Wrap Text
Unaudited group results and ordinary dividend announcement for the half year ended 31 March 2016
Nampak Limited
(Registration number 1968/008070/06)
(Incorporated in the Republic of South Africa)
Share code: NPK ISIN: ZAE 000071676
Unaudited group results and ordinary dividend announcement
for the half year ended 31 March 2016
- Group revenue of R9.4 billion, up 10%
- Group trading profit of R989 million, up 17%
- Trading profit from the rest of Africa of R462 million, up 45%,
now 47% of group trading profit, up from 38% in 2015
- Group operating profit of R870 million down 7%, impacted by net
abnormal losses of R119 million, following an abnormal profit of
R90 million in prior period
- Glass operation turned around, delivers a profit of R44 million
- Adjusted HEPS (before abnormal foreign exchange rate effects) up 21%
- HEPS (after abnormal foreign exchange rate effects) up 4%
- R1.7 billion to be raised through a sale and lease back, balance
sheet bolstered
- Liquidity and foreign exchange issues actively managed
- Balance sheet structure improved; current ratio strengthened
by 20%
- Funding covenants observed and successfully renegotiated to
provide more flexibility
- 29% reduction in the lost time injury frequency rate
- No interim ordinary dividend declared, a conservative approach adopted
to cash management
Comments from the CEO, André de Ruyter
“Nampak has delivered a strong set of results for the first half of the
2016 financial year supported by the turnaround at Glass and a solid
result from our Metals divisions. Plastics increased trading profit by 20%
on improved revenues, while the Paper business increased trading profit by
34%. During the reporting period, markets in which Nampak operates were
characterised by subdued growth and volatile currencies due to lower
commodity prices, drought and tightening global financial conditions.
Import replacement, new contractual volumes and increased beverage
consumption as a result of a hotter than usual summer in South Africa
benefited group volumes.
Given the challenging macroeconomic conditions in the regions where
we operate, Nampak has taken proactive and prudent steps to reduce
its cost base, improve its operational performance, and strengthen
its balance sheet by restructuring debt, conserving cash, not declaring
an interim ordinary dividend and monetising non-core property. This
will increase Nampak’s resilience in the face of challenging
conditions and ensure sustainable profitability going forward.
We continue our focus on operational excellence and improved asset
utilisation across all of our operations. Enhancements in procurement,
operations and product portfolio optimisation have delivered results
to the bottom line.
The Buy Better programme is underway and savings are flowing through
with a target to deliver R120 million this financial year.
The Make Better programme through the implementation of operations
excellence initiatives led to substantial improvements in productivity
at plant level, with Glass reaching industry benchmark pack-to-melt
ratios, Plastics improving plant throughput in South Africa, and a
very pleasing 29% reduction in our lost time injury frequency rate.
The DivFood recapitalisation project is on budget and schedule. Latest
generation technology which has been commissioned at DivFood is delivering
the expected savings, and allowing us to meet increased demand for light-
weight packaging. The recently commissioned aluminium beverage can lines
at Springs and Rosslyn have made good progress up the learning curve as we
continue to reduce spoilage and increase throughput.
The Sell Better programme delivered further product rationalisation at Glass
and DivFood, where we have now reduced SKUs by an average of 35%. These
programmes, together with our efforts aimed at managing the impact of
currency volatility and liquidity constraints on results and performance;
position Nampak well to navigate the challenging economic conditions.
Against the backdrop of a pleasing first-half performance, it is however
expected that consumer demand in South Africa will continue to decline as
a result of adverse economic conditions during the second half of the financial
year. Although higher commodity prices are expected to provide some relief from
the liquidity constraints in Angola and Nigeria, restricted cash balances in
both countries at half year totalled approximately R1.5 billion. In view of
these risks, Nampak has decided not to declare an interim ordinary dividend,
rather focusing its efforts on conserving cash. In addition, strong cost
containment measures have been put in place.
The medium-term outlook for packaging in South Africa and other key African
markets remains favourable, underpinned by some 900 million emerging
consumers in Sub-Saharan Africa.”
Group performance review
Group performance from continuing operations
R million 2016 2015 % change
Revenue 9 422 8 588 10
Trading profit 989 845 17
Abnormal items (119) 90 —
Operating profit 870 935 (7)
Basic earnings per share (cents) 105.0 119.9 (12)
Adjusted headline earnings per share — before 123.2 101.6 21
abnormal foreign exchange rate effects (cents)
Headline earnings per share — after abnormal
foreign exchange rate effects (cents) 105.2 101.6 4
Dividend per share (cents) — 42.0
2015 results restated for change in the consolidation date of Zimbabwe
associates.
The group benefited from a solid performance from Bevcan Nigeria, improved
volumes and margins in the Plastics division, a turnaround in the Glass
division as well as a good recovery in the Nigerian paper and general
metal packaging business. This resulted in a 10% increase in group revenue
and a 17% increase in trading profit with trading margins increasing from
9.8% to 10.5%. Subdued consumer spending in the second quarter, a foreign
exchange loss of R114 million in Angola, as well as cost increases associated
with the ramp-up of recently commissioned projects put pressure on operating
margins which declined from 10.9% to 9.2% primarily due to the Angolan forex
loss on the devaluation of the kwanza. A change in the depreciation estimate
to better reflect utilisation of assets in our Metals division has resulted
in a reduction of R65 million in the depreciation charge.
Net abnormal losses of R119 million were recorded compared to R90 million net
abnormal profits reported in the prior period, resulting in a R209 million
adverse effect on operating profit. The devaluation of the kwanza accounts
for R114 million of the current period’s abnormal loss. In the prior period
the once off gain of R124 million in the restructuring of the Zimbabwe group
was offset by retrenchment and impairment costs resulting in a net abnormal
profit of R90 million.
The group continued to experience delays in timeously converting Nigeria
and Angola bank balances to US dollars (USD) due to hard currency shortages
in these countries. At 31 March 2016, Nampak had cash balances amounting to
R1.5 billion in those two countries compared to R700 million at
30 September 2015. Approximately R367 million (USD 25 million) of the
restricted cash has been hedged in Angola via USD-linked bonds, moderating
exposure to possible local currency devaluation. The amount of offshore
funding slowed towards the end of the reporting period as various
management interventions took place. During the period, approximately
60% liquidity was achieved on current foreign supplier invoices presented
to the Nigerian and Angolan banks for settlement and the balance was
funded using group treasury facilities. The increase in cash balances
in these territories is attributable to cash generation in the period,
exchange rate movements and an increase in loan funding from group
treasury to fund the liquidity shortfall in cash restricted countries.
