaries 34.2 (19.4)
1 203.6 1 275.6
Total comprehensive income/(expense)
attributable to:
Owners of Nampak Limited 1 567.7 1 566.1
Non-controlling interest in subsidiaries 29.1 (25.6)
1 596.8 1 540.5
Continuing operations
Basic earnings per share (cents) 191.4 221.3
Fully diluted basic earnings per share (cents) 184.8 213.7
Headline earnings per ordinary share (cents) 237.1 207.7
Fully diluted headline earnings per share
(cents) 229.1 200.5
Continuing and discontinued operations
Basic earnings per share (cents) 186.3 207.2
Fully diluted basic earnings per share (cents) 179.9 200.1
Headline earnings per ordinary share (cents) 234.7 199.9
Fully diluted headline earnings per share (cents) 226.7 193.0
Dividend per share (cents) 153.0 140.0
Summarised group statement of financial position
Restated
2014 2013
Notes Rm Rm
Assets
Non-current assets
Property, plant and equipment and investment
property 9 864.3 7 283.7
Goodwill and other intangible assets 3 419.5 814.5
Joint ventures, associates and other
investments 213.3 219.2
Deferred tax assets 135.7 98.6
Other non-current assets 65.0 137.9
13 697.8 8 553.9
Current assets
Inventories 3 518.4 3 219.8
Trade receivables and other current assets 3 538.9 2 873.6
Tax assets 8.5 3.6
Bank balances, deposits and cash 7 1 127.5 4 421.4
8 193.3 10 518.4
Assets classified as held for sale 5 — 551.6
Total assets 21 891.1 19 623.9
Equity and liabilities
Capital and reserves
Share capital 36.1 36.0
Capital reserves (402.3) (423.6)
Other reserves 315.2 (61.8)
Retained earnings 7 985.1 7 720.1
Shareholders’ equity 7 934.1 7 270.7
Non-controlling interest (51.0) (80.1)
Total equity 7 883.1 7 190.6
Non-current liabilities
Loans and borrowings 4 753.3 3 249.5
Retirement benefit obligation 2 173.0 2 193.1
Deferred tax liabilities 444.9 519.0
Other non-current liabilities 58.6 51.8
7 429.8 6 013.4
Current liabilities
Trade payables, provisions and other current
liabilities 4 054.9 3 532.6
Bank overdrafts 7 1 808.5 1 808.2
Loans and borrowings 519.5 695.9
Tax liabilities 195.3 142.5
6 578.2 6 179.2
Liabilities directly associated with assets
classified as held for sale 5 — 240.7
Total equity and liabilities 21 891.1 19 623.9
Summarised group statement of cash flows
Restated
2014 2013
Notes Rm Rm
Operating profit before working capital
changes 2 929.2 2 687.1
Working capital changes (189.1) (203.0)
Cash generated from operations 2 740.1 2 484.1
Net interest paid (361.9) (180.3)
Income from investments 7.2 5.4
Retirement benefits, contributions and
settlements (132.7) (116.6)
Tax paid (95.3) (433.5)
Replacement capital expenditure (833.5) (1 043.4)
Cash retained from operations 1 323.9 715.7
Dividends paid (904.4) (819.1)
Net cash retained from/(utilised in)
operating activities 419.5 (103.4)
Expansion capital expenditure (1 771.7) (370.9)
Acquisition of businesses 4 (3 491.1) (104.6)
Disposal of business 5 308.3 —
Other investing activities (15.4) (3.9)
Net cash utilised before financing
activities (4 550.4) (582.8)
Net cash raised in financing activities 897.3 2 527.7
Net (decrease)/increase in cash and cash
equivalents (3 653.1) 1 944.9
Cash and cash equivalents at beginning of year 7 2 613.2 178.6
Cash acquired on reconsolidation of Zimbabwe
subsidiary — 6.0
Translation of cash in foreign subsidiaries 358.9 483.7
(Net overdraft)/cash and cash equivalents at
end of year 7 (681.0) 2 613.2
Summarised group statement of changes in equity
Restated
2014 2013
Rm Rm
Opening balance 7 190.6 6 440.0
Net shares issued during the year 101.5 28.1
Share-based payment expense 17.0 19.4
Share grants exercised (97.1) (10.9)
Share of movement in associate’s and joint ventures’
non-distributable reserve 1.3 1.2
Transfer from hedging reserve to related assets (4.3) (10.8)
Gain on available-for-sale financial assets — 2.2
Derecognition of available-for-sale financial asset (18.3) —
Total comprehensive income for the year 1 596.8 1 540.5
Dividends paid (904.4) (819.1)
Closing balance 7 883.1 7 190.6
Comprising:
Share capital 36.1 36.0
Capital reserves (402.3) (423.6)
Share premium 147.0 45.6
Treasury shares (827.6) (827.6)
Share-based payments reserve 278.3 358.4
Other reserves 315.2 (61.8)
Foreign currency translation reserve 1 314.2 927.6
Financial instruments hedging reserve 1.2 4.4
Recognised actuarial losses (966.0) (976.2)
Share of non-distributable reserves in associate and
joint ventures 3.9 2.2
Available-for-sale financial assets revaluation
reserve (38.3) (20.0)
Other 0.2 0.2
Retained earnings 7 985.1 7 720.1
Shareholders’ equity 7 934.1 7 270.7
Non-controlling interest (51.0) (80.1)
