Wrap Text
Unaudited group results and dividend declaration
for the half year ended 31 March 2015
Nampak Limited
(Registration number 1968/008070/06) (Incorporated in the Republic of
South Africa) Share code: NPK ISIN: ZAE 000071676
Unaudited group results and dividend declaration
For the half year ended 31 March 2015
Highlights
* Group revenue from continuing operations up 16%
* HEPS from continuing operations down 8%
* Dividend per share declared at 42.0c
* Trading profit from the rest of Africa up 22%, rest of Africa now 38%
of group trading profit from 27% in 2014
* Group operating profit from continuing operations down 9%, following a
disappointing glass performance and headwinds in the South Africa trading
environment
* R1.6 billion received from the sale of Corrugated and Tissue divisions
* Bevcan Nigeria ramping up according to plan, Bevcan Angola 2nd line
commissioned and ramping up
* Sale of Flexible and Recycling divisions to be finalised by year-end
* Cost management and business improvement initiatives underway to benefit
2016 and beyond
Comments from the CEO, André de Ruyter
Nampak group performance had a mixed start to the 2015 financial year with
the first half results benefiting from the continued growth and strong
performance of our businesses in the rest of Africa, in particular Bevcan
Nigeria and Bevcan Angola. The challenging South African trading
environment combined with the loss made by the Glass division and cost
increases associated with the ramp-up of recently
commissioned projects kept the pressure on our performance. Nampak Glass
issues are being addressed through the implementation of a comprehensive
plan targeted at overcoming production inefficiencies and operational
constraints.
During the first half we continued delivery on our strategy both to unlock
value from our base business and to accelerate growth in the rest of
Africa. Our programme of active portfolio management continued, and
we completed the sale of the Corrugated and Tissue divisions effective
1 April 2015 and reached an agreement for the sale of Nampak Flexible as
well as Nampak Recycling. The disposal of these businesses forms part of
Nampak’s portfolio optimisation strategy to unlock cash from low-margin
divisions for redeployment into high-yield and high-growth opportunities
in the rest of Africa.
Contribution to trading profit from operations in the rest of Africa
increased to 38%, up from 27% in 2014 on the back of the continuing
ramp-up in production at Bevcan Nigeria as well as another good
performance from Bevcan Angola. Our growth strategy in the rest of Africa
focuses on metals and glass, the dominant packaging mediums for beverages.
We believe that these two packaging mediums have the
potential for growth in excess of GDP growth in the medium to long term.
Good progress was made in pursuit of a number of significant growth
opportunities in the rest of Africa during the first half. We are evaluating
potential glass opportunities in Angola, Nigeria and Ethiopia.
Nampak is strategically well-positioned with strong market positions and a
growing presence in the rest of Africa. We continue to focus on the
implementation of our strategy and believe it will assist the business
to deliver sustainable earnings growth in the long term.
Group performance review
Group performance from continuing operations
2015 2014 %
Rm Rm change
Revenue 8 766.2 7 574.5 15.7
Trading profit 857.6 996.3 (13.9)
Abnormal items 47.1 (0.1) —
Operating profit 904.7 996.2 (9.2)
Basic earnings per share (cents per share) 113.2 113.2 —
Headline earnings per share (cents per share) 101.6 110.5 (8.1)
Dividend per share (cents per share) 42.0 46.0 (8.7)
2014 results restated for operations accounted for as held for sale.
Overall group performance for the first half benefited from a solid
performance from the rest of Africa as well as modest growth from some
South African businesses, resulting in a 16% increase in group revenue.
The continued solid performance from Bevcan Angola as well as Bevcan
Nigeria contributed to trading profit. However, the challenging South
African trading environment, combined with the loss made by Nampak Glass,
as well as cost increases associated with the ramp-up of recently
commissioned projects kept the pressure on trading margins. As a result,
group operating profit was down 9.2% and headline earnings per share
from continuing operations declined by 8.1% to 101.6 cents from 110.5
cents in 2014. The group trading margin at 9.8% was impacted by the
aforementioned factors.
The group recorded net abnormal profits from continuing operations of
R47.1 million compared to a R0.1 million net loss in 2014. This was mainly
due to gains made on the revaluation and consolidation of the Zimbabwean
associates as part of the transaction undertaken to acquire a majority
shareholding in Zimbabwean subsidiaries.
The 2015 first half net finance costs at R165.9 million were at similar
levels to 2014. Net borrowings increased by R1.4 billion year on year.
Working capital outflow at R712.3 million was well controlled and
significantly better than the R1.2 billion outflow recorded during the
same period in 2014, resulting from improved business planning and cash
management.
Net debt to equity at the end of the interim period was 86% compared to
78% in 2014 and 73% at the end of September 2014. Net debt to EBITDA at
2.4 times was within the internal self-imposed limit of 2.5 times and the
external limit of 3.0 times.
The effective group tax rate for continuing operations was 1.4% compared
to 15.0% in 2014 and was favourably impacted by government incentives in
South Africa, a BEE employee share scheme expenditure deduction and
lower tax rates in jurisdictions outside South Africa.
The interim dividend was declared at 42.0 cents per share.
Segmental performance review
The significant business restructuring of the Nampak portfolios, as well
as IFRS requirements relating to segmental reporting, plus the
increasing prominence of our businesses in the rest of Africa; has
prompted a revision of our previous segmental reporting structure to
better reflect the current substrate focus and future growth strategy. As
a consequence, we are now reporting results by substrate; namely metals,
plastics, paper and glass. This enables improved disclosure of our entire
business across divisions, geographies and substrates.