Currency volatility and liquidity constraints are expected to remain in
the medium term and the company continues to assess and manage the impact
on results and performance.
The group’s trading profit for the half year increased by 17%, the operating
profit decreased by 7% and headline earnings per share from continuing
operations increased by 4% to 105.2 cents from 101.6 cents in 2015. Normalising
for the impact of the abnormal exchange rate effects increases the adjusted
HEPS by 21% to 123.2 cents.
During the period, the ZAR/USD exchange rate continued on its weakening
trajectory with the closing exchange rate at 31 March 2016 of R14.69
(2015: R12.14), which impacted the translation of the group’s USD
denominated borrowings. Net finance costs for the period increased by
44% from R166 million in 2015 to R239 million in 2016, due to increased
interest rates in South Africa, higher on average borrowings and the
translation effect on USD denominated debt.
The effective tax rate for continuing operations was 4.4%, versus the 1.1%
charge in the first half 2015. The group benefited from government grants for
capital-related projects in Bevcan, lower tax rates in other tax jurisdictions
outside South Africa and the utilisation of existing capital gains tax (CGT)
losses to offset capital gains arising from the sale and lease back transaction.
The sale and lease back transaction is the primary reason for the tax rate
being lower than previous guidance. The tax rate is expected to return to the
previous guidance range of 15% to 20% in 2017.
As a result of a weakening ZAR/USD exchange rate the following impacts
were recorded:
* net borrowings increased to R7.4 billion (2015: R7.1 billion) with net
gearing of 74% down from the 85% reported in the prior year.
* a foreign currency translation gain of R298 million (2015: R109 million)
was generated which is accounted for in other comprehensive income further
increasing shareholders equity.
Working capital was also impacted by translation at a weaker ZAR/USD
exchange rate. R410 million cash was released in the period as a result
of stringent management of inventories and trade receivables, compared
to R371 million absorbed in the prior period. The net working capital
cycle absorbed R488 million (2015: R689 million) during the period.
Improvements in the balance sheet structure have been achieved with
R1.3 billion of short-term funding being converted to long-term
funding at 31 March 2016 with a concomitant improvement in the group’s
short-term solvency as reflected in a 20% improvement in the group’s
current ratio. In the interests of prudence, funding covenants have
been renegotiated to cater for potential sudden foreign currency
fluctuations thereby improving flexibility in the group’s financing
structures. In light of the risks associated with the ZAR/USD exchange
rate volatility, the revised covenant calculation accommodates both
EBITDA and interest bearing debt being measured at the average ZAR/USD
exchange rate with incremental interest costs being levied in the event
of the covenant, based on average exchange rates, exceeding three times.
The average ZAR/USD exchange rate for the period was R15.04 compared to
R11.49 for the same period in the prior year, while the average ZAR/GBP
exchange rate was R22.13 compared to the prior year of R17.77.
Segmental performance review
Segmental Report (continuing operations)
Trading Trading
Revenue profit* margin (%)
R million 2016 2015 2016 2015 2016 2015
Metals 5 041 4 940 622 588 12.3 11.9
Plastics 2 891 2 481 202 168 7.0 6.8
Paper 831 621 95 71 11.4 11.4
Glass 659 546 44 (70) 6.7 (12.8)
Corporate Services — — 26 88 — —
Total (continuing operations) 9 422 8 588 989 845 10.5 9.8
* Operating profit before abnormal items.
2015 results restated for change in the consolidation date of Zimbabwe
associates and segments within which the consolidated entities were
reported.
Metals
This cluster includes all beverage, food and general packaging can
divisions in South Africa and the rest of Africa. Performance for the
cluster benefited from good volume performance in Nigeria’s beverage can
and general metal packaging businesses. The cluster’s margin for the first
half of 2016 was 12.3%, up 0.4% from the margin achieved in 2015. Contractual
USD selling prices in Nigeria and Angola continue to protect revenue and
margins against the impacts of local currency volatility.
Beverage can demand is mainly driven by pack-share dynamics, demand for
carbonated soft drinks and alcoholic beverages as well as marketing and
supply decisions by customers. The interaction between these drivers
determines the ultimate demand for beverage cans in the market. Bevcan
South Africa’s volumes softened in the second quarter after the first
quarter peak season with overall volumes down 4% on 2015 first half, of
which 2.4% relates to cans previously exported to supplement production
in Angola. The demand for the rest of the year is expected to be positive,
albeit at lower levels than in previous years, mainly due to import
replacement of 500ml cans, which Bevcan can now supply for the first time
to its customers in South Africa. Additional depreciation on new capital
equipment, incremental employee costs for new lines, costs related to the
commissioning and ramp-up of new production lines and price decreases passed
on to customers as previously agreed impacted results. The implemented
operations excellence initiative at the Springs site made a positive impact
in addressing the spoilage issue, which remains a key focus area for the
division. Recently commissioned aluminium lines and the remaining steel
lines are operating well with much improved spoilage and good operational
efficiencies. Newly signed long term (three to six years) sales agreements
with major customers, a well-established cost-competitive manufacturing
footprint and a strong market position puts the division in the best possible
position to maintain market share and leverage opportunities. In addition,
it is expected that capital investments made in recent years will continue
to generate improved performance through the learning curve in the form of
improved operational efficiencies and reduced costs.
The overall Angolan beverage market was adversely impacted by the slowdown
in economic activity and macroeconomic challenges resulting from lower
crude oil prices. Performance was further impacted by the devaluation of
the kwanza against the USD, most of which happened at the end of December
2015. As a result, Bevcan Angola’s first half sales volumes were 18%
lower than the prior year’s volumes. However, the recently finalised
supply agreement with Refriango, with official sales commencing on
1 April 2016, is expected to offset the first half’s volume decline.
Full year volumes are therefore expected to be moderately down year-on-year.
In light of the current macroeconomic challenges, management has implemented
measures to reduce costs and rationalise business activity. Nampak, like
other Angolan enterprises, continued to experience limited access to
foreign currency. Recent USD allocations from Angolan banks have enabled
the business to reduce restricted cash balances. In the medium term,
the local beverage can market is expected to benefit from investments
by customers in additional can filling line capacity, driven by growth
in demand for locally produced products. This, together with the
application of the beverage can import duty and the fact that Bevcan
Angola is the only local producer of cans, is expected to benefit
the business in the medium term.
The Nigerian economy grew during the period, albeit at lower levels than
in 2015, in the midst of macroeconomic challenges. A slowdown in
discretionary consumer spend resulted in flat beverage can demand.