Total equity 7 883.1 7 190.6
Notes
1. Basis of preparation
The summarised group financial statements are prepared in
accordance with the requirements of the JSE Limited Listings Requirements
for preliminary reports, and the requirements of the Companies Act of South
Africa applicable to summarised financial statements. The Listings
Requirements require preliminary reports to be prepared in accordance with
the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and
Financial Pronouncements as issued by the Financial Reporting Standards
Council, and to also, as a minimum, contain the information required by
IAS 34, Interim Financial Reporting.
The summarised preliminary 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 applied in the preparation of the group financial
statements for 2014, from which the summarised financial statements were
derived, are in terms of IFRS and are consistent with the accounting policies
applied in the preparation of the previous year's group financial statements
other than where the group has adopted new or revised accounting standards.
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 set
out below.
IFRS 10 Consolidated Financial Statements
IFRS 10 replaces the portions of IAS 27 Consolidated and Separate
Financial Statements that address the accounting for consolidated
financial statements and introduces a single control model for
consolidation. IFRS 10 provides guidance on when a subsidiary should be
consolidated and requires assessment of whether an investor has the power
to direct the relevant activities of an investee in order to obtain variable
returns. Once it has been established under IFRS 10 that an investee should
be consolidated, the actual consolidation principals remain the same as
under IAS 27.
During the current financial year, the group reassessed control in terms
of IFRS 10 and concluded that the application of this standard had the
effect that Red Coral Investments 23 (Pty) Ltd, a black-empowerment
share scheme established in 2005, was required to be deconsolidated.
The main impact of this change on the statement of comprehensive income
was the decrease in finance costs that were incurred on the preference
shares which were classified as non-current loans on the statement of
financial position. Apart from the derecognition of the preference shares,
the deconsolidation also led to the derecognition of the company’s
investment in Nampak Limited shares (31 857 195 ordinary shares) which had
been classified as treasury shares and hence a decrease in the earnings
per share and headline earnings per share in both the current and prior
periods.
The transitional provisions pertaining to the adoption of IFRS 10 require
that this standard must be applied retrospectively. Hence the comparative
amounts have been restated accordingly.
IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-
controlled Entities – Non-monetary Contributions by Venturers. This
standard defines joint control and changes the accounting for joint
arrangements by moving from three categories under IAS 31 to
distinguishing only between joint operations and joint ventures.
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 rights to and
obligations for the underlying assets and liabilities of the investee.
Joint operations are accounted for in the financial statements
of the investor by including the investor’s share of the assets,
liabilities, income and expenses of the investee, while joint ventures are
accounted for using the equity method of accounting under IAS 28 ie the
option in IAS 31 to account for joint ventures as defined in IFRS 11 using
proportionate consolidation has been removed.
During the current financial year, the group considered the structure of
and the rights of the parties to its joint arrangements and concluded that
these remain joint ventures. The group, hence, changed its accounting
method for these entities, consisting of Sancella S.A. (Pty) Ltd, Elopak
S.A. (Pty) Ltd, Bullpak Limited and Crown Cork Co. (Mozambique) Lda, to
equity accounting.
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 net asset 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.
The transitional provisions pertaining to the adoption of IFRS 11 require
that the group’s share of the these entities’ net assets at the beginning
of the comparative period (1 October 2012) be derecognised, and that the
investments in these entities be recognised with the carrying amounts of
these assets being the deemed cost of these investments at that date.