Segmental report (continuing operations)
Trading Trading
Revenue profit* margin
2015 2014 2015 2014 2015 2014
Rm Rm Rm Rm % %
Metals 5 029 4 181 590 573 11.7 13.7
Plastics 2 256 2 396 156 184 6.9 7.7
Paper 935 499 93 94 9.9 18.8
Glass 546 498 (70) 16 (12.8) 3.2
Corporate Services — — 89 129 — —
Total (continuing
operations) 8 766 7 574 858 996 9.8 13.2
* Operating profit before abnormal items.
2014 results restated for operations accounted for as held for sale.
Metals
This cluster includes all beverage, food and general packaging can
divisions in South Africa and the rest of Africa. The cluster’s
performance benefited from good sales in all beverage can businesses
across all geographies. Trading profit and margin were restrained due to
costs associated with the construction and commissioning of new lines
and the disappointing performance of the Nigerian general metal
packaging business.
Bevcan’s volumes in South Africa continued to expand at rates well above
GDP growth, supported by the continued increase in demand for the 440ml
beverage can in both the alcoholic and non-alcoholic market segments, as
well as continued can exports to Angola. Trading profit was lower due to
additional depreciation on capital expenditure, incremental employee costs
for new lines and costs related to the start-up and ramp-up of new
production lines. Price decreases passed on to customers in line with
contractual agreements also had an impact. As anticipated, energy costs
per can were lower than the previous reporting period due to improved
energy efficiency of the aluminium production lines.
Bevcan Angola continued to operate above design capacity supported by
strong growth in demand from all customers. Sales volumes grew unabated,
augmented by exports from South Africa. Trading profit was slightly
below 2014 levels, due mainly to increased overhead costs related to the
construction of the second line, that uses aluminium as a substrate.
Although the business, like other Angolan enterprises, continues to
experience challenges in sourcing foreign currency, the shortage has
become a strong driver for the growth in demand for locally produced
products in the beverage sector. This in turn is resulting in further
investments in can filling lines by our customers, which is anticipated to
underpin further demand growth.
Bevcan Nigeria continued ramping up production with volume growth in line
with expectations, supported by demand for beverage cans in both the beer
and carbonated soft drinks (CSD) markets. Nigeria is experiencing
increasing investments in brewing capacity and beer growth
rates are expected to be above GDP growth in the long term. This will in
turn drive increased demand for cans. Contracts were signed with large
multinational companies and the business contributed positively to profit.
As a result of currency adjustment clauses in sales contracts, the Angola
and Nigeria beverage can businesses have limited financial exposure to the
local currencies depreciation against the US dollar.
DivFood reported revenue growth due mainly to the recovery of tinplate
increases in 2014, a stronger export fruit season and growth in vegetable
cans supported by the weak rand that made imported canned products less
attractive. The Monobloc aerosols business is undergoing consolidation and
volumes for the personal care market were impacted. Margin pressure from
customers continues and profitability was below last year even though
operating costs were well controlled.
The demand for general metal packaging in Nigeria was negatively affected
by lower consumer demand, as a result of election uncertainty, and the
impact of the decline in the price of oil. A recovery is anticipated in
the short term. As a consequence of the currency devaluation, foreign
exchange losses for this Nigerian business in the period under review were
significant. In Kenya, demand for metal packaging was impacted by
agricultural seasonal variations in food cans, but should also recover in
the short term. Other market sectors were reasonably buoyant. The Zimbabwe
operations did well, supported by good demand as well as overhead
expenditure control.
Plastics
This cluster includes all plastics divisions currently based in South
Africa and the United Kingdom. Lower oil prices (and hence lower polymer
prices) had a positive impact on this cluster. However, this was eroded by
challenging operating conditions and some inflationary cost pressures that
resulted in higher operating costs. Ongoing cost savings and efficiency
improvement initiatives aided profitability. Megapak has been
consolidated; the drum business was integrated into the liquid packaging
division and the crate business into the closures division.
Liquid Packaging was negatively impacted by the loss of some small
customers that resulted in lower margins as well as lower production
activity, even though controllable costs were well managed. This is
expected to continue for the year until the lost customers are replaced
with new customers towards the end of the year. Substitution between
plastic bottles and paper cartons continues as consumers favour long- life
milk over fresh milk. The carton business improved due to market share
gain in sorghum beer and continued growth in fresh milk and mageu
products. Competition in the drums market continued to exert pressure
resulting in lower margins, even though the business benefited from lower
polymer prices.
In the Closures division, volumes were higher due to growth in demand
for plastic beverage bottles that continue to benefit from increased PET
market penetration. Sports closures, however, declined and had a
negative effect on the profitability of the division. Tubes had a
difficult start to the year due to overstocking at our customers,
compounded by the rebuilding of one of the tube lines, which resulted in
lower volumes. Volumes are expected to pick up in the second half of the
year. Crates improved as supply of raw materials stabilised.
Revenue for Plastics UK was below that of the previous year due mainly to
the loss of a customer. A reduction in overhead costs due to the
implementation of cost cutting measures contributed positively to trading
profit. Milk consumption in the UK remained relatively stable. The market
price for recycled material used in all Nampak milk bottles has also
increased and impacted profitability. The business remains a cash
generator and rand hedge. In the first half financial year 2015, the
average rand/pound rate was R17.77 from R17.22 a year earlier.