Bevcan Nigeria’s market share expanded, however, as customers allocated
bigger volumes to Nampak. The operation’s utilisation was at an annualised
output rate of 550 – 650 million cans per annum, which is expected to grow
during the second half. Operating profit was well up on last year’s
performance although the business, like other Nigerian enterprises,
continued to experience challenges sourcing foreign currency. Investments
in brewing capacity and beer consumption growth rates are expected
to be above GDP growth in the medium to long term, which in turn is
expected to drive increased demand for cans.
Negotiations with key customers in both Angola and Nigeria to provide
assistance to Nampak with the import of major raw material items and
components are continuing.
In South Africa, DivFood is halfway through its recapitalisation and
product rationalisation project. The benefits from the project combined
with recently signed customer contracts are expected to deliver savings
and enable the division to compete and grow profitably. The food
packaging business’ results were pleasing, with vegetables, fish,
meat and fruit being the main contributing categories. The performance
was supported by market share gains in fruit, a weaker ZAR/USD exchange
rate that encouraged import replacement of locally canned fish and growth
in the vegetable category due to promotional activity by brand owners.
Diversified packaging’s performance was satisfactory. Tinplate aerosol
volumes benefited from good insecticide demand and monobloc aerosols
volumes grew by 5%. However, paint volumes declined as a consequence of
the rationalisation of unprofitable products. During the period, DivFood
recorded operational improvements in key productivity measures.
Volumes in the general metal packaging businesses in the rest of Africa
were generally flat or in certain markets negative. In Nigeria overall
demand for metal packaging remained subdued, although it showed good
signs of recovery from 2015 levels. General liquidity issues forced
many customers to purchase locally produced products, instead of
importing. This trend is expected to contribute positively to performance
going forward. After the previous year’s performance was impacted by
national elections, the lower oil price and foreign exchange losses,
the business’s performance for the year is expected to continue to improve.
The main risk factor remains the possible devaluation of the Nigerian
naira (NGN) against the USD, the timing and extent of which are unknown.
The agricultural sector is a key market for Kenya’s metals business and
poor rains and harvests negatively affected results. Volumes in the general
consumer packaging were muted due to softening demand in the market. Demand
is expected to recover somewhat in the second half. In Tanzania, revenue
was behind 2015 due to lower metal crown demand resulting from a general
downturn in the beverage market. Trading profit increased, however, as a
result of cost savings and local currency stability.
Plastics
Plastics, a cluster that includes all the South African, rest of Africa and
United Kingdom plastics divisions, produced an improved performance driven
mainly by good volume growth, continued incremental improvement in cost
savings, product diversification and operational improvement. Revenue
for the cluster was up 17%, while trading profit was up 20%.
In South Africa, Liquid Packaging revenue for the period was ahead of the
prior year. Increased sales volumes were driven by healthy demand in the
carbonated soft drinks, juice and water market resulting from a hotter
than normal summer season and new sales to the oil lubricant market. Milk
volumes were flat and sorghum beer carton sales were lower due to changing
market dynamics. Trading profit for the period was higher than the prior
year as cost management initiatives reduced overhead costs. Revenue for
the Closures business was marginally down driven by lower metal closure
volumes for food and alcoholic beverages, with the exception of wine.
Growth in wine metal closures and plastic closures for bottled water and
carbonated soft drinks (CSD) contributed positively to profits. Tubes
supplies the toothpaste sector and continued to have a challenging year
as sales to a major customer were reduced and replaced with filled product
imports. Though the plant remains adequately loaded, capacity is available
to support growth of existing customers in the rest of Africa. The drums
business was impacted by reduced alcohol sales into the rest of Africa as
a result of macroeconomic conditions. Crates performed well benefiting from
the recent business turnaround that improved efficiencies and waste reduction.
Savings resulting from the turnaround combined with improved demand contributed
positively to performance. Recently signed long term agreements with key
customers present an opportunity to profitably supply exports into the
rest of Africa.
In the short term, the South African plastics business will continue to
focus on operational excellence, improving production efficiencies
and driving unit cost down to improve margins.
Revenue for Plastics UK was ahead of the prior year benefiting from new
long-term contracts that replaced some of the previously lost volumes.
However, margins were somewhat lower as a result of a programme implemented
to regain market share. The average ZAR/GBP rate for the period was R22.13
from R17.77 a year earlier. In an effort to improve performance, the business
is evaluating several options aimed at capturing opportunities outside the
milk industry to replace lost volume.
In Zimbabwe, the plastics businesses had a good half year, generating results
that were well ahead of the prior year. CMB performed well due to continued
growth in fruit juice and Mahewu bottle demand while Megapak’s performance
benefited from overall improvements in sales, particularly of preforms.
Megapak Zimbabwe was fully consolidated from 1 December 2014. The business
was previously equity-accounted as an associate. Megapak’s contribution to
the overall cluster performance was significantly lower in the first
half 2015. The increasing shortage of cash in circulation in Zimbabwean
economy remains a concern.
Paper
This cluster includes all paper businesses in the rest of Africa. Revenue
and trading profit for 2016 were up 34% compared to 2015, benefiting from
improved performance in Nigeria, the consolidation of the Hunyani divisions
(previously associates) in Zimbabwe and the consolidation of Bullpak
(previously a JV) in Kenya. Trading margins for the division at
11.4% are consistent for both periods.
Nigeria Cartons revenue and trading profit were ahead of the prior year
due to a recovery in cigarette carton sales. Similar to the metals operations,
the prior year’s performance was impacted by unique macroeconomic and political
factors. Sales volumes into the general fast moving consumer goods (FMCG)
market were mixed. This trend is expected to improve in the short term as
restrictions on imported products encourage local sourcing of packaged goods.
In Zimbabwe, Hunyani volumes were below the prior year’s performance largely
due to subdued second quarter demand on the back of a smaller tobacco crop
and liquidity issues experienced by customers. This followed a solid
performance in the first quarter. Benefits from cost containment
initiatives contributed to a significantly improved financial performance.
In Zambia, sorghum beer carton sales volumes for the period were significantly
down due to reduced demand and product substitution in the market. Sales are
expected to recover in the short term as output from a major customer’s
new operation increases.
Malawi’s sales performance for the period benefited from stronger volumes
in sorghum beer and from price increases and local currency appreciation.
While local profitability was good, the depreciation of the local currency
impacted negatively on the repatriated profits. The tobacco crop for 2016 is
expected to be higher than 2015 which will contribute to increased tobacco
case sales in the second half.
Kenya Bullpak performed in line with the prior period. Overall demand for
self-opening bags in the milling industry was flat, due to operational issues
at Bullpak’s major customer. Profitability and margins were marginally lower
than the previous year’s performance and are expected to be flat year-on-year
due to muted consumer demand.