Hence, the comparative amounts have been restated accordingly.
IFRS 12 Disclosure of Interest in Other Entities
IFRS 12 sets out the requirements for disclosures relating to the group’s
interest in subsidiaries, associates and joint ventures and unconsolidated
structured entities, and are more comprehensive than the previous
disclosure requirements.
The new standard requires information to assist users in evaluating the
nature and risks associated with interests in other entities and the
effects of these interests on the financial position, performance and cash
flows.
The application of the standard has resulted in more comprehensive
disclosure of the interests in the entities comprising the group as set
out in the detailed financial statements.
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single source of guidance under IFRS for all fair
value measurements. IFRS 13 does not change when an entity is required to
use fair value, but rather provides guidance on how to measure fair value
under IFRS when fair value is required or permitted by IFRS.
During the current financial year, the group reassessed its policies for
measuring fair value in accordance with IFRS 13. IFRS 13 also requires
additional disclosures.
The application of IFRS 13 did not materially impact the fair value
measurements of the group. Where additional disclosure is required, this
disclosure is provided in the individual notes relating to the assets
and liabilities whose fair values were determined in the detailed
financial statements.
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 amendment had no effect on the group financial statements as the
group had not deferred any portion of the actuarial gains or losses
arising on the remeasurement of pension assets or liabilities (ie
application of the corridor approach) prior to the effective date of this
revision.
A further amendment to this standard requires, with respect to plan
assets, that only the actual interest earned may be recognised in profit
or loss while any remeasurement of the return on these assets must be
recorded in other comprehensive income.
During the current financial year, the group reassessed the impact of the
above amendment on its retirement benefit plans and concluded that the
application of this standard required that the remeasurement portion of
the return on the UK Pension Fund plan assets be recognised in other
comprehensive income and not profit or loss. The change, however, was
not material.
The transitional provisions pertaining to adoption of IAS 19 as revised
require that this amendment must be applied retrospectively. However, due
to the impracticality of sourcing information to assess the impact
of the amendment prior to 1 October 2012, the amendment has been applied
prospectively from this date with only the comparative amounts
(30 September 2013) restated.
Restatement
The detailed effect of the above restatements on the comparatives is set
out in note 27 of the accounting policies of the full financial
statements. These are available on the Nampak website.
3. Included in operating profit are:
Restated
2014 2013
Rm Rm
Depreciation 772.9 705.1
Amortisation 41.0 38.0
Reconciliation of operating profit and trading profit
Operating profit 1 614.5 1 921.1
Net abnormal loss/(gain)* 433.2 (20.1)
Retrenchment and restructuring costs 28.1 30.6
Net impairment losses on plant, property and
equipment, goodwill and other intangible assets 431.5 61.3
Cash flow hedge ineffectiveness (0.1) (0.4)
Net profit on disposal of property (23.7) (0.7)
Net loss on disposal of investments — 0.1
Gain on reconsolidation of Zimbabwe entities — (87.8)
Gain on revaluation of original interest in joint
venture acquired (9.4) (23.2)
Business acquisition-related costs 6.8 —
Trading profit 2 047.7 1 901.0
* Abnormal losses/(gains) are defined as losses/(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. Business combinations
4.1 Subsidiaries
In line with the group’s strategy to grow its core businesses, the group
acquired with effect from 1 March 2014 the entire equity of the Alucan
Investments Limited (“AIL”) group for an amount of R3 508.0 million paid
in cash. The sole investment of this group is Alucan Packaging Limited,
a beverage can manufacturing operation in Nigeria.
2014 2013
Rm Rm
Assets acquired and liabilities recognised at the
date of acquisition
Current assets
Inventories 130.6 —
Trade and other receivables 108.4 —
Cash 43.2 —
Non-current assets
Property, plant and equipment 807.6 —
Deferred tax 29.5 —
Current liabilities
Trade and other payables (88.2) —
1 031.1 —
Goodwill arising on acquisition
Consideration transferred 3 508.0 —
Less: fair value of identifiable net assets acquired (1 031.1) —
Goodwill arising on acquisition 2 476.9 —
Cash flow impact of the acquisitions
Consideration paid in cash 3 508.0 —
Cash balances acquired (43.2) —
Net cash outflow on acquisition 3 464.8 —
Impact of the acquisition on the results of the group (current year)
Included in the group net revenue and profit after tax for the period is
R242.9 million and R32.7 million respectively which is attributable to the
interest acquired in AIL.