Profit for the year will be negatively impacted by increased overhead
expenditure as a result of a planned site restructuring and closure but
lifted by a focus on successful execution of commercial opportunities and
the continued close management of cost.
Paper
This cluster includes all paper divisions in the rest of Africa. The
cluster’s revenue and trading profit benefited from the inclusion of the
Zimbabwean entities previously accounted for as minorities, albeit at
lower margins; but was negatively impacted by weaker demand in some
markets and in country currency depreciation.
Bullpak, acquired with effect from 1 September 2014, contributed
positively to revenue and profit with strong demand for self-opening bags
for the milling industry in Kenya.
Nigeria Cartons was negatively impacted by general low demand for
cigarette cartons, compensated for, to some extent, by stronger demand for
general FMCG packaging. Currency losses resulting from the weakening of
the naira put pressure on profits.
Zambia sorghum beer carton sales improved on 2014. Revenue from Malawi
operations was up due to an increase in tobacco volumes, however margins
were negatively impacted by overhead cost increases resulting from
general country inflationary pressure.
Glass
Progress in the business recovery, albeit at a slower pace than
anticipated, was made at Glass. The plant experienced capacity constraints
towards the latter part of 2014, mainly attributable to the late
commissioning of the newly installed third furnace, which occurred in peak
season.
The legacy issues from the last quarter of 2014 were carried into 2015.
This, combined with lower first quarter production volumes, process
inefficiencies and higher operating costs resulted in Nampak Glass making
a half year operating loss. Operational constraints and inefficiencies are
being addressed through focused management interventions that include a
comprehensive business recovery plan, cost management initiatives and a
business culture change programme. Various technical improvements have
also been implemented and are in the execution phase with production
efficiency ratios improving steadily. Furnace 3 is ramping up and the
final phase of commissioning was concluded with the pre-heater
commissioning, a first for the southern hemisphere. It is expected that
full furnace energy saving benefits will be reflected in the 2016 financial
year. Demand in the glass market is expected to remain relatively stable
in the year ahead.
Corporate Services
The trading profit for the period benefited from cost saving initiatives
underway in the group. Head office cost management initiatives implemented
during this reporting period will start contributing positively in the
medium term.
Geographical update (continuing operations)
Trading Trading
Revenue profit* margin
2015 2014 2015 2014 2015 2014
Rm Rm Rm Rm % %
South Africa 5 459 4 916 375 526 6.9 10.7
Rest of Africa 2 339 1 509 330 270 14.1 17.9
United Kingdom 968 1 149 64 71 6.6 6.2
Corporate Services — — 89 129 — —
Total 8 766 7 574 858 996 9.8 13.2
* Operating profit before abnormal items.
2014 results restated for operations accounted for as held for sale.
South Africa
During the period under review, South Africa experienced significant
economic headwinds. Both business and consumer confidence were impacted
negatively as the unfavourable exchange rate and load shedding offset the
benefits of lower oil prices and slowing inflation. As a result of this
environment and other factors Nampak’s home business contribution to
trading profit reduced to 44% in 2015 from 53% in 2014.
Rest of Africa
During the six months to the end of March, the Nigerian naira and Angola’s
kwanza depreciated significantly against the US dollar, mainly due to the
impact of the sharp decline in the oil price. As a result, severe
liquidity constraints were experienced, particularly in Angola. Overall
GDP growth rate estimates for 2015 have been revised downwards in these
countries. While in the short term this is concerning, the impact in the
medium and long term is not considered prejudicial to the business or the
overall investment rationale in either economy.
First half 2015 revenue increased by 55%, while trading profit increased
by 22% due mainly to the strong performance from Bevcan Nigeria, Bevcan
Angola and the inclusion of Zimbabwean entities previously accounted for
as a minority interest. The rest of Africa now contributes 38% to trading
profit, up from 27% in 2014. The main drivers for the decline in margin
were the impact of currency depreciation in exposed businesses, the inclusion
of the low margin Zimbabwe businesses and higher costs incurred in Angola due
to the construction of the second beverage can line.
United Kingdom
The UK economy continues to show slow GDP growth of lower than 1% while
the plastics packaging market faces pricing and industry pressures from a
low inflation UK economy. Trading profit decreased by 12% to £3.2 million.
In Rand terms the trading profit decreased by 10% while the average
rand/pound rate was R17.77 from R17.22 a year earlier. The division’s
contribution to group trading profit is stable at 7%.
Update on key projects
The group continued to invest to unlock further value from existing
businesses and for growth. Total capital expenditure for this period
amounted to R1.2 billion compared to R1.0 billion in 2014. R432 million
was spent on Bevcan aluminium conversion, R349 million on Bevcan Angola’s
second beverage can line and a new warehouse. The balance was spent on
other projects.
Aluminium conversion on track, Springs site fully converted
The conversion of Nampak Bevcan tinplate lines to aluminium progressed
well. The two existing tinplate lines at Bevcan Springs were fully
converted to aluminium. The installation of a new aluminium line at the
Rosslyn site is on track for commissioning during the third quarter of
calendar year 2015 and the installation of a second aluminium line has
already commenced. The Cape Town tinplate line will be converted to
aluminium in due course.