Glass
Following a challenging 2015 financial year, production output has now ramped
up on the back of the recently installed furnace 3. As a result, production
volumes for the period were 30% up on the previous year. Revenue for the
division was up 21%, delivering a R44 million trading profit for the period
compared to a trading loss of R70 million in the comparative period. The
overall beverage market in South Africa had a strong first quarter through to
December, however, demand softened in the second quarter as consumers came
under pressure. As a result, the Glass division recorded a trading margin
of 6.7%, which offers room for further improvement as market demand recovers.
Good market share growth has been recorded in the wine industry. The
division’s 2016 financial year trading profit is expected to be lower than
previous guidance based on current muted demand forecasts, which are
significantly lower than those evident at the end of the first quarter.
Furnace 3 technical and operational optimisation initiatives continue.
Corporate Services
Group corporate services include group property rentals of owned properties,
research and development services, treasury services and other corporate
activity costs. The trading profit declined due to the loss of corporate
charges previously recovered from disposed operations and FECs
mark to market movements. On the other hand, the trading profit for
the period benefited from cost saving initiatives underway in the group.
Geographical update (continuing operations)
Trading Trading
Revenue profit* margin (%)
R million 2016 2015 2016 2015 2016 2015
South Africa 5 459 5 459 466 375 8.5 6.9
Rest of Africa 2 805 2 161 462 318 16.5 14.7
United Kingdom 1 158 968 35 64 3.0 6.6
Corporate Services — — 26 88 — —
Total 9 422 8 588 989 845 10.5 9.8
* Operating profit before abnormal items.
2015 results restated for change in the consolidation date of Zimbabwe
associates and segments within which the consolidated entities were reported.
South Africa
During the six months to 31 March 2016, South Africa, like most emerging
markets experienced volatile exchange rates and an outflow of capital
coupled with low commodity prices and political uncertainty. Consumer
demand is under pressure and as a result of these conditions; revenue from
the South African businesses was flat. A solid recovery by the glass
operation and a good performance by plastics contributed positively to
performance. Trading profit was up 24% and the region’s contribution to
trading profit increased to 47% up from 44% recorded in 2015.
Rest of Africa
The rest of Africa recorded sales of R2.8 billion, up by 30% from R2.2 billion
during the same period in 2015, and it recorded an increase in trading profit
of 45% from R318 million to R462 million. The results were positively impacted
by currency depreciation against the USD, mainly due to the impact of the
sharp decline in commodity prices, including the oil price. Key market GDP
growth rate estimates were revised downwards and inflation increased. Severe
liquidity constraints were experienced in Angola and Nigeria. Bevcan Nigeria
returned a particularly strong performance, gaining market share, while the
other Nigerian businesses showed a positive recovery from the prior period.
The rest of Africa now contributes 47% to trading profit, up from 38% in 2015.
The current challenges do not change the overall investment rationale in key
markets where consumption of, in particular, packaged beer and carbonated soft
drinks is driven by sustainable demographic trends. We are encouraged by the
recent improvements in the oil price and decisions by governments in Angola
and Nigeria to approach the International Monetary Fund in an effort to
introduce reforms to their economies.
United Kingdom
The UK economy continues to show slow GDP growth while the dairy market faces
pricing and industry pressures. Trading profit decreased by 56% to GBP1.6 million.
In ZAR terms the trading profit decreased by 45% compensated for by a weaker
average ZAR/GBP rate which declined from R17.77 to R22.13. The division’s
contribution to group trading profit for the period declined from 8% to 3%.
Update on key projects
As part of the group’s cash conservation measures, guidance for 2016 capital
expenditure (including replacement and expansion projects) was revised down
to between R1.0 and R1.4 billion from the R1.2 to R1.6 billion previously
guided. Total capital expenditure for the period amounted to R921 million
compared to R1.2 billion spent during the same period in 2015, the majority
of which related to capital commitments made on approved projects in the prior
year. R648 million was spent on expansion projects, while R273 million was
spent on replacement projects. Further capital expenditure for the remainder
of the year will be prudently evaluated and will be limited to key projects.
Rosslyn line 2 commissioning imminent
In South Africa, the Bevcan recapitalisation programme is nearing completion.
The second aluminium line at the Rosslyn site is expected to be commissioned
in the second half of the 2016 financial year.
Bevcan Springs’ beverage can ends facility expansion
The project is expected to add four billion ends per annum to the existing
beverage can ends manufacturing facility in Springs. The project is going
well and production is expected to start in the second half of 2016 and
will enable supply to Nampak’s facilities in South Africa, Angola and Nigeria.
DivFood recapitalisation and product rationalisation project
The R450 million project is progressing as planned, with completion scheduled
for 2017. The project includes manufacturing consolidation, complexity
reduction and replacement of ageing equipment with energy efficient and
technologically advanced machinery. Benefits are expected to include
improved operations efficiencies, product light-weighting, cash fixed cost
reduction, and overall improved performance.
Rest of Africa glass projects
In view of current volatile macroeconomic conditions, Nampak is being
circumspect regarding further capital investment in the rest of Africa.
As communicated in December 2015, Nampak has taken a decision to delay
further capital investment in Angola. The value of the Nigeria and Ethiopia
glass opportunities to Nampak’s growth strategy is significant and these
projects continue to be evaluated and considered with prudence.
Active portfolio management
In line with Nampak’s strategy to deploy capital for the highest return and
to deleverage the balance sheet, the Nampak board has approved, subject to
approval by competition authorities and other legal requirements, the sale
and lease back of 16 properties in the group’s portfolio. This transaction
is intended to raise R1.7 billion in gross proceeds which will be applied
to the reduction of debt.
An agreement for the sale of Nampak’s 50% shareholding in, and loans to,
Sancella SA (Pty) Limited was entered into on 21 July 2015, with the
transaction being effective 1 December 2015. The proceeds from the
sale were applied to settle the outstanding loan balances.
Outlook
External macroeconomic challenges in key markets are expected to prevail
for the rest of the 2016 financial year. Nampak is focused on ensuring
this risk is adequately managed by utilising measures at its disposal,
where possible, to address exposure to further currency volatility, but
it cannot rule out further foreign exchange losses during the 2016
financial year.
Glass has turned around and is expected to deliver profits in line with
market dynamics. In the absence of a catalyst to promote economic growth
in key markets, demand for packaged goods and exchange rates are expected
to remain a key factor influencing the results.
A key driver for Nampak’s major decisions relating to corporate activity
has been to improve competitiveness and to ensure sustainable profitability
thus enabling the divisions to defend markets and leverage opportunities.