Information on net revenue and profit after tax for AIL is not available
prior to 1 March 2014.
4.2 Other interests
In order to gain outright control over the operations of Bullpak Limited
(“Bullpak”), formerly jointly controlled, the group acquired, with effect
from 1 September 2014, the remaining 51% interest in this business from
Unga Limited for an amount of R42.0 million paid in cash.
During the prior year, the group acquired with effect from 1 November
2012, the remaining 50% interest in Elopak (Pty) Ltd from Elopak AS for an
amount of R116.2 million paid in cash.
2014 2013
Rm Rm
Assets acquired and liabilities recognised at the
date of acquisition
Current assetsInventories 14.2 27.0
Trade and other receivables 25.8 41.6
Cash 15.7 11.6
Non-current assets
Property, plant and equipment 6.9 46.4
Intangibles — 43.9
Retirement benefit asset 0.3 —
Non-current receivables — 4.6
Current liabilities
Trade and other payables (19.2) (15.7)
Non-current liabilities
Deferred tax (1.3) (20.1)
42.4 139.3
Goodwill arising on acquisition
Consideration transferred 42.0 116.2
Plus: fair value of previously held interest 30.2 77.0
Less: fair value of identifiable net assets acquired (42.4) (139.3)
Goodwill arising on acquisition 29.8 53.9
Cash flow impact of the acquisitions
Consideration paid in cash 42.0 116.2
Cash balances acquired (15.7) (11.6)
Net cash outflow on acquisition 26.3 104.6
Impact of the acquisition on the results of the group (current year)
Included in the group net revenue and profit after tax for the period is
R6.5 million and R0.5 million respectively which is attributable to the
interest acquired in Bullpak.
Had Bullpak been acquired with effect 1 October 2013, the net revenue of
the group from continuing operations would have been R20 044.0 million,
while the profit after tax would have been R1 241.3 million.
5. Disposal of operations
During May 2013, the directors of the group 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 completed the
transaction by 1 August 2014, the effective date of the disposal. The
disposal is consistent with the group’s strategy of exiting its non-core
and underperforming businesses.
2014 2013
Rm Rm
Results of the discontinued operations for the year
Revenue 956.7 1 080.7
Expenses (978.6) (1 202.7)
Profit before tax (21.9) (122.0)
Attributable income tax benefit 6.1 34.1
(15.8) (87.9)
Loss on disposal of operations (33.7) —
Attributable income tax benefit 17.4 —
(16.3) —
Loss for the year from discontinued operations (32.1) (87.9)
Proceeds on disposal of the discontinued operations
Current assets
Inventory 243.1 —
Trade and other receivables 215.2 —
Non-current assets
Property, plant and equipment 159.4 —
Current liabilities
Trade and other payables (216.1) —
Non-current liabilities
Post-retirement benefit liability (35.3) —
Net assets disposed 366.3 —
Loss on disposal of businesses (33.7) —
Total disposal consideration 332.6 —
Less: deferred sales proceeds (24.3) —
Net inflow on disposal 308.3 —
Assets held for sale (and liabilities associated with these assets) in the
prior year (2013) relate to the discontinued operations above only.