Angola second aluminium beverage can line
The construction of the second line which uses aluminium as a substrate
was completed and the line was commissioned in May 2015. The line is
ramping up capacity and is anticipated to reach close to full capacity in
the short term. The existing tinplate line will be kept operational
due to the high market demand and will only be considered for conversion
to aluminium in the medium term. We are already evaluating the
installation of a third beverage can line for commissioning in the next
24 to 36 months.
Bevcan Springs’ new beverage can ends facility
Nampak is in the process of expanding the existing beverage can ends
manufacturing facility in Springs to produce a further four billion ends.
Growth in beverage can demand and Nampak capacity expansions have prompted
a requirement for additional ends production. This project is expected to
be completed by mid-2016.
Rest of Africa glass projects
Nampak is evaluating potential glass projects in Ethiopia, Angola and Nigeria.
Ethiopia beverage crate facility
The commissioning of the new plastic beverage crate facility has been
delayed due to administrative and electrical supply issues but is now
expected to commence production in June.
Active portfolio management
During this period Nampak made significant progress in the delivery of its
strategic objective to unlock further value from base businesses through
active portfolio management. Nampak successfully sold the Corrugated and
Tissue divisions for R1.6 billion, effective 1 April 2015. Agreements were
signed for the sale of the Recycling division for R76.3 million and the
Flexible division for a maximum target price of R300 million. Both the
latter transactions are subject to approval by the competition authorities
and are expected to conclude in the second half of 2015. The disposal of
these businesses forms part of Nampak’s portfolio optimisation strategy to
unlock cash from low-margin divisions and redeploy it into high-yield
and high-growth opportunities in the rest of Africa.
Business improvement initiatives update
Efforts to improve working capital management continue and progress on
reducing stock levels and improved supplier performance has been achieved.
Cost management is a keen focus area for all management; various
divisional cost increases were below Consumer Price Index (CPI) for the
current period.
The ongoing business optimisation initiatives at DivFood and Plastics in
South Africa, together with capital renewal projects, are expected to
deliver benefits in energy efficiency and productivity starting in 2016.
Corporate activity
Discontinued operations
In light of the progress made in the disposal of non-core divisions
explained above, the following divisions were accounted for as
discontinued:
Corrugated
Tissue
Recycling
Flexible
Outlook
The South African business environment is expected to remain challenging
in 2015. We will, however, continue to focus on unlocking value from our
base businesses. We expect efficiency gains from the aluminium
conversion and the new glass furnace to contribute to earnings in the
medium term.
The group’s operations in the rest of Africa are expected to continue
generating growth in revenue and profit, while the relatively peaceful
outcome of the Nigerian elections is seen as a positive development in a
key market for Nampak. Our strategy to accelerate growth in the rest of
Africa and to focus on core substrates – namely glass, metal and rigid
plastics, remains intact and is supported by a pipeline of potential growth
opportunities.
Nampak is strategically well-positioned with strong market positions and a
growing presence in the rest of Africa. We are looking to implement
our strategic objective of growing in the rest of Africa and believe
that this will contribute to sustainable earnings growth.
Declaration of Ordinary Dividend Number 86
Notice is hereby given that a gross interim ordinary dividend number 86 of
42.0 cents per share (2014: 46.0 cents per share) has been declared in
respect of the six months ended 31 March 2015, payable to shareholders
recorded as such in the register of the company at the close of business
on the record date, Friday, 3 July 2015. The last day to trade to
participate in the dividend is Friday, 26 June 2015. Shares will commence
trading “ex” dividend from Monday, 29 June 2015.
The important dates pertaining to this dividend are as follows:
Last day to trade ordinary shares “cum” dividend Friday, 26 June 2015
Ordinary shares trade “ex” dividend Monday, 29 June 2015
Record date Friday, 3 July 2015
Payment date Monday, 6 July 2015
Ordinary share certificates may not be de-materialised or re- materialised
between Monday 29 June 2015 and Friday 3 July 2015, both days inclusive.
In accordance with the JSE Listings Requirements, the following additional
information is disclosed for purposes of Dividends Tax: 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 35.7 cents per share for shareholders
liable to pay the Dividends Tax and 42.0 cents per share for shareholders
exempt from paying the Dividends Tax;
The issued number of ordinary shares at the declaration date is
702 472 738; and
Nampak Limited’s tax number is 9875081714.