In markets where Nampak operates, capital investments, strong customer
relationships, recently signed long term customer contracts, and a well-
established footprint with in-depth knowledge of local market dynamics
sustain its competitive advantage.
Ordinary dividend
The past five and half years have been characterised by strong investments
in capital expenditure, divestitures and investments in the rest of Africa
with net aggregate expenditure of R10.4 billion while maintaining a historic
dividend pay-out of 64.5% of HEPS. Consequently, group net debt has increased
from R16 million to R7.4 billion and net gearing from 0% to 74% respectively.
The reduction of interest bearing debt and a resultant improvement in the
group’s gearing levels have been identified as a key strategic objective
in light of volatile exchange rates, increasing interest rates and
liquidity issues in the Rest of Africa. Accordingly, the Nampak Limited
Board has decided not to declare an interim ordinary dividend, in order
to improve gearing, reduce interest costs and assist in the restructure
of the interest bearing debt and balance sheet structure.
Future ordinary dividend declarations will be considered having regard to
the prevailing economic conditions, rest of Africa liquidity constraints,
group cash flow requirements and the group’s performance outlook.
On behalf of the board
TT Mboweni AM de Ruyter GR Fullerton
Chairman Chief executive officer Chief Financial Officer
1 June 2016
Condensed group statement of comprehensive income
Restated
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar Change 30 Sep
R million Notes 2016 2015 % 2015
Continuing operations
Revenue 9 422.2 8 588.3 10 17 291.3
Operating profit 3 870.1 934.6 (7) 1 681.4
Finance costs (256.8) (179.7) (316.6)
Finance income 17.8 13.9 37.6
Share of net profit/(loss)
from associates and joint
ventures 2.7 3.4 (3.8)
Profit before tax 633.8 772.2 (18) 1 398.6
Income tax
(expense)/benefit (27.6) (8.6) 57.5
Profit for the period from
continuing operations 606.2 763.6 (21) 1 456.1
Discontinued operations
Loss for the period from
discontinued operations 4 — (68.4) (394.8)
Profit for the period 606.2 695.2 (13) 1 061.3
Other comprehensive
income/(expense), net
of tax
Items that will not be
reclassified to profit
or loss
Net actuarial loss from
retirement benefit
obligations — — (9.6)
Items that may be
reclassified subsequently
to profit or loss
Exchange differences on
translation of foreign
operations 12 297.7 109.3 774.6
Gains/(losses) on cash flow
hedges 111.9 (6.4) 56.8
Other comprehensive income
for the period, net of tax 409.6 102.9 >100 821.8
Total comprehensive income
for the period 1 015.8 798.1 27 1 883.1
Profit/(loss) attributable to:
Owners of Nampak Ltd 664.2 686.6 (3) 1 043.2
Non-controlling interest in
subsidiaries (58.0) 8.6 18.1
606.2 695.2 (13) 1 061.3
Total comprehensive income/
(expense) attributable to:
Owners of Nampak Ltd 1 047.4 770.9 36 1 794.0
Non-controlling interest in
subsidiaries (31.6) 27.2 89.1
1 015.8 798.1 27 1 883.1
Continuing operations
Basic earnings per share
(cents) 105.0 119.9 (12) 228.3
Fully diluted basic
earnings per share (cents) 104.7 115.8 (10) 225.6
Headline earnings per
ordinary share (cents) 105.2 101.6 4 208.2
Fully diluted headline
earnings per share (cents) 104.9 98.1 7 205.7
Continuing and discontinued
operations
Basic earnings per share
(cents) 105.0 109.0 (4) 165.6
Fully diluted basic
earnings per share (cents) 104.7 105.3 (1) 163.7
Headline earnings per
ordinary share (cents) 105.2 106.8 (1) 182.1
Fully diluted headline
earnings per share (cents) 104.9 103.2 2 179.9
Dividend per share (cents) — 42.0 (100) 134.0
Condensed group statement of financial position
Restated
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Assets
Non-current assets
Property, plant and equipment and
investment property 11 807.4 9 944.0 11 025.7
Goodwill and other intangible assets 4 299.2 3 650.6 4 118.6
Joint ventures, associates and other
investments 34.8 62.7 44.1
Deferred tax assets 152.2 99.9 145.3
Other non-current assets 43.9 46.7 33.0
16 337.5 13 803.9 15 366.7
Current assets
Inventories 3 827.1 3 287.9 3 890.6
Trade receivables and other current
assets 3 276.4 2 721.3 3 404.4
Tax assets 9.4 6.3 12.0
Bank balances, deposits and cash 2 398.2 1 374.2 1 587.4
9 511.1 7 389.7 8 894.4
Assets classified as held for sale 21.4 3 057.8 146.4
Total assets 25 870.0 24 251.4 24 407.5
Equity and liabilities
Capital and reserves
Share capital 35.3 36.1 36.1
Capital reserves 32.0 (393.3) (405.0)
Other reserves 1 444.3 399.2 1 061.7
Retained earnings 8 166.0 8 017.6 8 109.6
Shareholders’ equity 9 677.6 8 059.6 8 802.4
Non-controlling interest 338.4 305.5 370.0
Total equity 10 016.0 8 365.1 9 172.4
Non-current liabilities
Loans and borrowings 5 462.5 5 017.2 4 212.0
Retirement benefit obligation 1 996.5 2 187.1 2 008.4
Deferred tax liabilities 274.8 542.1 329.2
Other non-current liabilities 55.9 72.9 61.6
7 789.7 7 819.3 6 611.2
Current liabilities
Trade payables, provisions and other 3 681.3 3 329.0 4 418.6
current liabilities
Bank overdrafts 3 424.6 3 096.8 3 672.3
Loans and borrowings 938.4 659.7 446.8
Tax liabilities 20.0 56.8 86.2
8 064.3 7 142.3 8 623.9
Liabilities directly associated with
assets classified as held for sale — 924.7 —
Total equity and liabilities 25 870.0 24 251.4 24 407.5
Condensed group statement of cash flows
Restated