6. Determination of headline earnings
Restated
2014 2013
Rm Rm
Continuing operations
Profit attributable to equity holders of the
company for the year 1 201.5 1 382.9
Less: preference dividend (0.1) (0.1)
Basic earnings 1 201.4 1 382.8
Adjusted for:
Net impairment losses on goodwill, property, plant
and equipment, and other intangible assets 431.5 61.3
Net loss on disposal of businesses and other
investments — 0.1
Gain on revaluation of original interest in joint
venture acquired (9.4) (23.2)
Gain on reconsolidation of Zimbabwe entities — (87.8)
Net profit on disposal of property, plant,
equipment and intangible assets (18.9) (24.7)
Tax effects and non-controlling interests (116.3) (10.4)
Headline earnings for the year 1 488.3 1 298.1
Continuing and discontinued operations
Profit attributable to equity holders of the
company for the year 1 169.4 1 295.0
Less: preference dividend (0.1) (0.1)
Basic earnings 1 169.3 1 294.9
Adjusted for:
Net impairment losses on goodwill, property, plant
and equipment, and other intangible assets 431.5 116.3
Net loss on disposal of businesses and other
investments 33.7 0.1
Gain on revaluation of original interest in joint
ventures acquired (9.4) (23.2)
Gain on reconsolidation of Zimbabwe entities — (87.8)
Net profit on disposal of property, plant,
equipment and intangible assets (18.1) (25.2)
Tax effects and non-controlling interests (134.0) (25.7)
Headline earnings for the year 1 473.0 1 249.4
7. (Net overdraft)/cash and cash equivalents
Restated
2014 2013
Rm Rm
Bank balances, deposits and cash 1 127.5 4 421.4
Bank overdrafts (1 808.5) (1 808.2)
(681.0) 2 613.2
8. Supplementary information
Restated
2014 2013
Rm Rm
Capital expenditure 2 620.1 1 447.2
— expansion 1 771.7 370.9
— replacement 833.5 1 043.4
— intangibles 14.9 32.9
Capital commitments 2 017.9 2 379.3
— contracted 623.2 1 113.3
— approved not contracted 1 394.7 1 266.0
Lease commitments 274.9 311.5
— land and buildings 206.2 244.9
— other 68.7 66.6
Contingent Liabilities 38.6 10.1
— customer claims and guarantees 38.6 6.9
— tax contingent liabilities — 3.2
9. Share statistics
Restated
2014 2013
000 000
Ordinary shares in issue 700 708 697 897
Ordinary shares in issue – net of treasury shares 628 267 625 457
Weighted average number of ordinary shares on
which headline earnings and basic earnings per
share are based 627 728 624 921
Weighted average number of ordinary shares on which
diluted headline earnings and diluted basic earnings
per share are based 650 015 647 215
10. Additional disclosures
Restated
2014 2013
Net gearing (%) 73 16
EBITDA?* 2 859.9 2 725.5
Net debt: EBITDA??* (times) 2.0 0.4
Interest cover (times) 6.3 9.6
EBITDA*: Interest cover (times) 8.7 13.8
Return on equity – continuing operations (%) 16 22
Return on equity – continuing and discontinued
operations (%) 15 20
Return on net assets – continuing operations (%) 15 18
Return on net assets – continuing and discontinued
operations (%) 15 18
Net worth per ordinary share (cents)** 1 255 1 150
Tangible net worth per ordinary share (cents)** 710 1 019
* EBITDA is calculated before net impairments.
** Calculated on ordinary shares in issue – net of treasury shares.
11. Translation reserve movement
Due to the weakening of the Rand towards the end of the financial year,
a translation gain of R381.9 million (2013: R653.4 million gain) was
recognised for the year. The closing exchange rate at 30 September was
£1:R18.33 (2013: £1:R16.25).
12. 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.
13. Subsequent events
The group acquired a majority stake in Hunyani Holdings Ltd to be
renamed Nampak Zimbabwe Ltd through the consolidation of the entities
Hunyani Holdings Ltd, CarnaudMetalbox Zimbabwe Ltd and MegaPak Zimbabwe
(Pvt) Ltd. The completion of the transaction is expected in the first
quarter of the 2015 financial year.
Subsequent to year-end certain tax issues have been resolved. This will
have a favourable impact on future tax charges.
Nampak announced the disposal of the paper businesses Nampak Corrugated,
Nampak Tissue and Nampak Sacks, on 20 November 2014 for R1.6 billion.
There are conditions precedent and it is expected that the transaction
will be concluded in the second half of the 2015 financial year.
14. Independent auditor’s opinion
These summarised financial statements have been derived from the group
financial statements approved on 20 November 2014 and are consistent in
all material respects with the group financial statements. The auditors,
Deloitte & Touche, have issued their opinion on the group’s financial
statements for the year ended 30 September 2014. The audit was conducted
in accordance with International Standards on Auditing. They have issued
an unmodified audit opinion. A copy of the group financial statements is
available for inspection at the company’s registered office. Any reference
to future financial performance included in this announcement, has not
been reviewed or reported on by the company’s auditors.
Administration
Independent non-executive directors
RC Andersen, E Ikazoboh (Nigerian), RJ Khoza, NV Lila, PM Madi, TT Mboweni
(Chairman), 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
20 November 2014
Sponsor
UBS South Africa (Pty) Limited
Website www.nampak.com
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.
Date: 20/11/2014 02:59:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