On behalf of the board
TT Mboweni AM de Ruyter
Chairman Chief executive officer
26 May 2015
Summarised group statement of comprehensive income
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
2015 2014 % 2014
Notes Rm Rm Change Rm
Continuing operations
Revenue 8 766.2 7 574.5 15.7 15 308.0
Operating profit 3 904.7 996.2 (9.2) 1 842.8
Finance costs 180.4 184.3 352.7
Finance income 14.5 25.8 44.2
Income from investments — 0.1 0.1
Share of net (loss)/profit
from associates and joint
ventures (0.7) 12.3 33.5
Profit before tax 738.1 850.1 (13.2) 1 567.9
Income tax expense 10.3 127.2 141.8
Profit for the period from
continuing operations 727.8 722.9 0.7 1 426.1
Discontinued operations
(Loss)/profit for the period
from discontinued
operations (68.4) 29.6 (222.5)
Profit for the period 659.4 752.5 (12.4) 1 203.6
Other comprehensive income/
(expense) for the period,
net of tax
Items that will not be
reclassified to profit
or loss
Net actuarial gains from
retirement benefit
obligations — — 10.2
Items that may be reclassified
subsequently to profit or loss
Exchange differences on
translation of foreign
operations 12 122.3 111.2 381.9
(Losses)/gains on cash
flow hedges (6.4) (3.4) 1.1
Other comprehensive income
for the period, net of tax 115.9 107.8 7.5 393.2
Total comprehensive income
for the period 775.3 860.3 1 596.8
Profit attributable to:
Owners of Nampak Limited 644.7 740.1 (12.9) 1 169.4
Non-controlling interest
in subsidiaries 14.7 12.4 34.2
659.4 752.5 1 203.6
Total comprehensive income
attributable to:
Owners of Nampak Limited 728.2 850.6 1 567.7
Non-controlling interest
in subsidiaries 47.1 9.7 29.1
775.3 860.3 1 596.8
Continuing operations
Basic earnings per share
(cents) 113.2 113.2 — 221.7
Fully diluted basic
earnings per share (cents) 109.4 109.3 0.1 214.2
Headline earnings per
ordinary share (cents) 101.6 110.5 (8.1) 221.9
Fully diluted headline
earnings per share (cents) 98.2 106.7 (8.0) 214.3
Continuing and discontinued
operations Basic earnings
per share(cents) 102.4 117.9 (13.2) 186.3
Fully diluted basic
earnings per share (cents) 98.9 113.9 (13.2) 179.9
Headline earnings per
ordinary share (cents) 106.9 117.0 (8.6) 234.7
Fully diluted headline
earnings per share (cents) 103.3 113.0 (8.6) 226.7
Dividend per share (cents) 42.0 46.0 (8.7) 153.0
Summarised group statement of financial position
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
2015 2014 2014
Notes Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment and
investment property 9 944.0 8 671.0 9 864.3
Goodwill and other intangible
assets 3 585.1 3 179.8 3 419.5
Joint ventures, associates and
other investments 62.7 316.2 213.3
Deferred tax assets 99.9 111.3 135.7
Other non-current assets 46.7 106.3 65.0
13 738.4 12 384.6 13 697.8
Current assets
Inventories 3 287.9 3 821.1 3 518.4
Trade receivables and other
current assets 2 721.3 3 221.9 3 538.9
Tax assets 6.3 3.7 8.5
Bank balances, deposits and cash 8 1 374.2 945.8 1 127.5
7 389.7 7 992.5 8 193.3
Assets classified as held for sale 5 3 057.8 523.7 —
Total assets 24 185.9 20 900.8 21 891.1
EQUITY AND LIABILITIES
Capital and reserves
Share capital 36.1 36.0 36.1
Capital reserves (393.3) (405.4) (402.3)
Other reserves 398.4 48.5 315.2
Retained earnings 7 970.7 7 843.9 7 985.1
Shareholders' equity 8 011.9 7 523.0 7 934.1
Non-controlling interest 287.7 (70.4) (51.0)
Total equity 8 299.6 7 452.6 7 883.1
Non-current liabilities
Loans and borrowings 5 017.2 3 330.0 4 753.3
Retirement benefit obligation 2 187.1 2 263.9 2 173.0
Deferred tax liabilities 542.1 605.6 444.9
Other non-current liabilities 72.9 46.6 58.6
7 819.3 6 246.1 7 429.8
Current liabilities
Trade payables, provisions and
other current liabilities 3 329.0 3 222.8 4 054.9
Bank overdrafts 8 3 096.8 3 126.3 1 808.5
Loans and borrowings 659.7 501.4 519.5
Tax liabilities 56.8 140.1 195.3
7 142.3 6 990.6 6 578.2
Liabilities directly associated
with assets classified as held
for sale 5 924.7 211.5 —
Total equity and liabilities 24 185.9 20 900.8 21 891.1
Summarised group statement of cash flows
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
2015 2014 2014
Notes Rm Rm Rm
Operating profit before working
capital changes 1 442.9 1 540.5 2 796.5
Working capital changes (712.3) (1 218.8) (189.1)
Cash generated from operations 730.6 321.7 2 607.4
Net interest paid (173.5) (153.3) (361.9)
Income from investments 7.4 7.2 7.2
Income tax paid (56.9) (55.8) (95.3)
Replacement capital expenditure (651.8) (405.5) (833.5)
Cash (utilised in)/retained from
operations (144.2) (285.7) 1 323.9
Dividends paid (681.6) (616.3) (904.4)
Net cash (utilised in)/generated
from operating activities (825.8) (902.0) 419.5
Expansion capital expenditure (563.9) (606.8) (1 771.7)
Acquisition of businesses 6 — (3 336.4) (3 491.1)
Disposal of businesses — — 308.3
Other investing activities 99.3 (157.5) (15.4)
Net cash utilised before financing
activities (1 290.4) (5 002.7) (4 550.4)
Net cash raised from/(repaid in)
financing activities 167.5 (98.6) 897.3
Net decrease in cash and cash
equivalents (1 122.9) (5 101.3) (3 653.1)
(Net overdraft)/cash and cash
equivalents at beginning of period (681.0) 2 613.2 2 613.2
Cash acquired on consolidation of
Zimbabwe associates 57.1 — —
Translation of cash in foreign
subsidiaries 24.2 307.6 358.9
Net overdraft at end of period 8 (1 722.6) (2 180.5) (681.0)
Summarised group statement of changes in equity
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
2015 2014 2014
Rm Rm Rm
Opening balance 7 883.1 7 190.6 7 190.6