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million Notes 2016 2015 2015
Cash generated from
operations before working
capital changes 1 370.9 1 424.0 2 030.2
Working capital changes (488.3) (689.0) (668.6)
Cash generated from
operations 882.6 735.0 1 361.6
Net interest paid (236.4) (173.5) (376.4)
Income from investments — 7.4 7.4
Income tax paid (166.8) (56.9) (151.6)
Replacement capital
expenditure (273.5) (641.2) (1 357.5)
Cash retained from/(utilised
in) operations 205.9 (129.2) (516.5)
Dividends paid (572.4) (681.6) (946.2)
Net cash utilised in
operating activities (366.5) (810.8) (1 462.7)
Expansion capital expenditure (647.7) (563.9) (837.7)
Proceeds on disposal
of businesses 4 — — 1 982.7
Other investing activities 146.7 99.3 196.3
Net cash utilised before
financing activities (867.5) (1 275.4) (121.4)
Net cash raised from/(repaid
in) financing activities 1 885.9 167.5 (1 413.8)
Net increase/(decrease) in
cash and cash equivalents 1 018.4 (1 107.9) (1 535.2)
Net overdraft at beginning
of period (2 084.9) (681.0) (681.0)
Cash acquired on
consolidation of Zimbabwe
associates — 44.1 44.1
Translation of cash in
foreign subsidiaries 40.1 22.2 87.2
Net overdraft at end
of period 7 (1 026.4) (1 722.6) (2 084.9)
Condensed group statement of changes in equity
Restated
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Opening balance 9 172.4 7 883.1 7 883.1
Net shares issued during the period 28.4 74.0 74.9
Share-based payment expense 9.1 9.1 (2.6)
Share grants exercised (28.4) (74.1) (75.0)
Share buy-back (0.8) — —
Share of movement in associate's and
joint ventures’ non-distributable
reserve — (0.3) 0.6
Release of share of non-
distributable reserve of joint
venture disposed (0.6) — —
Dissolution of Black Management Trust 387.0 — —
Non-controlling interest realised on
disposal of subsidiary — — 2.6
Transfer from hedging reserve to
related assets — — (4.9)
Non-controlling interest on
consolidation of Zimbabwe associates — 356.8 356.8
Total comprehensive income for
the period 1 015.8 798.1 1 883.1
Dividends paid (566.9) (681.6) (946.2)
Closing balance 10 016.0 8 365.1 9 172.4
Comprising:
Share capital 35.3 36.1 36.1
Capital reserves 32.0 (393.3) (405.0)
Share premium 250.3 221.0 221.9
Treasury shares (399.7) (827.6) (827.6)
Share-based payments reserve 181.4 213.3 200.7
Other reserves 1 444.3 399.2 1 061.7
Foreign currency translation reserve 2 289.1 1 404.9 2 017.8
Financial instruments hedging
reserve 165.0 (5.2) 53.1
Recognised actuarial losses (975.6) (966.0) (975.6)
Share of non-distributable reserves
in associates and joint ventures 3.9 3.6 4.5
Available-for-sale financial assets
revaluation reserve (38.3) (38.3) (38.3)
Other 0.2 0.2 0.2
Retained earnings 8 166.0 8 017.6 8 109.6
Shareholders’ equity 9 677.6 8 059.6 8 802.4
Non-controlling interest 338.4 305.5 370.0
Total equity 10 016.0 8 365.1 9 172.4
Notes
1. Basis of preparation and accounting policies
The condensed interim financial statements are prepared in accordance with
the requirements of the JSE Limited Listings Requirements for interim reports,
and the requirements of the Companies Act of South Africa applicable to condensed
financial statements. The Listings Requirements require interim reports to be
prepared in accordance with and contain the information required by IAS 34
Interim Financial Reporting, as well as the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee and the Financial Pronouncements
as issued by the Financial Reporting Standards Council.
The interim financial statements have been prepared under the supervision
of the chief financial officer, G Fullerton 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 2015 annual financial statements, except
for the depreciation method applied to plant in the Bevcan operations (see below).
Change in accounting estimate
As of 1 October 2015, the group changed its method of depreciating plant at
its Bevcan operations from the straight-line method to the units of production
method, as it was felt that the latter method reflects more appropriately the
pattern of the consumption of the future economic benefits embodied in the
assets concerned. In accordance with IAS 16 Property, Plant and Equipment,
this change is an accounting estimate and is therefore applied prospectively
in terms of IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors. The impact of the change in depreciation method for the reported
period is a decrease in the depreciation expense of R64.5 million.
Restatement of comparatives
The comparative financial statements for March 2015 have been restated for
the impact of moving the consolidation date of the Zimbabwean associates,
Hunyani Holdings Ltd and Megapak Zimbabwe (Pvt) Ltd, from 1 October 2014
as previously reported to 1 December 2014, as well as the identification
of intangible assets consisting of brands, customer relationships and
supplier agreements in these entities during September 2015, and the
amortisation of these assets from the revised date of consolidation. The
consolidation date was changed due to the review of additional information
impacting the point in time as to when control was achieved over these
entities after the date that the prior year interim results were reported.
These changes were reflected in the September 2015 results as reported,
and therefore the September 2015 results have not been restated. Refer
note 5.