Net shares issued during the period 74.0 98.9 101.5
Share-based payment expense 9.1 10.3 17.0
Share grants exercised (74.1) (91.0) (97.1)
Share of movement in associate's and
joint ventures’ non-distributable reserve (0.3) (0.2) 1.3
Non-controlling interest recognised on
consolidation of Zimbabwe associates 314.1 — —
Transfer from hedging reserve to related
assets — — (4.3)
Reclassification of available-for-sale
financial assets — — (18.3)
Total comprehensive income for the period 775.3 860.3 1 596.8
Dividends paid (681.6) (616.3) (904.4)
Closing balance 8 299.6 7 452.6 7 883.1
Comprising:
Share capital 36.1 36.0 36.1
Capital reserves (393.3) (405.4) (402.3)
Share premium 221.0 144.5 147.0
Treasury shares (827.6) (827.6) (827.6)
Share-based payments reserve 213.3 277.7 278.3
Other reserves 398.4 48.5 315.2
Foreign currency translation reserve 1 404.1 1 041.5 1 314.2
Financial instruments hedging reserve (5.2) 1.0 1.2
Recognised actuarial losses (966.0) (976.2) (966.0)
Share of non-distributable reserves in
associates and joint ventures 3.6 2.0 3.9
Available-for-sale financial assets
revaluation reserve (38.3) (20.0) (38.3)
Other 0.2 0.2 0.2
Retained earnings 7 970.7 7 843.9 7 985.1
Shareholders’ equity 8 011.9 7 523.0 7 934.1
Non-controlling interest 287.7 (70.4) (51.0)
Total equity 8 299.6 7 452.6 7 883.1
Notes
1. Basis of preparation and accounting policies
The summarised interim consolidated financial statements have been
prepared in accordance with the framework concept, measurement and
recognition criteria of the International Financial Reporting Standards
(IFRS) including the information required by IAS34: Interim Financial
Reporting, 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 2014 annual financial
statements.
The comparative financial statements, March 2014 and September 2014, have
been restated for the impact of the additional discontinued operations
recognised during this period (see note 5), whereby the results of these
operations have been presented separately in the statement of
comprehensive income.
The March 2014 financial statements have also been restated for the impact
of Red Coral Investments 23 (Pty) Ltd, a black empowerment share scheme,
no longer being consolidated, and the impact of the change of Angolata
Lda’s functional currency from Angolan Kwanza to US Dollar. The share
scheme was no longer consolidated as the group assessed and concluded that
it did not meet the requirement of control in relation to the scheme as
defined by IFRS 10 Consolidated Financial Statements which was effective
from 1 October 2013. This assessment had not been
concluded as at March 2014.
The main impact of these restatements on the comparatives for the
statement of comprehensive income is as follows:
Restated
Unaudited Restated
6 months ended Year ended
31 Mar 2014 30 Sep 2014
Rm Rm
Revenue — decrease (2 220.7) (4 662.5)
Operating profit — (decrease)/ increase (69.2) 228.3
Profit for the period from continuing
operations — (decrease)/increase (29.1) 190.4
Basic earnings per share (continuing
operations) — (decrease)/increase (cents) (11.1) 30.3
Headline earnings per share (continuing
operations) — decrease (cents) (10.9) (15.2)
The main impact of these restatements on the comparatives for the
statement of financial position is as follows:
Restated
Unaudited Restated
6 months ended Year ended
31 Mar 2014 30 Sep 2014
Rm Rm
Non-current assets — increase 2.3 —
Current assets — decrease (234.8) —
Capital and reserves — increase 179.8 —
Non-current liabilities — decrease (239.3) —
Current liabilities — decrease (173.0) —
The main impact of these restatements on the comparatives for the
statement of cash flows is as follows:
Restated
Unaudited Restated
6 months ended Year ended
31 Mar 2014 30 Sep 2014
Rm Rm
Cash generated from operations — increase 1.0 —
Net cash utilised in operations — decrease 9.2 —
Net overdraft at the end of the period —
increase (66.8) —
Although the financial statements for September 2014 were audited prior to
the restatement for the discontinued operations, the impact of this
restatement implies that these financial statements are now unaudited.
3. Included in operating profit are:
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
2015 2014 2014
Rm Rm Rm
Depreciation 348.8 307.7 634.2
Amortisation 18.7 19.1 36.6
Net translation gains recognised on
shareholder loan (see note 4) — 99.0 138.5
Reconciliation of operating profit and
trading profit
Operating profit 904.7 996.2 1 842.8
Abnormal (gains)/losses?* (47.1) 0.1 24.9
Retrenchment and restructuring costs 19.4 — 14.0
Net impairment losses on plant,
property and equipment 10.1 0.2 37.3
Cash flow hedge ineffectiveness — (0.1) (0.1)
Net profit on disposal of property — — (23.7)
Gain on revaluation of original
interest in joint venture acquired — — (9.4)
Gain on revaluation and consolidation
of Zimbabwe associates (81.7) — —
Business acquisition-related costs 5.1 — 6.8
Trading profit 857.6 996.3 1 867.7
* Abnormal (gains)/losses are defined as gains and losses which do not
arise from normal trading activities or are of such a size, nature or
incidence that their disclosure is relevant to explain the performance for
the period.
4. Net translation gain recognised on shareholder loan
In the previous year, a net translation gain was recognised on the US
dollar denominated shareholder loan between Nampak Products Ltd and its
direct subsidiary, Angolata Lda. This loan was settled during September
2014.
5. Discontinued operations
During October 2014, the directors of the group approved of a plan to
dispose of the Nampak Corrugated, Nampak Sacks, Nampak Tissue and Sancella
S.A. (Pty) Ltd businesses. On 20 November 2014, the group entered into a
sale agreement for the disposal of the Nampak Corrugated and Nampak Tissue
businesses and completed the transaction on 1 April
2015, the effective date of the disposal of these businesses.
In addition, the directors of the group approved of a plan to dispose of
the Nampak Flexibles and Nampak Recycling businesses during March 2015,
and entered into a sale agreement for the disposal of Nampak Flexibles
on 25 March 2015. The transaction is expected to be completed during the
second half of the 2015 financial year.
During the previous year, the group disposed of the Nampak Cartons and
Labels business effective 1 August 2014.
The above disposals are consistent with the group’s strategy of exiting
its non-core and underperforming businesses.
The results of the discontinued operations included in the statement of
comprehensive income are set out below:
Restated
Unaudited Unaudited
6 months 6 months Restated
ended ended Year ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Results of the discontinued
operations for the year
Revenue 2 514.5 2 771.0 5 592.9
Expenses (2 606.4) (2 723.6) (5 906.2)
(Loss)/profit before tax (91.9) 47.4 (313.3)
Attributable income tax
benefit/(expense) 23.5 (17.8) 90.8
(Loss)/profit for the year from
discontinued operations (68.4) 29.6 (222.5)
Cash flows from the discontinued
operations
Net cash flows from operating
activities (75.2) (63.0) 336.8
Net cash flows from investing
activities (9.2) (48.1) (122.3)
Net cash flows (84.4) (111.1) 214.5
The above businesses have been classified and accounted for at 31 March as
disposal groups held for sale. These businesses had previously been
included in the South Africa Paper and Flexibles segment for segmental
reporting purposes. Impairment losses of R138.0 million (2014: R15.9
million) have been recognised for the period in respect of these disposal
groups.
6. Business combinations
6.1 Nampak Zimbabwe Ltd
The group consolidated Hunyani Holdings Ltd (“Hunyani”) and Megapak
Zimbabwe (Pvt) Ltd (“Megapak”) with effect from 1 October 2014. These
entities, situated in Zimbabwe, were previously recognised as
associates and equity accounted as such. The revaluation of the group’s
original interest in Hunyani and Megapak resulted in gains of R16.0
million and R10.6 million respectively.
With effect from 1 December 2014, the group restructured its subsidiary,
CarnaudMetalbox Zimbabwe Ltd, and Megapak under Hunyani, and Hunyani was
renamed Nampak Zimbabwe Ltd. The transaction also involved the group
increasing its effective interest in the Nampak Zimbabwe Ltd group to
51.43%.
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Assets acquired and liabilities
recognised at the date of
consolidation:
Current assets
Inventories 158.6 — —
Trade and other receivables 184.0 — —
Cash 57.1 — —
Non-current assets — —
Property, plant and equipment 395.6 — —
Investments 7.4 — —
Current liabilities — —
Trade and other payables (147.1) — —
Loans (37.4) — —
Non-current liabilities — —
Deferred tax (71.2) — —
547.0 — —
The initial accounting for the consolidation and restructuring of the
Nampak Zimbabwe Ltd group had only been provisionally determined at the
end of March 2015 as the necessary market valuations and other
calculations had not been finalised. The assets acquired and liabilities
recognised were therefore based on their carrying values as at 1 October
2014.
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Gain arising on consolidation
Fair value of previously held
interests 177.8 — —
Plus: outside shareholders
interests recognised 314.1 — —
Less: fair value of identifiable
net assets recognised (547.0) — —
Gain arising on consolidation (55.1) — —
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
R433.6 million and R1.7 million respectively which is attributable to
the consolidation of Hunyani and Megapak.
6.2 Alucan Investments Ltd
In the previous period, the group acquired with effect from 1 March
2014, the entire equity of Alucan Investments Ltd (“AIL”) 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.
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Assets acquired and liabilities
recognised at the date of
acquisition:
Current assets
Inventories — 114.9 130.6
Trade and other receivables — 81.4 108.4
Cash — 108.7 43.2
Non-current assets
Property, plant and equipment — 708.1 807.6
Deferred tax — — 29.5
Current liabilities
Trade and other payables — (7.2) (88.2)
— 1 005.9 1 031.1
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 had not been finalised. The assets
acquired and liabilities recognised at this date were therefore based on
their carrying values as at 25 February 2014.
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Goodwill arising on acquisition
Consideration paid in cash — 3 445.1 3 508.0
Less: fair value of identifiable
net assets acquired — (1 005.9) (1 031.1)
Goodwill arising on acquisition — 2 439.2 2 476.9
Goodwill arose on the acquisition of AIL as the cost of the combination
included a control premium. The consideration paid also included the
expected benefits of revenue growth and future profitability. The
consideration paid as recognised in March 2014 did not take into account
further payments related to this acquisition.
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Cash flow impact of the acquisition
Consideration paid in cash — 3 445.1 3 508.0
Cash balances acquired — (108.7) (43.2)
Net cash outflow on acquisition — 3 336.4 3 464.8
6.3 Bullpak Ltd
In the previous year, the group also acquired with effect from
1 September 2014 the remaining 51% interest in Bullpak Ltd from Unga Ltd
for an amount of R42.0 million paid in cash. The revaluation of the
group’s original interest in Bullpak resulted in a gain of R9.4 million.