The restated comparatives for the condensed group statement of
comprehensive income are as follows:
Unaudited Audited
6 months Year
ended ended
31 Mar 30 Sep
R million 2015 2015
Revenue — decrease (177.9) —
Operating profit — increase 29.9 —
Finance costs — decrease 0.7 —
Finance income — decrease (0.6) —
Share of net profit/(loss) from
associates and joint ventures —
increase 4.1 —
Profit before tax — increase 34.1 —
Income tax expense — decrease 1.7 —
Profit for the period from
continuing operations — increase 35.8 —
Profit for the period — increase 35.8 —
Exchange differences on translation
of foreign operations — decrease (13.0) —
Other comprehensive income for the
period, net of tax — decrease (13.0) —
Total comprehensive income for the
period — increase 22.8 —
Profit attributable to:
Owners of Nampak Ltd — increase 41.9 —
Non-controlling interest in
subsidiaries — increase (6.1) —
35.8 —
Total comprehensive income
attributable to:
Owners of Nampak Ltd — increase 42.7 —
Non-controlling interest in
subsidiaries — increase (19.9) —
22.8 —
Earnings per share — continuing
operations
Basic earnings per share (cents) —
increase 6.7 —
Fully diluted basic earnings per
share (cents) — increase 6.4 —
Earnings per share — continuing and
discontinued operations
Basic earnings per share (cents) —
increase (cents) 6.6 —
Fully diluted basic earnings per
share (cents) — increase (cents) 6.4 —
Headline earnings per ordinary share
(cents) — decrease (cents) (0.1) —
Fully diluted headline earnings per
share (cents) — decrease (cents) (0.1) —
The restated comparatives for the condensed group statement of
financial position are as follows:
Unaudited Audited
6 months Year
ended ended
31 Mar 30 Sep
R million 2015 2015
Goodwill and other intangible assets
— increase 65.5 —
Total assets — increase 65.5 —
Other reserves — increase 0.8 —
Retained earnings — increase 46.9 —
Shareholders' equity — increase 47.7 —
Non-controlling interest — increase 17.8 —
Total equity — increase 65.5 —
Total equity and liabilities —
increase 65.5 —
The restated comparatives for the condensed group statement of cash flows
are as follows:
Unaudited Audited
6 months Year
ended ended
31 Mar 30 Sep
R million 2015 2015
Cash generated from operations
before working capital changes —
decrease (18.9) —
Working capital changes — decrease 23.3 —
Cash generated from operations —
increase 4.4 —
Replacement capital expenditure —
decrease 10.6 —
Cash retained from/(utilised in)
operations — increase 15.0 —
Net cash utilised in operating
activities — decrease 15.0 —
Net cash utilised before financing
activities — decrease 15.0 —
Net decrease in cash and cash
equivalents — decrease 15.0 —
Cash acquired on consolidation of
Zimbabwe associates — decrease (13.0) —
Translation of cash in foreign
subsidiaries — decrease (2.0) —
The restated comparatives for the condensed group statement of
changes in equity are as follows:
Unaudited Audited
6 months Year
ended ended
31 Mar 30 Sep
R million 2015 2015
Non-controlling interest on
consolidation of Zimbabwe associates
— increase 42.7 —
Total comprehensive income for the
period — increase 22.8 —
Closing balance — increase 65.5 —
Comprising: —
Other reserves — foreign currency
translation reserve — increase 0.8 —
Retained earnings — increase 46.9 —
hareholders' equity — increase 47.7 —
Non-controlling interest — increase 17.8 —
Total equity — increase 65.5 —
3. Included in operating profit are:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Depreciation 423.4 341.2 758.7
Amortisation 24.3 19.9 43.6
Net translation gains recognised on
financial instruments 95.2 27.5 141.4
Loss arising from Angolan and
Nigerian illiquidity 113.8 — 160.5
Net (gain)/loss arising from normal
operating activities (18.6) 27.5 (19.1)
Reconciliation of operating profit
and trading profit
Operating profit 870.1 934.6 1 681.4
Abnormal losses/(gains)* 119.2 (89.6) 158.2
Retrenchment and restructuring costs 1.5 19.4 77.3
Net impairment losses on plant,
property and equipment 16.0 10.1 121.4
Net loss on disposal of joint
venture 1.0 — —
Net profit on disposal of property (14.1) — (102.5)
Loss on translation of financial
instruments** 113.8 — 160.5
Gain on revaluation and
consolidation of Zimbabwe
associates*** — (124.2) (124.2)
Business acquisition-related costs 1.0 5.1 25.7
Trading profit 989.3 845.0 1 839.6
* Abnormal losses/(gains) are defined as losses/(gains) 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.
** During the period, the group reassessed its disclosure of the losses on
the translation of financial instruments. Consequently, losses on the
translation of financial instruments arising from the illiquidity in
Angola and Nigeria were deemed abnormal in nature and have been disclosed
as such, while the translation of losses arising from normal trading
activities were regarded as being part of these activities and have,
therefore, been recognised as part of trading profit. As a result of this
reassessment, the losses arising from normal trading activities which were
recognised as abnormal for the period ending 30 September have been
reclassified as part of trading profit.
*** The gain on the revaluation and consolidation of the Zimbabwean
associates was remeasured after the consolidation date of these entities
was moved from 1 October 2014 to 1 December 2014 and certain intangible
assets were identified subsequent to March 2015. Refer note 5.
4. Disposal of operations
An agreement for the sale of Nampak’s 50% shareholding in, and loans to,
Sancella SA (Pty) Ltd was entered into on 21 July 2015, with the transaction
being effective 1 December 2015. The proceeds from the sale were applied to
settle the outstanding loan balances. The loans had been impaired to the
amount expected to be recovered in terms of the transaction as at
30 September 2015 and therefore no further loss has been recognised.
During the previous year, the group disposed of the following businesses:
Nampak Corrugated and Nampak Tissue businesses effective 1 April 2015;
Nampak Flexibles and Nampak Recycling businesses effective 1 July 2015;
Nampak Sacks business effective 29 September 2015.
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 condensed group
statement of comprehensive income are set out below.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Revenue — 2 514.5 3 385.7
Expenses — (2 606.4) (3 560.7)
Loss before tax — (91.9) (175.0)
Attributable income tax benefit — 23.5 8.1
Loss after tax — (68.4) (166.9)
Loss on disposal of operations — — (350.2)
Attributable income tax benefit — — 122.3
Loss on disposal of operations, net
of tax — — (227.9)
Loss for the year from discontinued
operations — (68.4) (394.8)
Proceeds on disposal of discontinued
operations
The fair values of assets and
liabilities disposed of were
as follows:
Current assets
Inventory — — 756.5
Trade and other receivables — — 958.9
Non-current assets
Property, plant and equipment — — 1 275.8
Other intangible assets — — 12.0
Investments — — 9.0
Loans and receivables — — 25.8
Current liabilities
Trade and other payables — — (699.8)
Non-current liabilities
Deferred income — — (6.9)
Net assets disposed — — 2 331.3
Non-controlling interest released — — 2.6
Goodwill disposed — — 34.0
Loss on disposal of businesses — — (350.2)
Total disposal consideration — — 2 017.7
Less: deferred sales proceeds — — (35.0)
Net inflow on disposal — — 1 982.7
5. Business combinations
Nampak Zimbabwe Ltd
The group consolidated Hunyani Holdings Ltd (“Hunyani”) and Megapak
Zimbabwe (Pvt) Ltd (“Megapak”) with effect from 1 December 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 R14.2 million and
R9.3 million respectively.
As part of this process, 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%.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Assets acquired and liabilities
recognised at the date of
consolidation:
Current assets
Inventories — 169.7 169.7
Trade and other receivables — 192.3 192.3
Cash — 44.1 44.1
Non-current assets
Property, plant and equipment — 414.1 414.1
Intangible assets — 63.3 63.3
Investments — 7.6 7.6
Current liabilities
Trade and other payables — (142.8) (142.8)
Tax liabilities — (2.9) (2.9)
Loans — (26.8) (26.8)
Non-current liabilities
Loans — (0.7) (0.7)
Deferred tax — (75.5) (75.5)
— 642.4 642.4
The initial accounting for the consolidation and restructuring of the
Nampak Zimbabwe Ltd group as reported at the end of March 2015 had only
been provisionally determined at that date as the necessary market valuations
and other calculations had not been finalised. The effective date of the
transaction was recognised at the time as being 1 October 2014 and the assets
acquired and liabilities recognised were therefore based on their carrying
values at this date.
During September 2015, it was established that the date that control was
achieved over Hunyani and Megapak was in fact 1 December 2014 and the
effective date of the transaction was consequently moved to this date.
This had the effect of changing the carrying value of these interests.
Furthermore, intangible assets consisting of brands, customer relationships
and supplier agreements to the value of R63.3 million were identified.
The assets recognised at the effective date of the transaction and the
resulting gain on consolidation recognised for the period ending March 2015
have therefore been restated. The impact of these restatements are
indicated in note 2.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Gain arising on consolidation
Fair value of previously held
interests — 184.9 184.9
Plus: outside shareholders
interests recognised — 356.8 356.8
Less: fair value of identifiable
net assets recognised — (642.4) (642.4)
Gain arising on consolidation — (100.7) (100.7)
6. Determination of headline earnings
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Continuing operations
Profit attributable to equity
holders of the company for the
period 664.2 755.0 1 438.0
Less: preference dividend — — (0.1)
Basic earnings 664.2 755.0 1 437.9
Adjusted for:
Net impairment losses on plant,
property and equipment 16.0 10.1 121.4
Net (profit)/loss on disposal of
businesses, property, plant and
equipment and intangible assets (15.0) 1.8 (102.8)
Gain on revaluation and
consolidation of Zimbabwe
associates — (124.2) (124.2)
Tax effects and non-controlling
interest (0.1) (3.2) (21.2)
Headline earnings for the period 665.1 639.5 1 311.1
Continuing and discontinued
operations
Profit attributable to equity
holders of the company for the
period 664.2 686.6 1 043.2
Less: preference dividend — — (0.1)
Basic earnings 664.2 686.6 1 043.1
Adjusted for:
Net impairment losses on plant,
property and equipment and
intangible assets 16.0 148.1 121.4
Net (profit)/loss on disposal of
businesses, property, plant and
equipment and intangible assets (15.0) 5.0 251.0
Gain on revaluation and
consolidation of Zimbabwe
associates — (124.2) (124.2)
Tax effects and non-controlling (0.1) (42.8) (144.4)
interest
Headline earnings for the period 665.1 672.7 1 146.9
7. Net overdraft
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Bank balances, deposits and cash 2 398.2 1 374.2 1 587.4
Bank overdrafts (3 424.6) (3 096.8) (3 672.3)
Net overdraft (1 026.4) (1 722.6) (2 084.9)
8. Carrying amount of financial instruments
The group’s financial instruments consist mainly of investments, bank balances,
deposits and cash, trade receivables and other financial assets, trade payables
and other financial liabilities, interest-bearing
borrowings and derivative financial instruments.
The following sets out the measurement bases of the various financial
instruments carried on the condensed group statement of financial position:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
At fair value — level 2
Financial assets
Derivative financial assets 178.0 10.9 178.2
Financial liabilities
Derivative financial liabilities 18.5 18.3 75.3
At cost
Financial assets
Investments 3.2 26.4 12.7
At amortised cost
Financial assets 5 364.9 3 819.8 4 608.4
Non-current financial assets 43.9 46.7 33.0
Trade receivables and other current
assets (excluding prepayments) 2 909.0 2 373.3 2 865.8
Bank balances, deposits and cash 2 398.2 1 374.2 1 587.4
Assets classified as held for sale* 13.8 25.6 122.2
Financial liabilities 13 380.4 11 967.5 12 433.4
Non-current loans and borrowings 5 462.5 5 017.2 4 212.0
Trade payables and other current
liabilities (excluding provisions) 3 554.9 3 193.8 4 102.3
Bank overdrafts and current loans 4 363.0 3 756.5 4 119.1
* Current portion of loan to Sancella SA (Pty) Ltd.
9. Supplementary information
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Capital expenditure 921.2 1 205.1 2 195.2
— expansion 647.7 563.9 837.7
— replacement 273.5 641.2 1 357.5
Capital commitments 768.5 2 265.3 1 500.1
— contracted 407.3 851.2 727.2
— approved not contracted 361.2 1 414.1 772.9
Lease commitments 120.0 80.0 175.6
— land and buildings 108.1 53.0 150.6
— other 11.9 27.0 25.0
Contingent liabilities 8.5 1.4 64.2
— customer claims and guarantees 8.5 1.4 14.8
— tax contingent liabilities — — 49.4
10. Share statistics
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
Ordinary shares in issue (000) 688 650 702 473 702 497
Ordinary shares in issue — net of
treasury shares (000) 638 923 630 032 630 057
Weighted average number of
ordinary shares on which headline
earnings and basic earnings per share are
based (000) 632 361 629 719 629 726
Weighted average number of
ordinary shares on which diluted
headline earnings and diluted
basic earnings per share
are based (000) 634 218 651 799 637 369
11. Additional disclosures
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 Mar 31 Mar 30 Sep
R million 2016 2015 2015
EBITDA* — continuing operations
(R million) 1 333.8 1 305.8 2 605.1
Net gearing (%) 74 85 72
Current ratio 1.2 1.3 1.0
Acid test ratio 0.7 0.9 0.6
Net debt: EBITDA (debt covenants)
(times) 2.7 2.4 2.3
EBITDA: Interest cover (debt
covenants) 5.9 7.7 9.9
Return on equity — continuing
operations (%) 15.9 22.8 18.5
Return on net assets — continuing
operations (%) 11.2 11.9 11.6
Net worth per ordinary share
(cents)** 1 515 1 279 1 397
Tangible net worth per ordinary
share (cents)** 842 700 743
* 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 R297.7 million
(2015: R109.3 million gain) was realised for the period.
The closing exchange rates at 31 March 2016 for the rand against the UK
pound and US dollar respectively were 21.15 (September 2015: 20.97) and
14.69 (September 2015: 13.86).
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, NV Lila, PM Madi, IN Mkhari,
RJ Khoza, CWN Molope, DC Moephuli, PM Surgey.
Executive directors
AM de Ruyter (Chief executive officer), GR Fullerton (Chief financial officer),
FV Tshiqi (Group human resources director).
Secretary
NP O’Brien
Registered office
Nampak House, Hampton Office Park, 20 Georgian Crescent East, Bryanston,
Sandton, 2191, South Africa
(PO Box 69983, Sandton, 2021, South Africa) Telephone +27 11 719 6300
Share registrar
Computershare Investor Services (Pty) Limited, 70 Marshall Street,
Johannesburg 2001, South Africa
(PO Box 61051, Marshalltown, 2107, South Africa) Telephone +27 11 370 5000
Sponsor
UBS South Africa (Pty) Limited
Date: 01/06/2016 01:03:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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