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Assets acquired and liabilities
recognised at the date of
acquisition:
Current assets
Inventories — — 14.2
Trade and other receivables — — 25.8
Cash — — 15.7
Non-current assets
Property, plant and equipment — — 6.9
Retirement benefit asset — — 0.3
Current liabilities
Trade and other payables — — (19.2)
Non-current liabilities
Deferred tax — — (1.3)
— — 42.4
Goodwill arising on acquisition
Consideration transferred — — 42.0
Plus: fair value of previously
held interest — — 30.2
Less: fair value of identifiable
net assets acquired — — (42.4)
Goodwill arising on acquisition — — 29.8
Cash flow impact of the acquisition
Consideration paid in cash — — 42.0
Cash balances acquired — — (15.7)
Net cash outflow on acquisition — — 26.3
7. Determination of headline earnings
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Continuing operations
Profit attributable to
equity holders of the company
for the period 713.1 710.5 1 391.9
Less: preference dividend — — (0.1)
Basic earnings 713.1 710.5 1 391.8
Adjusted for:
Net impairment losses on plant,
property and equipment 10.1 0.2 37.3
Net loss/(profit) on disposal
of property, plant and equipment
and intangible assets 1.8 (3.5) (20.1)
Gain on revaluation of original
interest in joint venture
acquired — — (9.4)
Gain on revaluation and
consolidation of Zimbabwe
associates (81.7) — —
Net gain on shareholder loan
recycled from translation reserve — (23.7) —
Tax effects and non-controlling
interest (3.2) 10.1 (6.9)
Headline earnings for the period 640.1 693.6 1 392.7
Continuing and discontinued
operations
Profit attributable to equity
holders of the company for the
period 644.7 740.1 1 169.4
Less: preference dividend — — (0.1)
Basic earnings 644.7 740.1 1 169.3
Adjusted for:
Net impairment losses on plant,
property and equipment and
intangible assets 148.1 16.1 431.5
Net loss on disposal of business — — 33.7
Net loss/(profit) on disposal of
property, plant and equipment and
intangible assets 5.0 (3.7) (18.1)
Gain on revaluation of original
interest in joint venture
acquired — — (9.4)
Gain on revaluation and
consolidation of Zimbabwe
associates (81.7) — —
Net gain on shareholder loan
recycled from translation reserve — (23.7) —
Tax effects and non-controlling
interest (42.8) 5.7 (134.0)
Headline earnings for the period 673.3 734.5 1 473.0
8. Net overdraft
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Bank balances, deposits and cash 1 374.2 945.8 1 127.5
Bank overdrafts (3 096.8) (3 126.3) (1 808.5)
(1 722.6) (2 180.5) (681.0)
9. Supplementary information
Restated
Unaudited Unaudited Restated
6 months 6 months Year
ended ended ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
Rm Rm Rm
Capital expenditure 1 215.7 1 012.3 2 605.2
— expansion 563.9 606.8 1 771.7
— replacement 651.8 405.5 833.5
Capital commitments 2 265.3 3 387.6 2 017.9
— contracted 851.2 1 266.4 623.2
— approved not contracted 1 414.1 2 121.2 1 394.7
Lease commitments 80.0 209.3 274.9
— land and buildings 53.0 148.2 206.1
— other 27.0 61.1 68.8
Contingent liabilities 1.4 3.8 38.6
— customer claims and other 1.4 3.8 35.3
— guarantees in respect of
property leases — — 3.3
10. Share statistics
Restated
Unaudited
Unaudited 6 months ended Restated
6 months ended 31 Mar 2014 Year ended
31 Mar 2015 Unaudited 30 Sep 2014
000 000 000
Ordinary shares in issue 702 473 700 643 700 708
Ordinary shares in issue —
net of treasury shares 630 032 628 203 628 267
Weighted average number of
ordinary shares on which
headline earnings and
basic earnings per share are
based 629 719 627 710 627 728
Weighted average number of
ordinary shares on which
diluted headline
earnings and diluted basic
earnings
per share are based 651 799 650 004 649 808
11. Additional disclosures
Restated
Unaudited Unaudited
6 months 6 months Restated
ended ended Year ended
31 Mar 2015 31 Mar 2014 30 Sep 2014
EBITDA?* (Rm) 1 366.4 1 470.7 2 809.7
Net gearing (%) 86 78 73
Net debt: EBITDA (debt covenants)
(times) 2.4 1.8 2.1
Interest cover (times) 5.4 6.5 6.2
EBITDA: Interest cover (debt
covenants) (times) 7.7 11.7 7.3
Return on equity — continuing
operations (%) 22 24 21
Return on net assets - continuing
operations (%) 11 18 16
Net worth per ordinary share
(cents)?** 1 317 1 186 1 255
Tangible net worth per ordinary
share (cents)?** 748 664 710
* 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 impact
of the financial statements being restated (see note 2).
12. Translation reserve movement
Due to the weakening of the rand, a translation gain of R122.3 million
(2014: R 111.2 million gain) was realised for the period.
The closing exchange rates at 31 March 2015 for the rand against the UK
pound and US dollar respectively were 18.02 (September 2014: 18.33) and
12.14 (September 2014: 11.30).
13. 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, IN Mkhari, DC Moephuli, CWN Molope, 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
26 May 2015
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: 26/05/2015 01:27:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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